UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[ X ]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended
December 31, 2009
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period
from ______________ to ________________
Commission File Number:
000-32905
AMANASU ENVIRONMENT
CORPRATION
(Exact
name of registrant as specified in its charter)
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Nevada
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98-0347883
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(State of other jurisdiction of
incorporation or organization)
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(I.R.S. Eployer Identification No.)
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445 Park Avenue Center 10th Floor New
York, NY 10022
(Address
of principal executive offices)
212-836-4727
(Registrant's telephone number, including area
code)
Securities
registered pursuant to Section 12(b) of the Act:
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Title of each class
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Name of each
exchange on which registered
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|
COMMON STOCK
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OTC-BB
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Securities
registered pursuant to section 12(g) of the Act:
(Title of class)
(Title of class)
Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act.
Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act.
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K(229.405 of this chapter)
is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
aadmendment to this Form 10-K.
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 copany"
in
Rule 12b-2 of the Exchange Act.
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Large accelerated
filer
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Accelerated
filer
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Non-accelerated
filer
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(Do not check if a
smaller reporting company)
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Smaller
reporting company
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X
|
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed
all docments and reports required to be
filed by sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution
of securities under a plan confirmed by a court.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of
the issuers
classes of common stock, as of the latest practiable
date: 44,000,816 as of March 31, 2010.
AMANASU ENVIRONMENT CORPORATION
ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2009
TABLE OF CONTENTS
Forward Looking Statements. Certain of the statements
contained in this Annual Report on Form 10-K include forward looking
statements. All statements other than statements of historical facts
included in this Form 10-K regarding the Company's financial position,
business strategy, and plans and objectives of management for future
operations and capital expenditures, and other matters, are forward
looking statements. These forward looking statements are based upon
management's expectations of future events. Although the Company
believes the expectations reflected in such forward looking statements
are reasonable, there can be no assurances that such expectations will
prove to be correct. Additional statements concerning important factors
that could cause actual results to differ materially from the Company's
expectations ("Item 1A. Risk Factors") are disclosed below in the Item
1A. Risk Factors section a nd elsewhere in this Form 10-K. All written
and oral forward looking statements attributable to the Company or
persons acting on behalf of the Company subsequent to the date of this
Form 10-K are expressly qualified in their entirety by the Cautionary
Statements.
Part I
Item 1. Business
General
Amanasu Environment Corporation (herein after
the "Company") principle business is in complete development of
Environmental Technologies to improve the quality of life for the future
of the planet. The Company is involved in all aspects of environmental
technology development: research & development, marketing, sales. It
also produces and acquires environmental technology and related
patents. Environmental technologies that the Company has been apart of
range from water filtration systems, industrial/medical waste
incinerators, solar panels, to name a few. The Company chose to have its
headquarters in the United States in order to bridge environmental
technology development internationally, with particular attention to
leading innovations in Japan. The Company's parent company Amanasu
Corporation, is a Japanese Corporation. The Company hopes to utilize
existing associations and partnerships in order to bring environmental
technologies from the United States and market them in Japan and other
surrounding countries.
Current
During the fiscal year ended December 31, 2008,
Chairman & Chief Executive Officer Atsushi Maki,
set a 2 year capital raising goal of
$30,000,000 to increase the Company's potential by entering
into the NASDAQ global market. The Company's
main objective has not changed for the coming fiscal year ending
December 31, 2010.
Aside from capital raising efforts, the company
continues to support Amanasu Maritech Corporation,
in development and required regulatory
approval for Commercial Cargo Ship Ballast Water Purification
System. The Company and Amanasu Maritech
Corporation are currently working through the approval process
of this type of product with the Japanese
regulatory bodies. Also required documentation,
and translations are being prepared for
additional approval by the main global governing body for marine
technologies, IMO the International Marine Organization.
The Company also continues to look for
partners and interested parties to further develop existing
business' and technolgies acquired by Amanasu
Maritech Corporation, the Company's child company.
The Company's principal offices were relocated
on April 1, 2010 from 115 East 57th Street 11th Floor New York, NY
10022, to 445 Park Avenue Center 10th floor New York, NY 10022
Telephone: 212-836-4727. The Tokyo branch has relocated from 1-3-38
Roppongi, Minatoku, Tokyo, 106-0032, Japan to 1-7-10 Motoakasaka
Building 9th Floor Motoakasaka Minato-Ku Tokyo Telephone: 03-5413-7322.
