EVBC Evolution Blockchain Group Inc (CE)

Upon entering into the Sublicense Agreement dated March 8, 2017 and the Garmatex Trademark & Technology License Agreement dated March 9, 2017, management has determined that our company ceased to be a shell company as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934 because we believe we are now able to fully exploit our intended business model.

Item 2.01(f) of Form 8-K states that if the registrant was a “shell” company, such as the Company was immediately before entering into the Master Sublicense Agreement, then the registrant must disclose in a Current Report on Form 8-K the information that would be required if the registrant were filing a general form for registration of securities on Form 10. Accordingly, this Report includes all of the information that would be included in a Form 10. Please note that unless indicated otherwise, the information provided below relates to us after the Master Sublicense Agreement. Information relating to periods prior to the date of the Master Sublicense Agreement only relate to the party specifically indicated. The following information is being provided with respect to the Company after giving effect to the Master Sublicense Agreement pursuant to the requirements of Item 2.01 of Form 8-K and Form 10.

FORM 10 DISCLOSURE

Our Corporate History and Background

We were incorporated under the laws of the State of Nevada on April 9, 2014. Our fiscal year end is April 30. 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.

On April 8, 2016, we entered into an arrangement agreement (the “Arrangement Agreement”) with Garmatex Technologies, Inc. (“GTBC”), a private company incorporated under the laws of the Province of British Columbia, pursuant to which we agreed to acquire all of the outstanding securities of GTBC 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). The Arrangement Agreement contains customary representations, warranties and conditions to closing. The Arrangement Agreement contains customary representations, warranties and conditions to closing. The closing of the Arrangement Exchange (the “Closing”) would only occur once the Company completes a name change, forward stock-split and was provided with audited financial statements from Garmatex, with such financial statements being prepared by an independent accounting firm registered with the Public Company Accounting Oversight Board (PCAOB).

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Effective August 15, 2016, we completed a merger with our wholly-owned subsidiary, Garmatex Holdings. Ltd., a Nevada corporation, which was incorporated solely to effect a change in our name. As a result, we have changed our name from “Oaxaca Resources Corp.” to “Garmatex Holdings Ltd.”. Also effective August 15, 2016, we effected a twelve and one-half to one forward stock split of our authorized and issued and outstanding common stock. As a result, our authorized capital of common stock increased from 90,000,000 shares of common stock with a par value of $0.001 and 10,000,000 shares of preferred stock with a par value of $0.001 to 1,125,000,000 shares of common stock with a par value of $0.001 and 10,000,000 shares of preferred stock with a par value of $0.001 and our previously outstanding 2,653,529 shares of common stock increased to 33,169,113 shares of common stock outstanding. There are no shares of preferred stock currently outstanding. We changed our name and effected forward-split as per the terms and conditions of the Arrangement Agreement.

As of the date of this report, and the Company and GTBC have determined that it is in the best interest of both parties to extend the term of the Arrangement Agreement, in order to allow GTBC additional time to provide us with the requisite audited financials as per the Arrangement Agreement.

Accordingly, we entered into and executed a non-exclusive Sublicense Agreement dated March 8, 2017 and the Garmatex Trademark & Technology License Agreement dated March 9, 2017 (collectively, “Master Sublicense Agreement”) with Garmatex Technologies, Inc. a company formed under the laws of the Province of British Columbia, Canada (“GTBC”) whereby we were granted various Intellectual Property Rights related to the design, development and manufacturing of various scientifically-engineered fabric technologies and performance technologies; including a patented T3® design, Bact-Out®, CoolSkin®, WarmSkin®, Kottinu™, ColdSkin™, SteelSkin™, Satinu™, CamoSkin™, RecoverySkin™, SlimSkin™, AbsorbSkin™ and IceSkin™ (collectively the foregoing are referred to hereinafter as the “Licensed IP”).

