UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

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

For the fiscal year ended June 30, ~~2013~~2014

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

For the transition period from_____________ to _____________.

Commission file number 000-53265

M LINE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization)	88-0375818 (I.R.S. Employer Identification No.)
2672 Dow Avenue Tustin, CA (Address of principal executive offices)	92780 (Zip Code)
2232 E. Orangethorpe Avenue Anaheim, CA (Address of principal executive offices)	92806 (Zip Code)

Registrant’s telephone number, including area code (714) 630-6253

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered

None		None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.001

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes x No ¨

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (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 No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant'’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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

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

Aggregate market value of the voting stock held by non-affiliates: $~~595~~ 204,~~594~~606 as based on last reported sales price of such stock. The voting stock held by non-affiliates on that date ~~consisted~~ consisted of 29204,~~779~~605,~~701~~940 shares of common stock.

Applicable Only to Registrants Involved in Bankruptcy Proceedings During the Preceding Five Years:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of ~~December~~June 1823, ~~2013~~2015, there were 751,~~306~~199,~~275~~555,785 of common stock, par value $0.001, issued and outstanding.

Documents Incorporated by Reference

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to rule 424(b) or (c) of the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). None.

M Line Holdings, Inc.

TABLE OF CONTENTS

PART I
ITEM 1 – BUSINESS	1	1
ITEM 1B – UNRESOLVED STAFF COMMENTS	15	12
ITEM 2 - PROPERTIES	16	13
ITEM 3 - LEGAL PROCEEDINGS	16	13
ITEM 4 – (REMOVED AND RESERVED)	20	17
PART II
ITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	21	17
ITEM 6 – SELECTED FINANCIAL DATA	24	18
ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION	25	19
ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33	26
ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	33	26
ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	34	27
ITEM 9A – CONTROLS AND PROCEDURES	34	27
ITEM 9B – OTHER INFORMATION	35	28
PART III
ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE		28
ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNACE	36
ITEM 11 – EXECUTIVE COMPENSATION	38	30
ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	42	32
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	44	33
ITEM 14 – PRINCIPAL ACCOUNTING FEES AND SERVICES	44	34
PART IV
ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES	45	35

PART I

Explanatory Note

This Annual Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”). These ~~statements~~ statements are based on management’s beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning possible or assumed future results of operations of the Company set forth under the heading “Management'’s Discussion and Analysis of Financial Condition or Plan of Operation.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider” or similar expressions are used.

Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. The Company'’s future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.

ITEM 1 – BUSINESS

Corporate History

M Line Holdings, Inc. (“We,” “M Line” or “Company”) was incorporated in Nevada on September 24, 1997~~, under the name Gourmet Gifts, Inc~~. ~~Prior~~Currently toM ~~December~~Line 11Holdings, ~~2001, we were engaged in the business of catalogue retail gifts~~Inc. Athas ~~the~~two ~~time,~~operating ~~our principal business activity entailed the packaging~~subsidiaries, sale and delivery of seasonal gourmet food and beverage items. However, due to difficulty in raising additional working capital to execute our business plan, we ceased operations, and subsequently completed a reverse merger with E.M. ~~Tool~~tool Company, Inc., adba ~~California corporation d.b.a.~~ Elite Machine Tool ~~Company~~and ~~(“Elite~~Precision Aerospace ~~Machine”)~~and Technologies, Inc.

Acquisition of Elite Machine and Reverse Acquisition Accounting

On December 11, 2001, we finalized an agreement to acquire 100% of the issued and outstanding capital stock of E.M. Tool Co., Inc. dba Elite Machine Tool (“Elite Machine”) . Immediately prior to the merger, we had 100,000,000 shares authorized, of which 6,768,000 shares were outstanding. Pursuant to the merger, all of the outstanding shares of Elite Machine, aggregating 21,262 shares, were exchanged for shares of our common stock on a 1 to 1,274 basis or into 27,072,000 (net of 600,000 shares subsequently cancelled) shares of our common stock leaving a total of 33,240,000 shares of common stock issued and outstanding after the merger. Immediately after the merger, our previous officers and directors resigned and the executive officers and directors of Elite Machine were elected and appointed to such positions, thereby effecting a change of control.

Due to the change in voting control and change in senior management in Gateway as a result of the merger, the transaction was recorded as a “reverse-merger” whereby Elite Machine was considered to be the acquirer for accounting purposes. At the closing of the reverse merger, Elite Machine became our wholly-owned subsidiary and we changed our corporate name to Gateway International Holdings, Inc., effective January 28, 2002.

Gateway International Holdings, Inc. changed its name to M Line Holdings, Inc. effective March 25, 2009.

After the merger, through Elite Machine, we were a company engaged in the acquisition, refurbishment, distribution and sales of pre-owned computer numerically controlled (“CNC”) machine tools to manufacturing customers across the United States of America. This was our sole business from this point until we acquired the additional businesses listed herein.

Acquisition of Precision Aerospace and Technologies, Inc. (formerly Eran Engineering, Inc.)

In October, 2003, pursuant to a Stock Purchase Agreement, dated June 17, 2003, we acquired all the issued and outstanding shares of Precision Aerospace and Technologies, Inc. (“Precision”) formerly Eran Engineering), a California corporation, from its two shareholders, Hans B. Thallmayer and Alice Thallmayer, for an aggregate purchase price of $1,250,000. In addition to a cash payment of $650,000, which was credited to the purchase price, we executed a promissory note in favor of the sellers in the principal amount of $600,000, payable in three equal annual installments of $200,000 and accruing simple interest at the rate of six percent (6%) per annum. Our obligation under the promissory note was secured by the pledge by Lawrence A. Consalvi, a former Director and former President and Chief Executive Officer, and Joseph T.W. Gledhill, a former Vice President and Director, of a security interest in certain shares of our common stock worth approximately $4,285,716 as of the date of the pledge. Concurrently with the closing of the acquisition, Precision (formerly Eran Engineering) purchased from R & H Investments, a partnership owned by the two selling shareholders of Precision (formerly Eran Engineering), the building in which Precision (formerlyEran Engineering) operates its business. The purchase price for the building was $1,250,000, and was paid as follows:

· $650,000 in cash and;

· A promissory note in the principal amount of $600,000, bearing simple interest at the rate of 6% per annum.

The cash portion of the purchase price paid by us for Precision (formerly Eran Engineering) and the building was financed pursuant to a term loan from Financial Federal Credit (“FFC”), in the principal amount of $1,300,000. The loan from FFC was primarily secured by a deed of trust on the building acquired by Precision and a security interest in all the equipment owned by Precision This note has been paid in full.

Further, in connection with the acquisition, Precision entered into employment agreements with Erich Thallmayer to serve as the President and Chief Executive Officer of Precision at an annual base salary of $105,600 and with Hans Thallmayer to serve as its Operating Manager at an annual base salary of $90,000. Our former Director and Vice President, Joseph T.W. Gledhill, subsequently replaced Erich Thallmayer as the company's President and Chief Executive Officer. Hans Thallmayer is no longer employed as the company's Operating Manager. We have no obligation to either Erich Thallmayer or Hans Thallmayer in connection with their past employment agreements.

As discussed below, Precision manufactures and assembles specialized, precision components used primarily in the commercial aviation, medical, and defense industries. In 2007 Precision moved its manufacturing plant to Tustin and the building purchased in the acquisition was sold. Barton Webb was appointed in July 2011 to serve as the President of Precision.

Precision Aerospace and Technologies, Inc. a Nevada Corporation (“Precision”) was formed in April 2013 and Eran Engineering, Inc. was merged into Precision.

Re-Registration of our Common Stock

On May 16, 2008, we filed a registration statement on Form 10 to re-register our common stock, that had been delisted in May 2006, under Section 12 of the Exchange Act. As a result, on July 15, 2008, we became subject to the reporting requirements under the Exchange Act. Effective November 23, 2009, our common stock was re-listed on the OTC Bulletin Board under the symbol “MLHC.”

Business Overview

We currently conduct ~~all of~~ our operations primarily through two of our two wholly-owned subsidiaries: E. M. Tool Company, Inc. dba ~~Elite~~ Elite Machine Tool ~~Company~~(“Elite Machine”) and Precision Aerospace & Technologies, Inc. (formerly Eran Engineering) (“Precision”). ~~Through~~ Elite Machine ~~we refurbish~~refurbishes and ~~sell~~sells pre-owned CNC (computer numerically controlled) machine tool equipment and ~~service~~also services and ~~rebuild~~rebuilds 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 it’s customers.

Our services and products are primarily marketed and sold to the commercial aviation, ~~and defence~~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 addition to the above M Line Holdings, inc. provides financial services to customers. The services incl;ude advice and support in the following areas of corporate business.

Raising new capital.

Management support in relation to financial control and management of the business.

Advise, support and referrals in relation to stock listings, reverse mergers and lsiting on various US and European exchanges.

Sales and support where applicable specifically in relation to the aerospace industry providing referrals etc.

Any other customer needs where our team has expertise.

The new business will be managed by a wholly owned subsidiary, M Line Financial Services, Inc. (a Nevada corporation) that was formed subsequent to the year end.

Machine Sales Group

The Machine Sales Group is currently composed of one subsidiary, Elite Machine, 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.

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 ~~Japannes~~Japanese manufactured machine Tools.

For the years ended June 30, ~~2013~~2014, and ~~2012~~2013, the Machine and Tools Group accounted for $56,~~810~~593,~~909~~151 (6275.328%) and $5,~~929~~810,~~967~~909 (5862.2632%) of our total sales, respectively. This segment of our business also accounted for 6674.68% and 3166.6% of our gross profits for the years ended June 30, ~~2013~~2014, and ~~2012~~2013, respectively.

(a)

Company Overview

Elite Machine, our wholly owned subsidiary is a California corporation and was founded in 1990 by our former Director and Executive Vice President, and Manager Lawrence A. Consalvi. Mr. Consalvi was previously the President of Elite Machine. ~~Through the reverse merger transaction described above,~~ Elite Machine ~~became our wholly-owned subsidiary. Elite Machine~~ specializes in the sale of preowned CNC machine tools including Mori Seiki, and other high end ~~Japoanes~~ Japanese manufactured machine tools. Elite Machine is a leading dealer of pre-owned CNC machines in the Western United States. Elite Machine purchases pre-owned CNC machinery from Japan, Europe, ~~and~~but primarily in the United States, and inspects and where necessary repairs and refurbishes the machine tools prior to resale. ~~the~~The refurbishing completed on CNC machines it purchases typically includes painting, replacing parts, and servicing the machine.

(b)

Principal Products and Services.

Elite Machines is in the business of selling CNC machines. However, the company does not manufacture its own CNC machines. Elite Machine buys used CNC machines, ~~refurbishes~~ refurbishes them and sells them. CNC machines use commands from an onboard computer to control the movement of cutting tools and the rotation speeds of the part being produced. The computer controls enable the operator to program specific operations, ~~such~~ such as part rotation, ~~and~~ tooling selection and movement, for a particular part and then store that program in memory for future use. The machines are ~~then~~ typically used to mass produce a particular part. This helps ensure ~~all~~that the same parts are identical. The machine can ~~then~~ be reprogrammed to manufacture a different part depending on the needs of the customer.

Elite Machine purchases all the pre-owned machines it sells, bears the risk of reselling the machines, and is responsible for all costs incurred in order to resell the machines. Normally the machines sold by Elite Machine are sold “as is.” However, Elite Machine does offer a limited warranty to the purchasers of the used CNC machines it sells, but the company is planning on moving away from this practice. Currently, approximately 4070% of Elite Machine’s customers purchase with some type of warranty with most on a 30-day warranty.

(c)

Product Manufacturing.

Elite Machine does not manufacture any of its own products.

Elite Machine locates CNC machines for resale through relationships with past customers and through its marketing efforts, the monitoring of both internet and direct mail sale boards, and personal relationships with machine tool companies. Elite Machine purchases the machines on credit terms or cash on delivery. Machines are purchased based upon the desirability of the model and make and the age and condition of the machine. Refurbishment generally entails cleaning the machine, spot painting and testing for basic functionality. All machines are either sold on an “as is” or a warranty basis, typically with 30-day expiration, and Elite generally provides installation of the machine in the customer’s facility.

(d)

Sales, Marketing and Distribution.

The Elite Machine product line consists primarily of pre-owned CNC machines. These machines are predominately marketed through our in-house sales staff. Sales personnel are assigned regions and sell the machines in their territory. Used machines are sold on a warranty basis, typically with a 30-day expiration, and generally ~~include~~includes installation of the machine at the customer’s location. We also sell machine tools through alternative channels such as the internet, auctions and ~~auctions~~other machine sales operations.

On September 24, 2008, Lawrence A. Consalvi resigned from his position as President of Elite Machine. ~~Currently~~ Mr. Consalvi ~~manages~~became ~~Elite~~the General Manager of Elite Machine effective September 24, 2008 through the date of his resignation from the company on January 31, 2015.

(e)

New Product Development.

Due to Elite Machine selling machines manufactured by third parties, as opposed to being a manufacturing company, the company does not engage in new product development. However, the company does advise the CNC machine manufacturers regarding customer needs and requirements to assist with their future machine development.

(f)

Competition.

Our competitors in the machine tool industry consist of a large fragmented group of companies, including certain business units or affiliates of our customers. Our management believes that competition within the industry will not increase significantly as the barrier to entry carries a very high cost. However ~~however~~ industry consolidations and trends toward favoring greater outsourcing of components and a reduction in the number of preferred suppliers will increase. Certain of our competitors may have substantially greater financial, production and other resources and may have (i) the ability to adapt more quickly to changes in customer requirements and industry conditions or trends, (ii) stronger relationships with customers and suppliers, and (iii) greater name recognition.

(g)

Sources and Availability of Raw Materials.

All of the machines and parts sold by the Machine Sales Group are manufactured by third parties so we do not directly purchase any raw materials. However, the third party companies that manufacture CNC machines rely on the availability of a variety of raw materials, primarily metals such as steel and aluminum, but none of the primary raw materials are scarce and we do not anticipate the third party manufacturers will have any problems obtaining these raw materials.

The major third party company that manufactures CNC machines is DMG Mori Seki.

(h)

Dependence on Major Customers.

Our Machine Sales Group does not depend on one or two major customers. In fact, the largest single customer of this group accounted for less than 10% of the total revenue for this group.

(i)

Patents, Trademarks and Licenses.

Elite Machine does not have any patents or licenses, or other intellectual property.

(j)

Need for Government Approval.

As noted above, Elite Machine does not manufacture its own ~~products~~product, it merely sells ~~used~~pre-owned CNC machines. As sellers of ~~used~~pre-owned CNC machines, Elite Machine does not need government approval to operate its business.

(k)

Effect of Government Regulation on Business.

As noted above, Elite Machine does not manufacture its own ~~products~~product, they merely sell ~~used~~pre-owned CNC machines. As sellers of ~~used~~pre-owned CNC machines, Elite Machine is not subject to onerous government regulation.

However, in as much as Elite Machine refurbishes used CNC machines to resell, it maintains strict control standards on the maintenance and use of its equipment to ensure employee safety during the refurbishing process.

(l)

Research and Development.

Because Elite Machine sells products manufactured by third parties this business segment does not spend a material amount on research and development.

(m)

Effects of Compliance with Environmental Laws.

The machine tool industry is subject to environmental laws and regulations concerning emissions into the air, discharges into waterways, and the generation, handling, storage and disposal of waste materials, some of which may be hazardous. CNC machines contain coolants which are deemed as hazardous waste and must be disposed of according to the laws of specific jurisdictions. In addition, we perform spot painting of machines during the re-furbishing process. As required we provide for waste containers for coolants and cleaning products and contract with a hazardous waste company for proper disposal.

We strive to comply with all applicable environmental, health and safety laws and regulations. We believe that our operations are in compliance with all applicable laws and regulations on environmental matters. These laws and regulations, on federal, state and local levels, are evolving and frequently modified and we cannot predict accurately the effect, if any, they will have on its business in the future. In many instances, the regulations have not been finalized, or are frequently being modified. Even where regulations have been adopted, they are subject to varying and contradicting interpretations and implementation. In some cases, compliance can only be achieved by capital expenditure and we cannot accurately predict what capital expenditures, if any, may be required.

Environmental laws could become more stringent over time, imposing greater compliance costs and increasing risks and penalties associated with any violations. As a generator of hazardous materials, we are subject to financial exposure with regard to intentional or unintentional violations. In addition, we utilize facilities located in industrial areas with lengthy operating histories and it is possible that historical or neighboring activities could impact our facilities. Any present or future noncompliance with environmental laws or future discovery of contamination could have a material adverse effect on our results of operations or financial condition.

(n)

Employees.

As of June 30, ~~2013~~2014, we, with our subsidiaries, employ a total of 5747 full-time employees, including 2 executive employees. Of these employees our Machine Sales Group employs 2 managerial employees, and 10 employees engaged in the sales and processing of CNC machine sales and the precision ~~manufacturing~~ manufacturing group employs 73 managerial employees and 3532 machinists and support personnel.

We are not aware of any problems in our relationships with our employees. Our employees are not represented by a collective bargaining organization and we have never experienced any work stoppage.

Precision Manufacturing Group

The ~~Precision~~ 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 it’s 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 (~~formerly~~part ~~Iris Diagnostics) a division~~ of the Danaher ~~Group~~group).

5For the years ended June 30, 2014 and 2013, the Precision Manufacturing Group accounted for $2,106,971 (24.21%) and $3,513,776 (37.68%) of our sales, respectively. This segment of our business also accounted for 25% and 33% of our gross profits for the years ended June 30, 2014 and 2013, respectively.

For the years ended June 30, 2013 and 2012, the Precision Manufacturing Group accounted for $3,513,776 (37.68%) and $4,247,482 (42%) of our sales, respectively. This segment of our business also accounted for 33% and 50% of our gross profits for the years ended June 30, 2013 and 2012, respectively.

(a)

Company Overview.

(1) Precision Aerospace & Technologies, Inc., (~~formerlyEran~~formerly Eran Engineering, Inc).

~~In October, 2003, pursuant to a Stock Purchase Agreement, dated June 17, 2003, we acquired all the issued and outstanding shares of~~ Precision ~~(formerly Eran Engineering, a California corporation), from its two shareholders for an aggregate purchase price of $1,250,000. In addition to a cash payment of $650,000, which~~ was ~~credited~~acquired ~~to the purchase price, we executed a promissory note~~ in ~~favor of the sellers in the principal amount of $600~~October,~~000,~~ ~~payable in three equal annual installments of $200,000 and accruing simple interest at the rate of six percent (6%) per annum~~2003. ~~Our~~Precision ~~obligation~~manufactures ~~under~~precision ~~the~~metal ~~promissory~~parts ~~note was secured by the pledge by Lawrence A. Consalvi, our then President~~ and ~~Chief~~assemblies ~~Executive~~for ~~Officer, and Joseph T.W. Gledhill, our former Vice President and Director, of a security interest in certain shares of our common stock worth approximately $4,285,716 as of~~ the ~~date of the pledge. Concurrently with the closing of the acquisition~~aerospace, ~~Precision (formerly Eran Engineering) purchased from R & H Investments, a partnership owned by the two~~medical ~~selling~~defense ~~shareholders of Precision (formerly Eran Engineering), the building in which Precision (formerly Eran Engineering) operated its business. The purchase price for the building was $1,250,000,~~ and ~~was~~other ~~paid as follows:~~industries.

~~· $650,000 in cash and;~~6

· A promissory note in the principal amount of $600,000, bearing simple interest at the rate of 6% per annum.

Concurrently with the acquisition of Precision (formerly Eran Engineering), we purchased the Santa Ana, California, building in which Precision (formerly Eran Engineering) operated. The purchase price for the building was $1,250,000, of which we paid $600,000 by a promissory note in the amount of $600,000 and the remainder in cash financed pursuant to a term loan in the principal amount of $1,300,000. On February 23, 2007, we completed the sale of the building and property for a sales price of $2,017,000 resulting in a net gain to us of over $600,000.

(b) Product Manufacturing.

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 it’s 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~~group).

The primary components sold by Precision during the years ended June 30, ~~2013~~2014 and ~~2012~~2013, were parts sold to Panasonic Avionics Corporation, a leading provider of in-flight entertainment systems for commercial aircraft. The other components were parts manufactured for, and sold to, medical ~~companies~~ companies and general commercial aircraft companies. Precision (formerly Eran Engineering) maintains approximately 40 CNC machines for use in its specialized manufacturing processes. Barton Webb, serves as the executive Vice President of Precision.

(c) Sales, Marketing and Distribution.

Precision maintains an in-house sales staff that solicits orders from customers. Solicitation of orders is generally based upon relationships with buyers versus the use of advertising or other forms of solicitation. Orders are received via a bid process and Precision prepares costs estimates and submits a bid for the manufacturing order. Once an order is received, ~~generally~~ through a binding purchase order, Precision programs its machines to manufacture the part. Parts are manufactured internally and ~~then~~ in most cases, assembled at Precision’s facility. Some assemblies require the receipt of parts manufactured by other companies and as a result, delays in shipment could be encountered as a result of delays in manufacturing by contractors retained by the customer. Precision has no control or liability for these parts manufactured by other manufacturers used in the assembly’s delivered by Precision.

(d) New Product Development.

Precision usually does not develop any proprietary products, however Precision is currently working on one or two proprietory products. ~~Instead,~~unrelated to the aerospace industry. Precision primarily works with principal manufacturers to machine the components they require for the development of their products.

(e) Competition.

The market for precision part manufacturing is extremely competitive. There are no substantial barriers to entry, and we continue to face competition from domestic and international manufacturers. We believe that our ability to compete successfully depends upon a number of factors, including market presence, connections in the industry, reliability, low error rate, technical expertise and functionality, performance and quality of our parts, on time deliveries, customization, the pricing policies of our competitors, customer support, our ability to support industry standards, and industry and general economic trends.

Many of our competitors have greater market presence, engineering and marketing capabilities, and financial, technological and personnel resources than those available to us. As a result, they may be able to develop and expand more quickly, adapt more swiftly to new or emerging technologies and changes in customer requirements, take advantage of acquisition and other opportunities more readily, and devote greater resources to the marketing of their services than we can.7

~~The~~Many ~~competition~~of ~~for~~our ~~design,~~competitors have greater market ~~manufacturing~~presence, engineering and ~~service~~marketing incapabilities, ~~precision~~financial, ~~machining~~technological and ~~machine~~personnel ~~tools~~resources ~~consists~~greater ofthan ~~independent~~those ~~firms,~~available to ~~many~~us. ofAs ~~which~~a result, ~~however~~they may be able to develop and expand more quickly, ~~are~~adapt ~~smaller~~more swiftly to new or emerging technologies and ~~than~~changes ~~our~~in ~~collective~~customer ~~group~~requirements, take advantage of ~~wholly~~acquisition ~~owned~~and ~~subsidiaries.~~other Weopportunities ~~believe~~more ~~that~~readily, ~~this~~and ~~allows us~~devote greater resources to ~~bring~~the amarketing ~~broader~~of ~~spectrum~~their ofservices ~~support to~~than ~~its~~we ~~customers~~can.

