U.S.
SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549





Form
10-Q





(Mark
One)


x
            Quarterly
      Report under Section 13 or 15(d) of the Securities  Exchange Act
      of 1934





For the
quarterly period ended August 31, 2009





 ̈
            Transition
      Report under Section 13 or 15(d) of the Exchange Act for the Transition
      Period from ________ to ___________





Commission
File Number: 0-50333





DEMATCO,
INC.


(FORMERLY
ADVANCED MEDIA TRAINING, INC.)


(Exact
name of small business issuer as specified in its charter)





Delaware
                
                95-4810658(State
      or other jurisdiction of
                
                (I.R.S.
      Employerincorporation
      or organization)
                
                Identification
      No.)





17337
Ventura Boulevard, Suite 208


Encino,
California 91316


Issuer's
Telephone Number: (818) 784-0040


(Address
and phone number of principal executive offices)





Indicate by check mark whether the
registrant (1) filed all reports  required to be filed by
Section  13 or 15(d) of
the  Exchange  Act  during  the past 12
months  (or 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 has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T during the preceding 12 months.





Yes  ̈   No
 ̈





Indicate by check mark whether the
registrant is a large  accelerated filer, an
accelerated  filer, a  non-accelerated  filer, or
a smaller  reporting company.  See the definitions of "large
accelerated filer,"  "accelerated filer" and "smaller reporting
company" in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer  ̈
              Accelerated
      filer  ̈Non-accelerated
      filer  ̈
              Smaller
      reporting company x


(Do not
check if smaller reporting company)





Indicate by check mark whether the
issuer is a "shell company" as defined in Rule 12b-2 of the Securities Exchange
Act of 1934. Yes  ̈
No x





The Registrant had 193,103,524 shares
of common stock, par value $.001 per share, issued and outstanding as of
September 4, 2009.











INDEX TO
QUARTERLY REPORT


ON FORM
10-Q





PAGEPART
      I
                              FINANCIAL
      INFORMATIONItem
      1.
                              Financial
      Statements (Unaudited)
                              3Item
      2.
                              Management's
      Discussion and Analysis or Plan of Operation
                              4Item
      3.
                              Quantitative
      and Qualitative Disclosures About Market Risk
                              8Item
      4T.
                              Controls
      and Procedures
                              8PART
      II
                              OTHER
      INFORMATIONItem
      1.
                              Legal
      Proceedings
                              10Item
      2.
                              Unregistered
      Sales of Equity Securities and Use of Proceeds
                              10Item
      3.
                              Defaults
      upon Senior Securities
                              10Item
      4.
                              Submission
      of Matters to a Vote of Security Holders
                              10Item
      5.
                              Other
      Information
                              10Item
      6.
                              Exhibits
                              10Signatures
                              11





PART
I


FINANCIAL
INFORMATION





ITEM
1.  FINANCIAL STATEMENTS


DEMATCO, INC. AND SUBSIDIARIES (A
Development Stage Company)
  CONDENSED CONSOLIDATED BALANCE
SHEETS


ASSETSAugust 31,
              
              
              May 31,2009
              
              
              2009(Unaudited)Current
      Assets:Cash
              
              
              20,717
              
              
              $
              219Total Current
      Assets
              
              
              20,717
              
              
              
              219Total
      Assets
              
              $
              20,717
              
              
              $
              219LIABILITIES AND
      STOCKHOLDERS' DEFICITCurrent  Liabilities:Accounts payable and accrued
      expenses
              
              $
              347,098
              
              
              $
              196,876Unearned
      revenue
              
              
              671,129
              
              
              
              671,129Due to related
      parties
              
              
              314,621
              
              
              
              288,498Notes
      payable
              
              
              49,701
              
              
              
              19,601Total Current
      Liabilities
              
              
              1,382,549
              
              
              
              1,176,104Stockholders'
      Deficit:Common Stock,
      authorized 200,000,000 shares, par value $0.001,issued and outstanding;
      193,103,524 shares
              
              
              193,103
              
              
              
              193,103Additional Paid-in
      Capital
              
              
              4,145,900
              
              
              
              4,145,900Deficit accumulated during
      the development stage
              
              
              (5,703,622
              )
              
              
              (5,517,867
              )Cumulative translation
      adjustment
              
              
              2,787
              
              
              
              2,979Total Stockholders'
      Deficit
              
              
              (1,361,832
              )
              
              
              (1,175,885
              )Total Liabilities and
      Stockholders' Deficit
              
              $
              20,717
              
              
              $
              219




The accompanying notes are an integral
part of these statements.





