UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10/A
___________________________
General Form for
Registration of Securities of Small Business Issuers Under Section 12(g) of the Securities
Exchange Act of 1934
E
comat
I
nc.
(Exact Name Of Registrant
As Specified In Its Charter)
Nevada
|
10-24170365
|
(State of Incorporation)
|
(I.R.S. Employer
Identification No.)
|
|
|
2275 Huntington Drive, Suite 851, San Marino, CA
|
91108
|
(Address of Principal
Executive Offices)
|
(ZIP Code)
|
Registrant's Telephone Number, Including Area Code: (323)
552-9867
Securities to be Registered Under
Section 12(g) of the Act: Common Stock, $0.001
(Title of Class)
Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer (as
defined in Rule 12b-2 of the Exchange Act) or a smaller
reporting company.
Large accelerated
filer
¨
|
Accelerated filer
¨
|
Non-Accelerated
filer
¨
|
Smaller reporting
company
x
|
TABLE
OF CONTENTS
PART I
ITEM 1. DESCRIPTION OF
BUSINESS
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Contents
Some of the statements contained in this registration
statement on Form 10 of Ecomat, Inc. (hereinafter the
"Company", "We" or the "Registrant") discuss future
expectations, contain projections of our plan of operation or financial condition or state
other forward-looking information. In this registration statement, forward-looking
statements are generally identified by the words such as "anticipate",
"plan", "believe", "expect", "estimate", and the
like. Forward-looking statements involve future risks and uncertainties, there are factors
that could cause actual results or plans to differ materially from those expressed or
implied. These statements are subject to known and unknown risks, uncertainties, and other
factors that could cause the actual results to differ materially from those contemplated
by the statements. The forward-looking information is based on various factors and is
derived using numerous assumptions. A reader, whether investing in the Company's
securities or not, should not place undue reliance on these forward-looking statements,
which apply only as of the date of this Registration Statement. Important factors that may
cause actual results to differ from projections include, for example:
the success or failure of Management's efforts to implement the
Registrant's plan of operation;
the ability of the Registrant to fund its operating expenses;
t
he ability of the Registrant to compete with other companies that
have a similar plan of operation;
the effect of changing economic conditions impacting our plan of
operation;
the ability of the Registrant to meet the other risks as may be described
in future filings with the SEC.
General Background of the Registrant
Ecomat, Inc. (the "Company" or "Ecomat")
is a Nevada corporation that was formed to develop the Ecomat concept - an
environmentally sound solution to the current standard dry cleaning method
that utilizes percloroethylene, which has been shown to have various toxic
effects. 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.
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 our 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.
In 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.
In
connection with the Order of the U.S. Bankruptcy Court, the Court
authorized (i)
that the
existing officers and directors of Ecomat, Inc. will be deemed removed from
office and their official capacity terminated; (ii) that all common
share conversion rights of any kind, including, but not limited to, warrants,
options, convertible bonds, other convertible debt instruments, and convertible
preferred stock shall be canceled and extinguished; and (iii) Park Avenue
Group, Inc.
shall be authorized to appoint a new board of directors of Ecomat.
On June 15, 2006 and as a
result of the Bankruptcy Court Order, Park Avenue Group appointed Ivo Heiden to the board of directors of the Registrant
and to serve as its sole executive officer (the "Management"). Mr. Heiden
was an analyst for Park Avenue Group from 2003 until 2008 and has no ongoing
relationship with such entity.
Page 3
Business Objectives of the Company
Since the Chapter 7 proceedings, the Registrant had no business operations.
Management has determined to direct its efforts and limited resources to pursue potential new business
opportunities. The Registrant does not intend to limit itself to a particular industry and
has not established any particular criteria upon which it shall consider
a business opportunity.
The Registrant's common stock is subject to
quotation on the OTC Pink Sheets under the symbol ECMT. There is currently only a
limited trading market in the
Registrant's shares nor do we believe that any active trading market has existed for the
last 3 years. There can be no assurance that there will be an active trading market for
our securities following the effective date of this registration statement under
the Exchange Act. In the event
that an active trading market commences, there can be no assurance as to the market price
of our shares of common stock, whether any trading market will provide liquidity to
investors, or whether any trading market will be sustained.
Management
would have substantial flexibility in identifying and selecting a prospective new business
opportunity. The Registrant is dependent on the
judgment of its Management in connection with this process. In evaluating a prospective
business opportunity, we would consider, among other factors, the following:
costs
associated with pursuing a new business opportunity;
growth potential of the new
business opportunity;
experiences, skills and availability of additional personnel
necessary to pursue a potential new business opportunity;
necessary capital
requirements;
the competitive position of the new business opportunity;
stage of
business development;
the market acceptance of the potential products and services;
proprietary features and degree of intellectual property; and
the regulatory
environment that may be applicable to any prospective business opportunity.
The
foregoing criteria are not intended to be exhaustive and there may be other criteria that
Management may deem relevant. In connection with an evaluation of a prospective or
potential business opportunity, Management may be expected to conduct a due diligence
review.
The
time and costs required to pursue new business opportunities, which includes negotiating
and documenting relevant agreements and preparing requisite documents for filing pursuant
to applicable securities laws, can not be ascertained with any degree of certainty.
Management
intends to devote such time as it deems necessary to carry out the Registrant's affairs.
The exact length of time required for the pursuit of any new potential business
opportunities is uncertain. No assurance can be made that we will be successful in our
efforts. We cannot project the amount of time that our Management will actually devote to
the Registrant's plan of operation.
The
Registrant intends to conduct its activities so as to avoid being classified as an
"Investment Company" under the Investment Company Act of 1940, and therefore
avoid application of the costly and restrictive registration and other provisions of the
Investment Company Act of 1940 and the regulations promulgated thereunder.
Registrant is a Blank Check Company
At present, the Registrant is a development stage company with no revenues,
no assets and no specific business plan or purpose. The Registrant's
business plan is to seek new business opportunities or to engage in a merger
or acquisition with an unidentified company. As a result, the Registrant is
a "blank check company" and, as a result, any offerings of the Registrant's
securities under the Securities Act of 1933, as amended (the "Securities
Act") must comply with Rule 419 promulgated by the Securities and Exchange
Commission (the "SEC") under the Act. The Registrant's Common Stock is a
"penny stock," as defined in Rule 3a51-1 promulgated by the SEC under the
Securities Exchange Act of 1934 (the "Exchange Act"). The Penny Stock rules
require a broker-dealer, prior to a transaction in penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document
that provides information about Penny Stocks and the nature and level of
risks in the penny stock market.
Page 4
The broker-dealer also must provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its sales person in the transaction,
and monthly account statements showing the market value of each Penny Stock
held in the customer's account. In addition, the Penny Stock rules require
that the broker-dealer, not otherwise exempt from such rules, must make a
special written determination that the Penny Stock is suitable for the
purchaser and receive the purchaser's written agreement to the transaction.
These disclosure rules have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the
Penny Stock rules. So long as the common stock of the Registrant is subject
to the Penny Stock rules, it may be more difficult to sell the Registrant's
common stock.
We are a Shell Company as defined in Rule 405 promulgated by the SEC under
the Securities Act. A Shell Company is one that has no or nominal operations
and either: (i) no or nominal assets; or (ii) assets consisting primarily of
cash or cash equivalents. As a Shell Company, we are restricted in our use
of Registrations on Form S-8 under the Securities Act; the lack of
availability of the use of Rule 144 by security holders; and the lack of
liquidity in our stock.
Form S-8
Shell companies are prohibited from using Form S-8 to register securities
under the Securities Act. If a company ceases to be a Shell Company, it may
use Form S-8 sixty calendar days, provided it has filed all reports and
other materials required to be filed under the Exchange Act during the
preceding 12 months (or for such shorter period that it has been required to
file such reports and materials after the company files "Form 10
information," which is information that a company would be required to file
in a registration statement on Form 10 if it were registering a class of
securities under Section 12 of the Exchange Act. This information would
normally be reported on a current report on Form 8-K reporting the
completion of a transaction that caused the company to cease being a Shell
Company.
Unavailability of Rule 144 for Resale
Rule 144(i) "Unavailability to Securities of Issuers With No or Nominal
Operations and No or Nominal Non-Cash Assets" provides that Rule 144 is not
available for the resale of securities initially issued by an issuer that is
a Shell Company. We have identified our company as a Shell Company and,
therefore, the holders of our securities may not rely on Rule 144 to have
the restriction removed from their securities without registration or until
the company is no longer identified as a Shell Company.
As a result of our classification as a Shell Company, our investors are not
allowed to rely on the "safe harbor" provisions of Rule 144, promulgated
pursuant to the Securities Act, so as not to be considered underwriters in
connection with the sale of our securities until one year from the date that
we cease to be a Shell Company. This will likely make it more difficult for
us to attract additional capital through subsequent unregistered offerings
because purchasers of securities in such unregistered offerings will not be
able to resell their securities in reliance on Rule 144, a safe harbor on
which holders of restricted securities usually rely to resell securities.
Very Limited Liquidity of our Common Stock
Our common stock trades from time to time on the OTC Pink Sheet Market but
there is no active market maker in our common stock.
As a result, there is only limited liquidity in our common stock. We plan to
seek quotation of our common stock on the OTCQB Market. In order for our
common stock to become subject to quotation on the OTCQB Market, we must
obtain a market maker to file an application with the Financial Industry
Regulatory Authority (FINRA) on our behalf pursuant to Rule 15c2-11 under
the Exchange Act. If we fail to continue to comply with the listing
requirements of the OTCQB Market, the price of our common stock and the
ability of our stockholders to to access the capital markets could be
negatively impacted. We cannot provide any assurance that we will be able to
continue to satisfy the requirements of the OTCQB Markets' for continued
quotation.
We will be deemed a blank check company under Rule 419 of the
Securities Act
The provisions of Rule 419 apply to registration statements filed under the
Securities Act by a blank check company, such as the Company. Rule 419
requires that a blank check company filing a registration statement deposit
the securities being offered and proceeds of the offering into an escrow or
trust account pending the execution of an agreement for an acquisition or
merger.
Page 5
In addition, an issuer is required to file a post-effective amendment to the
registration statement upon the execution of an agreement for such
acquisition or merger. The rule provides procedures for the release of the
offering funds in conjunction with the post effective acquisition or merger.