As of April 27th, 2009 Amanasu Maritech
Corporation (formerly Amanasu Holdings Corporation) transferred its
shares of
Amanasu Water Corporation to its sister
Company Amanasu Techno Holdings Corporation.
Amanasu Techno Holdings plans to utilize the
Amanasu Water Corporation's existing resources
to enter into the Health, and Medical
Devices industry. In exchange Amanasu Holdings Corporation
received 200,000 shares of Amanasu Techno
Holdings.
The Company is concentrating its efforts into
Amanasu Maritech Corporation, and as a result
will not put further resources into Amanasu
Maritech Corporation's child companies
Amanasu Echo Frontier, Amanasu Energy, Petstyle,
Amanasu Project Support, and BJSS during the fisical year ending
December 31, 2010.
1
History
Amanasu Environment Corporation ("Company")
was incorporated in the State of Nevada on February 22, 1999 under the
name of Forte International Inc. On March 27, 2001, the Company's name
was changed to Amanasu Energy Corporation, and on November 13, 2002, its
name was changed to Amanasu Environment Corporation.
It has acquired the exclusive, worldwide license rights to a high
temperature furnace, a hot water boiler, and ring-tube desalination
methodology. At this time, the Company is not engaged in the commercial
sale of any of its licensed technologies. Its operations to date have
been limited to acquiring the technologies, conducting limited product
marketing, and testing the technologies for commercial sale. For each
such technology, proto-type or demonstrational units have been
constructed by each licensor or inventor of the technology. The Company
has conducted various internal tests on these units to determine the
commercial viability of the underlying technologies. As a result of such
testing, the Company believes that the products are not commercially
ready for sale, and that product refinements are necessary with respect
to each of the technologies. In addition, the Company may seek joint
venture or other affiliations with companies competitive in each
respective product market whereby the Company can capitalize on the
existing infrastructure of such other companies, such as product design
and engineering, marketing and sales, and warranty and post-warranty
service and repair. The Company believes that its marketing efforts to
sell any of its products will be limited until such time as it can
complete the refinements of its technologies. The Company can not
predict whether it will be successful in developing commercial products,
or establishing affiliations with any operating company.
On June 8, 2000, the Company obtained the exclusive, worldwide
license to a technology that disposes of toxic and hazardous wastes
through a proprietary, high temperature combustion system, known as the
Amanasu Furnace. The rights were obtained pursuant to a license
agreement with Masaichi Kikuchi, the inventor of the technology, for a
period of 30 years. The Company issued 1,000,000 share of common stock
to the inventor and 200,000 shares of common stock to a director of the
inventor's company. Under the licensing agreement; the Company is
required to pay the licensor a royalty of two percent of the gross
receipts from the sale of products using the technology. If the Company
fails to comply with any provision of the agreement after a 90-day
notice period, the licensor may terminate the agreement.
Effective September 30, 2002, the Company obtained the exclusive,
worldwide license to a hot water boiler technology that incinerates
waste tires in a safe and non-polluting manner and extracts heat energy
from the incineration process. The rights were obtained pursuant to a
license agreement with Sanyo Kogyo Kabushiki Gaisha and Ever Green
Planet Corporation, both Japanese companies, for a period of 30 years.
As consideration for this acquisition, the Company paid the licensors
$250,000, of which the Company's President paid $95,000, issued to them
600,000 shares of common stock, and issued to an affiliate of the
licensors 50,000 shares of common stock. The licensors are entitled to
receive a two percent royalty on the gross receipts from the sale of the
products related to the technology. If the Company fails to comply with
any provision of the agreement after a 90-day notice period, the
licensor may terminate the agreement.
On June 30, 2003, the Company acquired the exclusive worldwide rights
to produce and market a patented technology that purifies seawater, and
removes hazardous pollutants from wastewater. The rights were obtained
pursuant to a license agreement with Etsuro Sakagami, the inventor, for a
period of 30 years. As consideration for obtaining the license, the
Company issued 1,000,000 shares to the inventor, and 50,000 shares to a
finder. The licensor is entitled to receive a two percent royalty on the
gross receipts from the sale of the products related to the technology.