Pursuant to the terms of the agreement, we acquired the rights to further develop, commercialize, market and distribute certain proprietary inventions and know-how related to the Products. In exchange, we agreed to the following terms and conditions: (i) the Parties shall enter into Amendment No. 1 to the Arrangement Agreement; and (ii) we agreed to cancel various loans made pursuant to a Loan Agreement between us and GTBC in the aggregate amount of $953,988.00CDN.

Following the execution of the Master Sublicense Agreement and the grant of the license thereunder related to the Licensed IP, we are now able to fully implement our intended business plan and plan of operations.

Our Business

We plan to provide performance fabric solutions in virtually every sector that has textile applications. Our primary strategy is to deploy our performance fabrics as a premium ingredient brand, similar to Gore-Tex® in the outerwear market, or akin to Intel® in the computer space. We believe that our future fabrics will be superior in performance relative to current market “standards” and have a wide range of applications in multiple clothing and textile categories including, but not limited to, sports apparel, medical, sleepwear, linens, undergarments, military, designer wear, protective, industrial and first responders.

Our business model is to co-develop fabric with manufacturers to obtain exclusive licenses of technology and purchase fabric technology to build on our technology portfolio. We plan to commercialize these inventions by selling bolts of fabric directly to retailers and wholesalers. We plan to control the proprietary process of the technology for IP protection and do not intend to own any manufacturing facilities, which will effectively allow us to scale.

We are in the market to further acquire technologies from inventors looking for a commercialization partner.

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Industry overview

In 2014, global exports for textiles and apparel totaled approximately US$797 bn. Of that total, $314bn totaled textile and world apparel totaled $483bn.

2014’s worldwide use of fibers amounted to 90.1 million tonnes, up by 4.4% . The sizeable acceleration in growth compared with a rise of 1.5% in 2011 was realized despite persistent economic uncertainties and still negative growth in the euro area.

The market size of 90.1 million tonnes corresponds with an average per capita consumption of 12.7kg. 2014’s growth rate of 4.4% succeeded to outperform the long-term growth rate of 2.8% since 1970 and the short-term average annual growth of 3.5% since the year 2000. The recent acceleration of fiber demand reflects the impact of rapidly rising disposable incomes in populous nations like the BRIC-countries.

The market trend has unabatedly shifted toward manmade fibers that hold a 67% share at present, up from 54% in 2000. This trend will continue the more as International Cotton Advisory Committee expects negative impacts from the Chinese cotton policy and the cost difference to polyester.

Increasing costs of production for cotton and a reduction of land for cotton will slow growth and present more opportunities for synthetic fibers to grow as a percentage of the market.

The most readily addressable consumer market segments for our company are the sporting apparel and medical verticals, where innovations in performance are critically needed.

Performance fabric and performance apparel market segment

Due to the competitive nature of the sports world, within which persists a constant need for extra advantage, performance-based product has skyrocketed in sales in recent years and will continue to see significant growth. Estimated at $150 billion today, Allied Market Research forecasts “the world sports apparel market is expected to generate revenue of $184.6 billion by 2020.”

Hospital linens and the medical segment

Hospital acquired infections are a major issue in hospitals and care facilities. In the United States, the Centers for Disease Control and Prevention estimated roughly 1.7 million hospital-associated infections, from all types of microorganisms, including bacteria and fungi combined, cause or contribute to 99,000 deaths each year. In Europe, where hospital surveys have been conducted, the category of gram-negative infections are estimated to account for two-thirds of the 25,000 deaths each year. Nosocomial infections can cause severe pneumonia and infections of the urinary tract, bloodstream and other parts of the body. Many types are difficult to treat with antibiotics. In addition, antibiotic resistance can complicate treatment. The spread of infection through bacteria is something that can be prevented with linens that stop bacteria growth.

Garmatex’s Kottinu ^® – with the antimicrobial properties of Bact-Out® – is poised to penetrate the medical segment as an alternative to non-performing, cotton-based materials or materials based on synthetics that are more susceptible to harbouring microbial growths.

