UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2019September 30, 2020

Commission file number: 000-21613

Ecomat, Inc.

(Exact Name Of Registrant As Specified In Its Charter)

Registrant’s Telephone Number, Including Area Code: (323) 552-9867

Securities registered pursuant to Section 12(b) of the Act:

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [  ]

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.

On January 23,November 5, 2020, the Registrant had 23,811,750 shares of common stock outstanding.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTSBack to Table of Contents

Ecomat Inc.

Balance Sheets

Balance Sheets as of December 31, 2019September 30, 2020 and June 30 20192020

Back to Table of Contents

See Summary of Significant Accounting Policies and Notes to Financial Statements.

Ecomat, Inc.

Statements of Operations

For the Three and Six Months ended December 31,September 30, 2020 and 2019 and 2018

Back to Table of Contents

See Summary of Significant Accounting Policies and Notes to Financial Statements.

Ecomat, Inc.

Statement of Stockholders’ Deficit

For the Six Months ended December 31, 2019 and for the years ended June 30, 2019 and 2018

Back to Table of Contents

See Summary of Significant Accounting Policies and Notes to Financial Statements.

Ecomat, Inc.

Statements of Cash Flows

For the SixThree Months ended December 31,September 30, 2020 and 2019 and 2018

Back to Table of Contents

See Summary of Significant Accounting Policies and Notes to Financial Statements.

Ecomat, Inc.

Background and Significant Accounting Policies

December 31, 2019

September 30, 2020
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.

Basis of Presentation:

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

The Financial Statements presented herein have been prepared by us in accordance with the accounting policies described in our June 30, 20192020 audited financial statements and should be read in conjunction with the notes to financial statements which appear as part of those financial statements.

The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to intangible assets, income taxes, insurance obligations and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates under different assumptions or conditions.

In the opinion of Management, the information furnished in these interim financial statements reflects all adjustments necessary for a fair statement of the financial position and results of operations and cash flows as of and for the three and six-monththree-month periods ended December 31, 2019September 30, 2020 and 2018.2019. All such adjustments are of a normal recurring nature. The Financial Statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include some information and notes necessary to conform with annual reporting requirements.

Recently Issued Accounting Pronouncements

In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases. The amendments in ASU 2018-10 provide additional clarification and implementation guidance on certain aspects of the previously issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) and have the same effective and transition requirements as ASU 2016-02. Upon the effective date, ASU 2018-10 will supersede the current lease guidance in ASC Topic 840, Leases. Under the new guidance, lessees will be required to recognize for all leases, with the exception of short-term leases, a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis. Concurrently, lessees will be required to recognize a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2018-10 is effective for private companies and emerging growth public companies for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The guidance is required to be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative periods presented in the financial statements. During the three monthsthree-month period ended December 31, 2019,September 30, 2020, the Company assessed the impact this guidance had on its financial statements and concluded that at present ASU No. 2018-10 has no impact on its financial statements.

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 became 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 became 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.

If a business combination transaction is not consummated, we do not believe that we could succeed in raising additional capital, from unrelated parties, needed to sustain our operations without some strategic transaction, such as a business combination or merger. If we are unable to consummate such a transaction, we expect that we would need to cease all operations and wind down. Although we are currently evaluating our strategic alternatives with respect to all aspects of our business, we cannot assure you that any actions that we take would raise or generate sufficient capital to fully address the uncertainties of our financial position.

Note 3. Convertible Note

On July 8, 2017, we issued a convertible promissory note for services provided in the principal amount of $50,000 bearing interest at 1% per annum until paid or converted. The conversion price of the note is $0.008 per share. The closing price of the Company’s common stock on July 7, 2017 was $0.008 per share. Interest will be payable upon the maturity date at July 7, 2018. On October 1, 2018, the Company agreed to adjust the interest rate, effective July 1, 2018, on this convertible note from 1% to 8%. During the three-months ended December 31, 2019 and 2018, the Company recorded $538 and $997 in interest, respectively. On November 19, 2019, WWYD, Inc., the note holder, and the Company agreed to convert the principal amount and the accrued interest of $55,800 into 6,975,000 shares of restricted common stock. The Company did not record neither gain not loss in connection with this conversion of debt into equity. During the three-month periods ended September 30, 2020 and 2019, the Company recorded $0 and $997, respectively, in interest. As of December 31, 2019September 30, 2020 and June 30, 2019,2020, the accrued interest for this convertible note was $0$0.

On September 1, 2017, we entered into a Loan Agreement with Ivo Heiden, our sole officer and $4,266, respectively.director, under which we receive funding for general operating expenses from time-to-time as needed by the Company. The Loan Agreement bears interest of 8% per annum and shall be due and payable on a date 366 days from the date of the loan. On May 1, 2020, the Loan Agreement was extended to September 1, 2021. As of September 30, 2020 and June 30, 2020, the outstanding balance on this loan was $31,904 and $28,155 with accrued interest of $7,631 and $7,012. During the three-month periods ended September 30, 2020 and 2019, the Company borrowed $3,749 and $3,734, respectively, under this Loan Agreement. During the three-months period ended September 30, 2020 and 2019, we expensed interest of $619 and $470, respectively, related to this Loan Agreement.

