10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

Commission file number: 000-54648

LAS VEGAS RAILWAY EXPRESS, INC.

(Exact name of Registrant as Specified in its Charter)

Delaware	56-646797
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

6650 Via Austi Parkway, Suite 140

Las Vegas, NV  89119

 (Address of principal executive offices)

(702) 583-6715

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] 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).  

Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[  ]	Accelerated filer	[   ]
Non-accelerated filer	[  ]	Smaller reporting company	[X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes [  ] No [X]

Number of outstanding shares of common stock as of August 14, 2013 was 166,066,106.

LAS VEGAS RAILWAY EXPRESS, INC.

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION		PAGE
Item 1.	Financial Statements:	3
	Condensed Balance Sheets – June 30, 2013 (Unaudited) and March 31, 2013	3
	Condensed Statements of Operations  - for the Three Months Ended June 30, 2013 and 2012 (Unaudited)	4
	Condensed Statements of Cash Flows - for the Three Months Ended June 30, 2013 and 2012 (Unaudited)	5
	Notes to Condensed Financial Statements (Unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20
PART II OTHER INFORMATION
Item 1.	Legal Proceedings	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults upon Senior Securities	21
Item 4.	Mine Safety Disclosures	21
Item 5.	Other Information	21
Item 6.	Exhibits	22
SIGNATURES		22

2

PART I   FINANCIAL INFORMATION

 LAS VEGAS RAILWAY EXPRESS, INC.

CONDENSED BALANCE SHEETS

	June 30,			March 31,
	2013			2013
	(Unaudited)
Assets
Current assets
Cash	$	970,303		$	1,262,615
Other current assets		767,601			471,772
Total current assets		1,737,904			1,734,387
Property and equipment, net of accumulated depreciation		499,920			393,789
Other assets
Deposit with Union Pacific		600,000			600,000
Other assets		29,307			25,958
Goodwill		843,697			843,697
Total other assets		1,473,004			1,469,655
Total assets	$	3,710,828		$	3,597,831
Liabilities and Stockholders' Deficit
Current liabilities
Short term notes payable	$	13,333		$	13,333
Accounts payable and accrued expenses		478,687			375,295
Derivative liability		5,801,826			3,181,537
Convertible notes payable, net of discount		750,401			116,042
Liabilities of discontinued operations		85,041			194,041
Total current liabilities		7,129,288			3,880,248
Deferred tax liability		60,405			55,914
Total liabilities		7,189,693			3,936,162
Commitments and contingencies
Stockholders' deficit
Common stock, $0.0001 par value, 200,000,000 shares authorized, 162,316,106 and 154,111,882 shares issued and outstanding as of June 30, 2013 (unaudited) and March 31, 2013, respectively		16,232			15,411
Additional paid-in capital		18,297,073			18,221,881
Accumulated deficit		(21,792,170	)		(18,575,623	)
Total stockholders' deficit		(3,478,865	)		(338,331	)
Total liabilities and stockholders' deficit	$	3,710,828		$	3,597,831

See accompanying notes to condensed financial statements

3

LAS VEGAS RAILWAY EXPRESS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended
	June 30,			June 30,
	2013			2012
				(Restated)
Operating Expenses:
Compensation and payroll taxes	$	849,329		$	564,842
Selling, general and administrative		208,123			89,738
Professional fees		581,788			121,865
Depreciation expense		1,434			160
Total expenses		1,640,674			776,605
Loss from operations		(1,640,674	)		(776,605	)
Other (expense) income
Interest expense		(2,521,627	)		(13,770	)
Change in derivative liability		950,245			22,440
Total other (expense) income		(1,571,382	)		8,670
Net loss from continuing operations before provision for income taxes		(3,212,056	)		(767,935	)
Provision for income taxes		(4,491	)		(4,491	)
Net loss from continuing operations		(3,216,547	)		(772,426	)
Discontinued operations:
Income from discontinued operations, net of income taxes		-			484,420
Net loss	$	(3,216,547	)	$	(288,006	)
Net loss per share, continuing operations, basic and diluted	$	(0.02	)	$	(0.01	)
Net income per share, discontinued operations, basic and diluted	$	-		$	0.01
Net loss per share, basic and diluted	$	(0.02	)	$	(0.00	)
Weighted average number of common shares outstanding, basic and diluted		160,066,779			61,535,442

See accompanying notes to condensed financial statements

4

LAS VEGAS RAILWAY EXPRESS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

 (Unaudited)

	June 30,			June 30,
	2013			2012
				(Restated)
Cash flows from operating activities
Net loss	$	(3,216,547	)	$	(288,006	)
Income from discontinued operations					(484,420	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,434			160
Amortization of discounts on note payable		2,305,550			3,628
Amortization of debt offering costs		155,391			-
Deferred tax provision		4,491			4,491
Change in value of derivative liability		(950,245	)		(22,440	)
Stock issued and subscribed for services		400,905			394,227
Stock option compensation		-			20,131
Warrants issued for services		221,789			-
Changes in operating assets and liabilities:
Other current assets		20,531			15,500
Other assets		(3,349	)		-
Liabilities of discontinued operations, net		(109,000	)		(89,392	)
Accounts payable and accrued expenses		104,303			3,021
Net cash used in operating activities		(1,064,747	)		(443,100	)
Cash flows from investing activities
Purchases of property and equipment		(107,565	)		(14,596	)
Net cash used in investing activities		(107,565	)		(14,596	)
Cash flows from financing activities
Proceeds from sale of stock		-			1,190,000
Proceeds from convertible notes payable		880,000			-
Payments on note payable		-			(25,000	)
Net cash provided by financing activities		880,000			1,165,000
Net change in cash		(292,312	)		707,304
Cash, beginning of the period		1,262,615			53,632
Cash, end of the period	$	970,303		$	760,936
Supplemental disclosure of cash flow information:
Interest paid	$	-		$	1,944
Income taxes paid	$	-		$	-
Supplemental disclosure of non-cash investing and financing transactions:
Stock issued for debt	$	270,911		$	559,200
Stock issued for reduction of liabilities from discontinued operations	$	-		$	156,239

See accompanying notes to condensed financial statements

5

LAS VEGAS RAILWAY EXPRESS, INC.

NOTES TO CONDENDED FINANCIAL STATEMENTS

 (Unaudited)

(1)           Organization and basis of presentation

Basis of Financial Statement Presentation:

The accompanying unaudited interim financial statements of Las Vegas Railway Express, Inc. (the "Company") have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. These statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. However, the results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending March 31, 2014 or any other future period. These interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2013.

Going Concern:

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company had no revenue, a net loss of $3,216,547 for the three months ended June 30, 2013 and an accumulated deficit of $21,792,170 through June 30, 2013, as well as outstanding convertible notes payable of $2,405,000 which are payable on February 1, 2014.  Management believes that it will need additional equity or debt financing to implement the business plan.  These matters raise substantial doubt about the Company’s ability to continue as a going concern.

The Company estimates that it will need to obtain $10 million in additional capital to begin operations of its planned train service. The Company intends to raise these funds through the public or private sale of equity and/or debt securities. There is no assurance such funding will be available on terms acceptable to the Company, or at all. If the Company succeeds in raising such funds, it intends to use them for railcar purchase, design, refurbishment and outfitting for the National Routes beginning October 2013. The North Las Vegas depot design and construction, lease payments on the North Las Vegas depot site, Union Pacific Railroad (“UP”)capital infrastructure improvements of approximately $56 million  and the procurement of 24 railcars designed specifically for the Las Vegas route are planned to be paid for through a Railroad Rehabilitation & Improvement Financing (“RRIF”) loan from FRA. The Company estimates that the operating capital generated from the National Routes would fund the operating costs of the deployment of the Las Vegas route. The RRIF loan will pay for the infrastructure improvements required on that route.

The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Restatements:

The accompanying condensed financial statements for the three months ended June 30, 2012 have been restated to reflect a correction relating to certain warrants and notes payable outstanding which contained elements that qualified them as derivative liabilities.  Accordingly, the Company obtained a third party valuation of the warrants and embedded derivatives and reclassified them as derivative liabilities.  As a result, the Company recorded the change in the fair value of the derivative liabilities as a component of the condensed statement of operations.  The Company also made corrections to stock-based compensation, as well as its deferred income tax provision.

6

The impact of the restatements described above is as follows.

For the three months ended June 30, 2012:
	As Previously
	Reported			Adjustments			Restated
Compensation and payroll taxes	$	326,115		$	238,727		$	564,842
Selling, general and administrative		89,738			-			89,738
Professional fees		148,365			(26,500	)		121,865
Depreciation expense		160			-			160
Total expenses		564,378			212,227			776,605
Loss from operations		(564,378	)		(212,227	)		(776,605	)
Interest expense		(10,553	)		(3,217	)		(13,770	)
Change in derivative liability		-			22,440			22,440
Total other income (expense)		(10,553	)		19,223			8,670
Net loss from continuing operations before tax provision		(574,931	)		(193,004	)		(767,935	)
Provision for income taxes		-			(4,491	)		(4,491	)
Net loss from continuing operations		(574,931	)		(197,495	)		(772,426	)
Discontinued operations:
Income from discontinued operations, net of income tax		484,420			-			484,420
Net loss	$	(90,511	)	$	(197,495	)	$	(288,006	)

 (2)           Summary of Significant Accounting Policies

Risks and Uncertainties:

The Company operates in an industry that is subject to intense competition and potential government regulations.  Significant changes in regulations and the inability of the Company to establish contracts with rail services providers could have a materially adverse impact on the Company’s operations.

Use of Estimates:

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods.

Property and Equipment:

Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives of approximately five years once the individual assets are placed in service.  The Company expenses all purchases of equipment with individual costs of under $500.

Intangible Assets:

Goodwill represents the excess of purchase price over tangible and intangible assets acquired, less liabilities assumed arising from the acquisition of the train business on November 23, 2009.  Goodwill is not amortized, but is reviewed for potential impairment on an annual basis at the reporting unit level.  As required by the “Intangibles – Goodwill and Other” topic of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”), the Company conducted an analysis of the goodwill on its single reporting unit using the Company’s market capitalization (based on Level 1 inputs). For the three months ended June 30, 2013, the assessment for impairment found that there is no impairment of goodwill. The Company has no accumulated impairment losses on goodwill.

7

Deposit with Union Pacific:

On November 8, 2012, the Company signed an agreement with Union Pacific Railroad Company whereby the Company was granted a nonexclusive operating right to use Union Pacific railroad track between Daggett, California and Las Vegas, Nevada.  In connection with this agreement, the Company made an earnest money deposit of $600,000 and is required to meet certain financial conditions, including the provision of a letter of credit in favor of Union Pacific in the amount of $27,444,145 on or before October 31, 2013.  Failure to meet the conditions specified in the agreement will result in the Company losing the $600,000 deposit.

Income Taxes:

Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred tax assets of the Company relate primarily to operating loss carryforwards for federal income tax purposes. A full valuation allowance for deferred tax assets has been provided because the Company believes it is not more likely than not that the deferred tax asset will be realized. Realization of deferred tax assets is dependent on the Company generating sufficient taxable income in future periods.

The Company’s goodwill is deductible for tax but not for book. This difference creates a deferred tax liability, which cannot be matched with the Company’s deferred tax asset. As a result, the Company cannot net it with its net operating loss carryforward and therefore records a deferred tax liability to reflect the future non-deductibility of its goodwill asset. The deferred tax liability at June 30, 2013 (unaudited) and March 31, 2013 was $60,405 and $55,914, respectively.

