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

FORM 10-Q

Amendment 2

(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, 2012

[ ] 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

 

	FLORIDA		14-1908451
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Tax. I.D. No.)
879 W. 190 Street, Suite 457, Gardena, California 90248
(Address of Principal Executive Offices)
(310) 450-0299
(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 issuer’s classes of common stock as of March 31, 2012:  46,623,016

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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

FINANCIAL STATEMENTS EXPLANATORY NOTE

The purpose of this amendment to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, filed with the Securities Exchange Commission on May 15, 2012 (the “Form 10-Q”), is to include and assessment of our disclosure controls and procedures pursuant to Item 307 of Regulations S-K.  This amendment speaks as of the original filing date of the Form 10-Q and does not reflect events that may have occurred subsequent to the original filing date.

XBRL EXPLANATORY NOTE

Pursuant to Rule 406T of Regulation S-T, the XBRL files contained in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

Vision Industries Corp.

Balance Sheet

As of March 31, 2012 (Unaudited) and December 31, 2011 (Audited)

		March 31, 2012		December 31, 2011
		(Unaudited and Restated)		(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,809	$	3,480
Accounts Receivable		2,750		2,750
Note Receivable		226,855
Inventory		48,117		211,564
Prepaid expenses		37,417		34,848
Supply inventory		11,450		11,450
Total current assets		329,398		264,092
Property and equipment, net		351,592		203,418
Intangible assets, net		279,502		292,887
Other assets:
Deferred loss		140,166
Employee advances		7,000		4,208
Security deposits & other		23,420		21,200
Total other assets		170,586		25,408
Total assets	$	1,131,078	$	785,805
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued expense	$	736,134	$	523,615
Current portion notes payable		1,448,500		318,500
Total current liabilities		2,184,634		842,115
Noncurrent Liabilities:
Lease Liability		285,000
Notes payable - noncurrent portion				1,100,000
Total noncurrent liabilities		285,000		1,100,000
Total liabilities		2,469,634		1,942,115
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 46,623,016 issued and outstanding as of March 31, 2012, and 46,159,016 as of December 31, 2011.		46,623		46,159
Additional paid in capital		14,467,869		13,338,990
Deferred compensation		(130,500)		(217,500)
Accumulated deficit		(15,722,798)		(14,324,209)
Total stockholders' deficit		(1,338,556)		(1,156,310)
Total liabilities and stockholders' deficit	$	1,131,078	$	785,805

See accompanying notes and accountant’s report.

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Vision Industries Corp.

Statement of Operations

	For the three months ended
		March 31, 2012		March 31, 2011
		(Unaudited and Restated)		(Unaudited)
Revenue:
Sales	$	10,500	$	206,307
Total revenue		10,500		206,307
Direct Costs				92,682
Net revenue		10,500		113,625
Operating expenses:
Research and development		1,713		11,876
General & administrative		265,040		425,485
Equity based compensation		1,088,169		1,098,972
Depreciation and amortization		23,768		35,174
Total operating expenses		1,378,690		1,571,507
Loss before other expense		(1,368,190)		(1,457,882)
Other income (expense)
Miscellaneous Income		20,522
Interest expense		(52,120)		(54,395)
Rental Income		1,200
Total other income (expense)		(30,398)		(54,395)
Net loss	$	(1,398,588)	$	(1,512,277)
Gain (Loss) per share: basic and diluted	$	(0.04)	$	(0.04)
Weighted average number of common shares outstanding: basic and diluted		38,916,448		38,503,888

See accompanying notes and accountant’s report.

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Vision Industries Corp.