If the Company fails to comply with any provision of the agreement
after a 90-day notice period, the licensor may terminate the agreement.
2
Item 1A. Risk Factors
Ability To Develop Commercial Product
The Company presently maintains rights to three different
technologies. At this time, proto-type versions of products for each of
the three technologies have been developed, however, none of the
products are commercially ready for sale. In order to reach a stage of
commercial sales for the products, the Company prefers to put emphasis
on joint venturing and funding a company who has advanced technological
knowledge and progressed sales history of the same field for the purpose
of cooperation. The Company can not predict that it will be successful
in developing commercially ready products for any of the technologies in
the near future or at any time.
Rapid Technological Changes
The industries in which the Company intends to compete with are
subject to rapid technological changes. No assurances can be given that
the technological advantages which may be enjoyed by the Company in
respect of their technologies can not or will not be overcome by
technological advances in the respective industries rendering the
Company's technologies obsolete or non-competitive.
Lack of Indications Of Product Acceptability
The success of the Company will be dependent upon its ability to
develop commercially acceptable products and to sell such products in
quantities sufficient to yield profitable results. To date, the Company
has received no indications of the commercial acceptability of any of
its proposed products. Accordingly, the Company can not predict whether
its products can be marketed and sold in a commercial manner.
Management
The ability of the Company to successfully conduct its business
affairs will be dependent upon the capabilities and business acumen of
current management including Mr. Atsushi Maki, the Company's President.
Accordingly, shareholders must be willing to entrust all aspects of the
business affairs of the Company to its current management. Further, the
loss of any one of the Company's management team could have a material
adverse impact on its continued operation.
Control Exercised By Management
As of March 15, 2006, the existing officers and directors, and aff
iliates will control approximately 78.80% of the shareholder votes.
Consequently, management will control the vote on all matters brought
before shareholders, and holders of common stock may have no power in
corporate decisions usually brought before shareholders.
Conflicts of Interest
The officers of the Company are not full time employees. Presently,
the Company does not have a formal conflicts of interest policy
governing its officers and directors. In addition, the Company does not
have written employment agreements with its officers. Its officers
intend to devote sufficient business time and attention to the affairs
of the Company to develop the Company's business in a prudent and
business-like manner. However, the principal officer is engaged in other
businesses related and unrelated to the business of the Company, and in
the future, will engage in other business ventures. As a result, the
principal officer and other officer of the Company may have a conflict
of interest in allocating their respective time, services, and future
resources, and in exercising independent business judgment with respect
to their other businesses and that of the Company.
Reliance upon Third Parties
The Company does not intend on maintaining a significant technical
staff nor does it intend on manufacturing its products. Rather it will
rely heavily on consultants, contractors, and manufacturers to design,
develop and manufacture its products. Accordingly, there is no assurance
that such third parties will be available when needed at affordable
prices.
3
Competition
Although management believes its products, if developed, will have
significant competitive advantages to other products in their respective
industries, with respect to such products, the Company will be
competing in industries, such as the industrial waste industry, where
enormous competition exists. Competitors in these industries have
greater financial, engineering and other resources than the Company. No
assurances can be given that any advances or developments made by such
companies will not supersede the competitive advantages of the Company's
products.
Protection Of Intellectual Property
The success of the Company will be dependent, in part, upon the
protection of its proprietary of its various technologies from
competitive use. Certain of its technologies are the subject of various
patents in varying jurisdictions (See " Description of Business -
Proprietary Rights"). In addition to the patent applications, the
Company relies on a combination of trade secrets, nondisclosure
agreements and other contractual provisions to protect its intellectual
property rights. Nevertheless, these measures may be inadequate to
safeguard the Company's underlying technologies. If these measures do
not protect the intellectual property rights, third parties could use
the Company's technologies, and its ability to compete in the market
would be reduced significantly. In addition, if the sale of the
Company's product extends to foreign countries, the Company may not be
able to effectively protect its intellectual property rights in such
foreign countries.