Kottinu ^® linens wick away moisture and dry at a faster rate in comparison to charged cotton sheets. Faster drying times translate to energy savings in the laundering process. Kottinu ^® can extend the lifespan of the linen because it is a synthetic fabric while cotton break down faster. Minimal or no shrinkage, along with stain resistance, are also attributes of synthetic fabrics which outperform cotton over time and can lead to less product being taken out of circulation. With its “cotton-like” feel Kottinu ^® offers an aesthetic appeal and comfort for linen users.

Competitive environment and competitive strengths

The competitive environment is divided into two key categories. 1) Fabric mills that sell directly to manufacturers. These fabric mills are identified by some of the following characteristics: typically serve a geographic region, do not have consumer facing technology, and are typically low cost producers. 2) Technology providers like Gore-Tex, Invista and Lenzing brand their fibers and sell their yarn directly to fabric mills, while ensuring that their branding is consumer facing with hangtags, and they sell to mills all over the world. In many instances, they are working directly with the wholesaler/retailer whom then nominate their technology to be used in their apparel or other finished good. This second type of competitor closely resembles our competition.

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Moisture System Transference (“ MST” ) is the process which provides moisture management and at the core of our fabric technologies. MST microfiber technology bundles very fine, long-strand fibers called filaments to create performance threads. The unique blend and configuration of GTBC’s filaments within the threads creates a greater surface area for moisture to travel along. The specific knitting pattern increases the speed of moisture movement through the fabric.

Bact-Out ^® is GTBC’s antimicrobial protocol used in GTBC’s performance fabrics. Third part ty tested fabrics with Bact-Out ^® showed a control of fungi gram positive/gram negative bacteria up to 99.98% after 50 machine washes. Bact-Out® also helps to reduce the ongoing problem of body odour transference into the fabrics.

GTBC offers several performance fabric and design innovations: CoolSkin ^® , Kottinu ^® , ColdSkin, RecoverySkin, WarmSkin ^® , SteelSkin, T3 ^® Technology, SlimSkin, AbsorbSkin ^TM , IceSkin ^TM and SurfSkin.

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Sales and growth strategy

We intend to deploy our unique fabric and apparel design technologies throughout multiple industry segments, especially high-growth market segments: sports, medical, industrial, lifestyle and promotional.

Emerging Growth Company Status

We are an “emerging growth company” as defined under the Jumpstart our Business Startups Act (the “ JOBS Act ”). We expect to remain an “emerging growth company” for up to five years. As an “emerging growth company”, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”, including, but not limited to:

Employees

Our company is currently operated by Devon Loosdrecht, our CEO, president, chief financial officer, treasurer and sole director. We do not anticipate hiring employees in the near future. We intend to employ CEO of GTBC to implement our intended business plan and plan of operations.

You should carefully consider each of the risks and uncertainties described below and elsewhere in this Current Report on Form 8-K, as well as any amendments or updates reflected in subsequent filings with the SEC. We believe these risks and uncertainties, individually or in the aggregate, could cause our actual results to differ materially from expected and historical results and could materially and adversely affect our business operations, results of operations, financial condition and liquidity. Further, additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our results and business operations.

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Risks Associated with Our Business

The fabric sale is a new operation of the Company with a limited operating history and history of business, revenue generation or production history.

The Company has never been engaged in the fabric sale. There could be limited value to the current portfolio of technologies and raise significant doubt about our commercial viability. Our future operations are dependent upon many factors, including the ability to create sales from its current portfolio of technology.

Operating results may fluctuate depending on a number of factors which may cause the value of our shares to decrease significantly.