The obligations to file post-effective amendments are in addition to the
obligations to file Forms 8-K to report for both the entry into a material
definitive (non-ordinary course of business) agreement and the completion of
the transaction. Rule 419 applies to both primary and re-sale or secondary
offerings.
Within five (5) days of filing a post-effective amendment setting forth the
proposed terms of an acquisition, the Company must notify each investor
whose shares are in escrow. Each investor then has no fewer than 20 and no
greater than 45 business days to notify the Company in writing if they elect
to remain an investor. A failure to reply indicates that the person has
elected to not remain an investor. As all investors are allotted this second
opportunity to determine to remain an investor, acquisition agreements
should be conditioned upon enough funds remaining in escrow to close the
transaction.
Effecting a business combination
Prospective investors in the Company's common stock will not have an
opportunity to evaluate the specific merits or risks of any of the one or
more business combinations that we may undertake A business combination may
involve the acquisition of, or merger with, a company which needs to raise
substantial additional capital by means of being a publicly trading company,
while avoiding what it may deem to be adverse consequences of undertaking a
public offering itself. These include time delays, significant expense, loss
of voting control and compliance with various Federal and state securities
laws. A business combination may involve a company which may be financially
unstable or in its early stages of development or growth.
The Registrant has not identified a target business or target
industry
The Company's effort in identifying a prospective target business will not
be limited to a particular industry and the Company may ultimately acquire a
business in any industry Management deems appropriate. To date, the Company
has not selected any target business on which to concentrate our search for
a business combination. While the Company intends to focus on target
businesses in the United States, it is not limited to U.S. entities and may
consummate a business combination with a target business outside of the
United States. Accordingly, there is no basis for investors in the Company's
common stock to evaluate the possible merits or risks of the target business
or the particular industry in which we may ultimately operate. To the extent
we effect a business combination with a financially unstable company or an
entity in its early stage of development or growth, including entities
without established records of sales or earnings, we may be affected by
numerous risks inherent in the business and operations of financially
unstable and early stage or potential emerging growth companies. In
addition, to the extent that we effect a business combination with an entity
in an industry characterized by a high level of risk, we may be affected by
the currently unascertainable risks of that industry. An extremely high
level of risk frequently characterizes many industries which experience
rapid growth. In addition, although the Company's Management will endeavor
to evaluate the risks inherent in a particular industry or target business,
we cannot assure you that we will properly ascertain or assess all
significant risk factors.
Sources
of target businesses
Our Management anticipates
that target business candidates will be brought to our attention from various unaffiliated
sources, including securities broker-dealers, investment bankers, venture capitalists,
bankers and other members of the financial community, who may present solicited or
unsolicited proposals. Our Management may also bring to our attention target business
candidates. While we do not presently anticipate engaging the services of professional
firms that specialize in business acquisitions on any formal basis, we may engage these
firms in the future, in which event we may pay a finder's fee or other compensation
in connection with a business combination. In no
event, however, will we pay Management any finder's fee or other compensation for services
rendered to us prior to or in connection with the consummation of a business combination.
Page 6
Selection
of a target business and structuring of a business combination
Management owns 78.58% of the issued and
outstanding shares of common stock and will have broad flexibility in identifying and selecting a
prospective target business. In evaluating a prospective target business, our
Management
will consider, among other factors, the following:
financial condition and results of operation of
the target company;
growth potential;
experience and skill
of Management and availability of additional personnel;
capital requirements;
competitive position;
stage of development
of the products, processes or services;
degree of current or
potential market acceptance of the products, processes or services;
proprietary features
and degree of intellectual property or other protection of the products, processes or
services;
regulatory environment
of the industry; and
costs associated with
effecting the business combination.
These criteria are not
intended to be exhaustive. Any evaluation relating to the merits of a particular business
combination will be based, to the extent relevant, on the above factors as well as other
considerations deemed relevant by our Management in effecting a business combination
consistent with our business objective. In evaluating a prospective target business, we
will conduct a due diligence review which will encompass, among other things, meetings
with incumbent Management and inspection of facilities, as well as review of financial and
other information which will be made available to us.
We will endeavor to structure a
business combination so as to achieve the most favorable tax treatment to us,
the target business and both companies' stockholders. However, there can be no
assurance that the Internal Revenue Service or applicable state tax authorities
will necessarily agree with the tax treatment of any business combination we
consummate.
The time and costs required
to select and evaluate a target business and to structure and complete the business
combination cannot presently be ascertained with any degree of certainty. Any costs
incurred with respect to the identification and evaluation of a prospective target
business with which a business combination is not ultimately completed will result in a
loss to us.
Probable
lack of business diversification
While we may seek to effect
business combinations with more than one target business, it is more probable
that we will only have the ability to effect a single business combination, if
at all. Accordingly, the prospects for our success may be entirely dependent
upon the future performance of a single business. Unlike other entities which
may have the resources to complete several business combinations with entities
operating in multiple industries or multiple areas of a single industry, it is
probable that we will lack the resources to diversify our operations or benefit
from the possible spreading of risks or offsetting of losses. By consummating a
business combination with only a single entity, our lack of diversification may:
subject us to numerous economic, competitive and regulatory developments, any or
all of which may have a substantial adverse impact upon the particular industry in which
we may operate subsequent to a business combination, and
result in our
dependency upon the development or market acceptance of a single or limited number of
products, processes or services.
Limited ability to evaluate the target business' Management
Although we intend to
closely scrutinize the Management of a prospective target business when evaluating the
desirability of effecting a business combination, we cannot assure you that our assessment
of the target business' Management will prove to be correct. In addition, we cannot assure
you that the future Management will have the necessary skills, qualifications or abilities
to manage a public company intending to embark on a program of business development.
Furthermore, the future role of our director, if any, in the target business cannot
presently be stated with any certainty.
Page 7
While it is possible that our director will remain
associated in some capacity with us following a business combination, it is unlikely that
he will devote his full efforts to our affairs subsequent to a business combination.
Moreover, we cannot assure you that our director will have significant experience or
knowledge relating to the operations of the particular target business.
Following a business
combination, we may seek to recruit additional managers to supplement the incumbent
Management of the target business. We cannot assure you that we will have the ability to
recruit additional managers, or that additional managers will have the requisite skills,
knowledge or experience necessary to enhance the incumbent Management.
Our auditors have expressed substantial doubt about our ability to continue as a
going concern
Our audited financial statements for the years ended June 30, 2017 and 2016, were prepared using the assumption that we will continue our operations
as a going concern. Our independent accountants in their audit report have expressed
substantial doubt about our ability to continue as a going concern. Our operations
are dependent on our ability to raise sufficient capital or complete business
combination as a result of which we become profitable. Our financial statements do not include any
adjustments that may result from the outcome of this uncertainty. There is not enough cash
on hand to fund our administrative expenses and operating expenses for the next twelve months. Therefore, we may be unable
to continue operations in the future as a going concern. If we cannot continue as a viable
entity, our stockholders may lose some or all of their investment in the Company's shares
of common stock.
Competition
In identifying, evaluating and selecting a target business,
we expect to encounter intense competition from other entities having a business
objective similar to ours. Many of these entities are well established and have
extensive experience identifying and effecting business combinations, either
directly or through affiliates. Many if not virtually most of these competitors
possess far greater financial, human and other resources compared to our
resources. While we believe that there are numerous potential target businesses
that we may identify, our ability to compete in acquiring certain of the more
desirable target businesses will be limited by our limited financial and human
resources. Our inherent competitive limitations are expected by Management to
give others an advantage in pursuing the acquisition of a target business that
we may identify and seek to pursue. Further, any of these limitations may place
us at a competitive disadvantage in successfully negotiating a business
combination. Our Management believes, however, that our status as a reporting
public entity with potential access to the United States public equity markets
may give us a competitive advantage over certain privately-held entities having
a similar business objective in acquiring a desirable target business with
growth potential on favorable terms.
If we succeed in effecting a business combination, there will
be, in all likelihood, intense competition from existing competitors of the
business we acquire. In particular, certain industries which experience rapid
growth frequently attract an increasingly larger number of competitors,
including those with far greater financial, marketing, technical and other
resources than the initial competitors in the industry in which we seek to
operate. The degree of competition characterizing the industry of any
prospective target business cannot presently be ascertained. We cannot assure
you that, subsequent to a business combination, we will have the resources to
compete effectively, especially to the extent that the target business is in a
high-growth industry.
Employees
Mr. Heiden, our CEO and CFO, is
our sole executive officer. Mr. Heiden is not obligated to devote any specific
number of hours per week and, in fact, intends to devote only as much time as he
deem reasonably necessary to administer the Company's affairs until such time as
a business combination is consummated. The amount of time he will devote in any
time period will vary based on the availability of suitable target businesses to
investigate. We do not intend to have any full-time employees prior to the
consummation of a business combination.
Page 8
Conflicts of Interest
The Company's Management is not required to commit its full
time to the Company's affairs. As a result, pursuing new business opportunities
may require a longer period of time than if Management would devote full time to
the Company's affairs. Management is not precluded from serving as an officer or
director of any other entity that is engaged in business activities similar to
those of the Registrant. Management has not identified and is not currently
negotiating a new business opportunity for us. In the future, Management may
become associated or affiliated with entities engaged in business activities
similar to those we intend to conduct. In such event, Management may have
conflicts of interest in determining to which entity a particular business
opportunity should be presented. In the event that the Company's Management has
multiple business affiliations, our Management may have legal obligations to
present certain business opportunities to multiple entities. In the event that a
conflict of interest shall arise, Management will consider factors such as
reporting status, availability of audited financial statements, current
capitalization and the laws of jurisdictions. If several business opportunities
or operating entities approach Management with respect to a business
combination, Management will consider the foregoing factors as well as the
preferences of the Management of the operating company. However, Management will
act in what it believes will be in the best interests of the shareholders of the
Registrant. The Registrant shall not enter into a transaction with a target
business that is affiliated with Management.
