Garmatex Holdings Ltd (OTCMKTS: GRMX) Is A Risky Bet

In this article, we noted that Garmtex Holdings Ltd. (OTCMKTS: GRMX) had returned outstanding returns to traders, but we also claimed that there was a lot of risk in owning the company. In this article, we will provide further proof of it. First of all, have a look at the company's chart price and observe the large amount of shares exchanged recently.SourceNew Proof of Fraudulent PracticesWe encourage investors to check out our previous article for more information about the business of the company and the state of the financial statements, as in this piece, we will go directly to the new information found.First of all, we found out that the company is not only run by a 31-year-old CEO with no relevant experience in the field, but it is also headquartered in a house in the middle of the countryside. Have a look:SourceSourceWe do believe that investors would feel better if they could visit other kind of offices. Not only because the company claims to be engaged in very serious research and development business, but also because it is said to be fabricating products:

“Fiberithm” is the science of fabric composition much like “algorithm” is to mathematics and computer science. Each fiberithm is a building block with an open architecture enabling future innovation. SourceThrough our fiberithm innovation process we create ingredient solutions that allow our brand partners to pivot quickly while fortifying their strategic initiatives in order to capture greater market share and grow their brand for the long term." Source

In this document, filed by the company, it is said that these offices are adequate. If you believe that you can fabricate products with "proprietary antimicrobial technology that kills 99.9% of bacteria" (website) from your kitchen, then the current office is adequate:

"Our principal executive offices are located at 7458 Allison Place, Chilliwack, British Columbia, Canada. The office is currently provided to us at no cost by Devon Loosdrecht, our CEO, president, chief financial officer, treasurer and sole director. We believe our current premises are adequate for our current limited operations and we do not anticipate that we will require any additional premises in the foreseeable future. We anticipate that we will continue to utilize these premises so long as the space requirements of our company do not require a larger facility." Source

In addition, we found out that the CEO still owns a large amount of shares; 50% exactly:

"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." Source

The CEO and the founder invested a very small amount of money in the company, since the balance sheet shows a total amount of assets of $79,827 as of April 30, 2016. The amount of cash is only $51 and the rest is as an asset due by another company that obtained shares.

"During the year ended April 30, 2016, the Company entered into a subscription agreement to issue 20,000 shares of common stock in the Company at a price of CDN$0.20 per common share for proceeds of CDN$100,000 which were received in trust by Garmatex Technologies. The proceeds are being held in trust until the completion of the LOI or will be repaid by Garmatex under the terms of the secured and subordinated loan agreement dated April 8, 2016. As of April 30, 2016, outstanding share subscriptions had not yet been issued by the Company as such the Company has a note payable due to the subscriber of CDN$100,000 (US$79,776)." Source

The total outstanding shares is 2,539,672 on the same date. This means that the book value per share is close to zero. But, the share price is valued right now at $1.15. Investors should understand that the founders have invested extremely an small amount of money and are selling shares for about $1.15. In other words, the company was worth almost zero, but once it became publicly traded, its value became approximately $2.9 million, given the amount of share reported in the last 10-k.The story does not end here. In a recent document, the company declared that thanks to a new merger agreement, the amount of shares is now 33,169,113. This means that the company is worth even more than $40 million. Let me recap so that you understand. The company, run by a 31-years-old CEO with no relevant experience in the field, located in a house in the countryside, with $51 in cash in the balance sheet, that claims to fabricate products, but has not done anything, is worth more than $40 million. This is part of the document that shows the increase in the amount of shares:

"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." Source

New investor - new heights?A new shareholder showed up lately. He holds 3,000,000 shares of the company. We believe that this investor will likely sell them.ConclusionThe company says on its website that it is engaged in high-technology activities. However, the current location of the company's headquarters and the fact that the company claims that have not fabricated anything yet just doesn't pass the smell test. Additionally, the large amount of shares issued, the percentage owned by the CEO and the state of the balance sheet, which shows $51 in cash, are also very suspicious. To sum up, investors need to be aware and be careful since the SEC maybe taking a closer look at GRMX. If it does, a trading suspension is likely.We will be updating our subscribers as soon as we know more. For the latest updates on GRMX, sign up below!Disclosure: We have no position in GRMX and have not been compensated for this article.