Evcarco (EVCA) 10-Q 2010 Q3 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

o           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission file number 333-158293

EVCARCO, INC.

(Exact name of registrant as specified in its charter)

Nevada	5012	26-3526039
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(IRS Employer Identification No.)

7703 Sand Street

 Fort Worth, Texas 76118

(Address of principal executive offices) (Zip Code)

(817) 595-0710

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

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.   x Yes    o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   o Yes  o 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	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of November 22, 2010, there were 72,771,266 shares of Common Stock, $0.001 par value; and 2,500,000 shares of Class A Convertible Preferred Stock, $0.001 par value.

1

EVCARCO, INC.

TABLE OF CONTENTS

	Index	Page Number
PART I	FINANCIAL INFORMATION
ITEM 1.	Financial Statements	F-1
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	5
ITEM 4.	Controls and Procedures	5
PART II	OTHER INFORMATION
ITEM 1.	Legal Proceedings	6
ITEM 1A.	Risk Factors	6
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6
ITEM 3.	Defaults Upon Senior Securities	6
ITEM 4.	(Removed and Reserved)	6
ITEM 5.	Other Information	6
ITEM 6.	Exhibits	7
SIGNATURES		7

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

EVCARCO, INC.

INDEX TO FINANCIAL STATEMENTS

Financial Statements
Balance Sheets as of September 30, 2010 (Unaudited) and December 31, 2009	F-2
Statements of Operations for the Three and Nine Months Ended September 30, 2010 and 2009 (Unaudited), and  from Inception (October 14, 2008) to September 30, 2010 (Unaudited)	F-3
Statement of Stockholders' Equity/(Deficit) from Inception (October 14, 2008) through September 30, 2010 (Unaudited)	F-4
Statements of Cash Flows for the Nine Months Ended September 30, 2010 and 2009 (Unaudited), and from Inception (October 14, 2008) to September 30, 2010 (Unaudited)	F-5
Notes to Financial Statements	F-6 to F-9

F-1

EVCARCO, Inc.
(A Development Stage Company)
Balance Sheets
	Sep. 30, 2010			Dec. 31, 2009
	(Unaudited)
ASSETS
Current assets
Cash	$	37,408		$	48,634
Inventory (see Note 4)		240,347			10,546
Other receivables		16,386			4,213
Prepaid expenses (see Note 5)		747,552			136,667
Total current assets		1,041,693			200,060
Property and equipment		38,962			7,654
Accumulated depreciation		(6,197	)		(1,933	)
Other assets		2,687			3,252
TOTAL ASSETS	$	1,077,145		$	209,033
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
Current liabilities
Accounts payable	$	370,883		$	18,739
Accrued expenses		40,713			30,726
Accrued interest (related parties)		6,887			334
Other payables		27,566			6,308
Note payable (see Note 6)		-			88,910
Convertible notes payable (see Note 7)		65,972			-
Loans payable (related parties) (see Note 8)		538,415			271,280
Total current liabilities		1,050,436			416,297
Total liabilities		1,050,436			416,297
Commitments and contingencies
Stockholders' equity/(deficit) (see Note 11)
15,000,000 shares Class A Preferred Convertible
Stock Authorized at $0.001/par value, none issued		-			-
180,000,000 shares Common Stock
Authorized at $0.001/par value
70,871,266 and 61,125,500 shares
issued and outstanding, respectively		70,871			61,126
Additional paid-in capital		3,295,626			891,964
Treasury stock, at cost, 13,625,900 and 0 respectively		(178,000	)		-
Deficit accumulated during development stage		(3,161,788	)		(1,160,354	)
Total stockholders' equity/(deficit)		26,709			(207,264	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)	$	1,077,145		$	209,033
The accompanying footnotes are an integral part of these financial statements.

