----

----

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

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

| Nevada                          | 88-0375818          |
|---------------------------------|---------------------|
| (State or other jurisdiction of | (I.R.S. Employer    |
| incorporation or organization)  | Identification No.) |

| 2672 Dow Avenue                                |             |
|------------------------------------------------|------------------|
| Tustin, CA                                     | 92780            |
|  (Address of principal executive offices) |  (Zip Code) |

| Large accelerated filer  ̈           | Accelerated filer  ̈    |
|-----------------------------------------------|----------------------------------|
|                                          |                             |
| Non-accelerated filer  ̈             | Smaller reporting company x |
| (Do not check if a smaller reporting company) |                             |

----

----

----

| PART I        |   |                                                                                         |   |   |
|---------------|--------|----------------------------------------------------------------------------------------------|--------|--------|
|          |   |                                                                                         |   |   |
| ITEM 1.       |   | Unaudited Financial Statements.                                                              |   | 3      |
|          |   |                                                                                         |   |   |
| ITEM 2.       |   | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |   | 17     |
|          |   |                                                                                         |   |   |
| ITEM 3.       |   | Quantitative and Qualitative Disclosures About Market Risk.                                  |   | 22     |
|          |   |                                                                                         |   |   |
| ITEM 4.       |   | Controls and Procedures.                                                                     |   | 22     |
|          |   |                                                                                         |   |   |
| PART II       |   |                                                                                         |   |   |
|          |   |                                                                                         |   |   |
| ITEM 1.       |   | Legal Proceedings.                                                                           |   | 25     |
|          |   |                                                                                         |   |   |
| ITEM 1A. |   | Risk Factors.                                                                                |   | 29     |
|          |   |                                                                                         |   |   |
| ITEM 2.       |   | Unregistered Sales of Equity Securities and Use of Proceeds.                                 |   | 29     |
|          |   |                                                                                         |   |   |
| ITEM 3.       |   | Defaults Upon Senior Securities.                                                             |   | 29     |
|          |   |                                                                                         |   |   |
| ITEM 4.       |   | Removed and Reserved.                                                                        |   | 29     |
|          |   |                                                                                         |   |   |
| ITEM 5.       |   | Other Information.                                                                           |   | 29     |
|          |   |                                                                                         |   |   |
| ITEM 6.  |   | Exhibits.                                                                                    |   | 30     |

