UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
  ———————
 FORM
10-K
 ———————
  x
                ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the fiscal year ended October 31, 2009Oro
                TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
  EVOLUTION
RESOURCES, INC.
 (Exact name of
registrant as specified in its charter)
 
 Nevada
                333-
      140306
                20-2356853(State
      or other jurisdiction of
                  incorporation
      or organization)
                Commission
                  file
      number)
                (IRS
      Employer
                  Identification
      No.)
 
 143
Yazoo Avenue
 Clarksdale,
Mississippi 38614
 (Address
of principal executive offices)
 
 (662)-655-1077
 (Registrant's
telephone number)
 
 Securities
registered under Section 12 (b) of the Exchange Act:
 None
 
 Securities
registered under Section 12(g) of the Exchange Act:
 Common
Stock, par value $.001
 (Title of
class)
 
 Check
whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or
for such shorter period that the issuer was required to file such reports), and
(2)has been subject to such filing requirements for the past 90 days. Yes þ   No
 ̈
  Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
  Yes oNo þ
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company filer.
See definition of “accelerated filer” and “large accelerated filer” 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 Exchange Act.
  Yes  ̈No þ
  State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date: 17,656,077 of Common Stock, as of November
27, 2009.
 TABLE
OF CONTENTS
 PagePART
      IItem
      1.
                Description
      of Business
                4Item
      1A.
                Risk
      Factors
                8Item
      1B.
                Unresolved
      Staff Comments
                16Item
      2.
                Properties
      (See Items 1 & 2 Business & Properties)
                16Item
      3.
                Legal
      Proceedings
                16Item
      4.
                Submission
      of Matters to a Vote of Security Holders
                16PART
      IIItem
      5.
                Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                17Item
      6.
                Selected
      Financial Data
                17Item
      7.
                Management’s
      Discussion and Analysis of Financial Condition
      and   Results of Operations
                17Item
      7A.
                Quantitative
      and Qualitative Disclosures About Market Risk
                24Item
      8.
                Financial
      Statements and Supplementary Data
                24Item
      9.
                Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                24Item
      9A.
                Controls
      and Procedures
                25Item
      9B.
                Other
      Information
                25PART
      IIIItem
      10.
                Directors,
      Executive Officers and Corporate Governance
                26Item
      11.
                Executive
      Compensation
                28Item
      12.
                Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                29Item
      13.
                Certain
      Relationships and Related Transactions and Director
      Independence
                30Item
      14.
                Principal
      Accountant Fees and Services
                31PART
      IVItem
      15.
                Exhibits
      and Financial Statement Schedules
                31SIGNATURES
                33
 
 
 SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
 Included
in this Form 10-K are “forward-looking” statements, as well as historical
information. Although we believe that the expectations reflected in these
forward-looking statements are reasonable, we cannot assure you that the
expectations reflected in these forward-looking statements will prove to be
correct. Our actual results could differ materially from those anticipated in
forward-looking statements as a result of certain factors, including matters
described in the section titled “Risk Factors.” Forward-looking statements
include those that use forward-looking terminology, such as the words
“anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “project,”
“plan,” “will,” “shall,” “should,” and similar expressions, including when used
in the negative. Although we believe that the expectations reflected in these
forward-looking statements are reasonable and achievable, these statements
involve risks and uncertainties and we cannot assure you that actual results
will be consistent with these forward-looking statements. Important factors that
could cause our actual results, performance or achievements to differ from these
forward-looking statements include the following:
 
 ·
              the
      availability and adequacy of our cash flow to meet our
      requirements,·
              economic,
      competitive, demographic, business and other conditions in our local and
      regional markets,·
              changes
      or developments in laws, regulations or taxes in the ethanol or energy
      industries,·
              actions
      taken or not taken by third-parties, including our suppliers and
      competitors, as well as legislative, regulatory, judicial and other
      governmental authorities,·
              competition
      in the ethanol industry,·
              the
      failure to obtain or loss of any license or permit,·
              changes
      in our business and growth strategy (including our plant building strategy
      and location strategy), capital improvements or development
      plans,·
              the
      availability of additional capital to support capital improvements and
      development, and·
              other
      factors discussed under the section entitled “Risk Factors” or elsewhere
      in this registration statement.
 
 All
forward-looking statements attributable to us are expressly qualified in their
entirety by these and other factors. We undertake no obligation to update or
revise these forward-looking statements, whether to reflect events or
circumstances after the date initially filed or published, to reflect the
occurrence of unanticipated events or otherwise.
 
  3
  PART
I
 
 ITEM
1. BUSINESS AND PROPERTIES
 
 As used
in this annual report, “we”, “us”, “our”, “Evolution”, “Company” or “our
company” refers to Evolution Resources, Inc.
 
 COMPANY
HISTORY
 
 Our
Company
 
 Evolution
is a development stage company focused on the advancement of the production of
cellulosic ethanol and biodiesel. Evolution’s business plan contains certain
proposed projects that if successfully implemented and completed, will leverage
existing assets and infrastructure to (a) significantly shorten the time frame
required to establish commercial scale cellulosic ethanol production facilities
and (b) “repurpose” certain industrial facilities to provide key biofuels
production components.
  Company
History
 
 Evolution,
formerly BBN Global Consulting, Inc. (“BBN”) was incorporated on March 15,
2005 under the laws of the State of Nevada. It was formed to be a consulting
firm with a mission of providing strategic business planning and management
consulting to small domestic companies and to assist medium sized companies in
China and Brazil to establish a business presence in the United States. As of
November 1, 2007 the Company had ceased operations, and all previous
business activities were discontinued. After the closing of the merger on May
27, 2009, as described below, BBN changed its name from BBN Global Consulting,
Inc. to Evolution Resources, Inc. to reflect the activities of our principal
business. Because of the merger, BBN ceased to be a “shell company” as that term
is defined in Rule 405 of the Securities Act and Rule 12b-2 of the
Exchange Act.
  On
May 27, 2009 (the “Merger Date”), BBN, Evolution and Evolution Resources
Acquisition Corporation (“ERAC”), a wholly-owned subsidiary of Evolution entered
into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the
terms of the Merger Agreement, on May 27, 2009 ERAC merged with and into
Evolution, with Evolution remaining as the surviving corporation (the
“Merger”).
  As a
result of the ownership interests of the former shareholders of Evolution, for
financial statement reporting purposes, the merger between BBN and Evolution has
been treated as a reverse acquisition with Evolution deemed the accounting
acquirer and BBN deemed the accounting acquiree under the purchase method of
accounting in accordance with ASC 805-10-40 “Business Combinations – Reverse
Acquisitions.”  The reverse merger is deemed a capital transaction and
the net assets of Evolution (the accounting acquirer) are carried forward to BBN
(the legal acquirer and the reporting entity) at their carrying value before the
combination. The acquisition process utilizes the capital structure of BBN and
the assets and liabilities of Evolution which are recorded at historical cost.
The equity of BBN is the historical equity of Evolution retroactively restated
to reflect the number of shares issued by BBN in the transaction.
  On
May 27, 2009, in connection with the Merger, the Company amended its
articles of incorporation to change its name from BBN Global Consulting, Inc. to
Evolution Resources. Inc.
  As of the
closing of the Merger, each issued and outstanding share of common stock of
Evolution was converted into the right to receive 15,296,077 shares of the
common stock of BBN. Following (i) the closing of the Merger and (ii) the
cancellation of 7,975,000 shares of BBN’s common stock in connection with the
Merger, the former shareholders of Evolution hold approximately 89.55% of the
common stock of BBN.
  4
 Our
principal offices are located at 143 Yazoo Ave, Clarksdale, Mississippi 38614,
and our telephone number is (662) 655-1077.   Our website is
www.evoresources.com
  Industry
Overview
 
 On
December 19, 2007 President Bush signed into law the Energy Independence and
Security Act of 2007 (Energy Act of 2007).  The Energy Act of 2007
provides for an increase in the supply of alternative fuel sources by setting a
mandatory Renewable Fuel Standard (RFS) requiring fuel producers to use at least
36 billion gallons of biofuel by 2022, 16 billion gallon of which must come from
cellulosic derived fuel.  Additionally, the Energy Act of 2007 called
for reducing U.S. demand for oil by setting a national fuel economy standard of
35 miles per gallon by 2020 – which will increase fuel economy standards by 40
percent and save billions of gallons of fuel.
 
 In June
2008 the Food, Conservation and Energy Act of 2008 (Farm Bill) was signed into
law.  The 2008 Farm Bill also modified existing incentives, including
ethanol tax credits and import duties and established a new integrated tax
credit of $1.01/gallon for cellulosic biofuels. The Farm Bill also
authorized new biofuels loan and grant programs, which will be subject to
appropriations, likely starting with the FY2010 budget request.
 
 Historically,
producers and blenders had a choice of fuel additives to increase the oxygen
content of fuels. MTBE (methyl tertiary butyl ether), a petroleum-based
additive, was the most popular additive, accounting for up to 75% of the fuel
oxygenate market. However, in the United States, ethanol is replacing MTBE as a
common fuel additive. While both increase octane and reduce air pollution, MTBE
is a presumed carcinogen which contaminates ground water. It has already been
banned in California, New York, Illinois and 16 other states. Major oil
companies have voluntarily abandoned MTBE and it is scheduled to be phased out
under the Energy Policy Act. As MTBE is phased out, we expect demand for ethanol
as a fuel additive and fuel extender to rise. A blend of 5.5% or more of
ethanol, which does not contaminate ground water like MTBE, effectively complies
with U.S. Environmental Protection Agency requirements for reformulated
gasoline, which is mandated in most urban areas.
 
 Ethanol
is a clean, high-octane, high-performance automotive fuel commonly blended in
gasoline to extend supplies and reduce emissions. In 2004, according to the
American Coalition for Ethanol, 3% of all United States gasoline was blended
with some percentage of ethanol. The most common blend is E10, which contains
10% ethanol and 90% gasoline. There is also growing federal government support
for E85, which is a blend of 85% ethanol and 15% gasoline.
 
 Ethanol
is a renewable fuel produced by the fermentation of starches and sugars such as
those found in grains and other crops. Ethanol contains 35% oxygen by weight
and, when combined with gasoline, it acts as an oxygenate, artificially
introducing oxygen into gasoline and raising oxygen concentration in the
combustion mixture with air. As a result, the gasoline burns more completely and
releases less unburnt hydrocarbons, carbon monoxide and other harmful exhaust
emissions into the atmosphere. The use of ethanol as an automotive fuel is
commonly viewed as a way to reduce harmful automobile exhaust emissions. Ethanol
can also be blended with regular unleaded gasoline as an octane booster to
provide a mid-grade octane product which is commonly distributed as a premium
unleaded gasoline.
 
 Studies
published by the Renewable Fuel Association indicate that approximately 8.1
billion gallons of ethanol were consumed in 2008 in the United States, and every
automobile manufacturer approves and warrants the use of E10. Because the
ethanol molecule contains oxygen, it allows an automobile engine to more
completely combust fuel, resulting in fewer emissions and improved performance.
Fuel ethanol has an octane value of 113 compared to 87 for regular unleaded
gasoline. Domestic ethanol consumption has tripled in the last eight years, and
consumption increases in some foreign countries, such as Brazil, are even
greater in recent years. For instance, 40% of the automobiles in Brazil operate
on 100% ethanol, and others use a mixture of 22% ethanol and 78% gasoline. The
European Union and Japan also encourage and mandate the increased use of
ethanol.
 
 For every
barrel of ethanol produced, the American Coalition for Ethanol estimates that
1.2 barrels of petroleum are displaced at the refinery level, and Informa
Economics has calculated that over 64 billion gallons of ethanol have been
produced in the United States since 1980.  As of October 2009, Informa
Economics estimates that there is a total U.S. annual ethanol production
capacity of 13.131 billion gallons, with 1.2 billion of that capacity currently
idle.   According to a Mississippi State University Department of
Agricultural Economics Staff Report in August 2003, a 10% ethanol blend results
in a 25% to 30% reduction in carbon monoxide emissions by making combustion more
complete. The same 10% blend lowers carbon dioxide emissions by 6% to
10%.
 
 In the
United States, ethanol is primarily made from starch crops, principally from the
starch fraction of corn. Consequently, most of the production plants are
concentrated in the grain belt of the Midwest, principally in Illinois, Iowa,
Minnesota, Nebraska and South Dakota.
  5
 
 In the
United States, there are two principal commercial applications for ethanol. The
first is as an oxygenate additive to gasoline to comply with clean air
regulations. The second is as a voluntary substitute for gasoline - this is a
purely economic choice by gasoline retailers who may make higher margins on
selling ethanol-blended gasoline, provided ethanol is available in the local
market. The U.S. gasoline market is currently approximately 170 billion gallons
annually, so the potential market for ethanol (assuming only a 10% blend) is 17
billion gallons per year. Increasingly, motor manufacturers are producing
flexible fuel vehicles (particularly sports utility vehicle models) which can
run on ethanol blends of up to 85% (known as E85) in order to obtain exemptions
from fleet fuel economy quotas. There are now in excess of 5 million flexible
fuel vehicles on the road in the United States and automakers will produce
several millions per year, offering further potential for significant growth in
ethanol demand.
 
 Cellulose
to Ethanol Production
 
 In a 2002
report, “Outlook for Biomass Ethanol Production Demand,” the U.S. Energy
Information Administration found that advancements in production technology of
ethanol from cellulose could reduce costs and result in production increases of
40% to 160% by 2010. Biomass (cellulosic feedstock) includes agricultural waste,
woody fibrous materials, forestry residues, waste paper, municipal solid waste
and most plant material. Like waste starches and sugars, they are often
available for relatively low cost, or are even free. However, cellulosic
feedstock is more abundant, global and renewable in nature. These waste streams,
which would otherwise be abandoned, land-filled or incinerated, exist in
populated metropolitan areas where ethanol prices are higher.
 
 Sources
and Availability of Raw Materials
 
 The U.S.
DOE and USDA in its April 2005 report “Biomass as Feedstock for a Bioenergy and
Bioproducts Industry: The Technical Feasibility of a Billion-Ton Annual Supply”
found that about one billion tons of cellulosic materials from agricultural and
forest residues are available to produce more than one-third of the current U.S.
demand for transportation fuels.
 
 Operational
Plan
  Evolution’s
management believes the renewable energy sector is in a unique
situation.  The American Recovery and Reinvestment Act of 2009 have
five main objectives in spending the $787 billion dollars that has been
allotted.  The objectives are:
 1.           To
preserve and create jobs and to promote economic recovery
 2.           To
assist those most impacted by the recession
 3.           To
provide investments needed to increase economic efficiency by spurring
technological advances in science and health
 4.           To
invest in transportation, environmental protection, and other infrastructure
that will provide long-term economic benefits
 5.           To
stabilize State and local government budgets in order to minimize and avoid
reduction in essential services and counterproductive state and local tax
increases.
 The
recession hit the renewable energy industry very hard.  The loss of
jobs and reduction in incomes impacted the US miles driven by billions of miles.
This took the pressure off the demand for gasoline thereby creating an
oversupply thus significantly reducing the price at the pump. This left a number
of renewable energy projects that were not well capitalized in financial
trouble.   There are some assets that are in the right locations
and priced to allow for the potential of a significant increase in value when
the economy returns and the demand for energy increases.
 
 Evolution
Resources has researched and discovered a number of these opportunities in the
States of Washington, Mississippi, and Louisiana.  The Company’s
management believes it can repurpose and upgrade the assets acquired at a
significant discount.  The team is also in a position to test new
technologies and to provide renewable energy at a cost competitive
price.  New grant and low interest loan programs are available from
the Federal and State agencies through the Department of Energy, Department of
Agriculture, Department of Defense and State Economic Development agencies that
were allocated stimulus money to revitalize and expand the renewable energy
industry.  These programs will allow not only significant leveraging
of the equity dollars but matching of these dollars with grants on a one for one
basis and in some cases a five to one match.
  6
 
 The
Company is concentrating the majority of its efforts on projects in Washington
state and the Louisiana Delta area, where it has garnered significant
governmental support from these two states.  Economic conditions in
this region have deteriorated to the extent that changes in certain industrial
sectors are critical for the livelihood of many of the towns and
cities.  Evolution is actively engaged with state and local
governments, as well as regional economic development authorities, who are
assisting with the development of the Company’s project plans.
 
 The
Company’s business plan contains certain proposed projects that will leverage
existing distressed assets and infrastructure to:
 
 a)           Significantly
shorten the time frame required to establish commercial scale cellulosic ethanol
production facilities
 b)           “Repurpose”
distressed industrial facilities to provide key biofuels production
systems
 c)           Beat
the competition to profitable production of renewable fuels
 
 The
projects involve the production of cellulosic ethanol – ethanol produced from
biomass sources such as wood chips, straws, and other plant matter.
  We are
currently focused on building a team of industry experts to advise and assist
our management as the project plans are developed. The team includes members
from the scientific, financial, legal, and government policy communities who are
all well experienced in the field of renewable fuels.
  The
projects that the Company is pursuing include the following:
  ·
              Development
      of a 4 million gallon per year (mmgy) cellulosic ethanol production
      facility located in an area with a large availability of straw biomass in
      the Moses Lake, Washington area. The project is attractive as the initial
      cellulosic facility due to the fact that the site for a proposed facility
      has existing ethanol components and equipment, initial design work for the
      project has already been completed, and certain permits for ethanol
      production formerly existed at the site. These elements, combined with the
      goal of engineering and constructing a relatively small commercial scale
      production facility, provide the potential to complete the project and
      bring it online in as little as seven
months.
  ·
              Development
      of a 60 mmgy cellulosic ethanol production facility to be located adjacent
      to an existing wood pulping facility. The project will leverage the
      existing pulping assets for the handling of large quantities of wood
      biomass and the capability to produce pulp cellulose, and will utilize a
      proprietary technology to convert the cellulose to fermentable
      sugars.  Although the Company is in negotiations with the owners
      of the pulp mill related to this project, it does not have any definitive
      agreements to acquire, or secure access to the land and facilities
      involved that would be necessary to develop this
  project.
  Critical
to the Company’s project plans is the establishment of a team of expert
engineers and experienced consultants well versed in the renewable fuels
sector.  Pursuant to this goal, Evolution has contracted certain
parties to work with the Company in the development of its business plan, the
acquisition or licensing of suitable technologies, financial analysis and
modeling, and the development of strategic relationships.
  In order
to fund the development of the projects, acquire certain assets, and perform the
required engineering and construction work involved with each project, Evolution
will need to raise approximately $200 million in a mix of equity, debt, and
federal and state government grants/guarantees.
  Evolution
has completed the acquisition of Liquafaction Corporation that will allow the
Company to pursue the 4 million gallon per year cellulosic ethanol project
described in the first bullet point above, which is located in Moses Lake, WA,
an area that contains a high concentration of wheat straw.  This
project will be relatively small in scope and will make use of existing assets
at the location that were at one time used for producing ethanol from corn and
barley feedstocks.  Accordingly, Evolution envisions this project as
an ideal pilot project for future commercial scale cellulosic ethanol projects
in that the time to engineer and construct the site will be relatively short so
that the cellulosic technologies may be vetted on the order of months, rather
than years.  The Company has contracted with Bio-Process Innovation,
Inc. (“BPI”), a company with proprietary technologies for the conversion of
renewable resources, (biomass, starches, sugars, MSW, and food processing wastes
streams) to higher value fuels and chemicals.  Dr. Clark Dale, an
experienced expert in fermentation and cellulosic processes, is BPI’s President,
and is the technical director for the Moses Lake project.
  7
  Evolution
has applied for a U.S. Department of Energy “Demonstration of Integrated
Biorefinery Operations” grant to assist with the financing of the Moses Lake
project.  Additionally, Evolution has applied for a $1 million loan
from the state of Washington through its Energy Efficiency and Renewable Energy
Loan and Grant Program.  Evolution has subsequently learned that that
it has been selected as a recipient of the loan, and is now in the process of
finalizing the loan contract with the Washington State Economic Development
office.
  Another
important member of the team that the Company has assembled is Mr. Tom Byrne,
principle of Byrne & Company, Ltd., with whom Evolution has a consulting
arrangement.  Byrne & Company has over 29 years experience within
various disciplines of the renewable energy industry, specializing in providing
services such as feasibility studies, business plans, project development and
management, and financial modeling.  They have extensive experience in
renewable energy projects involving grain-based ethanol, biodiesel, algae to
energy, and cellulosic to energy.  Byrne & Company's core
competency is the ability to understand scientific, marketing, management, and
transportation processes and concepts, and to utilize that understanding in
building a financial model to test the commercial viability of renewable energy
projects.
  Evolution
has also participated in a research consortium called the “Wood Ethanol Research
Consortium” (“WERC”), which was formed to provide a technical and economic
analysis of repurposing pulp and paper mills for the production of ethanol from
cellulosic sources.  The WERC has drawn strong industrial support over
the past three years for the innovative concept of repurposing uneconomical
Kraft pulp mills at low capital and high efficiency to profitable ethanol
plants.  The WERC was led in part by Dr. Richard Phillips, the former
senior vice president of technology for International Paper Company, currently
an adjunct professor at North Carolina State University, which hosted the
WERC.  The Company currently has a consulting arrangement with Dr.
Phillips. During his 34 years with International Paper, Dr. Phillips worked in a
variety of manufacturing and technical assignments. As senior vice president of
technology, Phillips had responsibility for Manufacturing and Engineering
Services, Research and Development, Safety and Environment.  In
addition, Phillips was Project Director for International Paper’s Pulp and Paper
mill and eucalyptus plantation project in Brazil.  He has authored
more than 30 journal articles and holds 8 United States patents, with two new
patent applications filed related to WERC.
  Evolution’s
management team has spent the last four years working in the renewable fuels
industry and through this experience has identified the opportunities described
above.  It has built a team of industry experts to advise and assist
the Company’s management as the project plans are developed. The team includes
members from the scientific, financial, legal, and government policy communities
who are all well experienced in the field of renewable fuels.
 
