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EXCEL - IDEA: XBRL DOCUMENT - VISION INDUSTRIES CORP | Financial_Report.xls |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Amendment 1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended: September 30, 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
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.) |
|
| ||||
1560 W. 190th Street, Torrance, California 90501 | ||||
(Address of Principal Executive Offices) | ||||
| ||||
(310) 450-0299 | ||||
(Registrants 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 September 30, 2012: 81,379,132
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TABLE OF CONTENTS
Part I – Financial Information
Item 2. Managements Discussion and Analysis and Results of Operation
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4. Controls and Procedures
Item 2. Unregistered Sales of Equity Securities and Use Of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
XBRL EXPLANATORY NOTE
The purpose of this Amendment No. 1 to the Registrants Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012 is to submit Exhibit 101 in accordance with Rule 405 of Regulation S-T. Exhibit 101 consists of the Interactive Data Files relating to this Amendment No. 1 to the Registrants Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012.
2
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PART I FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
Vision Industries Corp.
Balance Sheet
As of |
| September 30, 2012 |
| December 31,2011 | |||
|
| (unaudited) |
| (Audited) | |||
ASSETS | |||||||
Current assets: |
|
|
|
| |||
Cash and cash equivalents | $ | 249,901 | $ | 3,480 | |||
Accounts Receivable |
| 7,000 |
| 2,750 | |||
Inventory |
| 88,311 |
| 211,564 | |||
Prepaid expenses |
| 22,161 |
| 34,848 | |||
Supply inventory |
|
|
| 11,450 | |||
Total current assets |
| 367,373 |
| 264,092 | |||
|
|
|
|
| |||
Property and equipment, net |
| 332,481 |
| 203,418 | |||
|
|
|
|
| |||
Intangible assets, net |
| 252,732 |
| 292,887 | |||
|
|
|
|
| |||
Other assets: |
|
|
|
| |||
Deferred loss |
| 128,485 |
|
| |||
Employee advances |
|
|
| 4,208 | |||
Security deposits & other |
| 13,782 |
| 21,200 | |||
Total other assets |
| 142,267 |
| 25,408 | |||
|
|
|
|
| |||
Total assets | $ | 1,094,853 | $ | 785,805 | |||
|
|
|
|
| |||
LIABILITIES AND STOCKHOLDERS DEFICIT | |||||||
Current liabilities: |
|
|
|
| |||
Accounts payable and accrued expenses | $ | 572,896 | $ | 523,615 | |||
Current portion of lease liability |
| 87,252 |
|
| |||
Current portion notes payable |
| 632,500 |
| 318,500 | |||
Total current liabilities |
| 1,292,648 |
| 842,115 | |||
Noncurrent Liabilities: |
|
|
|
| |||
Lease Liability |
| 197,748 |
|
| |||
Notes payable - noncurrent portion |
|
|
| 1,100,000 | |||
Total noncurrent liabilities |
| 197,748 |
| 1,100,000 | |||
|
|
|
|
| |||
Total liabilities |
| 1,490,396 |
| 1,942,115 | |||
|
|
|
|
| |||
Stockholders' deficit: |
|
|
|
| |||
Preferred stock, $.001 par value, 2,000,000 authorized, 250,000 issued and outstanding as of September 30, 2012, and December 31, 2011, respectively |
| 250 |
| 250 | |||
Common stock, $.001 par value, 500,000,000 authorized 81,379,132 issued and outstanding as of September 30, 2012, and 46,159,016 as of December 31, 2011, respectively |
| 81,379 |
| 46,159 | |||
Additional paid in capital |
| 18,026,936 |
| 13,338,990 | |||
Deferred compensation |
| (43,500) |
| (217,500) | |||
Accumulated deficit |
| (18,460,608) |
| (14,324,209) | |||
Total stockholders' deficit |
| (395,543) |
| (1,156,310) | |||
|
|
|
|
| |||
Total liabilities and stockholders' deficit | $ | 1,094,853 | $ | 785,805 |
See accompanying notes to the financial statements.
3
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Vision Industries Corp.
