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EXCEL - IDEA: XBRL DOCUMENT - EVCARCO, INC.Financial_Report.xls
EX-31.2 - CERTIFICATION PURSUANT TO RULES 13A-14(A) AND 15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - EVCARCO, INC.exhibit_31-2.htm
EX-31.1 - CERTIFICATION PURSUANT TO RULES 13A-14(A) AND 15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - EVCARCO, INC.exhibit_31-1.htm
EX-32 - CERTIFICATION PURSUANT TO SECTION 902 OF THE SARBANES-OXLEY ACT OF 2002 (SUBSECTIONS (A) AND (B) OF SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE) - EVCARCO, INC.exhibit_32.htm

 
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
_______________

Form 10-K

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

For the fiscal year ended December 31, 2011

Commission file number: 000-53978
_______________


EVCARCO, INC.
 
 
(Exact name of registrant as specified in its charter)

Nevada
26-3526039
(State or other jurisdiction of incorporation or organization)
(I.R.S. 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:

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
Name of Each Exchange on Which Registered
None
Not Applicable
   

Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
Name of Each Exchange on Which Registered
Common Stock, $0.001 par value
Not Applicable

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities.  Yes o     No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 of the Act.  Yes o     No þ

 
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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 þ     No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 þ     No  o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

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. (Check one):
 
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
þ
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o     No þ
 
The aggregate market value of voting and non-voting common equity held by non-affiliates, computed by reference to the price at which the common equity was last sold, as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $1,382,000.
 
The number of shares of the registrant’s Common Stock, par value $0.001, outstanding on March 30, 2012 was 2,195,378,261. The number of shares of the registrant’s Class B Convertible Preferred Stock, par value $0.001, outstanding on March 30, 2012 was 5,000,000.


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 


 
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TABLE OF CONTENTS

   
Page
PART I
 
Item 1.
Business
  4
Item 1A.
Risk Factors
  7
Item 1B.
Unresolved Staff Comments
  12
Item 2.
Properties
  12
Item 3.
Legal Proceedings
  12
Item 4.
Mine Safety Disclosures
  12
     
PART II
 
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
  13
Item 6.
Selected Financial Data
  15
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
  16
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
  18
Item 8.
Financial Statements and Supplementary Data
  19
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  20
Item 9A.
Controls and Procedures
  20
Item 9B.
Other Information
  20
   
PART III
 
Item 10.
Directors, Executive Officers and Corporate Governance
  21
Item 11.
Executive Compensation
  23
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  24
Item 13.
Certain Relationships and Related Transactions, and Director Independence
  25
Item 14.
Principal Accounting Fees and Services
  26
   
PART IV
 
Item 15.
Exhibits, Financial Statement Schedules
  26

 
 

 
 

 


 
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PART I

ITEM 1.  BUSINESS

In this Annual Report on Form 10-K, “we”, “us”, “our”, “EVCARCO”, “Company” or similar terms are references to EVCARCO, Inc., unless the context clearly indicates otherwise. We were incorporated in the state of Nevada on October 14, 2008. Our offices are currently located at 7703 Sand Street, Fort Worth, Texas 76118. Our telephone number is (817) 595-0710.

Overview

EVCARCO, Inc. is a new car Franchised Dealership company that was incorporated on October 14, 2008 in the State of Nevada. We are engaged in selling environmentally conscious automobiles, offering both new electric and pre-owned vehicles, and plan to offer related financing, warranties, maintenance, and mechanical services. The Company was established to manage several automotive dealerships in multiple cities throughout the U.S. The first location in Fort Worth, TX has been in operation since December of 2008. Currently available products are from Wheego Electric Cars, Inc., manufactured in the US, and The Tazzari Group, produced in Italy.

Executives in the Company have many years of experience in the automobile industry managing large dealerships in the Dallas, Fort Worth, and North Texas regions.

Products and Services

EVCARCO has developed a new kind of business model for automotive dealerships that provide customers with quality, eco-friendly, and alternative-fuel vehicles, with an emphasis on performance, safety, affordability, and superior service. The Company already has established its first dealership at its Company headquarters in Fort Worth, Texas.  

EVCARCO intends to establish company-owned dealerships in other Texas markets, including Dallas, Houston, Austin, and San Antonio. The Company is also offering franchise dealerships in major markets across the country, initially focusing in the South and Southeast. The rate of expansion of company and franchise locations will largely depend on market acceptance of the new products and availability of capital.  EVCARCO dealerships will offer the latest new electric vehicles, multiple pre-owned car brands that utilize various green technologies, such as electric, hydrogen, and compressed natural gas, and regular pre-owned cars. Other products and services will include financing, warranties, maintenance, and mechanical services.

Some automobiles being sold by the Company are restricted by states to maximum speeds and streets with certain maximum speed limits due to their sale being pursuant to an exemption from certain Department of Transportation (“DOT”) safety requirements.  Also, certain automobiles that are not subject to these restrictions are being sold from manufacturers without certain DOT safety standards being certified as having been met, based on an ability to manufacture and sell a limited number of models while the DOT certification is being obtained. These limitations may restrict the market for the models the Company offers, or limit the volume of models available to be sold.

The following is a limited list of manufactures, whose products we sell, or intend to sell in the near future:

·           Wheego Electric Cars, Inc. - manufactures two fully electric models: LIFE FSV, with 100 miles range, a base model delivered retail price of $33,995, and WHIP LSV, currently certified as Low Speed Vehicle (LSV), capable of traveling 40 miles on a single charge, with a base model delivered retail price of $19,995.  Wheego wants to make the best electric cars in the world and educate everyone as to the practical benefits of owning and driving one.  At the current time, there is ongoing informal dispute with this manufacturer relating to our obligation to purchase certain number of units, territorial rights, and obligations of the manufacturer. Our future business relationship with Wheego is uncertain.
   
·           The Tazzari Group - manufactures ZERO, currently a LSV, an Italian electric urban sports vehicle, powered by the latest generation lithium batteries. Depending on the driving mode, ZERO has a range of up to 80 miles and starts at $31,000.  Tazzari’s mission is to provide the very best technology and quality at a really competitive price for a vehicle that is totally innovative and without peers in the field of ecological mobility - a trailblazer in the new age of lithium powered electric drive.  

·           Venta, Inc. - operates with the goal of discovering and distributing environmentally friendly automotive products. It currently has distribution contracts for Tazzari and Foton vehicles, with many others in the works.  Venta and EVCARCO work closely on brining new electric vehicles to US market.

·           Green Vehicles - manufactures fully electric vehicles for many lifestyles. Models include the Triac™, a freeway commuter; the Moose™, a van that retails for $16,995; and the Buckshot™, a heavy-duty work truck with a best-in-class 1/2 ton payload capacity, retailing for $23,995.  We are currently in negotiations to finalize the agreement with this manufacturer.