DEMATCO, INC. AND
SUBSIDIARIES
 (A
Development Stage Company)
  CONDEDSED CONSOLIDATED STATEMENTS
OF OPERATIONS FOR THE THREE MONTHS ENDED AUGUST
31, 2009 AND 2008, AND FOR THE PERIOD NOVEMBER 1,
2005 (INCEPTION) TO AUGUST 31, 2009 (UNAUDITED)


November 1,2005(Inception)
    toThree Months Ended August
      31,
            
            
            August
      31,2009
            
            
            2008
            
            
            2009Operating
      Expenses:General and
      administrative
            
            $
            122,476
            
            
            $
            149,699
            
            
            $
            3,304,602Research and
      development
            
            
            62,500
            
            
            
            175,000
            
            
            
            992,998Interest expense, related
      party
            
            
            779
            
            
            
            1,348
            
            
            
            11,515Interest
      expense
            
            
            -
            
            
            
            -
            
            
            
            1,345,665Loss on
      investment
            
            
            -
            
            
            
            -
            
            
            
            47,242Total
      Expenses
            
            
            185,755
            
            
            
            326,047
            
            
            
            5,702,022Net Loss Before Income
      Taxes
            
            
            (185,755
            )
            
            
            (326,047
            )
            
            
            (5,702,022
            )Income
      tax
            
            
            -
            
            
            
            -
            
            
            
            1,600Net
    Loss
            
            $
            (185,755
            )
            
            $
            (326,047
            )
            
            $
            (5,703,622
            )Basic and diluted loss per
      share
            
            $
            (0.00
            )
            
            $
            (0.00
            )Weighted average shares
      outstanding
            
            
            193,103,524
            
            
            
            178,103,524




The accompanying notes are an integral
part of these statements.







DEMATCO, INC. AND SUBSIDIARIES (A
Development Stage Company)
  CONDENSED CONSOLIDATED STATEMENTS
OF STOCKHOLDERS' DEFICIT FROM NOVEMBER 1, 2005 (INCEPTION)
TO AUGUST 31, 2009 (UNAUDITED)


DeficitAccumulatedDuring
              
              
              TotalCommon
      Stock
              
              
              
              
              
              Currency
              
              
              Development
              
              
              EquityShares
              
              
              Amount
              
              
              Paid-in
    Capital
              
              
              Translation
              
              
              Stage
              
              
              (Deficit)Common Shares issued to
      Foundersfor intangibles at $0.00573
      per share
              
              
              101,000,000
              
              
              $
              1,762,450
              
              
              $
              (1,762,450
              )
              
              $
              -
              
              
              $
              -
              
              
              $
              -Currency
      Translation
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (17
              )
              
              
              -
              
              
              
              (17
              )Net
    Loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,412
              )
              
              
              (1,412
              )Net Comprehensive
      Loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,429
              )Balance, December 31,
      2005
              
              
              101,000,000
              
              
              $
              1,762,450
              
              
              $
              (1,762,450
              )
              
              $
              (17
              )
              
              $
              (1,412
              )
              
              $
              (1,429
              )Recapitalization
              
              
              15,753,524
              
              
              
              (1,645,697
              )
              
              
              1,379,096
              
              
              
              -
              
              
              
              -
              
              
              
              (266,601
              )Shares of subsidiary
      cancelledin exchange for debt
      payment
              
              
              -
              
              
              
              -
              
              
              
              80,000
              
              
              
              -
              
              
              
              -
              
              
              
              80,000Contribution of
      services
              
              
              -
              
              
              
              -
              
              
              
              401,271
              
              
              
              -
              
              
              
              -
              
              
              
              401,271Currency
      Translation
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3
              
              
              
              -
              
              
              
              3Net
    loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (616,701
              )
              
              
              (616,701
              )Net Comprehensive
      Loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (616,698
              )Balance, May 31,
      2007
              
              
              116,753,524
              
              
              $
              116,753
              
              
              $
              97,917
              
              
              $
              (14
              )
              
              $
              (618,113
              )
              
              $
              (403,457
              )Common stock issued for
      cash
              
              
              1,100,000
              
              
              
              1,100
              
              
              
              53,900
              
              
              
              -
              
              
              
              -
              
              
              
              55,000Common stock issued for
      services
              
              
              35,220,000
              
              
              
              35,250
              
              
              
              1,374,750
              
              
              
              -
              
              
              
              -
              
              
              
              1,410,000Common stock issued for
      debt
              
              
              25,000,000
              
              
              
              25,000
              
              
              