Statement of Operations
|
| For the nine months ended |
| For the three months ended | ||||
|
| September 30, 2012 |
| September 30, 2011 |
| September 30, 2012 |
| September 30 2011 |
|
| (Unaudited) |
| (Unaudited) |
| (Unaudited) |
| (Unaudited) |
Revenue: |
|
|
|
|
|
|
|
|
Sales | $ | 26,545 | $ | 764,157 | $ | 16,045 | $ | 294,240 |
Total revenue |
| 26,545 |
| 764,157 |
| 16,045 |
| 294,240 |
|
|
|
|
|
|
|
|
|
Direct Costs |
|
|
| 304,892 |
|
|
| 103,040 |
|
|
|
|
|
|
|
|
|
Gross profit |
| 26,545 |
| 459,265 |
| 16,045 |
| 191,200 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development |
| 5,012 |
| 135,937 |
| 1,088 |
| 43,896 |
General & administrative |
| 838,058 |
| 1,246,607 |
| 343,874 |
| 426,604 |
Equity based compensation |
| 3,177,907 |
| 3,926,042 |
| 1,044,869 |
| 1,470,720 |
Depreciation and amortization |
| 82,985 |
| 105,522 |
| 35,449 |
| 35,174 |
Total operating expenses |
| 4,103,962 |
| 5,414,108 |
| 1,425,280 |
| 1,976,394 |
|
|
|
|
|
|
|
|
|
Loss before other expense |
| (4,077,417) |
| (4,954,843) |
| (1,409,235) |
| (1,785,194) |
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
Miscellaneous Income |
| 20,522 |
|
|
| 385 |
|
|
Interest income |
| 5,725 |
|
|
|
|
|
|
Foreign exchange gain (loss) |
|
|
| (26,696) |
|
|
|
|
Miscellaneous Expense |
| (555) |
|
|
|
|
|
|
Interest expense |
| (85,873) |
| (121,947) |
| (1,300) |
| (27,252) |
Rental Income |
| 1,200 |
|
|
|
|
|
|
Total other income (expense) |
| (58,981) |
| (148,643) |
| (915) |
| (27,252) |
|
|
|
|
|
|
|
|
|
Net loss | $ | (4,136,398) | $ | (5,103,486) | $ | (1,410,150) | $ | (1,812,446) |
|
|
|
|
|
|
|
|
|
Gain (Loss) per share: basic and diluted | $ | (0.08) | $ | (0.13) | $ | (0.03) | $ | (0.04) |
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding: basic and diluted |
| 51,870,217 |
| 38,904,093 |
| 52,386,355 |
| 38,897,981 |
See accompanying notes to the financial statements.
4
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Vision Industries Corp.
Statement of Cash Flows
|
| For the nine months ended | ||
|
| September 30, 2012 |
| September 30, 2011 |
|
| (Unaudited) |
| (Unaudited) |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
Net (loss) | $ | (4,136,398) | $ | (5,103,486) |
|
|
|
|
|
Adjustments to reconcile net (loss) to net cash provided (used) by operating activities: |
|
| ||
Stock-based compensation |
| 3,177,907 |
| 3,926,042 |
Depreciation and amortization |
| 82,985 |
| 105,522 |
Cancellation of Asher note derivative |
|
|
| (210,104) |
Conversion of notes |
|
|
| 225,634 |
Adjustment to carrying value of fixed assets |
| (82,272) |
|
|
Foreign exchange loss |
|
|
| 26,695 |
Stock Issuances in lieu of professional services |
|
|
| 40,628 |
Changes in operating assets and liabilities: |
|
|
|
|
Change in inventory |
| (81,749) |
| (197,921) |
Change in Accounts receivables |
| (4,250) |
|
|
Change in Employee Advances |
| 4,208 |
|
|
Change in Note Receivable |
| 285,000 |
|
|
Trade deposits |
|
|
| 111,025 |
Change in Other assets |
| 3,704 |
| (7,807) |
Prepaid expenses |
| 12,687 |
| (3,697) |
Accounts payable and accrued expense |
| (90,294) |
| 100,121 |
Cash used by operating activities |
| (828,472) |
| (987,348) |
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
Leaseback of fixed assets- capitalized |
| (285,000) |
|
|
Cash used by investing activities |
| (285,000) |
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
Principal payments on notes payable |
|
|
| (400) |
Note Receivable -Sale-Leaseback of fixed assets |
| 285,000 |
|
|
Issuance of common stock |
| 35,220 |
| 248,285 |
Interest reduction- conversion of notes payable |
| 139,572 |
|
|
Additional paid in capital -conversion of notes |
| 1,696,101 |
|
|
Conversion of notes payable |
| (1,458,500) |
|
|
Short term borrowings |
| 662,500 |
| 200,000 |
Cash provided by financing activities |
| 1,359,893 |
| 447,885 |
|
|
|
|
|
Net increase(decrease) in cash and cash equivalents |
| 246,421 |
| (539,463) |
|
|
|
|
|
Cash and cash equivalents, beginning of period |
| 3,480 |
| 641,069 |
|
|
|
|
|
Cash and cash equivalents, end of period | $ | 249,901 | $ | 101,606 |
See accompanying notes to the financial statements.
