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

~~SECURITIES~~FORM ~~AND EXCHANGE COMMISSION~~10-Q

~~Washington,~~(Mark ~~D.C. 20549~~One)

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended April 30, 2012
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended October 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 number 000-33391

(Name of Registrant as Specified in Its Charter)

Nevada
(State or Other Jurisdiction
of Incorporation or Organization)

88-0490890
(I.R.S. Employer
Identification No.)

4894 Lone Mountain #168, Las Vegas, Nevada

(Address of Principal Executive Offices)

89130
(Zip Code)

(702) 940-9940
(Issuer’s Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act: None

~~None~~Securities registered under Section 12(g) of the Exchange Act: Common Stock, Par value $0.01 per share

~~Securities~~Indicate ~~registered~~by ~~under~~check mark whether the issuer: (1) filed all reports required to be filed by Section 1213 or 15(gd) of the Exchange Act: during the past 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.

~~Common~~[X] Yes [ ~~Stock, Par value $0.01 per share~~] No

Indicate by check mark whether the ~~issuer:~~registrant ~~(1)~~has ~~filed~~submitted ~~all~~electronically ~~reports~~and ~~required~~posted on its corporate Web site, if any, every Interactive Data File required to be ~~filed~~submitted byand ~~Section 13~~posted orpursuant ~~15(d)~~to Rule 405 of ~~the~~Regulation ~~Exchange~~S-T ~~Act~~(§232.405 of this chapter) during the ~~past~~preceding 12 ~~months~~ months (or for such shorter period that the registrant was required to ~~file~~submit ~~such reports),~~ and ~~(2) has~~post ~~been subject to~~ such ~~filing requirements for the past 90 days~~files). ~~xYes o No~~

~~Indicate~~[ by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x] Yes o [X] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. (Check One):

Large accelerated filer [ o] Accelerated filer o[ ] Non-accelerated filer o[ ~~(Do~~] ~~not check if a smaller reporting company)~~ Smaller reporting company x[X]

~~Indicate~~(Do bynot check ~~mark~~if ~~whether the registrant is~~ a ~~shell~~smaller ~~company~~reporting ~~(as defined in Rule 12b-2 of the Exchange Act~~company)~~. o Yes x No~~

OnIndicate ~~May~~by ~~19,~~check ~~2012,~~mark ~~there~~whether ~~were~~the ~~26,423,470~~registrant is ~~shares~~a shell company (as defined in Rule 12b-2 of ~~common~~the ~~stock~~Exchange ~~outstanding~~Act).

~~Table~~[ of] ~~Contents~~Yes [ X ] No

~~TABLE~~On OFDecember ~~CONTENTS~~17, 2012, there were 32,373,470 shares of common stock outstanding.

	Page No.
PART I. FINANCIAL INFORMATION
ITEM 1 – Unaudited Financial Statements	3
Balance Sheets as of April 30, 2012 and July 31, 2011 (Unaudited)	4
Consolidated Statements of Operations for the Three and Nine Months Ended April 30, 2012 and 2011 (Unaudited)	5
Consolidated Statement of Comprehensive Income (Loss) for the Three and Nine Months Ended April 30, 2012 and 2011 (Unaudited)	6
Consolidated Statements of Cash Flows for the Nine Months Ended April 30, 2012 and 2011 (Unaudited)	7
Statement of Stockholders Deficiency (Unaudited)	8
Notes to Unaudited Consolidated Financial Statements	9
ITEM 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations	19
ITEM 3 – Quantitative and Qualitative Disclosures About Market Risk	24
ITEM 4T – Controls and Procedures	24
PART II. OTHER INFORMATION
ITEM 6 – Exhibits	25

Table of Contents

-1-

Table of Contents

Table of Contents

	Page No.
PART I. FINANCIAL INFORMATION	3
ITEM I - Unaudited Financial Statements	3
Balance Sheets as of October 31, 2012 and July 31, 2012 (Unaudited)	4
Consolidated Statements of Operations for the Three Months Ended October 31, 2012 and 2011 (Unaudited)	5
Consolidated Statement of Comprehensive Loss for the Three Months Ended October 31, 2012 and 2011 (Unaudited)	6
Consolidated Statements of Cash Flows for the Three Months Ended October 31, 2012 and 2011 (Unaudited)	7
Statement of Stockholders Deficiency (Unaudited)	8
Notes to Unaudited Consolidated Financial Statements	9-16
ITEM 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations	16-19
ITEM 3 - Quantitative and Qualitative Disclosures about Market Risk	19
ITEM 4 - Controls and Procedures	19
PART II. OTHER INFORMATION	19-20
ITEM 6 - Exhibits	21-24

Table of Contents

-2-

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted from the following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that the following consolidated financial statements be read in conjunction with the year-end consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended July 31, ~~2011~~2012. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. The results of operation for the ~~nine~~three months ended October ~~April 30~~31, 2012 and 2011, are not necessarily indicative of the results for the entire fiscal year or for any other period.

Table of Contents -3-

Table of Contents

Li-ion Motors Corp.
Consolidated Balance Sheets
(unaudited)

	October 31			July 31,
	2012			2012
Assets

Current assets:
Cash and cash equivalents	$	44		$	64
Accounts receivable, net of allowance for doubtful accounts of $605,347 and $561,237, respectively		—			—
Notes receivable, net of allowance for doubtful accounts of $1,750,000 and $2,458,602, respectively		—			—
Inventories		1,500			1,500
Building and building improvements, net		—			1,049,146
Other current assets		3,190			3,190
Total current assets		4,734			1,053,900
Property and equipment, net		5,146			5,785
Deferred patent and trademark costs		37,913			37,413
Total assets	$	47,793		$	1,097,098

Liabilities and Stockholders' Deficiency

Current liabilities:
Accounts payable and accrued expenses	$	1,474,901		$	1,538,060
Current portion of long-term debt		463,107			1,460,189
Customer deposits		102,188			102,188
Total current liabilities		2,040,196			3,100,437

Long-term liabilities:
Long-term debt, less current portion		250,000			250,879
Total liabilities		2,290,196			3,351,316

Commitments and contingencies		—			—

Stockholders' deficiency
Preferred stock, $.001 par value, 5,000,000 shares authorized, 0 issued and outstanding		—			—
Common stock, $.001 par value, 400,000,000 shares authorized, 29,173,470 and 26,423,470 issued and outstanding at October 31, 2012 and July 31, 2012, respectively.		29,173			26,423
Additional paid-in capital		62,667,874			62,619,444
Accumulated deficit		(64,931,435	)		(64,892,123	)
Accumulated other comprehensive loss		(8,015	)		(7,962	)
Stockholders' deficiency attributable to Li-ion Motors Corp.		(2,242,403	)		(2,254,218	)

Non-controlling interests		—			—
Stockholders' deficiency		(2,242,403	)		(2,254,218	)
Total stockholders' deficiency		(2,242,403	)		(2,254,218	)
Total liabilities and stockholders' deficiency	$	47,793		$	1,097,098


See accompanying notes to unaudited consolidated financial statements

~~Li-ion~~Table ~~Motors~~of ~~Corp.~~Contents -4-

Consolidated Balance Sheets

Li-ion Motors Corp.
Consolidated Statements of Operations
(unaudited)

	For the Three Months Ended
	October 31,
		2012			2011
Revenue:
Sales	$	—		$	3,568
License agreement revenue		—			168,750
Total revenue		—			172,318

Costs and expenses:
Cost of sales		—			595
General and administrative		48,320			224,218
Loss on disposal of property and equipment		12,019			—
Research and development		1,297			255,866

Total costs and expenses		61,636			480,679

Loss from operations		(61,636	)		(308,361	)

Other (expenses) income:
Interest (expense)		(22,211	)		(41,533	)
Other income		44,535			62,671

Loss before provision for (benefit from) income taxes		(39,312	)		(287,224	)

Provision for (benefit from) income taxes		—			—

Net loss		(39,312	)		(287,224	)

Less: net loss attributable to non-controlling interest		—			—

Net loss attributable to Li-ion Motors Corp	$	(39,312	)	$	(287,224	)

Loss per share - basic and diluted:
Loss per common share attributable to Li-ion Motors Corp. common shareholders	$	(0.00	)	$	(0.01	)

Weighted average number of shares outstanding - basic and diluted		27,475,667			26,423,470


See accompanying notes to unaudited consolidated financial statements

~~(unaudited)~~Table of Contents -5-

	April 30,			July 31,
Li-ion Motors Corp.
	2012			2011
Consolidated Statement of Comprehensive Loss
Assets
(unaudited)
Current assets:
	For the Three Months Ended
Cash and cash equivalents	$	127		$	5,118
	October 31,
Accounts receivable, net of allowance for doubtful accounts of $517,128 and $0, respectively		-			-
		2012			2011
Notes receivable, net of allowance for doubtful accounts of $2,448,208, and $762,327, respectively		-			1,750,000
Net loss	$	(39,312	)	$	(287,224	)
Inventories		244,947			380,558
Other comprehensive income
Other current assets		53,657			193,893
Currency translation adjustment		(53	)		43
Total current assets		298,731			2,329,569
Comprehensive loss		(39,365	)		(287,181	)
Property and equipment, net		1,804,119			1,983,739
Comprehensive loss attributable to noncontrolling interest		—			—
Deferred patent and trademark costs		37,263			35,858
Comprehensive loss attributable to Li-ion Motors Corp	$	(39,365	)	$	(287,181	)
Total assets	$	2,140,113		$	4,349,166
See accompanying notes to unaudited consolidated financial statements
Liabilities and Stockholders' Equity (Deficiency)
Current liabilities:
Accounts payable and accrued expenses	$	1,673,278		$	1,156,136
Current portion of long-term debt		572,829			399,407
Customer deposits		102,188			102,287
Deferred license agreement revenue		216,661			324,333
Total current liabilities		2,564,956			1,982,163
Long-term liabilities:
Long-term debt, less current portion		923,280			939,608
Deferred license agreement revenue, less current portion		1,239,589			1,370,833
Total liabilities		4,727,825			4,292,604
Commitments and contingencies		-			-
Stockholders' equity (deficiency)
Preferred stock, $.001 par value, 5,000,000 shares authorized, 0 issued and outstanding		-			-
Common stock, $.001 par value, 60,000,000 shares authorized, 26,423,470 and 26,423,470 issued and 26,423,470 and 6,423,470 outstanding at April 30, 2012 and July 31, 2011, respectively.		26,423			26,423
Additional paid-in capital		62,619,444			62,639,444
Accumulated deficit		(65,224,775	)		(62,580,108	)
Accumulated other comprehensive loss		(8,804	)		(9,197	)
		(2,587,712	)		76,562
Less: Treasury stock, 20,000,000 shares at cost at July 31, 2011		-			(20,000	)
Stockholders' equity (deficiency) attributable to Li-ion Motors Corp.		(2,587,712	)		56,562
Non-controlling interests		-			-
Stockholders' equity (deficiency)		(2,587,712	)		56,562
Total stockholders' equity (deficiency)		(2,587,712	)		56,562
Total liabilities and stockholders' equity (deficiency)	$	2,140,113		$	4,349,166

~~See~~Table ~~accompanying~~of ~~notes~~Contents ~~to unaudited consolidated financial statements.~~-6-

Li-ion Motors Corp.
Consolidated Statements of Cash Flows
(unaudited)

	For the Three Months Ended
	October 31,
		2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(39,312	)	$	(287,224	)
Adjustments to reconcile net earnings (loss) to net cash utilized by operating activities
Depreciation		639			23,073
Loss on disposal of property and equipment, net		12,019			—
Provision for doubtful accounts		—			20,353
Licensing fees		—			(43,750	)
Increase (decrease) in cash flows from changes in operating assets and liabilities
Inventories		—			(86,132	)
Prepaid expenses and other current assets		—			(52,801	)
Deferred patent and trademark costs		(500	)		(725	)
Bank overdraft		—			2,540
Accounts payable and accrued expenses		(10,370	)		114,921
Customer deposits		—			(99	)
Deferred revenue		—			(125,000	)
Net cash used in operating activities		(37,524	)		(434,844	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment		—			—
Net cash used in investing activities		—			—

CASH FLOWS FROM FINANCING ACTIVITIES:
Advances on notes receivable		—			(35,976	)
Payments received on notes receivable		—			15,623
Proceeds from issuance of debt		37,557			475,027
Payments on debt		—			(24,708	)
Net cash provided by financing activities		37,557			429,966

Effect of exchange rate changes on cash and cash equivalents		(53	)		43
		—
CHANGE IN CASH AND CASH EQUIVALENTS
Net increase (decrease) in cash and cash equivalents		(20	)		(4,835	)
Cash and cash equivalents at beginning of period		64			5,118

Cash and cash equivalents at end of period	$	44		$	283

SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid during the period for:
Interest	$	—		$	9,411
Income taxes	$	—		$	—

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES
Assignment of note receivable with Sky Power Solutions Corp. to Frontline Asset Management debt	$	70,860		$	—
Shares issued for debt	$	51,180		$	—

See accompanying notes to unaudited consolidated financial statements

Table of Contents -7-

Li-ion Motors Corp.

Li-ion Motors Corp.
Consolidated Statement of Stockholders' Equity (Deficiency)
For the Periods Ended As Noted
(unaudited)

	Number of Common Shares		Common Shares $0.01 Par Value		Additional Paid in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Treasury Stock at Cost			Non- Controlling Interest		Comprehensive Income (Loss)			Total

Balance - August 1, 2011		26,423,470	$	26,423	$	62,639,444		$	(62,580,108	)	$	(9,197	)	$	(20,000	)	$	—	$	118,160		$	56,562

Common stock issued as collateral on loan released to lender		—		—		(20,000	)		—			—			20,000			—					—
Foreign currency translation		—		—		—			—			1,235			—			—		1,235			1,235
Net earnings		—		—		—			(2,312,015	)		—			—			—		(2,312,015	)		(2,312,015	)
Comprehensive income																			$	(2,310,780	)		—

Balance-July 31, 2012		26,423,470		26,423		62,619,444			(64,892,123	)		(7,962	)		—			—					(2,254,218	)

Common stock issued on conversion of debt		2,750,000		2,750		48,430			—			—			—			—					51,180
Foreign currency translation		—		—		—			—			(53	)		—			—		(53	)		(53	)
Net earnings		—		—		—			(39,312	)		—			—			—		(39,312	)		(39,312	)
Comprehensive income				—											—				$	(39,365	)		—

Balance- July 31, 2012		29,173,470	$	29,173	$	62,667,874		$	(64,931,435	)	$	(8,015	)	$	—		$	—				$	(2,242,403	)


See accompanying notes to unaudited consolidated financial statements

~~Consolidated~~Table ~~Statements~~ of ~~Operations~~Contents -8-

~~(unaudited)~~Li-ion Motors Corp.

	For the Three Months Ended						For the Nine Months Ended
	April 30,						April 30,
	2012			2011			2012			2011
Revenue:
Sales	$	(217,000	)	$	2,041		$	259,696		$	6,513
License agreement revenue		168,750			285,416			506,250			535,417
Total revenue		(48,250	)		287,457			765,946			541,930
Costs and expenses:
Cost of sales		(36,871	)		587			221,176			17,240
General and administrative		82,334			420,563			2,702,993			1,302,933
Loss on disposal of property and equipment		128,702			-			133,390			-
Research and development		73,986			(81,712	)		485,637			947,493
Total costs and expenses		248,151			339,438			3,543,196			2,267,666
Loss from operations		(296,401	)		(51,981	)		(2,777,250	)		(1,725,735	)
Other (expenses) income:
Interest expense		(34,220	)		(105,504	)		(108,062	)		(408,226	)
Other income		89,602			103,528			240,645			2,656,506
Net earnings (loss) before provision for (benefit from) income taxes		(241,019	)		(53,957	)		(2,644,667	)		522,544
Provision for (benefit from) income taxes		-			-			-			-
Net earnings (loss)		(241,019	)		(53,957	)		(2,644,667	)		522,544
Less: Net earnings (loss) attributable to non-controlling interest		-			-			-			-
Net earnings (loss) attributable to Li-ion Motors Corp	$	(241,019	)	$	(53,957	)	$	(2,644,667	)	$	522,544
Earnings (loss) per share - basic and diluted:
Earnings (loss) per common share attributable to Li-ion Motors Corp. common shareholders	$	(0.01	)	$	(0.01	)	$	(0.10	)	$	0.09
Weighted average number of shares outstanding - basic and diluted		26,423,470			6,065,817			26,423,470			6,028,250

Notes to Unaudited Consolidated Financial Statements

~~See~~As ~~accompanying~~of ~~notes~~and tofor ~~unaudited~~the ~~consolidated~~Three ~~financial~~Months ~~statements~~Ended October 31, 2012

5Note 1. Financial Statement Presentation

~~Table~~History and Nature of ~~Contents~~Business

Li-ion Motors Corp. was incorporated under the laws of the State of Nevada on April 12, 2000. The Company is currently pursuing the development and marketing of electric powered vehicles and products based on the advanced lithium battery technology it has developed.

~~Consolidated~~On ~~Statement~~April 16, 2008, the Company sold their controlling interest of ~~Comprehensive~~approximately ~~Income~~69% of the outstanding common stock in Zingo, Inc. (~~Loss~~presently Sky Power Solutions Corp., “SPS”). Prior to April 16, 2008, SPS was a related party that provided telecommunication services to business and residential customers utilizing VOIP technology and currently is researching and developing rechargeable lithium ion batteries.