The Company periodically evaluates its tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits.  As of June 30, 2013 and March 31, 2013, the Company has not established a liability for uncertain tax positions.

Basic and Diluted Loss Per Share:

In accordance with FASB ASC 260, “Earnings Per Share,” the basic loss per common share is computed by dividing the net loss available to common stockholders after preferred stock dividends, by the weighted average common shares outstanding during the period.  Diluted earnings per share reflect per share amounts that would have resulted if diluted potential common stock had been converted to common stock.  Common stock equivalents have not been included in the earnings per share computation for the three months ended June 30, 2013 and 2012 as the amounts are anti-dilutive.  As of June 30, 2013, the Company had 2,000,000 outstanding options which were excluded from the computation of net income per share because they are anti-dilutive.  As of June 30, 2013, the Company also had convertible debt of $2,405,000 that is convertible into 48,100,000 shares of common stock which was excluded from the computation.  As of June 30, 2013, the Company had 82,449,842 outstanding warrants which were also excluded from the computation because they were anti-dilutive.

Share Based Payment:

The Company issues stock, options and warrants as share-based compensation to employees and non-employees.

The Company accounts for its share-based compensation to employees in accordance FASB ASC 718.  Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. 

The Company accounts for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 “Equity - Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date. For interim periods, the fair value is estimated and the percentage of completion is applied to that estimate to determine the cumulative expense recorded.

8

The Company values stock compensation based on the market price on the measurement date. As described above, for employees this is the date of grant, and for non-employees, this is the date of performance completion.

The Company values stock options and warrants that do not qualify as derivative instruments using the Black-Scholes option pricing model.  There were no options or warrants granted during the three months ended June 30, 2013 or 2012 that were valued used in the Black-Scholes model.

Certain warrants qualify as derivative instruments and are valued using the binomial lattice method. See discussion below regarding accounting for derivative liabilities.

Derivative Liabilities:

In connection with the private placement of Convertible Notes beginning in February 2013, the Company became contingently obligated to issue shares of common stock in excess of the 200 million authorized under the Company’s certificate of incorporation.  Consequently, the ability to settle these obligations with shares would be unavailable causing these obligations to potentially be settled in cash. This condition creates a derivative liability.

The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares.

Using this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued on and subsequent to February 13, 2013 are derivative liabilities.

The Company also has certain warrants and notes payable with elements that qualify as derivatives. The warrants have anti-dilution clauses that prevent calculation of the ultimate number of shares that may be issued upon exercise, and two of the notes payable had a variable conversion feature that similarly prevented the calculation of the number of shares into which they were convertible.

The Company values these warrants and notes payable using the binomial lattice method.  The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations.

Fair Value of Financial Instruments:

The Company's financial instruments as defined by FASB ASC 825-10-50 include cash, notes payable and derivative liabilities.  Derivative liabilities are recorded at fair value.  The principal balance of notes payable approximates fair value because current interest rates and terms offered to the Company for similar debt are substantially the same.

FASB ASC 820 defines fair value, establishes a framework for measuring fair value, in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. FASB ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

Level 1. Observable inputs such as quoted prices in active markets;

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.

In the absence of such information or if the Company is not able to corroborate these prices by other available relevant market information, the fair values are estimated using internal calculations or discounted cash flow techniques that incorporate prepayment rates, discount rates and delinquency and default and cumulative loss expectations, that are implied by market prices for similar securities and collateral structure types. Because this valuation technique relies on significant unobservable inputs, the fair value estimation is classified as Level 3. The process for determining fair value using unobservable inputs is generally more subjective and involves a high degree of management judgment and assumptions. These assumptions may have a significant effect on the estimates of fair value, and the use of different assumptions as well as changes in market conditions could have a material effect on the results of operations or financial condition.

9

New Accounting Pronouncements:

There are no recent accounting pronouncements that management believes will have a material impact on the Company's present or future consolidated financial statements

(3)            Property and Equipment

Property and equipment consisted of the following.

	June 30,			March 31,
	2013			2013
	(Unaudited)
Office equipment	$	51,458		$	40,921
Software		30,167			14,192
Transportation equipment under construction		435,610			354,557
		517,235			409,670
Less: accumulated depreciation		(17,315	)		(15,881	)
	$	499,920		$	393,789

(4)           Notes payable

A summary of outstanding notes payable is as follows:

	June 30,		March 31,
	2013		2013
	(Unaudited)
Secured promissory notes, dated May 17, 2011 through May 17, 2012 to an investor bearing interest at 8% per annum, payable on May 17, 2012.  The Company is in default on this note.		13,333		13,333
Total outstanding notes payable	$	13,333	$	13,333

As of June 30, 2013, the Company is in default on the above note payable for $13,333.  As of June 30, 2013, there has been no demand made for repayment of the notes or accrued interest.

10

(5)           Convertible Notes Payable

During February and March 2013, the Company issued a series of convertible notes payable (the “Convertible Notes”) to investors for total proceeds of $1,900,000.  The Convertible Notes are convertible into shares of the Company’s common stock at $0.05 per share at the option of the debt holder.  The Convertible Notes bear interest at a rate of 8% per annum, and have a maturity date of February 1, 2014.  Prior to March 31, 2013, the debt holders converted $105,000 of outstanding principal into 2,100,000 shares of common stock.  As a result, as of March 31, 2013, the remaining gross principal balance of convertible notes payable outstanding amounted to $1,795,000.

During the three months ended June 30, 2013, the Company issued additional Convertible Notes to investors for additional proceeds of $880,000, with the same terms as described above.  During the three months ended June 30, 2013, the debt holders converted $270,000 of outstanding principal and $911 of accrued interest into 5,417,756 shares of common stock pursuant to the original terms in the agreements.  As of June 30, 2013, the remaining principal balance of convertible notes payable amounted to $2,405,000, including $50,000 outstanding to a Director of the Company.

The Company does not have sufficient authorized shares to cover the conversion feature of the convertible notes.  The conversion feature of the Convertible Notes issued on and after February 13, 2013 created a derivative liability for the Company. See Note 6, Derivative Instruments. The beneficial conversion feature of the notes issued prior to February 13, 2013 was recorded as a discount to the notes based on its intrinsic value.

In connection with the Convertible Notes, the Company granted an aggregate of 53,600,000 (including 17,600,000 during the three months ended June 30, 2013) warrants to purchase additional shares of common stock at an exercise price of $0.10 per share and a contractual life of 3 years.  Of the 17,600,000 warrants granted during the three months ended June 30, 2013, 1,000,000 were granted to a Director of the Company.  The Company does not have sufficient authorized shares to cover the warrants.  As a result, the warrants issued during the three months ended June 30, 2013 were determined to be derivative liabilities which resulted in additional derivative liabilities of $1,372,237.  See Note 8, Derivative Instruments.

The value of the derivative liabilities and discounts created through the issuance of the Convertible Notes and warrants during the three months ended June 30, 2013 as described above exceeded the proceeds of the Convertible Notes by $1,401,191. This excess was recorded as interest expense on the issuance dates of each note and warrant during the three months ended June 30, 2013.

The following summarizes the book value of the convertible notes payable outstanding as of June 30, 2013 and March 31, 2013.

	June 30,			March 31,
	2013			2013
	(Unaudited)
Principal balance of convertible notes payable outstanding	$	2,405,000		$	1,795,000
Less: discount on convertible notes payable		(1,654,599	)		(1,678,958	)
Convertible notes payable, net	$	750,401		$	116,042

.

11

Future scheduled maturities of these notes payable are as follows:

	Year Ended
	March 31,
2014	$	2,405,000
Total	$	2,405,000

In connection with the Convertible Notes, the Company incurred debt issuance costs, which primarily represented commissions paid to acquire the debt.  These costs have been capitalized and are being amortized through the maturity date of the notes.  During the three months ended June 30, 2013, the Company capitalized an additional $521,351 of debt issuance costs, including the fair value of 4,760,000 warrants issued on April 29, 2013 as commission.  Amortization of these capitalized debt issuance costs amounted to $155,391 for the three months ended June 30, 2013, which is reflected as interest expense on the accompanying statement of operations.  As of June 30, 2013 and March 31, 2013, the remaining amount of capitalized debt issuance costs amounted to $497,760 and $116,329, respectively, which are included as a component of other current assets on the accompanying consolidated balance sheets.

(6)           Derivative Instruments

Excess Shares

In connection with the private placement of Convertible Notes beginning in February 2013 (see Note 5), the Company became contingently obligated to issue shares of common stock in excess of the 200 million shares authorized under the Company’s certificate of incorporation.  Consequently, the ability to settle these obligations with shares would be unavailable causing these obligations to potentially be settled in cash. This condition creates a derivative liability.

The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split or anti-dilution, to have an issuance date to coincide with the event giving rise to the additional shares.

Using this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued on and subsequent to February 13, 2013 are classified as derivative liabilities.

Other Derivatives

The Company has certain warrants and notes payable with elements that qualify as derivatives. The warrants have anti-dilution clauses that prevent calculation of the ultimate number of shares that may be issued upon exercise, and two of the notes payable had a variable conversion feature that similarly prevented the calculation of the number of shares into which they were convertible.

The derivative liability, as it relates to the different instruments, is shown in the following table.

	Three Months Ended June 30, 2013								Three Months Ended June 30, 2012
			Conversion Feature									Conversion Feature
			of									of
	Warrants		Notes Payable			Total			Warrants			Notes Payable			Total
Beginning balance, April 1	$	1,663,394	$	1,518,143		$	3,181,537		$	134,791		$	35,708		$	170,499
Additional issuances		2,472,282		1,364,711			3,836,993			-			-			-
Exercised/converted		-		(266,459	)		(266,459	)		-			(29,439	)		(29,439	)
Change in derivative liability		22,441		(972,686	)		(950,245	)		(22,440	)		-			(22,440	)
Ending balance, June 30	$	4,158,117	$	1,643,709		$	5,801,826		$	112,351		$	6,269		$	118,620

12

The derivative liability was valued using the binomial lattice method with the following inputs.

	Three			Three
	Months Ended			Months Ended
	June 30, 2013			June 30, 2012
Expected life in years	0.59 - 4.43 years			0.17 - 4.28 years
Stock price volatility		112.3% - 270.1	%		48.5% - 191.6	%
Discount rate		0.09% - 1.20	%		0.07% - 0.61	%
Expected dividends	None			None
Forfeiture rate		0	%		0	%

(7)             Equity

Common Stock

The Company is authorized to issue 200,000,000 shares of common stock and no other class of stock at this time.   The holders of common stock are entitled to one vote per share on all matters submitted to a vote of stockholders and are not entitled to cumulate their votes in the election of directors.  The holders of common stock are entitled to any dividends that may be declared by the Board of Directors out of funds legally available therefore subject to the prior rights of holders of any outstanding shares of preferred stock and any contractual restrictions we have against the payment of dividends on common stock. In the event of our liquidation or dissolution, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of preferred stock.  Holders of common stock have no preemptive or other subscription rights and no right to convert their common stock into any other securities.

During the three months ended June 30, 2013, the Company issued an aggregate of 5,417,756 shares of common stock for the conversion of $270,911 in convertible notes payable and accrued interest.  This included 4,000,000 shares of common stock for the conversion of a $200,000 convertible note payable held by a related party entity owned by a Director of the Company.  During the three months ended June 30, 2012 the Company issued an aggregate of 9,808,773 of common stock as payment of $715,439 of outstanding notes payable and accrued interest.

