Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2014 | Aug. 19, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | M LINE HOLDINGS INC | |
Entity Central Index Key | 1,072,248 | |
Document Type | 10-Q | |
Trading Symbol | mlhc | |
Document Period End Date | Dec. 31, 2014 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 1,199,555,785 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,015 |
CONSOLIDATED BALANCE SHEETS (UN
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) | Dec. 31, 2014 | Jun. 30, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 60,460 | $ 46,925 |
Accounts receivable, net | 230,169 | 222,344 |
Inventory, net | 1,752,862 | 1,430,682 |
Total current assets | 2,043,491 | 1,699,951 |
Property and equipment, net | 258,178 | 402,476 |
Deposits and other | 123,285 | 140,922 |
Total assets | 2,424,954 | 2,243,349 |
Current liabilities: | ||
Bank overdraft | 307,318 | 149,699 |
Accounts payable | 1,721,832 | 1,350,157 |
Accounts payable - related party | 35,954 | 35,954 |
Accrued expenses and other | 3,128,087 | 2,594,616 |
Litigation payable | 287,500 | 287,500 |
Derivative liability | 965,003 | 634,769 |
Line of credit | 2,694,703 | 2,330,453 |
Notes payable - current, net of debt discount of $310,291 and $317,977 | 814,048 | 1,018,755 |
Current portion of capital lease obligations | 53,901 | 53,901 |
Total current liabilities | 10,008,346 | 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 | $ 10,178,795 | $ 8,626,253 |
Commitments and contingencies | ||
Stockholders' deficit: | ||
Common stock: $0.001 par, 1,000,000,000 shares authorized, 942,437,603 and 243,178,484 shares issued and outstanding at December 31, 2014 and June 30, 2014, respectively | $ 942,437 | $ 243,178 |
Additional paid in capital | 13,300,109 | 12,846,981 |
Accumulated deficit | (22,006,587) | (19,473,263) |
Total Stockholders' deficit | (7,753,841) | (6,382,904) |
Total liabilities and Stockholders' deficit | 2,424,954 | 2,243,349 |
Series A Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Preferential stock | 200 | $ 200 |
Series B Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Preferential stock | $ 10,000 |
CONSOLIDATED BALANCE SHEETS (U3
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) | Dec. 31, 2014 | Jun. 30, 2014 |
Debt discount (in dollar) | $ 310,291 | $ 317,977 |
Common stock, par value (in dollars per shares) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 942,437,603 | 243,178,484 |
Common stock, shares outstanding | 942,437,603 | 243,178,484 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per shares) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 200,000 | 200,000 |
Preferred stock, shares outstanding | 200,000 | 200,000 |
Series B Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per shares) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 10,000,000 | 0 |
Preferred stock, shares outstanding | 10,000,000 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement [Abstract] | ||||
Net sales | $ 1,504,304 | $ 3,306,380 | $ 2,461,784 | $ 6,033,574 |
Cost of sales | 1,481,115 | 2,394,345 | 2,430,381 | 4,112,425 |
Gross profit | 23,189 | 912,035 | 31,403 | 1,921,149 |
Operating expenses: | ||||
Selling, general and administrative | 499,607 | 372,690 | 1,329,313 | 1,151,051 |
Operating income (loss) | (476,418) | 539,345 | (1,297,910) | 770,098 |
Other income (expense): | ||||
Interest expense | (353,935) | (220,350) | (418,716) | (345,342) |
Loss on debt extinguishment | (165,526) | |||
Derivative loss | (165,437) | (48,130) | (651,172) | (48,130) |
Total other income (expenses) | (519,372) | (268,480) | (1,235,414) | (393,472) |
Income (loss) before income tax | $ (995,790) | 270,865 | $ (2,533,324) | 376,626 |
Income tax provision | (1,694) | (1,694) | ||
Net income (loss) | $ (995,790) | 269,171 | $ (2,533,324) | 374,932 |
Deemed dividend - Series B Preferred Stock | (225,500) | (225,500) | ||
Net income (loss) available to common stockholders | $ (1,221,290) | $ 269,171 | $ (2,758,824) | $ 374,932 |
Net income (loss) per share: | ||||
Basic and diluted (in dollars per share) | $ 0 | $ (0.01) | $ 0 | $ (0.02) |
Weighted average number of common shares - basic and diluted (in shares) | 942,437,603 | 83,972,797 | 737,919,242 | 78,632,746 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED) - USD ($) | 6 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (2,533,324) | $ 374,932 |
Reconciliation of net loss to net cash provided by operations: | ||
Loss on disposition of assets | 46,250 | |
Bad debt expense | 39,211 | |
Depreciation | 54,798 | $ 85,253 |
Amortization of debt discount and deferred financing fees | 335,836 | 155,027 |
Loss on debt extinguishment | $ 165,526 | |
Issuance of shares for services | 217,916 | |
Change in derivative liabilities | $ 651,172 | 48,130 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (47,036) | (356,402) |
Inventory | (322,180) | (57,776) |
Prepaid expenses and other assets | $ 17,637 | (2,477) |
Due from related party | (28,652) | |
Accounts payable, accrued expenses and other | $ 1,253,527 | (393,838) |
Net cash provided by (used in) operating activities | (338,583) | $ 42,113 |
