UNITED STATES SECURITIES AND EXCHANGE COMMISSION





Washington, D.C. 20549


_______________





Form 10-K





ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE SECURITIES EXCHANGE ACT OF 1934





For the fiscal year ended December 31, 2010





Commission file number: 333-158293


_______________








EVCARCO, INC.





(Exact name of registrant as specified in its charter)





Nevada
26-3526039(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)7703 Sand StreetFort Worth, Texas
76118(Address of principal executive offices)
(Zip Code)





Registrant’s telephone number, including area code:





(817) 595-0710





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





Title of Each Class
Name of Each Exchange on Which RegisteredNone
Not Applicable





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


Title of Each Class
Name of Each Exchange on Which RegisteredCommon Stock, $0.001 par value
Not Applicable





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





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





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o     No  o


1








Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o





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





Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
þ





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





The aggregate market value of voting and non-voting common equity held by non-affiliates, computed by reference to the price at which the common equity was last sold, as of the last business day of the registrant’s most recently completed second fiscal quarter was $884,211.





The number of shares of the registrant’s Common Stock, par value $0.001, outstanding on March 31, 2011 was 109,681,901.


The number of shares of the registrant’s Class A Convertible Preferred Stock, par value $0.001, outstanding on March 31, 2011 was 2,500,000.


The number of shares of the registrant’s Class B Convertible Preferred Stock, par value $0.001, outstanding on March 31, 2011 was 1,500,000.




































































2





TABLE OF CONTENTS





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


























3





PART I





ITEM 1.BUSINESS





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





Overview





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





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





Products and Services





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





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





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





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





·           Wheego Electric Cars, Inc. - manufactures Wheego Whip, fully electric car, currently certified as Low Speed Vehicle (LSV), capable of traveling 40 miles on a single charge, with a base model delivered retail price of $19,995.  Wheego wants to make the best electric cars in the world and educate everyone as to the practical benefits of owning and driving one.  EVCARCO is offering Wheegos under authorized dealership contract for Tarrant Country, Texas and has options on other territories in several states. At the current time, there is ongoing informal dispute with this manufacturer relating to our obligation to purchase certain number of units, territorial rights, and obligations of the manufacturer. Our future business relationship with Wheego is uncertain.





·           The Tazzari Group - manufactures ZERO, currently a LSV, an Italian electric urban sports vehicle, powered by the latest generation lithium batteries. Depending on the driving mode, ZERO has a range of up to 80 miles and starts at $31,000.  Tazzari’s mission is to provide the very best technology and quality at a really competitive price for a vehicle that is totally innovative and without peers in the field of ecological mobility - a trailblazer in the new age of lithium powered electric drive.





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





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


4


ITEM 1.BUSINESS - continued





·           RONN Motor Company, Inc. - developed Scorpion HXTM, hydrogen fuel injected hybrid vehicle. Estimated price for this exotic sports car is $250,000.  Full production is scheduled to begin soon.  Their other products, H2GOTM real time hydrogen generation system and RonnZoilTM line of biodegradable lubricants will be available for sale in the near future.  EVCARCO has signed a memorandum of understanding with RMC, and is working to finalize the agreement for retail sales of their products.





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





Strategic Marketing Plan





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





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





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





·
Aggressively market its brand through social media, online strategic partnerships, and search engine optimization.


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





Market Analysis





Hybrid Vehicles





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





Electric Vehicles





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





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


5




ITEM 1.BUSINESS - continued





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





Compressed Natural Gas (“CNG”)





Currently, the only production CNG vehicle available is the Honda Civic GX; however, several companies sell aftermarket conversion kits for cars and trucks. The U.S. Environmental Protection Agency has stated that CNG is the cleanest internal-combustion technology available. Attributes include:





·           Reduction of carbon monoxide emissions of 90 to 97 percent


·           Reduction of carbon dioxide emissions of 25 percent


·           Reduction of nitrogen oxide emissions of 35 to 60 percent


·           Potential reduction of non-methane hydrocarbon emissions of 50 to 75 percent


·           Emission of fewer toxic and carcinogenic pollutants


·           Emission of little or no particulate matter


·           Elimination of evaporative emissions





Competition





The Company’s franchise model will be deployed so that it faces minimal competition in each of its markets. However, the Company will face competition from electric carmakers sold through other dealers. Some of these are major players in the automotive industry (GM, Nissan, and others), while others are small companies that have hit upon the correct formula of price, performance, and features to make consumers demand their cars.





Competitive Advantage





EVCARCO believes that its competitive advantages include:





·
The Company is the first automotive retail group dedicated to opening car dealerships that only sell eco-friendly vehicles


·
Management team has more than 45 years of combined experience in sales, service, ownership, and management of multiple automobile dealerships


·
Uses the most advanced clean technologies available


·
Best selection on both new and pre-owned electric vehicles and other environmentally friendly vehicles


·
We intend to have diverse sources of operating revenue


·
Creative marketing tactics that will reach a large segment of customers





Sources and Availability of Products and Supplies





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





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





Dependence on One or A Few Major Customers





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





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





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





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





6




ITEM 1.BUSINESS - continued





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





Regulations





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





Furthermore, we expect that new laws and regulations, particularly at the federal level, in the labor and employment, health care, environmental, and consumer protection areas may be enacted that could also affect our business.





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





Available Information





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








ITEM 1A.RISK FACTORS





Risk Factors Relating to Our Business





Our independent auditors have expressed doubt about our ability to continue as a going concern, indicating the possibility that we may not be able to continue to operate.





From inception through December 31, 2010, the Company has generated revenues of $1,739,108 and incurred cumulative net losses of $4,030,180. Without obtaining adequate capital, it is unlikely we can maintain operations long enough to become profitable. Therefore, we may be unable to continue operations in the future as a going concern. No adjustment has been made in the accompanying financial statements to the amounts and classification of assets and liabilities which could result should we be unable to continue as a going concern. In addition, our independent auditors included an explanatory paragraph in their report on the accompanying financial statements regarding concerns about our ability to continue as a going concern. To date, we have completed only initial stages of our business plan and we can provide no assurance that we will be able to generate enough revenue from our business in order to achieve profitability. It is not possible at this time for us to predict with assurance the potential success of our business. The revenue and income potential of our proposed business and operations are unproven, and the lack of operating history makes it difficult to evaluate the future prospects of our business. If we cannot continue as a viable entity, our stockholders may lose some or all of their investment in our Company.





As a company in the early stage of development with an unproven business strategy, our limited history of operations makes evaluation of our business and prospects difficult.





We were incorporated on October 14, 2008. Our business prospects are difficult to predict because of our limited operating history, early stage of development and unproven business strategy. Our primary business activities will be to earn revenues through new car sales, pre-owned car sales, parts, service, both work performed under the manufacturer’s warranty and customer pay repairs, finance & insurance sales, accessory sales, and aftermarket products. Although we believe that our business plan has significant profit potential, we may not be able to attain profitable operations and our management may not succeed in realizing our business objectives.


7




ITEM 1A.RISK FACTORS - continued





Our business plan may be unsuccessful, and if it fails, we will not have alternate services or products to offer in order to ensure our continuation as a going concern.





The success of our business plan is dependent on the continued development and improvement by the manufacturers of the automobiles we sell. Lack of operating history makes it difficult to validate our business plan. In addition, the success of our business plan is dependent upon the market acceptance of the electric automobiles we sell. Should our market strategy be too narrowly focused or should the target market not be as responsive as we anticipate, we will not have in place alternate services or products that we can offer to ensure our continuation as a going concern.





We have maintained losses since inception, which we expect will continue in the future.





We expect to continue to incur operating losses in near future. These losses will occur because we do not yet have sufficient revenues to offset the expenses associated with the development, marketing and sales of our products and services. We cannot guarantee that we will ever be successful in generating sufficient revenues in the future. We recognize that if we are unable to generate adequate revenues, we will not be able to earn profits or continue operations. There is no history upon which to base any assumptions regarding the likelihood that we will prove successful, and we can provide no assurance that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.





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





We may not be able to execute our business plan or stay in business without additional funding.





Our ability to successfully develop our technology and to eventually produce and sell our product to generate operating revenues depends on our ability to obtain the necessary financing to implement our business plan. We will require additional financing, through issuance of debt and/or equity, in order to establish profitable operations. Such financing, if required, may not be forthcoming. Even if additional financing is available, it may not be available on terms we find favorable. At this time, there are no anticipated sources of additional funds in place. Failure to secure the needed additional financing will have an adverse effect on our ability to remain in business.





We may not be able to compete effectively against our competitors.





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





We need to retain key personnel to support our product and ongoing operations.





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





Risks Relating to Our Common Stock





Because we are subject to “penny stock” rules, the level of trading activity in our stock may be reduced.





Broker-dealer practices in connection with transactions in “penny stocks” are regulated by penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on some national securities exchanges). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, broker-dealers who sell these securities to persons other than established customers and “accredited investors” must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. Consequently, these requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security subject to the penny stock rules. If a trading market does develop for our common stock, these regulations will likely be applicable, and investors in our common stock may find it difficult to sell their shares.


8


ITEM 1A.RISK FACTORS - continued





FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.





FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity in our common stock. As a result, fewer broker-dealers may be willing to make a market in our common stock, reducing a stockholder’s ability to resell shares of our common stock.





The price of our common stock may be volatile, which substantially increases the risk that you may not be able to sell your shares at or above the price that you may pay for the shares.





Our common stock is currently quoted on the OTC Bulletin Board under the trading symbol “EVCA.OB.” The market price of our common stock may be volatile. It may fluctuate significantly in response to the following factors:





·
variations in quarterly operating results;





·
our announcements of significant contracts and achievement of milestones;





·
our relationships with other companies or capital commitments;





·
additions or departures of key personnel;





·
sales of common stock or termination of stock transfer restrictions;





·
changes in financial estimates by securities analysts, if any; and





·
fluctuations in stock market price and volume.