On October 12, 2018, we issued a $75,000 convertible promissory note to Ivo Heiden. The convertible note bears interest at 8% per annum until paid or converted. The conversion price of the note is $0.034 per share, the closing price of the Company’s common stock on the date of issuance. Interest will be payable upon the maturity date at October 12, 2020. During the three monthsthree-month periods ended December 31,September 30, 2020 and 2019, and 2018, the Company expensed interest of $1,496$1,512 and $1,315,$1,496, respectively, related to this note. As of December 31, 2019,September 30, 2020 and June 30, 2020, the Company has recorded $7,249$11,753 and $10,241, respectively, in accrued interest with respect to this convertible note.

On May 1, 2020, we issued a $90,000 convertible promissory note to Ivo Heiden. The convertible note bears interest at 8% per annum until paid or converted. The conversion price of the note is $0.04 per share, the closing price of the Company’s common stock on the date of issuance. Interest will be payable upon the maturity date at May 1, 2022. During the three-month period ended September 30, 2020, the Company expensed interest of $1,815 related to this note. As of September 30, 2020 and June 30, 2020, the Company has recorded $3,018 and $1,203, respectively, in accrued interest with respect to this convertible note.

In accordance with ASC # 815, Accounting for Derivative Instruments and Hedging Activities, we evaluated the note holder’s non-detachable conversion right provision and liquidated damages clause, contained in the terms governing the Convertible Note to determine whether the features qualify as an embedded derivative instrument at issuance. Such non-detachable conversion right provision and liquidated damages clause did not need to be accounted as derivative financial instruments.

Note 4. 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.

On September 1, 2017, we entered into a Loan Agreement with Ivo Heiden, our sole officer and director, under which we receive funding for general operating expenses from time-to-time as needed by the Company. The Loan Agreement bears interest of 8% per annum and shall be due and payable on a date 366 days from the date of the loan. On June 28, 2019, the Loan Agreement was extended to September 1, 2020. As of December 31, 2019, the outstanding balance on this loan was $25,805 with accrued interest of $5,931. During the three months ended December 31, 2019 and 2018, the Company borrowed $2,240 and $1,729, respectively, under this Loan Agreement. During the three months ended December 31, 2019 and 2018, the Company expensed interest of $515 and $334, respectively related to this note. As of December 31, 2019September 30, 2020 and June 30, 2019,2020, our CEO has made advances of $25,805$31,904 and $19,831, respectively, under this Loan Agreement.$28,155, respectively.

As of December 31, 2019September 30, 2020 and June 30, 2019,2020, accrued interest due to our CEO was $13,180$22,402 and $9,203, respectively.

As of December 31, 2019 and June 30, 2019, accrued compensation due to our CEO was $75,000 and $45,000,$18,456, respectively.

On October 12, 2018,May 1, 2020, the Company issued a convertible note of $75,000$90,000 to our CEO evidencing previously accrued compensation.

As of September 30, 2019, the Company owed a $50,000 convertible note and accrued interest of $5,262 to WWYD, Inc., a related party.

On November 19, 2019, the Company and WWYD, Inc., a note holder, agreed to convert the principal amount of $55,000 and the accrued interest of $5,800 into 6,975,000 shares of restricted common stock.

During the three months ended September 30, 2020 and 2019, the Company did not issue any shares of common stock.

Note 5. Subsequent Events

The Company had no subsequent events after December 31, 2019September 30, 2020 to the date the financial statements were issued.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONOPERATION. Back to Table of Contents

Some of the statements contained in this quarterly report 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. 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 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 three months ended December 31, 2019September 30, 2020 as compared to the three months ended December 31, 2018September 30, 2019

We have not generated any revenues during the three months ended December 31, 2019September 30, 2020 and 2018.2019. We had total operating expenses of $17,239$1,524 related to general and administrative expenses during the three months ended December 31,September 30, 2019 compared to $17,730$19,859 during the same period in the prior year. We incurred interest expense of $2,549$3,946 during three months ended December 31, 2019September 30, 2020 compared to interest expense of $2,646$2,963 during the three months ended December 31, 2018.September 30, 2019. During the three months ended December 31,September 30, 2020 and 2019, and 2018, we had a net loss of $19,789$5,470 and $20,376$22,822, respectively.

The decrease in our net loss was due to discontinued officer compensation.