InThe ~~addition~~competition tofor ~~similar companies~~design, ~~we compete against the in-house~~ manufacturing and service ~~capabilities~~in ofprecision ~~our~~machining ~~larger~~and ~~customers.~~machine Wetools ~~believe~~consists ~~these~~of ~~large manufacturers~~independent ~~are~~firms, ~~increasingly~~many ~~outsourcing~~of ~~activities~~which ~~that~~ are ~~outside~~smaller ~~their~~than ~~core~~our ~~competency~~collective group toof ~~increase~~wholly ~~their~~owned ~~efficiencies and reduce their costs~~subsidiaries. ~~This~~We ~~outsourcing~~believe ~~provides~~that anthis ~~opportunity for~~ allows us to ~~grow~~bring ~~with~~a ~~our~~broader ~~current~~spectrum ~~clients~~of ~~and~~support ~~the~~to ~~addition~~our ~~of new clients~~customers.

In addition to similar companies, we compete against the in-house manufacturing and service capabilities of our larger customers. We believe these large manufacturers are increasingly outsourcing activities that are outside their core competency to increase their efficiencies and reduce their costs. This outsourcing provides an opportunity for us to grow with our current and the addition of new customers.

Although there are numerous domestic and foreign companies which compete in the markets for the products and services offered by us, our management believes that it will be able to compete effectively with these firms on price and ability to meet customer deadlines and the stringent quality control standards. We strive to develop a competitive advantage by providing high quality, high precision and quick turnaround support to customers from design to delivery.

(f) Sources and Availability of Raw Materials.

Our precision equipment group utilizes a variety of raw materials in its specialized manufacturing processes, however, the primary raw materials it uses are widely available and we believe they will be readily available for our use as needed.

(g) Dependence on Major Customers.

Precision has two major customers: Panasonic Avionics Corp., which accounted for 4559.2284% and 5344.7776% of ~~Precision’s~~our total revenue for the years ended June 30, ~~2013~~2014 and ~~2012~~2013, respectively, and Beckman Coulter, which accounted for 1415.7397% and 815.1437% of ~~Precision’s~~our total revenue for the years ended June 30, ~~2013~~2014 and ~~2012~~2013 respectively.

(h) Patents, Trademarks and Licenses.

Precision does not have any patents or licenses, or other intellectual property.

(i) Need for Government Approval.

As a manufacturer of precision parts, Precision’s business is not subject to government approval for its operations or its end products. .

(j) Effect of Government Regulation on Business.

As a manufacturer of precision parts there are certain regulations that relate to the conduct of our business in general, such as regulations and standards established by the Occupational Safety and Health Act or similar state laws relating to employee health and safety. As such we maintain strict control standards on the maintenance and use of its equipment to ensure employee safety. We comply with all guidelines and recommendations regarding the use of safety equipment such as safety goggles, protective gloves and aprons, ventilators or air guards as may be required. Employees are specifically trained, including emphasis on safety procedures, for each machine used. Management maintains and reviews a schedule of maintenance and safety check for all the equipment used in its operations.

Although there are not many regulations on the manufacturing of precision parts, there are certifications companies can receive in the industry. Precision is ISO 9001-2008 and AS9100 rev. C registered.

(k) Research and Development.

Our precision manufacturing group does not normally engage in research and development. Precision purchases manufactured CNC machines and receives a purchase order with detailed instructions from its customers regarding the specifications for the parts it wishes to have Precision manufacture.

(l) Effects of Compliance with Environmental Laws.

The precision manufacturing industry is subject to environmental laws and regulations concerning emissions into the air, discharges into waterways, and the generation, handling, storage and disposal of waste materials, some of which may be hazardous.

The precision manufacturing division utilizes various coolants and lubricants that could be considered hazardous waste. Care is taken to prevent accidental discharge and all coolants and lubricants removed from machines are contained and disposed of by an outside waste disposal company. In addition, our ~~Tustin~~Anaheim facility is subject to certain local waste water regulations and is required annually to have its waste water and backflow prevention equipment tested by an outside testing agency. The last test was performed in November 2013 and we passed without exception.

Precision strives to comply with all applicable environmental, health and safety laws and regulations. Precision believes that its operations are in compliance with all applicable laws and regulations on environmental matters. These laws and regulations, on federal, state and local levels, are evolving and frequently modified and we cannot predict accurately the effect, if any, they will have on its business in the future. In many instances, the regulations have not been finalized, or are frequently being modified. Even where regulations have been adopted, they are subject to varying and contradicting interpretations and implementation. In some cases, compliance can only be achieved by capital expenditure and we cannot accurately predict what capital expenditures, if any, may be required.

(m) Employees.

As of June 30, ~~2013~~2014, we, with our subsidiaries, employ a total of 5747 full-time employees, including 2 executive employees. For the precision manufacturing group, we employ 43 managerial employees, ~~1 sales manager,~~ and 3532 employees engaged in precision metal parts manufacturing related positions and the machinery sales group employs 2 managerial employees and 10 sales and support personnel.

We are not aware of any problems in its relationships with its employees. The Company’s employees are not represented by a collective bargaining organization and the Company has never experienced any work stoppage.

Industry Overview

CNC Machines

Since the introduction of CNC tooling machines, continual advances in computer control technology have allowed for easier programming and additional machine capabilities. A vertical turning machine permits the production of larger, heavier and more oddly-shaped parts on a machine that uses less floor space when compared to the traditional horizontal turning machine because the spindle and cam are aligned on a vertical plane, with the spindle on the bottom. Horizontal turning machines have become faster and more accurate with the ability to perform more functions i.e. milling of the parts and cross milling both on and off center line of the part. The vertical turning machines have additionally increased thru-put for part production through increased spindle RPM’s (rotations per minute), with the ability to accomplish high speed machining and increased accuracy through new electronics. Finally, the horizontal machines , through the same features mentioned above and with the expansion of more tools and the ability to add multiple pallets out in the field, gives the customer the ability to grow into the machine as ~~his~~its work flow increases.

Precision Tools

The precision tools industry, as it relates to Precision (formerly Eran) and our business, deals with the manufacturing of specific, specialized parts for use in several different industries, including, but not limited to, the commercial aviation, medical, aerospace and defense industries. Since the introduction of Computer Numerical Control (CNC) machines into the manufacturing arena, the process of taking raw material and producing a product have had a significant impact in today’s highly competitive manufacturing environment. Precision tool manufacturing companies operate by receiving a purchase order from a customer, then with a blueprint drawing from engineering, and produce a part program which is then loaded into the on board memory of the CNC machine tool. The machine tool follows the part program and cuts the material into the desired shape which the engineers have designed. The CNC Machine tool benefits are: a more consist end product as well as a closer tolerance product on a consistent part-over-part process. In today’s competitive market all types of raw materials are used from a varied type of steel, aluminum, brass, copper as well as plastics.

The precision manufacturing business is an ever changing segment and to remain competitive companies must be prepared to constantly maintain their quality programs, equipment and train their personnel. Manufacturing in today’s work environment is extremely competitive and, therefore, ~~maintaining~~ maintaining ISO registration is ~~almost certainly~~ a requirement. To become a first tier supplier to major aerospace and defense contractors a company must become AS9100 compliant with a Continuous Improvement Operation with an eye on the future. All of these programs in conjunction with a competitive price point and on time delivery commitment will make a significant impact to a company’s ability to maintain their business and grow.

ITEM 1A. – RISK FACTORS.

As a smaller reporting company we are not required to provide a statement of risk factors. However, we believe this information may be valuable to our shareholders for this filing. We reserve the right to not provide risk factors in our future filings. Our primary risk factors and other considerations include:

If we are unable to maintain relationships with our suppliers, our business could be materially adversely affected.

~~Substantially~~All ~~all~~ of our materials ~~products~~necessary for our precision manufacturing division are ~~manufactured~~provided by third parties. To the extent that a ~~manufacturer~~supplier is unwilling to do business with us, or to continue to do business with us once we enter into formal agreements with it, our business could be materially adversely affected. In addition, to the extent that the manufacturer modifies the terms of any contract it may enter into with us (including, without limitation, the terms regarding price, rights of return, or other terms that are favorable to us), or extend lead times, limit supplies due to capacity constraints, or other factors, there could be a material adverse effect on our business.

We operate in a competitive industry and continue to be under the pressure of eroding gross profit margins, which could have a material adverse effect on our business.

9The market for the products we sell is very competitive and subject to rapid technological change. The prices for refurbished machinery tend to decrease over their life cycle, which can result in decreased gross profit margins for us. There is also substantial and continuing pressure from customers to reduce their total cost for equipment. Customers of our manufactured parts are also always trying to buy at lower prices. We expend substantial amounts on the value creation services required to remain competitive, retain existing business, and gain new customers, and we must evaluate the expense of those efforts against the impact of price and margin reductions. Further, our margins will be lower in certain geographic markets and certain parts of our business than in others. If we are unable to effectively compete in our industry or are unable to maintain acceptable gross profit margins, our business could be materially adversely affected.

The market for the products we sell is very competitive and subject to rapid technological change. The prices for our intended products tend to decrease over their life cycle, which can result in decreased gross profit margins for us. There is also substantial and continuing pressure from customers to reduce their total cost for products. We expend substantial amounts on the value creation services required to remain competitive, retain existing business, and gain new customers, and we must evaluate the expense of those efforts against the impact of price and margin reductions. Further, our margins will be lower in certain geographic markets and certain parts of our business than in others. If we are unable to effectively compete in our industry or are unable to maintain acceptable gross profit margins, our business could be materially adversely affected.

Products sold by us may be found to be defective and, as a result, warranty and/or product liability claims may be asserted against us, which may have a material adverse effect on the company.

We may face claims ~~for~~ for damages as a result of defects or failures in the products we ~~intend to~~ sell to our customers. Although many of our products are ~~sold~~ sold under a third-party warranty or are sold “as is” our ability to avoid liabilities, including consequential damages, may be limited as a result of differing factors, such as the inability to exclude such damages due to the laws of some of the locations where we do business. Our business could be materially adversely affected as a result of a significant quality or performance issue in the products developed by us, if we are required to pay for the damages that result.

Our share ownership is concentrated.

~~Money Line Capital, Inc., our largest shareholder, controls approximately 21.6% of our outstanding common stock.~~ Our officers and directors, as a group, own a15.86% ~~majority~~ of ~~Money~~our ~~Line Capital, Inc.’s~~ common stock and ~~own~~one anofficer ~~additional~~has ~~30.8%~~voting ofcontrol ~~our~~through ~~common~~a preferred stock asvoting ablock of ~~group~~shares. As a result, ~~these~~this ~~stockholders~~stockholder can exert significant influence over all matters requiring stockholder approval, including the election and removal of directors, any merger, consolidation or sale of all or substantially all of assets, as well as any charter amendment and other matters requiring stockholder approval. In addition, these stockholders may dictate the day to day management of the business. This concentration of ~~ownership~~voting control may delay or prevent a change in control and may have a negative impact on the market price of our common stock by discouraging third party investors. In addition, the interests of these stockholders may not always coincide with the interests of our other stockholders.

If we acquire other companies or assets, we may not be able to successfully integrate them or attain the anticipated benefits.

We intend to acquire other businesses that are synergistic with ours. If we are unsuccessful in integrating our acquisitions, or if integration is more difficult than anticipated, we may experience disruptions that could have a material adverse effect on our business. In addition, we may not realize all of the anticipated benefits from our acquisitions, which could result in an impairment of goodwill or other intangible assets.

If we fail to maintain an effective system of internal controls or discover material weaknesses in our internal controls over financial reporting, we may not be able to report our financial results accurately or timely or detect fraud, which could have a material adverse effect on our business.

An effective internal ~~control~~ control environment is necessary for us to produce reliable financial reports and is an important part of our effort to prevent ~~financial~~ financial fraud. We will be required to periodically evaluate the effectiveness of the design and operation of our internal controls ~~over~~ over financial reporting. Based on these evaluations, we may conclude that enhancements, modifications or changes to internal controls are necessary or desirable. While management will evaluate the effectiveness of our internal controls on a regular basis, ~~and although we have recently undergone substantial changes to address any weaknesses,~~ these controls may not always be effective. There are inherent limitations on the effectiveness of internal controls, including collusion, management override, and failure of human judgment. In addition, control procedures are designed to reduce rather than eliminate business risks. If we fail to maintain an effective system of internal controls, or if management or our independent registered public accounting firm discovers material weaknesses in our internal controls, we may be unable to produce reliable financial reports or prevent fraud, which could have a material adverse effect on our business. In addition, we may be subject to sanctions or investigation by regulatory authorities, such as the SEC. Any such actions could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements, which could cause the market price of our common stock to decline or limit our access to capital.

1013

We ~~rely on third-party suppliers and manufacturers to provide our CNC machines, and we will~~ have ~~limited~~two ~~control~~customers ~~over~~that ~~these~~account for ~~suppliers~~greater ~~and~~than ~~manufacturers and~~76% ~~may~~of ~~not~~our betotal ~~able~~sales of toour ~~obtain~~Precision ~~quality~~manufacturing ~~products~~division onfor athe ~~timely~~year ~~basis~~ended orJune in30, ~~sufficient quantity~~2014.

~~All~~Panasonic Avionics Corp. account for 59.84% and 45.22% and Beckman Coulter 15.97% and 14.73% of our ~~CNC~~total ~~machines are~~sales ~~manufactured~~for bythe ~~third-party~~years ~~manufacturers.~~ended June 30, 2014 and 2013, respectively. We do not have ~~any~~a long- term, ~~contracts~~exclusive agreement with these ~~suppliers~~customers. orIf ~~manufacturing~~either ~~sources. We~~of these customers ~~expect~~reduced weor ~~will~~stopped ~~have~~ordering toprecision ~~compete~~parts ~~with~~from ~~our~~Precision ~~competitors~~it ~~for~~would ~~production~~have ~~capacity~~a ~~and~~material ~~availability~~adverse atimpact ~~these~~on ~~third-party~~our ~~manufacturers~~consolidated sales, results of operations and cash flows.

~~There~~We ~~can~~have beone ~~no assurance~~customer that ~~there~~accounted ~~will~~for ~~not~~100% ~~be a significant disruption in the supply~~ of ~~CNC machines from our intended sources or, in~~ the ~~event~~total ofsales ~~a disruption, that we would be able to locate alternative suppliers~~ of ~~equipment~~M ofline ~~comparable quality at an acceptable price~~Holdings, ~~or at all~~Inc. ~~In addition,~~for we cannot be certain that our unaffiliated manufacturers will be able to fill our orders in a timely manner. If we experience significant increased demand, or need to replace an existing manufacturer, there can be no assurance that additional manufacturing capacity will be available when required on terms that are acceptable to us, or at all, or that any supplier or manufacturer would allocate sufficient capacity to us in order to meet our requirements. In addition, even if we are able to expand existing or find new manufacturing sources, we may encounter delays in production and added costs as a result of the ~~time~~year itended ~~takes~~June ~~to train our suppliers and manufacturers in our methods~~30, ~~products and quality control standards~~2014. Any delays, interruption or increased costs in the manufacture of our products could have an adverse effect on our ability to meet retail customer and consumer demand for our products and result in lower revenues and net income both in the short and long-term.

InWe ~~addition,~~currently ~~there~~have ~~can~~one becustomer no(OR ~~assurance~~Holdings, ~~that~~Inc.) ~~our suppliers and manufacturers will continue to manufacture products~~ that ~~are~~accounted ~~consistent~~for ~~with~~100% ~~our standards. We may receive shipments~~ of ~~product that fail to conform to~~ our ~~quality~~total ~~control~~sales ~~standards.~~for Inthe ~~that~~year ~~event,~~ended ~~unless~~June ~~we are able to obtain replacement products in a timely manner~~30, we2014 ~~risk the loss of revenues resulting from the inability to sell those products~~ and ~~related~~$0 ~~increased~~in ~~administrative and shipping costs~~2013. InThere is ~~addition,~~no ~~because~~guaranty that we docan ~~not~~continue ~~control our manufacturers, products that fail~~ to ~~meet~~obtain ~~our~~customers ~~standards~~for ~~or other unauthorized products could end up in~~ the ~~marketplace~~same ~~without~~kind ~~our~~of ~~knowledge,~~services ~~which could harm our reputation~~ in the ~~marketplace~~future.

We have two customers that account for greater than 59% of our total sales for the year ended June 30, 2013.

Panasonic Avionics Corp. account for 45.22% and 53.77% and Iris Diagnostics 14.73% and 8.14% of our total sales for the years ended June 30, 2013 and 2012, respectively. We do not have a long term, exclusive agreement with these customers. If either of these customers reduced or stopped ordering precision parts from Eran it would have a material adverse impact on our consolidated sales, results of operations and cash flows.

Our Machine Sales Group relies on the availability of used CNC machines for resale, if no used machines are available for purchase our business will suffer.

The primary business of our Machine Sales Group is to purchase and resell used CNC machines. If there are no or limited CNC machines available for purchase, our Machine Sales Group sales will suffer. Likewise, if there is a slow down in the economy and the current owners of CNC machines opt not to sell their used CNC machines to purchase new ones, or our customers hold on to their existing CNC machines longer and do not purchase additional used CNC machines our sales will suffer.

~~The~~Decisions ~~current crisis~~from in the credit markets regarding the financing of equipment may adversely affect our customers’ ability to finance the purchase of ~~new and~~ used CNC machines. This ~~would~~ could result in a significant reduction in our sales.

~~Most~~Many of our customers ~~that~~ that purchase used CNC machines do so utilizing credit. ~~The~~Credit ~~current~~decisions ~~crisis in the credit markets~~ may adversely affect our customers’ ability to finance the purchase of a used CNC machine from us. If this were to occur it would result in a significant reduction in our sales.

As of June 30, ~~2013~~ 2014, the Company owed Main ~~Pacific~~Credit ~~Western Bank~~ $0 and $~~253~~20,~~128~~759 at June 30,. ~~2012~~2013.

We have ~~paid~~refinanced inthe ~~full~~line ~~all~~of credit with Main Credit and have therefore repaid the balance due of ~~our~~$20,759 ~~obligations~~during the fiscal year ended June 30, 2014. The balance due to Main ~~Pacific~~Credit, ~~Western~~$20,759 ~~Bank~~at June 30, ~~and~~2013 aswas apaid ~~result~~in ~~this~~full ~~settles~~in July 2013. We have therefore repaid in full all ~~outstanding~~our ~~legal~~obligations ~~disputes~~to ~~between~~Main Credit during the ~~parties~~fiscal year ended June 30, 2014.

11As of June 30, 2014, the Company owed TCA Global Credit Master Fund, LLC (“TCA”) $2,330,452 and $1,681,973 at June 30. 2013.

AsThe Company’s Line of Credit ~~June~~with 30TCA became due on October 31, 2013~~, the~~ ~~Company~~and ~~owed~~was ~~Main~~renewed ~~Credit~~for ~~$20,753~~a ~~and~~further ~~$1,083,879~~six atmonths. ~~June~~The line of credit expired on April 30 2014. ~~2012~~On January 15, 2015 management entered into a settlement agreement with TCA that includes two forms of repayment that will be concluded within a fifteen month period.

We have refinanced the line of credit with Main Credit and have therefore repaid the sum of $1,063,126 during the fiscal year nded June 30, 2013. The balance due to Main Credit, $20,753 at June 30, 2013 was paid in full in July 2013. We have therefore repaid in full all our obligations to Main Credit in the subsequent fiscal period.14

As of June 30, 2013, the Company owed TCA Global Credit Master Fund, LP $1,681,973 and $0 at June 30. 2012.

The company’s Line of Credit with TCA Global Credit Master Fund, LP became due on October 31, 2013 and was renewed for a further six months. Management is currently in the process of refinancing its line of credit with TCA Global Credit Master Fund, LP and is currently in negotiation with other lenders.

New governmental regulation relating to greenhouse gas emissions may subject us to significant new costs and restrictions on our operations.

Climate change is receiving increasing attention worldwide. Many scientists, legislators and others attribute climate change to increased levels of greenhouse gases, including carbon dioxide, which has led to significant legislative and regulatory efforts to limit greenhouse gas emissions. There are bills pending in Congress that would regulate greenhouse gas emissions through a cap-and-trade system under which emitters would be required to buy allowances to offset emissions of greenhouse gas. In addition, several states are considering various greenhouse gas registration and reduction programs. Greenhouse gas regulation could increase the price of the electricity we purchase, increase costs for our use of natural gas, potentially restrict access to or the use of natural gas, require us to purchase allowances to offset our own emissions or result in an overall increase in our costs of raw materials, any one of which could significantly increase our costs, reduce our competitiveness in a global economy or otherwise negatively affect our business, operations or financial results. While future emission regulation appears likely, it is too early to predict how this regulation will affect our business, operations or financial results.

The Commission previously revoked the registration of our common stock pursuant to Section 12(j) of the Exchange Act due to our failure to timely file our periodic reports under the Exchange Act. If we fail to timely file these reports in the future, we could be delisted from an exchange and/or the Commission could delist our common stock again, which could negatively impact our business and cause a significant decrease in our stock price.

On May 31, 2006, the Commission entered an Order Imposing Remedial Sanctions which revoked the registration of our common stock pursuant to Section 12(j) of the Exchange Act and ordered our then president and chief executive officer, Lawrence A. Consalvi, to cease and desist from causing any violations or future violations of the Exchange Act. This deregistration was the result of our inability to obtain financial information from acquisitions we completed in the past. Although we have since divested ourselves of those acquisitions, and taken numerous remedial measures to ensure this does not occur in the future, there can be no assurance that future acquisitions by us will not have issues or cause us to be delinquent with our required filings under the Exchange Act. Any delinquent filings could have an adverse effect on our business and our stock price, if we are publicly-traded. These adverse effects include being delisted from any exchange where our common stock may be listed, such as the OTC Bulletin Board, which could cause our stock price to decrease. Additionally, if we are unable to timely file our periodic reports under the Exchange Act, the Commission could again revoke the registration of our common stock pursuant to Section 12(j) of the Exchange Act, prohibiting us from listing our stock on any public marketplace, including the OTC Bulletin Board and Pink Sheets, which would have the effect of our common stock not being publicly-traded and greatly reduce the liquidity of our common stock and greatly reduce the ability of our stockholders to sell or trade our common stock. Regarding our business, if we were delinquent in our filings and/or had the registration of our common stock revoked, we may be unable to effectuate our business plan to acquire other companies in our industry since we likely would not be able to structure these acquisitions using our common stock or other securities. This could negatively impact our business and cause a significant decrease in our stock price.

ITEM 1B – UNRESOLVED STAFF COMMENTS

This Item is not applicable to us as we are not an accelerated filer, a large accelerated filer, or a well-seasoned issuer; however, we have not received written comments from the Commission staff regarding our periodic or current reports under the Securities Exchange Act of 1934 within the last 180 days before the end of our last fiscal year.

1215

ITEM 2 – PROPERTIES

In July, 2007, we entered into a 5-year triple net lease for approximately 48,600 square feet of manufacturing and office space in a free-standing industrial ~~building~~ building at 2672 Dow Avenue, Tustin, California 92780 for a average monthly rental of $28,390 for the first 12 months, $35,090 for the second 12 months, $36,143 for the third 12 months, $37,227 for the fourth 12 months and $38,334 for the final 12 months. We finalized an amendment to the lease agreement on September 30, 2011 that extends the lease under new terms that commenced on July 1, 2012 and continues until June 30, 2017. The rent for month 1 (July 2012) through month 12 is $27,741, month 13 to 24 $28,573, month 25 to 36, $29,430, month 37 to 48, $30,313 and month 49 to 60, $31,223.

