Letter from the President

by Paul S. Moller

Volume 10, Issue 1

April 2010

TO: Moller International Newsletter Subscribers

STEADY PROGRESS ON NEW SKYCAR / NEUERA FLIGHT CONTROL SYSTEM

Moller International’s advanced quadruple flight control system for the Skycar and Neuera aircraft incorporates several new subsystems. The heart of the stability system’s capabilities are in the Flight Control Computer (FCC) but equally important are the Engine Control Cards (ECC), Joystick Control Card (JCC) and Message Board Computer (MBC).

The subsystems are intended to provide an unmatched level of safety and ultimately provide Skycar and Neuera users with a simple, easy to use, highly automated control system that provides clear and concise feedback on the operational status of our aircraft.

Currently under development, the Graphical User Interface (GUI) of the MBC will use a high level diagnostic signal panel to display status conditions in simple “traffic signal light” terms using red, yellow and green lights. During routine operation the green light will indicate that all systems are operating within normal parameters. When the system determines the need for maintenance or service, a yellow light will be illuminated to indicate a condition needing attention. In the event of a system failure a red light will come on and necessitate the need for the operator to take immediate corrective actions. Using the MBC panel, the operator can “drill down” to see more details on the alert and get further suggestions for the actions required. The circuitry for these systems has been designed, the software is under development, and bench, ground and flight-testing is scheduled for later this year.

SKYCAR IN THE MOVIES

The M200M Skycar full-scale model was recently used in the production of a made for TV movie scheduled to air on NBC sometime in the not-too-distant future. The live action scenes were shot in Montreal Canada while the production team informed us that the “flying” scenes were being done digitally with the aid of state-of-the-art computer graphics.

Many of you have seen this Skycar, as it is the mock-up vehicle we often take to shows and exhibitions. At nearly 18 feet long, 8 feet wide and almost 5 feet tall, it accurately represents the Company’s follow-on version to the M400 Skycar when a “sportier” 2-passenger volantor might be offered. But for now we’ll all have to be content with some movie-magic as we imagine what it will be like to hop into and take off in our own personal VTOL aircraft.

MI LICENSES AEROBOT NAME AND TECHNOLOGY TO CYBERKING TOYS

Moller International (OTC-BB: MLER) announced early last month that it has entered into an agreement to share its Aerobot™ vertical take off and landing (VTOL) control power techniques with Future Toys Design, Limited of Hong Kong; more commonly known by its distribution arm, Cyberking Toys.

The agreement provides the toy manufacturer with on-going technical support to assist with the design and development of its line of small VTOL enabled flying aircraft-like toys in exchange for royalties on sales of these toys. Furthermore, the Company has provided Cyberking with a license to use its trademarked name, Aerobot, in the labeling of its products. While the Company has chosen to share its control power techniques, it retains all rights to the patented stability architecture including the software algorithms and hardware (FCC, JCC, ECC and MBC) used in its manned and unmanned vehicles.

The Cyberking Aerobot™ is a small, palm-sized, battery operated, remotely controlled aircraft that nearly anyone can quickly learn to fly and safely control. The propeller is embedded within the body of the aircraft shielding both the user and objects around it. Capable of three-dimensional flight, this unique aircraft is able to climb and descend, turn left or right, go forward or backward, all using a single propeller and the applied Aerobot™ technology. This is a totally new platform technology and completely unique in the toy industry.

“One long-term goal of the Company is to reduce the cost of the control technology used in our Aerobot™, Skycar®, and Neuera products. I can’t think of a better way to do this than to get similar electronics and software into mass production and into Cyberking’s scale model VTOL aircraft,” said Paul Moller, President of Moller International. “We hope to do the same thing with our Rotapower® engine in the near future…get it produced in high volume and integrated into lots of different products.”

Cyberking’s sales representative Andrew Lam stated that the first firm they have talked to has shown an interest in ordering as many as 500,000 units per year. With a retail price of $34.99 and potential outlets in the US through stores such as Wal-Mart, Target, Toys-R-Us and K-Mart, the future sales of this product look very bright. Cyberking has agreed to pay Moller International a royalty of 4% of the MSRP for each unit sold that incorporates the Aerobot® name and technology. Cyberking plans to make a formal announcement regarding the availability of the Aerobot® at an as yet unidentified upcoming toy manufacturer’s show.

MI TEAMS UP IN PREPARATION FOR RESPONSE TO DARPA’S CALL FOR A “FLYING CAR”

Last year Moller International submitted a response to the Defense Advanced Research Projects Agency (DARPA) request for proposal SB091-014, TITLE: Personal Air Vehicle Technology (see http://www.dodsbir.net/solicitation/sbir091/darpa091.htm).