Results of Operations during the six months ended December 31, 2019 as compared to the six months ended December 31, 2018

We have not generated any revenues during the six months ended December 31, 2019 and 2018. We had total operating expenses of $37,098 related to general and administrative expenses during the six months ended December 31, 2019 compared to $35,230 during the same period in the prior year. We incurred interest expense of $5,512 during six months ended December 31, 2019 compared to interest expense of $3,942 during the six months ended December 31, 2018. During the six months ended December 31, 20190 and 2018, we had a net loss of $42,610 and $39,172, respectively.

Liquidity and Capital Resources

At present, the Company has no business operations and no cash resources other than advances provided by our CEO. Our CEO and/or 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 such time the Company enters into a business combination. The Company would be unable to continue as a going concern without interim financing provided by our CEO. If we require additional financing, we cannot predict whether equity or debt financing will become available at terms acceptable to us, if at all. At present, the Company has no financial resources to pay for such services and may be required to issue restricted shares in lieu of cash or, in the alternative, issue debt instruments evidencing financial obligations if and when they arise.

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.

On December 31, 2019September 30, 2020 and June 30, 2019,2020, we have had no current assets. As of December 31, 2019,September 30, 2020, we had $190,110$220,431 in liabilities consisting of accounts payable of $1,125, advance from a related party of $25,805, accrued compensation of $75,000,$31,904, accrued interest due to related parties of $13,180$22,402 and a $75,000$125,000 in two convertible note.notes. As of June 30, 2019,2020, we had $203,300$214,961 in current liabilities consisting of accounts payable of $3,350, advance from a related party of $19,831, accrued compensation of $45,000,$28,155, accrued interest due to related parties of $13,469$18,456 and $125,000a $165,000 in two convertible notes.

During the sixthree months ended December 31,September 30, 2020, we had negative cash flow from operating activities of $3,749 due to a net loss of $5,470. We financed our negative cash flow from operations through $3,749 in advances from our CEO. During the three months ended September 30, 2019, we had negative cash flow from operating activities of $5,974$3,734 due to a net loss of $42,610 offset by an increase of $36,636 in accounts payable and accrued liabilities.$22,822. We financed our negative cash flow from operations through $5,974$3,734 in advances from our CEO. During the six months ended December 31, 2018, we had negative cash flow from operating activities of $4,229 due to a net loss of $39,172 offset by an increase in accounts payable of $1,000 and an increase of $33,943 in accounts payable and accrued liabilities. We financed our negative cash flow from operations through $4,229 in advances from our CEO.

The Company currently plans to satisfy its cash requirements for the next 12 months through borrowings from its CEO and believes it can satisfy its cash requirements so long as it is able to obtain financing from him. 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. On September 1, 2017, we formalized a verbal funding agreement and entered into a Loan Agreement with Ivo Heiden, our sole officer and director, under which we receive funding of up to $100,000 for general operating expenses from time-to-time as needed by the Company. The loan bears an interest rate of 8% per annum and shall be due and payable on a date three hundred sixty-six (366) days from the date of the Loan Agreement. On June 28, 2019, the Loan Agreement was extended to September 1, 2020. As of December 31, 2019,September 30, 2020, the Company has received a total of $25,805$31,904 under this Loan Agreement.

The Company intends 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, 20192020 and 20182019 with an explanatory paragraph on going concern.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKRISK. Back to Table of Contents

We have not entered into, and do not expect to enter into, financial instruments for trading or hedging purposes.

ITEM 4. CONTROLS AND PROCEDURESPROCEDURES. Back to Table of Contents

Evaluation of disclosure controls and procedures.

As of December 31, 2019,September 30, 2020, the Company’s chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures as provided under the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013), our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were ineffective because of the identification of material weaknesses including lack of sufficient internal accounting personnel in order to ensure complete documentation of complex transactions and adequate financial reporting during the period ended December 31, 2019.September 30, 2020. The Company has no formal control process related to the identification and approval of related party transactions. Management has identified corrective actions for the weaknesses and intends to implement accounting procedures to address before mentioned material weaknesses during the fiscal year 2020.2021.

Changes in internal controls.

During the quarterly period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGSPROCEEDINGS. Back to Table of Contents

None.

ITEM 1A. RISK FACTORSFACTORS. Back to Table of Contents

In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Risk Factors” in our Form 1010-K for the year 2019 as filed with the SEC, which could materially affect our business, financial condition or future results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSPROCEEDS. Back to Table of Contents

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIESBack to Table of Contents

None.

ITEM 4. MINE SAFETY DISCLOSUREBack to Table of Contents

None.

ITEM 5. OTHER INFORMATIONSECURITIES. Back to Table of Contents

None.

ITEM 6. EXHIBITS4. MINE SAFETY DISCLOSURE. Back to Table of Contents

None.

ITEM 5. OTHER INFORMATION. Back to Table of Contents

None.

ITEM 6. EXHIBITS. Back to Table of Contents

(a) The following documents are filed as exhibits to this Form 10-Q or incorporated by reference herein. Any document incorporated by reference is identified by a parenthetical reference to the SEC filing that included such document.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacities and on the date indicated.