----

|                                                                                                                                                              |   | As of December 31, |       |   | As of June 30, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|------------|--------|----------------|--------|
|                                                                                                                                                              |   | 2010               |       |   | 2010           |   |
|                                                                                                                                                              |   |               |       |   |           |   |
| Assets                                                                                                                                                            |   |               |       |   |           |   |
|                                                                                                                                                              |   |               |       |   |           |   |
| Current Assets:                                                                                                                                                   |   |               |       |   |           |   |
| Cash and cash equivalents                                                                                                                                         |   | $                  | 78,256     |   |           | $      | 50,410 |   |
| Accounts receivable, net                                                                                                                                          |   |               | 649,544    |   |           |   | 613,642 |   |
| Inventories                                                                                                                                                       |   |               | 825,972    |   |           |   | 751,300 |   |
| Due from related party                                                                                                                                            |   |               | 653,608    |   |           |   | 352,333 |   |
| Prepaid and other current assets                                                                                                                                  |   |               | 9,500      |   |           |   | 53,723 |   |
| Current Assets - Discontinued Operations                                                                                                                          |   |               | 8,113      |   |           |   | 8,113 |   |
| Total current assets                                                                                                                                              |   |               | 2,224,993  |   |           |   | 1,829,521 |   |
|                                                                                                                                                              |   |               |       |   |           |   |   |   |
| Property and equipment, net                                                                                                                                       |   |               | 646,884    |   |           |   | 813,203 |   |
| Intangible Assets, net                                                                                                                                            |   |               | 100,034    |   |           |   | 136,409 |   |
| Deposits and other                                                                                                                                                |   |               | 60,077     |   |           |   | 60,077 |   |
| Non Current Assets - Discontinued Operations                                                                                                                      |   |               | 23,377     |   |           |   | 23,377 |   |
| Total Assets                                                                                                                                                      |   | $                  | 3,055,364  |   |           | $      | 2,862,587 |   |
|                                                                                                                                                              |   |               |       |   |           |   |   |   |
| Liabilities and Shareholders' (Deficit) Equity                                                                                                                    |   |               |       |   |           |   |   |   |
|                                                                                                                                                              |   |               |       |   |           |   |   |   |
| Current Liabilities:                                                                                                                                              |   |               |       |   |           |   |   |   |
| Line of Credit                                                                                                                                                    |   | $                  | 218,889    |   |           | $      | 218,889 |   |
| Accounts Payable                                                                                                                                                  |   |               | 1,039,024  |   |           |   | 720,565 |   |
| Accrued Expenses and other                                                                                                                                        |   |               | 641,682    |   |           |   | 557,095 |   |
| Derivative liability                                                                                                                                              |   |               | 62,370     |   |           |   | 98,289 |   |
| Notes payable - current                                                                                                                                           |   |               | 165,809    |   |           |   | 272,941 |   |
| Convertible notes payable                                                                                                                                         |   |               | 100,000    |   |           |   | 100,000 |   |
| Capital Leases - current                                                                                                                                          |   |               | 47,211     |   |           |   | 46,527 |   |
| Current Liabilities - Discontinued Operations                                                                                                                     |   |               | 704,361    |   |           |   | 704,061 |   |
| Total Current Liabilities                                                                                                                                         |   |               | 2,979,346  |   |           |   | 2,718,367 |   |
|                                                                                                                                                              |   |               |       |   |           |   |   |   |
| Notes Payable - long term                                                                                                                                         |   |               | 45,087     |   |           |   | 19,750 |   |
| Capital Leases - long term                                                                                                                                        |   |               | 25,275     |   |           |   | 44,310 |   |
| Deferred Income Taxes                                                                                                                                             |   |               | 16,710     |   |           |   | 16,710 |   |
| Deferred Rent - long term                                                                                                                                         |   |               | 19,783     |   |           |   | 39,566 |   |
| Total liabilities                                                                                                                                                 |   |               | 3,086,201  |   |           |   | 2,838,703 |   |
|                                                                                                                                                              |   |               |       |   |           |   |   |   |
| Shareholders' (Deficit) Equity                                                                                                                                    |   |               |       |   |           |   |   |   |
| Common Stock, $0.001: 100,000,000 shares Authorized; 30,901,956 and 30,861,956 shares issued and outstanding at December 31, 2010 and June 30, 2010, respectively |   |               | 30,902     |   |           |   | 30,862 |   |
| Additional paid in capital                                                                                                                                        |   |               | 9,507,773  |   |           |   | 9,505,812 |   |
| Accumulated deficit                                                                                                                                               |   |               | (9,569,512 | )      |           |   | (9,512,790 | ) |
| Total stockholders' (deficit) equity                                                                                                                              |   |               | (30,838    | )      |           |   | 23,884 |   |
| Total Liabilities and Shareholders' (Deficit) Equity                                                                                                              |   | $                  | 3,055,364  |   |           | $      | 2,862,587 |   |

