10-Q 1 viic10q033113.htm Vision Industries Corp.-- Quarterly Report on Form 10-QSB

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2013

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________

Commission File No. 333-146209

VISION INDUSTRIES CORP.

(Exact name of small business issuer as specified in its charter)

 

 

FLORIDA

 

14-1908451

 

 

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Tax. I.D. No.)

 

 

2230 E. Artesia Blvd. , Long Beach, California 90805

(Address of Principal Executive Offices)

 

(310) 454-5658

(Registrant’s Telephone Number, Including Area Code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ  No  o


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes þ   No o


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.


Large accelerated filer.o

Accelerated filer.   o

Non-accelerated filer.  o

(Do not check if a smaller reporting company)

Smaller reporting company.  þ


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o  No  þ

The number of shares outstanding of each of the issuers classes of common stock as May 16, 2013:  84,910,365





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TABLE OF CONTENTS


Part I Financial Information

Item 1.  Financial Statements

Item 2.  Management’s Discussion and Analysis and Results of Operation

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Item 4.  Controls and Procedures

Part II – Other Information 

Item 1.  Legal Proceedings

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

Item 5.  Other Information

Item 6.  Exhibits

Signatures






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PART I – FINANCIAL INFORMATION


ITEM 1.

FINANCIAL STATEMENTS

Vision Industries Corp.

Balance Sheet

As of March 31, 2013 (Unaudited) and December 31, 2012 (Audited)


 

 

March 31, 2013

 

December 31, 2012

 

 

(Unaudited)

 

(Audited)

ASSETS

Current assets:

 

 

 

 

  Cash and cash equivalents

$

628,089

$

23,374

  Trade deposits

 

25,000

 

29,259

  Advances

 

1,500

 

-

  Inventory

 

75,380

 

75,086

  Prepaid expenses

 

11,531

 

9,088

  Supply inventory

 

3,264

 

    Total current assets

 

719,764

 

136,807

 

 

 

 

 

Property and equipment, net

 

310,236

 

317,615

 

 

 

 

 

Intangible assets, net

 

227,562

 

240,147

 

 

 

 

 

Other assets:

 

 

 

 

  Deferred loss

 

109,616

 

116,624

  Employee advances

 

9,758

 

9,758

  Security deposits & other

 

35,970

 

-

    Total other assets

 

180,344

 

126,382

 

 

 

 

 

Total assets

$

1,437,906

$

820,951

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

Current liabilities:

 

 

 

 

  Accounts payable and accrued expense

$

576,147

$

625,241

  Current portion notes payable

 

1,393,517

 

730,684

    Total current liabilities

 

1,969,664

 

1,355,925

 

 

 

 

 

Noncurrent Liabilities:

 

 

 

 

  Notes payable - noncurrent portion

 

487,113

 

185,446

    Total noncurrent liabilities

 

487,113

 

185,446

 

 

 

 

 

Total liabilities

 

2,456,777

 

1,541,371

 

 

 

 

 

Stockholders' deficit:

 

 

 

 

Preferred stock, $.001 par value, 2,000,000 authorized, 250,000  issued and outstanding as of March 31, 2012, and December 31, 2011, respectively

 

250

 

250

Common stock, $.001 par value, 500,000,000 authorized 84,910,365 issued and outstanding as of March 31, 2013 and 82,946,546 as of December 31, 2012.

 

84,910

 

82,946

  Additional paid in capital

 

19,638,845

 

18,803,258

  Accumulated deficit

 

(20,742,876)

 

(19,608,874)

    Total stockholders' deficit

 

(1,018,871)

 

(703,420)

 

 

 

 

 

Total liabilities and stockholders' deficit

$

1,437,906

$

820,951


The accompanying notes are an integral part of these financial statements.




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Vision Industries Corp.

Statement of Operations


 

For the three months ended

 

 

March 31, 2013

 

March 31, 2012

 

 

(Unaudited)

 

(Unaudited)

Revenue:

 

 

 

 

  Sales

$

0

$

10,500

    Total revenue

 

0

 

10,500

 

 

 

 

 

Direct Costs

 

 0

 

 0

 

 

 

 

 

Net revenue

 

 

 

10,500

  

 

 

 

 

Operating expenses:

 

 

 

 

  Research and development

 

296

 

1,713

  General & administrative

 

344,372

 

265,040

  Equity based compensation

 

743,574

 

1,088,169

  Depreciation and amortization

 

29,974

 

23,768

    Total operating expenses

 

1,118,216

 

1,378,690

 

 

 

 

 

Loss before other expense

 

(1,118,216)

 

(1,368,190)

 

 

 

 

 

Other income (expense)

 

 

 

 

  Miscellaneous Income

 

15,337

 

20,522

  Interest expense

 

(50,123)

 

(52,120)

  Rental Income

 

 

 

1,200

    Total other income (expense)

 

(34,786)

 

(30,398)

 

 

 

 

 

Net loss

$

(1,153,002)

$

(1,398,588)

 

 

 

 

 

Gain (Loss) per share: basic and diluted

$

(0.02)

$

(0.04)

 

 

 

 

 

Weighted average number of common shares outstanding: basic and diluted

 

59,052,655

 

38,916,448



The accompanying notes are an integral part of these financial statements.