During the three months ended June 30, 2013, the Company issued an aggregate of 2,590,000 shares of common stock as payment for services, directors’ and employee compensation resulting in total expense of $318,550.  During the three months ended June 30, 2012, the Company issued an aggregate of 2,500,000 shares of common stock as payment for services, directors’ and employee compensation resulting in an expense of $182,000.   The fair value of the directors’ and employees’ service was determined by the closing price of the stock on date of grant and board of director minutes authorizing the shares.

During the three months ended June 30, 2013, the Company issued 196,468 shares of common stock for the exercise of warrants.  There were no warrants exercised during the three months ended June 30, 2012.

During the three months ended June 30, 2012, the Company issued 23,600,000 shares of common stock as part of a private placement for total proceeds of $1,190,000.  There were no shares sold during the three months ended June 30, 2013.

Warrants

During the three months ended June 30, 2013, the Company issued an aggregate of 17,600,000 warrants in connection with the Convertible Notes issued during the period, as well as 4,760,000 warrants for the payment of commissions associated with acquiring the Convertible Notes.  These warrants have been accounted for as derivative liabilities (see Note 6).

During the three months ended June 30, 2013, the Company issued an additional 2,000,000 warrants as payment of directors’ services.  The warrants have been accounted for as derivative liabilities (see Note 6).  

There were no warrants issued during the three months ended June 30, 2012.

13

(8)             Stock Option Plan:

The Company’s 2011 Stock Option Plan provides for the grant of 20,000,000 incentive or non-statutory stock options to purchase common stock. Employees, who share the responsibility for the management growth or protection of the business of the Company and certain Non-Employee (“Selected Persons”), are eligible to receive options which are approved by a committee of the Board of Directors.  These options vest over five years and are exercisable for a ten-year period from the date of the grant.

As of June 30, 2013, the Company had 2,000,000 options outstanding at an exercise price of $0.50 per share.  These options were fully vested as of March 31, 2013, and therefore there no further compensation cost was recorded during the three months ended June 30, 2013.  Stock option compensation cost recorded during the three months ended June 30, 2012 amounted to $20,131.  No options were granted or exercised during the quarters ended June 30, 2013 and 2012.  The outstanding options will expire in November 2018.  

(9)             Discontinued Operations:

Prior to January 21, 2010, the Company had been actively engaged in acquiring underperforming mortgage loan portfolios and generating revenues from re-performing, sale of loans and fee revenue.  As of January 21, 2010, the Company changed its primary business and abandoned the prior business. Accordingly, the assets and liabilities and results of operation related to this business have been classified as discontinued operations in the financial statements for all periods presented.  During the three months ended June 30, 2013 and 2012, the Company had net income from discontinued operations of $0 and $484,420, respectively, which resulted from the write down of payables.

The following table summarizes the liabilities classified as discontinued operations in the accompanying balance sheets:

	June 30,		March 31,
	2013		2013
	(Unaudited)
Notes payable, related party	$	85,041	$	194,041
	$	85,041	$	194,041

The Company entered into forbearance agreements with investors holding the notes that are included in liabilities to be disposed of.  The new notes call for monthly payments and to be repaid in full by December 31, 2013.

(10)          Subsequent Events

On July 1, 2013 and July 22, 2013 the Company issued 750,000 shares of common stock for consulting services.

On July 16, 2013 the Company was granted an extension with respect to meeting certain conditions under its operating agreement with the Union Pacific Railroad to October 31, 2013. All other conditions remain in place.

On July 17, 2013 the Company issued 2,000,000 restricted shares of common stock to employees per employment agreements.

On August 2, 2013 the Company issued 1,000,000 restricted shares of common stock for consulting services.

14

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This Quarterly Report contains forward-looking statements about the Company's business, financial condition and prospects that reflect management's assumptions and beliefs based on information currently available. There can be no assurance that the expectations indicated by such forward-looking statements will be realized. If any of management's assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, Las Vegas Railway Express, Inc., actual results may differ materially from those indicated by the forward- looking statements.

The key factors that are not within the Company's control and that may have a direct bearing on operating results include, but are not limited to, managements' ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry, as well as the risk factors identified in the Company’s Annual Report on Form 10-K for the year ended March 31, 2013, filed with the SEC on July 1, 2013.

When used in this Report, words such as, "believes," "expects," "intends," "plans," "anticipates," "estimates" and similar expressions are intended to identify and qualify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions. However, the forward-looking statements contained herein are not covered by the safe harbors created by Section 21E of the Securities Exchange Act of 1934.  

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere herein.

Business Overview

Our company, Las Vegas Railway Express, Inc., was funded on the vision of establishing a new and innovative passenger train service between Las Vegas and the Los Angeles metropolitan area using existing railroad tracks and specialized rail cars that have been refurbished to resemble a casino style motif. This has been the center point of our business plan using existing freight railroad lines. The development concept is to provide a Las Vegas style experience on the trains. We have acquired a series of 16 passenger railcars under an agreement with Transportation Management Services, which has provided the Company with 16 bi-level passenger cars with a total capacity of 756 passengers. Passengers will board our trains in Los Angeles and make stop in Fullerton, approximately30 miles away, before continuing non-stop to Las Vegas. We are constructing a new depot station in North Las Vegas, 3 miles from downtown. Passengers will be able to book their tickets via Amtrak’s national ticketing network as well as through our website. We will also book rooms, outings, shows and the like for our passengers.

The Company has also identified eight routes similar to the LA to Las Vegas route, currently served by Amtrak trains, which originate from a metropolitan area and have a segment of the route, which passes through a casino/resort destination or to another metropolitan area. The Company will construct its Vegas Class cars for each route, which it will couple up to the Amtrak trains and will serve as a First Class option for current Amtrak travelers. The Company will pay a fee to Amtrak to haul the cars and to couple and uncouple them at the destinations. This is a common practice with Amtrak through its Charter Group and requires no master agreement or agreements with railroad companies. The origination and destination stations along the various routes already exist, so the Company will not need to construct any station facilities in order to operate these routes. The Company has executed a Memorandum of Understanding, or MOU, with AMTRAK for haulage of the cars outlining duties and responsibilities of each party, subject to execution of a definitive agreement.

Our core business plan emanates from a regional transportation feasibility study published in 2007, which suggested that a well-run rail service between Los Angeles and Las Vegas could garner up to 30% of the approximately 12 million passengers who regularly drive between these two metropolitan areas. See: www.rtcsouthernnevada.com. We believe that with our current business plan, we would be able to break-even, on an operating basis, with approximately 1.5% of that overall market. In addition, a market study done by RL Banks outlines eight other routes with similar demographics to the X Train LA/Las Vegas route. We believe the operating model we will use on the LA/Las Vegas route is replicable on the other eight routes with similar potential financial results.

Over the last 18 months, we have been engaged in activities designed to secure the necessary rights, equipment and facilities required to commence commercial service on the LA to Las Vegas route in 2014. These include: securing operating rights to run our trains over tracks owned by private railroads; obtaining the capability to operate train equipment safely and in conformity with applicable government regulations; purchasing or leasing appropriate locomotive and passenger cars designed to move passengers over the route in comfort; and securing leases on terminal facilities and passenger depots in Los Angeles and in Las Vegas. In addition, we have had discussions with Amtrak regarding coupling our casino style consists up to their existing passenger trains on the routes we have identified. Based on these discussions, we believe this arrangement, under which we would pay the going rate fee for such accommodation, will be acceptable to Amtrak

15

We have entered into an MOU with Amtrak for managing the operation of the train.

We have executed a Memorandum of Understanding with the City of Fullerton for use of their station for a Southern California station of the LA/Las Vegas service. The Company’s common stock is currently quoted on the OTCQB under the symbol “XTRN”. The company website is www.vegasxtrain.com. The contents of this website are not incorporated into this Report.

The Company maintains offices at 6650 Via Austi Parkway, Suite 140, Las Vegas, Nevada 89119.

Critical Accounting Policies

The preparation of our consolidated financial statements and notes thereto requires management to make estimates and assumptions that affect the amounts and disclosures reported within those financial statements. On an ongoing basis, management evaluates its estimates, including those related to impairment of goodwill, contingencies, litigation and income taxes.  Management bases its estimates and judgments on historical experiences and on various other factors believed to be reasonable under the circumstances.  Actual results under circumstances and conditions different than those assumed could result in differences from the estimated amounts in the financial statements. There have been no material changes to these policies during the fiscal year.

Intangible and Long-Lived Assets:

We follow Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, “Property Plant and Equipment”, which establishes a “primary asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long lived asset to be held and used.  Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.  Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

Goodwill is accounted for in accordance with ASC Topic 350, “Intangibles – Goodwill and Other”. We assess the impairment of long-lived assets, including goodwill and intangibles on an annual basis or whenever events or changes in circumstances indicate that the fair value is less than its carrying value. Factors that we consider important which could trigger an impairment review include poor economic performance relative to historical or projected future operating results, significant negative industry, economic or company specific trends, changes in the manner of our use of the assets or the plans for our business, market price of our common stock, and loss of key personnel. We have determined that there was no impairment of goodwill.

Stock-Based Compensation:

Transactions in which the Company exchanges its equity instruments for goods or services is accounted for using authoritative guidance for stock based compensation. This guidance also addresses transactions in which the Company incurs liabilities in exchange for goods or services that are based on the fair value of the Company’s equity instruments or that may be settled by the issuance of those equity instruments.

If the Company issues stock for services which are performed over a period of time, the Company records the value paid in the equity section of the Company’s financial statements as it is a non-cash equity transaction. The Company accretes the expense to stock based compensation expense on a monthly basis for services rendered within the period.

16

We use the fair value method for equity instruments granted to non-employees and will use the Black-Scholes model for measuring the fair value of options, if issued. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.

Derivative Liabilities:

In connection with the private placement of Convertible Notes beginning in February 2013, the Company became contingently obligated to issue shares of common stock in excess of the 200 million authorized under the Company’s certificate of incorporation.  Consequently, the ability to settle these obligations with shares would be unavailable causing these obligations to potentially be settled in cash.  This condition creates derivative liabilities in relation to dilutive securities.

The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares.

Using this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to February 19, 2013 are derivative liabilities.

The Company also has certain warrants and notes payable with elements that qualify as derivatives. The warrants have anti-dilution clauses that prevent calculation of the ultimate number of shares that may be issued upon exercise, and two of the notes payable had a variable conversion feature that similarly prevented the calculation of the number of shares into which they were convertible.

The Company values these warrants and notes payable using the binomial lattice method.  The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations.

New Accounting Pronouncements:

There are no recent accounting pronouncements that management believes will have a material impact on the Company's present or future consolidated financial statements.

Results of Operations

The following is a comparison of the consolidated results of operations for the three months ended June 30, 2013 and 2012.