Effective April 15, 2008, the Company entered into a License Agreement (~~unaudited~~“License Agreement”) with SPS providing for their license to SPS of their patent applications and technologies for rechargeable lithium ion batteries for electric vehicles and other applications (“Licensed Products”). Under the License Agreement, the Company has the right to purchase their requirements of lithium ion batteries from SPS, and their requirements of lithium ion batteries shall be supplied by SPS in preference to, and on a priority basis as compared with, supply and delivery arrangements in effect for other customers of SPS. The Company’s cost for lithium ion batteries purchased from SPS shall be SPS’s actual manufacturing costs for such batteries for the fiscal quarter of SPS in which the Company’s purchase takes place. On May 25, 2010, the license agreement was amended to reflect Sky Power’s territory would only be the United States and US possessions and territories and we can license to other companies in other parts of the world. The Company issued a license to a firm for the rights in Canada in 2010.

	For the Three Months Ended						For the Nine Months Ended
	April 30,						April 30,
	2012			2011			2012			2011
Net earnings (loss)	$	(241,019	)	$	(53,957	)	$	(2,644,667	)	$	522,544
Other comprehensive income
Currency translation adjustment		(118	)		180			393			44
Comprehensive income (loss)		(241,137	)		(53,777	)		(2,644,274	)		522,588
Comprehensive income (loss) attributable to noncontrolling interest		-			-			-			-
Comprehensive income (loss) attributable to Li-ion Motors Corp	$	(241,137	)	$	(53,777	)	$	(2,644,274	)	$	522,588

Under the terms of the license agreement, SPS has agreed to invest a minimum of $1,500,000 in each of the next two years in development of the technology for the Licensed Products. To date, SPS has not met the minimum requirements in the development of technology, and therefore, is not in compliance with its obligations under this covenant of the license agreement. The Company has advised SPS that it will not give notice of default against them for their failure to comply with this covenant over the term of the License Agreement.

~~See~~Effective ~~accompanying~~May ~~notes~~28, 2010, the Company entered into a ten year license agreement with Lithium Electric Vehicle Corp. (“LEVC”) providing for the Company to ~~unaudited~~license ~~consolidated~~to ~~financial~~LEVC ~~statements~~certain of the Company’s patent applications and technologies for electric vehicles and other applications. The purpose of the licensee is to expand sales of the Company’s current line of products by the manufacture and sale of such products in Canada, which is LEVC’s exclusive territory under the license agreement.

6The license agreement consists of an annual fee of $500,000 for ten years and an additional $1,750,000 based on a valuation report prepared by an independent third party. LEVC is required to pay $1 million of the license fee during year one for the initial two years and $500,000 each additional year. The Company has received $732,666 from LEVC with a balance due of $267,334 as of July 31, 2012, which is now delinquent. The Company has reflected the delinquent amount due from LEVC in its accounts receivable and has established a reserve for doubtful accounts for the entire amount.

~~Table~~The ofCompany ~~Contents~~is currently in discussions with LEVC regarding the delinquency.

~~Li-ion~~The ~~Motors~~note ~~Corp~~of $1,750,000 has been reflected on the books of the Company. Due to LEVC having no assets to secure the note, the Company has recorded a reserve for doubtful accounts for the entire note amount of $1,750,000.

~~Consolidated~~Basis ~~Statements~~ of ~~Cash Flows~~Presentation

~~(unaudited)~~Going Concern

	For the Nine Months Ended
	April 30,
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)	$	(2,644,667	)	$	522,544
Adjustments to reconcile net earnings (loss) to net cash utilized by operating activities
Depreciation		41,816			50,857
Loss on disposal of property and equipment		133,390			-
Provision for doubtful accounts		2,071,639			8,110
Interest income		-			(74,315	)
Licensing fees		(398,577	)		(160,417	)
Non-cash sale of inventories		(255,000	)		-
Increase (decrease) in cash flows from changes in operating assets and liabilities
Inventories		135,611			(355,765	)
Employee advances		-			9,537
Prepaid expenses and other current assets		140,236			(40,004	)
Deferred patent and trademark costs		(1,405	)		(14,867	)
Bank overdraft		-			(14,104	)
Accounts payable and accrued expenses		517,141			(310,433	)
Customer deposits		(99	)		2,188
Deferred revenue		(232,673	)		(376,287	)
Net cash used in operating activities		(492,588	)		(752,956	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment		-			(140,704	)
Net cash used in investing activities		-			(140,704	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances on notes receivable		(71,364	)		(176,959	)
Payments received on notes receivable		22,991			168,849
Proceeds from issuance of debt		575,555			2,002,423
Payments on debt		(39,978	)		(1,102,298	)
Net cash provided by financing activities		487,204			892,015
Effect of exchange rate changes on cash and cash equivalents		393			(133	)
CHANGE IN CASH AND CASH EQUIVALENTS
Net increase (decrease) in cash and cash equivalents		(4,991	)		(1,778	)
Cash and cash equivalents at beginning of period		5,118			2,113
Cash and cash equivalents at end of period	$	127		$	335
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid during the period for:
Interest	$	18,008		$	321,407
Income taxes	$	-		$	-
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES
Property and equipment and inventories exchanged for payment on debt	$	259,415		$	-
Assignment of debt from Frontline Asset Management to Cameo Properties, LLC	$	250,000		$	-
Assignment of note receivable with Sky Power Solutions Corp. to Frontline Asset Management debt	$	112,500		$	-
Shares issued for debt	$	-		$	5,857,309

The Company’s financial statements for the three months ended October 31, 2012, have been prepared on a going concern basis which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. The Company did not have any cash revenue from vehicle sales in the three months ended October 31, 2012. Management recognized that the Company’s continued existence is dependent upon its ability to obtain needed working capital through additional equity and/or debt financing and revenue to cover expenses, as the Company continues to incur losses from operations.

~~See~~Since ~~accompanying~~its ~~notes~~incorporation, the Company financed its operations through advances and loans from its controlling shareholders. The Company expects to ~~unaudited~~finance ~~consolidated~~operations ~~financial~~through ~~statements~~the sale of equity or other investments as well as continued advances from shareholders for the foreseeable future, as the Company does not expect to receive significant revenue from vehicle sales until the required certifications have been received. There is no guarantee that the Company will be successful in arranging financing on acceptable terms.

7Table of Contents -9-

~~Table~~The Company’s facility in Mooresville, North Carolina was financed through Bayview Loan Servicing, LLC (“Bayview”) and Frontline Asset Management, Inc. (“Frontline”), which had a second lien on the property. Li-ion became delinquent with the mortgage payments, and, following a prior foreclosure filing and new agreement as to payments under the mortgage, on July 12, 2012, Bayview refiled a notice of ~~Contents~~hearing on foreclosure on its deed of trust and security agreement for a hearing on August 21, 2012, the outstanding amount of the loan at July 31, 2012 being $946,279. A similar notice of foreclosure pursuant to the Frontline deed of trust was filed by the Trustee with the same court on July 25, 2012, noticing a hearing for August 22, 2012, the amended notice of default in the amount of $660,546 having been given on July 23, 2012. The Trustee for Frontline also filed on July 25, 2012, a notice of foreclosure and sale to take place on August 22, 2012. The Trustee under the Bayview deed of trust on August 21, 2012, filed its notice of foreclosure and sale to take place on September 18, 2012, of the real and personal property securing the deed of trust. On September 14, 2012, the sale of the property pursuant to the Frontline August 22, 2012 foreclosure and sale was completed, and Frontline assigned its rights to its foreclosure bid to A&S Holdings Inc., a related holding company, subject to the rights of Bayview, as the holder of the first mortgage on the property.

~~Li-ion~~As ~~Motors~~of ~~Corp~~the filing of this Report, the Company does not have any substantive plan on where its facilities will be or how it will continue the manufacturing process of its electric vehicles.

~~Consolidated~~The ~~Statement~~Company’s ability to raise additional capital is affected by trends and uncertainties beyond its control. The Company does not currently have any arrangements for financing and it may not be able to find such financing if required. Obtaining additional financing would be subject to a number of ~~Stockholders'~~factors, ~~Equity~~including ~~(Deficiency)~~investor sentiment. Market factors may make the timing, amount, terms or conditions of additional financing unavailable to it. These uncertainties raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying financial statements do not include adjustments that might result from the outcome of these uncertainties. The Company has reduced the workforce to a few consultants, even if financing is obtained qualified engineers and technicians that would need to be hired may not be readily available.

~~For~~Common ~~the Periods Ended As Noted~~Stock

~~(unaudited)~~On December 13, 2011, the Board of Directors unanimously approved an amendment to the Company’s Articles of Incorporation to decrease the authorized number of shares of common stock from 300 million shares, par value $.001 per share, to 60 million shares, par value $.001 per share. The Company filed the amendment with the Secretary of State of Nevada on December 14, 2011.

	Number of Common Shares		Common Shares $0.01 Par Value		Additional Paid in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Treasury Stock at Cost			Non-Controlling Interest		Comprehensive Income (Loss)			Total
Balance - August 1, 2010		6,015,227	$	6,015	$	56,782,543		$	(62,699,029	)	$	(8,436	)	$	-		$	-				$	(5,918,907	)
Issuance of stock for conversion of promissory notes		408,243		408		5,856,901			-			-			-			-					5,857,309
Common stock issued as collateral on loan		20,000,000		20,000		-			-			-			(20,000	)		-					-
Foreign currency translation		-		-		-			-			(761	)		-			-	$	(761	)		(761	)
Net earnings		-		-		-			118,921			-			-			-		118,921			118,921
Comprehensive income																			$	118,160			-
Balance - July 31, 2011		26,423,470		26,423		62,639,444			(62,580,108	)		(9,197	)		(20,000	)		-					56,562
Common stock issued as collateral on loan released to lender		-		-		(20,000	)		-			-			20,000			-					-
Foreign currency translation		-		-		-			-			393			-			-	$	393			393
Net earnings		-		-		-			(2,644,667	)		-			-			-		-			(2,644,667	)
Comprehensive income																			$	393			-
Balance - April 30, 2012		26,423,470	$	26,423	$	62,619,444		$	(65,224,775	)	$	(8,804	)	$	-		$	-				$	(2,587,712	)

Effective January 26, 2012, the Financial Industry Regulatory Authority approved a one-for-five reverse split of the common stock. All share and per share amounts have been restated to reflect the one-for-five reverse stock split.

~~See~~All ~~accompanying~~shares ~~notes~~and per share information has been revised to give ~~unaudited~~retroactive ~~consolidated~~effect ~~financial~~to ~~statements~~the reverse stock split.

8Our board of directors unanimously approved an amendment to our Articles of Incorporation to increase the authorized number of shares of common stock from 60,000,000 shares, par value $.001 per share, to 400,000,000 shares, par value $.001 per share, on July 20, 2012. On the same date we received the written consent from shareholders of our company holding a majority (75.69%) of the outstanding shares of our common stock. We filed the amendment with the Secretary of State of Nevada on August 30, 2012, and the amendment was effective on that date.

~~Table~~Note 2. Summary of ~~Contents~~Significant Accounting Policies

LiThe Company’s significant accounting policies are summarized in Note 1 of the Company’s Annual Report on Form 10-~~ion~~K ~~Motors~~for ~~Corp~~the year ended July 31, 2012. There were no significant changes to these accounting policies during the three months ended October 31, 2012 and the Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.

~~Notes~~Note to3. ~~Unaudited~~Fair ~~Consolidated~~Value ~~Financial Statements~~Measurements

~~April~~The 30Company utilizes the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis or on a nonrecurring basis during the reporting period. The fair value is an exit price, ~~2012~~representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. The accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows:

~~Note~~Level 1. ~~Financial~~- Observable ~~Statement~~inputs ~~Presentation~~such as quoted market prices in active markets

~~History~~Level ~~and~~2 ~~Nature~~- Inputs ofother ~~Business~~than quoted prices in active markets that are either directly or indirectly observable

~~Li-ion~~Level ~~Motors~~3 ~~Corp.~~- ~~(formerly~~Unobservable EVinputs ~~Innovations,~~about ~~Inc.,~~which ~~the~~little ~~“Company”)~~or no ~~was~~market ~~incorporated~~data ~~under the laws of the State of Nevada on April 12~~exists, ~~2000.~~therefore ~~The~~requiring ~~Company~~an isentity ~~currently looking for funding in order~~ to ~~pursue~~develop ~~the~~its ~~development~~own ~~and marketing of electric powered vehicles and products based on the advanced lithium battery technology it has developed.~~assumptions

OnTable ~~April 16, 2008, the Company sold their controlling interest~~ of ~~approximately~~Contents 69% of the outstanding common stock in Zingo, Inc. (presently Sky Power Solutions Corp., “SPS”). Prior to April 16, 2008, SPS was a related party that provided telecommunication services to business and residential customers utilizing VOIP technology and currently is researching and developing rechargeable lithium ion batteries.-10-

~~Effective~~As ~~April~~of 15October 31, ~~2008~~2012, the Company ~~entered~~held ~~into~~certain afinancial assets ~~License~~that ~~Agreement~~are ~~(“License~~measured ~~Agreement”)~~at ~~with~~fair ~~SPS~~value ~~providing~~on ~~for~~a ~~their~~recurring ~~license~~basis. These toconsisted ~~SPS~~ of ~~their~~cash ~~patent applications~~ and ~~technologies~~cash ~~for rechargeable lithium ion batteries for electric vehicles and other applications (“Licensed Products”)~~equivalents. The fair ~~Under~~value ~~the~~of ~~License Agreement,~~ the ~~Company~~cash ~~has the right to purchase their requirements of lithium ion batteries from SPS,~~ and ~~their~~cash ~~requirements~~equivalents ofis ~~lithium~~determined ~~ion~~based ~~batteries~~on ~~shall~~quoted bemarket ~~supplied~~prices ~~by SPS~~ in ~~preference~~public ~~to,~~markets and onis acategorized ~~priority basis~~ as Level ~~compared with, supply and delivery arrangements in effect for other customers of SPS~~1. The Company’s ~~cost~~does ~~for~~not ~~lithium~~have ~~ion~~any ~~batteries~~financial ~~purchased~~assets ~~from~~measured ~~SPS~~at ~~shall~~fair bevalue ~~SPS’s~~on ~~actual~~a ~~manufacturing~~recurring ~~costs~~basis ~~for~~as ~~such~~Level ~~batteries~~3 ~~for~~and ~~the~~there were ~~fiscal~~no ~~quarter~~transfers ~~of SPS~~ in ~~which~~or ~~the~~out ~~Company’s~~of ~~purchase~~Level ~~takes place. On May 25~~1, ~~2010,~~Level ~~the~~2 ~~license~~or ~~agreement~~Level ~~was~~3 ~~amended~~during ~~to reflect Sky Power’s territory would only be~~ the ~~United~~three ~~States~~months ~~and~~ended ~~U.S.~~October ~~possessions~~31, ~~and~~2012 ~~territories~~ and ~~we can license to other companies in other parts of the world~~2011. ~~The Company issued a license to a firm for the rights in Canada in 2010.~~

~~Under~~The ~~the~~following ~~terms~~table ofsets ~~the~~forth ~~license~~by ~~agreement~~level, ~~SPS~~within ~~has agreed to invest a minimum of $1,500,000 in each of~~ the ~~next~~fair value ~~two years in development of the technology for the Licensed Products. To date~~hierarchy, ~~SPS has not met~~ the ~~minimum requirements in the development of technology, and therefore, is not in compliance with its obligations under this covenant of the license agreement. The~~ Company’s ~~has~~financial ~~advised~~assets ~~SPS that~~accounted ~~it will not give notice of default against them~~ for ~~their~~at ~~failure~~fair tovalue ~~comply~~on ~~with~~a ~~this~~recurring ~~covenant~~basis ~~over~~as ~~the term~~ of ~~the~~October ~~License~~31, ~~Agreement.~~2012 ~~SPS~~and July ~~is currently working on developing a stand-alone solar generation system~~31, ~~and not pursuing the battery development system~~2012.

Effective May 28, 2010, the Company entered into a ten year license agreement with Lithium Electric Vehicle Corp. (“LEVC”) providing for the Company to license to LEVC certain of the Company’s patent applications and technologies for electric vehicles and other applications. The purpose of the licensee is to expand sales of the Company’s current line of products by the manufacture and sale of such products in Canada, which is LEVC’s exclusive territory under the license agreement.

			Assets at Fair Value as of October 31, 2012 and 2011 Using

				Quoted Prices in Activated Markets for Identical Asssets		Significant Other Observable Inputs		Significant Observable Inputs
		Total		(Level 1)		(Level 2)		(Level 2)
October 31, 2012
Cash and Cash Equivalents	$	44	$	44	$	—	$	—

July 31, 2012
Cash and Cash Equivalents	$	64	$	64	$	—	$	—

~~The~~Note ~~license agreement consists of an annual fee of $500,000 for ten years and an additional $1,750,000 based on a valuation report prepared by an independent third party~~4. ~~LEVC~~ isNotes required to pay $1 million of the license fee during year one for the initial two years and $500,000 each additional year. The Company has received $732,666 from LEVC with a balance due of $267,334 as of April 30, 2012, which is now delinquent. The Company has reflected the delinquent amount due from LEVC in its accounts receivable and has established a reserve for doubtful accounts for the entire amount. The Company has recorded the amount received and the receivable as deferred revenue and has amortized the license fee income ratably over the life of the agreement.Receivable

~~The~~As of July 31, 2012, the Company ishad ~~currently~~a innote ~~discussions~~receivable balance with ~~LEVC~~Sky ~~regarding~~Power ~~the~~Corp. ~~delinquency~~(“SPS”) of $708,602. ~~LEVC~~ isOn ~~attempting~~October to2, ~~complete~~2012 athe ~~public~~Company ~~registration~~sold its interest in ~~Germany~~the receivable to Frontline Asset Management (“Frontline”) for $0. As10 ~~part~~on ofthe dollar which reduced the ~~registration~~Company’s ~~statement~~debt with Frontline by $70,786. The ~~LEVC~~entire isnote ~~required~~receivable tohad bepreviously ~~current~~been ~~with~~reserved ~~the~~for ~~Company~~in its entirety; therefore, we had a $70,786 credit in ~~connection~~our ~~with~~bad debt expense which is included in the ~~annual~~general ~~license~~and ~~fees~~administrative expenses on the Company’s consolidated statement of operations.

