UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
DC 20549
 
 FORM
10-Q
 
 x           Quarterly
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 
 For the
quarterly period ended January 31, 2009
 
  ̈  Transition
Report pursuant to 13 or 15(d) of the Securities Exchange
Act   of 1934
 
 For the
transition period from ______________  to
______________
 
 Commission File
Number     000-33391
 
 EV
      INNOVATIONS, INC.(Exact
      name of Small Business Issuer as specified in its
  charter)
 
 Nevada
                      
                      88-0490890(State
      or other jurisdiction of
                      
                      (IRS
      Employer Identification No.)incorporation
      or organization)
 
 4894 Lone Mountain #168, Las Vegas
      NV
                    
                    89130(Address
      of principal executive offices)
                    
                    (Postal
      or Zip Code)
 
 Issuer's
telephone number, including area code:  702-425-7376
 
 Former
      name, former address and former fiscal year, if changed
    sincelast
      report)
 
 Check  whether
the issuer (1) filed all reports  required to be filed by Section 13
or 15(d) of the  Exchange  Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports),  and (2) has been subject to such filing requirements for
the past 90 days. x
Yes  ̈
No
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act. Yes  ̈ No x
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a smaller reporting company.  (Check
One):
 
 Large
accelerated filer   ̈                                                                                     Accelerated
filer   ̈
 
 Non-accelerated
filer     ̈                                                                                     Smaller
reporting company  x
 (Do not
check if a smaller reporting company)
 
 APPLICABLE
ONLY TO CORPORATE ISSUERS
  The
number of shares outstanding the issuer's common stock, $.001 par value, was
20,178,660 as of March 4, 2009.
 
 
 
 EV
INNOVATIONS, INC.
 
 TABLE OF
CONTENTS
 
 Page
      No.PART
      I. FINANCIAL INFORMATION
                2ITEM
      1 - Financial Statements
                2ITEM
      2 - Management's Discussion and Analysis of Financial Condition and
      Results of Operations.
                17ITEM
      3 -  Quantitative and Qualitative Disclosures about Market
      Risk
                22ITEM
      4T- Controls and Procedures.
                22PART
      II. OTHER INFORMATION
                22ITEM
      1 - Legal ProceedingsITEM
      6 - ExhibitsEXHIBIT
      31 - Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002EXHIBIT
      32 - Certification pursuant to Section 906 of the Sarbanes- Oxley Act of
      2002
 
 
  PART
I.       FINANCIAL INFORMATION
  
 EV
INNOVATIONS, INC.
 
 I N D E
X
 
 Page No.ITEM
      I - Unaudited Consolidated Financial StatementsConsolidated
      Balance Sheets as of January 31, 2009 and July 31, 2008
      (Unudited)
                                        
                                        
                                        2Consolidated
      Statements of Operations for the Six and Three Months Ended January 31,
      2009 and 2008 and from Inception (April 12, 2000) to January 31, 2009
      (Unaudited)
                                        
                                        
                                        3Consolidated
      Statement of Stockholders Equity (Deficit) (Unaudited)
                                        
                                        
                                        4Consolidated
      Statements of Cash Flows for the Six Months Ended January 31, 2009 and
      2008 and from Inception (April 12, 2000) to January 31, 2009
      (Unaudited)
                                        
                                        
                                        5Notes
      to Unaudited Consolidated Financial Statements
                                        
                                        
                                        7-16
 
 
 
 EV
INNOVATIONS, INC.
 A
Development Stage Company
 
 Consolidated
Balance Sheets
 (UNAUDITED)
 
 January
      31,
                                                                  
                                                                  
                                                                  July
      31,2009
                                                                  
                                                                  
                                                                  2008ASSETSCurrent
      assets:Cash
                                                                  
                                                                  $
                                                                  28,288
                                                                  
                                                                  
                                                                  $
                                                                  101,095Accounts
      receivable, net of allowance for doubtful accounts of $0
                                                                  
                                                                  
                                                                  62,090
                                                                  
                                                                  
                                                                  
                                                                  13,601Inventories
                                                                  
                                                                  
                                                                  287,068
                                                                  
                                                                  
                                                                  
                                                                  287,310Employee
      Advances
                                                                  
                                                                  
                                                                  5,072
                                                                  
                                                                  
                                                                  
                                                                  -Other
      current assets
                                                                  
                                                                  
                                                                  21,656
                                                                  
                                                                  
                                                                  
                                                                  69,119Total
      current assets
                                                                  
                                                                  
                                                                  404,174
                                                                  
                                                                  
                                                                  
                                                                  471,125Property
      and equipment, net
                                                                  
                                                                  
                                                                  2,076,611
                                                                  
                                                                  
                                                                  
                                                                  2,014,580Other
      long term assets:Other
      assets
                                                                  
                                                                  
                                                                  51,600
                                                                  
                                                                  
                                                                  
                                                                  51,600Deferred
      patent costs
                                                                  
                                                                  
                                                                  21,042
                                                                  
                                                                  
                                                                  
                                                                  19,903Total
      other long term assets
                                                                  
                                                                  
                                                                  72,642
                                                                  
                                                                  
                                                                  
                                                                  71,503$
                                                                  2,553,427
                                                                  
                                                                  
                                                                  $
                                                                  2,557,208LIABILITIES
      AND STOCKHOLDERS' DEFICIENCYCurrent
      liabilities:Current
      portion of long-term debt
                                                                  
                                                                  $
                                                                  31,572
                                                                  
                                                                  
                                                                  $
                                                                  32,422Accounts
      payable and accrued expenses
                                                                  
                                                                  
                                                                  811,706
                                                                  
                                                                  
                                                                  
                                                                  330,183Customer
      deposits
                                                                  
                                                                  
                                                                  374,393
                                                                  
                                                                  
                                                                  
                                                                  149,160Advances
      from related parties
                                                                  
                                                                  
                                                                  684,566
                                                                  
                                                                  
                                                                  
                                                                  38,000Total
      current liabilities
                                                                  
                                                                  
                                                                  1,902,237
                                                                  
                                                                  
                                                                  
                                                                  549,765Long-term
      debt - less current portion above
                                                                  
                                                                  
                                                                  6,636,122
                                                                  
                                                                  
                                                                  
                                                                  6,135,408Commitments
      and contingencies
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -Stockholders'
      deficiency:Preferred
      stock, $.001 par value, 5,000,000 shares authorized, no shares
      issued
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -Common
      stock, $.001 par value, 35,714,285 authorized; outstanding 23,347,257 at
      January 31, 2009 and  July 31, 2008,
respectively
                                                                  
                                                                  
                                                                  23,347
                                                                  
                                                                  
                                                                  
                                                                  23,347Additional
      paid-in-capital
                                                                  
                                                                  
                                                                  47,790,509
                                                                  
                                                                  
                                                                  
                                                                  47,790,509Deficit
      accumulated during the development stage
                                                                  
                                                                  
                                                                  (53,786,376
                                                                  )
                                                                  
                                                                  
                                                                  (51,947,451
                                                                  )Cumulative
      other comprehensive income (loss)
                                                                  
                                                                  
                                                                  (12,412
                                                                  )
                                                                  
                                                                  
                                                                  5,630Total
      stockholders' deficiency
                                                                  
                                                                  
                                                                  (5,984,932
                                                                  )
                                                                  
                                                                  
                                                                  (4,127,965
                                                                  )$
                                                                  2,553,427
                                                                  
                                                                  
                                                                  $
                                                                  2,557,208
 
 SEE
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
 
 2
  EV
INNOVATIONS, INC.
 A
Development Stage Company
 
 Consolidated
Statements of Operations
 (UNAUDITED)
 
 INCEPTIONSIX
      MONTHS ENDED
                          
                          
                          THREE
      MONTHS ENDED
                          
                          
                          (April
      12,, 2000)January
      31,
                          
                          
                          January
      31,
                          
                          
                          THROUGH2009
                          
                          
                          2008
                          
                          
                          2009
                          
                          
                          2008
                          
                          
                          January
      31, 2009Sales
                          
                          $
                          223,001
                          
                          
                          $
                          208,703
                          
                          
                          $
                          221,056
                          
                          
                          $
                          106,289
                          
                          
                          $
                          2,192,055Costs
      and expenses:Cost
      of sales
                          
                          
                          290,541
                          
                          
                          
                          292,300
                          
                          
                          
                          290,541
                          
                          
                          
                          106,506
                          
                          
                          
                          2,824,104General
      and administrative
                          
                          
                          788,996
                          
                          
                          
                          1,447,783
                          
                          
                          
                          305,095
                          
                          
                          
                          873,724
                          
                          
                          
                          43,248,657Research
      and development
                          
                          
                          579,207
                          
                          
                          
                          400,830
                          
                          
                          
                          162,955
                          
                          
                          
                          327,288
                          
                          
                          
                          7,950,900Loss
      from sale of other assets
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (314,381
                          )1,658,744
                          
                          
                          
                          2,140,913
                          
                          
                          
                          758,591
                          
                          
                          
                          1,307,518
                          
                          
                          
                          53,709,280Loss
      from continuing operations
                          
                          
                          (1,435,743
                          )
                          
                          
                          (1,932,210
                          )
                          
                          
                          (537,535
                          )
                          
                          
                          (1,201,229
                          )
                          
                          
                          (51,517,225
                          )Other
      income (expense):Interest
      expense
                          
                          
                          (448,391
                          )
                          
                          
                          (45,085
                          )
                          
                          
                          (421,098
                          )
                          
                          
                          (18,005
                          )
                          