Cash flows from investing activities: | ||
Proceeds from disposals of property and equipment | 35,000 | |
Net cash provided by investing activities | 35,000 | |
Cash flows from financing activities: | ||
Net borrowings (repayments) on line of credit | 50,000 | $ (53,493) |
Proceeds from notes payable | 110,499 | 202,195 |
Bank overdraft | 157,619 | (48,092) |
Payments to notes payable | $ (1,000) | (206,871) |
Payments on capital leases | (31,441) | |
Net cash provided by (used in) financing activities | $ 317,118 | (137,702) |
Net increase (decrease) in cash and cash equivalents | 13,535 | (95,589) |
Cash and cash equivalents at beginning of period | 46,925 | 182,305 |
Cash and cash equivalents at end of period | $ 60,460 | 86,716 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | $ 158,815 | |
Cash paid for income taxes | ||
Supplemental disclosure of non-cash investing and financing activities: | ||
Debt discount resulting from derivative liability | $ 602,576 | $ 63,000 |
Return of property and equipment | 8,250 | |
Acquisition of property and equipment through line of credit | 224,250 | |
Interest added to principal | 124,031 | |
Shares issued for conversion of debt | 347,773 | |
Deemed dividend - Series B Preferred Stock | $ (225,500) |
Business
Business | 6 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business | 1. Business M. Line Holdings, Inc. (the Company) and its subsidiaries currently are engaged in the following businesses, which also represent its business segments: · E.M. Tool Company, Inc. dba Elite Machine Tool Company (Elite), its wholly owned subsidiary, acquires, refurbishes and sells pre-owned CNC machine tool equipment. This is the machine sales group. · 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. · M Line Business Services, Inc., (M Line Business) 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 related to the aerospace industry. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. Significant Accounting Policies Basis of presentation In the opinion of management, the accompanying interim consolidated balance sheets and 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 Companys annual report on Form 10-K for the fiscal year ended June 30, 2014 filed with the U.S. Securities and Exchange Commission (the Commission) on 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, Precision, and M Line Business . All intercompany 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. |
Going Concern and Management Pl
Going Concern and Management Plans | 6 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern and Management Plans | 3. Going Concern and Management Plans The Companys 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 $22,006,587 as of December 31, 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. 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 Companys 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. |
Inventories
Inventories | 6 Months Ended |
Dec. 31, 2014 | |
Inventory Disclosure [Abstract] | |
Inventories | 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 managements review of current inventory levels. The Company includes inventory costs, labor and overhead costs directly associated with manufacturing its product. Inventories as of December 31 and June 30, 2014 consist of the following: December. June 30, 2014 Finished goods and components $ 959,610 $ 1,112,647 CNC machines held for sale 511,000 152,000 Work in progress 446,781 327,620 Raw materials and parts 11,392 14,336 1,928,783 1,606,603 Less: Reserve for inventories (175,921 ) (175,921 ) Inventories, net. $ 1,752,862 $ 1,430,682 |
Accrued Expenses
Accrued Expenses | 6 Months Ended |
Dec. 31, 2014 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | 5. Accrued Expenses Accrued expenses and other as of December 31 and June 30, 2014 consist of the following: December June 30, Compensation and related benefits $ 2,209,233 $ 2,023,064 Audit Fees 50,000 46,000 Other 868,854 525,552 $ 3,128,087 $ 2,594,616 |
Capital Leases
Capital Leases | 6 Months Ended |
Dec. 31, 2014 | |
Leases, Capital [Abstract] | |
Capital Leases | 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 December 31, and June 30, 2014. December June 30, 2014 $ 53,901 $ 53,901 2015 46,426 46,426 Total minimum lease payments 100,327 100,327 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 |
Line of Credit
Line of Credit | 6 Months Ended |
Dec. 31, 2014 | |
Line of Credit Facility [Abstract] | |
Line of Credit | 7. Line of Credit TCA Global Master Credit Fund LP (TCA): The Company has an existing line of credit with TCA Global Credit Master Fund, LLC (TCA) in the amount of $10 million. As of December 31 and June 30, 2014, the Company has drawn $1,700,000 from the line of which $2,420,453 and $2,330,453 is outstanding as of December 31, 2014 and June 30, 2014. Amounts drawn from the line of credit are subject to interest and matured on October 31, 2013. The line was automatically renewed for a further six months and 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 is secured by the receivables and inventory and a second position on the equipment of Precision and the inventory and receivables of Elite together with a blanket lien over all of the Companys assets. During the six months ended December 31, 2014, additional interest of $90,000 was added to the balance of the line of credit. In October 2014, the Company also entered into a new line of credit with Eqfin, LLC in the amount of $300,000 to provide equipment finance for the purchase of equipment for our subsidiary, Elite. The line is subject to annual interest of 19% and matures on October 5, 2015. The Company has drawn $274,250 from the line which remains outstanding as of December 31, 2014. This line is secured by the equipment that is purchased by Elite. |