 
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ITEM 1.  BUSINESS - continued
 
·           RONN Motor Company, Inc. - developed Scorpion HX™, hydrogen fuel injected hybrid vehicle. Estimated price for this exotic sports car is $250,000.  Full production is scheduled to begin soon.  Their other products, H2GO™ real time hydrogen generation system and RonnZoil™ line of biodegradable lubricants will be available for sale in the near future.  EVCARCO has signed a memorandum of understanding with RMC, and is working to finalize the agreement for retail sales of their products.

·           Coulomb Technologies Charging Stations - Coulomb Technologies provides networked charging stations for the electric vehicles.  Coulomb offers 24/7 service and support for all of its stations as well as a Network Operating System that provides a smart charging infrastructure.  EVCARCO is an authorized dealer of Coulomb products.

Strategic Marketing Plan

Our overall marketing objective is to drive rapid market penetration of EVCARCO products, establishing us in the marketplace with high quality electric new cars and hybrid pre-owned vehicles. We will establish our branding as an environmentally responsible automobile dealership.

There are five key phases to the strategy in which EVCARCO intends to penetrate the marketplace:

·
           Launch EVCARCO franchises, with new electric vehicles and pre-owned operations.

·
           Aggressively market its brand through social media, online strategic partnerships, and search engine optimization.
 
 
·
           Establish EVCARCO through branding the Company as eco-friendly by use of:
·
                      Billboards and other outside advertising
·
                      Internet sales and advertising
·
                      Industry specific magazines and articles
·
                      Involvement of local media by using the Go Green campaign
·
                     Join and sponsor environmental clubs and groups, participate in their community activities
·
                     Get involved in political issues which support the environment
 
 
·
           Set up outside dealership displays and events to create awareness of the product capabilities:
·
                      Ride and Drive events
·
                      Kiosk in malls with information
·
                      Exposure through daily use of vehicles
 
 
·
           Develop Green projects and sustainable transportation programs with various governmental entities, non-profit and educational organizations.
·
                      Aggressively market its brand through social media, online strategic partnerships, and search engine optimization.
 
Market Analysis

Hybrid Vehicles

According to R.L. Polk, registrations for new hybrid vehicles totaled 315,668 in 2008, down slightly from 2007 but still a 3,270% increase from 2000.  Sales of hybrids show strong correlation with the price of gasoline.  With the predicted rise in oil prices, due to growing global demand, future of these vehicles remains optimistic.  In 2008, hybrids comprised 2.8 percent of all vehicles in North America, that number is expected to raise to 5.3 percent by 2012.  Although, some experts believe, that hybrid vehicles are only a stepping stone on the path toward even cleaner and more energy efficient cars, powered completely by electricity, fuel cells and other developing technologies.

Electric Vehicles

In 2006, a documentary titled “Who Killed the Electric Car” was released as an expose of the various forces that brought about the demise of the General Motors (“GM”) EV1. The EV1 was introduced to consumers in California in the 1990s, and enjoyed strong consumer demand before vanishing from the market and the media. This film brought the electric car back to the forefront of environmentally conscious Americans, who began searching for electric vehicle options once again.

Current U.S. Administration announced plans for significant financial support for development of fuel-efficient vehicles, as well as advanced electric and hybrid batteries.

 
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ITEM 1.  BUSINESS - continued
 
Two full-size, highway rated models are currently available in the US - Nissan Leaf and Tesla Roadster.  Most existing car manufacturers have electric cars in their production plans.  Some of the models have already been announced for upcoming years: BMW Megacity, BYD E6, Coda (Electric Sedan), Ford Focus EV and Transit Connect Electric, Mercedes BlueZero, Mini E, Mitsubishi iMiEV, Pininfarina Blue Car, Renault Fluence, Smart ED, Subaru R1E, Toyota FT-EV, Tesla Model S.

Compressed Natural Gas (“CNG”)

Currently, the only production CNG vehicle available is the Honda Civic GX; however, several companies sell aftermarket conversion kits for cars and trucks. The U.S. Environmental Protection Agency has stated that CNG is the cleanest internal-combustion technology available. Attributes include:
 
·           Reduction of carbon monoxide emissions of 90 to 97 percent
·           Reduction of carbon dioxide emissions of 25 percent
·           Reduction of nitrogen oxide emissions of 35 to 60 percent
·           Potential reduction of non-methane hydrocarbon emissions of 50 to 75 percent
·           Emission of fewer toxic and carcinogenic pollutants
·           Emission of little or no particulate matter
·           Elimination of evaporative emissions
 
Competition
 
The Company’s franchise model will be deployed so that it faces minimal competition in each of its markets. However, the Company will face competition from electric carmakers sold through other dealers. Some of these are major players in the automotive industry (GM, Nissan, and others), while others are small companies that have hit upon the correct formula of price, performance, and features to make consumers demand their cars.
 
Competitive Advantage
 
EVCARCO believes that its competitive advantages include:
 
·
           The Company is the first automotive retail group dedicated to opening car dealerships that only sell eco-friendly vehicles
·
           Management team has more than 25 years of combined experience in sales, service, ownership, and management of multiple automobile dealerships
·
           Uses the most advanced clean technologies available
·
           Best selection on both new and pre-owned electric vehicles and other environmentally friendly vehicles
·
           We intend to have diverse sources of operating revenue
·
           Creative marketing tactics that will reach a large segment of customers

Sources and Availability of Products and Supplies

Currently the Company has access to an adequate supply of products, from various manufacturers.  These companies and their products are new, not well established, and are a subject to significant risk and uncertainty.

The Company believes that due to the number of manufacturers who are trying to develop alternative fuel products and constant progress in new technologies and new entrants to the market, loss of one or several sources will not have significant negative impact on our operations.
 
Dependence on One or A Few Major Customers

We do not anticipate dependence on one or a few major customers into the foreseeable future.

Patents, Trademarks, Licenses, Franchise Restrictions and Contractual Obligations & Concessions

We own, and have registered, the following marks on the Principal Register of the United States Patent and Trademark Office.

MARK
REGISTRATION DATE
REGISTRATION NUMBER
EVCARCO (standard characters)
June 29, 2010
3812043
EV.CAR.CO (standard characters)
June 22, 2010
3808446
EV.CAR.CO (stylized design)
June 22, 2010
3808448
FUTURE DRIVEN (standard characters) June 22, 2010 3808447 


 
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ITEM 1.  BUSINESS - continued
 
Currently, there are no pending infringement, opposition, or cancellation proceeding or any pending material litigation involving the Marks. There are no agreements currently in effect, which significantly limit our rights to use or license the use of the Marks in any material manner. We are not aware of any superior prior rights or infringing uses of the Marks in any state.
 
Regulations

We operate in a highly regulated industry. A number of state and federal laws and regulations affect our business. In every state in which we operate, we must obtain dealer licenses issued by state regulatory authorities. Federal regulations and a lot of states require franchise or business opportunity registrations. Numerous laws and regulations govern our conduct of business, including those relating to our sales, operations, financing, insurance, advertising, and employment practices. These laws and regulations include state franchise laws and regulations, consumer protection laws, privacy laws, escheatment laws, anti-money laundering laws, and other extensive laws and regulations applicable to new and used motor vehicle dealers, as well as a variety of other laws and regulations. These laws also include federal and state wage-hour, anti-discrimination, and other employment practices laws.
 