                          
                          (1,420,942
                          )Interest
      income
                          
                          
                          2,293
                          
                          
                          
                          -
                          
                          
                          
                          (4,784
                          )
                          
                          
                          -
                          
                          
                          
                          2,293Other
      income
                          
                          
                          42,916
                          
                          
                          
                          24,965
                          
                          
                          
                          23,501
                          
                          
                          
                          24,831
                          
                          
                          
                          989,304Net
      loss from continuing operations
                          
                          
                          (1,838,925
                          )
                          
                          
                          (1,952,330
                          )
                          
                          
                          (939,916
                          )
                          
                          
                          (1,194,403
                          )
                          
                          
                          (51,946,570
                          )Provision
      for income tax
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Net
      loss from continuing operations
                          
                          
                          (1,838,925
                          )
                          
                          
                          (1,952,330
                          )
                          
                          
                          (939,916
                          )
                          
                          
                          (1,194,403
                          )
                          
                          
                          (51,946,570
                          )Discontinued
      operations:Loss
      from discontinued operations
                          
                          
                          -
                          
                          
                          
                          (430,067
                          )
                          
                          
                          -
                          
                          
                          
                          (119,908
                          )
                          
                          
                          (1,320,313
                          )Gain
      on disposal of discontinued operations
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          90,069Net
      loss on discontinued operations
                          
                          
                          -
                          
                          
                          
                          (430,067
                          )
                          
                          
                          -
                          
                          
                          
                          (119,908
                          )
                          
                          
                          (1,230,244
                          )Loss
      from continued and discontinued operations
                          
                          
                          (1,838,925
                          )
                          
                          
                          (2,382,397
                          )
                          
                          
                          (939,916
                          )
                          
                          
                          (1,314,311
                          )
                          
                          
                          (53,176,814
                          )Minority
      interest share of loss of consolidated subsidiaries from discontinued
      operations
                          
                          
                          -
                          
                          
                          
                          2,377
                          
                          
                          
                          -
                          
                          
                          
                          2,377
                          
                          
                          
                          19,200Net
      loss
                          
                          
                          (1,838,925
                          )
                          
                          
                          (2,380,020
                          )
                          
                          
                          (939,916
                          )
                          
                          
                          (1,311,934
                          )
                          
                          
                          (53,157,614
                          )Other
      comprehensive income (loss):Foreign
      currency translation
                          
                          
                          1,511
                          
                          
                          
                          -
                          
                          
                          
                          (850
                          )
                          
                          
                          -
                          
                          
                          
                          7,141Net
      comprehensive loss
                          
                          $
                          (1,837,414
                          )
                          
                          $
                          (2,380,020
                          )
                          
                          $
                          (940,766
                          )
                          
                          $
                          (1,311,934
                          )
                          
                          $
                          (53,150,473
                          )Net
      loss per share - basic and diluted - continuing operations
                          
                          $
                          (0.08
                          )
                          
                          $
                          (0.29
                          )
                          
                          $
                          (0.05
                          )
                          
                          $
                          (0.15
                          )Weighted
      shares outstanding – basic and diluted - continuing
    operations
                          
                          
                          23,347,257
                          
                          
                          
                          6,815,453
                          
                          
                          
                          20,483,914
                          
                          
                          
                          7,987,977Net
      loss per share - basic and diluted - discontinued
    operations
                          
                          $
                          -
                          
                          
                          $
                          (0.06
                          )
                          
                          $
                          -
                          
                          
                          $
                          (0.01
                          )Weighted
      shares outstanding – basic and diluted - discontinued
      operations
                          
                          
                          23,347,257
                          
                          
                          
                          6,815,453
                          
                          
                          
                          23,347,257
                          
                          
                          
                          15,713,385
 
 SEE
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
 
 3
  EV
INNOVATIONS, INC.
 A
Development Stage Company
 
 Consolidated
Statement of Stockholder's Equity (Deficiency)
 
 DeficitAccumulated
                                
                                
                                
                                
                                
                                CumulativeAdditional
                                
                                
                                During
      the
                                
                                
                                
                                
                                
                                OtherCommon
      stock
                                
                                
                                
                                
                                
                                Paid-in
                                
                                
                                Development
                                
                                
                                Subscription
                                
                                
                                ComprehensiveShares
                                
                                
                                Amount
                                
                                
                                Capital
                                
                                
                                Stage
                                
                                
                                Receivable
                                
                                
                                Income
      (loss)
                                
                                
                                TotalBalance
      April 12, 2000
                                
                                
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                -Stock
      issuancesIssuance
      of stock for cash
                                
                                
                                760,500
                                
                                
                                
                                7,605
                                
                                
                                
                                81,690
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                89,295Net
      loss for the period
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (7,773
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (7,773
                                )Balance
      January 31, 2001
                                
                                
                                760,500
                                
                                
                                
                                7,605
                                
                                
                                
                                81,690
                                
                                
                                
                                (7,773
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                81,522Net
      loss for the year
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (65,618
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (65,618
                                )Balance
      January 31, 2002
                                
                                
                                760,500
                                
                                
                                
                                7,605
                                
                                
                                
                                81,690
                                
                                
                                
                                (73,391
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                15,904Stock
      issuancesNon-cash
      issuance of common stock
                                
                                
                                3,600,000
                                
                                
                                
                                (3,244
                                )
                                
                                
                                403,249
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                400,005Value
      of rent donated by a related party
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                6,000
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                6,000Net
      loss for the year
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (825,493
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (825,493
                                )Balance
      January 31, 2003
                                
                                
                                4,360,500
                                
                                
                                
                                4,361
                                
                                
                                
                                490,939
                                
                                
                                
                                (898,884
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (403,584
                                )Stock
      issuancesNon-cash
      issuance of stock
                                
                                
                                1,012,500
                                
                                
                                
                                1,013
                                
                                
                                
                                (1,013
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Employee
      stock based compensation
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                4,660,000
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (4,660,000
                                )
                                
                                
                                -Exercise
      of options, split adjusted
                                
                                
                                707,400
                                
                                
                                
                                707
                                
                                
                                
                                588,793
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                589,500Expenses
      paid with stock
                                
                                
                                2,250
                                
                                
                                
                                2
                                
                                
                                
                                8,748
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                8,750Amortization
      of deferred stock compensation
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                4,394,000
                                
                                
                                
                                4,394,000Issuance
      of common stock for cash and note
                                
                                
                                42,533
                                
                                
                                
                                42
                                
                                
                                
                                199,958
                                
                                
                                
                                -
                                
                                
                                
                                (50,000
                                )
                                
                                
                                -
                                
                                
                                
                                150,000Net
      loss for the year
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (5,261,224
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (5,261,224
                                )Balance
      January 31, 2004
                                
                                
                                6,125,183
                                
                                
                                
                                6,125
                                
                                
                                
                                5,947,425
                                
                                
                                
                                (6,160,108
                                )
                                
                                
                                (50,000
                                )
                                
                                
                                (266,000
                                )
                                
                                
                                (522,558
                                )Stock
      issuancesReturn
      of non-cash issuance
                                
                                
                                (1,012,500
                                )
                                
                                
                                (1,013
                                )
                                
                                
                                1,013
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Stock
      redemption
                                
                                
                                (900,000
                                )
                                
                                
                                (900
                                )
                                
                                
                                900
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Employee
      stock based compensation
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                7,071,467
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                7,071,467Exercise
      of options
                                
                                
                                1,072,892
                                
                                
                                
                                1,073
                                
                                
                                
                                924,222
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                925,295Stock
      re-issuance
                                
                                
                                900,000
                                
                                
                                
                                900
                                
                                
                                
                                (900
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Amortization
      of deferred stock compensation
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                266,000
                                
                                
                                
                                266,000Basis
      of assets acquired less then purchase price
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (54,656
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (54,656
                                )Stock
      dividend
                                
                                
                                618,558
                                
                                
                                
                                619
                                
                                
                                
                                (619
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Collection
      of receivable
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                50,000
                                
                                
                                
                                -
                                
                                
                                
                                50,000Net
      loss for the year
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (12,586,255
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (12,586,255
                                )Balance
      January 31, 2005
                                
                                
                                6,804,133
                                
                                
                                
                                6,804
                                
                                
                                
                                13,888,852
                                
                                
                                
                                (18,746,363
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (4,850,707
                                )Stock
      issuanceExercise
      of options
                                
                                
                                9,500
                                
                                
                                
                                10
                                
                                
                                
                                60,790
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                60,800Sale
      of stock for cash
                                
                                
                                4,000
                                
                                
                                
                                4
                                
                                
                                
                                19,996
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                20,000Stock
      issued for related party advances
                                
                                
                                500,000
                                
                                
                                
                                500
                                
                                
                                
                                3,384,094
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                3,384,594Stock
      dividend
                                
                                
                                365,882
                                
                                
                                
                                366
                                
                                
                                
                                (366
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Options
      issued for expenses
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                250,000
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                250,000Net
      loss for the period
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (2,918,739
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (2,918,739
                                )Balance
      July 31, 2005
                                
                                
                                7,683,515
                                
                                
                                
                                7,684
                                
                                
                                
                                17,603,366
                                
                                
                                
                                (21,665,102
                                )
                                
                                
                                
                                
                                
                                
                                -
                                
                                
                                
                                (4,054,052
                                )Stock
      issuancesValue
      of stock options issued
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                7,577,255
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                7,577,255Exercise
      of options
                                
                                
                                1,470,500
                                
                                
                                
                                1,470
                                
                                
                                
                                9,434,530
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                9,436,000Stock
      issued for debt
                                