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Vision Industries Corp.

Statements of Cash Flow


 

 

For the three months ended

 

 

March 31, 2013

 

March 31, 2012

 

 

(Unaudited )

 

(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

  Net (loss)

$

(1,153,002)

$

(1,398,588)

 

 

 

 

 

Adjustments to reconcile net (loss) to net cash provided (used) by operating activities:

 

 

 

  Stock-based compensation

 

743,574

 

1,088,169

  Depreciation and amortization

 

29,974

 

23,768

  Adjustment to carrying value of fixed assets

 

 

 

(82,272)

  Stock Issuances in lieu-professional services

 

63,400

 

(826)

Changes in operating assets and liabilities:

 

 

 

 

  Change in inventory

 

(3,558)

 

(53,004)

   Note Receivable

 

 

 

58,145

  Trade deposits

 

4,259

 

(2,220)

   Advances

 

(1,500)

 

 

  Prepaid expenses

 

(2,443)

 

(2,570)

  Accounts payable and accrued expense

 

(32,052)

 

209,727

Cash used by operating activities

 

(351,348)

 

(159,671)

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

  Leaseback of fixed assets- capitalized

 

 

 

(285,000)

  Purchase of fixed assets

 

(3,003)

 

 

  Security Deposits

 

(35,970)

 

 

Cash used by investing activities

 

(38,973)

 

(285,000)

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

  Principal payments on notes payable

 

(54,964)

 

 

  Note Receivable -Sale-Leaseback of fixed assets

 

 

 

285,000

  Subscription agreement for stock and warrants

 

 

 

129,000

  Borrowings

 

1,050,000

 

30,000

Cash provided by financing activities

 

995,036

 

444,000

 

 

 

 

 

Net decrease increase in cash and cash equivalents

 

604,715

 

(671)

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

23,374

 

3,480

 

 

 

 

 

Cash and cash equivalents, end of period

$

628,089

$

2,809

 

 

 

 

 

NONCASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

  Conversion of convertible note

$

32,500

$

464 

   Interest expense

$

50,123

$

(52,120)


The accompanying notes are an integral part of these financial statements.





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VISION INDUSTRIES CORP.

Notes to Financial Statements

March 31, 2013

 (Unaudited)




Note 1 General background and business environment


The Company was incorporated May 11, 2004 in the State of Florida with the intent of providing consulting services to the transportation industry.  In 2013 the company moved its headquarters to Long Beach, California, to concentrate on the development and production of zero-emission drivetrains for heavy duty vehicles.


Management’s immediate vision for the high performance hydrogen drive system is to provide a pollution free transportation solution for today’s drivers in California and to expedite availability of hydrogen fueling stations in and around the Ports of Long Beach and Los Angeles, California.


Vision has engaged in “well-to-wheel” national initiatives to deploy their zero-emission FCEVs in nonattainment areas, such as the Port of Houston and the twin Ports of Los Angles and Long Beach. Accompanying any regional fleet deployment are plans to build and operate a hydrogen fueling station, which Vision is actively funding with the assistance of government grants and traditional project financing.



Note 2  Significant Accounting Policies


Basis for Presentation

In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair statement of (a) the result of operations for the three months ended March 31, 2013 and 2012; (b) the financial position at March 31, 2013; and (c) cash flows for the three months ended March 31, 2013 and 2012, have been made.


The Company prepares its financial statements in conformity with generally accepted accounting principles in the United States of America.  These principals require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Management believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual results could differ from those estimates.



Critical Accounting Policies and Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets,


On an on-going basis, the Company evaluates its estimates and judgments, including those related to revenue recognition, inventories, adequacy of allowances for doubtful accounts, valuation of long-lived assets, income taxes, equity-based compensation, litigation and warranties.  The Company bases its estimates on historical and anticipated results and trends and on carious other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events.


The policies discussed below are considered by management to be critical to an understanding of the Company’s financial statements.  These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent for other sources.  By their nature, estimates are subject to an inherent degree of uncertainty.  Actual results may differ from those estimates.



Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all short-term securities with a maturity of three months or less to be cash equivalents.



Accounts Receivable and Allowance for Doubtful Accounts




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Accounts receivable represent amounts due from customers in the ordinary course of business..  The Company considers accounts more than 90 days old to be past due. The Company uses the allowance method for recognizing bad debts. When an account is deemed uncollectible, it is written off against the allowance. The Company generally does not require collateral for its accounts receivable. The Company considers all accounts receivable to be collectable and consequently has provided no allowance for doubtful accounts.




Inventories

Inventories are stated at the lower of cost or market.




Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization.  Significant improvements and betterments are capitalized, while maintenance and repairs are charged to operations as incurred.  When items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in the results of operations.


Depreciation is recorded on the straight-line basis over the estimated useful lives of the assets, which range from five to seven years.




Advertising Costs

The costs of advertising are expensed as incurred and are included in the Company’s operating expenses.  Advertising expenses for the three months ended March 31, 2013 and March 2012 were $25 and $235, respectively.