We ~~also~~entered ~~have~~into aan ~~five~~amicable ~~year lease~~settlement ~~for approximately 13,820 square feet of office and warehouse space located at 3840 East Eagle Drive, Anaheim, California~~agreement atwith athe ~~monthly~~landlord ~~rental rate~~ of ~~$8,777 for~~ the ~~first~~Tustin ~~year,~~property ~~$9,040~~to ~~for~~surrender the ~~second~~lease ~~year,~~without ~~$9,311~~any ~~for~~penalty ~~the~~and ~~third~~on ~~year,~~July $91,~~591~~ ~~for~~2014 we moved the ~~fourth~~precision ~~year,~~engineering ~~and~~group ~~$9,879~~to ~~for~~our ~~the~~new ~~fifth~~premises ~~year. The~~at ~~lease~~2320 ~~for~~E. ~~this~~Orangethorpe ~~property began September 1~~Avenue, ~~2010 and expires on August 31~~Anaheim, ~~2015. The Machines~~CA ~~Sales Group resides at this location~~92806.

We entered into a 10 year triple net lease for approximately 28,354 square feet of manufacturing and office space in a free-standing industrial building at 2310-2320 E. Orangethorpe Avenue, Anaheim, CA 92806 for an average monthly rent of $23,353 for the first 12 months, $24,053 for the second twelve months, $24,775 for the third twelve months, $25,518 for the fourth twelve months and $26,284 for the fifth twelve months.

We have a five year lease for approximately 13,820 square feet of office and warehouse space located at 3840 East Eagle Drive, Anaheim, California at a monthly rental rate of $8,777 for the first year, $9,040 for the second year, $9,311 for the third year, $9,591 for the fourth year, and $9,879 for the fifth year. The lease for this property began September 1, 2010 and expires on August 31, 2015. The Machines Sales Group resides at this location.

However, we have surrendered the lease for the 3840 East Eagle Drive, Anaheim property as we have moved the business of the machine tool division to our new premises at 2320 E. Orangethorpe Avenue, Anaheim, CA 92806.

ITEM 3 - LEGAL PROCEEDINGS

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 June 30, ~~2013~~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 tois ~~be extremely low~~remote.

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.

AThe ~~provision~~company ~~has~~entered ~~been~~into ~~made~~a insettlement ~~the~~agreement ~~June~~for ~~30,~~a ~~2013~~settlement ~~financial statements with respect to this matter~~ in the ~~sum~~total amount of $37,500. However, no payments have been made to date.

3.A ~~Hwacheon~~provision ~~Machinery~~has v.been ~~All~~made ~~American~~in ~~CNC~~the ~~Sales~~June 30, ~~Circuit~~2014 ~~Court~~financial statements ofwith ~~the~~respect ~~19th~~to ~~Judicial~~this ~~Circuit,~~matter ~~Lake~~in ~~County,~~the ~~Illinois,~~sum ~~Case~~of No$37,500. ~~09L544.~~

~~The~~3. ~~Complaint~~Donald ~~was~~Yu ~~filed~~v. onM ~~June~~Line 8Holdings, ~~2009~~ Inc., et al.; Case No. 30-2012-00574019- CU-BC-CJC

13This 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.

~~The~~In ~~Complaint~~response, ~~alleges~~defendants ~~causes of action~~filed ~~for account stated and arises from~~ a ~~claim~~motion ~~by Hwacheon that All American CNC has not paid it for machines sold~~ to ~~All~~set ~~American CNC.~~aside ~~The~~the ~~Complaint~~defaults ~~seeks~~and ~~damages~~vacate ofthe ~~approximately~~default ~~$362,000.~~judgments ~~All American filed an answer on or about July 15, 2009. Default has been entered~~ against ~~All American CNC Sales, Inc.~~

InMessrs. aBanker ~~hearing~~and inAnish ~~the~~as ~~Superior Court~~well ofas ~~California,~~renegotiate ~~Hwacheon~~the ~~filed~~terms anof ~~alter~~the ~~ego~~prior ~~case~~settlement ~~against~~with ~~Eran~~Plaintiff. ~~Engineering,~~On ~~Inc.~~or ~~(currently~~about ~~known~~September 30, as2013, ~~Precision~~the ~~Aerospace~~parties ~~and~~entered ~~Technologies,~~into ~~Inc.),~~a ~~E.M.~~supplemental ~~Tool~~settlement ~~Company,~~agreement ~~Inc.~~ and Mmutual ~~Line~~release ~~Holdings,~~wherein ~~Inc. The judge granted~~ the ~~summary~~Company ~~judgment~~agreed ~~against~~to ~~all~~pay ~~three~~plaintiff ~~defendants in~~ the ~~amount~~sum of $~~403~~24,~~860.91,~~000 ~~including~~in ~~interest~~two ~~through~~(2) equal ~~February 8, 2011~~installments. ~~Post judgment proceedings have been initiated by Hwacheon.~~ The ~~Company~~first ~~and~~installment ~~Eran~~of ~~Engineering~~$12,000 ~~Inc.~~has ~~(currently~~already ~~known~~been ~~as Precision Aerospace and Technologies, Inc~~paid.~~) filed an appeal, which later was dismissed pursuant to settlement.~~

The ~~Company~~final ~~entered~~installment ~~into~~of ~~a revised~~$12,000 ~~settlement~~was ~~agreement~~due ~~for~~on aor ~~settlement~~before inOctober 30, ~~the~~2013, ~~total~~and ~~amount~~has ofnot ~~$85,000,~~been aspaid ofat ~~March~~this ~~31,~~time. ~~2013,~~A ~~which~~judgment ~~was~~remains ~~subsequently~~outstanding ~~paid~~against inthe ~~full~~Company onin ~~April~~the ~~30,~~sum ~~2013~~of $12,000.

A4. ~~satisfaction of~~Subramani ~~judgment~~Srinivasan, ~~has~~et ~~been~~al. ~~filed~~v. inM ~~this~~Line ~~matter~~Holdings, Inc., et al.; Case No. 30-2014-00724484-CU-CO-CJC

4.This ~~Fadal~~is ~~Machining~~a v.breach ~~All~~of ~~American~~contract, ~~CNC Sales~~fraud, and etrelated ~~al.,~~causes ~~Los~~of ~~Angeles~~action ~~Superior~~against ~~Court,~~Defendants ~~Los~~Eran ~~Angeles~~Engineering, ~~California~~Inc.; Bart Webb; Precision Aerospace and Technologies, ~~Case~~Inc. No(erroneously sued as “Precision Aerospace Technologies, Inc.”); ~~BC415693~~M-Line Holdings, Inc.; Anthony Anish; Jitu Banker; Larry Consalvi; and Elite

~~The~~Machine ~~Complaint~~Tools ~~was filed on June 12~~(collectively, ~~2009~~“Defendants”).

The ~~Complaint~~parties ~~alleges~~entered ~~causes~~into ofa ~~action~~settlement ~~for~~agreement ~~breach~~against ofthe ~~contract~~corporate ~~and~~defendants ~~common~~on ~~counts~~or ~~against~~about ~~All~~January ~~American~~22, ~~CNC~~2015. ~~seeking~~Pursuant ~~damages~~to in the ~~amount~~terms ofand atconditions ~~least~~of ~~$163,578.88,~~the ~~and arises~~settlement ~~from~~agreement, athe ~~claim~~corporate bydefendants ~~Fadal~~agreed ~~that All American failed~~ to pay ~~amounts due. On June 26~~$20,000 ~~2009,~~in ~~Fadal~~three ~~amended~~(3) ~~the~~equal ~~Complaint~~installments toon ~~include~~or Mbefore ~~Line Holdings~~April 30, ~~Inc~~2015. ~~as a Defendant.~~

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.

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. This amount has been provided for in the june 30, 2014 financial statements.

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.

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 $163,579, 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 ~~has~~had made a provision in the sum of $60,000~~.00~~ in the financial statements as of June 30, 2013, ~~but~~which amount has been increased to $210,000 in the financial statements as of June 30, 2014 as no payments that ~~are~~were due under the settlement agreement have been made. The increase to $210,000 includes the original amount due Plaintiff under the compaint plus accrued interest. Judgment was entered on June 16, 2011, and a Writ was issued on February 24, 2012.

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

The ~~Complaint~~complaint was filed on April 14, 2009.

The ~~Complaint~~complaint alleges causes of action for Declaratory Relief, Breach of Contract, Fraud, Common Counts, and Negligent Misrepresentation, claiming the ~~Defendant~~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~~complaint are estimated to be approximately $40,000. Court records show that a stipulated judgment was entered on August 27, 2012; and 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.~~20.~~ A sum of $40,000~~.00~~ has been paid in installments of $10,000~~.00~~ each ~~effective November 8, 2013~~ and the final payment of $8,673 was made on December 9, 2013.

ANo provision ofis ~~$48,673~~required ~~was~~in ~~made for~~ this matter in the June 30, ~~2013~~2014 financial statements ~~which~~as ~~was~~the ~~fully~~plaintiff has been paid in ~~December 2013~~full.

68. 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.~~30.~~

14The 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 June 30, 2014.

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 June 30, 2013.

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.

79. 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 June 30, ~~2013~~2014.

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

8. Joe Gledhill v. M Line Holdings, Inc., et. al.- Orange County Superior Court Case No. 30-2011-00506723

Joseph Gledhill, a former officer and director of the Company and its subsidiary, Eran Engineering, Inc. (currently known as Precision Aerospace and Technologies, Inc.), has filed suit within the Pacific Western case seeking indemnity of the Pacific Western claim and various other causes of action. Management has decided to vigorously defend these claims and believes Mr. Gledhill’s suit has no merit. Trial was set for April 8, 2013. This case has been dismissed.

9. M Line Holdings, Inc., v. Timothy Consalvi, et. al.- Orange County Superior Court Case No. 30-201100493329

The Company filed suit against two of its former directors alleging that they breached their fiduciary duties to the Company by mismanaging the corporate affairs of the Company and its subsidiaries, resulting in damages to the Company and its subsidiaries. The defendants were never served, and the defendants never answered the complaint. This case has been dismissed with prejudice.

10.

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.

11.

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

15This suit was filed subsequent to June 30, 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 ~~suit~~case was ~~filed~~settled on ~~June~~November 205, 2013 infor ~~respect~~$50,000 ofrequiring ana ~~alleged~~payment ~~deficiency~~of in$10,000 ~~the~~on ~~machine~~November ~~supplied~~15, to2013 ~~Douglas~~with ~~Technologies. The company decided to settle~~ the ~~lawsuit~~ ~~and~~balance ~~thereby~~being ~~entered~~paid ~~into~~in a8 ~~settlement~~monthly ~~agreement~~installments ~~with~~of $5,000 ~~the customer~~each.

~~This~~No ~~case was settled on November 15,~~provision ~~2013~~is ~~for~~required ~~$50,000~~in ~~requiring~~this amatter ~~commencing~~in ~~payment~~the ofJune ~~$10~~30,~~000~~ on2014 ~~November~~financial ~~15,~~statements ~~2013~~as ~~with~~ the ~~balance~~plaintiff ~~being paid in 8 monthly installments of $5,000 each.~~has

~~A provision in the amount of $50,000 has~~ been ~~made~~ paid in ~~the financial statements as of June 30, 2013~~full.

12. ~~Donald~~Alu YuForge, Inc., dba American Handforge . v MJitu ~~Line~~Banker, ~~Holdings~~Precision Aerospace & Technologies, Inc., ~~Anthony~~and LM ~~Anish~~Line ~~and~~Holdings, ~~Jitu Banker~~Inc., et al., case number 30-~~2012~~2013-~~00574019~~00670772-CUCL-BC-CJC.

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

The case was settled on ~~September~~October 2531, ~~2013~~ 2013 for $2419,~~000~~500 ~~requiring~~with ~~two~~ payments of $125,~~000~~250 ~~each~~on October 31, ~~payable~~2013, $5,250 on ~~September~~November 30, 2013 and ~~October~~the 30balance of $9,000 on December 31, 2013.

The Company has made ~~the~~all ~~first payment~~ of ~~$12,000on~~the required ~~September~~payments ~~30,~~and ~~2013~~therefore ~~but~~no ~~has~~provision ~~not~~is ~~made~~required in the ~~second~~financial ~~payment~~statements ~~due~~as onof ~~October~~June 30, ~~2013.~~2014

A13. ~~provision~~Yates, inFontenot, ~~the~~Smith ~~amount~~& ~~of $24~~Brum,~~000 has~~ ~~been~~LLC ~~made~~v. inM ~~the~~Line ~~financial~~Holdings, ~~statements~~Inc. as(formerly ofGateway ~~June~~International 30Holdings, ~~2013~~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.

~~13. Alu Forge, Inc., dba American Handforge . v Jitu Banker, Precision Aerospace & Technologies, Inc., and M Line Holdings, Inc., et al., case number 30-2013-00670772-CL-BC-CJC.~~19

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.

A provision in the sum of $19,500 has been made in the financial statements of the Company at June 30, 2013.

The case was settled on October 31, 2013 for $19,500 with payments of $5,250 due on October 31, 2013, $5,250 on November 30, 2013 both oif whiuch have been paid and the balance of $9,000 is due on December 31, 2013.

The Company made the first two payments of $5,250 with the final payment due on December 31, 2013.

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

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 All ~~provision in~~of the ~~amount~~payments ofdue ~~$255,374~~to Plaintiff has been made inand ~~the~~no ~~financial~~provision ~~statements~~is required as of June 30, ~~2013~~2014.

~~Litigation~~The iscompany ~~subject to~~moved ~~inherent~~out ~~uncertainties,~~of ~~and~~its ~~unfavorable~~Tustin location ~~rulings~~in ~~could~~July ~~occur. If~~2014 anand ~~unfavorable~~agreed ~~ruling~~the ~~were~~surrender toof ~~occur~~its inlease ~~any~~with of the ~~above~~landlord, ~~matters~~Yates, ~~there~~Fontenot, ~~could~~Smith beand aBrum, ~~material~~LLC. ~~adverse~~No ~~effect~~further action onwill ~~the~~be ~~Company’s~~taken ~~financial~~on ~~condition,~~this ~~results of operations or liquidity~~matter.

1614. 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 defendants owe 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 provided for $2,330,452 in the financial statements that includes all interest and fees due to Plaintiff through June 30, 2014.

15.

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 defendants owe 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 our client’s financial condition, results of operations or liquidity.

ITEM 4 – (REMOVED AND RESERVED).

PART II

ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is currently listed on the OTC Bulletin Board under the symbol “MLHC.” On May 16, 2008, we filed a registration statement on Form 10 to re-register our common stock under Section 12 of the Exchange Act. As a result, on July 15, 2008, we became subject to the reporting requirements under the Exchange Act. We began listing on the OTC Bulletin Board on November 23, 2009.

The following table sets forth the high and low bid information for each quarter within the two most recent fiscal years. The information reflects prices between dealers, and does not include retail markup, markdown, or commission, and may not represent actual transactions.

Fiscal Year Ended June 30,		Period	~~Period~~Bid Prices		~~Bid Prices~~
			High		~~High~~		Low		~~Low~~
	2012		First Quarter		$	0.07			$	0.02
2013		First Quarter	$	0.05			$	0.01
		Second Quarter	~~Second Quarter~~$	0.03	$	~~0.06~~	$	0.01	$	~~0.03~~
		Third Quarter	~~Third Quarter~~$	0.09	$	~~0.05~~	$	0.01	$	~~0.01~~
		Fourth Quarter	~~Fourth Quarter~~$	0.05	$	~~0.03~~	$	0.01	$	~~0.02~~
	2013		First Quarter		$	0.06			$	0.01
2014		First Quarter	$	0.04			$	0.01
		Second Quarter	~~Second Quarter~~$	0.01	$	~~0.03~~	$	0.00	$	~~0.01~~
		Third Quarter	~~Third Quarter~~$	0.00	$	~~0.08~~	$	0.00	$	~~0.01~~
		Fourth Quarter	~~Fourth Quarter~~$	0.00	$	~~0.0504~~	$	0.00	$	~~0.01~~

The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure relating to the market for penny stocks in connection with trades in any stock defined as a penny stock. The Commission has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to a few exceptions which we do not meet. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated therewith.

Holders

As of June 30, ~~2013~~2014, there were 70243,~~211~~178,~~145~~ 484 shares of our common stock outstanding held ~~by134~~by144 holders of record of our common stock and numerous shareholders holding shares in brokerage accounts. Of these shares, 31204,~~819~~605,~~701were~~940 were held by non-affiliates. On the cover page of this filing we value these shares at $0.~~024~~001. These shares were valued at $0.~~024~~001 per share, which was closing price of our common stock on the OTC Bulletin Board on ~~December~~June 2122, ~~2013~~2015.

Dividends

In May 2005, we declared and paid a dividend of $0.005 on our common stock. The dividend was paid to all shareholders except shareholders who are also directors of the Company or members of their immediate family, all of whom waived their right to receive the dividend payment. We have not paid any dividends since May, 2005 ~~nor~~and docurrently wethere ~~plan~~are tono inplans ~~the~~to ~~foreseeable~~pay future dividends.

1721

Securities Authorized for Issuance Under Equity Compensation Plans

There are no outstanding options or warrants to purchase shares of our common stock under any equity compensation plans.

Non-Qualified Stock Option Plan

In November 2006, the Board of Directors approved the creating of a non-qualified stock option plan for key managers, which, among other provisions, would have provided for the granting of options by the board at strike prices at or exceeding market value, and expiration periods of up to ten years. This plan was never created and no options were ever issued.

~~As a result, we did not have any options, warrants or rights outstanding as of June 30, 2011.~~22

As a result, we did not have any options, warrants or rights outstanding as of June 30, 2014.

Plan Category	Number of Securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders		-0-		-0-		-0-
Equity compensation plans not approved by security holders		-0-		-0-		-0-
Total		-0-		-0-		-0-

Recent Issuance of Unregistered Securities

During the year ended June 30, ~~2013~~2014, the ~~company~~ Company issued the following shares of common stock.

1412,~~840~~805,~~000~~130 shares were issued to financial advisors and other parties in payment of services to the Company. The Company valued the shares at the market price on the issuance dates in the sum of $~~267~~67,~~942~~451.

~~The Company also issued 8~~136,~~500~~062,~~000~~209 shares ~~of the~~were ~~Company~~issued ~~common~~to ~~stock~~financial ininstitutions ~~lieu of salaries and expenses due on behalf of related parties. The shares were valued at $168,700~~in ~~based~~connection onwith the ~~market~~conversion ~~price~~ of ~~the~~debt ~~shares~~and atinterest ~~the~~totalling ~~grant date~~$446,489.

~~During~~5,100,000 ~~the~~shares ~~year~~were ~~ended~~issued ~~June~~to ~~30,~~a ~~2013,~~financial ~~the~~advisor ~~Company~~in ~~issued~~respect ~~200,000~~of ~~Series~~consulting Aservices ~~Preferred~~provide to the company. These shares towere avalued ~~lender~~at inmarket ~~connection~~price ~~with~~on ~~our~~the ~~line~~issuance date in the sum of ~~credit~~$40,290.

IfThe ~~our~~Company ~~stock~~also isissued ~~listed on~~6,000,000 anshares ~~exchange~~in welieu ~~will~~of payroll ~~be subject to the Securities Enforcement~~ and ~~Penny~~13,000,000 ~~Stock~~shares ~~Reform~~to ~~Act~~settle ofunpaid ~~1990~~salaries ~~requires~~due ~~additional disclosure relating~~ to ~~the market for penny stocks in connection with trades in any stock defined as a penny stock~~officers. The ~~Commission~~shares ~~has~~were ~~adopted regulations~~valued ~~that~~at ~~generally define a penny stock to be any equity security that has a market price of less than~~ $~~5.00 per share~~190, ~~subject~~000 tobased aon ~~few exceptions which we do not meet. Unless an exception is available,~~ the ~~regulations require the delivery, prior~~market toprice ~~any transaction involving a penny stock,~~ of ~~a disclosure schedule explaining~~ the ~~penny~~shares ~~stock~~at ~~market and~~ the ~~risks~~grant ~~associated therewith~~date.

During the year ended June 30, 2014, the Company did not issue any shares of preferential stock.

If our stock is listed on an exchange we will be subject to the Securities Enforcement and Penny Stock Reform Act of 1990 which requires additional disclosure relating to the market for penny stocks in connection with trades in any stock defined as a penny stock. The Commission has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to a few exceptions which we do not meet. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated therewith.

ITEM 6 – SELECTED FINANCIAL DATA

As a smaller reporting company we are not required to provide the information required by this Item.

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ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Forward-Looking Statements

This annual report on Form 10-K of M Line Holdings, Inc. for the year ended June 30, ~~2013~~2014 contains forward-looking statements, principally in this Section and “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 annual 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 of 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 this filing, as well as any cautionary language in this annual report, 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 maintain a credit facility to purchase new and used machines, manufacture new products; the ability to obtain financing for product acquisition; changes in product strategies; general economic, financial and business conditions; changes in and compliance with governmental regulations; changes in various tax laws; and the availability of key management and other personnel.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which requires us to make estimates and assumptions in certain circumstances that affect amounts reported. In preparing these financial statements, management has made its best estimates and judgments of certain amounts, giving due consideration to materiality. We believe that of our significant accounting policies (more fully described in Notes to the Consolidated Financial Statements), the following are particularly important to the portrayal of our results of operations and financial position and may require the application of a higher level of judgment by our management, and as a result are subject to an inherent degree of uncertainty.

Estimates

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally 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 revenues and expenses during the reporting period. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty. We review our estimates on an on-going basis, including those related to sales allowances, the allowance for doubtful accounts, inventory reserves, long-lived assets, income taxes and litigation. We base our estimates on our historical experience, knowledge of current conditions and our beliefs of what could occur in the future considering available information. Actual results may differ from these estimates, and material effects on our operating results and financial position may result. We believe the following critical accounting policies involve our more significant judgments and estimates used in the preparation of our consolidated financial statements.

1925

Revenue Recognition

We recognize revenues when ~~the~~ the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) our price to the customer is fixed or determinable; and (iv) collection of the sales price is reasonably assured. Delivery occurs when goods are shipped and title and risk of loss transfer to the customer, in accordance with the terms specified in the arrangement with the customer. In addition, we recognize revenue form financial services provided to our customers. Payment for these services is made in the form of cash and/or marketable securities. Revenue recognition is deferred in all instances where the earnings process is incomplete. We record reserves for estimated sales returns and allowances for both CNC machine sales and manufactured parts in the same period as the related revenues are recognized. We base these estimates on our historical experience for returns or the specific identification of an event necessitating a reserve. Our estimates may change from time to time in the event we ship manufactured parts which in the customers’ opinion, do not conform to the specifications provided. To the extent actual sales returns differ from our estimates, ~~our~~ our future results of operations may be affected.