                                
                                12,732,500
                                
                                
                                
                                12,733
                                
                                
                                
                                2,987,266
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                2,999,999Stock
      dividend
                                
                                
                                4,008,615
                                
                                
                                
                                4,008
                                
                                
                                
                                (4,008
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Net
      loss for the year
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (13,126,909
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (13,126,909
                                )Balance
      July 31, 2006
                                
                                
                                25,895,130
                                
                                
                                
                                25,895
                                
                                
                                
                                37,598,409
                                
                                
                                
                                (34,792,011
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                2,832,293Stock
      issuancesValue
      of stock options issued (valued at $1.05 per share)
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                2,103,600
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                2,103,600Exercise
      of options (valued at $3.55 per share)
                                
                                
                                1,206,000
                                
                                
                                
                                1,206
                                
                                
                                
                                4,280,094
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                4,281,300Value
      of stock issued for services (valued at $0.8387 per share)
                                
                                
                                3,100,000
                                
                                
                                
                                3,100
                                
                                
                                
                                2,596,900
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                2,600,000Stock
      dividends
                                
                                
                                9,299,381
                                
                                
                                
                                9,300
                                
                                
                                
                                (9,300
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Net
      loss for the year
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (10,619,757
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (10,619,757
                                )Foreign
      currency transactions
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (7,860
                                )
                                
                                
                                (7,860
                                )Balance
      July 31, 2007
                                
                                
                                39,500,511
                                
                                
                                
                                39,501
                                
                                
                                
                                46,569,703
                                
                                
                                
                                (45,411,768
                                )
                                
                                
                                -
                                
                                
                                
                                (7,860
                                )
                                
                                
                                1,189,576Stock
      issuancesValue
      of stock options issued (valued at $1.8933 per share)
                                
                                
                                -
                                
                                
                                
                                
                                
                                
                                
                                804,652
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                804,652Common
      stock issued as collateral on loan pre-reverse stock split
                                
                                
                                10,000,000
                                
                                
                                
                                10,000
                                
                                
                                
                                (10,000
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Reverse
      stock split
                                
                                
                                (42,428,598
                                )
                                
                                
                                (42,429
                                )
                                
                                
                                42,429
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Common
      stock issued as collateral on loan post-reverse stock
split
                                
                                
                                16,071,427
                                
                                
                                
                                16,071
                                
                                
                                
                                (16,071
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Exercise
      of options post-reverse stock split (valued at $1.96 per
      share)
                                
                                
                                203,917
                                
                                
                                
                                204
                                
                                
                                
                                399,796
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                400,000Net
      loss for the year
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (6,535,683
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (6,535,683
                                )Foreign
      currency transactions
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                13,490
                                
                                
                                
                                13,490Balance
      July 31, 2008
                                
                                
                                23,347,257
                                
                                
                                
                                23,347
                                
                                
                                
                                47,790,509
                                
                                
                                
                                (51,947,451
                                )
                                
                                
                                -
                                
                                
                                
                                5,630
                                
                                
                                
                                (4,127,965
                                )Net
      (loss) for the period
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (899,009
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (899,009
                                )Foreign
      currency transactions
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (17,600
                                )
                                
                                
                                (17,600
                                )Balance
      October 31, 2008
                                
                                
                                23,347,257
                                
                                
                                
                                23,347
                                
                                
                                
                                47,790,509
                                
                                
                                
                                (52,846,460
                                )
                                
                                
                                -
                                
                                
                                
                                (11,970
                                )
                                
                                
                                (5,044,574
                                )Net
      (loss) for the period
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (939,916
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (939,916
                                )Foreign
      currency transactions
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (442
                                )
                                
                                
                                (442
                                )Balance
      January 31, 2009
                                
                                
                                23,347,257
                                
                                
                                $
                                23,347
                                
                                
                                $
                                47,790,509
                                
                                
                                $
                                (53,786,376
                                )
                                
                                $
                                -
                                
                                
                                $
                                (12,412
                                )
                                
                                $
                                (5,984,932
                                )
  SEE
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
 
 4
 
 EV
INNOVATIONS, INC.
 A
Development Stage Company
 
 Consolidated
Statements of Cash Flows
 (UNAUDITED)
 
 Inception(April
      12,, 2000)SIX
      MONTHS ENDED
                              
                              
                              throughJanuary
      31,
                              
                              
                              January
      31,2009
                              
                              
                              2008
                              
                              
                              2009Cash
      provided (used in) Operating Activities:Net
      (loss)
                              
                              $
                              (1,838,925
                              )
                              
                              $
                              (2,380,020
                              )
                              
                              $
                              (53,786,376
                              )Adjustments
      to reconcile net (loss) to cashDepreciation
      and amortization
                              
                              
                              43,176
                              
                              
                              
                              58,659
                              
                              
                              
                              863,142Bad
      debt expense
                              
                              
                              -
                              
                              
                              
                              9,678
                              
                              
                              
                              186,582Gain/loss
      of sale of other assets
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              315,169Minority
      interest in income
                              
                              
                              -
                              
                              
                              
                              (2,377
                              )
                              
                              
                              -Non
      cash stock-based compensation
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              24,550,293(Increase)
      in accounts receivable
                              
                              
                              (48,489
                              )
                              
                              
                              (22,485
                              )
                              
                              
                              (248,672
                              )(Increase)
      in inventories
                              
                              
                              242
                              
                              
                              
                              (34,229
                              )
                              
                              
                              (287,068
                              )(Increase)
      in employee advances
                              
                              
                              (5,072
                              )
                              
                              
                              -
                              
                              
                              
                              (5,072
                              )decrease
      in prepaid expenses and other assets
                              
                              
                              47,463
                              
                              
                              
                              57,275
                              
                              
                              
                              (21,656
                              )Loss
      on sale of property and equipment
                              
                              
                              -
                              
                              
                              
                              3,903
                              
                              
                              
                              -(Increase)
      in other assets
                              
                              
                              -
                              
                              
                              
                              (19,686
                              )
                              
                              
                              (50,000
                              )Increase
      (decrease) in accounts payable and accrued expenses
                              
                              
                              510,373
                              
                              
                              
                              (78,239
                              )
                              
                              
                              840,556Increase
      in customer deposits
                              
                              
                              225,233
                              
                              
                              
                              35,000
                              
                              
                              
                              374,393(Increase)
      decrease in deferred revenue
                              
                              
                              -
                              
                              
                              
                              (2,990
                              )
                              
                              
                              -(Gain)
      on sale of subsidiary
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (90,069
                              )Loss
      from discontinued operations
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              1,320,313Cash
      used in operating activities
                              
                              
                              (1,065,999
                              )
                              
                              
                              (2,375,511
                              )
                              
                              
                              (26,038,465
                              )Cash
      provided by (used in) Investing Activities:Increase
      in other assets
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (1,452,353
                              )Proceeds
      from sale of other assets
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              1,136,372Proceeds
      from sale of subsidiary
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              215,000Purchase
      of property and equipment
                              
                              
                              (105,207
                              )
                              
                              
                              (88,350
                              )
                              
                              
                              (1,244,039
                              )Proceeds
      from sale of property and equipment
                              
                              
                              -
                              
                              
                              
                              1,070
                              
                              
                              
                              108,318Investment
      in subsidiaries
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              (688,220
                              )Increase
      in deferred patent costs
                              
                              
                              (1,139
                              )
                              
                              
                              -
                              
                              
                              
                              (21,042
                              )Cash
      used in investing activities
                              
                              
                              (106,346
                              )
                              
                              
                              (87,280
                              )
                              
                              
                              (1,945,964
                              )Cash
      provided (used in) by Financing Activities:Proceeds
      from the exercise of stock options
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              15,692,895Collection
      of stock receivable
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              50,000Proceeds
      from the issuance of debt
                              
                              
                              486,428
                              
                              
                              
                              3,596,611
                              
                              
                              
                              9,601,141Advances
      from related parties
                              
                              
                              1,088,967
                              
                              
                              
                              2,712,008
                              
                              
                              
                              13,758,774Payments
      of related party advances
                              
                              
                              (442,401
                              )
                              
                              
                              (2,755,478
                              )
                              
                              
                              (9,914,684
                              )Payments
      of debt
                              
                              
                              (15,414
                              )
                              
                              
                              (1,048,784
                              )
                              
                              
                              (1,422,297
                              )Proceeds
      from the issuance of common stock
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              259,300Cash
      provided by financing activities
                              
                              
                              1,117,580
                              
                              
                              
                              2,504,357
                              
                              
                              
                              28,025,129Effect
      of exchange rate changes on cash and cash equivalents
                              
                              
                              (18,042
                              )
                              
                              
                              2,281
                              
                              
                              
                              (12,412
                              )Net
      increase (decrease) in cash
                              
                              
                              (72,807
                              )
                              
                              
                              43,847
                              
                              
                              
                              28,288Cash
      at beginning of period
                              
                              
                              101,095
                              
                              
                              
                              3,775
                              
                              
                              
                              -Cash
      at end of period
                              
                              $
                              28,288
                              
                              
                              $
                              47,622
                              
                              
                              $
                              28,288Supplemental
      information:Cash
      paid during the year for:Interest
      paid
                              
                              $
                              54,389
                              
                              
                              $
                              45,006Income
      taxes paid
                              
                              $
                              -
                              
                              
                              $
                              -Non
      - cash financing activities:Fixed
      assets acquired by the issuance of debt
                              
                              $
                              -
                              
                              
                              $
                              -
                              
                              
                              $
                              1,300,000Shares
      issued for related party advances
                              
                              $
                              -
                              
                              
                              $
                              -
                              
                              
                              $
                              3,000,000Accrued
      expenses charged to long term debt
                              
                              $
                              28,850
                              
                              
                              $
                              -
                              
                              
                              $
                              28,850
 
 SEE
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
  5


EV
INNOVATIONS, INC.