Income Taxes

Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of certain assets and liabilities for financial and tax reporting.  Deferred taxes represent the future tax return consequences of those differences, which will be taxable either when the assets and liabilities are recovered or settled.  Deferred taxes also are recognized for operating losses that are available to offset future federal income taxes.  Income tax expense is the current tax payable or refundable for the period plus or minus the net change in the deferred tax asset and liability accounts.




Stock-Based Compensation

All forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and amortized into expenses over the vesting period.


The Company records equity instruments issued to non-employees at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instrument vests. Non-employee stock-based compensation charges are amortized over the vesting period or period of performance of the services.




Intangible Assets

Intangible assets are amortized using the straight-line method over their estimated period of benefit, ranging from one to fifteen years.  We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists.  All of our intangible assets are subject to amortization.   




Revenue Recognition

The Company typically operates on a project basis and recognizes revenue when it has completed tasks specified in the particular contract for a specific project.  From time to time Vision may sell all or part of a development project for parts or components and recognizes the revenue from the sale when items are shipped. Revenue is recognized net of sales taxes and upon transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognized to the extent where there are significant uncertainties




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regarding recovery of the consideration due, associated costs or the possible return of goods.  The direct costs of a project are recorded as incurred and recognized as direct expense of a sale at time of invoice.




Research and Development Recognition Policy

Research expenditure is recognized as an expense when it is incurred. Development expenditure is recognized as an expense except that expenditure incurred on development projects are capitalized as long-term assets to the extent that such expenditure is expected to generate future economic benefits. Development expenditure is capitalized if, and only if an entity can demonstrate all of the following:  

a)

its ability to measure reliably the expenditure attributable to the asset under development;

b)

the product or process is technically and commercially feasible;

c)

its future economic benefits are probable;

d)

its ability to use or sell the developed asset;

e)

the availability of adequate technical, financial and other resources to complete the asset under development; and

f)

its intention to complete the intangible asset and use or sell.

Capitalized development expenditure is measured at cost less accumulated amortization and impairment losses, if any. Development expenditure initially recognized as an expense is not recognized as assets in the subsequent period. The development expenditure is amortized on a straight-line method over a period of not exceeding 7 years when the products are ready for sale or use. In the event that the expected future economic benefits are no longer probable of being recovered, the development expenditure is written down to its recoverable amount.  



Effects of Recent Accounting Pronouncements

We have reviewed accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods.  We believe that the following impending standards may have an impact on our future filings.  The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

Recent accounting pronouncements issued by the FASB (including its EITF), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company's present or future financial statements.




Per Share Computations

Basic net earnings per share are computed using the weighted-average number of common shares outstanding. Diluted earnings per share is computed by dividing net income by the weighted-average number of common shares and the dilutive potential common shares outstanding during the period.





Note 3 Inventories


Inventories consisted of the following as of March 31, 2013 and December 31, 2012:



Schedule of Inventory

 

 

March 31, 2013

(Unaudited)

 

December 31, 2012

Raw Materials

$

43,649

$

43,433

Work in Process

 

31,731

 

31,653

Finished Goods

 

 0

 

0

 

$

75,380

$

75,086




Note 4 Property and equipment


Property and equipment as of March 31, 2013 and as of December 31, 2012 consist of the following:



Schedule of Property and Equipment

  

  

  

March 31, 2013

(Unaudited)

 

December 31, 2012

Automobiles

  

$

0

$

3,381

Computers

  

  

8,950

  

10.407

Furniture and fixtures

  

  

2075

  

1,550

Office equipment

  

  

1,000

  

1,000

Leased assets

 

 

285,000

 

285,000

Shop equipment

  

  

47,970

  

44,034

Production prototypes

  

  

73,240 

  

73,240

 Property and Equipment -- gross

  

  

418,235

  

418,612

Less accumulated depreciation

  

  

(107,999)

  

(100,997)

 Property and Equipment -- net

  

$

310,236

$

317,615



Property and equipment are stated at cost whereas production prototypes are stated at net realizable value.  


Depreciation is computed using the straight-line method over the estimated useful lives of the assets.  Useful lives for computer equipment and software range from three to five years, and furniture, equipment, and production equipment from five to seven years. Depreciation on leased production prototypes uses the straight-line method over four years, however, the prototypes are evaluated on a yearly basis for impairment due to changes in estimates or net realizable value.  


The Company has elected to capitalize the lease accordance with ASC 840, “Accounting for Leases.”


Depreciation expense for the three months ended March 31, 2013 was $17,389  which consisted of depreciation of property and equipment of $10,381 and depreciation of deferred loss on sale leaseback of $7,008 and.  Depreciation for March 31, 2012 was $10,383




Note 5 Intangibles


Intangible assets at March 31, 2013 and December 31, 2012 consist of the following:



Schedule of Intangible Assets

 

 

March 31, 2013

(Unaudited)

 

December 31, 2012

Beginning Balance

$

416,636

$

416,636

Additions

 

-

 

-

Amortization

 

189,074

 

176,489

Impairment

 

-

 

-

Ending Balance

$

227,582

$

240,147


Amortization expense for the three months ended March 31, 2013 and March 31, 2012 was $12,585 and $13,385.