5
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VISION INDUSTRIES CORP.
Notes to Financial Statements
September 30, 2012 (Unaudited)
Note 1 Business Description
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.
Managements immediate vision for the high performance hydrogen drive system is to provide a pollution free transportation solution for todays 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 todays drivers.
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 nine months ended September 30, 2012 and 2011; (b) the financial position at September 30, 2012; and (c) cash flows for the nine months ended September 30, 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 various 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 Companys 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
6
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VISION INDUSTRIES CORP.
Notes to Financial Statements
September 30, 2012 (Unaudited)
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.
Inventory
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 Companys operating expenses. Advertising expenses for the nine months ended September 30, 2012 and September 30, 2011 were $473 and $26,408, 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.
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VISION INDUSTRIES CORP.
Notes to Financial Statements
September 30, 2012 (Unaudited)
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.
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 Companys consolidated results of operations, financial position or cash flows.
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 September 30, 2012 and December 31, 2011:
Schedule of Inventory
8
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VISION INDUSTRIES CORP.
Notes to Financial Statements
September 30, 2012 (Unaudited)
|
| September 30, 2012 |
| December 31, 2011 |
Raw Materials | $ | 37,770 | $ | 26,027 |
Work in Process |
| 50,541 |
| 185,537 |
Finished Goods |
| 0 |
| 0 |
| $ | 88,311 | $ | 211,564 |
Note 4 Property and equipment
Property and equipment as of September 30, 2012.and as of December 31, 2011 consist of the following:
Schedule of Property and Equipment
|
|
| September 30, 2012 |
| December 31, 2011 |
Automobiles |
| $ | 11,238 | $ | 11,238 |
Computers |
|
| 7,033 |
| 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 |
|
| 73,240 |
| 526,753 |
Property and Equipment -- gross |
|
| 423,095 |
| 589,714 |
Less accumulated depreciation |
|
| (90,614) |
| (386,296) |
Property and Equipment -- net |
| $ | 332,481 | $ | 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.
Depreciation expense for the nine months ended September 30, 2012 and September 30, 2011 was $26,770 and $40,155 respectively.
Note 5 Intangibles
Intangible assets at September 30, 2012 and December 31, 2011 consist of the following:
Schedule of Intangible Assets
|
| September 30, 2012 |
| December 31, 2011 | |
Beginning Balance | $ | 415,836 | $ | 415,836 | |
Additions |
| - |
| 0 | |
Amortization |
| 163.904 |
| 123,749 | |
Impairment |
| - |
|
| |
Ending Balance | $ | 252,732 | $ | 292,887 |
Amortization expense for the nine months ended September 30, 2012 and for the year ended December 31, 2011 was $40,155 and $53,540.
11
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VISION INDUSTRIES CORP.
Notes to Financial Statements
September 30, 2012 (Unaudited)
Note 6 Accrued expenses
Accounts payable and accrued expenses at September 30, 2012 and December 31, 2011 were $572,896 and $523,615, respectively and included operating expenses. At September 30, 2012, the accrued expenses consist mainly of salary, payroll liabilities and accrued interest expense totaling $290,400.
Note 7 Income Tax
The Company is subject to taxation in the U.S. and various state jurisdictions. As of December 31, 2011 the Companys 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 Companys actual tax rate varies from the statutory rate (federal and state) due to utilization of full valuation allowances. As of September 30, 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, 398,000 shares of common stock issued 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.
On May 8, 2012, Greenstreet Financial Advisors exercised an option to acquire 250,000 shares of common stock in lieu of fees.
In May 2012 Asher Enterprise Inc., over a series of five transactions during the month converted $68,500 of debt and $2,740 of accrued interest into 1,699,923 of common stock at an average conversion price of $0.04216.
In June 2012 Asher Enterprise Inc. converted its $50,000 note and $2,000 of accrued interest over a series of four transactions into 1,254,818 of common stock at an average conversion price of $0.041325.
On June 18, 2012, Juha Halttunen converted a $200,000 notes, plus accrued interest of $25,000 into 6,000,000 of common stock at a conversion price of $0.0375
On June 18, 2012, Quality Investment Fund (QIF) converted its $500,000 note, plus accrued interest of $37,636 into 10,752,732 shares of common stock at a conversion price of $0.05.