ITEM 1A. RISK FACTORS
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Contents
Forward-Looking Statements
This registration statement on Form 10 contains forward-looking statements that
are based on current expectations, estimates, forecasts and projections about us, our
future performance, the market in which we operate, our beliefs and our
Management's
assumptions. In addition, other written or oral statements that constitute forward-looking
statements may be made by us or on our behalf. Words such as "expects",
"anticipates", "targets", "goals", "projects",
"intends", "plans", "believes", "seeks",
"estimates", variations of such words and similar expressions are intended to
identify such forward-looking statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions that are difficult to
predict or assess. Therefore, actual outcomes and results may differ materially from what
is expressed or forecast in such forward-looking statements.
Any
investment in our shares of common stock involves a high degree of risk. You should
carefully consider the following information about these risks, together with the other
information contained in this annual report before you decide to invest in our common
stock. Each of the following risks may materially and adversely affect our business
objective, plan of operation and financial condition. These risks may cause the market
price of our common stock to decline, which may cause you to lose all or a part of the
money you invested in our common stock. We provide the following cautionary discussion of
risks, uncertainties and possible inaccurate assumptions relevant to our business plan.
In addition to other information included in this annual report, the following
factors should be considered in evaluating the Company's business and future prospects.
The Company has a limited operating history
and very limited resources.
Since emerging from bankruptcy, the Company's operations
have been limited to seeking a potential business combination and has had no revenues from
operations. Investors will have no basis upon which to evaluate the Company's ability to
achieve the Company's business objective, which is to effect a merger, capital stock
exchange and/or acquire an operating business. The Company will not generate any revenues until,
at the earliest, after the consummation of a business combination or acquiring
an operating business.
Our auditors have expressed substantial doubt about our ability to continue as a
going concern.
As of June 30,
2017, we had no cash and cash equivalents and an accumulated deficit of $12,732.
Our audited financial statements for the years ended June 30, 2017 and 2016, were prepared using the assumption that we will continue our operations
as a going concern. Our independent accountants in their audit report have expressed
substantial doubt about our ability to continue as a going concern. Our operations
are dependent on our ability to raise sufficient capital or complete business
combination as a result of which we become profitable. Our financial statements do not include any
adjustments that may result from the outcome of this uncertainty.
Page 9
There is not enough cash
on hand to fund our administrative expenses and operating expenses for the next twelve months. Therefore, we may be unable
to continue operations in the future as a going concern. If we cannot continue as a viable
entity, our stockholders may lose some or all of their investment in the Company's shares
of common stock.
Since the Company has not yet selected a particular
target industry or target business with which to complete a business
combination, the Company is unable to ascertain the merits or risks associated
with any particular business or industry.
Since the Company has not yet identified a particular
industry or prospective target business, there is no basis for investors to evaluate the
possible merits or risks of the target business which the Company may ultimately acquire.
If the
Company completes a business combination with a financially unstable company or an entity
in its development stage, the Company may be affected by numerous risks inherent in the
operations of those entities. Although the Company's Management intents to
evaluate the risks inherent in a particular industry or target business, the Company
cannot assure you that it will properly ascertain or assess all of the significant risk
factors.
There can be no assurance that any prospective business
combination will benefit shareholders or prove to be more favorable to shareholders than
any other investment that may be made by shareholders and investors.
Unspecified and
unascertainable risks
There is no basis for shareholders to
evaluate the possible merits or risks of potential business combination. To the extent that the Company
effects a business combination with a financially unstable operating company or an entity
that is in its early stage of development or growth, the Company will become subject to numerous
risks. If the Company effects a business combination with an entity in
a high risk industry, the Company will become subject to the
currently unascertainable risks of that industry. Although
Management will endeavor to evaluate the risks inherent in a particular business or
industry, there can be no assurance that Management will properly ascertain or assess all
such risks that the Company perceived at
the time of the consummation of a business combination.
It is likely that the Company's current
sole officer and director will resign upon consummation of a business combination and the
Company will have only limited ability to evaluate the Management of the target business.
The Company's ability to successfully effect a business
combination will be dependent upon the efforts of the Company's Management. The future
role of Management in the target business cannot presently be
ascertained. Although it is possible that Management may remain associated with the target business following a business combination, it is likely that
the Management of the target business will remain
in place. Although the Company intends to closely scrutinize the management of a
target business in connection with evaluating the desirability of effecting a
business combination, the Company cannot assure you that the Company's assessment of
Management will prove to be correct.
Dependence on key personnel
The Company is dependent upon the
continued services of Management. To the extent that his services become
unavailable, the Company will be required to obtain other qualified personnel and there
can be no assurance that it will be able to recruit qualified persons upon
acceptable terms.
The Company's sole officer and director may allocate
his time to other businesses activities, thereby causing conflicts of
interest as to how much time to devote to the Company's
affairs. This could have a negative impact on the Company's ability to
consummate a business combination in a timely manner, if at all.
The Company's officer and director is not required to commit
his full time to the Company's affairs, which may result in a conflict of
interest in allocating his time between the Company's business and other
businesses. The Company does not intend to have any full time employees prior to
the consummation of a business combination. Management of the Company is engaged
in other business endeavors and is not obligated to contribute any specific
number of his hours per week to the Company's affairs.
Mr. Heiden owes fiduciary duty to Baltic Capital Corp. of which he is the sole
officer and director. Baltic Capital Corp. is a private
corporation engaged in the business of providing corporate securities compliance
services. Mr. Heiden was an analyst for Park Avenue Group from 2003 until 2008
and has no ongoing relationship with such entity.
Page 10
If Management's other
business affairs require him to devote more time to such
affairs, it could limit his ability to devote time to the Company's affairs and
could have a negative impact on the Company's ability to consummate a business
combination. Furthermore, we do not have an employment agreement with Mr. Heiden.
Mr. Heiden has no formal obligation or commitment to provide any particular
amount of time to the Company's affairs.
The Company may be unable to obtain additional
financing, if and when required, to complete a business combination or to fund
the operations and growth of the business combination target, which could compel
the Company to restructure a potential business combination transaction or to
entirely abandon a particular business combination.
The Company has not yet identified any prospective target
business. If we require funds for a particular business combination, because of
the size of the business combination or otherwise, we will be required to seek
additional financing, which may or may not be available a terms and conditions
satisfactory to the Company, if at all. To the extent that additional financing
proves to be unavailable when and if needed to consummate a particular business
combination, we would be compelled to restructure the transaction or abandon
that particular business combination and seek an alternative target business
candidate. In addition, if we consummate a business combination, we may require
additional financing to fund the operations or growth of the target business.
The failure to secure additional financing could have a material adverse effect
on the continued development or growth of the target business. The Company's
officer, director or stockholders are not required to provide any financing to
us in connection with or after a business combination.
It is probable that the Company will only be
able to enter into one business combination, which will cause us to be solely dependent on
such single business and a limited number of products or services.
It is probable that the Company will enter into a
business combination with a single operating business. Accordingly, the prospects for the
Company's success may be:
solely
dependent upon the performance of a single operating business, or
dependent upon the
development or market acceptance of a single or limited number of products or services.
In this case, the Company will not be able to diversify
the Company's operations or benefit from the possible spreading of risks or offsetting of
losses, unlike other entities which may have the resources to complete several business
combinations in different industries or different areas of a single industry.
The Company has limited resources and there
is significant competition for business combination opportunities. Therefore, the Company
may not be able to enter into or consummate an attractive business combination.
The Company expects to encounter intense competition
from other entities having a business objective similar to the Company's, including
venture capital funds, leveraged buyout funds and operating businesses competing for
acquisitions. Many of these entities are well established and have extensive experience in
identifying and effecting business combinations directly or through affiliates. Many of
these competitors possess greater technical, human and other resources than the Company
does and the Company's financial resources are limited when contrasted with those of many
of these competitors. While the Company believes that there are numerous potential target
businesses that it could acquire, the Company's ability to compete in acquiring certain
sizable target businesses will be limited by the Company's limited financial resources and
the fact that the Company will use its common stock to acquire an operating business. This
inherent competitive limitation gives others an advantage in pursuing the acquisition of
certain target businesses.
The Company may be unable to obtain
additional financing, if required, to complete a business combination or to fund the
operations and growth of the target business, which could compel the Company to
restructure a potential business transaction or abandon a particular business combination.
We
may be required to seek additional financing. We cannot assure you that such financing
would be available on acceptable terms, if at all. If additional financing
proves to be unavailable, we
would be compelled to restructure the transaction or abandon that particular business
combination and seek an alternative target business. In addition, if we
consummate a business combination, we may require additional financing to fund the
operations or growth of the target business. The failure to secure additional financing
could have a material adverse effect on the continued development or growth of the target
business.
Page 11
Financing
requirements to fund operations associated with reporting obligations under the Exchange Act.
The Company has no
revenues and is dependent upon the willingness of the Company's Management to
fund the costs associated with the reporting obligations under the Exchange Act,
other administrative costs associated with the Company's corporate existence and
expenses related to the Company's business objective. The Company is not likely
to generate any revenues until the consummation of a business combination, at
the earliest. The Company believes that it will have available sufficient
financial resources available from its Management to continue to pay accounting and other professional fees
and other miscellaneous expenses that may be required until the Company
commences business operations following a business combination.
We are dependent upon interim funding provided by Management
or an affiliated party to pay professional fees and expenses. Our Management has provided funding, without formal agreement, as has been
required to pay for accounting fees and other administrative expenses of the
Company.
The Company does not currently engage in any business
activities that provide cash flow. The costs of investigating and analyzing
potential business combination candidates and preparing and filing Exchange Act
reports for what may be an unlimited period of time will be paid by our sole
officer and director, or an affiliated party notwithstanding the fact that there
is no written agreement to pay such costs. Mr. Heiden and/or an affiliated party
have informally agreed to pay the Company's expenses in the form of advances
at an imputed interest rate of 8%
.
The Company intents to repay these
advances when it has the cash resources to do so.
Based on Mr. Heiden's resource commitment to fund our operations , we believe that we will be able to
continue as a going concern
until such time as we conclude a business combination
. During the next 12
months we anticipate incurring costs related to:
filing of Exchange Act reports.
franchise fees, registered agent fees and accounting fees, and
investigating, analyzing and consummating an acquisition or business
combination.
We estimate that these costs will range from five to six thousand dollars per
year, and that we will be able to meet these costs as necessary through
loans/advances from Management or affiliated parties until we enter into a
business combination.
