UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

Form 10-Q

(Mark One)

þQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period endedMarch 31, September 30, 2014

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

¨TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _______________to_______________ to _______________.

Commission File Number000-53265

M LINE HOLDINGS, INC.

(Exact Name of Company as Specified in its Charter)

Nevada88-0375818
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
  
2672 Dow Avenue 
Tustin, CA92780
(Address of principal executive offices)(Zip Code)

(714) 630-6253

(Registrant’s telephone number, including area code)

_______________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X]þ     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]þ    No [   ].¨.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See 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  [   ]¨Smaller reporting company  [X]þ
(Do not check if a smaller reporting company) 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [   ]¨     No [X]þ.

-1-


Applicable only to issuers involved in bankruptcy proceedings during the preceding five years

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.
Yes [X]þ     No.[   ]¨

Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of May 18, 2014,August 19, 2015, there were 216,413,8011,199,555,785 shares of common stock, par value $.001, issued and outstanding.

-2-


M LINE HOLDINGS, INC.

TABLE OF CONTENTS

  Page
   
PART I 3
   
Item 1.Financial Statements (Unaudited)43
   
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations1718
   
Item 3.Quantitative and Qualitative Disclosures About Market Risk22
   
Item 4.Controls and Procedures2322
   
PART II  
   
Item 1.Legal Proceedings23
   
Item 1A.Risk Factors2627
   
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds2627
   
Item 3.Defaults Upon Senior Securities2627
   
Item 4.(Removed and Reserved)2627
   
Item 5.Other Information2627
   
Item 6.Exhibits26Exhibits27
   
 Signatures28Signatures30

-3-


-2-

PART 1—FINANCIAL INFORMATION

References in this document to “us,” “we” or the “Company” refer to M LINE HOLDINGS, INC. and our subsidiaries, E.M. Tool Company, Inc. and Precision Aerospace & Technologies, Inc., formerly Eran Engineering, Inc.

Item 1. Financial Statements.

M LINE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

Assets   
  As of March 31  As of June 30 
  2014  2013 
Current assets:      
       
Cash and cash equivalents$ 187,148 $182,305 
Accounts receivable, net 2,044,498  990,010 
Inventory, net 1,654,593  1,555,910 
Due from related party 179,769  99,348 
Deferred financing costs -  199,516 
       
     Total current assets 4,066,008  3,027,089 
       
Property and equipment, net 439,308  556,555 
       
Deposits and other 115,922  113,445 
       
Total assets$ 4,621,238 $3,697,089 
       
Liabilities and shareholders' equity  
       
Current liabilities:      
Bank overdraft$ 80,366 $85,542 
Accounts payable 1,404,470  1,421,626 
Accounts payable - related party 43,454  43,454 
Accrued expenses and other 2,753,988  2,788,697 
Litigation payable 137,500  137,500 
Derivative liability 605,987  - 
Line of credit 1,641,215  1,702,726 
Notes payable - current, net of debt discount of $292,142 and $69,996 respectively. 701,403  675,961 
Current portion of capital lease obligations 53,901  54,501 
Deferred income -  10,000 
     Total Current Liabilities 7,422,284  6,920,007 
       
Notes payable - net of current portion 274,194  318,903 
       
Capital lease obligation, net of current portion 50,917  90,742 
       
Total liabilities 7,747,395  7,329,652 
       
Commitments and contingencies -  - 
       
Shareholders' equity:      
       
Preferential stock: $0.001 par value, 10,000,000 shares authorized, 200,000 shares issued and outstanding at March 31, 2014 and June 30, 2013 respectively 200  200 
Common stock: $0.001 par, 500,000,000 shares authorized, 145,951,247 and 70,211,145 shares issued and outstanding at March 31, 2014 and June 30, 2013, respectively 145,951  70,211 
       
Additional paid in capital 11,798,044  10,741,397 
       
Subscription receivable (27,200) - 
       
Accumulated deficit (15,043,152) (14,444,371)
       
Total shareholders' equity (3,126,157) (3,632,563)
       
Total liabilities and shareholders' equity$ 4,621,238 $3,697,089 

  As of September 30  As of June 30 
  2014  2014 
       
Assets      
Current assets:      
Cash and cash equivalents $12,408  $46,925 
         
Accounts receivable, net  114,754   222,344 
         
Inventory, net  1,514,843   1,430,682 
   1,642,005   1,699,951 
         
Property and equipment, net  283,778   402,476 
         
Deposits and other  130,786   140,922 
Total assets $2,056,569  $2,243,349 
         
Liabilities and Stockholders’ deficit        
         
Current liabilities:        
         
Bank overdraft $311,171   149,699 
Accounts payable  1,641,652   1,350,157 
         
Accounts payable - related party  35,954   35,954 
         
Accrued expenses and other  2,623,861   2,594,616 
         
Litigation payable  287,500   287,500 
         
Derivative liability  549,003   634,769 
         
Line of credit  2,330,453   2,330,453 
Notes payable - current, net of debt discount of $314,663 and $317,977  810,676   1,018,755 
         
Current portion of capital lease obligations  53,901   53,901 
         
Total current liabilities  8,644,171   8,455,804 
         
Notes payable - net of current portion  124,023   124,023 
         
Capital lease obligation, net of current portion  46,426   46,426 
         
Total liabilities  8,814,620   8,626,253 
         
Commitments and contingencies  -   - 
         
Stockholders’ deficit:        
Preferential stock: $0.001 par value, 10,000,000 shares authorized, 200,000 and 200,000 shares issued and outstanding at September 30, 2014 and June 30, 2014 respectively  200   200 
         
Common stock: $0.001 par, 1,000,000,000 shares authorized, 942,437,603 and 243,178,484 shares issued and outstanding at September 30, 2014 and June 30, 2014, respectively  942,437   243,178 
         
Additional paid in capital  13,310,109   12,846,981 
         
Accumulated deficit  (21,010,797)  (19,473,263)
         
Total Stockholders’  deficit  (6,758,051)  (6,382,904)
Total liabilities and Stockholders’ deficit $2,056,569  $2,243,349 

The accompanying notes form an integral part of these unaudited consolidated financial statements

-4-


-3-

M LINE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED

CONSOLIDATED STATEMENTSSTATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2014 AND 2013

(UNAUDITED)

 

 

Three months ended March 31,

 

 

Nine months ended March 31,

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

 2,419,511

 

$

 2,319,819

 

$

 8,453,085

 

$

 6,741,292

 

Cost of sales

 

1,459,876

 

 

1,960,709

 

 

5,572,301

 

 

5,082,455

 

Gross profit

 

959,635

 

 

359,110

 

 

2,880,784

 

 

1,658,837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

724,055

 

 

863,060

 

 

1,875,106

 

 

2,711,324

 

Amortization of intangible assets

 

-

 

 

-

 

 

-

 

 

-

 

Total operating expense

 

724,055

 

 

863,060

 

 

1,875,106

 

 

2,711,324

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

235,580

 

 

(503,950

)

 

1,005,678

 

 

(1,052,487

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(557,325

)

 

(111,463

)

 

(902,667

)

 

(302,928

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative loss

 

(651,968

)

 

-

 

 

(700,098

)

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other expenses

 

(1,209,293

)

 

(111,463

)

 

(1,602,765

)

 

(302,928

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income tax

 

(973,713

)

 

(615,413

)

 

(597,087

)

 

(1,355,415

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax provision

 

-

 

 

-

 

 

(1,694

)

 

(2,086

)

Net loss

$

 (973,713

)

$

 (615,413

)

$

 (598,781

)

$

 (1,357,501

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and dilutive loss per share:

$

 (0.01

)

 

(0.01

)

$

 (0.01

)

$

 (0.02

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares under in per share calculations (basic and diluted)

 

104,796,533

 

 

62,234,201

 

 

87,226,691

 

 

58,266,218

 

  Three months ended September 30, 
  2014  2013 
       
Net sales $957,480  $2,727,194 
         
Cost of sales  1,018,891   1,718,080 
         
Gross Profit (loss)  (61,411  1,009,114 
         
Operating expenses:        
         
Selling, general and administrative  760,081   778,361 
         
Amortization of intangible assets  -   12,500 
         
Total operating expense  760,081   790,861 
         
Operating income (loss)  (821,492)  218,253 
         
Other income (expense):        
         
Interest expense  (64,781)  (112,492)
         
Loss on debt extinguishment  (165,526)  - 
         
Change in derivative liability  (485,735)  - 
         
Total other income (expenses)  (716,042)  (112,492)
         
Income (loss) before income tax  (1,537,534)  105,761 
         
Income tax provision  -   - 
Net income (loss) $(1,537,534) $105,761 
         
Net income (loss) per share:        
Basic and diluted $(0.00) $0.00 
Weighted average number of common shares - basic and diluted  533,400,881   73,292,696 

The accompanying notes form an integral part of these unaudited consolidated financial statements

-5-


-4-

M LINE HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

  Nine months ended March 31, 
  2014  2013 
 Cash flows from operating activities:      
 Net loss$ (598,781)$ (1,357,501)
 Reconciliation of net loss to net cash provided by operations:      
 Depreciation 125,247  134,828 
 Amortization of deferred financing costs 199,516  - 
 Amortization of debt discount 393,293  - 
 Issuance of shares for services 217,916  380,750 
 Change in derivative liabilities 700,098  - 
 Changes in operating assets and liabilities:      
 Accounts receivable (1,054,488) (111,780)
 Inventory (98,683) (13,415)
 Prepaid expenses and other assets (2,477) (26,816)
 Due from related party (80,421) (54,974)
 Accounts payable, accrued expenses and other (85,566) 1,016,646 
 Litigation payable -  105,959 
       
 Net cash provided by (used in) operating activities (284,346) 73,697 
 Cash flows from investing activities:      
 Acquisition of property and equipment (8,000) (53,650)
 Net cash used in investing activities (8,000) (53,650)
 Cash flows from financing activities:      
 Net borrowings (repayments) on line of credit (61,511) (223,501)
 Net proceeds from notes payable 643,695  619,835 
 Bank overdraft (5,176) - 
 Payments to notes payable (239,394) (220,384)
 Payments on capital leases (40,425) (60,738)
 Net cash provided by financing activities 297,189  115,212 
       
 Net increase in cash and cash equivalents 4,843  135,259 
       
 Cash and cash equivalents at beginning of period 182,305  5,212 
       
 Cash and cash equivalents at end of period$ 187,148 $ 140,471 
       
 Supplemental disclosure of cash flow information:      
 Cash paid for interest$ 211,560 $ 302,928 
 Cash paid for income taxes$ - $ - 
       
Non-cash investing and financing activities:$  $  
Debt discount from derivative liability 544,400  - 
Common stock issued for debt conversions 248,761  - 
Derivative resolution due to conversions 638,511  - 
Subscription receivable 27,200  - 

  Three months ended September
30,
 
  2014  2013 
Cash flows from operating activities:       
Net loss $(1,537,534) $105,761 
Reconciliation of net loss to net cash provided by operations:        
Loss on disposition of assets  46,250   - 
Bad debt expense  24,277   - 
Depreciation  29,199   44,385 
Amortization of intangible assets  -   12,500 
Issuance of shares for services  -   47,916 
Amortization of debt discount  80,901   26,704 
Loss on debt extinguishment  165,526   - 
Change in derivative liabilities  485,735   - 
Changes in operating assets and liabilities:        
Accounts receivable  83,313   (22,754)
Inventory  (84,161)  (264,351)
Prepaid expenses and other assets  10,136   (7,801)
Due from related party  -   (25,000)
Accounts payable, accrued expenses and other  354,870   20,847 
Net cash used in operating activities  (341,488)  (61,793)
         
Cash flows from investing activities:        
Proceeds from disposal of assets  35,000   - 
Acquisition of property and equipment  -   (12,500)
Net cash provided by (used in) investing activities  35,000   (12,500)
         
Cash flows from financing activities:        
Net borrowings (repayments) on line of credit  -   (85,590)
Proceeds from notes payable  110,499   63,000 
Bank overdraft  161,472   57,492 
Payments to notes payable  -   (117,247)
Payments on capital leases  -   (8,983)
Net cash provided by (used in) financing activities  271,971   (91,328)
         
Net decrease in cash and cash equivalents  (34,517)  (165,621)
         
Cash and cash equivalents at beginning of period  46,925   182,305 
Cash and cash equivalents at end of period $12,408  $16,684 
         
Supplemental disclosure of cash flow information:        
Cash paid for interest $-  $85,788 
Cash paid for income taxes $-  $- 
         
Supplemental disclosure of non-cash financing activities:        
Debt discount resulting from derivative liability $352,013   - 
Return of property and equipment  8,250   - 
Interest added to principal  34,031   - 
Shares issued for conversion of debt  347,773   - 

The accompanying notes form an integral part of these unaudited consolidated financial statements

-6-


-5-

M LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. (UNAUDITED)

1.Business

M. Line Holdings, Inc. (the “Company”) and its subsidiaries currently are engaged in the following businesses, which also represent its business segments:

·Precision Aerospace & Technologies, Inc., formerly Eran Engineering, Inc. (“Precision”), its wholly owned subsidiary, manufactures precision metal component parts and assemblies for the aerospace, medical and defense industries. This is the precision manufacturing group.