~~The~~During ~~note~~the ofthree ~~$1,750,000~~months ~~has~~ended ~~been~~October ~~reflected~~31, on2012, the ~~books of the~~ Company advanced $0 and ~~the~~$0 ~~fee~~was isrepaid ~~being~~by ~~amortized~~SPS. ~~over~~During the ~~life~~three ofmonths ~~the~~ended ~~ten-year~~October ~~agreement.~~31, ~~Due~~2011 to the ~~uncertainty~~Company ofadvanced ~~LEVC’s~~SPS ~~ability~~$35,976 toof ~~complete~~which $15,623 ~~the~~was ~~public~~repaid. ~~registration~~As inof ~~Germany~~October 31, 2012 and ~~with~~July ~~LEVC~~31, ~~having~~2012, noan ~~assets~~allowance tofor ~~secure~~doubtful ~~the~~accounts ~~note,~~in the ~~Company~~amount ~~has~~of ~~recorded~~$0 aand ~~reserve~~$708,602, respectively, ~~for~~was ~~doubtful~~recorded ~~accounts~~against ~~for~~ the ~~entire~~ note receivable, reducing the amount ofto $~~1,750,000~~0.

9On November 26, 2010, LEVC issued the Company a Secured Promissory Note (“LEVC Note”) in the amount of $1,750,000 in accordance with the license agreement. The LEVC Note bears interest at ten (10%) percent per annum on the outstanding amount of the loan and shall accrue for the first 12 months during which the outstanding amount, or any portion thereof is outstanding. Commencing for the first month following the first year and for all subsequent months during which any portion of the amount is outstanding, LEVC shall make monthly interest payments in arrears on the first day of the month following the month for which the interest payment is made on the outstanding amount of the LEVC Note, including any accrued unpaid interest thereon. The outstanding amount and any accrued but unpaid interest thereon shall be repaid in full by LEVC within sixty (60) days of receiving written demand for repayment by the Company. LEVC shall have the right to repay the LEVC Note in whole or in part, at any time without notice, bonus or penalty. The LEVC Note is secured by LEVC’s (1) inventory; (2) equipment, other than inventory; (3) receivables; and (4) all other property, including leasehold interests, chattel paper, documents of title, securities, instruments, money and intangibles. In addition, the LEVC Note includes a conversion right in which the Company can convert the LEVC Note if LEVC should begin trading on the TSX Venture Exchange. The conversion clause stipulates that the LEVC Note will be converted at a price the greater of fifteen cents ($0.15) per share or ninety percent (90%) of the average ten (10) day trading price and if the conversion of the LEVC Note results in a fractional share, LEVC shall, in lieu of issuing such fractional share, pay to the Company an amount equal to the conversion value of the fractional share.

~~Table~~LEVC is currently attempting to complete a public registration in Germany. The Company has the option, upon the completion of ~~Contents~~the registration, of converting the note into LEVC common stock. Due to the uncertainty of LEVC’s ability to complete the public registration in Germany and with LEVC having no assets to secure the note, the Company has recorded a reserve for doubtful accounts for the entire note amount of $1,750,000.

~~Effective~~The ~~January 3, 2012, the~~ Company ~~entered~~recognized ~~into~~interest aincome ~~management agreement with Advanced Technology Services, Inc. (“ATS”). The agreement stipulates that (1) ATS is responsible for the supervision~~ of ~~all persons who perform compensated services on behalf of the Company. Except for the Company’s President and Director~~$44,535 ~~ATS shall employ~~ and~~/or~~ ~~enter into consultant contracts with all persons who perform compensated services on its behalf~~$44,110, none ~~on such terms and conditions as are consistent with its budget and other requirements~~ of ~~its~~which ~~funds.~~has ~~All~~been ~~such~~received, ~~persons~~in ~~shall~~accordance beto ~~employees~~the ~~and~~terms ~~independent contractors~~ of ~~ATS and not of~~ the ~~Company~~LEVC ~~and~~Note ~~ATS shall be responsible~~ for ~~all~~the ~~income~~three ~~and~~months ~~payroll~~ended ~~tax~~October ~~withholding and reporting. (2) In administering funds~~31, ~~ATS~~2012 ~~will establish~~ and ~~maintain one or more bank accounts and will follow the same internal operating procedures regarding expense authorization and check writing procedures~~October 31, ~~including expense documentation requirements~~2011, ~~as it follows for withdrawals of its own funds~~respectively. ~~(3)~~The ~~Maintenance~~Company ofhas ~~accurate,~~reflected ~~complete,~~the ~~and~~amount ~~separate~~due ~~financial~~from ~~records,~~LEVC ~~kept~~ in ~~accordance~~its ~~with~~accounts ~~generally~~receivable ~~accepted accounting principles,~~ and ~~ATS~~has ~~will~~established ~~prepare~~ a ~~monthly and a fiscal year-end balance sheet and income/expense statement~~ reserve for ~~delivery~~doubtful toaccounts the Company within thirty (30) days after the close of the period. The Company may inspect any of its financial records at any reasonable time. (4) Neither party shall be liable to the other party or to third parties for the ~~acts~~entire oramount ~~omissions of the other party. Each party shall indemnify, assume the defense of (if requested),~~ and ~~hold~~is ~~harmless~~included ~~the~~in ~~other~~general ~~party~~ and ~~its~~administrative ~~directors,~~expenses ~~officers,~~on employees, and agents from every claim, loss, damage, injury, expense (including attorney’s fees), judgment, and liability of every kind, nature, and description (“Liability”) arising in whole or in part from the ~~indemnifying party~~Company’s ~~negligent,~~consolidated statement fraudulent, or illegal acts or omissions except, as to the party requesting indemnification, to the extent such Liability results in whole or in part from the unauthorized, negligent, fraudulent, or illegal act or omission of ~~the party requesting indemnification~~operations. ~~In recognition for its services, ATS will receive a 10% management fee based upon of all expenditures for the month.~~

~~Basis~~Table of ~~Presentation~~Contents -11-

~~Going~~Note ~~Concern~~5. Inventories

~~The~~Inventories ~~Company’s~~consist ~~financial statements for the nine months ended April 30, 2012, have been prepared on a going concern basis which contemplates the realization~~ of ~~assets and settlement of liabilities and commitments in~~ the normal course of business. Management recognized that the Company’s continued existence is dependent upon its ability to obtain needed working capital through additional equity and/or debt financing and revenue to cover expenses, as the Company continues to incur losses from operations.following:

Since its incorporation, the Company financed its operations through advances and loans from its controlling shareholders and in 2010, the Company received approximately $2.5 million as an award from Automotive XPrize. The Company expects to finance operations through the sale of equity or other investments as well as continued advances from shareholders for the foreseeable future, as the Company does not expect to receive significant revenue from vehicle sales until the required certifications have been received. There is no guarantee that the Company will be successful in arranging financing on acceptable terms.

	October 31,		July 31,
	2012		2012
Finished Goods	$	1,500	$	1,500
	$	1,500	$	1,500

~~The~~Finished ~~Company’s~~goods ~~ability to raise additional capital is affected by trends and uncertainties beyond its control. The Company does not currently have any arrangements~~ for ~~financing~~the ~~and~~quarter itended ~~may~~October ~~not~~31, ~~be able to find such financing if required. Obtaining additional financing would be subject to a number of factors~~2012, ~~including~~and year ~~investor~~ended ~~sentiment. Market~~July ~~factors may make the timing~~31, ~~amount~~2012, ~~terms~~are orrelated ~~conditions of additional financing unavailable~~ to ~~it. These uncertainties raise substantial doubt about~~ the ~~ability of the~~ Company’s toplanned ~~continue~~sales asof aelectric ~~going~~powered ~~concern~~vehicles. ~~The accompanying financial statements do not include adjustments that might result from the outcome of these uncertainties.~~

~~Common~~ Note ~~Stock~~6. Property and Equipment

OnProperty June 24, 2011, the Board of Directors unanimously approved an amendment to the Company’s Articles of Incorporation to decrease the authorized number of shares of common stock from 100 million shares, par value $.001 per share, to 300 million shares, par value $.001 per share. The Company filed the amendment with the Secretary of State of Nevada on August 10, 2011, after mailing a Definitive Information Statement to the Company’s stockholders and ~~the~~equipment ~~amendment~~consist ~~was effective August 10, 2011.~~of:

On December 13, 2011, the Board of Directors unanimously approved an amendment to the Company’s Articles of Incorporation to decrease the authorized number of shares of common stock from 300 million shares, par value $.001 per share, to 60 million shares, par value $.001 per share. The Company filed the amendment with the Secretary of State of Nevada on December 14, 2011.

	October 31,			July 31,
	2012			2012

Building and Improvements	$	—		$	552,276
Equipment and Furniture and Fixtures		4,827			4,827
Vehicles		66,429			66,429
Land		—			700,000

		71,256			1,323,532

Less Accumulated Depreciation		(66,110	)		(268,601	)
Less Current Portion		-			(1,049,146	)
Net Property and Equipment	$	5,146		$	5,785

~~Effective~~Depreciation ~~January~~expense ~~26,~~for ~~2012,~~ the ~~Securities~~three ~~and~~months ~~Exchange~~ended ~~Commission~~October ~~approved~~31, 2012 aand ~~one-for-five~~2011 ~~reverse~~was ~~split~~$639 ofand ~~the~~$23,073, ~~common~~respectively ~~stock. All share~~ and ~~per~~is ~~share~~included ~~amounts~~in ~~have~~general ~~been~~and ~~restated~~administrative toexpenses ~~reflect~~on the ~~one-for-five~~Company’s consolidated ~~reverse~~statement ~~stock~~of ~~split~~operations.

10On September 14, 2012, the sale of the property pursuant to the Frontline August 22, 2012 foreclosure and sale was completed. Due to the foreclosure of the property and the loss of rights to the facility, the Company wrote-off the building and its improvements, which caused a loss of $12,019 and is reflected on the Company’s consolidated statement of operations.

~~Table~~Note of7. ~~Contents~~Other Current Assets

Note 2. Summary of Significant Accounting Policies

	July 31,		October 31,
	2012		2012
Deposits	$	3,190	$	3,190
Total	$	3,190	$	3,190

~~The Company’s significant accounting policies are summarized in~~ Note ~~1 of the Company’s Annual Report on Form 10-K for the year ended July 31, 2011~~8. ~~There~~ ~~were~~Accounts noPayable ~~significant changes to these accounting policies during the three months ended April 30, 2012~~ and ~~the~~Accrued ~~Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.~~Expenses

~~Reclassifications~~Accounts payable, accrued expenses and other current liabilities at October 31, 2011 and July 31, 2011 consisted of:

Certain prior period amounts have been reclassified to conform with current period presentations.

	October 31,		July 31,
	2012		2012

Accounts Payable	$	313,686	$	291,156
Accounts Payable - Related Parties		7,177		4,682
Wages, Paid Leave and Payroll Related Taxes		971,639		948,410
Accrued Interest		27,533		120,067
Legal Settlements		152,976		152,976
Other		1,890		20,769

Total	$	1,474,901	$	1,538,060

~~Note~~Accounts 3.payable ~~Notes~~due ~~Receivable~~to related parties are reimbursable general and administrative expenses paid by the Company’s President and Consultant.

~~During~~Table the nine months ended April 30, 2012, the Company advanced Sky Power Solutions Corp. (“SPS”) $71,364. The advances were reduced by $22,991 in payments through a reimbursement for a leased employee and $112,500 through an assignment of ~~debt~~Contents to Frontline Asset Management (“Frontline”). During the nine months ended April 30, 2011, the Company advanced SPS $176,959 of which $168,849 was repaid ($74,000 in the form of cash and $94,849 in reimbursement for a leased employee). The entire amount was reserved as an allowance for doubtful accounts . As of April 30, 2012 and July 31, 2011, an allowance for doubtful accounts in the amount of $698,208 and $762,327, respectively, was recorded against the note receivable, reducing the amount to $0.-12-

~~On November 26, 2010, LEVC issued the Company a Secured Promissory~~ Note ~~(“LEVC Note”) in the amount of $1,750,000 in accordance with the license agreement~~9. ~~The~~ ~~LEVC~~Long-Term Note bears interest at ten (10%) percent per annum on the outstanding amount of the loan and shall accrue for the first 12 months during which the outstanding amount, or any portion thereof is outstanding. Commencing for the first month following the first year and for all subsequent months during which any portion of the amount is outstanding, LEVC shall make monthly interest payments in arrears on the first day of the month following the month for which the interest payment is made on the outstanding amount of the LEVC Note, including any accrued unpaid interest thereon. The outstanding amount and any accrued but unpaid interest thereon, shall be repaid in full by LEVC within sixty (60) days of receiving written demand for repayment by the Company. LEVC shall have the right to repay the LEVC Note in whole or in part, at any time without notice, bonus or penalty. The LEVC Note is secured by LEVC’s (1) inventory; (2) equipment, other than inventory; (3) receivables; and (4) all other property, including leasehold interests, chattel paper, documents of title, securities, instruments, money and intangibles. In addition, the LEVC Note includes a conversion right in which the Company can convert the LEVC Note if LEVC should begin trading on the TSX Venture Exchange. The conversion clause stipulates that the LEVC Note will be converted at a price the greater of fifteen cents ($0.15) per share or ninety percent (90%) of the average ten (10) day trading price and if the conversion of the LEVC Note results in a fractional share, LEVC shall, in lieu of issuing such fractional share, pay to the Company an amount equal to the conversion value of the fractional share.Debt

~~LEVC~~Long-term isdebt ~~currently~~consists ~~attempting to complete a public registration in Germany. The Company has the option, upon the completion~~ of the registration, of converting the note into LEVC common stock. Due to the uncertainty of LEVC’s ability to complete the public registration in Germany and with LEVC having no assets to secure the note, the Company has recorded a reserve for doubtful accounts for the entire note amount of $1,750,000.:

The Company recognized interest income of $131,370, none of which has been received, in accordance to the terms of the LEVC Note for the nine months ended April 30, 2012. The Company has reflected the amount due from LEVC in its accounts receivable and has established a reserve for doubtful accounts for the entire amount.

	October 31,			July 31,
	2012			2012

5% Note payable to Bayview Loan Servicing, LLC, payable in monthly installments of $5,433 including interest, collateralized by real property. Due to foreclosure of the building, the entire balance has been eliminated. (1)	$	—		$	946,279

12% Note payable to Frontline Asset Management, payable in monthly installments of interest only, due in full on March 1, 2013 (2)		456,809			508,492

48.956% Note payable to Amicus Funding Group, LLC, payable in monthly installments of approximately $467, collateralized by real property due in full on September 1, 2013 (3)		6,297			6,297

10% Note payable to Cameo Properties, LLC payable in monthly installments of interest only, due in full on December 27, 2014 (4)		250,000			250,000

		713,106			1,711,068
Less current portion		(250,000	)		(399,407	)
	$	463,106		$	1,311,661

11Principal maturities for long-term debt are as follows for the first quarters ended October 31:

Table of Contents

2013	$	463,106
2014		250,000
2015		—
2016		—
2017		—
Thereafter		—
	$	713,106

~~Note~~Table 4.of ~~Inventories~~Contents -13-

~~Inventories~~(1 ~~consist~~In November 2007, the Company refinanced the first mortgage loan on its Mooresville, North Carolina building (the “property”) with Bayview. On July 25, 2012, Frontline, the junior lien holder noticed a foreclosure hearing and sale to take place on August 22, 2012, and the sale of the ~~following:~~property to an assignee of Frontline, which was the only bidder, was completed on September 14, 2012. The Company debt to Bayview was reduced to zero upon the completion of the sale.

	April 30,		July 31,
	2012		2011
Raw Materials	$	1,103	$	1,103
Work-In-Progress		208,844		344,455
Finished Goods		35,000		35,000
	$	244,947	$	380,558

(2) On February 26, 2010, the Company entered into a loan agreement with Frontline. The loan provides for payments to the Company of $2,000,000 with interest at a fixed annual rate of 12%. On March 1, 2012, an Addendum to the original Promissory Note, dated February 26, 2010, was entered into which amended the term of the note to provide for interest only payments, due on the last day of every month until maturity date March 30, 2013, when all principal and accrued interest shall be due and payable. On April 11, 2011, Frontline assigned $850,279 of its debt to Windsor Capital, Inc. (“Windsor”). On April 19, 2011, Frontline partially assigned $437,309 to Kisumu S.A. (“Kisumu”) and Kisumu immediately converted the assigned note for 1,041,212 shares of Common Stock at a fair value price of $0.42 per share. On April 19, 2011, Frontline assigned $420,000 to Eurolink Corporation (“Eurolink”) and Eurolink immediately converted the assigned note for 1,000,000 shares of Common Stock at a fair value price of $0.42 per share. On December 27, 2011, Frontline purchased two electric vehicles for $255,000. On the same day Frontline assigned $250,000 to Cameo Properties, LLC. On April 26, 2012, the Company assigned $112,500 of its note receivable with SPS to Frontline which reduced the balance due to Frontline by $112,500. On September 13, 2012, Frontline converted $39,000 of accrued interest for 1,300,000 shares of Common Stock at a fair value price of $0.30 per share. On October 2, 2012, Frontline purchased our receivable with SPS at $0.10 on the dollar for $70,786, which reduced the Company’s accrued interest by $43,726 and debt by $27,060. On October 2, 2012, Frontline converted $12,180 for 1,450,000 shares of Common Stock at a fair value price of $0.0084 per share.