              1,454,244
              
              
              
              -
              
              
              
              -
              
              
              
              1,479,244Related party debt
      forgiveness
              
              
              -
              
              
              
              -
              
              
              
              30,089
              
              
              
              -
              
              
              
              -
              
              
              
              30,089Contribution of
      services
              
              
              -
              
              
              
              -
              
              
              
              400,000
              
              
              
              -
              
              
              
              -
              
              
              
              400,000Currency
      Translation
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (980
              )
              
              
              -
              
              
              
              (980
              )Net
    loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (3,442,943
              )
              
              
              (3,442,943
              )Net Comprehensive
      Loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (3,443,923
              )Balance, May 31,
      2008
              
              
              178,073,524
              
              
              $
              178,103
              
              
              $
              3,410,900
              
              
              $
              (994
              )
              
              $
              (4,061,056
              )
              
              $
              (473,047
              )Common stock issued for
      services
              
              
              15,000,000
              
              
              
              15,000
              
              
              
              370,000
              
              
              
              -
              
              
              
              -
              
              
              
              385,000Contribution of
      services
              
              
              -
              
              
              
              -
              
              
              
              365,000
              
              
              
              -
              
              
              
              -
              
              
              
              365,000Currency
      Translation
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3,973
              
              
              
              -
              
              
              
              3,973Net
    loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,456,811
              )
              
              
              (1,456,811
              )Net Comprehensive
      Loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,452,838
              )Balance, May 31,
      2009
              
              
              193,073,524
              
              
              $
              193,103
              
              
              $
              4,145,900
              
              
              $
              2,979
              
              
              $
              (5,517,867
              )
              
              $
              (1,175,885
              )Contribution of
      services
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Currency
      Translation
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (192
              )
              
              
              -
              
              
              
              (192
              )Net
    loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (185,755
              )
              
              
              (185,755
              )Net Comprehensive
      Loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (185,947
              )Balance, August 31,
      2009
              
              
              193,073,524
              
              
              $
              193,103
              
              
              $
              4,145,900
              
              
              $
              2,787
              
              
              $
              (5,703,622
              )
              
              $
              (1,361,832
              )




The accompanying notes are an integral
part of these statements.







DEMATCO, INC. AND SUBSIDIARIES (A
Development Stage Company)
  CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (UNAUDITED)


November 1,2005(Inception)
    toThree Months Ended August
      31,
            
            
            August
      31,2009
            
            
            2008
            
            
            2009Operating
      Activities:Net
    loss
            
            $
            (185,755
            )
            
            $
            (326,047
            )
            
            $
            (5,703,622
            )Adjustments to reconcile net
      loss to net cash (used in)provided by operating
      activities:Currency transalation
      adjustment
            
            
            (192
            )
            
            
            3,973
            
            
            
            2,787Stock issued for
      services
            
            
            -
            
            
            
            -
            
            
            
            1,795,000Interest
      expense
            
            
            -
            
            
            
            -
            
            
            
            1,208,333Contributed
      services
            
            
            -
            
            
            
            115,000
            
            
            
            1,166,271Amortization of debt
      discount
            
            
            -
            
            
            
            -
            
            
            
            137,331Loss in investment in
      securities
            
            
            -
            
            
            
            -
            
            
            
            45,732Changes in operating Assets
      and LiabilitiesAccounts payable and accrued
      expenses
            
            
            150,222
            
            
            
            11,981
            
            
            
            347,273Due to related party, under
      consulting agreement
            
            
            -
            
            
            
            -
            
            
            
            239,000Unearned
      revenue
            
            
            -
            
            
            
            275,000
            
            
            
            671,129Due to related
      entity
            
            
            -
            
            
            
            30,000
            
            
            
            30,090Accrued interest due to
      related party
            
            
            -
            
            
            
            1,348
            
            
            
            10,737Net cash (used in) provided
      by operating activities
            
            
            (35,725
            )
            
            
            111,255
            
            
            
            (49,939
            )Investing
      Activities:Purchase of
      securities
            
            
            -
            
            
            
            (45,732
            )
            
            
            (45,732
            )Net cash provided by (used
      in) investing activities
            
            
            -
            
            
            
            (45,732
            )
            
            
            (45,732
            )Financing
      Activities:Net repayments on line of
      credit
            
            
            -
            
            
            
            -
            
            
            
            (19,094
            )Net proceeds from
      (repayments of) loans from related parties
            
            
            26,123
            
            
            
            (62,148
            )
            
            
            8,080Net proceeds (repayments of)
      notes payable
            
            
            30,100
            
            
            
