Ecomax, Inc - Quarter Report: 2019 March (Form 10-Q)

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Note 1. The Company and Significant Accounting Policies

Ecomat, Inc. (the "Company") was incorporated on December 14, 1995 pursuant to the laws of the State of Delaware. On February 9, 2007, the Company completed its change in domicile to Nevada. The Company used to operate a wet-cleaning process which was one of the first environmentally sound solution to current dry cleaning methods.
Bankruptcy Proceedings

On March 26, 1999, the Company filed a petition under Chapter 7 for liquidation of the Company's business. As a result of which all of its properties were transferred to a United States Trustee and the Company terminated all of its business operations. The Bankruptcy Trustee has disposed of all of the assets.

On May 18, 2006, the Trustee for the Company and Park Avenue Group, Inc. entered into a contract that was subject to Bankruptcy Court approval for the sale of certain asset free and clear of all liens, claims and encumbrances, the asset being comprised of the corporate shell of the debtor, Ecomat, Inc. (the "Asset"). On June 14, 2006, the Bankruptcy Court granted an order approving the contract and finding that Park Avenue Group is a good faith purchaser within the meaning of 11 USC Section 363(m) of the Bankruptcy Code.

Basis of Presentation:

We adopted "fresh-start" accounting as of June 15, 2006 in accordance with procedures specified by AICPA Statement of Position ("SOP") No. 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code.

The Financial Statements presented herein have been prepared by us in accordance with the accounting policies described in our June 30, 2018 audited financial statements and should be read in conjunction with the notes to financial statements which appear as part of those financial statements.

The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to intangible assets, income taxes, insurance obligations and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates under different assumptions or conditions.
In the opinion of Management, the information furnished in these interim financial statements reflects all adjustments necessary for a fair statement of the financial position and results of operations and cash flows as of and for the three and nine-month periods ended March 31, 2019 and 2018. All such adjustments are of a normal recurring nature. The Financial Statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include some information and notes necessary to conform with annual reporting requirements.

Recently Issued Accounting Pronouncements

In August, 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). Effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period.

In May, 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The amendments in this Update affect the guidance in Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements for Topic 606 (and any other Topic amended by Update 2014-09). Accounting Standards Update 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year.

In April, 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments in this Update affect the guidance in Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), which is not yet effective. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements in Topic 606 (and any other Topic amended by Update 2014-09). Accounting Standards Update 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year.

The Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material impact on results of operations, financial condition, or cash flows, based on current information.

Note 2. Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern The Company has incurred losses, has negative operational cash flows and has no revenues. The future of the Company is dependent upon Management success in its efforts and limited resources to pursue and effect a business combination.

These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty.

Note 3. Convertible Note

On July 8, 2017, we issued a convertible promissory note to Securities Compliance and subsequently assigned this note to WWYD, Inc., bearing interest at 1% per annum until paid or converted. The conversion price of the note is $0.008 per share. The closing price of the Company's common stock on July 7, 2017 was $0.007 per share. Interest will be payable upon the maturity date at July 7, 2018. On October 1, 2018, the Company agreed to adjust the interest rate, effective July 1, 2018, on this convertible notes from 1% to 8%. During the period ended March 31, 2019 and 2018, the Company recorded $975 and $91, respectively, in interest. As of June 30, 2018, all services had been provided and no additional services are due under this note. As of March 31, 2019, the accrued interest of this convertible note was $3,279.

On September 1, 2017, we entered into a Loan Agreement with Ivo Heiden, our sole officer and director, under which we receive funding for general operating expenses from time-to-time as needed by the Company. The Loan Agreement bears interest of 8% per annum and shall be due and payable on a date 366 days from the date of the loan. On September 1, 2018, the Loan Agreement was extended to September 1, 2019. As of March 31, 2019, the outstanding balance on this loan was $17,731 with accrued interest of $4,596. During the three month-period ended March 31, 2019 and 2018, we expensed interest of $346 and $224, respectively, related to this Loan Agreement.

On October 12, 2018, we issued a $75,000 convertible promissory note to Ivo Heiden evidencing previously accrued compensation. The convertible notes bears interest at 8% per annum until paid or converted. The conversion price of the note is $0.034 per share, the closing price of the Company's common stock on the date of issuance. Interest will be payable upon the maturity date at October 12, 2020. During the period ended March 31, 2019, the Company expensed $1,463 in interest. As of March 31, 2019, the Company has recorded $2,778 in accrued interest with respect to this convertible note.
In accordance with ASC # 815, Accounting for Derivative Instruments and Hedging Activities, we evaluated the note holder's non-detachable conversion right provision and liquidated damages clause, contained in the terms governing the Convertible Note to determine whether the features qualify as an embedded derivative instrument at issuance. Such non-detachable conversion right provision and liquidated damages clause did not need to be accounted as derivative financial instruments.

Note 5. Related Party Transactions

Due to Related Parties:

Amounts due to related parties consist of advances made by our CEO and accrued interest due to our CEO.

As of March 31, 2019 and June 30, 2018, our CEO has made advances of $17,731 and $12,502, respectively.

As of March 31, 2019 and June 30, 2018, accrued interest due to our CEO was $7,374 and $3,617, respectively.

As of March 31, 2019 and June 30, 2018, accrued compensation due to our CEO was $30,000 and $60,000, respectively.

On October 12, 2018, the Company issued a convertible note of $75,000 to our CEO evidencing previously accrued compensation.

As of March 31, 2019 and June 30, 2018, the Company owed a $50,000 convertible note and accrued interest of $3,279 and $309, respectively, to WWYD, Inc., a related party.

During the three and nine months ended March 31, 2019 and 2018, the Company did not issue any shares of common stock.

Note 6. Subsequent Events

The Company had no subsequent events after March 31, 2019 to the date the financial statements were issued.

Results of Operations during the three months ended March 31, 2019 as compared to the three months ended March 31, 2018

We have not generated any revenues during the three months ended March 31, 2019 and 2018. We had total operating expenses of $16,050 related to general and administrative expenses during the three months ended March 31, 2019 compared to $28,450 during the same period in the prior year . The significant decrease is due to reduced compensation expenses. We incurred interest expense of $2,784 during three months ended March 31, 2019 compared to interest expense of $316 during the three months ended March 31, 2018 . During the three months ended March 31, 2019 and 2018 , we had a net loss of $18,834 and $28,766, respectively.

Results of Operations during the nine months ended March 31, 2019 as compared to the nine months ended March 31, 2018

We have not generated any revenues during the nine months ended March 31, 2019 and 2018. We had total operating expenses of $51,280 related to general and administrative expenses during the nine months ended March 31, 2019 compared to $87,899 during the same period in the prior year. The significant decrease is due to reduced compensation expenses. We incurred interest expense of $6,726 during nine months ended March 31, 2019 compared to interest expense of $739 during the nine months ended March 31, 2018 . During the nine months ended March 31, 2019 and 2018 , we had a net loss of $58,006 and $88,638, respectively.

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