The Company’s proposal defined a military version of our state of the art Skycar aircraft. This vehicle’s design combined the high-speed of a fixed-wing aircraft with VTOL capability of a helicopter. It had foldable wings and an undercarriage suitable for driving on improved roads. Its propulsion and stability system were based on the M400 Skycar® volantor - utilizing four rotating ducted-fan nacelles for generating thrust during VTOL and forward flight, and two wheel-mounted electric motors for ground propulsion.

In December 2009 Dr. Moller attended an “Industry Day” where DARPA and other interested government representatives had an opportunity to provide more material on the concept they have in mind and opened up a dialogue with potential industry solution providers. During this session Moller International met with several key providers of military hardware and subsequently received an invitation to join a team with the diverse skill set, which we believe will be needed to respond to Transformer (TX), Vertical Takeoff and Landing Roadable Air Vehicle, Broad Agency Announcement (BAA) Solicitation 10-52, released on April 12, 2010.

While the team is still being formed, the prospective members are Pratt & Whitney/Rocketdyne, Purdue University, University of Dayton, Bede Aircraft Corp, AirBuoyant, LLC, Robert J Pegg and Xtreme Alternative Defense Systems.

As it stands now the team will be lead by Pete Bitar of Xtreme Alternative Defense Systems (XADS), a pioneer in the development of Non-Lethal and anti-materiel Directed Energy Weapons (DEW) who is based in Anderson, Indiana. We expect a formal confirmation of the members to be made by Pete before the end of the month. Moller International plans to contribute its expertise in engine, propulsion and stabilization technologies and assist in other areas as appropriate.

SKYCAR FLIGHTS MODELED IN MS FLIGHT SIM

The Microsoft Flight Simulator plug-ins of the M400 Skycar files provides a real-time flight simulation of the Skycar to anyone with this inexpensive PC-based software package. Jesse Levin, an avid Skycar flight-simmer, has taken this one step further, providing the Skycar two flight scenarios; one features the Skycar in a civilian role flying from New York up to the Hamptons, and the second is a military version with a “US Marine Corp” paint scheme and flying around in a simulated “Middle Eastern” town. The surroundings will no doubt be familiar to many active service people as it is a model of the “practice” facilities located at 29 Palms Marine Corp Training Center in Southern California. The Skycar is shown on the ground driving in and among other military vehicles (the shot next to a Blackhawk helicopter gives the viewer some idea of scale) and negotiates its way through the village. Jesse has done a wonderful job of showing the nacelle’s mechanics, with close up shots of the vanes and rudder during hover and transition. To view either video, the civilian or his Marine Corp Skycar visit our web site at www.moller.com and go to Videos. They are the first and second videos on the page. We’d love to see other examples of Skycars in action so if you have one please send a link to Bruce ( \n This e-mail address is being protected from spambots. You need JavaScript enabled to view it This e-mail address is being protected from spambots. You need JavaScript enabled to view it ).

FREEDOM MOTORS LICENSING ROTAPOWER ENGINE TECHNOLOGY

Freedom Motors, in a second round of negotiations has signed a more definitive set of terms for a joint venture agreement with a very large company based in China. This company, in a show of good faith, has escrowed $1 million USD in a US bank for the benefit of Freedom Motors.

Under the proposed joint venture agreement Freedom Motors will exclusively license this company to produce and jointly distribute its Rotapower® engines worldwide. This agreement will cover the rights to all applications except aircraft and ducted fans, applications that will be retained by Moller International.

About Freedom Motors

Freedom Motors was founded in 1997 as a wholly owned division of Moller International. In 2001 it became a separate corporation that was exclusively licensed to manufacture, sub-license and sell Rotapower® engines throughout the world. It later demonstrated that its Rotapower engine could meet California’s requirements for ULEV while running on gasoline and the Super Ultra Low Emissions Vehicle (SULEV) levels on ethanol.

The Company recently developed and is patenting a compound version of its Rotapower® engine that has the potential to achieve extremely low fuel consumption as well. This new engine is particularly well suited to be used as the backup power source for a plug-in hybrid vehicle (PHEV). Many of Freedom’s LOI’s are for this application.

Sincerely,

/s/

Paul S. Moller, Ph.D.

President

"SAFE HARBOR" Statement:

This newsletter may contain forward-looking statements. The words "estimate", "possible" and "seeking" and similar expressions identify forward-looking statements, which speak only as to the date the statement was made. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted, or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to, the effect of government regulation, competition and other material risks.