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SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-QSB
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005
 Commission File Number 000-27106
 VISEON, INC.
  Nevada
    
    41-1767211(State or other jurisdiction of
    
    (IRS Employer Identification No.)incorporation or organization)
 8445 Freeport Parkway, Suite 245, Irving, Texas 75063
 (972) 906-6300
 þ o
 o þ
   o þ




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INDEX
 PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets  September 30, 2005 (unaudited) and
June 30, 2005 (unaudited)
    
    
    3Consolidated Statements of Operations (unaudited)  Three months ended
September 30, 2005 and 2004
    
    
    4Consolidated Statements of Cash Flows (unaudited)  Three months ended
September 30, 2005 and 2004
    
    
    5Notes to Unaudited Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis or Plan of Operation
    
    
    14Item 3. Controls and Procedures
    
    
    16PART II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    17Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    17Item 6. Exhibits
    
    
    17Signatures
    
    
    17Certification Pursuant to Rule 13a-14(a)Certification Pursuant to Rule 13a-14(a)Certification Pursuant to Section 906Certification Pursuant to Section 906




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PART I
 FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 VISEON, INC. AND SUBSIDIARIES
 
 Consolidated Balance Sheets
 September 30,
    
    
    June 30,2005
    
    
    2005(Unaudited)
    
    
    (Audited)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    6,306,500
    
    
    $
    239,383Accounts receivable
    
    
    3,320
    
    
    
    16,541Inventories
    
    
    89,517
    
    
    
    3,758Prepaid expenses
    
    
    349,172
    
    
    
    379,291Total Current Assets
    
    
    6,748,509
    
    
    
    638,973PROPERTY AND EQUIPMENT, NET
    
    
    26,034
    
    
    
    26,428INTANGIBLE ASSETS, NET
    
    
    326,467
    
    
    
    266,358TOTAL ASSETS
    
    $
    7,101,010
    
    
    $
    931,759LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    725,270
    
    
    $
    1,230,041Accrued expenses
    
    
    305,682
    
    
    
    336,287Net liabilities of discontinued
operations
    
    
    204,975
    
    
    
    723,475Total Current Liabilities
    
    
    1,235,927
    
    
    
    2,289,803COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY (DEFICIT)Convertible preferred stock, $.01 par value per share
5,000,000 shares authorizedSeries A convertible preferred stock, 111 and 125 shares
issued and outstanding (liquidation preference of
$2,775,000 and $3,125,000)
    
    
    1
    
    
    
    1Series B convertible preferred stock, 376 and 0 shares
issued and outstanding (liquidation preference of
$9,400,000 and $0)
    
    
    4
    
    
    
    Common stock, $.01 par value per share
100,000,000 shares authorized
34,345,412 and 32,849,070 issued and outstanding
    
    
    343,454
    
    
    
    328,491Additional paid-in capital
    
    
    54,167,288
    
    
    
    40,056,336Accumulated deficit
    
    
    (48,645,664
    )
    
    
    (41,742,872
    )Total Stockholders Equity (Deficit)
    
    
    5,865,083
    
    
    
    (1,358,044
    )TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY
    
    $
    7,101,010
    
    
    $
    931,759
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##### Table of Contents



VISEON, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Operations
 (Unaudited)
 Three Months
    
    
    Three MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004(Unaudited)
    
    
    (Unaudited)NET SALES
    
    $
    
    
    
    $
    168,169COST OF GOODS SOLD
    
    
    
    
    
    
    157,637Gross Profit (Loss)
    
    
    
    
    
    
    10,532RESEARCH AND DEVELOPMENT
    
    
    997,828
    
    
    
    783,767SELLING, GENERAL AND ADMINISTRATIVE
    
    
    842,953
    
    
    
    694,673Operating Loss
    
    
    (1,840,781
    )
    
    
    (1,467,908
    )OTHER INCOME (EXPENSE)Interest income
    
    
    17,966
    
    
    
    17,642Interest expense
    
    
    (117,500
    )
    
    
    Other Income (Expense), net
    
    
    (99,534
    )
    
    
    17,642LOSS FROM CONTINUING OPERATIONS
    
    
    (1,940,315
    )
    
    
    (1,450,266
    )GAIN FROM DISCONTINUED OPERATIONS
    
    
    108,640
    
    
    
    4,979NET LOSS
    
    
    (1,831,675
    )
    
    
    (1,445,287
    )Preferred Stock Dividends
    
    
    (4,875,322
    )
    
    
    (204,026
    )NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
    
    $
    (6,706,997
    )
    
    $
    (1,649,313
    )Basic and diluted loss per share:Loss from continuing operations
    
    $
    (0.06
    )
    
    $
    (0.06
    )Gain from discontinued operations
    
    $
    0.00
    
    
    $
    0.00Net loss
    
    $
    (0.05
    )
    
    $
    (0.07
    )Net loss attributable to common stockholders
    
    $
    (0.20
    )
    
    $
    (0.07
    )Weighted average common shares outstanding:Basic and diluted
    
    
    33,445,691
    
    
    
    25,177,131
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VISEON, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Cash Flows
 (Unaudited)
 Three Months
    
    
    Three MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004Cash flows from operating activities:Net loss
    
    $
    (1,831,675
    )
    
    $
    (1,445,287
    )Adjustments to reconcile net loss to net
cash flows from operating activities:Depreciation and amortization
    
    
    10,399
    
    
    
    11,239Amortization of original issue discount
    
    
    117,500
    
    
    
    Compensation related to stock options
    
    
    
    
    
    
    Compensation related to issuance of stock
    
    
    
    
    
    
    46,250Common stock issued for services rendered
    
    
    20,000
    
    
    