~~Raw~~Loans ~~materials,~~under ~~work~~the inFrontline ~~progress~~loan ~~and~~agreement ~~finished~~are ~~goods~~secured ~~for~~by a junior deed of trust on the ~~quarter~~Company’s property ~~ended~~located ~~April~~at 30158 Rolling Hill Road, Mooresville, North Carolina. On August 22, 2012, the foreclosure by Frontline of the property took place, pursuant to a notice of foreclosure and ~~year~~sale ~~ended~~dated July 31 25, ~~2011~~2012, ~~are~~and ~~related~~the foreclosure sale to an assignee of Frontline, which was the ~~Company’s~~only ~~planned~~bidder, ~~sales~~was completed on September 14, 2012. Frontline received $50,000 upon the sale of ~~electric~~the ~~powered~~foreclosed ~~vehicles~~property and this amount reduced the debt to Frontline.

~~Note~~During 5the three months ended October 31, 2012 and 2011, the Company received advances totaling $37,557 and $457,634, respectively; and made payments of $0 and $13,811, respectively. ~~Property~~Interest expense for the three months ended October 31, 2012 and ~~Equipment~~2011, was $15,289 and $17,659, respectively.

~~Property~~(3) ~~and~~On March 11, 2011, the Company financed $7,992 for office equipment ~~consist~~with Amicus Funding Group, LLC (“Amicus”) and monthly payments including interest of: 48.956% are approximately $477. During the three months ended October 31, 2012 and 2011, the Company repaid $0 and $515, respectively. Interest expense for the three months ended October 31, 2012 and 2011, was $567 and $885, respectively. The Company is in default on this note.

	April 30,			July 31,
	2012			2011
Building and Improvements	$	1,292,276		$	1,292,276
Equipment and Furniture and Fixtures		4,827			328,663
Vehicles		66,429			66,429
Software Costs		-			28,913
Land		700,000			700,000
		2,063,532			2,416,281
Less Accumulated Depreciation		(259,413	)		(432,542	)
Net Property and Equipment	$	1,804,119		$	1,983,739

(4) The Company entered into a Loan Agreement, dated as of July 14, 2011, with Cameo Properties LLC (“Cameo”) and was amended on October 14, 2011 (the “Amended Loan Agreement”). Each Note issued under the Amended Loan Agreement is due three years from the date of its issuance. The Amended Loan Agreement provides for loans to the Company of up to $750,000 (the “Loan”), with a minimum initial loan of $250,000 within 60 days of the date of the Loan Agreement, and up to an additional $500,000 within the first year and a half from execution of the Amended Loan Agreement. This is not a revolving facility, and any principal repaid by the Company will not be available for additional advances to the Company under the Amended Loan Agreement. The Company cannot, without the Lender’s consent, prepay all or part of the Loan. The notes evidencing the installments of the loans bear interest payable monthly in arrears at the rate of 10% per annum, and mature and are due and payable three years from the date of issuance. On December 27, 2011, Frontline assigned $250,000 of its receivable to Cameo. Interest expense for the three months ended October 31, 2012 and 2011, was $6,301 and $0, respectively.

~~Depreciation~~Note ~~expense for the three months ended April 30, 2012 and 2011, was $~~10~~,100 and $12,010, respectively~~. ~~Depreciation expense for the nine months ended April 30, 2012 and 2011, was $41,816and $50,857, respectively, and is included in general and administrative expenses on the Company~~Stockholders’s ~~consolidated~~Equity statement of operations. During the three months ended April 30, 2012, the Company evaluated its current fixed asset inventory of equipment, furniture and fixtures, and software and wrote off $137,804 due to being obsolete. This was offset by $4,415 the Company received from Frontline for various equipment.(Deficiency)

12On July 14, 2011, the Company entered into a Loan Agreement with Cameo Properties LLC (“Cameo”). The loans under the Loan Agreement are secured, over the life of the loan, by 20 million shares of our common stock. If the Company should default on the loan, Cameo will retain all of the 20 million shares of common stock. In the event of a reverse stock split or combination of shares, the number of shares of common stock constituting the Share Collateral will, immediately following such reverse stock split or combination of shares, be increased by a new issuance of common stock of the Company to that number of shares constituting the Share Collateral immediately prior to such reverse stock split or combination of shares. The certificates representing any share dividends that the Company pays during the term of the Loan with respect to the Shares being held in escrow shall be credited and delivered to the Lender and held by the Lender pursuant to the terms of the Loan Agreement.

~~Table~~Effective January 26, 2012, the Securities and Exchange Commission approved a one-for-five reverse split of ~~Contents~~the common stock. Pursuant to the anti-dilution provisions in the Cameo Properties loan agreement the Company issued 16,000,000 shares to Cameo Properties, so they again held 20,00,000 post reverse stock split shares.

~~Note~~Table 6.of ~~Other~~Contents ~~Current Assets~~-14-

	April 30,		July 31,
	2012		2011
Retainers and Deposits	$	3,657	$	4,957
Deferred Product Asset		-		4,958
Prepaid Expenses		50,000		65,553
Interest Receivable		-		118,425
Total	$	53,657	$	193,893

Changes to Authorized Common Stock

~~The~~On ~~deferred~~June ~~product~~24, ~~asset~~2011, isthe ~~for~~Board ~~product~~of ~~liability~~Directors ~~costs~~unanimously ~~that~~approved an amendment to the ~~Company~~Articles ~~prepared~~of ~~and~~Incorporation ~~amortized~~to ~~over~~increase the ~~two~~authorized ~~year~~number ~~life~~of inshares ~~the~~of ~~amount~~common ofstock ~~$24~~from 100 million shares,~~936~~ par ~~and~~value $20.001 per share,~~636~~ asto of300 ~~April~~million 30shares, ~~2012~~par ~~and~~value ~~July~~$.001 31per share. The Company filed the amendment with the Secretary of State of Nevada on August 10, 2011, ~~respectively~~after mailing a Definitive Information Statement to the Company’s stockholders and the isamendment ~~included~~was ineffective ~~accrued~~August ~~expenses-other~~10, 2011.

~~Note~~On 7December 13, 2011, the Board of Directors unanimously approved an amendment to the Company’s Articles of Incorporation to change the authorized number of shares of common stock from 300 million shares, par value $.001 ~~Accounts~~per ~~Payable~~share, to 60 million shares, par value $.001 per share, and ~~Accrued~~to ~~Expenses~~effect a reverse split in the outstanding common stock in the same ratio. The Company filed the amendment with the Secretary of State of Nevada on December 14, 2011.

~~Accounts~~Our ~~payable~~board of directors unanimously approved an amendment to our Articles of Incorporation to increase the authorized number of shares of common stock from 60,000,000 ~~accrued~~shares, par ~~expenses~~value ~~and~~$.001 ~~other~~per ~~current~~share, ~~liabilities~~to at400,000,000 ~~April~~shares, par value $.001 per share, on July 20, 2012. On the same date we received the written consent from shareholders of our company holding a majority (75.69%) of the outstanding shares of our common stock. We filed the amendment with the Secretary of State of Nevada on August 30, 2012, and ~~July~~the ~~31,~~amendment ~~2011~~was ~~consisted~~effective ~~of:~~on that date.

	April 30.		July 31,
	2012		2011
Accounts Payable	$	917,574	$	608,623
Accounts Payable - Related Parties		27,971		28,029
Wages, Paid Leave and Payroll Related Taxes		482,059		259,122
Accrued Interest		86,723		8,403
Legal Settlements		158,951		171,750
Other		-		80,209
Total	$	1,673,278	$	1,156,136

Note 11. Net Earnings (Loss) Per Common Share

~~Accounts~~The ~~payable~~following ~~due~~table tosets ~~related~~forth ~~parties~~the ~~are~~reconciliation ~~reimbursable~~of ~~general~~the basic and ~~administrative~~diluted ~~expenses~~net ~~paid~~earnings by(loss) per common share computations for the ~~Company’s~~three ~~President~~months ended October 31, 2012 and ~~Consultant~~2011.

	Three Months Ended
	October 31,
	2012			2011
Basic and Diluted Earnings (Loss) Per Share
Net Earnings (Loss) Ascribed to Common Shareholders - Basic and Diluted	$	(39,312	)	$	(287,224	)
Weighted Average Shares Outstanding - Basic and Diluted		27,475,667			32,088,513

Basic and Diluted Net Earnings (Loss) Per Common Share	$	(0.00	)	$	(0.01	)

~~Table~~Note of12. ~~Contents~~Share Based Compensation

~~Note~~The 8.Company ~~Long~~records compensation expense in its consolidated statement of operations related to employee stock-~~Term~~based ~~Debt~~options and awards in accordance with FASB ASC 718, “Compensation”, and (“ASC 718”).

~~Long~~The Company recognizes the cost of all employee stock options on a straight-~~term~~line ~~debt~~attribution ~~consists~~basis over their respective contractual terms, net of: estimated forfeitures. The Company has selected the modified prospective method of transition.

	April 30,			July 31,
	2012			2011
5% Note payable to Bayview Loan Servicing, LLC, payable in monthly installments of $5,433 including interest, collateralized by real property due in full on or before March 2038 (1)	$	946,279		$	951,921
9.367% Note payable to Allegiance Direct Bank, payable in monthly installments of approximately $1,000, due in full on February 28, 2012 (2)		-			6,112
12% Note payable to Frontline Asset Management, payable in monthly installments of interest only, due in full on March 30, 2013 (3)		273,768			349,465
48.956% Note payable to Amicus Funding Group, LLC, payable in monthly installments of approximately $467, collateralized by real property due in full on September 1, 2013 (4)		6,499			7,394
26.85% Note payable to Treger Financial, payable in monthly installments of approximately $2,000, collateralized by real property due in full on June 1, 2012 (5)		19,563			24,123
10% Note payable to Cameo Properties, LLC payable in monthly installments of interest only, due in full on December 27, 2014 (6)		250,000			-
		1,496,109			1,339,015
Less Current Portion		(572,829	)		(399,407	)
	$	923,280		$	939,608

Stock Option Plan

~~Principal~~As ~~maturities~~of ~~for~~October ~~long-term~~31, ~~debt~~2012, there are asno ~~follows~~shares of common stock remaining and available for ~~the~~issuance ~~second~~under ~~quarters~~the ~~ended~~stock ~~April~~option ~~30:~~ plans.

2013	$	572,829
2014		20,887
2015		19,793
2016		20,822
2017		21,906
Thereafter		839,872
	$	1,496,109

Note 13. Income Taxes

~~(1)~~The InCompany ~~November~~adopted ~~2007,~~ the ~~Company~~provisions ~~refinanced~~of aASC ~~loan on its North Carolina building. The loan is with Bayview Loan Servicing~~740, ~~LLC~~“Income Taxes” (“~~Bayview~~ASC 74”). On March 31, 2010, the Company entered into a stipulation agreement with Bayview which reduced the monthly payment to $5,349, including interest. On May 27, 2011, the Company entered into a loan adjustment agreement with Bayview which increased the unpaid liability by $9,043 to $953,316 and decreased the monthly payments to $5,433, including interest. In 2013, Bayview may step up the interest rate at that time. The loan is set to mature on ~~March~~August ~~31, 2038. Effective April~~ 1, ~~2012, the interest rate adjusts to Prime plus 4~~2007.~~875%. Interest~~ ~~rate~~The ~~changes~~implementation ~~are~~of ~~limited~~ASC to740 2%did ~~increase~~not orimpact ~~decrease in any annual adjustments. During~~ the ~~three~~total ~~months~~amount ~~ended~~of ~~April 30, 2012 and 2011,~~ the Company’s liabilities repaid $2,893 and $7,932, respectively. During the nine months ended April 30, 2012 and 2011, the Company repaid $5,642 and $12,005, respectively. On March 26, 2012, Bayview agreed to a repayment plan in which the Company is required to pay an additional $5,000 per month for ~~the~~uncertain ~~next~~tax ~~nine months or through January 5, 2013~~position. ~~The Company is in default of this note.~~

14The Company recorded no provisions for income taxes for the three months ended October 31, 2012 and 2011.

~~Table~~Note of14. ~~Contents~~Commitments and Contingencies

~~Interest~~Legal expense for the three months ended April 30, 2012 and 2011, for Bayview was $12,077 and $12,005, respectively. Interest expense for the nine months ended April 30, 2012 and 2011, was $36,068 and $32,127, respectively.Proceedings

~~(2) On February 28, 2011, the Company financed a general liability insurance policy with Allegiance Direct Bank (“Allegiance”) for the period February 28, 2011 to February 28, 2012 for $13,351.~~ The Company ~~was~~is ~~required~~currently toinvolved ~~make a down payment of $3,351~~ in ~~February~~various ~~2011~~claims and ~~monthly payments including interest of 9~~legal proceedings.~~4%.~~ ~~During the three months ended April 30~~Quarterly, ~~2012 and 2011,~~ the Company ~~repaid~~reviews ~~$0 and $2,075, respectively. During~~ the ~~nine~~status ~~months~~of ~~ended~~each ~~April~~significant ~~30,~~matter ~~2012~~ and ~~2011,~~assesses ~~the~~its ~~Company~~potential ~~repaid~~financial ~~$3,013~~ exposure and ~~$5,000,~~if ~~respectively.~~the ~~The~~potential ~~Company~~loss ~~was~~from ~~unable~~any toclaim ~~make~~or ~~the~~legal ~~final~~proceeding ~~three~~is ~~payments~~considered onprobable ~~the note~~ and the ~~Company’s~~amount ~~general~~can ~~liability~~be ~~insurance~~reasonably ~~was cancelled. The remaining months unused in~~ estimated, the ~~policy~~Company ~~was~~accrues ~~credited~~a ~~back~~liability tofor the ~~note~~estimated ~~of $3,098, which left a zero balance due to Allegiance~~loss.

~~Interest~~Caudle ~~expense~~& ~~for~~Spears ~~the~~has ~~three~~obtained ~~months~~a ~~ended~~default ~~April~~judgment ~~30,~~against the ~~2012~~Company ~~and~~in ~~2011~~Meckenberg County, ~~paid~~North toCarolina, ~~Allegiance~~General ~~Direct~~Court, ~~Bank~~in isthe $0amount ~~and~~of $~~231~~17, ~~respectively~~686. ~~Interest~~This ~~expense~~law ~~for~~firm ~~the~~represented ~~nine~~us ~~months~~in ~~ended~~our litigation ~~April~~against 30Martin Koebler, ~~2012~~a former employee, whom we successfully sued for return of Company property and ~~2011~~other damages. The Company is in settlement negotiations with Caudle & Spears, ~~paid~~since toits ~~Allegiance~~judgment ~~Direct~~against ~~Bank~~Martin Koebler is still in the collection process. A payment agreement has been reached in the amount of $~~197~~2,500 per month with no interest until paid. The Company is not current with its payment arrangements and has a balance of $~~492~~4,263 ~~respectively~~still due.

~~(3)~~Table ~~On February 26, 2010, the Company entered into a loan agreement with Frontline Asset Management, Inc. ("Frontline"). The loan provides for payments to the Company~~ of ~~$2,000,000~~Contents with interest at a fixed annual rate of 12%. On March 1, 2012, an Addendum to the original Promissory Note, dated February 26, 2010, was entered into which amended the term of the note to provide for interest only payments, due on the last day of every month until maturity date March 30, 2013, when all principal and accrued interest shall be due and payable. On April 11, 2011, Frontline assigned $850,279 of its debt to Winsor Capital, Inc. (“Winsor”). On April 19, 2011, Frontline partially assigned $437,309 to Kisumu S.A. (“Kisumu”) and Kisumu immediately converted the assigned note for 1,041,212 shares of Common Stock at a fair value price of $0.42 per share. On April 19, 2011, Frontline assigned $420,000 to Eurolink Corporation (“Eurolink”) and Eurolink immediately converted the assigned note for 1,000,000 shares of Common Stock at a fair value price of $0.42 per share. On December 27, 2011, Frontline assigned $250,000 to Cameo Properties, LLC. On April 26, 2011, the Company assigned $112,500 of its note receivable with SPS to Frontline which reduced the balance due to Frontline by $112,500.-15-

~~During~~Internal ~~the~~Revenue ~~three~~Service ~~months~~(“IRS”) ~~ended~~served ~~April~~the ~~30,~~Company with ~~2012~~a ~~and~~tax ~~2011,~~lien ~~the~~dated ~~Company~~March ~~received~~3, ~~advances~~2010 ~~totaling~~in ~~$3,093~~the ~~and~~total amount of $~~743~~251,~~863,~~928. ~~respectively;~~Third ~~and~~quarter ~~made~~2009 ~~payments~~taxes ofare ~~$572~~approximately ~~and~~ $~~198~~117,~~996~~000, ~~respectively~~which are included in total due. ~~During~~The ~~the~~Company ~~nine~~has ~~months~~been ~~ended~~served ~~April~~with ~~30,~~an ~~2012~~additional ~~and~~tax lien dated January 19, 2011, in the amount of $2,925. The Company ~~received~~had ~~advances~~a ~~totaling~~payment ~~$575,555~~plan ~~and~~in ~~$1,576,618,~~place ~~respectively~~with IRS; ~~and~~however, ~~made~~the Company is arrears in payments as of ~~$22~~July 31,~~270~~ 2012. Management is working with the local IRS office to try and revise the payment agreement. The balance due on the most recent statement from the IRS is $1566,~~081,669, respectively~~071.