2.

·M Line Business Services, Inc., its wholly owned subsidiary, provides advice and support in raising new capital, management support in relation to financial control and management of the business, advice and support in relation to stock listing, reverse mergers, listing on various US and European exchanges, and sales and support specifically relating to the aerospace industry.

2.Significant Accounting Policies

Basis of presentation

In the opinion of management, the accompanying interim consolidated balance sheets and related interim statements of operations and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in the Company’s annual report on Form 10-K for the fiscal year ended June 30, 20132014 filed with the U.S. Securities and Exchange Commission (the “Commission”) on January 2, 2014.June 24, 2015.

Principles of consolidation

The accompanying consolidated financial statements include the accounts of M Line Holdings, Inc. and its wholly owned subsidiaries Elite and Precision.Precision.. All Intercompanyintercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management are among others, realization of inventories, collectability of accounts receivable, litigation, impairment of goodwill and long-lived assets other than goodwill. Actual results could materially differ from those estimates.

Recent accounting pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations.

3.

-6-

3.Going Concern and Management Plans

The Company's consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has an accumulated deficit of $15,043,152$21,010,797 as of March 31,September 30, 2014 and negative working capital.

The Company recognizes that the very weak economy over the past few years and the difficulty in raising new funds has impacted the working capital needs of the Company.

-7-


The consolidated financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company's continuation as a going concern is dependent upon its ability to retain its current short term financing and ultimately to generate sufficient cash flow to meet its obligations on a timely basis in order to attain profitability.

To date the Company has funded its operations from both internally generated cash flow and external sources. The Company will pursue additional external capitalization opportunities, as necessary, to fund its long-term goals and objectives.

4.

4.Inventories

Inventories are stated at the lower of cost or market, cost being determined using the first in first out (“FIFO”) method. The Company provides inventory reserves for obsolescence and other matters based on management’s review of current inventory levels. The Company includes inventory costs, labor and overhead costs directly associated with manufacturing its product.

Inventories consistedas of September 30 and June 30 consist of the following:

  September 30,
2014
  June 30,
2014
 
Finished goods and components $1,021,457  $1,112,647 
CNC machines held for sale  210,750   152,000 
Work in progress  446,781   327,620 
Raw materials and parts  11,776   14,336 
   1,690,764   1,606,603 
Less: Reserve for inventories  (175,921)  (175,921)
Inventories, net. $1,514,843  $1,430,682 

5.Accrued Expenses

Accrued expenses and other as of September 30 and June 30 consist of the following:

  September 30,
2014
  June 30, 2014 
Compensation and related benefits $2,156,849  $2,023,064 
Audit fees  50,000   46,000 
Other  417,012   525,552 
  $2,623,861  $2,594,616 

  March 31,  June 30, 
  2014  2013 
Finished Goods and Components$ 1,194,034 $ 971,099 
CNC Machines held for sale 265,500  364,583 
Work in Progress 378,419  415,108 
Raw Materials and Parts 16,640  5,120 
  1,854,593  1,755,910 
Less: Reserve for inventories (200,000) (200,000)
Inventories, net.$ 1,654,593 $ 1,555,910 
-7-

5. Accrued Expenses

  March 31,  June 30, 
  2014  2013 
Compensation and related benefits$ 1,939,270 $ 1,934,314 
Audit Fees 46,000  72,500 
Other 768,718  781,883 
 $ 2,753,988 $ 2,788,697 

6.
6.Capital Leases

The Company leases certain equipment under capital leases with terms ranging from four to five years. Future annual minimum lease payments are as follows as of March 31, 2014September 30, and June 30, 2013.

  March 31,  June 30, 
  2014  2013 
2014$ 53,901 $ 54,501 
2015 50,917  54,501 
2016 -  36,241 
2017 -  - 
Total minimum lease payments 104,818  145,243 
Less amount representing interest -  - 
Present value of future minimum lease payments 104,818  145,243 
Less current portion of capital lease obligations (53,901) (54,501)
Capital Lease obligations, net of current portion$ 50,917 $ 90,742 

-8-


7. Line of Credit2014.

Main Credit:

  September
30, 2014
  June 30,
2014
 
2014 $53,901  $53,901 
2015  46,426   46,426 
Total minimum lease payments  100,327   100,327 
Less amount representing interest  -   - 
Present value of future minimum lease payments  100,327   100,327 
Less current portion of capital lease obligations  (53,901)  (53,901)
Capital lease obligations, net of current portion $46,426  $46,426 

As of March 31, 2014, the Company owed $0 principal as all outstanding sums were paid in July 2013.

7.Line of Credit

TCA Global Master Credit Fund LP (“TCA”):

The Company has an existing line of credit with MainTCA Global Credit was replaced on April 30, 2013, with a line of credit from TCA up toMaster Fund, LLC (“TCA”) in the amount of $10 million. As of March 31,September 30 and June 30, 2014, the Company has drawn $1,836,470$1,700,000 from the line of which $1,641,215$2,330,453 is outstanding as of March 31,September 30, 2014 and June 30, 2014. Amounts drawn from the line of credit are subject to interest at 18% per annum. The loanand matured on October 31, 2013, but2013. The line was extendedautomatically renewed for a further period of six months throughand expired on April 30, 2014.

There is no availability under the line of credit. The Company has entered into a settlement agreement with TCA and expects to repay the debt within 15 months. The line of credit with TCA Global Credit Master Fund, LP is secured by the receivables and inventory and a second position on the equipment of Precision Aerospace and Technologies, Inc., E. M. Tool Co. Inc.,the inventory and receivables of Elite together with a blanket lien over all of the group’sCompany’s assets.

8.

-8-

8.Notes Payable

Notes Payablepayable as of September 30 and June 30 consist of :

  March 31,  June 30, 
  2014  2013 
       
Notes payable to a financial institution, secured by the underlying equipment in aggregate monthly installments of varying amounts, on a reducing balance method, with the balance due in October 2016.$ 335,525 $ 422,940 
       
An unsecured note payable to a corporation in respect of accounting software payable in monthly installments of $ 1,923. This note is now due and payable and is being negotiated with the company. 46,811  46,811 
       
Two unsecured convertible notes payable to a financial institution, net of debt discount of 186,676 16,970  - 
       
An unsecured convertible note payable to a financial institution, net of discount of $25,208 2,292  - 
       
An unsecured convertible note payable to a financial institution, net of discount of $17,917 3,583  - 

-9-



Two unsecured convertible notes payable in the sum of $110,751, $55,463 of which have been converted to common stock, net of discount of $4,407. 50,881  - 
       
Two unsecured notes payable in the sum of $150,000, each, to a financial institution in full in November 2011 and March 31, 2012. The company is currently in default and has negotiated to pay the notes in monthly installments of $20,000 commencing November 2012. 137,810  354,459 
       
Two unsecured convertible notes payable in the sum of $110,751, $18,500 of which have been converted to common stock, net of discount of $35,209 57,042  - 
       
Two unsecured convertible notes payable in the sum of $110,751, $48,750 of which have been converted to common stock, net of discount of $10,001 52,000  - 
       
An unsecured note payable to a corporation in weekday amounts of $700, increasing to $1,650, in September 2013 through December 2013. This note is currently past due. 40,300  86,624 
       
An unsecured note payable to a corporation in weekday amounts of $691 each, ending in December 2013. This note is currently past due. 57,121  84,030 
       
An unsecured note payable to a corporation in weekday amounts of $890 each, ending in October 2014, net of a discount of $12,724. 69,911  - 

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An unsecured note payable to a corporation in weekday amounts of $841 each, ending in February 2014. This note is currently past due. 105,351  - 
       
TOTAL 975,597  994,864 
Less Current Portion 701,403  675,961 
Long Term Portion$ 274,194 $ 318,903 
       
                                                                             2014 701,403  675,961 
                                                                             2015 143,537  123,780 
                                                                             2016 130,657  123,780 
                                                                             2017 -  71,343 
                                                                 Thereafter -  - 
  975,597  994,864 

9.

  September 30, 2014  June 30, 2014 
CONVERTIBLE NOTES (DERIVATIVE).        
         
One unsecured  5% convertible notes payable to a  financial institution due March 4, 2015. This note can be converted to common stock at 55% of the lowest closing price in the 20 trading days prior to conversion. $130,200  $110,000 
         
Two unsecured 8% convertible notes payable in the sum of $110,751 to a  financial institution due February 12, 2015. These notes can be converted to common stock after 180 days from the date of issuance at 55% of the lowest closing price in the last 7 trading days prior to conversion.  40,804   50,000 
         
An unsecured 12% convertible note payable to a financial institution due January 31, 2015. This note can be converted to common stock at 55% of the lowest closing price in the 5 trading days prior to conversion.  11,500   21,500 
         
An unsecured 12% convertible note payable to a financial institution due February 12, 2016. This note can be converted to common stock at $0.0235 or 60% of the lowest closing price in the last 25 trading days prior to conversion.  40,710   50,631 
         
Two unsecured convertible notes payable in the sum of $110,674 to a financial institution with $50,000 due on February 6, 2015 and $55,674 due on May 30, 2015. These notes can be converted to common stock after 180 days from the date of issuance at 55% of the lowest closing price in the last 7 to 10 trading days prior to conversion.  16,144   105,674 
         
Two unsecured 8% convertible notes payable to a financial institution both due May 30, 2015. These notes can be converted to common stock after 180 days from the date of issuance at 55% of the lowest closing price in the last 10 trading days prior to conversion.  83,855   160,674 
         
Four unsecured convertible notes with interest ranging from 8% to
12% payable to a financial institution with $50,000 due April 25,
2015, $75,000 due on December 25, 2014, $125,662 due October 3,
2014 and $37,500 due on February 18, 2015. These notes can be converted to common stock after maturity date at 40% - 55% of the lowest closing price in the last 10 to 20 trading days prior to conversion.
  220,109   225,562 
         
Three unsecured 8% convertible notes payable in the sum of $160,674 to a financial institution with $50,000 due on February 6, 2015 and $110,674 due on June 10, 2015. These notes can be converted to common stock after 180 days from the date of issuance at 50% - 55% of the lowest closing price in the last 7 to 15 trading days prior to conversion.  130,000   160,674 
         
An unsecured 8% convertible note payable to a financial institution due on June 10, 2015. This note can be converted to common stock after 180 days from the date of issuance at 55% of the lowest closing price in the last 10 trading days prior to conversion.  50,000   50,000 
   723,322   934,715 
OTHER NOTES (NON-CONVERTIBLE).        
Notes payable to a financial institution, secured by the underlying equipment in aggregate monthly installments of varying amounts, on a reducing balance method, with the balance due in October  2016. $247,811  $247,811 
         
Two unsecured notes payable in the sum of $150,000 each, to a financial institution in full in November 2011 and March 31, 2012. The Company is currently in default and has negotiated to pay the notes in monthly installments of $20,000 commencing November 2012.  75,459   75,459 
         
An  unsecured note payable to a corporation in weekday amounts of $700, increasing to $1,650, in September 2013 and ending in December 2013. This note is in default  but a settlement reached with monthly payments being made will pay off the note by June 25, 2015. The note was not paid by June 25 and the Company is currently negotiating a new pay-off schedule.  40,300   40,300 
         
An  unsecured note payable to a corporation in weekday amounts of $691 each through December 2013. This note is in default but a settlement reached with monthly payments being made will pay off the note by October 2015.  57,120   57,120 
         
An  unsecured note payable to a corporation in weekday amounts of $841 each through February 2014. This note is in default.  105,350   105,350 
   526,040   526,040 
Total of convertible and other notes  1,249,362   1,460,755 
Less Debt discount  (314,663)  (317,977)
TOTAL  934,699   1,142,778 
Less Current Portion  810,676   1,018,755 
Long Term Portion $124,023  $124,023 
         
2016  124,023   124,023 
2017      
2018      
2019      
Thereafter      
  $124,023  $124,023 

Owing to the variable conversion rates of the convertible notes, the Company determined that the conversion feature met the definition of a liability under ASC 815-40. Consequently, the Company bifurcated the conversion feature and accounted for this as a derivative liability. See Note 11.