            -
            
            
            
            49,701Net proceeds from common
      stock
            
            
            -
            
            
            
            -
            
            
            
            55,000Cash proceeds from
      Progressive
            
            
            -
            
            
            
            -
            
            
            
            22,701Net cash provided by (used
      in) financing activities
            
            
            56,223
            
            
            
            (62,148
            )
            
            
            116,388Net Increase (Decrease) in
      cash
            
            
            20,498
            
            
            
            3,375
            
            
            
            20,717Cash, beginning of
      period
            
            
            219
            
            
            
            2,284
            
            
            
            -Cash, end of
      period
            
            $
            20,717
            
            
            $
            5,659
            
            
            $
            20,717Supplemental
      Information:Interest
      Paid
            
            $
            -
            
            
            $
            -
            
            
            $
            -Income Taxes
      Paid
            
            $
            -
            
            
            $
            -
            
            
            $
            -Schedule of Non-Cash
      Activities:Related party debt
      forgiveness
            
            $
            -
            
            
            $
            -
            
            
            $
            30,090




The accompanying notes are an integral
part of these statements.


3


DEMATCO,
INC. AND SUBSIDIARIES
  (A
Development Stage Company)
  NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  AUGUST
31, 2009
  (UNAUDITED)
  
  NOTE
1. GENERAL ORGANIZATION AND BUSINESS
  Dematco,
Inc, (formerly Advanced Media Training, Inc.; the “Company”) is engaged in the
business of dematerializing or converting financial instruments from paper to
electronic form so as to enable such instruments to be traded electronically on
exchanges or exchange platforms on a peer to peer basis.
  PRINCIPLES
OF CONSOLIDATION
  The
consolidated financial statements include the accounts of Dematco, Inc. and its
wholly-owned subsidiaries, Dematco, Ltd., which is a United Kingdom registered
private company based in London and Dematco Group Corp., which is a British
Virgin Islands corporation incorporated on November 5, 2008.
  All
material inter-company accounts and transactions have been
eliminated.
  NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  PRESENTATION
AND GOING CONCERN
  The
accompanying consolidated financial statements have been prepared assuming that
the company will continue as a going concern, which contemplates the realization
of assets and the liquidation of liabilities in the normal course of
business.  The Company is in its development stage, has incurred
significant losses since inception and has a working capital
deficit.  These factors raise substantial doubt about the Company’s
ability to continue as a going concern.  The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities that
might result from this uncertainty.
  The
Company plans to improve its financial condition by fulfilling its
responsibilities under Dematerialization Services Agreements as described in
Note 4. However, there is no assurance that the company will accomplish this
objective.
  
  DEMATCO,
INC. AND SUBSIDIARIES
  (A
Development Stage Company)
  NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  AUGUST
31, 2009
  (UNAUDITED)
  USE OF
ESTIMATES
  The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period.  Actual results could differ from these
estimates.
  CASH AND
CASH EQUIVALENTS
  Cash and
cash equivalents include all short-term liquid investments that are readily
convertible to known amounts of cash and have original maturities of three
months or less.
  PREPARATION
OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  The
interim condensed consolidated financial statements for the periods ended August
31, 2009 and August 31, 2008 have been prepared by the Company’s management,
without audit, in accordance with accounting principles generally accepted in
the United States of America and pursuant to the rules and regulations of the
United States Securities and Exchange Commission (“SEC”).  In the
opinion of management, these interim condensed consolidated financial statements
contain all adjustments (consisting of only normal recurring adjustments, unless
otherwise noted) necessary to present fairly the Company’s financial position,
results of operations and cash flows for the fiscal periods
presented.  Certain information and note disclosures normally included
in annual financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or
omitted in these interim financial statements pursuant to the SEC’s rules and
regulations, although the Company’s management believes that the disclosures are
adequate to make the information presented not misleading.  The
financial position, results of operations and cash flows for the interim periods
disclosed herein are not necessarily indicative of future financial
results.  These interim condensed consolidated financial statements
should be read in
  
