Groen Brothers Aviation - Condensed Consolidated Statements of...

Groen Brothers Aviation - Recent Material Event

Item 1. Financial Statements

Condensed Consolidated Balance Sheet, December 31, 2007 (unaudited)

Condensed Consolidated Statements of Operations for the Three Months ended December 31, 2007 and 2006 (unaudited)

Condensed Consolidated Statements of Operations for the Six Months ended December 31, 2007 and 2006 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Six Months ended December 31, 2007 and 2006 (unaudited)

Notes to Condensed Consolidated Financial Statements

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

Item 3. Controls and Procedures


Part II - OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 3. Defaults Upon Senior Securities

Item 4. Submission of Matters to a Vote of Security Holders

Item 5. Other Information

Item 6. Exhibits

SIGNATURES

PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statements

GROEN BROTHERS AVIATION, INC.

Condensed Consolidated Balance Sheet (Unaudited)

December 31, 2007

Assets

Current assets:
Cash	$	4,000
Accounts receivable		275,000
Related party accounts and notes receivable		52,000
Prepaid expenses		182,000
Inventories		418,000
Total current assets		931,000

Property and equipment, net		804,000

Total assets	$	1,735,000

Liabilities and Stockholders’ Deficit

Current liabilities:
Bank Overdraft	$	46,000
Accounts payable		3,521,000
Accrued expenses		7,856,000
Deferred revenue		595,000
Short-term notes payable		568,000
Related party notes payable		16,039,000
Series B 15% cumulative redeemable non-voting preferred stock, no par value, 50,000,000 shares authorized, 60,975 shares issued and outstanding		63,262,000
Total current liabilities		91,887,000
Long-term liabilities:
Accrued expenses		4,966,000
Deferred revenue		25,000
Long-term debt		106,000
Related party long-term debt		931,000
Dealer deposits		2,145,000

Total liabilities		100,060,000

Stockholders’ deficit:
Series A convertible preferred stock, no par value, 50,000,000 shares authorized, 1,400,000 shares issue and outstanding		70,000
Common stock, no par value, 500,000,000 shares authorized, 154,970,681 shares issued and outstanding		32,694,000
Accumulated deficit		(131,089,000	)

Total stockholders’ deficit		(98,325,000	)

Total liabilities and stockholders’ deficit	$	1,735,000

See accompanying notes to condensed consolidated financial statements.

GROEN BROTHERS AVIATION, INC.

Condensed Consolidated Statements of Operations (Unaudited)

Three Months Ended December 31,



Revenues	$	1,545,000		$	1,749,000

Costs and expenses:
Cost of sales		2,048,000			2,106,000
Research and development		417,000			631,000
General and administrative expenses		733,000			497,000

Total costs and expenses		3,198,000			3,234,000

Loss from operations		(1,653,000	)		(1,485,000	)

Other income (expense):
Related party interest income		1,000			1,000
Interest and other income		6,000			3,000
Gain on extinguishment of debt		23,000			-
Interest expense		(826,000	)		(661,000	)
Series B preferred stock interest expense		(2,286,000	)		(4,364,000	)

Total other income (expense)		(3,082,000	)		(5,021,000	)

Loss before income taxes		(4,735,000	)		(6,506,000	)

Income tax benefit		-			-

Net loss	$	(4,735,000	)	$	(6,506,000	)


Net loss per share – basic and diluted	$	(0.03	)	$	(0.04	)

Weighted average number of common shares outstanding – basic and diluted		156,574,000			146,652,000

See accompanying notes to condensed consolidated financial statements.

GROEN BROTHERS AVIATION, INC.

Condensed Consolidated Statements of Operations (Unaudited)

Six Months Ended December 31,


Revenues	$	3,569,000	$	1,812,000

Costs and expenses:
Cost of sales		4,206,000		2,378,000
Research and development		676,000		1,102,000
General and administrative expenses		1,561,000