-9-

In connection with one of the notes issued during the quarter ended September 30, 2014, the Company issued 15,625,000 warrants that have a term of 5 years and an exercise price of $0.0016 per share. The exercise price on these warrants, contain a reset provision in the event shares are sold by the Company at a price lower than the exercise price. Consequently, the warrants were accounted for as derivatives and the fair value of such warrants amounting to $28,125 was recognized as a debt discount and amortized over the term of the note.

During the three months ended September 30, 2014, the Company converted total debt of $347,773 for 699,259,119 common shares and recognized a loss on debt extinguishment related to the conversion of $1,089,040.

9.Commitments and Contingencies

Leases

The Company leased its manufacturing and office facilities under non-cancellable operating lease arrangements.

Rent expense under operating leases was $404,462$99,276 and $375,887$138,749 for the ninethree months ended March 31,September 30, 2014 and 2013.2013, respectively .

Litigations

Litigation payable consistedas of the following at March 31, 2014September 30 and June 30, 2013:2014 consist of the following:

  March 31,  June 30, 
  2014  2013 
       
       
An unsecured note payable to a corporation in settlement of a lawsuit payable in 12 monthly payments of $5,000.$ 60,000  60,000 
       
Unsecured notes payable to various parties in settlement of lawsuits payable in full. 77,500  77,500 
       
TOTAL$ 137,500  137,500 

  September 30,
2014
  June 30,
2014
 
       
An unsecured note payable to a corporation in settlement of a lawsuit payable in 12 monthly payments of $5,000. $210,000   210,000 
         
Unsecured notes payable to various parties in settlement of lawsuits payable in full.  77,500   77,500 
         
TOTAL $287,500   287,500 

The Company’s existing litigationslitigation proceedings are set forth below:

1.

James M. Cassidy v. Gateway International Holdings, Inc., American Arbitration Association, Case No. 73-194-32755- 0873-194-32755-08.

The Company was served with a Demand for Arbitration and Statement of Claim, which was filed on September 16, 2008.

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The Company was served with a Demand for Arbitration and Statement of Claim, which was filed on September 16, 2008.

The Statement of Claim alleges that claimant is an attorney who performed services for the Company pursuant to an agreement dated April 2, 2007 between the Company and the claimant. The Statement of Claim alleges that the Company breached the agreement and seeks compensatory damages in the amount of $195,000 plus interest, attorneys’ fees and costs.

-10-
 

The Statement of Claim alleges that claimant is an attorney who performed services for the Company pursuant to an agreement dated April 2, 2007 between the Company and the claimant. The Statement of Claim alleges that the Company breached the agreement and seeks compensatory damages in the amount of $195,000 plus interest, attorneys’ fees and costs. Management denies the allegations of the Statement of Claim and will vigorously defend against these allegations. An arbitrator has not yet been selected, and a trial date has not yet been scheduled.

No provision has been made in the September 30 and June 30, 2014 financial statements with respect to this matter because the Company has assessed the litigation as having no merit and the likelihood of any liability pursuant to this litigation to be extremely low.

 

No provision has been made in the March 31, 2014 financial statements with respect to this matter, because the Company has assessed the litigation as having no merit and the likelihood of any liability pursuant to this litigation to be remote.

2.

CNC Manufacturing v. All American CNC Sales, Inc., Elite Machine Tool Company/Sales & Services, CNC Repos,Superior Court for the State of California, County of Riverside, Case No. RIC 509650.

Plaintiff filed this Complaint on October 2, 2008.

The Complaint alleges causes of action for breach of contract and rescission and claims that All American breached the agreement with CNC Manufacturing by failing to deliver a machine that conforms to the specifications requested by CNC Manufacturing, and requests damages totaling $138,750. Elite Machine filed an Answer timely, on January 15, 2009.

Abstract of Judgment and Writ were issued August 17, 2012.

The Company entered into a settlement agreement for a settlement in the total amount of $37,500. However, no payments have been made to date.

A provision has been made in the September 30 and June 30, 2014 financial statements with respect to this matter in the sum of $37,500.

 

Plaintiff filed this Complaint on October 2, 2008.

The Complaint alleges causes of action for breach of contract and rescission and claims that All American breached the agreement with CNC Manufacturing by failing to deliver a machine that conforms to the specifications requested by CNC Manufacturing, and requests damages totaling $138,750. Elite Machine filed an answer timely, on January 15, 2009.

Abstract of Judgment and Writ were issued August 17, 2012.

A provision has been made in the March 31, 2014 financial statements in litigation payable with respect to this matter in the sum of $37,500.

3.Donald Yu v. M Line Holdings, Inc., et al.;Case No. 30-2012-00574019-CU-BC-CJC

This is an employment dispute asserted by a former employee against M Line Holdings and two corporate insiders, Jitu Banker and Anthony Anish, in their respective individual capacities. The action was filed in Orange County Superior Court on June 4, 2012. The parties entered into a settlement agreement and stipulation for judgment against M Line Holdings, only, on about May 12, 2013. Pursuant to the terms and conditions of the settlement agreement, M Line agreed to pay $21,450.00 in three (3) equal installments. M Line Holdings failed to make payment on a timely basis, and plaintiff filed a stipulated judgment against M Line Holdings on June 12, 2013. Plaintiff also filed default judgments against Messrs. Banker and Anish.

In response, defendants filed a motion to set aside the defaults and vacate the default judgments against Messers. Banker and Anish as well as renegotiate the terms of the prior settlement with Plaintiff. On or about September 30, 2013, the parties entered into a supplemental settlement agreement and mutual release wherein the Company agreed to pay plaintiff the sum of $24,000 in two (2) equal installments. The first installment of $12,000 has already been paid.

The final installment of $12,000 was due on or before October 30, 2013, and has not been paid at this time. A judgment remains outstanding against the Company in the sum of $12,000.

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4.Subramani Srinivasan, et al. v. M Line Holdings, Inc., et al.; Case No. 30-2014-00724484-CU-CO-CJC

This is a breach of contract, fraud, and related causes of action against Defendants Eran Engineering, Inc., Bart Webb, Precision Aerospace and Technologies, Inc. (erroneously sued as "Precision Aerospace Technologies, Inc."); M-Line Holdings, Inc.; Anthony Anish; Jitu Banker; Larry Consalvi; and Elite Machine Tools (collectively, "Defendants").

The parties entered into a settlement agreement against the corporate defendants on or about January 22, 2015. Pursuant to the terms and conditions of the settlement agreement, the corporate defendants agreed to pay $20,000 in three (3) equal installments on or before April 30, 2015.

As of June 2, 2015, the corporate defendants have paid $20,000 and this case has been dismissed, which effectively terminates all litigation in its entirety.

5.Can Capital Asset Servicing, Inc. v. E.M. Tool Company, Inc., et al.; Case No. 30-2014-00727606- CU-CL-CJC

This is a breach of contract and related claims arising out of a business loan, and alleges that E.M. Tool failed to pay Can Capital all amounts due under the loan agreement in the principal sum of $58,313, plus interest, costs and attorneys’ fees.

On or about November 2014, the parties entered into a settlement agreement and stipulated judgment. Pursuant to the terms and conditions of the settlement agreement, the Company agreed to pay plaintiff the sum of $50,000 in installments on or before May 15, 2015.

As of May 13, 2015, the defendants have made partial payments, and still owe plaintiff $25,500. Plaintiff provided notice of its intent to file the stipulated judgment on May 7, 2015, and commence collection efforts if payment of $10,000 is not paid prior thereto and those payments have been made. Since May, a payment of $1,500 has been made. The balance as of August 17, 2015 is $24,000.

6.Fadal Machining v. All American CNC Sales, et al.al., Los Angeles Superior Court, Los Angeles,California,Case No. BC415693.

The Complaint was filed on June 12, 2009.

The Complaint alleges causes of action for breach of contract and common counts against All American CNC seeking damages in the amount of at least $163,579, and arises from a claim by Fadal that All American failed to pay amounts due. On June 26, 2009, Fadal amended the complaint to include M Line Holdings, Inc. as a defendant.

A settlement agreement in the amount of $60,000 was signed on May 31, 2011.

The Company had made a provision in the sum of $210,000 in the financial statements as of September 30 and June 30, 2014 as no payments that were due under the settlement agreement have been made. Judgment was entered on June 16, 2011, and a Writ was issued on February 24, 2012.

 

The Complaint was filed on June 12, 2009.

7.

The Complaint alleges causes of action for breach of contract and common counts against All American CNC seeking damages in the amount of at least $163,578.88, and arises from a claim by Fadal that All American failed to pay amounts due. On June 26, 2009, Fadal amended the Complaint to include M Line Holdings, Inc. as a Defendant.

A settlement agreement in the amount of $60,000 was signed on May 31, 2011.

The Company has made a provision in the sum of $60,000 in the financial statements in accounts payable as of June 30, 2013 but no payments that are due under the settlement agreement have been made. Judgment was entered on June 16, 2011, and a Writ for collection was issued on February 24, 2012.

4.

Fox Hills Machining v. CNC Repos, Orange County Superior Court, Orange County, California, Case No. 30-2009- 00121514.

The Complaint was filed on April 14, 2009.

The Complaint alleges causes of action for Declaratory Relief, Breach of Contract, Fraud, Common Counts, and Negligent Misrepresentation, claiming the Defendant failed to pay Fox Hills Machining for the sale of two machines from Fox Hills to CNC Repos. The damages sought in the Complaint are estimated to be approximately $40,000. Court records show that a stipulated judgment was entered on August 27, 2012; a writ was issued on September 9, 2012.

However, an agreement has been entered into with Fox Hills Machinery to pay off the judgment in the sum of $48,673. A sum of $40,000 has been paid in installments of $10,000 each effective November 8, 2013 and the final payment was made on December 9, 2013.

5.

C. William Kircher Jr. v. M Line Holdings, Inc.Orange County Superior Court Case No. 00397576

A former attorney for M Line Holdings, Inc. has sued seeking damages for failure to pay legal fees in the amount of $120,166.

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A former attorney for M Line Holdings, Inc. has sued seeking damages for failure to pay legal fees in the amount of $120,166.

The parties reached a settlement. The terms of the settlement call for 12 payments of $5,000 per month commencing August 25, 2011 and the issuance of 150,000 shares of common stock. The Company has issued the 150,000 shares of common stock and made two payments to date. The Company has a provision in the sum of $50,000 in the financial statements as of September 30 and June 30, 2014.

-12-
 

The Company currently is in default of its payment obligations under the settlement. Plaintiff currently is seeking to obtain a judgment as a result of the breach of the settlement agreement.

The parties reached a settlement. The terms of the settlement call for 12 payments of $5,000 per month commencing August 25, 2011 and the issuance of 150,000 shares of common stock. The company has issued the 150,000 shares of common stock and made two payments to date. The Company has a provision in the sum of $50,000 in the financial statements in accounts payable as of March 31, 2014.

8.

The Company currently is in default of its payment obligations under the settlement. Plaintiff currently is seeking to obtain a judgment as a result of the breach of the settlement agreement.

6.

Timothy D. Consalvi v. M Line Holdings, Inc. et.al., Orange County Superior Court Case No, 00308489.