Note 6 Accrued expenses


Accounts payable and accrued expenses at March 31, 2013 and December 31, 2012 were $576,147 and $608,241, respectively and included operating expenses.  At March 31, 2013, the accrued expenses consist mainly of salary, payroll liabilities and accrued interest expense totaling $348,975.



Note 7 Income Tax


The Company is subject to taxation in the U.S. and various state jurisdictions. As of December 31, 2011 the Company’s tax years for 2009, 2010 and 2011 are subject to examination by the tax authorities. With few exceptions, as of December 31, 2012, the Company is no longer subject to U.S. federal and state examinations by tax authorities for years before 2009.





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The Company’s actual tax rate varies from the statutory rate (federal and state) due to utilization of full valuation allowances.  As of March 31, 2013, the Company notes that ASC 740-10 has had no material changes.



Note 8 Stockholders’ equity


On December 31, 2012, there were 82,946,546 shares of common stock issued and outstanding.  There was no issuance of preferred stock during the first quarter, the common stock issues were:


On January 3, 2013, Asher Enterprise exercised its conversion rights to 643,087 shares of common stock, pursuant to convertible note in the amount of $20,000.


On January 10, 2013, Asher Enterprise exercised its conversion rights to 420,732 shares of common stock, pursuant to convertible note in the amount of $12,500.


On February 4, 2013,  300,000 shares were issued to each of three individuals for payment in lieu for commission for the brokering of a loan facility arrangement with QIF, for a total of 900,000 shares of common stock.


Accordingly, on March 31, 2013, there were 84,910,365 shares of common stock issued and outstanding and 250,000  shares of preferred stock issued and outstanding.



Note 9 Commitment and contingencies

 

On June 6, 2012 the Company entered into a sublease agreement with Enova Systems. for its corporate office at 1560 W. 190th Street, Second floor, Torrance, CA 90501.  The sublease was on a month to month basis and ended January 31, 2013. The Company acquired temporary office space from Regus  Management Group on a month to month basis until March 31, 2013. The Company then entered into facility lease agreement for its current Headquarters and R&D facility in Long Beach, CA..


On February 29, 2012, Vision entered into a Sale Leaseback Agreement with Total Transportation Services, Inc. (TTSI) of Rancho Dominguez, California (see Note 9.) The lease is payable in forty eight (48) monthly installments of Seven Thousand Nine hundred Thirty-two-dollars ($7,932) starting on November 30, 2012.


Minimum future lease payments obligation on the leased equipment mentioned above, as of March 31, 2013, is as follows


Schedule of Lease Payments on Lease Equipment

Year

 

Amount

2013

 

110,048

2014

 

95,184

2015

 

95,184

2016

 

78,962





Note 10 Notes Payable


Table below describes all current debentures and note payables as of March 31, 2013 and December 31, 2012:





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Schedule of Debentures and Notes Payable

 

 

Interest Rate

Outstanding principal

 

Issue Date

3/31/2013

12/31/2012

Current portion notes payable:

 

 

 

 

 

TTSI  Lease

2/29/2012

15%

95,184

95,184

 

Asher 6

6/26/2012

8%

 

32,500

 

TTSI

8/22/2012

8%

50,000

50,000

 

QIF Malta 1 Ltd

9/12/2012

8%

500,000

500,000

 

Asher 7

12/13/2012

8%

 

53,000

 

Black Mountain Equities, Inc.

1/8/2013

8%

55,000

 

 

QIF Malta 1 Ltd

2/4/2013

8%

693,333

 

Total current portion notes payable 

 

1,393,517

730,684

 

 

 

 

Non-current portion notes payable:

 

 

 

 

TTSI Lease

2/29/2012

15%

185,446

185,446

 

QIF Malta 1 Ltd

2/4/2013

8%

301,667

 

Total non-current portion notes payable

 

$487,113

$185,446



On February 29, 2012, Vision entered into a Sale Leaseback Agreement with Total Transportation Services, Inc. (TTSI) of Rancho Dominguez, California (see Note 9.) The lease is payable in forty eight (48) monthly installments of Seven Thousand Nine hundred Thirty-two-dollars (($7,932) starting on November 30, 2012. The current portion of the lease liability is $95,184; the long term portion is $185,446.


On August 22, 2012 the Company entered into a secured convertible promissory note for $50,000 with total Transportation Services (TTSI). The convertible note matures on August 22, 2013 and bears an interest rate of 8%. The note is collateralized by the Company’s Kenworth Series T800 Glider; and security interests in all copy rights and patents.


On September 12, 2012, the Company entered into a loan agreement with QIF Malta 1 Ltd in the amount of $500,000, bearing interest rate of 8% and maturing on September 12, 2013, without a conversion feature.


On January 8, 2013, the Company entered into a convertible loan arrangement with Black Mountain Equities, Inc. for $55,000, earning interest at the rate of 8% per annum.