F-2

EVCARCO, Inc.
(A Development Stage Company)
Statements of Operations
														Inception
														(Oct. 14, 2008)
		For the Three Months Ended						For the Nine Months Ended						Through
		Sep. 30, 2010			Sep. 30, 2009			Sep. 30, 2010			Sep. 30, 2009			Sep. 30, 2010
		(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues		$	196,092		$	379,151		$	574,263		$	703,601		$	1,508,599
	Total Revenues		196,092			379,151			574,263			703,601			1,508,599
Cost of goods sold			172,782			392,821			543,489			719,703			1,482,467
	Gross Profit/(Loss)		23,310			(13,670	)		30,774			(16,102	)		26,132
Sales and marketing expenses			11,606			48,358			91,275			67,621			201,810
General and administrative expenses			614,181			297,250			1,849,574			573,093			2,777,678
Inventory adjustment			-			-			27,800			-			110,653
Depreciation and amortization			2,212			603			5,077			1,742			7,887
	Total Operating Expenses		627,999			346,211			1,973,726			642,456			3,098,028
	Operating Loss		(604,689	)		(359,881	)		(1,942,952	)		(658,558	)		(3,071,896	)
Other income/(loss)
Loss on asset dispositions, net			(714	)		-			(607	)		-			(607	)
Interest income			-			3			37			195			326
Interest expense (related parties)			(6,281	)		(2,051	)		(14,100	)		(3,242	)		(19,961	)
Interest expense			(19,681	)		(10,847	)		(43,812	)		(14,995	)		(69,650	)
	Total Other Loss		(26,676	)		(12,895	)		(58,482	)		(18,042	)		(89,892	)
	Loss Before Taxes		(631,365	)		(372,776	)		(2,001,434	)		(676,600	)		(3,161,788	)
Income tax (expense) benefit			-			-			-			-			-
	Net Loss	$	(631,365	)	$	(372,776	)	$	(2,001,434	)	$	(676,600	)	$	(3,161,788	)
Basic and diluted loss per share		$	(0.01	)	$	(0.01	)	$	(0.03	)	$	(0.01	)
Weighted average number of
common shares outstanding			73,470,083			54,284,761			66,912,404			53,193,469
The accompanying footnotes are an integral part of these financial statements.

F-3

EVCARCO, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity/(Deficit)
Inception (October 14, 2008) Through September 30, 2010
													Deficit
													accumulated
							Additional						during the
	Common stock						paid-in			Treasury			development
	Shares			Amount			capital			stock			stage			Total
Founders' stock issued @ $0.0003/sh. Oct. 2008		46,500,000		$	46,500		$	(31,000	)	$	-		$	-		$	15,500
Stock issued for services @ $0.0003/sh. Oct. 2008		5,100,000			5,100			(3,400	)								1,700
Stock issued for cash @ $0.1667/sh. Oct. 2008		306,000			306			50,694									51,000
Stock issued for cash @ $0.1667/sh. Nov. 2008		612,000			612			101,388									102,000
Stock issued for cash @ $0.1667/sh. Dec. 2008		12,000			12			1,988									2,000
Net loss														(91,060	)		(91,060	)
Balance December 31, 2008		52,530,000		$	52,530		$	119,670		$	-		$	(91,060	)	$	81,140
Stock issued for cash @ $0.1667/sh. Jan. 2009		123,000			123			20,377									20,500
Stock issued for services @ $0.1667/sh. Feb. 2009		6,000			6			994									1,000
Stock issued for property @ $0.19/sh. Jul. 2009		1,406,000			1,406			265,734									267,140
Stock issued for cash @ $0.50/sh. Jul. 2009		1,500			2			748									750
Stock issued for services @ $0.50/sh. Jul. 2009		600,000			600			299,400									300,000
Founders' stock issued @ $0.0003/sh. Oct. 2009		6,000,000			6,000			(4,000	)								2,000
Stock issued for loan @ $0.1667/sh. Oct. 2009		120,000			120			19,880									20,000
Stock issued for services @ $0.50/sh. Oct. 2009		90,000			90			44,910									45,000
Stock issued for cash @ $0.50/sh. Oct. 2009		105,000			105			52,395									52,500
Stock issued for cash @ $0.50/sh. Nov. 2009		14,000			14			6,986									7,000
Stock issued for cash @ $0.50/sh. Dec. 2009		130,000			130			64,870									65,000
Net loss														(1,069,294	)		(1,069,294	)
Balance December 31, 2009		61,125,500		$	61,126		$	891,964		$	-		$	(1,160,354	)	$	(207,264	)
Stock issued for cash @ $0.25/sh. Jan. 2010		40,000			40			9,960									10,000
Stock issued for cash @ $0.50/sh. Feb. 2010		64,000			64			31,936									32,000
Stock issued for cash @ $0.21/sh. Feb. 2010		100,000			100			20,900									21,000
Stock issued for services @ $0.45/sh. Feb. 2010		2,600,000			2,600			1,167,400									1,170,000
Stock issued for services @ $0.25/sh. Mar. 2010		200,000			200			49,800									50,000
Stock issued for cash @ $0.50/sh. Jun. 2010		14,000			14			6,986									7,000
Stock issued for cash @ $0.50/sh. Jun. 2010		60,000			60			29,940									30,000
Stock issued for cash @ $0.21/sh. Jun. 2010		200,000			200			41,800									42,000
Stock issued for services @ $0.06/sh. Jun. 2010		1,000,000			1,000			54,000									55,000
Stock issued for services @ $0.04/sh. Jun. 2010		6,427,000			6,427			250,723									257,150
Stock issued for services @ $0.04/sh. Jul. 2010		5,500,000			5,500			219,500									225,000
Stock issued for note conv. @ $0.012/sh. Aug. 2010		7,166,666			7,166			79,507									86,673
Proceeds received for shares to be issued Jan.-Mar.								300,000									300,000
Proceeds received for shares to be issued Apr. 2010								80,000									80,000
Beneficial conversion features								47,584									47,584
Stock buyback @ $0.013/sh. Aug. 2010		(13,625,900	)		(13,626	)		13,626			(178,000	)					(178,000	)
Net loss														(2,001,434	)		(2,001,434	)
Balance September 30, 2010 (Unaudited)		70,871,266		$	70,871		$	3,295,626		$	(178,000	)	$	(3,161,788	)	$	26,709
The accompanying footnotes are an integral part of these financial statements.