A former president of All American CNC Sales, Inc. has filed suit against the Company seeking payment on an alleged severance obligation by the Company. The Complaint does not specify the damages sought. The parties then reached a settlement in the principal sum of $40,000 to be documented in due course. Meanwhile a default was entered against the Company, which management believes was in error because a settlement was already reached by the principal parties involved. The default has since been vacated, and the Company has answered the complaint and has filed a motion for leave to file a cross complaint.

A settlement of $50,000 was reached in this case, requiring payments commencing on March 11, 2011 for 10 months. The first two month’s payments were made; however, the Company currently is in default of the terms of this settlement agreement. Mr. Consalvi filed his stipulated judgment on March 5, 2012. Abstract of judgment and Writ were issued on March 13, 2012.

A provision in the sum of $40,000 has been made in the financial statements as of September 30 and June 30, 2014.

To date there has been no further action on this case, and the Company plans to resolve this matter as soon as possible.

 

A former president of All American CNC Sales, Inc. has filed suit against the Company seeking payment on an alleged severance obligation by the Company. The Complaint does not specify the damages sought. The parties then reached a settlement in the principal sum of $40,000 to be documented in due course. Meanwhile a default was entered against the Company, which management believes was in error because a settlement was already reached by the principal parties involved. The default has since been vacated, and the Company has answered the complaint and has filed a motion for leave to file a cross complaint.

9.

A settlement of $50,000 was reached in this case, requiring payments commencing on March 11, 2011 for 10 months.

The first two month’s payments were made; however, the Company currently is in default of the terms of this settlement agreement. Mr. Consalvi filed his stipulated judgment on March 5, 2012. Abstract of judgment and Writ were issued on March 13, 2012.

A provision in the sum of $40,000 has been made in the financial statements in litigation payable as of March 31, 2014.

To date, there has been no further action on this case.

7.

All Direct Travel Services, Inc. v. Jitu Banker, M Line holdings, Inc., Airworks International, Inc.,case number 30-2011- 00472824-CL-CO-CJC30-2011-00472824-CL-CO-CJC

 

This case was settled as to Jitu Banker and the Company for $2,000 payable on February 25, 2013. We do not yet have sufficient information to determine what the potential outcome of this may be or whether or to what extent it would or could have a financial impact on the Company. A default judgment was entered on January 6, 2012.

8.

Douglas Technologies Group, Inc. v Elite Machine Tool Company and Lawrence Consalvi, et al., case number 30- 2013-00657906-CU-FR-CJC.

This suit was filed on June 20, 2013 in respect of an alleged deficiency in the machine supplied to Douglas Technologies. The Company decided to settle the lawsuit and thereby entered into a settlement agreement with the customer.

This case was settled as to Jitu Banker and the Company for $2,000 payable on NovemberFebruary 25, 2013. We do not yet have sufficient information to determine what the potential outcome of this may be or whether or to what extent it would or could have a financial impact on the Company. A default judgment was entered on January 6, 2012.

To date there has been no further action on this case, and the Company plans to resolve this matter as soon as possible.

10.TCA Global Credit Master Fund, L.P. vs M LI ne Holdings, Inc. EM Tool Company, Inc. dba Elite Machine Tool, Precision Aerospace and Technologies, Inc., Anthony Anish and Jitendra Bankercase # CACE-14-012871

Plaintiff filed this case on July 1, 2014 in Broward County, Florida.

The complaint alleges that the Company owes the Plaintiff the amount due under the revolving note, and is claiming foreclosure of the collateral, breach of the credit agreement and a claim against the individuals under the validity agreement due to the non-payment.

The Plaintiff obtained a default judgment however due to a settlement agreement reached on September 5, 2013 for $50,000 requiring2014 ceased any further legal activity. The Defendants were unable to honor the agreement and Plaintiff continued to obtain sister state judgments in California and Nevada.

On February 23, 2015 a new settlement agreement was signed between the parties under which plaintiff agreed to accept two methods of repayment, the first being $1,200,000 paid over a fifteen month period commencing payment of $10,000 on November 15, 2013as soon as the Company was up to date with its filings and the balance being paidof funding would come from a new asset based lending program that Defendants were in 8 monthly installmentsthe process of $5,000 each. Payments amounting to of $30,000 were made during the period ended March 31, 2014.arranging.

The balance of the provision in accounts payable is $20,000 at March 31, 2014.

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The Company has accrued $2,330,453 in the financial statements that includes all interest and fees due to Plaintiff through September 30, and June 30, 2014.

9.

11.

Donald Yu. vGlobal Vantage Ltd., a California Corporation vs Eran Engineering, Inc. Precision Aerospace and Technologies, Inc., M Line Holdings, Inc., Anthony L Anish, Lawrence Consalvi and Jitu Banker, et al., case number 30-2012-005-740-19-CU- BC-CJCKenneth Collini.

This suit was filed in respect of consulting services rendered to the Company. The Company decided to settle the lawsuit and thereby entered into a settlement agreement with Donald Yu.

The case was settled on September 25, 2013 for $24,000 requiring two payments of $12,000 each, payable on September 30, 2013 and October 30, 2013.

The Company made the first payment of $12,000

Plaintiff filed this complaint on September 30, 2013 but has not made the second payment due on October 30, 2013.

A provision in the sum of $12,000 has been made in the financial statements in accrued expenses as of March 31, 2014.

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10.

Alu Forge, Inc., dbaAmerican Handforge . v Jitu Banker, Precision Aerospace & Technologies, Inc., and M LineHoldings, Inc., et al., case number30-2013-00670772-CL-BC-CJC.

This suit was filed in respect of materials supplied to the Company. The Company decided to settle the lawsuit and thereby entered into a settlement agreement with the plaintiff.

The case was settled on October 31, 2013 for $19,500 with payments of $5,250 on October 31, 2013, $5,250 on November 30, 2013 and the balance of $9,000 on December 31, 2013.

The Company made the first and second payments of $5,250 on October 31, 2013 and December 24, 2013, and the final payment of $9,000 was made on December 31, 2013.

No provision is necessary as the liability has been settled in full.


11.Yates, Fontenot, Smith & Brum, LLC v. M Line Holdings, Inc. (formerly Gateway International Holdings, Inc.), et al.;Case No. 30-2013-00630586

The above-referenced matter is an unlawful detainer action concerning certain real property located at 2672 Dow Avenue, Tustin, California. The unlawful detainer action was filed against the Company by its landlord Yates, Fontenot, et al. on February 15, 2013. The action is pendingAugust 7, 2014 in Orange County, Superior Court.California.

On

The complaint alleges that the Company owes funds that are due for the lease of certain equipment or about September 2013, the parties settled the action for an agreed upon sum payable in installments through January 5, 2014. Assuming all payment obligations are made, plaintiff shall file a request for dismissal with prejudiceplaintiffs want repossession of the entire action by or before March 14, 2014.equipment.

A provision

The plaintiffs obtained judgment in February 2015 and the amount of $35,000equipment has been made in the financial statements, in accounts payable, as of March 31, 2014.returned to plaintiff. However, defendants are filing an appeal against this judgment.

Litigation is subject to inherent uncertainties, and unfavorable rulings could occur.  If an unfavorable ruling were to occur in any of the above matters, there could be a material adverse effect on the Company’s financial condition, results of operations or liquidity.

The related provisions for these litigations are reported under litigation payable, accounts payable and accrued expenses and other in the consolidated balance sheets.

10. Shareholders’ Equity

10.Shareholders’ Equity

During the ninethree months ended March 31,September 30, 2014, the Company issued the following shares of common stock:

11.Fair Value of Financial Instruments

The authorized common stock of the Company was increased to 500,000,000 shares effective October 15, 2013.

11. Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable.

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Level 1 -

Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets.

Level 2 -

Quoted prices for similar assets and liabilities in active markets; quoted prices included for identical or similar assets and liabilities that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. These are typically obtained from readily-available pricing sources for comparable instruments.

Level 3 -

Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own beliefs about the assumptions that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.

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The following table presents the derivative financial instrument, theinstrument. The Company’s only financial liability is measured and recorded at fair value on the Company’s consolidated balance sheets on a recurring basis and their level of hierarchy as of March 31,September 30, 2014:

  Amount  Level 1  Level 2  Level 3 
Embedded conversion derivative liability$ 605,987 $ - $ - $    605,987 
Total$ 605,987 $ - $ - $    605,987 

  Amount  Level 1  Level 2  Level 3 
Embedded conversion derivative liability $549,003  $-  $-  $549,003 
Total $549,003  $-  $-  $549,003 

The following table provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments, measured at fair value on a recurring basis using significant unobservable inputs:

Balance at June 30, 2013$ -
Fair value of warrant derivative liabilities at issuance, recorded as debt discount544,400
Settlement of derivative liabilities to additional paid in capital(638,511)
Unrealized derivative loss included in other expense700,098
Balance at March 31, 2014$ 605,987

Balance at June 30, 2014 $634,769 
Fair value of warrant derivative liabilities at issuance, recorded as debt discount  352,013 
Settlement of derivative liabilities to gain on debt extinguishment  (923,514)
Unrealized derivative loss resulting from marked to market fair values included in other expense  485,735 
Balance at September 30, 2014 $549,003 

The fair value of the derivative liability is calculated at the time of issuance and the Company records a derivative liability for the calculated value. Changes in the fair value of the derivative liability are recorded in other income (expense) in the consolidated statements of operations.

The following are the assumptions used for derivative instrument valued using the Black Scholes option pricing model:

  At Issuance  March 31, 2014 
Market value of stock on measurement date$ 0.01 - 0.03 $ 0.01 
Risk-free interest rate 0.07 - 0.35%  0.13 – 0.44% 
Dividend yield 0%  0% 
Volatility factor 256 - 343%  321 -334% 
Term 0.26 - 2 years  0.84 – 1.9 years 

12.

  At Issuance  September 30,
2014
 
Market value of stock on measurement date $0.0012 - 0.0018  $0.001 
Risk-free interest rate  0.05 - 1.58%  0.02 - 1.78%
Dividend yield  0%  0%
Volatility factor  241 - 417%  229 -414%
Term  0.51 - 5 years   0.35 – 4.88 years 

12.Related Party Transactions

As of March 31,September 30, 2014, the amount due from related party was $0. As of $179,769September 30, 2014, the related party payable was $35,954, which represents anthe amount due fromto an officer of Elitethe Company for funds advanced by the Company.amounts charged to his personal credit card.

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13.
13.Segments and Geographic Information

The Company’s segments consist of individual companies managed separately with each manager reporting to the Board. “Other” represents corporate functions. Sales, and operating or segment profit, are reflected net of inter-segment sales and profits. Segment profit is comprised of net sales less operating expenses and interest. Income taxes are not allocated and reported by segment since they are excluded from the measure of segment performance reviewed by management. The revenue of the Precision Manufacturing group is down significantly compared to the comparable period last year as a result of rebuilding revenue following the Company’s move and subsequent delay before production could start again.