Furthermore, we expect that new laws and regulations, particularly at the federal level, in the labor and employment, health care, environmental, and consumer protection areas may be enacted that could also affect our business.

Safety, required gas mileage regulations, and state lemon laws, while affecting the automobile industry generally, could have an increased impact on the Company due to its size and limited scope of automobiles intended to be sold.  Additionally many of the automobiles offered by the Company are subject to state LSV regulations, which vary by state.

Available Information

Our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to these filings, are available free of charge through our internet website at www.evcarco.com as soon as reasonably practicable after these reports have been electronically filed with, or furnished to, the Securities and Exchange Commission. These reports also are available at the SEC’s internet website at www.sec.gov. Information contained on or accessible from our website is not incorporated by reference into this annual report on Form 10-K and should not be considered part of this report or any other filing that we make with the SEC.


ITEM 1A.  RISK FACTORS

Risk Factors Relating to Our Business
 
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.
 
From January 1, 2010 through December 31, 2011, the Company has generated revenues of $1,478,102 and incurred net losses of $4,819,052.  Total accumulated deficit as of December 31, 2011, was $5,979,406.  Without obtaining adequate capital, it is unlikely we can maintain operations long enough to become profitable. Therefore, we may be unable to continue operations in the future as a going concern. 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 addition, our independent auditors included an explanatory paragraph in their report on the accompanying financial statements regarding concerns about our ability to continue as a going concern. To date, we have completed only initial stages of our business plan and we can provide no assurance that we will be able to generate enough revenue from our business in order to achieve profitability. It is not possible at this time for us to predict with assurance the potential success of our business. The revenue and income potential of our proposed business and operations are unproven, and the lack of operating history makes it difficult to evaluate the future prospects of our business. If we cannot continue as a viable entity, our stockholders may lose some or all of their investment in our Company.

 

 
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ITEM 1A.  RISK FACTORS - continued
 
As a company in the early stage of development with an unproven business strategy, our limited history of operations makes evaluation of our business and prospects difficult.
 
We were incorporated on October 14, 2008. Our business prospects are difficult to predict because of our limited operating history, early stage of development and unproven business strategy. Our primary business activities will be to earn revenues through new car sales, pre-owned car sales, parts, service, both work performed under the manufacturer’s warranty and customer pay repairs, finance & insurance sales, accessory sales, and aftermarket products. Although we believe that our business plan has significant profit potential, we may not be able to attain profitable operations and our management may not succeed in realizing our business objectives.
 
Our business plan may be unsuccessful, and if it fails, we will not have alternate services or products to offer in order to ensure our continuation as a going concern.
 
The success of our business plan is dependent on the continued development and improvement by the manufacturers of the automobiles we sell. Lack of operating history makes it difficult to validate our business plan. In addition, the success of our business plan is dependent upon the market acceptance of the electric automobiles we sell. Should our market strategy be too narrowly focused or should the target market not be as responsive as we anticipate, we will not have in place alternate services or products that we can offer to ensure our continuation as a going concern.
 
We have maintained losses since inception, which we expect will continue in the future.
 
We expect to continue to incur operating losses in near future. These losses will occur because we do not yet have sufficient revenues to offset the expenses associated with the development, marketing and sales of our products and services. We cannot guarantee that we will ever be successful in generating sufficient revenues in the future. We recognize that if we are unable to generate adequate revenues, we will not be able to earn profits or continue operations. There is no history upon which to base any assumptions regarding the likelihood that we will prove successful, and we can provide no assurance that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.

To date, we have completed only initial stages of our business plan and we can provide no assurance that we will be able to generate enough revenue from our business in order to achieve profitability. It is not possible at this time for us to predict with assurance the potential success of our business. The revenue and income potential of our proposed business and operations are unproven, and the lack of operating history makes it difficult to evaluate the future prospects of our business. If we cannot continue as a viable entity, our stockholders may lose some or all of their investment in our Company.

 We may not be able to execute our business plan or stay in business without additional funding.
 
Our ability to successfully develop our technology and to eventually produce and sell our product to generate operating revenues depends on our ability to obtain the necessary financing to implement our business plan. We will require additional financing, through issuance of debt and/or equity, in order to establish profitable operations. Such financing, if required, may not be forthcoming. Even if additional financing is available, it may not be available on terms we find favorable. At this time, there are no anticipated sources of additional funds in place. Failure to secure the needed additional financing will have an adverse effect on our ability to remain in business.

We may not be able to compete effectively against our competitors.
 
We are engaged in a rapidly evolving industry, and face direct competition from competitors that may have greater resources, research and development staff, sales and marketing staff and facilities than we do. In addition, other recently developed technologies are, or may in the future be, the basis of competitive products. There can be no assurance that our competitors will not develop technologies and products that are more effective than those being developed by us or that would render our technology and product obsolete or noncompetitive.

We need to retain key personnel to support our product and ongoing operations.
 
The development and marketing of our product will continue to place a significant strain on our management and other resources. Our future success depends upon the continued services of our executive officers who have critical industry experience and relationships that we rely on to implement our business plan. The loss of the services of any of our executive officers would negatively impact our ability to sell our product, which could adversely affect our financial results and impair our growth. Currently, we have no employment agreement with any of the officers, but anticipate entering into such agreements in the near future.


 
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ITEM 1A.  RISK FACTORS - continued
 
Risks Relating to Our Common Stock
  
Because we are subject to “penny stock” rules, the level of trading activity in our stock may be reduced.
 
Broker-dealer practices in connection with transactions in “penny stocks” are regulated by penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on some national securities exchanges). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, broker-dealers who sell these securities to persons other than established customers and “accredited investors” must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. Consequently, these requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security subject to the penny stock rules. If a trading market does develop for our common stock, these regulations will likely be applicable, and investors in our common stock may find it difficult to sell their shares.
 
FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.
 
FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity in our common stock. As a result, fewer broker-dealers may be willing to make a market in our common stock, reducing a stockholder’s ability to resell shares of our common stock.
 
The price of our common stock may be volatile, which substantially increases the risk that you may not be able to sell your shares at or above the price that you may pay for the shares.
 
Our common stock is currently quoted on the OTC Bulletin Board under the trading symbol “EVCA.OB.” The market price of our common stock may be volatile. It may fluctuate significantly in response to the following factors:
 
 
·
variations in quarterly operating results;
 
 
·
our announcements of significant contracts and achievement of milestones;
 
 
·
our relationships with other companies or capital commitments;
 
 
·
additions or departures of key personnel;
 
 
·
sales of common stock or termination of stock transfer restrictions;
 
 
·
changes in financial estimates by securities analysts, if any; and
 
 
·
fluctuations in stock market price and volume.
 
Your inability to sell your shares during a decline in the price of our stock may increase losses that you may suffer as a result of your investment.
 
 
 
 
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ITEM 1A.  RISK FACTORS - continued
 
Our insiders beneficially own a significant portion of our stock, and accordingly, may have control over stockholder matters, the company’s business and management.
 