Accounts Receivable

We perform ongoing credit evaluations of our customers and adjust credit limits based upon payment history and the customer'’s current credit worthiness, as determined by our review of their current credit information. We continuously monitor collections and payments from our customers and maintain an allowance for doubtful accounts based upon our historical experience and any specific customer collection issues that we have identified. While our credit losses have historically been within our expectations and the allowance established, we may not continue to experience the same credit loss rates as we have in the past. Accounts receivable are written off or reserves established when considered to be uncollectible or at risk of being uncollectible. While management believes that adequate allowances have been provided in the ~~Consolidated~~consolidated ~~Financial~~financial ~~Statements~~statements, it is possible that we could experience unexpected credit losses. Our accounts receivable are concentrated in a relatively few number of customers. One customer, Panasonic Avionics Corporation (“Panasonic”), a leading provider of in-flight entertainment systems for commercial aircraft, accounts for 232.3847% and 4425.6473% of our consolidated accounts receivable balance at June 30, ~~2013~~2014 and ~~2012~~2013, respectively. Another customer, Or Holdings, Inc. accounted for 89.42% and 0% of our consolidated accounts receivable balance at June 30, 2014 and 2013. Therefore, a significant change in the liquidity or financial position of any one customer could make it more difficult for us to collect our accounts receivable and require us to increase our allowance for doubtful accounts, which could have a material adverse impact on our consolidated financial position, results of operations and cash flows.

Inventories

Within our Precision Manufacturing segment, we seek to purchase and maintain raw materials at sufficient levels to meet lead times based on forecasted demand. Within our Machine Tools segment, we purchase machines held for resale based upon 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 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 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.

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 the 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 a normal expected production levels, we charge such under-absorption of fixed overhead to operations.

Long-lived Assets

We continually monitor and review long-lived assets, including fixed assets intangible assets with definite lives, for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. The determination of recoverability is based on an estimate of the undiscounted cash flows expected to result from the use of an asset and its eventual disposition. The estimate of cash flows is based upon, among other things, certain assumptions about expected future operating performance, growth rates and other factors. Our estimates of cash flows may differ from actual cash flows due to, among other things increased competition, loss of customers and loss of manufacturer representation contract, all which can cause materially changes our operating performance. If the sums of the undiscounted cash flows are less than the carrying value, we recognize an impairment loss, measured as the amount by which the carrying value exceeds the fair value of the asset or discounted cash flows. Long-lived assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

20Based on management’s review, we determined that there was no impairment provision of long-lived assets as of June 30, 2014.

cash flows are less than the carrying value, we recognize an impairment loss, measured as the amount by which the carrying value exceeds the fair value of the asset or discounted cash flows. Long-lived assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Based on management’s review, we determined that there was no impairment provision of long-lived assets for the year ended June 30, 2013.

Accounting for Income Taxes

The Company accounts for income taxes in accordance with FASB ASC Topic 740-10, Income Taxes, (“ASC 740”) which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the differences between the financial statement and the tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense represents the tax payable for the period and the change during the period in deferred tax assets and liabilities.

The Company accounts ~~for~~ for uncertain tax positions in accordance with ASC 740, which prescribes a recognition threshold and measurement attribute for ~~financial~~ financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also provides ~~guidance~~ guidance on various related matters such as ~~derecognition~~de-recognition, interest, penalties and disclosures required. The Company recognizes ~~interest~~ interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

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.

Results of Operations

Sales Concentration

The sales within our Precision ~~Manufacturing~~ Manufacturing segment are highly concentrated within two customers, Panasonic Avionics and Beckman Coulter. Sales to these customers ~~accounted~~ accounted for 2318% and 2623% of consolidated sales for the years ended June 30, ~~2013~~2014 and ~~2012~~2013, respectively. The loss of all or a ~~substantial~~ substantial portion of sales to ~~this~~these ~~customer~~customers would cause us to lose a substantial portion of our sales within this segment and on a consolidated basis, and have a corresponding negative impact on our operating profit margin due to operation leverage this customer provides. This could lead to sales volumes not being high enough to cover our current cost structure or provide adequate operating cash flows. Panasonic has been a customer of ours for approximately 1520 years and we believe our relationship is ~~good~~satisfactory.

Gross Profit

Our gross profit represents sales less the cost of sales. Gross margin represents our gross profit divided by sales.

Cost of sales for our Precision Manufacturing segment primarily consists of raw materials, direct labor, depreciation of manufacturing equipment and overhead incurred in the manufacturing of parts for our customers. Our gross margins will increase and decrease depending on the amount of products we manufacture as result of allocating fixed manufacturing costs over a larger or reduced number of parts, which yields lower or higher per unit costs, respectively. As a result, a change in manufacturing volume in a quarter can significantly affect our gross margin in that and future quarters.

Cost of sales for our Machine Sales Segment includes the cost of machines, replacement parts, freight, and refurbishment expenses. Gross margins within the Machine Sales segment can vary based on the price we procure equipment for in the marketplace, sales mix between new and used equipment and the costs to refurbish used machines.28

21Cost of sales for our Machine Sales Segment includes the cost of machines, replacement parts, freight, and refurbishment expenses. Gross margins within the Machine Sales segment can vary based on the price we procure equipment for in the marketplace, sales mix and the costs to refurbish used machines.

Selling, General and Administrative

Our selling, general and administrative expenses consist of personnel costs, including the sales, executive, finance and administration. These costs also include non-manufacturing related depreciation, overhead and professional fees.

Interest Expense

Interest expense primarily consists of the cost of borrowings under our ~~accounts receivable~~ line of credit agreement with ~~Main~~TCA Global Credit ~~Corporation~~Master Fund, ~~Pacific Western Bank~~LLC, other financial institutions and ~~Credit~~credit and capital lease agreements. See Liquidity and Capital Resources and Notes to Consolidated Financial Statements for further ~~discussion~~information.

Segment Information

	For the year ended June 30, 2013		For the year ended June 30, 2012		Change
	For the year ended June 30,		For the year ended June 30,
	2014		2013		Change
Sales by segment:
Machine Sales	$	56,~~810~~593,~~909~~151	$	5,~~929~~810,~~967~~909	$	~~(119~~782,~~058~~242	)
Precision Engineering		32,~~513~~106,~~776~~971		43,~~247~~513,~~482~~776		(~~733~~1,~~706~~406,805	)
		9,324,685		10,177,449		(852,764	)
Financial Services		1,000		-		1,000
		8,701,122		9,324,685		(623,563	)
Gross Profit by segment:
Machine Sales		1,~~174~~235,~~017~~024		1,~~105~~174,~~395~~017		6861,~~622~~007
Precision Engineering		~~589~~414,~~214~~390		1589,~~741,329~~214		(1174,~~152,115~~824	)
		1,763,231		2,846,724		(1,083,493	)
Financial Services		1,000		-		1,000
		1,650,414		1,763,231		(112,817	)
Gross Profit by segment: %
Machine Sales		6674.5883		1766.58
Precision Engineering		3325.4211		4133.42
Financial Services		0.06		-

~~Results~~At June 30, 2014 the 2,100,000 shares of ~~Operations~~common ~~for~~stock of OR Holdings, Inc. held by M Line Holdings, Inc. was traded on the ~~Year~~GXG ~~Ended~~Stock ~~June~~Exchange 30in Europe. At that date the market value of the shares was $1.00 (.70 Euros) per share. However, ~~2013~~since that date, OR Holdings, Inc. suspended its trading in advance of a move to Marche Libre Stock Exchange in Europe and ~~2012~~the new listing has not been completed as yet. As a result revenue from financial services provided by M Line was reduced to a notional value of $1,000.

Results of Operations for the Years Ended June 30, 2014 and 2013

Introduction

For the twelve months ended June 30, ~~2013~~2014, we generated $910,~~324~~800,~~685~~122 in revenues on cost of sales of $7,~~561~~182,~~454~~846. With these revenues and cost of sales for the year ended June 30, ~~2013~~2014, we had a net loss of $41,~~393~~161,~~268~~813, after taxes. For the year ended June 30, ~~2012~~2013, we had revenues of $109,~~177~~324,~~449~~685 , on cost of sales of $7,~~330~~561,~~725~~454. With these revenues and costs of sales we had a net loss of $~~768~~4,~~242~~393,268, after taxes, for year ended June 30, ~~2012~~2013. An explanation of these numbers and how they relate to our business is contained below.

22Revenues, Expenses and Loss from operations:

Revenues, Expenses and Loss from operations:
	Year ended			Year ended
		Year ended June 30, 2013			Year ended June 30, 2012
	June 30, 2014			June 30, 2013			Change
Revenues	$	9,324,685		$	10,177,449
Revenue	$	8,701,122		$	9,324,685		$	(623,563	)
Cost of Sales		7,561,454			7,330,725
Cost of sales		7,050,708			7,561,454			(510,746	)
Selling, General and Administrative Expenses		4,226,647			2,629,232
Selling general and administrative expenses		3,811,699			4,226,647			(414,948	)
Write off of related party receivable		1,446,067			0
Write-off related party receivable		-			1,446,067			(1,446,067	)
Amortization of intangible asset		0			31,952
Operating loss		(2,161,285	)		(3,909,483	)		(1,748,198	)
Operating income (loss)		(3,909,483	)		185,540
Interest expense		(1,884,005	)		(497,365	)		1,386,640
Interest Expense		(497,365	)		(208,145	)
Change in derivative liability		(946,518	)		-			946,518
Gain on sale of assets		0			138,642
Loss on settlement of liability		(35,190	)		-			35,190
Gain on debt settlement		0			86,097
Total other income (expense)		(2,865,713	)		(497,365	)		2,368,348
Total Other Income (Expense)		(497,365	)		(743,237	)
Income tax (provision) benefit		(1,894	)		13,580			(15,474	)
Net Loss before income tax	$	(4,393,268	)	$	(765,842	)
Net income (loss)	$	(5,028,892	)	$	(4,393,268	)	$	635,624

Revenues

Sales in the fiscal ~~2013~~ 2014 period decreased 8 6.3869% compared to the comparable period in fiscal 2013.

The change is attributable primarily to a ~~decrease~~decreased in the sales in the Precision Manufacturing Group. Sales ~~decreased~~increased by (213.~~01)~~ 46% in the Machine Sales Group ~~and~~while it decreased by ~~(17~~40.~~27)~~ 01% in the Precision Manufacturing Group.

The 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 86145 pieces of equipment sold in the year ended June 30, ~~2013~~2014 was $6142,~~224~~360 compared to the comparable period in fiscal ~~2012~~2013 of 8486 pieces of equipment sold at an average sale price of $6761,~~239~~224. In addition ~~repair work~~service sales for the year ended June 30, ~~2012~~2014 was $~~146~~255,~~712~~539 compared to the comparable period in fiscal ~~2012~~2013 of $~~156~~146,~~098~~712.

Market conditions reflect not only the price that equipment can be purchased for but also the price 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 buying 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 decrease of $~~756~~1,~~817~~406,805 in sales of precision metal component parts from a ~~customer~~two ofcustomers of ours, Panasonic Avionics, and Godrich Aerostructures in the fiscal year ended June 30, ~~2013~~2014, compared to the fiscal year ended ~~June 30,~~ ~~2012 compared to $46,078 from fiscal year 2011 to 2012. Furthermore new customer sales to Goodrich Aerostructures resulted in an increase of $84,950 during the year ended~~ June 30, 2013 ~~as compared to $256,878 for new customers in the comparable period in fiscal 2012~~.

Our precision manufacturing group has recently received orders from Panasonic Avionics, and we expect to increase our sales to much higher levels fiscal 2014 to those achieved in fiscal 2013. We have contacted new customers and expect to receive orders shortly. We anticipate increasing our sales to old and new customers should result in a positive effect on the future results of the Company.

We anticipate that as a result of an increase in activity in the aerospace industry, we will continue to grow the revenues of both the Machine Tool Group and the Precision Manufacturing Group.

Gross Margin

Gross profit decreased by 386.0640% compared to the comparable period in fiscal ~~2012~~2013. The gross profit for the Machine Sales Group increased by 65.219% due to an increase in margins as a result of lower prices and associated costs paid for ~~product~~equipment. The decrease within the Precision Manufacturing Group of 6629.267% resulted from lower margins as a result of the decrease in sales in this group.

Cost of Sales

Our cost of sales for the year ended June 30, ~~2013~~2014, ~~was~~were $7,~~561~~050,~~454~~708 and consisted primarily of used CNC machines, refurbishment of those machines payroll and raw ~~materials~~ materials usage, compared to our cost of sales for the year ended June 30, ~~2012~~2013 of $7,~~330~~561,~~725~~454. The ~~increase~~decrease in our cost of sales was primarily due to the ~~increase~~decreases in the purchase of raw materials and outside processing costs to meet the sales of our ~~precision~~ precision manufacturing group. The sales of management services by M Line Holdings, Inc., had no costs for the year ended June 30, 2014.

Write off of Related Party receivable

The related party receivable of $1,446,067 for the fiscal year 2013 was written off in full .

Selling, General and Administrative Expenses

Our selling, general and administrative expenses are those expenses ~~we have~~ related to the actual sales of our products and the costs we incur in transporting those products. For the year ended June 30, ~~2013~~2014 our selling ~~general~~ and ~~administrative~~ distribution expenses were $43,~~226~~811,~~647~~699, compared to $24,~~661~~226,~~184~~647 for the year ended June 30, ~~2012~~2013. Our selling, general and administrative expenses for the year ended June 30, ~~2013~~2014, primarily consisted of salaries of $21,~~051~~869,~~973~~299, rent of $~~460~~545,~~565~~177, legal and professional fees of $~~506~~709,~~853,~~028. ~~insurance~~Our selling and administrative expenses included a change of $~~166~~390,~~275~~000 for officers salaries which were waived by those officers and credited to paid in capital. The decrease in selling, general and ~~legal~~administrative ~~settlements~~expenses was a direct result of ~~$352,447~~an intended reduction of these expenses during the year due to the reduction in revenues in both our Elite Machine and Precision subsidiaries.

Interest Expense

For the year ended June 30, ~~2013~~2014, our interest expense increased by $~~289~~1,~~220~~386,640 compared to the comparable period in ~~2012~~2013. The change is attributable to higher average debt balances ~~and~~ , increases in the average interest ~~rate~~rates paid onand ~~our~~fees ~~debt~~charged ~~and~~primarily ~~capital~~on ~~lease~~our debt obligations.

Gain on Sale of Assets

During 2014, we had a gain on the sale of assets within the Precision Products Group in the sum of $19,000. We did not have a gain on sale of assets in 2013.

Research and Development

We did not incur ~~research~~ Research and ~~development~~ Development expenditures during the fiscal ~~2013~~2014 period.

However, we did incur research and development expenditure during the third quarter of fiscal 2012, which represented the development costs incurred for aircraft structures. The Company upgraded its manufacturing base from purely aircraft interiors to a combination which includes aircraft structures. and therefore incurred considerable startup costs relating to these developments.

Liquidity and Capital Resources

Our principal sources of liquidity consist of cash and cash equivalents, cash generated from operations and borrowing from various sources. At June 30, ~~2013~~ 2014, our cash and cash equivalents totaled $~~182~~46,~~305~~925.

AtAs of June 30, ~~2013~~2014, we had $0 in debt outstanding under our ~~credit~~Accounts ~~agreement~~Receivable ~~with~~and ~~Pacific~~Inventory ~~Western~~line ~~Bank~~of ascredit ~~all outstanding debt~~ with ~~the~~Main ~~bank~~Credit. ~~had~~We ~~been~~have paid off inthe ~~full.~~sum ~~The credit agreement provided for borrowings~~ of ~~up to~~ $120,~~500,000,~~753 in full and ~~included~~final asettlement ~~line~~ of ~~credit,~~all ~~a term loan and a letter~~ of ~~credit.~~our ~~The amount~~ outstanding ~~under~~debt ~~the~~to ~~line~~Main ofCredit ~~credit,~~during ~~term~~the ~~loan~~fiscal ~~and~~year ~~letter~~ended ~~of credit are all $0, as of~~ June 30, ~~2013~~ 2014.

24As of June 30, 2014, we had $2,330,452 in debt outstanding under our Accounts Receivable and Inventory Line of Credit with TCA Global Credit Master Fund, LLC

AsOur ofexisting ~~June~~sources ~~30,~~of ~~2013~~liquidity, wealong ~~had~~with ~~$20~~cash expected to be generated from sales,~~753~~ inmay ~~debt~~not ~~outstanding~~be ~~under~~sufficient to fund our ~~Accounts~~operations, ~~Receivable~~anticipated capital expenditures, working capital and ~~Inventory~~other ~~line~~financing ofrequirements ~~credit~~for ~~with~~the ~~Main~~foreseeable ~~Credit~~future. WeIf ~~have~~that ~~subsequent~~is the case we may need to seek 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 ~~year~~achieve ~~end~~anticipated revenue targets, ~~paid~~or ~~off~~if we experience significant increases in the ~~sum~~cost of ~~$20~~raw material and equipment for resale,~~753~~ lose a significant customer, or increases in ~~full~~our ~~and~~expense ~~final~~levels ~~settlement~~resulting from ofbeing ~~all~~a ofpublicly-traded ~~our~~company. ~~outstanding~~If we attempt to obtain additional debt or equity financing, we cannot assure you that such financing will be available to ~~Main~~us ~~Credit~~on favorable terms, or at all.

~~As of June 30, 2013, we had $1,681,973 in debt outstanding under our Accounts Receivable and Inventory Line of Credit with TCA Global Credit Master Fund, LP.~~31

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, lose a significant customer, or increases in our expense levels resulting from being a publicly-traded company, if we achieve this status. 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 years ended June 30:

Provided by (used in)	~~2013~~2014			~~2012~~2013			Change
Operating activities	$	(~~539~~815,~~087~~209	)	$	~~266~~(539,~~425~~087	)	$	(~~272~~276,~~662~~122	)
Investing activities		~~(19~~11,~~335~~000	)		(5919,~~907~~335	)		4030,~~572~~335
Financing activities		~~735~~668,~~515~~829			~~110~~735,~~508~~515			~~625~~(66,~~007~~686	)
		177,093			(215,824	)		392,917
	$	(135,380	)	$	177,093		$	(312,473	)

Cash Flows for the Years Ended June 30, ~~2013~~2014 and ~~2012~~2013

Operating Activities

Net cash used in in operating activities was $(~~539~~815,~~087~~209) ~~for~~during the year ended June 30, ~~2013~~2014, compared to $(~~266~~539,~~425~~087) for the year ended June 30, ~~2012~~2013. Our cash used in operating activities for the year ended June 30, ~~2013~~2014 was primarily due to net losses of $(45,~~393~~028,~~268~~092) offset by non-cash expenses related to ~~inventory~~bad ~~reserves~~debt expense, depreciation, amortization, share based compensation, ~~and~~change ~~write~~in ~~off~~derivative ofliability ~~related~~and ~~party~~waiver ~~receivables~~of ~~totaling~~officers tosalaries totaling $2,~~440~~958,~~793~~682, $~~(195~~457,~~693)~~744 in accounts receivables, $~~(146~~125,~~499)~~228 in inventories, $(3027,~~639~~477) in prepaid expenses and other assets and $1624,~~626,806~~647 in accounts payable and accrued expenses.

Investing Activities

Net cash used in investing ~~activities~~ activities was ($1911,~~335)~~000 for the year ended June 30, ~~2013~~2014, compared to $(5919,~~907~~335) for the year ended June 30, ~~2012~~2013. The cash provided ~~used~~ for investing activities for the year ended June 30, ~~2013~~2014 was ~~for~~from ~~capital~~proceeds ~~expenditures~~from disposition of assets.

Financing Activities

Net cash provided by ~~financing~~ financing activities was $~~735~~668,~~515~~829 for the year ended June 30, ~~2013~~2014, compared to $~~110~~735,~~508~~515 for the year ended June 30, ~~2012~~2013. The cash provided by financing activities for the year ended June 30, ~~2013~~2014, consisted of $~~348~~(44,~~847~~916) inpayment ~~net borrowings~~ on ~~our line of credit,~~capital leases, $~~596~~1,~~051~~037,978 in proceeds onfrom note payables, and $~~222~~(319,~~125~~819) in payments on note payables ~~and capital leases~~.

2532

Contractual Obligations

The following table summarizes our contractual obligations and commercial commitments as of June 30, ~~2013~~2014 for the next five years:

	2014		2015		2016		2017		Thereafter		Total
	2015		2016		2017		2018		2019		TOTAL
Debt obligations		2,448,683		123,780		123,780		71,343		—		2,767,586
Debt Obligations	$	3,349,208	$	124,023	$	-	$	-	$	-	$	3,473,231
Capital leases		54,501		54,501		36,241						145,243
Capital Leases		53,901		46,426		-		-		-		100,327
Operating leases		457,410		471,132		463,174		472,508		328,152		2,192,376
Operating Leases		233,530		287,242		295,859		304,735		313,877		1,435,243
		2,962,608		651,428		625,211		545,868		328,152		5,105,205

Quantitative and Qualitative Disclosures about Market Risk

The only financial ~~instruments~~ instruments we hold are cash and cash equivalents. We also have a fixed interest rate agreement with TCA Global Credit Master Fund, LPLLC secured by receivables and inventory and a second position on the equipment of Precision ~~Aerospace~~ and ~~Technologies,~~the ~~Inc.,~~inventory and Ereceivables of MElite ~~Tool Co~~Machine., ~~Inc.~~ In addition we ~~have~~had a fixed interest rate credit facility with Main Credit secured by the receivables and inventory of ~~Eran Engineering~~Precision. The Main Credit facility was paid off in full in the ~~subsequent~~current fiscal period. Changes in market interest rates ~~will~~may impact our interest costs.

We are currently 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 credit and currency rates or changes in economic conditions.

Off Balance Sheet Arrangements

We have no off balance sheet arrangements.

ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company we are not required to provide the information required by this Item.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Registered Public Accounting Firm - MaloneBailey, LLP	F-1
Report of Registered Public Accounting Firm	F-1
Report of Registered Public Accounting Firm - Kabani & Company, Inc.	F-2
Consolidated Balance Sheets as of June 30, 2014 and 2013	F-2
Consolidated Balance Sheets as of June 30, 2012 and 2011	F-3
Consolidated Statements of Operations for the years ended June 30, 2014 and 2013	F-3
Consolidated Statements of Operations for the years ended June 30, 2012 and 2011	F-4
Consolidated Statements of Shareholders’ Deficit for the years ended June 30, 2014 and 2013	F-4
Consolidated Statements of Shareholders’ Equity for the years ended June 30, 2012 and 2011	F-5
Consolidated Statements of Cash Flows for the years ended June 30, 2014 and 2013	F-5
Consolidated Statements of Cash Flows for the years ended June 30, 2012 and 2011	F-6
Notes to Consolidated Financial Statements	F-6
Notes to Consolidated Financial Statements	F-8

2633

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ToREPORT ~~the~~OF ~~Board~~INDEPENDENT ofREGISTERED ~~Directors~~PUBLIC ACCOUNTING ~~and Stockholders~~FIRM

To the Board of Directors and Stockholders of

M Line Holdings, Inc.

~~Tustin~~Anaheim, CA

We have audited the accompanying consolidated balance sheets ~~sheet~~ of M Line Holdings, Inc. and its subsidiaries (collectively, the “Company”) as of June 30, ~~2013~~ 2014 and 2013 and the related consolidated statements of operations, ~~changes~~change in stockholders’ ~~equity (~~deficit) and cash flows for ~~the~~ ~~year~~each of the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our ~~audit~~audits.