 ITEM
1A. RISK FACTORS
 
 We
have a no operating history, and our business may not be
successful.
  We are
currently in an early stage of our business plan. We have no operating history
with respect to the construction and operation of biodiesel refineries. Our
limited operating history makes it difficult for potential investors to evaluate
our business. Therefore, our proposed operations are subject to all of the risks
inherent in the initial expenses, challenges, complications and delays
frequently encountered in connection with the formation of any new business, as
well as those risks that are specific to the biodiesel industry in general.
Investors should evaluate an investment in our company in light of the problems
and uncertainties frequently encountered by companies attempting to develop
markets for new products, services and technologies. Despite best efforts, we
may never overcome these obstacles to achieve financial success.
  Our
business is speculative and dependent upon the implementation of our business
plan, as well as our ability to enter into agreements with third parties for
necessary financing, the provision of necessary feedstock sources, engineering,
procurement and construction services and the sale and distribution of our
biodiesel fuel on terms that will be commercially viable for us. There can be no
assurance that our efforts will be successful or result in revenue or profit.
There is no assurance that we will earn significant revenues or that our
investors will not lose their entire investment.
  We
have yet to attain profitable operations and because we will need additional
financing to fund our activities, there is substantial doubt about our ability
to continue as a going concern.
  Our
ability to continue to operate as a going concern is fully dependent upon our
ability to obtain sufficient financing to continue our development and
operational activities. The ability to achieve profitable operations is in
direct correlation to our ability to raise sufficient financing. It is important
to note that even if the appropriate financing is received, there is no
guarantee that we will ever be able to operate profitably or derive any
significant revenues from our operation. We will be required to raise additional
financing to fully implement our entire business plan.
  8
  There is
no guarantee that we will ever operate profitably or even receive positive cash
flows from full operations.
  Need
for ongoing financing
  Our
business plan depends on the completion of our cellulosic based ethanol
production project. Our proposed cellulosic based ethanol facilities will
require approximately $200 million of funding to execute. We will be
relying on additional financing, and would benefit from funding from such
sources as The Energy Policy Act grants and loan guarantee programs. We are
currently in discussions with potential sources of financing but no definitive
agreements are in place. If we cannot achieve the requisite financing or
complete the projects as anticipated, this could adversely affect our business,
the results of our operations, prospects and financial condition.
  The
continued credit crisis and related turmoil in the global financial system has
had, and may continue to have, an impact on our business and our financial
condition. We may face significant challenges if conditions in the financial
markets do not improve or if there is any other disruptions to the global
economy on a short or long tem basis.  We currently have no
commitments for funding and there can be no assurance that we will be able to
obtain additional funding in the future from either debt or equity financings,
bank loans, collaborative arrangements or other sources on terms acceptable to
us, or at all. If adequate funds are not available or are not available on
acceptable terms when required, we may be required to significantly curtail our
operations or may not be able to fund expansion, take advantage of unanticipated
acquisition opportunities, develop or enhance services or products or respond to
competitive pressures. Such inability could have a material adverse effect on
our business, results of operations and financial condition. If additional funds
are raised through the issuance of equity or convertible debt securities,
the percentage ownership of our shareholders will be reduced, shareholders
may experience additional dilution, and such securities may have rights,
preferences and privileges senior to those of our common stock. If we borrow
money, we will have to pay interest and may also have to agree to restrictions
that limit our operating flexibility. If we are unable to obtain adequate
financing, we may have to curtail business operations, which would have a
material negative effect on operating results and would most likely result in a
lower stock price.
  Our
ability to access the capital markets may be severely restricted at a time when
we would like, or need, to raise capital, which could have an adverse impact on
our ability to meet our capital commitments and flexibility to react to changing
economic and business conditions.  The changing credit markets due to
the past and current credit crisis could have a negative impact on our lenders
or our customers, causing them to fail to meet their obligations to
us.  Additionally, demand for our services and products depends on
activity and expenditure levels in the ethanol industry, which are negatively
impacted by reduced availability of credit and private or public financing
alternatives, lack of consumer confidence and falling oil and gas
prices.
 
 Our
results of operations, financial condition and business outlook are highly
dependent on commodity prices, which are subject to significant volatility and
uncertainty, and the availability of supplies.
  Our
results are substantially dependent on many different commodity prices,
especially prices for biodiesel, ethanol, petroleum diesel, feedstock and
materials used in the construction of our refineries. As a result of the
volatility of the prices for these items, our results may fluctuate
substantially and we may experience periods of declining prices for our products
and increasing costs for our raw materials, which could result in operating
losses.
  Biodiesel
is a commodity whose price is determined based on the price of petroleum diesel,
world demand, supply and other factors, all of which are beyond our control.
World prices for biodiesel have fluctuated widely in recent years. We expect
that prices will continue to fluctuate in the future. Price fluctuations will
have a significant impact upon our revenue, the return on our investment in
biodiesel refineries and on our general financial condition. Price fluctuations
for biodiesel may also affect the investment market, and our ability to raise
investor capital. Although market prices for biodiesel rose to near-record
levels during 2005 and have gone up since then, they have drastically decreased
in the past twelve months. Future decreases in the prices of biodiesel or
petroleum diesel may have a material adverse effect on our financial condition
and future results of operations.
  The price
of feedstock is influenced by market demand, weather conditions, animal
processing and rendering plant decisions, factors affecting crop yields, farmer
planting decisions and general economic, market and regulatory factors. These
factors include government policies and subsidies with respect to agriculture
and international trade, and global and local demand and supply. The
significance and relative effect of these factors on the price of feedstock is
difficult to predict. Any event that tends to negatively affect the supply of
feedstock, such as increased demand, adverse weather or crop disease, could
increase feedstock prices and potentially harm our business. In addition, we may
also have difficulty, from time to time, in physically sourcing feedstock on
economical terms due to supply shortages or quality control issues of feedstock
providers. Such a shortage or quality control issues could require us to suspend
operations until feedstock of acceptable quality is available at economical
terms, which would have a material adverse effect on our business, results of
operations and financial position. The price we pay for feedstock at a facility
could increase if an additional multi-feedstock biodiesel production facility is
built in the same general vicinity or if alternative uses are found for lower
cost feedstocks.
  9
 Changes
in the price and availability of our feedstock may hinder our ability to
generate revenues and may result in plant shutdowns.
  Because
there is little or no correlation between the price of feedstock and the price
of biodiesel, we cannot pass along increased feedstock prices to our biodiesel
customers. As a result, increased feedstock prices may result in decreased
profits and we may even be forced to shut down our plants, either temporarily or
permanently. If we continue to experience a sustained period of high feedstock
prices, such pricing may reduce our ability to generate revenues and our profit
margins will decrease, and these decreases may be significant.
  The
raw materials and energy necessary to produce cellulosic ethanol may be
unavailable or may increase in price, adversely affecting our business, results
of operations and financial condition.
  The
principal raw material we plan to use to produce ethanol and its
co-products is biomass from wood chips, wheat straw, and other sources.
Changes in the price of biomass can significantly affect our business. In
general, rising feedstock prices result in lower profit margins and,
therefore, represent unfavorable market conditions. This is especially true
since market conditions generally do not allow us to pass along
increased biomass prices to our customers because the price of ethanol is
primarily determined by other factors, such as the supply of ethanol and the
price of oil and gasoline. At certain levels, biomass prices may even make
ethanol production uneconomical depending on the prevailing price of
ethanol.
  The price
of biomass can be influenced by general economic, market and
regulatory factors. These factors include weather conditions, crop conditions
and yields, farmer planting decisions, government policies and subsidies with
respect to agriculture and international trade and global supply and demand. The
significance and relative impact of these factors on the price of biomass
is difficult to predict. Any event that tends to negatively impact the supply
of biomass will tend to increase prices and potentially harm our business.
Additional increases in cellulosic ethanol production could further boost
demand for biomass and result in increases in biomass prices. The production of ethanol also requires a significant and
uninterrupted supply of other raw materials and energy, primarily water,
electricity and natural gas. The prices of electricity and natural gas have
fluctuated significantly in the past and may fluctuate significantly in the
future. Local water, electricity and gas utilities may not be able to reliably
supply the water, electricity and natural gas that our facilities will need or
may not be able to supply those resources on acceptable terms. Any disruptions
in the ethanol production infrastructure network, whether caused by labor
difficulties, earthquakes, storms, other natural disasters or human error or
malfeasance or other reasons, could prevent timely deliveries of biomass or
other raw materials and energy and may require us to halt production which could
have a material adverse effect on our business, results of operations and
financial condition.
  The
market price of ethanol is volatile and subject to large fluctuations, which may
cause our profitability or losses to fluctuate significantly.
  The
market price of ethanol is volatile and subject to large fluctuations. The
market price of ethanol is dependent upon many factors, including the supply of
ethanol and the price of gasoline, which is in turn dependent upon the price of
petroleum which is highly volatile and difficult to forecast. Fluctuations in
the market price of ethanol may cause our profitability or losses to fluctuate
significantly.
  The
United States ethanol industry is highly dependent upon a myriad of federal and
state legislation and regulation and any changes in such legislation or
regulation could have a material adverse effect on our results of operations and
financial condition.
  The
production of ethanol is made significantly more competitive by federal tax
incentives. The federal excise tax incentive program allows gasoline
distributors who blend ethanol with gasoline to receive a federal excise tax
rate reduction for each blended gallon they sell regardless of the blend rate.
The current federal excise tax on gasoline is $0.184 per gallon, and is paid at
the terminal by refiners and marketers. If the fuel is blended with ethanol, the
blender may claim a $0.45 per gallon tax credit for each gallon of ethanol used
in the mixture, and up to $1.01 per gallon if produced from cellulosic sources.
The federal excise tax incentive program may not be renewed prior to its
expiration in 2010, or if renewed, it may be renewed on terms significantly less
favorable than current tax incentives. The elimination or significant reduction
in the federal excise tax incentive program could have a material adverse effect
on our results of operations.
  10
  Waivers
or repeal of the national RFS minimum levels of renewable fuels included in
gasoline could have a material adverse affect on our results of
operations.
  Shortly
after passage of the Energy Independence and Security Act of 2007, which
increased the minimum mandated required usage of ethanol, a Congressional
sub-committee held hearings on the potential impact of the new national RFS on
commodity prices. While no action was taken by the sub-committee towards repeal
of the new national RFS, any attempt by Congress to re-visit, repeal or grant
waivers of the new national RFS could adversely affect demand for ethanol and
could have a material adverse effect on our results of operations and financial
condition.
  Strategic
relationships on which we may rely are subject to change.
  Our
ability to identify and enter into commercial arrangements with feedstock
suppliers, construction contractors, equipment fabricators, transportation,
logistics and marketing services providers and biodiesel customers will depend
on developing and maintaining close working relationships with industry
participants. Our success in this area will also depend on our ability to select
and evaluate suitable projects as well as to consummate transactions in a highly
competitive environment. These realities are subject to change and may impair
our ability to grow.
  To
develop our business, we will use the business relationships of management in
order to form strategic relationships. These relationships may take the form of
joint ventures with other private parties or local government bodies,
contractual arrangements with other companies, including those that supply
feedstock that we will use in our business, or minority investments from third
parties. There can be no assurances that we will be able to establish these
strategic relationships, or, if established, that the relationships will be
maintained, particularly if members of our management leave our company. In
addition, the dynamics of our relationships with strategic partners may require
us to incur expenses or undertake activities we would not otherwise be inclined
to incur or undertake in order to fulfill our obligations to
these partners or maintain these relationships. If we do not successfully
establish or maintain strategic relationships, our business may be negatively
affected.
  Competition
may impair our success.
  We face
competition from other producers of biodiesel and ethanol with respect to the
procurement of feedstock, and biomass, respectively, obtaining suitable
properties for the construction of biodiesel and ethanol plants and selling
biodiesel, ethanol and related products. Such competition could be intense,
driving up the cost of feedstock and biomass, and driving down the price for our
products. Competition will likely increase as the price of energy, and in
particular oil, rises. Additionally, new companies are constantly entering the
market, increasing the competition.
  Larger
foreign-owned and domestic companies who have been engaged in this business for
substantially longer periods of time, such as vertically integrated oil,
agricultural and food supply companies, including Conoco-Phillips, Chevron,
Tyson, Purdue, ADM, Cargill and Bunge, and independent companies such as
Imperium Renewables, Inc. and Green Earth Fuels, LLC all have access to greater
resources. The same is true for more established companies who decide to enter
into our industry. These companies may have greater success in the recruitment
and retention of qualified employees, as well as in conducting their own
refining and fuel marketing operations, and may have greater access to feedstock
and biomass, market presence, economies of scale, financial resources and
engineering, technical and marketing capabilities, which may give them a
competitive advantage. In addition, actual or potential competitors may be
strengthened through the acquisition of additional assets and interests. If we
are unable to compete effectively or adequately respond to competitive
pressures, this may materially adversely affect our results of operation and
financial condition and could also have a negative impact on our ability to
obtain additional capital from investors.
  Our
business is subject to local legal, political, and economic factors which are
beyond our control.
  We
believe that the current political environment for construction of biodiesel and
ethanol plants is sufficiently supportive to enable us to plan and implement our
operations. However, there are risks that conditions will change in an adverse
manner. These risks include, but are not limited to, laws or policies affecting
mandates or incentives to promote the use of biodiesel, ethanol, environmental
issues, land use, air emissions, water use, zoning, workplace safety,
restrictions imposed on the biodiesel fuel industry such as restrictions on
production, substantial changes in product quality standards, restrictions on
feedstock supply, price controls, and import and/or export controls. Any changes
in biodiesel fuel, ethanol fuel, financial incentives, investment regulations,
policies or a shift in political attitudes are beyond our control and may
adversely affect our business and future financial results.
  11
 Environmental
risks and regulations may adversely affect our business.
  All
phases of designing, constructing and operating biodiesel and ethanol refineries
present environmental risks and hazards. We are subject to environmental
regulation implemented or imposed by a variety of federal, state and municipal
laws and regulations as well as international conventions. Among other things,
environmental legislation provides for restrictions and prohibitions on spills
and discharges (particularly with respect to plant wastewater discharge), as
well as emissions of various substances produced in association with biodiesel
and ethanol fuel operations. Legislation also requires that facility sites be
operated, maintained, abandoned and reclaimed in such a way that would satisfy
applicable regulatory authorities. Compliance with such legislation can require
significant expenditures and a breach may result in the imposition of fines and
penalties, some of which may be material. Environmental legislation is evolving
in a manner we expect may result in stricter standards and enforcement, larger
fines and liability, as well as potentially increased capital expenditures and
operating costs.
  The
presence or discharge of pollutants in or into the air, soil or water may give
rise to liabilities to governments and third parties and may require us to incur
costs to remedy such presence or discharge. If we are unable to remediate such
conditions economically or obtain reimbursement or indemnification from third
parties, our financial condition and results of operations could be adversely
affected.
  Lack
of diversification may increase our risk.
  Larger
companies have the ability to manage their risk through diversification.
However, we lack diversification, in terms of both the nature and geographic
scope of our business. As a result, we could potentially be impacted more by
factors affecting the biodiesel and ethanol industries or the regions in which
we operate than we would if our business were more diversified.
  Penalties
we may incur could impair our business.
  Failure
to comply with government regulations could subject us to civil and criminal
penalties require us to forfeit property rights and may affect the value of our
assets or our ability to conduct our business. We may also be required to take
corrective actions, including, but not limited to, installing additional
equipment, which could require us to make substantial capital expenditures. We
could also be required to indemnify our employees in connection with any
expenses or liabilities that they may incur individually in connection with
regulatory action against them. These could result in a material adverse effect
on our prospects, business, financial condition and our results of
operation.
  Our
business will suffer if we cannot obtain or maintain necessary permits or
licenses.
  Our
operations will require licenses, permits and in some cases renewals of these
licenses and permits from various governmental authorities. Our ability to
obtain, sustain, or renew such licenses and permits on acceptable, commercially
viable terms are subject to change, as, among other things, the regulations
and policies of applicable governmental authorities may change. Our
inability to obtain or extend a license or a loss of any of these licenses or
permits may have a material adverse effect on our operations and financial
condition.
  Technological
advances could cause our plants to become uncompetitive or
obsolete.
  It is
possible that technological advances in the processes and procedures for
processing biodiesel and ethanol could make the processes and procedures that we
utilize at our plants less efficient or obsolete. Our plants will be
single-purpose facilities and have no use other than the production of biodiesel
and ethanol, as the case may be, and associated products. Much of the cost of
each plant will be attributable to the cost of production technology which may
be impractical or impossible to update. If we are unable to adopt or incorporate
technological advances, our biodiesel and ethanol production methods could be
less efficient than those of our competitors. If our competitors develop, obtain
or license technology that is superior to ours or that makes our technology
obsolete, we may be required to incur significant costs to enhance or acquire
new technology so that our biodiesel and ethanol production remains competitive.
Alternatively, we may be required to seek third-party licenses, which may be
unavailable and/or could result in significant expenditures. These costs could
negatively impact our financial performance by increasing our operating costs
and reducing our net income.
  12
 If
demand for biodiesel fails to grow at the same rate as planned supply, the
excess production capacity will adversely impact our financial
condition.
  Based
upon estimates by the National Biodiesel Board, the estimated annual production
capacity of plants currently under construction far exceeds the current
estimated annual consumption of biodiesel. In a study prepared for the National
Biodiesel Board, LECG, LLC predicts that the national demand for biodiesel fuel
will increase to only 650 million gallons by 2015, far below the expected
production capacity. If biodiesel production capacity continues to expand at its
current pace, and demand does not grow to meet the available supply, excess
production capacity will result and drive biodiesel prices lower.
  Our
business may suffer if we are unable to attract or retain talented
personnel.
  As of
October 31, 2009, we had four full-time equivalent employees. Our success will
depend in large measure on the abilities, expertise, judgment, discretion,
integrity, and good faith of our management, as well as other personnel. We have
a relatively small but very effective management team, and the loss of a key
individual or inability to attract suitably qualified replacements or additional
staff could adversely affect our business. We may also experience difficulties
in certain jurisdictions in our efforts to obtain and/or retain suitably
qualified staff willing to work in such jurisdictions. Our success depends on
the ability of management and employees to interpret market and technical data
correctly, as well as to respond to economic, market and other conditions. No
assurance can be given that our key personnel will continue their association or
employment with us or that replacement personnel with comparable skills will be
found. If we are unable to attract and retain key personnel and additional
employees, our business may be adversely affected.
  Competition
from other sources of fuel may decrease the demand for our biodiesel and
ethanol.
  Diesel
fuel prices per gallon remain at levels below or equal to the price of
biodiesel. In addition, numerous other domestic fuels are currently under
development and may prove to be more cost-efficient and displace biodiesel
and/or ethanol as an environmentally-friendly alternative. If diesel prices do
not continue to increase or if a new fuel is developed to
compete with biodiesel and ethanol, it may be difficult to market our fuels,
which could result in decreased revenues.
  Competition
from other diesel fuel lubricity additives may be a less expensive alternative
to our biodiesel, which would cause us to lose market share and adversely affect
our ability to generate revenues.
  The EPA
has issued regulations to reduce the amount of sulfur in diesel fuel in order to
improve air quality. The removal of sulfur from diesel fuel reduces its
lubricity which must be corrected with fuel additives, such as biodiesel which
has inherent lubricating properties. Our proposed biodiesel plants are expected
to compete with producers of other diesel additives having similar lubricity
values as biodiesel, such as petroleum-based lubricity additives. Many major oil
companies produce these petroleum-based lubricity additives and strongly favor
their use because they may be used in lower concentrations than biodiesel. In
addition, much of the infrastructure in place is for petroleum-based additives.
As a result, petroleum-based additives may be more cost-effective than
biodiesel. Therefore, it may be difficult to market our biodiesel as a lubricity
additive, which could adversely affect our ability to generate
revenues.
  Risks
Related to Our Common Stock; Liquidity Risks
  Pursuant
to the Merger, we became a public company that is subject to the reporting
requirements of federal securities laws, which can be expensive and may divert
resources from other projects, thus impairing its ability to grow.
  As a
result of the Merger, we became a public reporting company and, accordingly,
subject to the information and reporting requirements of the Securities Exchange
Act of 1934 and other federal securities laws, including compliance with the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). The costs of preparing
and filing annual and quarterly reports, proxy statements and other information
with the SEC (including reporting of the Merger) and furnishing audited reports
to stockholders will cause our expenses to be higher than they would have been
if we remained privately held and did not consummate the Merger.
  It may be
time consuming, difficult and costly for us to develop and implement the
internal controls and reporting procedures required by the Sarbanes-Oxley Act.
We may need to hire additional financial reporting, internal controls and other
finance personnel in order to develop and implement appropriate internal
controls and reporting procedures. If we are unable to comply with the internal
controls requirements of the Sarbanes-Oxley Act, then we may not be able to
obtain the independent accountant certifications required by such act, which may
preclude us from keeping our filings with the SEC current.
  13
  If
we fail to establish and maintain an effective system of internal control, we
may not be able to report our financial results accurately or to prevent fraud.
Any inability to report and file our financial results accurately and timely
could harm our reputation and adversely impact the trading price of our common
stock.
  Effective
internal control is necessary for us to provide reliable financial reports and
prevent fraud. If we cannot provide reliable financial reports or prevent fraud,
we may not be able to manage our business as effectively as we would if an
effective control environment existed, and our business and reputation with
investors may be harmed. As a result, our small size and any current internal
control deficiencies may adversely affect our financial condition, results of
operation and access to capital. We have not performed an in-depth analysis to
determine if historical un-discovered failures of internal controls exist, and
may in the future discover areas of our internal control that need
improvement.
  Public
company compliance may make it more difficult for us to attract and retain
officers and directors.
  The
Sarbanes-Oxley Act and new rules subsequently implemented by the SEC have
required changes in corporate governance practices of public companies. As a
public company, we expect these new rules and regulations to increase our
compliance costs in 2009 and beyond and to make certain activities more time
consuming and costly. As a public company, we also expect that these new rules
and regulations may make it more difficult and expensive for us to obtain
director and officer liability insurance in the future and we may be required to
accept reduced policy limits and coverage or incur substantially higher costs to
obtain the same or similar coverage. As a result, it may be more difficult for
us to attract and retain qualified persons to serve on our board of directors or
as executive officers.
  Because
we became public by means of a reverse merger, we may not be able to attract the
attention of major brokerage firms.
  There may
be risks associated with us becoming public through a “reverse merger.”
Securities analysts of major brokerage firms may not provide coverage of us
since there is no incentive to brokerage firms to recommend the purchase of our
common stock. No assurance can be given that brokerage firms will, in the
future, want to conduct any secondary offerings on behalf of our post-Merger
company.
  Our
stock price may be volatile.
  The
market price of our common stock is likely to be highly volatile and could
fluctuate widely in price in response to various factors, many of which are
beyond our control, including the following:
  ·changes in our
industry
 ·competitive pricing
pressures
 ·our ability to
obtain working capital financing
 ·additions or
departures of key personnel
  