F-4

EVCARCO, Inc.
(A Development Stage Company)
Statements of Cash Flows
							Inception
	For the Nine			For the Nine			(Oct. 14, 2008)
	Months Ended			Months Ended			Through
	Sep. 30, 2010			Sep. 30, 2009			Sep. 30, 2010
	(Unaudited)			(Unaudited)			(Unaudited)
Cash flows used in operating activities:
Net loss	$	(2,001,434	)	$	(676,600	)	$	(3,161,788	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization		5,077			1,742			7,887
Consulting expenses (stock)		1,146,265			113,500			1,357,298
Beneficial conversion feature amortization		18,556			-			18,556
Loss on asset dispositions		607			-			607
Change in operating assets and liabilities:
Inventory		(229,801	)		(109,915	)		(240,347	)
Other receivables		(12,173	)		-			(16,386	)
Other assets		-			-			(4,129	)
Accounts payable		352,144			72,253			370,883
Accrued expenses		9,987			16,632			40,713
Accrued interest (related parties)		6,553			158			6,887
Other payables		21,258			(868	)		27,566
Net cash used in operating activities		(682,961	)		(583,098	)		(1,592,253	)
Cash flows used in investing activities:
Purchase of property and equipment		(35,414	)		(2,069	)		(43,068	)
Proceeds from sales of property and equipment		2,829			-			2,829
Net cash used in investing activities		(32,585	)		(2,069	)		(40,239	)
Cash flows from financing activities:
Payments of notes payable		(2,237	)		(58,588	)		(135,827	)
Proceeds from notes payable		-			167,500			222,500
Proceeds from convertible notes payable		95,000			-			95,000
Net change in loans payable (related parties)		124,557			198,453			395,837
Issuance of common stock		142,000			288,390			747,390
Proceeds from common stock not yet issued		380,000			-			380,000
Purchase Treasuary Stock		(35,000	)		-			(35,000	)
Net cash flows provided by financing activities		704,320			595,755			1,669,900
Increase/(decrease) in cash		(11,226	)		10,588			37,408
Cash at beginning of period		48,634			22,467			-
Cash at end of period	$	37,408		$	33,055		$	37,408
Cash paid for:
Interest	$	22,537		$	13,781		$	48,375
Interest (related parties)	$	7,547		$	3,084		$	13,074
Non-cash activities:
Stock issued for prepaid services	$	610,885		$	187,500		$	747,552
Stock issued for loans	$	86,673		$	-		$	106,673
Stock buyback for balance of shareholder advances	$	143,000		$	-		$	143,000
Debt discount from beneficial conversion feature	$	47,584		$	-		$	47,584
The accompanying footnotes are an integral part of these financial statements.