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VISION INDUSTRIES CORP.
Notes to Financial Statements
September 30, 2012 (Unaudited)
On June 25, 2012, Quality Investment Fund (QIF) converted its $600,000 note, plus accrued interest of $72,197.25 into 13,443,945 shares on common stock at a conversion price of $0.05.
On August 22, 2012 Asher Enterprises converted a convertible promissory note in the principal amount of $32,500 dated February 1, 2012, plus accrued interest of $1,300 into 1,357,000 shares of common stock.
Accordingly, on September 30, 2012, there were 81,379,132 shares of common stock issued and outstanding and 250,000 shares of preferred stock issued and outstanding.
On September 11, 2012 the Company entered into a common stock purchase warrant with two private individuals each with the right to purchase 5,000,000 shares of common stock for a total of 10,0000 shares at an exercise price of $0.05. The purchase warrants shall expire on September 11, 2014, the second anniversary of the issue date. The warrants were awarded at an estimated fair value of $681,000. The value will be amortized over the lives of the grant starting in the next quarter.
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 initially starting on or about August 1, 2012. The term of the lease has subsequently been adjusted to begin on November 30, 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.
Note 10 Commitment and contingencies
The Companys leases for office and R&D facilities expired in January 2012. Starting 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 is on a month to month basis. Negotiations are in progress on future lease commitments.
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 September 30, 2012, is as follows:
Schedule of Lease Payments on Lease Equipment
Year |
| Amount |
2012 |
| $15,864 |
2013 |
| 95,184 |
2014 |
| 95,184 |
2015 |
| 95,184 |
2016 |
| 78,962 |
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VISION INDUSTRIES CORP.
Notes to Financial Statements
September 30, 2012 (Unaudited)
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.
On June 4, 2012, Russell Miller and BEK Investments, LLC (Plaintiffs) filed a Complaint, subtitled Petition for Writ of Mandamus, and Costs and Fees, in the Circuit Court in and for Manatee County, Florida (the county where Visions registered office is located) (Case No. 2012CA3732). The Complaint sought relief under Florida Statutes Section 607.1604, which provides for court ordered inspection of records if the Shareholder demand was made in good faith and for a proper purpose, if the demand describes with reasonable particularity his or her purpose and the records her or she desired to inspect, and if the records requested are directly connected with the shareholders purpose. Notwithstanding the Companys good faith belief that the demand was being made for an improper purpose, that the purpose was not described with reasonable particularity and that the records were not directly related to a proper purpose, on June 18, 2012, the Court found that the demand was for a proper purpose and ordered the requested records be produced. Accordingly, the Company has complied with the court order and produced requested records. As per Florida Statutes Section 607.1604, the Court further granted Plaintiffs Motion for Attorneys Fees and Costs in the amount of $29,235.71.
Note 11 Notes Payable
Table below describes all current debentures and note payables as of September 30, 2012 and December 31, 2011:
Schedule of Debentures and Notes Payable
|
| Remaining years to Maturity | Interest Rate | Outstanding principal | ||
| Issue Date | 2012 | 2011 | |||
Current portion notes payable |
|
|
|
|
| |
| Quality Investment Fund | 11/18/2010 | 0 | 12% | 0 | 600,000 |
| QIF Malta 1 Ltd | 12/28/2010 | 0 | 5% | 0 | 500,000 |
| Juha Halttunen | 1/31/2011 | 0 | 9% | 0 | 200,000 |
| Asher Enterprise, Inc. | 11/12/2011 | 0 | 8% | 0 | 68,500 |
| Asher Enterprise, Inc. | 5/14/2012 | 0 | 8% | $ 50,000 |
|
| Asher Enterprise, Inc. | 6/30/2012 | 0 | 8% | 32,500 |
|
| TTSI | 8/22/2012 | 0 | 8% | 50,000 |
|
| QIF Malta 1 Ltd | 9/12/2012 | 0 | 8% | 500,000 |
|
Total current portion notes payable |
|
| $ 632,500 | 1,418,500 | ||
|
|
|
|
| ||
Current portion of lease liability |
|
| $ 87,252 |
| ||
Long term portion of lease liability |
|
| $ 197,748 |
|
On February 1, 2012 the Company entered into a securities purchase agreement with Asher Enterprise, Inc. in connection with the issuance of an 8% convertible note in the aggregate principal amount of $32,500, convertible into shares of common stock.