~~Interest~~Tallman ~~expense~~Hudders ~~for~~& ~~the~~Sorrentino ~~three~~has ~~months~~obtained ~~ended~~a ~~April~~judgment in 30Lehigh County, ~~2012~~Pennsylvania, on behalf of their client Javad Hajihadian, an individual. Mr. Hajihadian had ordered and ~~2011~~paid for, the first super car to be produced by Li-ion Motors in November 2008. The car was in the design stage when it was ordered. Mr. Hajihadian’s attorney subsequently contacted the Company to cancel his contract and have his payment refunded. The parties had reached a settlement agreement and the payment was being refunded with interest. The settlement agreement was for $15102,~~227~~500 and stipulated monthly payments of $1410,~~883,~~250 ~~respectively~~commencing in July 2010. Payments ~~Interest~~were ~~expense~~made ~~for~~through ~~the~~November 2010, ~~nine~~totaling ~~months~~$51,250, ~~ended~~leaving ~~April~~a 30balance of five payments or $51,250 ~~2012~~still due; which is reflected on the Company’s balance sheet under current liabilities. The Company became delinquent and Mr. Hajihadian proceeded with litigation and on February 4, 2011, a judgment was ~~$48,131~~issued ~~and~~in his favor for $9451,~~746, respectively~~750.

~~(4)~~The OnCompany’s ~~March~~facility ~~11,~~in ~~2011~~Mooresville, ~~the~~North ~~Company~~Carolina was financed $7through Bayview and Frontline,~~992~~ ~~for~~which ~~office~~had ~~equipment~~a second lien on the property. Li-ion became delinquent with ~~Amicus~~the ~~Funding~~mortgage payments, ~~Group~~and, ~~LLC~~following ~~(“Amicus”)~~a prior foreclosure filing and ~~monthly~~new agreement as to payments ~~including~~under ~~interest~~the mortgage, on July 12, 2012, Bayview refiled a notice of ~~48.956%~~hearing ~~are~~on ~~approximately~~foreclosure on its deed of trust and security agreement for a hearing on August 21, 2012, the outstanding amount of the loan at July 31, 2012 being $~~477~~946,279. ~~During~~ A similar notice of foreclosure pursuant to the ~~three~~Frontline deed ~~months~~of ~~ended~~trust ~~April~~was 30filed by the Trustee with the same court on July 25, 2012, ~~and~~noticing ~~2011~~a hearing for August 22, 2012, with an amended notice of default, the ~~Company~~amount ~~repaid~~of $0508,492 being outstanding under the loan as of July 31, 2012. The Trustee for Frontline also filed on July 25, 2012, a notice of foreclosure and ~~$141~~sale to take place on August 22, ~~respectively~~2012. ~~During~~The Trustee under the ~~nine~~Bayview deed ~~months~~of ~~ended~~trust ~~April~~on 30August 21, 2012, filed its notice of foreclosure and ~~2011~~sale to take place on September 18, 2012, of the ~~Company~~real ~~repaid~~and personal ~~$895~~property securing the deed of trust. On September 14, 2012, the sale of the property pursuant to the Frontline August 22, 2012 foreclosure and ~~$141~~sale was completed, ~~respectively~~and Frontline assigned its rights to its foreclosure bid to A&S Holdings Inc. ~~The~~, ~~Company~~subject isto inthe ~~default~~rights of Bayview, as the holder of the first mortgage on ~~this~~the ~~note~~property.

~~Interest~~Fine ~~expense~~Mobile and Li-ion Motors entered into a confession of judgment in relation to X-Prize winnings. The parties agreed to a payment arrangement of $10,000 per month for ~~the~~a ~~three~~period of eight (8) months. If ~~ended~~a ~~April~~default 30were to occur, ~~2012~~the ~~and~~debtor ~~2011,~~would ~~was~~then ~~$745~~be ~~and~~entitled to exercise confession of judgment in the amount of $~~326~~120,000 ~~respectively~~without further delay. The ~~Interest~~initial ~~expense~~payment ~~for~~was wired on December 15, 2011; however, the ~~nine~~Company was ~~months~~unable ~~ended~~to ~~April~~make 30any additional payments. On June 18, 2012 Fine Mobile executed the judgment with the Iredell County Sheriff’s Office and ~~2011,~~ ~~was~~on $July 2,~~448~~ ~~and~~2012, ~~$326~~the Sherriff took possession of the building located at 158 Rolling Hill Road, ~~respectively~~Mooresville, NC, seizing all remaining assets.

~~(5) On February 1, 2011, the Company financed $29,750 for production equipment with Treger Financial (“Treger”) and monthly payments including interest of 26~~ Note 15.~~85%~~ ~~are~~Subsequent approximately $2,000. During the three months ended April 30, 2012 and 2011, the Company repaid $0 and $5,627, respectively. During the nine months ended April 30, 2012 and 2011, the Company repaid $4,560 and $5,627, respectively. The Company is in default on this note.Events

~~Interest~~On ~~expense~~November ~~for the three months ended April 30~~13, 2012, ~~and~~Frontline ~~2011~~assigned $17,280 ~~was~~of ~~$514~~its ~~and~~debt to $1Kisumu,~~811,~~ ~~respectively~~S.A. ~~Interest~~(“Kisumu”) ~~expense~~and ~~for~~Kisumu converted the ~~nine~~assigned ~~months~~note ~~ended~~for ~~April 30~~3,200,000 ~~2012~~shares ~~and~~of ~~2011,~~common ~~was~~stock ~~$2,591~~below ~~and~~fair market value at $~~2,477,~~0.0054 ~~respectively~~per share.

~~(6)~~Li-ion ~~The~~Motors ~~Company~~has ~~entered~~filed ~~into~~merger adocuments ~~Loan~~with Nevada ~~Agreement,~~Secretary ~~dated as~~ of ~~July~~State ~~14, 2011, with Cameo Properties LLC (“Cameo”) and was amended~~ on ~~October~~November 1430, ~~2011~~2012 ~~(the~~to ~~“Amended~~merge ~~Loan~~its ~~Agreement”).~~wholly ~~Each~~owned ~~Note~~subsidiary, ~~issued~~Terra ~~under~~Inventions ~~the Amended Loan Agreement is due three years from the date of its issuance~~Corp. ~~The~~into ~~Amended Loan Agreement provides for loans to~~ the Company ~~of up to $750~~,~~000~~ and ~~(the~~in ~~“Loan”), with a minimum initial loan of $250,000 within 60 days of~~ the ~~date~~merger ~~of the Loan Agreement, and up~~ to anchange ~~additional $500,000 within~~ the ~~first~~Company’s ~~year~~name ~~and~~to aTerra ~~half~~Inventions ~~from execution of the Amended Loan Agreement~~Corp. ~~This~~The isname ~~not~~change ~~a revolving facility, and any principal repaid by the Company~~ will ~~not~~take beeffect ~~available~~when approved for ~~additional~~trading ~~advances~~by toFINRA. On the ~~Company~~same ~~under~~date the ~~Amended Loan Agreement. The~~ Company ~~cannot,~~filed ~~without~~a ~~the~~one-for-ten ~~Lender’s~~reverse ~~consent,~~split ~~prepay all or part~~ of the ~~Loan.~~common ~~The~~stock ~~notes~~with ~~evidencing~~a change ~~the~~to ~~installments of~~ the ~~loans~~authorized ~~bear~~common ~~interest~~stock ~~payable monthly~~ in ~~arrears at~~ the ~~rate~~same ofratio ~~10%~~also ~~per~~to ~~annum,~~be ~~and~~effective ~~mature~~upon ~~and~~approval ~~are~~for ~~due~~trading ~~and~~by ~~payable three years from the date of issuance~~FINRA. ~~On December 27, 2011, Frontline assigned $250,000 of its receivable to Cameo.~~

~~Interest~~ITEM ~~expense~~2. ~~for~~Management's ~~the~~Discussion ~~three months ended April 30, 2012~~ and ~~2011,~~Analysis ~~was~~of ~~$5,624~~Financial ~~and~~Condition ~~$0, respectively. Interest expense for the nine months ended April 30, 2012~~ and ~~2011,~~Results ~~was~~of ~~$8,562 and $0, respectively~~Operations.

15Forward Looking Statements

~~Table~~This ofquarterly ~~Contents~~report contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual results are likely to differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in this section.

~~Note~~Table 9.of ~~Stockholders’~~Contents ~~Equity (Deficiency)~~-16-

OnResults ~~April~~of ~~15,~~Operations ~~2010, the Company entered into a loan agreement~~ for ~~$2,000,000 with Winsor. The entire loan amount was secured by 10,000,000 shares of~~ the ~~Company~~Three ~~common~~Months ~~stock. On~~Ended ~~April 19~~October 31, ~~2011, Winsor converted the entire $2,000,000 outstanding loan amount for the 10,000,000 collateralized common stock.~~2012

OnElectric ~~April~~Vehicle 19, 2011, Frontline partially assigned $437,309 to Kisumu S.A. (“Kisumu”) and Kisumu immediately converted the assigned note for 1,041,212 shares of Common Stock at a fair value price of $0.42 per share. On April 19, 2011, Frontline assigned $420,000 to Eurolink Corporation (“Eurolink”) and Eurolink immediately converted the assigned note for 1,000,000 shares of Common Stock at a fair value price of $0.42 per share.Operations

OnWe ~~April~~did ~~19,~~not ~~2011,~~have ~~Starglow~~any ~~Assets,~~sales ~~Inc.~~for ~~converted~~our electric vehicles during the ~~entire~~three $3months ended October 31,~~000,000~~ ~~outstanding~~2012 ~~loan~~and ~~amount~~2011. ~~for~~Our only sales during the 7three months ended October 31,~~500~~ 2011,~~000~~ were ~~collateralized~~for ~~shares~~vehicle parts which totaled $3,568.

OnWith ~~July 14, 2011,~~ the ~~Company~~licenses ~~entered into a Loan Agreement with Cameo Properties LLC. The loans under the Loan Agreement are secured by 20 million shares~~ of our ~~common~~lithium ~~stock. In~~battery and ~~the~~electric ~~event~~vehicle oftechnology adescribed ~~reverse stock split or combination of shares~~below, ~~the~~we ~~number~~are ofconcentrating ~~shares~~on ofsales ~~common stock constituting the Share Collateral will, immediately following such reverse stock split or combination~~ of ~~shares,~~our ~~be increased by a new issuance of common stock of the Company to that number of shares constituting the Share Collateral immediately prior to such reverse stock split or combination of shares~~vehicles. The certificates representing any share dividends that the Company pays during the term of the Loan with respect to the Shares being held in escrow shall be credited and delivered to the Lender and held by the Lender pursuant to the terms of the Loan Agreement.

OnSky ~~December~~Power ~~13,~~License ~~2011, by shareholder approval, the authorized shares of common stock shares were reduced from 100,000,000 to 60,000,000 shares.~~Agreement

~~Effective~~We ~~January~~entered 26into a License Agreement (“Sky Power License Agreement”) with Sky Power in April 2008, ~~2012~~providing for our license to Sky Power of our patent applications and technologies for rechargeable lithium ion batteries for hybrid vehicles and other applications (“Licensed Products”). Under the Sky Power License Agreement, we have the ~~Securities~~right to purchase our requirements of lithium ion batteries from Sky Power, and ~~Exchange~~our ~~Commission~~requirements ~~approved~~of lithium ion batteries shall be supplied by Sky Power in preference to, and on a ~~one-~~priority basis as compared with, supply and delivery arrangements in effect for~~-five~~ ~~reverse~~other ~~split~~customers of ~~the~~Sky ~~common stock~~Power. ~~Pursuant~~ toOur ~~the~~cost ~~anti-dilution~~for ~~provisions~~lithium inion ~~the~~batteries ~~Cameo~~purchased from ~~Properties~~Sky ~~loan~~Power ~~agreement~~shall be Sky Power’s actual manufacturing costs for such batteries for the ~~Company~~fiscal ~~issued~~quarter 16of Sky Power in which our purchase takes place. On May 25,~~000~~ 2010,~~000~~ ~~shares~~the Sky Power License Agreement was amended to ~~Cameo~~reflect ~~Properties~~Sky Power’s territory would be the United States, soU.S. ~~they~~possessions ~~again~~and ~~held~~territories 20only,~~00,000~~ ~~post~~and ~~reverse~~the ~~stock~~Company ~~split~~can ~~shares~~license other companies in other parts of the world.

~~Increase/Decreases~~Sky Power agreed to invest a minimum of $1,500,000 in ~~Authorized~~2008 ~~Common~~and ~~Stock~~2009, in development of the technology for the Licensed Products. To date, Sky Power has not met the minimum requirements in the development of technology, and therefore, is not in compliance with its obligations under this covenant of the license agreement. The Company has advised Sky Power that it will not give notice of default against them for their failure to comply with this covenant over the term of the License Agreement.

On ~~June~~May 2425, ~~2011,~~2010 the ~~Board~~Sky ofPower ~~Directors~~License Agreement ~~unanimously~~was ~~approved~~amended ~~an amendment~~ to limiting the ~~Articles~~license ofgranted ~~Incorporation~~ to ~~increase~~Sky ~~the~~Power ~~authorized~~to ~~number~~only ofthe ~~shares~~United ~~of common stock from 100 million shares~~States, ~~par~~permitting ~~value~~Li-ion ~~$.001~~to ~~per~~grant ~~share,~~other licenses to ~~300~~companies ~~million~~in ~~shares,~~other ~~par~~parts ~~value $.001 per share. The Company filed the amendment with the Secretary~~ of ~~State of Nevada on August 10, 2011, after mailing a Definitive Information Statement to~~ the ~~Company’s stockholders and the amendment was effective August 10, 2011~~world.

OnLithium ~~December~~Electric ~~13,~~Vehicle 2011, the Board of Directors unanimously approved an amendment to the Company’s Articles of Incorporation to increase the authorized number of shares of common stock from 300 million shares, par value $Corp.~~001~~ ~~per~~License ~~share, to 60 million shares, par value $.001 per share. The Company filed the amendment with the Secretary of State of Nevada on December 14, 2011.~~Agreement

~~Note~~Effective ~~10. Net~~May ~~Earnings~~28, 2010, the Company entered into a ten year license agreement with Lithium Electric Vehicle Corp. (~~Loss~~“LEVC”) ~~Per~~providing ~~Common~~for ~~Share~~the Company to license to LEVC certain of the Company’s patent applications and technologies for electric vehicles and other applications. The purpose of the licensee is to expand sales of the Company’s line of products by the manufacture and sale of such products in Canada, which is LEVC’s exclusive territory under the license agreement.

The ~~following~~license ~~table~~agreement ~~sets~~consists ~~forth~~of ~~the~~an annual ~~reconciliation~~fee of ~~the~~$500,000 ~~basic~~for ten years and ~~diluted~~an ~~net~~additional ~~earnings~~$1,750,000 ~~(loss)~~based ~~per~~on ~~common~~a ~~share~~valuation ~~computations~~report prepared by an independent third party. LEVC is required to pay $1 million of the license fee during year one for the ~~three~~initial ~~months~~two ~~ended~~years ~~April~~and 30$500,000 each additional year. The Company has received $732,666 from LEVC with a balance due of $267,334 as of July 31, 2012, which is now delinquent. The Company has reflected the delinquent amount due from LEVC in its accounts receivable and has ~~2011~~established a reserve for doubtful accounts for the entire amount.

	Three Months Ended						Nine Months Ended
	April 30,						April 30,
	2012			2011			2012			2011
Basic and Diluted Earnings (Loss) Per Share
Net Earnings (Loss) Ascribed to Common Shareholders - Basic and Diluted	$	(250,395	)	$	(53,957	)	$	(2,644,667	)	$	522,544
Weighted Average Shares Outstanding - Basic and Diluted		26,423,470			6,065,817			26,423,470			6,028,250
Basic and Diluted Net Earnings (Loss) Per Common Share	$	(0.01	)	$	(0.01	)	$	(0.10	)	$	0.09

The Company is still in discussions with LEVC regarding the delinquency.

16The note of $1,750,000 has been reflected on the books of the Company and due to LEVC having no assets to secure the note; the Company has recorded a reserve for doubtful accounts for the entire note amount of $1,750,000.

~~Table~~Cost of ~~Contents~~Sales

~~Net~~Cost ~~loss~~of ~~per~~sales ~~common~~as ~~share~~a percentage of net sales for the ~~nine~~three months ended ~~April~~October 3031, ~~2011~~2012, ~~has~~was ~~been~~approximately ~~revised~~0% as compared to approximately 0% during the same period in 2011. ~~All~~ Based ~~share~~on ~~and~~our ~~per~~historical ~~share~~review ~~amounts~~of ~~have~~costs, ~~been~~we ~~restated~~expect tothat ~~reflect~~cost of sales in the ~~one-for-five~~future ~~reverse~~will ~~stock~~remain ~~split~~in line on a percentage basis with our historic level of approximately 20%. As sales volumes and prices increase, costs should then reduce as ~~discussed~~a inpercentage ~~Note~~of 9sales.

~~The~~General ~~amounts~~and ~~previously~~Administrative ~~reported for the three months ended April 30, 2011, were as follows:~~Expenses

	Three Months Ended			Nine Months Ended
	April 30. 2011			April 30. 2011
Basic and Diluted Loss Per Common Share	$	(0.00	)	$	0.02
Weighted Average Number of Shares
Outstanding -Basic and Diluted		30,299,586			30,129,548

General and administrative (“SG&A”) expenses decreased to $48,320 for the three months ended October 31, 2012, as compared to $224,218 during the same period in 2011. The decrease was attributable to: (1) bad debt expense of $91,139; (2) penalties and late fees of $39,937; (3) depreciation expense of $22,434; (4) director fees of $16,000; and (5) other various expenses of $6,388. Of all SG&A expenses the Company incurred during the first quarter 2012, the majority were charges that are expected to be recurring.