As of March 30, 2012, our insiders beneficially own approximately 2% of our stock, and have approximately 70% of the voting power. As a result, our executive officers, directors and affiliated persons will have significant influence to:
 
 
·
elect or defeat the election of our directors;
 
 
·
amend or prevent amendment of our articles of incorporation or bylaws;
 
 
·
effect or prevent a merger, sale of assets or other corporate transaction; and
 
 
·
affect the outcome of any other matter submitted to the stockholders for vote.
 
Moreover, because of the significant ownership position held by our insiders, new investors will not be able to effect a change in the Company’s business or management, and therefore, shareholders would be subject to decisions made by management and the majority shareholders.
 
In addition, sales of significant amounts of shares held by our directors and executive officers, or the prospect of these sales, could adversely affect the market price of our common stock. Management’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
  
The sale of securities by us in any equity or debt financing could result in dilution to our existing stockholders and have a material adverse effect on our earnings.

We are authorized to issue up to 5,000,000,000 shares of common stock, of which 2,195,378,261 shares are issued and outstanding as of March 30, 2012. Our Board of Directors has the authority to cause us to issue additional shares of common stock, and to determine the rights, preferences and privilege of such shares, without consent of any of our stockholders. Any sale of common stock by us in a future private placement offering could result in dilution to the existing stockholders as a direct result of our issuance of additional shares of our capital stock. In addition, our business strategy may include expansion through internal growth by acquiring complementary businesses, acquiring or licensing additional brands, or establishing strategic relationships with targeted customers and suppliers. In order to do so, or to finance the cost of our other activities, we may issue additional equity securities that could dilute our stockholders’ stock ownership. We may also assume additional debt and incur impairment losses related to goodwill and other tangible assets, and this could negatively impact our earnings and results of operations.

If securities or industry analysts do not publish research or reports about our business, or if they downgrade their recommendations regarding our common stock, our stock price and trading volume could decline.

The trading market for our common stock may be influenced by the research and reports that industry or securities analysts publish about us or our business. If any of the analysts who cover us downgrade our common stock, our common stock price would likely decline. If analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our common stock price or trading volume to decline.

If we continue to fail to maintain an effective system of internal controls, we might not be able to report our financial results accurately or prevent fraud; in that case, our stockholders could lose confidence in our financial reporting, which could negatively impact the price of our stock.

Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. In addition, Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires us to evaluate and report on our internal control over financial reporting for all our current operations. The process of implementing our internal controls and complying with Section 404 will be expensive and time - consuming, and will require significant attention of management. We cannot be certain that these measures will ensure that we implement and maintain adequate controls over our financial processes and reporting in the future. Even if we conclude that our internal control over financial reporting provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, because of its inherent limitations, internal control over financial reporting may not prevent or detect fraud or misstatements. Failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. If we or our independent registered public accounting firm discover a material weakness or a significant deficiency in our internal control, the disclosure of that fact, even if quickly remedied, could reduce the market’s confidence in our financial statements and harm our stock price. In addition, a delay in compliance with Section 404 could subject us to a variety of administrative sanctions, including ineligibility for short form resale registration, action by the Securities and Exchange Commission, and the inability of registered broker-dealers to make a market in our common stock, which could further reduce our stock price and harm our business.
 
 
 
 
 
10

 
 
ITEM 1A.  RISK FACTORS - continued
 
Because we do not intend to pay any dividends on our common stock, holders of our common stock must rely on stock appreciation for any return on their investment.
 
There are no restrictions in our Articles of Incorporation or Bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend we would not be able to pay our debts as they become due in the usual course of business; or our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution. We have not declared or paid any dividends on our common stock since our inception, and we do not anticipate paying any such dividends for the foreseeable future. Accordingly, holders of our common stock will have to rely on capital appreciation, if any, to earn a return on their investment in our common stock.
 
The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified members for our Board of Directors.
 
As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Sarbanes-Oxley Act. The requirements of these rules and regulations increase our legal, accounting and financial compliance costs, may make some activities more difficult, time-consuming and costly and may also place undue strain on our personnel, systems and resources.
 
In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we will need to expend significant resources and provide significant management oversight. We have a substantial effort ahead of us to implement appropriate processes, document our system of internal control over relevant processes, assess their design, remediate any deficiencies identified and test their operation. As a result, management’s attention may be diverted from other business concerns, which could harm our business, operating results and financial condition. These efforts will also involve substantial accounting-related costs.

Our financial results could vary significantly from quarter to quarter and are difficult to predict.

Our revenues and operating results could vary significantly from quarter to quarter because of a variety of factors, many of which are outside of our control. As a result, comparing our operating results on a period-to-period basis may not be meaningful. In addition, we may not be able to predict our future revenues or results of operations. We base our current and future expense levels on our internal operating plans and sales forecasts, and our operating costs are to a large extent fixed. As a result, we may not be able to reduce our costs sufficiently to compensate for an unexpected shortfall in revenues, and even a small shortfall in revenues could disproportionately and adversely affect financial results for that quarter. Individual products and services represent meaningful portions of our revenues and net loss in any quarter. We may incur significant or unanticipated expenses when licenses are renewed.

In addition to other risk factors discussed in this section, factors that may contribute to the variability of our quarterly results include:

 
·
the number of new products and services released by us and our competitors;

 
·
the amount we reserve against returns and allowances;

 
·
the timing of release of new products and services by us and our competitors, particularly those that may represent a significant portion of revenues in a period;

 
·
the popularity of new products and services, and products and services released in prior periods;

 
·
the timing of charges related to impairments of goodwill, intangible assets, royalties and minimum guarantees;

 
·
changes in pricing policies by us or our competitors;

 
·
fluctuations in the size and rate of growth of overall consumer demand for our products and services;

 
·
strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;

 
·
our success in entering new geographic markets;

 
·
foreign exchange fluctuations;

 
·
accounting rules governing recognition of revenue;
 
 
·
the timing of compensation expense associated with equity compensation grants; and

 
·
decisions by us to incur additional expenses, such as increases in marketing or research and development.

As a result of these and other factors, our operating results may not meet the expectations of investors or public market analysts who choose to follow our company. Our failure to meet market expectations would likely result in decreases in the trading price of our common stock.
 
 
11

 
 
 


ITEM 1B.  UNRESOLVED STAFF COMMENTS

Not applicable.


ITEM 2.  PROPERTIES

Our executive offices are currently at 7703 Sand St., Fort Worth, TX 76118. The current lease for this location is for 26 months, expiring December 31, 2012, at a monthly rate of $2,300. This location serves as our primary office for day to day operation as well as storing, servicing and selling our new and pre-owned inventory. We do not have any investments or interests in any real estate. Our company does not invest in real estate mortgages, nor does it invest in securities of, or interests in, persons primarily engaged in real estate activities.

  
ITEM 3.  LEGAL PROCEEDINGS

We know of no existing or pending legal proceedings against us, nor are we involved as a plaintiff in any proceeding or pending litigation. There are no proceedings in which any of our directors, officers or any of their respective affiliates, or any beneficial stockholder, is an adverse party or has a material interest adverse to our interest. Our address for service of process in Nevada is Nevada Agency and Trust Company, 50 West Liberty Street, Reno, Nevada 89501.