 ·sales of our common
stock
 ·our ability to
execute our business plan
 ·operating results
that fall below expectations
 ·loss of any
strategic relationship
 ·regulatory
developments
 ·economic and other
external factors
 ·period-to-period
fluctuations in our financial results
 
 14
 In
addition, the securities markets have from time to time experienced significant
price and volume fluctuations that are unrelated to the operating performance of
particular companies. These market fluctuations may also materially and
adversely affect the market price of our common stock.
  We
have not paid dividends in the past and do not expect to pay dividends in the
future. Any return on investment may be limited to the value of our common
stock.
  We have
never paid cash dividends on our common stock and do not anticipate doing so in
the foreseeable future. The payment of dividends on our common stock will depend
on earnings, financial condition and other business and economic factors
affecting us at such time as our board of directors may consider relevant. If we
do not pay dividends, our common stock may be less valuable because a return on
your investment will only occur if our stock price appreciates.
  There
is currently no liquid trading market for our common stock and we cannot ensure
that one will ever develop or be sustained.
  To date
there has been no liquid trading market for our common stock. Our common stock
is traded on the OTC Bulletin Board system under the symbol
“EVLN”.  As a result, investors may be unable to sell their shares of
our common stock. We cannot predict how liquid the market for our common stock
might become.
  As soon
as is practicable, we anticipate applying for listing of our common stock on
either the NYSE Amex Equities, The NASDAQ Capital Market or other national
securities exchange, assuming that we can satisfy the initial listing standards
for such exchange. We currently do not satisfy the initial listing standards,
and cannot ensure that we will be able to satisfy such listing standards or that
our common stock will be accepted for listing on any such exchange. Should we
fail to satisfy the initial listing standards of such exchanges, or our common
stock is otherwise rejected for listing and remains quoted on
the OTC Bulletin Board or is suspended from the OTC Bulletin Board, the trading
price of our common stock could suffer and the trading market for our common
stock may be less liquid and our common stock price may be subject to increased
volatility.
  Furthermore,
for companies whose securities are quoted on the OTC Bulletin Board, it is more
difficult (1) to obtain accurate quotations, (2) to obtain coverage for
significant news events because major wire services generally do not publish
press releases about such companies, and (3) to obtain needed
capital.
  Offers
or availability for sale of a substantial number of shares of our common stock
may cause the price of our common stock to decline.
  If our
stockholders sell substantial amounts of our common stock in the public market,
including upon the effectiveness of a registration statement or upon expiration
of statutory holding periods, or issued upon the exercise of outstanding options
or warrants, it could create a circumstance commonly referred to as an
“overhang” and in anticipation of which the market price of our common stock
could fall. The existence of an overhang, whether or not sales have occurred or
are occurring, also could make more difficult our ability to raise additional
financing through the sale of equity or equity-related securities in the future
at a time and price that we deem reasonable or appropriate.
  Our
principal stockholders have significant voting power and may take actions that
may not be in the best interest of all other stockholders.
 
 One of
our stockholders holds approximately 67.89% of our current outstanding shares of
common stock at November 27, 2009.  They may be able to exert
significant control over our affairs requiring stockholder approval, including
approval of significant corporate transactions. This concentration of ownership
may, among other things, adversely affect the market price of our common stock
or result in actions that may not be in the best interests of all our
stockholders.
 
 You
could be diluted from the issuance of additional common stock.
 
 As of
October 31, 2009, we had 17,581,077 shares of common stock outstanding and
22,500 shares of series A preferred stock outstanding.  We are
authorized to issue up to 74,000,000 shares of common stock and 1,000,000 of
preferred stock. To the extent of such authorization, our Board of Directors
will have the ability, without seeking stockholder approval, to issue additional
shares of common stock in the future for such consideration as the Board of
Directors may consider sufficient. The issuance of additional common stock in
the future may reduce your proportionate ownership. Further, such issuance may
result in a change of control of our corporation.
  15
 Our
common stock may be deemed a “penny stock,” which would make it more difficult
for our investors to sell their shares.
  Our
common stock may be subject to the “penny stock” rules adopted under
Section 15(g) of the Exchange Act. The penny stock rules generally apply to
companies whose common stock is not listed on The NASDAQ Stock Market or other
national securities exchange and trades at less than $4.00 per share, other than
companies that have had average revenue of at least $6,000,000 for the last
three years or that have tangible net worth of at least $5,000,000 ($2,000,000
if the company has been operating for three or more years). These rules require,
among other things, that brokers who trade penny stock to persons other than
“established customers” complete certain documentation, make suitability
inquiries of investors and provide investors with certain information concerning
trading in the security, including a risk disclosure document and quote
information under certain circumstances. Many brokers have decided not to trade
penny stocks because of the requirements of the penny stock rules and, as a
result, the number of broker-dealers willing to act as market makers in such
securities is limited. If we remain subject to the penny stock rules for any
significant period, it could have an adverse effect on the market, if any, for
our securities. If our securities are subject to the penny stock rules,
investors will find it more difficult to dispose of our securities.
 
 You
should consider the United States federal income tax consequences of owning our
securities.
  There are
risks associated with the United States federal income tax consequences of
owning our common stock. Because the tax consequences of owning our common stock
are complex and certain tax consequences may differ depending on the holder's
particular tax circumstances, each potential investor should consult with and
rely on its own tax advisor about the tax consequences. In addition, there can
be no assurance that the United States federal income tax treatment currently
applicable to owning our common stock will not be modified by legislative,
administrative, or judicial action that may have a retroactive effect. No
representation or warranty of any kind is made with respect to the acceptance by
the Internal Revenue Service or any court of law regarding the treatment of any
item of income, deduction, gain, loss or credit by an investor on its tax
return.
  Failure
to achieve and maintain effective internal controls in accordance with Section
404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on
our business and operating results.
 
 It may be
time consuming, difficult, and costly for us to develop and implement the
additional internal controls, processes, and reporting procedures required by
the Sarbanes-Oxley Act. If we are unable to comply with these requirements of
the Sarbanes-Oxley Act, we may not be able to obtain the independent accountant
certifications that the Sarbanes-Oxley Act requires of publicly traded
companies.
 
 The
Company received a going concern paragraph in the report from its
auditors.
 
 In their
report dated October 31, 2009, the Company’s auditors indicated there was
substantial doubt about the Company’s ability to continue as a going concern
without any adequate fund-raising. Accordingly, unless we raise additional
working capital, project financing and/or revenues grow to support our business
plan we may be unable to remain in business.
 
 ITEM
1B. UNRESOLVED STAFF COMMENTS
 
 None
  ITEM
2. PROPERTIES (SEE ITEMS 1 AND 2 – BUSINESS AND PROPERTIES)
 
 ITEM
3. LEGAL PROCEEDINGS
 
 From time
to time we are subject to litigation which, if successful, could exceed
applicable insurance coverage.  We are not currently a party to any legal
proceedings which are not incidental to our routine business or that we believe
will have a material adverse affect on our results of operations.
  ITEM
4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 No
matters were submitted to shareholders for the period ended October 31,
2009.
 16
 PART
II
  ITEM 5.  MARKET
FOR COMMON EQUITY, AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 
 Common
Stock
 
 Our
common stock is currently traded on the OTC Bulletin Board under the symbol
"EVLN".
 
 On
October 31, 2009, the closing sale price for our common shares, as reported by
the OTCBB, was $4.00 per share, there were 17,581,077 shares of common stock
outstanding and there were approximately 49 record holders of our common
stock.
 
 Dividend
Policy
 
 The
Company has never paid any cash dividends on our capital stock and does not
anticipate paying any cash dividends on the common shares in the foreseeable
future. The Company intends to retain future earnings to fund ongoing operations
and future capital requirements of our business. Any future determination to pay
cash dividends will be at the discretion of the Board and will be dependent upon
our financial condition, results of operations, capital requirements and such
other factors as the Board deems relevant.
 
 ITEM 6.SELECTED FINANCIAL
DATA
 
 Not
applicable.
 
 ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
 
 This
discussion should be reviewed in conjunction with our audited financial
statements and accompanying notes included in this report for the year ended
October 31, 2009.
 
 MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  Safe Harbor
Statement under the Private Securities Litigation Reform Act of
1995
 
 Information
set forth herein contains "forward-looking statements" which can be identified
by the use of forward-looking terminology such as "believes," "expects," "may,”
“should" or "anticipates" or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy. No assurance can be given
that the future results covered by the forward-looking statements will be
achieved. The Company cautions readers that important factors may affect the
Company’s actual results and could cause such results to differ materially from
forward-looking statements made by or on behalf of the Company. These factors
include the Company’s lack of historically profitable operations, dependence on
key personnel, the success of the Company’s business, ability to manage
anticipated growth and other factors identified in the Company's filings with
the Securities and Exchange Commission, press releases and/or other public
communications.
  Overview
 
 Evolution
Resources, Inc. is a development stage company focused on the advancement of the
profitable production of cellulosic ethanol and biodiesel. Our business plan
contains certain proposed projects that if successfully implemented and
completed, will leverage existing assets and infrastructure to (a) significantly
shorten the time frame required to establish commercial scale cellulosic ethanol
production facilities and (b) “repurpose” certain industrial facilities to
provide key biofuels production components.
  17
 
 We are
currently focused on building a team of industry experts to advise and assist
our management as the project plans are developed. The team will include members
from the scientific, financial, legal, and government policy communities who are
all well experienced in the field of renewable fuels.
 
 Corporate
History
 
 We were
incorporated in the State of Nevada in March 2005.
 
 On May
27, 2009, the Company, Evolution Resources, Inc., a Delaware corporation
(“Evolution”) and Evolution Resources Acquisition Corp. (“ERAC”), a wholly-owned
subsidiary of the Company, entered into an Agreement and Plan of Merger.
Pursuant to the terms of the Merger Agreement, ERAC merged with and into
Evolution, with Evolution remaining as the surviving corporation and as our sole
wholly-owned subsidiary.  After the closing of the merger, we changed
our name from BBN Global Consulting, Inc. to Evolution Resources, Inc. to
reflect the business of our principal subsidiary. Because of the merger, we
ceased to be a “shell company” as that term is defined in Rule 405 of the
Securities Act and Rule 12b-2 of the Exchange Act.
 
 As of the
closing of the merger, each issued and outstanding share of common stock of
Evolution was converted into the right to receive 15,296,077 shares of our
common stock, which constitutes approximately 89.55% of our outstanding common
stock.
 
 Prior to
the merger, we were a shell company, and we had no assets or liabilities. As a
result of the merger transaction described above, the financial statements
presented are our consolidated financial statements including our wholly-owned
subsidiary, Evolution (which is the operating entity).
 
 Recent
Events
 
 On
July 14, 2009, Evolution entered into a Stock Purchase Agreement (the
“Agreement”) whereby the Company acquired all of the issued and outstanding
common stock of Liquafaction Corporation (“Liquafaction”) and 53% of the
membership interests of Liqua Ethanol, LLC (“Liqua LLC”) (the shares of
Liquafaction and Liqua LLC are referred to collectively as the “Equity”). The
purchase price of the Equity is as follows: (i) $35,000 upon the execution of
this Agreement, to be paid from a prior deposit, (ii) a total of $30,000 due in
equal weekly payments for eight weeks from the date hereof and (iii) $150,000
upon the earlier of the completion of the Moses Lakes project funding or 120
days from the date of the Agreement. Additionally, the seller received a (i)
warrant to purchase 1,150,000 shares of Buyer’s common stock at an exercise
price of $7.00 per share and (ii) the right to receive additional warrants to
purchase up to an additional 400,000 shares at an exercise price of $7.00 per
share based on various performance objectives contained in the Agreement
(collectively, the “Warrants”). The fair value of the warrants was $3,258,409 at
acquisition, and $3,403,273 as of October 30, 2009. The changes in fair market
value are included in the Consolidated Statement of Operations loss on
derivatives totaling $4,151,660 as of October 31, 2009.
 
 Liquafaction,
both individually and through Liqua Ethanol, LLC of which Liquafaction owns 53%,
owns an idle corn ethanol facility located in Moses Lake, Washington. The
Company intends to convert the facility into a large demonstration/small
commercial-scale bio-refinery that produces ethanol and associated co-products
from wheat straw.
 
 
 On July
31, 2009, we entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with certain accredited investors pursuant to which we
sold  $215,000 aggregate principal amount of senior secured notes due
November 30, 2009 (the “Notes”) and five-year warrants to purchase 1,000,000
shares of common stock at an exercise price of $5.00 per share (the
“Warrant”).
 
