ITEM
1. BUSINESS
Some
of the statements contained in this annual report on Form 10-K of Ecomax, Inc. (hereinafter the “Company”, “We”
or the “Company”) discuss future expectations, contain projections of our plan of operation or financial condition or state
other forward-looking information. In this annual report, 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 annual report. 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 Company’s plan of operation; |
● |
the
ability of the Company to fund its operating expenses; |
● |
the
ability of the Company 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 Company to meet the other risks as may be described in future filings with the U.S. Securities and Exchange
Commission, or the SEC. |
General
Background of the Company
Ecomax,
Inc. (formerly known as Ecomat Inc., the “Company” or “Ecomax) was incorporated on December 14, 1995, pursuant to the
laws of the State of Delaware and was formed to develop the Ecomat concept - an environmentally sound solution to the current standard
dry-cleaning method that utilizes perchloroethylene, which has been shown to have various toxic effects.
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.
On
June 14, 2006, the Bankruptcy Court granted an order approving the contract and finding that Park Avenue Group was a good faith purchaser
within the meaning of 11 USC Section 363(m) of the Bankruptcy Code.
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
Company and to serve as its Chief Executive Officer, Chief Financial Officer, sole director, and Chairman of the Board of Directors.
On
February 5, 2007, the Company issued 13,230,000 shares of common stock to Ivo Heiden, for services provided valued at $2,500. Since then,
Ivo Heiden controlled 78.58% of the issued and outstanding shares of common stock.
On
February 9, 2007, the Company completed its change in domicile to Nevada.
On
January 5, 2021, the Company entered into a Stock Purchase Agreement (the “SPA”) with Clark Orient (BVI) Limited, (“Clark
Orient”), Mr. Heiden, and WWYD, Inc. (WWYD, Inc. was a 5% or more stockholder of the Company. Mr. Heiden and WWYD, Inc. collectively
referred to as the “Sellers”), pursuant to which Clark Orient acquired 20,205,000 shares of common stock of the Company (the
“Shares”) from Sellers for an aggregate purchase price of $320,000. The transaction contemplated in the SPA closed on January
7, 2021. The Shares represent approximately 85% of the issued and outstanding common stock of the Company. The transaction resulted in
a change in control of the Company.
In
connection with the change in control, Mr. Heiden, our then Chief Executive Officer, Chief Financial Officer, sole director, and Chairman
of the Board of Directors of the Company, resigned from all of his positions with the Company and the resignations became effective on
January 6, 2021. Ms. Yang Gui was appointed as the Chief Executive Officer, Chief Financial Officer, sole director, and Chairwoman of
the Board of Directors of the Company, effective on January 6, 2021.
On
March 11, 2021, upon the departure of Ms. Yang Gui, Mr. Yu Yam Anthony Chau was appointed as the Chief Executive Officer, Chief Financial
Officer, sole director, and Chairman of the Board of Directors of the Company, effective on March 11, 2021.
On
March 18, 2021, by unanimous written consent of the Board of Directors of the Company, the Board of Directors adopted resolutions approving
1) a reverse split of the Company’s common stock at a ratio of 1-for-10, whereby every 10 shares of the issued and outstanding
common stock shall be combined into one share of issued and outstanding common stock (the “Reverse Stock Split”); 2) an increase
in the number of the authorized capital stock from 75,000,000 to 500,000,000, with the par value remaining at $0.0001 per share, consisting
of 450,000,000 shares of common stock, par value $0.0001 per share and 50,000,000 shares of preferred stock, par value $0.0001 per share
(the “Increase of Authorized Stock”); 3) a change of the Company’s name and ticker from “Ecomat, Inc.”
and “ECMT,” to “Ecomax, Inc.” and “ECMX” (the “Change of Name,” together with the Reverse
Stock Split and the Increase of Authorized Stock, collectively as the “Corporate Actions”); 4) amendments to its articles
of incorporation to reflect the Corporate Actions (the “Amendments of Articles of Incorporation”); and 5) a proposal that
such resolutions be submitted for a vote of the stockholders of the Company.
On
March 18, 2021, the stockholder holding in the aggregate 20,205,000 shares of common stock or approximately 85% of the common stock outstanding
on such date, approved the Corporate Actions.
On
April 1, 2021, the Company filed a preliminary information statement on Schedule 14C with the SEC.
On
April 13, 2021, the Company filed a definitive information statement on Schedule 14C with SEC.
On
April 20 and 21, 2021, the Company filed a certificate of change and a certificate of amendment with the Secretary of State of the State
of Nevada.
On
April 28, 2021, the Company filed an Issuer Notification Form with FINRA requesting confirmation of the Change of Name.
On
May 21, 2021, the change of the Company’s name to “Ecomax, Inc.” became effective.
The
Corporate Actions, as of the date of this report, have all came into effect. As of the date of this report, our ticker symbol on OTC
Markets has been changed to EMAX and our name has been changed to Ecomax, Inc.
Business
Objectives of the Company
The
Company has no business operations. Management has determined to direct its efforts and limited resources to pursue potential new business
opportunities. The Company 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
Company’s common stock is subject to quotation on the OTC Pink Sheets under the symbol EMAX. There is currently only a limited
trading market in the Company’s shares and the Company believes that no active trading market has existed for the last 3 years.
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
has substantial flexibility in identifying and selecting a prospective new business opportunity. The Company 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, cannot be ascertained with any degree of certainty. In addition,
the global COVID-19 pandemic has created significant challenges for us to search for a target and any target business with which we ultimately
consummate a business combination, may be materially adversely affected by the COVID-19 pandemic.
Management
intends to devote such time as it deems necessary to carry out the Company’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 Company’s plan of operation.
The
Company’s 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.
The
Company is a Blank Check Company
At
present, the Company is a development stage company with no revenues, no assets and no specific business plan or purpose. The Company’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 Company is a “blank check company” and, as a result, any offerings of the Company’s securities under the Securities
Act of 1933, as amended (the “Securities Act”) must comply with Rule 419 promulgated by the SEC under the Act. The Company’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 (the “Penny Stock Rules”). 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 salesperson 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 Company is subject to the Penny Stock Rules, it may be more difficult to sell the Company’s
common stock.
The
Company is 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
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 our 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.
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
Company 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.
Selection
of a target business and structuring of a business combination
Management
has 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:
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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.
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, 2022 and 2021, 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.
Yu Yam Anthony Chau, our CEO and CFO, is our sole executive officer. Mr. Chau
is not obligated to devote any specific number of hours per week and, in fact, intends to devote only as much time as he deems
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.
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 Company. Management has not identified and is not currently
negotiating a new business opportunity for us. In the future, our management may become associated or affiliated with entities engaged
in business activities similar to those we intend to conduct. In such event, our 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 stockholders of the Company.