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 $87,252, the long term portion is $197,748.
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VISION INDUSTRIES CORP.
Notes to Financial Statements
September 30, 2012 (Unaudited)
On May 14, 2012 the Company entered into a securities purchase agreement with Asher Enterprise, Inc. in connection with the issuance of an 8% convertible note in the aggregate principal amount of $50,000, convertible into shares of common stock.
On June 30, 2012 the Company entered into a securities purchase agreement with Asher Enterprise, Inc. in connection with the issuance of an 8% convertible note in the aggregate principal amount of $32,500, convertible into shares of common stock
On August 22, 2012 the Company entered into a secured convertible promissory note for $50,000. The convertible note matures on August 22, 2013 and bears an interest rate of 8%. The note is collateralized by the Companys 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.
Note 12 Prototype Research and development costs
The Company is currently designing and developing several Class 8 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 Companys cash and available credit are not sufficient to support its operations for the next year. Accordingly, management needs to seek additional financing. On August 1, 2012, the Company entered into an engagement agreement with investment bankers Viant Green Capital LLC and Viant Capital LLC to serve as its strategic and financial advisor. Viant was brought on to assist the Company in developing a strategy to effectuate a financing, licensing and/or business combination transaction, including identifying prospective transaction participants and investor prospects.
As of September 30, 2012, the Company has retained earnings (accumulated deficit) of ($18,460,608). 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
Vision Motor Industries held its Annual meeting of Shareholders on October 24, 2012 with the purpose to elect the three (3) nominees for director, named in the Annual Proxy Statement, to serve until the next annual meeting of shareholders and until their successors are duly elected and qualified.. Martin Schuermann, Brett D. Mayer and Scott Lambert were elected Directors.
Management has evaluated events subsequent to the balance sheet date for the nine months ended September 30, 2012, through November 14, 2012, and determined that there is no material events that have occurred that would require
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VISION INDUSTRIES CORP.
Notes to Financial Statements
September 30, 2012 (Unaudited)
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.
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ITEM 2.
MANAGEMENTS 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 managements 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 Managements 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 todays 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 California and the Port of Houston in Texas. Vision Industries will survey and evaluate
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on an ongoing basis the benefits of joint ventures, acquisitions and strategic alliances with our customers and other participants in the alternative fuel vehicle industry and specialty vehicle assembling industry to strengthen our global business position.
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. We raised an additional $250,000 through the sales of our preferred stock in the third quarter of 2011. For the nine months ended September 30, 2012 Vision has raised an additional $1.01 million in short and long term financing arrangements. 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
On August 7, 2012, Vision announced that the Company and Cargotec USA have agreed to cooperate to complete a zero-emission terminal tractor demonstration project for the Technology Advancement Program (TAP). The TAP is a clean-air initiative sponsored by the twin Ports of Los Angeles and Long Beach. The project calls for demonstrating the efficacy of deploying zero-emission hydrogen fuel cell-electric hybrid terminal tractors to move containerized cargo within the Port facilities
Vision Industries finalized a purchase order agreement for 100 Tyrano Class 8 trucks with Total Transportation Services, Inc. (TTS-I). The purchase agreement allows TTS-I to purchase an additional three hundred trucks, bringing the total value of a contract to approximately $108 million dollars.
On October 1, 2012 Vision Industries announced that the Houston Galveston Area Council received notification that it was selected to negotiate the terms of a U.S. Department of Energy- Zero Emission Cargo Transport Demonstration grant. If awarded, Vision would supply a total of twenty (20) Vision Class 8 Zero Emission hydrogen fuel cell/ electric hybrid trucks in connection with these grants.
On October 12, 2012 the Southern California Air Quality Management District moved to recognize $4.17 million received from the U.S. Department of Energy Zero emission Cargo Transportation grant. The AQMD was authorized to execute a contract with Vision, whose vehicles were approved by the DOE for demonstration purposes. The Department of Energy will co-fund a small fleet of four (4) Tyrano trucks for drayage testing in the Ports of Los Angeles and Long Beach.
On September 21, 2012, Balqon Corporation and Vision Industries entered into a Joint Development Agreement to build its zero-emission hydrogen fuel cell/ electric hybrid terminal tractor,, the Zero-TT. The intended markets for the Zero-TT are distribution centers, rail yards and marine terminals. This agreement combines the Cargotec USA Kalmar Chassis with Balqons proven drivetrain and Visions hydrogen fuel cell range-extenders.