Notes Payable
Notes Payable | 6 Months Ended |
Dec. 31, 2014 | |
Notes Payable [Abstract] | |
Notes Payable | 8. Notes Payable Notes payable as of December 31 and June 30 consist of : December June 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. 56,120 57,120 An unsecured note payable to a corporation in weekday amounts of $841 each through February 2014. This note is in default. 105,350 105,350 525,040 526,040 Total of convertible and other notes 1,248,362 1,460,755 Less Debt discount (310,291 ) (317,977 ) TOTAL 938,071 1,142,778 Less Current Portion 814,048 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 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. In connection with one of the notes issued during the six months ended December 31, 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 six months ended December 31, 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. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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 $237,662 and $253,454 for the six months ended December 31, 2014 and 2013, respectively. Litigation Litigation payable as of December 31 and June 30, 2014 consist of the following: December 31, June 30, 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 Companys existing litigation proceedings are set forth below: 1. James M. Cassidy v. Gateway International Holdings, Inc. , American Arbitration Association, Case No. 73-194-32755-08 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 December 31 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. 2. CNC Manufacturing v. All American CNC Sales, Inc., Elite Machine Tool Company/Sales & Services, CNC Repos 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 December 31 and June 30, 2014 financial statements 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. 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, the Company has paid $1,500. The balance as of August 17, 2015 is $24,000 6 . Fadal Machining v. All American CNC Sales, et al 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. 7. C. William Kircher Jr. v. M Line Holdings, Inc. 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 December 31, 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 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 months 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 December 31 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., 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. 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 Banker case # 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 $2,420,453 and $2,330,453 in the financial statements that includes all interest and fees due to Plaintiff through December 31, and June 30, 2014, respectively. 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 Companys 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. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Dec. 31, 2014 | |
Equity [Abstract] | |
Shareholders 'Equity | 10. Shareholders Equity During the six months ended December 31, 2014, the Company issued the following shares of common stock: · 699,259,119 common shares were issued to financial institutions in connection with the conversion of debt and accrued interest totaling to $347,773. · On October 14, 2014, the Board agreed to issue 10,000,000 blank check preferred stock to Anthony Anish, the COO of the Company. These shares carry no par value and are designated as the Companys Series B preferred stock having only the following rights; The Series B stock shall be non-convertible, zero dividend, zero interest and carrying a voting power of the combined voting power of 50% of the Companys common and preferred stock while outstanding. The fair value of these shares amounting to $225,500 was recorded as a deemed dividend during the six months ended December 31, 2014. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Dec. 31, 2014 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 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. · 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 entitys 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. The following table presents the derivative financial instrument. The Companys only financial liability is measured and recorded at fair value on the Companys consolidated balance sheets on a recurring basis and their level of hierarchy as of December 31, 2014: Amount Level 1 Level 2 Level 3 Embedded conversion derivative liability $ 965,003 $ $ $ 965,003 Total $ 965,003 $ $ $ 965,003 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, 2014 $ 634,769 Fair value of warrant derivative liabilities at issuance, recorded as debt discount 602,576 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 651,172 Balance at December 31, 2014 $ 965,003 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 December 31, 2014 Market value of stock on measurement date $ 0.0012 - 0.0018 $ 0.0002 Risk-free interest rate 0.05 1.58 % 0.03 1.65 % Dividend yield 0 % 0 % Volatility factor 241 - 417 % 286 -402 % Term 0.51 - 5 years 0.10 4.63 years |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 12. Related Party Transactions As of December 31, 2014, the amount due from related party was $0 compared to $0 as at June 30, 2014. The amount due to an officer of the Company as at December 31, 2014 and June 30, 2014 was $35,594, This amount is for expenses of the Company paid personally by the Officer on behalf of the Company. |
Segments and Geographic Informa
Segments and Geographic Information | 6 Months Ended |
Dec. 31, 2014 | |
Segment Reporting [Abstract] | |
Segments and Geographic Information | 13. Segments and Geographic Information The Companys 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 Companys move and subsequent delay before production could start again. Segment information is as follows for the three months and six months ended December 31, 2014 and 2013: Segment Information for the three months ended December 31, 2014 Machine Precision Manufacturing Corporate Total Revenue $ 1,172,882 $ 331,422 $ $ 1,504,304 Interest Expense 40,500 45,000 268,435 353,935 Depreciation and Amortization 25,599 25,599 Income (loss) before taxes (169,182 ) (180,696 ) (645,912 ) (995,790 ) Total Assets 642,218 1,726,093 56,643 2,424,954 Capital Expenditure $ $ $ $ Segment Information for the three months ended December 31, 2013 Machine Precision Manufacturing Corporate Total Revenue $ 2,447,201 $ 859,179 $ $ 3,306,380 Interest Expense 40,306 60,528 119,516 220,350 Depreciation and Amortization 750 40,118 40,868 Income (loss) before taxes 34,199 474,097 (300,431 ) 207,865 Total Assets 1,076,182 2,746,680 19,176 3,842,038 Capital Expenditure $ $ $ $ Segment Information for the six months ended December 31, 2014 Machine Sales Precision Manufacturing Corporate Total Revenue $ 1,903,109 $ 558,675 $ $ 2,461,784 Interest Expense 72,000 90,000 256,716 418,716 Depreciation and Amortization 54,798 54,798 Income (loss) before taxes (486,884 ) (490,549 ) (1,555,891 ) (2,533,324 ) Total Assets 642,218 1,726,093 56,643 2,424,954 Capital Expenditure $ $ $ $ Segment Information for the six months ended December 31, 2013 Machine Sales Precision Manufacturing Corporate Total Revenue $ 4,206,759 $ 1,826,815 $ $ 6,033,574 Interest Expense 98,511 114,815 132,016 345,342 Depreciation and Amortization 1,500 83,753 85,253 Income (loss) before taxes 208,649 557,894 (389,917 ) 376,626 Total Assets 1,076,182 2,746,680 19,176 3,842,038 Capital Expenditure $ $ $ $ Sales are derived principally from customers located within the United States. No segment information has been provided for M Line Business Services, Inc. as the Company had not started trading prior to December 31, 2014 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
Subsequent Events | 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 Companys filings are current and will then receive $80,000 per month for 13 months and $60,000 in the 15 th · 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 the lowest price for the 20 consecutive days prior to conversion. |
Significant Accounting Polici20
Significant Accounting Policies (Policies) | 6 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation In the opinion of management, the accompanying interim consolidated balance sheets and 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 Companys annual report on Form 10-K for the fiscal year ended June 30, 2014 filed with the U.S. Securities and Exchange Commission (the Commission) on June 24, 2015. |
Principles of consolidation | Principles of consolidation The accompanying consolidated financial statements include the accounts of M Line Holdings, Inc. and its wholly owned subsidiaries Elite, Precision, and M Line Business . All intercompany accounts and transactions have been eliminated. |
Use of estimates | 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 | 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. |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Dec. 31, 2014 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories as of December 31 and June 30, 2014 consist of the following: December. June 30, 2014 Finished goods and components $ 959,610 $ 1,112,647 CNC machines held for sale 511,000 152,000 Work in progress 446,781 327,620 Raw materials and parts 11,392 14,336 1,928,783 1,606,603 Less: Reserve for inventories (175,921 ) (175,921 ) Inventories, net. $ 1,752,862 $ 1,430,682 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 6 Months Ended |
