ECOMAX, INC. 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
We have not generated any revenues during the years 2020 and 2019. We had total operating expenses of$56,673 related to general and administrative expenses during the year endedJune 30, 2020 compared to total operating expenses of$67,330 during the year endedJune 30, 2019 . We incurred interest expense of$10,788 during the year endedJune 30, 2020 compared to interest expense of$9,542 during the year endedJune 30, 2019 . During the year endedJune 30, 2020 and 2019, we had a net loss of$67,461 and$76,872 , 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. 20 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 and funding provided by Management 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.
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
OnJune 30, 2020 and 2019, we have had no current assets. As ofJune 30, 2020 , we had$214,961 in liabilities consisting of accounts payable of$3,350 , advance from a related party of$28,155 , accrued interest due to related parties of$18,456 and a$165,000 in convertible notes. As ofJune 30, 2019 , we had$203,300 in current liabilities consisting of advance from a related party of$19,831 , accrued compensation of$45,000 , accrued interest due to related parties of$13,469 and$125,000 in two convertible notes. We had a negative cash flow from operations of$8,324 during the year endedJune 30, 2020 , mainly due to a net loss of$67,461 offset by an increase in accounts payable and accrued liabilities of$59,137 . We financed our negative cash flow from operations during the year endedJune 30, 2020 through advances made by our CEO of$8,324 .
We had a negative cash flow from operations of$7,329 during the year endedJune 30, 2019 mainly due to a net loss of$76,872 offset by an increase in accounts payable and accrued liabilities of$69,543 . We financed our negative cash flow from operations during the year endedJune 30, 2019 through advances made by our CEO of$7,329 . 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. OnSeptember 1, 2017 , we formalized a verbal funding agreement and entered into a Loan Agreement withIvo 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. OnMay 1, 2020 , the Loan Agreement was extended toSeptember 1, 2021 . As ofJune 30, 2020 , the Company has received a total of$28,155 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 endedJune 30, 2020 and 2019 with an explanatory paragraph on going concern. 21
Off-Balance Sheet Arrangements
As of
Contractual Obligations and Commitments
As of
Critical Accounting Policies
Our significant accounting policies are described in the notes to our financial
statements for the years ended
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 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 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Back to Table of Contents
Report of Independent Registered Public Accounting Firm
23
Financial Statements:
Balance Sheets as ofJune 30, 2020 and 2019 24 Statements of Operations for the Years EndedJune 30, 2020 and 2019 25
Statements of Changes in Stockholders' Deficit for the Years Ended
Statements of Cash Flows for the Years EndedJune 30, 2020 and 2019 27 Notes to Financial Statements 28 22 [[Image Removed]] REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Back to Table of Contents To the Board of Directors and Stockholders ofEcomat Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets ofEcomat Inc. (the Company) as ofJune 30, 2020 and 2019 and the related statements of operations, stockholders' deficit, and cash flows for the two-year period endedJune 30, 2020 and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as ofJune 30, 2020 and 2019 and the results of its operations and its cash flows for the periods endedJune 30, 2020 and 2019, in conformity with accounting principles generally accepted inthe United States of America . Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with thePublic Company Accounting Oversight Board (United States ) (PCAOB) and are required to be independent with respect to the Company in accordance with theU.S. federal securities laws and the applicable rules and regulations of theSecurities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, 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. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company suffered losses from operations which raise substantial doubt about its ability to continue as a going concern. Managements 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. /s/M&K CPAS, PLLC
We have served as the Company's auditor since 2016.
Houston, TX September 17, 2020 23 Ecomat Inc. Balance Sheets Balance Sheets as of June 30 2020 and 2019 Back to Table of Contents June 30, 2020 June 30, 2019 ASSETS Current assets: Cash $ - $ -
Total current assets -
-
Total assets $ - $ -
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities: Accounts payable -trade $ 3,350 $
-
Advances from - related party 28,155
19,831
Accrued compensation - related party -
45,000
Accrued interest related party 18,456
13,469
Convertible notes - related party 165,000
125,000 Total current liabilities 214,961 203,300 Stockholders' deficit: Preferred stock,$0.0001 par value; 1,000,000 authorized; none issued and outstanding at June 30, 2020 and June 30, 2019. -
-
Common stock,$0.0001 par value; 74,000,000 shares authorized; 23,811,750 and 16,836,750 issued and outstanding atJune 30, 2020 and 2019, respectively 2,381 1,684 Additional paid in capital 58,894 3,791 Accumulated deficit (276,236 ) (208,775 ) Total stockholders' deficit (214,961 ) (203,300 )
Total liabilities and stockholders' deficit $ - $
-
See Summary of Significant Accounting Policies and Notes to Financial
Statements.
24
Ecomat Inc.
Statements of Operations
Back to Table of Contents
Fiscal Year Fiscal Year
Ended Ended
June 30, 2020 June 30, 2019
Revenue $ - $ -
Costs and expenses:
General and administrative 56,673 67,330
Total operating expenses 56,673 67,330
Other income and expenses
Interest expense 10,788 9,542
Net loss $ (67,461 ) $ (76,872 )
Per shares amounts:
Basic and diluted net loss $ (0.00 ) $ (0.00 )
Weighted average shares outstanding (basic and
diluted) 21,105,602 16,836,750
See Summary of Significant Accounting Policies and Notes to Financial Statements.
25
Ecomat Inc.