Your inability to sell your shares during a decline in the price of our stock may increase losses that you may suffer as a result of your investment.





Our insiders beneficially own a significant portion of our stock, and accordingly, may have control over stockholder matters, the company’s business and management.





As of March 31, 2011, our insiders beneficially own approximately 34% of our stock, and have approximately 95% of the voting power. As a result, our executive officers, directors and affiliated persons will have significant influence to:





·
elect or defeat the election of our directors;





·
amend or prevent amendment of our articles of incorporation or bylaws;





·
effect or prevent a merger, sale of assets or other corporate transaction; and





·
affect the outcome of any other matter submitted to the stockholders for vote.





Moreover, because of the significant ownership position held by our insiders, new investors will not be able to effect a change in the Company’s business or management, and therefore, shareholders would be subject to decisions made by management and the majority shareholders.


9




ITEM 1A.RISK FACTORS - continued





In addition, sales of significant amounts of shares held by our directors and executive officers, or the prospect of these sales, could adversely affect the market price of our common stock. Management’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.





The sale of securities by us in any equity or debt financing could result in dilution to our existing stockholders and have a material adverse effect on our earnings.





We are authorized to issue up to 180,000,000 shares of common stock, of which 109,681,901 shares are issued and outstanding as of March 31, 2011. Our Board of Directors has the authority to cause us to issue additional shares of common stock, and to determine the rights, preferences and privilege of such shares, without consent of any of our stockholders. Any sale of common stock by us in a future private placement offering could result in dilution to the existing stockholders as a direct result of our issuance of additional shares of our capital stock. In addition, our business strategy may include expansion through internal growth by acquiring complementary businesses, acquiring or licensing additional brands, or establishing strategic relationships with targeted customers and suppliers. In order to do so, or to finance the cost of our other activities, we may issue additional equity securities that could dilute our stockholders’ stock ownership. We may also assume additional debt and incur impairment losses related to goodwill and other tangible assets, and this could negatively impact our earnings and results of operations.





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





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





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





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





Because we do not intend to pay any dividends on our common stock, holders of our common stock must rely on stock appreciation for any return on their investment.





There are no restrictions in our Articles of Incorporation or Bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend we would not be able to pay our debts as they become due in the usual course of business; or our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution. We have not declared or paid any dividends on our common stock since our inception, and we do not anticipate paying any such dividends for the foreseeable future. Accordingly, holders of our common stock will have to rely on capital appreciation, if any, to earn a return on their investment in our common stock.





10




ITEM 1A.RISK FACTORS - continued


The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified members for our Board of Directors.





As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Sarbanes-Oxley Act. The requirements of these rules and regulations increase our legal, accounting and financial compliance costs, may make some activities more difficult, time-consuming and costly and may also place undue strain on our personnel, systems and resources.





In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we will need to expend significant resources and provide significant management oversight. We have a substantial effort ahead of us to implement appropriate processes, document our system of internal control over relevant processes, assess their design, remediate any deficiencies identified and test their operation. As a result, management’s attention may be diverted from other business concerns, which could harm our business, operating results and financial condition. These efforts will also involve substantial accounting-related costs.





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





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





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





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





·
the amount we reserve against returns and allowances;





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





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





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





·
changes in pricing policies by us or our competitors;





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





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





·
our success in entering new geographic markets;





·
foreign exchange fluctuations;





·
accounting rules governing recognition of revenue;





·
the timing of compensation expense associated with equity compensation grants; and





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





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











11


ITEM 1B.UNRESOLVED STAFF COMMENTS





Not applicable.








ITEM 2.PROPERTIES





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





ITEM 3.LEGAL PROCEEDINGS





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








ITEM 4.(REMOVED AND RESERVED)





























12





PART II





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





Market Information





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





Period

High


LowDecember 15, 2009 - December 31, 2009

$
0.510


$
0.080January 1, 2010 - March 31, 2010

$
0.515


$
0.090April 1, 2010 - June 30, 2010

$
0.390


$
0.030July 1, 2010 - September 30, 2010

$
0.050


$
0.012October 1, 2010 - December 31, 2010

$
0.044


$
0.002





Prices may represent inter-dealer prices without retail markup, markdowns, or commissions, and may not represent actual transactions.





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





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








Holders





As of March 31, 2011, there were approximately 1,500 stockholders of record of our stock. Some holders of our common stock are “street name” or beneficial holders, whose shares are held by brokers and other financial institutions.





Dividends





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





Securities Authorized for Issuance under Equity Compensation Plans





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





Unregistered Sales of Equity Securities.





Information regarding sales after the third quarter of 2010:





Exemptionfrom

Terms ofDate







regulation

conversionSold

Amount

Securities Sold

Consideration *

claimed **

or exercise10/11/10

2,500,000

Class A Convertible Preferred Stock

Debt conversion - $100,000

Reg. D

1 share of Class A Convertible Preferred Stock is convertible into 4 shares of Common Stock10/14/10

1,900,000

Common Stock

Cash - $380,000

Reg. D

None12/14/10

2,272,727

Common Stock

Debt conversion - $10,000

Reg. D

None12/23/10

3,225,806

Common Stock

Debt conversion - $10,000

Reg. D

None12/31/10

500,000

Common Stock

Services

Reg. D

None


13




- continued


Exemptionfrom

Terms ofDate







regulation

conversionSold

Amount

Securities Sold

Consideration *

claimed **

or exercise


01/03/11

3,500,000

Common Stock

Debt conversion - $7,000

Reg. D

None01/18/11

3,809,524

Common Stock

Debt conversion - $8,000

Reg. D

None01/28/11

3,888,889

Common Stock

Debt conversion - $7,000

Reg. D

None02/01/11

500,000

Common Stock

Services

Reg. D

None02/04/11

1,944,444

Common Stock

Debt conversion - $3,500

Reg. D

None02/09/11

4,000,000

Common Stock

Debt conversion - $8,000

Reg. D

None02/11/11

1,500,000

Class B Convertible Preferred Stock

In exchange for 15,000,000 shares of Common Stock

Reg. D

1 share of Class B Convertible Preferred Stock is convertible into 10 shares of Common Stock02/15/11

1,679,245

Common Stock

Debt conversion - $6,500

Reg. D

None02/01/11

500,000

Common Stock

Services

Reg. D

None02/10/11

4,800,000

Common Stock

Debt conversion - $50,000

Reg. D

None02/18/11

500,000

Common Stock

Services

Reg. D

None02/27/11

18,000,000

Common Stock

Debt conversion - $32,400

Reg. D

None03/29/11

3,290,000

Common Stock

Debt conversion - $50,000

Reg. D

None





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





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








14





ITEM 6.SELECTED FINANCIAL DATA





We have derived the following selected financial information as of December 31, 2010 and 2009, and for the period from October 14, 2008 through December 31, 2010, from our audited financial statements included in Item 8 of this annual report. The selected financial information below should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this annual report and our audited financial statements and related notes included in Item 8 of this annual report.





Inception(October 14, 2008)Year Ended


Year Ended


ThroughStatement of Operations

December 31,

2010


December 31,

2009


December 31,

2010Revenues

$
804,772


$
887,755


$
1,739,108Gross Loss

$
(63,798
)

$
(90,299
)

$
(151,293
)Operating Loss

$
(2,772,496
)

$
(1,039,419
)

$
(3,901,440
)Net Loss

$
(2,869,826
)

$
(1,069,294
)

$
(4,030,180
)Net loss per common share:Basic and diluted

$
(0.04
)

$
(0.02
)Weighted average number of common shares outstanding


68,493,655



54,717,104December 31,


December 31,Balance Sheet Data

2010


2009Total Assets

$
616,720


$
209,033Total Liabilities


1,306,056



416,297Total Stockholders' Deficit


(689,336
)


(207,264
)











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





This annual report on Form 10-K contains statements which, to the extent they do not recite historical fact, constitute "forward looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can identify these statements by the use of words like “may”, “will”, “could”, “should”, “project”, “believe”, “anticipate”, “expect”, “plan”, “estimate”, “forecast”, “potential”, “intend”, “continue”, and variations of these words or comparable words. Forward looking statements do not guarantee future performance and involve risks and uncertainties. Actual results may differ substantially from the results that the forward looking statements suggest for various reasons, including those discussed under the caption "Risks Relating to Our Business" in Item 1A of this annual report.  These forward looking statements are made only as of the date of this report. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based. This discussion should be read together with the financial statements and other financial information included in this Form 10-K.





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


15




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





Overview





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





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





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





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





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





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









Plan of Operation





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





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





·
Advertising and Marketing – Work to develop brand identity, marketing materials, and our web site. Utilize all available marketing venues and public relations opportunities to promote the Company and its products.





·
Sales – Grow sales to 45-50 new cars, and 125-175 pre-owned cars per quarter.





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





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





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





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





Operating Environment





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





Operating Results





Since inception through December 31, 2010, we have generated revenues of $1,739,108 and incurred cumulative net losses of $4,030,180. Limited financial resources have affected our ability to acquire inventory, and our financial statements reflect very sporadic purchasing and sales activity, which may continue until we are able to raise the sufficient capital.