Operating results may fluctuate as a result of a number of factors, many of which will be outside of our control. As a result of these fluctuations, financial planning and forecasting may be more difficult and comparisons of operating results on a period-to-period basis may not necessarily be meaningful. Our business can be seasonal in nature, reflecting overall economic conditions as well as client budgeting and buying patterns in the textile and technical apparel industries. This may result in the fluctuation of operating results. Further, the cyclicality and seasonality of our business could become more pronounced and may cause operating results to fluctuate more widely.

Additional funds for our planned operations will be required.

We will need substantial funding for our planned operations. No assurances can be given that we will be able to raise the additional funding that will be required for such activities. To meet such funding requirements, we will be required to undertake additional equity financing, which would be dilutive to shareholders. Debt financing, if available, may also involve restrictions on financing and operating activities. There is no assurance that additional financing will be available on terms acceptable to us or at all. If we are unable to obtain additional financing as needed, we will be required to reduce the scope of our operations.

Third-party technology licenses may not continue to be available to us in the future.

We will rely on certain technology that we license from GTBC. These third-party technology licenses may not in the future be available to us on commercially reasonable terms, or at all. The loss of any of these technology licenses could result in delays in performance of work until our company identifies, licenses and integrates equivalent technology, and it may not be able to identify, license or integrate any such equivalent technology in a timely manner or at all. Any resulting delays in performance could damage our reputation, which could materially adversely affect our business, operating results or financial condition.

Others may assert intellectual property infringement claims against us.

Infringement or misappropriation claims (or claims for indemnification resulting from such claims) against us may be asserted or prosecuted, regardless of their merit, and any such assertions or prosecutions may adversely affect our business and/or operating results. Irrespective of the validity or the successful assertion of such claims, we would incur significant costs and diversion of resources relating to the defense of such claims, which could have an adverse effect on our business, operating results or both.

If any claims or actions are asserted against us, we may seek to obtain a license of a third-party’s intellectual property rights; however, under such circumstances such a license may not be available on reasonable terms or at all. Any such litigation could result in a material adverse effect on the business, prospects and financial results of our company.

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Adverse economic conditions may have an adverse effect on the business and financial results of our company.

Textiles and garments may be considered discretionary items for consumers. Factors affecting the level of consumer spending for such discretionary items include general economic conditions, particularly those in Canada and the United States, and other factors such as consumer confidence in future economic conditions, fears of recession, the availability of consumer credit, level of unemployment, tax rates and the cost of consumer credit. As global economic conditions continue to be volatile or economic uncertainty remains, trends in consumer discretionary spending also remain unpredictable. The current volatility in the United States economy in particular has resulted in an overall slowing in growth in the retail sector because of decreased consumer spending, which may remain depressed for the foreseeable future. These unfavorable economic conditions may lead consumers to delay or reduce purchase of fabric products and therefore have a material adverse effect on our financial condition.

Unpredictability of demand could negatively influence our product offerings, plans operations and strategies.

Our success depends on our ability to identify and originate product trends as well as to anticipate and react to changing consumer demands in a timely manner. All of our future products are subject to changing consumer preferences that cannot be predicted with certainty. If we are unable to introduce new products or novel technologies in a timely manner or our new products or technologies are not accepted by our customers, our competitors may introduce similar products in a more timely fashion, which could hurt our goal to be viewed as a leader in performance fabric innovation. Our new products may not receive consumer acceptance as consumer preferences could shift rapidly to different types of performance fabrics or away from these types of products altogether, and our future success depends in part on our ability to anticipate and respond to these changes. Failure to anticipate and respond in a timely manner to changing consumer preferences could lead to, among other things, lower sales and excess inventory levels. Even if we are successful in anticipating consumer preferences, our failure to effectively introduce new products that are accepted by consumers could result in a decrease in net revenue and excess inventory levels, which could have a material adverse effect on our financial condition.

A growing competitive market in technologically advanced textiles could affect our ability to gain market share.

The market for performance textiles is highly competitive. It includes increasing competition from established companies who are expanding their production and marketing of performance products, as well as from frequent new entrants to the market. There can be no assurance that other companies with greater financial and technological resources will not develop similar scientifically advance fabric technologies similar to our company’s or with greater perceived benefits which would affect our ability to compete successfully against existing competitors or future entrants into the market.