We conducted our ~~audit~~audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform ~~the~~ an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included ~~consideration~~ consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit ~~also~~ includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,. An audit also includes assessing the accounting principles used and significant estimates made by by management, as well as evaluating the overall financial statement presentation. We believe that our ~~audit~~audits ~~provides~~provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements ~~referred~~ referred to above present fairly, in all material respects, the financial position of M Line Holdings, Inc. and its subsidiaries as of June 30, 2014 and 2013, and the results of their operations and their cash flows for each of the ~~year~~years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from operations and negative cash flows from operations. These raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ MaloneBailey, LLP

www.~~malone-bailey~~malonebailey.com

Houston, Texas

~~December~~June 3023, ~~2013~~2015

F-1

~~REPORT~~M OFLINE ~~INDEPENDENT~~HOLDINGS, ~~REGISTERED~~INC. ~~PUBLIC ACCOUNTING~~AND ~~FIRM~~SUBSIDIARIES

To the Board of Directors and Stockholders

M Line Holdings, Inc.

We have audited the accompanying consolidated balance sheet of M Line Holdings, Inc. (the “Company”) as of June 30, 2012 and the related consolidated statements of operation, stockholders' equity, and cash flow for the year then. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2012 and the results of its operations and its cash flow for the year then ended in conformity with accounting principles generally accepted in the United States of America.

The Company's consolidated financial statements are prepared using the accounting principles generally accepted 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 incurred operating losses of $768,242 for the year ended June 30, 2012. The Company had an excess of current liabilities above current assets of a negative working capital of $508,610 at June 30, 2012. The Company has an accumulated deficit of $10,051,106 as of June 30, 2012. These factors as discussed in Note 3 to the consolidated financial statements raise doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 19. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ Kabani & Company, Inc.

CERTIFIED PUBLIC ACCOUNTANTS

Los Angeles, California

October 15, 2012

F-2

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2013 AND JUNE 30, 2012

	As of June 30			As of June 30
	2014			2013
Assets

Current assets:
Cash and cash equivalents	$	46,925		$	182,305
Accounts receivable, net		222,344			990,010
Inventory, net		1,430,682			1,555,910
Due from related party		-			99,348
Deferred financing fees		-			199,516
Total current assets		1,699,951			3,027,089

Property and equipment, net		402,476			556,555
Deposits and other		140,922			113,445
Total assets	$	2,243,349		$	3,697,089

Liabilities and stockholders’ deficit

Current liabilities:
Bank overdraft	$	149,699			85,542
Accounts payable		1,350,157			1,421,626
Accounts payable - related party		35,954			43,454
Accrued expenses and other		2,594,616			2,788,697
Litigation payable		287,500			137,500
Derivative liability		634,769			-
Line of credit		2,330,453			1,702,726
Notes payable - current, net of debt discount of $317,977 and $69,996		1,018,755			675,961
Current portion of capital lease obligations		53,901			54,501
Deferred income		-			10,000
Total current liabilities		8,455,804			6,920,007


Notes payable - net of current portion		124,023			318,903
Capital lease obligation, net of current portion		46,426			90,742
Total liabilities		8,626,253			7,329,652

Commitments and contingencies		-			-

Stockholders’ deficit:
Preferred stock: $0.001 par value, 20,000,000 shares authorized, 200,000 shares issued and outstanding at June 30, 2014 and June 30, 2013 respectively		200			200
Common stock: $0.001 par, 1,000,000,000 shares authorized, 243,178,484 and 70,211,145 shares issued and outstanding at June 30, 2014 and June 30, 2013, respectively		243,178			70,211
Additional paid in capital		12,846,981			10,741,397
Accumulated deficit		(19,473,263	)		(14,444,371	)
Total stockholders’ deficit		(6,382,904	)		(3,632,563	)
Total liabilities and stockholders’ deficit	$	2,243,349		$	3,697,089

Assets
	As of June 30			As of June 30
	2013			2012
Current assets:
Cash and cash equivalents	$	182,305		$	5,212
Accounts receivable, net		990,010			794,317
Inventory, net		1,555,910			1,609,411
Due from related parties		99,348			1,262,615
Deferred financing fees		199,516			—
Total current assets		3,027,089			3,671,555
Property and equipment, net		556,555			543,050
Deposits and other		113,445			82,806
Total assets	$	3,697,089		$	4,297,411
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
Bank overdraft	$	85,542		$	—
Accounts payable		1,421,626			996,861
Accounts payable – related party		43,454			—
Accrued expenses and other		2,788,697			1,314,065
Litigation payable		137,500			116,541
Line of credit		1,702,726			1,083,879
Notes payable – current, net of debt discount of $69,996		675,961			597,261
Current portion of capital lease obligations		54,501			71,556
Deferred income		10,000			—
Total Current Liabilities		6,920,007			4,180,163
Notes payable – net of current portion		318,903			19,749
Capital lease obligation, net of current portion		90,742			—
Deferred income taxes		—			16,710
Total liabilities		7,329,652			4,216,622
Commitments and contingencies		—			—
Shareholders' Equity (Deficit):
Preferred Stock: $0.001 par value, 10,000,000 shares authorized, Series A - 200,000 and 0 shares issued and outstanding at June 30, 2013 and June 30, 2012 respectively		200			—
Common stock: $0.001 par, 100,000,000 shares authorized, 70,211,145 and 46,871,145 shares issued and outstanding at June 30, 2013 and June 30, 2012, respectively		70,211			46,871
Additional paid in capital		10,741,397			10,179,021
Related party receivable on issuance of shares		—			(94,000	)
Accumulated deficit		(14,444,371	)		(10,051,103	)
Total shareholders' equity (deficit)		(3,632,563	)		80,789
Total Liabilities and Shareholders' Equity (Deficit)	$	3,697,089		$	4,297,411

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

F-32

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED JUNE 30, ~~2013~~2014 AND ~~JUNE 30, 2012~~2013

	As of June 30,
	Year Ended June 30
	2013			2012
	2014			2013
Net sales	$	9,324,685		$	10,177,449
Sales	$	8,701,122		$	9,324,685
Cost of sales		7,~~561~~050,~~454~~708			7,~~330~~561,~~725~~454
Gross profit		1,~~763~~650,~~231~~414			21,~~846~~763,~~724~~231
Operating expenses:
Selling, general and administrative		43,~~226~~811,~~647~~699			24,~~669~~226,~~232~~647
Amortization of intangible assets		—			31,952
Write off of related party receivables		-			1,446,067
Write off of related party receivables		1,446,067			—
Total operating expenses		3,811,699			5,672,714
Total operating expense		5,672,714			2,661,184
Operating loss		(2,161,285	)		(3,909,483	)
Operating income (loss)		(3,909,483	)		185,540
Interest expense		(1,884,005	)		(497,365	)
Other income (expense):
Change in derivative liability		(946,518	)		-
Interest expense		(497,365	)		(208,145	)
Loss on settlement of liability		(35,190	)		-
Research and development expenses		—			(967,946	)
Total other expenses		(2,865,713	)		(497,365	)
Gain on debt settlement		—			86,097
Loss before income tax		(5,026,998	)		(4,406,848	)
Gain on sale of assets		—			(138,642	)
Income tax benefit (provision)		(1,894	)		13,580
Total other income (expenses)		(497,365	)		(951,382	)
Net loss	$	(5,028,892	)	$	(4,393,268	)
Loss before income tax		(4,406,848	)		(765,842	)
Income tax provision (benefit)		(13,580	)		2,400
Net loss	$	(4,393,268	)	$	(768,242	)
Loss per common share:
Basic and diluted	$	(0.0704	)	$	(0.0207	)
Weighted average common shares outstanding Basic and diluted		60,746,844			45,296,196
Weighted average number of common shares outstanding – Basic and diluted		116,246,955			60,746,844

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

F-3

M LINE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE YEARS ENDED JUNE 30, 2014 AND 2013

	Preferred Stock				Common Stock				Additional		Related party			Accumulated
	Shares		Amount		Shares		Amount		Paid-in Amount		Receivable			Deficit			Total

Balance at June 30, 2012		-	$	-		46,871,145	$	46,871	$	10,179,021	$	(94,000	)	$	(10,051,103	)	$	80,789

Shares issued for deferred financing costs		200,000		200		-		-		149,074		-			-			149,274
Shares issued for services		-		-		14,840,000		14,840		253,102		-			-			267,942
Shares issued in lieu of payroll		-		-		8,500,000		8,500		160,200		-			-			168,700
Share based compensation		-		-		-		-		-		94,000			-			94,000
Net loss		-		-		-		-		-		-			(4,393,268	)		(4,393,268	)
Balance at June 30, 2013		200,000		200		70,211,145		70,211		10,741,397		-			(14,444,371	)		(3,632,563	)

Shares issued for services		-		-		12,805,130		12,805		54,646		-			-			67,451
Shares issued in lieu of payroll		-		-		6,000,000		6,000		54,000		-			-			60,000
Shares issued to settle unpaid salaries						13,000,000		13,000		117,000								130,000
Shares issued for conversion of debt		-		-		136,062,209		136,062		310,427		-			-			446,489
Shares issued for settlement of liability		-		-		5,100,000		5,100		35,190		-			-			40,290
Waiver of officers' salaries		-		-						390,000		-			-			390,000
Resolution of derivative liability		-		-		-		-		1,144,321		-			-			1,144,321
Net loss		-		-				-		-		-			(5,028,892	)		(5,028,892	)
Balance at June 30, 2014		200,000	$	200		243,178,484	$	243,178	$	12,846,981	$	-		$	(19,473,263	)	$	(6,382,904	)

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

F-4

M LINE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED JUNE 30, 2013 AND 2012
	Preferred Stock				Common Stock				Additional		Related party			Accumulated
	Shares		Amount		Shares		Amount		Paid-in Amount		Receivable			Deficit			Total
Balance at June 30, 2011		—	$	—		38,570,845	$	38,571	$	9,813,315	$	(94,000	)	$	(9,282,861	)	$	475,025
Shares issued for services		—		—		8,300,300		8,300		365,706		—			—			374,006
Net loss		—		—		—		—		—		—			(768,242	)		(768,242	)
Balance at June 30, 2012		—		—		46,871,145		46,871		10,179,021		(94,000	)		(10,051,103	)		80,789
Shares issued for deferred financing costs		200,000		200		—		—		149,074		—			—			149,274
Shares issued for services		—		—		14,840,000		14,840		253,102		—			—			267,942
Shares issued in lieu of payroll		—		—		8,500,000		8,500		160,200		—			—			168,700
Sharebased compensation		—		—		—		—		—		94,000			—			94,000
Net loss		—		—		—		—		—		—			(4,393,268	)		(4,393,268	)
Balance at June 30, 2013		200,000	$	200		70,211,145	$	70,211	$	10,741,397	$	—		$	(14,444,371	)	$	(3,632,563	)

M LINE HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year ended June 30,
	2014			2013
Cash flows from operating activities:
Net loss	$	(5,028,892	)	$	(4,393,268	)
Reconciliation of net loss to net cash provided by operations:
Provision for deferred income tax		-			(16,710	)
Write off related party receivable		-			1,446,067
Gain on disposition of assets		(19,000	)		-
Bad debt expense		490,601			-
Amortization of deferred financing costs		199,516			99,758
Amortization of debt discount		642,517			7,504
Depreciation		162,079			173,532
Change in derivative liability		946,518			-
Share based compensation		127,451			530,642
Reserve for inventories		-			200,000
Loss on settlement of liability		35,190			-
Waiver of officers' salaries		390,000			-
Changes in operating assets and liabilities:
Accounts receivable		457,744			(195,693	)
Inventory		125,228			(146,499	)
Prepaid expenses and other assets		(27,477	)		(30,639	)
Due from related party		(81,331	)		1,626,806
Accounts payable, accrued expenses and other		624,647			43,454
Deferred income		(10,000	)		10,000
Litigation payable		150,000			105,959
Net cash used in operating activities		(815,209	)		(539,087	)

Cash flows from investing activities:
Acquisition of property and equipment		(8,000	)		(19,335	)
Proceeds from disposition of assets		19,000			-
Net cash provided by (used in) investing activities		11,000			(19,335	)

Cash flows from financing activities:
Net borrowings (repayments) on line of credit		(68,571	)		348,847
Proceeds from notes payable		1,037,978			596,051
Due from related party		-			(72,800	)
Bank overdraft		64,157			85,542
Payments on notes payable		(319,819	)		(190,701	)
Payments on capital leases		(44,916	)		(31,424	)
Net cash provided by financing activities		668,829			735,515

Net increase (decrease) in cash and cash equivalents		(135,380	)		177,093

Cash and cash equivalents at beginning of period		182,305			5,212
Cash and cash equivalents at end of period	$	46,925		$	182,305

Supplemental disclosure of cash flow information:
Cash paid for interest	$	279,374		$	390,103
Cash paid for income taxes	$	-		$	-

Supplemental disclosure of non cash financing activities:
Borrowings on capital leases	$	-		$	167,702
Shares issued for deferred financing costs		-			149,274
Settlement of liabilities and deferred financing costs through line of credit and notes payable		-			270,000
Debt discount from derivative liability		832,572			-
Interest added to principal		759,008			-
Shares issued to settle unpaid salary		130,000			-
Shares issued for settlement of debt		5,100			-
Shares issued for conversion of debt		446,489			-
Resolution of derivative liability		1,144,321			-

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

F-5

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30, 2013 AND JUNE 30, 2012

	2013			2012
Cash flows from operating activities:
Net loss	$	(4,393,268	)	$	(768,242	)
Adjustment to reconcile loss to net cash provided by (used in) operating activities:
Provision for deferred income taxes		(16,710	)		—
Write off related party receivable		1,446,067			—
Gain on disposition of assets		—			(138,642	)
Bad debt expense		—			(61,902	)
Amortization of deferred financing costs		99,758			—
Amortization of debt discount		7,504			—
Depreciation		173,532			192,755
Amortization of intangible assets		—			31,952
Share based compensation		530,642			374,006
Gain on debt settlement		—			(86,097	)
Reserve for inventories		200,000			50,099
Changes in operating assets and liabilities:
Accounts receivable		(195,693	)		161,783
Inventory		(146,499	)		(460,088	)
Prepaid expenses and other assets		(30,639	)		11,994
Accounts payable, accrued expenses and other		1,626,806			656,217
Accounts payable related party		43,454			—
Deferred revenue		10,000			—
Litigation payable		105,959			(230,260	)
Net cash used in operating activities		(539,087	)		(266,425	)
Cash flows from investing activities:
Acquisition of property and equipment		(19,335	)		(59,907	)
Net cash used in investing activities		(19,335	)		(59,907	)

F-6

Cash flows from financing activities:
Net borrowings (repayments) on line of credit		348,847			456,834
Proceeds from notes payable		596,051			150,000
Due from related party		(72,800	)		(493,116	)
Payments on notes payable		(190,701	)		—
Payments on capital leases		(31,424	)		(3,210	)
Bank overdraft		85,542			—
Net cash provided by financing activities		735,515			110,508
Net increase (decrease) in cash and cash equivalent		177,093			(215,824	)
Cash and cash equivalents at beginning of period		5,212			221,036
Cash and cash equivalents at end of period	$	182,305		$	5,212
Supplemental disclosure of cash flow information:
Cash paid for interest	$	390,103		$	208,145
Cash paid for income taxes	$	—		$	—
Supplemental disclosure of non cash financing activities:
Borrowings on capital leases	$	167,702		$	—
Shares issued for deferred financing costs		149,274			—
Settlement of liabilities and deferred financing costs through line
of credit and notes payable		270,000			—

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

F-7

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Organization and Business

Organization and Business

M. Line Holdings, Inc. (“we”, “our”, the “Company”) was incorporated in Nevada on September 24, 1997. The Company and its subsidiaries are engaged in the following businesses:

a) Acquiring, refurbishing and selling pre-owned CNC machine-tool equipment through Elite Machine Tool Company (“Elite”), its wholly owned subsidiary, the machine sales group.

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

M Line Holdings, inc. is currently providing financial and management advice to customers. this business will be managed by M Line Financial Services, Inc. (formed subsequent to this financial year end) and will be part of the new financial and technology group set up in Fiscal 2015.

Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.

Principles of Consolidation

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

Business Segments

FASB ASC Topic 280: Segment Reporting (“ASC 280”) requires the determination of reportable business segments (i.e., the management approach). This approach requires that business segment information used by the chief operating decision maker to assess performance and manage company resources be the source for segment information disclosure. The Company operates in two reportable segments consisting of (1) Machine Sales and (2) Precision Manufacturing.

Concentrations of Credit Risks

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents and trade accounts receivable. The Company invests its cash balances through high-credit quality financial institutions. From time to time, the Company maintains bank account levels in excess of FDIC insurance limits. If the financial institutions in which the Company has its accounts have financial difficulties, the Company’s cash balances could be at risk.

Sales from significant customers representing 10% or more of sales consist of the following customers for the years ended June 30:

				Year ended June 30, 2013				Year ended June 30, 2012
		Year ended June 30, 2014				Year ended June 30, 2013
Percent of sales	~~Percent of sales~~		18.00		17		16.76		23
	Number of customer				1				1
Number of customers			2				1

F-86

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As a result of the Company'’s concentration of its customer base and industries served, the loss or cancellation of business from, or significant changes in scheduled deliveries of product sold to the above customers or a change in their financial position could materially and adversely affect the Company'’s ~~consolidated~~ consolidated financial position, results of operations and cash flows.

~~One~~Two ~~customer~~customers, included in the Precision ~~Manufacturing~~ Manufacturing segment represents a significant concentration. Sales to ~~this~~these ~~customer~~customers as a percentage of sales within the Precision ~~Manufacturing~~ Manufacturing Segment are as follows for the years ended June 30:

	Year ended June 30,
	2013		2012
	2014		2013
% of segment sales significant customer sales concentration		4576		5445

Accounts receivable from ~~this~~these ~~customer~~customers at June 30, ~~2013~~2014 and ~~2012~~ 2013 were $~~254~~84,~~757~~174 and $~~354~~254,~~589~~757 respectively.

The Company’s Precision Manufacturing segment ~~operates~~operated a single manufacturing facility located in Tustin, California. The company has moved its location to a facility in Anaheim, California. on July 1, 2014. A major interruption in the manufacturing operations at this facility would have a material adverse effect on the consolidated financial position and results of operations of the Company.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally 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 and the reported amounts of sales 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.

Cash and Cash Equivalents

The Company considers all highly liquid investments with insignificant interest rate risk and original maturities of three months or less from the date of purchase to be cash equivalents. The carrying amounts of cash and cash equivalents approximate their fair values. The Company maintains cash and cash equivalents balances at certain financial institutions in excess of amounts insured by federal agencies. Management does not believe that as a result of this concentration, it is subject to any unusual financial risk beyond the normal risk associated with commercial banking relationships.

Accounts Receivable

The Company performs periodic credit evaluations and continually monitors its collection of amounts due from its customers. The Company adjusts credit limits and payment terms granted to its customers based upon payment history and the customer'’s current creditworthiness. The Company does not require collateral from its customers to secure amounts due from them. The Company regularly reviews its accounts receivable and collection of these balances subsequent to each of these periods. The Company maintains reserves for potential credit losses, and historically, such losses have been within ~~management~~managment expectations. As of June 30, ~~2013~~2014 and ~~2012~~2013, accounts receivable totals were $~~990~~2,~~010 and~~321,344 and $~~794~~990,~~317,~~010 net of an allowance for bad debt expense of $2945,~~566~~534 and $4729,~~193~~566 respectively.

~~Inventories~~F-7

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 labor and overhead costs directly associated with manufacturing its products in inventory costs.

F-9

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Inventories

Deferred financing fees

The Company incurs costs in connection with its line of credit which may consist of legal, finders and due diligence fees. Such costs are deferred and amortized to interest expense over the term of the line of credit. AsAmortization of ~~June~~deferred ~~30,~~financing ~~2013,~~fees for the ~~Company~~years ~~incurred~~ended ~~deferred~~June ~~financing~~30, ~~costs~~2014 ofand 2013 amounted to $~~299~~199,~~274 of~~516 ~~which~~and $99,758 ~~has been amortized to interest expense for the year ended June 30~~, ~~2013~~respectively.

Property and Equipment

Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Equipment under capital lease obligations is depreciated over the estimated useful life of the asset. Leasehold improvements are amortized over the shorter of the estimated useful life or the term of the lease. Repairs and maintenance are expensed as incurred, while improvements are capitalized. Upon the sale or retirement of property and equipment, the accounts are relieved of the cost and the related accumulated depreciation, which any resulting gain or loss included in the consolidated statements of operations.

Long-Lived Assets

The Company reviews its fixed assets and certain identifiable intangibles with definite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset or discounted cash flows. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.

Based on management’s review, the ~~Company~~ Company determined that there was no impairment to its long-lived assets for the years ended June 30, ~~2013~~2014 and ~~2012~~2013.

Income Taxes

The Company accounts for uncertain tax ~~positions~~ positions in accordance with ASC 740, which prescribes a recognition threshold and measurement attribute for financial statement ~~recognition~~ recognition and measurement of a tax position taken or expected to be taken in a tax return and also provides guidance on various related matters such as ~~derecognition~~de-recognition, interest, penalties and disclosures required. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

~~Contingencies and Litigation~~F-8

The Company evaluates contingent liabilities including threatened or pending litigation. Management assesses the likelihood of any adverse judgments or outcomes to a potential claim or legal proceeding, as well as potential ranges of probable losses, when the outcomes of the claims or proceedings are probable and reasonably estimable. A determination of the amount of accrued liabilities required, if any, for these contingencies is made after the analysis of each matter. Because of uncertainties related to these matters, management bases its estimates on the information available at the time. As additional information becomes available, management reassess the potential liability related to its pending claims and litigation and may revise our estimates. Any revisions in the estimates of potential liabilities could have a material impact on the results of operations and financial position.

F-10

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Contingencies and Litigation

Revenue Recognition

The Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104 “Revenue Recognition”. Revenue is recognized at the date of shipment to customers when; a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist, and collectability is reasonably assured.

Revenues generated from the Precision Manufacturing segment consist of manufactured parts and in some instances, assembly of these items based on detailed engineering specifications received by the Company from the customer. The Company generally begins to manufacture the parts upon the receipt and acceptance of a purchase order which specifies the quantity, price and delivery dates such products are required to be shipped within. Prior to shipment, physical inspection of the parts is performed to ensure specifications meet the engineering requirements. Historically, customer returns have been inconsequential.

Revenues generated from the sales of new and pre-owned Computer Numerically Controlled machines from the Machine Tools segment are based on the acceptance of a purchase order and the customer’s acknowledgement of the Company’s terms and conditions which specifies the shipping terms, payment terms and the warranty period, if any. In certain instances, the Company may perform installation services including the leveling of the machine, which is inconsequential. Under agreements with certain new equipment manufacturers, a ninety day warranty is provided to customers whereby the manufacturer is responsible for any replacement parts and the Company is responsible for the installation of the parts. In certain instances, the Company provides warranties for used equipment for periods ranging up to thirty days. Historically, warranty costs have been inconsequential. Generally, the Company does not accept returns of equipment. Warranty expense, included in cost of sales, for the years ended June 30, ~~2013~~2014 and ~~2012~~2013 amounted to $6896,~~364~~955 and $3568,~~047~~364, respectively.

Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as customer deposits.