16




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





Revenues for 2010 were $804,772, as compared to $887,775 for 2009.  In 2009, sales of new electric cars were $198,085, which represented approximately 22% of revenues for that year.  These sales occurred mostly in the fourth quarter, assisted by federal and state tax credits and significant manufacturers’ rebates.  We did not sell any new electric automobiles in 2010, which reflected declining interest in Low Speed Vehicles (LSV), due in large part, to announcements by manufacturers of new, highway rated models, expected in late spring of 2010. None of those models were actually released before the end of the year. All of the revenues for 2010 and 78% for 2009 came from sales of pre-owned vehicles to both, retail customers and other dealers, along with miscellaneous income and fees.  Number of used units sold in 2010 was 88, in 2009 - 52. We have no special arrangements pertaining to acquisition or sales of pre-owned cars.  Although we intend to offer those in the future, so far, we have not derived any revenues from parts, repairs, financing or insurance contracts.





Gross profit for both, 2010 and 2009 was negative - $63,798 and $90,299, respectively. In both years, it included significant inventory impairments.  In 2010, the entire impairment, in the amount of $102,555, related write-down of inventory to market, reflecting deterioration of market for LSV, with some manufacturers stopping production (ZENN) and some going out of business (ECM). The impairment adjustment for 2009 was $82,853. $37,976 was write-down of inventory to market, and $44,877 related to cars not received under the following contract: In July of 2009, we acquired thirty five pre-owned SMART cars in exchange for 1,406,000 shares of common stock valued at $267,140, and $47,000 of cash, for the total acquisition price of $314,140. Most of those cars were sold within two months of acquisition, and since at the time, there was no public market for our stock, we determined that proceeds realized from the sales were more reliable indication of value, than the value placed on private placement transactions at that time. Average selling price of the cars, applied to the entire lot, less cash paid, yielded the value of $0.19 per share, reflected in the financial statements. As of December 31, 2009, we did not receive five of the cars included in contract, and one was broken down, and all attempts to recover the cars or the value were unsuccessful.





Operating loss for 2010 was $2,772,496 as compared to $1,039,419 for 2009.  In 2010 we dedicated a significant amount of effort and resources to development of business, market for our products, search for new products, and being newly publicly traded company on development of market awareness for our stock and investor relationships. These activities were conducted not only in the U.S., but Europe and South America as well.  The greatest increase in general and administrative expenses, relating to the increase in operating loss, came from consulting services, paid for primarily in shares of common stock. Consultants’ compensation in stock for 2010 was $1,590,414, as compared to $209,333 for 2009.
 
 Net loss for 2010 was $2,869,826, as compared to $1,069,294 for 2009. Net loss for 2010, included $212,400 of gain on extinguishment of liabilities, which represented cancellation of accrued compensation to our former President and CEO, Mr. Dale Long, upon his departure from the Company in August of 2010. The other major component of other income/(loss) was interest expense - $96,010 in 2010, and $30,070 in 2009, with the increase reflecting larger amount of debt of the Company.


Liquidity and Capital Resources





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


As of December 31, 2010, working capital deficiency amounted to $721,787.





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





Currently, we have no commitments or potential agreements for additional funding with either our shareholders, officers and directors, or any third parties.  We’ve made no arrangements with any financial institutions to finance the sales of our vehicles to our customers.





Other Items and Conditions





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





17




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





Critical Accounting Policies





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








ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not applicable.


18








ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA








FINANCIAL STATEMENTS





Index to Financial Statements











PageReport of Independent Registered Public Accounting Firm
F-1Report of Independent Registered Public Accounting Firm
F-2Balance Sheets - December 31, 2010 and 2009 (Audited)
F-3Statements of Operations - For the Years Ended December 31, 2010 and 2009, and for the Period from Inception (October 14, 2008) Through December 31, 2010 (Audited)
F-4Statement of Stockholders' Equity - For the Period from Inception (October 14, 2008) to December 31, 2010 (Audited)
F-5Statements of Cash Flows- For the Years Ended December 31, 2010 and 2009 and for the Period from Inception (October 14, 2008) Through December 31, 2010 (Audited)
F-6Notes to Financial Statements - December 31, 2010 (Audited)
F-7 to F-17





























19




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To the Board of Directors and Stockholders
 EVCARCO, Inc.
 
 
 We have audited the accompanying balance sheet of EVCARCO, Inc. ( the “Company”), as of December 31, 2010, and the related statements of operations, changes in stockholders’ deficit, and cash flows for the year ended December 31, 2010, and for the period from inception (October 14, 2008) to December 31, 2010.  The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.
 
 We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.
 
 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company, as of December 31, 2010, and the results of their operations and their cash flows for the year ended December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.
 
 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company, as of December 31, 2010, and the results of their operations and their cash flows for the year ended December 31, 2010, and for the period from inception (October 14, 2008) to December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.
 
 The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, as of December 31, 2010, the Company has an accumulated deficit of $4,030,180 and negative working capital of $721,787, both of which raise substantial doubt about its ability to continue as a going concern.  Management’s plans concerning these matters are also described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 
 /s/ Whitley Penn LLP
 
 Dallas, Texas
 April 15, 2011







F-1




SEALE AND BEERS, CPAs
 PCAOB & CPAB REGISTERED AUDITORS
 www.sealebeers.com
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the Board of Directors
 EVCARCO, Inc.
 (A Development Stage Company)
 
 We have audited the accompanying balance sheets of EVCARCO, Inc. (A Development Stage Company) as of December 31, 2009 and 2008, and the related statements of operations, stockholders’ equity (deficit) and cash flows for the year ended December 31, 2009, from inception on October 14, 2008 through December 31, 2008, and from inception on October 14, 2008 through December 31, 2009. These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.
 
 We conduct our audits in accordance with standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.
 
 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of EVCARCO, Inc. (A Development Stage Company) as of December 31, 2009 and 2008, and the related statements of operations, stockholders’ equity (deficit) and cash flows for the year ended December 31, 2009, from inception on October 14, 2008 through December 31, 2008, and from inception on October 14, 2008 through December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.
 
 The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 8 to the financial statements, as of December 31, 2009 the Company has an accumulated deficit of $1,160,354 since inception, which raises substantial doubt about its ability to continue as a going concern.  Management’s plans concerning these matters are also described in Note 8.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 /s/ Seale and Beers, CPAs
 
 Seale and Beers, CPAs
 Las Vegas, Nevada
 April 29, 2010
 
 Except for Note 11, which is dated June 16, 2010, and Note 13, which is dated April 4, 2011.
 
 
 50 S. Jones Blvd. Suite 202 Las Vegas, NV 89107 Phone: (888)727-8251 Fax: (888)782-2351








F-2






EVCARCO, Inc.(A Development Stage Company)Balance SheetsDecember 31, 2010

December 31, 2009ASSETSCurrent assetsCash and cash equivalents

$
77,680

$
48,634Inventory (see Note 4)


180,150


10,546Other receivables


21,386


4,213Prepaid expenses (see Note 5)


305,053


136,667Total current assets


584,269


200,060Facilities and equipment


37,865


7,654Accumulated depreciation


(7,702
)

(1,933Facilities and equipment, net


30,163


5,721Other assets


2,288


3,252TOTAL ASSETS

$
616,720

$
209,033LIABILITIES AND STOCKHOLDERS' DEFICITCurrent liabilitiesAccounts payable

$
569,215

$
18,739Accrued expenses


81,312


30,726Accrued interest (related parties)


2,818


334Other payables


26,118


6,308Notes payable (see Note 6)


-


88,910Convertible notes payable (see Note 7)


95,443


-Loans payable to shareholders (see Note 8)


531,150


271,280Total current liabilities


1,306,056


416,297Commitments and contingenciesStockholders' deficit15,000,000 shares Class A Convertible Preferred StockAuthorized at $0.001/par value ($1.00 liquidation preference),2,500,000 and 0 shares issued and outstanding (see Note 12)


2,500


-180,000,000 shares Common StockAuthorized at $0.001/par value78,769,799 and 61,125,500 sharesissued and outstanding, respectively (see Note 13)


78,770


61,126Additional paid-in capital


3,259,574


891,964Deficit accumulated during development stage (see Note 2)


(4,030,180
)

(1,160,354Total Stockholders' Deficit


(689,336
)

(207,264TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

$
616,720

$
209,033The accompanying footnotes are an integral part of these financial statements.
 
 F-3




EVCARCO, Inc.(A Development Stage Company)Statements of OperationsInception(October 14, 2008)Through2010


2009


December 31, 2010Revenues


$
804,772


$
887,755


$
1,739,108Cost of goods sold


766,015



895,201



1,704,993Inventory impairment


102,555



82,853



185,408Gross Loss


(63,798
)


(90,299
)


(151,293
)Sales and marketing expenses


92,834



97,143



203,369General and administrative expenses


2,821,272



849,613



3,749,376Gain on extinguishment of liabilities


(212,400
)


-



(212,400
)Depreciation and amortization


6,992



2,364



9,802Total Operating Expenses


2,708,698



949,120



3,750,147Operating Loss


(2,772,496
)


(1,039,419
)


(3,901,440
)Other income/(loss)Loss on asset disposition, net


(1,356
)


-



(1,356
)Interest income


36



195



325Interest expense (related parties)


(20,131
)


(5,114
)


(25,992
)Interest expense


(75,879
)


(24,956
)


(101,717
)Total Other Income/(Loss)


(97,330
)


(29,875
)


(128,740
)Loss before income taxes


(2,869,826
)


(1,069,294
)


(4,030,180
)Income tax (expense) benefit


-



-



-Net loss

$
(2,869,826
)

$
(1,069,294
)

$
(4,030,180
)Basic and diluted loss per share


(0.04
)


(0.02
)Weighted average number ofcommon shares outstanding


68,493,655



54,717,104The accompanying footnotes are an integral part of these financial statements.