----

|                                                        |   | Three Month Periods Ended December 31, |       |   | Six Month Periods Ended December 31, |   |
|-------------------------------------------------------------|--------|-----------------------------------------------------------------|------------|--------|---------------------------------------------------------------|--------|
|                                                        |   | 2010                                                            |       |   | 2009                                                          |   |   | 2010 |   |   | 2009 |   |
|                                                        |   |                                                            |       |   |                                                          |   |   |   |   |   |   |   |
| Net sales                                                   |   | $                                                               | 2,528,795  |   |                                                          | $      | 1,318,923 |   |   | $ | 4,185,394 |   |   | $ | 2,967,082 |   |
| Cost of sales                                               |   |                                                            | 1,817,611  |   |                                                          |   | 981,623 |   |   |   | 2,747,635 |   |   |   | 2,327,057 |   |
| Gross Profit                                                |   |                                                            | 711,184    |   |                                                          |   | 337,300 |   |   |   | 1,437,759 |   |   |   | 640,025 |   |
|                                                        |   |                                                            |       |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                         |   |                                                            |       |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general and administrative                         |   |                                                            | 823,303    |   |                                                          |   | 743,357 |   |   |   | 1,539,788 |   |   |   | 1,610,953 |   |
| Amortization of intangible assets                           |   |                                                            | 18,188     |   |                                                          |   | 10,447 |   |   |   | 36,376 |   |   |   | 20,891 |   |
| Total operating income                                      |   |                                                            | 841,491    |   |                                                          |   | 753,804 |   |   |   | 1,576,164 |   |   |   | 1,631,844 |   |
|                                                        |   |                                                            |       |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |
| Operating loss                                              |   |                                                            | (130,307   | )      |                                                          |   | (416,504 | ) |   |   | (138,405 | ) |   |   | (991,819 | ) |
|                                                        |   |                                                            |       |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense):                                     |   |                                                            |       |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |
| Interest Expense                                            |   |                                                            | (25,536    | )      |                                                          |   | (14,926 | ) |   |   | (37,954 | ) |   |   | (28,115 | ) |
| Rental Income                                               |   |                                                            | 73,699     |   |                                                          |   | - |   |   |   | 73,699 |   |   |   | - |   |
| Interest Income                                             |   |                                                            | 4,637      |   |                                                          |   | - |   |   |   | 10,819 |   |   |   | - |   |
| Change in derivative liability                              |   |                                                            | 35,919     |   |                                                          |   | - |   |   |   | 35,919 |   |   |   | - |   |
| Gain on sale of assets                                      |   |                                                            | -          |   |                                                          |   | 2,497 |   |   |   | - |   |   |   | 2,497 |   |
| Total other income (expense)                                |   |                                                            | 88,720     |   |                                                          |   | (12,429 | ) |   |   | 82,484 |   |   |   | (25,618 | ) |
| Loss from continuing operations before income tax           |   |                                                            | (41,588    | )      |                                                          |   | (428,933 | ) |   |   | (55,922 | ) |   |   | (1,017,437 | ) |
|                                                        |   |                                                            |       |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |
| Income tax provision                                        |   |                                                            | -          |   |                                                          |   | - |   |   |   | 800 |   |   |   | - |   |
| Income from continuing operations after income tax          |   |                                                            | (41,588    | )      |                                                          |   | (428,933 | ) |   |   | (56,722 | ) |   |   | (1,017,437 | ) |
| Loss from discontinued operations, net of income taxes      |   |                                                            | -          |   |                                                          |   | (56,223 | ) |   |   | - |   |   |   | (56,223 | ) |
| NET LOSS                                                    |   | $                                                               | (41,588    | )      |                                                          | $      | (485,156 | ) |   | $ | (56,722 | ) |   | $ | (1,073,660 | ) |
|                                                        |   |                                                            |       |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME PER SHARE:                                       |   |                                                            |       |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted net loss per share:                       |   |                                                            |       |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |
| Continuing operations                                       |   | $                                                               | (0.00      | )      |                                                          | $      | (0.01 | ) |   | $ | (0.00 | ) |   | $ | (0.03 | ) |
| Discontinued Operations                                     |   |                                                            | -          |   |                                                          |   | (0.00 | ) |   |   | - |   |   |   | (0.00 | ) |
| Total net loss per share                                    |   | $                                                               | (0.00      | )      |                                                          | $      | (0.02 | ) |   | $ | (0.00 | ) |   | $ | (0.03 | ) |
|                                                        |   |                                                            |       |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common shares under in per share |   |                                                            |       |   |                                                          |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                       |   |                                                            | 30,893,260 |   |                                                          |   | 30,861,956 |   |   |   | 30,877,608 |   |   |   | 30,861,956 |   |
| Dilutive                                                    |   |                                                            | 30,893,260 |   |                                                          |   | 30,861,956 |   |   |   | 30,877,608 |   |   |   | 30,861,956 |   |

----

|                                                                                      |   | 2010   |     |   | 2009   |   |
|-------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
| Cash flows from operating activities:                                                     |   |   |     |   |   |   |
| Net loss                                                                                  |   | $      | (56,722  | )      |   | $      | (1,073,660 | ) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |   |   |     |   |   |   |   |   |
| Gain on disposition of assets                                                             |   |   | -        |   |   |   | (2,497 | ) |
| Depreciation                                                                              |   |   | 166,319  |   |   |   | 200,480 |   |
| Amortization of intangible assets                                                         |   |   | 36,376   |   |   |   | 20,891 |   |
| Shares issued for services                                                                |   |   | 2,000    |   |   |   | - |   |
| Change in derivative liabilities                                                          |   |   | (35,919  | )      |   |   | - |   |
| Changes in operating assets and liabilities:                                              |   |   |     |   |   |   |   |   |
| Account receivable                                                                        |   |   | (35,902  | )      |   |   | 314,948 |   |
| Inventory                                                                                 |   |   | (74,672  | )      |   |   | 293,670 |   |
| Prepaid expenses and other assets                                                         |   |   | 44,224   |   |   |   | 170,975 |   |
| Due from related party                                                                    |   |   | (301,275 | )      |   |   | - |   |
| Account payable and accrued expenses                                                      |   |   | 403,046  |   |   |   | 54,273 |   |
| Deferred rent                                                                             |   |   | (19,783  | )      |   |   | (13,141 | ) |
| Cash provided by/(used in) operating activities                                           |   |   | 127,692  |   |   |   | (34,061 | ) |
| Cash used in operating activities of discontinued operations                              |   |   | 300      |   |   |   | - |   |
| Net cash provide by/(used in) operating activities                                        |   |   | 127,992  |   |   |   | (34,061 | ) |
|                                                                                      |   |   |     |   |   |   |   |   |
| Cash flows from financing activities:                                                     |   |   |     |   |   |   |   |   |
| Payments on notes payable                                                                 |   |   | (81,796  | )      |   |   | (152,966 | ) |
| Payments on capital leases                                                                |   |   | (18,351  | )      |   |   | (36,607 | ) |
| Net cash used in financing activities                                                     |   |   | (100,147 | )      |   |   | (189,574 | ) |
|                                                                                      |   |   |     |   |   |   |   |   |
| Net increase/(decrease) in cash and cash equivalent                                       |   |   | 27,846   |   |   |   | (223,635 | ) |
|                                                                                      |   |   |     |   |   |   |   |   |
| Cash and cash equivalents at beginning of period                                          |   |   | 50,410   |   |   |   | 438,030 |   |
| Cash and cash equivalents at end of period                                                |   | $      | 78,256   |   |   | $      | 214,395 |   |
|                                                                                      |   |   |     |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                                         |   |   |     |   |   |   |   |   |
| Cash paid for interest                                                                    |   | $      | 37,954   |   |   | $      | 28,115 |   |
| Cash paid for income taxes                                                                |   | $      | -        |   |   | $      | - |   |
|                                                                                      |   |   |     |   |   |   |   |   |
| Supplemental disclosure of non-cash investing and financing activities:                   |   |   |     |   |   |   |   |   |
| Return of caoital lease                                                                   |   | $      | -        |   |   | $      | 21,054 |   |

