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

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

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

Overview

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

Since becoming incorporated, EVCARCO, Inc. has not made any significant purchases or sale of assets. EVCARCO, Inc. is not a blank check registrant as that term is defined in Rule 419(a) (2) of Regulation C of the Securities Act of 1933, since it has a specific business plan or purpose.

On May 23, 2012 ("the acquisition date"), the Company acquired 100% of the outstanding common and preferred shares of The Third Stone Corporation in exchange for 3,329,504 shares of its common stock and 1,000,000 shares of Class B Convertible preferred stock, valued at $167,475 based on the closing share price on May 23, 2012. The Third Stone Corporation ("The Subsidiary") was incorporated in the State of Wyoming on September 27, 2011. The Subsidiary is currently producing consumer software applications in sports, social media, finance and home automation sectors. The results of the Subsidiary's operations have been included in the consolidated financial statements since the acquisition date. In connection with acquisition, the Board made some changes to the management team: Mr. Gary Easterwood was appointed as President and Chief Executive Officer, Mr. Mack Sanders became Chief Operating Officer, and Mr. Walter Speck was appointed as an Executive Vice President.

On June 12, 2012, the Company effectuated a 1-for-500 reverse stock split of its issued and outstanding common stock. All amounts of shares reflected in this report and on the accompanying consolidated financial statements are on post-split basis. On the same day, the Company increased its authorized common stock to 900,000,000 shares, and decreased its authorized Class B Convertible preferred stock to 75,000,000 shares.

On August 7, 2012, Mr. Water Speck acquired a controlling interest in the Company by purchasing 7,000,000 shares of Class B Convertible preferred stock from Mr. Nikolay Frolov, CFO and Director. Mr. Speck became Chairman of the Board of the Company, Mr. Easterwood was appointed Director, and Mr. Frolov resigned from the Board.

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

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

Plan of Operation

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

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

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

· Sales - Grow sales to 15-20 new cars, and 80-100 pre-owned cars per quarter. Get the software sales and app revenues to the level of $20,000 - $30,000 per month.

· Product Research and Development - Continue working on identifying and testing products and vehicles from U.S. companies, as well as foreign manufacturers, which can provide cleaner, safer, faster, and more economical forms of transportation, by utilizing the latest developments in the alternative fuel area. Finalize development of several significant software projects and begin their distribution through variety of sales channels. Continue developing mobile apps relating to both out automotive and software business.

· Franchise Development - Begin marketing the EVCARCO franchise concept and licensing of Company's Trademarks, with the short term objective of securing several territories and establishing one to three Dealer Development Candidates during 2012.

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

Operating Environment

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

Operating Results

Limited financial resources have affected our ability to acquire inventory, and our consolidated financial statements reflect very sporadic purchasing and sales activity, which may continue until we are able to raise the sufficient capital.

For the quarterly periods ended September 30, 2012 and 2011, gross revenues were $241,412 and $120,745, gross profit was $26,501 and $8,922, respectively. Net losses for the same quarterly periods were $1,006,936 and $375,379, including approximately $163,394 and $120,000, respectively, of accrued compensation to the officers of the Company.

For the nine month periods ended September 30, 2012 and 2011, gross revenues were $761,824 and $469,840, gross profit was $81,323 and $30,629, respectively. Net losses for the same quarterly periods were $1,639,545 and $1,624,828, including approximately $407,084 and $443,800, respectively, of accrued compensation to the officers of the Company.

As of September 30, 2012, the Company had assets of $717,789, and total liabilities of $2,976,235. As of December 31, 2011, the Company had assets of $235,682, and total liabilities of $1,879,985.

Amounts for revenues and gross margins reflect sporadic operations of the company affected by limited financial resources. The trend in losses reflects the rise in business activity and increasing efforts in realizing the Company's business plan and starting normal business operations.

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

Liquidity and Capital Resources

As of September 30, 2012 and December 31, 2011, the Company had no significant cash reserves or other liquid assets.

As of September 30, 2012 and December 31, 2011, working capital deficiency amounted to $2,799,307 and $1,665,928, respectively.

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

Other Items and Conditions

As of September 30, 2012, the Company had $2,976,235 of current liabilities outstanding. That amount included approximately $218,186 of compensation and related taxes accrued to the officers of the Company; approximately $176,607 of other accrued compensation and related taxes; $129,788 of shareholder advances; and $1,182,597 of convertible debt.

As of December 31, 2011, the Company had $1,879,985 of current liabilities outstanding. That amount included $725,611 owed to the two officers and major shareholders of the Company (primarily for accrued compensation), and $346,530 of convertible debt.

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