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Segment information is as follows for the three and nine months ended March 31,September 30, 2014 and 2013:

Segment Information for the three Machine  Precision       
months ended March 31, 2014 Sales  Manufacturing  Corporate  Total 
             
Revenue$ 1,580,726 $ 838,785 $ - $ 2,419,511 
             
Interest Expense 36,342  79,153  441,830  557,325 
Depreciation and Amortization 750  39,244  -  39,994 
Income (loss) before taxes 291,422  (46,896) (1,218,239) (973,713)
Total Assets 1,613,644  2,976,949  30,645  4,621,238 
Capital Expenditure$ - $ 8,000 $ - $8,000 

Segment Information for the three Machine  Precision       
months ended March 31, 2013 Sales  Manufacturing  Corporate  Total 
Revenue$ 1,431,482 $ 888,337 $ - $ 2,319,819 
Interest Expense -  66,878  44,585  111,463 
Depreciation and Amortization 750  37,091  2,799  40,640 
Income (loss) before taxes (18,914) (418,053) (178,466) (615,433)
Total Assets 780,201  2,675,766  1,270,213  4,726,180 
Capital Expenditure$ - $ - $ - $ - 

Segment Information for the nine Machine  Precision       
months ended March 31, 2014 Sales  Manufacturing  Corporate  Total 
             
Revenue$ 5,787,485 $ 2,665,600 $ - $ 8,453,085 
Interest Income -  -  -  - 
Interest Expense 134,853  193,968  573,846  902,667 
Depreciation and Amortization 1,500  123,747  -  125,247 
Income (loss) before taxes 500,068  511,001  (1,608,156) (597,087)
Total Assets 1,613,644  2,976,949  30,645  4,621,238 
Capital Expenditure$ - $ 8,000 $ - $8,000 

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Segment Information for the nine Machine  Precision       
months ended March 31, 2013 Sales  Manufacturing  Corporate  Total 
Segment Information for the
three months ended September
30, 2014
 Machine
Sales
 Precision
Manufacturing
 Corporate Total 
                     
Revenue$ 3,891,147 $ 2,850,145 $ - $ 6,741,292  $730,227  $227,253  $-  $957,480 
Interest Income -  -  -  - 
Interest Expense 17,151  199,481  86,296  302,928   31,500   45,000   (11,719)  64,781 
Depreciation and Amortization 2,250  128,790  3,787  134,827   -   29,199   -   29,199 
Income (loss) before taxes (81,042) (806,340) (468,033) (1,355,415)
Loss before taxes  (317,703)  (309,850)  (909,981)  (1,537,534)
Total Assets 780,201  2,675,766  1,270,213  4,726,180   274,809   1,535,701   246,059   2,056,569 
Capital Expenditure$ - $ (53,651)$ - $ (53,651) $-  $-  $-  $- 

Segment Information for the
three months ended September
30, 2013
 Machine
Sales
  Precision
Manufacturing
  Corporate  Total 
Revenue $1,759,558  $967,636  $-  $2,727,194 
Interest Expense  58,204   54,288   -   112,492 
Depreciation and Amortization  750   43,636   12,500   56,886 
Income (loss) before taxes  174,317   83,930   (152,486)  105,761 
Total Assets  1,079,295   2,476,208   251,486   3,806,989 
Capital Expenditure $-  $-  $-  $- 

Sales are derived principally from customers located within the United States.

14. Subsequent Events

In April and part of May 2014,

No segment information has been provided for M Line Business Services, Inc. (ML Machinery Funding, Inc.) as the company issued 70,462,554 shares of common stockwas incorporated subsequent to the note holders, disclosed in note 8, in settlement of the debt due to these companies.September 30, 2014.

Mr. Percy Cerff was appointed to the Board of Directors on April 21, 2014.

14.Subsequent Events

·On January 15, 2015, the effective date, the Company entered into a settlement agreement with TCA. Under the terms of the agreement, TCA will receive $100,000 as soon as all of the Company’s filings are current and will then receive $80,000 per month for 13 months and $60,000 in the 15th month. These payments will be accelerated at any time. In addition the balance of the note TCA will be paid through financing being obtained from an asset based lender. TCA will release their liens on the Company at that time.

·Since October 1, 2014, the Company has raised funds through a 10% convertible note for $330,000 of which $257,000 has been funded. The note is convertible at the lower of $0.001 or 50% of the lowest trading price of the Company’s common stock during the 20 consecutive trading days prior to the date of conversion.

·In October 2014, M Line Holdings, Inc. formed a wholly owned subsidiary, M Line Machinery Funding, Inc. This Company which has not traded to date, will be used for machinery finance and also for any other financial services provided by the Company to prospective customers. The name has been changed to M Line Business Services, Inc.

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·On October 14, 2014, the Company issued to one of its officers 10 million shares of blank check preferred stock (designated as Series B Preferred Stock) which are non-convertible, zero divided and zero interest and carry a voting power equivalent to 50% of the Company’s outstanding common and preferred stock.

·On March 3, 2015, a total of 200,000,000 shares were issued to two officers in lieu of payroll.

·In March 2015, the Company issued 57,118,182 shares in connection with the conversion of debt amounting to $6,283.

·On April 1, 2015, the Company temporarily shut down the operations of Elite laying off all the staff. Management was dissatisfied with the manner in which the Company was being managed and decided to restart the business by the end of 2015 in a new location with new management.

·On August 7, 2015, The Company entered into a short term loan in the amount of $10,720. This amount is due for repayment together with interest and fees of $1,780 on September 1, 2015. In the event it is not paid the amount may be coverted to stock at 125% of the original note amount and converted at the lower of $0.0002 or a 50% discount to market based on the lowest price for the 20 consecutive days prior to conversion.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This quarterly report on Form 10-Q of M Line Holdings, Inc. (referred to herein as “us, “we” or the “Company”) for the ninethree month period ended March 31,September 30, 2014 contains forward-looking statements, principally in this section and in the section herein titled “Business.” Generally, you can identify these statements because they use words like “anticipates,” “believes,” “expects,” “future,” “intends,” “plans” and similar terms. These statements reflect only our current expectations. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy, and actual results may differ materially from those we anticipated due to a number of uncertainties, many of which are unforeseen, including, among others, the risks we face as described in this filing. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this quarterly report. These forward-looking statements are within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbors created thereby. To the extent that such statements are not recitations of historical fact, such statements constitute forward-looking statements that, by definition, involve risks and uncertainties. In any forward-looking statement where we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will be accomplished.

We believe it is important to communicate our expectations to our investors. There may be events in the future, however, that we are unable to predict accurately or over which we have no control. The risk factors listed in our Annual Report on Form 10-K, as well as any cautionary language in our Annual Report on Form 10-K, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Factors that could cause actual results or events to differ materially from those anticipated, include but are not limited to: our ability to successfully develop new products; the ability to obtain financing for product development; changes in product strategies; general economic, financial and business conditions; changes in and compliance with governmental healthcare and other regulations; changes in tax laws; and the availability of key management and other personnel.

Overview

We currently conduct all of our operations through two of our two wholly-owned subsidiaries: E..M. Tool Company, Inc. dba Elite Machine Tool Company (“Elite”) and Precision Aerospace & Technologies, Inc. (“Precision”), (formerly Eran Engineering, Inc.). Through Elite we refurbish and sell pre-owned CNC (computer numerically controlled) machine tool equipment and service and rebuild CNC equipment for customers and Precision is a customer focused, industry leading aircraft and medical precision metal component manufacturer offering low cost build-to-print and assembly services for production and spare parts, with design, development and sustaining engineering support services for its customers.it’scustomers.

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Our services and products are primarily marketed and sold to the commercial aviation, defense, medical, and energy industries. Currently we manage the operations of these subsidiaries. In the future we hope to expand our business, both through the growing of our existing businesses and their client bases, as well as through acquisitions of companies that complement the products and services we currently offer.

In October 2014, we formed our new subsidiary M Line Business Services, Inc. that is providing corporate services and advice to various corporate clients. The revenue for this first client was included in the June 2014 10-K however the true value of the income derived was not included as the payment received in public stock could not be valued as the Company was not listed at that time. We expect the true value to be included in the June 2015 10-K as the Company is expected to be listed during August, 2015

Machine Sales Group

The Machine Sales Group is currently composed of one subsidiary, Elite, which is in the business of acquiring refurbishing and selling computer numerically controlled (“CNC”) machine tools, and providing service and machine rebuilds, to manufacturing customers.

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CNC machines use commands from an onboard computer to control the movement of cutting tools and the rotation speeds in order to cut precision metal parts. The computer controls enable the operator to program specific operations, such as part rotation and tooling selection and movement for a particular part and then store that program in memory for future use. Because CNC machines can manufacture parts unattended and operate at speeds faster than similar manually-operated machines, they can generate higher profits with less rework and scrap. Elite Machine specializes in selling refurbished Mori Seiki and other high end Japanese manufactured machine Tools.

In April 2015 we temporarily shut down operations of Elite. All the staff were laid off. We plan on restarting Elite shortly but certainly before the end of 2015 with a new management team and staff. The decision was made to stop the losses being incurred at Elite and we knew we needed new management.

Precision Manufacturing Group

The Precision Manufacturing Group is composed of Precision (formerly Eran Engineering), a wholly-owned subsidiary. Precision is a customer focused, industry leading aircraft and medical component manufacturer offering low cost build-to-print and assembly services for production and spare parts, with design, development and sustaining engineering support services for its customers. Precision, with an installed base of over forty CNC machines, manufactures parts and assemblies primarily for the aerospace and medical industries. Aerospace Customers include Panasonic Avionics Corporation (“Panasonic”), Rockwell Collins, UTC Aerospace, (formerly Goodrich Aerostructures), a division of the United Technologies Group and our largest medical customer, Beckman Coulter (part of the Danaher group).

Trends Affecting Our Business

Although the recent tightening of the capital markets has eased, customers’ limited access to capital still limits our ability to sell used CNC machines. Historically, as capital markets tighten, companies that purchase large machines on credit, such as CNC machines, have more difficulty in obtaining credit and, therefore, are unable to purchase machines that they may be able to purchase in better financial times. The credit markets have improved slightly but may have an impact on our customers’ ability to purchase machines, which could negatively impact our business.

The primary components sold by our Precision Manufacturing Group during the ninethree month period ended March 31,September 30, 2014 and 2013 were parts sold to Panasonic, a leading provider of in-flight entertainment systems for commercial aircraft. Although the market for in-flight entertainment systems has improved and is expected to continue to improve over the next two to three years, business is still inconsistent, and this may affect our business over the next several months. In addition, if there is a decrease in work, this may have an impact with the Machine Sales Group, as many of our customers that purchase machines from us do business with airline manufacturers.

Critical Accounting Policies

Use of Estimates

Our preparation, discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which are in conformity with and have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of sales and expenses during the reporting period. By their nature, these estimates made by management are, among others, realization of inventories, collectability of accounts receivable, litigation, impairment of goodwill and long-lived assets other than goodwill. We regularly evaluate our estimates and assumptions based on historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. To the extent actual results differ from these estimates,our future results of operations may be affected.

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Inventories

Within our Precision Manufacturing Group, we seek to purchase and maintain raw materials at sufficient levels to meet lead times based on forecasted demand. We generally manufacture parts based on purchase orders. Within our Machine Sales Group, we purchase machines held for resale based on management’s judgment of current market conditions and demand for both new and used machines. If forecasted demand exceeds actual demand, we may need to provide an allowance for excess or obsolete quantities on hand. We also review our inventories for changes in demand patterns and in the market prices of machines held in inventory and provide reserves as deemed necessary. If actual market conditions are less favorable than those projected by management, additional inventory reserves for CNC machines and parts may be required. We state our inventories at the lower of cost, using the first-in, first-out method on an average costs basis, or market.

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Abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) are recognized as current-period charges. Fixed production overhead is allocated to the costs of conversion into inventories based on normal capacity of the production facilities. We utilize an expected normal level of production within the Precision manufacturing segment, based on our plant capacity. To the extent we do not achieve normal expected productions levels, we charge such under-absorption of fixed overhead to operations.

Results of Operations for the Three Months Ended March 31,September 30, 2014 compared to the Three Months Ended March 31,September 30, 2013.

  For the three  For the three    
  months  months    
  ended March  ended March    
  31,  31,    
  2014  2013  Change 
          
Sales by segment:         
Machine Sales$ 1,580,726 $ 1,431,482  149,244 
Precision Engineering 838,785  888,337  (49,552)
  2,419,511  2,319,819  99,692 
          
Gross Profit by segment:         
Machine Sales 637,451  239,390  398,061 
Precision Engineering 322,184  119,720  202,464 
  959,635  359,110  600,525 
          
Gross Profit by segment: %         
Machine Sales 66.43  66.66    
Precision Engineering 33.57  33.34    

  For the three
months ended
September
30,
  For the three
months ended
September
30,
    
  2014  2013  Change 
          
Sales by segment:            
Machine Sales $730,227  $1,759,558   (1,029,331)
Precision Engineering  227,253   967,636   (740,383)
   957,480   2,727,194   (1,769,714)
             
Gross Profit by segment:            
Machine Sales  (1,828)  527,269   (529,097)
Precision Engineering  (59,584)  481,845   (541,429)
   (61,412)  1,009,114   (1,070,526)
             
Gross Profit by segment: %            
Machine Sales  (2.98)  52.25     
Precision Engineering  (97.02)  47.75     

Sales

Sales in the three month period ended March 31,September 30, 2014 increased 4.30%decreased 64.89% compared to the three month period ended March 31,September 30, 2013.