F-5

EVCARCO, INC.

(A Development Stage Company)

Notes to Financial Statements

September 30, 2010

NOTE 1.   ORGANIZATION AND DESCRIPTION OF BUSINESS

EVCARCO, Inc. (“The Company”) was incorporated under the laws of the State of Nevada on October 14, 2008.  The Company sells “green” automobiles, offering the latest technology electric vehicles, pre-owned vehicles converted to various green technologies, and a comprehensive financial package to complement the sales.  The Company is in the development stage, having only begun operations recently.

NOTE 2.   BASIS OF PRESENTATION

The Financial Statements are unaudited. As permitted under the Securities and Exchange Commission (“SEC”) requirements for interim reporting, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted. We believe that these financial statements include all necessary and recurring adjustments for the fair presentation of the interim period results. These financial statements should be read in conjunction with the Financial Statements and related notes included in our annual report on Form 10-K for the fiscal year ended December 31, 2009. The results of operations for the three and nine months ended September 30, 2010 are not necessarily indicative of the results to be ex pected for the year ending December 31, 2010.

Certain reclassifications to the 2009 Financial Statements have been made to conform to the 2010 presentation.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Subsequent actual results may differ from those estimates.

NOTE 3.   FAIR VALUE OF FINANCIAL INSTRUMENTS

Carrying amounts of certain of our financial instruments, including accounts receivable, other receivables, accounts payable, and other payables approximate fair value due to their short maturities. Carrying value of note payable and convertible notes payable approximate fair values as they approximate market rates of interest. None of our financial instruments are held for trading purposes.

NOTE 4.  INVENTORY

At each period end, respectively, the Company had the following inventory:

	Sep. 30, 2010		Dec. 31, 2009
New vehicles	$	159,027	$	-
Pre-owned vehicles		46,950		3,550
Other items		34,370		6,996
Total inventory	$	240,347	$	10,546

During the first quarter of 2010, the Company had additional impairment relating to the vehicles that were devalued at the end of 2009.  The impairment, in the amount of $27,800, is reflected as inventory adjustment on the statements of operations.

At the end of 2009 we had made a decision to impair inventory in the amount of $82,853.  $37,976 was a mark down of inventory to market.  $44,877 of the impairment related to five SMART cars, that were not received under the contract to exchange cash and stock for thirty five pre-owned vehicles.  The contract is essentially settled and completed, and the Company will not be able to recover those cars.

F-6

EVCARCO, INC.

(A Development Stage Company)

Notes to Financial Statements

September 30, 2010

NOTE 5.  PREPAID EXPENSES

Most of the balance of the prepaid expenses represents the unearned portion of stock compensation issued under consulting agreements, terms of which vary, and are up to one year in length.

The table below outlines details of the activity by quarter, including scheduled future amortization:

Quarter ending	Stock compensation issued		Amortization			Other prepaid items			Balance of prepaid expenses
September 30, 2009	$	250,000	$	(62,500	)				$	187,500
December 31, 2009		20,000		(70,833	)					136,667
March 31, 2010		1,177,500		(178,280	)	$	5,557			1,141,444
June 30, 2010		281,250		(401,042	)		4,613			1,026,265
September 30, 2010		185,000		(453,543	)		(10,170	)	$	747,552
December 31, 2010				(442,499	)
March 31, 2011				(275,053	)
June 30, 2011				(30,000	)
	$	1,913,750	$	(1,913,750	)	$	-

NOTE 6.  NOTE PAYABLE

From June of 2009, through August of 2010, the Company received $150,000 of advances from RGTK, an unrelated entity.   The note was unsecured, due upon demand and accrued interest at the end of each month on the then outstanding balance at the rate of 36% per annum.  As of December 31, 2009, the principal balance of the note was $88,910.  Interest paid under the note in 2010 and 2009, respectively, was $19,580 and $16,051.  On August 23, 2010, the note balance of $86,673 was converted into 7,166,666 shares of Company’s common stock.