17

	Three Months Ended
	June 30,			June 30,
	2013			2012			$ Change			% Change
Operating Expenses:
Compensation and payroll taxes	$	849,329		$	564,842		$	284,487			50.4	%
Selling, general and administrative		208,123			89,738			118,385			131.9	%
Professional fees		581,788			121,865			459,923			377.4	%
Depreciation expense		1,434			160			1,274			796.3	%
Total expenses		1,640,674			776,605			864,069			111.3	%
Loss from continuing operations		(1,640,674	)		(776,605	)		(864,069	)		111.3	%
Other (expense) income
Interest expense		(2,521,627	)		(13,770	)		(2,507,857	)		18212.5	%
Change in derivative liability		950,245			22,440			927,805			4134.6	%
Total other (expense) income		(1,571,382	)		8,670			(1,580,052	)		-18224.4	%
Net loss from continuing operations before provision for income taxes		(3,212,056	)		(767,935	)		(2,444,121	)		318.3	%
Provision for income taxes		(4,491	)		(4,491	)		-			0.0	%
Net loss from continuing operations		(3,216,547	)		(772,426	)		(2,444,121	)		316.4	%
Discontinued operations:
Income from discontinued operations, net of income taxes		-			484,420			(484,420	)		-100.0	%
Net loss	$	(3,216,547	)	$	(288,006	)	$	(2,928,541	)		1016.8	%

Operating Expenses

Compensation expense increased by $284,487, or 50.4%, during the quarter ended June 30, 2013 as compared to the quarter ended June 30, 2012.  The increase in compensation expense during the quarter ended June 30, 2013 is related to the hiring of additional full-time employees and the additional board members as compared to the same period in 2012.  In addition, we issued warrants as compensation to Board members during the three months June 30, 2013 resulting in additional expenses of $221,789.  Selling, general and administrative expenses increased by $118,385, or 131.9%, during the quarter ended June 30, 2013 as compared to the same period in 2012 primarily due to increases in director and officers’ insurance and travel expenses related to raising capital.   Professional fees increased by $459,923, or 377.4%, during 2013 as compared to 2012 due primarily to increases in legal fees, consulting services, accounting and financial advisory related to the implementation of the business plan and raising funds.  

Other (Expense) Income

Interest expense increased by $2,507,857 during the quarter ended June 30, 2013 as compared to the same period in 2012.  The increase is due primarily to the increase in debt outstanding during the quarter ended June 30, 2013 due to the issuance of convertible notes payable from February 2013 through June 2013.  The conversion feature associated with the convertible notes and the value of warrants issued in connection with the convertible notes have been accounted for as discounts to the convertible notes payable.  The discount is being amortized into interest expense over the maturity date of the convertible notes.  This resulted in additional interest expense during the three months ended June 30, 2013 of $2,305,550.  In addition, we had capitalized debt issuance costs related to these convertible notes payable, which are being amortized over the maturity date of the notes of February 1, 2014, which resulted in additional interest expense in 2013 of $155,391.   These amounts did not exist during the same period in 2012.

18

The change in the value of derivative liabilities amounted to $950,245 for the three months ended June 30, 2013 as compared to $22,440 for the same period of 2012.  The increase was primarily to the increase in derivative liabilities outstanding resulting from the issuance of convertible notes and warrants from February 2013 through June 2013.  The amounts are being treated as derivative liabilities as we became contingently obligated to issue shares of common stock in excess of the 200 million shares authorized under the Company’s certificate of incorporation.  This condition did not exist during the three months ended June 30, 2012.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support asset growth, satisfy disbursement needs, maintain reserve requirements and otherwise operate on an ongoing basis. The Company has no operating revenues and is currently dependent on financing and sale of stock to fund operations.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company had a net loss of $3,216,547 for the three months ended June 30, 2013 and an accumulated deficit of $21,792,170 through June 30, 2013, as well as outstanding convertible notes payable of $2,405,000 which are payable on February 1, 2014.  Management believes that it will need additional equity or debt financing to implement the business plan.  These matters raise substantial doubt about the Company’s ability to continue as a going concern.

The Company estimates that it will need to obtain a minimum of $10 million in additional capital to begin operations of its planned train service. The Company intends to raise these funds through the public or private sale of equity and/or debt securities.  There is no assurance such funding will be available on terms acceptable to the Company, or at all. If the Company succeeds in raising such funds, it intends to use them for railcar purchase, design, refurbishment and outfitting, Las Vegas depot design and construction, lease payments, Union Pacific Railroad (“UP”) and BNSF Railway Company (“BNSF”) mileage fees, salaries and other professional fees and also information technology and corporate infrastructure development. In addition, we will need to pay approximately $56 million to UP to procure operating rights for the Company on the UP route between Daggett, CA and Las Vegas, NV. The Company plans to apply for a Railroad Rehabilitation & Improvement (“RRIF”) loan to secure the capital for the improvements on the Union Pacific Railroad.  RRIF funding may be used to acquire, improve or rehabilitate rail equipment or facilities, including track, components of track, bridges, yards, buildings and shops.

We continue to actively pursue various funding options, including equity offerings and debt financings, to obtain additional funds to continue the development of our products and bring them to commercial markets. There can be no assurance that we will be able to consummate any fund raising transactions on terms acceptable to us or at all.  

We believe that the successful growth and operation of our business is dependent upon our ability to do the following:

 - obtain adequate sources of debt or equity financing to pay unfunded operating expenses and fund long-term business operations; and

 - manage or control working capital requirements by controlling operating expenses.

There can be no assurance that we will be successful in achieving our long-term plans as set forth above, or that such plans, if consummated, will enable us to obtain profitable operations or continue in the long-term.

19

Description of Outstanding Debt

We have outstanding convertible notes payable of $2,405,000, which earn interest of 8% per annum and mature on February 1, 2014.  The outstanding principal and accrued interest are convertible into shares of common stock at a rate of $0.05 per share at the option of the debt holder.

We have an outstanding note payable of $13,333 which was due on May 17, 2012 and earns interest at 8% per annum.  The Company is in default on this note payable.  As of June 30, 2013, there has been no demand made for repayment of the notes or accrued interest.

Cash Flows

Net cash used in operating activities for the three months ended June 30, 2013 was $1,064,747 as compared to net cash used in operating activities for the three months ended June 30, 2012 of $443,100. The primary reasons for the differences between our net loss of $3,216,547 and net cash used in operating activities for the three months ended June 30, 2013 were amortization of discounts on convertible notes payable of $2,305,550, the non-cash stock issued for compensation and services of $440,905, and the non-cash issuance of warrants for services of $221,789, offset by a decrease in our derivative liabilities of $950,245.  The changes in assets and liabilities compared to 2012 related to the timing of payments for operating items, primarily payroll, as well as the payment of $109,000 of liabilities from discontinued operations.

Cash used in investing activities during the three months ended June 30, 2013 were expenditures of $107,565 for the purchase of property and equipment.  During the three months ended June 30, 2012, we had purchases of property and equipment of $14,569.

Net cash provided by financing activities was $880,000 for the three months ended June 30, 2013 consisting of proceeds from the issuance of convertible notes payable.  During the three months ended June 30, 2012, we had net cash provided by financing activities of $1,165,000, which represented $1,190,000 from the proceeds from the sale of common stock offset by repayments of $25,000 payment for a note payable. 

Management currently believes that cash flows from current and future equity investments will be sufficient to meet the Company’s liquidity and capital needs at least through fiscal 2014.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4.   Controls and Procedures.

Evaluation of Disclosure Controls and Procedures and Changes in Internal Control over Financial Reporting

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of June 30, 2013. In designing and evaluating our disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applied its judgment in evaluating the cost-benefit relationship of possible controls and procedures.  Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of June 30, 2013, our disclosure controls and procedures were effective.

Management’s Responsibility for Financial Statements

Our management is responsible for the integrity and objectivity of all information presented in this Quarterly Report on Form 10-Q. The consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America and include amounts based on management’s best estimates and judgments. Management believes the consolidated financial statements fairly reflect the form and substance of transactions and that the financial statements fairly represent the Company’s financial position and results of operations.

Changes in Internal Control Over Financial Reporting

There were no changes during the three months ended June 30, 2013 in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

20

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

In the ordinary course of business, the Company may be or has been involved in legal proceedings from time to time. As of the date of this quarterly report on Form 10-Q, there have been no material changes to any legal proceedings relating to the Company which previously were not reported.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

During the 3 months ended June 30, 2013, the Company issued shares of its common stock as follows:

● 5,417,756 shares issued to convertible promissory notes holders for conversion of notes and accrued interest for a total value of $270,911.

● 1,590,000 shares issued for services of $103,550.

● 1,000,000 shares issued to Board of Director member per agreements.

The above referenced issuances were made in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended, for transactions not involving a public offering.

Item 3.  Default Upon Senior Securities

The Company has an outstanding note payable of $13,333 which was due on May 17, 2012 and earns interest at 8% per annum.  The Company is in default on this note payable.  As of June 30, 2013, there has been no demand made for repayment of the notes or accrued interest.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information.

None

21

Item 6.  Exhibits.

Exhibit No.	Description
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002.
32.	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002

EX-101.INS	XBRL INSTANCE DOCUMENT
EX-101.SCH	XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
EX-101.CAL	XBRL TAXONOMY EXTENSION CALCULATION LINKBASE

EX-101.DEF	XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
EX-101.LAB	XBRL TAXONOMY EXTENSION LABELS LINKBASE
EX-101.PRE	XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: August 14, 2013	Las Vegas Railway Express, Inc.
	By: /s/ Michael A. Barron
	Chief Executive Officer (principal executive officer)
Date: August 14, 2013
	By: /s/ Wanda Witoslawski
	Chief Financial Officer (principal financial officer)

22

EX-31.1

Exhibit 31.1

Section 302 Certification of Chief Executive Officer

I, Michael Barron, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Las Vegas Railway Express, Inc.

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to 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;

3.   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;

4.   The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)           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;

           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 financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

           c)           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

           d)           disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financing reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)   all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 14, 2013

/s/ Michael A. Barron

     Michael A. Barron

     Chief Executive Officer (principal executive officer)

EX-31.2

Exhibit 31.2

Section 302 Certification of Chief Financial Officer

I, Wanda Witoslawski, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Las Vegas Railway Express, Inc.

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to 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;

3.   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;

4.   The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)           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;

           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 financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

           c)           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

           d)           disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financing reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)   all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 14, 2013

/s/ Wanda Witoslawski

     Wanda Witoslawski

     Chief Financial Officer (principal executive officer)

EX-32

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SEC. 1350

(SECTION 906 OF SARBANES-OXLEY ACT OF 2002)

In connection with the Quarterly Report of Las Vegas Railway Express, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael A. Barron, Chief Executive Officer and Wanda Witoslawski, Chief Financial Officer hereby certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

Dated:  August 14, 2013

/s/ Michael A. Barron

       Michael A. Barron

       Chief Executive Officer (principal executive officer)

         /s/ Wanda Witoslawski

       Wanda Witoslawski

       Chief Financial Officer (principal financial officer)

XML

(2) Summary of Significant Accounting Policies: Use of Estimates (Policies)

3 Months Ended

Jun. 30, 2013

Policies

Use of Estimates:

Use of Estimates:

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods.