The change is attributable to an increasethe decrease in sales in both the Machine Sales Group and Precision Manufacturing Group. Sales increaseddecreased by 10.43%58.50% in the Machine Sales Group and decreased by 5.58%76.51% in the Precision Manufacturing Group.

Our Machine Sales Group primarily sells pre-owned CNC machinery manufactured by Mori Seiki. The average sale price of the machinery changes based on the equipment that is available to purchase in the market place and the prevailing market conditions that affect the price that equipment can be sold for. The average sale price of the 2915 pieces of equipment sold in the three months ended March 31,September 30, 2014 was $54,442$47,033 compared to the comparable period in fiscal 2013 of 2029 pieces of equipment sold at an average sale price of $69,225.$56,738. In addition, service work for the three months ended March 31,September 30, 2014 was $8,635$23,658 compared to the comparable period in fiscal 2013 of $33,365.$79,308.

Market conditions reflect not only the price that equipment can be purchased for but also the price at which that equipment may be sold. During good economic times when the business climate is improving, particularly in areas such as aerospace, the demand for

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equipment can result in a change in the purchase price. However, the need for that equipment by customers is generally reflected in the sale price. Therefore, as a general rule margins are reasonably consistent even though average sale prices may change. As a result, we do not expect future results to be materially impacted by these conditions.

The decrease in sales in the Precision Manufacturing Group is the result of a net decrease of $49,552 in sales of precision metal component parts from Goodrich Aerostructures in the three months ended March 31, 2014.

Gross Margin

Gross profit increased by 167.23% in fiscal period ended March 31, 2014 compared to the comparable period in fiscal 2013. The gross profit for the Machine Sales Group increased by 166.28% due to an increase in the volume of machines sold during this three month period. The increase within the Precision Manufacturing Group of 169.11% resulted from lower costs of goods sold as a result of an improvement in work flow and the scheduling of work in the factory. Management had recognized this weakness previously and has corrected it, thereby achieving greater productivity in the production area.

Selling, General & Administrative

Selling, general and administrative costs decreased by $139,005 to $724,055 for the three month period ended March 31, 2014 compared to $863,060 for the three months ended March 31, 2013. The change is due primarily to improved manufacturing efficiencies in the Precision engineering division.

Interest Expense

Interest expense increased by $445,862 for the three months ended March 31, 2014 compared to the three months ended March 31, 2013. The change is attributable to the amortization of the debt discount related to new notes in 2014.

Derivative Gain (Loss)

The derivative loss for the three month period ended March 31, 2014 was $651,968 compared to that of the comparable period in 2013 amounting to $0. The loss was the result of the new notes in 2014 that qualified as derivatives.

Results of Operations for the Nine Months Ended March 31, 2014 compared to the Nine Months Ended March 31, 2013.

  For the nine  For the nine    
  months  months    
  ended March  ended March    
  31,  31,    
  2014  2013  Change 
          
Sales by segment:         
Machine Sales$ 5,787,485 $ 3,891,147  1,896,338 
Precision Engineering 2,665,600  2,850,145  (184,545)
  8,453,085  6,741,292  1,711,793 
          
Gross Profit by segment:         
Machine Sales 1,564,034  753,614  810,420 
Precision Engineering 1,316,750  905,223  411,527 
  2,880,784  1,658,837  1,221,947 
          
Gross Profit by segment: %         
Machine Sales 54.29  45.43    
Precision Engineering 45.71  54.57    

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Sales

Sales in the nine month period ended March 31, 2014 increased 25.39% compared to the nine month period ended March 31, 2013.

The change is attributable to an increase in sales in the Machine Sales Group. Sales increased by 48.73% in the Machine Sales Group and decreased by 6.47% in the Precision Manufacturing Group.

Our Machine Sales Group primarily sells pre-owned CNC machinery manufactured by Mori Seiki. The average sale price of the machinery changes based on the equipment that is available to purchase in the market place and the prevailing market conditions that affect the price that equipment can be sold for. The average sale price of the 105 pieces of equipment sold in the nine months ended March 31, 2014 was $51,373 compared to the comparable period in fiscal 2013 of 58 pieces of equipment sold at an average sale price of $62,347. In addition, service work for the nine months ended March 31, 2014 was $232,709 compared to the comparable period in fiscal 2013 of $48,131.

Market conditions reflect not only the price that equipment can be purchased for but also the price at which that equipment may be sold. During good economic times when the business climate is improving, particularly in areas such as aerospace, the demand for equipment can result in a change in the purchase price. However, the need for that equipment by customers is generally reflected in the sale price. Therefore, as a general rule margins are reasonably consistent even though average sale prices may change. As a result, we do not expect future results to be materially impacted by these conditions.

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The decrease in sales in the Precision Manufacturing Group is primarily the result of a net decrease of $184,545$564,558 in sales of precision metal component parts from Goodrich AerostructuresPanasonic Avionics Corporation in the ninethree months ended March 31,September 30, 2014.

Gross Margin

Gross profit increaseddecreased by 73.66%106.03% in fiscal period ended March 31,September 30, 2014 compared to the comparable period in fiscal 2013. The gross profit for the Machine Sales Group increaseddecreased by 107.54%100.35% due to an increasea decrease in the volume of machines sold during this ninethree month period. The increasedecrease within the Precision Manufacturing Group of 45.46%112.37% resulted from lowerhigher costs of goods sold as a resultin relation to lower sales due primarily to the move of an improvementour business from the Tustin location to our new location in work flow in the scheduling of work in the factory. Management had recognized this weakness previously and has corrected it, thereby achieving greater productivity in the production area.Anaheim. .

Selling, General & Administrative

Selling, general and administrative costs decreasedincreased by $836,218$18,280 to $1,875,106$760,081 for the ninethree month period ended March 31,September 30, 2014 compared to $2,711,324$778,361 for the ninethree months ended March 31,September 30, 2013. The change is due primarily due to moving costs in the write back of the overprovision for rent expense and a reduction of legal and professional expenses due to lower costs for investor relations and financing costs.Precision engineering division.

Interest Expense

Interest

Interst expense increasedhas decreased by $599,739$47,711 for the ninethree months ended March 31,September 30, 2014 compared to the ninethree months ended March 31,September 30, 2013. The change is attributable to amortizationa reduction of debt discount relatedthe interest portion that relates to new notes in 2014 as well as the recognition of amortization of deferred financing fees.derivative liabilities.

Derivative Gain (Loss).

There was a

The derivative gain (loss) of $700,098 for the ninethree month period ended March 31,September 30, 2014 and $0 inwas $(485,735) compared to that of the comparable period in 2013 amounting to $0. 

Loss on Debt Extinguishment

The loss on debt extinguishment for the three month period ended September 30, 2014 was $(165,526) compared to $0 for the comparable period three months ended September 30, 2013. The changeThis expense is duerelated to the additionalconversion of the convertible notes that qualified as derivatives in 2014.and settlement of the corresponding derivative liabilities.

Liquidity and Capital ResourcesResources.

Our principal sources of liquidity consist of cash and cash equivalents, cash generated from operations and borrowing from various sources, including repayment of debt by the issue of common stock. As of March 31,September 30, 2014, our working capital (current assets less current liabilities) totaled ($3,356,276)7,002,166) compared to $(3,983,660)$(6,755,853) as of June 30, 2013,2014, a decrease of $627,384.$246,313.

The Company has an accumulated deficit of $21,010,797 as of September 30, 2014 and negative working capital. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

As of March 31,September 30, 2014 we had $1,641,215$2,330,453 in debt outstanding under our Accounts Receivable and Inventory line of Credit with TCA Global Credit Master Fund, LP.

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Our existing sources of liquidity, along with cash expected to be generated from sales, may not be sufficient to fund our operations, anticipated capital expenditures, working capital and other financing requirements for the foreseeable future. If that is the case we may need to seek to obtain additional debt or equity financing, especially if we experience downturns or cyclical fluctuations in our business that are more severe or longer than anticipated, or if we fail to achieve anticipated revenue targets, or if we experience significant increases in the cost of raw material and equipment for resale, or lose a significant customer, or experience increases in our expense levels resulting from being a publicly traded company. If we attempt to obtain additional debt or equity financing, we cannot assure you that such financing will be available to us on favorable terms, or at all.

Cash Flows

The following table sets forth our cash flows for the ninethree month periodsperiod ended March 31,September 30, 2014 and 2013.

Provided by (used in) 2014  2013  Change 
          
Operating activities (284,346) 73,697  (358,043)
Investing activities (8,000) (53,650) 45,650 
Financing activities 297,189  115,212  181,977 
  4,843  135,259  130,416 

Provided by (used in) 2014  2013  Change 
          
Operating activities  (341,488)  (61,793)  279,695 
Investing activities  35,000   (12,500)  (47,500)
Financing activities  271,971   (91,328)  (363,299)
   (34,517)  (165,621)  (131,104)

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Operating Activities

Operating cash flows during the ninethree month periodsperiod ended March 31,September 30, 2014 and 2013, respectively, reflect our results of operations, offset by net cash provided by operating assets and liabilities and non-cash items (depreciation, amortization and stock-based compensation). During the ninethree month period ended March 31,September 30, 2014, non-cash expenses included in our net income and in operating activities totaled $1,636,070$831,888 compared to $515,578$131,505 in the ninethree month period ended March 31,September 30, 2013.

The increase (decrease) in operating assets and liabilities for the ninethree month period ended March 31,September 30, 2014 and 2013 were $(1,321,635)$364,158 and $915,610,$(299,059), respectively. During the ninethree month period ended March31,September 30, 2014, the decreaseincrease was primarily attributable to an increase in accounts receivable, and inventory.accounts payable and accrued expenses..

Investing Activities

We made capital expendituresdisposals and (capital expenditures) of $8,000$35,000 and $(53,650)$(12,500) during the ninethree month period of the fiscal 2014 and 2013 period, respectively.

Financing Activities

Net cash provided by (used in) financing activities was $297,189$271,191 for the nine monthsthree month ended March 31,September 30, 2014, compared to $115,212 $(91,328)for the ninethree months ended March 31,September 30, 2013.

Off Balance Sheet Arrangements

We have no off balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

As a smaller reporting company, we are not required to provide the information required by this Item. However, we opted to include the following information.

The only financial instruments we hold are cash and cash equivalents. Changes in market interest rates will impact our interest costs.

We currently are billed by the majority of our vendors in U.S. dollars, and we currently bill the majority of our customers in U.S. dollars. However, our financial results could be affected by factors such as changes in foreign currency rates or changes in economic conditions.

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Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of December 31, 2012,September 30, 2014, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of September 30, 2013,2014, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified and described in this Item 4. The principal weakness is that we have limited staff due to the size of the Company. As a result the division of duties and responsibilities amongst staff and the lack of internal controls lead to the material weaknesses in these business areas.

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Changes in Internal Control over Financial Reporting

There have been no changes to our internal control over financial reporting during our nine month period ended March 31, 2014.

PART II—OTHER INFORMATION

Litigation

The Company’s existing litigation proceedings are set forth below:

1.

James M. Cassidy v. Gateway International Holdings, Inc., American Arbitration Association, Case No. 73-194- 32755-0873-194-32755-08.


The Company was served with a Demand for Arbitration and Statement of Claim, which was filed on September 16, 2008.

The Statement of Claim alleges that claimant is an attorney who performed services for the Company pursuant to an agreement dated April 2, 2007 between the Company and the claimant. The Statement of Claim alleges that the Company breached the agreement and seeks compensatory damages in the amount of $195,000 plus interest, attorneys’ fees and costs. Management denies the allegations of the Statement of Claim and will vigorously defend against these allegations. An arbitrator has not yet been selected, and a trial date has not yet been scheduled.

No provision has been made in the September 30 and June 30, 2014 financial statements with respect to this matter because the Company has assessed the litigation as having no merit and the likelihood of any liability pursuant to this litigation to be extremely low.

The Company was served with a Demand for Arbitration and Statement of Claim, which was filed on September 16, 2008.

The Statement of Claim alleges that claimant is an attorney who performed services for the Company pursuant to an agreement dated April 2, 2007 between the Company and the claimant. The Statement of Claim alleges that the Company breached the agreement and seeks compensatory damages in the amount of $195,000 plus interest, attorneys’ fees and costs. Management denies the allegations of the Statement of Claim and will vigorously defend against these allegations. An arbitrator has not yet been selected, and a trial date has not yet been scheduled.