Statement of Cash Flows

		For the three months ended
		March 31, 2012		March 31, 2011
		(Unaudited and Restated)		(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)	$	(1,398,588)	$	(1,512,277)
Adjustments to reconcile net (loss) to net cash provided (used) by operating activities:
Stock-based compensation		1,088,169		1,098,972
Depreciation and amortization		23,768		35,174
Conversion of notes				211,779
Cancellation of Asher note derivative				(210,104)
Adjustment to carrying value of fixed assets		(82,272)
Stock Issuances in lieu of professional services		(826)		-
Changes in operating assets and liabilities:
Change in inventory		(53,004)		(12,589)
Note Receivable-reduction		58,145		(60,362)
Trade deposits		(2,220)		9,261
Prepaid expenses		(2,569)		3,386
Accounts payable and accrued expense		209,727		(3,264)
Cash used by operating activities		(159,671)		(440,024)
CASH FLOWS FROM INVESTING ACTIVITIES:
Leaseback of fixed assets- capitalized		(285,000)
Security Deposits				(307)
Cash used by investing activities		(285,000)		(307)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable				(400)
Note Receivable -Sale-Leaseback of fixed assets		285,000
Subscription agreement for stock and warrants		129,000
Short term borrowings		30,000		200,000
Cash provided by financing activities		444,000		199,600
Net decrease increase in cash and cash equivalents		(671)		(240,731)
Cash and cash equivalents, beginning of period		3,480		641,069
Cash and cash equivalents, end of period	$	2,809	$	400,338
NONCASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common stock	$	464	$	819
Paid in capital	$		$	1,138,872
Interest expense	$	(52,120)	$	(42,839)
Sales  Leaseback - Consideration		285,000
Sales  Leaseback – Sale of truck frame from inventory		(216,452)
Sales  Leaseback – Sale from fixed assets (net of accumulated depreciation - $244,559)		(208,714)
Sales  Leaseback – Deferred Loss		140,166

See accompanying notes and accountant’s report.

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VISION INDUSTRIES CORP.

Notes to Financial Statements

March 31, 2012

 (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 2009 the company moved its headquarters to EL Segundo, California, to concentrate on the development and production of zero-emission drivetrains for heavy duty vehicles as well as high performance sports cars.

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.

The Company is uniquely positioned to leverage its knowledge and experience about alternative fuels, electronic controls, hydrogen and hybrid hydrogen/electric drive systems, and hydrogen handling and refueling.  The Company intends to become part of the truly pollution free or reduced pollution solution and alternative energy conversion systems solution for today’s drivers.

Note 2.Summary of 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, 2012 and 2011; (b) the financial position at March 31, 2012; and (c) cash flows for the three months ended March 31, 2012 and 2011, 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

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

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VISION INDUSTRIES CORP.

Notes to Financial Statements

March 31, 2012

(Continued)

Note 2.Summary of significant accounting policies - continued

Accounts Receivable and Allowance for Doubtful Accounts - continued

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 costor 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 years ended March 31, 2012 and March 31, 2011 were $235  and $10,232.64, 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

In accordance with ASC 718-10 “Share-Based Payment” all forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest.

The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC 505-50, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services,” which requires that such equity instruments are recorded 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 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.

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VISION INDUSTRIES CORP.

Notes to Financial Statements

March 31, 2012

(Continued)

Note 2.Summary of significant accounting policies-continued

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

There are no recently issued accounting standards that are expected to have a material impact on the Company’s consolidated results of operations, financial position or cash flows. We have considered accounting standards issued by FASB through Accounting Standard Update No. 2011-04, “Fair Value Measurement.”

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, 2012 and December 31, 2011:

				March 31, 2012		December 31, 2011
Raw Materials			$	27,165	$	37,792
Work in Process				20,952		185,194
Finished Goods						0
			$	48,117	$	222,986

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VISION INDUSTRIES CORP.

Notes to Financial Statements

March 31, 2012

(Continued)

Note 4 Property and equipment

Property and equipment as Restated March 31, 2012. and as of December 31, 2011 consist of the following:

			March 31, 2012 (Restated)		December 31, 2011
Automobiles		$	11,238	$	11,238
Computers			5,139		5,139
Furniture and fixtures			1,550		1,550
Office equipment			1,000		1,000
Leased assets			285,000
Shop equipment			44,034		44,034
Production prototypes			73,480		526,753
			421,441		589,714
Less accumulated depreciation			(70,249)		(386,296)
		$	351,192	$	203,418

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.  