A
Development Stage Company





NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





Note
1. Financial statement presentation





The
financial statements have been prepared in accordance with Securities Exchange
Commission requirements for interim financial statements.  Therefore,
they do not include all information and footnotes required by accounting
principles generally accepted in the United States for complete financial
statements.  These financial statements should be read in conjunction
with the financial statements and notes thereto contained in the Company's
Annual Report on form 10-K for the year ended July 31, 2008 as filed with the
Securities Exchange Commission.





The
results of operations for the interim periods shown in this report are not
necessarily indicative of results to be expected for the full
year.  In the opinion of management, the information contained herein
reflects all adjustments necessary to make the results of operations for the
interim period a fair statement of such operations.  All such
adjustments are of a normal recurring nature.





History
and Nature of Business


EV
Innovations, Inc. (formerly Hybrid Technologies, Inc.) was incorporated under
the laws of the State of Nevada on April 12, 2000. EV Innovations, Inc.'s (the
“Company”) original business was the exploration and development of mineral
interests. The Company abandoned these interests in 2003.





The
Company is currently pursuing the development and marketing of electric powered
vehicles and products based on the advanced lithium battery technology it has
developed. At January 31, 2009 the Company deems itself a development stage
company as planned principal operations are minimal in its primary line of
business.





On April
16, 2008, the Company sold their controlling interest of approximately 69% of
the outstanding common stock in Zingo, Inc. (now Superlattice Power, Inc.,
“SPI”). Prior to April 16, 2008, SPI was a related party who provided
telecommunication services to business and residential customers utilizing VOIP
technology and currently is researching and developing rechargeable lithium ion
batteries.





Effective
April 15, 2008, the Company entered into a license agreement with SPI providing
for their license to SPI of their patent applications and technologies for
rechargeable lithium ion batteries for electric vehicles and other applications
(“licensed products”). Under the license agreement, the Company has the right to
purchase their requirements of lithium ion batteries from SPI, and their
requirements of lithium ion batteries shall be supplied by SPI in preference to,
and on a priority basis as compared with, supply and delivery arrangements in
effect for other customers of SPI. The Company’s cost for lithium ion batteries
purchased from SPI shall be SPI’s actual manufacturing costs for such batteries
for the fiscal quarter of SPI in which the Company’s purchase takes
place.





SPI has
agreed to invest a minimum of $1,500,000 in each of the next two years in
development of the technology for the Licensed Products. To date, investments
have been made in the amount of $35,608. If the SPI does not make the required
investments, it will be in default under the license agreement; the Company
would have the right to terminate the license agreement.





Basis
of presentation


The
Company’s financial statements for the six months ended January 31, 2009 have
been prepared on a going concern basis which contemplates the realization of
assets and settlement of liabilities and commitments in the normal course of
business. The Company had $223,001 of revenue for the six months ending January
31, 2009, and as of January 31, 2009, there was a stockholders’ deficiency of
approximately $6 million. Management recognized that the Company’s continued
existence is dependent upon its ability to obtain needed working capital through
additional equity and/or debt financing and revenue to cover expenses as the
Company continues to incur losses.





The
Company’s business is subject to most of the risks inherent in the establishment
of a new business enterprise. The likelihood of the Company’s success must be
considered in light of expenses, difficulties, delays and unanticipated
challenges encountered in connection with the formation of a new business,
raising operating and development capital, and the marketing of new
products.  There is no assurance the Company will ultimately achieve a
profitable level of operations.




6


EV
INNOVATIONS, INC.
 A
Development Stage Company
 
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




The
Company presently does not have sufficient liquid assets to finance its
anticipated funding needs and obligations.  The Company’s continued
existence is dependent upon its ability to obtain needed working capital through
additional equity and/or debt financing and achieve a level of sales adequate to
support its cost structure. Management is actively seeking additional capital to
ensure the continuation of its current activities and complete its proposed
activities. However, there is no assurance that additional capital will be
obtained. These uncertainties raise substantial doubt about the ability of the
Company to continue as a going concern. The accompanying financial statements do
not include any adjustments that might result from the outcome of these
uncertainties should the Company be unable to continue as a going
concern.





SIGNIFICANT
ACCOUNTING POLICIES





Basis
of consolidation


The
consolidated financial statements included the accounts and records of the
Company and its wholly-owned and majority-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated. The Company does
not have any special purpose entities.





Where the
Company’s ownership is less than 100 percent, the minority ownership interests
are reported in the Consolidated Balance Sheets as a liability.  The
Company record minority interest expense which reflects the portion of the
earnings (loss) of majority owned operations which are applicable to the
minority interest partners. The minority ownership of the Company’s earnings is
classified as “Minority interest share of (earnings) loss of consolidated
subsidiaries” from discontinued operations in the Consolidated Statements of
Operations.





The
following is a listing of the Company's subsidiaries and its ownership
interests:





Global
      Electric, Corp.
                  
                  
                  67.57
                  %R
      Electric Car, Co.
                  
                  
                  67.57
                  %Solium
      Power, Corp.
                  
                  
                  67.57
                  %Hybrid
      Technologies USA Distributing Inc.
                  
                  
                  100.00
                  %Hybrid
      Electric Vehicles India Pvt. Ltd.
                  
                  
                  100.00
                  %





Estimates


The
preparation of financial statements prepared in accordance with the accounting
standards generally accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements. Actual results could differ from those
estimates.





Financial
instruments


The fair
value of accounts receivables, accounts payable and accrued expenses and
advances from related parties approximates fair value based on their short
maturities. The fair value of notes payable approximate fair value based the
value of other notes having the same or similar terms, interest rates and
collateral.





Accounts
receivables


The
Company provides credit to customers in the normal course of business. An
allowance for accounts receivable is estimated by management based in part on
the aging of receivables and historical transactions. Periodically management
reviews accounts receivable for accounts that appear to be uncollectible and
writes off these uncollectible balances against the allowance
accordingly.





Inventories


Inventories
are stated at the lower of cost or market. Cost is based on the specific
identification method.





7


EV
INNOVATIONS, INC.
 A
Development Stage Company
 
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




Property
and equipment


Property
and equipment are recorded at cost less accumulated depreciation. Depreciation
of property and equipment are accounted for by accelerated methods over the
following estimated useful lives:




Lives
              
              MethodsBuilding
      improvements
              
              39
      years
              
              Straight
      lineFurniture
      and fixtures
              
              10
      years
              
              AcceleratedSoftware
              
              3-5
      years
              
              Straight
      lineComputers
              
              5
      years
              
              Straight
      line




Deferred
patent costs


The
Company capitalizes costs directly incurred in pursuing patent applications as
deferred patent costs. When such applications result in an issued patent, the
related costs are amortized over the remaining legal life of the patents, which
is assumed to be 17 years, using the straight-line method. On a quarterly basis,
the Company reviews the issued patents and pending patent applications and if
the Company determines to abandon a patent application, or an issued patent no
longer has economic value, the unamortized balance in deferred patent costs
relating to that patent is immediately expensed. As of January 31, 2009 there
were only pending patent applications.





Stock
based compensation


The
Company issues stock options to employees and other certain service providers
under stockholder approved stock option programs that provide the right to
purchase the Company’s stock pursuant to stock purchase programs. The Company
also issued common stock for services performed.  The fair value of
the stock options issued is estimated on the date of grant using the Black
Scholes Option Pricing Model.  The fair value of common stock issued
for services is estimated on the date of issuance based on the value of the
stock issued or the consideration received.





Revenue
recognition


The
Company recognizes revenue in accordance with the guidance contained in SEC
Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial Statements"
and other relevant accounting literature.  Revenue is recognized when
the product has been delivered and title and risk of loss have passed to the
customer, collection of the resulting receivable is deemed reasonably assured by
management, persuasive evidence of an arrangement exists and the sale price is
fixed and determinable.





Shipping
and handling


Shipping
and handling costs related to services and product sales are expensed as
incurred.





Advertising


Advertising
costs are expensed as incurred and are included in general and administrative
expenses. Total advertising expenditures for the six months ended January 31,
2009 and 2008 and inception (August 12, 2000) to January 31, 2009 date amounted
to approximately $179,000, $76,170 and $1,957,000, respectively. On January 15,
2009, Fenner, Gray and Associates were hired to assist with the preparation and
submission of a multi-million dollar loan application being issued through the
Department of Energy. The loan award is earmarked to create an additional 500
jobs and purchase a 400,000 square foot manufacturing and production facility.
The facility will produce EVI’s original concept of all electric powered
cars.





Research
and development


The
Company is currently a research and development (“R&D”) stage company and
therefore the Board of Directors has not set a budget for R&D. However, all
projects and purchases must be approved before being started or
purchased.  As of January 31, 2009, there have been expenses put
toward research and development. For the six months ending January 31, 2009,
salaries amounted to approximately $518,000 in R&D, parts and supplies was
approximately $41,000, shipping charges, battery management systems and other
R&D were approximately $7,000, $11,000 and $2,000,
respectively.





8




EV
INNOVATIONS, INC.
 A
Development Stage Company
 
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




Concentration
of risk


The
Company maintains cash deposit accounts and certificates of deposits which at
times may exceed federally insured limits. These accounts have not experienced
any losses and the Company believes it is not exposed to any significant credit
risk related to cash.