The Company's sole officer and director has a 78.58%
equity interest in the Company and thus is in a position to influence certain
actions requiring stockholder vote.
Management has no present intention to call for an annual
meeting of stockholders to elect new directors prior to the consummation of a
business combination. As a result, our current director will continue in office
at least until the consummation of the business combination. If there is an
annual meeting of stockholders for any reason, the Company's Management has
broad discretion regarding proposals submitted to a vote by shareholders as a
consequence of Management's significant equity interest. Accordingly, the
Company's Management will continue to exert substantial control at least until
the consummation of a business combination.
Broad discretion of Management
Any person who invests in the Company's common stock
will do so without an opportunity to evaluate the specific merits or risks of any
prospective business combination. As a result, investors will be entirely dependent on the
broad discretion and judgment of Management in connection with the selection of a
prospective business combination. There can be no assurance that determinations made by
the Company's Management will permit us to achieve the Company's business objectives.
Page 12
Reporting
requirements may delay or preclude a business combination
Pursuant to
the requirements of Section 13 of the Exchange Act, the Company is required to provide
certain information about significant acquisitions and other material events. The Company
will continue to be required to file quarterly reports on Form 10-Q and annual reports on
Form 10-K, which annual report must contain the Company's audited financial statements. As
a reporting company under the Exchange Act, following any business combination, we will be
required to file a report on Form 8-K, which report contains audited financial statements
of the acquired entity. These audited financial statements must be filed with the SEC
within 5 days following the closing of a business combination. While obtaining audited
financial statements is typically the responsibility of the acquired company, it is
possible that a potential target company may be a non-reporting company with unaudited
financial statements. The time and costs that may be incurred by some potential target
companies to prepare such audited financial statements may significantly delay or may even
preclude consummation of an otherwise desirable business combination. Acquisition
prospects that do not have or are unable to obtain the required audited statements may not
be appropriate for acquisition because we are subject to the reporting requirements of the
Exchange Act.
If the Company is deemed to be an investment
company, the Company may be required to institute burdensome compliance requirements and
the Company's activities may be restricted, which may make it difficult for the Company to
enter into a business combination.
restrictions on the nature of the Company's investments; and
restrictions on the
issuance of securities, which may make it difficult for us to complete a business
combination.
In addition, we may have imposed upon us burdensome
requirements, including:
registration as an
investment company;
adoption of a specific
form of corporate structure; and
reporting, record
keeping, voting, proxy and disclosure requirements and other rules and regulations.
The Company does not believe that its anticipated
principal activities will subject it to the Investment Company Act of 1940.
The Company may be deemed to have no
"Independent Director", actions taken and expenses incurred by our officer and
director on behalf of the Company will generally not be subject to "Independent
Review".
Our director owns shares of our common stock and,
although no compensation will be paid to him for services rendered prior to or in
connection with a business combination, he may receive reimbursement for out-of-pocket
expenses incurred by him in connection with activities on the Company's behalf such as
identifying potential target businesses and performing due diligence on suitable business
combinations. There is no limit on the amount of these out-of-pocket expenses and there
will be no review of the reasonableness of the expenses by anyone other than our board of
director, which consist of one directors who may seek reimbursement. If our director will
not be deemed "independent," he will generally not have the benefit of
independent director examining the propriety of expenses incurred on our behalf and
subject to reimbursement. Although the Company believes that all actions taken by our
director on the Company's behalf will be in the Company's best interests, the Company
cannot assure the investor that this will actually be the case. If actions are taken, or
expenses are incurred that are actually not in the Company's best interests, it could have
a material adverse effect on our business and plan of operation and the price of our stock
held by the public stockholders.
General Economic
Risks.
The Company's current and
future business objectives and plan of operation are likely dependent, in large part, on
the state of the general economy. Adverse changes in economic conditions may adversely
affect the Company's business objective and plan of operation. These conditions and other
factors beyond the Company's control include also, but are not limited to regulatory
changes.
Page 13
Risks
Related to Our Common Stock
The Company's shares of common stock are traded
from time to time on the
OTC Pink Sheet Market.
Our common stock trades from time to time on
the OTC Pink Sheet Market. As a result, there is only limited liquidity in our common
stock. We plan to seek quotation of our common stock on the OTCQB Market.
Quotation of the Company's securities on the OTCQB market limits the liquidity and price
of the Company's common stock more than if the Company's shares of common stock were
listed on the Nasdaq Stock Market or a national exchange.
In order for our common stock to become subject to quotation on the OTCQB
Market, we must obtain a market maker to file an application with the Financial
Industry Regulatory Authority (FINRA) on our behalf pursuant to Rule 15c2-11
under the Exchange Act. If we fail to continue to comply with the listing
requirements of the OTCQB Market, the price of our common stock and the ability
of our stockholders to to access the capital markets could be negatively
impacted. We cannot provide any assurance that we will be able to continue to
satisfy the requirements of the OTCQB Markets' for continued quotation.
There can be no assurance that there will be a
liquid trading
market for the Company's common stock following a business combination. In the event that
a liquid trading market commences, there can be no assurance as to the market price of
the Company's shares of common stock, whether any trading market will provide liquidity to
investors, or whether any trading market will be sustained.
Our common
stock is subject to the Penny Stock Rules of the SEC and the trading market in our common
stock is limited, which makes transactions in our stock cumbersome and may reduce the
value of an investment in our common stock.
The Securities and
Exchange Commission has adopted Rule 3a51-1 which establishes the definition of a
"penny stock," for the purposes relevant to us, as any equity security that has
a market price of less than $5.00 per share or with an exercise price of less than $5.00
per share, subject to certain exceptions. For any transaction involving a penny stock,
unless exempt, Rule 15g-9 require:
that a broker or
dealer approve a person's account for transactions in penny stocks; and
the broker or
dealer receive from the investor a written agreement to the transaction, setting forth the
identity and quantity of the penny stock to be purchased.
In order to approve
a persons account for transactions in penny stocks, the broker or dealer must:
obtain financial
information and investment experience objectives of the person; and
make a reasonable
determination that the transactions in penny stocks are suitable for that person and the
person has sufficient knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks.
The broker or
dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule
prescribed by the SEC relating to the penny stock market, which, in highlight form:
sets forth the
basis on which the broker or dealer made the suitability determination; and
that the broker or
dealer received a signed, written agreement from the investor prior to the transaction.
Generally, brokers
may be less willing to execute transactions in securities subject to the "penny
stock" rules. This may make it more difficult for investors to dispose of our common
stock and cause a decline in the market value of our stock.
Disclosure also has
to be made about the risks of investing in penny stocks in both public offerings and in
secondary trading and about the commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities and the rights and
remedies available to an investor in cases of fraud in penny stock transactions. Finally,
monthly statements have to be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny stocks.
Page 14
State blue sky
registration; potential limitations on resale of the Company's common stock
The holders of the Company's
shares of common stock registered under the Exchange Act and those persons who desire to
purchase them in any trading market that may develop in the future, should be aware that
there may be state blue-sky law restrictions upon the ability of investors to resell the
Company's securities. Accordingly, investors should consider the secondary market for the
Registrant's securities to be a limited one.
It is the
intention of the Registrant's Management following the consummation of a business
combination to seek coverage and publication of information regarding the Registrant in an
accepted publication manual which permits a manual exemption. The manual exemption permits
a security to be distributed in a particular state without being registered if the
Registrant issuing the security has a listing for that security in a securities manual
recognized by the state. However, it is not enough for the security to be listed in a
recognized manual. The listing entry must contain (1) the names of issuers, officers, and
directors, (2) an issuer's balance sheet, and (3) a profit and loss statement for either
the fiscal year preceding the balance sheet or for the most recent fiscal year of
operations. Furthermore, the manual exemption is a nonissuer exemption restricted to
secondary trading transactions, making it unavailable for issuers selling newly issued
securities.
Most of the accepted manuals
are those published by Standard and Poor's, Moody's Investor Service, Fitch's Investment
Service, and Best's Insurance Reports, and many states expressly recognize these manuals.
A smaller number of states declare that they "recognize securities manuals" but
do not specify the recognized manuals. The following states do not have any provisions and
therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois,
Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin.
Rule 144 Related Risks
The SEC adopted amendments to Rule 144 which
became effective on February 15, 2008. These Rule 144 amendments apply to
securities acquired both before and after that date. Generally, under the Rule
144 amendments, a person who has beneficially owned restricted shares for at
least six months would be entitled to sell their securities provided that:
(i) such person is not deemed to have been an affiliate at the time of, or at
any time during the three months preceding, a sale; (ii) we are subject to and
are current in the Exchange Act periodic reporting requirements for at least
90 days before the sale; and (iii) if the sale occurs prior to satisfaction of a
one-year holding period, provided current information is available at the time
of sale.
Persons who have beneficially owned restricted
shares for at least six months but who are affiliates at the time of, or at any
time during the three months preceding a sale, would be subject to additional
restrictions, by which such person would be entitled to sell within any
three-month period only a number of securities that does not exceed the greater
of either of the following: (i) 1% of the total number of securities of the same
class then outstanding; or (ii) the average weekly trading volume of such
securities during the four calendar weeks preceding the filing of a notice on
Form 144 with respect to the sale; provided, in each case, that we are subject
to the Exchange Act periodic reporting requirements for at least three months
before the sale. Such sales by affiliates must also comply with the manner of
sale, current public information and notice provisions of Rule 144.
These Rule 144 related risks are subject to
further restrictions in the event that the Exchange Act reporting company is
deemed to be a Shell Company, such as the Registrant.
Restrictions on the Reliance of Rule 144 by Shell Companies or Former
Shell Companies
Historically, the SEC staff has taken the position that Rule 144 is not
available for the resale of securities initially issued by companies that
are, or previously were, blank check companies, like us. The SEC has
codified and expanded this position in the amendments discussed above by
prohibiting the use of Rule 144 for resale of securities issued by any shell
companies (other than business combination related shell companies) or any
issuer that has been at any time previously a shell company. The SEC has
provided an important exception to this prohibition, however, if the
following conditions are met:
Page 15
- The issuer of
the securities that was formerly a shell company has ceased to be a
shell company;
- The issuer of
the securities is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act;
- The issuer of
the securities has filed all Exchange Act reports and material
required to be filed, as applicable, during the preceding 12 months
(or such shorter period that the issuer was required to file such
reports and materials), other than Current Reports on Form 8-K; and
-At least one
year has elapsed from the time that the issuer filed current
comprehensive disclosure with the SEC reflecting its status as an
entity that is not a shell company.