On February 29, 2012 the Company leased back the production prototypes that were sold as part of the Sales-Leaseback agreement with Total Transportation Services Inc.  mentioned in Note 9. The Company has elected to capitalize the lease accordance with SFAS 13, “Accounting for Leases;” as amended by SFAS 28 “Accounting for Sales with Leaseback;” and SFAS 98 “Accounting for Leases.”

Depreciation expense for the three months ended March 31, 2012 and March 31, 2011 was $10,383 and $87,156 respectively.

Note 5 Intangibles

Intangible assets at March 31, 2012 and December 31, 2011 consist of the following:

		March 31, 2012		December 31, 2011
Beginning Balance	$	292,887	$		346,427
Additions		-			0
Amortization		13,385			53,540
Impairment		-
	$	279,502	$		292,887

Amortization expense for the three months ended March 31, 2012 and December 31, 2011 was $13,385 and $53,540.

Note 6 Accrued expenses

Accounts payable and accrued expenses at March 31, 2012 and December 31, 2011 were $734,164 and $523,615, respectively and included operating expenses.  At March 31, 2012, the accrued expenses consist mainly of salary, payroll liabilities and accrued interest expense totaling $332,442.

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VISION INDUSTRIES CORP.

Notes to Financial Statements

March 31, 2012

(Continued)

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 2008, 2009 and 2010 are subject to examination by the tax authorities. With few exceptions, as of December 31, 2011, the Company is no longer subject to U.S. federal and state examinations by tax authorities for years before 2008.

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, 2012, the Company notes that ASC 740-10 has had no material changes.

Note 8 Stockholders’ equity

On December 31, 2011, there were 46,159,016 shares of common stock issued and outstanding .There was no issuance of preferred stock during the first quarter, the common stock issues were:.

On February 1, 2012, 396,000 shares of common stock issued to Donald and Katherine Hymanowski were cancelled

On March 3, 2012, an investor executed a subscription agreement to purchase 860,000 units of securities of the Company, with each unit consisting of one (1) share of common stock at $0.15 per share and one common stock purchase warrant to purchase one (1) share at $.20 per share.  

Accordingly, on March 31, 2012, there were 46, 623,016 shares of common stock issued and outstanding and 250,000 shares of preferred stock issued and outstanding.

Note 9 Financing

On February 29, 2012, Vision entered into a Sale Leaseback Agreement with Total Transportation Services, Inc. (TTSI) of Rancho Dominguez, California.  In the Agreement, TTSI would be allowed to purchase two (2) prototype hybrid Class 8 trucks from Vision for $285,000, payable with interest at a rate of eight percent (8%) per annum in five (5) installments of principal and interest in the amount of $58,145. The base lease obligation is  $285,000, plus a 15%  interest payable in forty-eight (48) monthly installments of $7,932 starting on or about August 1, 2012. At the end of the lease period, Vision will have the option to buy-back the vehicles for a $5,700 fee, plus a return of sales tax paid by TTSI.

On January 31, 2012 the Company entered into a subscription agreement with VP Bank(Switzerland) for the right to purchase 860,000 shares of common stock, and a similar number of warrants to purchase common stock at $ 0.20 per share for a total consideration of $129,000.

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VISION INDUSTRIES CORP.

Notes to Financial Statements

March 31, 2012

(Continued)

Note 10 Commitment and contingencies

The Company’s leases for office and R&D facilities expired in January 2012. Starting February 1, 2012 the Company leases its corporate office at 879 W. 190^th Street, Suite 457, Gardena, CA 90248, on a month to month basis. Negotiations are in progress on future lease commitments.

On April 8, 2011, Vision Industries, Corp. (“Vision”) commenced litigation against Lawrence Weisdorn and Donald Hejmanowski as well as ICE Conversions, Inc. (collectively the “Defendants”).   Weisdorn and Hejmanowski are former employees and executives of Vision.  The litigation includes causes of action for alleged breach of fiduciary duty, fraud, conversion and unfair competition (amongst other causes) as charged by Vision against the Defendants.