No provision has been made in the March 31, 2014 financial statements with respect to this matter, because the Company has assessed the litigation as having no merit and the likelihood of any liability pursuant to this litigation to be remote.

2.

CNC Manufacturing v. All American CNC Sales, Inc., Elite Machine Tool Company/Sales & Services, CNC Repos,Superior Court for the State of California, County of Riverside, Case No. RIC 509650.

Plaintiff filed this Complaint on October 2, 2008.

The Complaint alleges causes of action for breach of contract and rescission and claims that All American breached the agreement with CNC Manufacturing by failing to deliver a machine that conforms to the specifications requested by CNC Manufacturing, and requests damages totaling $138,750. Elite Machine filed an answer timely, on January 15, 2009.

Abstract of Judgment and Writ were issued August 17, 2012.

A provision has been made in the March 31, 2014 financial statements in litigation payable with respect to this matter in the sum of $37,500.

3.

Fadal Machining v. All American CNC Sales, et al., Los Angeles Superior Court, Los Angeles, California, Case No. BC415693.

The Complaint was filed on June 12, 2009.

The Complaint alleges causes of action for breach of contract and common counts against All American CNC seeking damages in the amount of at least $163,578.88, and arises from a claim by Fadal that All American failed to pay amounts due. On June 26, 2009, Fadal amended the Complaint to include M Line Holdings, Inc. as a Defendant.

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Plaintiff filed this Complaint on October 2, 2008.

The Complaint alleges causes of action for breach of contract and rescission and claims that All American breached the agreement with CNC Manufacturing by failing to deliver a machine that conforms to the specifications requested by CNC Manufacturing, and requests damages totaling $138,750. Elite Machine filed an Answer timely, on January 15, 2009.

Abstract of Judgment and Writ were issued August 17, 2012.

The Company entered into a settlement agreement for a settlement in the total amount of $37,500. However, no payments have been made to date.

A provision has been made in the September 30 and June 30, 2014 financial statements with respect to this matter in the sum of $37,500.

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3.  Donald Yu v. M Line Holdings, Inc., et al.;Case No. 30-2012-00574019-CU-BC-CJC

This is an employment dispute asserted by a former employee against M Line Holdings and two corporate insiders, Jitu Banker and Anthony Anish, in their respective individual capacities. The action was filed in Orange County Superior Court on June 4, 2012. The parties entered into a settlement agreement and stipulation for judgment against M Line Holdings, only, on about May 12, 2013. Pursuant to the terms and conditions of the settlement agreement, M Line agreed to pay $21,450.00 in three (3) equal installments. M Line Holdings failed to make payment on a timely basis, and plaintiff filed a stipulated judgment against M Line Holdings on June 12, 2013. Plaintiff also filed default judgments against Messrs. Banker and Anish.

In response, defendants filed a motion to set aside the defaults and vacate the default judgments against Messers. Banker and Anish as well as renegotiate the terms of the prior settlement with Plaintiff. On or about September 30, 2013, the parties entered into a supplemental settlement agreement and mutual release wherein the Company agreed to pay plaintiff the sum of $24,000 in two (2) equal installments. The first installment of $12,000 has already been paid.

The final installment of $12,000 was due on or before October 30, 2013, and has not been paid at this time. A judgment remains outstanding against the Company in the sum of $12,000.

4.   Subramani Srinivasan, et al. v. M Line Holdings, Inc., et al.; Case No. 30-2014-00724484-CU-CO-CJC

This is a breach of contract, fraud, and related causes of action against Defendants Eran Engineering, Inc., Bart Webb, Precision Aerospace and Technologies, Inc. (erroneously sued as "Precision Aerospace Technologies, Inc."); M-Line Holdings, Inc.; Anthony Anish; Jitu Banker; Larry Consalvi; and Elite Machine Tools (collectively, "Defendants").

The parties entered into a settlement agreement against the corporate defendants on or about January 22, 2015. Pursuant to the terms and conditions of the settlement agreement, the corporate defendants agreed to pay $20,000 in three (3) equal installments on or before April 30, 2015.

As of June 2, 2015, the corporate defendants have paid $20,000 and this case has been dismissed, which effectively terminates all litigation in its entirety.

5.   Can Capital Asset Servicing, Inc. v. E.M. Tool Company, Inc., et al.; Case No. 30-2014-00727606- CU-CL-CJC

This is a breach of contract and related claims arising out of a business loan, and alleges that E.M. Tool failed to pay Can Capital all amounts due under the loan agreement in the principal sum of $58,313, plus interest, costs and attorneys’ fees.

On or about November 2014, the parties entered into a settlement agreement and stipulated judgment. Pursuant to the terms and conditions of the settlement agreement, the Company agreed to pay plaintiff the sum of $50,000 in installments on or before May 15, 2015.

As of May 13, 2015, the defendants have made partial payments, and still owe plaintiff $25,500. Plaintiff provided notice of its intent to file the stipulated judgment on May 7, 2015, and commence collection efforts if payment of $10,000 is not paid prior thereto and those payments have been made. Since May, a payment of $1,500 has been made. The balance as of August 17, 2015 is $24,000.

6.   Fadal Machining v. All American CNC Sales, et al., Los Angeles Superior Court, Los Angeles,California,Case No. BC415693.

The Complaint was filed on June 12, 2009.

A settlement agreement in the amount of $60,000 was signed on May 31, 2011.

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The Complaint alleges causes of action for breach of contract and common counts against All American CNC seeking damages in the amount of at least $163,579, and arises from a claim by Fadal that All American failed to pay amounts due. On June 26, 2009, Fadal amended the complaint to include M Line Holdings, Inc. as a defendant.

A settlement agreement in the amount of $60,000 was signed on May 31, 2011.

The Company had made a provision in the sum of $210,000 in the financial statements as of September 30, and June 30, 2014 as no payments that were due under the settlement agreement have been made. Judgment was entered on June 16, 2011, and a Writ was issued on February 24, 2012.

7.   C. William Kircher Jr. v. M Line Holdings, Inc.Orange County Superior Court Case No. 00397576

A former attorney for M Line Holdings, Inc. has sued seeking damages for failure to pay legal fees in the amount of $120,166.

The parties reached a settlement. The terms of the settlement call for 12 payments of $5,000 per month commencing August 25, 2011 and the issuance of 150,000 shares of common stock. The Company has issued the 150,000 shares of common stock and made two payments to date. The Company has a provision in the sum of $50,000 in the financial statements as of September 30, and June 30, 2014.

The Company currently is in default of its payment obligations under the settlement. Plaintiff currently is seeking to obtain a judgment as a result of the breach of the settlement agreement.

8.   Timothy D. Consalvi v. M Line Holdings, Inc. et.al., Orange County Superior Court Case No, 00308489.

A former president of All American CNC Sales, Inc. has filed suit against the Company seeking payment on an alleged severance obligation by the Company. The Complaint does not specify the damages sought. The parties then reached a settlement in the principal sum of $40,000 to be documented in due course. Meanwhile a default was entered against the Company, which management believes was in error because a settlement was already reached by the principal parties involved. The default has since been vacated, and the Company has answered the complaint and has filed a motion for leave to file a cross complaint.

A settlement of $50,000 was reached in this case, requiring payments commencing on March 11, 2011 for 10 months. The first two month’s payments were made; however, the Company currently is in default of the terms of this settlement agreement. Mr. Consalvi filed his stipulated judgment on March 5, 2012. Abstract of judgment and Writ were issued on March 13, 2012.

 

The Company has made a provision in the sum of $60,000 in the financial statements in accounts payable as of June 30, 2013 but no payments that are due under the settlement agreement have been made. Judgment was entered on June 16, 2011, and a Writ for collection was issued on February 24, 2012.

4.

Fox Hills Machining v. CNC Repos, Orange County Superior Court, Orange County, California, Case No. 30-2009- 00121514.

The Complaint was filed on April 14, 2009.

The Complaint alleges causes of action for Declaratory Relief, Breach of Contract, Fraud, Common Counts, and Negligent Misrepresentation, claiming the Defendant failed to pay Fox Hills Machining for the sale of two machines from Fox Hills to CNC Repos. The damages sought in the Complaint are estimated to be approximately $40,000. Court records show that a stipulated judgment was entered on August 27, 2012; a writ was issued on September 9, 2012.

However, an agreement has been entered into with Fox Hills Machinery to pay off the judgment in the sum of $48,673.

A sum of $40,000 has been paid in installments of $10,000 each effective November 8, 2013 and the final payment was made on December 9, 2013.

5.

C. William Kircher Jr. v. M Line Holdings, Inc.Orange County Superior Court Case No. 00397576

A former attorney for M Line Holdings, Inc. has sued seeking damages for failure to pay legal fees in the amount of $120.166.

The parties reached a settlement. The terms of the settlement call for 12 payments of $5,000 per month commencing August 25, 2011 and the issuance of 150,000 shares of common stock. The company has issued the 150,000 shares of common stock and made two payments to date. The Company has a provision in the sum of $50,000 in the financial statements in accounts payable as of March 31, 2014.

The Company currently is in default of its payment obligations under the settlement. Plaintiff currently is seeking to obtain a judgment as a result of the breach of the settlement agreement.

6.

Timothy D. Consalvi v. M Line Holdings, Inc. et.al, Orange County Superior Court Case No, 00308489.

A former president of All American CNC Sales, Inc. has filed suit against the Company seeking payment on an alleged severance obligation by the Company. The Complaint does not specify the damages sought. The parties then reached a settlement in the principal sum of $40,000 to be documented in due course. Meanwhile a default was entered against the Company, which management believes was in error because a settlement was already reached by the principal parties involved. The default has since been vacated, and the Company has answered the complaint and has filed a motion for leave to file a cross complaint.

A settlement of $50,000 was reached in this case, requiring payments commencing on March 11, 2011 for 10 months.

The first two month’s payments were made; however, the Company currently is in default of the terms of this settlement agreement. Mr. Consalvi filed his stipulated judgment on March 5, 2012. Abstract of judgment and Writ were issued on March 13, 2012.

A provision in the sum of $40,000 has been made in the financial statements in litigation payable as of March 31, 2014.

To date, there has been no further action on this case.

7.

All Direct Travel Services, Inc. v. Jitu Banker, M Line holdings, Inc., Airworks International, Inc., case number 30-2011- 00472824-CL-CO-CJC

This case was settled as to Jitu Banker and the Company for $2,000 payable on February 25, 2013. We do not yet have sufficient information to determine what the potential outcome of this may be or whether or to what extent it would or could have a financial impact on the Company. A default judgment was entered on January 6, 2012.

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8.

Douglas Technologies Group, Inc. v Elite Machine Tool Company and Lawrence Consalvi, et al., case number 30- 2013-00657906-CU-FR-CJC.

This suit was filed on June 20, 2013 in respect of an alleged deficiency in the machine supplied to Douglas Technologies. The Company decided to settle the lawsuit and thereby entered into a settlement agreement with the customer.

This case was settled on November 5, 2013 for $50,000 requiring a commencing payment of $10,000 on November 15, 2013 with the balance being paid in 8 monthly installments of $5,000 each.

Payments amounting to of $30,000 were made during the period ended March 31, 2014.

The balance of the provision in accounts payable is $20,000 at March 31, 2014.

9.

Donald Yu. v M Line Holdings, Inc., Anthony L Anish and Jitu Banker, et al., case number 30-2012-005-740-19-CU- BC-CJC.

This suit was filed in respect of consulting services rendered to the Company. The Company decided to settle the lawsuit and thereby entered into a settlement agreement with Donald Yu.

The case was settled on September 25, 2013 for $24,000 requiring two payments of $12,000 each, payable on September 30, 2013 and October 30, 2013.

The Company made the first payment of $12,000 on September 30, 2013 but has not made the second payment due on October 30, 2013.


A provision in the sum of $12,000 has been made in the financial statements in accrued expenses as of March 31, 2014.

10.

Alu Forge, Inc., dba American Handforge . v Jitu Banker, Precision Aerospace & Technologies, Inc., and M LineHoldings, Inc., et al., case number30-2013-00670772-CL-BC-CJC.

This suit was filed in respect of materials supplied to the Company. The Company decided to settle the lawsuit and thereby entered into a settlement agreement with the plaintiff.