----

| 1. | Business |
|----|----------|

|   | · | Acquiring, refurbishing and selling new and used CNC machine-tool equipment (Machine Sales segment). |
|--------|--------|------------------------------------------------------------------------------------------------------|

|   | · | Manufacturing precision metal component parts for the defense, automotive, aerospace and medical industries through its Eran Engineering, Inc. (“Eran”) subsidiary (Precision Manufacturing segment). |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | Basis of Presentation and Significant Accounting Policies |
|----|-----------------------------------------------------------|

----

| 3. | Inventories |
|----|-------------|

|                          |   | December31, 2010 |    |   | June 30, 2010 |   |
|-------------------------------|--------|------------------|---------|--------|---------------|--------|
| Finished Goods and Components |   | $                | 606,933 |   |          | $      | 568,695 |   |
| CNC Machines held for sale    |   |             | 79,000  |   |          |   | 134,500 |   |
| Work in Progress              |   |             | 182,153 |   |          |   | 140,773 |   |
| Raw Materials and Parts       |   |             | 11,648  |   |          |   | 12,416 |   |
|                          |   |             | 879,734 |   |          |   | 856,384 |   |
| Less: Reserve for inventories |   |             | (53,762 | )      |          |   | (105,084 | ) |
| Inventories, net              |   | $                | 825,972 |   |          | $      | 751,300 |   |

----

| 4. | Accrued Expenses |
|----|------------------|

|                              |   | December31, 2010 |    |   | June 30, 2010 |   |
|-----------------------------------|--------|------------------|---------|--------|---------------|--------|
| Compensation and related benefits |   | $                | 446,405 |   |          | $      | 336,595 |   |
| Audit Fees                        |   |             | 15,000  |   |          |   | 70,000 |   |
| Other                             |   |             | 180,277 |   |          |   | 150,500 |   |
|                              |   | $                | 641,682 |   |          | $      | 557,095 |   |

| 5. | Capital Leases |
|----|----------------|

|                                              |   | December31, 2010 |   |   | June 30, 2010 |   |
|---------------------------------------------------|--------|-----------------------|--------|--------|-------------------------|--------|
| 2011                                              |   | $                     | 47,644 |   |                    | $      | 48,454 |   |
| 2012                                              |   |                  | 32,547 |   |                    |   | 45,693 |   |
| 2013                                              |   |                  | 3,650  |   |                    |   | 13,900 |   |
| 2014                                              |   |                  | -      |   |                    |   | - |   |
| 2015                                              |   |                  | -      |   |                    |   | - |   |
| Total minimum lease payments                      |   |                  | 83,841 |   |                    |   | 108,047 |   |
| Less amount representing interest                 |   |                  | 11,355 |   |                    |   | 17,210 |   |
| Present value of future minimum lease payments    |   |                  | 72,486 |   |                    |   | 90,837 |   |
| Less current portion of capital lease obligations |   |                  | 47,211 |   |                    |   | 46,527 |   |
| Capital Lease obligations, net of current portion |   | $                     | 25,275 |   |                    | $      | 44,310 |   |

| 6. | Line of Credit and Notes Payable |
|----|----------------------------------|

| Line of Credit |   | $      | 218,889 |   |
|----------------|--------|--------|---------|--------|
| Term Loan      |   |   | -       |   |
| Total          |   | $      | 218,889 |   |