As a result, it is likely that pursuant to Rule 144, stockholders who
receive our restricted securities in a business combination will not be able
to sell our shares without registration until one year after we have
completed our initial business combination.
Rule 145 Related Risk
Under the new amendments, affiliates of a target company who receive
registered shares in a Rule 145 business combination transaction, and who do
not become affiliates of the acquirer, will be able to immediately resell
the securities received by them into the public markets without registration
(except for affiliates of a shell company as discussed in the following
section). However, those persons who are affiliates of the acquirer, and
those who become affiliates of the acquirer after the acquisition, will
still be subject to the Rule 144 resale conditions generally applicable to
affiliates, including the adequate current public information requirement,
volume limitations, manner-of-sale requirements for equity securities, and,
if applicable, a Form 144 filing.
Application of Rule 145 to Shell Companies
Public resale of securities acquired by affiliates of acquirers and target
companies in business combination transactions involving shell companies
will continue to be subject to restrictions imposed by Rule 145. If the
business combination transaction is not registered under the Securities Act,
then the affiliates must look to Rule 144 to resell their securities (with
the additional Rule 144 conditions applicable to shell company securities).
If the business combination transaction is registered under the Securities
Act, then affiliates of the acquirer and target company may resell the
securities acquired in the transaction, subject to the following conditions:
-The issuer must
meet all of the conditions applicable to shell companies under
Rule 144;
- After 90 days from the date of the acquisition,
the affiliates may resell their securities subject to Rule 144's volume
limitations, adequate current public information requirement, and
manner-of-sale requirements;
- After six
months from the date of the acquisition, selling security-holders
who are not affiliates of the acquirer may resell their securities
subject only to the adequate current public information requirement
of Rule 144; and
- After one year
from the date of the acquisition, selling security-holders who are
not affiliates or the acquirer may resell their securities without
restriction.
Application of Rule
419 to Shell Companies
The provisions of Rule 419 apply to
registration statements filed under the Securities Act of 1933, as amended,
by a blank check company. Rule 419 requires that a blank check company
filing such registration statement deposit the securities being offered and
proceeds of the offering into an escrow or trust account pending the
execution of an agreement for an acquisition or merger.
Page 16
In addition, the registrant is required to
file a post-effective amendment to the registration statement upon the
execution of an agreement for such acquisition or merger. The rule provides
procedures for the release of the offering funds in conjunction with the
post effective acquisition or merger. The obligations to file post-effective
amendments are in addition to the obligations to file Forms 8-K to report
for both the entry into a material non-ordinary course agreement and the
completion of the transaction. Rule 419 applies to both primary and re-sale
or secondary offerings.
Within five (5) days of filing a post
effective amendment setting forth the proposed terms of an acquisition, the
Company must notify each investor whose shares are in escrow. Each investor
then has no fewer than 20 and no greater than 45 business days to notify the
Company in writing if they elect to remain an investor. A failure to reply
indicates that the person has elected to not remain an investor. As all
investors are allotted this second opportunity to determine to remain an
investor, acquisition agreements should be conditioned upon enough funds
remaining in escrow to close the transaction.
You May Not Be Entitled to Protections Normally Afforded to Investors of
Bank Check Companies.
If the net
proceeds of an offering under the Securities Act of 1933 is used to complete
a initial business combination with a target business that has not been
identified, and we will have net tangible assets in excess of $5,000,001
upon the successful consummation of this offering and will file a Current
Report on Form 8-K, including an audited balance sheet demonstrating this
fact, we are exempt from rules promulgated by the SEC to protect investors
of blank check companies such as Rule 419. Accordingly, investors will not
be afforded the benefits or protections of those rules which would, for
example, completely restrict the transferability of our securities, require
us to complete our initial business combination within 18 months of the
effective date of the initial registration statement and restrict the use of
interest earned on the funds held in the trust account.
Investors will
then not be entitled to protections normally offered to investors in Rule
419 blank check offerings.
Possible
Issuance of Additional Securities.
Our Articles of Incorporation authorize the issuance of
74,000,000 shares of
common stock, par value $0.0001. As of June 30, 2017, we had 16,836,750 shares issued and outstanding. We may be
expected to issue additional shares in connection with our pursuit of new business
opportunities and new business operations. To the extent that additional shares of common
stock are issued, our shareholders would experience dilution of their respective ownership
interests. If we issue shares of common stock in connection with our intent to pursue new
business opportunities, a change in control of the Registrant may be expected to occur.
The issuance of additional shares of common stock may adversely affect the market
price of our common stock, in the event that an active trading market commences.
Dividends
unlikely
The Company does not expect
to pay dividends for the foreseeable future because it has no revenues or cash resources.
The payment of dividends will be contingent upon the Company's future revenues and
earnings, if any, capital requirements and overall financial conditions. The payment of
any future dividends will be within the discretion of the Company's board of directors as
then constituted. It is the Company's expectation that future Management following a
business combination will determine to retain any earnings for use in its business
operations and accordingly, the Company does not anticipate declaring any dividends in the
foreseeable future.
Page 17
ITEM 2.
FINANCIAL INFORMATION
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Management's Plan of Operation
The following discussion contains
forward-looking statements. Forward-looking statements give our current expectations or
forecasts of future events. You can identify these statements by the fact that they do not
relate strictly to historical or current facts. They use of words such as
"anticipate", "estimate", "expect", "project",
"intend", "plan", "believe", and other words and terms of
similar meaning in connection with any discussion of future operating or financial
performance. From time to time, we also may provide forward-looking statements in other
materials we release to the public.
Overview
The Company's current
business objective is to seek a business combination with an operating company. We intend
to use the Company's limited personnel and financial resources in connection with such
activities.
The Company will utilize its capital stock, debt or a combination of
capital stock and debt, in effecting a business combination.
It may
be expected that entering into a business combination will involve the issuance of
restricted shares of capital stock.
The issuance of additional shares of our
capital stock:
may significantly reduce the equity interest of our stockholders;
will likely cause a
change in control if a substantial number of our shares of capital stock are issued, and
most likely will also result in the resignation or removal of our present officer and
director; and
may adversely affect
the prevailing market price for our common stock.
Similarly, if we issued debt securities, it
could result in:
default and
foreclosure on our assets if our operating revenues after a business combination were
insufficient to pay our debt obligations;
acceleration of our
obligations to repay the indebtedness even if we have made all principal and interest
payments when due if the debt security contained covenants that required the maintenance
of certain financial ratios or reserves and any such covenants were breached without a
waiver or renegotiations of such covenants;
our immediate payment
of all principal and accrued interest, if any, if the debt security was payable on demand;
and
our inability to
obtain additional financing, if necessary, if the debt security contained covenants
restricting our ability to obtain additional financing while such security was
outstanding.
Results of Operations during the year ended June 30, 2017 as compared to the year
ended June 30, 2016
We have not generated any revenues during the years 2017 and
2016. We had total operating
expenses of $2,259 related to general and administrative expenses during the year
ended June 30, 2017 compared to total operating expenses of $749 during the
year ended June 30, 2016. We incurred interest expense of $563 during the year
ended June 30, 2017 compared to interest expense of $384 during the year ended
June 30, 2016. During the year ended
June 30, 2017 and 2016, we had a net loss of $2,822 and $1,133, respectively
mainly due to our general and administrative expenses.
Liquidity and Capital
Resources
At present, the Company has no business operations and no
cash resources other than that provided by Management. We are dependent upon
interim funding provided by Management or an affiliated party to pay
professional fees and expenses. Our Management and an affiliated party have
agreed to provide funding as may be required to pay for accounting fees and
other administrative expenses of the Company until the Company enters into a
business combination. The Company would be unable to continue as a going concern
without interim financing provided by Management.
Page 18
If we require additional financing, we cannot predict whether equity or debt
financing will become available at terms acceptable to us, if at all. The
Company depends upon services provided by Management and an affiliated party to
fulfill its filing obligations under the Exchange Act. At present, the Company
has no financial resources to pay for such services.
The Company does not currently engage in any business
activities that provide cash flow. The costs of investigating and analyzing
business combinations, maintaining the filing of Exchange Act reports, the
investigation, analyzing, and consummation of an acquisition for an
unlimited period of time will be paid from additional money contributed by
Ivo Heiden, our sole officer and director, or an affiliated party. Mr.
Heiden or an affiliated party have verbally agreed to pay the Company's expenses
through advances until we enter into a business combination. The imputed
interest for these advances is 8%. The Company intents to repay
these advances and when it has the cash resources to do so.
During the next 12 months we anticipate
incurring costs related to:
filing of Exchange Act reports.
franchise fees, registered agent fees and accounting fees, and
investigating, analyzing and consummating an acquisition or business
combination.
We estimate that these costs will be in the range of five to six thousand
dollars per year, and that we will be able to meet these costs as necessary,
to be advanced/loaned to us by Management and/or an affiliated party.
On June 30, 2017 and June 30, 2016, we have had no current assets.
As of June 30, 2017, we had $9,871
in liabilities consisting of short-term borrowings of $7,053 due to our CEO and
accrued interest of $2,818. As of June 30, 2016, we had
$7,049 in liabilities consisting of short-term borrowings of $4,794 due to our
CEO and accrued interest of $2,255.
We had a negative cash flow from operations of
$2,259 during the year ended June 30, 2017 mainly due to a net loss of $2,822
offset by an increase in accounts payable and accrued liabilities of
$563. We financed our negative cash flow from operations during the year
ended June 30, 2017 through advances made by our CEO of $2,259.
We had a negative cash flow from operations of
$749 during the year ended June 30, 2016 mainly due to a net loss of $1,133
offset by an increase in accounts payable and accrued liabilities of
$384. We financed our negative cash flow from operations through advances
from our CEO.