On February 4, 2013, the Company entered into a new agreement with QIF Malta 1 Ltd., for a principal sum of $1,290,000 USD, PLUS the previous loan amount of $500,000 USD (of September 12, 2012 date), which included outstanding interest, pursuant to a new Loan Agreement (“New Loan”). The outstanding principal balance of the New Loan bears interest at the rate of eight percent (8%) per annum and does not specify a conversion feature. The total amount due of $1,790,000 USD, plus outstanding interest, is payable to QIF in three equal installments on October 31, 2013, November 30, 2013, and June 30, 2014. The New Loan also includes a non-dilution clause, applied to QIF and to five other entities that collectively hold a 57% majority interest in Vision. As of March 31, 2013, the Company has received $995,000 of the $1,290,000 loan amount, of which $693,333 is considered as current and $301,667 is long term.



Note 11 Research and Development Costs


The Company is currently developing several prototypes.  Some of them will have alternative uses as demonstration models, anticipated to be used at trade shows and marketing events.  Additionally, these prototypes are being developed from automobiles and trucks.  Successful testing of our modifications will result in a salable unit, retaining a future value.  Therefore we have capitalized our prototypes in property and equipment on our balance sheet.  See Note 4 for further discussion on the carrying value of these prototypes.



Note 12 Going Concern Issue




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The Company’s cash and available credit are not sufficient to support its operations for the next year.  Accordingly, management needs to seek additional financing.  As stated above, on January 30, 2013, the Company engaged Colebrooke Capital, Inc., to help the company secure financing of up to $5 million in connection with operational expansion and the execution of strategic initiatives.  



Note 13 Subsequent Events


On April 1, 2013, the Company entered into a thirty-nine (39) month lease agreement with Gateway Pacific Properties, Inc., for its new and permanent corporate headquarters at 2230 E. Artesia Blvd., Long Beach CA 90805.  The combined office space and production facility is 21,087 Sq. Ft.  The rent is $4,850 per month for the first year; $9,991 for the second year; $10,291 for the third year; and $10,607 for the final three months of the lease term.


On May 10, 2013, the date of Vision Industries most recent shareholders meeting, the Board of Directors of the Company appointed Martin Schuermann, Brett D. Mayer and Scott Lambert to serve as Independent Directors of the Company.  Neither Mr. Schuermann, Mr. Mayer nor Mr. Lambert have entered into any transactions with us which would require disclosure under Item 404(a) of Regulation S-K (17 CFR 229.404(a)). All proposed amendments to the Company by-laws were passed.


Management has evaluated other events subsequent to the balance sheet date for the three months ended March 31, 2013, through May 15, 2013, and determined that there are no other material events that have occurred that would require adjustments to or disclosure in our Financial Statements.   Management has also considered all accounting pronouncements issued subsequent to year end and do not expect to have any retroactive restatement of these financial statements as a result of the subsequent implementation of any  new accounting principles.





 


ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION


The following discussion should be read in conjunction with our financial statements and the notes thereto.


Forward-Looking Statements


This quarterly report contains forward-looking statements relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this Report, the words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. These statements reflect management’s current view of us concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others: our potential inability to raise additional capital, the possibility that third parties hold proprietary rights that preclude us from marketing our products, the emergence of additional competing technologies, changes in domestic and foreign laws, regulations and taxes, changes in economic conditions, a general economic downturn, a downturn in the securities markets, Securities and Exchange Commission regulations which affect trading in the securities of “penny stocks,” and other risks and uncertainties. Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this Report as anticipated, estimated or expected.


Use of Certain Defined Terms


Except as otherwise indicated by the context, references in this report to “Vision” “we,” “us,” or “our” and the “Company” are references to the business of Vision Industries Corp.   


Use of GAAP Financial Measures


We use GAAP financial measures in the section of this quarterly report captioned “Management’s Discussion and Analysis and Results of Operation.” All of the GAAP financial measures used by us in this report relate to the inclusion of financial information.


Overview


This subsection of MD&A is an overview of the important factors that management focuses on in evaluating our businesses, financial condition and operating performance, our overall business strategy and our earnings for the periods covered.


General


The company’s mission statement is to “develop zero-emission transportation solutions for the 21 st century. “ To achieve this mission, Vision has internally organized itself to focus on fuel cell vehicle technology and hydrogen fueling.


Since December 2008, the company has refocused its efforts in building Class 8 fuel cell electric vehicles (FCEV) used in drayage transportation.


In 2010, the US Department of Energy named Vision’s Class 8 on-road big rig, the Tyrano, and terminal tractor, the Zero-TT, as “alternative and advanced vehicles.” This timely recognition came in an era of increased federal and state-level zero- emission legislation and funding.  As part and parcel of the company’s rise in acceptance, the Vision Tyrano was introduced by then Governor Arnold Schwarzenegger, at the state capital event announcing his Hydrogen Highway initiative. Since then, the Vision brand has been synonymous with zero-emission drayage and cleantech transportation.


Description of the Business


Since alternative energy and cleantech transportation became a center-piece in the national energy narrative, extensive efforts in terms of legislation and governmental funding opportunities have been made available to spur the development of a national alternative fueling infrastructure and for vehicle technologies using them.


With that as a backdrop, Vision has engaged in “well-to-wheel” national initiatives to deploy their zero-emission FCEVs in nonattainment areas, such as the Port of Houston and the twin Ports of Los Angles and Long Beach. Accompanying any regional fleet deployment are plans to build and operate a hydrogen fueling station, which Vision is actively funding with the assistance of government grants and traditional project financing.


