1405424--3/29/2010--VISION_INDUSTRIES

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Risk Factors Related To Our Financial Condition We have a limited operating history, with no track record to determine if our planned business will be financially viable or successful. Because we expect to continue to incur net losses, we may not be able to implement our business strategy, and the price of our common shares may decline. We expect to incur significant operating expenses over the next several years. We expect our quarterly revenues and operating results to vary significantly in the future. The length and variability of the sales cycles for our products make it difficult to forecast accurately the timing and amount of specific sales and corresponding revenue recognition. We may be unable to raise additional capital to pursue our commercialization plans and may be forced to discontinue product development, reduce our sales and marketing efforts or forego attractive business opportunities. We may need to raise additional funds sooner if our estimates of revenues, costs and capital expenditures change or are inaccurate. Our ability to grow revenue and future prospects depends to a certain extent on the commitment of the state and local governments to support alternate fuels and, generally, to the commitment of consumers to support the commercialization of alternate fuels in general and hydrogen in particular. We intend to depend upon a diverse pool of new customers for the bulk of our revenue and a decrease in revenue from these customers could materially adversely affect our business and financial condition and results of operations. Our customer arrangements are expected to be non-exclusive, with no long-term volume commitments, and on a purchase order basis. We have a history of operating losses and negative cash flow that may continue into the foreseeable future. We have spent significant funds to develop and refine our technologies and services. We may never be able to introduce commercially viable hydrogen/alternative fuel Vehicles and systems. A mass market for hydrogen fuel cell products, alt-fuel products and systems may never develop or may take longer to develop than anticipated. We may experience delays in shipping our products as a result of changing customer specifications and testing procedures. We may be adversely affected by labor disputes. We may be subject to warranty claims, and our provision for warranty costs may not be sufficient. The automotive industry experiences significant product liability claims. Our insurance may not be sufficient. Risk Factors Related To Our Business and Industry We have limited experience assembling hydrogen Vehicles for alt-fuel and hydrogen applications on a commercial basis. We may not meet our product development and commercialization milestones. Significant markets for fuel cell and other hydrogen energy products may never develop or may develop more slowly than we anticipate, which would significantly harm our revenues and may cause us to be unable to recover the losses we have incurred and expect to incur in the development of our products. Hydrogen and other alternate fuels may not be readily available on a cost-effective basis, in which case our products may be unable to compete with existing power sources and our revenues and results of operations would be materially adversely affected. Changes in government policies and regulations could hurt the market for our products. Our business will suffer if environmental policies change and no longer encourage the development and growth of clean power technologies. Although the development of alternative energy sources, and in particular hydrogen fueled products, has been identified as a significant priority by many governments, we cannot be assured that governments will not change their priorities or that any such change would not materially affect our revenues and our business. The development of uniform codes and standards for hydrogen-powered vehicles and related hydrogen refueling infrastructure may not develop in a timely fashion, if at all. We currently face and will continue to face significant competition from other developers and manufacturers of hydrogen fueling technology and equipment. Competition in the markets for fuel cell power modules and our vehicles are significant and will likely persist and intensify over time. If we are unable to continuously improve our Vehicles and if we cannot generate effective responses to our competitors brand power, product innovations, pricing strategies, marketing campaigns, partnerships, distribution channels, service networks, and other initiatives, our ability to gain market share or market acceptance for our products could be limited, our revenues and our profit margins may suffer, and we may never become profitable. Our Vehicles depend somewhat upon the market demand for hydrogen fuel, which, to a large extent, will be dependent on third party efforts to develop and manufacture products and systems for sale to commercial, governmental and industrial users, and consumers, as well as systems integrators, OEMs, suppliers and other market channel partners that have mature sales and distribution networks for their products We rely upon third party suppliers to supply key materials and components for our Vehicles. We will need to recruit, train and retain key management and other qualified personnel to successfully expand our business. We may not be able to manage successfully the expansion of our operations. If we do not properly manage foreign sales and operations, our business could suffer. We intend to acquire technologies or companies in the future, and these acquisitions could disrupt our business and dilute our shareholders interests. We have no experience assembling or assembling our products on a large scale basis, and if we do not develop adequate assembling and assembly processes and capabilities to do so in a timely manner, we may be unable to achieve our growth and profitability objectives. Risk Factors Related To Our Vehicles and Technology We may never complete the development of commercially viable hydrogen powered Vehicles for new hydrogen and/or other alternative energy applications, and if we fail to do so, we will not be able to meet our business and growth objectives. Any failures or delays in field tests of our products could negatively affect our customer relationships and increase our assembling costs. The components of our products may contain defects or errors that could negatively affect our customer relationships and increase our development, service and warranty costs. Our business may become subject to additional future product certification regulations, which may impair our ability to market our products. The development of uniform codes and standards for hydrogen fuel cell vehicles and related hydrogen refueling infrastructure may not develop in a timely fashion. We anticipate that regulatory bodies will establish certification procedures and impose regulations on fuel cell enabling technologies, alt-fuel technologies and hybrid fuel technologies and products which may impair our ability to distribute, install and service our