  DEMATCO,
INC. AND SUBSIDIARIES
  (A
Development Stage Company)
  NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  AUGUST
31, 2009
  (UNAUDITED)
  
  conjunction
with the annual financial statements and the notes thereto included in the
Company’s most recent Annual Report on Form 10-K for the fiscal year ended May
31, 2009.
  REVENUE
RECOGNITION
  The
Company recognizes revenue under the Dematerialization Service Agreements
described in Note 4 in the period in which the Dematerialization Life Settlement
Policies are delivered to and accepted by the respective clients.
  STOCK
BASED COMPENSATION
  Stock-based
compensation is accounted for in accordance with SFAS No. 123(r). The cost of
stock-based awards are measured at grant date based on the estimated fair value
of the award and expensed at grant date or over any requisite service
period.
  FOREIGN
CURRENCY TRANSLATION
  The
financial statements of Dematco, Ltd. are measured using the Great Britain Pound
as the functional currency.  Assets, liabilities and equity accounts
of Dematco, Ltd. are translated at exchange rates as of the balance sheet
date.  Revenues and expenses are translated at average rates of
exchange in effect during the period.  The resulting cumulative
translation adjustments have been recorded as a separate component of
stockholders’ deficit.  The consolidated financial statements are
presented in the United States of America dollars.
  INCOME
TAXES
  The
provision for income taxes is the total of the current taxes payable and the net
of the change in the deferred income taxes.  Provision is made for the
deferred income taxes where differences exist between the period in which
transactions affect current taxable income and the period in which they enter
into the determination of net income in the financial statements.
  
  DEMATCO,
INC. AND SUBSIDIARIES
  (A
Development Stage Company)
  NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  AUGUST
31, 2009
  (UNAUDITED)
  NET LOSS
PER SHARE
  Basic and
diluted net loss per share has been computed by dividing net loss by the
weighted average number of common shares outstanding during the applicable
fiscal periods.  At August 31, 2009, the Company had no potentially
dilutive shares outstanding.  Potentially dilutive shares are excluded
from the computation in loss periods, as their effect would be
anti-dilutive.
  FAIR
VALUE OF FINANCIAL INSTRUMENTS
  The
Company’s financial instruments consist of cash and cash equivalents, accounts
payable and accrued expenses, due to related parties, and notes
payable.  Pursuant to SFAS No. 107, “DISCLOSURES ABOUT FAIR VALUE OF
FINANCIAL INSTRUMENTS,” the Company is required to estimate the fair value of
all financial instruments at the balance sheet date.  The Company
considers the carrying values of its financial instruments in the financial
statements to approximate their fair values due to the short term nature of the
instruments.
  NOTE
3. INVESTMENT IN SECURITIES
  On August
11, 2008, the Company purchased 1,600,000 shares of Private Trading Systems, PLC
(“PTS”), for (£) 24,000, or $45,732.  The Company’s Chief Executive
Officer and its principal shareholder are shareholders of
PTS.  Additionally, the Company’s then Chief Financial Officer was an
officer of PTS.  On November 30, 2008, the investment in PTS was
determined to have had an other-than-temporary decline in value and was written
down to $-0-.
  
  DEMATCO,
INC. AND SUBSIDIARIES
  (A
Development Stage Company)
  NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  AUGUST
31, 2009
  (UNAUDITED)
  NOTE
4. UNEARNED REVENUE
  During
the last year ended May 31, 2009, the Company entered into contracts for the
dematerialization of Life Settlement Policies and received $688,459 in deposits
from clients.  Of this amount, $17,330 has been applied to the
reimbursement of research and development expenses.  As of August 31,
2009, the Company has not brought the dematerialization process to a commercial
stage of operation.
  The
Dematerialization Services Agreements provide for the Company to convert Life
Settlements Policies to be purchased by the clients into electronic form
facilitating the trading of such securities and have terms of up to three years.
As compensation, the Company is to receive fees at a rate of two percent of the
face value of the securities to be dematerialized, 0.25% upon commencement and
1.75% upon completion of the process to dematerialize the
securities.
  On
September 24, 2008, the Company entered into a Fee Sharing Agreement with
Private Trading System PLC (“PTS”) whereby the Company agreed to introduce its
clients to PTC as the provider of an electronic platform for trading Senior Life
Settlement Policies (“SLSP’s”) in real time. The agreement has a term of five
years and provides for the company to pay PTS 10% of the initial fee from
clients and 20% of the completion fee from clients and for PTS to pay the
Company 20% of the PTS fees and commissions received from such clients. The
Company’s chief executive officer and then chief financial officer were also
then directors of PTS.
  