NOTE 7.  CONVERTIBLE NOTES PAYABLE

On June 7, 2010, the Company issued a convertible promissory note in the amount of $60,000, bearing interest at a rate of 8% per annum. The note is unsecured and matures on March 2, 2011. The entire principal and accrued interest on the note are convertible into common stock of the Company at a variable conversion price. The Company recorded $24,251 related to the deemed beneficial conversion feature of this note, of which $8,083 and $10,778 have been amortized to interest expense in the accompanying statements of operations for the three and nine months ended September 30, 2010, respectively.  As of September 30, 2010, the balance of interest accrued under the note was $1,517.

On August 25, 2010, the Company issued a convertible promissory note in the amount of $35,000, bearing interest at a rate of 34.29% per annum. The note is unsecured and matures on February 24, 2011. The entire principal and accrued interest on the note are convertible into common stock of the Company at a variable conversion price. The Company recorded $23,333 related to the deemed beneficial conversion feature of this note, of which $7,778 has been amortized to interest expense in the accompanying statement of operations for the three months ended September 30, 2010.  As of September 30, 2010, the balance of interest accrued under the note was $1,203.

F-7

EVCARCO, INC.

(A Development Stage Company)

Notes to Financial Statements

September 30, 2010

NOTE 8.  RELATED PARTY TRANSACTIONS

On August 25, 2010, Mr. Dale Long resigned from his position of President/CEO, as well as the Board of Directors of the Company.  Under the terms of Separation and Buy-Back Agreement, the Company purchased 13,625,900 shares of its common stock, held by Mr. Long for $178,000, of which $35,000 was paid in cash and $143,000 was offset against advances made to Mr. Long.  $196,400 of accrued compensation, and $16,000 of related accrued payroll taxes were cancelled as part of the same agreement, and were credited against the  general and administrative expenses for the current quarter.

For the nine months ended September 30, 2010 and 2009, the Company accrued $242,000 and $204,570, respectively, in salaries payable to its three officers and major shareholders (excluding compensation to Mr. Long, described in the paragraph above).  For the period since inception (October 14, 2008) through September 30, 2010, the Company accrued $520,770.

As of September 30, 2010 and December 31, 2009, the balances of shareholder notes were $538,415 and $271,280, respectively.  The balances included accrued salaries, along with various advances to and from the Company.  The notes are unsecured, due upon demand and accrue interest at the end of each month on the then outstanding balance at the rate of 5.00% per annum.  Accrued interest payable on the notes at each respective quarter end was $6,887 and $334.  Interest paid during the corresponding nine month periods was $7,547 and $3,084, respectively.  These notes payable do not approximate fair value, as they are with related parties, and do not bear market rates of interest.

NOTE 9.  OPERATING SEGMENTS

During the period from inception through September 30, 2010 the Company operated as a single business segment.

NOTE 10.  GOING CONCERN

The Company has sustained operating losses since inception and had an accumulated deficit of approximately $3.2 million as of September 30, 2010. This deficit has been funded primarily through stock issuances, debt and cash generated from operations.