~~Note~~Table ~~11.~~of ~~Share~~Contents ~~Based Compensation~~-17-

~~The~~Research ~~Company records compensation expense in its consolidated statement of operations related to employee stock-based options~~ and ~~awards~~Development ~~in accordance with FASB ASC 718, “Compensation”, and (“ASC 718”).~~Expenses

~~The~~No ~~Company~~set ~~recognizes~~amount ~~the~~has ~~cost~~been ofset aside for research and development (“R&D”), however, all ~~employee~~projects ~~stock~~and ~~options~~purchases onrequire aapproval ~~straight-line~~prior ~~attribution~~to ~~basis~~initiation. ~~over~~Salaries, ~~their~~payroll taxes, ~~respective~~and ~~contractual~~benefits ~~terms~~expensed to R&D for the three months ending October 31, ~~net~~2012, ofamounted ~~estimated~~to ~~forfeitures~~$0 and $248,806 for the three months ending October 31, 2011. ~~The~~Parts ~~Company~~and ~~has~~supplies, ~~selected~~shipping charges, and battery management systems expensed to R&D were $1,297 and $7,060 for the ~~modified~~three ~~prospective~~months ~~method~~ending ofOctober ~~transition~~31, 2012 and October 31, 2011, respectively. We expect that research and development expenses will continue to remain substantial and grow as we aggressively move to bring products to market.

~~Stock~~Interest ~~Option Plan~~Expense

AsInterest ofexpense ~~April~~decreased ~~30,~~to ~~2012~~$22,211 ~~there~~for the ~~are~~three nomonths ~~shares~~ended ofOctober ~~common~~31, ~~stock~~2011, ~~remaining~~as ~~and~~compared ~~available~~to $41,533 for ~~issuance~~2011. ~~under~~Interest ~~the~~expense ~~stock~~consists ~~option~~primarily ~~plans~~of interest related to borrowings.

~~Note~~Other ~~12.~~ Income ~~Taxes~~

~~The~~Other ~~Company~~income ~~adopted~~for the ~~provisions~~three ofmonths ~~ASC~~ended October ~~740~~31, ~~“Income Taxes” (“ASC 74”) on August 1~~2012, ~~2007.~~consisted ~~The implementation~~ of ~~ASC~~interest ~~740~~income ~~did~~from ~~not impact~~ the ~~total~~LEVC ~~amount~~Note of ~~the Company’s liabilities for uncertain tax position~~$44,535.

~~The~~Other ~~Company~~income ~~recorded~~for nothe ~~provisions~~three ~~for~~months ended October 31, 2011, consisted primarily of accounting fees and rental income ~~taxes~~from Sky Power for ~~the~~$18,431 ~~nine~~and ~~months~~interest ~~ended~~income ~~April~~from the ~~30,~~LEVC ~~2012~~Note ~~and~~of ~~2011~~$44,110.

~~Note~~Net ~~13. Commitments and Contingencies~~Loss

~~Lease~~Net ~~Agreement~~loss attributable to common stockholders for the three months ended October 31, 2012 was $39,312, as compared to $287,223 for the previous fiscal quarter. Basic and diluted loss attributable to common stockholders per share of common stock for the three months ended October 31, 2012 was $0.00 as compared to $0.01 for the previous fiscal quarter.

~~Effective~~Liquidity ~~April 16, 2008, SPS agreed to lease approximately 5,000 square feet of space in the Company’s North Carolina facility at a rental rate of $2,500 per month~~ and ~~the~~Capital monthly rental to be escalated five (5%) percent annually beginning April 16, 2009. The leased space is suitable for, and utilized by SPS for, SPS’s developmental and manufacturing operations for licensed products pursuant to the License Agreement. The leased space is leased on a month-to-month basis at a current monthly rental of $3,038. Although the lease was signed, the space is only 80% completed as of April 30, 2012.Resources

~~Total~~Since ~~rental~~our ~~income~~incorporation, ~~for~~we ~~the~~have ~~three~~financed our ~~months~~operations ~~ended~~almost ~~April~~exclusively ~~30,~~through ~~2012~~the ~~and~~sale ~~2011,~~of ~~was~~our common shares ~~$8,825~~to investors and ~~$10,656, respectively~~borrowings. We expect to finance operations through borrowings ~~Total~~and ~~rental~~the ~~income~~sale ~~for~~of equity in the ~~nine~~foreseeable ~~months~~future ~~ended~~as ~~April~~we ~~30,~~receive ~~2012~~minimal ~~and~~revenue ~~2011,~~from ~~was~~our current ~~$29,187~~business ~~and~~operations. ~~$31,694, respectively~~There is no guarantee that we will be successful in arranging financing on acceptable terms.

~~Effective~~At ~~January~~October 331, 2012, ~~ATS~~we ~~agreed~~had toliabilities of ~~lease approximately 35~~$2,~~000~~290,196, ~~square~~as ~~feet~~compared ofwith ~~space~~$3,351,316 inat ~~the~~July ~~Company’s~~31, ~~North~~2012; ~~Carolina~~and ~~facility~~working atcapital ~~a rental rate~~ of $62,~~928~~035,462 ~~per month~~ and ~~the~~stockholders' ~~monthly~~equity ~~rental~~deficiency of ~~to be escalated five (5%) percent annually beginning January 1~~$2, ~~2013~~242,403.

~~Total~~Our ~~rental~~property ~~income~~and ~~for~~equipment ~~the~~decreased ~~three~~to $5,146 ~~months~~at ~~ended~~October ~~April 30~~31, 2012 ~~and 2011~~, ~~was~~as ~~$20,784~~compared ~~and~~with $05,785 ~~respectively.~~at ~~Total~~July ~~rental income for the nine months ended April 30~~31, 2012 ~~and 2011, was $27,712 and $0, respectively~~.

17Net cash used in operating activities was $37,524 during the three months ended October 31, 2012, as compared with $434,844 in 2011. We did not have any investing activities during the three months ended October 31, 2012 and 2011.

~~Table~~During the three months ended October 31, 2012, from the issuance of ~~Contents~~a promissory note for a receivable, we advanced $0 to Sky Power and were repaid $0. During the three months ended October 31, 2012, we received net proceeds of $37,557 from the issuance of promissory notes for debt, and made repayments of $0. Total cash provided by financing activities in the three months ended October 31, 2012 was $37,557 as compared with $429,666 in 2011.

~~Management~~Liquidity ~~Agreement~~Issues

~~Effective~~The ~~January 3, 2012, the~~ Company ~~entered~~has ~~into~~substantial obligations ato ~~management~~the ~~agreement~~Internal ~~with~~Revenue ~~Advanced~~Service ~~Technology~~and ~~Services,~~other ~~Inc~~creditors. ~~(“ATS”).~~ The ~~agreement~~Company ~~stipulates that (1) ATS~~ is ~~responsible~~working ~~for~~toward ~~the~~a ~~supervision~~payment ofplan ~~all~~with ~~persons who perform compensated services on behalf of~~ the ~~Company.~~Internal Revenue ~~Except~~Service (IRS) for ~~the~~delinquent ~~Company’s~~payroll ~~President~~taxes, and ~~Director,~~have ~~all~~a ~~such~~plan ~~persons~~in ~~shall~~place bewith ~~employees~~one ~~and independent contractors~~ of ~~ATS~~two ~~and~~judgment ~~not of the Company~~creditors. ~~(2)~~ ~~ATS~~There ~~will~~is ~~establish~~no ~~and~~assurance that ~~maintain~~we ~~one or more bank accounts and~~ will ~~follow~~be ~~the~~able ~~same~~raise ~~internal~~additional ~~operating~~required ~~procedures~~capital ~~regarding~~to ~~expense~~meet ~~authorization~~obligations ~~and~~arising ~~check~~from ~~writing~~the ~~procedures.~~settlements ~~(3) Maintenance~~ of ~~accurate,~~these ~~complete,~~obligations and litigation ~~separate financial records~~matters, ~~kept~~as inwell ~~accordance~~as ~~with generally accepted accounting principles. (4) Neither party shall be liable to~~ the ~~other~~settlement ~~party~~payments orwith ~~to third parties for~~ the ~~acts or omissions of the other party. . In recognition for its services~~IRS, ~~ATS~~and ~~will~~continue ~~receive a 10% management fee based upon all expenditures for the month~~operations.

~~Total~~Table ~~management~~of ~~fee~~Contents expense for the three months ended April 30, 2012 and 2011, was $20,498 and $0, respectively. Total management fee expense for the nine months ended April 30, 2012 and 2011, was $23,522 and $0, respectively.-18-

~~Surety~~Our ~~Bond~~current operating funds are less than necessary for commercialization of our planned products, and therefore we will need to obtain additional financing in order to complete our business plan. We anticipate that up to $2,000,000 of additional working capital will be required over the next 12 months for market introduction of these products through joint venture partners or otherwise. We do not have sufficient cash on hand to meet these anticipated obligations, which are in addition to payments we will owe to judgment creditors and the IRS.

~~The~~We ~~Company~~do ~~renewed~~not ~~the~~currently have ~~manufacturing~~any ~~license~~additional ~~with~~arrangements ~~the~~for ~~North Carolina Department of Motor Vehicles. This license requires a surety bond of $50~~financing,~~000~~ ~~for~~and ~~three~~we ~~years~~may ~~which~~not ~~the~~be ~~Company~~able ~~acquired~~to ~~from~~find ~~Kaercher~~such ~~Campbell~~financing &if ~~Associates and is effective through February 18, 2012~~required. ~~The~~Obtaining ~~Company~~additional financing iswould ~~licensed~~be assubject ~~a motor vehicle dealer~~ to ~~engage~~a innumber ~~the business~~ of ~~selling~~factors, ~~motor~~including ~~vehicles~~investor ~~by the State of North Carolina DMV~~sentiment. ~~The~~ ~~Company's~~Market ~~license~~factors ~~was~~may ~~effective~~make ~~through~~the ~~March~~timing, 31amount, ~~2012.~~terms or ~~The~~conditions ~~bond~~of ~~was~~additional ~~not~~financing ~~renewed~~unavailable ~~and subsequently lapsed. The Company is currently seeking~~ to ~~have another bond in place by end of the 2012 the fiscal year~~us.

~~Legal~~ Critical ~~Proceedings~~Accounting Issues

The Company’s issignificant ~~currently~~accounting policies ~~involved~~are summarized in ~~various~~Note ~~claims~~1 ~~and~~of ~~legal~~the ~~proceedings.~~Company’s ~~Quarterly,~~Annual ~~the~~Report ~~Company~~on ~~reviews~~Form 10-K for the ~~status~~year ofended ~~each~~July ~~significant~~31, ~~matter~~2012. ~~and~~There ~~assesses~~were no ~~its~~significant ~~potential~~changes ~~financial~~to ~~exposure~~these ~~and~~accounting ifpolicies during the ~~potential~~three ~~loss~~months ~~from~~ended ~~any~~October ~~claim~~31, or2012, ~~legal~~and ~~proceeding~~the isCompany ~~considered~~does ~~probable~~not ~~and~~expect that the ~~amount~~adoption ~~can~~of beother ~~reasonably~~recent ~~estimated,~~accounting ~~the~~pronouncements ~~Company~~will ~~accrues~~have a ~~liability~~material ~~for~~impact ~~the~~on ~~estimated~~its ~~loss~~financial statements.

~~Caudle~~Item ~~& Spears has obtained a default judgment against the Company in Mecklenberg County, North Carolina, General Court, in the amount of $17,686~~3. ~~This~~Quantitative ~~law firm represented us in our litigation against Martin Koebler, a former employee, whom we successfully sued for return of Company property~~ and ~~other~~Qualitative ~~damages.~~Disclosures ~~The~~About ~~Company~~Market ~~is in settlement negotiations with Caudle & Spears, since its judgment against Martin Koebler is still in the collection process~~Risk. ~~A payment agreement has been reached in the amount of $2,500 per month with no interest until paid. The Company is not current with its payment arrangements and has a balance of $4,263 still due.~~

~~Internal~~ Interest ~~Revenue~~Rate ~~Service~~Risk ~~(“IRS”)~~- ~~served~~Interest ~~the~~rate ~~Company~~risk ~~with~~refers ato fluctuations ~~tax~~in ~~lien~~the ~~dated~~value ~~March~~of 3,a ~~2010~~security resulting from changes in the ~~total~~general ~~amount~~level of ~~$251,928~~interest rates. ~~Third~~Investments ~~quarter~~that ~~2009 taxes~~ are ~~approximately~~classified as ~~$117,000,~~cash ~~which~~and ~~are~~cash ~~included~~equivalents inhave ~~total~~original ~~due. The~~maturities ~~Company~~of ~~has~~three ~~been~~months ~~served~~or ~~with~~less. anOur ~~additional~~interest ~~tax~~income ~~lien~~is ~~dated~~sensitive ~~January~~to ~~19,~~changes ~~2011,~~ in the general ~~amount~~level of ~~$2,925~~ U.S. ~~The~~interest ~~Company~~rates. We ~~had~~do anot ~~payment~~have ~~plan~~significant inshort-term ~~place~~investments, ~~with~~and ~~IRS,~~due ~~however,~~to the ~~Company~~short-term ~~is four months in arrears in payments for a total~~ nature of ~~$10~~our investments,~~000~~ ~~due~~we atbelieve ~~April~~that ~~30,~~there ~~2012. Management~~ is ~~working~~not ~~with~~a ~~the~~material ~~local~~risk ~~IRS office to try and revise the payment agreement~~exposure. ~~The~~Our ~~balance~~debt ~~due~~is onat ~~the~~fixed ~~most~~interest ~~recent statement from the IRS is $525,130~~rates.

~~Tallman~~Credit ~~Hudders~~Risk &- ~~Sorrentino~~Our ~~has~~accounts ~~obtained~~receivables are asubject, ~~judgment~~ in ~~Lehigh~~the ~~County,~~normal ~~Pennsylvania,~~course ~~on behalf~~ of ~~their client Javad Hajihadian~~business, ~~an individual. Mr. Hajihadian had ordered and paid for, the first super car~~ to becollection ~~produced by Li-ion Motors in November 2008~~risks. ~~The~~We ~~car~~regularly ~~was~~assess inthese ~~the~~risks ~~design stage when it was ordered. Mr. Hajihadian’s attorney subsequently contacted the Company to cancel his contract~~ and have ~~his~~established ~~payment~~policies and ~~refunded.~~business ~~The~~practices ~~parties~~to ~~had~~protect ~~reached~~against ~~a settlement agreement and~~ the ~~payment~~adverse ~~was~~effects ~~being refunded with interest. The settlement agreement was for $102,500 and stipulated monthly payments~~ of ~~$10,250~~collection ~~commencing in July 2010~~risks. ~~Payments~~ ~~were~~As ~~made through November 2010, totaling $51,250, leaving~~ a ~~balance~~result ofwe ~~five~~do ~~payments~~not oranticipate ~~$51,250~~any ~~still~~material losses due; which is reflected on the Company’s balance sheet under current liabilities. The Company became delinquent and Mr. Hajihadian proceeded with litigation and on February 4, 2011, a judgment was issued in ~~his~~this ~~favor for $51,750~~area. ~~Management was deposed December 2011, and produced requested documents and information.~~

~~The~~Item ~~Company’s facility in Mooresville North Carolina is financed through Bayview~~4. ~~The~~Controls ~~Company became delinquent with the mortgage payments~~ and ~~Bayview filed Foreclosure in Superior Court of Iredell County North Carolina~~Procedures. The hearing was March 13, 2012, and the attorneys for the Company attended the hearing to request a forbearance period so a repayment schedule might be effected. Bayview opposed the extension; due to prior extensions granted and previous times Bayview renegotiated the interest and reduced the rate. The Clerk of the Court granted 42 days, and a new hearing is set for April 24, 2012. Bayview granted a forbearance , a payment schedule was provided and the Company made the first payment. Since the first payment was made, there was no hearing in April. The Company is now in default.

~~Two~~As ~~creditors~~of the end of the fiscal quarter covered by this Form 10-Q, the Company carried out an ~~individual~~evaluation, under the supervision and awith ~~corporation~~the participation of the Company’s management, ~~have~~including ~~received~~the ~~judgments~~Company’s ~~against~~Chief Executive Officer and Principal Financial and Accounting Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rule 13a-14 of the ~~amount~~Securities Exchange Act of $51934. Based upon that evaluation,~~160~~ the Chief Executive Officer and Principal ~~$110~~Financial and Accounting Officer concluded that the Company’s disclosure controls and procedures were not effective in timely alerting her to material information relating to the Company (including its consolidated subsidiaries) required to be included in this Quarterly Report on Form 10-Q. There have been no changes in the Company’s internal controls over financial reporting during the Company’s last fiscal quarter that have materially affected,~~000~~ or are reasonably likely to materially affect, ~~respectively~~the Company’s internal control over financial reporting.

18PART II. OTHER INFORMATION

~~Table~~ITEM of1. ~~Contents~~Legal Proceedings.

~~ITEM~~ Other 2.than as ~~Management's~~described ~~Discussion~~below, ~~and~~we ~~Analysis~~are ofnot ~~Financial~~a ~~Condition~~party to any material legal proceedings and ~~Results~~to ofour ~~Operations~~knowledge, no such proceedings are threatened or contemplated.

~~Forward~~Caudle ~~Looking~~& ~~Statements~~Spears v. EV Innovations, Inc.