Revenues generated from financial services are recognized at the time the services are performed.

revenues generated by M Line Holdings, inc. consist of the following services including, financial advice, raising new capital, advice and support in relation to new stock listings, reverse mergers etc. and where applicable sales support.

Cost of Goods Sold

The Company includes the following in cost of goods sold; materials, production labor, tooling, depreciation, outside services and an apportionment of S.G & A.

Advertising

The Company expenses the cost of advertising when incurred as selling expenses. Advertising expenses were $176,~~901~~266 and $717,~~685~~901, for the years ended June 30, ~~2013~~2014 and ~~2012~~2013, respectively.

Stock-Based Compensation

The Company accounts for share-based awards issued to employees in accordance with FASB ASC 718. Accordingly, employee share-based payment compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period or vesting period. Additionally, share-based awards to non-employees are expensed over the period in which the related services are rendered at their fair value.

~~Net~~The ~~Income~~Company ~~(Loss)~~accounts ~~per~~for share based awards issued to non-employees in accordance with FASB ASC 505. This requires us to estimate ~~Share~~the value of securities used for compensation and to charge such amounts to expense over the periods benefited. The estimated fair value at the date of the award of options or warrants for our common stock is estimated using the Blach-Scholes pricing model as follows: Expected volatility is based on the historical volitility of our stock. the risk free interest rate is based on the US Treasury constant maturity rates as of the grant date. The expected life of the option is based on historical exercise behaviour and expected future experience.

~~Basic~~Net ~~net~~Loss ~~loss~~ per share is calculated by dividing net loss by the Company’s weighted average common shares outstanding during the period. Diluted net income per share reflects the potential dilution to basic earnings per share that could occur upon conversion or exercise of securities, options or other such items to common shares using the treasury stock method, based upon the Company’s weighted average fair value of the common shares during the period. For each period presented, basic and diluted net loss per share amounts are identical as the Company does not have potentially dilutive securities. The weighted average number of shares used to compute basis and dilute loss per share is the same as the effect of potential dilutive securities is anti-dilutive.Share

~~Fair~~Basic ~~Value~~net loss per share is calculated by dividing net loss by the Company’s weighted average common shares outstanding during the period. Diluted net income per share reflects the potential dilution to basic earnings per share that could occur upon conversion or exercise of ~~Financial~~securities, ~~Instruments~~options or other such items to common shares using the treasury stock method, based upon the Company’s weighted average fair value of the common shares during the period. For each period presented, basic and diluted net loss per share amounts are identical as the Company does not have potentially dilutive securities.

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, line of credit and notes payable approximates fair value due to the immediate or shortF-term maturity of these financial instruments. The fair value of long-term notes approximates the carrying amounts based upon the expected borrowing rate for debt with similar remaining maturities and comparable risk.9

F-11

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value of Financial Instruments

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, line of credit and notes payable approximates fair value due to the immediate or short-term maturity of these financial instruments. The fair value of long-term notes approximates the carrying amounts based upon the expected borrowing rate for debt with similar remaining maturities and comparable risk.

Reclassification

Certain reclassification has been made to the previous year’s financial statements to conform to current year presentation with no effect on previously reported net loss.

Recent Accounting Pronouncements

F-10

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Going Concern and Management Plans.

The Company'’s consolidated ~~financial~~ financial statements are prepared using generally accepted accounting principles in the United States of America applicable to to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has an accumulated deficit of $1419,~~444~~473,~~371~~263 as of June 30, ~~2013~~2014, negative working capital and negative cash flows from operations for the year ended June 30, ~~2013~~2014.

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

The consolidated financial ~~statements~~ statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary ~~should~~ 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 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 continue to pursue additional external capitalization opportunities, as necessary, to fund its long-term goals and objectives.

The Company has taken significant steps to resolve these issues. The Company has pursued various sources of financing including asset based lending in order to relieve its cash flow deficiencies.

The Company has signed documention with both TCA Global Credit Master Fund, LLC ("TCA") and a lending source that will result in the repayment of $1,200,000 of the outstanding amount due TCA over a fifteen month period. The Company continues to negotiate for other capital that will pay off any balance due TCA.

The Company's future plans include the acquisition of another machine tool shop and another CNC machinery sales company. These acquisitions will add revenue and profit and will help to make the Company more attractive to prospective capital sources.

Inventories

Inventories consist of the following at June 30:

	2013			2012
	June 30, 2014			June 30, 2013
Finished goods and components	$	~~971~~1,~~099~~112,647		$	1971,~~157,918~~099
CNC machines held for sale		~~364~~152,~~583~~000			~~116~~364,~~000~~583
Work in progress		~~415~~327,~~108~~620			~~387~~415,~~969~~108
Raw materials and parts		514,~~120~~336			5,~~632~~120
		1,755,910			1,667,519
		1,606,603			1,755,910
Less: Reserve for inventories		(~~200~~175,~~000~~921	)		(58200,~~108~~000	)
Inventories, net.	$	1,555,910		$	1,609,411
	$	1,430,682		$	1,555,910

5. Related ~~Party Transactions~~Parties

As of June 30, 2014 and 2013, the amount due from related parties ~~of $99,348~~ includes an amount due from an officer of Elite amounting to $~~83,348~~0 ~~which is expected to be repaid to the Company within the next fiscal year. The Company advanced funds~~ and ~~paid various general expenses incurred by the related party during the course of business for the years ended June 30~~$99,348 ~~2013 and 2012~~respectively.

As of June 30, ~~2012,~~2014 ~~the~~and ~~amount~~2013, ~~due from related parties includes amounts advanced to an entity that is majority-owned by certain officers of~~ the Company ~~amounting~~owes ~~to 1~~$35,~~176,229 in~~954 ~~connection~~and ~~with~~$43,454 ~~its~~respectively, ~~planned~~to ~~acquisitions~~one of ~~the~~its ~~entity’s~~officers ~~subsidiaries.~~for ~~The~~expenses ~~acquisitions~~paid ~~did~~on ~~not~~behalf ~~push~~of ~~through and~~ the Company ~~has written off the outstanding balance as of June 30, 2013 amounting to $1,446,067~~.

~~F-12~~During the year ended June 30, 2014, two officers of the Company waived their salaries for the year totalling $390,000. The waived salaries were credited to additional paid in capital.

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2013, the Company owes $43,454 to one of its officers for expenses paid on behalf of the Company.

Property and Equipment

Property and equipment consists of the following at June 30:

	Estimated Useful life (in years)	~~Estimated Useful life (in years)~~	2014	~~2013~~		2013	~~2012~~
Machinery and equipment		7	$	2,~~603~~440,~~313~~562		$	2,~~435~~603,~~611~~313
Fixtures, fixtures and office equipment		3 to 5		341,308			321,973
Fixtures, Fixtures and office equipment		3 to 5		345,682			341,308
Vehicles		5		23,276			23,276
Leasehold improvements		3		105,298			105,298
				3,073,195			2,886,158
Total				2,914,818			3,073,195
Less - accumulated depreciation				(2,516,640	)		(2,343,108	)
Less accumulated depreciation				2,512,342			2,516,640
Property and equipment net.			$	556,555		$	543,050
			$	402,476		$	556,555

Depreciation expense was $~~173~~162,~~532~~079 and $~~192~~173,~~755~~ 532 for the years ended June 30, ~~2013~~2014 and ~~2012~~2013, respectively.

F-11

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accrued Expenses and Other

Accrued expenses and other consist of the following at June 30:

	2013		2012
	June 30, 2014		June 30, 2013
Compensation and related benefits	$	12,~~934~~023,~~314~~064	$	~~993~~1,~~077~~934,314
Audit fees		7246,~~500~~000		7772,500
Other		~~781~~525,~~883~~552		~~243~~781,~~488~~883
	$	2,~~788~~594,~~697~~616	$	12,~~314~~788,~~065~~697

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 June 30:

F-12

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	June 30, 2014			June 30, 2013
2014	$	53,901		$	54,501
2015		46,426			54,501
2016		-			36,241
2017		-			-
Total minimum lease payments		100,327			145,243
Less amount representing interest		-			-
Present value of future minimum lease payments		100,327			145,243
Less current portion of capital lease obligations		(53,901	)		(54,501	)
Capital lease obligations, net of current portion	$	46,426		$	90,742

Line of Credit

Main Credit: As of June 30, 2014 the Company owed $0 principal, which sum was paid in full in July 2013.

TCA Global Credit Master Fund, LLC:

The line of credit with Main Credit was replaced on April 30, 2013 with a line of credit from TCA Global Credit Master Fund, LLC (“TCA”) in the amount of $10 million. As of June 30, 2014, the Company has drawn $1,700,000 from the line of which $2,330,453, including interest, is outstanding as of 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. The Company has entered into a settlement agreement with TCA that results in the repayment of $1,200,000 of the TCA debt over a fifiteen month period. 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 Company’s assets.

F-13

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	2013		2012
2013	$	—	$	71,558
2014		54,501		—
2015		54,501		—
2016		36,241		—
2017		—		—
Total minimum lease payments		145,243		71,558
Less amount representing interest		—		—
Present value of future minimum lease payments		145,243		71,558
Less current portion of capital lease obligations		54,501		71,558
Capital lease obligations, net of current portion	$	90,742	$	—

10.

Notes Payable:

9. Line of Credit and Note Payable

Pacific Western Bank:

The Company owed $0 and $253,128 plus accrued interest as of June 30, 2013 and 2012 respectively.

Main Credit:

As of June 30, 2013 the Company owed $20,753 principal, which sum was paid in full in July 2013.

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

The line of credit with Main Credit was replaced on April 30, 2013 with a line of credit from TCA up to the amount of $10 million. As of June 30, 2013, the Company has drawn $1,700,000 from the line of which $1,681,973 is outstanding as of June 30, 2013. Amounts drawn from the line of credit are subject to interest of 18% per annum and the loan matured on October 31, 2013 but was extended for a further six months.

The line of credit with TCA Global Credit Master Fund, LP is secured by the receivables and inventory of Precision Aerospace and Technologies, Inc.. and E. M. Tool Co. Inc. and a blanket lien over all of the group’s assets.

10. Note Payable

Notes payable as of June 30 consist of:

	2013			2012
	June 30,			June 30,
Notes payable to a financial institution, secured by the underlying equipment in aggregate monthly installments of varying amounts, on a reducing balance method, with terms ranging from 48 to 50 months	$	422,940		$	253,129
	2014			2013
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
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		$	422,940
An unsecured note payable to a corporation in respect of accounting software payable in monthly installments of $ 1,923. This note was disputed and was written off in the absence of any collection activity for over four years.		-			46,811
One unsecured 5% convertible notes payable to a financial institution due March 4, 2015		110,000			-
An unsecured 12% convertible note payable to a financial institution due February 12, 2016		50,631			-
An unsecured 12% convertible note payable to a financial institution due January 31, 2015		21,500			-
Two unsecured 8% convertible notes payable in the sum of $110,751, to a financial institution due February 12, 2015		50,000			-
Two unsecured notes payable in the sum of $150,000, each, to a financial institution due 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			354,459
Two unsecured 8% 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		105,674			-
Three unsecured 8% convertible notes payable in the sum of $160,674 each, to a financial institution with $50,000 due on February 6, 2015 and $110,674 due on June 10, 2015		160,674			-
Three unsecured 8% convertible notes payable to a financial institution $50,000 due April 25, 2015, $75,000 due on December 25, 2015 and $125,662 due October 3, 2015		225,562			-
Two unsecured 8% convertible notes payable to a financial institution both due May 30, 2015		160,674			-
An unsecured 8% convertible note payable to a financial institution on due June 10, 2015		50,000			-
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		40,300			125,600
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 this note by October 15, 2015		57,120			115,050
An unsecured note payable to a corporation in weekday amounts of $841 each, through February 2014. This note is in default.		105,350			-
Less Debt Discount		(317,977	)		(69,996	)
TOTAL		1,142,778			994,864
Less - Current Portion		1,018,755			675,961
Long Term Portion	$	124,023		$	318,903
2015		124,023			123,780
2016		-			123,780
2017		-			71,343
2018		-			-
Thereafter		-			-
		124,023			318,903

In connection with one of the notes, the Company issued 17 million warrants that have a term of 5 years and an exercise price of $0.003 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 $54,400 were recognized as a debt discount and amortized over the term of the note.

F-14

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

An unsecured note payable to a corporation in respect of machines sold to us payable in monthly installments of $5,000 per month. This note was fully paid as of June 30, 2013.		—		17,070
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.		354,459		300,000
An unsecured note payable to a corporation in weekday amounts of $700 increasing to $1,650 in September 2013, and ending in December 2013, net of discount of $38,976		86,624		—
An unsecured note payable to a corporation in weekday amounts of $691.22 each and ending in December 2013, net of discount of $31,020.		84,030		—
TOTAL		994,864		617,010
Less - Current Portion		675,961		597,261
Long Term Portion	$	318,903	$	19,749
2014	$	675,961	$	597,261
2015		123,780		19,749
2016		123,780		—
2017		71,343		—
Thereafter		—		—
	$	994,864	$	617,010

11.

Litigation Payable

F-15

	June 30,2014		June 30,2013
An unsecured note payable to a corporation in settlement of a lawsuit payable in 12 monthly payments of $5,000.	$	210,000		60,000

Unsecured notes payable to various parties in settlement of lawsuits payable in full.		77,500		77,500

	$	287,500		137,500

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. Litigation Settlements Payable:

Litigation payable at June 30 consists of:	2013		2012
An unsecured note payable to a corporation in settlement of a lawsuit payable on the refinance of the Company's equipment; fully paid in 2013	$	—	$	48,316
An unsecured note payable to a corporation in settlement of a lawsuit payable in 12 monthly payments of $5,000		60,000		60,000
An unsecured note payable to a corporation in settlement of a lawsuit payable in 12 monthly installments of $1,000, fully paid in 2013		—		8,225
Unsecured notes payable to various parties in settlement of lawsuits payable in full		77,500		—
	$	137,500	$	116,541

12.

Commitments and Contingencies

Leases

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

Rent expense under operating leases was $~~460~~545,~~565~~ 177 and $~~383~~460,~~932~~ 565 for the years ended June 30, ~~2013~~2014 and ~~2012~~2013, respectively.

Future rent under lease agreements for the next five years are as follows:

	2014		$	457,410
2015		233,530
	2015			471,132
2016		287,242
	2016			463,174
2017		295,859
	2017			472,508
2018		304,735
	Thereafter			328,152
2019		313,877
			$	2,192,376
Thereafter		1,777,349

~~13. Litigation~~F-15

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

F-16

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13.

Litigation

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.

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.

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

AThe ~~provision~~company ~~has~~entered ~~been~~into ~~made~~a insettlement ~~the~~agreement for ~~June~~a ~~30,~~settlement ~~2013~~in ~~financial~~the ~~statements~~total ~~with~~amount ~~respect~~of to$37,500. ~~this~~However, ~~matter~~no inpayments ~~the~~have ~~sum~~been ofmade ~~$37,500~~to date.

~~The~~3. ~~Complaint~~Donald ~~was~~Yu ~~filed~~v. onM ~~June 8~~Line Holdings, ~~2009~~Inc., et al.; Case No. 30-2012-00574019- CU-BC-CJC

~~The~~This ~~Complaint~~is ~~alleges~~an ~~causes~~employment ofdispute asserted by a former ~~action~~employee ~~for~~against ~~account~~M Line ~~stated~~Holdings and ~~arises~~two ~~from~~corporate ainsiders, ~~claim~~Jitu byBanker ~~Hwacheon~~and ~~that~~Anthony ~~All~~Anish, ~~American~~in ~~CNC~~their ~~has~~respective ~~not~~individual capacities. ~~paid~~The itaction ~~for~~was ~~machines~~filed ~~sold~~in toOrange ~~All~~County ~~American CNC~~Superior Court on June 4, 2012. The ~~Complaint~~parties ~~seeks~~entered ~~damages~~into ofa ~~approximately~~settlement ~~$362~~agreement and stipulation for judgment against M Line Holdings,~~000~~ only, on about May 12, 2013. ~~All~~Pursuant ~~American~~to ~~filed~~the anterms ~~answer~~and onconditions of orthe ~~about~~settlement ~~July~~agreement, 15M Line agreed to pay $21,450.00 ~~2009~~in three (3) equal installments. ~~Default~~M Line ~~has~~Holdings failed ~~been~~to ~~entered~~make payment on a timely basis, and plaintiff filed a stipulated judgment against ~~All~~M Line ~~American~~Holdings ~~CNC~~on ~~Sales~~June 12, ~~Inc~~2013. Plaintiff also filed default judgments against Messrs. Banker and Anish.

In a hearing in the Superior Court of California, Hwacheon filed an alter ego case against Eran Engineering, Inc. (currently known as Precision Aerospace and Technologies, Inc.), E.M. Tool Company, Inc. and M Line Holdings, Inc. The judge granted the summary judgment against all three defendants in the amount of $403,861, including interest through February 8, 2011. Post judgment proceedings have been initiated by Hwacheon. The Company and Eran Engineering, Inc. (currently known as Precision Aerospace and Technologies, Inc.) filed an appeal, which later was dismissed pursuant to settlement.F-16

~~The~~In ~~Company~~response, ~~entered~~defendants ~~into~~filed a ~~revised~~motion ~~settlement~~to ~~agreement~~set ~~for~~aside athe ~~settlement~~defaults inand vacate the ~~total~~default ~~amount~~judgments ofagainst ~~$85,000,~~Messers. Banker and Anish as well as renegotiate the terms of ~~March~~the 31prior settlement with Plaintiff. On or about September 30, 2013, ~~which~~the ~~was~~parties ~~subsequently~~entered ~~paid~~into a supplemental settlement agreement and mutual release wherein the Company agreed to pay plaintiff the sum of $24,000 in ~~full~~two (2) equal installments. The onfirst ~~April~~installment 30of $12,000 ~~2013~~has already been paid.

AThe ~~satisfaction~~ final installment of ~~judgment~~$12,000 was due on or before October 30, 2013, and has not been ~~filed~~paid inat this ~~matter~~time. A judgment remains outstanding against the Company in the sum of $12,000.00.

4. ~~Fadal~~Subramani ~~Machining v. All American CNC Sales~~Srinivasan, et al., ~~Los~~v. ~~Angeles~~M ~~Superior~~Line ~~Court~~Holdings, ~~Los Angeles~~Inc., ~~California,~~et al.; Case No. ~~BC415693.~~30-2014-00724484-CU-CO-CJC

FThis 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-17Line Holdings, Inc.; Anthony Anish; Jitu Banker; Larry Consalvi; and Elite Machine Tools (collectively, “Defendants”).

~~M-LINE~~The ~~HOLDINGS~~parties entered into a settlement agreement against the corporate defendants on or about January 22, ~~INC~~2015. ~~AND~~Pursuant ~~SUBSIDIARIES~~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.

~~NOTES~~As TOof ~~CONSOLIDATED~~June ~~FINANCIAL~~2, ~~STATEMENTS~~2015, the corporate defendants have paid $20,000 and this case has been dismissed, which

effectively terminates all litigation in its entirety.

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

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.

This amount has been provided for in the June 30, 2014 finacial statements.

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~~579, and arises from a claim by Fadal that All American failed to pay amounts due. On June 26, 2009, Fadal amended the ~~Complaint~~complaint to include M Line Holdings, Inc. as a ~~Defendant~~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 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 was issued on February 24, 2012.F-17

5.The ~~Fox~~Company ~~Hills~~had ~~Machining~~made v.a ~~CNC~~provision ~~Repos~~in the sum of $60,000 ~~Orange~~in ~~County~~the ~~Superior~~financial ~~Court~~statements as of June 30, ~~Orange~~2013, ~~County~~which amount has been increased to $210,000 ~~California~~in the financial statements as of June 30, ~~Case~~2014 Noas no payments that were due under the settlement agreement have been made. ~~30-2009-00121514~~The increase to $210,000 includes the original amount due to the Plaintiff plus accrued interest. Judgment was entered on June 16, 2011, and a Writ was issued on February 24, 2012.

~~The~~7. ~~Complaint~~Fox ~~was~~Hills ~~filed~~Machining onv. ~~April 14~~CNC Repos, Orange County Superior Court, Orange County, California, Case No. 30-2009-00121514.

The ~~Complaint~~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~~filed on ~~August~~April 2714, ~~2012; a writ was issued on September 9, 2012~~2009.

~~However,~~The ancomplaint ~~agreement~~alleges ~~has been~~causes ~~entered~~of ~~into~~action ~~with~~for ~~Fox~~Declaratory Relief, ~~Hills~~Breach ~~Machinery~~of toContract, ~~pay~~Fraud, ~~off~~Common ~~the~~Counts, ~~judgment~~and inNegligent ~~the~~Misrepresentation, ~~sum~~claiming ofthe ~~$48,673.~~Defendant Afailed ~~sum~~to ofpay ~~$40,000~~Fox ~~has~~Hills Machining ~~been~~for ~~paid~~the ~~in installments~~sale of ~~$10,000~~two ~~each~~machines ~~effective~~from ~~November~~Fox 8,Hills ~~2013~~to ~~with~~CNC ~~the~~Repos. ~~final~~The ~~payment~~damages tosought bein ~~made~~the oncomplaint ~~December~~are 9,estimated ~~2013.~~to Abe ~~provision of~~approximately $4840,~~673~~000. ~~was~~Court ~~made~~records ~~for~~show ~~this~~that ~~matter~~a instipulated ~~the~~judgment ~~June~~was ~~30,~~entered ~~2013~~on ~~financial~~August ~~statements~~27, ~~which~~2012 and a writ was ~~fully~~issued ~~paid~~on inSeptember ~~December~~9, ~~2013~~2012.

6.However, C.an ~~William~~agreement ~~Kircher~~has ~~Jr.~~been ventered into with Fox Hills Machinery to pay off the judgment in the sum of $48,673. MA ~~Line~~sum ~~Holdings~~of $40,000 ~~Inc.~~has ~~Orange~~been ~~County~~paid ~~Superior~~in ~~Court~~installments ~~Case~~of ~~No.~~$10,000 ~~00397576~~each and the final payment of $8,673 being made on December 9, 2013.

ANo ~~former~~provision ~~attorney~~is ~~for~~required Min ~~Line~~this ~~Holdings, Inc.~~matter ~~has~~in ~~sued~~the ~~seeking~~June 30, ~~damages~~2014 ~~for~~financial ~~failure~~statements toas ~~pay~~the ~~legal~~plaintiff ~~fees~~has inbeen ~~the~~paid ~~amount~~in ~~of $120,166~~full.~~30.~~

~~The~~8. ~~parties~~C. ~~reached~~William aKircher ~~settlement~~Jr. ~~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~~v. ~~The~~M ~~Company~~Line ~~has issued the 150~~Holdings,~~000~~ ~~shares of common stock and made two payments to date~~Inc. ~~The~~Orange ~~Company~~County ~~has~~Superior aCourt ~~provision in~~Case ~~the sum of $50,000 in the financial statements as of June 30, 2013~~No. 00397576

~~The~~A ~~Company~~former ~~currently~~attorney isfor inM ~~default of~~Line ~~its~~Holdings, ~~payment obligations under the settlement~~Inc. ~~Plaintiff~~has ~~currently is~~ sued seeking todamages ~~obtain~~for afailure ~~judgment~~to aspay alegal ~~result~~fees ofin the ~~breach~~ amount of ~~the settlement agreement~~$120,166.