Employees
As of September 30, 2012, there were five (5) full time employees and two (2) consultants at Vision Industries Corp. This includes the officers who manage 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 years 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 September 30, 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
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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 Companys reported earnings, financial condition or cash flows.
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) |
September 30, 2012 | $26,450 | $4,092,282 | ($4,124,718) |
September 30, 2011 | $764,157 | $4,954,843 | ($5,103,486) |
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 September 30, 2012, we had cash and cash equivalents of $249,901.
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 September 11, 2012 the Company entered into a common stock purchase warrant with two private individuals each with the right to purchase 5,000,000 shares of common stock for a total of 10,000,000 shares at an exercise price of $0.05. The purchase warrants shall expire on September 11, 2014, the second anniversary of the issue date. The warrants were awarded at an estimated fair value of $681,000. The value will be amortized over the lives of the grant starting in the next quarter.
Results of Operations for the nine months ended September 30, 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
|
| Nine months ended |
|
|
|
| |||
|
| September 30, 2012 |
| September 30, 2011 |
|
|
|
| |
|
| Unaudited |
| Unaudited |
| Change |
| %Change | |
Revenue | $ | 26,545 | $ | 764,157 | $ | (737,612) |
| -96.53% | |
Direct Costs |
| 0 |
| 304,892 |
| 304,892 |
| -100.00% | |
Net Revenue |
| 26,545 |
| 459,265 |
| (432,720) |
| -94.22% | |
|
|
|
|
|
|
|
|
| |
Operating expenses: |
|
|
|
|
|
|
|
| |
Research and development |
| 5,010 |
| 135,937 |
| (130,927) |
| -96.31% | |
General & administrative |
| 838,060 |
| 1,246,607 |
| (408,547) |
| -32.77% | |
Equity based compensation |
| 3,177,907 |
| 3,926,042 |
| (748,135) |
| -19.06% | |
Depreciation/amortization expense |
| 82,985 |
| 105,522 |
| (22,537) |
| -21.36% | |
Total operating expenses |
| 4,103,962 |
| 5,414,108 |
| (1,310,146) |
| -24.20% | |
|
|
|
|
|
|
|
|
| |
Loss before other income (expense) |
| (4,077,417) |
| (4,954,843) |
| 877,426 |
| -17.71% | |
|
|
|
|
|
|
|
|
| |
Other income (expense): |
|
|
|
|
|
|
|
| |
Miscellaneous Income |
| 20,522 |
| 0 |
| 20,522 |
| 100.00% | |
Foreign exchange gain (loss) |
|
|
| (26,696) |
| 26,696 |
| -100.00% | |
Interest Income |
| 5,725 |
|
|
| 5,725 |
| 100.00% | |
Miscellaneous Expense |
| (555) |
|
|
| (555) |
|
| |
Interest expense |
| (85,873) |
| (121,947) |
| 36,074 |
| -29.58% | |
Rental Income |
| 1,200 |
|
|
| 1,200 |
| 100.00% | |
Total other income (expense) |
| (58,981) |
| (148,643) |
| 89,662 |
| -60.32% | |
|
|
|
|
|
|
|
|
| |
Net Loss | $ | (4,136,398) | $ | (5,103,486) | $ | 967,088 |
| -18.95% | |
Loss per share: basic and diluted | $ | (0.04) |
| (0.13) | $ | 0.00 |
| -8.47% | |
Weighted average number of common shares outstanding: basic and diluted |
| 51,870,217 |
| 38,897,981 |
|
|
|
|
Revenues. We had $26,545 in revenues for the nine months ended September 30, 2012 which is a 96.53% decrease compared to $764,157 of revenues for the nine months ended September 30, 2011. These revenues represent long term consulting arrangements that were substantially completed during the first nine months of 2012.
We believe that capital will be available through private investors and we can take advantage of the Clean Truck Program at the Ports of Long Beach and Los Angeles, California and the port of Houston, Texas 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 $1,310,146 to $4,103,962, for the nine months ended September 30, 2012 compared to $5,414,108 for September 30, 2011. Operating expenses decreased as a result of the completion of certain consulting arrangements and managements effort to achieve cost efficiencies through a reduction in manpower.
Income (Loss) from Operations. For the nine month periods ended September 30, 2012 and September 30, 2011, we incurred losses before other income and expenses of $4,077,417 and $4,954,843 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 decreased from $5,103,486 for the nine months ended September 30, 2011 to a net loss of $4,136,398 for the nine months ended September 30, 2012.