----

|                                                                                                                                                                                                                 |   | December 31,2010 |    |   | June 30,2010 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|---------|--------|--------------|--------|
| Notes payable to financial institutions, secured by the underlying equipment in aggregate monthly installments of $7,292 including interest rates between 7.2% and 9.75% per annum for a period of 50 and 60 months. |   | $                | 71,250  |   |         | $      | 98,046 |   |
|                                                                                                                                                                                                                 |   |             |    |   |         |   |   |   |
| An unsecured note payable to a corporation in respect of  accounting software payable in monthly installments of $1,785.00 per month.                                                                      |   |             | 46,812  |   |         |   | 46,811 |   |
|                                                                                                                                                                                                                 |   |             |    |   |         |   |   |   |
| An unsecured note payable to a corporation in respect of machines sold to us payable in monthly installments of $5,000.00 per month.                                                                                 |   |             | 61,070  |   |         |   | 86,070 |   |
|                                                                                                                                                                                                                 |   |             |    |   |         |   |   |   |
| An unsecured note payable to a corporation in settlement of a lawsuit payable in monthly installments of $5,000.00 per month                                                                                         |   |             | 31,764  |   |         |   | 61,764 |   |
|                                                                                                                                                                                                                 |   |             |    |   |         |   |   |   |
| Convertible note payable to a financial institution secured by common stock of the company and payable in full on demand.                                                                                            |   |             | 100,000 |   |         |   | 100,000 |   |
| TOTAL                                                                                                                                                                                                                |   |             | 310,896 |   |         |   | 392,691 |   |
| Less Current Portion                                                                                                                                                                                                 |   |             | 265,809 |   |         |   | 372,941 |   |
| Long Term Portion                                                                                                                                                                                                    |   | $                | 45,087  |   |         | $      | 19,750 |   |
|                                                                                                                                                                                                                 |   |             |    |   |         |   |   |   |
|          2011                                                                                                                                                                |   |             | 265,809 |   |         |   | 372,941 |   |
|          2012                                                                                                                                                                |   |             | 45,087  |   |         |   | 19,750 |   |
|           2013                                                                                                                                                          |   |             | -       |   |         |   | - |   |
|           2014                                                                                                                                                          |   |             | -       |   |         |   | - |   |
| Thereafter                                                                                                                                                                                                           |   |             | -       |   |         |   | - |   |
|                                                                                                                                                                                                                 |   |             | 310,896 |   |         |   | 392,691 |   |

----

| 7. | Litigation |
|----|------------|

|   | 1. | Voicu Belteu v. Mori Seiki Co., Ltd.; Mori Seiki U.S.A., Inc.; All American CNC Sales, Inc. dba Elite Machine Tool Company; Ellison Manufacturing Tech., Superior Court for the State of California, County of Orange, Case No. 30-2008-00103710. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | James M. Cassidy v. Gateway International Holdings, Inc., American Arbitration Association, Case No. 73-194-32755-08.   |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Elite Machine Tool Company v. ARAM Precision Tool and Die, Avi Amichai, Superior Court for the State of California, County of Orange, Case No. 30-2008-00090891. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 4. | 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.   |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5. | Sunbelt Machine Works Corp. v. All American CNC Sales, Inc., United States District Court, Southern District of Texas, Case No. 4:09-cv-108.   |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6. | Hwacheon Machinery v. All American CNC Sales, Circuit Court of the 19th Judicial Circuit, Lake County, Illinois, Case No. 09L544.   |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 7. | M Line Holdings, Inc. v. Hwacheon Machinery, Orange County Superior Court, Orange County, California, Case No. 30-2010-00369532.  The complaint was filed on May 4, 2010 |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8. | Fadal Machining v. All American CNC Sales, et al., Los Angeles Superior Court, Los Angeles, California, Case No. BC415693.   |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------|

|   | 9. | Do v. E.M. Tool Company, Orange County Superior Court, Orange County, California, Case No. 30-2009-00123879.   |
|--------|----|--------------------------------------------------------------------------------------------------------------------------|

|   | 10. | Fox Hills Machining v. CNC Repos, Orange County Superior Court, Orange County, California, Case No. 30-2009-00121514.   |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------|

----

|   | 11. | Laureano v. Eran Engineering, State of California Worker’s Compensation Appeals Board, no case number. |
|--------|-----|--------------------------------------------------------------------------------------------------------------|

|   | 12. | Timothy D. Consalvi v. M Line Holdings, Inc. et.al., Orange County Superior Court Case No, 00308489. |
|--------|-----|------------------------------------------------------------------------------------------------------|

|   | 13. | C. William Kircher Jr. V M Line Holdings, Inc.  Orange County Superior Court Case No. 00397576 |
|--------|-----|-----------------------------------------------------------------------------------------------------|

|   | 14. | M Line Holdings, Inc.  V  Pacific Western Bank Orange County Superior Court Case No BC448012. The case was filed on 10/21/2010. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 15. | Pacific Western Bank  V M Line Holdings, Inc.   Orange County Superior Court Case No BC448012. The case was filed as a cross-complaint on 11/12/2010. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | MLH filed an answer on or about 1/21/2011. Plaintiff filed a writ of attachment motion that was defeated by MLH. |
|--------|------------------------------------------------------------------------------------------------------------------|