The Company currently plans to satisfy its cash
requirements for the next 12 months through
borrowings from its CEO or companies affiliated with its CEO and believes it can satisfy its cash requirements so
long as it is able to obtain financing from these affiliated parties. The
Company expects that money borrowed will be used during the next 12 months
to satisfy the Company's operating costs, professional fees and for general
corporate purposes.
There is no written funding agreement between the Company and
Mr. Heiden , our sole officer and director.
Mr. Heiden has verbally agreed to pay the Company's expenses
through advances until we enter into a business combination. The imputed
interest for these advances is 8%. The Company intents to repay
these advances at a time when it has the cash resources to do so.
The Company has
only limited capital. Additional financing is necessary for the Company to continue as a
going concern. Our independent auditors have unqualified audit opinion for the years ended
June 30, 2017 and 2016 with an explanatory paragraph on going concern.
Page 19
Off-Balance Sheet
Arrangements
As of
June 30, 2017 and 2016, we did not have any off-balance sheet arrangements as defined in
Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.
Contractual
Obligations and Commitments
As of
June 30, 2017 and 2016, we did not have any contractual obligations.
Critical Accounting
Policies
Our significant
accounting policies are described in the notes to our financial statements for the years
ended June 30, 2017 and 2016, and are included elsewhere in this registration
statement.
ITEM 3. DESCRIPTION OF PROPERTY
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The Registrant's
corporate office
is located at 2275 Huntington Drive, Suite 851, San Marino, CA 91108, which space is provided to us on a rent-free basis. The Registrant
believes that the office facilities are sufficient for the foreseeable future and this
arrangement will remain until we find a new business opportunity.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Back to Table of
Contents
The following table sets forth information regarding the
beneficial ownership of our common stock as of June 30, 2017. The information in this
table provides the ownership information for: each person known by us to be the beneficial
owner of more than 5% of our common stock; each of our directors; each of our executive
officers; and our executive officers and directors as a group.
Beneficial
ownership has been determined in accordance with the rules and regulations of the SEC and
includes voting or investment power with respect to the shares. Unless otherwise
indicated, the persons named in the table below have sole voting and investment power with
respect to the number of shares indicated as beneficially owned by them.
Name of Beneficial Owner
|
|
Common Stock Beneficially Owned (1)
|
|
Percentage of Common Stock Owned (1)
|
Ivo Heiden
|
|
13,230,000
|
|
78.58%
|
2275
Huntington Drive, Suite 851
|
|
|
|
|
San Marino, CA 91108
|
|
|
|
|
Director and
Officer (1 person)
|
|
13,230,000
|
|
78.58%
|
(1) Applicable
percentage ownership is based on 16,836,750 shares of common stock outstanding as of
June 30, 2017. Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment power with
respect to securities. Shares of common stock that are currently exercisable or
exercisable within 60 days of June 30, 2017 are deemed to be beneficially owned by the
person holding such securities for the purpose of computing the percentage of ownership of
such person, but are not treated as outstanding for the purpose of computing the
percentage ownership of any other person.
Page 20
ITEM 5.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Back to Table of
Contents
The following table
sets forth the names and ages of the member of our Board of Director and our executive
officers and the positions held by each.
Name
|
|
Age
|
|
Title
|
Ivo
Heiden
|
|
50
|
|
CEO, CFO and Chairman
|
Ivo Heiden, 50, has been CEO, CFO and Chairman
of the Registrant since June 2006.
Mr. Heiden has been CEO, CFO and Chairman of Kinder Holding Corp., a public
reporting company, since February 2007.
During the last five years, Mr. Heiden has been
engaged in the business of providing corporate securities compliance service to
publically traded companies. From December 2009 until October 2014, Mr. Heiden served on the board of directors of Peregrine Industries, Inc., a public
reporting company. From October 2004 until November 2014, Mr. Heiden served as
the CEO, CFO and Chairman of Emerald Medical Applications Corp.
Since 2008, Mr. Heiden is the president, sole officer and director of Baltic Capital Corp. a private corporation.
Our director holds
office until the next annual meeting of stockholders and until his successors have been
duly elected and qualified. There are no agreements with respect to the election of
directors. We do not compensate our directors. Officers are appointed annually by the
Board of Directors and each executive officer serves at the discretion of the Board of
Directors. We do not have any standing committees at this time.
Our director,
officer or affiliates have not, within the past five years, filed any bankruptcy petition,
been convicted in or been the subject of any pending criminal proceedings, or is any such
person the subject or any order, judgment or decree involving the violation of any state
or federal securities laws.
Section 16(a)
Compliance
Section 16(a) of
the Securities and Exchange Act of 1934 requires the Registrant's directors and executive
officers, and persons who own beneficially more than ten percent (10%) of the Registrant's
Common Stock, to file reports of ownership and changes of ownership with the Securities
and Exchange Commission. Copies of all filed reports are required to be furnished to the
Registrant pursuant to Section 16(a). Once the Registrant becomes subject to the
Exchange Act of 1934, our office and director has
informed us that he intends to file
reports required to be filed under Section 16(a).
ITEM 6. EXECUTIVE COMPENSATION
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Contents
No executive compensation was paid during the fiscal
periods ended June 30, 2017, 2016 and 2015. The Registrant has no
employment agreement with any of its officers and directors.
ITEM 7. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
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Contents
During the years ended June 30, 2017 and 2016, Mr. Heiden made advances
of $2,259
and 749, respectively,
to the Company for franchise taxes, audit fees and registered agent fees.
The largest principal amount in advances during the year ended June 30, 2017
was $1,500 of audit fees.
The largest principal amount in advances during the year ended June 30, 2016
was $650 for Nevada annual corporation fees.
As of June 30, 2017 and 2016, the Company owed a total
of $9,871 and $7,049, respectively to Mr. Heiden.
As of June 30, 2017 and 2016, the Company owed $7,053
and $4,794
,
respectively
in cash advances made by Mr. Heiden to the
Company.
The imputed interest for these advances is 8%.
As of June 30,
2017 and 2016, the Company owed $2,818 and $2,255
,
respectively
in accrued interest to Mr. Heiden.
ITEM 8. LEGAL PROCEEDING
Back to Table of
Contents
None.
Page 21
ITEM 9.
MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Back to Table of
Contents
Market
Information
Our common stock is
currently quoted on the OTC market "Pink Sheets" under the symbol ECMT. For the periods indicated, the
following table sets forth the high and low bid prices per share of common stock. The
below prices represent inter-dealer quotations without retail markup, markdown, or
commission and may not necessarily represent actual transactions.
|
|
Price
Range
|
|
Period
|
|
High
|
|
|
Low
|
|
Year Ended June 2016:
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
0.0033
|
|
|
$
|
0.0033
|
|
Second Quarter
|
|
$
|
0.0033
|
|
|
$
|
0.0033
|
|
Third Quarter
|
|
$
|
0.0034
|
|
|
$
|
0.0033
|
|
Fourth Quarter
|
|
$
|
0.0034
|
|
|
$
|
0.0034
|
|
Year Ended June 30, 2017:
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
0.0034
|
|
|
$
|
0.0034
|
|
Second Quarter
|
|
$
|
0.0098
|
|
|
$
|
0.0036
|
|
Third Quarter
|
|
$
|
0.0098
|
|
|
$
|
0.0036
|
|
Fourth Quarter
|
|
$
|
0.0037
|
|
|
$
|
0.0037
|
|
As of June 30, 2017, our shares of common stock were held by
approximately 47 stockholders of record. The transfer agent of our common stock is
Standard Registrar and Transfer Company, Inc. Phone (801) 571-8844.
Dividends
Holders of common
stock are entitled to dividends when, as, and if declared by the Board of Directors, out
of funds legally available therefore. We have never declared cash dividends on its common
stock and our Board of Directors does not anticipate paying cash dividends in the
foreseeable future as it intends to retain future earnings to finance the growth of our
businesses. There are no restrictions in our articles of incorporation or bylaws that
restrict us from declaring dividends.
Securities
Authorized for Issuance Under Equity Compensation Plans
No equity compensation plan or agreements under which our common
stock is authorized for issuance has been adopted during the fiscal year ended
June 30, 2017 and 2016.
ITEM 10.
RECENT SALES OF UNREGISTERED SECURITIES
Back to Table of
Contents
None.
Page 22
ITEM 11. DESCRIPTION OF
REGISTRANT'S SECURITIES TO BE REGISTERED
Back to Table of
Contents
The following statements relating
to the capital stock set forth the material terms of the Company's securities; however,
reference is made to the more detailed provisions of our Certificate of Incorporation and
by-laws, copies of which are filed herewith.
Common Stock
Our Certificate of Incorporation authorize the issuance of 74,000,000 shares of common stock, par value $0.0001. Our holders of shares of common stock are entitled to
one vote for each share on all matters to be voted on by the shareholders. Holders of
common stock do not have cumulative voting rights. Holders of common stock are entitled to
share ratably in dividends, if any, as may be declared from time to time by the board of
directors in its discretion from legally available funds. In the event of a liquidation,
dissolution or winding up of the Company, the holders of common stock are entitled to
share pro rata all assets remaining after payment in full of all liabilities. Holders of common
stock have no preemptive rights to purchase the Company's common stock. There are no
conversion or redemption rights or sinking fund provisions with respect to the common
stock.
Dividends
Dividends, if any, will be contingent upon our revenues and earnings, if any, capital
requirements and financial conditions. The payment of dividends, if any, will be within
the discretion of our board of directors. We intend to retain earnings, if any, for use in
our business operations and accordingly, the board of directors does not anticipate
declaring any dividends prior to a business combination transaction, nor can there be any
assurance that any dividends will be paid following any business combination.
Preferred Stock
Our Certificate of Incorporation authorize the issuance of
1,000,000 shares of preferred
stock, par value $0.0001, and vest in the Company's board of directors the authority to
establish series of unissued preferred shares by the designations, preferences,
limitations and relative rights, including voting rights, of the preferred shares of any
series so established to the same extent that such designations, preferences, limitations,
and relative rights could have been fully stated in the Articles of Incorporation, and in
order to establish a series, the board of directors shall adopt a resolution setting forth
the designation of the series and fixing and determining the designations, preferences,
limitations and relative rights, including voting rights, thereof or so much thereof as
shall not be fixed and determined by the Certificate of Incorporation.