ITEM 4.  MINE SAFETY DISCLOSURES
 
Not applicable.
 
 
 
 

 

 
 
 
 
 

 


 
12

 
 
 



PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock began trading on the OTC Bulletin Board (”OTCBB”) under the symbol “EVCA” on December 15, 2009.  The following table sets forth the high and low sales prices of our common stock for the periods indicated.

Period
 
High
   
Low
 
             
January 1, 2010 - March 31, 2010
 
$
0.5150
   
$
0.0900
 
April 1, 2010 - June 30, 2010
 
$
0.3900
   
$
0.0300
 
July 1, 2010 - September 30, 2010
 
$
0.0500
   
$
0.0120
 
October 1, 2010 - December 31, 2010
 
$
0.0440
   
$
0.0020
 
January 1, 2011 - March 31, 2011
 
$
0.1085
   
$
0.0026
 
April 1, 2011 - June 30, 2011
 
$
0.0320
   
$
0.0097
 
July 1, 2011 - September 30, 2011
 
$
0.0140
   
$
0.0017
 
October 1, 2011 - December 31, 2011
 
$
0.0020
   
$
0.0001
 
 
Prices may represent inter-dealer prices without retail markup, markdowns, or commissions, and may not represent actual transactions.

On March 26, 2010, the stock was delisted from the OTCBB for failure to comply with Rule 15c2-11.  There was no wrong doing on the part of the Company.  Our stock was delisted because our market makers chose to quote our shares on Pink Sheets, rather than on OCTBB.  The shares were still trading on Pink Sheets.  On May 21, 2010, the stock was reinstated on OTCBB.

Between November 23, 2010 and December 8, 2010, the stock was traded on the OTC Bulletin Board (”OTCBB”) under the symbol “EVCAE”, due to the delay in filing of the Quarterly Report (Form 10-Q) for the quarter ended September 30, 2010.


Holders

As of March 30, 2012, there were approximately 100 stockholders of record of our stock. Some holders of our common stock are “street name” or beneficial holders, whose shares are held by brokers and other financial institutions.

Dividends

We have not paid any cash dividends to our stockholders. The declaration of any future cash dividends will be at the discretion of our Board of Directors and will depend upon our earnings, if any, our capital requirements and financial position, or general economic and other pertinent conditions.  It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, into our business.

Securities Authorized for Issuance under Equity Compensation Plans

We do not have any compensation plans under which equity securities are authorized for issuance.

Unregistered Sales of Equity Securities.

Information regarding unregistered sales not included in previous reports:

 
13

 
 
 
ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES - continued
 
           
Exemption
 
           
From
Terms of
Date
         
Regulation
conversion
Sold
 
Amount
 
Securities Sold
Consideration *
claimed **
or exercise
11/10/11
    4,500,000  
Common Stock
Debt conversion - $900
Reg. D
None
11/30/11
    44,000,000  
Common Stock
Debt conversion - $5,720
Reg. D
None
12/01/11
    21,052,632  
Common Stock
Debt conversion - $4,000
 Reg. D
  None
12/08/11
    13,333,334  
Common Stock
Debt conversion - $2,000
 Reg. D
  None
12/12/11
    21,040,000  
Common Stock
Debt conversion - $2,104
Reg. D
  None
12/14/11
    21,428,571  
Common Stock
Debt conversion - $3,000
 Reg. D
None
12/20/11
    28,000,000  
Common Stock
Debt conversion - $2,800
 Reg. D
None
12/22/11
    28,000,000  
Common Stock
Debt conversion - $2,800
 Reg. D
None
12/22/11
    20,833,333  
Common Stock
Debt conversion - $2,500
Reg. D
None
12/27/11
    20,833,333  
Common Stock
Debt conversion - $2,500
 Reg. D
None
01/03/12
    22,222,222  
Common Stock
Debt conversion - $2,000
Reg. D
None
01/03/12
    38,000,000  
Common Stock
Debt conversion - $1,900
Reg. D
None
01/09/12
    36,000,000  
Common Stock
Debt conversion - $1,620
Reg. D
None
01/17/12
    21,428,571  
Common Stock
Debt conversion - $1,500
Reg. D
None
01/19/12
    36,000,000  
Common Stock
Debt conversion - $1,620
Reg. D
None
01/25/12
    76,923,000  
Common Stock
Debt conversion - $5,000
Reg. D
None
01/27/12
    36,000,000  
Common Stock
Debt conversion - $1,620
Reg. D
None
01/30/12
    22,222,222  
Common Stock
Debt conversion - $2,000
Reg. D
None
02/01/12
    21,666,667  
Common Stock
Debt conversion - $2,600
Reg. D
None
02/02/12
    36,000,000  
Common Stock
Debt conversion - $1,620
Reg. D
None
02/07/12
    11,333,334  
Common Stock
Debt conversion - $1,020
Reg. D
None
02/13/12
    50,000,000  
Common Stock
Debt conversion - $5,000
Reg. D
None
02/13/12
    21,666,667  
Common Stock
Debt conversion - $2,600
Reg. D
None
02/15/12
    100,000,000  
Common Stock
Debt conversion - $6,500
Reg. D
None
02/17/12
    100,000,000  
Common Stock
Debt conversion - $6,500
Reg. D
None
02/22/12
    3,500,000  
Class B Convertible Preferred Stock
Debt conversion - $7,350
Reg. D
1 share of Class B Convertible Preferred Stock is convertible into 10 shares of Common Stock
02/23/12
    100,000,000  
Common Stock
Debt conversion - $13,000
Reg. D
None
02/27/12
    50,000,000  
Common Stock
Debt conversion - $5,000
Reg. D
None
02/27/12
    21,875,000  
Common Stock
Debt conversion - $3,500
Reg. D
None
03/01/12
    50,000,000  
Common Stock
Debt conversion - $6,500
Reg. D
None
03/02/12
    8,105,818  
Common Stock
Settlement
Reg. D
None
03/07/12
    50,000,000  
Common Stock
Debt conversion - $3,250
Reg. D
None
03/07/12
    70,000,000  
Common Stock
Debt conversion - $3,500
Reg. D
None
03/14/12
    100,000,000  
Common Stock
Debt conversion - $6,500
Reg. D
None
03/21/12
    70,000,000  
Common Stock
Debt conversion - $3,500
Reg. D
None
03/21/12
    21,250,000  
Common Stock
Debt conversion - $1,700
Reg. D
None
03/26/12
    150,000,000  
Common Stock
Debt conversion - $9,750
Reg. D
None
03/27/12
    10,000,000  
Common Stock
Settlement
Reg. D
None
03/28/12
    21,250,000  
Common Stock
Debt conversion - $1,700
Reg. D
None
03/30/12
    75,000,000  
Common Stock
Debt conversion - $3,750
Reg. D
None
03/30/12
    100,000,000  
Common Stock
Debt conversion - $6,500
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.
 