----

|   | 16. | In re: Chapter 7 Bankruptcy of All American CNC Sales, Inc.  United  States Bankruptcy Court, Central District of California Case No 8:10-bk-26771-TA.   Case was filed on 11/24/2010. Awaiting notice of 341A hearing date. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8. | Common Stock |
|----|--------------|

| 9. | Related Party Transaction |
|----|---------------------------|

|                          |   | Machine Sales |      |   | PrecisionManufacturing |   |      | Corporate |   |   | Total   |   |
|-------------------------------|--------|--------------------|-----------|--------|------------------------|--------|-----------|-----------|--------|--------|---------|--------|
| Revenue                       |   | $                  | 1,805,568 |   |                   | $      | 723,227   |      |   | $      | -       |   |   | $ | 2,528,795 |   |
| Interest Income               |   |               | -         |   |                   |   | -         |      |   |   | 4,637   |   |   |   | 4,637 |   |
| Interest Expense              |   |               | -         |   |                   |   | 21,634    |      |   |   | 3,902   |   |   |   | 25,536 |   |
| Depreciation and Amortization |   |               | 18,938    |   |                   |   | 55,298    |      |   |   | 5,861   |   |   |   | 80,097 |   |
| Income (loss) before taxes    |   |               | (46,217   | )      |                   |   | 33,792    |      |   |   | (29,165 | )      |   |   | (41,588 | ) |
| Total Assets                  |   |               | 625,115   |   |                   |   | 1,807,155 |      |   |   | 623,095 |   |   |   | 3,055,364 |   |
| Capital Expenditure           |   | $                  | -         |   |                   | $      | -         |      |   | $      | -       |   |   | $ | - |   |

----

|                          |   | Machine Sales |    |   | PrecisionManufacturing |   |      | Corporate |   |   | Total    |   |
|-------------------------------|--------|--------------------|---------|--------|------------------------|--------|-----------|-----------|--------|--------|----------|--------|
| Revenue                       |   | $                  | 651,720 |   |                   | $      | 667,203   |      |   | $      | -        |   |   | $ | 1,318,923 |   |
| Interest Income               |   |               | -       |   |                   |   | -         |      |   |   | -        |   |   |   | - |   |
| Interest Expense              |   |               | -       |   |                   |   | 3,300     |      |   |   | 11,626   |   |   |   | 14,926 |   |
| Depreciation and Amortization |   |               | 11,847  |   |                   |   | 97,799    |      |   |   | 295      |   |   |   | 109,941 |   |
| Income (loss) before taxes    |   |               | 1,845   |   |                   |   | (210,868  | )         |   |   | (276,133 | )      |   |   | (485,156 | ) |
| Total Assets                  |   |               | 523,200 |   |                   |   | 2,574,799 |      |   |   | 401,669  |   |   |   | 3,499,668 |   |
| Capital Expenditure           |   | $                  | -       |   |                   | $      | -         |      |   | $      | -        |   |   | $ | - |   |

|                          |   | Machine Sales |      |   | PrecisionManufacturing |   |      | Corporate |   |   | Total   |   |
|-------------------------------|--------|--------------------|-----------|--------|------------------------|--------|-----------|-----------|--------|--------|---------|--------|
| Revenue                       |   | $                  | 2,594,464 |   |                   | $      | 1,590,930 |      |   | $      | -       |   |   | $ | 4,185,394 |   |
| Interest Income               |   |               | -         |   |                   |   | -         |      |   |   | 10,819  |   |   |   | 10,819 |   |
| Interest Expense              |   |               | 94        |   |                   |   | 33,996    |      |   |   | 3,864   |   |   |   | 37,954 |   |
| Depreciation and Amortization |   |               | 37,876    |   |                   |   | 153,097   |      |   |   | 11,722  |   |   |   | 202,695 |   |
| Income (loss) before taxes    |   |               | 21,487    |   |                   |   | (57,170   | )         |   |   | (20,239 | )      |   |   | (55,922 | ) |
| Total Assets                  |   |               | 625,115   |   |                   |   | 1,807,155 |      |   |   | 623,095 |   |   |   | 3,055,364 |   |
| Capital Expenditure           |   | $                  | -         |   |                   | $      | -         |      |   | $      | -       |   |   | $ | 0 |   |