F-4




EVCARCO, Inc.(A Development Stage Company)Statement of Stockholders' Equity/(Deficit)Inception (October 14, 2008) Through December 31, 2010DeficitaccumulatedClass A Convertible


Additional


during theCommon stock


Preferred stock


paid-in


developmentShares


Amount


Shares


Amount


capital


stage


TotalFounders' stock issued @ $0.0003/sh. Oct. 2008


46,500,000


$
46,500



-


$
-


$
(31,000
)

$
-


$
15,500Stock issued for services @ $0.0003/sh. Oct. 2008


5,100,000



5,100



-



-



(3,400
)






1,700Stock issued for cash @ $0.1667/sh. Oct.-Dec. 2008


930,000



930



-



-



154,070







155,000Net loss






















(91,060
)


(91,060
)Balance December 31, 2008


52,530,000


$
52,530



-


$
-


$
119,670


$
(91,060
)

$
81,140Stock issued for cash @ $0.1667/sh. Jan. 2009


123,000



123



-



-



20,377







20,500Stock issued for services @ $0.1667/sh. Feb. 2009


6,000



6



-



-



994







1,000Stock issued for property @ $0.19/sh. Jul. 2009


1,406,000



1,406



-



-



265,734







267,140Stock issued for cash @ $0.50/sh. Jul. 2009


1,500



2



-



-



748







750Stock issued for services @ $0.50/sh. Jul. 2009


600,000



600



-



-



299,400







300,000Founders' stock issued @ $0.0003/sh. Oct. 2009


6,000,000



6,000



-



-



(4,000
)






2,000Stock issued for loan @ $0.1667/sh. Oct. 2009


120,000



120



-



-



19,880







20,000Stock issued for services @ $0.50/sh. Oct. 2009


90,000



90



-



-



44,910







45,000Stock issued for cash @ $0.50/sh. Oct.-Dec. 2009


249,000



249



-



-



124,251







124,500Net loss






















(1,069,294
)


(1,069,294
)Balance December 31, 2009


61,125,500


$
61,126



-


$
-


$
891,964


$
(1,160,354
)

$
(207,264
)Stock issued for cash @ $0.25/sh. Jan. 2010


40,000



40



-



-



9,960







10,000Stock issued for cash @ $0.50/sh. Feb. 2010


64,000



64



-



-



31,936







32,000Stock issued for cash @ $0.21/sh. Feb. 2010


100,000



100



-



-



20,900







21,000Stock issued for services @ $0.45/sh. Feb. 2010


2,600,000



2,600



-



-



1,167,400







1,170,000Stock issued for services @ $0.25/sh. Mar. 2010


200,000



200



-



-



49,800







50,000Stock issued for cash @ $0.50/sh. Jun. 2010


14,000



14



-



-



6,986







7,000Stock issued for cash @ $0.50/sh. Jun. 2010


60,000



60



-



-



29,940







30,000Stock issued for cash @ $0.21/sh. Jun. 2010


200,000



200



-



-



41,800







42,000Stock issued for services @ $0.06/sh. Jun. 2010


1,000,000



1,000



-



-



54,000







55,000Stock issued for services @ $0.04/sh. Jun. 2010


6,427,000



6,427



-



-



250,723







257,150Stock issued for services @ $0.04/sh. Jul. 2010


5,500,000



5,500



-



-



219,500







225,000Stock issued for note conv. @ $0.012/sh. Aug. 2010


7,166,666



7,166



-



-



79,507







86,673Stock buyback @ $0.013/sh. Aug. 2010


(13,625,900
)


(13,626
)


-



-



(164,374
)






(178,000
)Stock issued for loan @ $0.04/sh. Oct. 2010


-



-



2,500,000



2,500



97,500







100,000Stock issued for cash @ $0.20/sh. Oct. 2010


1,900,000



1,900



-



-



378,100







380,000Stock issued for note conv. @ $0.0044/sh. Dec. 2010


2,272,727



2,273



-



-



7,727







10,000Stock issued for note conv. @ $0.0031/sh. Dec. 2010


3,225,806



3,226



-



-



6,774







10,000Stock issued for services @ $0.0033/sh. Dec. 2010


500,000



500



-



-



1,150







1,650Beneficial conversion features


















78,281







78,281Net loss






















(2,869,826
)


(2,869,826
)Balance December 31, 2010


78,769,799


$
78,770



2,500,000


$
2,500


$
3,259,574


$
(4,030,180
)

$
(689,336
)The accompanying footnotes are an integral part of these financial statements.


F-5


EVCARCO, Inc.(A Development Stage Company)Statements of Cash FlowsInception(October 14, 2008)Through2010


2009


December 31, 2010Operating activities:Net loss

$
(2,869,826
)

$
(1,069,294
)

$
(4,030,180
)Adjustments to reconcile net loss to net cash flowsused in operating activities:Depreciation and amortization


6,992



2,364



9,802Consulting expenses (stock)


1,590,414



209,333



1,801,447Beneficial conversion feature amortization


45,724



-



45,724Loss on asset dispositions


1,356



-



1,356Gain on extinguishment of debt


(212,400
)


-



(212,400
)Inventory received in considerationfor stock issuance


-



267,140



267,140Change in operating assets and liabilities:Inventory


(169,604
)


91,683



(180,150
)Other receivables


(17,173
)


(4,213
)


(21,386
)Other assets


337



-



(3,792
)Accounts payable


550,476



18,739



569,215Accrued expenses


50,586



26,357



81,312Accrued interest (related parties)


2,484



88



2,818Other payables


19,810



4,367



26,118Net cash flows used in operating activities


(1,000,824
)


(453,436
)


(1,642,976
)Investing activities:Purchase of facilities and equipment


(35,414
)


(3,636
)


(43,068
)Proceeds from sales of property and equipment


2,829



-



2,829Net cash flows used in investing activities


(32,585
)


(3,636
)


(40,239
)Financing activities:Payments on notes payable


(2,237
)


(61,090
)


(63,327
)Proceeds from loans payable


-



170,000



170,000Proceeds from convertible notes payable


148,000



-



148,000Net change in loans payable (related parties)


429,692



226,579



700,972Issuance of common stock


522,000



147,750



840,250Common stock buyback


(35,000
)


-



(35,000
)Net cash flows provided by financing activities


1,062,455



483,239



1,760,895Increase in cash and cash equivalents


29,046



26,167



77,680Cash and cash equivalents at beginning of period


48,634



22,467



-Cash and cash equivalents at end of period

$
77,680


$
48,634


$
77,680Cash paid for:Interest

$
26,536


$
24,956


$
52,374Interest (related parties)

$
17,647


$
5,026


$
23,174Non-cash activities:Stock issued for property

$
-


$
267,140


$
267,140Stock issued for services

$
1,758,800


$
346,000


$
2,106,500Stock issued for loans

$
206,673


$
20,000


$
226,673Stock buyback for balance of shareholder advances

$
143,000


$
-


$
143,000Debt discount from beneficial conversion feature

$
78,281


$
-


$
78,281The accompanying footnotes are an integral part of these financial statements.





F-6
 
 EVCARCO, INC.
 (A Development Stage Company)
 Notes to Financial Statements
 December 31, 2010





NOTE 1.   ORGANIZATION AND DESCRIPTION OF BUSINESS





EVCARCO, Inc. (“The Company”) was incorporated under the laws of the State of Nevada on October 14, 2008.  The Company sells “green” automobiles, offering the latest technology electric vehicles, pre-owned vehicles converted to various green technologies.  The Company is in the development stage.








NOTE 2.  GOING CONCERN





The financial statements of the Company have been prepared on the basis of accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company had negative working capital of $721,787 and an accumulated deficit of $4,030,180 at December 31, 2010.  These matters raise substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts, or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.





The Company has primarily funded its operations through the net proceeds received from the Company's issuance of stock and convertible debt.  The Company plans to issue additional equity and/or debt to fund its future operations.





Based on the Company’s current liquidity position, the Company will need to raise additional capital through debt or equity funding within the next twelve months.  There is no assurance that any such financing will be available on acceptable terms or at all.  Should continuing funding requirements not be met, the Company’s operations may cease to exist.








NOTE 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Basis of Presentation





The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.  The Company operates on calendar basis.





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








F-7
 
 EVCARCO, INC.
 (A Development Stage Company)
 Notes to Financial Statements
 December 31, 2010





NOTE 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued


Basic and Diluted Earnings per Share
 
 Basic net loss per share amount is computed by dividing the net loss by the weighted average number of common shares outstanding for the period.  Diluted net loss per share is the same as basic net loss per share, since the effects of potentially dilutive securities are excluded from the calculation for all periods presented, as their inclusion would be anti-dilutive. Dilutive securities consist of convertible notes payable and convertible preferred stock.





Cash and Cash Equivalents





The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.  There are no restrictions on Company’s cash.  At December 31, 2010 and 2009, balances in Company’s cash accounts did not exceed federally insured limits.





Inventory





Inventory of cars and other products is valued at the lower of cost (specific identification method) or market.





Facilities and Equipment





Facilities and equipment are recorded at cost.  Depreciation is charged on the straight-line basis for buildings, furniture and equipment over the estimated useful lives of the assets.  Leasehold improvements are amortized on a straight-line basis over the term of the lease, or the life of the improvements, whichever is shorter.  Maintenance and repairs are charged to expense as incurred.  Major improvements are capitalized.





Estimated useful lives:


Leasehold improvements - 2-5 years


Furniture, fixtures and equipment - 5 years





Fair Value of Financial Instruments





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





Revenue Recognition





The Company recognizes revenue from the sale of its dealer inventory when all of the following conditions have been met:




(a)
evidence exists of an arrangement with the customer, typically consisting of a purchase order or contract;
 (b)
the Company’s products have been delivered and risk of loss has passed to the customer;
 (c)
the Company has completed all of the necessary terms of the contract generally including but not limited to, dealer preparation of the product and training where applicable;
 (d)
the amount of revenue to which the Company is entitled is fixed or determinable;
 (e)
the Company believes it is probable that it will be able to collect the amount due from the customer;
 (f)
the costs with respect to the transaction can be measured reliably.