On December 21, 2011, Vision and Hejmanowski entered into a settlement agreement, whereby both parties released each other from any past and future claims.

On January 17, 2012, LAWRENCE ERWIN WEISDORN, in his capacity as Debtor in Possession for the Bankruptcy Estate of Lawrence Erwin Weisdorn, filed and adversary claim against the company.  The company denies any wrongdoing and will continue to enforce its rights to the fullest extent of the law.

On April 13, 2012, the Company received a Summons from former Director of Investors Relations, Russell Miller, alleging Breach of Contract, Wrongful Termination and other claims.  The Company will defend its position to the fullest extent of the law, including seeking damages from the plaintiff where appropriate.

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 or prior to August 1, 2012.

Minimum future lease payments obligation on the leased equipment mentioned above, as of March 31, 2012, is as follows::

Year		Amount
2012		$47,592
2013		95,184
2014		95,184
2015		95,184
2016		47,592

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VISION INDUSTRIES CORP.

Notes to Financial Statements

March 31, 2012

(Continued)

Note 11 Notes Payable

Table below describes all current debentures and note payables as of March 31, 2012 and December 31, 2011;

			Remaining years to Maturity	Interest Rate	Outstanding principal
		Issue Date			2012	2011
Current portion notes payable
	Asher 3	11/17/2011	0	8%	50,000	50,000
	Asher 2	11/12/2011	0	8%	68,500	68,500
	Asher	2/6/2012			30,000
	Juha Halttenen	1/31/2011	0	9%	200,000	200,000
	Quality Investment Fund	11/18/2010	0	12%	600,000	600,000
	QIF Malta 1 Ltd	12/28/2010	0	5%	500,000	500,000
Total current portion notes payable					1,448,500	1,418,500

Note 12 Research and development costs

The Company is currently designing and developing several Class8 and terminal tractor prototypes for usage in and around the port facilities.  Some of them will have alternative uses as demonstration models, anticipated to be used at trade shows and marketing events.  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 3 for further discussion on the carrying value of these prototypes.

Note 13 Going concern issue

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 July 8, 2010, the Company entered into a non-exclusive placement agreement with Stonegate Securities, Inc., a Texas corporation, to raise capital via a private placement to be executed in the near future.  Due to current global sentiment towards alternative energy and fuel efficiency in the HEV/EV markets, management is in active discussions with Stonegate about the potential to raise approximately $10,000,000-$12,000,000 in the current year to fund continued development and commercialization of products in the heavy-duty truck market.

As of March 31, 2012, the Company has an accumulated deficit of $15,709,413.  These financial statements have been prepared on the basis that adequate financing will be obtained.  These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Note 14 Subsequent events

Asher Industries, Inc., the holder of a Convertible Note dated October 27, 2011, in the amount of $68,500, has elected to convert $10,000 of the principal amount of the Note into that number of shares of common stock pursuant to the conversion provisions. The conversion date is May 2, 2012 with 220,264 shares of common stock to be issued.

On May 11, 2012 the Company has entered into a purchase agreement with Total Transportation Services (TTSI) of Rancho Dominquez, California. The purchase agreement calls for an initial delivery of 100 Tyrano Class 8 Trucks, with a second production right of 300 trucks. The estimated value of the initial purchase order would approximate $27,000,000.

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VISION INDUSTRIES CORP.

Notes to Financial Statements

March 31, 2012

(Continued)

Note 14 Subsequent events - continued

On May 11, 2012 Asher Industries, Inc. noticed the Company of its intention to convert $18,000 of the principal amount of the convertible Note of $68,500, mentioned above, into 444,712 shares of common stock pursuant to the conversion provision.