As its modus operandi, Vision aims to target drayage trucking fleet operators who operate in the nation’s eight (8) largest deep-water ports (Los Angeles, Long Beach, Oakland, Seattle, Houston, Savanah, New York and New Jersey). Fleets who operate at these locations usually have predetermine routes, travel less than 50-mile (from Port to rail yard or distribution center) and have a return to base duty-cycle. Unique to those areas is an abundance of Hydrogen in the form of a pipeline or a nearby steam methane reformer (SMR) facility supporting a petro-chemical plant.





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The convergence of factors, such as, government reduced-emission mandates (typical of nonattainment areas), availability of hydrogen, short routes (less than 50 miles) and a return to base duty-cycle, make it ideal for Vision’s FCEV and fueling businesses.


At the present time, third party components exist for the various products that Vision installs in its Vehicles and that the Vehicles have not required substantial design modifications or further engineering to bring the Vehicles to market. We believe acquisition of supplies, costs of assembly and other costs related to the production of the Vehicle(s), will require the investment of a material amount of our current and future assets.


In the long-run, Vision plans to outsource the assembly for its FCEV to major OEMs to reduce operational expenses. The fueling business, on the other hand, if attached to a hydrogen pipeline, has the ability to increase the company’s contribution margin with reasonable demand.


Employees


As of March 31, 2013, there were seven (5) full time employees and two (2) consultants at Vision Industries Corp.  This includes the officer/director who runs the corporation.


Critical Accounting Policies


The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Our actual results could differ from those estimates.  To be as accurate with our estimates as possible, we use our historical data to forecast our future results.  Deviations from our projections are addressed when our financials are reviewed on a monthly basis.  This allows us to be proactive in our approach to managing our business.  It also allows us to rely on proven data rather than having to make assumptions regarding our estimates.


Management does not believe that our actual results are related to any sensitivity in estimates made by management.  The year-end consistency of our results has shown that our prior year’s historical data is the best projector of our future results.


Income Taxes


The Company utilizes a liability approach to financial accounting and reporting for income taxes.  The difference between the financial statement and tax bases of assets and liabilities is determined annually.  Deferred income tax assets and liabilities are computed for those differences that have future tax consequences using the currently enacted tax laws and rates that apply to the periods in which they are expected to affect taxable income. Valuation allowances are established, if necessary, to reduce deferred tax asset accounts to the amounts that will more likely than not be realized.  No valuation allowance was deemed necessary by management as of March 31, 2013.  Income tax expense is the current tax payable or refundable for the period, plus or minus the net change in the deferred tax asset and liability accounts.  


Impairment of Long-Lived Assets


Accounting Standards Codification (“ASC”) 360 requires that long-lived assets and certain identifiable intangibles held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  We assess the potential impairment of long-lived assets, principally property and equipment, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. We determine if there is impairment by comparing undiscounted future cash flows from the related long-lived assets with their respective carrying values. In determining future cash flows, significant estimates are made by us with respect to future operating results of the restaurant over its remaining lease term. If assets are determined to be impaired, the impairment charge is measured by calculating the amount by which the asset carrying amount exceeds its fair value. This process of assessing fair values requires the use of estimates and assumptions, which are subject to a high degree of judgment. If these assumptions change in the future, we may be required to record impairment charges for these assets. The adoption of ASC 360 has not materially affected the Company’s reported earnings, financial condition or cash flows.




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Results of Operations


The following table provides a summary of the results of operations for our last two full fiscal years.


Table 1.0 Summary of Results of Operations

PERIOD

REVENUE

TOTAL EXPENSES

NET INCOME (LOSS)

March 31, 2013

0

$1,153,002

(1,153,002)

March 31, 2012

10,500

$1,409.088

(1,398,588)

December 31, 2012

26,545

$5,292,209

(5,265,664)

December 31, 2011

764,157

$7,208,341

(6,444,184)


Liquidity and Capital Resources


As of March 31, 2013, we had cash and cash equivalents of $628,089.  


Results of Operations for the three months ended March 31, 2013 and 2012


The following tables set forth key components of our results of operations for the periods indicated, in dollars.


Table 2.0 Comparison of our Statement of Operations

 

 

Three months ended

 

 

 

 

 

 

March 31, 2013

 

March 31, 2012

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Change

 

%Change

Revenue

$

0

$

10,500

$

(10,500)

 

-100%

Direct Costs

 

0

 

0

 

0

 

-100%

Net Revenue

 

0

 

10,500

 

(10,500)

 

-100%

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

294

 

1,713

 

(1,419)

 

-83%

General & administrative

 

344,372

 

265,040

 

79,332

 

30%

Equity based compensation

 

743,574

 

1,088,169

 

(344,595)

 

-32%

Depreciation/amortization expense

 

29,976

 

23,768

 

6,208

 

26%

Total operating expenses

 

1,118,216

 

1,378,690

 

(260,474)

 

-19%

 

 

 

 

 

 

 

 

 

Loss before other income (expense)

 

(1,118,216)

 

(1,378,190)

 

249,974

 

-18%

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

  Miscellaneous Income

 

15,337

 

20,522

 

(5,185)

 

-25%

  Interest expense

 

(50,123)

 

(52,120)

 

1,997

 

-4%

  Rental Income

 

 

 

1,200

 

(1,200)

 

-100%

Total other income (expense)

 

(34,786)

 

(30,398)

 

(4,388)

 

14%

 

 

 

 

 

 

 

 

 

Net Loss

$

(1,153,002)

$

(1,398,588)

$

245,586

 

-18%


Revenues. We had no revenues for the three months ended March 31, 2013 which is a 100% decrease compared to $10,500 of revenues for the three months ended March 31, 2012.  