14

 
 
 

ITEM 6.  SELECTED FINANCIAL DATA

We have derived the following selected financial information as of December 31, 2011 and 2010, from our audited financial statements included in Item 8 of this annual report. The selected financial information below should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this annual report and our audited financial statements and related notes included in Item 8 of this annual report.
 
             
             
   
Year Ended
   
Year Ended
 
Statement of Operations
 
December 31,
2011
   
December 31,
2010
 
             
Revenues
 
$
673,330
   
$
804,772
 
                 
Gross Profit/(Loss)
 
$
28,892
   
$
(63,798
)
                 
Operating Loss
 
$
(1,674,487
)
 
$
(2,773,852
)
                 
Net Loss
 
$
(1,949,226
)
 
$
(2,869,826
)
                 
Net loss per common share:
               
Basic and diluted
 
$
(0.01
)
 
$
(0.04
)
                 
Weighted average number of common shares outstanding
   
 201,701,598
     
 68,493,655
 
                 
                 
   
December 31,
   
December 31,
 
Balance Sheet Data
 
2011
   
2010
 
                 
Total Assets
 
$
235,682
   
$
616,720
 
Total Liabilities
   
1,879,985
     
1,306,056
 
Total Stockholders' Deficit
   
(1,644,303
)
   
(689,336
 

 
 
 
 
 
 
 
 
 
 
 
 
 

 
15

 
 
 

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This annual report on Form 10-K 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 Relating to Our Business" in Item 1A of this annual report.  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-K.

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. 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.
 
 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.

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, position of President remains vacant.

On December 16, 2010, Mr. Mack Sanders was appointed as Chief Executive Officer.

On May 15, 2011, Mr. Scott O’Neal resigned from the Company’s Board of Directors, and his position of COO.

On March 27, 2012, Mr. Edouard Prous resigned from the Company’s Board of Directors, and his position of CTO.

Plan of Operation

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

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

·           Advertising and Marketing – Work to develop brand identity, marketing materials, and our web site. 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 80-100 pre-owned cars per quarter.

·           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..

 
16

 
 
 

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued
 
·           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 one to three Dealer Development Candidates during 2012.

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

Limited financial resources have affected our ability to acquire inventory, and our financial statements reflect very sporadic purchasing and sales activity, which may continue until we are able to raise the sufficient capital.
 
Revenues for 2011 were $673,330, as compared to $804,772 for 2010.  97.8% of revenues in 2011, and 99.1% in 2010, came from sales of pre-owned vehicles to both, retail customers and other dealers, along with miscellaneous income and fees. Remaining revenues of $15,000 and $6,883, respectively, represented liquidation of inventory of new electric cars, which reflected declining interest in Low Speed Vehicles (LSV), due in large part, to announcements by manufacturers of new, highway rated models, come of which came out in 2011.  Number of used units sold in 2011 was 78, in 2010 - 88. We have no special arrangements pertaining to acquisition or sales of pre-owned cars.  Although we intend to offer those in the future, so far, we have not derived any revenues from parts, repairs, financing or insurance contracts.

Gross profit for 2011 was $28,892, gross loss for 2010 - $63,798. The amount for 2011 included impairment of Tazzari Zero, which remained in inventory for over one-and-a-half years, in the amount of $16,772.  In 2010, gross loss included an impairment in the amount of $102,555, related write-down of inventory to market, reflecting deterioration of market for LSV, with some manufacturers stopping production (ZENN) and some going out of business (ECM).
 
Operating loss for 2011 was $1,674,487, as compared to $2,773,852 for 2010.  In 2010 we dedicated a significant amount of effort and resources to development of business, market for our products, search for new products, and being newly publicly traded company on development of market awareness for our stock and investor relationships. These activities were conducted not only in the U.S., but Europe and South America as well.  2011 represents slow down of such activities, due to lack of capital resources and decrease in share price on the market.  Major decrease in general and administrative expenses, reducing operating loss, was in consulting services, paid for in shares of common stock - $386,653 in 2011, and $1,590,414 in 2010.  Other reductions were in travel - $27,187 in 2011, vs. $80,659 in 2010; and rent - $28,044 vs. $86,913, respectively. Operating loss for 2011, included $37,800 of gain on extinguishment of liabilities, which represented cancellation of accrued compensation to our former CIO, Mr. Joshua Spivey. Operating loss for 2010, included $212,400 of gain on extinguishment of liabilities, which represented cancellation of accrued compensation to our former President and CEO, Mr. Dale Long, upon his departure from the Company in August of 2010.
 
Net loss for 2011 was $1,949,226, as compared to $2,869,826 for 2010. Interest expense was the major component of other income/(loss) - $274,739 in 2011, and $96,010 in 2010, with the increase reflecting larger amount of debt of the Company.

Liquidity and Capital Resources

As of December 31, 2011 and 2010, the Company had no significant cash reserves or other liquid assets.  

As of December 31, 2011 and 2010, working capital deficiency amounted to $1,665,928 and $721,787, respectively.

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.

 
17

 
 
 

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued
 
Currently, we have no commitments or potential agreements for additional funding with either our shareholders, officers and directors, or any third parties.  We’ve made no arrangements with any financial institutions to finance the sales of our vehicles to our customers.

Other Items and Conditions

As of December 31, 2011 and 2010, the Company had $1,879,985 and $1,306,056, respectively, in debt payable and accrued expenses outstanding. The Company has no off balance sheet arrangements, or significant obligations under any contracts.

Critical Accounting Policies
  
The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures about contingent assets and liabilities. We base these estimates and assumptions on historical experience and on various other information and assumptions that are believed to be reasonable under the circumstances. Estimates and assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as additional information is obtained, as more experience is acquired, as our operating environment changes and as new events occur.  We do not believe that, so far, our business has required us to apply judgment in accounting for uncertain and/or subjective matters, and has been anything other than straight forward application of accounting regulations, and that in our determination, none of our significant accounting policies, as described in the Notes to audited financial statements, have risen to the level that can be described as Critical at this time.

 
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 Not applicable.


 
18

 
 
 

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
 
FINANCIAL STATEMENTS
 
Index to Financial Statements
 
 
 
 
Page
   
Report of Independent Registered Public Accounting Firm
F-1
   
Balance Sheets - December 31, 2011 and 2010
F-2
   
Statements of Operations - For the Years Ended December 31, 2011 and 2010
F-3
   
Statement of Stockholders' Deficit - For the Years Ended December 31, 2011 and 2010
F-4 to F-6
   
Statements of Cash Flows - For the Years Ended December 31, 2011 and 2010
F-7
   
Notes to Financial Statements - December 31, 2011 and 2010
F-8 to F-21
   
 
 

 
 
 
 
 
 


 
19

 
 


 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders
EVCARCO, Inc.


We have audited the accompanying balance sheets of EVCARCO, Inc. (the “Company”), as of December 31, 2011 and 2010, and the related statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended.  The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company, as of December 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, as of December 31, 2011, the Company has an accumulated deficit of $5,979,406 and negative working capital of $1,665,928, both of which raise substantial doubt about its ability to continue as a going concern.  Management’s plans concerning these matters are also described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 
/s/ Whitley Penn LLP

 
Dallas, Texas
April 16, 2012
 
 
 
 
 
 
 
 

 
F-1

 
 
 
 
EVCARCO, Inc.
 