 The Notes
bear interest at a rate of 18% per annum, which is payable quarterly beginning
on October 1, 2009. The Notes are secured by (i) substantially all of our assets
and subsidiaries and (ii) the pledge of our entire equity interest in each of
our subsidiaries. The Notes are guaranteed by each of our subsidiaries. We and
all of our subsidiaries also entered into an account control agreement to secure
the Notes. With appropriate notice, we have the option to repay the Notes prior
to the due date.
  18
 
 On
October 30, 2009, the Company entered into an agreement with the seller of
Liquafaction to cancel the initial consideration of 1,150,000 warrants to
purchase the Buyer’s shares of common stock at $7.00 per share in exchange for
the issuance of 500,000 shares of the Buyer’s common stock.  The
Seller’s basis in the Company’s stock was determined to be market of $4.00 per
share value as of October 30, 2009. The 1,150,000 warrants have a derivative
liability of $3,403,273 as of October 30, 2009.  Therefore the Company
recognized a $1,403,273 accounting gain on the cancellation of the warrants and
the issuance of 500,000 common shares at market value.
 
 Projects
 
 The
proposed projects include the following:
 
 ·
              Development
      of a 4 million gallon per year (mmgy) cellulosic ethanol production
      facility located in an area with a large availability of straw biomass.
      The project is attractive as the initial cellulosic facility due to the
      fact that the site for the proposed facility has existing ethanol
      components and equipment, initial design work for the project has already
      been completed, and certain permits for ethanol production already exist
      at the facility. These elements, combined with the goal of engineering and
      constructing a relatively small commercial scale production facility,
      provide the potential to complete the project and bring it online in as
      little as seven months.
 
 ·
              Development
      of a 60 mmgy cellulosic ethanol production facility to be located adjacent
      to an existing pulping facility. The project will leverage the existing
      mill assets for the handling of large quantities of wood biomass and the
      capability to produce pulp cellulose, and will utilize a proprietary
      technology to convert the cellulose to fermentable
  sugars.
 
 In order
to fund the development of the projects, acquire certain assets, and perform the
required engineering and construction work involved with each project, we will
need to raise approximately $200 million in a mix of equity, debt, and federal
government grants/guarantees.
 
 Presently,
Evolution has completed the acquisition of Liquafaction Corporation that will
allow the Company to pursue the 4 million gallon per year project described in
the first bullet point above.  Although the Company is in negotiations
for the next bullet point project described above, it does not have any
agreements or understandings to acquire, or secure access to, that project, the
land or facilities described above that would be necessary to develop this
project. As such, no assurance can be made that the above-described projects
will ever be developed.
 
 Plan
of Operations
 
 The
renewable energy sector is in a unique situation.  The American
Recovery and Reinvestment Act of 2009 have five main objectives in spending the
$787 billion dollars that has been allotted.  The objectives
are:
  1.           To
preserve and create jobs and to promote economic recovery
 2.           To
assist those most impacted by the recession
 3.           To
provide investments needed to increase economic efficiency by spurring
technological advances in science and health
 4.           To
invest in transportation, environmental protection, and other infrastructure
that will provide long-term economic benefits
 5.           To
stabilize State and local government budgets in order to minimize and avoid
reduction in essential services and counterproductive state and local tax
increases.
  The
recession hit the renewable energy industry very hard.  The loss of
jobs and reduction in incomes impacted the US miles driven by billions of
miles.  This took the pressure off the demand for gasoline and
creating an oversupply thus significantly reduces the price at the
pump.  This left a number of renewable energy projects that were not
well capitalized in financial trouble.   There are some assets
that are in the right locations and priced to allow for the potential of a
significant increase in value when the economy returns and the demand for energy
increases.
 
 19
 Evolution
Resources has researched and discovered a number of these opportunities in the
States of Washington, Mississippi, and Louisiana.  The team assembled
can repurpose and upgrade the assets acquired at a significant
discount.  The team is also in a position to test new technologies and
to provide renewable energy at a cost competitive price.  New grant
and low interest loan programs are available from the Federal and State agencies
through the Department of Energy, Department of Agriculture, Department of
Defense and State Economic Development agencies that were allocated stimulus
money to revitalize and expand the renewable energy industry.  These
programs will allow not only significant leveraging of the equity dollars but
matching of these dollars with grants on a one for one basis and in some limited
cases a five to one match.
 
 The
Company is concentrating the majority of its efforts on projects in the
Mississippi and Louisiana Delta area, where it has garnered significant
governmental support from these two states.  Economic conditions in
this region have deteriorated to the extent that changes in certain industrial
sectors are critical for the livelihood of many of the towns and
cities.  Evolution is actively engaged with state and local
governments, as well as regional economic development authorities, who are
assisting with the development of the Company’s project plans.
 
 The
Company’s business plan contains certain proposed projects that will leverage
existing distressed assets and infrastructure to:
 
 a)           Significantly
shorten the time frame required to establish commercial scale cellulosic ethanol
production facilities
 b)           “Repurpose”
distressed industrial facilities to provide key biofuels production
systems
 c)           Beat
the competition to profitable production of renewable fuels
 
 The
projects involve the production of cellulosic ethanol – ethanol produced from
biomass sources such as wood chips, straws, and other plant matter – and the
production of biodiesel – a fuel made from animal fats or vegetable
oils.
  Evolution’s
management team has spent the last three years working in the renewable fuels
industry and through this experience has identified the opportunities described
above.  It has built a team of industry experts to advise and assist
the Company’s management as the project plans are developed. The team includes
members from the scientific, financial, legal, and government policy communities
who are all well experienced in the field of renewable fuels.
 
 Financial
Summary for the period from April 9, 2009 (“inception”) to October 31,
2009
  Revenue: From inception to the
period ended October 31, 2009, we had no operating revenues. We do not
expect to earn significant revenues in the near future.
  Operating
Expense:From
inception to the period ended October 31, 2009, we incurred $893,619 in
operating expenses which consisted of professional and management fees of
$428,741, depreciation and amortization of $254,250 and general and
administrative expenses of $210,628.
  Other
Income and Expenses:From
inception to the period ended October 31, 2009, we recognized $4,151,660 related
to a loss on derivative liabilities and changes in market values during the
period.  We recognized a gain of $1,403,273 on the cancellation of
warrants in conjunction with the Liquafaction acquisition, and $45,022 in
interest expense for the period ended October 31, 2009.
  Liquidity
and Capital Resources
  As of October 31, 2009, we
had $2,221 cash on hand. We are in the very early stages of
development.We expect to rely upon funds raised from private
placements, as well as future equity and debt offerings, current and future
grant opportunities to implement our business and growth plan and to meet our
liquidity needs going forward.  However, we cannot assure you that such
financing will be available to us on favorable terms, or at all. If, after
utilizing the existing sources of capital that become available to the Company,
further capital needs will be needed and if we are not successful in obtaining
the financing, we may be forced to curtail our existing or planned future
operations.
  20
 Consultants
and Independent Contractors
  Presently,
we have certain agreements or understandings consultants and independent
contractors. As such, no assurance can be made that we will be able to retain
these consultants or other appropriate consultants/contractors or, if we are
able to retain new consultants/contractors, that the terms will be favorable to
us.
  Net
Cash from Continuing Operations – Operating Activity
 
 Our cash
flow from operations has been negative since the inception of the company. We do
not anticipate that we will have a positive cash flow from operations for the
remainder of 2009 and 2010. Whether we have positive cash flow in 2011 depends
on whether we are able to continue to finance our current business plan and
successfully complete our cellulosic ethanol facility. Failure to obtain such
financing would have an adverse impact on financial position and results of
operations and ability to continue as a going concern.
 
 During
the period from our inception to October 31, 2009, we have incurred an operating
loss net of tax of $5,005,571.  This operating loss was offset by
the extraordinary gain of $10,346,857 on the acquisition of Liquafaction which
resulted in net income of $5,341,286. At October 31, 2009 we had negative
working capital (current assets less current liabilities) of
$1,362,652.
 
 During
the period ended October 31, 2009, our net cash from operating activities was
$11,311,470.
 
 Net
Cash from Continuing Operations - Investing Activities
 
 For the
year ended October 31, 2009 net cash used in investing activities was
$11,750,130 which was primarily the result of a gain on the Liquafaction
acquisition of $10,346,857 and a gain on the cancellation of warrants of
$1,403,273.
 
 Net
Cash from Continuing Operations – Financing Activity
 
 Net cash
provided by our financing activities was $440,000 for the year ended October 31,
2009. During this period, we received $225,000 in convertible debt that was
converted into common stock.  In addition, we received $215,000 in
notes payable.
  Credit
Facilities and Loans
  On
August 17, 2009, in conjunction with the acquisition of Liquafaction,
Evolution applied for a grant/loan provided by the Washington State Department
of Commerce. The Company applied for the grant in order to assist funding
efforts toward its planned cellulosic ethanol project located in Moses Lake,
Washington.
  The
Washington state loan/grant application follows an application made by the
Company in June of this year for a grant provided by the U.S. Department of
Energy (“DOE”) entitled “Demonstration of Integrated Biorefinery Operations” for
the same cellulosic ethanol project in Moses Lake, Washington.
  The
Company was notified that it was selected as a recipient to be awarded a
Washington State loan although no funds have been received by the Company as of
October 31, 2009. The Company will utilize the work it has completed in
preparing for these grants/loans as a basis for additional federal funding
applications going forward.
  21
 Critical
Accounting Policies
  Use
of Estimates
  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.
 
 Revenue
Recognition
 
 We are
currently a developmental-stage company and have minimal operational revenues to
date. The company follows the guidance in accordance with the principles of ASC
605-10, “Revenue Recognition” from 1) sales of ethanol from our production
facilities when (a) persuasive evidence that an agreement exists; (b) the
products have been delivered; (c) the prices are fixed and determinable and not
subject to refund or adjustment; and (d) collection of the amounts due is
reasonably assured and inventory held for sale is sold.
 
 Cash
and Cash Equivalents
  The
Company considers all highly liquid debt instruments and other short-term
investments with a maturity of three months or less, when purchased, to be cash
equivalents.
  Trade
Receivables
 
 Trade
receivables are carried at original invoice less an estimate made for doubtful
receivables based on a periodic review of all outstanding
amounts.  Management of the Company has established an allowance for
doubtful accounts based on their estimate of uncollectible accounts and is
established based on historical performance that is tracked by the Company on an
ongoing basis.  Trade receivables are written off when deemed
uncollectible. Recoveries of trade receivables previously written off are
recorded when received.
 
 Long-Lived
Assets
 
 The
Company assesses the realizable value of long-lived assets for potential
impairment at least annually or when events and circumstances warrant such a
review.  The carrying value of a long-lived asset is considered
impaired when the anticipated fair value is less than its carrying
value.  In assessing the recoverability of our long-lived assets, we
must make assumptions regarding estimated future cash flows and other factors to
determine the fair value of the respective assets.  In addition, we
must make assumptions regarding the useful lives of these assets.  As
of October 31, 2009, we evaluated our long-lived assets for potential
impairment.  Based on our evaluation, no impairment charge was
recognized.
 
 Project
Development
 
 Project
development costs will be either expensed or capitalized. The costs of materials
and equipment that will be acquired or constructed for project development
activities, and that have alternative future uses, both in project development,
marketing or sales, will be classified as property and equipment and depreciated
over their estimated useful lives.
 
 22
 Fair
Value of Financial Instruments
  ASC-825-10,
“Financial Instruments,” requires the Company to disclose, when reasonably
attainable, the fair market values of its accounts receivable, accounts payable,
accrued expenses, deferred revenue and notes payable that are deemed to be
financial instruments. The carrying amounts and estimated fair values of the
Company’s financial instruments approximate their fair value due to their
short-term nature.
  Earnings
per Common Share
  The
Company complies with ASC 260-10, “Earnings per Share,” which requires dual
presentation of basic and diluted earnings per share. Basic EPS excludes
dilution and is computed by dividing income (loss) available to common
stockholders by the weighted-average common shares outstanding for the year.
Diluted EPS reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into common
stock or resulted in the issuance of common stock that then shared in the
earnings of the entity.
  Income
Taxes
  The
Company complies with ASC 740-10, “Income Taxes,” which requires an asset and
liability approach to financial accounting and reporting for income taxes.
Deferred income tax assets and liabilities are computed for differences between
the financial statement and tax bases of assets and liabilities that will result
in future taxable or deductible amounts based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established, when necessary, to reduce
deferred income tax assets to the amounts expected to be realized.
  Impairment
of Long-Lived Assets:
  In
accordance with ASC 360-10-35, “Plant, Property and Equipment – Subsequent
Measurement," long lived assets such as property and equipment and intangible
assets are not subject to amortization, are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
group may not be recoverable. Recoverability of asset groups to be held and used
is measured by a comparison of the carrying amount of an asset group to
estimated undiscounted future cash flows expected to be generated by the asset
group. If the carrying amount of an asset group exceeds its estimated future
cash flows, an impairment charge is recognized by the amount by which the
carrying amount of an asset group exceeds fair value of the asset
group.
  Derivative
Instruments
 
 The
Company accounts for derivatives in accordance with ASC 815-10, “Derivatives
& Hedging – and Related Disclosures” and the related interpretations. ASC
815-10 requires companies to recognize all derivative instruments as either
assets or liabilities in the consolidated balance sheet at fair value. The
accounting for changes in the fair value of a derivative instrument depends on:
(i) whether the derivative has been designated and qualifies as part of a
hedging relationship, and (ii) the type of hedging relationship. For those
derivative instruments that are designated and qualify as hedging instruments, a
company must designate the hedging instrument based upon the exposure being
hedged as either a fair value hedge, cash flow hedge or hedge of a net
investment in a foreign operation. At October 31, 2009, the Company had not
entered into any transactions which were considered hedges under ASC
815-10.  In conjunction with the issuance of Series A convertible
preferred stock, the Company has accounted for the embedded derivative liability
in accordance with ASC 815-15, “Derivatives & Hedging – Embedded
Derivatives” and performs a mark to market analysis at the end of each reporting
period.
  Off
Balance Sheet Arrangements
 
 We have
no off-balance sheet arrangements.
 23
 Annual
Results of Operations
 
 Revenue
 
 From our
inception through the period ended October 31, 2009, we had no operating
revenues. We do not expect to earn significant revenues in the near
future.
 
 Operating
Expenses
 
 From our
inception through the period ended October 31, 2009, we incurred $893,619 in
operating expenses which consisted of professional and management fees of
$428,741, depreciation and amortization of $254,250 and general and
administrative expenses of $210,628.
 
 Legal
and Accounting Expense
 
 From our
inception through October 31, 2009, we incurred $99,445 in legal and accounting
expense.  $77,445 was related to various normal course of business
operations legal fees and $12,000 in accounting fees related to various reviews
and filings with the Securities and Exchange Commission.
 
 Research
and Development Expense
 
 From our
inception to the period ended October 31, 2009, we have had no research and
development expense.
 
 Interest
Expense
 
 From
inception through October 31, 2009, we incurred $45,002 in interest expense
$35,002 related to interest bearing notes payable acquired in the Liquafaction
acquisition, and $10,000 related to the issuance of the Harborview notes
payable.
 
 ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 The
Company is subject to certain market risks, including changes in interest rates
and currency exchange rates.  The Company does not undertake any
specific actions to limit these exposures.
 
 ITEM 8. FINANCIAL STATEMENTS
 
 The
Report of Independent Registered Public Accounting Firm and Consolidated
Financial Statements are set forth beginning on page F-1 of this Form 10-K and
are incoporated herein.
 
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
 
 There
were no changes in or disagreements with our accountants related to accounting
and financial disclosure for the period ended October 31, 2009.
 
 24
 ITEM 9A. CONTROLS AND PROCEDURES
 
 EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES
 
 Our
management team, under the supervision and with the participation of our
principal executive officer and our principal accounting officer, evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures as such term is defined under Rule 13a-15(e) promulgated under the
Securities Exchange Act of 1934, as amended (Exchange Act), as of the last day
of the fiscal period covered by this report, October 31, 2009. The term
disclosure controls and procedures means our controls and other procedures that
are designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SEC’s rules
and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is
accumulated and communicated to management, including our principal executive
and principal accounting officer, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure. Based on
this evaluation, our principal executive officer and our principal accounting
officer concluded that our disclosure controls and procedures were effective as
of October 31, 2009
 
 Our
principal executive officer and our principal accounting officer, are
responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act Rules 13a-15(f).
Management is required to base its assessment of the effectiveness of our
internal control over financial reporting on a suitable, recognized control
framework, such as the framework developed by the Committee of Sponsoring
Organizations (COSO). The COSO framework, published in Internal Control-Integrated
Framework, is known as the COSO Report. Our principal executive officer
and our principal accounting officer have chosen the COSO framework on which to
base its assessment. Based on this evaluation, our management concluded that our
internal control over financial reporting was effective as of October 31,
2009.
 
 This
annual report on Form 10-K does not include an attestation report of our
registered public accounting firm regarding internal control over financial
reporting. Our principal executive officer and our principal financial officer’s
report was not subject to attestation by our registered public accounting firm
pursuant to temporary rules of the Securities and Exchange Commission that
permit us to provide only management’s report in this annual report on Form
10-K.
 
 There
were no changes in our internal control over financial reporting that occurred
during the last quarter of 2008 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.
 
 It should
be noted that any system of controls, however well designed and operated, can
provide only reasonable and not absolute assurance that the objectives of the
system are met. In addition, the design of any control system is based in part
upon certain assumptions about the likelihood of certain events. Because of
these and other inherent limitations of control systems, there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote.
 
 CHANGES
IN INTERNAL CONTROL OVER FINANCIAL REPORTING
 
 During
the period ended October 31, 2009, there were no changes in our internal control
over financial reporting that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.
 
 ITEM 9B. OTHER INFORMATION
 
 None.
 
 25
 PART
III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE
GOVERNANCE;
 
 The
following table and biographical summaries set forth information, including
principal occupation and business experience, about our directors and executive
officers at October 31, 2009. There is no familial relationship between or among
the nominees, directors or executive officers of the Company.
 
 
 NAME
              
              AGE
              
              POSITION
              
              OFFICER
      AND/OR DIRECTOR SINCEDennis
      G. McLaughlin
              
              43
              
              Chairman
      & Chief Executive Officer
              
              May
      2009Christopher
      P. Chambers
              
              44
              
              Executive
      Vice President & Chief  Accounting Officer
              
              May
      2009Hank
      Cohen
              
              38
              
              Director
              
              September  2007Herbert
      E. Myer
              
              63
              
              Director
              
              August
      2009
 
 The
Company’s Directors serve in such capacity until the first annual meeting of the
Company’s shareholders and until their successors have been elected and
qualified. The Company’s officers serve at the discretion of the Company’s Board
of Directors, until their death, or until they resign or have been removed from
office.
 
 There are
no agreements or understandings for any director or officer to resign at the
request of another person and none of the directors or officers is acting on
behalf of or will act at the direction of any other person. The activities of
each director and officer are material to the operation of the Company. No other
person’s activities are material to the operation of the Company.
 