The Company will need additional capital to continue to maintain and expand its operations and will endeavor to raise funds through the issuance of stock and debt, and revenues from operations, but despite our efforts we may not generate revenues from operations or obtain sufficient capital on acceptable terms, if at all. If the Company cannot obtain such capital or generate such operating revenues it would have an adverse impact on our financial position and results of operations and ability to continue as a going concern. The Company’s operating capital and capital expenditure requirements will vary based on a number of factors, including the level of sales and marketing activities for our services and products and there can be no assurance that additional private or public financings, including debt or equity financing, will b e available as needed, or, if available, on terms favorable to us. To the extent we use debt financing, if available, we will have to pay interest and the Company may have to agree to restrictive covenants that could impose limitations on our operating flexibility. If the Company cannot successfully obtain additional future funding it may jeopardize our ability to continue our business and operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.  These financial statements have been prepared on a going concern basis, and do not reflect any adjustments if the Company is unable to continue as a going concern.

F-8

EVCARCO, INC.

(A Development Stage Company)

Notes to Financial Statements

September 30, 2010

NOTE 11.  STOCKHOLDERS’ EQUITY/DEFICIT

Effective April 29, 2009, the Company filed an amendment with the Nevada Secretary of State to increase authorized shares of common stock from 25,000,000 to 60,000,000; and to authorize Class A convertible preferred stock in the amount of 15,000,000 shares at $0.001 par value.

On July 10, 2009, the Company effectuated a 3-for-1 forward stock split of its issued and outstanding common stock.  All amounts of shares reflected on these financial statements are on a post-split basis.

During the first four months of 2010, the Company received $380,000 of cash for shares of common stock to be issued.

On August 25, 2010, the Company re-purchased and cancelled 13,625,900 shares of common stock from Mr. Dale Long, for $178,000, relating to his departure from the Company.  Of that amount, $35,000 was paid in cash and $143,000 was offset against advances made to Mr. Long.

NOTE 12.  SUBSEQUENT EVENTS

On October 11, 2010, the Company issued 2,500,000 shares of Class A convertible preferred stock to Mr. Nikolay Frolov (CFO and Director), for the amount of $100,000, as partial satisfaction of the loan payable to the shareholder.

On October 14, 2010, under the terms of original agreement, the Company issued 1,900,000 shares of common stock for $380,000 received in the early part of 2010.

On November 3, 2010, the Company issued a convertible promissory note in the amount of $53,000, bearing interest at a rate of 8% per annum. The note is unsecured and matures on July 25, 2011. The entire principal and accrued interest on the note are convertible into common stock of the Company at a variable conversion price.

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains statements which, to the extent they do not recite historical fact, constitute "forward looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can identify these statements by the use of words like "may," "will," "could," "should," "project," "believe," "anticipate," "expect," "plan," "estimate," "forecast," "potential," "intend," "continue," and variations of these words or comparable words. Forward looking statements do not guarantee future performance and involve risks and uncertainties. Actual results may differ substantially from the results that the forward looking statements suggest for various reasons, including those discussed under the caption "Risks Related to Our Business" in our Annual Report on Form 10-K. These forward looking statements are made only as of the date of this report. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based. This discussion should be read together with the financial statements and other financial information included in this Form 10-Q.

The following discussion contains forward-looking statements that are subject to significant risks and uncertainties. There are several important factors that could cause actual results to differ materially from historical results and percentages and results anticipated by the forward-looking statements. The Company has sought to identify the most significant risks to its business, but cannot predict whether or to what extent any of such risks may be realized nor can there be any assurance that the Company has identified all possible risks that might arise. Investors should carefully consider all of such risks before making an investment decision with respect to the Company's stock.

Overview

EVCARCO, Inc. is a development stage company that was incorporated on October 14, 2008 in the State of Nevada.  We have begun our business operations and we currently have minimal revenue and no significant assets, as a result, we face substantial liquidity risk and uncertainty, near-term and otherwise, which threatens our ability to continue.  EVCARCO, Inc has never declared bankruptcy, has never been in receivership, and has never been involved in any illegal action or proceedings.

Since becoming incorporated, EVCARCO, Inc. has not made any significant purchases or sale of assets, nor has it been involved in any mergers, acquisitions or consolidations. EVCARCO, Inc is not a blank check registrant as that term is defined in Rule 419(a) (2) of Regulation C of the Securities Act of 1933, since it has a specific business plan or purpose.