Raw materials required in the manufacture of products may be susceptible availability and pricing and quality fluctuations and may adversely affect our financial results.

Our business will rely on externally sourced raw materials in our manufacturing operations, and will business with a broad range of suppliers to ensure steady supplies of high-quality raw materials at competitive prices. Many of the parts or materials used in manufacturing of our textiles are anticipated to be made from oil. If the price of crude oil rises, the purchase price of such parts or materials may increase as well. Further, unanticipated contingencies among these suppliers or if parts and materials procured by these suppliers suffer from quality problems or are in short supply, we may be forced to discontinue production. Such events, if occurred, may adversely affect our financial position and results of operations.

Brand leaders are slow to adopt new technologies and the long business development cycle could delay the return on investment of resources required to develop our business.

Textile innovation for customized product development is a collaborative effort between suppliers, our company and the customer. All play a key role to ensure the functionality and performance of the products are developed to meet the customer’s specific technical textile requirements. Technological advances in textiles are slow to be adopted by large multinational companies and approvals must be had at many stages of the buying process. As a result, the extended business development cycle and delayed of return on investment may have an adverse effect our financial condition.

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We Have Limited Resources For Marketing Of Our Products And We May Not Be Able To Attract Sufficient Paying Customers To Make Our Business Sustainable.

We have limited resources for marketing of our products. Our future sales will depend in large part on our ability to attract sufficient paying customers to make our business profitable and sustainable. Also, we may not be able to attract and retain personnel or be able to build an efficient and effective marketing force, which could negatively impact sales of our products, and reduce our revenues and profitability.

The Company's Ability To Implement Its Business And Marketing Strategy

The implementation of the Company's business and marketing strategy will depend on a number of factors. These include our ability to (i) find and hire reliable and sufficiently skilled third-party marketing personnel, (ii) make our products known and establish a trusted brand to our potential end user customers, (iii) establish a significant paying customer base, (iv) obtain adequate financing on favorable terms in order to fund our business, (v) maintain appropriate procedures, policies and systems; (vi) hire, train and retain skilled employees, and (vii) operate successfully and profitably within an environment of increasing competition. The inability of the Company to manage any or all of these factors could impair our ability to implement our business strategy successfully, which could have a material adverse effect on our business, financial condition and the results of our operations.

Our Operating Results May Prove Unpredictable

Our operating results are likely to fluctuate significantly in the future due to a variety of factors, many of which we have no control over. Factors that may cause our operating results to fluctuate significantly include: the level of commercial acceptance by the public of our products; fluctuations in the demand for our products; the amount and timing of operating costs and capital expenditures relating to the operation of and/or expansion of our business, operations, infrastructure and general economic conditions. If realized, any of these risks could have a material adverse effect on our business, financial condition and the results of operations.

The current state of capital markets, particularly for small companies, is expected to reduce our ability to obtain the financing necessary to continue our business. If we cannot raise the funds that we need to continue acquisitions and fund future business opportunities, we will go out of business and investors will lose their entire investment in our company.

Like other smaller companies, we face difficulties in raising capital for our continued operations and to consummate a business opportunity with a viable business. We may not be able to raise money through the sale of our equity securities or through borrowing funds on terms we find acceptable.

Because Devon Loosdrecht controls a large percentage of our voting stock, he has the ability to influence matters affecting our stockholders.

Devon Loosdrecht, our CEO, president, chief financial officer, treasurer and sole director, owns over 50% of our common stock and controls a majority of the votes attached to our outstanding voting securities. As a result, he has the ability to influence matters affecting our stockholders, including the election of directors, the acquisition of assets, and the issuance of securities. Because he controls a majority of votes, it would be very difficult for investors to replace our management if they disagree with the way our business is being operated. Because the influence by Mr. Loosdrecht could result in management making decisions that are in the best interest of Mr. Loosdrecht and not in the best interest of the investors, you may lose some or all of the value of your investment in our common stock.