XML

CONDENSED STATEMENT OF OPERATIONS (USD $)	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Operating Expenses:
Compensation and payroll taxes	$ 849,329	$ 564,842
Selling, general and administrative	208,123	89,738
Professional fees	581,788	121,865
Depreciation expense	1,434	160
Total expenses	1,640,674	776,605
Loss from operations	(1,640,674)	(776,605)
Other (expense) income
Interest expense	(2,521,627)	(13,770)
Change in derivative liability	950,245	22,440
Total other (expense) income	(1,571,382)	8,670
Net loss from continuing operations before provision for income taxes	(3,212,056)	(767,935)
Provision for income taxes	(4,491)	(4,491)
Net loss from continuing operations	(3,216,547)	(772,426)
Income from discontinued operations, net of income taxes	0	484,420
Net loss	$ (3,216,547)	$ (288,006)
Net loss per share, continuing operations, basic and diluted	$ (0.02)	$ (0.01)
Net income per share, discontinued operations, basic and diluted		$ 0.01
Net loss per share, basic and diluted	$ (0.02)	$ 0.00
Weighted average number of common shares outstanding, basic and diluted	160,066,779	61,535,442

XML

(5) Convertible Notes Payable

3 Months Ended

Jun. 30, 2013

Notes

(5) Convertible Notes Payable

(5)           Convertible Notes Payable

During February and March 2013, the Company issued a series of convertible notes payable (the “Convertible Notes”) to investors for total proceeds of $1,900,000.  The Convertible Notes are convertible into shares of the Company’s common stock at $0.05 per share at the option of the debt holder.  The Convertible Notes bear interest at a rate of 8% per annum, and have a maturity date of February 1, 2014.  Prior to March 31, 2013, the debt holders converted $105,000 of outstanding principal into 2,100,000 shares of common stock.  As a result, as of March 31, 2013, the remaining gross principal balance of convertible notes payable outstanding amounted to $1,795,000.

During the three months ended June 30, 2013, the Company issued additional Convertible Notes to investors for additional proceeds of $880,000, with the same terms as described above.  During the three months ended June 30, 2013, the debt holders converted $270,000 of outstanding principal and $911 of accrued interest into 5,417,756 shares of common stock pursuant to the original terms in the agreements.  As of June 30, 2013, the remaining principal balance of convertible notes payable amounted to $2,405,000, including $50,000 outstanding to a Director of the Company.   

The Company does not have sufficient authorized shares to cover the conversion feature of the convertible notes.  The conversion feature of the Convertible Notes issued on and after February 13, 2013 created a derivative liability for the Company. See Note 6, Derivative Instruments. The beneficial conversion feature of the notes issued prior to February 13, 2013 was recorded as a discount to the notes based on its intrinsic value.

In connection with the Convertible Notes, the Company granted an aggregate of 53,600,000 (including 17,600,000 during the three months ended June 30, 2013) warrants to purchase additional shares of common stock at an exercise price of $0.10 per share and a contractual life of 3 years.  Of the 17,600,000 warrants granted during the three months ended June 30, 2013, 1,000,000 were granted to a Director of the Company.  The Company does not have sufficient authorized shares to cover the warrants.  As a result, the warrants issued during the three months ended June 30, 2013 were determined to be derivative liabilities which resulted in additional derivative liabilities of $1,372,237.  See Note 8, Derivative Instruments.

The value of the derivative liabilities and discounts created through the issuance of the Convertible Notes and warrants during the three months ended June 30, 2013 as described above exceeded the proceeds of the Convertible Notes by $1,401,191. This excess was recorded as interest expense on the issuance dates of each note and warrant during the three months ended June 30, 2013.

The following summarizes the book value of the convertible notes payable outstanding as of June 30, 2013 and March 31, 2013.

		June 30,		March 31,
		2013		2013
		(Unaudited)
Principal balance of convertible notes payable outstanding	$	2,405,000	$	1,795,000
Less: discount on convertible notes payable		(1,654,599)		(1,678,958)
Convertible notes payable, net	$	750,401	$	116,042

.

Future scheduled maturities of these notes payable are as follows:

		Year Ended
		March 31,
2014	$	2,405,000
Total	$	2,405,000

In connection with the Convertible Notes, the Company incurred debt issuance costs, which primarily represented commissions paid to acquire the debt.  These costs have been capitalized and are being amortized through the maturity date of the notes.  During the three months ended June 30, 2013, the Company capitalized an additional $521,351 of debt issuance costs, including the fair value of 4,760,000 warrants issued on April 29, 2013 as commission.  Amortization of these capitalized debt issuance costs amounted to $155,391 for the three months ended June 30, 2013, which is reflected as interest expense on the accompanying statement of operations.  As of June 30, 2013 and March 31, 2013, the remaining amount of capitalized debt issuance costs amounted to $497,760 and $116,329, respectively, which are included as a component of other current assets on the accompanying consolidated balance sheets.          

XML

(2) Summary of Significant Accounting Policies: Derivative Liabilities (Policies)

3 Months Ended

Jun. 30, 2013

Policies

Derivative Liabilities

Derivative Liabilities:

In connection with the private placement of Convertible Notes beginning in February 2013, the Company became contingently obligated to issue shares of common stock in excess of the 200 million authorized under the Company’s certificate of incorporation.  Consequently, the ability to settle these obligations with shares would be unavailable causing these obligations to potentially be settled in cash. This condition creates a derivative liability.

The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares.

Using this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued on and subsequent to February 13, 2013 are derivative liabilities.

The Company also has certain warrants and notes payable with elements that qualify as derivatives. The warrants have anti-dilution clauses that prevent calculation of the ultimate number of shares that may be issued upon exercise, and two of the notes payable had a variable conversion feature that similarly prevented the calculation of the number of shares into which they were convertible.

The Company values these warrants and notes payable using the binomial lattice method.  The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations.  

XML

(2) Summary of Significant Accounting Policies: Property and Equipment (Policies)

3 Months Ended

Jun. 30, 2013

Policies

Property and Equipment:

Property and Equipment:

Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives of approximately five years once the individual assets are placed in service.  The Company expenses all purchases of equipment with individual costs of under $500.

XML

(9) Discontinued Operations (Details) (USD $)	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Details
Income from discontinued operations, net of income taxes	$ 0	$ 484,420

XML

(2) Summary of Significant Accounting Policies: Basic and Diluted Loss Per Share (Details) (USD $)	3 Months Ended
	Jun. 30, 2013
Details
Outstanding Employee Stock Options	2,000,000
Convertible Debt	$ 2,405,000
Stock Issued During Period, Shares, Conversion of Convertible Securities	48,100,000
Warrants and Rights Outstanding	$ 82,449,842

XML

(3) Property and Equipment: Schedule of Other Assets, Noncurrent (Tables)

3 Months Ended

Jun. 30, 2013

Tables/Schedules

Schedule of Other Assets, Noncurrent

		June 30,		March 31,
		2013		2013
		(Unaudited)
Office equipment	$	51,458	$	40,921
Software		30,167		14,192
Transportation equipment under construction		435,610		354,557
		517,235		409,670
Less: accumulated depreciation		(17,315)		(15,881)
	$	499,920	$	393,789

XML

(1) Organization and Basis of Presentation: Schedule of Error Corrections and Prior Period Adjustments (Tables)

3 Months Ended

Jun. 30, 2013

Tables/Schedules

Schedule of Error Corrections and Prior Period Adjustments

For the three months ended June 30, 2012:
		As Previously
		Reported		Adjustments		Restated
Operating Expenses:
Compensation and payroll taxes	$	326,115	$	238,727	$	564,842
Selling, general and administrative		89,738		-		89,738
Professional fees		148,365		(26,500)		121,865
Depreciation expense		160		-		-160
Total expenses		564,378		212,227		776,605
Loss from operations		(564,378)		(212,227)		(776,605)
Interest expense		(10,553)		(3,217)		(13,770)
Change in derivative liability		-		22,440		22,440
Total other income (expense)		(10,553)		19,223		8,670
Net loss from continuing operations before tax provision		(574,931)		(193,004)		(767,935)
Provision for income taxes		-		(4,491)		(4,491)
Net loss from continuing operations		(574,931)		(197,495)		(772,426)
Discontinued operations:
Income from discontinued operations, net of income tax		484,420				484,420
Net loss	$	(90,511)	$	(197,495)	$	(288,006)

XML

(7) Equity (Details) (USD $)	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Mar. 31, 2013
Details
Common stock shares authorized	200,000,000		200,000,000
Shares issued from converted debt	5,417,756
Convertible notes payable and accrued interest	$ 270,911
Shares converted held by related party entity	4,000,000
Convertible note payable held by related party entity	200,000
Shares issued as payment of notes payable	9,808,773
Outstanding notes payable and accrued interest	715,439
Shares issued for services	2,590,000	2,500,000
Services expense	318,550	182,000
Shares issued for warrants	196,468
Shares issued for private placement	23,600,000
Proceeds from private placement	$ 1,190,000
Warrants issued in connection with convertible notes	17,600,000
Warrants issued for payments of commissions	4,760,000
Warrants issued for payments of directors' services	2,000,000

XML

(1) Organization and Basis of Presentation (Details) (USD $)	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Mar. 31, 2013
Details
Net loss	$ 3,216,547	$ 288,006
Accumulated Other Comprehensive Income (Loss), Net of Tax	21,792,170
Convertible Notes Payable Outstanding			$ 2,405,000
Additional capital necessary to begin operations	$10 million

XML

(4) Notes Payable: Schedule of Long-term Debt Instruments (Details) (USD $)	Jun. 30, 2013	Mar. 31, 2013
Details
Secured promissory notes, dated May 17, 2011 through May 17, 2012 to an investor bearing interest at 8% per annum, payable on May 17, 2012	$ 13,333	$ 13,333
Short term notes payable	$ 13,333	$ 13,333

XML

(10) Subsequent Events (Details)	Aug. 02, 2013	Jul. 22, 2013	Jul. 17, 2013	Jul. 01, 2013
Details
Shares issued for consulting services		750,000		750,000
Restricted shares issued per employement agreement			2,000,000
Restricted shares issued for consulting services	1,000,000

XML

(6) Derivative Instruments: Schedule of Derivative Liabilities at Fair Value (Tables)

3 Months Ended

Jun. 30, 2013

Tables/Schedules

Schedule of Derivative Liabilities at Fair Value

		Three Months Ended June 30, 2013						Three Months Ended June 30, 2012
				Conversion Feature						Conversion Feature
				of						of
		Warrants		Notes Payable		Total		Warrants		Notes Payable		Total
Beginning balance, April 1	$	1,663,394	$	1,518,143	$	3,181,537	$	134,791	$	35,708	$	170,499
Additional issuances		2,472,282		1,364,711		3,836,993		-		-		-
Exercised/converted		-		(266,459)		(266,459)		-		(29,439)		(29,439)
Change in derivative liability		22,441		(972,686)		(950,245)		(22,440)		-		(22,440)
Ending balance, June 30	$	4,158,117	$	1,643,709	$	5,801,826	$	112,351	$	6,269	$	118,620

XML

(5) Convertible Notes Payable: ScheduleOfFutureMaturitiesOfNotesPayable (Details) (USD $)	Jun. 30, 2013
Details
Principal Balance	$ 2,405,000

XML

(2) Summary of Significant Accounting Policies: New Accounting Pronouncements (Policies)

3 Months Ended

Jun. 30, 2013

Policies

New Accounting Pronouncements:

New Accounting Pronouncements: 

There are no recent accounting pronouncements that management believes will have a material impact on the Company's present or future consolidated financial statements

XML

(1) Organization and Basis of Presentation

3 Months Ended

Jun. 30, 2013

Notes

(1) Organization and Basis of Presentation

(1)           Organization and basis of presentation

Basis of Financial Statement Presentation:

The accompanying unaudited interim financial statements of Las Vegas Railway Express, Inc. (the "Company") have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. These statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. However, the results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending March 31, 2014 or any other future period. These interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2013.

Going Concern:

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company had no revenue, a net loss of $3,216,547 for the three months ended June 30, 2013 and an accumulated deficit of $21,792,170 through June 30, 2013, as well as outstanding convertible notes payable of $2,405,000 which are payable on February 1, 2014.  Management believes that it will need additional equity or debt financing to implement the business plan.  These matters raise substantial doubt about the Company’s ability to continue as a going concern.