The case was settled on October 31, 2013 for $19,500 with payments of $5,250 on October 31, 2013, $5,250 on November 30, 2013 and the balance of $9,000 on December 31, 2013.

The Company made the first and second payments of $5,250 on October 31, 2013 and December 24, 2013, and the final payment of $9,000 was made on December 31, 2013.

No provision is necessary as the liability has been settled in full.


11.

Yates, Fontenot, Smith & Brum, LLC v. M Line Holdings, Inc. (formerly Gateway International Holdings, Inc.), et al.; Case No. 30-2013-00630586

The above-referenced matter is an unlawful detainer action concerning certain real property located at 2672 Dow Avenue, Tustin, California. The unlawful detainer action was filed against the Company by its landlord Yates, Fontenot, et al. on February 15, 2013. The action is pending in Orange County Superior Court.

On or about September 2013, the parties settled the action for an agreed upon sum payable in installments through January 5, 2014. Assuming all payment obligations are made, plaintiff shall file a request for dismissal with prejudice of the entire action by or before March 14, 2014.

A provision in the amount of $35,000 has been made in the financial statements in accounts payable, as of March 31,September 30 and June 30, 2014.

To date there has been no further action on this case, and the Company plans to resolve this matter as soon as possible.

9.   All Direct Travel Services, Inc. v. Jitu Banker, M Line holdings, Inc., Airworks International, Inc.,case number 30-2011-00472824-CL-CO-CJC

This case was settled as to Jitu Banker and the Company for $2,000 payable on February 25, 2013. We do not yet have sufficient information to determine what the potential outcome of this may be or whether or to what extent it would or could have a financial impact on the Company. A default judgment was entered on January 6, 2012.

To date there has been no further action on this case, and the Company plans to resolve this matter as soon as possible.

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10.  TCA Global Credit Master Fund, L.P. vs M LI ne Holdings, Inc. EM Tool Company, Inc. dba Elite Machine Tool, Precision Aerospace and Technologies, Inc., Anthony Anish and Jitendra Bankercase # CACE-14-012871

Plaintiff filed this case on July 1, 2014 in Broward County, Florida.

The complaint alleges that the Company owes the Plaintiff the amount due under the revolving note, and is claiming foreclosure of the collateral, breach of the credit agreement and a claim against the individuals under the validity agreement due to the non-payment.

The Plaintiff obtained a default judgment however due to a settlement agreement reached on September 5, 2014 ceased any further legal activity. The Defendants were unable to honor the agreement and Plaintiff continued to obtain sister state judgments in California and Nevada.

On February 23, 2015 a new settlement agreement was signed between the parties under which plaintiff agreed to accept two methods of repayment, the first being $1,200,000 paid over a fifteen month period commencing as soon as the Company was up to date with its filings and the balance of funding would come from a new asset based lending program that Defendants were in the process of arranging.

The Company has accrued $2,330,453 in the financial statements that includes all interest and fees due to Plaintiff through September 30, and June 30, 2014.

11.  Global Vantage Ltd., a California Corporation vs Eran Engineering, Inc. Precision Aerospace and Technologies, Inc., M Line Holdings, Inc., Anthony Anish, Lawrence Consalvi and Kenneth Collini

Plaintiff filed this complaint on August 7, 2014 in Orange County, California.

The complaint alleges that the Company owes funds that are due for the lease of certain equipment or plaintiffs want repossession of the equipment.

The plaintiffs obtained judgment in February 2015 and the equipment has been returned to plaintiff. However, defendants are filing an appeal against this judgment.

Litigation is subject to inherent uncertainties, and unfavorable rulings could occur.  If an unfavorable ruling were to occur in any of the above matters, there could be a material adverse effect on the Company’s financial condition, results of operations or liquidity.

The related provisions for these litigations are reported under litigation payable, accounts payable and accrued expenses and other in the consolidated balance sheets.

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Item 1A. Risk Factors.

As a smaller reporting company we are not required to provide the information required by this Item. However, we did include risk factors in our Annual Report on Form 10-K for the year ended June 30, 2013,2014, as filed with the Commission on December 31, 2013.June 24, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The Company issued 59,740,102699,699,259,119 shares of the Company's common stock in settlementfor conversion of debt and to our investor relations and other consultants in payment of services to the Company. These shares were free trading and restricted in accordance with Rule 144. The issuance was exempt registration pursuant to Section 4 (2) of the Securities Act of 1933 and Mass Media, Newport Coast Securities, Bruce Barren and American Capital Venturesthese financial institutions are sophisticated investors and familiar with our operations.

The Company issued 16,000,000 shares of the Company's common stock to officers of the Company in lieu of salaries. These shares were restricted in accordance with Rule 144. The issuance was exempt registration pursuant to Section 4 (2) of the Securities Act of 1933 and Bruce Barren, our CEO, Anthony Anish and Jitu banker, are sophisticated investors and familiar with our operations.

Item 3. Defaults uponUpon Senior Securities.

There have been no events required to be reported under this Item.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The following Exhibits required by Item 601 of Regulation S-K to be filed herewith are either filed herewith or incorporated by reference to previously filed documents, as indicated.

Item No. Description
   
3.1 (1) Articles of Incorporation of M Line Holdings, Inc., a Nevada corporation, as amended
3.2 (5)Certificate of Amendment of Articles of Incorporation
   
3.23.3 (1) 

Bylaws of M Line Holdings, Inc., a Nevada corporation

3.3 (2)Amended By Laws of M Line Holdings, inc. a Nevada Corporation
   
10.1(1) Asset Purchase Agreement with CNC Repos, Inc. and certain of its shareholders dated October 1, 2007
   
10.2(1) 

Commercial Real Estate Lease dated February 15, 2007 for the office space located in Tustin, CA.-

   
10.3(1) 

Commercial Real Estate Lease dated November 15, 2007 for the office space located in Anaheim, CA

   
10.4(1) 

Share ExchangeEmployment Agreement with Gledhill/Lyons, Inc.Timothy D. Consalvi dated March 26,February 1, 2007

   
10.5(1) 

Share ExchangeEmployment Agreement with Nu-Tech Industrial Sales, Inc.Anthony L. Anish dated March 19, 2007

January 1, 2015
   
10.6(1) (2) Employment Agreement with Jitendra Banker dated January 1, 2015

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10.7 (1)Settlement Agreement with TCA Global Credit Master Fund, LP
10.9 (1)Fee Agreement with Steve Kasprisin dated April 30, 2008

   
10.7(2)10.10 (3)

Separation Agreement by and between Gateway International Holdings, Inc., and Mr. Lawrence A. Consalvi dated September 26, 2008

   
10.8(3)10.11 (4) 

Independent ContractorSales Agent Agreement by and between Gateway International Holdings, Inc., and Mr. Lawrence A.

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Consalvi dated September 30, 2008

  
10.910.12 (4)

(3)

Loan Agreements with Pacific Western Bank dated September 20, 2008 -

  
10.1010.13 (5)

(4)

Assignment of Promissory Note and Consent Thereto by and between M Line Holdings, Inc. and Money Line Capital, Inc. dated March 24, 2009


10.11(4)

10.14 (5)M Line Holdings, Inc. Demand Note for up to $500,000 dated March 25, 2009 [Note:What is this pro note, and what is its status? Is this the first Note described in Note 7 (Notes Payable) in the financial statements?]


10.12

(5)

10.15 (6)Letter of Intent by and between M Line Holdings, Inc. and Money Line Capital, Inc. dated June 30, 2010

  
10.1310.16 (8)

(6)

Securities Purchase Agreement and Convertible Promissory Note with Asher Enterprises, Inc. dated April 26, 2010

  
10.14

(6)Convertible Promissory Note with Asher Enterprises, Inc. dated May 25, 2010

 
10.1510.18 (8)

(6)

Commercial Real Estate Lease with SG&H Partners, L.P. for Anaheim Property dated August 13, 2010

July 1, 2015
  
10.1610.19 (8)

(6)

Business Loan Agreement with Pacific Western Bank dated June 7, 2010

  
10.1710.20 (8)

(7)

Loan and Security Agreement and Note with Utica Leaseco, LLC
10.21 (8)Note and Stock Purchase Agreements with Spagus Capital Partners, LLC
10.19 (9)Loan Agreements with TCA Global Master Credit Fund, LP
10.19(10)Convertible note agreement with Gel Properties, LLC
10.20 (10)Convertible Note agreement with LG Funding, LLC
10.21 (10)Convertible Note agreements with Beaufort Capital, LLC
10.22 (10)Convertible Note agreements with Union Capital, Inc.
10.23 (10)Convertible Note agreements with Coventry Funding, Inc.
10.24 (10)Convertible Note agreements with Iconic Holdings, Inc.
10.25 (10)Convertible Note with Adar Bays, LLC
10.26 (10)Convertible Note with JMJ Financial
10.23Addendum No. 2 dated September 30, 2011 to Commercial Real Estate Lease dated February 15, 2007 for the office space located in Tustin, CA


10.18

(7)

10.24Executive Employee Agreement with Barton Webb dated July 25, 2011

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21 (7)List of Subsidiaries
  
10.19

(8)Loan and Security Agreement with Utica Leaseco, LLC dated as of October 8, 2012

 
10.1931.1

Loan Agreements with TCA Global Credit master Fund, LP

 
10.20

(8)Note and Stock Purchase Agreements with Spagus Capital Partners, LLC dated September 29, 2011

10.21

Executive Employee Agreement with Anthony L. Anish dated July 17, 2013

10.22

Executive Employee Agreement with Jitu Banker dated July 17, 2013

21

List of Subsidiaries

31.1

Rule 13a-14(a)/15d-14(a) Certification of George Colin (filed herewith).

  
31.2

Rule 13a-14(a)/15d-14(a) Certification of Jitu Banker (filed herewith).

  
32.1

Section 1350 Certification of George Colin (filed herewith).

  
32.2

Section 1350 Certification of Jitu Banker (filed herewith).

____________________

(1) Incorporated by reference from our Registration Statement on Form 10-12G filed with the Commission on May 16, 2008.

(2) Incorporated by reference from our Registration Statement on First Amended Form 10-12G/A filed with the Commission on July 16, 2008.

(3) Incorporated by reference from our First Amended Current Report on Form 8-K/A filed with the Commission on October 10, 2008.

(4)  Incorporated by reference from our Quarterly Report on Form 10-Q for the period ended September 30, 2008, as filed with the Commission on November 13, 2008.

(5)  Incorporated by reference from our Current Report on Form 8-K filed with the Commission on April 24, 2009.

(6)  Incorporated by reference from our Current Report on Form 8-K filed with the Commission on July 6, 2009.

(7)  Incorporated by reference from our Annual Report on Form 10-K for the period ended June 30, 2009, as filed with the Commission on October 13, 2009.

(8)  Incorporated by reference from our Annual Report on Form 10-K for the period ended June 30, 2010, as filed with the Commission on November 12, 2010.

(1)

Previously filed with Registration Statement on Form 10-12G filed with the Commission on May 16, 2008.

(2)

Previously filed with First Amended Current Report on Form 8-K/A filed with the Commission on October 10, 2008.

(3)

Previously filed with Quarterly Report on Form 10-Q for the period ended September 30, 2008 filed with the Commission on November 13, 2008.

(4)

Previously filed with Current Report on Form 8-K filed with the Commission on April 24, 2009.

(5)

Previously filed with Current Report on Form 8-K filed with the Commission on July 6, 2009.

(6)

Previously filed with Annual Report on Form 10-K for the period ended June 30, 2010 filed with the Commission on November 12, 2010.

(7)

Previously filed with Annual Report on Form 10-K for the period ended June 30, 2011 filed with the Commission on October 13, 2011.

(8)

Previously filed with Annual Report on Form 10-K for the period ended June 30, 2012 filed with the Commission on October 16, 2012.

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SIGNATURES

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  M Line Holdings, Inc.
   
Dated: May 20, 2014August 19, 2015/s/ Bruce Barren
 By:Bruce Barren
  President, Chief Executive
  Officer and a Director
   
Dated: May 20, 2014August 19, 2015/s/ Jitu Banker
 By:Jitu Banker
  Chief Financial Officer,
  and a Director

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