Income
taxes


The
Company accounts for income taxes using an asset and liability approach under
which deferred income taxes are recognized by applying enacted tax rates
applicable to future years to the differences between the financial statement
carrying amounts and the tax bases of reported assets and
liabilities.





The
principal item giving rise to deferred taxes is the net operating loss carry
forward.





Effective
August 1, 2007, uncertain tax positions are accounted for in accordance with
FASB Interpretation No. 48 "Accounting for Uncertainty in Income
Taxes."





Long-lived
assets


The
Company accounts for long-lived assets in accordance with Statement of Financial
Accounting Standard No. 144 (SFAS 144) "Accounting for Long-Lived Assets". The
carrying value of long-lived assets is reviewed on a regular basis for the
existence of facts and circumstances that may suggest impairment. The Company
recognizes impairment when the sum of undiscounted future cash flows is less
than the carrying amount of the asset. The write down of the asset is charged to
the period in which the impairment occurs.





Foreign
currency translation


The
functional currency for some foreign operations is the local currency. Assets
and liabilities of foreign operations are translated at balance sheet date rates
of exchange and income, expense and cash flow items are translated at the
average exchange rate for the period. Translation adjustments in future periods
will be recorded in Cumulative Other Comprehensive Income. The translation gains
or losses were not material for the six months ended January 31, 2009 and
2008.





Comprehensive
loss


The
Company reports comprehensive loss in accordance with the requirements of SFAS
No. 130. For the years ended July 31, 2008 and 2007, the difference between net
loss and comprehensive loss is foreign currency translation.





Loss
per Share


Basic
loss per common share is computed by dividing net loss by the weighted average
number of common shares outstanding during the specified
period.  Diluted loss per common share is computed by dividing net
loss by the weighted average number of common shares and potential common shares
during the specified period. All potentially dilutive securities, which include
options and warrants convertible into 1,019,000 and 1,219,000 common shares at
January 31, 2009 and 2008, respectively, have been excluded from the
computations, as their effect is anti-dilutive.





Discontinued
Operations


In April
2008, the Company completed the sale of SPI. The operations of SPI were
accounted for as discontinued operations in the consolidated financial
statements for the years presented herein.  The divestiture resulted
in a loss of $0 and $430,067, respectively, for the six months ended January 31,
2009, and 2008, and $1,230,244 from inception (August 12, 2000) through January
31, 2009.




9


EV
INNOVATIONS, INC.
 A
Development Stage Company
 
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


Summarized
combined statement of loss for discontinued operations is as
follows:




SIX MONTHS ENDEDJanuary 31,2009
                  
                  
                  2008Net
      sales
                  
                  $
                  -
                  
                  
                  $
                  430,322Loss
      before income tax
                  
                  
                  -
                  
                  
                  
                  (860,389
                  )Provision
      for income taxes
                  
                  
                  -
                  
                  
                  
                  -Loss
      from operations - net tax
                  
                  
                  -
                  
                  
                  
                  (430,067
                  )Gain
      on sale of discontinued operations
                  
                  
                  -
                  
                  
                  
                  -Provision
      for income taxes
                  
                  
                  -
                  
                  
                  
                  -Loss
      from discontinued operations - net of tax
                  
                  $
                  -
                  
                  
                  $
                  (430,067
                  )





Reclassification


Certain
reclassifications have been made to the prior year’s financial statements to
conform to the current year presentation. These reclassifications have had no
impact on the net. The reclassification consisted of other assets being
reclassified as marketable securities. The Company reclassified certain
continuing operations to discontinued operations for the six months ended
January 31, 2008 in the Company’s Consolidated Statements of
Operations.





Recently
issued accounting pronouncements


In
December 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 160, “Noncontrolling
Interests in Consolidated Financial Statements – an amendment of ARB No. 51”
(“SFAS No. 160”).  SFAS No. 160 amends Accounting Research Bulletin
(“ARB”) No. 51 to establish accounting and reporting standards for the
noncontrolling (minority) interest in a subsidiary and for the deconsolidation
of a subsidiary.  It clarifies that a noncontrolling interest in a
subsidiary is an ownership interest in the consolidated entity that should be
reported as equity in the Consolidated Financial Statements.  SFAS No.
160 also requires consolidated net income to be reported at amounts that include
the amounts attributable to both the parent and the noncontrolling interest on
the face of the consolidated statement of income.  Under SFAS No. 160,
the accounting for changes in a parent’s ownership interest in a subsidiary that
do not result in deconsolidation must be accounted for as equity transactions
for the difference between the parent’s carrying value and the cash exchanged in
the transaction.  In addition, SFAS No. 160 also requires that a
parent recognize a gain or loss in net income when a subsidiary is
deconsolidated (except in the case of a spin-off), and requires expanded
disclosure in the Consolidated Financial Statements that clearly identify and
distinguish between the interests of the parent’s ownership interest and the
interests of the noncontrolling owners of a subsidiary.  This
Statement is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008.  The Company will
adopt SFAS No. 160 on January 1, 2009, as required, and is currently evaluating
the impact of such adoption on its financial statements.





In
February 2008, the FASB issued FASB Staff Position SFAS 157-1, “Application
of SFAS No. 157 to SFAS No. 13 and Its Related Interpretative Accounting
Pronouncements that Address Leasing Transactions” (“FSP SFAS 157-1”) and FASB
Staff Position SFAS 157-2, “Effective Date of SFAS No. 157” (“FSP SFAS
157-2”). FSP SFAS 157-1 excludes SFAS No. 13 and its related interpretive
accounting pronouncements that address leasing transactions from the
requirements of SFAS No. 157, with the exception of fair value measurements of
assets and liabilities recorded as a result of a lease transaction but measured
pursuant to other pronouncements within the scope of SFAS No. 157. FSP SFAS
157-2 delays the effective date of SFAS No. 157 for all nonfinancial assets and
nonfinancial liabilities, except those that are recognized or disclosed at fair
value in the financial statements on a recurring basis (at least annually). FSP
SFAS 157-1 and FSP SFAS 157-2 became effective for the Company upon adoption of
SFAS No. 157 on January 1, 2008. The Company will provide the additional
disclosures required relating to the fair value measurement of nonfinancial
assets and nonfinancial liabilities when it fully implements SFAS No. 157 on
January 1, 2009, as required, and does not believe they will have a significant
impact on its financial statements.




10


EV
INNOVATIONS, INC.
 A
Development Stage Company
 
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities”, an amendment of FASB Statement No. 133 (“SFAS No.
161”).  The new standard is intended to improve financial reporting
about derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an
entity’s financial position, financial performance and cash flows.  It
is effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008.  The Company does not
believe that SFAS No. 161 will have a material impact on its financial
statements.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS No. 162”).  SFAS No. 162 identifies the
sources of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements of nongovernmental
entities that are presented in conformity with generally accepted accounting
principles (GAAP) in the United States.  This Statement is effective
sixty days following the SEC’s approval of the Public Company Accounting
Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles.”  The
Company is currently evaluating the potential impact, if any, of the adoption of
SFAS No. 162 on its financial statements.3





Note
2. Property and equipment





Property
and equipment consist of:





January 31,
                  
                  
                  July 31,2009
                  
                  
                  2008Building
      and improvements
                  
                  $
                  1,272,352
                  
                  
                  $
                  1,272,352Furniture
      and fixtures
                  
                  
                  25,278
                  
                  
                  
                  19,548Office
      equipment
                  
                  
                  139,858
                  
                  
                  
                  137,030Machinery
      and equipment
                  
                  
                  107,445
                  
                  
                  
                  19,026Vehicles
                  
                  
                  60,979
                  
                  
                  
                  60,979Software
      costs
                  
                  
                  20,104
                  
                  
                  
                  11,874Land
                  
                  
                  700,000
                  
                  
                  
                  700,0002,326,016
                  
                  
                  
                  2,220,809Less
      accumulated depreciation
                  
                  
                  (249,405
                  )
                  
                  
                  (206,229
                  )$
                  2,076,611
                  
                  
                  $
                  2,014,580





Depreciation
expense for the six months ended January 31, 2009 and 2008 was $43,176 and
$58,659, respectively.





Note
3. Inventories





Inventories
consist of the following:





January 31,
                  
                  
                  July 31,2009
                  
                  
                  2008Raw
      materials
                  
                  $
                  131,002
                  
                  
                  $
                  134,456Work
      in progress
                  
                  
                  88,159
                  
                  
                  
                  117,124Finished
      goods
                  
                  
                  67,907
                  
                  
                  
                  35,730$
                  287,068
                  
                  
                  $
                  287,310





Raw
materials, work in progress and finished goods for the six months ended January
31, 2009, and year ended July 31, 2008, is related to the Company’s planned
sales of electric powered vehicles.





Note
4. Advances from related parties and related party transactions





During
the six months ended January 31, 2009 and 2008, the Company received and repaid
additional advances from Del Mar Ventures Corp, a company owned by Aarif Jamani
(a Company stockholder) of $0 in 2009, and $0 and $9,940, respectively in 2008.
As of January 31, 2009 and 2008, the balance was $0 and $10,000,
respectively.


11


EV
INNOVATIONS, INC.


A
Development Stage Company





NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





The
Company received and repaid additional advances from SSRI (owned by a Company
stockholder) for the six months ended January 31, 2009 and 2008 in amounts of
$1,037,967 and $442,401, respectively for 2009 and $2,672,813 and $2,733,088,
respectively for 2008. As of January 31, 2009 the amount due to SSRI was
$633,566. And as of January 31, 2008 the amount due from SSRI was $60,275,
respectively.