Dec. 31, 2014 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Accrued expenses and other as of December 31 and June 30, 2014 consist of the following: December June 30, Compensation and related benefits $ 2,209,233 $ 2,023,064 Audit Fees 50,000 46,000 Other 868,854 525,552 $ 3,128,087 $ 2,594,616 |
Capital Leases (Tables)
Capital Leases (Tables) | 6 Months Ended |
Dec. 31, 2014 | |
Leases, Capital [Abstract] | |
Schedule of future annual minimum lease payments | Future annual minimum lease payments are as follows as of December 31, and June 30, 2014. December June 30, 2014 $ 53,901 $ 53,901 2015 46,426 46,426 Total minimum lease payments 100,327 100,327 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 |
Notes Payable (Tables)
Notes Payable (Tables) | 6 Months Ended |
Dec. 31, 2014 | |
Notes Payable Tables | |
Schedule of notes payable | Notes payable as of December 31 and June 30 consist of : December June 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. 56,120 57,120 An unsecured note payable to a corporation in weekday amounts of $841 each through February 2014. This note is in default. 105,350 105,350 525,040 526,040 Total of convertible and other notes 1,248,362 1,460,755 Less Debt discount (310,291 ) (317,977 ) TOTAL 938,071 1,142,778 Less Current Portion 814,048 1,018,755 Long Term Portion $ 124,023 $ 124,023 2016 124,023 124,023 2017 2018 2019 Thereafter $ 124,023 $ 124,023 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of litigation payable | Litigation payable as of December 31and June 30, 2014 consist of the following: December 31, June 30, 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 |
Fair Value of Financial Instr26
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Dec. 31, 2014 | |
Fair Value Disclosures [Abstract] | |
Schedule of financial liability measured and recorded at fair value on recurring basis | The following table presents the derivative financial instrument. The Companys only financial liability is measured and recorded at fair value on the Companys consolidated balance sheets on a recurring basis and their level of hierarchy as of December 31, 2014: Amount Level 1 Level 2 Level 3 Embedded conversion derivative liability $ 965,003 $ $ $ 965,003 Total $ 965,003 $ $ $ 965,003 |
Schedule of changes in fair value | 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, 2014 $ 634,769 Fair value of warrant derivative liabilities at issuance, recorded as debt discount 602,576 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 651,172 Balance at December 31, 2014 $ 965,003 |
Schedule of assumptions used for derivative instrument | The following are the assumptions used for derivative instrument valued using the Black Scholes option pricing model: At Issuance December 31, 2014 Market value of stock on measurement date $ 0.0012 - 0.0018 $ 0.0002 Risk-free interest rate 0.05 1.58 % 0.03 1.65 % Dividend yield 0 % 0 % Volatility factor 241 - 417 % 286 -402 % Term 0.51 - 5 years 0.10 4.63 years |
Segments and Geographic Infor27
Segments and Geographic Information (Tables) | 6 Months Ended |
Dec. 31, 2014 | |
Segments And Geographic Information Tables | |
Schedule of segment information | Segment information is as follows for the three months and six months ended December 31, 2014 and 2013: Segment Information for the three months ended December 31, 2014 Machine Precision Manufacturing Corporate Total Revenue $ 1,172,882 $ 331,422 $ $ 1,504,304 Interest Expense 40,500 45,000 268,435 353,935 Depreciation and Amortization 25,599 25,599 Income (loss) before taxes (169,182 ) (180,696 ) (645,912 ) (995,790 ) Total Assets 642,218 1,726,093 56,643 2,424,954 Capital Expenditure $ $ $ $ Segment Information for the three months ended December 31, 2013 Machine Precision Manufacturing Corporate Total Revenue $ 2,447,201 $ 859,179 $ $ 3,306,380 Interest Expense 40,306 60,528 119,516 220,350 Depreciation and Amortization 750 40,118 40,868 Income (loss) before taxes 34,199 474,097 (300,431 ) 207,865 Total Assets 1,076,182 2,746,680 19,176 3,842,038 Capital Expenditure $ $ $ $ Segment Information for the six months ended December 31, 2014 Machine Sales Precision Manufacturing Corporate Total Revenue $ 1,903,109 $ 558,675 $ $ 2,461,784 Interest Expense 72,000 90,000 256,716 418,716 Depreciation and Amortization 54,798 54,798 Income (loss) before taxes (486,884 ) (490,549 ) (1,555,891 ) (2,533,324 ) Total Assets 642,218 1,726,093 56,643 2,424,954 Capital Expenditure $ $ $ $ Segment Information for the six months ended December 31, 2013 Machine Sales Precision Manufacturing Corporate Total Revenue $ 4,206,759 $ 1,826,815 $ $ 6,033,574 Interest Expense 98,511 114,815 132,016 345,342 Depreciation and Amortization 1,500 83,753 85,253 Income (loss) before taxes 208,649 557,894 (389,917 ) 376,626 Total Assets 1,076,182 2,746,680 19,176 3,842,038 Capital Expenditure $ $ $ $ |
Going Concern and Management 28
Going Concern and Management Plans (Details Narrative) - USD ($) | Dec. 31, 2014 | Jun. 30, 2014 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ 22,006,587 | $ 19,473,263 |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2014 | Jun. 30, 2014 |
Inventory Disclosure [Abstract] | ||
Finished goods and components | $ 959,610 | $ 1,112,647 |
CNC machines held for sale | 511,000 | 152,000 |