The board of directors may authorize the issuance of
preferred shares without further action by our shareholders and any preferred shares would
have priority over the common stock with respect to dividend or liquidation rights. Any
issuance of preferred shares may have the effect of delaying, deferring or preventing a
change in control of the Company and may contain voting and other rights superior to
common stock. As a result, the issuance of preferred shares may adversely affect the
relative rights of the holders of common stock.
Page 23
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
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Contents
Our articles of incorporation, by-laws and director
indemnification agreements provide that each person who was or is made a party
or is threatened to be made a party to or is otherwise involved (including,
without limitation, as a witness) in any action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
or she is or was a director or an officer of Brenham or, in the case of a
director, is or was serving at our request as a director, officer, or trustee of
another corporation, or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer or trustee or in any other capacity while serving as a
director, officer or trustee, shall be indemnified and held harmless by us to
the fullest extent authorized by the Nevada General Corporation Law against all
expense, liability and loss reasonably incurred or suffered by such.
SSection 145 of the Nevada General Corporation Law permits
a corporation to indemnify any director or officer of the corporation
against expenses (including attorney's fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred in connection with any
action, suit or proceeding brought by reason of the fact that such person is
or was a director or officer of the corporation, if such person acted in
good faith and in a manner that he or she reasonably believed to be in, or
not opposed to, the best interests of the corporation, and, with respect to
any criminal action or proceeding, if he or she had no reason to believe his
or her conduct was unlawful. In a derivative action, ( i.e ., one brought by
or on behalf of the corporation), indemnification may be provided only for
expenses actually and reasonably incurred by any director or officer in
connection with the defense or settlement of such an action or suit if such
person acted in good faith and in a manner that he or she reasonably
believed to be in, or not opposed to, the best interests of the corporation,
except that no indemnification shall be provided if such person shall have
been adjudged to be liable to the corporation, unless and only to the extent
that the court in which the action or suit was brought shall determine that
the defendant is fairly and reasonably entitled to indemnity for such
expenses despite such adjudication of liability.
Pursuant to Section 102(b)(7) of the Nevada General
Corporation Law, Article Seven of our articles of incorporation eliminates
the liability of a director to us for monetary damages for such a breach of
fiduciary duty as a director, except for liabilities arising:/font>
from any breach of the director's duty of loyalty to us;
from acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
under Section 174 of the Nevada General Corporation Law; and
from any transaction from which the director derived an improper
personal benefit.
Page 24
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Back to Table of
Contents
Page 25
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Back to Table of Contents
To the Board of Directors
aand Stockholders of Ecomat, Inc.
We have audited the accompanying balance sheets of Ecomat,
Inc. as of June 30, 2017 and 2016, and the related statements of income,
comprehensive income, stockholders' equity, and cash flows for each of the
years in the two-year period ended June 30, 2017. Ecomat, Inc.'s management
is responsible for these financial statements. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. The company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our
audit included consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of Ecomat,
Inc. as of June 30, 2017 and 2016, and the results of its operations and its
cash flows for each of the years in the two-year period ended June 30, 2017,
in conformity with accounting principles generally accepted in the United
States of America.
The accompanying financial statements have been prepared
assuming that Ecomat, Inc. will continue as a going concern. As discussed in
Note 2 to the financial statements, Ecomat, Inc. suffered a loss from
operations which raises substantial doubt about its ability to continue as a
going concern. Management's plans regarding those matters are also described
in Note 2. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
M&K CPAS, PLLCbr>
www.mkacpas.com
Houston,
Texas
July 10, 2017
Page 26
Ecomat, Inc.
|
(As
Successor Company)
|
Balance
Sheets
|
Back to Table of Contents
|
|
|
|
June 30, 2017
|
|
June 30, 2016
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash
|
$
|
-
|
$
|
-
|
Total current assets
|
|
-
|
|
-
|
|
|
|
|
|
Total assets
|
$
|
-
|
$
|
-
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accrued interest
|
$
|
2,818
|
$
|
2,255
|
Advances from
related party
|
|
7,053
|
|
4,794
|
Total current liabilities
|
|
9,871
|
|
7,049
|
|
|
|
|
|
Stockholders'
deficit:
|
|
|
|
|
Preferred stock,
$0.0001 par value; 1,000,000 authorized;
|
|
-
|
|
-
|
Common stock,
$0.0001 par value; 74,000,000 shares authorized;
|
|
|
|
|
16,836,750 issued and outstanding at
June 30, 2017 and 2016.
|
|
1,684
|
|
1,684
|
Additional paid in
capital
|
|
1,177
|
|
1,177
|
Accumulated deficit
|
|
(12,732)
|
|
(9,910)
|
Total
stockholders' deficit
|
|
(9,871)
|
|
(7,049)
|
Total liabilities and stockholders' deficit
|
$
|
-
|
$
|
-
|
|
See Summary of Significant Accounting Policies and Notes
to Financial Statements.
|
Page 27
Ecomat, Inc.
|
(As Successor Company)
|
Statements of Operations
|
Back to Table of Contents
|
|
|
|
Fiscal Year
|
|
Fiscal Year
|
|
|
Ended
|
|
Ended
|
|
|
June 30, 2017
|
|
June 30, 2016
|
Revenue
|
$
|
-
|
$
|
-
|
Costs and
expenses:
|
|
|
|
|
General and administrative
|
|
2,259
|
|
749
|
Total
operating expenses
|
|
2,259
|
|
749
|
|
|
|
|
|
Other income and expenses
|
|
|
|
|
Interest expense
|
|
563
|
|
384
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(2,822)
|
$
|
(1,133)
|
|
|
|
|
|
Per shares amounts:
|
|
|
|
|
Basic and diluted
net loss
|
$
|
(0.00)
|
$
|
(0.00)
|
|
|
|
|
|
Weighted
average shares outstanding (basic and diluted)
|
|
16,836,750
|
|
16,836,750
|
|
See Summary
of Significant Accounting Policies and Notes to Financial Statements.
|
Page 28
Ecomat, Inc.
|
(As Successor Company)
|
Statement
of Stockholders' Deficit
|
Back to Table of Contents
|
|
|
Common Stock
|
|
Additional
|
|
|
|
Total
|
|
Number of
|
|
Stated Or
|
|
Paid-In
|
|
Accumulated
|
|
Shareholders'
|
|
Shares
|
|
Par Value
|
|
Capital
|
|
Deficit
|
|
Deficit
|
Balance
at June 30, 2015
|
16,836,750
|
$
|
1,684
|
$
|
1,177
|
$
|
(8,777)
|
$
|
(5,916)
|
Net loss
|
-
|
|
-
|
|
-
|
|
(1,133)
|
|
(1,133)
|
Balance
at June 30, 2016
|
16,836,750
|
$
|
1,684
|
$
|
1,177
|
$
|
(9,910)
|
$
|
(7,049)
|
Net loss
|
-
|
|
-
|
|
-
|
|
(2,822)
|
|
(2,822)
|
Balance
at June 30, 2017
|
16,836,750
|
$
|
1,684
|
$
|
1,177
|
$
|
(12,732)
|
$
|
(9,871)
|
|
See Summary of Significant Accounting Policies and Notes
to Financial Statements.
|
Page 29
Ecomat, Inc.
|
(As Successor Company)
|
Statements of Cash Flows
|
Back to Table of Contents
|
|
|
|
Fiscal Year
|
|
Fiscal Year
|
|
|
Ended
|
|
Ended
|
|
|
June 30, 2017
|
|
June 30, 2016
|
Cash flows from operating
activities:
|
|
|
|
|
Net
loss
|
$
|
(2,822)
|
$
|
(1,133)
|
Adjustments required to
reconcile net loss
|
|
|
|
|
to cash used in
operating activities:
|
|
|
|
|
Changes in
operating assets and liabilities:
|
|
|
|
|
Increase
(decrease) in accounts payable and accrued liabilities
|
|
563
|
|
384
|
Cash flows used by operating activities
|
|
(2,259)
|
|
(749)
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
Advances from related party
|
|
2,259
|
|
749
|
Cash generated by financing activities
|
|
2,259
|
|
749
|
|
|
|
|
|
Change in cash
|
|
-
|
|
-
|
Cash -
beginning of
period
|
|
-
|
|
-
|
Cash
- end of period
|
$
|
-
|
$
|
-
|
|
|
|
|
|
See Summary of Significant Accounting Policies and Notes to Financial Statements.
|
Page 30
Ecomat, Inc.
Background and Significant Accounting Policies
June 30, 2017
Back to Table of Contents
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.
Significant Accounting Policies:
Use of Estimates:
The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statement and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from the estimates.
Cash and Cash Equivalents:
For financial statement presentation purposes, the
Company considers those short-term, highly liquid investments with original
maturities of three months or less to be cash or cash equivalents. There
were no cash equivalents at June 30, 2017 or 2016.
Property and Equipment:
New property and equipment are recorded at cost. Property
and equipment included in the bankruptcy proceedings and transferred to the
Trustee had been valued at liquidation value. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets,
generally 5 years. Expenditures for renewals and betterments are
capitalized. Expenditures for minor items, repairs and maintenance are
charged to operations as incurred. Gain or loss upon sale or retirement due
to obsolescence is reflected in the operating results in the period the
event takes place.
Valuation of Long-Lived Assets:
We review the recoverability of our long-lived assets
including equipment, goodwill and other intangible assets, when events or
changes in circumstances occur that indicate that the carrying value of the
asset may not be recoverable. The assessment of possible impairment is based
on our ability to recover the carrying value of the asset from the expected
future pre-tax cash flows (undiscounted and without interest charges) of the
related operations. If these cash flows are less than the carrying value of
such asset, an impairment loss is recognized for the difference between
estimated fair value and carrying value. Our primary measure of fair value
is based on discounted cash flows. The measurement of impairment requires
management to make estimates of these cash flows related to long-lived
assets, as well as other fair value determinations.
Stock Based Compensation:
Stock-based awards are accounted for using the fair value
method in accordance with ASC 718, Share-Based Payments. Our primary type of
share-based compensation consists of stock options. We use the Black-Scholes
option pricing model in valuing options. The inputs for the valuation
analysis of the options include the market value of the Company's common
stock, the estimated volatility of the Company's common stock, the exercise
price of the warrants and the risk free interest rate.