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 Companys 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.
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The management of the Corporation is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system is a process designed to provide reasonable assurance to management and to the board of directors regarding the preparation and fair presentation of published financial statements.
Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Corporation; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Corporations assets that could have a material effect on our financial statements.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, 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 assessed the effectiveness of the Corporations internal control over financial reporting as of September 30, 2012. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Based on our assessment management believes that, as of September 30, 2011, the Corporations internal control over financial reporting is effective based on those criteria.
Changes in Internal Controls over Financial Reporting.
We had no significant changes in our internal controls during the period ended September 30, 2012. Management concluded that there has been no change in our internal control over financial reporting during the period ended September 30, 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
Vision / Weisdorn
On April 8, 2011, Vision Industries, Corp. (Vision) commenced litigation against Lawrence Weisdorn and Donald Hejmanowski (former officers and directors of Vision) as well as ICE Conversions, Inc. (collectively the Defendants), in the Superior Court of the State of California, County of Los Angeles (Case No. BC459033), (the State Court Case) which was subsequently removed to the Bankruptcy Court for the Central District of California (Adversray Proceeding No. 11-01356-GM) (the Removed Case). 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 April 28, 2011, Vision commenced an Adversary Proceeding against Weisdorn in the United State Bankruptcy Court for the Central District of California pursuant to 11 U.S.C. 523 seeking to have Weisdorns alleged obligation to Vision declared Non-Dischargeable (Case No. 11-01234-GM) (the Non-Dischargeability Proceeding) . On July 11, 2011, the United States Bankruptcy Court remanded the Removed Case to the State Court for adjudication and granted relief from the automatic bankruptcy stay so Vision could pursue the State Court Proceeding in State Court. On December 2, 2011, a First Amended Complaint was filed in the State Court Case. On December 21, 2011, Vision and Hejmanowski negotiated a settlement agreement, whereby Hejmanowski surrendered 396,000 shares of his Vision stock and agreed to pay Visions attorneys fees and both parties released each other from any past and future claims. Thereafter, on January 11, 2012, the Complaint as to Defendant Donald Hejmanowski, only, was dismissed. On February 10, 2012, Vision caused the Clerk of the Los Angeles Superior Court to enter a default against defendant Ice Conversions, Inc. 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, in the United States Bankruptcy Court, Central District of California (Case No 10-24366-GM) (the Adversary Proceeding) alleging fraudulent preferential transfer of stock by Debtor to Defendant Vision pursuant to 11 U.S.C. Section 547(A)(2). On July 31, 2012, Vision and Weisdorn executed a settlement agreement addressing the State Court Case, the Adversary Proceeding, and the Non-Dischargeability proceeding subject to approval of the Bankruptcy Court. On August 24, 2012, the United States Bankruptcy Court filed an order approving settlement of controversy and approving the settlement agreement.
Vision / Russell Miller
On March 15, 2012, Russell Miller (former Director of Investors Relations of Vision who was terminated on May 20, 2011) and others, submitted a Shareholder Demand for inspection of 32 categories of records. The Company, in good faith, believed that the demand was being made for an improper purpose and denied the request unless the Shareholders disclosed the proper purposes associated with each category of records requested.
On April 4, 2012, Mr. Miller commenced litigation against Vision, 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 June 4, 2012, Mr. Miller and BEK Investments, LLC (Plaintiffs) filed a Complaint, subtitled Petition for Writ of Mandamus, and Costs and Fees, in the Circuit Court in and for Manatee County, Florida (the county where Visions registered office is located) (Case No. 2012CA3732). The Complaint sought relief under Florida Statutes Section 607.1604, which provides for court ordered inspection of records if the Shareholder demand was made in good faith and for a proper purpose, if the demand describes with reasonable particularity his or her purpose and the records her or she desired to inspect, and if the records requested are directly connected with the shareholders purpose. Notwithstanding the Companys good faith belief that the demand was being made for an improper purpose, that the purpose was not described with reasonable particularity and that the records were not directly related to a proper purpose, on June 18, 2012, the Court found that the demand was for a proper purpose and ordered the requested records be produced. Accordingly, the Company has complied with the court order and produced requested records. As per Florida Statutes Section 607.1604, the Court further granted Plaintiffs Motion for Attorneys Fees and Costs Costs in the amount of $29,235.71.