F-8
 
 EVCARCO, INC.
 (A Development Stage Company)
 Notes to Financial Statements
 December 31, 2010




















NOTE 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued





To the extent that one or more of these conditions has not been satisfied, the Company would defer recognition of revenue. For the period from inception (October 14, 2008) through December 31, 2010, we have not deferred any revenue. We have not yet derived any revenues from parts, repairs, financing or insurance contracts.





Warranties





The Company does not warranty the vehicles it sells and has no contingency after the sale.  New vehicles carry manufacturers’ warranty.  Warranty for pre-owned vehicles can be arranged through a third party provider.





Equity-Based Payments to Non-Employees





The Company has issued common stock to non-employees for payment of services.  Measurement of the share-based payment transactions with non-employees are based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. After the Company’s common stock began trading on the Over The Counter Bulletin Board on December 14, 2009, we have relied primarily on the trading data for the measurement of value for the shares issued.





Income Taxes





A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards.





Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.





Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.





Comprehensive Loss





Comprehensive loss, which is comprised of net loss and certain defined changes in stockholders’ deficit that are excluded from net loss, is the same as net loss for all periods presented.





Concentration of Credit Risk





Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash deposits. This cash is on deposit with a large federally insured bank. The Company has not experienced any losses in cash balances and does not believe it is exposed to any significant credit risk on cash and cash equivalents.





F-9
 
 EVCARCO, INC.
 (A Development Stage Company)
 Notes to Financial Statements
 December 31, 2010


NOTE 3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued





Recent Accounting Pronouncements





Below is a listing of the most recent accounting standards and their effect on the Company.





In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-06, Fair Value Measurements and Disclosures, which adds new disclosure requirements for transfers into and out of Levels 1 and 2 in the fair value hierarchy and additional disclosures about purchases, sales, issuances, and settlements relating to Level 3 fair value measurements.  This ASU also clarifies existing fair value disclosures about the level of disaggregation about inputs and valuation techniques used to measure fair value.  The ASU is effective for the first reporting period beginning after December 15, 2009, except for the requirement to provide Level 3 activity on a gross basis, which is effective for fiscal year ends beginning after December 15, 2010 and interim periods within those years.  The adoption did not have a material effect on our financial condition or results of operations.





The Company does not expect any recent accounting pronouncements to have a material impact on its financial statements.








NOTE 4.  INVENTORY





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





Dec. 31, 2010


Dec. 31, 2009New vehicles

$
84,272


$
-Pre-owned vehicles


66,750



3,550Other items


29,128



6,996Total inventory

$
180,150


$
10,546





During the first quarter of 2010, the Company had additional impairment related to the vehicles that were devalued at the end of 2009.  The impairment, in the amount of $27,800 related to ECM model that became inoperable and the manufacturer was out of business, and includes some repair and transportation costs.





At the end of 2010, we made a decision to write down to market our inventory of Wheegos.  Impairment of $74,755, related to seven 2010 Whips, with cost between $16,000 and $20,000. Each was written down to $7,500, in line with the price offered by the manufacturer at that time.





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





For 2010 and 2009, total impairments of $102,555 and $82,853, respectively, are reflected as inventory impairment on the accompanying statements of operations.





F-10
 
 EVCARCO, INC.
 (A Development Stage Company)
 Notes to Financial Statements
 December 31, 2010





NOTE 5.  PREPAID EXPENSES





As of December 31, 2010 and 2009, balances of prepaid expenses were $305,053 and $136,667, respectively. The amounts represented the unearned portion of stock compensation issued under consulting agreements, determined as follows:





Nature of services
Term of the contract

Number of shares issued


Fair value assigned


Expensed


Unearned portionMarketing, investor relationships, business and strategy consulting
07/01/09 - 06/30/10


500,000


$
250,000


$
125,000


$
125,000Graphic design, video recording, web services
10/15/09 - 04/15/10


40,000



20,000



8,333



11,667Various sales and marketing services
3 months or less


156,000



76,000



76,000



-2009 Totals



696,000


$
346,000


$
209,333


$
136,667Amortization






$



$
136,667


$
(136,667
)Legal and investor relationship services
01/01/10 - 06/30/10


300,000



54,070



54,070



-International business development and legal services
02/26/10 - 02/25/11


2,600,000



1,170,000



983,280



186,720Marketing, investor relationships, business and strategy consulting
05/15/10 - 05/14/11


6,000,000



240,000



150,000



90,000Public relations
07/28/10 - 01/28/11


4,000,000



170,000



141,667



28,333Various public relations, marketing, business and technical services
6 months or less


3,327,000



124,730



124,730



-2010 Totals



16,227,000


$
1,758,800


$
1,590,414


$
305,053








NOTE 6.  NOTES PAYABLE





During 2009, the Company received $150,000 of advances and made $61,090 of principal repayments to RGTK, an unrelated entity.   The note is unsecured, due upon demand and accrues interest at the end of each month on the then outstanding balance at the rate of 36% per annum.  As of December 31, 2009, principal balance of note was $88,910.  Interest paid during the same period was $17,110.





On August 23, 2010, total outstanding balance of the note in the amount of $86,683, including accrued interest, was settled by conversion into 7,166,666 shares of common stock of the Company.  Interest paid under the note for 2010 was $12,953.





F-11
 
 EVCARCO, INC.
 (A Development Stage Company)
 Notes to Financial Statements
 December 31, 2010








NOTE 7.  CONVERTIBLE NOTES PAYABLE





On June 7, 2010, the Company issued a convertible promissory note in the amount of $60,000, bearing interest at a rate of 8% per annum. The note is unsecured and matures on March 2, 2011. The entire principal and accrued interest on the note are convertible into common stock of the Company at a variable conversion price, with 39% discount to the market price, at the point of conversion. The Company recorded $24,251 related to the deemed beneficial conversion feature of this note, of which $22,455 has been amortized to interest expense in the accompanying statements of operations for 2010.  During December of 2010, $20,000 of the principal outstanding under the note was converted into 5,498,533 shares of common stock of the Company.  As of December 31, 2010, the balance of the note was $40,000, and the balance of interest accrued under the note was $2,705. Subsequent to year end, during January and February of 2011, the remaining note balance, including $2,400 of accrued interest, was converted into 18,822,102 shares of common stock of the Company.  Remainder of the accrued interest was written off.





On August 25, 2010, the Company issued a convertible promissory note in the amount of $35,000, bearing interest at a rate of 34.29% per annum. The note is unsecured and matures on February 24, 2011. The entire principal and accrued interest on the note are convertible into common stock of the Company at a variable conversion price, with 40% discount to the market price, at the point of conversion. The Company recorded $23,333 related to the deemed beneficial conversion feature of this note, of which $16,448 has been amortized to interest expense in the accompanying statement of operations for 2010.  As of December 31, 2010, principal remained unchanged, and the balance of interest accrued under the note was $245. Interest paid under the note for 2010 was $4,245. Subsequent to year end, on February 27, 2011, $32,400 of the principal outstanding under the note was converted into 18,000,000 shares of common stock of the Company.





On November 3, 2010, the Company issued a convertible promissory note in the amount of $53,000, bearing interest at a rate of 8% per annum. The note is unsecured and matures on July 25, 2011. The entire principal and accrued interest on the note are convertible into common stock of the Company at a variable conversion price, with 39% discount to the market price, at the point of conversion. The Company recorded $30,697 related to the deemed beneficial conversion feature of this note, of which $6,822 has been amortized to interest expense in the accompanying statements of operations for 2010.  As of December 31, 2010, principal remained unchanged, and the balance of interest accrued under the note was $669.








NOTE 8.  RELATED PARTY TRANSACTIONS





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





For the years ended December 31, 2010 and 2009, the Company accrued $332,000 and $278,770, respectively, in salaries payable to its three officers and major shareholders (excluding compensation to Mr. Long, described in the paragraph above).





F-12
 
 EVCARCO, INC.
 (A Development Stage Company)
 Notes to Financial Statements
 December 31, 2010








NOTE 8.  RELATED PARTY TRANSACTIONS - continued





As of December 31, 2010 and 2009, the balances of shareholder notes were $531,150 and $271,280, respectively.  The balances included accrued salaries, along with various advances to and from the Company.  The notes are unsecured, due upon demand and accrue interest at the end of each month on the then outstanding balance at the rate of 5.00% per annum.  Accrued interest payable on the notes at each respective year end was $2,818 and $334.  Interest paid during the corresponding annual periods was $17,647 and $5,026, respectively.  These notes payable do not approximate fair value, as they are with related parties, and do not bear market rates of interest. In October of 2010, $100,000 of the balance outstanding under the shareholder notes was converted into 2,500,000 shares of Class A convertible preferred stock of the Company.





As of December 31, 2010, balance of accrued expenses included $32,400 of compensation and related payroll taxes for two officers and directors, who joined the Company in the last quarter of 2010.





NOTE 9.  COMMITMENTS AND CONTINGENCIES





The Company leases its location under a 26 month agreement, which was renewed in November of 2010.  For the years following December 31, 2010, future minimum annual rents under this agreement are as follows:


2011
$
27,4502012
$
27,450Total
$
54,900




Rent expense for the years ended December 31, 2010 and 2009, were $86,913 and $24,651, respectively, reflected in general and administrative expenses in the accompanying statements of operations.  Rent expense for 2010 included $61,500 for the second location, in Dallas Texas, leased between May and August of 2010.