 Dennis
McLaughlin - Chief Executive Officer, President and Chairman of the
Board
  Dennis
McLaughlin was appointed as the Chief Executive Officer, President and Director
of the Company in connection with the Merger. He has served as Chairman of the
Board of Directors for Evolution Fuels, Inc. (a publicly traded company) since
September 2005 and as CEO since February 2006.  Mr. McLaughlin has
served as Chairman of the Board of Directors for Big Star Informative Media (a
publicly traded company) since October 2009.  He has served as CEO and
Chairman of Apollo Resources International, Inc. (a publicly traded company)
since October of 2004. He was CEO of Blue Wireless & Data, Inc. (a
publicly traded company) from June 2004 through April 2005, and served
as Chairman from June 2004 to 2007. He was CEO and Co-Chairman of Ocean
Resources, Inc. (a publicly traded company) from September 2003 to
January 2005. Prior to that he founded Aurion Technologies, LLC in 1998 and
served as CEO and was a Director through 2001. He founded Aurora Natural Gas,
LLC in 1993 and served as CEO through 2001. Prior to starting his own companies,
he worked as a Manager of Marketing & Transportation for Highland Energy
from 1991 to 1993, and before this worked as a gas marketing representative for
Clinton Natural Gas from 1990 to 1991. Mr. McLaughlin received a Bachelor of
Economics degree from the University of Oklahoma in 1992.
  Christopher
P. Chambers - Executive Vice President, Chief Accounting Officer
  Christopher
“Kit” Chambers was appointed as the Chief Accounting Officer and Director of the
Company in connection with the Merger. He has been Secretary and Executive Vice
President of Evolution Fuels Inc. since November 8, 2005. He has served on
the Board of Directors for Big Star Informative Media (a publicly traded
company) since October 2009.  Mr. Chambers has been Secretary of
Apollo Resources International Inc. since October of 2004 and serves as its
Vice President. Mr. Chambers served as the President of Blue Wireless &
Data Inc. (a publicly traded company) from September 27, 2005 to
September 13, 2006 and served as its Corporate Secretary from
July 2004 to September 13, 2006. He served as the Chief Executive
Officer of Blue Wireless & Data Inc., from May 3, 2005 to
September 27, 2005. He served as Chief Operating Officer and Secretary of
Ocean Resources Inc., (a publicly traded company) from October 2003 to
January 2005.  From January 1999 to December 2001, he was
employed by Aurion Technologies LLC, as Vice President of Operations, then as
Vice President of Sales Engineering. From March 1994 to December 1998,
he served as Vice President, Software Development of Aurora Natural Gas LP. From
January 1998 to February 2004, he served as an independent consultant
in the film and video industry in Dallas, Texas. He has served as Director of
Apollo Resources International Inc. from November, 2004. He served as a Director
of Blue Wireless & Data Inc. from July 2004 to September 13, 2006.
Mr. Chambers received a Bachelor of Science degree from the University of
Oklahoma in 1989.
  26
 Hank
Cohn - Director
  Hank Cohn
is currently serving as President and Chief Executive Officer of PracticeOne,
Inc., an integrated software and services company for physicians. He is also
executive Vice President at Galaxy Ventures, LLC, a closely-held investment fund
with a multi-pronged investment strategy concentrating in the areas of bond
trading and early stage technology investments. Mr. Cohn acts as Portfolio
Manager for investments. Mr. Cohn is also a member of the Board of
Directors of Crystal International Travel Group, Inc. (CINT.OB) and Analytical
Surveys, Inc. (ANLT). From March 2007 to August 2007, Hank Cohn was
the sole officer and director of International Food and Wine Consultants, Inc. a
company trading on the OTCBB. Mr. Cohn holds an MBA in finance and
investments from Baruch College.
  Herbert
E. Myer - Director
  Mr. Meyer
is founder of Real-World Intelligence Inc., a company that designed intelligence
systems for corporations throughout the world. He is also President of Storm
King Press, a publishing company whose books and DVDs are sold worldwide. In
addition, Mr. Meyer is host and producer of The Siege of Western
Civilization, a DVD outlining the threats to our security, our economy, and our
culture that has become an international best-seller. Mr. Meyer also serves as a
member of the Board of Directors for Evolution Fuels, Inc. During the Reagan
Administration, Mr. Meyer served as Special Assistant to the Director of
Central Intelligence and Vice Chairman of the CIA’s National Intelligence
Council. In these positions, he managed production of the U.S. National
Intelligence Estimates and other top-secret projections for the President and
his national security advisers. Mr. Meyers is widely credited with being
the first senior US Government official to forecast the collapse of the Soviet
Union—a forecast for which he later was awarded the U.S. National Intelligence
Distinguished Service Medal, the Intelligence Community’s highest honor.
Formerly an associate editor of Fortune, he has authored several books including
The War Against Progress, Real-World Intelligence, and Hard Thinking.
Mr. Meyer and his wife, Jill, are co-authors of How to Write, which is
among the world’s most widely used writing handbooks. Mr. Meyer’s essays on
intelligence and politics have been published in The Wall Street Journal,
National Review Online, Policy Review, and The American Thinker. He is a
frequent guest on leading television and radio talk shows.
  Election
of Directors and Officers
  Holders of our Common Stock are entitled to one (1)
vote for each share held on all matters submitted to a vote of the stockholders,
including the election of directors. Cumulative voting with respect to the
election of directors is not permitted by our Articles of Incorporation. The
holders of the Preferred Shares are entitled to appoint one representative as a
member of our Board of Directors.
  Our Board of Directors shall be elected at the annual
meeting of the shareholders or at a special meeting called for that purpose.
Each director shall hold office until the next annual meeting of shareholders
and until the director’s successor is elected and qualified.
  Compensation
of Independent Directors
  Each member of our board of directors who is not an
employee of the Company (a “non-employee director”) may receive an annual
retainer in cash and/or shares of our Common Stock as determined by the board of
directors and all directors will be reimbursed for costs and expenses related to
attending meetings of the board of directors, though such compensation has not
yet been established.
  Term
of Office
  Our
directors are appointed for a one-year term to hold office until the next annual
general meeting of our shareholders or until removed from office in accordance
with our bylaws. Our officers are appointed by our board of directors and hold
office until removed by the board.
  27
 Audit
Committee
  We do not
have a standing audit committee of the Board of Directors. Management has
determined not to establish an audit committee at present because of our limited
resources and limited operating activities do not warrant the formation of an
audit committee or the expense of doing so. We do not have a financial expert
serving on the Board of Directors or employed as an officer based on
management’s belief that the cost of obtaining the services of a person who
meets the criteria for a financial expert is beyond our limited financial
resources and the financial skills of such an expert are simply not required or
necessary for us to maintain effective internal controls and procedures for
financial reporting in light of the limited scope and simplicity of accounting
issues raised in our financial statements at this stage of our
development.
   ITEM
11. EXECUTIVE COMPENSATION
  Long-Term
      CompensationAnnual
      Compensation
              
              
              Awards
              
              
              PayoutsName
      and Principal Position
              Year
              
              Salary
              
              
              Bonus
      ($)
              
              
              Other
                Annual
      Compensation
                (#
      of shares of Common Stock)
              
              
              Restricted
      Stock
                Awards
      ($)
              
              
              Securities
      Underlying Options/
                SARs
              
              
              LTIP
      Payouts
              
              
              All
      Other Compensation ($)Dennis G. McLaughlin
                Chairman of the Board  Chief Executive
      Officer
              2009
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0Christopher P. Chambers,
                Principal
      Accounting Officer Director
              2009
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0Hank
      Cohen, Director
              2009
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0Herbert
      E. Myer, Director
              2009
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
              
              
              
              0
 
 
 28
 Employment
Agreements
  We have not entered into employment agreements with
our executive officers as October 31, 2009. We may also issue to our officers
and directors cash compensation, restricted stock grants or grants of stock
options on terms and conditions to be determined by our board of directors or
designated committee.
  Compensation
of Directors
  The
Company did not provide for issuances of its securities through a stock option
plan or even have a committee to approve such agreement. We intend to provide
our directors with compensation for their service on our board of directors,
though such compensation has not yet been established.
  ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
 
 The
following table sets forth, as of October 31, 2009, the number of shares of our
common stock owned by (i) each person who is known by us to own of record
or beneficially five percent (5%) or more of our outstanding shares,
(ii) each of our directors, (iii) each of our executive officers and
(iv) all of our directors and executive officers as a group. Unless
otherwise indicated, each of the persons listed below has sole voting and
investment power with respect to the shares of our common stock beneficially
owned.
 
 
 Title
      of Class
              Name
      of Beneficial Owner (1)
              Number
      of
                shares
              
              Percent
      of
                ClassCommon
              Dennis
      G. McLaughlin, Chairman & Chief Executive Office
              0
              
              
              0.00
              %Common
              Christopher
      P. Chambers, Vice President & Principal Accounting
    Officer
              15,296,077
              
              
              89.55
              %Common
              Hank
      Cohen
              25,000
              
              
              *All
      officers and directors as a group (3 persons)
              15,321,077
              
              
              89.55
              %All
      officers, directors and 5% holders as a group (3 persons)
              15,321,077
              
              
              89.55
              %
 
  (1)
              Beneficial
      ownership is determined in accordance with Rule 13d-3(a) of the Exchange
      Act and generally includes voting or investment power with respect to
      securities.
 
  Changes
in Control
 
 We are
not aware of any arrangements that may result in a change in control of the
Company.
 
 29
 
 DESCRIPTION
OF SECURITIES
 
 General
 
 As of
October 31, 2009, our authorized capital stock consists of 74,000,000 shares of
common stock, par value $0.001, and 1,000,000 authorized shares of preferred
stock, par value $0.001. As of October 31, 2009, there were
17,581,077 shares of our common stock issued and outstanding, all of which
were fully paid, non-assessable and entitled to vote, and 22,500 shares of
series A convertible preferred stock issued and outstanding. The Series A
preferred stock has a liquidation preference of $100 per share and voting rights
along with the common stockholders. Each share of our common stock entitles its
holder to one vote on each matter submitted to the stockholders.
 
 Common
Stock
 
 The
shares of our common stock presently outstanding, and any shares of our common
stock issued upon exercise of stock options and/or warrants, will be fully paid
and non-assessable. Each holder of common stock is entitled to one vote for each
share owned on all matters voted upon by shareholders, and a majority vote is
required for all actions to be taken by shareholders. In the event we liquidate,
dissolve or wind-up our operations, the holders of the common stock are entitled
to share equally and ratably in our assets, if any, remaining after the payment
of all our debts and liabilities and the liquidation preference of any shares of
preferred stock that may then be outstanding. The common stock has no preemptive
rights, no cumulative voting rights, and no redemption, sinking fund, or
conversion provisions. Since the holders of common stock do not have cumulative
voting rights, holders of more than 50% of the outstanding shares can elect all
of our Directors, and the holders of the remaining shares by themselves cannot
elect any Directors. Holders of common stock are entitled to receive dividends,
if and when declared by the Board of Directors, out of funds legally available
for such purpose, subject to the dividend and liquidation rights of any
preferred stock that may then be outstanding.
 
 Voting Rights
 
 Each
holder of Common Stock is entitled to one vote for each share of Common Stock
held on all matters submitted to a vote of stockholders.
 
 Dividends
 
 Subject
to preferences that may be applicable to any then-outstanding shares of
Preferred Stock, if any, and any other restrictions, holders of Common Stock are
entitled to receive ratably those dividends, if any, as may be declared from
time to time by the Company’s board of directors out of legally available funds.
The Company and its predecessors have not declared any dividends in the past.
Further, the Company does not presently contemplate that there will be any
future payment of any dividends on Common Stock.
 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
 Due to
the Company’s early stage of development, the Company relies on external
financing to fund its daily operations.  The company relies on
Evolution Fuels, Inc. (“Fuels”), a company under common control by a group of
shareholders to fund its operating expenses.  These advance funding
transactions are non-interest bearing and do not have a due date and continue to
accrue and are included in accounts payable.  The Company cannot
guarantee that it will be able to repay these funds to Fuels and will continue
to accrue going forward until the Company’s operations are fully self
funded.  These are recorded on the Company’s books as accounts
payable.
 
 Since
inception, all company staff is contracted through OSA, LLC (“OSA”), a company
under common control by one major shareholder of Evolution.  At
October 31, 2009, the Company had 4 full time equivalent employees and
management services fees of $90,987 for the period April 9, 2009 to October 31,
2009. These advance funding transactions are non-interest bearing and do not
have a due date and continue to accrue.  The Company cannot guarantee
that it will be able to repay these funds to OSA and will continue to accrue
going forward until the Company’s operations are fully self funded.
 
 30
 ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
 a.) Audit Fees: Aggregate fees
billed for professional services rendered for the audit of our annual financial
statements and review of our financial statements included in Form 10-Q for the
years ended October 31, 2009 were $12,000.
 
 b.)
Audit-Related Fees: No fees were billed for assurance and related services
reasonably related to the performance of the audit or review of our financial
statements and not reported under “Audit Fees” above in the years ended December
31, 2009.
 
 c.) Tax
Fees: No fees were billed for tax services for the year ended October 31,
2009.
  d.) All Other
Fees:  No fees were billed for other professional services other than
those described above at October 31, 2009.
 
 ITEM 15.EXHIBITS
 
 The
following documents are filed as a part of this Report.
 
 Exhibit
Number                                Exhibit Description
 
 2.1
              First
      Amendment to Stock Purchase Agreement, dated as of July 28, 2009, between
      Evolution and Mark Mollo (Filed as an exhibit to the Company’s
      Form 8-K, filed with the Securities and Exchange Commission on July
      29, 2009 and incorporated by
reference).
  2.2
              Agreement
      and Plan of Merger, dated as of May 27, 2009 by and between BBN
      Global Consulting, Inc., Evolution Resources Acquisition Corp. and
      Evolution Resources, Inc. (Filed as an exhibit to the Company’s
      Form 8-K, filed with the Securities and Exchange Commission on
      June 2, 2009and incorporated by
reference).
  3.1
              Amended
      and Restated Articles of Incorporation (Filed as an exhibit to the
      Company’s Form 8-K, filed with the Securities and Exchange Commission
      on June 2, 2009and incorporated by
  reference).
  3.2
              Bylaws
      (Filed as an exhibit to the Company’s Form 8-K, filed with the
      Securities and Exchange Commission on June 2, 2009and incorporated by
      reference).
  3.3
              Certificate
      of Designation of Series A Convertible Preferred Stock (Filed as an
      exhibit to the Company’s  Form 8-K, filed with the
      Securities and Exchange Commission on June 2, 2009and incorporated by
      reference).
  3.4
              Amendment
      to Certificate of Designation After Issuance of Class or Series (Filed as
      an exhibit to the Company’s Form 8-K, filed with the Securities and
      Exchange Commission on November 5, 2009and incorporated by
      reference).
  4.1
              $215,000
      Secured Promissory Note issued by Evolution to Harborview Master Fund,
      L.P. on July 31, 2009  (Filed as an exhibit to the Company’s
      Form 8-K, filed with the Securities and Exchange Commission
      on  August 6, 2009and incorporated by
  reference).
  4.2
              Amended
      and Restated Warrant to Purchase 1,000,000 shares of common stock of
      Evolution issued to Harborview Master Fund on October 30, 2009 (Filed as
      an exhibit to the Company’s Form 8-K, filed with the Securities and
      Exchange Commission on November 5, 2009 and incorporated by
      reference).
  4.3
              Security
      Agreement, dated July 31, 2009 between Evolution and Harborview Master
      Fund, L.P. (Filed as an exhibit to the Company’s Form 8-K, filed with
      the Securities and Exchange Commission on August 6, 2009and incorporated
      by reference).
  31
 4.4
              Guaranty,
      dated July 31, 2009 between Evolution and Harborview Master Fund, L.P.
      (Filed as an exhibit to the Company’s Form 8-K, filed with the
      Securities and Exchange Commission on August 6, 2009and incorporated by
      reference).
  4.5
              Pledge
      Agreement, dated July 31, 2009 between Evolution and Harborview Master
      Fund, L.P. (Filed as an exhibit to the Company’s Form 8-K, filed with
      the Securities and Exchange Commission on August 6, 2009and incorporated
      by reference).
  4.6
              Account
      Control agreement, dated July 31, 2009 between Evolution and Harborview
      Master Fund, L.P. (Filed as an exhibit to the Company’s Form 8-K,
      filed with the Securities and Exchange Commission on August 6, 2009and
      incorporated by reference).
  4.7
              Warrant
      to Purchase 1,150,000 shares of common stock of Evolution issued to Mark
      Mollo on July 14, 2009 (Filed as an exhibit to the Company’s
      Form 8-K, filed with the Securities and Exchange Commission on July
      29, 2009and incorporated by
reference).
  10.01
              Securities
      Purchase Agreement, dated July 31, 2009 between Evolution and Harborview
      Master Fund, L.P. (Filed as an exhibit to the Company’s Form 8-K,
      filed with the Securities and Exchange Commission on August 6, 2009and
      incorporated by reference).
  10.2
              Series A
      Convertible Stock Purchase Agreement, dated May 27, 2009 between
      Evolution and various accredited investors (Filed as an exhibit to the
      Company’s Form 8-K, filed with the Securities and Exchange Commission
      on June 2, 2009and incorporated by
  reference).
  10.3
              Registration
      Rights Agreement, dated May 27, 2009 between Evolution and various
      shareholders of BBN (Filed as an exhibit to the Company’s Form 8-K,
      filed with the Securities and Exchange Commission on June 2, 2009 and
      incorporated by reference).
  21.1Subsidiaries of the
Registrant
  31.1           Rule 13a-14(a)
Certification of Principal Executive Officer (Filed herewith).
  31.2           Rule 13a-14(a)
Certification of Principal Financial Officer (Filed herewith).
  32.1           Section 1350
Certification of Principal Executive Officer (Filed herewith).
  32.2           Section 1350
Certification of Principal Financial Officer (Filed herewith).
  32
  SIGNATURES
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this Form 10-K to be signed on its behalf
by the undersigned, thereunto duly authorized.
  Evolution
      Resources, Inc.November
      27, 2009
                By:
                /s/ Dennis
      G. McLaughlinName Dennis
      G. McLaughlinChairman
      and Chief Executive Officer
  
 KNOW ALL
MEN BY THESE PRESENTS, that each of the undersigned officers and directors of
Evolution Resources, Inc. hereby constitutes and appoints Dennis G. McLaughlin
and Christopher P. Chambers, or either of them (with full power to each of them
to act alone), his true and lawful attorneys-in-fact and agents, with full power
of substitution, for him and on his behalf and in his name, place and stead, in
any and all capacities, to sign, execute and file any and all amendments
(including post-effective amendments) to this Form 10-K, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys, and each of
them, full power and authority to do so and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as full to all intents and purposes as he himself might or
could do if personally present, thereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done.
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates as indicated therein.
  Signature
                
                
                
                Date/s/
      Dennis G. McLaughlin
                
                Chairman  and
      Chief Executive Officer
                
                November
      27, 2009Dennis
      G. McLaughlin/s/
      Christopher P. Chambers
                
                Executive
      Vice President, Principal Accounting Officer and
      Director
                
                November
      27, 2009Christopher
      P. Chambers/s/
      Hank Cohen
                
                Director
                
                November
      27, 2009Hank
      Cohen
 /s/
      Herbert E. Myer
              
              Director
              
              November
      27, 2009Herbert
      E. Myer
    
  ITEM
8. FINANCIAL STATEMENTS
 
 INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 PageReport
      to Independent Registered Public Accounting Firm
              F-2Financial
      StatementsConsolidated
      Balance Sheet as of October 31, 2009
              F-3Consolidated
      Statements of Operations for the period April 9, 2009 (Inception) through
      October 31, 2009
              F-4Consolidated
      Statements of Changes in Stockholders’ Equity for the period April 9, 2009
      (Inception) through October 31, 2009
              F-5Consolidated
      Statements of Cash Flows for the period April 9, 2009
      (Inception) through October 31, 2009
              F-6Notes
      to Consolidated Financial Statements
              F-7
  
  REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
 To the
Board of Directors and stockholders of
 Evolution
Resources, Inc.
 Clarksdale,
Mississippi
 
 
 We have
audited the accompanying consolidated balance sheets of Evolution Resources,
Inc.  (the “Company”) as of October 31, 2009 and the related
statements of operations, stockholders’ equity and cash flows for the period
from April 9, 2009 (inception) through October 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
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audits 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. Our audit included 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 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 the Company as of October 31, 2009
and the results of its operations and its cash flows for the period from April
9, 2009 (inception) through October 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 3 to the
financial statements, the Company has no revenues. Net income for the period was
$5,341,286 which was the result of an extraordinary gain of $10,346,857 in
conjunction with the acquisition of Liquafaction on July 14, 2009. These factors
raise substantial doubt about the Company’s ability to continue as a going
concern. Management's plans in regards to these matters are also described in
Note 3.  The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
 
 
 /s/Li & Company,
PC
 Li &
Company, PC
 
 Skillman,
New Jersey
 November
27, 2009   F-2
 EVOLUTION
RESOURCES, INC.
 (A
Development Stage Company)
 Consolidated
Balance Sheet
 
 
 October
      31, 2009ASSETSCurrent
      assets:Cash
      and cash
      equivalents
              
              $
              2,221Prepaid
      expenses
              
              
              56,781Total
      current
      assets
              
              
              59,002Property
      and equipment, net of accumulated depreciation of $93,000
              
              
              10,538,970Equipment,
      net held for sale
              
              
              5,150,000Exclusivity
      agreement
              
              
              1,500,000Capitalized
      issuance expense
              
              
              57,667Total
      assets
              
              $
              17,305,639LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable and accrued expenses
              
              $
              1,079,152Accrued
      interest
      payable
              
              
              282,502Current
      portion of deferred
      liability
              
              
              60,000Total
      current liabilities
              
              
              1,421,654Deferred
      liability, net of current
      portion
              
              
              1,440,000Notes
      payable, net of discount of
      $53,750
              
              
              1,320,250Derivative
      liability
              
              
              4,392,823Deferred
      income tax liability
              
              
              1,335,322Total
      liabilities
              
              
              9,910,049Stockholders’
      equity:Convertible
      preferred stock, Series A, at $0.001 par value; 1,000,000 authorized,
      liquidation preference of $100 per share; 22,500 shares authorized; 22,500
      shares issued and outstanding
              
              
              53,973Common
      stock, $0.001 par value, 74,000,000 shares  authorized,
      17,581,077 shares issued and outstanding
              
              
              17,581Additional
      paid-in capital
              
              
              1,982,750Income
      accumulated during the development stage
              
              
              5,341,286Total
      stockholders’ equity
              
              
              7,395,590Total
      liabilities and stockholders’
      equity
              
              $
              17,305,639
 
 See accompanying notes to the consolidated
financial statements.
  F-3
  EVOLUTION
RESOURCES, INC.
 (A
Development Stage Company)
 Consolidated
Statement of Operations
 
 For
      the Period from April 9, 2009 (Inception) through October 31,2009Revenue:
              
              $
              -Operating expenses:Professional
      fees
              
              
              337,754Management
      services
              
              
              90,987Depreciation
      and
      amortization
              
              
              254,250General
      and
      administrative
              
              
              210,628Total
      operating expenses
              
              
              893,619Loss
      from operations
              
              
              (893,619
              )Other
      expense (income):Interest
      expense
              
              
              45,022Gain
      on the exchange of warrants
              
              
              (1,403,273
              )Loss
      on derivative liability
              
              
              4,151,660Other
      income
              
              
              (16,779
              )Total
      other expense (income), net before taxes
              
              
              2,776,630Loss
      from continuing operations
              
              
              (3,670,249
              )Income
      tax provision
              
              
              (1,335,322
              )Net
      loss from continuing operations
              
              
              (5,005,571
              )Extraordinary
      gain on acquisition, net of taxes
              
              
              10,346,857Net
      income
              
              $
              5,341,286Net
      income (loss) per common shareLoss
      per common share from continuing operations - basic and
      diluted
              
              $
              (0.29
              )Net
      income per common share from extraordinary gain on acquisition - basic and
      diluted
              
              $
              0.59Net
      income per common share
              
              $
              0.30Weighted
      average number of common shares outstanding - basic and
      diluted
              
              
              17,581,077
 
 See
accompanying notes to the consolidated financial statements.
  F-4
 
 EVOLUTION RESOURCES, INC.(A Development
Stage Company)
 Consolidated
Statement of Stockholders’ Equity
 For the
Period from April 9, 2009 (Inception) through October 31, 2009
 Preferred
                Stock
                (Shares)
              
              
              Preferred
                Stock
                ($)
              
              
              Discount
      on Preferred Stock
                ($)
              
              
              Common
                Stock
                (Shares)
              
              
              Common
                Stock
                ($)
              
              
              Additional
                Paid-in
                Capital
              
              
              Income
      Accumulated During the Development
                Stage
              
              
              Total
                Stockholders’
                EquityBalance
      at April 9, 2009 (Inception)
              
              
              —
              
              
              
              —
              
              
              
              
              
              
              9,760,000
              
              
              
              9,760
              
              
              
              49,995
              
              
              
              (83,218
              )
              
              
              (23,463
              )Reverse
      acquisition
              
              
              —
              
              
              
              —
              
              
              
              
              
              
              7,321,077
              
              
              
              7,321
              
              
              
              (66,745
              )
              
              
              83,218
              
              
              
              23,794May
      28, 2009 - sale of 12,000 shares of Series A Convertible Preferred Stock
      for $120,000 with discount of $120,000
              
              
              12,000
              
              
              
              120,000
              
              
              
              (120,000
              )
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —June
      16, 2009 - sale of 5,000 shares of Series A Convertible Preferred Stock
      for $50,000 with discount of $50,000
              
              
              5,000
              
              
              
              50,000
              
              
              
              (50,000
              )
              
              
              —
              
              
              
              
              
              
              
              —
              
              
              
              —
              
              
              
              —June
      26, 2009 - sale of 5,500 Shares of Series A Convertible Preferred Stock
      for $55,000 with discount of $55,000
              
              
              5,500
              
              
              
              55,000
              
              
              
              (55,000
              )
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —Issuance
      of shares for
                cancellation
      of acquisition
                warrants
              
              
              —
              
              
              
              —
              
              
              
              
              
              
              
              500,000
              
              
              
              500
              
              
              
              1,999,500
              
              
              
              —
              
              
              
              2,000,000Amortization
      of discount on   preferred shares
              
              
              —
              
              
              
              —
              
              
              
              53,973
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              53,973Net
      income
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              5,341,286
              
              
              
              5,341,286Balance
      at October 31, 2009
              
              
              22,500
              
              
              $
              225,000
              
              
              $
              (171,027
              )
              
              
              17,581,077
              
              
              $
              17,581
              
              
              $
              1,982,750
              
              
              $
              6,676,608
              
              
              $
              7,395,590
 
 See
accompanying notes to the consolidated financial statements.
  F-5
  EVOLUTION
RESOURCES, INC.
 (A
Development Stage Company)
 Consolidated
Statement of Cash Flows
 
 .
 For
      the Period from April 9, 2009 (Inception) through
                October
      31, 2009Cash
      flows from operating activities:Net
      income
              
              $
              5,341,286Adjustments
      to reconcile net income to net cash provided by (used in) operating
      activitiesDerivative
      liability
              
              
              4,229,732Discount
      on note payable
              
              
              (215,000
              )Discount
      on preferred stock
              
              
              (171,027
              )Depreciation
      and
      amortization
              
              
              254,250Capitalized
      issuance
      costs
              
              
              (57,667
              )Other
              
              
              23,794Changes
      in operating assets and liabilities:Prepaid
      expenses
              
              
              (56,781
              )Exclusivity
      agreement
              
              
              (1,500,000
              )Accounts
      payable and accrued liabilities
              
              
              627,561Deferred
      liability
              
              
              1,500,000Income taxes payable
              
              
              1,335,322Net
      cash provided by operating activities
              
              
              11,311,470Cash
      flows from investing activities:Gain
      on cancellation of warrants
              
              
              (1,403,273
              )Gain on acquisition
              
              
              (10,346,857
              )Net
      cash used in investing activities
              
              
              (11,750,130
              )Cash
      flows from financing activities:Sale
      of Series A convertible preferred stock
              
              
              225,000Cash
      from note payable
              
              
              215,000Net
      cash  provided by financing activities
              
              
              440,000Net
      decrease in cash and cash equivalents
              
              
              1,340Cash
      and cash equivalents, beginning of year
              
              
              881Cash
      and cash equivalents, end of year
              
              $
              2,221Supplemental
      disclosures:Cash
      paid during the period for interest, net of interest
      capitalized
              
              $
              -Cash
      paid during the period for income
      taxes
              
              $
              -
 
 See
accompanying notes to the consolidated financial statements.  F-6
 EVOLUTION
RESOURCES, INC.
  (A
Development Stage Company)
 October
31, 2009
  Notes to
the Consolidated Financial Statements
  NOTE
1 – ORGANIZATION
 
 Evolution
Resources, Inc. (“Evolution” or the “Company”), formerly BBN Global Consulting,
Inc. (“BBN”). BBN was incorporated on March 15, 2005 under the laws of the
State of Nevada. It was formed to be a consulting firm with a mission of
providing strategic business planning and management consulting to small
domestic companies and to assist medium sized companies in China and Brazil to
establish a business presence in the United States. Since November 1, 2007
the Company has ceased operations, and all previous business activities have
been discontinued. After the closing of the merger on May 27, 2009, as described
below, BBN changed its name from BBN Global Consulting, Inc. to Evolution
Resources, Inc. to reflect the activities or our principal business. Because of
the merger, BBN ceased to be a “shell company” as that term is defined in
Rule 405 of the Securities Act and Rule 12b-2 of the Exchange
Act.
  On
May 27, 2009 (the “Merger Date”), BBN, Evolution and Evolution Resources
Acquisition Corporation (“ERAC”), a wholly-owned subsidiary of Evolution entered
into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the
terms of the Merger Agreement, on May 27, 2009 ERAC merged with and into
Evolution, with Evolution remaining as the surviving corporation (the
“Merger”).
  As a
result of the ownership interests of the former shareholders of Evolution, for
financial statement reporting purposes, the merger between BBN and Evolution has
been treated as a reverse acquisition with Evolution deemed the accounting
acquirer and BBN deemed the accounting acquiree under the purchase method of
accounting in accordance with ASC 805-10-40, “Business Combinations – Reverse
Acquisitions”.  The reverse merger is deemed a capital transaction and
the net assets of Evolution (the accounting acquirer) are carried forward to BBN
(the legal acquirer and the reporting entity) at their carrying value before the
combination. The acquisition process utilizes the capital structure of BBN and
the assets and liabilities of Evolution which are recorded at historical cost.
The equity of BBN is the historical equity of Evolution retroactively restated
to reflect the number of shares issued by BBN in the transaction.
  On
May 27, 2009, in connection with the Merger, the Company amended its
articles of incorporation to change its name from BBN Global Consulting, Inc. to
Evolution Resources, Inc.
  As of the
closing of the Merger, each issued and outstanding share of common stock of
Evolution was converted into the right to receive 15,296,077 shares of the
common stock of BBN. Following (i) the closing of the Merger and (ii) the
cancellation of 7,975,000 shares of BBN’s common stock in connection with the
Merger, the former shareholders of Evolution hold approximately 89.55% of the
common stock of BBN.
  Evolution
is a development stage company focused on the advancement of the production of
cellulosic ethanol and biodiesel. Evolution’s business plan contains certain
proposed projects that if successfully implemented and completed, will leverage
existing assets and infrastructure to (a) significantly shorten the time frame
required to establish commercial scale cellulosic ethanol production facilities
and (b) “repurpose” certain industrial facilities to provide key biofuels
production components.
  NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
 
 Basis of
presentation
 
 The
accompanying consolidated financial statements and related notes have been
prepared in accordance with accounting principles generally accepted in the
United States of America (“U.S. GAAP”) for complete financial information, and
with the rules and regulations of the United States Securities and Exchange
Commission (“SEC”) to Form 10-K and Article 8 of Regulation
S-X.
  The
consolidated financial statements include the accounts of the Company at October
31, 2009 and for the period from April 9, 2009 (“Inception”) through
October 31, 2009. All inter-company balances and transactions have been
eliminated.
   F-7
  Development Stage
Company
  The
Company is a development stage company as defined by ASC 915-10“Development Stage
Entities”.The Company is still devoting substantially all of
its efforts on establishing the business and its planned principal operations
have not commenced. All losses accumulated since inception has been considered
as part of the Company's development stage activities.
  Use of
estimates
  The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
  Fiscal year
end
  The Company elected October 31, as its fiscal year
ending date.
  Cash
equivalents
  The
Company considers all highly liquid investments with a maturity of three months
or less when purchased to be cash equivalents.
  Property,
Plant and Equipment
 
 Property,
plant and equipment are carried at cost. Depreciation of property, plant and
equipment is provided using the straight line method at rates based on the
estimated useful lives.The cost of asset
additions and improvements that extend the useful lives of property and
equipment are capitalized. Routine maintenance and repairs items are charged to
current operations. The original cost and accumulated depreciation of asset
dispositions are removed from the accounts and any gain or loss is reflected in
the statement of operations in the period of disposition.
 
 Licenses
  The
Company has adopted the guidelines as set out in ASC 350-10 “Intangibles, Goodwill and
Other” for licenses. Under the requirements as set out in ASC 350-10,
licenses are stated at cost and amortized over their remaining legal lives,
estimated useful lives or the term of the contracts, whichever is shorter. Upon
becoming fully amortized, the related cost and accumulated amortization are
removed from the accounts.
 
 Impairment of Long-Lived
Assets
 
 In
accordance with Statement of ASC 360-10-35 “Property, Plant and Equipment –
Subsequent Measurement”, the Company reviews the carrying value of its
long-lived assets , which includes property, plant and equipment and
licenses annually or whenever events or changes in circumstances indicate
that the historical cost-carrying value of an asset may no longer be
appropriate. The Company assesses recoverability of the carrying value of the
asset by estimating the future net cash flows expected to result from the asset,
including eventual disposition. If the future net cash flows are less than the
carrying value of the asset, an impairment loss is recorded equal to the
difference between the asset’s carrying value and fair value. The Company
determined that there were no impairments of long-lived assets as of October 31,
2009.
 
 F-8
  Discount on Series A
convertible preferred stock
  The
Company has allocated the proceeds received from Series A convertible
preferred stock between the underlying instruments and has recorded the
conversion feature as a liability in accordance with ASC 815-10, “Derivative and
Hedging – and Related Disclosures”,  and related interpretations. The
conversion feature and certain other features that are considered embedded
derivative instruments, such as a conversion reset provision, a penalty
provision and redemption option, have been recorded at their fair value within
the terms of ASC 815-10 as its fair value can be separated from the convertible
note and its conversion is independent of the underlying note value. The
conversion liability is marked to market each reporting period with the
resulting gains or losses shown on the Statement of Operations.
  Derivatives
  The
Company accounts for derivatives in accordance with ASC 815-10, “Derivative and
Hedging – and Related Disclosures”, ASC 815-10 as amended, requires companies to
recognize all derivative instruments as either assets or liabilities in the
consolidated balance sheet at fair value. The accounting for changes in the fair
value of a derivative instrument depends on: (i) whether the derivative has been
designated and qualifies as part of a hedging relationship, and (ii) the type of
hedging relationship. For those derivative instruments that are designated and
qualify as hedging instruments, a company must designate the hedging instrument
based upon the exposure being hedged as either a fair value hedge, cash flow
hedge or hedge of a net investment in a foreign operation. At October 31,
2009, the Company had not entered into any transactions which were considered
hedges under ASC 815-10.  In conjunction with the issuance of Series A
convertible preferred stock, the Company has accounted for the embedded
derivative liability in accordance with ASC 815-15, “Derivatives & Hedging –
Embedded Derivatives” and performs a mark to market analysis at the end of each
reporting period.
  Financial
instruments
  The
Company evaluates its Series A convertible preferred stock to determine if
those contracts or embedded components of those contracts qualify as derivatives
to be separately accounted for under ASC 815-15, “Derivatives and Hedging –
Embedded Derivatives”, and related interpretations including ASC 815-40,
“Derivatives and Hedging – Contracts in Entities Own Equity”.  The
result of this accounting treatment is that the fair value of the embedded
derivative is marked-to-market each balance sheet date and recorded as a
liability. In the event that the fair value is recorded as a liability, the
change in fair value is recorded in the Statement of Operations as other income
or expense. Upon conversion or exercise of a derivative instrument, the
instrument is marked to fair value at the conversion date and then that fair
value is reclassified to equity.
  In
circumstances where the embedded conversion option in a convertible instrument
is required to be bifurcated and there are also other embedded derivative
instruments in the convertible instrument that are required to be bifurcated,
the bifurcated derivative instruments are accounted for as a single, compound
derivative instrument.
  The
classification of derivative instruments, including whether such instruments
should be recorded as liabilities or as equity, is re-assessed at the end of
each reporting period. Equity instruments that are initially classified as
equity that become subject to reclassification under ASC 815-10, “Derivative and
Hedging – and Related Disclosures”, are reclassified to liability at the fair
value of the instrument on the reclassification date. Derivative instrument
liabilities are classified in the balance sheet as current or non-current based
on whether or not net-cash settlement of the derivative instrument is expected
within 12 months of the balance sheet date.
  The fair
value model utilized to value the various compound embedded derivatives in the
secured convertible notes comprises multiple probability-weighted scenarios
under various assumptions reflecting the economics of the secured convertible
notes, such as the risk-free interest rate, expected Company stock price and
volatility, likelihood of conversion and or redemption, and likelihood of
default status and timely registration. At inception, the fair value of the
single compound embedded derivative was bifurcated from the host debt contract
and recorded as a derivative liability which resulted in a reduction of the
initial notional carrying amount of the secured convertible notes (as
unamortized discount which will be amortized over the term of the notes under
the effective interest method).
  Fair value of financial
instruments
 
 The
Company has adopted and follows ASC 820-10,“Fair Value Measurements and
Disclosures” for measurement and disclosures about fair value of its
financial instruments.  ASC 820-10 establishes a framework for
measuring fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair value measurements. To increase consistency and
comparability in fair value measurements and related disclosures, ASC 820-10
establishes a fair value hierarchy which prioritizes the inputs to valuation
techniques used to measure fair value into three (3) broad
levels.  The fair value hierarchy gives the highest priority to quoted
prices (unadjusted) in active markets for identical assets or liabilities and
the lowest priority to unobservable inputs.  The three (3) levels of
fair value hierarchy defined by ASC 820-10 described below:
 
 F-9
 Level
      1
              
              Quoted
      market prices available in active markets for identical assets or
      liabilities as of the reporting date.Level
      2
              
              Pricing
      inputs other than quoted prices in active markets included in Level 1,
      which are either directly or indirectly observable as of the reporting
      date.Level
      3
              
              Pricing
      inputs that are generally observable inputs and not corroborated by market
      data.
 