~~This~~Caudle ~~quarterly~~& ~~report~~Spears ~~contains~~has ~~forward-looking statements~~obtained ~~that~~a ~~involve~~default judgment ~~risks~~against ~~and~~the ~~uncertainties. We~~Company ~~use~~in ~~words~~Mecklenberg ~~such~~County, asNorth ~~anticipate~~Carolina, ~~believe~~General Court, ~~plan~~in the amount of $17,686. ~~expect~~This law firm represented us in our litigation against Martin Koebler, ~~future~~a former employee, ~~intend~~whom ~~and~~we ~~similar~~successfully ~~expressions~~sued tofor ~~identify~~return ~~such~~of ~~forward-looking statements~~Company property and other damages. ~~You~~The ~~should~~Company ~~not~~is ~~place~~in ~~too~~settlement ~~much reliance on~~negotiations ~~these forward-looking statements. Our~~with ~~actual~~Caudle ~~results~~& ~~are~~Spears, ~~likely~~since toits ~~differ materially~~judgment ~~from~~against ~~those anticipated~~Martin Koebler is still in ~~these~~the ~~forward-looking statements for~~collection ~~many reasons~~process. A payment agreement has been reached in the amount of $2,500 per month with no interest until paid. ~~including~~The Company ~~the~~is ~~risks~~not ~~faced~~current bywith usits ~~described~~payment inarrangements ~~this~~and ~~section~~has a balance of $4,263 still due.

~~Results~~Table of ~~Operations~~Contents ~~for the Three and Nine months Ended April 30, 2012~~-19-

~~Electric~~Internal ~~Vehicle~~Revenue ~~Operations~~Service

WeInternal ~~had~~Revenue ~~negative~~Service ~~sales~~(“IRS”) served ofthe ~~our~~Company ~~electric~~with ~~powered~~a ~~vehicles~~tax ~~for~~lien ~~the~~dated ~~three~~March ~~months~~3, ~~ended~~2010 ~~April~~in ~~30,~~the ~~2012~~total amount of $~~217~~251,~~000~~928. ~~due~~Third toquarter a2009 ~~return~~taxes ofare ~~merchandise~~approximately $117,000, which ~~took~~are ~~place~~included ~~during~~in ~~the~~total due. The Company’s ~~second~~has ~~quarter~~been served with ~~Frontline~~an ~~Asset~~additional ~~Management. For~~tax ~~the~~lien ~~three~~dated ~~months~~January ~~ended April 30~~19, 2011, wein ~~had~~the amount of $02,925. inThe ~~sales~~Company ofhad ~~our~~a ~~electric~~payment ~~powered~~plan ~~vehicles. Vehicle~~in ~~parts~~place ~~sold~~with ~~during~~IRS; however, the ~~three~~Company ~~months~~is ~~ended~~arrears ~~April~~in 30payments as of July 31, 2012. ~~and~~Management ~~2011~~is ~~were~~working $0with the local IRS office to try and revise the payment agreement. The balance due on the most recent statement from the IRS is $2566,~~041, respectively~~071.

~~Sales~~Javad of our electric powered vehicles for the nine months ended April 30, 2012 and 2011 were $255,000 and $0, respectively. Vehicle parts sold during the nine months ended April 30, 2012 and 2011 were $4,696 and $6,513, respectively.Hajihadian

WeTallman ~~convert~~Hudders ~~and~~& ~~manufacture~~Sorrentino ~~vehicles~~has obtained a judgment in ~~our~~Lehigh ~~developmental~~County, ~~facility~~Pennsylvania, inon ~~Mooresville~~behalf of their client Javad Hajihadian, ~~North~~an ~~Carolina~~individual. Mr. ~~This~~Hajihadian had 40ordered and paid for,~~000~~ ~~square~~the ~~foot~~first ~~facility~~super ~~has~~car ~~office~~to ~~space,~~be produced by Li-ion Motors in November 2008. The car was in the design stage when it was ordered. ~~room~~Mr. Hajihadian’s attorney subsequently contacted the Company to cancel his contract and have his payment refunded. The parties had reached a settlement agreement and the payment was being refunded with interest. The settlement agreement was for ~~manufacturing~~$102,500 ~~conversions~~and stipulated monthly payments of $10,250 ~~storage~~commencing ~~and~~in July 2010. Payments were made through November 2010, totaling $51,250, leaving a ~~battery~~balance ~~lab~~of ~~that~~five payments or $51,250 still due; which is ~~leased~~reflected on tothe ~~Sky~~Company’s ~~Power,~~balance sheet under current liabilities. The Company became delinquent and Mr. Hajihadian proceeded with litigation ~~the~~and ~~potential~~on ~~for~~February ~~future~~4, ~~growth~~2011, ~~enabling~~a usjudgment towas ~~work~~issued onin ~~many~~his ~~projects~~favor for $51,750. Management was deposed December 2011, and ~~vehicles~~produced ~~concurrently~~requested documents and information.

~~With~~ Bayview ~~the~~Loan ~~licenses of our lithium battery and electric vehicle technology described below~~Servicing, we are concentrating on sales of our vehicles. Several nationwide newspaper advertising campaigns generated some orders for our vehicles, and an increase in inquiries about our electric vehicle products.LLC

~~Sky~~The ~~Power~~Company’s ~~License~~facility ~~Agreement~~in Mooresville North Carolina was financed through Bayview Loan Servicing, LLC (“Bayview”) secured by a first lien on the Company’s property located at 158 Rolling Hill Road in Mooresville. Frontline Asset Management, Inc. (“Frontline”) holds a note in the amount of $2,000,000 (current balance due of $508,492) secured by a second lien on the property.. On July 12, 2012, Bayview refiled a notice of hearing on foreclosure on its deed of trust and security agreement for a hearing on August 21, 2012, the outstanding amount of the loan at July 31, 2012 being $946,279. A similar notice of foreclosure pursuant to the Frontline deed of trust was filed by the Trustee with the same court on July 25, 2012, noticing a hearing for August 22, 2012, with an amended notice of default, the amount of $508,492 being outstanding under the loan as of July 31, 2012. The Trustee for Frontline also filed in Superior Court of Iredell County North Carolina on July 25, 2012, a notice of foreclosure and sale to take place on August 22, 2012. The Trustee under the Bayview deed of trust on August 21, 2012, filed its notice of foreclosure and sale to take place on September 18, 2012, of the real and personal property securing the deed of trust. On September 14, 2012, the sale of the property pursuant to the Frontline August 22, 2012 foreclosure and sale was completed, and Frontline assigned its rights to its foreclosure bid to A&S Holdings Inc., subject to the rights of Bayview, as the holder of the first mortgage on the property.

We FINE entered into a License Agreement (“Sky Power License Agreement”) with Sky Power in April 2008, providing for our license to Sky Power of our patent applications and technologies for rechargeable lithium ion batteries for hybrid vehicles and other applications (“Licensed Products”). Under the Sky Power License Agreement, we have the right to purchase our requirements of lithium ion batteries from Sky Power, and our requirements of lithium ion batteries shall be supplied by Sky Power in preference to, and on a priority basis as compared with, supply and delivery arrangements in effect for other customers of Sky Power. Our cost for lithium ion batteries purchased from Sky Power shall be Sky Power’s actual manufacturing costs for such batteries for the fiscal quarter of Sky Power in which our purchase takes place. On May 25, 2010, the Sky Power License Agreement was amended to reflect Sky Power’s territory would be the United States, U.S. possessions and territories only, and the Company can license other companies in other parts of the world. Mobile

~~Sky~~Fine ~~Power~~Mobile ~~agreed~~and toLi-ion ~~invest~~Motors entered into a ~~minimum~~confession of ~~$1,500,000~~judgment in ~~2008~~relation ~~and~~to ~~2009,~~the inX-Prize ~~development~~winnings. The parties agreed to a payment arrangement of ~~the~~$10,000 per ~~technology~~month for ~~the~~a ~~Licensed~~period ~~Products~~of eight (8) months., If Toa ~~date~~default were to occur, ~~Sky~~the ~~Power~~debtor ~~has~~would ~~not~~then ~~met~~be ~~the~~entitled ~~minimum~~to ~~requirements~~exercise confession of judgment in the ~~development~~amount of ~~technology~~$120,000 ~~and~~without ~~therefore,~~further isdelay. The ~~not~~initial inpayment ~~compliance~~was ~~with~~wired ~~its~~on ~~obligations~~December ~~under~~15, 2011; ~~this~~however, ~~covenant of~~ the ~~license~~Company ~~agreement. The~~was ~~Company~~unable ~~has~~to ~~advised~~make ~~Sky~~any ~~Power~~additional ~~that~~payments. On itJune ~~will~~18, ~~not~~2012 ~~give~~Fine ~~notice~~Mobile ofexecuted ~~default~~the ~~against~~judgment with ~~them~~the ~~for~~Iredell ~~their~~County ~~failure~~Sheriff’s toOffice ~~comply~~and ~~with~~on ~~this~~July ~~covenant~~2, ~~over~~2012, the ~~term~~Sherriff took possession of the ~~License~~building ~~Agreement~~located at 158 Rolling Hill Road, Mooresville, NC, seizing all remaining assets.

~~Lithium~~Table ~~Electric~~of ~~Vehicle~~Contents ~~Corp. License Agreement~~-20-

~~Effective~~ITEM ~~May 28, 2010, the Company entered into a ten year license agreement with Lithium Electric Vehicle Corp~~6. (“LEVC”) providing for the Company to license to LEVC certain of the Company’s patent applications and technologies for electric vehicles and other applications. The purpose of the licensee is to expand sales of the Company’s current line of products by the manufacture and sale of such products in Canada, which is LEVC’s exclusive territory under the license agreement.Exhibits

31		Certification of Chief Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes- Oxley Act of 2002, filed herewith.

32		Certification of Chief Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XRL Taxonomy Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Label Linkbase Document

101.PRE		XBRL Taxonomy Presentation Linkbase Document

~~Table~~The XBRL related information in Exhibits 101 to this Quarterly Report on Form 10-Q shall not be deemed “filed” or a part of ~~Contents~~a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, and is not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of those sections.

~~The~~Table ~~license agreement consists~~ of anContents annual fee of $500,000 for ten years and an additional $1,750,000 based on a valuation report prepared by an independent third party. LEVC is required to pay $1 million of the license fee during year one for the initial two years and $500,000 each additional year. The Company has received $732,666 from LEVC with a balance due of $267,334 as of April 30, 2012, which is now delinquent. The Company has reflected the delinquent amount due from LEVC in its accounts receivable and has established a reserve for doubtful accounts for the entire amount. The Company has recorded the amount received and the receivable as deferred revenue and has amortized the license fee income ratably over the life of the agreement.-21-

~~Cost of Sales~~SIGNATURES

~~Cost~~In accordance with Section 13 ofor ~~sales~~15(d) ~~as a percentage~~ of ~~net vehicle sales for~~ the ~~three months ended April 30~~Exchange Act, ~~2012 was a negative 17% (due to~~ the ~~reversal of the second quarter sale) as compared to approximately 29% during the same period in 2011.~~ ~~Cost~~registrant caused ofthis ~~sales~~report ~~as a percentage of net vehicle sales for the nine months ended April 30, 2012 was 85% compared~~ to ~~approximately~~be ~~265%~~signed ~~during the same period in 2011. Based~~ on ~~our~~its ~~historical~~behalf by ~~review of costs, we expect that cost of sales in~~ the ~~future will remain in line on a percentage basis with our historic level of approximately 20%. As sales volumes and prices increase~~undersigned, ~~costs~~thereunto ~~should then reduce as a percentage of sales~~duly authorized.

General and Administrative Expenses

	Li-ion Motors Corp.

Date: December 17, 2012	By:	/s/ Stacey Fling
		Stacey Fling
		Chief Executive Officer and Principal Financial Officer

~~General~~ In accordance with ~~and administrative (“SG&A”) expenses decreased to $82,334 for~~ the ~~three months ended April 30~~ Securities Exchange Act, ~~2012,~~this asreport ~~compared~~has tobeen ~~$420,563~~signed below by ~~during~~ the ~~same~~following ~~period~~persons inon ~~2011.~~behalf ~~The~~of ~~decrease was attributable to~~ the ~~reduction~~registrant ofand ~~expenditures~~ in ~~(1)~~the ~~financing related activities of $122,529; (2) bad debt expense of $65,764; (3) advertising of $61,456; (4) professional fees of $57,746; (5) directors fees of $14,000; (6) travel of $12,528; (7)~~ capacities and ~~other~~on ~~various~~the ~~expenses~~dates ~~of $4,206~~indicated.

SG&A expenses increased to $2,702,993 for the nine months ended April 30, 2012, as compared to $1,302,933 during the same period in 2011. The increase was attributable to an additional expenditure of bad debt of $2,194,898, which was offset with reduction in: (1) advertising and marketing expense of $380,928; (2) professional fees of $177,366; (3) financing related activities of $97,529; (4) travel related expenses of $66,254; (5) insurance expense of $27,504; (6) warranty expense of $20,139; and (7) other various expenses of $25,118.


By:	/s/ Stacey Fling
	Stacey Fling
	President
	(President, Chief Executive Officer
	Principal Financial Officer and Director)

Date: December 17, 2012

OfTable ~~all SG&A expenses the Company incurred during the first nine months~~ of ~~2012,~~Contents ~~the majority were charges that are expected to be recurring.~~-22-

~~Research~~Exhibit ~~and Development Expenses~~31 CERTIFICATION

~~No set amount has been set aside for research and development (“R&D”)~~I, ~~however,~~Stacey ~~all projects and purchases require approval prior to initiation. Salaries~~Fling, ~~payroll~~certify taxes, and benefits expensed to R&D for the three months ended April 30, 2012 and April 30, 2011, amounted to $71,719 and $227,922, respectively. Parts and supplies expensed to R&D was $2,267 and $10,369 for the three months ended April 30, 2012 and 2011, respectively. Shipping charges, battery management systems, and motor development costs were $0 and a credit of $623, for the three months ended April 30, 2012 and 2011, respectively. Costs associated with building two prototypes of our electric powered vehicles during the third quarter 2011 were reclassed to the Company’s vehicle inventory created a credit of $319,380 to R&D.that:

~~Salaries, payroll taxes, and benefits expensed to R&D for the nine months ended April 30, 2012 and April 30, 2011, amounted to $475,969 and $870,788, respectively~~1. ~~Parts~~ ~~and~~I ~~supplies~~have ~~expensed~~reviewed tothis ~~R&D~~quarterly ~~was~~report ~~$9,668~~on ~~and~~Form ~~$29,328 for~~10-Q ~~the~~of ~~nine~~Li-ion ~~months~~Motor ~~ended April 30, 2012 and 2011, respectively~~s Corp. ~~Shipping charges, battery management systems, and motor development costs were $0and $47,377, for the nine months ended April 30, 2012 and 2011, respectively.~~;

We2. ~~expect~~Based ~~that~~on ~~research~~my ~~and~~knowledge, ~~development~~this ~~expenses~~report ~~will~~does ~~continue~~not tocontain ~~remain~~any ~~substantial~~untrue ~~and~~statement ~~grow~~of a asmaterial wefact ~~aggressively~~or ~~move~~omit to ~~bring~~state ~~products~~a material fact necessary to ~~market~~make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

~~Interest~~3. ~~Expense~~Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

~~Interest~~4. ~~expense~~The ~~decreased~~registrant to's ~~$34,220~~other ~~for~~certifying ~~the~~officers ~~three~~and ~~months~~I ~~ended~~are ~~April~~responsible ~~30, 2012 as compared to $105,505~~ for establishing ~~2011,~~ and ~~$108,062~~maintaining ~~for~~disclosure ~~the~~controls ~~nine~~and ~~months~~procedures ~~ended~~(as ~~April~~defined ~~30,~~in ~~2012~~Exchange asAct ~~compared~~Rules to13a-15(e) ~~$408,226~~and ~~for~~15d-15(e)) and ~~2011~~internal ~~due~~control toover ~~the~~financial ~~reduction~~reporting of(as ~~the~~defined ~~Company’s~~in ~~debt.~~Exchange ~~Interest~~Act ~~expense~~Rules ~~consists~~13a-15(f) ~~primarily~~and of15d-15(f))for ~~interest~~the ~~related~~registrant and ~~to borrowings.~~have:

20a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

~~Table~~b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of ~~Contents~~financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

~~Other~~c. ~~Income~~evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

~~Effective~~d. ~~April~~disclosed ~~16,~~in ~~2008,~~this ~~Sky~~report ~~Power~~any ~~agreed~~change ~~to lease approximately 5,000 square feet of space (“Leased Space”)~~ in ~~our~~the ~~North~~registrant's ~~Carolina~~internal ~~facility,~~control over ~~such~~financial ~~Leased~~reporting ~~Space~~that tooccurred beduring ~~suitable~~the ~~for,~~registrant's ~~and~~most ~~utilized~~recent byfiscal ~~Sky~~quarter ~~Power~~(the ~~for, Sky Power’~~registrant's ~~developmental~~fourth ~~and~~quarter ~~manufacturing~~in the ~~operations~~case ~~for~~of ~~Licensed~~an ~~Products~~annual ~~pursuant~~report) tothat ~~the~~has ~~License~~materially ~~Agreement. The~~affected, ~~Leased~~or ~~Space~~ is ~~leased~~reasonably onlikely ~~a month-~~to~~-month~~ ~~basis~~materially ~~at a monthly rental of $3~~affect,~~038~~ the ~~monthly~~registrant's internal ~~rental~~control toover befinancial ~~escalated~~reporting; ~~five (5%) percent annually.~~and

~~Effective~~5. ~~January~~The 3,registrant’s ~~2012,~~other ~~Advanced~~certifying ~~Technology~~officer(s) ~~Services,~~and ~~Inc.~~I ~~agreed~~have todisclosed, based ~~lease~~on ~~approximately~~our ~~35,000~~most ~~square~~recent ~~feet~~evaluation of ~~space~~internal incontrol ~~the~~over ~~Company’s~~financial ~~North~~reporting, ~~Carolina~~to ~~facility~~the atregistrant's aauditors ~~rental rate of $6,928 per month~~ and the ~~monthly~~audit committee ~~rental~~of tothe beregistrant's ~~escalated~~board ~~five~~of directors (~~5%)~~or ~~percent~~persons ~~annually~~performing ~~beginning~~the ~~January~~equivalent ~~1, 2013.~~functions):

~~Other~~a. ~~income~~all ~~for~~significant ~~the~~deficiencies ~~three~~and ~~months~~material ~~ended~~weaknesses ~~April~~in ~~30,~~the ~~2012~~design ~~consists~~or operation of ~~(1)~~internal ~~accounting~~control ~~fees~~over ~~and~~financial ~~rental~~reporting ~~income~~which ~~from~~are ~~Sky~~reasonably ~~Power~~likely ~~for~~to ~~$16,325;~~adversely ~~(2)~~affect ~~rental~~the ~~income~~registrant's ability ~~from~~to ~~Advanced Tech of $20~~record,~~784;~~ ~~(3) interest income from the LEVC note of $43~~process,~~151;~~ ~~(4)~~summarize ~~reclassification of loss on disposal of property~~ and ~~equipment~~report offinancial ~~$9,376~~information; and ~~(5) various other income of $130. Other income was reduced by $164 for foreign exchange transactional expense .~~

~~Other~~b. ~~income~~any ~~for~~fraud, ~~the~~whether ~~three~~or ~~months~~not ~~ended April 30~~material, ~~2011~~that ~~consists~~involves ~~of:~~management ~~(1)~~or ~~accounting~~other employees ~~fees~~who ~~and~~have ~~rental~~a ~~income~~significant ~~from~~role ~~Sky~~in ~~Power for $18,156; (2) interest income from~~ the ~~LEVC~~registrant's ~~Note~~internal ofcontrol ~~$74,315;~~over ~~(3)~~financial ~~recognition of fixed assets of $10,656; and (5) recycling of scrap metal for $15; and (6) $386 for foreign exchange transactional expense~~reporting.