Work in progress | 446,781 | 327,620 |
Raw materials and parts | 11,392 | 14,336 |
Inventory, gross | 1,928,783 | 1,606,603 |
Less: Reserve for inventories | (175,921) | (175,921) |
Inventories, net | $ 1,752,862 | $ 1,430,682 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Dec. 31, 2014 | Jun. 30, 2014 |
Payables and Accruals [Abstract] | ||
Compensation and related benefits | $ 2,209,233 | $ 2,023,064 |
Audit fees | 50,000 | 46,000 |
Other | 868,854 | 525,552 |
Accrued Liabilities and Other Liabilities | $ 3,128,087 | $ 2,594,616 |
Capital Leases (Details)
Capital Leases (Details) - USD ($) | Dec. 31, 2014 | Jun. 30, 2014 |
Leases, Capital [Abstract] | ||
2,014 | $ 53,901 | $ 53,901 |
2,015 | 46,426 | 46,426 |
Total minimum lease payments | 100,327 | 100,327 |
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 |
Line of Credit (Details Narrati
Line of Credit (Details Narrative) - USD ($) | 6 Months Ended | ||
Dec. 31, 2014 | Oct. 02, 2014 | Jun. 30, 2014 | |
Line of credit, amount drawn | $ 1,700,000 | $ 1,700,000 | |
Line of credit, amount outstanding | 2,420,453 | $ 2,330,453 | |
TCA Global Master Credit Fund LP ("TCA") [Member] | |||
Line of credit, amount outstanding | $ 10,000,000 | ||
Debt repayment period | 15 months | ||
Additional interest | $ 90,000 | ||
Eqfin, LLC [Member] | |||
Line of credit, amount drawn | 274,250 | ||
Line of credit, amount outstanding | $ 274,250 | $ 300,000 | |
Annual interest | 19.00% |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - Dec. 31, 2014 | USD ($)Number$ / sharesshares |
Notes Payable [Abstract] | |
Number of warrants issued | shares | 15,625,000 |
Warrants Term | 5 years |
Exercise price of warrants | $ / shares | $ 0.0016 |
Fair value of warrants | $ 28,125 |
Debt beneficial conversion feature | $ 347,773 |
Number of equity instrument issued | Number | 699,259,119 |
Loss on debt extinguishment | $ 1,089,040 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 6 Months Ended | |
Dec. 31, 2014 | Jun. 30, 2014 | |
Total of convertible notes | $ 723,322 | $ 934,715 |
Total of other non convertible notes | 525,040 | 526,040 |
Total of convertible and other notes | 1,248,362 | 1,460,755 |
Less discount | (310,291) | (317,977) |
TOTAL | 938,071 | 1,142,778 |
Less: current portion | 814,048 | 1,018,755 |
Long term portion | 124,023 | 124,023 |
2,016 | $ 124,023 | $ 124,023 |
2,017 | ||
2,018 | ||
2,019 | ||
Thereafter | ||
Long term debt maturities repayements | $ 124,023 | $ 124,023 |
5% One Unsecured Convertible Note Payable Due March 4, 2015 [Member] | ||
Total of convertible notes | $ 130,200 | 110,000 |
Description of conversion term | This note can be converted to common stock at 55% of the lowest closing price in the 20 trading days prior to conversion. | |
8% Two Unsecured Convertible Note Payable Due February 12, 2015 [Member] | ||
Total of convertible notes | $ 40,804 | 50,000 |
Description of conversion term | 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. | |
12% Unsecured Convertible Note Payable Due January 31, 2015 [Member] | ||
Total of convertible notes | $ 11,500 | 21,500 |
Description of conversion term | This note can be converted to common stock at 55% of the lowest closing price in the 5 trading days prior to conversion. | |
12% Unsecured Convertible Note Payable February 12, 2016 [Member] | ||
Total of convertible notes | $ 40,710 | 50,631 |
Description of conversion term | 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. | |
Two Unsecured Convertible Note Payable [Member] | ||
Total of convertible notes | $ 16,144 | 105,674 |
Description of conversion term | 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. | |
8% Two Unsecured Convertible Note Payable Due May 30, 2015 [Member] | ||
Total of convertible notes | $ 83,855 | 160,674 |
Description of conversion term | 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. | |
Four Unsecured Convertible Note Payable [Member] | ||
Total of convertible notes | $ 220,109 | 225,562 |
Description of conversion term | 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. | |
8% Three Unsecured Convertible Note Payable [Member] | ||
Total of convertible notes | $ 130,000 | 160,674 |
Description of conversion term | 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. | |
8% Unsecured Convertible Note Payable Due June 10, 2015 [Member] | ||
Total of convertible notes | $ 50,000 | 50,000 |
Description of conversion term | 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. | |
Notes Payable to Financial Institution Due October 2016 [Member] | ||
Total of other non convertible notes | $ 247,811 | 247,811 |
Description of conversion term | 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. | |
Two Unsecured Convertible Note Payable [Member] | ||
Total of other non convertible notes | $ 75,459 | 75,459 |
Description of conversion term | 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. | |
Unsecured Note Payable Due June 25, 2015 [Member] | ||
Total of other non convertible notes | $ 40,300 | 40,300 |
Description of conversion term | 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. | |
Unsecured Note Payable Due October 2015 [Member] | ||