7.The ~~Timothy~~parties D.reached ~~Consalvi~~a vsettlement. MThe ~~Line~~terms ~~Holdings~~of the settlement call for 12 payments of $5,000 ~~Inc~~per month commencing August 25, 2011 and the issuance of 150,000 shares of common stock. The etCompany has issued the 150,000 shares of common stock and made two payments to date.~~al.~~ The Company has a provision in the sum of $50,000 ~~Orange~~in ~~County~~the ~~Superior~~financial ~~Court~~statements ~~Case~~as Noof June 30, ~~00308489~~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.

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

F-18

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A provision in the sum of $40,000 has been made in the financial statements as of June 30, ~~2013~~2014.

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

~~8. Joe Gledhill v. M Line Holdings, Inc., et. al.~~F- ~~Orange County Superior Court Case No. 30-2011-00506723~~18

9. M Line Holdings, Inc., v. Timothy Consalvi, et. al.- Orange County Superior Court Case No. 30-201100493329

10.

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

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

11.

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 subsequent to June 2030, 2013 in respect of an alleged deficiency in the machine supplied to Douglas Technologies. The ~~Company~~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.

~~12.~~No ~~Donald~~provision ~~Yu.~~is vrequired Min ~~Line~~this ~~Holdings,~~matter ~~Inc.,~~in ~~Anthony~~the LJune ~~Anish~~30, 2014 ~~and~~financial ~~Jitu~~statements ~~Banker,~~as etthe ~~al.,~~plaintiff ~~case~~has ~~number~~been ~~30-2012-005-740-19-CU-BC-CJC.~~paid in full

~~This~~12. ~~suit~~Alu ~~was~~Forge, ~~filed~~Inc., indba ~~respect~~American ~~of consulting~~Handforge ~~services rendered to the Company~~. ~~The~~v ~~Company~~Jitu ~~decided~~Banker, toPrecision ~~settle~~Aerospace ~~the~~& ~~lawsuit~~Technologies, Inc., and ~~thereby~~M ~~entered~~Line ~~into~~Holdings, aInc., ~~settlement~~et ~~agreement with~~al., ~~Donald~~case Yunumber 30-2013-00670772-CL-BC-CJC.

~~The~~This ~~case~~suit was ~~settled~~filed onin ~~September~~respect of materials supplied to ~~25,~~the ~~2013~~company. ~~for~~The ~~$24,000~~company ~~requiring~~decided ~~two~~to ~~payments~~settle ofthe ~~$12,000~~lawsuit ~~each,~~and ~~payable~~thereby onentered ~~September~~into ~~30,~~a ~~2013~~settlement ~~and~~agreement ~~October~~with ~~30,~~the ~~2013~~plaintiff.

The ~~Company~~case ~~made~~was ~~the~~settled ~~first~~on ~~payment~~October 31, 2013 for $19,500 with payments of $125,~~000~~250.00 on ~~September~~October 3031, 2013, ~~but~~$5,250 ~~has~~on ~~not~~November ~~made~~30, 2013 and the ~~second~~balance ~~payment~~of ~~due~~$9,000 on ~~October~~December 3031, 2013.

AThe ~~provision~~Company inhas ~~the~~made ~~sum~~all of the required ~~$24,000~~payments ~~has~~and ~~been~~therefore ~~made~~no provision is required in the financial statements as of June 30, ~~2013.~~2014

13.

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

All of the payments due to Plaintiff has been made and no provision is required as of June 30, 2014.

The Company moved out of its Tustin location in July 2014 and agreed the surrender of its lease with the landlord, Yates, Fontenot, Smith and Brum, LLC. No further action will be taken on this matter.

F-19

14.

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

15.

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 defendants owe funds that are due for the lease of certain equipment or plaintiffs want repossession of the equipment.

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

F-20

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1314. ~~Alu~~Income ~~Forge, Inc., dba American Handforge . v Jitu Banker, Precision Aerospace & Technologies, Inc., and M Line Holdings, Inc., et al., case number 30-2013-00670772-CL-BC-CJC.~~Taxes

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.

A provision in the sum of $19,500 has been made in the financial statements of the Company at June 30, 2013.

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

14. Yates, Fontenot, Smith and 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 comcerning the 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 the plaintiff shall file a request for dismissal with prejudice of the entire action by March 14, 2014.

A provision in the amount of $255,374 has been made in the financial statements as of June 30, 2013.

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 and accrued expenses and other in the consolidated balance sheet.

13. Income Taxes

The provision (benefit) for income taxes is comprised of the following for the years ended June 30:

	2013			2012
	Year ended			Year ended
Current tax expense	$	—		$	—
	June 30,			June 30,
Federal		360			—
	2014			2013
State		2,770			2,400
Current tax expense	$	-		$	-
Deferred		(16,710	)		—
Federal		-			360
	$	(13,580	)	$	2,400
State		1,894			2,770
Deferred		-			(16,710	)
	$	1,894		$	(13,580	)

The benefit for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The differences between the federal statutory tax rate of 34% and the effective tax rates are primarily due to state income tax provisions, net operating loss (“NOL”) carry forwards, deferred tax valuation allowance and permanent differences as follows for the years ended June 30:

F-20

	Year ended			Year ended
	June 30,			June 30,
	2014			2013
Federal tax at statutory rate		34	%		34	%
Permanent differences:
State income tax, net of federal benefit		9	%		9	%
Change in valuation allowance		(28	)%		(20	)%
Other		(15	)%		(23	)%
		0	%		0	%

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	2013			2012
Federal Tax at statutory rate		34	%		34	%
Permanent differences:
State Income Tax, net of federal benefit		9	%		11	%
Change in valuation allowance		(20	)%		(34	)%
Other		(23	)%		(3)	%
		0	%		8	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying value of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Deferred tax asset - current		2013		2012
Allowances for bad debt	$	12,666	$	14,816
Reserve for inventories		85,680		23,147
Accrued expenses		12,884		14,281
Other		15,390		14,311
		126,620		66,555

Non-current
Net operating loss carry forwards		1,414,764			659,149
Depreciation		9,767			25,767
Amortization of intangibles		40,822			2,800
		1,465,355			687,716
Total deferred tax assets		1,591,975			754,271
Valuation allowance		(1,591,975	)		(754,271	)
Net deferred tax assets	$	—		$	—
Miscellaneous deferred tax liability
Non-current	$	—		$	16,710

The Company’s income tax provision was computed based on the federal statutory rate and the average state statutory rates, net of the related federal benefit. As of June 30, 2013 and 2012 the Company had federal and state net operating loss (“NOL”) carry forwards of approximately $3.7 million and $550,000, respectively, net of Internal Revenue Code ("IRC") Section 382 limitations. If not used, these carry forwards will begin expiring between 2012 and 2021. These net operating losses are available to offset future regular and alternative minimum taxable income.

The Company has recorded as of June 30, 2013 a valuation allowance of $1,591,975, as it believes that it is more likely than not that the deferred tax assets will not be realizable in future years. Management has based its assessment on available historical and projected operating results.

F-21

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred tax assets at June 30, 2014 and 2013 consist of:
	Year ended June 30,			Year ended June 30,
	2014			2012
Deferred tax asset - current
Allowances for bad debt	$	19,507		$	12,666
Reserve for inventories		75,364			85,680
Accrued expenses		11,470			12,884
Other		15,390			15,390

	$	121,731		$	126,620

Deferred tax assets-non-current

Net operating loss carry forwards	$	3,381,274		$	1,414,764
Depreciation		9,768			9,767
Amortization of intangibles		50,212			40,822
	$	3,441,254		$	1,465,353

Total deferred tax asset	$	3,562,985		$	1,591,973
Valuation allowance		(3,562,985	)		(1,591,973	)
Net deferred tax asset	$	-		$	-

The Company’s income tax provision was computed based on the federal statutory rate and the average state statutory rates, net of the related federal benefit. As of June 30, 2014 and 2013 the Company had federal and state net operating loss (“NOL”) carry forwards of approximately $7.9 million and $7.7 million, respectively, net of Internal Revenue Code (“IRC”) Section 382 limitations. If not used, these carry forwards will begin expiring between 2012 and 2021. These net operating losses are available to offset future regular and alternative minimum taxable income.

The Company has recorded as of June 30, 2014 a valuation allowance of approximately $2.7 million, as it believes that it is more likely than not that the deferred tax assets will not be realizable in future years. Management has based its assessment on available historical and projected operating results.

F-22

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15.

Shareholders’ Equity

The Company’s articles of incorporation authorize up to ~~100~~1,000,000 ,000 shares of $0.001 par value common stock. Shares of common or preferential stock may be issued in one or more classes or series at such time as the Board of Directors determine.

The Company’s articles of incorporation authorize up to 1020,000,000 shares of $0.001 par value preferred stock.

The Company designated 200,000 shares as Series A ~~Preferred~~preferred shares. The Series A preferred shares are not entitled to dividends but are convertible to common shares.

During the year ended June 30, ~~2012~~2013, the Company issued the following shares of common stock:

·● 314,~~650~~840,000 common shares were issued to financial advisors ~~and other parties~~ in payment of services to the company. The Company valued ~~the~~these shares at the market price on the issuance date in the sum of $~~129~~467,~~000~~942.

·● The Company also issued 48,~~237,~~500,000 common shares in lieu of salaries and expenses due on behalf of related parties. The shares were valued at $~~234~~168,~~006~~700 based on the market price of the shares at the grant dates.

·During ~~412,800~~the ~~common~~year ~~shares~~ended ~~were~~June ~~issued~~30, to2013, ~~employees of~~ the Company asissued a200,000 Series ~~bonus~~A inPreferred ~~lieu of cash payments. The Company valued these~~ shares atto ~~the~~a ~~market~~lender ~~price~~in onconnection ~~the~~with ~~issuance date in~~ the ~~sum~~line of ~~$11,000~~credit.

During the year ended June 30, ~~2013~~2014, the ~~company~~Company issued the following shares of common stock:

·● 1412,~~840~~805,~~000~~130 ~~common~~ shares were issued to financial advisors and other parties in payment of services to the ~~company~~Company. The Company valued ~~these~~the shares at the market price on the issuance ~~date~~dates in the sum of $~~267~~67,~~942~~451.

·● ~~The Company also issued 8~~136,~~500~~062,~~000~~209 ~~common~~ shares inwere ~~lieu~~issued ofto ~~salaries~~financial ~~and~~institutions ~~expenses~~in ~~due~~connection onwith ~~behalf of related parties. The shares were valued at $168,700 based on~~ the ~~market~~conversion ~~price~~ of ~~the~~debt ~~shares~~and ataccrued ~~the~~interest ~~grant~~totaling ~~dates~~$446,489.

~~During~~● ~~the year ended June 30~~5, ~~2013~~100, ~~the Company issued 200,~~000 ~~Series~~shares Awere ~~Preferred~~issued ~~shares~~ to a ~~lender~~financial advisor in ~~connection~~respect ~~with~~of ~~the~~consulting ~~line~~services ofprovided ~~credit~~to the Company. These shares were valued ~~using~~ ~~the~~at ~~common~~market ~~share’s stock~~ price aton the issuance date ofin ~~grant using~~ the ~~“as~~sum ~~if” converted method. The fair value~~ of ~~the shares amounting to~~ $~~149~~40,~~274~~290. ~~was~~The Company recognized asa ~~deferred~~loss ~~financing~~on ~~costs~~settlement ~~and amortized over the term~~ of ~~the line of credit~~$35,190.

The Company also issued 6,000,000 shares in lieu of payroll and 13,000,000 shares to settle unpaid salaries due to officers. The shares were valued at $190,000 based on the market price of the shares at the grant date.

During the year ended June 30, 2014, the company did not issue any Preferred shares.

Non-Qualified Stock Option Plan

In November 2006, the Board approved a Non-Qualified Stock Option Plan for key managers, which, among other provisions, provides for the granting of options by the board at strike prices at or exceeding market value, and expiration periods of up to ten years. No stock options have been granted under this plan.

16. ~~Segments~~Fair ~~and~~Value ~~Geographic~~of ~~Information~~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 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.

F-23

The following table presents the derivative financial instrument, the Company’s only financial liability measured and recorded at fair value on the Company’s consolidated balance sheets on a recurring basis and their level of hierarchy:

As of June 30, 2014:

	Amount		Level 1		Level 2		Level 3
Embedded conversion derivative liability	$	634,769	$	-	$	-	$	634,769
Total	$	634,769	$	-	$	-	$	634,769

As of June 30, 2013:

Amount

Level 1

Level 2

Level 3

Embedded conversion derivative liability

Total

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 discount		832,572
Settlement of derivative liabilities to additional paid in capital		(1,144,321	)
Unrealized derivative loss included in other expense		946,518
Balance at June 30, 2014	$	634,769

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			June 30, 2014
50% of the market value of stock on measurement date	$	0.01 - 0.03		$	0.04 - 0.025
Risk-free interest rate		0.07 - 0.13	%		0.07 – 0.44	%
Dividend yield		0	%		0	%
Volatility factor		256 - 343	%		255 -334	%
Term		0.26 - 2 years			0.25 – 1.9 years

17.

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.

~~F-22~~Segment information is as follows as of and for the year ended June 30, 2014:

Segment Information for the year ended June 30, 2014	Machine Sales			Precision Manufacturing			Corporate			Total

Revenue	$	6,593,151		$	2,106,971		$	1,000		$	8,701,122

Interest expense		158,718			270,615			1,454,672			1,884,005
Depreciation and amortization		1,500			160,579			-			162,079
Loss before taxes		(636,758	)		(1,028,070	)		(3,364,064	)		(5,028,892	)
Total assets		374,911			1,783,300			85,138			2,243,349
Capital expenditures	$	-		$	8,000		$	-		$	8,000

Segment Information for the year ended June 30, 2013		Machine Sales			Precision Manufacturing			Corporate			Total
Revenue	$	5,810,909		$	3,513,776		$	-		$	9,324,685
Interest expense		44,913			266,400			186,052			497,365
Depreciation and amortization		3,000			166,745			3,787			173,532
Loss before taxes		(55,673	)		(1,361,221	)		(2,989,954	)		(4,406,848	)
Total assets		1,077,202			2,384,185			235,702			3,697,089
Capital expenditures	$	-		$	19,335		$	-		$	19,335

At June 30, 2014 the 2,100,000 shares of common stock of OR Holdings, Inc. held by M Line Holdings, Inc. was traded on the GXG Stock exchange in Europe. At that date the market value of the shares was $1.00 (.70 Euros) per share. However, since that date, OR Holdings, Inc. suspended its trading in advance of a move to Marche Libre Stock Exchange in Europe and the new listing has not been completed as yet. As a result revenue from financial services provided by M Line was reduced to a notional value of $1,000.

F-24

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Segment information is as follows as of and for the years ended June 30, 2013 and 2012:

	Machine Sales			Precision Manufacturing			Corporate			Total
Revenue	$	5,810,909		$	3,513,776		$	—		$	9,324,685
Interest expense		44,913			266,400			186,052			497,365
Depreciation and amortization		3,000			166,745			3,787			173,532
Loss before taxes		(55,673	)		(1,361,221	)		(2,989,954	)		(4,406,848	)
Total Assets		1,077,202			2,384,185			235,702			3,697,089
Capital Expenditure	$	—		$	19,335		$	—		$	19,335

Segment information for the year ended June 30, 2012:

	Machine Sales			Precision Manufacturing			Corporate			Total
Revenue	$	5,929,967		$	4,247,482		$	—		$	10,177,449
Interest expense		10,354			150,545			47,246			208,145
Depreciation and amortization		3,000			169,703			20,052			192,755
Loss before taxes		(57,142	)		(670,597	)		(38,103	)		(765,842	)
Total Assets		284,625			2,779,874			1,232,912			4,297,411
Capital Expenditure	$	—		$	337,191		$	—		$	337,191

Sales are derived principally from customers located within the United States

Long-lived assets consist of property, ~~plant~~ and equipment ~~and~~that ~~intangible assets and~~ are located within the United States.

F-2325

M-LINE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18. Subsequent Events

a. On July 1, 2014, the Company moved its corporate office and its precision manufacturing facility to our new facility at 2320 E Orangethorpe Avenue, Anaheim, CA 92806. The Company’s new lease is for a period from July 1, 2015 until August 31, 2024, The rent commenced at $23,353 per month and increases annually. The Company has an option for a ten year extension of the lease on final terms to be agreed.

b. 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 the Company’s filings are current and will then receive $80,000 per month for 13 months and $60,000 in the 15^th month. These payments may be accelerated at any time. In addition the balance of the note due TCA will be paid through financing being obtained from an asset based lender. TCA will release their liens on the Company at that time.

c. Since July 1, 2014 the Company has converted notes and unpaid interest totalling $306,977 to 668,818,367 common shares.

d. Since July 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.

e. In October 2014, M Line Holdings, Inc. formed a new 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 Financial Services, Inc.

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

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

F-26

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There are no items required to be reported under this Item.

Item 9A Controls and Procedures

(a) 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 June 30, ~~2013~~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~~ executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding ~~required~~ required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of June 30, ~~2013~~2014, our disclosure controls and procedures were not effective at the reasonable assurance level due to the ~~material~~ material weaknesses identified and described in Item 9A(b).

(b) Management Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, as amended, as a process designed by, or under the supervision of, our principal executive and principal financial officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States and includes those policies and procedures that:

•	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and any disposition of our assets;
•	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
•	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Our management assessed the effectiveness of our internal control over financial reporting as of June 30, ~~2013~~2014. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on this assessment, Management has identified the following two material weaknesses that have caused management to conclude that, as of June 30, ~~2013~~2014, our disclosure controls and procedures, and our internal control over financial reporting, were not effective at the reasonable assurance level:

1. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.34

271. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. In addition there is a material weakness due to a lack of resources to handle technical and financial reporting maters for complex and unusual matters. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

2. We have not documented our internal controls ~~and have adequate internal controls over our financial reporting process~~. We have limited policies and procedures that cover the recording and reporting of financial transactions and accounting provisions. As a result we were delayed in our ability to calculate certain accounting provisions, such as inventory valuation and deferred taxes. While we believe these provisions are accounted for correctly in the attached audited financial statements our lack of internal controls led to a delay in the filing of this ~~Annual~~ Annual Report. We were required to provide written documentation of key internal controls over financial reporting beginning with our fiscal year ended June 30, 2009. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has ~~concluded~~ concluded that the control deficiency that resulted represented a material weakness. Management also recognized a material weakness due to the lack of resources in handling technical and financial reporting for complex and unusual transactions.

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the consolidated financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

(c) Remediation of Material Weaknesses

To remediate the material weakness in our documentation, evaluation and testing of internal controls we plan to engage a third-party firm to assist us in remedying this material weakness.

(d) Changes in Internal Control over Financial Reporting

There are no changes to report during our fiscal quarter ended June 30, ~~2013~~2014.

ITEM 9B – OTHER INFORMATION

There are no events required to be disclosed by the Item.

PART III

ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

The following table sets forth the names and ages of our current directors and executive officers, the principal offices and positions held by each person, and the date such person became a director or executive officer. Our executive officers are elected annually by the Board of Directors. The directors serve one year terms until their successors are elected. The executive officers serve terms of one year or until their death, resignation or removal by the Board of Directors. Unless described below, there are no family relationships among any of the directors and officers.

Name	Age	Position~~(s)~~
George Colin	81	Director (3/09), Chief Executive Officer (12/08)
Bruce Barren	74	Chief Executive Officer (8/13) / Director (8/13)
Jitu Banker	74	Chief Financial Officer (3/09) and Director (3/09)
Anthony L. Anish	66	Chief Operating Officer (8/13) / Secretary (6/11) Director 6/11
Anthony Anish	65	Secretary (6/11) and Director (6/11)
Jitu Banker	74	Chief Financial Officer (3/09) / Director (1/09)
George Colin	84	Chairman of the Board (8/13) / Director (1/09)

Bruce Barren is the CEO of the company. Bruce has been involved in the aerospace industry for some 45 years working with companies that manufacture component parts and defense electronics, including as CEO of Hydro-Mill and as a key advisor of Mexmill both of which were sold at 1x plus revenue. Mr. Barren is also Group Chairman of the EMCO/Hanover Group (see website: www.emcohanover.com), which, since its inception in 1971, has concluded more than $3+ billion in financial transactions worldwide as international merchant bankers. He has been involved in 200+ business turnarounds and emerging businesses, either as an advisor or CEO.

Anthony Anish became a Director in early 2011 and is currently the COO and Company Secretary Mr. Anish has expensive business and financing experience having been involved in many growth businesses both in the USA but also in England. Mr. Anish has been managing M Line Holdings, Inc. since March 2009 and has overseen the recovery of the group during the very difficult economic downturn. Mr. Anish qualified as a member of the Institute of Chartered Accountants in London, England in 1971.

Jitu Banker has served as one of the Company’s directors since January, 2009. Mr. Banker is currently the President and Chief Financial Officer of Money Line Capital, Inc., the Company’s largest shareholder. Since 1990, Mr. Banker has also been the owner of Banker & Co., a company specializing in tax, accounting, Internal Revenue Service audits, and other related services. Mr. Banker has a Bachelor of Arts in Accounting with Economics and is a member of the Institute of Chartered Accountants in England and Wales, the Institute of Management Accountants in London, England, and the American Institute of Certified Public Accountants

George Colin is the Chairman of the Board. Since 1994 Mr. Colin has been an independent consultant for numerous corporations regarding general business and investment decisions. From 1976 to 1994, Mr. Colin was the Chief Executive Officer and majority shareholder of Odyssey Systems. In this role he managed all aspects of the business. Mr. Colin also served as a lieutenant in the U.S. Navy. Mr. Colin received NROTC officer training at Villanova University and obtained a BSCE in 1955.

Anthony Anish became a Director in early 2011 and is currently the COO and Company Secretary. Mr. Anish has extensive business and financing experience having been involved in many growth businesses both in the USA but also in England. Mr. Anish has been managing M Line Holdings, Inc. since March 2009 and has overseen the recovery of the group during the very difficult economic downturn. Mr. Anish qualified as a member of the Institute of Chartered Accountants in London, England in 1971.

Jitu Banker has served as one of the Company’s directors since January, 2009. Mr. Banker is currently the President and Chief Financial Officer of Money Line Capital, Inc., the Company’s largest shareholder. Since 1990, Mr. Banker has also been the owner of Banker & Co., a company specializing in tax, accounting, Internal Revenue Service audits, and other related services. Mr. Banker has a Bachelor of Arts in Accounting with Economics and is a member of the Institute of Chartered Accountants in England and Wales, the Institute of Management Accountants in London, England, and the American Institute of Certified Public Accountants.

Other Directorships

None of our officers and directors are directors of any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.

Audit Committee

We do not currently have an audit committee.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers and persons who own more than ten percent of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater than ten percent shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

During the most recent fiscal year, to the Company’s knowledge, the following delinquencies occurred:

		No. of	No. of
	No. of Late	Transactions	Failures to
Name	Reports	Reported Late	File
George Colin	0	0	0
Jitu Banker	0	0	0

Anthony Anish	0	0	0
Money Line Capital, Inc.	0	0	0

Board Meetings and Committees

During the fiscal year ended June 30, ~~2013~~2014, the Board of Directors met on a regular basis and took written action on numerous other occasions. All the members of the Board attended the meetings. The written actions were by unanimous consent.