  DEMATCO,
INC. AND SUBSIDIARIES
  (A
Development Stage Company)
  NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  AUGUST
31, 2009
  (UNAUDITED)
  
  
  NOTE
5. RELATED PARTY TRANSACTIONS
  Due to
related party consists of:
  August
      31, 2009
              
              
              May
      31, 2009Amounts
      due to former chief executive officer:Note
      payable, 8% interest rate, due June 30, 2009
              
              $
              38,645
              
              
              $
              38,645Accrued
      interest on note payable
              
              
              8,896
              
              
              
              8,896Payable
      under consulting agreement which provided for monthly fees of $10,000
      through December 31, 2008
              
              
              239,000
              
              
              
              239,000Loan
      payable to owner of approximately 30% of the Company’s issued and
      outstanding common stock, 0% interest rate, due upon
demand
              
              
              28,080
              
              
              
              1,957Total
              
              
              314,621
              
              
              
              288,498
 
 
  DEMATCO,
INC. AND SUBSIDIARIES
  (A
Development Stage Company)
  NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  AUGUST
31, 2009
  (UNAUDITED)
  
  NOTE
6. NOTE PAYABLE
  The
$49,701 notes payable at August 31, 2009 ($19,601 at May 31, 2009) are due to
Denvel Limited, bear interest at 0% and are due upon demand.
  NOTE
7. STOCKHOLDERS’ EQUITY
  INCENTIVE
STOCK PLAN
  During
February 2008, The Company executed The Dematco, Inc. 2008 Incentive Stock Plan,
(the “Plan”).  The Plan is designed to retain directors, executives
and selected employees and consultants and reward them for making major
contributions to the success of the Company.  These objectives are
accomplished by making long-term incentive awards under the Plan thereby
providing participants with proprietary interest in the growth and performance
of the Company.  The Plan shall be administered by the Company’s Board
of Directors.  The persons who shall be eligible to receive grants
shall be directors, officers, employees, or consultants to the
Company.  Subject to adjustment as provided in the Plan, the total
number of shares of stock which may be purchased or granted directly by options,
stock awards or restricted stock purchase offers, or purchased indirectly
through exercise of options granted under the Plan shall not exceed fifty
million (50,000,000).  The Company shall reserve and keep available at
all times during the term of the Plan such number of shares as shall be
sufficient to satisfy the requirements of the Plan. In March 2008, a total of
35,250,000 shares valued at $1,410,000 were issued for services under the
Plan.  In September and November 2008, a total of 15,000,000 shares
valued at $385,000 were issued for services under the Plan.







ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION




You
should read this section together with our financial statements and related
notes thereto included elsewhere in this report. In addition to the historical
information contained herein, this report contains forward-looking statements
that are subject to risks and uncertainties. Forward-looking statements are not
based on historical information but relate to future operations, strategies,
financial results or other developments. Forward-looking statements are
necessarily based upon estimates and assumptions that are inherently subject to
significant business, economic and competitive uncertainties and contingencies,
many of which are beyond our control and many of which, with respect to future
business decisions, are subject to change. Certain statements contained in this
Form 10-Q, including, without limitation, statements containing the words
"believe," "anticipate," "estimate," "expect," "are of the opinion that" and
words of similar import, constitute "forward-looking statements." You should not
place any undue reliance on these forward-looking statements.




You
should be aware that our results of operations could materially be affected by a
number of factors, which include, but are not limited to the following: economic
and business conditions specific to the financial/securities industries;
competition from other companies offering similar services, our ability to
control costs and expenses, access to capital, and our ability to meet
contractual obligations. There may be other factors not mentioned above or
included elsewhere in this report that may cause actual results to differ
materially from any forward-looking information.




CRITICAL
ACCOUNTING POLICIES




Our
discussion and analysis of our financial condition and results of operations are
based upon our statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses. In
consultation with our Board of Directors, we have identified five critical
accounting policies that we believe are key to an understanding of our financial
statements. These are important accounting policies that require management's
most difficult, subjective judgments.




The first
critical policy relates to the preparation and disclosure of our financial
statements. The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern, which contemplates the
realization of assets and the liquidation of liabilities in the normal course of
business. The Company is in its development stage and has no source of revenue
from operations. This raises substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might result from
this uncertainty. The Company has survived only through borrowings from
shareholders. The Company must raise funds or continue borrowings in the near
future to survive. There is no assurance that management can find investors or
continue borrowings to cover the losses generated.




The
second critical accounting policy relates to the issuance of debt with a
beneficial conversion feature. The Company has valued the convertible note
payable (imputing an interest rate of 20%) and the related beneficial conversion
option to convert the principal balance into shares using the “Relative Fair
Value” approach. The fair value of the conversion option was determined using
the Black Scholes model. The relative fair value of this conversion option
represented approximately 83% of the total instrument, thus resulting in a large
discount on the original debenture. The Company amortized the discount using the
interest method through the date of conversion to common stock.