|                          |   | Machine Sales |      |   | PrecisionManufacturing |   |      | Corporate |   |   | Total    |   |
|-------------------------------|--------|--------------------|-----------|--------|------------------------|--------|-----------|-----------|--------|--------|----------|--------|
| Revenue                       |   | $                  | 1,527,766 |   |                   | $      | 1,439,702 |      |   | $      | (386     | )      |   | $ | 2,967,082 |   |
| Interest Income               |   |               | -         |   |                   |   | -         |      |   |   | -        |   |   |   | - |   |
| Interest Expense              |   |               | 224       |   |                   |   | 7,128     |      |   |   | 20,763   |   |   |   | 28,115 |   |
| Depreciation and Amortization |   |               | 24,997    |   |                   |   | 195,784   |      |   |   | 590      |   |   |   | 221,371 |   |
| Income (loss) before taxes    |   |               | (236,266  | )      |                   |   | (549,692  | )         |   |   | (287,702 | )      |   |   | (1,073,660 | ) |
| Total Assets                  |   |               | 523,200   |   |                   |   | 2,574,799 |      |   |   | 401,669  |   |   |   | 3,499,668 |   |
| Capital Expenditure           |   | $                  | -         |   |                   | $      | -         |      |   | $      | -        |   |   | $ | - |   |

| 12. | Going Concern and Management Plans |
|-----|------------------------------------|

----

| 13. | Subsequent Events |
|-----|-------------------|

----

----

----

|                     |   | Three months ended December 31, |      |
|--------------------------|--------|--------------------------------------|-----------|
|                     |   | 2010                                 |      |   | 2009 |   |
| Sales by segment:        |   |                                 |      |   |   |   |
| Machine Sales            |   | $                                    | 1,805,569 |   |   | $ | 651,721 |   |
| Precision Engineering    |   |                                 | 723,227   |   |   |   | 667,202 |   |
|                     |   |                                 | 2,528,796 |   |   |   | 1,318,923 |   |
| Gross Profit by segment: |   |                                 |      |   |   |   |   |   |
| Machine Sales            |   |                                 | 253,030   |   |   |   | 132,474 |   |
| Precision Engineering    |   |                                 | 458,155   |   |   |   | 204,826 |   |
|                     |   |                                 | 711,185   |   |   |   | 337,300 |   |

----

|                     |   | Six months ended December 31, |      |
|--------------------------|--------|------------------------------------|-----------|
|                     |   | 2010                               |      |   | 2009 |   |
| Sales by segment:        |   |                               |      |   |   |   |
| Machine Sales            |   | $                                  | 2,594,464 |   |   | $ | 1,527,766 |   |
| Precision Engineering    |   |                               | 1,590,930 |   |   |   | 1,439,702 |   |
|                     |   |                               | 4,185,394 |   |   |   | 2,967,468 |   |
| Gross Profit by segment: |   |                               |      |   |   |   |   |   |
| Machine Sales            |   |                               | 592,354   |   |   |   | 215,038 |   |
| Precision Engineering    |   |                               | 845,405   |   |   |   | 425,373 |   |
|                     |   |                               | 1,437,759 |   |   |   | 640,411 |   |

----

|                 |   | 2010   |     |   | 2009   |   |     | Change |   |
|----------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|
| Operating activities |   |   | 127,992  |   |   |   | (34,061  | )      |   |   | (162,053 | ) |
| Investing activities |   |   | -        |   |   |   | -        |   |   |   | - |   |
| Financing activities |   |   | (100,147 | )      |   |   | (189,573 | )      |   |   | 89,427 |   |
|                 |   |   |     |   |   |   |     |   |   |   |   |   |
|                 |   |   | 27,847   |   |   |   | (223,634 | )      |   |   | (251,481 | ) |

----

| ITEM 3. | Quantitative and Qualitative Disclosures about Market Risk. |
|--------------|-------------------------------------------------------------|

| ITEM 4.  | Controls and Procedures. |
|--------------------|--------------------------|

----

| • | 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. |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| ITEM 1. | Legal Proceedings. |
|--------------|--------------------|

|   | 1. | Voicu Belteu v. Mori Seiki Co., Ltd.; Mori Seiki U.S.A., Inc.; All American CNC Sales, Inc. dba Elite Machine Tool Company; Ellison Manufacturing Tech., Superior Court for the State of California, County of Orange, Case No. 30-2008-00103710. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | James M. Cassidy v. Gateway International Holdings, Inc., American Arbitration Association, Case No. 73-194-32755-08.   |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Elite Machine Tool Company v. ARAM Precision Tool and Die, Avi Amichai, Superior Court for the State of California, County of Orange, Case No. 30-2008-00090891. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4. | 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.   |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5. | Sunbelt Machine Works Corp. v. All American CNC Sales, Inc., United States District Court, Southern District of Texas, Case No. 4:09-cv-108.   |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 6. | Hwacheon Machinery v. All American CNC Sales, Circuit Court of the 19th Judicial Circuit, Lake County, Illinois, Case No. 09L544.   |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7. | M Line Holdings, Inc. v.  Hwacheon Machinery, Orange County Superior Court, Orange County, California, Case No. 30-2010-00369532.  The complaint was filed on May 4, 2010 |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8. | Fadal Machining v. All American CNC Sales, et al., Los Angeles Superior Court, Los Angeles, California, Case No. BC415693.   |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------|

|   | 9. | Do v. E.M. Tool Company, Orange County Superior Court, Orange County, California, Case No. 30-2009-00123879.   |
|--------|----|--------------------------------------------------------------------------------------------------------------------------|