Balance Sheets
 
   
             
   
December 31, 2011
   
December 31, 2010
 
ASSETS
           
             
Current assets
           
             
Cash and cash equivalents
 
$
26,046
   
$
77,680
 
Inventory
   
165,778
     
180,150
 
Other receivables
   
21,045
     
21,386
 
Prepaid expenses
   
1,188
     
305,053
 
                 
Total current assets
   
214,057
     
584,269
 
                 
Facilities and equipment
   
32,807
     
37,865
 
Accumulated depreciation
   
(13,470
)
   
(7,702
)
                 
Facilities and equipment, net
   
19,337
     
30,163
 
                 
Other assets
   
2,288
     
2,288
 
                 
                 
TOTAL ASSETS
 
$
235,682
   
$
616,720
 
                 
                 
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
                 
Current liabilities
               
                 
Accounts payable
 
$
606,527
   
$
569,215
 
Accrued expenses
   
197,070
     
81,312
 
Accrued interest (related parties)
   
14,978
     
2,818
 
Other payables
   
4,247
     
26,118
 
Convertible notes payable
   
346,530
     
95,443
 
Loans payable to shareholders
   
710,633
     
531,150
 
                 
Total current liabilities
   
1,879,985
     
1,306,056
 
                 
Commitments and contingencies
               
                 
Stockholders' deficit
               
                 
15,000,000 shares Class A Convertible Preferred Stock
               
   Authorized at $0.001/par value ($1.00 liquidation preference),
               
   0 and 2,500,000 shares issued and outstanding
   
-
     
2,500
 
980,000,000 shares Class B Convertible Preferred Stock
               
   Authorized at $0.001/par value ($5.00 liquidation preference),
               
   1,500,000 and 0 shares issued and outstanding
   
1,500
     
-
 
5,000,000,000 shares Common Stock
               
   Authorized at $0.001/par value
               
   668,434,760 and 78,769,799 shares
               
   issued and outstanding, respectively
   
668,435
     
78,770
 
Additional paid-in capital
   
3,665,168
     
3,259,574
 
Accumulated deficit
   
(5,979,406
)
   
(4,030,180
)
                 
Total stockholders' deficit
   
(1,644,303
)
   
(689,336
)
                 
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
 
$
235,682
   
$
616,720
 
                 
                 
                 
                 
The accompanying footnotes are an integral part of these financial statements.
 
 
 
 
 
F-2

 
 
EVCARCO, Inc.
 
Statements of Operations
 
   
     
2011
   
2010
 
               
               
Revenues
 
$
673,330
   
$
804,772
 
                   
Cost of goods sold
   
627,666
     
766,015
 
Inventory impairment
   
16,772
     
102,555
 
                   
 
Gross Profit/(Loss)
   
28,892
     
(63,798
)
                   
Sales and marketing expenses
   
6,483
     
92,834
 
General and administrative expenses
   
1,723,869
     
2,821,272
 
Loss on asset disposition, net
   
3,501
     
1,356
 
Gain on extinguishment of liabilities
   
(37,800
)
   
(212,400
)
Depreciation and amortization
   
7,326
     
6,992
 
                   
 
Total Operating Expenses
   
1,703,379
     
2,710,054
 
                   
                   
 
Operating Loss
   
(1,674,487
)
   
(2,773,852
)
                   
Other income/(loss)
               
Interest income
   
-
     
36
 
Interest expense (related parties)
   
(29,248
)
   
(20,131
)
Interest expense
   
(245,491
)
   
(75,879
)
                   
 
Total Other Loss
   
(274,739
)
   
(95,974
)
                   
                   
 
Loss before income taxes
   
(1,949,226
)
   
(2,869,826
)
                   
Income tax (expense) benefit
   
-
     
-
 
                   
 
Net Loss
 
$
(1,949,226
)
 
$
(2,869,826
)
                   
                   
Basic and diluted loss per share
 
$
(0.01
)
 
$
(0.04
)
                   
Weighted average number of
   
201,701,598
     
68,493,655
 
common shares outstanding
               
                   
                   
                   
                   
                   
                   
                   
                   
                   
The accompanying footnotes are an integral part of these financial statements.
 
 
 
F-3

 
 
 
EVCARCO, Inc.
 
Statement of Stockholders' Deficit
 
                                       
         
Class A Convertible
 
Class B Convertible
 
Additional
           
 
Common stock
 
Preferred stock
 
Preferred stock
 
paid-in
 
Accumulated
       
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
capital
 
deficit
   
Total
 
                                       
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  
Stock buyback @ $0.013/sh. Aug. 2010
  (13,625,900     (13,626 )   -     -     -     -     (164,374 )           (178,000 )
Stock issued for loan @ $0.04/sh. Oct. 2010
  -     -     2,500,000     2,500     -     -     97,500             100,000  
Stock issued for cash @ $0.20/sh. Oct. 2010
  1,900,000     1,900     -     -     -     -     378,100             380,000  
Stock issued for note conv. @ $0.0044/sh. Dec. 2010
  2,272,727     2,273     -     -     -     -     7,727             10,000  
Stock issued for note conv. @ $0.0031/sh. Dec. 2010
  3,225,806     3,226     -     -     -     -     6,774             10,000  
Stock issued for services @ $0.0033/sh. Dec. 2010
  500,000     500     -     -     -     -     1,150             1,650  
Beneficial conversion features
                                      78,281             78,281  
                                                         
Net loss
                                            (2,869,826 )     (2,869,826 )
                                                         
                                                         
Balance December 31, 2010
  78,769,799   $ 78,770     2,500,000   $ 2,500     -   $ -   $ 3,259,574   $ (4,030,180 )   $ (689,336 )
                                                         
                                                         
Stock issued for note conv. @ avg. $0.00196/sh. Jan. 2011
  11,198,413     11,198     -     -     -     -     10,802             22,000  
Stock issued for services @ $0.0048/sh. Feb. 2011
  500,000     500     -     -     -     -     1,900             2,400  
Stock exchange Feb. 2011
  (15,000,000     (15,000 )   -     -     1,500,000     1,500     13,500             -  
Stock issued for note conv. @ avg. $0.00268/sh. Feb. 2011
  7,623,689     7,624     -     -     -     -     12,776             20,400  
Stock issued for debt conv. @ $0.0104/sh. Feb. 2011
  4,800,000     4,800     -     -     -     -     45,200             50,000  
Stock issued for services @ $0.073/sh. Feb. 2011
  500,000     500     -     -     -     -     36,000             36,500  
Stock issued for note conv. @ $0.0018/sh. Feb. 2011
  18,000,000     18,000     -     -     -     -     14,400             32,400  
Stock issued for debt conv. @ $0.0152/sh. Mar. 2011
  3,290,000     3,290     -     -     -     -     46,710             50,000  
Stock issued for debt conv. @ $0.01/sh. Mar. 2011
  3,177,200     3,177     -     -     -     -     28,595             31,772  
Stock issued for debt conv. @ $0.014/sh. Apr. 2011
  3,560,000     3,560     -     -     -     -     46,440             50,000  
Stock issued for services @ $0.019/sh. Apr. 2011
  1,500,000     1,500     -     -     -     -     27,000             28,500  

 
 
 
 
F-4

 
 
 
Statement of Stockholders' Deficit - continued
 
EVCARCO, Inc.
 