Neither EVCARCO, Inc nor its officers, directors, promoters, or affiliates has had preliminary contact or discussions with, nor do we have any present plans, proposals, arrangements, or understandings with any representatives of the owners of any business or company regarding the  possibility of an acquisition or merger.

Our independent auditors have expressed doubt about our ability to continue as a going concern, indicating the possibility that we may not be able to continue to operate. No adjustment has been made in the accompanying financial statements to the amounts and classification of assets and liabilities which could result should we be unable to continue as a going concern.

In July of 2010, management of the Company and the Board of Directors made the decision to close one of our two locations, and to vacate the premises at 6124 Denton Drive in Dallas, Texas. This location, which has been in operation since May of 2010, was unable to generate sufficient revenues to cover the fixed expenses of the facility.

On August 25, 2010, Mr. Dale Long resigned from the Company’s Board of Directors, and his position of President/CEO.  As of the time of this filing, positions of President and CEO remain vacant.

On October 18, 2010, Mr. Joshua D. Spivey was appointed as Chief Investment Officer and elected to the Board of Directors.

Plan of Operation

Over the next twelve months, we will concentrate on the following six areas to grow our operations:

·           Capital and Funding – Seek to obtain capital from all available sources.

·           Advertising and Marketing – Utilize all available marketing venues and public relations opportunities to promote the Company and its products.

·           Sales – Grow sales to 15-20 new cars, and 100-125 pre-owned cars per quarter.

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

·           Product Development – Continue to work with existing manufacturers and search for new manufacturers.

·           Franchise Development – Begin marketing the EVCARCO franchise concept and licensing of Company’s Trademarks, with the short term objective of securing several territories and establishing five to ten Dealer Development Candidates during 2011. Several candidates in various states have already been identified for dealer development.

·           Product Research and Development – Continue working on identifying and testing products and vehicles from U.S. companies, as well as foreign manufacturers, which can provide cleaner, safer, faster, and more economical forms of transportation, by utilizing the latest developments in the alternative fuel area

Maintaining an adequate inventory of automobiles requires significant capital.  Given the Company’s liquidity limitations its inventory levels may be adversely impacted.

Operating Environment

The Company continues to operate in a tough economic climate, tight equity and credit markets, which caused significant decline in automobile sales and put many dealers out of business.  This challenging operating environment also presents tremendous opportunity for our concept: decrease in competition, rise of fuel prices, consumers becoming more cost conscious, and environmental issues gaining a lot of traction, are making our products a lot more attractive alternative to traditional transportation solutions.

Operating Results

Since inception through September 30, 2010, we have generated revenues of $1,508,599 and incurred cumulative net losses of $3,161,788.

For the quarterly periods ended September 30, 2010 and 2009, gross revenues were $196,092 and $379,151, gross profit/(loss) was $23,310 and ($13,670), respectively. Higher sales in the third quarter of 2009 include liquidation of a lot of SMART cars acquired in exchange for shares of common stock.  Lower sales in the corresponding quarter of 2010 reflect general slow down of activity in the used car market, but show significant improvement in the operating margins.  Net losses for the same quarterly periods were $631,365 and $372,776, each of them including approximately $100,000 of accrued compensation to the officers and major shareholders of the Company.  Loss for the quarter ended September 30, 2010, includes $2 12,400 reduction to general and administrative expenses, related to departure of Mr. Long from the company, and cancellation of compensation accrued to him, along with corresponding accrued payroll taxes.

For the nine month periods ended September 30, 2010 and 2009, gross revenues were $574,263 and $703,601, gross profit/(loss) was $30,774 and ($16,102), respectively. Net losses for the same periods were $2,001,434 and $676,600, each of them including approximately $134,000 (after cancellation of Mr. Long’s compensation) and $298,000, respectively, of accrued compensation to the officers and major shareholders of the Company.  The losses included $1,146,265 and $113,500 of stock based compensation for consulting services.

Amounts for revenues and gross margins reflect sporadic operations of the development stage company, affected by limited financial resources. The trend in losses reflects the rise in business activity and increasing efforts in realizing the Company’s business plan and starting normal business operations.  Major areas of increasing expenditures include: legal and professional fees relating to compliance and reporting; consulting services (mainly paid for by stock issuances) relating to marketing, business development, investor and public relationships; travel and related expenses.