The
Company did not receive and repay any additional advances from Salim Rana (a
Company Stockholder) for the six months ended January 31, 2009 and 2008. As of
January 31, 2009 and 2008, the amount due to Salim Rana was $0 and $82,866,
respectively.





The
Company received and repaid additional advances from A & S Holding (owned by
a previous Company president) for the six months ended January 31, 2009 and 2008
in amount of $0 for 2009 and $10,876 and $0, respectively for
2008.  As of January 31, 2009 and 2008, the amount due to the Company
was $0.





The
Company received and repaid additional advances from Greg Navone (Director of
the Company) for the six months ended January 31, 2009 and 2008 in amount of
$51,000 and $0, respectively for 2009 and $115,000 and $117,700, respectively
for 2008. As of July 31, 2008 and 2007, the amount due to the Company was
$51,000 and $2,300, respectively.





Due from
related parties and advances from related parties are reported as current assets
or liabilities. These advances are not subject to written agreements and have no
specific repayment terms but are deemed due on demand and are not interest
bearing notes except for the Greg Navone note.





Note
5. Long-term debt





Long-term
debt consists of:


12


EV
INNOVATIONS, INC.


A
Development Stage Company





NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





January
      31,
                                    
                                    
                                    July
      31,2009
                                    
                                    
                                    200810.875%
      note payable to Bayview Loan Servicing, LLC, payable in
      monthly installments of approximately $11,388
      including interest, collateralized by real property due in full
      on or before December 2022 (1)
                                    
                                    
                                    970,266
                                    
                                    
                                    
                                    984,20410%
      note payable to Wyndom Capital Investments, Inc., payable in October
      2010 collateralized by 10,000,000 shares of  the Company's
      common stock (2)
                                    
                                    
                                    4,000,000
                                    
                                    
                                    
                                    3,971,15010%
      note payable to Crystal Capital Ventures, payable in May
      2011collateralized by 7,500,000 shares of  the Company's common
      stock (3)
                                    
                                    
                                    1,697,428
                                    
                                    
                                    
                                    1,211,00015.8%
      note payable to Allegiance Direct Bank, payable in
      monthly installments of approximately $525, due in full on
      October 2008 (4)
                                    
                                    
                                    -
                                    
                                    
                                    
                                    1,4766,667,694
                                    
                                    
                                    
                                    6,167,830Less
      current portion
                                    
                                    
                                    (31,572
                                    )
                                    
                                    
                                    (32,422
                                    )$
                                    6,636,122
                                    
                                    
                                    $
                                    6,135,408





Principal
maturities on continuing operations are as follows as of January 31,
2009:





2009
                        
                        $
                        31,5722010
                        
                        
                        4,036,7622011
                        
                        
                        1,738,3942012
                        
                        
                        45,6502013
                        
                        
                        50,870Thereafter
                        
                        
                        764,446$
                        6,667,694





(1)
In November 2007, the Company refinanced a loan on a building. The Company paid
the remainder of the loan to Richard Howard, with $50,000 in cash and $1,000,000
from the new loan proceeds. The new loan with Bayview Loan Servicing, LLC is
$1,000,000. The loan has an initial interest rate at 10.875% per annum with a
monthly payment of $11,388, including interest. The loan is due on December 1,
2022. After the first 24 months, the interest rate adjusts to Prime plus 4.875%.
Interest rate changes are limited to 2% increase or decrease in any annual
adjustments. Interest expense for the six months ended January 31, 2009 and 2008
for Bayview Loan Servicing, LLC is approximately $54,400 and $19,900,
respectively, and $118,400 from inception (August 12, 2000) through January 31,
2009.





(2) In
October 2007, the Company entered into a loan agreement with Wyndom Capital
Investments, Inc. (“Wyndom”). The Company issued 10,000,000 pre-reverse stock
split shares (computes to 1,428,573 post-reverse stock split shares) of
outstanding stock as collateral for the above note and 8,571,427 post reverse
stock split shares of outstanding stock as collateral to total 10,000,000 post
reverse stock split shares. The agreement provides loans of up to $4,000,000
with interest payable monthly at a rate of 10% per annum and due in full in
October of 2010. Loans under the agreement are secured by the Company’s shares
of common stock at a rate of two and one half shares to each dollar of
principal. As of January 31, 2009, the Company has borrowed $4,000,000 under the
loan agreement. Interest expense for the six months ended January 31, 2009 and
2008 for Wyndom is approximately $306,000 and $25,000, and $461,000 from
inception (August 12, 2000) through January 31, 2009. If Wyndom were to declare
default and take possession of the collateral, the number of shares is
sufficient to make Wyndom the controlling shareholder.


13


EV
INNOVATIONS, INC.


A
Development Stage Company





NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





(3) On
May 5, 2008, the Company entered into a loan agreement with Crystal Capital
Ventures Inc. (“Crystal Capital”). The loan agreement provides for loans to the
Company of up to $3,000,000, with a minimum initial loan of $500,000 taking
place on May 19, 2008. The notes bear interest payable monthly in arrears at the
rate of 10% per annum; and mature and are due and payable May 4, 2011. The loans
under the loan agreement are secured by shares of the Company’s common stock
held by Crystal Capital. The Company is required to issue shares as collateral
at the rate of two and one half shares of the Company’s common stock for each
dollar principal amount of the loan advanced to the
Company.  Following disbursement of the first $1,000,000 of funds
pursuant to the loan agreement, on May 27, 2008, the Company issued 7,500,000
shares of common stock as collateral to Crystal Capital.





As of
January 31, 2009, the Company has borrowed $1,697,428 under the loan agreement.
Interest expense for the six months ended January 31, 2009 and 2008 for Crystal
Capital is approximately $88,000 and $0, respectively, and $88,000 from
inception (August 12, 2000) through January 31, 2009.





(4) On
January 31, 2008 the Company financed a workman’s compensation policy with
Allegiance Direct Bank for the period January 31, 2008 to January 31, 2009 for
$6,396.  The Company was required to make a down payment of
approximately $1,966 in January 2008 and monthly payments including interest of
15.8%. Interest expense for the six months ended January 31, 2009 and 2008
Allegiance Direct Bank is approximately $0 and $195 from inception (August 12,
2000) through January 31, 2009.





Note
6. Stockholders’ equity





In
January 2008, the Company’s shareholders approved a 1:7 reverse stock
split.  Except for the presentation of common shares authorized and
issued on the consolidated balance sheet and shares presented in the
consolidated statement of stockholders’ equity (deficit), all shares and par
share information has been revised to give retroactive effect to the reverse
stock split.  Authorized shares were 50,000,000 and were increased to
250,000,000 on December 24, 2007 (computes to 35,714,285 post-reverse stock
split authorized shares). Wyndom Capital Investments, Inc. currently holds
10,000,000 post-reverse stock split shares as collateral for a loan of up to
$4,000,000 and Crystal Capital Ventures Inc. holds 7,500,000 post reverse stock
split shares as collateral for a loan up to $3,000,000 as discussed in Note
5.





Note
7. Segment information





FASB
Statement No. 131,Disclosures about Segments of an Enterprise and Related Information,
establishes standards for reporting information about operating segments.
Operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly by
management. The Company is organized by line of business and geographical area.
The Company has two businesses, telecommunication services and the development
and sale of electric powered vehicles.





The
following is financial information relating to the Company’s business
segments:


14


EV
INNOVATIONS, INC.


A
Development Stage Company





NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





SIX MONTHS ENDED
                                Janaury 31,2009
                              
                              
                              2008Revenues
      from external customers:United
      States
                              
                              $
                              223,001
                              
                              
                              $
                              208,703Hong
      Kong
                              
                              
                              -
                              
                              
                              
                              -India
                              
                              
                              -
                              
                              
                              
                              -Total
      revenues from continuing operations
                              
                              $
                              223,001
                              
                              
                              $
                              208,703Loss
      from continuing operations:United
      States
                              
                              
                              (1,392,058
                              )
                              
                              
                              (1,931,960
                              )Hong
      Kong
                              
                              
                              (1
                              )
                              
                              
                              (250
                              )India
                              
                              
                              (43,684
                              )
                              
                              
                              -Total
      loss from continuing operations
                              
                              $
                              (1,435,743
                              )
                              
                              $
                              (1,932,210
                              )





Note
8. Going concern





The
Company's financial statements are prepared based on the going concern
principle. That principle anticipates the realization of assets and payments of
liabilities through the ordinary course of business.  No adjustments
have been made to reduce the value of any assets or record additional
liabilities, if any, if the Company were to cease to exist. The Company has
incurred significant operating losses since inception. These operating losses
have been funded by the issuance of capital, loans and advances. There are no
guarantees that the Company will continue to be able to raise the funds
necessary. Additionally, the lack of capital may limit the Company's ability to
establish a viable business.





Note
9. Subsequent Events





On
February 1, 2009, the Company entered into a six month space lease agreement
with SkinzWraps of Dallas, Texas. The agreement is good thru July 31, 2009 and
rent shall be paid to the Company of $700 per month or graphics work in the
equivalent.





On June
28, 2006, the Company executed two $50,000 notes, one bearing interest at 6% and
the other non-interest bearing note, to a contractor, as compensation for monies
paid by the Company to the contractor for the contractor to file for a patent,
and $50,000 for inventory that was either missing or damaged. The patent that
the contractor received with the money of EVI was assigned to EVI as collateral
until both notes and interest were paid in full. On August 19, 2008, the
non-interest bearing note in the amount of $50,000 was repaid. On February 19,
2009, the interest bearing note in the amount of $50,000, plus interest of
$8,319, was repaid and the patent that was being held as collateral was
returned. The interest bearing note is included in other current assets on the
Company's balance sheet at January 31, 2009.