    Common stock warrants issued for services
rendered
    
    
    124,207
    
    
    
    Gain from discontinued operations
    
    
    (108,640
    )
    
    
    (4,979
    )Changes in operating assets and liabilities:Accounts receivable, net
    
    
    13,222
    
    
    
    8,312Inventories, net
    
    
    (85,760
    )
    
    
    (10,950
    )Prepaid expenses
    
    
    30,119
    
    
    
    59,347Accounts payable
    
    
    (504,771
    )
    
    
    19,020Accrued expenses
    
    
    (126,621
    )
    
    
    136,060Net cash flows used in operating
activities
    
    
    (2,342,020
    )
    
    
    (1,180,988
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (3,594
    )
    
    
    Proceeds from sale of equipment
    
    
    
    
    
    
    Payments for intangible assets
    
    
    (66,520
    )
    
    
    (63,267
    )Net cash flows from investing activities
    
    
    (70,114
    )
    
    
    (63,267
    )Cash flows from financing activities:Payments on short-term notes payable
    
    
    (250,000
    )
    
    
    Proceeds from short-term notes payable
    
    
    250,000
    
    
    
    Proceeds from exercise of common stock
warrants
    
    
    240,000
    
    
    
    Proceeds from issuance of convertible
preferred stock and warrants
    
    
    9,400,000
    
    
    
    Payments of convertible preferred stock and
warrant issuance costs
    
    
    (1,160,749
    )
    
    
    (26,863
    )Dividends on convertible preferred stock
    
    
    
    
    
    
    (3,491
    )Net cash flows from financing activities
    
    
    8,479,251
    
    
    
    (30,354
    )Change in cash and cash equivalents from
discontinued operations
    
    
    
    
    
    
    (11,000
    )Increase (decrease) in cash and cash
equivalents
    
    
    6,067,117
    
    
    
    (1,285,609
    )Cash and cash equivalents, beginning of period
    
    
    239,383
    
    
    
    5,339,393Cash and cash equivalents, end of period
    
    $
    6,306,500
    
    
    
    $4,053,784
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Three Months
    
    
    Three MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004Supplemental cash flow information:Cash paid for interest
    
    
    
    
    
    
    Noncash investing and financing activities:Net liabilities of discontinued operations
converted into common stock and warrants
    
    
    409,860
    
    
    
    Accrued preferred stock dividends converted to
common stock
    
    
    52,083
    
    
    
    140,833Common stock issued for preferred stock dividends
    
    
    30,999
    
    
    
    70,416Conversion of preferred stock to common stock
    
    
    3,500
    
    
    
    Cashless exercise of warrants
    
    
    2,619
    
    
    
    Warrants issued to induce exercise of warrants
    
    
    195,795
    
    
    
    Accretion of
beneficial conversion option
    
    
    4,696,240
    
    
    
    
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VISEON, INC. AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005 and 2004
 1. DESCRIPTION OF THE BUSINESS :
  TM
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2. BASIS OF PRESENTATION :
   3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES :
 Intangible Assets.
 Revenue Recognition.
   Accounts Receivable.
 Inventory Valuation.
 Loss Per Common Share.
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Stock Based Compensation.
  For the three months endedSeptember 30,2005
    
    2004Loss attributable
to common StockholdersAs reported
    
    $
    (6,706,997
    )
    
    $
    (1,649,313
    )Pro forma
    
    
    (7,010,211
    )
    
    
    (1,767,919
    )Basic and diluted
loss per share:As reported
    
    
    (0.20
    )
    
    
    (0.07
    )Pro forma
    
    
    (0.21
    )
    
    
    (0.07
    )Stock based
compensation:As reported
    
    
    
    
    
    
    Pro forma
    
    
    303,214
    
    
    
    118,606
  For the three months endedSeptember 30,2005
    
    2004Risk-free interest rate
    
    
    4.25
    %
    
    
    4.25
    %Expected life of options granted
    
    10 years
    
    10 yearsExpected volatility
    
    
    35.26
    %
    
    
    33.31
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
 4. RECENT ACCOUNTING PRONOUNCEMENTS :
  5. CONVERTIBLE PREFERRED STOCK AND WARRANTS :
 Series A Convertible Preferred Stock with Warrants.
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Series B Convertible Preferred Stock with Warrants.
  10




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6. COMMITMENTS AND CONTINGENCIES :
 Manufacturing Agreement
   Distributor and Dealer Agreements
  Investor and Recruitment Agreement
  Legal Proceedings
    7. STOCKHOLDERS EQUITY (DEFICIT) :
   12




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8. DISCONTINUED OPERATIONS :
  9. SUBSEQUENT EVENTS :
     13




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Item 2. Managements Discussion and Analysis or Plan of Operation
 Overview
 TM
  Results of Operations
 Three Months ended September 30, 2005 Compared to Three Months ended September 30, 2004.
 Net Sales.
 Gross Profit (Loss).
 Research and Development Expenses.
 Selling, General and Administrative Expenses.
 Other Income (Expense).
 14




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Gain from Discontinued Operations.
 Preferred Stock Dividends.
 Liquidity and Capital Resources
    Critical Accounting Policies and Estimates
   15




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Revenue Recognition
   Allowance for Doubtful Accounts
  Accounting for Income Taxes
  
 Item 3. Controls and Procedures
  16




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PART II
 OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 6. Exhibits
 (a) Exhibits
 31.01
    
    Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.31.02
    
    Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.32.01
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 200232.02
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
  
 SIGNATURES
 VISEON, INC.By:
    
    /s/ John C. HarrisJohn C. HarrisPresident and Chief Executive
OfficerDate: November 14, 2005By:
    
    /s/ Brian R. DayBrian R. DayChief Financial OfficerDate: November 14, 2005
 17