The Company estimates that it will need to obtain $10 million in additional capital to begin operations of its planned train service. The Company intends to raise these funds through the public or private sale of equity and/or debt securities. There is no assurance such funding will be available on terms acceptable to the Company, or at all. If the Company succeeds in raising such funds, it intends to use them for railcar purchase, design, refurbishment and outfitting for the National Routes beginning October 2013. The North Las Vegas depot design and construction, lease payments on the North Las Vegas depot site, Union Pacific Railroad (“UP”)capital infrastructure improvements of approximately $56 million  and the procurement of 24 railcars designed specifically for the Las Vegas route are planned to be paid for through a Railroad Rehabilitation & Improvement Financing (“RRIF”) loan from FRA. The Company estimates that the operating capital generated from the National Routes would fund the operating costs of the deployment of the Las Vegas route. The RRIF loan will pay for the infrastructure improvements required on that route.

The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Restatements:

The accompanying condensed financial statements for the three months ended June 30, 2012 have been restated to reflect a correction relating to certain warrants and notes payable outstanding which contained elements that qualified them as derivative liabilities.  Accordingly, the Company obtained a third party valuation of the warrants and embedded derivatives and reclassified them as derivative liabilities.  As a result, the Company recorded the change in the fair value of the derivative liabilities as a component of the condensed statement of operations.  The Company also made corrections to stock-based compensation, as well as its deferred income tax provision.     

The impact of the restatements described above is as follows.

For the three months ended June 30, 2012:
		As Previously
		Reported		Adjustments		Restated
Operating Expenses:
Compensation and payroll taxes	$	326,115	$	238,727	$	564,842
Selling, general and administrative		89,738		-		89,738
Professional fees		148,365		(26,500)		121,865
Depreciation expense		160		-		-160
Total expenses		564,378		212,227		776,605
Loss from operations		(564,378)		(212,227)		(776,605)
Interest expense		(10,553)		(3,217)		(13,770)
Change in derivative liability		-		22,440		22,440
Total other income (expense)		(10,553)		19,223		8,670
Net loss from continuing operations before tax provision		(574,931)		(193,004)		(767,935)
Provision for income taxes		-		(4,491)		(4,491)
Net loss from continuing operations		(574,931)		(197,495)		(772,426)
Discontinued operations:
Income from discontinued operations, net of income tax		484,420				484,420
Net loss	$	(90,511)	$	(197,495)	$	(288,006)

XML

(3) Property and Equipment

3 Months Ended

Jun. 30, 2013

Notes

(3) Property and Equipment

(3)         Property and Equipment

Property and equipment consisted of the following.

		June 30,		March 31,
		2013		2013
		(Unaudited)
Office equipment	$	51,458	$	40,921
Software		30,167		14,192
Transportation equipment under construction		435,610		354,557
		517,235		409,670
Less: accumulated depreciation		(17,315)		(15,881)
	$	499,920	$	393,789

XML

(6) Derivative Instruments

3 Months Ended

Jun. 30, 2013

Notes

(6) Derivative Instruments

(6)           Derivative Instruments

Excess Shares

In connection with the private placement of Convertible Notes beginning in February 2013 (see Note 5), the Company became contingently obligated to issue shares of common stock in excess of the 200 million shares authorized under the Company’s certificate of incorporation.  Consequently, the ability to settle these obligations with shares would be unavailable causing these obligations to potentially be settled in cash. This condition creates a derivative liability.

The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split or anti-dilution, to have an issuance date to coincide with the event giving rise to the additional shares.

Using this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued on and subsequent to February 13, 2013 are classified as derivative liabilities.

Other Derivatives

The Company has certain warrants and notes payable with elements that qualify as derivatives. The warrants have anti-dilution clauses that prevent calculation of the ultimate number of shares that may be issued upon exercise, and two of the notes payable had a variable conversion feature that similarly prevented the calculation of the number of shares into which they were convertible.

The derivative liability, as it relates to the different instruments, is shown in the following table.

		Three Months Ended June 30, 2013						Three Months Ended June 30, 2012
				Conversion Feature						Conversion Feature
				of						of
		Warrants		Notes Payable		Total		Warrants		Notes Payable		Total
Beginning balance, April 1	$	1,663,394	$	1,518,143	$	3,181,537	$	134,791	$	35,708	$	170,499
Additional issuances		2,472,282		1,364,711		3,836,993		-		-		-
Exercised/converted		-		(266,459)		(266,459)		-		(29,439)		(29,439)
Change in derivative liability		22,441		(972,686)		(950,245)		(22,440)		-		(22,440)
Ending balance, June 30	$	4,158,117	$	1,643,709	$	5,801,826	$	112,351	$	6,269	$	118,620

The derivative liability was valued using the binomial lattice method with the following inputs.

	Three	Three
	Months Ended	Months Ended
	June 30, 2013	June 30, 2012
Expected life in years	0.59 - 4.43 years	0.17 - 4.28 years
Stock price volatility	112.3% - 270.1%	48.5% - 191.6%
Discount rate	0.09% - 1.20%	0.07% - 0.61%
Expected dividends	None	None
Forfeiture rate	0%	0%

XML

(4) Notes Payable

3 Months Ended

Jun. 30, 2013

Notes

(4) Notes Payable

(4)           Notes payable

A summary of outstanding notes payable is as follows:

		June 30,		March 31,
		2013		2013
		(Unaudited)
Secured promissory notes,  dated  May 17, 2011 through
May 17, 2012 to an investor bearing interest at 8% per annum,
payable on May 17, 2012.  The Company is in default on this note.		13,333		13,333
Total outstanding notes payable	$	13,333	$	13,333

As of June 30, 2013, the Company is in default on the above note payable for $13,333.  As of June 30, 2013, there has been no demand made for repayment of the notes or accrued interest.

XML

(5) Convertible Notes Payable (Details) (USD $)	3 Months Ended	15 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Mar. 31, 2013
Details
ProceedsFromConvertibleNote		$ 1,900,000
Convertible note share price	$ 0.05
Convertible note interest rate	8.00%
Convertible note converted amount	105,000
Shares Issued For Convertible Note	2,100,000
Convertible Note Gross Principal			1,795,000
Proceeds from additional convertible notes	880,000
Outstanding principal converted	270,000
Accrued interest	911
Shares issued from converted debt	5,417,756
Principal Balance	2,405,000	2,405,000
Principal balance outstanding to Director of the Company	50,000	50,000
Warrants issued to purchase additional sharesn exercise price	$ 0.10
Shares isssued to Director of the Company	1,000,000
Initial derivative liabilitiy	1,372,237	1,372,237
Convertible Notes Interest Expense	1,401,191
Debt Issuance Cost	521,351
Warrants Issued	4,760,000
Amortization of capitalized debt	155,391
Capitalized debt issuance costs balance	$ 497,760	$ 497,760	$ 116,329

XML

(4) Notes Payable: Schedule of Long-term Debt Instruments (Tables)

3 Months Ended

Jun. 30, 2013

Tables/Schedules

Schedule of Long-term Debt Instruments

		June 30,		March 31,
		2013		2013
		(Unaudited)
Secured promissory notes,  dated  May 17, 2011 through
May 17, 2012 to an investor bearing interest at 8% per annum,
payable on May 17, 2012.  The Company is in default on this note.		13,333		13,333
Total outstanding notes payable	$	13,333	$	13,333

XML

(6) Derivative Instruments: Warrant Value Assumptions Schedule (Tables)

3 Months Ended

Jun. 30, 2013

Tables/Schedules

Warrant Value Assumptions Schedule

	Three	Three
	Months Ended	Months Ended
	June 30, 2013	June 30, 2012
Expected life in years	0.59 - 4.43 years	0.17 - 4.28 years
Stock price volatility	112.3% - 270.1%	48.5% - 191.6%
Discount rate	0.09% - 1.20%	0.07% - 0.61%
Expected dividends	None	None
Forfeiture rate	0%	0%

XML

(2) Summary of Significant Accounting Policies: Income Taxes (Details) (USD $)	Jun. 30, 2013	Mar. 31, 2013
Details
Deferred Tax Liabilities, Net	$ 60,405	$ 55,914

XML

(6) Derivative Instruments: Warrant Value Assumptions Schedule (Details) (USD $)	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Details
WarrantValueAssumptionsExpectedLife	0.59 - 4.43 years	0.17 - 4.28 years
WarrantValueAssumptionsStockPriceVolatility	112.3% - 270.1%	48.5% - 191.6%
Warrant Value Assumption Discount Rate	0.09% - 1.20%	0.07% - 0.61%
WarrantValueAssumptionsExpectedDividends	$ 0	$ 0
WarrantValueAssumptionsForfeitureRate	0.00%	0.00%

XML

BALANCE SHEET PARENTHETICAL (USD $)	Jun. 30, 2013	Mar. 31, 2013
CONDENSED BALANCE SHEETS
Common stock par value	$ 0.0001	$ 0.0001
Common stock shares authorized	200,000,000	200,000,000
Common stock shares issued	162,316,106	154,111,882
Common stock shares outstanding	162,316,106	154,111,882

XML

(9) Discontinued Operations

3 Months Ended

Jun. 30, 2013

Notes

(9) Discontinued Operations:

9)            Discontinued Operations:

Prior to January 21, 2010, the Company had been actively engaged in acquiring underperforming mortgage loan portfolios and generating revenues from re-performing, sale of loans and fee revenue.  As of January 21, 2010, the Company changed its primary business and abandoned the prior business. Accordingly, the assets and liabilities and results of operation related to this business have been classified as discontinued operations in the financial statements for all periods presented.  During the three months ended June 30, 2013 and 2012, the Company had net income from discontinued operations of $0 and $484,420, respectively, which resulted from the write down of payables.

The following table summarizes the liabilities classified as discontinued operations in the accompanying balance sheets: 

		June 30,		March 31,
		2013		2013
		(Unaudited)
Notes payable, related party	$	85,041	$	194,041
	$	85,041	$	194,041

The Company entered into forbearance agreements with investors holding the notes that are included in liabilities to be disposed of.  The new notes call for monthly payments and to be repaid in full by December 31, 2013.