----

|   | 10. | Fox Hills Machining v. CNC Repos, Orange County Superior Court, Orange County, California, Case No. 30-2009-00121514.   |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------|

|   | 11. | Laureano v. Eran Engineering, State of California Worker’s Compensation Appeals Board, no case number. |
|--------|-----|--------------------------------------------------------------------------------------------------------------|

|   | 12. | Timothy D. Consalvi v. M Line Holdings, Inc. et.al., Orange County Superior Court Case No, 00308489. |
|--------|-----|------------------------------------------------------------------------------------------------------|

|   | 13. | C. William Kircher Jr. V M Line Holdings, Inc.  Orange County Superior Court Case No. 00397576 |
|--------|-----|-----------------------------------------------------------------------------------------------------|

----

|   | 14. | M Line Holdings, Inc.  V  Pacific Western Bank Orange County Superior Court Case No BC448012. The case was filed on 10/21/2010. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Complaint alleges causes of action for Declaratory Relief, Breach of Contract, Fraud, Common Counts, and Negligent Misrepresentation, claiming the Defendant failed to fund against the line of credit when funds were available and also failed to remove two of the personal guarantors after agreeing in writing to do so and MLH is seeking unspecified damages. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 15. | Pacific Western Bank  V M Line Holdings, Inc.   Orange County Superior Court Case No BC448012. The case was filed as a cross-complaint on 11/12/2010. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Cross-complaint alleges causes of action basically for breach of written agreement and related claims. Defendant failed to repay a credit line when it became due and is also claiming that defendant must repay two equipment loans even though these loans are current due to the terms of the credit line agreement. Cross-complaint is seeking damages of $300,616. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | MLH filed an answer on or about 1/21/2011. Plaintiff filed a writ of attachment motion that was defeated by MLH. |
|--------|------------------------------------------------------------------------------------------------------------------|

|   | 17. | In re: Chapter 7 Bankruptcy of All American CNC Sales, Inc.  United  States Bankruptcy Court, Central District of California Case No 8:10-bk-26771-TA.  Case was filed on 11/24/2010. Awaiting notice of 341A hearing date. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM 1A. | Risk Factors. |
|---------------|---------------|

| ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
|--------------|--------------------------------------------------------------|

| ITEM 3.  | Defaults upon Senior Securities. |
|--------------------|----------------------------------|

| ITEM 4. | Removed and Reserved. |
|--------------|-----------------------|

| ITEM 5.  | Other Information. |
|--------------------|--------------------|

----

| ITEM 6.  | 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                                                                                                        |
|            |   |                                                                                                                                                         |
| 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                                                                            |
|            |   |                                                                                                                                                         |
| 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, 2009                                                       |
|            |   |                                                                                                                                                         |
| 10.16 (7)       |   | Securities Purchase Agreement and Convertible Promissory Note with Asher Enterprises, Inc. dated April 26, 2010 (filed herewith)                             |
|            |   |                                                                                                                                                         |
| 10.17 (7)       |   | Convertible Promissory Note with Asher Enterprises, Inc. dated May 25, 2010 (filed herewith)                                                                 |
|            |   |                                                                                                                                                         |
| 10.18 (7)       |   | Commercial Real Estate Lease with SG&H Partners, L.P. for Anaheim Property dated August 13, 2010 (filed herewith)                                        |
|            |   |                                                                                                                                                         |
| 10.19 (7)       |   | Business Loan Agreement with Pacific Western Bank dated June 7, 2010 (filed herewith)                                                                        |
|            |   |                                                                                                                                                         |
| 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, 2010, as filed with the Commission on November 12, 2010.         |

----

|                 | M Line Holdings, Inc. |
|----------------------|-----------------------|
|                 |                  |   |
| Dated: March 9, 2011 |                  | /s/ George Colin |
|                 | By:                   | George Colin |
|                 |                  | President, Chief Executive |
|                 |                  | Officer and a Director |
|                 |                  |   |
| Dated: March 9, 2011 |                  | /s/ Jitu Banker |
|                 | By:                   | Jitu Banker |
|                 |                  | Chief Financial Officer, |
|                 |                  | Secretary and a Director |

----