Statement of Stockholders' Deficit
 
                                       
         
Class A Convertible
 
Class B Convertible
 
Additional
           
 
Common stock
 
Preferred stock
 
Preferred stock
 
paid-in
 
Accumulated
       
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
capital
 
deficit
   
Total
 
                                       
Stock issued for note conv. @ $0.011/sh. May 2011
  4,835,087     4,835     -     -     -     -     48,165             53,000  
Stock issued for debt conv. @ $0.0147/sh. May 2011
  3,400,000     3,400     -     -     -     -     46,600             50,000  
Stock issued for debt conv. @ $0.0089/sh. May 2011
  3,664,607     3,665     -     -     -     -     28,950             32,615  
Stock issued for debt conv. @ $0.0073/sh. May 2011
  3,880,086     3,880     -     -     -     -     24,445             28,325  
Stock issued for debt conv. @ $0.0074/sh. Jun. 2011
  6,770,000     6,770     -     -     -     -     43,230             50,000  
Stock conversion Jun. 2011
  10,000,000     10,000     (2,500,000 )   (2,500 )   -     -     (7,500 )           -  
Stock buyback @ $0.0098/sh. Jun. 2011
  (8,102,500     (8,103 )   -     -     -     -     (70,897 )           (79,000 )
Stock issued for services @ $0.026/sh. Jul. 2011
  500,000     500     -     -     -     -     12,500             13,000  
Stock issued for debt conv. @ $0.0059/sh. Aug. 2011
  7,001,367     7,001     -     -     -     -     33,999             41,000  
Stock issued for note conv. @ $0.0058/sh. Aug. 2011
  2,068,966     2,069     -     -     -     -     9,931             12,000  
Stock issued for note conv. @ $0.0026/sh. Aug. 2011
  10,181,818     10,182     -     -     -     -     14,218             24,400  
Stock issued for note conv. @ $0.0023/sh. Sep. 2011
  4,347,826     4,348     -     -     -     -     5,652             10,000  
Stock issued for note conv. @ $0.0019/sh. Sep. 2011
  5,263,158     5,263     -     -     -     -     4,737             10,000  
Stock issued for debt conv. @ $0.00085/sh. Sep. 2011
  14,705,883     14,706     -     -     -     -     (2,206 )           12,500  
Stock issued for services @ $0.0024/sh. Sep. 2011
  500,000     500     -     -     -     -     700             1,200  
Stock issued for note conv. @ $0.0009/sh. Oct. 2011
  7,777,778     7,778     -     -     -     -     (778 )           7,000  
Stock issued for note conv. @ $0.0008/sh. Oct. 2011
  7,500,000     7,500     -     -     -     -     (1,500 )           6,000  
Stock issued for debt conv. @ $0.00055/sh. Oct. 2011
  22,727,273     22,727     -     -     -     -     (10,227 )           12,500  
Stock issued for note conv. @ $0.0007/sh. Oct. 2011
  7,857,143     7,857     -     -     -     -     (2,357 )           5,500  
Stock issued for note conv. @ $0.0006/sh. Oct. 2011
  7,500,000     7,500     -     -     -     -     (3,000 )           4,500  
Stock issued for debt conv. @ $0.00061/sh. Oct. 2011
  10,491,803     10,492     -     -     -     -     (4,092 )           6,400  
Stock issued for note conv. @ $0.0006/sh. Oct. 2011
  15,000,000     15,000     -     -     -     -     (6,000 )           9,000  
Stock issued for note conv. @ $0.0005/sh. Oct. 2011
  8,000,000     8,000     -     -     -     -     (4,000 )           4,000  
Stock issued for debt conv. @ $0.0004/sh. Oct. 2011
  31,250,000     31,250     -     -     -     -     (18,750 )           12,500  
Stock issued for debt conv. @ $0.00051/sh. Oct. 2011
  5,074,161     5,074     -     -     -     -     (2,474 )           2,600  
Stock issued for note conv. @ $0.0005/sh. Oct. 2011
  38,800,000     38,800     -     -     -     -     (19,400 )           19,400  
Stock issued for note conv. @ $0.0004/sh. Oct. 2011
  12,500,000     12,500     -     -     -     -     (7,500 )           5,000  
                                                         
                                                         

 
F-5

 
 
Statement of Stockholders' Deficit - continued
 
EVCARCO, Inc.
 
Statement of Stockholders' Deficit
 
                                       
         
Class A Convertible
 
Class B Convertible
 
Additional
           
 
Common stock
 
Preferred stock
 
Preferred stock
 
paid-in
 
Accumulated
       
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
capital
 
deficit
   
Total
 
                                       
Stock issued for debt conv. @ $0.00025/sh. Nov. 2011
  34,000,000     34,000     -     -     -     -     (25,500 )           8,500  
Stock issued for note conv. @ $0.0004/sh. Nov. 2011
  25,000,000     25,000     -     -     -     -     (15,000 )           10,000  
Stock issued for note conv. @ $0.00028/sh. Nov. 2011
  25,000,000     25,000     -     -     -     -     (18,000 )           7,000  
Stock issued for debt conv. @ $0.0002/sh. Nov. 2011
  4,500,000     4,500     -     -     -     -     (3,600 )           900  
Stock issued for note conv. @ $0.00013/sh. Nov. 2011
  44,000,000     44,000     -     -     -     -     (38,280 )           5,720  
Stock issued for note conv. @ $0.00019/sh. Dec. 2011
  21,052,632     21,053     -     -     -     -     (17,053 )           4,000  
Stock issued for debt conv. @ $0.00015/sh. Dec. 2011
  13,333,334     13,333     -     -     -     -     (11,333 )           2,000  
Stock issued for debt conv. @ $0.0001/sh. Dec. 2011
  21,040,000     21,040     -     -     -     -     (18,936 )           2,104  
Stock issued for note conv. @ $0.0001/sh. Dec. 2011
  56,000,000     56,000     -     -     -     -     (50,400 )           5,600  
Stock issued for note conv. @ $0.00014/sh. Dec. 2011
  21,428,571     21,429     -     -     -     -     (18,429 )           3,000  
Stock issued for note conv. @ $0.00012/sh. Dec. 2011
  41,666,666     41,667     -     -     -     -     (36,667 )           5,000  
Beneficial conversion features
                                      263,023             263,023  
                                                         
Net loss
                                            (1,949,226 )     (1,949,226 )
                                                         
                                                         
Balance December 31, 2011
  668,434,760   $ 668,435     -   $ -     1,500,000   $ 1,500   $ 3,665,168   $ (5,979,406 )   $ (1,644,303 )