EVBC Evolution Blockchain Group Inc (CE)

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

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

We were incorporated under the laws of the State of Nevada on April 9, 2014. Our fiscal year end is April 30. Our principal offices are currently located at 7458 Allison Place, Chilliwack, British Columbia, Canada. Our telephone number is: (778) 823-3104.

Following incorporation, we commenced the business of a mineral exploration company. On May 8, 2014, we incorporated our wholly-owned subsidiary, ORC Exploration LLC, for the purposes of mineral exploration. On May 20, 2014, we acquired an option to acquire a 100% legal and beneficial ownership interest in the Elizabeth mineral claim, located in the Omineca Mining District in the central part of the Province of British Columbia. Our initial mining exploration program, which was scheduled to commence in the second quarter of the fiscal year ending April 30, 2015, was delayed until the fourth quarter due to forest fire concerns.

Due to a dearth of available financing options, which has affected many junior mining companies in recent years, we subsequently ran out of funds to proceed with our planned exploration program. As a result, our management decided to seek out other potential business operations and management skills for the continuation of our business. In connection therewith, effective June 8, 2015, our chief executive officer (“ CEO ”) and sole director, Jose Montes, resigned all positions as an officer and director of the Company, and we appointed Mike Gilliland to serve as our sole officer and director. Effective March 14, 2016, Mr. Gilliland resigned all positions as an officer and director of our company, and we appointed Devon Loosdrecht to serve as our sole officer and director.

We are currently seeking new business opportunities with established business entities to affect a merger or other form of business combination with our company. On April 8, 2016, we entered into an arrangement agreement (the “ Arrangement Agreement ”) with Garmatex Technologies, Inc. (“ Garmatex ”), a private company incorporated under the laws of the Province of British Columbia, pursuant to which we have agreed to acquire all of the outstanding securities of Garmatex in exchange for the issuance of equivalent securities of our company by way of a statutory arrangement (the “ Arrangement ”) under the Business Corporations Act (British Columbia). In the event that the Arrangement is successfully completed, we will commence operating Garmatex’s business, which is the development and supply of scientifically engineered fabric technologies. As of the date of this report, the Company has executed an amendment, effective August 15, 2016, to the Arrangement Agreement which has allowed for an extension of the termination date to May 31, 2017. The agreement has not yet closed as subjects to this Arrangement Agreement have not yet been met.

Completion of the Arrangement is subject to a number of conditions as in the Arrangement Agreement. There can be no assurance that the Arrangement will be completed as proposed or at all. In the event that the Arrangement is not successfully completed, we expect that we will continue to seek out new business opportunities. We anticipate that any new acquisition or business opportunity that we may be party to will require additional financing. There can be no assurance, however, that we will be able to acquire the financing necessary to enable us to pursue our plan of operation and enter into such an agreement. If we require additional financing and we are unable to obtain such funds, our business will fail.

4

Even if we are able to complete the Arrangement or commence a different new business opportunity and obtain the necessary funding, there is no assurance that we will be able to generate any revenue, or that any revenue that may be generated will be sufficient to provide a return to our investors.

In implementing a structure for a particular business acquisition or opportunity, we may become a party to a merger, consolidation, reorganization, joint venture or other business combination with another corporation or entity. We may also acquire stock or assets of an existing business. Upon the consummation of a transaction, it is likely that our present management will no longer be in control of our company. In addition, it is likely that some or all of our current management will resign and be replaced by one or more new officers or directors.

We anticipate that the selection of a business opportunity in which to participate will be complex and without certainty of success. We believe that there are numerous firms in various industries seeking the perceived benefits of being a publicly reporting corporation. Business opportunities may be available in many different industries and with businesses at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Business opportunities that we believe are in the best interests of our company to pursue may be scarce or we may be unable to obtain opportunities that we want. We can provide no assurance that we will be able to locate compatible business opportunities.

Currently, we do not have a source of revenue. We are not able to fund our cash requirements through our current operations. Historically, we have been able to raise a limited amount of capital through private placements of our equity stock, but we are uncertain about our continued ability to raise funds privately. Further, we believe that our company may have difficulties raising capital until we locate a prospective business through which we can pursue our plan of operation. If we are unable to secure adequate capital to continue our acquisition efforts, our shareholders may lose some or all of their investment and our business may fail.

Results of Operations for the three and nine months ended January 31, 2017.

We generated no revenues for the nine months ending January 31, 2017 and 2016. We do not expect to generate revenues until we have established a new business plan and operations and successfully implemented such business plan.

Three months ended January 31, 2017 compared to three months ended January 31, 2016

We incurred operating income of $4,053 for the three months ended January 31, 2017, compared with operating expenses of $10,759 for the three months ended January 31, 2016. The most significant changes in operating expenses comprised of a foreign exchange recovery of $15,604 (2015 - $nil) and legal fees of $2,690 (2015 - $7,399). The difference between periods was attributable to the foreign exchange on promissory notes received from Garmatex Technologies and decreased legal fees due to an additional legal invoice which was missed and included in the prior year period.