Our Articles of Incorporation exculpates our officers and directors from certain liability to our Company or our stockholders.

Our Articles of Incorporation contain a provision limiting the liability of our officers and directors for their acts or failures to act, except for acts involving intentional misconduct, fraud or a knowing violation of law. This limitation on liability may reduce the likelihood of derivative litigation against our officers and directors and may discourage or deter our stockholders from suing our officers and directors based upon breaches of their duties to our Company.

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Risks Relating to Ownership of Our Securities

Our stock price may be volatile, which may result in losses to our shareholders.

The stock markets have experienced significant price and trading volume fluctuations, and the market prices of companies listed on the OTC Markets quotation system in which shares of our common stock are traded, have been volatile in the past and have experienced sharp share price and trading volume changes. The trading price of our common stock is likely to be volatile and could fluctuate widely in response to many factors, including the following, some of which are beyond our control:

Domestic and international stock markets often experience significant price and volume fluctuations. These fluctuations, as well as general economic and political conditions unrelated to our performance, may adversely affect the price of our common stock.

Our common shares may become thinly traded and you may be unable to sell at or near ask prices, or at all.

We cannot predict the extent to which an active public market for trading our common stock will be sustained. Although the trading price of our common shares increased significantly recently, it has historically been sporadically or “thinly-traded” meaning that the number of persons interested in purchasing our common shares at or near bid prices at certain given time may be relatively small or non-existent.

This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community who generate or influence sales volume. Even if we came to the attention of such persons, those persons tend to be risk-averse and may be reluctant to follow, purchase, or recommend the purchase of shares of an unproven company such as ours until such time as we become more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained.

The market price for our common stock is particularly volatile given our status as a relatively small company, which could lead to wide fluctuations in our share price. You may be unable to sell your common stock at or above your purchase price if at all, which may result in substantial losses to you.

Shareholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price.

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We do not anticipate paying any cash dividends to our common shareholders.

We presently do not anticipate that we will pay dividends on any of our common stock in the foreseeable future. If payment of dividends does occur at some point in the future, it would be contingent upon our revenues and earnings, if any, capital requirements, and general financial condition. The payment of any common stock dividends will be within the discretion of our Board of Directors. We presently intend to retain all earnings after paying the interest for the preferred stock, if any, to implement our business plan; accordingly, we do not anticipate the declaration of any dividends for common stock in the foreseeable future.

Volatility in our common share price may subject us to securities litigation.

The market for our common stock is characterized by significant price volatility as compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.

The elimination of monetary liability against our directors, officers and employees under Nevada law and the existence of indemnification rights of our directors, officers and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers and employees.

Our Articles of Incorporation contains a specific provision that eliminates the liability of our directors and officers for monetary damages to our company and shareholders. Further, we are prepared to give such indemnification to our directors and officers to the extent provided for by Nevada law. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup. These provisions and resultant costs may also discourage our company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors and officers even though such actions, if successful, might otherwise benefit our company and shareholders.

Our business is subject to changing regulations related to corporate governance and public disclosure that have increased both our costs and the risk of noncompliance.

Because our common stock is publicly traded, we are subject to certain rules and regulations of federal, state and financial market exchange entities charged with the protection of investors and the oversight of companies whose securities are publicly traded. These entities, including the Public Company Accounting Oversight Board, the SEC and FINRA, have issued requirements and regulations and continue to develop additional regulations and requirements in response to corporate scandals and laws enacted by Congress, most notably the Sarbanes-Oxley Act of 2002. Our efforts to comply with these regulations have resulted in, and are likely to continue resulting in, increased general and administrative expenses and diversion of management time and attention from revenue-generating activities to compliance activities. Because new and modified laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices.

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