Total of other non convertible notes | $ 56,120 | 57,120 |
Description of conversion term | 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. | |
Unsecured Note Payable [Member] | ||
Total of other non convertible notes | $ 105,350 | $ 105,350 |
Description of conversion term | An unsecured note payable to a corporation in weekday amounts of $841 each through February 2014. This note is in default. |
Commitments and Contingencies35
Commitments and Contingencies (Details Narrative) - USD ($) | Aug. 17, 2015 | May. 31, 2015 | May. 31, 2011 | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Jun. 02, 2015 |
Rent Expense | $ 237,662 | $ 253,454 | |||||
Litigation payable | $ 287,500 | $ 287,500 | |||||
Shares issued for deposit (in shares) | 699,259,119 | ||||||
James M. Cassidy V. Gateway International Holdings, Inc [Member] | |||||||
Lawsuit filing date | September 16, 2008 | ||||||
Damages sought, value | $ 195,000 | ||||||
Cnc Manufacturing V. All American Cnc Sales, Inc., [Member] | |||||||
Lawsuit filing date | October 2, 2008 | ||||||
Damages sought, value | $ 138,750 | ||||||
Damages awarded value | $ 37,500 | $ 37,500 | |||||
Settlement agreement, date | September 30, 2014 | June 30, 2014 | |||||
Donald Yu v M Line Holdings [Member] | |||||||
Damages awarded value | $ 24,000 | ||||||
Settlement agreement, date | September 30, 2013 | ||||||
Settlement agreement consideration 1 | $ 21,450 | ||||||
Settlement agreement periodic payments | 12,000 | ||||||
Damages paid value | $ 12,000 | ||||||
Fadal Machining V. All American Cnc Sales, Et Al., [Member] | |||||||
Lawsuit filing date | June 12, 2009 | ||||||
Damages sought, value | $ 163,579 | ||||||
Settlement agreement, date | May 31, 2011 | ||||||
Settlement agreement, terms | A settlement agreement in the amount of $60,000 was signed on May 31, 2011. | ||||||
Accrual, carrying value, provision | $ 210,000 | ||||||
C. William Kircher Jr. V M Line Holdings, Inc. [Member] | |||||||
Settlement agreement periodic payments | $ 5,000 | ||||||
Settlement agreement, terms | 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. | ||||||
Legal fees | $ 120,166 | ||||||
Shares issued for deposit (in shares) | 150,000 | ||||||
Accrual, carrying value, provision | $ 50,000 | $ 50,000 | |||||
All Direct Travel Services Inc. Vs Jitu Banker [Member] | |||||||
Estimate of possible loss | 2,000 | ||||||
Timothy D Consalviv M Line Holdings Incetal [Member] | |||||||
Damages sought, value | $ 40,000 | ||||||
Settlement agreement, terms | A settlement of $50,000 was reached in this case, requiring payments commencing on March 11, 2011 for 10 months. | ||||||
Accrual, carrying value, payments | $ 50,000 | ||||||
Accrual, carrying value, provision | $ 40,000 | 40,000 | |||||
Subramani Srinivasan, et al. v. M Line Holdings, Inc [Member] | |||||||
Settlement agreement, date | January 22, 2015 | ||||||
Settlement agreement periodic payments | $ 20,000 | ||||||
Subramani Srinivasan, et al. v. M Line Holdings, Inc [Member] | Subsequent Event [Member] | |||||||
Litigation payable | $ 20,000 | ||||||
Can Capital Asset Servicing, Inc. v. E.M. Tool Company, Inc [Member] | |||||||
Settlement agreement, date | May 15, 2015 | ||||||
Settlement agreement consideration 1 | $ 58,313 | ||||||
Settlement agreement periodic payments | 50,000 | ||||||
Accrual, carrying value, payments | $ 24,000 | 25,500 | |||||
Reduction amount | $ 1,500 | ||||||
Accrual, carrying value, provision | $ 10,000 | ||||||
Fadal Machining V. All American Cnc Sales, Et Al., [Member] | |||||||
Accrual, carrying value, provision | $ 60,000 | 210,000 | |||||
TCA Global Credit Master Fund, L.P [Member] | |||||||
Lawsuit filing date | July 1, 2014 | ||||||
Settlement agreement, date | September 5, 2014 | ||||||
Settlement agreement periodic payments | $ 1,200,000 | ||||||
Accrual, carrying value, payments | $ 2,420,453 | $ 2,330,453 | |||||
Global Vantage Ltd [Member] | |||||||
Lawsuit filing date | August 7, 2014 |
Commitments and Contingencies36
Commitments and Contingencies (Details) - USD ($) | Dec. 31, 2014 | Jun. 30, 2014 |
Litigation payable | $ 287,500 | $ 287,500 |
Unsecured Note Various Parties [Member] | ||
Litigation payable | 210,000 | 210,000 |
Unsecured note payable to corporation settlement of lawsuit payable [Member] | ||
Litigation payable | $ 77,500 | $ 77,500 |
Shareholders' Equity (Details N
Shareholders' Equity (Details Narrative) - USD ($) | Oct. 14, 2014 | Dec. 31, 2014 | Dec. 31, 2014 |
Shares issued for debt repayment, Shares | 699,259,119 | ||
Shares valued for debt settlement | $ 347,773 | ||
Preferred stock voting rights | The Series A stock shall be non-convertible, zero dividend, zero interest and carrying a voting power of the combined voting power of 50% of the Companys common and preferred stock while outstanding. | ||
Deemed dividend | $ 225,500 | $ 225,500 | |
Anthony Anish COO [Member] | Series B Preferred Stock [Member] | |||
Stock issued | $ 10,000,000 | ||
Deemed dividend | $ (225,500) |
Fair Value of Financial Instr38
Fair Value of Financial Instruments (Details) - Fair Value, Measurements, Recurring [Member] | Dec. 31, 2014USD ($) |