Operating Expenses. Expenses decreased by $249,974 to $1,118,216 for the three months ended March 31, 2013 compared to 1,368,190 for March 31, 2012


Income (Loss) from Operations. For the three month periods ended March 31, 2013 and March 31, 2012, we incurred losses before other income and expenses of $1,118,216 and $1,368,190 respectively.  This significant loss from operations is primarily attributable to our equity based compensation coupled with our lack of significant revenues.


Net Loss. Net loss decreased from $1,398,558 for the three months ended March 31, 2012 to a net loss of $1,153,002 for the three months ended March 31, 2013. This decrease in loss is attributable to a decrease in equity based compensation.




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Inflation  


Inflation does not materially affect our business or the results of our operations.


Recent Accounting Pronouncements


The Financial Accounting Standards Board and other entities issued new or modifications to, or interpretations of, existing accounting guidance during this quarter. The Company has carefully considered the new pronouncements that altered generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term.


Off-Balance Sheet Arrangements


We do not have any off-balance arrangements.


ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


The Company does not have exposure to many market risks, such as potential loss arising from adverse change in market rates and prices, such as foreign currency exchange and interest rates.  We do not hold any derivatives or other financial instruments for trading or speculative purposes.



ITEM 4.

CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures


Based on an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) required by paragraph (b) of Rule 13a-15 or Rule 15d-15, as of March 31, 2013, our Chief Executive Officer and Principal Financial Officer have concluded that as of March 31, 2013, our disclosure controls and procedures were not effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitations, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.


Changes in Internal Controls over Financial Reporting.

 

We had no significant changes in our internal controls during the period ended March 31, 2013.  Management concluded that there has been no change in our internal control over financial reporting during the period ended March 31, 2013, that has materially affected or is reasonably likely to affect our internal control over financial reporting.

 



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PART II – OTHER INFORMATION

 

ITEM 1

LEGAL PROCEEDINGS


Vision / Russell Miller


As previously reported in our Quarterly Report on Form 10-Q for the three months ended March 31, 2012, on April 4, 2012, Mr. Russell Miller commenced litigation against the Company, Martin Schuermann (current Director and corporate secretary and treasurer of Vision), Lawrence Weisdorn, and Allan Legator (former officer of Vision), in the Superior Court of the State of California, County of Los Angeles (Case No. BC482212) alleging Breach of Contract, Wrongful Termination and other claims. On April 2, 2013, Mr. Miller and the Company, Martin Schuermann and Allan Legator entered into a Settlement Agreement and, on May 10, 2013, a request for Dismissal was filed by Mr. Miller’s attorneys.


ITEM 2

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 

Except as specified below, we have not sold any of our securities in a private placement transaction or otherwise during the past three years.


Set forth below is information regarding the issuance and sales of Vision Industries Corp.’s common stock without registration under the Securities Act of 1933during the three months ended March 31, 2013.

  

a)

On January 3, 2013, Asher Enterprise exercised its conversion rights to 643,087 shares of common stock, pursuant to convertible note in the amount of $20,000.


b)

On January 10, 2013, Asher Enterprise exercised its conversion rights to 420,732 shares of common stock, pursuant to convertible note in the amount of $12,500.


c)

On February 4, 2013, 300,000 shares were issued to each of three individuals for payment in lieu for commission for the brokering of a loan facility arrangement with QIF, for a total of 900,000 shares of common stock.

 


ITEM 3.

DEFAULTS UPON SENIOR SECURITIES


None


ITEM 4.

MINE SAFETY DISCLOSURES


Not Applicable


ITEM 5

OTHER INFORMATION


(a)

None.



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(b)

ITEM 6

EXHIBITS


 Exhibit No.

Description

3.1

Articles of Incorporation

Filed on September 20, 2007 as Exhibit 3(i) to the registrant’s Registration Statement on Form SB-2 (File No. 333-146209) and incorporated herein by reference.

3.2

Amended and Restated Articles of Incorporation

Filed on September 20, 2007 as Exhibit 3(ii) to the registrant’s Registration Statement on Form SB-2 (File No. 333-146209) and incorporated herein by reference.

3.3

Amended and Restated Articles of Incorporation

Filed on September 20, 2007 as Exhibit 3(iii) to the registrant’s Registration Statement on Form SB-2 (File No. 333-146209) and incorporated herein by reference.