NOTE 10.  OPERATING SEGMENTS





During the period from inception through December 31, 2010 the Company operated as a single business segment.








NOTE 11.  INCOME TAXES





For the years ended December 31, 2010 and 2009, the Company incurred net operating losses and, accordingly, no provision for income taxes has been recorded.  In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets.  At December 31, 2010, the Company had approximately $3,457,000 of net operating losses, which will begin to expire in 2027.





F-13
 
 EVCARCO, INC.
 (A Development Stage Company)
 Notes to Financial Statements
 December 31, 2010





NOTE 11.  INCOME TAXES - continued





The reconciliation of income taxes at the U.S. federal statutory tax rate to our effective tax rate was as follows:





Dec. 31, 2010

Dec. 31, 2009Statutory provision (benefit) rate

34%


34%State, and other taxes, net of federalincome tax benefit

-


-Portion of net operating losses andtemporary differences resulting from theestablishment or reduction in thevaluation allowance

(34)


(34)Effective tax rate

- %


- %








Significant components of the Company’s deferred tax assets and liabilities were as follows:





Dec. 31, 2010

Dec. 31, 2009Deferred tax assets:Inventory
$
25,417

$
-Intangible assets

3,874


4,176Syndication costs

8,500


8,500Accrued liabilities

236,056


148,436Beneficial conversion features

15,546


-Sec. 179 deduction

12,453


2,181Net operating loss carryforwards

1,175,506


276,195Total deferred tax assets

1,477,352


439,488Deferred tax liabilities:Prepaid expenses

(103,718)


(46,467)Facilities and equipment

(9,859)


(1,538)Total deferred tax liabilities

(113,577)


(48,005)Net deferred tax assets before valuation allowance

1,363,775


391,483Less: Valuation allowance

(1,363,775)


(391,483)Net deferred tax assets
$
-

$
-





Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income.  As the achievement of required future taxable income is uncertain, the Company has recorded a valuation allowance for the full amount of the deferred tax assets.








F-14
 
 EVCARCO, INC.
 (A Development Stage Company)
 Notes to Financial Statements
 December 31, 2010





NOTE 11.  INCOME TAXES - continued
 
 The Company has not undertaken a study to assess whether an ownership change has occurred as defined under Section 382 of the Internal Revenue Code. If there has been such an ownership change at any time since the Company’s formation, utilization of net operating loss carryforwards and other credit carryforwards would be subject to a significant yearly restriction. Therefore, in future years, the Company may be required to pay income taxes even though significant operating loss and tax credit carryforwards exist.





As of January 1, 2009, the Company adopted ASC Topic No. 740-10, Income Taxes. This interpretation, among other things, creates a two-step approach for evaluating uncertain tax positions. Recognition (step one) occurs when an enterprise concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination. Measurement (step two) determines the amount of benefit that more likely than not will be realized upon settlement. Derecognition of a tax position that was previously recognized would occur when an entity subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained. ASC 740-10 specifically prohibits the use of a valuation allowance as a substitute for derecognition of tax positions and it has expanded disclosure requirements. The adoption of ASC 740-10 had no impact on the Company’s financial statements and there are no uncertain tax positions as of December 31, 2010. The Company is currently subject to a three year statute of limitation by major tax jurisdictions.








NOTE 12.  CONVERTIBLE PREFERRED STOCK





Effective April 29, 2009 the Company filed an amendment with the Nevada Secretary of State to authorize Class A convertible preferred stock in the amount of 15,000,000 shares at $0.001 par value.  Class A shares have no dividend rights, except as may be declared by the Board of Directors in its sole discretion. Class A stock is ranked senior and prior to the Corporation’s common stock as to dividends and upon liquidation. Class A shares have liquidation rights of $1 per share, and are entitled to 4 votes each, on any matters requiring shareholders’ vote. One share of Class A stock can be converted into 4 shares of common stock at any time, upon demand from of the holder.





On October 11, 2010, the Company issued 2,500,000 shares of Class A convertible preferred stock to an officer and director for $100,000 in partial satisfaction of the loan payable to such officer and director. The number of Class A shares was determined by applying a discount, for the lack of marketability and liquidity, of approximately 30% to the market price of common stock, multiplied by four, which represents conversion rights of a Class A share into common stock.








NOTE 13.  COMMON STOCK





At inception on October 14, 2008, the Company issued 46,500,000 shares of common stock to founders for a cash consideration of $15,500.





From the inception on October 14, 2008 through December 31, 2008, the Company issued 930,000 shares of common stock to various investors for a cash consideration of $155,500.





F-15
 
 EVCARCO, INC.
 (A Development Stage Company)
 Notes to Financial Statements
 December 31, 2010





NOTE 13.  COMMON STOCK - continued





From the inception on October 14, 2008 through December 31, 2008, the Company issued 5,100,000 shares of common stock for professional services.





Effective April 29, 2009 the Company filed an amendment with the Nevada Secretary of State to increase authorized shares of common stock from 25,000,000 to 60,000,000.





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





On July 14, 2009, the Company issued 1,406,000 shares of common stock for property, in the form of pre-owned vehicles.  We acquired thirty five pre-owned SMART cars in exchange for 1,406,000 shares of common stock and $47,000 of cash. Most of those cars were sold within two months of acquisition, and since at the time, there was no public market for our stock, we determined that proceeds realized from the sales were more reliable indication of value, than the value placed on private placement transactions at that time. Based on average selling price of the cars, we determined the value of the lot to be $314,140, and consequently, the value of the stock - $267,140, or approximately $0.19 per share.





On October 27, 2009, the Company issued 6,000,000 shares of common stock to founders for a cash consideration of $2,000.  This issue represents correction of an accounting error. It was our intention to record these shares as a stock subscription at the time the original founders’ shares were issued. The correction was not material enough to the financial statements to require restatement.





On October 27, 2009, the Company issued 120,000 shares of common stock to settle a note payable in the amount of $20,000.  We were able to negotiate a settlement of $20,000 advance, received in April of 2009 from unrelated party, in exchange for stock.  Negotiated price per share was equivalent to the prices received in private placement transaction around the time of the advance (considering the stock split which occurred in July of 2009).





During 2009, the Company issued 373,500 shares of common stock to various investors for a cash consideration of $145,750.





During 2009, the Company issued 696,000 shares of common stock for professional services.





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





In August of 2010, the Company issued 7,166,666 shares of common stock in complete satisfaction of note payable with outstanding principal and interest balance of $86,673. The number of shares was computed based on agreed upon discount to market price of the shares at the time of the conversion.





In December of 2010, the Company issued 5,498,533 shares of common stock in partial satisfaction of principal of convertible note payable, originated on June 7, 2010, in the amount of $20,000. The number of shares was computed based on agreed upon discount to market price of the shares at the time of the conversion.





F-16
 
 EVCARCO, INC.
 (A Development Stage Company)
 Notes to Financial Statements
 December 31, 2010





NOTE 13.  COMMON STOCK - continued





During 2010, the Company issued 2,378,000 shares of common stock to various investors for a cash consideration of $522,000, based on the price negotiated in each individual, private agreement.





During 2010, the Company issued 16,227,000 shares of common stock for professional services, valued at $1,758,800, based on the market price at the time of issuance.








NOTE 14.  SUBSEQUENT EVENTS





Effective February 11, 2011 the Company filed an amendment with the Nevada Secretary of State to authorize Class B convertible preferred stock in the amount of 20,000,000 shares at $0.001 par value.  Class B shares have no dividend rights, except as may be declared by the Board of Directors in its sole discretion. Class B stock is ranked senior and prior to the Corporation’s Class A convertible preferred stock and to the Corporation’s common stock as to dividends and upon liquidation. Class B shares have liquidation rights of $5 per share, and are entitled to 1,000 votes each, on any matters requiring shareholders’ vote. One share of Class B stock can be converted into 10 shares of common stock at any time, upon demand from of the holder.





In February of 2011, the Board of Directors approved an exchange for the three officers, directors and major shareholders - Mr. O’Neal, Mr. Prous and Mr. Frolov.  The exchange resulted in cancellation of 15,000,000 shares of common stock, in total, held by the individuals, and issuance of 1,500,000 shares of Class B convertible preferred stock, based on 1:10 conversion rights attached to Class B shares.





During January and February of 2011, the Company issued 18,822,102 shares of common stock in complete satisfaction of the convertible note payable, originated on June 7, 2010, in the amount of $42,400.





On February 1, 2011, the Company issued 500,000 shares of common stock for professional services, valued at $2,400, based on the market price at the time of issuance.





On February 10, 2011, the Company issued 4,800,000 shares of common stock in satisfaction of $50,000 owed under a consulting agreement.





On February 18, 2011, the Company issued 500,000 shares of common stock for professional services, valued at $36,500, based on the market price at the time of issuance.





On February 27, 2011, the Company issued 18,000,000 shares of common stock in partial satisfaction of principal of convertible note payable, originated on August 25, 2010, in the amount of $32,400.





On March 29, 2011, the Company issued 3,290,000 shares of common stock in satisfaction of $50,000 owed under a consulting agreement.



















F-17





ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE





None.








ITEM 9A.CONTROLS AND PROCEDURES





(a) Disclosure Controls and Procedures





We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as defined by Rule 15d-15(e) under the Securities Exchange Act of 1934 as of the end of the period covered by this annual report. Based upon that evaluation, as required by Rule 15d-15(b), our Chief Executive Officer and our Chief Financial Officer concluded that as of December 31, 2010, our disclosure controls and procedures are effective.