Code of Ethics

We have not adopted a written code of ethics, primarily because we believe and understand that our officers and directors adhere to and follow ethical standards without the necessity of a written policy.

2937

ITEM 11 - EXECUTIVE COMPENSATION

Executive Officers and Directors. The following tables set forth certain information about compensation paid, earned or accrued for services by (i) our Chief Executive Officer and (ii) all other executive officers who earned in excess of $100,000 in the fiscal year ended June 30, ~~2013~~2014, ~~2012~~2013 and ~~2011~~ 2012 (“Named Executive Officers”):

Name and principal position	Year		Salary ($)		~~Salary ($)~~		Bonus $		~~Bonus $~~		Stock Awards ($)*		Stock Awards ($)*		Option Awards ($)*		Option Awards ($)*		Non-Equity Incentive Plan Compensation ($)		~~Non-Equity Incentive Plan Compensation ($)~~		Nonqualified Deferred Compensation ($)		~~Nonqualified Deferred Compensation ($)~~		All Other Compensation ($)		~~All Other Compensation ($)~~		Total ($)		~~Total ($)~~
George Colin (1) Chief Executive Officer	2014	~~2013~~		-		—		-		—		-		—		-		—		-		—		-		—		-		—		-		—
		2012				—				—				—				—				—				—				—				—
	2013			-				-				-				-				-				-				-				-
		2011				—				—				—				—				—				—				—				—
	2012			-				-				-				-				-				-				-				-
Jitu Banker (2) Chief Financial Officer	2014	~~2013~~		#		~~135,000~~		-		~~200,000~~		-		—		-		—		-		—		-		—		-		—		-		~~335,000~~
		2012				180,000				—				—				—				—				—				—				180,000
	2013			135,000				200,000				-				-				-				-				-				335,000
		2011				112,000 (2)				—				—				—				—				—				—				112,000 (2)
	2012			180,000				-				-				-				-				-				-				180,000
Anthony Anish (3) Chief perations Officer/Secretary		2013				135,000				200,000				—				—				—				—				—				335,000
Anthony Anish (3) Chief Operations Officer/Secretary	2014			#				-				-				-				-				-				-				-
		2012				96,912				—				—				—				—				—				—				96,912
	2013			135,000				200,000				-				-				-				-				-				335,000
		2011				—				—				—				—				—				—				—				—
	2012			96,912				-				-				-				-				-				-				96,912
Robert Sabahat (3) Former Secretary		2011				—				—				—				—				—				—				—				—
Bruce Barren(4) CEO	2014			90,000#				-				-				-				-				-				-				90,000

	*	Based upon the aggregate grant date fair value calculated in accordance with ASC 718-Compensation-Stock Compensation. Our policy and assumptions made in valuation of share based payments are contained in the Notes to our June 30, 2013 financial statements.
	(1)	George M. Colin was hired as our Chief Executive Officer on December 9, 2008.
	(2)	Jitu Banker was hired as our Chief Financial Officer on March 31, 2009. Of the $112,000 of compensation for Mr. Banker in 2011, $98,000 is accrued compensation.
	(3)	Robert Sabahat was hired our Secretary effective March 31, 2009 and resigned from his position on June 7, 2011.
	(4)	Mr. Anish was hired as our Secretary on June 7, 2011.

*	Based upon the aggregate grant date fair value calculated in accordance with the Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standard (“FAS”) No. 123R, Share Based Payment. Our policy and assumptions made in valuation of share based payments are contained in the Notes to our June 30, 2014 financial statements.

#	Salaries in the amounts of $210,000 for Mr. Anish and $180,000 for Mr. Banker due per the terms of their respective employment agreements were waived. These salaries were expensed in the profit and loss account and credited to paid in capital. Mr. Barren received 3,000,000 shares at the time he became CEO and 6,000,000 shares during the fiscal year in lieu of payroll.

(1)	George M. Colin was hired as our Chief Executive Officer on December 9, 2008 and resigned on August 8, 2013

(2)	Jitu Banker was hired as our CFO in March 31, 2009.

(3)	Anthony Anish was hired as our Secretary on June 7, 2011

(4)	Bruce Barren was hired as our CEO on August 8, 2013

+	These amounts were accrued in 2013.

Employment Contracts

We have written employment agreements with two of our executive officers, Mr. Anthony Anish and Mr. Jitu Banker

3039

Agreement with Anthony Anish. On July 1, 2011, we entered into an employment agreement with Anthony L Anish to serve as our Chief Operating Officer and Secretary, of M Line Holdings, Inc. , at a compensation rate of $210,000 per annum. The initial term of this employment agreement is for three years commencing July 1, 2011, with renewals based on the mutual consent of employee and the company unless terminated by either party. The agreement also provides that for a period of 12 months following termination of the employment agreement, Mr. Anish shall not (i) compete with respect to any services or products of the Company which are either offered or are being developed by the Company, (ii) disclose any information about our affairs including trade secrets, know-how, customer lists, business plans, operational methods, policies, suppliers, customers or other such Company information, nor (iii) use or employ any of our information for his own benefit or in any way adverse to our interests. This contract was replaced with a new contract on January 1, 2015.

Agreement with Jitu Banker. On July 1, 2011, we entered into an employment agreement with Jitu Banker to serve as our Chief Financial Officer, of M Line Holdings, Inc. , at a compensation rate of $180,000 per annum. The initial term of this employment agreement is for three years commencing July 1, 2011, with renewals based on the mutual consent of employee and the company unless terminated by either party. The agreement also provides that for a period of 12 months following termination of the employment agreement, Mr. Banker shall not (i) compete with respect to any services or products of the Company which are either offered or are being developed by the Company, (ii) disclose any information about our affairs including trade secrets, know-how, customer lists, business plans, operational methods, policies, suppliers, customers or other such Company information, nor (iii) use or employ any of our information for his own benefit or in any way adverse to our interests. This contract was replaced with a new contract on January 1, 2015.

Director Compensation

The following table sets forth director compensation as of June 30, ~~2013~~2014:

									Nonqualified
	Fees Earned						Non-Equity		Deferred
	or Paid in						Incentive Plan		Compensation		All Other
	Cash		Stock Awards		Option Awards		Compensation		Earnings		Compensation		Total
Name	($)		($) *		($) *		($)		($)		($)		($)
George Colin (1)		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Jitu Banker (2)		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Robert Sabahat (3)		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Bruce Barren (3)		-0-		-0-		-0-		-0-		-0-		-0-		-0-
Anthony Anish (4)		-0-		-0-		-0-		-0-		-0-		-0-		-0-

Based upon the aggregate grant date fair value calculated in accordance with the Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standard (“FAS”) No. 123R, Share Based Payment. Our policy and assumptions made in valuation of share based payments are contained in the notes to our financial statements. The monies shown in the “option awards” column is the total calculated value for each individual.

	(1)	George M. Colin was appointed to our Board of Directors on January 28, 2009.
	(2)	Jitu Banker was appointed to our Board of Directors on January 28, 2009.
	(3)	Robert Sabahat was appointed to our Board of Directors on March 31, 2009, and resigned on June 7, 2011.
	(4)	Anthony Anish was appointed to our Board of Directors on June 7, 2011.

	(3)	Bruce Barren was appointed to our Board of Directors on August 8, 2013.
	(4)	Anthony Anish was appointed to our Board of Directors on June 7, 2011.

We do not provide any compensation to our directors for serving as directors.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth certain information concerning outstanding stock awards held by the Named Executive Officers as of June 30, ~~2013~~2014:

31Option Awards Stock Awards Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) George Colin - - - - - - - - - Jitu Banker - - - - - - - - - Anthony Anish - - - - - - - - - Bruce Barren - - - - - - - - -

Option Awards Stock Awards Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) George Colin — — — — — — — — — Jitu Banker — — — — — — — — — Anthony Anish — — — — — — — — — Robert Sabahat — — — — — — — — —

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth, as of ~~September~~ June 30, ~~2013~~2014, certain information with respect to the Company’s equity securities owned of record or beneficially by (i) each Officer and Director of the Company; (ii) each person who owns beneficially more than 10% of each class of the Company’s outstanding equity securities; and (iii) all Directors and Executive Officers as a group.

Common Stock
Title of Class	Name and Address of Beneficial Owner (3)	Amount and Nature of Beneficial Ownership			Percent of Class (1)
Common Stock	George Colin (2)		3,790,468			51.256	%
Common Stock	Jitu Banker (2)		712,350,000	(4)		105.008	%
Common Stock	Anthony Anish (2)		813,432,500			~~11.~~5.52	%
Common Stock	Bruce Barren (2)		39,000,000			43.170	%
Common Stock	Money Line Capital, Inc. 17702 Mitchell North, Suite 201 Irvine, CA 92614		157,~~818~~068,~~476~~748	(6)		212.691	%
Common Stock	All Directors and Officers As a group (4 persons)		2238,572,~~968~~544			3015.886	%

	(1)	Unless otherwise indicated, based on 73,211,145 shares of common stock issued and outstanding. Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage of the person holding such options or warrants, but are not deemed outstanding for the purposes of computing the percentage of any other person.
	(2)	Indicates one of our officers or directors.
	(3)	Unless indicated otherwise, the address of the shareholder is M Line Holdings, Inc.
	(4)	Includes 25,000 shares held by Mr. Banker’s son.
	(5)	All three of our officers and directors own stock in Money Line Capital, Inc., but none individually or as a group control Money Line’s investment or control decisions, and, therefore, disclaim ownership of Money Line Capital’s stockholdings, including our common stock.
	(6)	Includes 1,110,000 shares not owned by Money Line Capital, but controlled by irrevocable proxy.

	(1)	Unless otherwise indicated, based on 243,178,484 shares of common stock issued and outstanding. Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage of the person holding such options or warrants, but are not deemed outstanding for the purposes of computing the percentage of any other person.
	(2)	Indicates one of our officers or directors.
	(3)	Unless indicated otherwise, the address of the shareholder is M Line Holdings, Inc.
	(4)	Includes 25,000 shares held by Mr. Banker’s son.
	(5)	All three of our officers and directors own stock in Money Line Capital, Inc., but none individually or as a group control Money Line’s investment or control decisions, and, therefore, disclaim ownership of Money Line Capital’s stockholdings, including our common stock.
	(6)	Includes 1,110,000 shares not owned by Money Line Capital, but controlled by irrevocable proxy.

The issuer is not aware of any person who owns of record, or is known to own beneficially, ten percent or more of the outstanding securities of any class of the issuer, other than as set forth above. There are no classes of stock other than common stock issued or outstanding.

~~Change of Control Transaction~~43

OnITEM ~~June~~13 30, 2010, we entered into a binding letter of intent (“LOI”) with Money Line Capital, Inc. (“MLCI”), our largest shareholder. Under the LOI the parties agree to complete a transaction whereby all the MLCI shareholders will exchange their shares of MLCI stock for shares of our stock. No cash will be exchanged in this transaction. The parties had agreed to negotiate in good faith to close the transaction on or before January 29, 2010, however due to the downturn in the economy, MLCI’s inability to complete the required audits, and the desire of our Board of Directors to get as favorable a valuation for our common stock as possible, the parties have put the merger transaction on hold indefinitely. In order for us to finalize the transaction we must be current in our reporting obligations under the Securities and Exchange Act of 1934, as amended, and be publicly-~~traded at~~ ~~the~~CERTAIN ~~time~~RELATIONSHIPS ofAND ~~the~~RELATED ~~closing; and MLCI must have its financial statements (and its subsidiaries~~TRANSACTIONS, ~~as applicable) audited for the period~~AND ~~ended~~DIRECTOR ~~June 30, 2011, as well as completing a valuation by a qualified third-party company~~INDEPENDENCE. ~~We have re-evaluated the acquisition of MLCI as a whole and now plan to acquire certain subsidiaries of MLCI one at a time in order to reduce the costs associated with this transaction.~~

Technically the transaction will not result in a change of control since the shares currently held by Money Line Capital, Inc., the owner of 21.6% of our common stock, will be retired and become treasury shares, and the new owners of a majority of our common stock will be the shareholders of Money Line Capital at the time of the closing of the transaction.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Letter of Intent with Money Line Capital, Inc. On June 30, 2010, we entered into a binding Letter of Intent (the “LOI”) with Money Line Capital, Inc., a California corporation (“MLCI”). MLCI is our largest shareholder and specializes in business financing transactions and holds equity in a number of operating subsidiaries in various fields, including financing, aerospace, real estate, media, beverage, and technology. Under the LOI the parties agree to complete a transaction whereby all the MLCI shareholders will exchange their shares of MLCI stock for shares of our stock. No cash will be exchanged in this transaction. The parties had agreed to negotiate in good faith to close the transaction on or before January 29, 2010, however due to the downturn in the economy, MLCI’s inability to complete the required audits, and the desire of our Board of Directors to get as favorable a valuation for our common stock as possible, the parties have put the merger transaction on hold indefinitely. In order for us to finalize the transaction we must be current in our reporting obligations under the Securities and Exchange Act of 1934, as amended, and be publicly-traded at the time of the closing; and MLCI must have its financial statements (and its subsidiaries, as applicable) audited for the period ended June 30, 2011, as well as completing a valuation by a qualified third-party company.

We have re-evaluated the acquisition of MLCI as a whole and now plan to acquire certain subsidiaries of MLCI one at a time in order to reduce the costs associated with this transaction.

Assignment of Gledhill Note. On March 25, 2009, we entered into an Assignment of Promissory Note and Consent Thereto (the “Assignment”) with MLCI, under which MLCI agreed to assume our repayment obligations to Joseph Gledhill and Joyce Gledhill under that certain $650,000 principal amount Promissory Note dated December 8, 2008 (the “Gateway Note”) in exchange for the issuance of 3,250,000 shares of our common stock (the “Shares”). Mr. Gledhill, one of our former directors, and Joyce Gledhill consented to the Assignment. Pursuant to the Assignment, MLCI and the Gledhill’s entered into a new $650,000 principal amount secured promissory note, a security agreement and a pledge agreement. We issued the 3,250,000 shares of our common stock to MLCI on June 30, 2009.

~~MLCI~~Leavitt ~~Demand Note.~~Family weTrust ~~entered into a Demand Promissory~~ Note. ~~dated~~We ~~March~~currently ~~25,~~have ~~2009~~an ~~(the~~unsecured note ~~“Note”),~~payable ~~evidencing~~to ~~the~~a ~~terms~~stockholder ~~under which~~payable ~~MLCI~~in ~~will~~monthly ~~loan~~installments usof ~~up to~~ $~~500~~4,~~000~~505 onper anmonth, ~~“as~~non-interest ~~needed”~~bearing, ~~basis~~including ~~for working capital purposes. The Note accrues~~ interest imputed at ~~a of 10~~12% per annum~~. Under~~ ~~the~~for ~~terms~~financial ofstatement ~~the Note~~purposes, ~~MLCI is not obligated to loan us any money, but the Note sets forth the terms~~ in the ~~event~~aggregate ~~MLCI~~amount ~~elects~~of ~~to loan us money for working capital purposes. Through June 30, 2013, MLCI loaned us~~ $~~0 under this Note~~139,641. As of June 30, ~~2013~~2014, ~~we had repaid all loan amounts in full and there was~~ $028,533 remains outstanding.

Leavitt Family Trust Note. We currently have an unsecured note payable to a stockholder payable in monthly installments of $4,505 per month, non-interest bearing, including interest imputed at 12% per annum for financial statement purposes, in the aggregate amount of $139,641. As of June 30, 2013, $28,533 remains outstanding.

Joseph Gledhill Note. We had a second unsecured note payable outstanding to Joseph T.W. Gledhill, a former officer and director, and a current stockholder, which was due January, 2009, with interest of 6% per annum, in the aggregate amount of $706,200. This note consolidated earlier promissory notes issued by us in favor of Mr. Gledhill. This loan from Mr. Gledhill was used for working capital requirements. This note was assigned to Money Line Capital, Inc. on March 25, 2009 in exchange for the issuance of 3,250,000 shares of our common stock to Money Line Capital, Inc., which were issued on June 30, 2009. As a result of the assignment this note is no longer an obligation of the company.

We do not have an audit, compensation, or nominating committee, and none of our Directors are considered independent.

We have not had a promoter during the last five fiscal years.

ITEM 14 – PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit and Restated Fees

During the year ended June 30, ~~2013~~2014, Malone Bailey ~~Kabani & Company~~ charged $4583,~~000~~383, in fees for professional services for the audit of our financial statements inand ~~our~~the review of our Form 10-Q, ~~review~~quarterly of financial statements. During the year ended June 30, ~~2012~~2013, ~~Kabani~~Malone &Bailey ~~Company~~ charged us $~~120~~55,000 in fees for professional services for the audit of our financial statements and Kabani and Co. charged $55,000 for the review of our Form 10-Q quarterly financial statements.

During the year ended June 30, 2013, we appointed MaloneBailey, LLP as our new auditors who will charge us the sum of $45,000 for the audit of our financial statements in our form 10K, audit of our financial statements.

Tax Fees

During the year ended June 30, ~~2013~~2014, ~~Kabani & Company and/or~~ MaloneBailey, ~~LLP~~ billed us $0 for professional services for tax preparation. During the year ended June 30, ~~2012~~2013, Kabani & Company billed us $0 for professional services for tax preparation.

All Other Fees

During the year ended June 30, ~~2013~~2014, neither Kabani & Company nor MaloneBailey, ~~LLP~~ billed us any amounts for any other fees. During the year ended June 30, ~~20121~~2013, Kabani & Company did not bill us any amounts for any other fees.

Of the fees described above for the year ended June 30, ~~2013~~2014, 100% were approved by the entire Board of Directors.

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PART IV

ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements

The following financial statements are filed as part of this report:

Report of Registered Public Accounting Firm - MaloneBailey, LLP	F-1
Report of Registered Public Accounting Firm	F-1
Report of Registered Public Accounting Firm - Kabani & Company, Inc.	F-2
Consolidated Balance Sheets as of June 30, 2014 and 2013	F-2
Consolidated Balance Sheet as of June 30, 2013 and 2012	F-3
Consolidated Statements of Operations for the years ended June 30, 2014 and 2013	F-3
Consolidated Statements of Operations for the years ended June 30, 2013 and 2012	F-4
Consolidated Statements of Shareholders’ Deficit for the years ended June 30, 2014 and 2013	F-4
Consolidated Statements of Shareholders’ Equity for the years ended June 30, 2013 and 2012	F-5
Consolidated Statements of Cash Flows for the years ended June 30, 2014 and 2013	F-5
Consolidated Statements of Cash Flows for the years ended June 30, 2013 and 2012	F-6
Notes to Consolidated Financial Statements	F-6
Notes to Consolidated Financial Statements	F-8

(a)(2) Financial Statement Schedules

We do not have any financial statement schedules required to be supplied under this Item.

(a)(3) Exhibits

Refer to (b) below.

(b) Exhibits

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
3.3 (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)		Employment Agreement with Timothy D. Consalvi dated February 1, 2007
10.5 (1)		Employment Agreement with Joseph T.W. Gledhill dated February 5, 2007
10.6 (2)		Employment Agreement with Lawrence A. Consalvi dated February 5, 2007
10.7 (1)		Share Exchange Agreement with Gledhill/Lyons, Inc. dated March 26, 2007
10.8 (1)		Share Exchange Agreement with Nu-Tech Industrial Sales, Inc. dated March 19, 2007

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10.5 (1)		Employment Agreement with Anthony L. Anish dated January 1, 2015
10.6 (2)		Employment Agreement with Jitendra Banker dated January 1, 2015
10.7 (1)		Settlement Agreement with TCA Global Credit Master Fund, LP
10.8 (1)
10.9 (1)		Fee Agreement with Steve Kasprisin dated April 30, 2008
10.10 (3)		Separation Agreement by and between Gateway International Holdings, Inc., and Mr. Lawrence A. Consalvi dated September 26, 2008
10.11 (4)		Sales Agent Agreement by and between Gateway International Holdings, Inc., and Mr. Lawrence A. Consalvi dated September 30, 2008
10.12 (4)		Loan Agreements with Pacific Western Bank dated September 20, 2008
10.13 (5)		Assignment of Promissory Note and Consent Thereto by and between M Line Holdings, Inc. and Money Line Capital, Inc. dated March 24, 2009
10.14 (5)		M Line Holdings, Inc. Demand Note for up to $500,000 dated March 25, 2009
10.15 (6)		Letter of Intent by and between M Line Holdings, Inc. and Money Line Capital, Inc. dated June 30, 2010
10.16 (8)		Securities Purchase Agreement and Convertible Promissory Note with Asher Enterprises, Inc. dated April 26, 2010 (filed herewith)
10.17 (8)		~~Convertible Promissory Note with Asher Enterprises, Inc. dated May 25, 2010~~
10.18 (8)		Commercial Real Estate Lease with SG&H Partners, L.P. for Anaheim Property dated ~~August~~July 131, ~~2010~~2015
10.19 (8)		Business Loan Agreement with Pacific Western Bank dated June 7, 2010
10.20 (8)		Loan and Security Agreement and Note with Utica Leaseco, LLC (filed herewith)
10.21 (8)		Note and Stock Purchase Agreements with Spagus Capital Partners, LLC (filed herewith)
10.19 (9)		Loan Agreements with TCA Global ~~Credit~~ Master Credit Fund, LP
10.22		Addendum No. 2 dated September 30, 2011 to Commercial Real Estate Lease dated February 15, 2007 for the office space located in Tustin, CA
10.19(10)		Convertible note agreement with Gel properties, LLC
10.23		Executive Employee Agreement with Barton Webb dated July 25, 2011
10.20 (10)		Convertible Note agreement with LG Funding, LLC
10.21 (10)		Covertible Note agreements with Beaufort Capital, LLC
10.22 (10)		Covertible 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		Convertible Note with JMJ Financial
10.23		Addendum No. 2 dated September 30, 2011 to Commercial Real Estate Lease dated February 15, 2007 for the office space located in Tustin, CA
10.24		Executive Employee Agreement with Barton Webb dated July 25, 2011
21 (7)		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.

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: December 31, 2013	/s/ George Colin
Dated: June 23, 2015	/s/ Bruce Barren
	By:	~~George~~Bruce ~~Colin~~Barren
		Chief Executive Officer
		and a Director
Dated: December 31, 2013	/s/ Jitu Banker
Dated: June 23, 2015	/s/ Jitu Banker
	By:	Jitu Banker
		Chief Financial Officer
		and a Director
Dated: December 31, 2013	/s/ Anthony Anish
Dated: June 23, 2015	/s/ Anthony Anish
	By:	Anthony Anish
		Secretary and a Director

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Dated: December 31, 2013	/s/ George Colin
Dated: June 23, 2015	/s/ Bruce Barren
	By:	~~George~~Bruce ~~Colin~~Barren
		Chief Executive Officer
		and a Director
Dated: December 31, 2013	/s/ Jitu Banker
Dated: June 23, 2015	/s/ Jitu Banker
	By:	Jitu Banker
		Chief Financial Officer
		and a Director
Dated: December 31, 2013	/s/ Anthony Anish
Dated: June 23, 2015	/s/ Anthony Anish
	By:	Anthony Anish
		Secretary and a Director

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