Liquidity and Capital Resources

At the end of the current quarter, the Company had no significant cash reserves or other liquid assets.

In an effort to raise additional capital and/or borrow funds the Company filed a Registration Statement under the Securities Act of 1933, for 61,225,000 shares common stock, $0.001 Par Value, by filing Form S-1.  The registration will not be effective until declared by the Securities and Exchange Commission. The Company is currently working to answer comments from the staff in order to have in declared effective, to help facilitate operational funding, growth capital, and inventory lines of credit.

Meeting future liquidity needs will require sales of dealership franchises, as well as income from new and pre-owned auto sales and service. We estimate it will take an estimated $165,000 per Company dealership location in addition to a line of credit of $1.2 million for floor plans at each location. This means as a company in an early stage of development, our ability to proceed with our plan of operation will continually be a function of our ability to raise sufficient capital to continue our operations.

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

Other Items and Conditions

As of September 30, 2010, the Company had $1,050,436 of current liabilities outstanding.  That amount included $538,415 owed to the three officers and major shareholders of the company (mostly accrued compensation), and $65,972 of convertible debt.

The Company has no off balance sheet arrangements, or significant obligations under any contracts.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, or the Exchange Act. This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission. An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Operating Officer (COO) and Chief Financial Officer (CFO), of the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2010. Based on that evaluation, the Company’s management concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2010. During the quarter ended on September 30, 2010, there was no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

Management is not aware of any legal proceedings contemplated by any governmental authority against us. None of our directors, officers or affiliates are (i) a party adverse to us in any legal proceedings, or (ii) have an adverse interest to us in any legal proceedings.

ITEM 1A.  RISK FACTORS

Not required.

ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Information regarding sales after the second quarter of 2010:

				Exemption
				from	Terms of
Date				regulation	conversion
Sold	Amount	Securities Sold	Consideration *	claimed **	or exercise
07/16/10	1,000,000	Common Stock	Services	Reg. D	None
07/16/10	500,000	Common Stock	Services	Reg. D	None
07/28/10	4,000,000	Common Stock	Services	Reg. D	None
08/25/10	7,166,666	Common Stock	Debt Conversion - $86,673	Reg. D	None
10/11/10	2,500,000	Class A Convertible Preferred Stock	Debt Conversion - $100,000	Reg. D	None
10/14/10	1,900,000	Common Stock	Cash - $380,000	Reg. D	None

* For per share price, see Statement of Stockholders’ Equity.  No commissions or discounts were paid.

** The company relied on information from purchasers that they were accredited investors and/or such investors were provided adequate information and were otherwise determined to be suitable.  In all cases, there was no public solicitation.

During the period from January through April of 2010, the Company received $380,000 in investment funds, for which the shares of common stock were issued on October 14, 2010, at $0.20 per share, based on the original agreement.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  (REMOVED AND RESERVED)

None.

ITEM 5.  OTHER INFORMATION

On July 27, 2010, the Company filed a Registration Statement under the Securities Act of 1933 for its Common stock, $0.001 Par Value, by filing Form S-1.  The registration will not be effective until declared by the Securities and Exchange Commission.

On August 25, 2010, the Company re-purchased and cancelled 13,625,900 shares of common stock from Mr. Dale Long, for $178,000, relating to his departure from the Company.

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ITEM 6.  EXHIBITS

Exhibit Number	Exhibit
31.1	Certification of Chief Executive Officer pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934.
31.2	Certification of Chief Financial Officer pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934.
32	Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C., Section 1350.

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 thereunto duly authorized.

	EVCARCO, INC.
Date: December 6 , 2010	By:	/s/  Nikolay Frolov
		Nikolay Frolov
		Principal Executive Officer Pro Tem

Date: December 6 , 2010	By:	/s/  Nikolay Frolov
		Nikolay Frolov
		Chief Financial Officer (Principal Financial and Accounting Officer)

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