Nature of Operations and Ability to Continue as a Going Concern

6 Months Ended

Oct. 31, 2017

Nature of Operations and Ability to Continue as a Going Concern [Text Block]

Note 2	Nature of Operations and Ability to Continue as a Going Concern

	On August 15, 2016, the Company changed its corporate name from Oaxaca Resources Inc. to Garmatex Holdings Ltd. Oaxaca Resources Corp. (the “Company”) was incorporated in the State of Nevada, United States of America on April 9, 2014. The Company was formed for the purpose of acquiring and developing mineral properties. The Company’s year-end is April 30.

	These unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these interim unaudited consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company has yet to achieve profitable operations, has an accumulated deficit of $1,213,762 and expects to incur further losses in the development of its business, all of which raises substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing from shareholders or other sources to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available or on acceptable terms, if at all. The interim unaudited consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

On April 8, 2016, the Company entered into a definitive Arrangement Agreement with Garmatex Technologies, Inc., a private company incorporated under the laws of the Province of British Columbia, Canada ("Garmatex"), pursuant to which the Company has agreed to acquire all of the issued and outstanding securities of Garmatex in exchange for equivalent securities of the Company by way of a statutory arrangement (the “Arrangement”) pursuant to the Business Corporations Act (British Columbia). The purpose of the Arrangement is for the Company, through the acquisition of Garmatex, to engage in Garmatex’s business of developing and supplying scientifically-engineered fabric technologies. As of the date of this report, the Arrangement Agreement with Garmatex Technologies has expired as conditions of the merger had not yet been satisfied.

On March 8, 2017, the Company executed an amended, effective August 15, 2016, to the Arrangement, which allowed for an extension of the termination date to May 31, 2017 and settlement of all the loans issued under the previously entered Secured and Subordinated Loan Agreement, dated March 15, 2016, which in aggregate was CDN $953,988. In consideration of the settlement, Garmatex granted a non-exclusive technology Sublicense Agreement, dated March 8, 2017, and a Garmatex Trademark and Technology License Agreement, dated March 9, 2017, to their trade secret formulae and trademarks (note 3).

Upon entering the Sublicense and License Agreements, management has determined that the Company ceased to be a shell company as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934 because the Company is now able to fully exploit their intended business model.

Effective August 15, 2016, the Company effected a forward stock split on the basis of 12.5:1. As such, the Company’s authorized capital was increased from 90,000,000 shares of common stock, par value $0.001 to 1,125,000,000 shares of common stock, par value $0.001 and all shares of common stock issued and outstanding were increased on the basis of twelve and one half new shares for each one old shares. These consolidated financial statements give retroactive effect to such forward split and all share and per share amounts have been adjusted accordingly.

Effective on September 15, 2017 the Arrangement Agreement has been terminated between the Company and Garmatex Technologies Inc.

GARMATEX HOLDINGS LTD. 10-Q