Groen Brothers Aviation - Condensed Consolidated Statements of...

Groen Brothers Aviation - Recent Material Event

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheet, March 31, 2008 (unaudited)	2

	Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2008 and 2007 (unaudited)	3

	Condensed Consolidated Statements of Operations for the Nine Months ended March 31, 2008 and 2007 (unaudited)	4

	Condensed Consolidated Statements of Cash Flows for the Nine Months ended March 31, 2008 and 2007 (unaudited)	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Controls and Procedures	35


Part II - OTHER INFORMATION

Item 1.	Legal Proceedings	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 3.	Defaults Upon Senior Securities	36

Item 4.	Submission of Matters to a Vote of Security Holders	37

Item 5.	Other Information	37

Item 6.	Exhibits	37

SIGNATURES		38

PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statements

GROEN BROTHERS AVIATION, INC.
Condensed Consolidated Balance Sheet (Unaudited)
March 31, 2008
Assets

Current assets:

Accounts receivable	$	518,000
Related party accounts and notes receivable		50,000
Prepaid expenses		188,000
Inventories		326,000
Total current assets		1,082,000

Property and equipment, net		706,000

Total assets	$	1,788,000

Liabilities and Stockholders’ Deficit

Current liabilities:
Bank Overdraft	$	28,000
Accounts payable		3,656,000
Accrued expenses		8,250,000
Deferred revenue		306,000
Short-term notes payable		563,000
Related party notes payable		16,895,000
Series B 15% cumulative redeemable non-voting preferred stock, no par value, 50,000,000 shares authorized, 65,637 shares issued and outstanding		65,634,000
Total current liabilities		95,332,000
Long-term liabilities:
Accrued expenses		5,084,000
Deferred revenue		25,000
Long-term debt		105,000
Related party long-term debt		931,000
Dealer deposits		2,105,000

Total liabilities		103,582,000

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, 162,125,376 shares issued and outstanding		33,437,000
Accumulated deficit		(135,301,000	)

Total stockholders’ deficit		(101,794,000	)

Total liabilities and stockholders’ deficit	$	1,788,000

See accompanying notes to condensed consolidated financial statements.

GROEN BROTHERS AVIATION, INC.
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended March 31,


Revenues	$	2,214,000		$	1,387,000

Costs and expenses:
Cost of sales		2,005,000			4,404,000
Research and development		70,000			241,000
General and administrative expenses		889,000			813,000

Total costs and expenses		2,964,000			5,458,000

Loss from operations		(750,000	)		(4,071,000	)

Other income (expense):
Related party interest income		1,000			1,000
Interest and other income		18,000			2,000
Gain on extinguishment of debt		23,000			-
Interest expense		(1,131,000	)		(671,000	)
Series B preferred stock interest expense		(2,373,000	)		(2,047,000	)

Total other income (expense)		(3,462,000	)		(2,715,000	)

Loss before income taxes		(4,212,000	)		(6,786,000	)

Income tax benefit		-			-

Net loss	$	(4,212,000	)	$	(6,786,000	)


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

Weighted average number of common shares outstanding – basic and diluted		154,080,000			149,739,000

See accompanying notes to condensed consolidated financial statements.

GROEN BROTHERS AVIATION, INC.
Condensed Consolidated Statements of Operations (Unaudited)
Nine Months Ended March 31,



Revenues	$	5,783,000	$	3,199,000