Vehicles. Failure to comply with applicable environmental and other laws and regulations could adversely affect our business and harm our results of operations. We are also subject to various other federal, state, local and foreign laws and regulations. New technologies could render our existing Vehicles obsolete. Changes in environmental policies could hurt the market for our products. Rapid technological advances or the adoption of new codes and standards could impair our ability to deliver our Vehicles in a timely manner and, as a result, our revenues would suffer. We depend upon intellectual property and our failure to protect that intellectual property could adversely affect our future growth and success. We may enter into third party licenses, which by their terms may limit or preclude us, as the case may be, in the exploitation of certain intellectual property rights. We have not conducted formal evaluations to confirm that our technology and Vehicles do not or will not infringe upon the intellectual property rights of third parties. Some of our proprietary intellectual property is not protected by any patent or patent application, and, despite our precautions, it may be possible for third parties to obtain and use such intellectual property without authorization. We may seek to protect our proprietary intellectual property through contracts including, when possible, confidentiality agreements and inventors rights agreements with our customers and employees. Our failure to obtain or maintain the right to use certain intellectual property may negatively affect our business. Our involvement in intellectual property litigation could negatively affect our business. Our products use flammable fuels that are inherently dangerous substances and could subject us to product liabilities. Risk Factors Related To Ownership of Our Common Shares If at any time we qualify as a passive foreign investment company under United States tax laws, our shareholders may be subject to adverse tax consequences. United States shareholders should consult their own United States tax advisors with respect to the United States tax consequences of holding our common shares and annually determine whether we are a passive foreign investment company. Future sales of common shares by our principal shareholders could cause our share price to fall and reduce the value of a shareholder s investment. Our articles of incorporation could be amended at any time by a small group of persons, who control over 50% of the our shares, to issue an unlimited number of common and preferred shares, and significant issuances of common or preferred shares could dilute the share ownership of our shareholders, deter or delay a takeover of us that our shareholders may consider beneficial or depress the trading price of our common shares. Foreign investors may not be able to enforce foreign civil liability judgments against us or our directors, controlling persons and officers. Our share price is volatile and we may experience significant share price and volume fluctuations. Shareholders would likely receive much less than the amount they paid for their Units if we liquidate our assets and distribute the proceeds. As of Dec. 31, 2009, there were 20,470,000 outstanding options and 15,122,400 warrants to purchase our common shares. Risk Factors Relating to Our Business Vision is a new company and, since the date of its inception on May 11, 2004, has lost money and losses may continue. Our independent registered public accounting firm has added going concern language to its report on our financial statements, which means that Vision may not be able to continue operations without continued reliance on investment capital, which may not be readily obtainable. Our common stock may be deemed to be a penny stock, which may make it more difficult for investors to sell their shares due to suitability requirements. Failure To Achieve And Maintain Effective Internal Controls In Accordance With Section 404 Of The Sarbanes-Oxley Act Could Have A Material Adverse Effect On Our Business And Operating Results. Vision and its Management Have Limited Experience. We could fail to attract or retain key personnel. Vision depends upon its senior management and the loss or unavailability of any one of them could put Vision at a competitive disadvantage. Vision will not pay cash dividends and investors may have to sell their Units in order to realize their investment. The amount of shares of Vision common stock held by management may deter takeover attempts opposed by management, which may in turn limit the opportunity of Vision s stockholders to sell their shares at a premium to the then current market price. Risks Factors Relating to Vision s Industry Currently, we have no customers or hydrogen production capability. We will incur a certain amount of product liability risk for the Vehicles we sell. Because hydrogen and other alternate fuels have not yet been fully accepted by consumers and our ultimate customers as fuels for vehicles, we may face barriers to acceptance of our products which means we may never generate significant revenues. If we enter into strategic partnerships for production, sale or maintenance of our Vehicles, the terms and enforceability of such strategic partner relationships may be uncertain. We currently face and will continue to face significant competition. Because we face intense competition from larger and better established companies that have more resources than we do, we may be unable to develop our business plan or generate revenues. Risks Factors Related to an Investment in our Securities Our Common shares are expected to be sporadically or thinly traded for the foreseeable future, so stockholders may be unable to sell at or near ask prices or at all if they need to sell Vision shares to raise money or otherwise desire to liquidate their shares. The sale of a large amount of common shares held by our shareholders, or the perception that such sales could occur, could substantially depress the prevailing market price for our shares. The elimination of monetary liability against our directors under our articles of incorporation and the existence of indemnification rights to our directors, officers, and employees in our bylaws may result in substantial expenditures by our Company and may discourage lawsuits against our directors, officers, and employees. If we fail to maintain adequate internal controls we may not be able to produce reliable financial reports in a timely manner or prevent financial fraud. We may be unable to remedy our material weakness on internal control over financial reporting in a timely manner. Any future acquisitions or transactions may not be successful. We cannot assure you that we will be able to identify suitable acquisition, investment, alliance, or joint venture opportunities or that we will be able to consummate any such transactions or relationships on terms and conditions acceptable to us, or that such transactions or relationships will be successful. Any future acquisitions could harm our operating results and share price.

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1405424--3/29/2010--VISION_INDUSTRIES_CORP