3.4

Articles of Amendment to Articles of Incorporation

Filed on March 31, 2009 as Exhibit 3(iv) to the registrant’s Annual Report on Form 10-K (File No. 333-146209) and incorporated herein by reference.

3.5

Articles of Correction

Filed on March 31, 2009 as Exhibit 3(v) to the registrant’s Annual Report on Form 10-K (File No. 333-146209) and incorporated herein by reference.

3.6

By-Laws

Filed on September 20, 2007 as Exhibit 3(iv) to the registrant’s Registration Statement on Form SB-2 (File No. 333-146209) and incorporated herein by reference.

3.7

Articles of Amendment to Articles of Incorporation

Filed on July 5, 2011, as Exhibit 3.7 to the Company’s Current Report on Form 8-K dated June 30, 2011, and incorporated herein by reference.

3.8

Amended and Restated Bylaws

Filed herewith

4

Form of Stock Subscription Agreement

Filed on September20, 2007 as Exhibit 4 to the registrant’s Registration Statement on Form SB-2 (File No. 333-146209) and incorporated herein by reference.

10.1

Joseph Scutero Subscription Agreement

Filed on May December 26, 2007 as Exhibit 10.1 to the registrant’s Registration Statement on Form SB-2 (File No. 333-146209) and incorporated herein by reference.

10.2

Lynnette J. Harrison Subscription Agreement

Filed on December 26, 2007 as Exhibit 10.2 to the registrant’s Registration Statement on Form SB-2 (File No. 333-146209) and incorporated herein by reference.

10.3

Assignment and Contribution Agreement between Cheetah Consulting, Inc. and Ice Conversions, Inc.

Filed on December 29, 2008, as Exhibit 10 to the Company’s Current Report on Form 8-K dated December 15, 2008 and incorporated herein by reference.

10.4

Vision Industries Corp. 2009 Non-Qualified Stock Option Plan

Filed on February 11, 2009, as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated January 8, 2009 and incorporated herein by reference.

10.5

Investor Relations Consulting Agreement (Redwood Consultants, LLC)

Filed on February 11, 2009, as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated January 8, 2009 and incorporated herein by reference.

10.6

Vision Industries Corp. Amended 2009 Non-Qualified Stock Option Plan

Filed on March 29, 2010, as Exhibit 10.6 to the Company’s Annual Report on Form 10-K dated March 26, 2010 and incorporated herein by reference.

14

Code of Ethics

Filed on September 20, 2007 as Exhibit 14 to the registrant’s Registration Statement on Form SB-2 (File No. 333-146209) and incorporated herein by reference.

23

Consent of Independent Registered Public Accounting Firm, Randall N. Drake, C.P.A.

Filed on March 29, 2010 as Exhibit 23 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 333-146209) and incorporated herein by reference.

31.1

Certification of Chief Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

31.2

Certification of Chief Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

32

Certification of Chief Executive Officer and Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Filed herewith

99

Auto Assignment

Filed on September 20, 2007 as Exhibit 99 to the registrant’s Registration Statement on Form SB-2 (File No. 333-146209) and incorporated herein by reference.

99.3

Lawrence Weisdorn Employment Agreement

Filed on December 29, 2008, as Exhibit 99.3 to the Company’s Current Report on Form 8-K dated December 15, 2008 and incorporated herein by reference.

99.4

Donald Hejmanowski Employment Agreement

Filed on December 29, 2008, as Exhibit 99.4 to the Company’s Current Report on Form 8-K dated December 15, 2008 and incorporated herein by reference.

99.5

Martin Schuermann Employment Agreement

Filed on December 29, 2008, as Exhibit 99.5 to the Company’s Current Report on Form 8-K dated December 15, 2008 and incorporated herein by reference.

99.6

Martin Schuermann Employment Agreement

Filed on June 16, 2011, as Exhibit 99.6 to the Company’s Current Report on Form 8-K dated June 14, 2011, and incorporated herein by reference.

99.11

Jerome Torresyap Employment Agreement

Filed on August 2, 2012, as Exhibit 99.12 to the Company’s Current Report on Form 8-K dated August 1, 2012, and incorporated herein by reference.

99.12

QIF Malta 1 Ltd Loan Agreement February 4, 2013

Filed on February 12, 2013, as Exhibit 99.12 to the Company’s Current Report on Form 8-K dated February 4, 2013, and incorporated herein by reference.

101

Financial statements from the amended quarterly report on Form 10-Q of Vision Industries Corp. for the quarter ended March 31, 2013, filed on May 20, 2013, formatted in XBRL: (i) the Balance Sheet, (ii) the Statement of Income, (iii) the Statement of Cash Flows and (iv) the Notes to the Financial Statements.

Filed herewith




SIGNATURES


 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

VISION INDUSTRIES CORP.

 

 

 

 

Dated :  May 20, 2013

/s/ JEROME TORRESYAP

 

Jerome Torresyap

 

President

 

 

Dated :  May 20, 2013

/s/ MARTIN SCHUERMANN

 

Martin Schuermann

 

Chief Executive Officer, Secretary, Treasurer and Director

 

 

Dated :  May 20, 2013

/s/ DAVID MORENO

 

David Moreno

 

Acting Chief Financial Officer




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