On
January 15, 2009, the Company’s shareholders approved a 1:3 reverse stock split
for the outstanding shares but it did not take effect until February 19, 2009.
Common stock, authorized shares was 35,714,285 and was increased to 50,000,000
on February 19, 2009. On February 20, 2009, the Company issued Wyndom Capital
Investments, Inc. an additional 6,666,665 shares so they hold 10,000,000 post
reverse stock split shares as collateral for a loan of up to $4,000,000 as
discussed in Note 5. Crystal Capital Ventures Inc. was issued 4,999,999 shares
so they hold 7,500,000 post reverse stock split shares as of February 20, 2009,
as collateral for a loan of up to $3,000,000 as discussed in Note
5.





February
24, 2009, under the 2006 stock option plan the remainder of the shares were
granted and exercised, this closed that plan. The Company has registered the
2009 stock option plan with the SEC for 3,000,000 shares, and of those 900,000
shares have been granted at par value $0.001 per share and a purchase share
price of $0.90 per share.


15


EV
INNOVATIONS, INC.


A
Development Stage Company





NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





EVI has
applied to NC DMV for a manufacturing license. This application required a
surety bond of $50,000 for three years which the Company acquired from Kaercher
Campbell & Associates. EVI was licensed as a motor vehicle dealer to engage
in the business of selling motor vehicles on March 9, 2009, until March 31,
2010, by the State of North Carolina DMV.


16


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





FORWARD
LOOKING STATEMENTS





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





RESULTS
OF OPERATION





During
the period since inception on April 12, 2000 to January 31, 2009, we have incurred
net losses aggregating $53,157,624. At January 31, 2009, we had liabilities of
$8,538,359 and a working capital deficiency of $1,498,063. As of
January 31, 2009, we had $28,288 cash on hand.





SIX
MONTHS ENDED JANUARY 31, 2009 and 2008





We had
sales of $223,001 and incurred a net loss of $1,838,925 for the six months ended
January 31, 2009, which included general and administrative costs of $788,996
and research and development expense of $579,207.





Our net
loss for the six-month period ended January 31, 2009 decreased from the
comparative period in fiscal 2008 (from $2,380,020 in 2008 to $1,838,925 in
2009). This was primarily due to a decrease in general and administrative
expense from $1,447,783 in the six-month period ended January 31, 2008, to
$788,996 for the comparable period in 2009, an increase in research and
development expense from $400,830 in 2008 to $579,207 in 2009; and an increase
in sales from $208,703 in the six-month period ended January 31, 2008, to
$223,001 in 2009. In 2009, we also incurred interest expense of $448,391 related
to loans payable, as compared with $45,085 for the comparable period in
2008.





THREE
MONTHS ENDED JANUARY 31, 2009 and 2008





We had
sales of $221,056 and incurred a net loss of $939,916 for the three months ended
January 31, 2009, which included general and administrative costs of $305,095
and research and development expense of $162,955.





Our net
loss for the three-month period ended January 31, 2009 decreased from the
comparative period in fiscal 2008 (from $1,314,311 in 2008 to $939,916 in 2009).
This was primarily due to a decrease in general and administrative expense from
$873,724 in the three-month period ended January 31, 2008, to $305,095 for the
comparable period in 2009, a decrease in research and development expense from
$327,288 in 2008 to $162,955 in 2009; and an increase in sales from $106,289 in
the three-month period ended January 31, 2008, to $221,056 in 2009. In 2009, we
also incurred interest expense of $421,098 related to loans payable, as compared
with $18,005 for the comparable period in 2008.





Telecommunications
Services





On April
16, 2008 we sold our controlling interest of approximately 69% of the
outstanding common stock in Zingo, Inc. (now Superlattice Power, Inc.), which
provided telecommunication services to business and residential customers
utilizing VoIP technology.


17


Electric
Vehicle Operations





We
convert vehicles in our developmental facility in Mooresville, North Carolina.
Our team of highly qualified engineers oversee groups of electrical and
mechanical staff. This 40,000 square foot facility has room for both conversions
and storage with the potential for future growth, enabling us to work on many
projects and vehicles concurrently.





With the
license of our lithium battery technology described below, we are concentrating
on sales of our vehicles. We have initiated several nationwide newspaper
advertising campaigns which have generated orders for our vehicles, and we are
also seeing as a result a significant increase in inquiries about our electric
vehicle products.





Effective
April 15, 2008, we entered into a License Agreement (the “License Agreement”)
with Superlattice Power, Inc. (formerly our subsidiary, Zingo, Inc., “SPI”)
providing for our license to SPI of our patent applications and technologies for
rechargeable lithium ion batteries for hybrid vehicles and other applications
(“Licensed Products”). Under the License Agreement, we have the right to
purchase our requirements of lithium ion batteries from SPI, and our
requirements of lithium ion batteries shall be supplied by SPI in preference to,
and on a priority basis as compared with, supply and delivery arrangements in
effect for other customers of SPI. Our cost for lithium ion batteries purchased
from SPI shall be SPI’s actual manufacturing costs for such batteries for the
fiscal quarter of SPI in which our purchase takes place.





SPI has
agreed to invest a minimum of $1,500,000 in each of the next two years in
development of the technology for the Licensed Products.




Effective
April 16, 2008, SPI agreed to lease approximately 5,000 square feet of space
(“Leased Space”) in our North Carolina facility, such Leased Space to be
suitable for, and utilized by SPI for, SPI’s developmental and manufacturing
operations for Licensed Products pursuant to the License Agreement. The Leased
Space is leased on a month-to-month basis at a monthly rental of $2,500, the
monthly rental to be escalated five (5%) percent annually. Effective April 16,
2008, we also sold to SPI for the purchase price of $29,005, specified equipment
and supplies related to the Licensed Field.





On March
9, 2009 the State of North Carolina issued a manufacturing license to the
Company, and we now are manufacturing our own original design vehicles with
VIN’s, while we continue to convert other vehicles.





Commercial
Initiatives





On
February 5, 2004 we announced the initiation of a lithium-ion conversion project
with the United States Navy. We have funded the initial 3kw prototype for this
project, and the prototype has been completed and delivered to the Navy. The NYC
Taxi Commission agreed to test a PT Cruiser which was delivered January 2007.
The converted PT Cruiser Taxi was driven for two months in New York City. The
vehicle has been returned and the project is completed. Paratransit, Sacramento,
California, a company providing community transportation services, purchased two
converted PT Cruisers. We have signed a Space Act agreement with NASA and
several vehicles are being tested by NASA at the Kennedy Space Center in
Florida. We are also participating to showcase our technology in a “green” home
in Calgary, Alberta. We signed an agreement in June 2007, pursuant to which the
Canadian Ministry of Transportation purchased a Smart Car and PT Cruiser, both
of which have been delivered. The Smart Car was not suited to their needs, has
been returned and we will be refunding the purchase price. In September 2007, we
signed a contract to provide and delivered a PT Cruiser to Arcadis, a contractor
to the U.S. Environmental Protection Administration.


18


5.2
            Liquidity
      and Capital Resources





Since our
incorporation, we have financed our operations almost exclusively through
the sale of our common shares to investors and borrowings. We expect to finance
operations through the sale of equity in the foreseeable future as we receive
minimal revenue from our current business operations. There is no guarantee that
we will be successful in arranging financing on acceptable terms.





During
the nine months ended January 31, 2009, we received net proceeds of $471,014
from the issuance of promissory notes for debt, and net proceeds of advances
from related parties of $646,566.





Wyndom
Capital Loan Agreement





On
October 29, 2007, we entered into a Loan Agreement with Wyndom Capital
Investments, Inc. (referred to in this paragraph as the “Lender”). The Loan
Agreement provides for loans to the Company of up to $4,000,000, with a minimum
initial loan of $500,000 the disbursement of which to us took place in late
October, 2007. The notes evidencing the installments of the loans bear interest
payable monthly in arrears at the rate of 10% per annum, and mature and are due
and payable three years from the date of issuance. The loans under the Loan
Agreement are secured by shares of our common stock held by the Lender. We are
required to issue shares as collateral at the rate of two and one half shares of
our common stock for each dollar principal amount of the loan advanced to us. If
there is a trading halt in our common stock or we file for bankruptcy or
reorganization, the Lender has full recourse against the Company to collect the
unpaid amounts owing under the Loan Agreement and notes issued pursuant thereto,
including a first priority lien on all of our assets. In the event of the
occurrence of another type of default, which we do not cure in a timely fashion,
the Lender, as its sole recourse, is entitled to take possession for its sole
benefit of the shares of common stock designated as collateral for the principal
amount of the Loan that is in default. After the Lender has disbursed the first
$1,000,000 principal amount of the Loan to us, the Lender is entitled to receive
a certificate for the balance of the 7,500,000 shares of common stock
representing the collateral for the $3,000,000 balance of the funds that may be
disbursed under the Loan Agreement. To the extent the $3,000,000 balance of
funds are not delivered, we are entitled to cancel such certificate, with the
Lender retaining the appropriate number of shares as collateral for advances in
excess of $1,000,000. Following disbursement of the first $1,000,000 of funds
pursuant to the Loan Agreement, on November 19, 2007, we issued 10,000,000
shares of common stock as collateral to the Lender. Following the one-for-seven
reverse split effective in January 2008, we issued 8,571,427 shares of common
stock to Wyndom to bring the number of their collateral shares back up to
10,000,000, as required by the Wyndom Loan Agreement. Following the
0ne-for-three stock split effective February 19, 2009, 6,666,665 shares of
common stock were issued to Wyndom to bring their collateral shares back up to
10,000,000 as required by the Wyndom Loan Agreement.