4





The third
critical policy relates to shares issued for services. We value the shares
issued based on the closing price of our stock on the date of
grant.




The
fourth critical policy relates to the inducement to convert debt. During 2008,
we lowered the original conversion price of our convertible note payable to
induce the holder to convert into common stock. The difference in shares issued
from that originally to be issued was valued at the closing price of our stock
on the date of conversion and recorded as additional interest
expense.




SELECT
FINANCIAL INFORMATION





For the Three Months Ended08/31/09
                
                
                08/31/08(Unaudited)
                
                
                (Unaudited)Statement
      of Operations DataTotal
      revenue
                
                $
                —
                
                
                $
                —Operating
      loss
                
                $
                185,755
                
                
                $
                (326,047
                )Net
      loss per share
                
                $
                (0.00
                )
                
                $
                (0.00
                )Balance
      Sheet Data
                
                
                08/31/09
                
                
                
                08/31/09Total
      assets
                
                $
                20,717
                
                
                $
                219Total
      liabilities
                
                $
                1,382,549
                
                
                $
                1,176,104Stockholders'
      deficit
                
                $
                (1,361,832
                )
                
                $
                1,175,885





RESULTS
OF OPERATIONS




GENERAL




On December 11, 2006, we completed
the acquisition of Dematco, Ltd., and at the same time, elected a new slate of
directors and appointed new corporate officers. Concurrent with the acquisition,
our new management decided to change the Company's business to that of its just
acquired wholly-owned subsidiary, Dematco, Ltd., and as soon as feasible to
cease all activities related to the business of producing and distributing
workforce training videos. Effective March 1, 2007, we entered into an Asset and
Liability Assumption Agreement with our then wholly-owned subsidiary Progressive
Training, Inc., and as a result ceased all activities associated with our former
business.




Since that date, and for the
foreseeable future, all of our efforts will be focused on the further
development and marketing of our dematerialization process. During fiscal 2010,
we plan to take the following steps in order to improve the process, and
generate revenue from operations, (a) fulfill our existing contracts and (b)
attempt to sign additional contracts for the dematerialization of financial
instruments within the insurance industry.


5





On August 14, 2009, we entered into a
Services Agreement with a finder in which we agreed to give this finder 10% of
any compensation we receive from First Corporation for the introduction of
investors to First Corporation following its share exchange with Acquma. The
agreement terminates on December 31, 2009.




On that same date, we also entered
into an additional Dematerialization Services Agreement, on our standard form,
for the dematerialization of senior life settlement policies in the aggregate
face amount of $50,000,000.




THREE-MONTH
PERIOD ENDED AUGUST 31, 2009 COMPARED TO THREE-MONTH PERIOD ENDED AUGUST31, 2008




REVENUES




EXPENSES




General
and administrative expenses decreased $27,223 from $149,699 in 2008 to
122,476 in 2009, primarily as a result of lower personnel costs.








NET
LOSS




As a result of the aforementioned,
our net loss was $185,755 for the three months ended August 31, 2009 and
$326,047 for the three months ended August 31, 2008.




PLAN OF
OPERATION




On March 1, 2007 we ceased all
activities associated with our former business of the production and
distribution of workforce training videos, see "Company History" and focused all
efforts on the further development and marketing of our dematerialization
process.




We will continue to devote our
limited resources to marketing and developing our dematerialization process. At
this time these efforts are focused on fulfilling the contracts mentioned above,
and seeking to acquire additional contracts for the use of our dematerialization
process. We cannot be certain that we will succeed in these
efforts.


6





Management expects that revenues from
our above mentioned contracts will provide sufficient funds to maintain
operations, and satisfy our budgeted cash requirements through August 31,
2010.




We currently have no employees. Mr.
Robert Stevens, our Chief Executive Officer (and principal accounting and
financial officer) and Chairman of the Board of Directors, Mr. Lindsay Smith,
our Director, and, our principal shareholder Mr. Terence Ramsden, each work on a
part-time basis.




LIQUIDITY
AND CAPITAL RESOURCES




Our working capital deficit was
$1,361,832 at August 31, 2009, which includes liabilities due to related parties
and entities of $314,621.




Our cash flows used by operating
activities were $35,725 for the three months ended August 31, 2009. This is the
primary results of our net loss of $185,755 offset by a $150,222 increase in
accounts payable and accrued expenses.




During the three months ended August
31, 2009 our cash flows provided by financing activities was
$56,223, as a result of proceeds from loans.


We currently have no material
commitments at this time to fund development of our dematerialization process or
to acquire any significant capital equipment.




We are a company with a limited
operating history and a history of net losses.