Management has evaluated other events subsequent to the balance sheet date for the three months ended March 31, 2012, through May 29, 2012, and determined that there are no other material events that have occurred that would require adjustments to or disclosure in our Consolidated 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.

Note 15 – Restatement

The Company restated the financial statements for the three months ended March 31, 2012 to correct various misstatements associated with the sales and leaseback transaction and to adjust common stock outstanding as follows:  1) Inventory was reduced for the work in process sold in the transaction.  2) The cost and accumulated depreciation of a prototype erroneously included in the sale and lease back was added back to property and equipment. 3) The deferred gain or loss on the sale and leaseback was adjusted for the work in process sold. 4) The number of common shares outstanding and the amount of additional paid in capital was adjusted to actual amounts at March 31, 2012.   

		As originally stated		Restated		Change Amount		Percent difference
Inventory	$	214,272	$	48,117	$	(166,155)		-77.5%
Property and Equipment - net		344,764		351,592		6,828		2.0%
Deferred (Gain)/ Loss		(19,160)		140,166		159,326		831.6%
Common Stock		46,159		46,623		464		1.0%
Additional Paid in Capital		14,468,333		14,467,869		464		0.0%

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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

We are a company focused on marketing zero-emission vehicles to a variety of alternative energy and green-minded individuals, OEM dealer networks, as well as for sale to end-user consumers. We are uniquely positioned to leverage our knowledge and experience about alternative fuels, electronic controls, hydrogen and hybrid hydrogen/electric drive systems, and hydrogen handling and refueling. We intend to become part of the truly pollution free or reduced pollution solution and alternative energy conversion systems solution for today’s drivers.

We believe that a substantial commercial market will begin to develop for these products over the next two (2) to seven (7) years. However, we also believe that these Vehicles will reach significant production volumes only if fuel cell and hydrogen-based vehicles and hydrogen fueling products enter the marketplace in sufficient quantities to create a demand for a broad network of hydrogen fueling stations owned and operated by Vision or others.

A number of automotive and industrial manufacturers are developing alternative clean power systems using fuel cells or clean burning gaseous fuels in order to decrease fuel costs, lessen dependence on crude oil, and reduce harmful emissions. Our products for the clean power market, featuring off-the-shelf components that provide fuel storage, fuel delivery, and electronic vehicle control systems, will compete directly with other OEM offerings.

The current market for our vehicles is the emerging world market for passenger, fleet, industrial, and military vehicles powered by fuel cells and hybrid engines using hydrogen. Vision plans to continue the development of our electric/hydrogen hybrid vehicles to meet market opportunities. We are focusing our alt-fuel enabling technology marketing efforts on North America, particularly Southern California. Vision plans to continue the development of our products to meet market opportunities. Vision also plans to expand our capabilities and products to new customers.

Our Board of Directors believes that our sales and revenue will continue to grow as we fulfill our existing contractual relationships with ports of Long beach and Los Angeles. In order to expand our operations, we may need to raise cash from sources other than our operations. Our only other source for cash at this time is investment by others in the Company.  During the fourth quarter of 2010 and

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the first half of 2011, we raised $1.7 million in short and long term notes to fund current operations.  In addition, we raised an additional $250,000 through the sales of our preferred stock in the third quarter of 2011. Our future financial success will be dependent on the success of our expansion, which may take years to complete, and our future cash flows, if any, are impossible to predict at this time. The realization value from any expansion is largely dependent on factors beyond our control such as the market for our services.

Employees

As of March 31, 2012, there were seven (7) full time employees and two (1) 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, 2012.  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, 2012	10,500	$1,409,088	(1,398,588)
March 31, 2011	206,307	$1,718,584	(1,512,277)
December 31, 2011	764,157	$7,208,341	(6,444,184)
December 31, 2010	24,962	$4,604,711	(4,579,749)

Liquidity and Capital Resources

As of March 31, 2012, we had cash and cash equivalents of $2,809.  