We incurred other income of $7,361 for the three months ended January 31, 2017, as compared to other expenses of ($602) for the three months ended January 31, 2016. Our other income consisted of interest expense of $616 (2015-$602) and interest income of $7,977 (2015 - $nil). Interest expense for 2017 and 2016 included $616 and $602, respectively, to reflect the interest accrued on promissory notes issued during the periods.

We incurred a net income of $11,414 for the three months ended January 31, 2017, as compared with a net loss of $11,361 for the prior year three-month period. The reason for this income as opposed to the prior year loss is due to a foreign exchange recovery of $15,604 due to the value of promissory notes in Canadian dollars at the balance sheet date.

Nine months ended January 31, 2017 compared to nine months ended January 31, 2016

5

We incurred operating expenses of $72,028 for the nine months ended January 31, 2017, compared with operating expenses of $37,866 for the nine months ended January 31, 2016. The most significant changes in operating expenses comprised of consulting fees of $18,254 (2015 - $nil) and filing fees of $18,458 (2015 - $2,545). The difference between periods was mostly attributable to a one-time fee for a mining consultants firm as well as the addition of monthly consulting fees to the President of the Company which were not present in the prior comparable period. The difference is also attributable to increased filing fees due to the merger, name change, forward split, and annual filings with SEDAR.

We incurred other income of $16,839 for the nine months ended January 31, 2017, as compared to ($1,583) for the nine months ended January 31, 2016. Our other income consisted of interest expense of $1,847 (2015-$1,583) and interest income of $18,686 (2015 - $nil). Interest expense for 2016 and 2015 included $1,847 and $1,583, respectively, to reflect the interest accrued on promissory notes issued during the periods.

We incurred a net loss of $55,189 for the nine months ended January 31, 2017, as compared with a net loss of $39,449 for the prior year nine-month period.

Liquidity and Capital Resources

As of January 31, 2017, we had total current assets of $666,123, consisting of cash in the amount of $1,838 and due from related party notes of 664,285. We had current liabilities of $6,217 as of January 31, 2017. Accordingly, we had working capital of $659,906 as of January 31, 2017.

Operating Activities

Operating activities used $48,467 in cash for the nine months ended January 31, 2017 as compared to $11,173 used for the prior nine months ended January 31, 2016. The decrease in cash was attributable to the increase in net loss and interest receivable for the current period.

Investing Activities

Investing activities used cash of $323,028 for the nine months ended January 31, 2017 as compared to $nil for the nine months ended January 31, 2016. The increase in the use of cash was due to the advance of funds to Garmatex Technologies.

Financing Activities

Financing activities provided cash of $369,530 for the nine months ended January 31, 2017, as compared to $11,200 for the nine months ended January 31, 2016, which comprised of $314,530 in funds received for common stock, $55,000 in funds received for shares to be issued in the Company, and $11,200 in related and third party borrowings in 2015.

Based upon our current financial condition, we do not expect to have sufficient cash to operate our business at the current level for the next twelve months. We intend to fund future operations through new business sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. We plan to seek additional financing in a private equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our future business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.

Going Concern

Our financial statements have been prepared assuming that we will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We have incurred cumulative losses of $164,457 through January 31, 2017, expect to incur further losses in the development of our new business and have been dependent on funding operations through the issuance of convertible debt and private sale of equity securities. These conditions raise substantial doubt about our ability to continue as a going concern. Management’s plans include continuing to finance operations through the private or public placement of debt and/or equity securities and the reduction of expenditures. However, no assurance can be given at this time as to whether we will be able to achieve these objectives.

6

As discussed in the notes to our unaudited consolidated financial statements, we have no established source of revenue. This has raised substantial doubt for our auditors about our ability to continue as a going concern. Without realization of additional capital, it would be unlikely for us to continue as a going concern.

Off Balance Sheet Arrangements

The Company has performed an analysis of the related party loan balance under ASC 810-10, and has determined that the loan represents a variable interest in Garmatex. Garmatex Technologies is a variable interest entity (“VIE”) and depends on the Company, as well as additional parties, for continuing financial support in order to maintain operations. However, the Company cannot make key operating decisions considered to be most significant to the VIE, and is therefore not considered to be the primary beneficiary. Our maximum exposure to loss approximates to the carrying value of the due from related party loan balance on the Balance Sheet at January 31, 2017.

Other than noted above, we have no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Recently Issued Accounting Pronouncements

In November 2015, FASB issued Accounting Standards Update No. 2015-17 Income Taxes: Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 eliminates the requirement to bifurcate deferred taxes between current and non-current on the balance sheet and requires that deferred tax liabilities and assets be classified as noncurrent on the balance sheet. ASU 2015-17 is effective for public entities in fiscal years beginning after December 15, 2016, and for interim periods within those fiscal years. The amendments for ASU-2015-17 can be applied retrospectively or prospectively and early adoption is permitted. The adoption of this standard is not expected to have a material impact for any period presented.

Management does not believe that any other recently issued, but not yet effective, accounting standard if currently adopted would have a material effect on the accompanying financial statements.

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position, or cash flow.