(b) Internal Control Over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2010, based on the criteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the criteria set forth in Internal Control - Integrated Framework, our management concluded that our internal control over financial reporting was not effective for the following reasons:





a)
The deficiency was identified as the Company's limited segregation of duties amongst the Company's employees with respect to the Company's control activities. This deficiency is the result of the Company's limited number of employees. This deficiency may affect management's ability to determine if errors or inappropriate actions have taken place. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible changes in our controls and procedures.








(c) Changes in our Internal Control over Financial Reporting





Management of the Company has also evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, any change in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal year covered by this Annual Report on Form 10-K.  There was no change in the Company's internal control over financial reporting identified in that evaluation that occurred during the fiscal year covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.





Risk factors related to controls and procedures





The Company has limited segregation of duties amongst its employees with respect to the Company's preparation and review of the Company's financial statements due to the limited number of employees, which is a deficiency in internal controls, and if the Company fails to maintain an effective system of internal controls, it may not be able to accurately report its financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in the Company's financial reporting which could harm the trading price of the Company's stock.





Management has found it necessary to limit the Company's administrative staffing in order to conserve cash, until the Company's level of business activity increases. As a result, there is very limited segregation of duties amongst the administrative employees, and the Company and its independent public accounting firm have identified this as a deficiency in the Company's internal controls. The Company intends to remedy this deficiency by hiring additional employees and reallocating duties, including responsibilities for financial reporting, among the employees as soon as there are sufficient resources available. However, until such time, this deficiency will continue to exist. Despite the limited number of administrative employees and limited segregation of duties, management believes that the Company's administrative employees are capable of following its disclosure controls and procedures effectively.




ITEM 9B.OTHER INFORMATION





None.




20





PART III





ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





Directors and Executive Officers of Registrant





The name, age and position of each of our directors and executive officers as of December 31, 2010 are as follows:





Name

Age

PositionMack Sanders

50

Chief Executive Officer and DirectorNikolay Frolov

38

Chief Financial Officer, Treasurer and DirectorScott O'Neal

40

Chief Operating Officer, Secretary, Vice President and DirectorEdouard Prous

35

Chief Technology Officer, Vice President and DirectorJoshua Spivey

30

Chief Investment Officer and Director





Mr. Mack Sanders is our Chief Executive Officer and Director. He has served in these capacities since December 16, 2010. Mr. Sanders has over 25 years of extensive automotive experience, working in various management and sales capacities for several dealerships in the state of Texas. For the last decade, Mr. Sanders owned and operated successful automobile wholesale business.





Mr. Nikolay Frolov, CPA, is our Chief Financial Officer, Treasurer and Director. He has served in these capacities since we were incorporated on October 14, 2008. Mr. Frolov has over 15 years of experience in accounting. Before joining EVCARCO in 2008 as the CFO, Mr. Frolov was the assistant controller for Romacorp, Inc.  Prior to this role, Mr. Frolov was a manager for Travis, Wolff & Co., LLP. Mr. Frolov was a senior consultant with Taylor and Taylor, LLP from 1994-2006. Mr. Frolov graduated with honors from the University of Texas at Arlington with Bachelor’s and Master’s degrees in Accounting.





Mr. Scott O’Neal is our Chief Operating Officer, Secretary, Vice President and Director. He has served in these capacities since we were incorporated on October 14, 2008. Mr. O’Neal oversees sales and manufacturer relations for EVCARCO. With over 20 years of experience in the auto industry, Mr. O’Neal began in the auto business in 1988, working at family dealerships in Fort Worth, Texas. In 1995, he joined New Toyota Franchise Dealership as the fleet sales manger, achieving multiple Toyota Gold Sales Society Awards, Toyota’s top sales award. During the last ten years, Mr. O'Neal owned and operated independent car dealerships and other successful companies. Since 2006, Mr. O’Neal has helped launch companies such as Fireman’s Contractors and EVCARCO, for which he continues to serve as COO, advisor, and investor.





Mr. Edouard Prous is our CTO, Vice President of International Operations and Distribution, and Director. He has served in these capacities since we were incorporated on October 14, 2008. Mr. Prous, a Russian native, has extensive experience in international business and the auto industry. Prior to joining EVCARCO in 2008, Mr. Prous founded and ran Ace Plus, Inc. From 2001 to 2006, Mr. Prous served as COO of ONPRO, Inc. Mr. Prous has also been the COO of Auto Solutions, Inc. He started his career at Accurate Auto Group, where he served as vice president from 1995-1999.





Mr. Joshua Spivey is our Chief Investment Officer and Director. He has served in these capacities since October 18, 2010. He manages investor relations and provides valuable insight on capital formations and structured financing.  Prior to joining EVCARCO Mr. Spivey has founded several wealth-building business including his boutique hedge fund VOM Capital Partners, L.P. located in Fort Worth, TX where he still serves as GP today.  Mr. Spivey currently holds several securities licenses along with financial designations; he also served in the United States Air Force and currently resides with his family in Keller, Texas.





Board Composition





Our Bylaws provide that the Board of Directors shall consist of one or more members, but not more than nine, and that our shareholders shall determine the number of directors at each regular meeting. Each director serves for a term that expires at the next regular meeting of the shareholders or until his successor is elected and qualified.





Committees of the Board of Directors





Due to our size, limited operating history and financial conditions we do not presently have a separately constituted audit committee, compensation committee, nominating committee, executive committee or any other committees of our Board of Directors. Our entire Board of Directors acts as our audit committee and handles matters related to compensation and nominations of directors. We do not have an audit committee “financial expert.”


21




ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE - continued





Potential Conflicts of Interest





Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executives or directors.





Director Independence





We are not subject to listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our board comprised of a majority of “independent directors.” Our determination of independence of directors is made using the definition of “independent director” contained in Rule 4200(a)(15) of the Marketplace Rules of the NASDAQ Stock Market (“NASDAQ”), even though such definitions do not currently apply to us because, we are not listed on NASDAQ. We have determined that none of our directors currently meet the definition of “independent” as within the meaning of such rules as a result of their current positions as our executive officers.





Significant Employees





We have no significant employees other than the executive officers described above.





Family Relationships





There are no familial relationships among any of our officers and directors.





Involvement in Certain Legal Proceedings





No director, person nominated to become a director, executive officer, promoter or control person of our company has, during the last five years: (i) been convicted in or is currently subject to a pending a criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law, nor (iii) any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto.





Stockholder Communications with the Board





We have not implemented a formal policy or procedure by which our stockholders can communicate directly with our Board of Directors or make nominations to the Board of Directors. Nevertheless, every effort has been made to ensure that the views of stockholders are heard by the Board of Directors or individual directors, as applicable, and that appropriate responses are provided to stockholders in a timely manner. We believe that we are responsive to stockholder communications, and therefore have not considered it necessary to adopt a formal process for stockholder communications with our Board. During the upcoming year, our Board will continue to monitor whether it would be appropriate to adopt such a process.





Code of Ethics





As of December 31, 2010, we had not adopted a Code of Ethics, which would include our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.






































22




ITEM 11.EXECUTIVE COMPENSATION





Summary Compensation Table





The following table sets forth information with respect to compensation paid by us to our officers and directors for the fiscal years ended December 31, 2010 and 2009.





Non-Equity


Non-qualifiedIncentive


Deferred


AllName and









Stock


Option


Plan


Comp.


OtherPrincipal



Salary


Bonus


Awards


Awards


Comp.


Earnings


Comp.


TotalPosition

Year

($)


($)


($)


($)


($)


($)


($)


($)Mack SandersCEO

2010


10,000



-



-



-



-



-



-



10,000and Director

2009


-



-



-



-



-



-



-



-Nikolay Frolov,CFO, Treasurer

2010


91,000



-



-



-



-



-



-



91,000and Director

2009


47,800



-



-



-



-



-



-



47,800Scott O'Neal,COO, Secretary

2010


121,000



-



-



-



-



-



-



121,000VP and Director

2009


120,200



-



-



-



-



-



-



120,200Edouard Prous,CTO, VP and

2010


120,000



-



-



-



-



-



-



120,000Director

2009


110,770



-



-



-



-



-



-



110,770Joshua SpiveyCIO

2010


20,000



-



-



-



-



-



-



20,000and Director

2009


-



-



-



-



-



-



-



-





Amounts of compensation for 2010 and 2009, reported in the table above, represent accrued compensation. The manner and timing of payments of the accrued compensation will depend on the future financial conditions of the Company.





Refer to the Notes to Financial Statements for more information.





For the year 2010 and 2009, the Company accrued $71,000 and $125,400, respectively, in compensation for former President, CEO and Director, Dale Long.  As part of the separation agreement, upon his departure from the Company on August 25, 2010, the entire amount of $196,400, along with the related accrued payroll taxes of $16,000, was cancelled and is shown as gain on extinguishment of liabilities on the accompanying statements of operations for 2010, and is not reflected in the table above.





Outstanding Equity Awards





We do not currently have a stock option plan, but we do anticipate putting in place a long-term incentive plan providing compensation, intended to serve as incentive for performance. No individual grants of stock options or other equity incentive awards have been made to any executive officer or any director since our inception; accordingly, none were outstanding at December 31, 2010 and 2009.





Employment Contracts, Termination of Employment, Change-in-Control Arrangements





There are currently no employment or other contracts or arrangements with our executive officers. There are no compensation plans or arrangements, including payments to be made by us, with respect to our officers, directors or consultants that would result from the resignation, retirement or any other termination of such directors, officers or consultants from us. There are no arrangements for directors, officers, employees or consultants that would result from a change-in-control.


23





ITEM 11.EXECUTIVE COMPENSATION- continued





Compensation of Directors





We have no formal plan for compensating our directors for their services in their capacity as directors. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our Board of Directors. The Board of Directors may award special remuneration to any director undertaking any special services on behalf of EVCARCO other than services ordinarily required of a director.