On November 15, 2010 the Company was engaged by the City of Long Beach through the Long Beach Harbor Department to develop and place into demonstration service one hydrogen fuel cell/plug-in electric class 8 on-road truck (TYRANO^TM) and one hydrogen fuel cell/plug-in zero emission terminal tractor (ZETT).  This project will demonstrate zero emission heavy-duty vehicles in cargo handling and short haul drayage operations within the San Pedro Bay Ports.  The contract provides for City of Long Beach and City of Los Angeles (the “joint ports”) Technology Advancement Program (TAP) Funding in the amount of $425,000.  TAP was created as part of the joint ports’ Clean Air Action Program to accelerate the verification or commercial availability of new, clean technologies that are applicable to the port industry and result in significant reductions of diesel particulate matter, nitrogen oxides, sulfur oxides and other pollutants.

On February 29, 2012, Vision entered into a Sale Leaseback Agreement with Total Transportation Services, Inc. (TTSI) of Rancho Dominguez, California.  In the Agreement, TTSI would be allowed to purchase two (2) prototype hybrid Class 8 trucks from Vision for $285,000, payable in five installments of $58,145. Vision will then enter into a 48-month lease agreement for the right to use the trucks.  The lease portion is valued at $285,000, plus a 15% interest rate. At the end of the lease period, Vision will have the option to buy-back the vehicles for a $5,700 fee, plus a return of sales tax paid by TTSI.

On January 31, 2012 the Company entered into a subscription agreement with VP Bank (Switzerland) for the right to purchase 860,000 shares of common stock, and a similar number of warrants to purchase common stock at $ 0.20 per share for a total consideration of $129,000. The stock were purchased on March 3, 2012.

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Results of Operations for the three months ended March 31, 2012 and 2011

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

Revenues. We had $10,500 in revenues for the three months ended March 31, 2012 which is a 94.91% decrease compared to $206,307 of revenues for the three months ended March 31, 2011.  These revenues over the first three months of 2012 represent our consulting arrangements..

We believe that capital will be available through private investors and we can take advantage of the new Clean Truck Program at the Ports of Long Beach and Los Angeles, California to generate revenue.  We are also in the process of qualifying our trucks for potential State and Federal subsidy programs.

Operating Expenses. Expenses decreased by $206,202 to $1,365,305, for the three months ended March 31,2012 compared to 1,571,501 for March 31, 2011

Income (Loss) from Operations. For the three month periods ended March 31, 2012 and March 31, 2011, we incurred losses before other income and expenses of $1,354,805 and $1,457,882 respectively.  This significant loss from operations is primarily attributable to our equity based compensation coupled with our lack of significant revenues.

Net Loss. As a result of the factors described above, net loss increased from $1,385,203 for the three months ended March 31, 2012 to a net loss of $1,512,277 for the three months ended March 31, 2011.

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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, 2012, our Chief Executive Officer and Principal Financial Officer have concluded that as of March 31, 2012, 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, 2012.  Management concluded that there has been no change in our internal control over financial reporting during the period ended March 31, 2012, 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

On April 8, 2011, Vision Industries, Corp. (“Vision”) commenced litigation against Lawrence Weisdorn and Donald Hejmanowski as well as ICE Conversions, Inc. (collectively the “Defendants”).   Weisdorn and Hejmanowski are former employees and executives of Vision.  The litigation includes causes of action for alleged breach of fiduciary duty, fraud, conversion and unfair competition (amongst other causes) as charged by Vision against the Defendants.   Vision intends to enforce its rights to the fullest extent of the law through the subject litigation.

On December 21, 2011, Vision and Donald Hejmanowski entered into a settlement agreement, whereby both parties released each other from any past and future claims.

On January 17, 2012, Lawrence Erwin Weisdorn, in his capacity as Debtor in Possession for the Bankruptcy Estate of Lawrence Erwin Weisdorn, filed an adversary claim against Vision.  Vision denies any wrongdoing and will continue to enforce its rights to the fullest extent of the law.