 As
defined by ASC 820-10, the fair value of a financial instrument is the amount at
which the instrument could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale, which was further clarified
as the price that would be received to sell an asset or paid to transfer a
liability (“an exit price”) in an orderly transaction between market
participants at the measurement date.  The carrying amounts of the
Company’s financial assets and liabilities, such as cash and cash equivilants
equivalents, prepayments and other current assets, accounts payable and accrued
expenses, accrued interest taxes payable, and other current liabilities,
approximate their fair values because of the short maturity of these
instruments.  The Company’s note payable approximates the fair value
of such instrument based upon management’s best estimate of interest rates that
would be available to the Company for similar financial arrangement at October
31, 2009.
 
 The
Company does not have any assets or liabilities measured at fair value on a
recurring or a non-recurring basis, consequently, the Company did not have any
fair value adjustments for assets and liabilities measured at fair value at
October 31, 2009, nor gains or losses are reported in the statement of
operations that are attributable to the change in unrealized gains or losses
relating to those assets and liabilities still held at the reporting date for
the interim period then ended.
 
 Revenue
recognition
  The
Company follows the guidance of ASC 605-10, “Revenue Recognition” to recognize
revenue related to its operations. The Company recognizes revenue when it is
realized or realizable and earned less estimated future returns. The Company
considers revenue realized or realizable and earned when all of the following
criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the
product has been shipped or the services have been rendered to the customer,
(iii) the sales price is fixed or determinable, and (iv) collectability is
reasonably assured and inventory held for sale is sold.
 
 Income
taxes
  The
Company accounts for income taxes under ASC 740-10,“Income Taxes”. Deferred
income tax assets and liabilities are determined based upon differences between
the financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse. Deferred tax assets are reduced by a valuation
allowance to the extent management concludes it is more likely than not that the
assets will not be realized. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in the statements of operations in the period that includes the
enactment date.
  ASC
740-10-25, “Income Taxes – Recognition” addresses the determination of whether
tax benefits claimed or expected to be claimed on a tax return should be
recorded in the financial statements.  ASC 740-10-25, the Company may
recognize the tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the
position.  The tax benefits recognized in the financial statements
from such a position should be measured based on the largest benefit that has a
greater than fifty percent (50%) likelihood of being realized upon ultimate
settlement.  ASC 740-10-40, “Income Taxes – De-recognition”, provides
guidance on de-recognition, classification, interest and penalties on income
taxes, accounting in interim periods and requires increased
disclosures.  The Company had no material adjustments to its
liabilities for unrecognized income tax benefits according to the provisions of
ASC 740-10-25.
 
 Net income (loss) per common
share
  Net
income (loss) per common share is computed pursuant to ASC 260-10, “Earnings per
Share”, Basic net income per share is computed by dividing net income by the
weighted average number of shares of common stock outstanding during the period.
Diluted net income per share is computed by dividing net income by the weighted
average number of shares of common stock and potentially outstanding shares of
common stock during each period to reflect the potential dilution that could
occur from common shares issuable through Series A convertible preferred
stock, which excludes 2,857,143 shares of common stock issuable under the
conversion feature of the Series A convertible preferred stock for the
period from April 9, 2009 (Inception) through October 31,
2009.
  F-10
 Recently Issued Accounting
Pronouncements
  
 On June
5, 2003, the United States Securities and Exchange Commission (“SEC”) adopted
final rules under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”),
as amended by SEC Release No. 33-9072 on October 13, 2009.  Under the
provisions of Section 404 of the Sarbanes-Oxley Act, public companies and their
independent auditors are each required to report to the public on the
effectiveness of a company’s internal controls.  The smallest public
companies with a public float below $75 million have been given extra time to
design, implement and document these internal controls before their auditors are
required to attest to the effectiveness of these controls.  This
extension of time will expire beginning with the annual reports of companies
with fiscal years ending on or after June 15, 2010.  Commencing with
its annual report for the year ending December 31, 2010, the Company will be
required to include a report of management on its internal control over
financial reporting. The internal control report must include a
statement
 
 ·
                Of
      management’s responsibility for establishing and maintaining adequate
      internal control over its financial
reporting;
 
 ·
                Of
      management’s assessment of the effectiveness of its internal control over
      financial reporting as of year end;
and
 
 ·
                Of
      the framework used by management to evaluate the effectiveness of the
      Company’s internal control over financial
  reporting.
 
 Furthermore,
it is required to file the auditor’s attestation report separately on the
Company’s internal control over financial reporting on whether it believes that
the Company has maintained, in all material respects, effective internal control
over financial reporting.
 
 In
June 2009, the FASB approved the “FASB Accounting Standards Codification”
(the “Codification”) as the single source of authoritative nongovernmental U.S.
GAAP to be launched on July 1, 2009.  The Codification does not
change current U.S. GAAP, but is intended to simplify user access to all
authoritative U.S. GAAP by providing all the authoritative literature related to
a particular topic in one place.  All existing accounting standard
documents will be superseded and all other accounting literature not included in
the Codification will be considered non-authoritative. The Codification is
effective for interim and annual periods ending after September 15,
2009.
 
 In
August 2009, the FASB issued the FASB Accounting Standards Update No.
2009-04 “Accounting for
Redeemable Equity Instruments - Amendment to Section 480-10-S99” which
represents an update to section 480-10-S99, distinguishing liabilities from
equity, per EITF Topic D-98, Classification and Measurement of
Redeemable Securities.  The Company does not expect the
adoption of this update to have a material impact on its consolidated financial
position, results of operations or cash flows.
 
 In
August 2009, the FASB issued the FASB Accounting Standards Update No.
2009-05 “Fair Value
Measurement and Disclosures Topic 820 – Measuring Liabilities at Fair
Value”, which provides amendments to subtopic 820-10, Fair Value
Measurements and Disclosures – Overall, for the fair value measurement of
liabilities.  This update provides clarification that in circumstances
in which a quoted price in an active market for the identical liability is not
available, a reporting entity is required to measure fair value using one or
more of the following techniques: 1. A valuation technique that uses: a. The
quoted price of the identical liability when traded as an asset b. Quoted prices
for similar liabilities or similar liabilities when traded as assets. 2. Another
valuation technique that is consistent with the principles of topic 820; two
examples would be an income approach, such as a present value technique, or a
market approach, such as a technique that is based on the amount at the
measurement date that the reporting entity would pay to transfer the identical
liability or would receive to enter into the identical liability. The amendments
in this update also clarify that when estimating the fair value of a liability,
a reporting entity is not required to include a separate input or adjustment to
other inputs relating to the existence of a restriction that prevents the
transfer of the liability. The amendments in this update also clarify that both
a quoted price in an active market for the identical liability when traded as an
asset in an active market when no adjustments to the quoted price of the asset
are required are Level 1 fair value measurements.  The Company does
not expect the adoption of this update to have a material impact on its
consolidated financial position, results of operations or cash
flows.
 F-11
 In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-08 “Earnings Per
Share – Amendments to Section 260-10-S99”,which represents technical
corrections to topic 260-10-S99, Earnings per share, based on EITF Topic D-53,
Computation of
Earnings Per Share for a Period that includes a Redemption or an Induced
Conversion of a Portion of a Class of Preferred Stock and EITF Topic
D-42, The
Effect of the Calculation of Earnings per Share for the Redemption or Induced
Conversion of Preferred Stock. The Company does not expect the adoption
of this update to have a material impact on its consolidated financial position,
results of operations or cash flows.
  In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-09 “Accounting for
Investments-Equity Method and Joint Ventures and Accounting for Equity-Based
Payments to Non-Employees”.  This update represents a
correction to Section 323-10-S99-4, Accounting by
an Investor for Stock-Based Compensation Granted to Employees of an Equity
Method Investee. Additionally, it adds observer commentAccounting
Recognition for Certain Transactions Involving Equity Instruments Granted to
Other Than Employees to the Codification. The Company does not expect the
adoption to have a material impact on its consolidated financial position,
results of operations or cash flows.
  In
September 2009, the FASB issued the FASB Accounting Standards Update No.
2009-12 “Fair Value
Measurements and Disclosures Topic 820 – Investment in Certain Entities That
Calculate Net Assets Value Per Share (or Its Equivalent)”, which provides
amendments to Subtopic 820-10, Fair Value Measurements and Disclosures-Overall,
for the fair value measurement of investments in certain entities that calculate
net asset value per share (or its equivalent). The amendments in this update
permit, as a practical expedient, a reporting entity to measure the fair value
of an investment that is within the scope of the amendments in this update on
the basis of the net asset value per share of the investment (or its equivalent)
if the net asset value of the investment (or its equivalent) is calculated in a
manner consistent with the measurement principles of Topic 946 as of the
reporting entity’s measurement date, including measurement of all or
substantially all of the underlying investments of the investee in accordance
with Topic 820. The amendments in this update also require disclosures by major
category of investment about the attributes of investments within the scope of
the amendments in this update, such as the nature of any restrictions on the
investor’s ability to redeem its investments a the measurement date, any
unfunded commitments (for example, a contractual commitment by the investor to
invest a specified amount of additional capital at a future date to fund
investments that will be make by the investee), and the investment strategies of
the investees. The major category of investment is required to be determined on
the basis of the nature and risks of the investment in a manner consistent with
the guidance for major security types in U.S. GAAP on investments in debt and
equity securities in paragraph 320-10-50-1B. The disclosures are required for
all investments within the scope of the amendments in this update regardless of
whether the fair value of the investment is measured using the practical
expedient. The Company does not expect the adoption to have a material impact on
its consolidated financial position, results of operations or cash
flows.
  Management
does not believe that any other recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on the
accompanying financial statements.
  NOTE
3 – GOING CONCERN
  As
reflected in the accompanying consolidated financial statements, the Company had
an operating loss net of tax of $5,005,571 at October 31, 2009, with
no revenues since inception.  Net income for the period was $5,341,286
which was the result of an extraordinary gain of $10,346,857 in conjunction with
the acquisition of Liquafaction on July 14, 2009.
  While the Company is attempting to
commence operations and generate revenues, the Company’s cash position may not
be significant enough to support the Company’s daily operations. Management
intends to raise additional funds by way of a public or private offering.
Management believes that the actions presently being taken to further implement
its business plan and generate revenues provide the opportunity for the Company
to continue as a going concern. While the Company believes in the viability of
its strategy to increase revenues and in its ability to raise additional funds,
there can be no assurances to that effect. The ability of the Company to
continue as a going concern is dependent upon the Company’s ability to further
implement its business plan and generate revenues.
 
 The financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as
a going concern.
  NOTE
4 – ACQUISITIONS
  On
July 14, 2009, Evolution entered into a Stock Purchase Agreement (the
“Agreement”) whereby the Company acquired all of the issued and outstanding
common stock of Liquafaction Corporation (“Liquafaction”) and
fifty-three percent of the membership interests of Liqua Ethanol, LLC
(“Liqua LLC”) (the shares of Liquafaction and Liqua LLC are referred to
collectively as the “Equity”). The purchase price of the Equity is as follows:
(i) $35,000 upon the execution of this Agreement, to be paid from a prior
deposit, (ii) a total of $30,000 due in equal weekly payments for eight weeks
from the date hereof and (iii) $150,000 upon the earlier of the completion of
the Moses Lakes project funding or 120 days from the date of the Agreement.
Additionally, the Shareholder received a (i) warrant to purchase 1,150,000
shares of Buyer’s common stock at an exercise price of $7.00 per share and (ii)
the right to receive additional warrants to purchase up to an additional 400,000
shares at an exercise price of $7.00 per share based on various performance
objectives contained in the Agreement (collectively, the “Warrants”). The fair
value of the warrants was $3,258,409 at acquisition, and $3,403,273 as of
October 30, 2009. The changes in fair market value are included in the
Consolidated Statement of Operations loss on derivatives totaling $4,151,660 as
of October 31, 2009.
   F-12
 On
October 30, 2009, the company entered into an agreement with the seller of
Liquafaction to cancel the initial consideration of 1,150,000 warrants to
purchase the Buyer’s shares of common stock at $7.00 per share in exchange for
the issuance of 500,000 shares of the Buyer’s common stock.  The
Seller’s basis in the Company’s stock was determined to be market of $4.00 per
share value as of October 30, 2009. The 1,150,000 warrants have a derivative
liability of $3,403,273 as of October 30, 2009.  Therefore the Company
recognized a $1,403,273 gain on the cancellation of the warrants and the
issuance of 500,000 common shares at market value.
 
 The
objective of this project is to convert a former idled corn ethanol facility
into a pilot-scale biorefinery that produces ethanol and associated co-products
from wheat straw in order to test biomass pretreatment and enzymatic hydrolysis
technology on a relatively small scale prior to final engineering and
construction of a larger 3 million gallon/year cellulosic production
facility at the same location. The planned facility will utilize the area’s
abundant wheat straw for conversion into high value co-products: ethanol, single
cell protein, lignin, and syrup. The larger facility is designed to profitably
produce approximately 3 million gallons of ethanol per year from 54,000
tons of wheat straw through the implementation of a number of highly effective
and efficient process technologies.
  The
Washington state loan/grant application follows an application made by the
Company in June of this year for a grant provided by the U.S. Department of
Energy (“DOE”) entitled “Demonstration of Integrated Biorefinery Operations” for
the same cellulosic ethanol project in Moses Lake, Washington.
  Although there is no guarantee that the
Company will be awarded the grant funds that it has requested, the Company will
utilize the work it has completed in preparing for these grants as a basis for
additional federal funding applications.
  The
primary reason for this acquisition was to obtain an immediate distribution
vehicle for Evolution’s cellulosic ethanol.
 
 The
following table summarizes the fair values assigned of the assets acquired and
the liabilities assumed the period ended October 31, 2009 and the date of
acquisition, July 14, 2009.  The initial valuation of was based on
preliminary fair values assigned to the assets prior to the third party
evaluation.
 
 
 October 31,
      2009
              
              
              July 14,
      2009Inventory
      available for sale
              
              $
              5,150,000
              
              
              $
              -Property
      and equipment
              
              
              177,070
              
              
              
              5,486,219Total
      assets
              
              
              15,781,970
              
              
              
              5,486,219Less:Liabilities
              
              
              1,868,749
              
              
              
              2,059,425Total
      acquisition price
              
              $
              3,473,364
              
              
              $
              3,426,794
 
 Evolution
Resources purchase price totaled $3,473,363 for the Liquafaction
acquisition.  The excess of the fair value of the assets acquired and
liabilities assumed over the purchase price was allocated to negative goodwill.
In accordance with ASC 350-20, “Intangibles, Goodwill and
Other”,the
negative goodwill was recorded as an extraordinary gain on
acquisition.  The excess of assets acquired over liabilities assumed
of $13,913,221.
 
  F-13
 The
initial preliminary valuation of the assets of Liquafaction was calculated on
July 14, 2009 and was valued at $5,486,219. The books and records of
Liquafaction were not well kept from inception through July 14, 2009 to
accurately determine the appropriate value of the assets.  The
preliminary value of the assets and liabilities were determined through creation
of financial statements from bank records.  The Company then engaged a
third party appraisal firm, The Mentor Group, (“Mentor”) to perform a valuation
of the assets of Liquafaction..  The new third party appraisal was
then used to determine the current fair market value of the assets of
$15,781,970 which included the discounted value on the plant equipment and the
fair market value of the inventory available for sale at October 31,
2009.  See Note 8 – Property, Plant & Equipment for additional
valuation information.
  NOTE
5 – PREPAID EXPENSES
  Prepaid
expenses at October 31, 2009 consisted of the following:
  October 31,
      2009Wood
      to Ethanol Research Council (WERC)
                  
                  $
                  39,584Gordon,
      Arata, McCollam, Duplantis & Eagan, LLP
                  
                  
                  11,197Richard
      Phillips
                  
                  
                  6,000$
                  56,781
 NOTE 6 — PROPERTY,
PLANT AND EQUIPMENT
 
 The
Company had no property, plant and equipment as of April 9,
2009.  As of October 31, 2009, property, plant and equipment consisted
principally of the assets related to the Liquafaction business acquired on July
14, 2009 as follows:
 
 DescriptionProduction
      Facilities
              
              
              10,631,970Fixtures
      and equipment
              
              
              -Total cost
              
              
              10,631,970Accumulated
      Depreciation
              
              
              (93,000
              )Net
      property, plant and equipment
              
              $
              10,538,970
 
 In
conjunction with the Liquafaction purchase on July 14, 2009, the Company engaged
the appraisal firm The Mentor Group, (“Mentor”) to perform a third party market
value appraisal of the assets acquired in the transaction (Ethanol Plant and
Elevator).  Mentor inspected the facilities on April 13, 2007 and
conducted its initial appraisal and evaluation based upon an orderly liquidation
on an “as is” and “as completed basis” based on the leasehold improvements and
integrated fixed equipment systems with a premised 12-18 month exposure and
marketing period.   Mentor updated their initial analysis and
valuation performed on April 13, 2007 and at October 13, 2009 valued the
facilities at $13,720,000 as of October 5, 2010.
 
 For the
purposes of determining the appropriate depreciation for the facilities, Mentor
used the depreciation table provided by Marshall and Swift.  As of
July 14, 2009 (the acquisition date), Mentor determined the facilities had a 30
year useful life and an effective age of 10 years.  This resulted in a
21% depreciation percentage was used.  The company intends to continue
using the Marshall and Swift tables depreciating the plant and elevator site by
the percentage change in the table each year.  Annual depreciation
will be 3% of the asset value, with year 1 depreciation being $318,960 or
$26,580 per month.   Depreciation expense for the period ended
October 31, 2009 was $93,000.
 
 Evolution’s
accounting policy is to record depreciation on a straight-line basis over the
estimated useful lives of the various assets as follows:
 
 Furniture
      and fixtures
              
              5-7
      YearsMachinery
      and equipment
              
              5-10
      YearsProduction
      Facilities
              
              20
      Years


F-14
 The Company entered into an
agreement to join the “North Carolina State University Wood to Ethanol Research
Consortium” (“WERC”) in order to have access to WERC’s body of research
surrounding new developments in ethanol production.  The Company paid
$50,000 for membership in the WERC beginning June 1, 2009 through June 1,
2011.  The prepaid balance of this membership was $39,584 at October
31, 2009.
  The
Company retained the service of Gordon, Arata, McCollam, Duplantis & Eagan,
LLP to provide outside legal services.  The Company paid a $20,000
retainer in advance and has been charged $8,803 through October 31, 2009,
leaving a prepaid balance of $11,197.
  The
Company has entered into a consulting agreement on March 11, 2009 with Richard
Phillips to provide technical expertise, guidance and business development
assistance with regard to cellulosic ethanol production.  The Company
paid Mr. Phillips a retainer of $10,000 and he had charged a total of $4,000
against the retainer, leaving a prepaid balance of $6,000 at October 31,
2009.
 NOTE 7
– EXCESS EQUIPMENT HELD FOR SALE
  At
October 31, 2009, the Company has $5,150,000 of excess equipment held for sale.
This excess equipment originated from the Liquafaction acquisition and was
included in the $13,720,000 orderly liquidation value of the facilities on an
“as is” and “as completed” basis.  This excess equipment is not needed
for the completion of the cellulosic ethanol facility and the Company has
determined it will be classified as excess equipment held for sale and sold to
third parties.  The excess equipment was valued at $3,090,000 which
was a 40% discount from the full market value if sold in an orderly liquation
sale. The excess equipment will be carried at $5,150,000 (market value) on the
Company’s books as determined by The Mentor Group which is included in their
full market value of the facility as it does not need to be sold
immediately.  As required, the Company will perform an annual
valuation of the excess equipment held for sale, and mark the equipment to
market as applicable.
  NOTE 8 – LICENSING
AGREEMENT
  Licensing
Agreement
  On
April 27, 2009, the Company entered into a licensing agreement with
Bio-Process Innovation, Inc. (“BPI”) to license its patented and proprietary
processes and associated yeast(s). The Company then amended this agreement on
November 18, 2009, effective October 31, 2009.  The Company will have
to pay a one time design/usage fee of $0.05 per gallon ethanol design capacity
per year in two installments; 50% upon Project Commencement, as defined, and 50%
upon the plant meeting production nameplate capacity over a period of two weeks
operation. In addition BPI will charge a monthly Royalty fee equal to 4% of the
Net Pre-Tax Revenues, as defined, from the sale of all products and co-products
produced in each of the Company’s refineries.
 