We had a cash balance of $20,717 on
August 31, 2009.




If revenues from the sale of our
dematerialization process do not provide sufficient funds to maintain
operations, then we believe the raising of funds through borrowings from our
shareholder or the sale of additional equity will be sufficient to satisfy our
budgeted cash requirements through August 31, 2010. Additionally, we may attempt
a private placement sale of our common stock. Further, our ability to pursue any
business opportunity that requires us to make cash payments would also depend on
the amount of funds that we can secure from these various sources.




If funding is insufficient at any
time in the future, we may not be able to take advantage of business
opportunities or respond to competitive pressures, any of which could have a
negative impact on the business, operating results and financial condition. In
addition, if additional shares were issued to obtain financing, current
shareholders may suffer a dilutive effect on their percentage of stock ownership
in the Company.


7





ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




Based on the nature of our current
operations, we have not identified any issues of market risk at this
time.




ITEM 4T.
CONTROLS AND PROCEDURES




EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES.




Mr.
Robert Stevens, our Chief Executive Officer and principal accounting and
financial officer has evaluated the effectiveness of our disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end
of the period covered by this quarterly report on Form 10-Q (the "Evaluation
Date"). Based on that evaluation, Mr. Stevens has concluded that, as of the
Evaluation Date, our disclosure controls and procedures are still not effective
in ensuring that (i) information required to be disclosed by the company in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SEC's rules
and forms and (ii) information required to be disclosed by the company in the
reports that we file or submit under the Exchange Act is accumulated and
communicated to the company's management, including our principal executive and
financial officer, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.




Disclosure
controls and procedures are those controls and procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and principal accounting and
financial Officer, to allow timely decisions regarding required
disclosure.




Notwithstanding
the assessment that our internal control over financial reporting was not
effective and that there were material weaknesses as identified in this report,
we believe that our financial statements contained in this Quarterly Report on
Form 10-Q accurately present our financial condition, results of operations and
cash flows in all material respects.




Our Board
of Directors has determined that it is in the best interests of the company and
its shareholders to address the lack of formal internal controls and procedures
and to implement changes to our internal control over information and financial
reporting. We are exploring ways to improve our accounting procedures to ensure
accuracy. We are also working to improve our internal control through increased
segregation of critical duties among the members of our general and
administrative staff and improved oversight of the financial accounting and
reporting process by our principal accounting officer. With regard to the
latter, we are also considering the need to engage additional accounting
personnel.


8





Management,
including our Chief Executive Officer and principal accounting and financial
officer, has discussed the material weakness noted above with our independent
registered public accounting firm.




CHANGES
IN INTERNAL CONTROL OVER FINANCIAL REPORTING




There
were no changes in our internal control over financial reporting identified in
connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule
15d-15 under the Securities Exchange Act of 1934, as amended, that occurred
during the fiscal quarter ended August 31, 2009 that have materially affected,
or that are reasonably likely to materially affect, our internal control over
financial reporting. Because the company was cash constrained, and could not
hire staff to take segregated duties. The company is now considering what if any
extra staff will resolve this and ensure better internal control.




LIMITATIONS
ON THE EFFECTIVENESS OF CONTROLS AND PROCEDURES




Our
management does not expect that our controls and procedures will prevent all
potential errors or fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met.


9


PART
II


OTHER
INFORMATION




ITEM 1.
LEGAL PROCEEDINGS None.




ITEM 2.
UNREGISTERED SALES OF EQUITY AND USE OF PROCEEDS




None.




ITEM 3.
DEFAULTS UPON SENIOR SECURITIES




None.




ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS




During
the quarter ended August 31, 2009, no matters were submitted for vote to the
Company's security holders.




ITEM 5.
OTHER INFORMATION




None.




ITEM 6.
EXHIBITS





10.1
                  Agreement
      with First Corporation, a Colorado corporation, dated as of July 1,
      2009.10.2
                  Services
      Agreement with Jurg Walker dated as of August 14, 2009.31
                  Certification
      of CEO Pursuant to Securities Exchange Act Rules 13a-14 and
      15d-14,  as Adopted  Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.32
                  Certification  Pursuant
      to 18 U.S.C.  Section 1350, as Adopted Pursuant to Section 906
      of the Sarbanes-Oxley Act of
2002.


10




SIGNATURES




In accordance with the requirements
of the Exchange Act, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.





DEMATCO,
      INC.(Registrant)Dated:
      October 20, 2009
                /S/ ROBERT STEVENSRobert
      Stevens, President and ChiefExecutive
      Officer


11