On April 13, 2012, Vision received a Summons and Complaint from former Director of Investors Relations, Russell Miller, alleging Breach of Contract, Wrongful Termination and other claims.  Vision will defend its position to the fullest extent of the law, including seeking damages from the plaintiff where appropriate.

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 last three years.

(a)

On May 4, 2009, the Board of Directors authorized the sale of up to 5,000,000 units (at $0.50 per unit) with each unit comprised of one common share and two common share purchase warrants (“Warrants”). The first Warrant is exercisable into one common share for a period of 60 months from closing of this offering at a price of $0.75 per share, and the second Warrant is exercisable into one common share for a period of 60 months from closing of this offering at a price of $1.25 per share.  The minimum investment is $20,000 or 40,000 units. The Company filed a Form D with the U.S. Securities and Exchange Commission for sales under Regulation D Section 506.  Shares are being sold to U.S. citizens under the Regulation D 506 exemption claimed under Section 4(2) of the Securities Act of 1933, as amended.  These shares were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 as the shares were not a part of a public offering and pursuant to Rule 506 of the Rules and Regulations of the Securities Act of 1933. The Offering began on September 29, 2009 with a scheduled termination date of September 29, 2009.  The following terms of the Offering were amended on September 28, 2009: effective both immediately and retroactively, the price per unit was changed from $0.50 per unit to $0.25 per unit, increasing the number of units authorized to 10,000,000, and the offering was extended fifteen (15) days to October 15, 2009.  On October 14, 2009, the offering was extended again to November 30, 2009. The Offering was subsequently extended to June 30, 2010.  Each purchaser received an Offering Memorandum, and as of June 30, 2010, the Company had sold 7,065,200 of the authorized 10,000,000 units for total of $1,766,300 with broker commissions of $35,000.

(b)

On February 15, 2010, the Board of Directors awarded certain employees 260,000 shares of common stock.   

(c)

On March 24, 2010, the Company entered into a consulting agreement with the Casale Alliance, LLP.  The company issued 22,020 shares of restricted common stock all subject to the restrictions of SEC Rule 144.  We account for stock-based compensation in accordance ASC 718-10 “Share-Based Payment”.  Under the fair value recognition provisions of this statement, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the applicable vesting period of the stock award.

(d)

On March 31, 2010 the Company entered into a business consulting agreement with Janette Minasian Pires CPA, Inc.  The Company issued 195,000 shares of restricted common stock all subject to the restrictions of SEC Rule 144.  

(e)

On April 22, 2010 and April 30, 2010, the Company executed a contract with Del Mar Corporate Consulting, LLC and Grant Bettingen approved the issuance of 200,000 and 120,707 shares, respectively of restricted common stock subject to the restrictions of SEC Rule 144.   

(f)

On May 7, 2010, the Company accepted the resignation of Donald Hejmanowski, Vice President Corporate Communications and Director and accepted the surrender of 1,425,000 shares common stock and the cancellation of 2,000,000 unvested stock options. These shares were historically recorded at par value and were returned at par.

(g)

On May 14, 2010, the Board of Directors awarded certain employees 1,500,000 shares of common stock.

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(h)

On May 21, 2010, the Company accepted the resignation of Lawrence Weisdorn, Secretary, Treasurer, Chief Operating Officer, Chief Financial Officer and Director and accepted the surrender of 5,755,000 shares common stock and the cancellation of 2,000,000 unvested stock options. These shares were historically recorded at par value and were returned at par.  

(i)

On July 8, 2010, the Company entered into a non-exclusive placement agreement with Stonegate Securities, Inc., a Texas corporation, to raise capital via a private placement to be executed in the near future.  In exchange for their services, the Company issued 600,000 shares of restricted common stock all subject to the restrictions of SEC Rule 144.   On November 15th, 2010 the Company issued 150,000 shares at $0.05 per share to Gerard N. Casale for legal services performed on behalf of the Company in the fourth quarter of 2010.