 The
Company will be granted the exclusive and non-transferable rights to the use of
BPI technologies associated with the production of ethanol and co-products from
cellulosic biomass materials within the United States for an exclusivity fee of
$1,500,000 paid in installments of no less than $5,000 per month, with the total
amount being paid in full in no more than 36 months from the date of the
agreement.  Exclusive rights to BPI technologies may be maintained by
the Company for an annual maintenance fee of $150,000 paid to BPI beginning 36
months from the date of the agreement.
  The
Company recorded the licensing agreement as a $1,500,000 asset with an
offsetting short term deferred liability of $60,000 and long term deferred
liability of $1,440,000 to amortize the exclusivity agreement over the life of
the ten year agreement.
 
 In
conjunction with the amended agreement dated November 18, 2009, the Company and
BPI entered into a convertible note as of the date of the agreement for the
total amount of $1,500,000 bearing interest of 8% per annum.  As the
monthly payments or other payments are made, the note amount shall be reduced
dollar for dollar.  The note shall be convertible into common shares
of Evolution common stock at the election of the licensee such that any
remaining balance owed as of month 30 may be converted into the shares at the
market price that may be liquidated over the succeeding 6 months in equal
proportional amounts each month.
  F-15
 NOTE
9 – NOTES PAYABLE
  In
connection with the acquisition of Liquafaction on July 14, 2009, the Company
assumed certain secured notes payable held by Liquafaction related to the
financing of the facilities.  The following table outlines the notes
payable at October 31, 2009.
 
 Note Holder
              Date of Issuance
              Maturity Date
              
              Interest Rate
              
              
              Issue AmountNWNRG/ADAB
      (1)
              4/27/2007
              1/31/2010
              
              
              9.25%
              
              
              $
              360,000Shawn
      Bunce (2)
              5/29/2007
              1/31/2010
              
              
              12.00
              
              
              
              358,000Bruce
      Blackwell (3)
              8/1/2008
              1/31/2010
              
              
              12.00
              
              
              
              220,000Harborview
      Master Fund LP
              7/31/2009
              11/30/2009
              
              
              18.00
              
              
              
              215,000Discount
      of Harborview note
              -
              -
              
              
              
              
              
              
              (53,750
              )Bruce
      Blackwell (4)
              5/1/2007
              1/31/2010
              
              
              12.00
              
              
              
              200,000Marguerite
      Heiser (5)
              11/26/2007
              7/26/2007
              
              
              9.25
              
              
              
              11,000Pat
      Brannen (6)
              2/15/2008
              8/9/2008
              
              
              9.50
              
              
              
              10,000$
              1,320,250Accrued
      Interest
              
              
              
              
              
              
              
              
              282,502
 
 Note
(1):Secured by
boiler and 2 centrifuges
 Note
(2):Secured by
elevator property
 Note
(3):Secured by main
ethanol plant equipment
 Note
(4):Secured by
evaporator
 Note
(5):Marguerite
Heiser entered into 3 separate promissory notes with Liquafaction; $39,600,
$30,000 and $4,650.  The note for $39,600 was secured by equipment and
was due on August 9, 2008.  When the principal balance and interest due was not paid as
per the initial agreement, Marguerite Heiser enforced the security agreement and
the equipment was sold to reduce her total notes payable balance.  A
verbal agreement with Marguerite Heiser was entered into for $11,000 and is
included in the notes payable balance at October, 31, 2009.
 
 
 The total
accrued interest related to the notes payable was $282,502 at October 31,
2009.
 
 On July
31, 2009, we entered into a Securities Purchase Agreement with certain
accredited investors pursuant to which we sold  $215,000 aggregate
principal amount of senior secured notes bearing 18% interest per annum, due
November 30, 2009, and five-year warrants to purchase 1,000,000 shares
of common stock at an exercise price of $5.00 per share (the “Warrant”). The
Notes are secured by (i) substantially all of the assets of Evolution and its
subsidiaries and (ii) the pledge of Evolution of its entire equity interest in
each of its subsidiaries. The Notes are guaranteed by each of Evolution’s
subsidiaries. Evolution and each of its subsidiaries also entered into an
account control agreement to secure the Notes. With appropriate notice,
Evolution has the option to repay the Notes prior to the due date. At the date
of original issuance, the Company recognized a discount on the note of $215,000
representing the fair value of the warrants at issuance. Amortization on the
debt discount totaled $161,250 for the period ended October 31,
2009.
 
 NOTE 10
– COMMITMENTS AND CONTINGENCIES
  The
Company has entered into a consulting agreement on February 28, 2009 with
Chrysalis Energy Partners, LLC, (“Chrysalis”) to provide professional services
through February 28, 2010. The Company is to pay $10,000 per month for
these services. As of October 31, 2009 we have incurred $90,361 in fees and
expenses and have made payments of $79,000 to Chrysalis.
  F-16
 The
Company has entered into a consulting agreement on May 14, 2009 with Byrne &
Company Limited (“Byrne”) to provide consulting services as directed to develop
a business plan and two fully functional financial models. The Company is to pay
$10,000 per month for these services. The Company can terminate this agreement
at any time with or without cause.  As of October 31, 2009 we have
incurred $72,432 in fees and expenses and have made payments of $65,000 to
Byrne.
  The
Company entered into a supply agreement on April 16, 2009 with Booshoot Gardens,
LLC (“Booshoot”) to provide growing Phyllostachys edulis (“Moso”) to establish
biomass forests in the Mississippi Delta region for used in the production of
cellulosic ethanol. The total supply contract cost is $1,000,000, with 50% of
the contract cost to be payable upon delivery after the date of arrival of
goods.  As of October 31, 2009, the Company has made payments totaling
$110,000 to Booshoot.  The contract stipulates that Booshoot will not be
bound by any order placed by the Company until such order has been received and
accepted by Booshoot in writing.  In addition, Booshoot will not be bound
by any order until Booshoot has received 30% of the purchase price in progress
payments.  The Company has not placed any orders with Booshoot.  The
Company is attempting to re-negotiate the progress payment terms with Booshoot.
 The Company has not accrued any additional amounts, as of October 31 2009,
beyond the payments totaling $110,000.
  The
Company entered into a consulting agreement with Informa Economics, Inc.
(“Informa”) to provide periodic consulting services to the
Company.  At October 31, 2009, the Company had not incurred any
expenses or made any payments to Informa.
  In
conjunction with the Liquafaction acquisition, the Company assumed certain
leases and liabilities associated with the acquisition.  Liquafaction
had two main leases associated with its business operations; a ground lease for
the main ethanol facilities and an adjacent warehouse lease.
  The
Company assumed the main ethanol plant lease which Liquafaction had entered into
in September 2006.  The original lease terms ran from June 1, 2006 to
and including May, 31, 2009.  The initial lease called for monthly
rent of $5,000 for the first twelve months, escalating to $10,000 per month
thereafter.  At the acquisition date, Liquafaction was behind on its
monthly plant rent payments. The Company entered into a new lease agreement for
the ethanol plant which at the time included the late rental payments of
$170,000 from the initial lease and continuing monthly rental payments of
$10,000 per month.
  On
April 27, 2009, the Company entered into a licensing agreement with
Bio-Process Innovation, Inc. (“BPI”) to license its patented and proprietary
processes and associated yeast(s). The Company then amended this agreement on
November 18, 2009, effective October 31, 2009.  The Company will have
to pay a one time design/usage fee of $0.05 per gallon ethanol design capacity
per year in two installments; 50% upon Project Commencement, as defined, and 50%
upon the plant meeting production nameplate capacity over a period of two weeks
operation. In addition BPI will charge a monthly royalty fee equal to 4% of the
Net Pre-Tax Revenues, as defined, from the sale of all products and co-products
produced in each of the Company’s refineries.
  The
Company will be granted the exclusive and non-transferable rights to the use of
BPI technologies associated with the production of ethanol and co-products from
cellulosic biomass materials within the United States for an exclusivity fee of
$1,500,000 paid in installments of no less than $5,000 per month, with the total
amount being paid in full in no more than 36 months from the date of the
agreement.  Exclusive rights to BPI technologies may be maintained by
the Company for an annual maintenance fee of $150,000 paid to BPI beginning 36
months from the date of the agreement.
  The
Company recorded the exclusivity agreement as a $1,500,000 asset with an
offsetting short term deferred liability of $60,000 and long term deferred
liability of $1,440,000 to amortize the exclusivity agreement over the life of
the ten year agreement at October 31, 2009.
  Per the
amended agreement, the Company and BPI entered into a convertible note as of the
date of the agreement for the total amount of $1,500,000 bearing interest of 8%
per annum.  As the monthly payments or other payments are made, the
note amount shall be reduced dollar for dollar.  The note shall be
convertible into common shares of Evolution common stock at the election of the
licensee such that any remaining balance owed as of month 30 may be converted
into the shares at the market price that may be liquidated over the succeeding 6
months in equal proportional amounts each month.
  F-17
 The
Company entered into an agreement to join the “North Carolina State University
Wood to Ethanol Research Consortium” (“WERC”) in order to have access to WERC’s
body of research surrounding new developments in ethanol
production.  The Company paid $50,000 for membership in the WERC
beginning June 1, 2009 through June 1, 2011.  The prepaid balance of
this membership was $39,584 at October 31, 2009.
  The
Company retained the service of Gordon, Arata, McCollam, Duplantis & Eagan,
LLP to provide outside legal services.  The Company paid a $20,000
retainer in advance and has been charged $8,803 through October 31, 2009,
leaving a prepaid balance of $11,197.
  The
Company has entered into a consulting agreement on March 11, 2009 with Richard
Phillips to provide technical expertise, guidance and business development
assistance with regard to cellulosic ethanol production.  The Company
paid Mr. Phillips a retainer of $10,000 and he had charged a total of $4,000
against the retainer, leaving a prepaid balance of $6,000 at October 31,
2009.
  On
October 14, 2009, the Company entered into a six-month agreement with Trilogy
Capital Partners, Inc. (“Trilogy”) for the development and implementation of a
financial communications program designed to increase the investor awareness of
the Company in the investment community.  Trilogy will work with the
Company to structure and implement a marketing program designed to create
extensive financial market and investor awareness and to drive long-term
shareholder support.  The program will utilize technology driven
communications to attract additional long term investors and create additional
opportunities in M&A and Business Development.  In conjunction
with this agreement, on October 14, 2009, the Company entered into an agreement
to issue Trilogy 427,000 shares of the Company’s common stock.
  The
Company rents warehouse space in Medera, CA from Olberti, LLC (“Olberti”) for
$4,500 per month, which originated in December 2007 in conjunction with the
Liquafaction acquisition to store a large burner/economizer that is needed for
the operation of the ethanol plant in Moses Lake, WA.  The Company has
no formal written lease agreement with Olberti.  As of October 31,
2009, the company owed $60,000 in rent to Olberti.
  The
Company leases a warehouse and water well/rights in Moses Lake, WA at the
Liquafaction facility to store inventory held for sale and draw water for use in
the plant.  The lease for the warehouse and water well/rights is
$4,200 and $3,000 per month respectively.  The lease originated in May
2007.
  NOTE
11 – STOCKHOLDERS’ EQUITY
  Common
Stock
  On
October 14, 2009, the Company entered into a six-month agreement with Trilogy
Capital Partners, Inc. (“Trilogy”) for the development and implementation of a
financial communications program designed to increase the investor awareness of
the Company in the investment community.  Trilogy will work with the
Company to structure and implement a marketing program designed to create
extensive financial market and investor awareness and to drive long-term
shareholder support.  The program will utilize technology driven
communications to attract additional long term investors and create additional
opportunities in M&A and Business Development.  In conjunction
with this agreement, on October 14, 2009, the Company entered into an agreement
to issue Trilogy 427,000 shares of the Company’s common stock.
  October 30,
2009, Evolution Resources, Inc. (“Evolution”) entered into a Stock Purchase
Agreement (the “Purchase Agreement”) with Harborview Master Fund, L.P.
(“Harborview”) pursuant to which Evolution sold, and Harborview purchased,
75,000 shares of Evolution’s common stock, par value $.001 (the “Shares”). In
consideration of the Shares, Harborview agreed to the following: (i) to amend
the conversion price of the Series A Convertible Preferred Stock issued by
Evolution to a $4.00 per share fixed conversion price and (ii) to amend the
exercise price of the Warrant to Purchase Shares of Common Stock issued to
Harborview on July 31, 2009 (the “Original Warrant”) to a $7.00 per share
exercise price subject to adjustment except that in certain circumstances the
conversion price may not be reduced below $4.00 per share (collectively, the
“Amendments”).
  On
October 30, 2009, the Company entered to an agreement with the Seller of
Liquafaction to cancel the outstanding 1,150,000 warrants in exchange for
500,000 shares of the Company’s common stock.
  F-18
 Series A Convertible
Preferred Stock
  On
May 27, 2009, the Company entered into a Series A Convertible
Preferred Stock Purchase Agreement (the “Purchase Agreement”) with Harborview
Master Fund, L.P. (“Harborview”). Pursuant to the Purchase Agreement, Harborview
purchased an aggregate of 22,500 shares of Series A Convertible Preferred
Stock (“Series A Preferred Stock”), for aggregate gross proceeds equal to
$225,000. The purchase price will be paid as follows: (i) $120,000 was paid on
the Merger Date, May 27, 2009 (ii) $55,000 will be paid upon the filing of
a registration statement and (iii) $50,000 upon the effectiveness of the
registration statement.
  The
Series A Preferred Stock shall not be entitled to receive any dividends,
have a liquidation value of $100 per share and shall be entitled to vote
together with the holders of the common stock of the Company, on an as converted
basis.
  The
Series A Preferred Stock may be converted into common stock of the Company
at the option of the holder by using a conversion price which shall be equal to
the liquidation value of $100 divided by the lesser of (i) $1.00, as adjusted or
(ii) 70% of the average  (a) if the common stock of the Company is then
listed or quoted on a trading market, the daily volume weighted average price of
the common stock for such date, for the five trading day period preceding the
conversion date; (b) if the common stock of the Company is not listed or quoted
on a trading market but are then reported in the “Pink Sheets”, the most recent
bid price per share, for the five trading day period preceding the conversion
date; or (c) in all other cases, the fair market value of a share of common
stock as determined by an independent.
  The
Company followed the accounting treatment in ASC 825-10, “Financial
Instruments”,”ASC
815-10, “Derivative and Hedging – and Related Disclosures”, and ASC 815-40,
“Derivatives and Hedging – Contracts in Entities Own Equity”.  The
Company recognized a derivative liability upon the issuance of $120,000 of the
Series A Preferred Stock that values the compound derivatives based on a
probability weighted discounted cash flow model. The significant assumptions
used for the valuation model were: the underlying stock price was used as the
fair value of the common stock even though it is thinly traded, projected
volatility of 215%, based on the average of 7 comparable alternative energy
companies, the Company would complete its registration requirements by
October 31, 2009, the holder would automatically convert at a stock price
of $1.50 if the Company was not in default, the holder would convert on a
quarterly basis in amounts not to exceed 25% of the average trading volume, the
average trading volume would increase at 5% per quarter, and the holder would
redeem if the stock price fell to $0.10 or lower. As the value of the derivative
liability was greater than the face value of the Series A Preferred Stock,
only the par value was prescribed to the Series A Preferred Stock. On date
of issuance the fair value of the Series A Preferred Stock derivative
liability was $3,258,409.  At October 30, 2009, the fair value of
the Series A Preferred Stock derivative liability was $3,403,273. The
change in the fair value of the warrants for the period ending October 31, 2009,
is included in the Consolidated Statement of Operations loss on derivatives
totaling $4,151,660.
  NOTE
12 – INCOME TAXES
  In conjunction with the acquisition of Liquafaction
on July 14, 2009 and respective gain of $ 10,346,857 at October 31, 2009, the
Company recorded an income tax provision of $1,335,322 for the period ended
October 31, 2009.
    NOTE
13 – SUBSEQUENT EVENTS
  Management
performed an evaluation of the Company’s activity through November 27, 2009, the
date these financials were issued to determine if they must be reported. The
Management of the Company determined that there are certain reportable
subsequent events to be disclosed as follows:
  On
November 18, 2009, the Company amended an earlier licensing agreement dated
April 27, 2008 with Bio-Process Innovation, Inc. (“BPI”) to license its patented
and proprietary processes and associated yeast(s). The Company then amended this
agreement on November 18, 2009, effective October 31, 2009.  The
Company will have to pay a one time design/usage fee of $0.05 per gallon ethanol
design capacity per year in two installments; 50% upon Project Commencement, as
defined, and 50% upon the plant meeting production nameplate capacity over a
period of two weeks operation. In addition BPI will charge a monthly Royalty fee
equal to 4% of the Net Pre-Tax Revenues, as defined, from the sale of all
products and co-products produced in each of the Company’s
refineries.
  F-19
 The
Company will be granted the exclusive and non-transferable rights to the use of
BPI technologies associated with the production of ethanol and co-products from
cellulosic biomass materials within the United States for an exclusivity fee of
$1,500,000 paid in installments of no less than $5,000 per month, with the total
amount being paid in full in no more than 36 months from the date of the
agreement.  Exclusive rights to BPI technologies may be maintained by
the Company for an annual maintenance fee of $150,000 paid to BPI beginning 36
months from the date of the agreement.





The
Company recorded the exclusivity agreement as a $1,500,000 asset with an
offsetting short term deferred liability of $60,000 and long term deferred
liability of $1,440,000 to amortize the exclusivity agreement over the life of
the ten year agreement at October 31, 2009.




Per the
amended agreement dated November 18, 2009, the Company and BPI entered into a
convertible note as of the date of the agreement for the total amount of
$1,500,000 bearing interest of 8% per annum.  As the monthly payments
or other payments are made, the note amount shall be reduced dollar for
dollar.  The note shall be convertible into common shares of Evolution
common stock at the election of the licensee such that any remaining balance
owed as of month 30 may be converted into the shares at the market price that
may be liquidated over the succeeding 6 months in equal proportional amounts
each month.