The following table summarizes all compensation awarded to, earned by or paid to our directors for all services rendered to us for the fiscal years ended December 31, 2010 and 2009.





Fees








Non-Equity


Non-qualifiedEarned








Incentive


Deferred


AllName and



or Cash


Stock


Option


Plan


Comp.


OtherPrincipal



Paid


Awards


Awards


Comp.


Earnings


Comp.


TotalPosition

Year

($)


($)


($)


($)


($)


($)


($)Mack SandersCEO

2010


-



-



-



-



-



-



-and Director

2009


-



-



-



-



-



-



-Nikolay Frolov,CFO, Treasurer

2010


-



-



-



-



-



-



-and Director

2009


-



-



-



-



-



-



-Scott O'Neal,COO, Secretary

2010


-



-



-



-



-



-



-VP and Director

2009


-



-



-



-



-



-



-Edouard Prous,CTO, VP and

2010


-



-



-



-



-



-



-Director

2009


-



-



-



-



-



-



-Joshua SpiveyCIO

2010


-



-



-



-



-



-



-and Director

2009


-



-



-



-



-



-



-








ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS





The following table sets forth information regarding the beneficial ownership of our common stock as of December 31, 2010 for (1) each person, or group of affiliated persons, known by us to beneficially own more than 5% of our common stock; (2) each of our executive officers; (3) each of our directors; and (4) all of our executive officers and directors as a group.





We have determined beneficial ownership in accordance with the rules of the Securities and Exchange Commission. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws, and the address for each person listed in the table is c/o EVCARCO Inc., 7703 Sand Street, Fort Worth, Texas 76118.











24


ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS- continued





The percentage ownership information shown in the table below is calculated based on 134,681,901 shares of common stock, which includes 109,681,901 shares of our common stock issued and outstanding as of March 31, 2011; increased by 10,000,000 shares of common stock, representing the right to acquire beneficial ownership, of the holder of 2,500,000 shares of Class A convertible preferred stock; and increased by 15,000,000 shares of common stock, representing the right to acquire beneficial ownership of the holders of 1,500,000 shares of Class B convertible preferred stock.


Amount and NatureTitle of



of BeneficialClass

Name of Beneficial Owner

Ownership


PercentageCommon Stock

Mack Sanders, CEO and Director


107,000



0.08
%Common Stock

Nikolay Frolov, CFO, Treasurer and Director


16,885,000
(1,2)


12.54
%Common Stock

Scott O’Neal, COO, Secretary, VP and Director


14,221,738
(3)


10.56
%Common Stock

Edouard Prous, CTO, VP and Director


14,344,856
(4)


10.65
%Common Stock

Joshua Spivey, CIO and Director


427,400
(5)


0.32
%All Officers and Directors as a Group


45,985,994



34.14
%Total  shares outstanding


134,681,901





(1) Includes the effect given to 10,000,000 shares of common stock, which can be acquired by converting 2,500,000 shares of Class A convertible preferred stock, held by Mr. Frolov.





(2) Includes the effect given to 5,000,000 shares of common stock, which can be acquired by converting 500,000 shares of Class B convertible preferred stock, held by Mr. Frolov.





(3) Includes the effect given to 5,000,000 shares of common stock, which can be acquired by converting 500,000 shares of Class B convertible preferred stock, held by Mr. O’Neal.





(4) Includes the effect given to 5,000,000 shares of common stock, which can be acquired by converting 500,000 shares of Class B convertible preferred stock, held by Mr. Prous.





(5) Includes indirect ownership of 300,000 shares of common stock





We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change in control of our Company.











ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE





Other than the stock transactions discussed below, EVCARCO, Inc has not entered into any transaction nor are there any proposed transactions in which any director, executive officer, shareholder of the company or any member of the immediate family of any of the foregoing had or is to have a direct or indirect material interest.





Mr. Dale Long, Mr. Scott O’Neal, Mr. Eduard Prous, as officers and members of our Board of Directors, each purchased by subscription 15,000,000 shares of common stock from EVCARCO, Inc. on October 15, 2008 for $5,000, each. Mr. Nikolay Frolov, as officer and member of our Board of Directors, also purchased by subscription 1,500,000 shares of common stock from EVCARCO, Inc. on October 15, 2008 for $500, and 6,000,000 shares of common stock on October 27, 2009, for $2,000.





On August 25, 2010, Mr. Dale Long resigned from his position of President/CEO, as well as the Board of Directors of the Company.  Under the terms of Separation and Buy-Back Agreement, the Company purchased 13,625,900 shares of its common stock, held by Mr. Long for $178,000, of which $35,000 was paid in cash and $143,000 was offset against advances made to Mr. Long.





On October 11, 2010, the Company issued 2,500,000 shares of Class A convertible preferred stock to Mr. Nikolay Frolov (CFO and Director), for the amount of $100,000, in partial satisfaction of the loan payable to the shareholder. The number of shares was determined by applying a discount, for the lack of marketability and liquidity, of approximately 30% to the market price of common stock, multiplied by four, which represents conversion rights of the Class A shares. The discount was significantly less than 39% and 40%, those of the conversion rights of unrelated parties, holding convertible notes payable at the time of the transaction.




In February of 2011, the Board of Directors approved an exchange for the three officers, directors and major shareholders - Mr. O’Neal, Mr. Prous and Mr. Frolov.  The exchange resulted in cancellation of 15,000,000 shares of common stock held by the individuals, and issuance of 1,500,000 shares of Class B convertible preferred stock, based on 1:10 conversion rights attached to Class B shares.


25


ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES





The following table includes the aggregate fees paid to our independent registered public accounting firm for the years ended December 31:


2010


2009Audit fees

$
15,945


$
14,921Audit-related fees


-



-Tax fees


-



-All other fees


-



-$
15,945


$
14,921














PART IV





ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES





(a) The following documents are filed as part of this annual report:





(1) Financial Statements





All financial statements of the Registrant as set forth under Item 8 of this Annual Report on Form 10-K.





(2) Financial Statement Schedules





All financial statement schedules have been omitted because they are not applicable or not required, or the information required thereby is included in the consolidated financial statements or the notes thereto included in this annual report.





(3) Exhibits





Each exhibit identified below is filed with this annual report. Exhibits designated with an “*” are filed herewith.





Exhibit No.
Description3.1
Articles of Incorporation of Registrant (1)3.2
Bylaws of Registrant (1)3.3
Amendment to Articles of Incorporation (2)3.4
Certificate of Designation (2)3.5
Amended and Restated Bylaws of the Registrant (4)5.1
Legal Opinion and Consent of The O’Neal Law Firm, P.C.10.1
Memorandum of Understanding (Electric City Motor North America) (3)10.2
Memorandum of Understanding (Ronn Motor Company) (3)10.3
Evidence of Franchise (3)10.4
Retailer Agreement (3)23.1*
Consent of Independent Registered Public Accounting Firm23.2*
Consent of Independent Registered Public Accounting Firm31.1*
Certification Pursuant to Rules 13a-14(a) and 15d-14(a) Under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2*
Certification Pursuant to Rules 13a-14(a) and 15d-14(a) Under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232*
Certification Pursuant to Section 902 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)


____________





*
Filed herewith.






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SIGNATURES





Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Forth Worth, State of Texas, on April 15, 2011.





EVCARCO, INC./s/  MACK SANDERSMack SandersChief Executive Officer and Director





Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on April 15, 2011.





Signatures
Title/s/  MACK SANDERS
Chief Executive Officer and Director(Mack Sanders)
(Principal Executive Officer)/s/  NIKOLAY FROLOV
Chief Financial Officer, Treasurer and Director(Nikolay Frolov)
(Principal Financial and Accounting Officer)/s/  SCOTT O’NEAL
Chief Operating Officer, Secretary,(Scott O’Neal)
Vice President and Director/s/  EDOUARD PROUS
Chief Technology Officer, Vice President(Edouard Prous)
and Director/s/  JOSHUA SPIVEY
Chief Investment Officer and Director(Joshua Spivey)





SUPPLEMENTAL INFORMATION:





NO ANNUAL REPORT OR PROXY MATERIAL WAS SENT TO SECURITY HOLDERS DURING THE LAST FISCAL YEAR, AND NO SUCH REPORT OR MATERIAL IS EXPECTED TO BE SENT IN THE CURRENT FISCAL YEAR.





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INDEX TO EXHIBITS





Exhibit No.
Description3.1
Articles of Incorporation of Registrant (1)3.2
Bylaws of Registrant (1)3.3
Amendment to Articles of Incorporation (2)3.4
Certificate of Designation (2)3.5
Amended and Restated Bylaws of the Registrant (4)5.1
Legal Opinion and Consent of The O’Neal Law Firm, P.C.10.1
Memorandum of Understanding (Electric City Motor North America) (3)10.2
Memorandum of Understanding (Ronn Motor Company) (3)10.3
Evidence of Franchise (3)10.4
Retailer Agreement (3)23.1*
Consent of Independent Registered Public Accounting Firm23.2*
Consent of Independent Registered Public Accounting Firm31.1*
Certification Pursuant to Rules 13a-14(a) and 15d-14(a) Under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2*
Certification Pursuant to Rules 13a-14(a) and 15d-14(a) Under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232*
Certification Pursuant to Section 902 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)


____________





1. Incorporated by reference to the Company's Registration Statement on Form S-1 as filed with the SEC on March 30, 2009.


2. Incorporated by reference to the Company's Registration Statement on Form S-1/A as filed with the SEC on May 1, 2009.


3. Incorporated by reference to the Company's Registration Statement on Form S-1/A as filed with the SEC on June 12, 2009.


4. Incorporated by reference to the Company's Registration Statement on Form POS AM as filed with the SEC on September 28, 2009.


* Filed herewith.











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