XML

CONDENSED STATEMENT OF CASH FLOWS (USD $)	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities
Net loss	$ (3,216,547)	$ (288,006)
Depreciation and amortization	1,434	160
Amortization of discounts on note payable	2,305,550	3,628
Amortization of debt offering costs	155,391
Deferred tax provision	4,491	4,491
Change in value of derivative liability	(950,245)	(22,440)
Stock issued and subscribed for services	400,905	394,227
Stock option compensation		20,131
Warrants issued for services	221,789
Other current assets	20,531	15,500
Other assets	(3,349)
Liabilities of discontinued operations, net	(109,000)	(89,392)
Accounts payable and accrued expenses	104,303	3,021
Net cash used in operating activities	(1,064,747)	(443,100)
Cash flows from investing activities
Purchases of property and equipment	(107,565)	(14,596)
Net cash used in investing activities	(107,565)	(14,596)
Cash flows from financing activities
Proceeds from sale of stock		1,190,000
Proceeds from convertible notes payable	880,000
Payments on note payable		(25,000)
Net cash provided by financing activities	880,000	1,165,000
Net change in cash	(292,312)	707,304
Cash, beginning of the period	1,262,615	53,632
Cash, end of the period	970,303	760,936
Interest paid		1,944
Income taxes paid
Stock issued for debt	270,911	559,200
Stock issued for reduction of liabilities from discontinued operations		$ 156,239

XML

CONDENSED BALANCE SHEETS (USD $)	3 Months Ended
	Jun. 30, 2013	Mar. 31, 2013
ASSETS:
Cash	$ 970,303	$ 1,262,615
Other current assets	767,601	471,772
Total current assets	1,737,904	1,734,387
Property and equipment, net of accumulated depreciation	499,920	393,789
Deposit with Union Pacific	600,000	600,000
Other assets	(3,349)
Goodwill	843,697	843,697
Total other assets	1,473,004	1,469,655
Total assets	3,710,828	3,597,831
Liabilities and Stockholders' Deficit
Short term notes payable	13,333	13,333
Accounts payable and accrued expenses	478,687	375,295
Derivative liability	5,801,826	3,181,537
Convertible notes payable, net of discount	750,401	116,042
Liabilities of discontinued operations	85,041	194,041
Total current liabilities	7,129,288	3,880,248
Deferred tax liability	60,405	55,914
TOTAL LIABILITIES	7,189,693	3,936,162
Commitments and contingencies
Stockholders' deficit
Common stock, $0.0001 par value, 200,000,000 shares authorized, 162,316,106 and 154,111,882 shares issued and outstanding as of June 30, 2013 (unaudited) and March 31, 2013, respectively	16,232	15,411
Additional paid-in capital	18,297,073	18,221,881
Accumulated deficit	(21,792,170)	(18,575,623)
Total stockholders' deficit	(3,478,865)	(338,331)
Total stockholders' deficit Total liabilities and stockholders' deficit	$ 3,710,828	$ 3,597,831

XML

(5) Convertible Notes Payable: Schedule Of Convertible Notes Payable (Tables)

3 Months Ended

Jun. 30, 2013

Tables/Schedules

Schedule Of Convertible Notes Payable

		June 30,		March 31,
		2013		2013
		(Unaudited)
Principal balance of convertible notes payable outstanding	$	2,405,000	$	1,795,000
Less: discount on convertible notes payable		(1,654,599)		(1,678,958)
Convertible notes payable, net	$	750,401	$	116,042

XML

(2) Summary of Significant Accounting Policies: Share Based Payment (Policies)

3 Months Ended

Jun. 30, 2013

Policies

Share Based Payment:

Share Based Payment:

The Company issues stock, options and warrants as share-based compensation to employees and non-employees.

The Company accounts for its share-based compensation to employees in accordance FASB ASC 718.  Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. 

The Company accounts for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 “Equity - Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date. For interim periods, the fair value is estimated and the percentage of completion is applied to that estimate to determine the cumulative expense recorded.

The Company values stock compensation based on the market price on the measurement date. As described above, for employees this is the date of grant, and for non-employees, this is the date of performance completion.

The Company values stock options and warrants that do not qualify as derivative instruments using the Black-Scholes option pricing model.  There were no options or warrants granted during the three months ended June 30, 2013 or 2012 that were valued used in the Black-Scholes model.

Certain warrants qualify as derivative instruments and are valued using the binomial lattice method. See discussion below regarding accounting for derivative liabilities.

XML

(6) Derivative Instruments: Schedule of Derivative Liabilities at Fair Value (Details) (USD $)	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Warrants	1,663,394	134,791
Derivative liability	$ 3,181,537	$ 170,499
Additional Issuances Derivative Liability	3,836,993
Exercised/converted Derivative Liability	(266,459)	(29,439)
Derivative Liability Change	(950,245)	(22,440)
Derivative liability	5,801,826	118,620
Debt
Derivative liability	1,518,143	35,708
Additional Issuances Derivative Liability	1,364,711
Exercised/converted Derivative Liability	(266,459)	(29,439)
Derivative Liability Change	(972,686)
Derivative liability	1,643,709	6,269
Warrant
Additional Issuances Derivative Liability	2,472,282
Derivative Liability Change	22,441	(22,440)
Derivative liability	$ 4,158,117	$ 112,351

XML

(3) Property and Equipment: Schedule of Other Assets, Noncurrent (Details) (USD $)	Jun. 30, 2013	Mar. 31, 2013
Property, Plant and Equipment, Gross	$ 517,235	$ 409,670
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	(17,315)	(15,881)
Property and equipment, net of accumulated depreciation	499,920	393,789
Computer Software, Intangible Asset
Property, Plant and Equipment, Gross	30,167	14,192
Office Equipment
Property, Plant and Equipment, Gross	51,458	40,921
Railroad Transportation Equipment
Property, Plant and Equipment, Gross	$ 435,610	$ 354,557

XML

(1) Organization and Basis of Presentation: Schedule of Error Corrections and Prior Period Adjustments (Details) (USD $)	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Compensation and payroll taxes	$ 849,329	$ 564,842
Selling, general and administrative	208,123	89,738
Professional fees	581,788	121,865
Depreciation and amortization	(1,434)	(160)
Total expenses	1,640,674	776,605
Loss from operations	(1,640,674)	(776,605)
Interest expense	(2,521,627)	(13,770)
Change in derivative liability	950,245	22,440
Other Operating Income (Expense), Net		8,670
Net loss from continuing operations before provision for income taxes	(3,212,056)	(767,935)
Provision for income taxes	(4,491)	(4,491)
Net loss from continuing operations	(3,216,547)	(772,426)
Income from discontinued operations, net of income taxes	0	484,420
Net loss	(3,216,547)	(288,006)
Scenario, Previously Reported
Compensation and payroll taxes		326,115
Selling, general and administrative		89,738
Professional fees		148,365
Depreciation and amortization		160
Total expenses		564,378
Loss from operations		(564,378)
Interest expense		(10,553)
Other Operating Income (Expense), Net		(10,553)
Net loss from continuing operations before provision for income taxes		(574,931)
Net loss from continuing operations		(574,931)
Income from discontinued operations, net of income taxes		484,420
Net loss		(90,511)
Restatement Adjustment
Compensation and payroll taxes		238,727
Professional fees		(26,500)
Total expenses		212,227
Loss from operations		(212,227)
Interest expense		(3,217)
Change in derivative liability		22,440
Other Operating Income (Expense), Net		19,223
Net loss from continuing operations before provision for income taxes		(193,004)
Provision for income taxes		(4,491)
Net loss from continuing operations		(197,495)
Net loss		$ (197,495)

XML

(2) Summary of Significant Accounting Policies: Deposit With Union Pacific (Details) (USD $)	Jun. 30, 2013	Mar. 31, 2013	Nov. 08, 2012
Details
Deposit with Union Pacific	$ (600,000)	$ (600,000)	$ 600,000	[1]

[1] The Company is required to meet certain financial conditions, including the provision of a letter of credit in favor of Union Pacific in the amount of $27,444,145 on or before March 31, 2013. Failure to meet the conditions specified in the agreement will result in the Company losing the $600,000 deposit.

XML

(8) Stock Option Plan

3 Months Ended

Jun. 30, 2013

Notes

(8) Stock Option Plan:

(8)           Stock Option Plan:

The Company’s 2011 Stock Option Plan provides for the grant of 20,000,000 incentive or non-statutory stock options to purchase common stock. Employees, who share the responsibility for the management growth or protection of the business of the Company and certain Non-Employee (“Selected Persons”), are eligible to receive options which are approved by a committee of the Board of Directors.  These options vest over five years and are exercisable for a ten-year period from the date of the grant.

As of June 30, 2013, the Company had 2,000,000 options outstanding at an exercise price of $0.50 per share.  These options were fully vested as of March 31, 2013, and therefore there no further compensation cost was recorded during the three months ended June 30, 2013.  Stock option compensation cost recorded during the three months ended June 30, 2012 amounted to $20,131.  No options were granted or exercised during the quarters ended June 30, 2013 and 2012.  The outstanding options will expire in November 2018.   

XML

(5) Convertible Notes Payable: ScheduleOfFutureMaturitiesOfNotesPayable (Tables)

3 Months Ended

Jun. 30, 2013

Tables/Schedules

ScheduleOfFutureMaturitiesOfNotesPayable

		Year Ended
		March 31,
2014	$	2,405,000
Total	$	2,405,000

XML

(5) Convertible Notes Payable: Schedule Of Convertible Notes Payable (Details) (USD $)	Jun. 30, 2013	Mar. 31, 2013
Details
Principal balance of convertible notes payable outstanding	$ 2,405,000	$ 1,795,000
Convertible notes payable discount	(1,654,599)	(1,678,958)
Convertible Notes Payable, Noncurrent	$ 750,401	$ 116,042

XML

(2) Summary of Significant Accounting Policies: Risks and Uncertainties (Policies)

3 Months Ended

Jun. 30, 2013

Policies

Risks and Uncertainties:

Risks and Uncertainties:

The Company operates in an industry that is subject to intense competition and potential government regulations.  Significant changes in regulations and the inability of the Company to establish contracts with rail services providers could have a materially adverse impact on the Company’s operations.

XML

(7) Equity

3 Months Ended

Jun. 30, 2013

Notes

(7) Equity

(7)           Equity

Common Stock

The Company is authorized to issue 200,000,000 shares of common stock and no other class of stock at this time.   The holders of common stock are entitled to one vote per share on all matters submitted to a vote of stockholders and are not entitled to cumulate their votes in the election of directors.  The holders of common stock are entitled to any dividends that may be declared by the Board of Directors out of funds legally available therefore subject to the prior rights of holders of any outstanding shares of preferred stock and any contractual restrictions we have against the payment of dividends on common stock. In the event of our liquidation or dissolution, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of preferred stock.  Holders of common stock have no preemptive or other subscription rights and no right to convert their common stock into any other securities.

During the three months ended June 30, 2013, the Company issued an aggregate of 5,417,756 shares of common stock for the conversion of $270,911 in convertible notes payable and accrued interest.  This included 4,000,000 shares of common stock for the conversion of a $200,000 convertible note payable held by a related party entity owned by a Director of the Company.  During the three months ended June 30, 2012 the Company issued an aggregate of 9,808,773 of common stock as payment of $715,439 of outstanding notes payable and accrued interest. 

During the three months ended June 30, 2013, the Company issued an aggregate of 2,590,000 shares of common stock as payment for services, directors’ and employee compensation resulting in total expense of $318,550.  During the three months ended June 30, 2012, the Company issued an aggregate of 2,500,000 shares of common stock as payment for services, directors’ and employee compensation resulting in an expense of $182,000.   The fair value of the directors’ and employees’ service was determined by the closing price of the stock on date of grant and board of director minutes authorizing the shares.

During the three months ended June 30, 2013, the Company issued 196,468 shares of common stock for the exercise of warrants.  There were no warrants exercised during the three months ended June 30, 2012.    

During the three months ended June 30, 2012, the Company issued 23,600,000 shares of common stock as part of a private placement for total proceeds of $1,190,000.  There were no shares sold during the three months ended June 30, 2013. 

Warrants

During the three months ended June 30, 2013, the Company issued an aggregate of 17,600,000 warrants in connection with the Convertible Notes issued during the period, as well as 4,760,000 warrants for the payment of commissions associated with acquiring the Convertible Notes.  These warrants have been accounted for as derivative liabilities (see Note 6). 

During the three months ended June 30, 2013, the Company issued an additional 2,000,000 warrants as payment of directors’ services.  The warrants have been accounted for as derivative liabilities (see Note 6).  

There were no warrants issued during the three months ended June 30, 2012. 