(j)

In conjunction with the consummation of the Novium Opportunity Umbrella QIF notes as well as the QIF Malta 1 Ltd note on October 8, November 15, and December 28, 2010, respectively, the Company issued 2,000,000 shares of common stock to C&M Capital for consulting services rendered with respect to the notes, in addition the Company also issued warrants totaling 7,600,000 to C&M Capital.  The related warrant expense was valued using the Black-Scholes option pricing model at date of issuance and is being amortized over the life of the notes. The equity based compensation charge for these warrants in the fourth quarter 2010 was $659,405.

(k)

On January 7, 2011 the Company issued 78,333 shares of common stock subject to the restrictions of SEC Rule 144 to Casale Alliance, LLP per agreement for legal services to be performed on behalf of the company for the first quarter of 2011.

(l)

During the months of January and February, 2011, Asher Enterprises, Inc. converted its $60,000 convertible note into common stock.  The total number of shares converted during this period totaled 740,516.  

(m)

On June 6^th, 2011 the Company issued 300,000 shares of common stock as compensation for financing services to be rendered.

(n)

On June 6^th, 2011 the Company issued 400,000 shares as finders’ fees for capital raises.

(o)

On June 30^th 2011, the Company issued 6,985,777 shares to Novium Opportunity Umbrella QIF upon conversion of their 300,000 Euro loan to common stock.

(p)

On June 30, 2011, and pursuant to the authority given to the Board of Directors vested in it by the provisions of its Articles of Incorporation, as amended, and Florida Statutes, the Board of Directors, by action in writing pursuant to Section 607.0821 of the Florida Business Corporation Act, adopted a resolution creating a series of 2,000,000 Preferred Shares, par value $0.001, designated as “Series A Preferred Shares”. These Series A Preferred shares are non-voting, shall be entitled to receive annual dividends at the rate of $0.10 per Series A Share, are convertible into five (5) Common Shares for each Series A Share converted, and must be converted on the third anniversary of the issue Date or the date the Share Price reaches $5.00 per share.

(q)

On July 7th 2011, the Company issued 150,000 shares of the newly established Series A Convertible Preferred Stock to Jablon Global Equity Fund, in return for $150,000 at a price of $1 per share. The company at the time of issuance reserved 750,000 shares of common stock in contemplation of conversion of these preferred shares at a later date.

(r)

On August 30th 2011, the Company issued 100,000 shares of Series A Convertible Preferred Stock to the Altair Fund, in return for $100,000 at a price of $1 per share. The company at the time of issuance reserved 500,000 shares of common stock in contemplation of conversion of these preferred shares at a later date.

(s)

During the third quarter of 2011, the company issued 203,759 shares of common stock to various consultants and professionals in lieu of payment for services provided to the Company. In addition, the Company issued 30,000 shares of common stock to an employee pursuant to his employment agreement.

(t)

ITEM 5

OTHER INFORMATION

(a)

On June 30, 2011, and pursuant to the authority given to the Board of Directors vested in it by the provisions of its Articles of Incorporation, as amended, and Florida Statutes, the Board of Directors, by action in writing pursuant to Section 607.0821 of the Florida Business Corporation Act, adopted a resolution creating a series of 2,000,000 Preferred Shares, par value $0.001, designated as “Series A Preferred Shares”.   These Series A Preferred shares are non-voting, shall be entitled to receive annual dividends at the rate of $0.10 per Series A Share, are convertible into five (5) Common Shares for each Series A Share converted, and must be converted on the third anniversary of the issue Date or the date the Share Price reaches $5.00 per share.

(b)

There were no material changes to the procedures by which security holders may recommend nominees to our board of directors.

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(c)

ITEM 6

EXHIBITS

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 :  December 19, 2012	/s/ JEROME TORRESYAP
	Jerome Torresyap
	President
Dated :  December 19, 2012	/s/ MARTIN SCHUERMANN
	Martin Schuermann
	Chief Executive Officer, Secretary, Treasurer and Director
Dated :  December 19, 2012	/s/ DAVID MORENO
	David Moreno
	Acting Chief Financial Officer

  

 

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