In the future, the Company may be required to protect or enforce its
patents and patent rights through patent litigation against third
parties, such as infringement suits or interference proceedings. These
lawsuits could be expensive, take significant time, and could divert
management's attention from other business concerns. These actions could
put the Company's patents at risk of being invalidated or interpreted
narrowly, and any patent applications at risk of not issuing. In defense
of any such action, these third parties may assert claims against the
Company. The Company cannot provide any assurance that it will have
sufficient funds to vigorously prosecute any patent litigation, that it
will prevail in any of these suits, or that the damages or other
remedies awarded, if any, will be commercially valuable. During the
course of these suits, there may be public announcements of the results
of hearings, motions and other interim proceedings or developments in
the litigation, which could result in the negative perception by
investors, which could cause the price of the Company's common stock to
decline dramatically.
Indemnification of Officers and Directors for Securities Liabilities
The Company's By-Laws eliminates personal liability in accordance
with the Nevada Revised Statutes (NRS). Section 78.7502 of the NRS
provides that a corporation may eliminate personal liability of an
officer or director to the corporation or its stockholders for breach of
fiduciary duty as an officer or director provided that such
indemnification is limited if such party acted in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interest of the corporation. In so far as indemnification for liability
arising from the Securities Act of 1933 ("Act") may be permitted to
directors, officers or persons controlling the Company, it has been
informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
Penny Stock Regulation
The Company's common stock may be deemed a "penny stock" under
federal securities laws. The Securities and Exchange Commission has
adopted regulations that define a "penny stock" generally to be any
equity security that has a market price of less than $5.00 per share,
subject to certain exceptions. These regulations impose additional sales
practice requirements on any broker/dealer who sell such securities to
other than established investors and accredited investors. For
transactions covered by this rule, the broker/dealer must make certain
suitability determinations and must receive the purchaser's written
consent prior to purchase. Additionally, any transaction may require the
delivery prior to sale of a disclosure schedule prescribed by the
Commission. Disclosure also is required to be made of commissions
payable to the broker/dealer and the registered representative, as well
as current quotations for the securities. Finally, monthly statements
are required to be sent disclosing recent price information for the
penny stock held in the account of the customers and information on the
limited market in penny stocks. These requirements generally are
considered restrictive to the purchase of such stocks, and may limit the
market liquidity for such securities.
4
Item 1B. Unresolved
Staff Comments
None.
Item 2. Properties
The Company's executive offices are located at
445 Park Avenue Center 10th Floor New York, NY 10022 and Vancouver,
British Columbia. The total premises are 2,000 square feet and are
subleased at a monthly rate of $2,500 under a lease agreement which
expires September 30, 2007. The Company shares the space with Amanasu
Technologies Corporation, a reporting company under the Securities
Exchange Act of 1934.In addition, the Company maintains an office at
1-7-10 Motoakasaka Building 9th Floor Motoakasaka Minato-Ku Tokyo Japan.
Item 3. Legal Proceedings
None.
Item 4. Submission of
Matters to a Vote of Security Holders
None.
Part II
Item 5. Market for
Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
The Company's common stock has traded on the
NASDAQ OTC Bulletin Board since October 2002 under the symbol "AMSU".
The table below sets forth the high and low bid prices of the Common
stock of the Company as reported by NASDAQ. The quotations reflect
inter-dealer prices, without retail mark-up, mark-down, or commissions
and may not necessarily represent actual transactions. There is an
absence of an established trading market for the Company's common stock,
as the market is limited, sporadic and highly volatile. The absence of
an active market may have an effect upon the high and low priced as
reported.