XML

(2) Summary of Significant Accounting Policies

3 Months Ended

Jun. 30, 2013

Notes

(2) Summary of Significant Accounting Policies

 (2)           Summary of Significant Accounting Policies

Risks and Uncertainties:

The Company operates in an industry that is subject to intense competition and potential government regulations.  Significant changes in regulations and the inability of the Company to establish contracts with rail services providers could have a materially adverse impact on the Company’s operations.

Use of Estimates:

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods.

Property and Equipment:

Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives of approximately five years once the individual assets are placed in service.  The Company expenses all purchases of equipment with individual costs of under $500.

Intangible Assets:

Goodwill represents the excess of purchase price over tangible and intangible assets acquired, less liabilities assumed arising from the acquisition of the train business on November 23, 2009.  Goodwill is not amortized, but is reviewed for potential impairment on an annual basis at the reporting unit level.  As required by the “Intangibles – Goodwill and Other” topic of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”), the Company conducted an analysis of the goodwill on its single reporting unit using the Company’s market capitalization (based on Level 1 inputs). For the three months ended June 30, 2013, the assessment for impairment found that there is no impairment of goodwill. The Company has no accumulated impairment losses on goodwill.

Deposit with Union Pacific:

On November 8, 2012, the Company signed an agreement with Union Pacific Railroad Company whereby the Company was granted a nonexclusive operating right to use Union Pacific railroad track between Daggett, California and Las Vegas, Nevada.  In connection with this agreement, the Company made an earnest money deposit of $600,000 and is required to meet certain financial conditions, including the provision of a letter of credit in favor of Union Pacific in the amount of $27,444,145 on or before October 31, 2013.  Failure to meet the conditions specified in the agreement will result in the Company losing the $600,000 deposit. 

Income Taxes:

Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred tax assets of the Company relate primarily to operating loss carryforwards for federal income tax purposes. A full valuation allowance for deferred tax assets has been provided because the Company believes it is not more likely than not that the deferred tax asset will be realized. Realization of deferred tax assets is dependent on the Company generating sufficient taxable income in future periods.

The Company’s goodwill is deductible for tax but not for book. This difference creates a deferred tax liability, which cannot be matched with the Company’s deferred tax asset. As a result, the Company cannot net it with its net operating loss carryforward and therefore records a deferred tax liability to reflect the future non-deductibility of its goodwill asset. The deferred tax liability at June 30, 2013 (unaudited) and March 31, 2013 was $60,405 and $55,914,,respectively.

The Company periodically evaluates its tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits.  As of June 30, 2013 and March 31, 2013, the Company has not established a liability for uncertain tax positions.

Basic and Diluted Loss Per Share:

In accordance with FASB ASC 260, “Earnings Per Share,” the basic loss per common share is computed by dividing the net loss available to common stockholders after preferred stock dividends, by the weighted average common shares outstanding during the period.  Diluted earnings per share reflect per share amounts that would have resulted if diluted potential common stock had been converted to common stock.  Common stock equivalents have not been included in the earnings per share computation for the three months ended June 30, 2013 and 2012 as the amounts are anti-dilutive.  As of June 30, 2013, the Company had 2,000,000 outstanding options which were excluded from the computation of net income per share because they are anti-dilutive.  As of June 30, 2013, the Company also had convertible debt of $2,405,000 that is convertible into 48,100,000 shares of common stock which was excluded from the computation.  As of June 30, 2013, the Company had 82,449,842 outstanding warrants which were also excluded from the computation because they were anti-dilutive.

Share Based Payment:

The Company issues stock, options and warrants as share-based compensation to employees and non-employees.

The Company accounts for its share-based compensation to employees in accordance FASB ASC 718.  Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. 

The Company accounts for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 “Equity - Based Payments to Non-Employees.” Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date. For interim periods, the fair value is estimated and the percentage of completion is applied to that estimate to determine the cumulative expense recorded.

The Company values stock compensation based on the market price on the measurement date. As described above, for employees this is the date of grant, and for non-employees, this is the date of performance completion.

The Company values stock options and warrants that do not qualify as derivative instruments using the Black-Scholes option pricing model.  There were no options or warrants granted during the three months ended June 30, 2013 or 2012 that were valued used in the Black-Scholes model.

Certain warrants qualify as derivative instruments and are valued using the binomial lattice method. See discussion below regarding accounting for derivative liabilities.

Derivative Liabilities:

In connection with the private placement of Convertible Notes beginning in February 2013, the Company became contingently obligated to issue shares of common stock in excess of the 200 million authorized under the Company’s certificate of incorporation.  Consequently, the ability to settle these obligations with shares would be unavailable causing these obligations to potentially be settled in cash. This condition creates a derivative liability.

The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares.

Using this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued on and subsequent to February 13, 2013 are derivative liabilities.

The Company also has certain warrants and notes payable with elements that qualify as derivatives. The warrants have anti-dilution clauses that prevent calculation of the ultimate number of shares that may be issued upon exercise, and two of the notes payable had a variable conversion feature that similarly prevented the calculation of the number of shares into which they were convertible.

The Company values these warrants and notes payable using the binomial lattice method.  The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations.  

Fair Value of Financial Instruments:

The Company's financial instruments as defined by FASB ASC 825-10-50 include cash, notes payable and derivative liabilities.  Derivative liabilities are recorded at fair value.  The principal balance of notes payable approximates fair value because current interest rates and terms offered to the Company for similar debt are substantially the same. 

FASB ASC 820 defines fair value, establishes a framework for measuring fair value, in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. FASB ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

Level 1. Observable inputs such as quoted prices in active markets;

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.

In the absence of such information or if the Company is not able to corroborate these prices by other available relevant market information, the fair values are estimated using internal calculations or discounted cash flow techniques that incorporate prepayment rates, discount rates and delinquency and default and cumulative loss expectations, that are implied by market prices for similar securities and collateral structure types. Because this valuation technique relies on significant unobservable inputs, the fair value estimation is classified as Level 3. The process for determining fair value using unobservable inputs is generally more subjective and involves a high degree of management judgment and assumptions. These assumptions may have a significant effect on the estimates of fair value, and the use of different assumptions as well as changes in market conditions could have a material effect on the results of operations or financial condition.

New Accounting Pronouncements: 

There are no recent accounting pronouncements that management believes will have a material impact on the Company's present or future consolidated financial statements

XML

(8) Stock Option Plan (Details) (USD $)	3 Months Ended
	Jun. 30, 2013
Details
Grant of Stock Options Under Plan	20,000,000
Outstanding Employee Stock Options	2,000,000
Grant Date Market Price of Company's Stock	$ 0.50
Stock option compensation cost	$ 20,131

XML

(9) Discontinued Operations: Schedule Of Liabilities Classified As Discontinued Operations (Tables)

3 Months Ended

Jun. 30, 2013

Tables/Schedules

Schedule Of Liabilities Classified As Discontinued Operations

		June 30,		March 31,
		2013		2013
		(Unaudited)
Notes payable, related party	$	85,041	$	194,041
	$	85,041	$	194,041

XML

(2) Summary of Significant Accounting Policies: Intangible Assets (Policies)

3 Months Ended

Jun. 30, 2013

Policies

Intangible Assets:

Intangible Assets:

Goodwill represents the excess of purchase price over tangible and intangible assets acquired, less liabilities assumed arising from the acquisition of the train business on November 23, 2009.  Goodwill is not amortized, but is reviewed for potential impairment on an annual basis at the reporting unit level.  As required by the “Intangibles – Goodwill and Other” topic of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”), the Company conducted an analysis of the goodwill on its single reporting unit using the Company’s market capitalization (based on Level 1 inputs). For the three months ended June 30, 2013, the assessment for impairment found that there is no impairment of goodwill. The Company has no accumulated impairment losses on goodwill.

XML

(10) Subsequent Events

3 Months Ended

Jun. 30, 2013

Notes

(10) Subsequent Events

(10)         Subsequent Events

On July 1, 2013 and July 22, 2013 the Company issued 750,000 shares of common stock for consulting services.

On July 16, 2013 the Company was granted an extension with respect to meeting certain conditions under its operating agreement with the Union Pacific Railroad to October 31, 2013. All other conditions remain in place.

On July 17, 2013 the Company issued 2,000,000 restricted shares of common stock to employees per employment agreements.

On August 2, 2013 the Company issued 1,000,000 restricted shares of common stock for consulting services.

XML

(2) Summary of Significant Accounting Policies: Basic and Diluted Loss Per Share (Policies)

3 Months Ended

Jun. 30, 2013

Policies

Basic and Diluted Loss Per Share:

Basic and Diluted Loss Per Share:

In accordance with FASB ASC 260, “Earnings Per Share,” the basic loss per common share is computed by dividing the net loss available to common stockholders after preferred stock dividends, by the weighted average common shares outstanding during the period.  Diluted earnings per share reflect per share amounts that would have resulted if diluted potential common stock had been converted to common stock.  Common stock equivalents have not been included in the earnings per share computation for the three months ended June 30, 2013 and 2012 as the amounts are anti-dilutive.  As of June 30, 2013, the Company had 2,000,000 outstanding options which were excluded from the computation of net income per share because they are anti-dilutive.  As of June 30, 2013, the Company also had convertible debt of $2,405,000 that is convertible into 48,100,000 shares of common stock which was excluded from the computation.  As of June 30, 2013, the Company had 82,449,842 outstanding warrants which were also excluded from the computation because they were anti-dilutive.

XML

(2) Summary of Significant Accounting Policies: Deposit With Union Pacific (Policies)

3 Months Ended

Jun. 30, 2013

Policies

Deposit With Union Pacific:

Deposit with Union Pacific:

On November 8, 2012, the Company signed an agreement with Union Pacific Railroad Company whereby the Company was granted a nonexclusive operating right to use Union Pacific railroad track between Daggett, California and Las Vegas, Nevada.  In connection with this agreement, the Company made an earnest money deposit of $600,000 and is required to meet certain financial conditions, including the provision of a letter of credit in favor of Union Pacific in the amount of $27,444,145 on or before October 31, 2013.  Failure to meet the conditions specified in the agreement will result in the Company losing the $600,000 deposit. 

XML

Document and Entity Information	3 Months Ended
	Jun. 30, 2013	Aug. 14, 2013
Document and Entity Information:
Entity Registrant Name	LAS VEGAS RAILWAY EXPRESS, INC.
Document Type	10-Q
Document Period End Date	Jun. 30, 2013
Amendment Flag	false
Entity Central Index Key	0001405227
Current Fiscal Year End Date	--03-31
Entity Common Stock, Shares Outstanding		166,066,106
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1

XML

(2) Summary of Significant Accounting Policies: Income Taxes (Policies)

3 Months Ended

Jun. 30, 2013

Policies

Income Taxes

Income Taxes:

Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred tax assets of the Company relate primarily to operating loss carryforwards for federal income tax purposes. A full valuation allowance for deferred tax assets has been provided because the Company believes it is not more likely than not that the deferred tax asset will be realized. Realization of deferred tax assets is dependent on the Company generating sufficient taxable income in future periods.

The Company’s goodwill is deductible for tax but not for book. This difference creates a deferred tax liability, which cannot be matched with the Company’s deferred tax asset. As a result, the Company cannot net it with its net operating loss carryforward and therefore records a deferred tax liability to reflect the future non-deductibility of its goodwill asset. The deferred tax liability at June 30, 2013 (unaudited) and March 31, 2013 was $60,405 and $55,914,,respectively.

The Company periodically evaluates its tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits.  As of June 30, 2013 and March 31, 2013, the Company has not established a liability for uncertain tax positions.