The attorney for Mr. Miller and BEK Investments, LLC, has subsequently filed with this Court, but not yet scheduled a hearing on, a motion to amend the complaint. The proposed Amended Complaint removes Russell Miller and adds Edward Smith, Philip Smith, The Anthony and Angela Reed Family Trust, Todd Jorgensen, Michael Rotberg, Matthew Folkerds, Michael Folkerds, Monica Pires, Eliana Pires, Diane Minasian, and Jannette Minasian Pires as new plaintiffs; adds Martin Schuermann; Don Hejmanowski, and Diane J. Harrison (former officer and director of Vision and current securities counsel) as defendants; and alleges fraud in the inducement, falsification of facts in connection with the sale of securities, deceptive advertising, breach of fiduciary duty, conversion, theft, and conspiracy. The proposed Amended Complaint alleges, among others, that the Company represented it had a working prototype hydrogen-electric hybrid vehicle when it did not; that its officers took salaries when they promised they would not; that it had a project with FedEx when it did not; and that the original 2008 Vision transaction with ICE Conversions was designed to perpetrate a fraud
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upon the public. The Company 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 nine months ended September 30, 2012.
(a)
On March 3, 2012, the Company issued 860,000 shares of stock to VP Bank (Switzerland) pursuant to a subscription to purchase 860,000 units ($0.15 per Unit; 1 Unit equaled 1 share of stock and 1 warrant to purchase 1 share of common stock at $0.20 per share) for $129,000 USD. 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.
(b)
On or about April 27, 2012, Greenstreet Consulting Services, LLC, exercised a warrant to purchase 250,000 shares of stock. The Company issued 250,000 shares of restricted common stock subject to the restrictions of SEC Rule 144.
(c)
On June 18, 2012, pursuant to a Note Conversion Agreement, the Company converted Juha Halttunens 9% Promissory Note into 6,000,000 shares of common stock. The total amount due on the Note of $225,000 was converted at $0.0375 USD per share.
(d)
On June 22, 2012, pursuant to a Note Conversion Agreement, the Company converted QIF Malta 1 Ltd. 5% Promissory Note into 10,750,000 shares of common stock. The total amount due on the Note of $537,500.00 was converted at $0.05USD per share.
(e)
On June 22, 2012, pursuant to the terms of the 12% Convertible Promissory Note Due November 15, 2012, the lender, Novium Opportunity Umbrella SICAV PLC-Quality Investment Fund converted the $672,197.25 due on the loan into 13,443,945 shares of common stock. Due to recent note conversions at conversion prices less than the $0.10 per share Conversion Price in the 12 % Convertible Note (e.g., Halttunen note converted at a conversion price of $0.0375 per share on June 18, 2012; QIF Malta 1 note converted at a conversion price of $0.05 per share on June 21, 2012), the Company and the Noteholder agreed to change the Conversion Price under the Note to $0.05 per share, without any further consideration.
(f)
On August 7, 2012 Asher Enterprises, Inc., converted $15,000 principal amount of its note into 602,410 shares of common stock.
(g)
On August10, 2012 Asher Enterprises, Inc., converted $17,500 principal amount of its outstanding note, together with $1,300 of accrued and unpaid interest into 755,020 shares of common stock
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4.
MINE SAFETY DISCLOSURES
Not Applicable
ITEM 5
OTHER INFORMATION
None
ITEM 6
EXHIBITS
Exhibit No. | Description |
31.1 | Certification of Chief Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed on November 14, 2012 as Exhibit 31.1to the issuers Quarterly Report on Form 10-Q and incorporated herein by reference. |
31.2 | Certification of Chief Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed on November 14, 2012 as Exhibit 31.2to the issuers Quarterly Report on Form 10-Q and incorporated herein by reference. |
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 on November 14, 2012 as Exhibit 32 to the issuers Quarterly Report on Form 10-Q and incorporated herein by reference. |
101* | Financial statements from the quarterly report on Form 10-Q of Vision Industries Corp. for the quarter ended September 30, 2012, 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 |
*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.
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.
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| VISION INDUSTRIES CORP. |
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Dated November 14, 2012 | /s/ JEROME TORRESYAP |
| Jerome Torresyap |
| President |
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Dated November 14, 2012 | /s/ MARTIN SCHUERMANN |
| Martin Schuermann |
| Chief Executive Officer, Secretary, Treasurer and Director |
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Dated November 14, 2012 | /s/ DAVID MORENO |
| David Moreno |
| Acting Chief Financial Officer |
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