As of
January 31, 2009, the Company has borrowed approximately $4,000,000 under the
Wyndom Capital Loan Agreement.


19


Crystal
Capital Ventures Loan Agreement





On May 5,
2008, we entered into a Loan Agreement with Crystal Capital Ventures Inc.
(referred to in this paragraph as the “Lender”). The Loan Agreement provides for
loans to the Company of up to $3,000,000, with a minimum initial loan of
$500,000 the disbursement of which to us took place on May 19, 2008. The notes
evidencing the installments of the loans bear interest payable monthly in
arrears at the rate of 10% per annum, and mature and are due and payable three
years from the date of issuance. The loans under the Loan Agreement are secured
by shares of our common stock held by the Lender. We are required to issue
shares as collateral at the rate of two and one half shares of our common stock
for each dollar principal amount of the loan advanced to us. If there is a
trading halt in our common stock or we file for bankruptcy or reorganization,
the Lender has full recourse against the Company to collect the unpaid amounts
owing under the Loan Agreement and notes issued pursuant thereto, including a
priority lien on all of our assets. In the event of the occurrence of another
type of default, which we do not cure in a timely fashion, the Lender, as its
sole recourse, is entitled to take possession for its sole benefit of the shares
of common stock designated as collateral for the principal amount of the Loan
that is in default. After the Lender has disbursed the first $1,000,000
principal amount of the Loan to us, the Lender is entitled to receive a
certificate for the balance of the 5,000,000 shares of common stock representing
the collateral for the $2,000,000 balance of the funds that may be disbursed
under the Loan Agreement. To the extent the $2,000,000 balance of funds are not
delivered, we are entitled to cancel such certificate, with the Lender retaining
the appropriate number of shares as collateral for advances in excess of
$1,000,000. Following disbursement of the first $1,000,000 of funds pursuant to
the Loan Agreement, on May 27, 2008, we issued 7,500,000 shares of common stock
as collateral to the Lender. Following the one-for-three reverse stock split
effective February 19, 2009, 4,999,999 shares of common stock were issued to
Crystal to bring their collateral shares back up to 7,500,000 as required by the
Crystal Capital Loan Agreement.





As of
January 31, 2009, the Company has borrowed $1,697,439 under the Crystal Capital
Loan Agreement.





Our
current operating funds are less than necessary for commercialization of our
planned products, and therefore we will need to obtain additional financing in
order to complete our business plan. We anticipate that up to $5,000,000 of
additional working capital will be required over the next 12 months for market
introduction of these products through joint venture partners or otherwise. We
do not have sufficient cash on hand to meet these anticipated
obligations.





Apart
from the Wyndom Capital and Crystal Capital Loan Agreements, which may not
furnish us with all of the capital that we will require, we do not currently
have any other arrangements for financing, and we may not be able to find such
financing if required. Obtaining additional financing would be subject to a
number of factors, including investor sentiment. Market factors may make the
timing, amount, terms or conditions of additional financing unavailable to
us.





Our
auditors are of the opinion that our continuation as a going concern is in
doubt. Our continuation as a going concern is dependent upon continued financial
support from our shareholders and other related parties.





CRITICAL
ACCOUNTING ISSUES





The
Company's discussion and analysis of its financial condition and results of
operations are based upon the Company's financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of the financial statements requires
the Company to make estimates and judgments that affect the reported amount of
assets, liabilities, and expenses, and related disclosures of contingent assets
and liabilities. On an on-going basis, the Company evaluates its estimates,
including those related to intangible assets, income taxes and contingencies and
litigation. The Company bases its estimates on historical experience and on
various assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about carrying values
of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or
conditions.


20


Other
Matters





New
Financial Accounting Standards





In
December 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 160, “Noncontrolling
Interests in Consolidated Financial Statements – an amendment of ARB No. 51”
(“SFAS No. 160”). SFAS No. 160 amends Accounting Research Bulletin (“ARB”) No.
51 to establish accounting and reporting standards for the noncontrolling
(minority) interest in a subsidiary and for the deconsolidation of a subsidiary.
It clarifies that a noncontrolling interest in a subsidiary is an ownership
interest in the consolidated entity that should be reported as equity in the
Consolidated Financial Statements. SFAS No. 160 also requires consolidated net
income to be reported at amounts that include the amounts attributable to both
the parent and the noncontrolling interest on the face of the consolidated
statement of income. Under SFAS No. 160, the accounting for changes in a
parent’s ownership interest in a subsidiary that do not result in
deconsolidation must be accounted for as equity transactions for the difference
between the parent’s carrying value and the cash exchanged in the transaction.
In addition, SFAS No. 160 also requires that a parent recognize a gain or loss
in net income when a subsidiary is deconsolidated (except in the case of a
spin-off), and requires expanded disclosure in the Consolidated Financial
Statements that clearly identify and distinguish between the interests of the
parent’s ownership interest and the interests of the noncontrolling owners of a
subsidiary. This Statement is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December 15, 2008. The Company
will adopt SFAS No. 160 on January 1, 2009, as required, and is currently
evaluating the impact of such adoption on its financial statements.





In
February 2008, the FASB issued FASB Staff Position SFAS 157-1, “Application
of SFAS No. 157 to SFAS No. 13 and Its Related Interpretative Accounting
Pronouncements that Address Leasing Transactions” (“FSP SFAS 157-1”) and FASB
Staff Position SFAS 157-2, “Effective Date of SFAS No. 157” (“FSP SFAS
157-2”). FSP SFAS 157-1 excludes SFAS No. 13 and its related interpretive
accounting pronouncements that address leasing transactions from the
requirements of SFAS No. 157, with the exception of fair value measurements of
assets and liabilities recorded as a result of a lease transaction but measured
pursuant to other pronouncements within the scope of SFAS No. 157. FSP SFAS
157-2 delays the effective date of SFAS No. 157 for all nonfinancial assets and
nonfinancial liabilities, except those that are recognized or disclosed at fair
value in the financial statements on a recurring basis (at least annually). FSP
SFAS 157-1 and FSP SFAS 157-2 became effective for the Company upon adoption of
SFAS No. 157 on January 1, 2008. The Company will provide the additional
disclosures required relating to the fair value measurement of nonfinancial
assets and nonfinancial liabilities when it fully implements SFAS No. 157 on
January 1, 2009, as required, and does not believe they will have a significant
impact on its financial statements.





In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities”, an amendment of FASB Statement No. 133 (“SFAS No.
161”). The new standard is intended to improve financial reporting about
derivative instruments and hedging activities by requiring enhanced disclosures
to enable investors to better understand their effects on an entity’s financial
position, financial performance and cash flows. It is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008. The Company does not believe that SFAS No. 161 will have
a material impact on its financial statements.


21


In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS No. 162”). SFAS No. 162 identifies the
sources of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements of nongovernmental
entities that are presented in conformity with generally accepted accounting
principles (GAAP) in the United States. This Statement is effective sixty
days following the SEC’s approval of the Public Company Accounting Oversight
Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity
With Generally Accepted Accounting Principles.” The Company is currently
evaluating the potential impact, if any, of the adoption of SFAS No. 162 on its
financial statements.





Item 3. Quantitative
and Qualitative Disclosures About Market Risk





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





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





Item
4(T). Controls and Procedures.





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





PART II-
OTHER INFORMATION





Item 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





(a)           The
Company held an Annual Meeting of Stockholders on January 15, 2009, in Calgary,
Alberta, Canada.





(b)           The
following persons were elected directors of the Company at the Annual Meeting,
to serve and hold office until the next annual meeting of stockholders and until
their successors are elected and qualify: Holly A. Roseberry, Brian Newman and
Gregory Navone.





(c)           At
the Annual Meeting, a total of 18,100,000 shares were present in person or by
proxy out of 23,347,257 shares outstanding. The following is the result of
stockholder voting on the proposals before the meeting:


22





Proposal
                  
                  Votes in Favor
                  
                  
                  Votes Against
                  
                  
                  Abstentions/ Broker NonvotesElection
      of Holly Roseberry as a Director
                  
                  
                  18,100,000
                  
                  
                  
                  —
                  
                  
                  
                  —Election
      of Brian Newman as a Director
                  
                  
                  18,100,000
                  
                  
                  
                  —
                  
                  
                  
                  —Election
      of Gregory Navone as a Director
                  
                  
                  18,100,000
                  
                  
                  
                  —
                  
                  
                  
                  —





At the
stockholders meeting, by a vote of an aggregate of 1,800,000 shares of common
stock, the stockholders, upon motion at the meeting by a major stockholder of
the Company the stockholders of the Company approved (1) a one-for-three reverse
split of the Company’s outstanding common stock; (2) a concurrent increase in
our authorized common stock from 35,714,285 shares to 50,000,000; and (3) a
change in the name of the Company from Hybrid Technologies, Inc. to EV
Innovations, Inc.





Item 6.
Exhibits





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





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





SIGNATURES





In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.





EV
      Innovations, Inc./s/Holly RoseberryHolly
      RoseberryPresident
      and Director(Chief Executive Officer andPrincipal Financial Officer)Dated: March 20,
2009


23