Fair Value of Financial Instruments:
FASB ASC 825, "Financial Instruments," requires entities
to disclose the fair value of financial instruments, both assets and
liabilities recognized and not recognized on the balance sheet, for which it
is practicable to estimate fair value. FASB ASC 825 defines fair value of a
financial instrument as the amount at which the instrument could be
exchanged in a current transaction between willing parties. At June 30, 2017
and 2016, the carrying value of certain financial instruments (cash and cash
equivalents, accounts payable and accrued expenses.) approximates fair value
due to the short-term nature of the instruments or interest rates, which are
comparable with current rates.
Earnings per Common Share:
We compute net income (loss) per share in accordance with
ASC 260, Earning per Share. ASC 260 requires presentation of both basic and
diluted earnings per share (EPS) on the face of the income statement. Basic
EPS is computed by dividing net income (loss) available to common
shareholders (numerator) by the weighted average number of shares
outstanding (denominator) during the period. Diluted EPS gives effect to all
dilutive potential common shares outstanding during the period using the
treasury stock method and convertible preferred stock using the if-converted
method. In computing Diluted EPS, the average stock price for the period is
used in determining the number of shares assumed to be purchased from the
exercise of stock options or warrants. Diluted EPS excludes all dilutive
potential shares if their effect is anti-dilutive.
Income Taxes:
We have adopted ASC 740, Accounting for Income Taxes.
Pursuant to ASC 740, we are required to compute tax asset benefits for net
operating losses carried forward. The potential benefits of net operating
losses have not been recognized in these financial statements because the
Company cannot be assured it is more likely than not it will utilize the net
operating losses carried forward in future years.
We must make certain estimates and judgments in
determining income tax expense for financial statement purposes. These
estimates and judgments occur in the calculation of certain tax assets and
liabilities, which arise from differences in the timing of recognition of
revenue and expense for tax and financial statement purposes.
Deferred tax assets and liabilities are determined based
on the differences between financial reporting and the tax basis of assets
and liabilities using the tax rates and laws in effect when the differences
are expected to reverse. ASC 740 provides for the recognition of deferred
tax assets if realization of such assets is more likely than not to occur.
Realization of our net deferred tax assets is dependent upon our generating
sufficient taxable income in future years in appropriate tax jurisdictions
to realize benefit from the reversal of temporary differences and from net
operating loss, or NOL, carryforwards. We have determined it more likely
than not that these timing differences will not materialize and have
provided a valuation allowance against substantially all of our net deferred
tax asset.
Management will continue to evaluate the realizability of
the deferred tax asset and its related valuation allowance. If our
assessment of the deferred tax assets or the corresponding valuation
allowance were to change, we would record the related adjustment to income
during the period in which we make the determination. Our tax rate may also
vary based on our results and the mix of income or loss in domestic and
foreign tax jurisdictions in which we operate.
In addition, the calculation of our tax liabilities
involves dealing with uncertainties in the application of complex tax
regulations. We recognize liabilities for anticipated tax audit issues in
the U.S. and other tax jurisdictions based on our estimate of whether, and
to the extent to which, additional taxes will be due. If we ultimately
determine that payment of these amounts is unnecessary, we will reverse the
liability and recognize a tax benefit during the period in which we
determine that the liability is no longer necessary. We will record an
additional charge in our provision for taxes in the period in which we
determine that the recorded tax liability is less than we expect the
ultimate assessment to be.
ASC 740 which requires recognition of estimated income
taxes payable or refundable on income tax returns for the current year and
for the estimated future tax effect attributable to temporary differences
and carry-forwards. Measurement of deferred income tax is based on enacted
tax laws including tax rates, with the measurement of deferred income tax
assets being reduced by available tax benefits not expected to be realized.
Uncertain Tax Positions:
The Financial Accounting Standards Board issued
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement No. 109, Accounting for Income Taxes" ("FIN
No. 48") which was effective for the Company on January 1, 2007. FIN No. 48
addresses the determination of whether tax benefits claimed or expected to
be claimed on a tax return should be recorded in the financial statements.
Under FIN No. 48, the Company may recognize the tax benefit from an
uncertain tax position only if it is more likely than not that the tax
position will be sustained on examination by the taxing authorities based on
the technical merits of the position. The tax benefits recognized in the
financial statements from such position should be measured based on the
largest benefit that has a greater than fifty percent likelihood of being
realized upon ultimate settlement. FIN No. 48 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods and disclosure requirements.
Our federal and state income tax returns are open for
fiscal years ending on or after June 30, 2007. We are not under examination
by any jurisdiction for any tax year. At June 30, 2017, we had no material
unrecognized tax benefits and no adjustments to liabilities or operations
were required under FIN 48.
Recent 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. "Fresh Start" Accounting
On March 26, 1999, all assets were transferred to the
Chapter 7 trustee in settlement of all outstanding corporate obligations. 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."
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.
All results for periods including and subsequent to
June 15, 2006 are referred to as those of the "Successor Company".
In accordance with SOP No. 90-7, the reorganized value of
the Company was allocated to the Company's assets based on procedures
specified by FASB ASC 805, "Business Combinations". Each liability existing
at the plan sale date, other than deferred taxes, was stated at the present
value of the amounts to be paid at appropriate market rates. It was
determined that the Company's reorganization value computed immediately
before June 15, 2006 was $0. We adopted "fresh-start" accounting because
holders of existing voting shares immediately before filing and confirmation
of the sale received less than 50% of the voting shares of the emerging
entity and its reorganization value is less than its post-petition
liabilities and allowed claims.
Note 4. Income Taxes
The Company had approximately $5.9 million in net
operating loss carryovers available to reduce future income taxes. These
carryovers were reduced to zero or eliminated through our bankruptcy
proceedings. We have adopted ASC 740 which provides for the recognition of a
deferred tax asset based upon the value the loss carry-forwards will have to
reduce future income taxes and management's estimate of the probability of
the realization of these tax benefits.
We have a current operating loss carry-forward of $12,732.
We have determined it more likely than not that these timing differences
will not materialize and have provided a valuation allowance against
substantially all our net deferred tax asset.
Future utilization of currently generated federal and
state NOL and tax credit carry forwards may be subject to a substantial
annual limitation due to the ownership change limitations provided by the
Internal Revenue Code of 1986, as amended and similar state provisions. The
annual limitation may result in the expiration of NOL and tax credit carry
forwards before full utilization.
|
|
June 30, 2017
|
|
June 30, 2016
|
Individual
components giving rise to the deferred tax assets are as follows::
|
|
|
|
|
Future
tax benefit arising from net operating loss carryovers
|
$
|
4,456
|
$
|
3,469
|
Less
valuation allowance
|
|
(4,456)
|
|
(3,469)
|
Total deferred tax asset
|
$
|
-
|
$
|
-
|
The
Company is not under examination by any jurisdiction for any tax year. Our
federal and state income tax returns are open for fiscal years ending on or
after June 30, 2007.
Note 6. Stockholders' Equity
Common
Stock
The certificate of incorporation authorize the issuance of
74,000,000 shares of common stock, par value $0.0001. All issued shares of
common stock are entitled to one vote per share of common stock. As of June
30, 2017, the Company has 16,836,750 shares of common stock issued and
outstanding.
During the years ended June 30, 2017 and 2016, the Company
did not issue any shares of common stock.
Preferred Stock
The certificate of incorporation
authorize the issuance of 1,000,000 shares of preferred stock with a par
value of $0.0001 per share. None are issued.
Stock Based Compensation
There were no grants of employee or non-employee stock or options in either
fiscal period ended June 30, 2017 and 2016.
Note 7. Change of Control
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 our 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.
In 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.
In
connection with the Order of the U.S. Bankruptcy Court, the Court
authorized (i)
that the
existing officers and directors of Ecomat, Inc. will be deemed removed from
office and their official capacity terminated; (ii) that all common
share conversion rights of any kind, including, but not limited to, warrants,
options, convertible bonds, other convertible debt instruments, and convertible
preferred stock shall be canceled and extinguished; and (iii) Park Avenue
Group, Inc.
shall be authorized to appoint a new board of directors of Ecomat.
On June 15, 2006 and as a
result of the Bankruptcy Court Order, Park Avenue Group appointed Ivo Heiden to the board of directors of the Registrant
and to serve as its sole executive officer (the "Management"). Mr. Heiden
was an analyst for Park Avenue Group from 2003 until 2008 and has no ongoing
relationship with such entity.
On
February 5, 2007, the Company issued 13,230,000 shares of common stock to
Ivo Heiden, the Company's CEO, for services provided valued at $2,500. Our CEO and Chairman controls
78.58% of the issued and
outstanding shares of common stock.
Note 8. 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 June 30, 2017 and 2016, our CEO has made advances
of $7,053 and $4,794, respectively.
As of June 30, 2017 and 2016, accrued interest due to our
CEO was $2,818 and $2,255, respectively.
During the years ended June 30, 2017 and 2016, the Company
did not issue any shares of common stock.
Note 9. Subsequent Events
The Company had no subsequent
events after June 30, 2017 to the date the financial statements were issued.
ITEM
14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Back to Table of
Contents
In its two most recent fiscal years, the Company has had no disagreements with its independent
accountants.
ITEM
15. FINANCIAL STATEMENTS AND EXHIBITS
Back to Table of
Contents
Exhibit No.
|
Description
|
2
|
Bankruptcy Court Order Confirming
Sale of Public Shell Entity to Park Avenue Group, Inc., attached to the
Company's Form 10 as filed with the SEC on July 10, 2017.
|
3.1
|
Certificate of
Incorporation,
as amended,
attached to the Company's Form 10 as filed with the SEC on July 10, 2017.
|
3.1
(a)
|
Certificate of
Amendment of Certificate of Incorporation,
attached to the Company's Form 10 as filed with the SEC on July 10, 2017.
|
3.2
|
Bylaws,
attached to the Company's Form 10 as filed with the SEC on July 10, 2017.
|
23
|
Consent of Independent Auditor,
previously filed.
|
SIGNATURES
Pursuant to the requirements of
Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this
amended registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: August 15, 2017
Ecomat, Inc.
By: Ivo Heiden, CEO
/s/
Ivo Heiden