Embedded conversion derivative liability | $ 965,003 |
Level 1 [Member] | |
Embedded conversion derivative liability | |
Level 2 [Member] | |
Embedded conversion derivative liability | |
Level 3 [Member] | |
Embedded conversion derivative liability | $ 965,003 |
Embedded conversion derivative liability [Member] | |
Embedded conversion derivative liability | $ 965,003 |
Embedded conversion derivative liability [Member] | Level 1 [Member] | |
Embedded conversion derivative liability | |
Embedded conversion derivative liability [Member] | Level 2 [Member] | |
Embedded conversion derivative liability | |
Embedded conversion derivative liability [Member] | Level 3 [Member] | |
Embedded conversion derivative liability | $ 965,003 |
Fair Value of Financial Instr39
Fair Value of Financial Instruments (Details 1) - Embedded conversion derivative liability [Member] | 6 Months Ended |
Dec. 31, 2014USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance | $ 634,769 |
Fair value of warrant derivative liabilities at issuance, recorded as debt discount | 602,576 |
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 | 651,172 |
Balance | $ 965,003 |
Fair Value of Financial Instr40
Fair Value of Financial Instruments (Details 2) - Dec. 31, 2014 - Embedded conversion derivative liability [Member] - $ / shares | Total |
Market value of stock on measurement date | $ 0.0002 |
Dividend yield | 0.00% |
Minimum [Member] | |
Risk-free interest rate | 0.03% |
Volatility factor | 286.00% |
Term | 1 month 6 days |
Maximum [Member] | |
Risk-free interest rate | 1.65% |
Volatility factor | 402.00% |
Term | 4 years 7 months 16 days |
At Issuance [Member] | |
Dividend yield | 0.00% |
At Issuance [Member] | Minimum [Member] | |
Market value of stock on measurement date | $ 0.0012 |
Risk-free interest rate | 0.05% |
Volatility factor | 241.00% |
Term | 6 months 3 days |
At Issuance [Member] | Maximum [Member] | |
Market value of stock on measurement date | $ 0.0018 |
Risk-free interest rate | 1.58% |
Volatility factor | 417.00% |
Term | 5 years |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Dec. 31, 2014 | Jun. 30, 2014 |
Related Party Transactions [Abstract] | ||
Due from related parties | $ 0 | $ 0 |
Due to officers | $ 35,954 | $ 35,954 |
Segments and Geographic Infor42
Segments and Geographic Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | |
Revenue | $ 1,504,304 | $ 3,306,380 | $ 2,461,784 | $ 6,033,574 | |
Interest Expense | 353,935 | 220,350 | 418,716 | 345,342 | |
Depreciation and Amortization | 25,599 | 40,868 | 54,798 | 85,253 | |
Income (loss) before taxes | (995,790) | 207,865 | (2,533,324) | 376,626 | |
Total Assets | $ 2,424,954 | $ 3,842,038 | $ 2,424,954 | $ 3,842,038 | $ 2,243,349 |
Capital Expenditure | |||||
Machine Sales [Member] | |||||
Revenue | $ 1,172,882 | $ 2,447,201 | $ 1,903,109 | $ 4,206,759 | |
Interest Expense | $ 40,500 | 40,306 | $ 72,000 | 98,511 | |
Depreciation and Amortization | 750 | 1,500 | |||
Income (loss) before taxes | $ (169,182) | 34,199 | $ (486,884) | 208,649 | |
Total Assets | $ 642,218 | $ 1,076,182 | $ 642,218 | $ 1,076,182 | |
Capital Expenditure | |||||
Precision Manufacturing [Member] | |||||
Revenue | $ 331,422 | $ 859,179 | $ 558,675 | $ 1,826,815 | |
Interest Expense | 45,000 | 60,528 | 90,000 | 114,815 | |
Depreciation and Amortization | 25,599 | 40,118 | 54,798 | 83,753 | |
Income (loss) before taxes | (180,696) | 474,097 | (490,549) | 557,894 | |
Total Assets | $ 1,726,093 | $ 2,746,680 | $ 1,726,093 | $ 2,746,680 | |
Capital Expenditure | |||||
Corporate [Member] | |||||
Revenue | |||||
Interest Expense | $ 268,435 | $ 119,516 | $ 256,716 | $ 132,016 | |
Depreciation and Amortization | |||||
Income (loss) before taxes | $ (645,912) | $ (300,431) | $ (1,555,891) | $ (389,917) | |
Total Assets | $ 56,643 | $ 19,176 | $ 56,643 | $ 19,176 | |
Capital Expenditure |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Aug. 07, 2015USD ($)Number | Jan. 15, 2015USD ($) | Mar. 31, 2015USD ($)shares | Mar. 03, 2015shares | Dec. 31, 2014shares | Jun. 30, 2014shares |
Shares issued | shares | 942,437,603 | 243,178,484 | ||||
Subsequent Event [Member] | ||||||
Value of convertable debt | $ 6,283 | |||||
Number of convertable shares issued | shares | 57,118,182 | |||||
Short term loan | $ 10,720 | |||||
Description of loan converted to stock | 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 the lowest price for the 20 consecutive days prior to conversion. | |||||
Debt instrument payement | $ 1,780 | |||||
Debt instrument, convertible, percentage of stock price (as a percent) | 125.00% | |||||
Discount to market based | 50.00% | |||||
Debt instrument, convertible, trading days | Number | 20 | |||||
Subsequent Event [Member] | TCA [Member] | ||||||
Agreement settlement amount | $ 100,000 | |||||
Subsequent Event [Member] | TCA [Member] | Pending Litigation Amount [Member] | ||||||
Agreement settlement amount | $ 80,000 | |||||
Agreement settlement amount term for pending amount | 13 months | |||||
Pending settlement amount in fifteenth month | $ 60,000 | |||||
Subsequent Event [Member] | Two officers [Member] | ||||||
Shares issued | shares | 200,000,000 |