Statement of Stockholders' Deficit for the years ended June 30, 2020 and 2019
Back to Table of Contents
Common Stock Additional Total
Number of Stated Or Paid-In Accumulated Shareholders'
Shares Par Value Capital Deficit DeficitBalance at June 30, 2018 16,836,750$ 1,684 $ 3,791 $ (131,903 ) $ (126,428 ) Net loss - - - (76,872 ) (76,872 ) Balance at June 30, 2019 16,836,750$ 1,684 $ 3,791 $ (208,775 ) $ (203,300 ) Shares issued upon debt conversion 6,975,000 697 55,103 - 55,800 Net loss - - - (67,461 ) (67,461 ) Balance at June 30, 2020 23,811,750 2,381 58,894 (276,236 ) (214,961 ) See Summary of Significant Accounting Policies and Notes to Financial Statements. 26 Ecomat Inc. Statements of Cash Flows Back to Table of Contents Fiscal Year Fiscal Year Ended Ended June 30, 2020 June 30, 2019 Cash flows from operating activities: Net loss$ (67,461 ) $ (76,872 ) Adjustments required to reconcile net loss to cash used in operating activities: Imputed interest - - Changes in operating assets and liabilities: Increase (decrease) in accounts payable and accrued liabilities 59,137
69,543
Cash flows used by operating activities (8,324 )
(7,329 )
Cash flows from financing activities: Advances from related party 8,324
7,329
Convertible note borrowings - - Cash generated by financing activities 8,324
7,329
Change in cash - -
Cash - beginning of period - -
Cash - end of period $ - $ -
Non-cash investing and financing activities:
Accrued compensation settled with convertible
notes payable $ 90,000 $ 75,000
Common stock issued upon conversion of debt $ 55,800 $
-
See Summary of Significant Accounting Policies and Notes to Financial
Statements.
27
Ecomat Inc.
Background and Significant Accounting Policies
June 30, 2020
Back to Table of Contents
Note 1. The Company and Significant Accounting Policies
Ecomat Inc. (the "Company") was incorporated onDecember 14, 1995 pursuant to the laws of theState of Delaware . OnFebruary 9, 2007 , the Company completed its change in domicile toNevada .
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
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 atJune 30, 2020 or 2019. 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. 28 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. AtJune 30, 2020 and 2019, 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 theU.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. 29
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 onJanuary 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 afterJune 30, 2007 . We are not under examination by any jurisdiction for any tax year. AtJune 30, 2020 , we had no material unrecognized tax benefits and no adjustments to liabilities or operations were required under FIN 48.
Recent Accounting Pronouncements
InJuly 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 afterDecember 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 year endedJune 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 theEmerging Issues Task Force ). Effective for public business entities for fiscal years beginning afterDecember 15, 2017 , and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning afterDecember 15, 2018 , and interim periods within fiscal years beginning afterDecember 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. 30 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. Income Taxes 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$276,236 . We have determined it more likely than not that these timing differences will not materialize and have provided a valuation allowance against substantially all our net deferred tax asset. Future utilization of currently generated federal and state NOL and tax credit carry forwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended and similar state provisions. The annual limitation may result in the expiration of NOL and tax credit carry forwards before full utilization. June 30, 2020 June 30, 2019 Individual components giving rise to the deferred tax assets are as follows: Future tax benefit arising from net operating loss carryovers$ 58,010 $ 48,843 Less valuation allowance (58,010 ) (48,843 ) 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
31 Note 4. Stockholders' Equity Common Stock The certificate of incorporation authorizes 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 ofJune 30, 2020 , the Company has 23,811,750 shares of common stock issued and outstanding. During the year endedJune 30, 2020 , the Company and 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 year endedJune 30, 2019 , the Company did not issue any shares of common stock. Preferred Stock
The certificate of incorporation authorizes the issuance of 1,000,000 shares of
preferred stock with a par value of
Stock Based Compensation
There were no grants of employee or non-employee stock or options in either
fiscal period ended
Note 5. Convertible Note OnJuly 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 onJuly 7, 2017 was$0.008 per share. Interest will be payable upon the maturity date atJuly 7, 2018 . OnOctober 1, 2018 , the Company agreed to adjust the interest rate, effectiveJuly 1, 2018 , on this convertible note from 1% to 8%. OnNovember 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 years endedJune 30, 2020 and 2019, the Company recorded$1,535 and$3,956 , respectively, in interest. As ofJune 30, 2020 andJune 30, 2019 , the accrued interest for this convertible note was$0 and$4,266 , respectively.
OnSeptember 1, 2017 , we entered into a Loan Agreement withIvo 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. OnMay 1, 2020 , the Loan Agreement was extended toSeptember 1, 2021 . As ofJune 30, 2020 and 2019, the outstanding balance on this loan was$28,155 and$19,831 with accrued interest of$7,012 and$4,946 . During the year endedJune 30, 2020 and 2019, the Company borrowed$8,324 and$7,329 , respectively, under this Loan Agreement. During the years endedJune 30, 2020 and 2019, we expensed interest of$2,066 and$1,329 , respectively, related
to this Loan Agreement.
OnOctober 12, 2018 , we issued a$75,000 convertible promissory note toIvo 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 atOctober 12, 2020 . During the years endedJune 30, 2020 and 2019, the Company expensed interest of$5,984 and$4,257 , respectively, related to this note. As ofJune 30, 2020 and 2019, the Company has recorded$10,241 and$4,257 , respectively, in accrued interest with respect to this convertible note. 32 OnMay 1, 2020 , we issued a$90,000 convertible promissory note toIvo 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 atMay 1, 2022 . During the year endedJune 30, 2020 , the Company expensed interest of$1,203 related to this note. As ofJune 30, 2020 , the Company has recorded$1,203 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 6. 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
As of
As of
As of
On
On
On
Note 7. Subsequent Events
The Company had no subsequent events after
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