~~Other~~December ~~income for the nine months ended April 30~~17, 2012 ~~consists~~By: of/s/ ~~(1)~~Stacey accounting fees and rental income from Sky Power for $51,687; (2) rental income from Advanced Tech of $27,712; (3) interest income from the LEVC note of $131,370; (4) forfeiture of customer deposit of $30,000; and (5) various other income of $130. Other income was reduced by $254 for foreign exchange transactional expense .Fling

Other income for the nine months ended April 30, 2011 consists of (1) accounting fees and rental income from Sky Power for $54,194; (2) interest income from the LEVC Note of $74,315; (3) receipt of net proceeds of $2,425,272 from XPrize; (4) forgiveness of debt of $111,321; (5) recognition of fixed assets of $10,656; and (6) recycling of scrap metal for $630 . Other income was reduced by $19,882 for foreign exchange transactional expense.-----------------------------

~~Net~~Stacey ~~Earnings~~Fling, ~~(Loss)~~President

~~Net~~(Principal ~~loss~~Executive ~~attributable to common stockholders for the three months ended April 30, 2012 was $241,019 compared to $53,957 for the previous fiscal quarter. Basic~~ and ~~diluted~~Financial ~~loss attributable to common stockholders per share of common stock for the three months ended April 30, 2012 was $0.01 as compared to $0.01 for the previous fiscal quarter.~~Officer)

~~Net~~Table ~~earnings attributable to common stockholders for the nine months ended April 30, 2012 was $2,644,667 compared to net earnings~~ of ~~$522,544~~Contents for the previous fiscal quarter. Basic and diluted loss attributable to common stockholders per share of common stock for the nine months ended April 30, 2012 was $0.10 as compared to a gain of $0.09 for the previous fiscal quarter.-23-

~~Liquidity~~EXHIBIT ~~and Capital Resources~~32

~~Since~~CERTIFICATION ~~our~~PURSUANT ~~incorporation,~~TO we18 ~~have financed our operations almost exclusively through the sale of our common shares to investors and borrowings~~U. ~~We expect to finance operations through borrowings and the sale of equity in the foreseeable future as we receive minimal revenue from our current business operations~~S.C. ~~There~~SECTION is1350 noAS ~~guarantee~~ADOPTED PURSUANT ~~that~~TO ~~we will be successful in arranging financing on acceptable terms.~~SECTION

At906 ~~April~~OF ~~30,~~THE ~~2012,~~SARBANES-OXLEY weACT ~~had~~OF ~~liabilities of $4,727,825, as compared with $4,292,604 at July 31, 2011; and working capital deficiency of $2,266,225 and stockholders' equity deficiency of $2,587,712.~~2002

~~Our~~In ~~property,~~connection ~~plant~~with ~~and~~the ~~equipment~~Quarterly ~~decreased~~Report toof ~~$1,804,119~~Li-ion atMotors ~~April~~Corp. (the 30“Company”) on Form 10-Q for the quarter ended October 31, 2012, as ~~compared~~filed with $1the Securities and Exchange Commission on the date hereof (the “Report”),~~983~~ I,~~739~~ atStacey ~~July~~Fling, 31Chief Executive Officer and Principal Financial Officer of the Company, ~~2011~~certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

~~Net~~(1) ~~cash~~The ~~used~~Report infully ~~operating~~complies ~~activities~~with ~~was $492,588 during~~ the requirements ~~nine~~of ~~months~~section ~~ended~~13(a) ~~April~~or ~~30,~~15(d) ~~2012,~~of ~~as compared with $752,956 in 2011, and cash used in investing activities during~~ the ~~nine~~Securities ~~months~~Exchange ~~ended~~Act ~~April~~of ~~30,~~1934; ~~2012, was $0, as compared to $140,704 during the same period in 2011.~~and

21(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

~~Table~~/s/ ofStacey ~~Contents~~Fling

During the nine months ended April 30, 2012, from the issuance of a promissory note for a receivable, we advanced $71,364 to Sky Power and were repaid $22,991. During the nine months ended April 30, 2012, we received net proceeds of $575,555 from the issuance of promissory notes for debt, and made repayments of $39,978 . Total cash provided by financing activities for the nine months ended April 30, 2012 was $487,204 as compared with $892,015 in 2011.----------------------

OnStacey May 5, 2008, the Company entered into a loan agreement with Crystal Capital Ventures Inc. and on October 1, 2010, the loan was assigned to Starglow Asset, Inc. (“Starglow”). The loan agreement provided for loans to the Company of up to $3,000,000, with a minimum initial loan of $500,000 taking place on May 19, 2008. The loan bore an interest payable monthly in arrears at the rate of 10% per annum, and initially matured on May 4, 2012. The loan under the loan agreement was secured by shares of the Company’s common stock held by Starglow. The Company was required to issue shares as collateral at the rate of two and one half shares of the Company’s common stock for each dollar principal amount of the loan advanced to the Company. Following disbursement of the first $1,000,000 of funds pursuant to the loan agreement, on May 27, 2008, the Company issued 2,500,000 shares of common stock as collateral. After the 1:3 reverse stock split in February 2009 the Company issued an additional 5,000,000 shares to make their shares held as collateral total 7,500,000. Pursuant to the anti-dilution provisions in the loan agreement with the 1:2 reverse stock split of February 1, 2010, the Company issued 3,749,999 shares to again increase their holdings to 7,500,000 post reverse stock split shares. In connection with the Company's 20% stock dividend, the Company issued an additional 1,500,000 common shares to be held as collateral.Fling

OnChief ~~April~~Executive ~~19,~~Officer ~~2011, Starglow converted the entire $3,000,000 outstanding loan amount for the 7,500,000 collateralized shares~~ and the Company issued a Stock Purchase Warrant (“Starglow Warrant”) which entitles Starglow, for a three-year period, to purchase at a purchase price of $.001 per share, on a one time basis and only following the effectiveness of the first reverse split of the Company’s common stock following the issuance of the Starglow Warrant , such number of shares of common stock as is equal to the difference between 7,500,000 and the number of shares into which such 7,500,000 shares were changed in such first reverse split, the effect of the Starglow Warrant being to protect Starglow from any dilution to its 7,500,000 share holding resulting from such first reverse split.

OnPrincipal ~~February~~Financial 26, 2010, the Company entered into a loan agreement with Frontline. The loan provides for payments to the Company of $2,000,000 with interest at a fixed annual rate of 12%. On March 1, 2012, an Addendum to the original Promissory Note, dated February 26, 2010, was entered into which amended the term of the note to provide for interest only payments, due on the last day of every month until maturity date March 30, 2013, when all principal and accrued interest shall be due and payable. On April 11, 2011, Frontline assigned $850,279 of its debt to Winsor Capital, Inc. (“Winsor”). On April 19, 2011, Frontline partially assigned $437,309 to Kisumu S.A. (“Kisumu”) and Kisumu immediately converted the assigned note for 1,041,212 shares of Common Stock at a fair value price of $0.42 per share. On April 19, 2011, Frontline assigned $420,000 to Eurolink Corporation (“Eurolink”) and Eurolink immediately converted the assigned note for 1,000,000 shares of Common Stock at a fair value price of $0.42 per share. On December 27, 2011, Frontline assigned $250,000 to Cameo Properties, LLC. On April 26, 2012, the Company assigned $112,500 of its note receivable with SPS to Frontline which reduced the balance due to Frontline by $112,500.Officer

OnDecember ~~April 15~~17, 2010 the Company entered into a loan agreement for $2,000,000 with Winsor. The loan provided for payments of up to $2,000,000 to the Company with an initial installment of $250,000 and additional installments of up to $1,750,000 with a 10% interest rate. The entire loan amount was secured by 12,000,000 shares of the Company common stock. Each loan installment matured in three years from issuance of the installment. The loan had an anti-dilution clause for the stock issued as collateral. Stock is issued and delivered proportionately to the delivery of funds. The loan was fully funded during the third quarter ending April 30, 2011 with (1) cash advances of $250,000; (2) debt assignment from Frontline of $850,279; (3) accrued interest of $33,534; and (4) $97,528 in cash advance fees.2012

On April 19, 2011, Winsor converted the entire $2,000,000 outstanding loan amount for the 10,000,000 collateralized shares and the Company issued a Stock Purchase Warrant (“Winsor Warrant”) which entitles Winsor, for a three-year period, to purchase at a purchase price of $.001 per share, on a one time basis and only following the effectiveness of the first reverse split of the Company’s common stock following the issuance of the Winsor Warrant , such number of shares of common stock as is equal to the difference between 10,000,000 and the number of shares into which such 10,000,000 shares were changed in such first reverse split, the effect being to protect Winsor from any dilution to its 10,000,000 share holding resulting from such first reverse split.

On July 14, 2011, the Company entered into a Loan Agreement with Cameo Properties LLC (“Cameo”) and was amended on October 14, 2011 (the “Amended Loan Agreement”). Each Note issued under the Amended Loan Agreement is due three years from the date of its issuance. The Amended Loan Agreement provides for loans to the Company of up to $750,000 (the “Loan”), with a minimum initial loan of $250,000 within 60 days of the date of the Loan Agreement, and up to an additional $500,000 within the first year and a half from execution of the Amended Loan Agreement. This is not a revolving facility, and any principal repaid by the Company will not be available for additional advances to the Company under the Amended Loan Agreement. The Company cannot, without the Lender’s consent prepay all or part of the Loan. The notes evidencing the installments of the loans bear interest payable monthly in arrears at the rate of 10% per annum, and mature and are due and payable three years from the date of issuance. On December 27, 2011, Frontline assigned $250,000 of its receivable to Cameo. Pursuant to the anti-dilution provisions in the Amended Loan Agreement, the Company has issued 20,000,000 shares to Cameo Properties as collateral.

Table of Contents

Liquidity Issues

On October 27, 2010, we received the $2,500,000 in funds for the X-Prize award, from the competition sponsored by Progressive Insurance Casualty Company. We will need additional capital to continue development and marketing of our electric vehicles, particularly given the number of companies competing in this sector and the fact that many of the larger car manufacturers are developing and marketing electric and hybrid vehicles.

The Company has substantial obligations to the Internal Revenue Service and other creditors. The Company is working toward a payment plan with the Internal Revenue Service (IRS) for delinquent payroll taxes, and have a plan in place with one of two judgment creditors. There is no assurance that we will be able raise additional required capital to meet obligations arising from the settlements of these obligations and litigation matters, as well as the settlement payments with the IRS, and continue operations.

Our current operating funds are less than necessary for commercialization of our planned products, and therefore we will need to obtain additional financing in order to complete our business plan. We anticipate that up to $2,000,000 of additional working capital will be required over the next 12 months for market introduction of these products through joint venture partners or otherwise. We do not have sufficient cash on hand to meet these anticipated obligations, which are in addition to payments we will owe to judgment creditors and the IRS.

We do not currently have any additional arrangements for financing, and we may not be able to find such financing if required. Obtaining additional financing would be subject to a number of factors, including investor sentiment. Market factors may make the timing, amount, terms or conditions of additional financing unavailable to us.

Critical Accounting Issues

The Company’s significant accounting policies are summarized in Note 1 of the Company’s Annual Report on Form 10-K for the year ended July 31, 2011. There were no significant changes to these accounting policies during the nine months ended April 30, 2012, and the Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk - Interest rate risk refers to fluctuations in the value of a security resulting from changes in the general level of interest rates. Investments that are classified as cash and cash equivalents have original maturities of three months or less. Our interest income is sensitive to changes in the general level of U.S. interest rates. We do not have significant short-term investments, and due to the short-term nature of our investments, we believe that there is not a material risk exposure. Our debt is at fixed interest rates.

Credit Risk - Our accounts receivables are subject, in the normal course of business, to collection risks. We regularly assess these risks and have established policies and business practices to protect against the adverse effects of collection risks. As a result we do not anticipate any material losses in this area.

Item 4 (T). Controls and Procedures.

As of the end of the fiscal quarter covered by this Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Principal Financial and Accounting Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rule 13a-14 of the Securities Exchange Act of 1934. Based upon that evaluation, the Chief Executive Officer and Principal Financial and Accounting Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting her to material information relating to the Company (including its consolidated subsidiaries) required to be included in this Quarterly Report on Form 10-Q. There have been no changes in the Company’s internal controls or in other factors which could significantly affect internal controls subsequent to the date the Company carried out its evaluation.

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PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings.

Other than as described below, we are not a party to any material legal proceedings and to our knowledge, no such proceedings are threatened or contemplated.

Caudle & Spears v. EV Innovations, Inc.

Caudle & Spears has obtained a default judgment against the Company in Mecklenberg County, North Carolina, General Court, in the amount of $17,686. This law firm represented us in our litigation against Martin Koebler, a former employee, whom we successfully sued for return of Company property and other damages. The Company is in settlement negotiations with Caudle & Spears, since its judgment against Martin Koebler is still in the collection process. A payment agreement has been reached in the amount of $2,500 per month with no interest until paid. The Company is not current with its payment arrangements and has a balance of $4,263 still due.

Internal Revenue Service

Internal Revenue Service (“IRS”) served the Company with a tax lien dated March 3, 2010 in the total amount of $251,928. Third quarter 2009 taxes are approximately $117,000, which are included in total due. The Company has been served with an additional tax lien dated January 19, 2011, in the amount of $2,925. The Company had a payment plan in place with IRS, however, the Company is four months in arrears in payments for a total of $10,000 due at April 30, 2012. Management is working with the local IRS office to try and revise the payment agreement. The balance due on the most recent statement from the IRS is $525,130.

Javad Hajihadian

Javad Hajihadian, an individual. Mr. Hajihadian had ordered and paid for, the first super car to be produced by Li-ion Motors in November 2008. The car was in the design stage when it was ordered,. Mr. Hajihadian’s attorney subsequently contacted the Company to cancel his contract and have his payment refunded. The parties had reached a settlement agreement and the payment was being refunded with interest. The settlement agreement was for $102,500 and stipulated monthly payments of $10,250 commencing in July 2010. Payments were made through November 2010, totaling $51,250, leaving a balance of five payments or $51,250 still due; which is reflected on the Company’s balance sheet under current liabilities. The Company became delinquent and Mr. Hajihadian proceeded with litigation and on February 4, 2011, a judgment was issued in his favor for $51,750. Management was deposed December 2011, and produced requested documents and information.

Bayview Loan Servicing, LLC

The Company’s facility in Mooresville North Carolina is financed through Bayview. The Company became delinquent with the mortgage payments and Bayview filed Foreclosure in Superior Court of Iredell County North Carolina. The hearing was March 13, 2012, and the attorneys for the Company attended the hearing to request a forbearance period so a repayment schedule might be effected. Bayview opposed the extension; due to prior extensions granted and previous times Bayview renegotiated the interest and reduced the rate. The Clerk of the Court granted 42 days, and a new hearing is set for April 24, 2012. Bayview granted a forbearance , a payment schedule was provided and the Company made the first payment. Since the first payment was made, there was no hearing in April. The Company is now in default.

Other Litigation

Two creditors, an individual and a corporation, have received judgments against the Company in the amount of $5,160 and $110,000, respectively.

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ITEM 6. Exhibits

31	Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act
32	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document *
101.SCH	XBRL Taxonomy Extension Schema Document *
101.CAL	XBRL Taxonomy Extension Calculation Linkbase *
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document *
101.LAB	XBRL Taxonomy Extension Label Linkbase Document *
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document *

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Li-ion Motors Corp.
Date: June 12, 2012	By:	/s/ Stacey Fling
		Stacey Fling
		Chief Executive Officer and Principal Financial Officer

In accordance with the Securities Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/ Stacey Fling
	Stacey Fling
	President
	(President, Chief Executive Officer
	Principal Financial Officer and Director)
Date: June 12, 2012

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