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Quarter Ended
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Mar. 31
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Jun. 30
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Sep. 30
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Dec. 31
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Year
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Fiscal Year 2009
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Common stock price per share:
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High
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$
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0.20
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$
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0.20
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$
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0.19
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$
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0.19
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$
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0.20
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Low
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$
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0.20
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$
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0.10
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$
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0.18
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$
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0.10
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$
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0.10
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Fiscal Year 2008
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Common stock price per share
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High
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$
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0.34
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$
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0.35
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$
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0.30
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$
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0.30
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$
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0.35
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Low
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$
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0.25
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$
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0.25
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$
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0.25
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$
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0.20
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$
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0.20
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5
Compensation Plan Information
|
Equity Compensation Plan
Information
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Plan
category
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Number
of securities to be issued upon exercise of outstanding options,
warrants and rights
(a)
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Weighted-average
exercise price of outstanding options, warrants and rights
(b)
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Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column (a))
(c)
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Equity
compensation plans approved by security holders (1)
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-0-
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-0-
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-0-
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Equity
compensation plans not approved by security holders (2)
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-0-
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-0-
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-0-
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Total
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-0-
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-0-
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-0-
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During the quarter ended June 30, 2003, 20,000 shares were allotted to Reraise Corporation, a private Japanese company, at a price of $4.99 per share for total consideration of $99,900. As of the date hereof, the shares have not been issued due to pending documentation needed to affect a new share issuance. As a result, the $99,900 consideration received should be considered a liability, as opposed to a capital contribution, until the shares have been issued. In July 2005, the Company made the repayment of the amount of $ 100,000 to Reraise Corporation thus ending the Company's liability.
Private Placement
During the 2005 fiscal year, the Company issued 1,000,000 shares of common stock, realizing cash proceeds of $3,500,000. These sales were exempt under Regulation S under the Securities Act of 1933, as amended, due to the foreign nationality of the relevant purchasers.
Recent Sales Of Unregistered Securities - Deposits for Common
The most recent sale of unregistered securities was during the
quarter ended June 30, 2003, 20,000
shares were allotted to Reraise Corporation, a private Japanese
company, at a price of $4.99 per
share for total consideration of $99,900. In July 2005, the
Company made the repayment of the amount
of $ 100,000 to Reraise and completed the liability.
Private Placement
During the 2005 fiscal year, the Company issued 1,000,000 shares
of common stock, realizing cash
proceeds of $3,500,000. These sales were exempt under Regulation S
under the Securities Act of 1933,
as amended, due to the foreign nationality of the relevant
purchasers.
Item 6. Selected Financial
Data
Not Applicable.
Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations
Plan Of Operations
Amanasu Environment
Corporation
The Company has 2 main objective's during the fiscal
year ending December 31, 2010.
The Company will continue in its goal to meet the
capital objective of $30,000,000 by the end of 2010.
Currently the company is exploring various potential
investment partners in Japan, as well as China.
The Company cannot predict whether it will be
successful with its objective.
6
Secondly the company will support Amanasu Maritech
Corporation's efforts on entering into marine technologies.
The Company will assist an approximately 24 month
design, and approval process for the product from at least 2
regulatory bodies: the Japanese Government, and the
IMO (International Marine Organization). This approval
process requires capital for additional product
testing, documentation, and documentation translations.
The Company believes that Amanasu Maritech
Corporation's most significant hurdle will be in capital raising.
The Company has already initiated documentation and
application processes, and is now looking for capital to
fund the project. The Company cannot predict whether
it will be successful with its capital raising efforts.
Results of Operations
Total Current Assets for the fiscal year ended December 31, 2009 was $546,567 compared to $703,583 for the same period of 2008. The decrease is due primarily to transfers of funds from Certificate of Deposits to Expense Accounts and use of those funds for operational expenses.
Total Current Liabilities for the fiscal year ended December 31, 2009 was $39,122 compared to $85,425 for the same period of 2008. The decrease is due primarily to transfers of funds from Certificate of Deposits to Expense Accounts and use of those funds for operational expenses.
Sales for the fiscal year ended December 31, 2009 were $ 0. Although the sales of the year ended December 31, 2008 are reported as zero, there are sales of $225,697 included in the calculation of Loss from Discontinued Operations. These are sales of Amanasu Shinwa Corporation, which was sold during 2008.
Gross Profit for the years ended December 31, 2009 and 2008 was $ 0. The amount of gross profit included in the calculation of Loss from Discontinued Operations was $33,931.
Expense for the year ended December 31, 2009 was $ (280,510) compared to $(610,114) for the same period of 2008. The decrease is due primarily to the absence of Amanasu Water Corporation and Amanasu Shinwa Corporation.
Impairment of fixed assets for the fiscal year ended December 31, 2009 was $ 0 compared to $(66,285) for the same period of 2008. There were no fixed assets impaired during 2009.
Impairment of investments for the year ended December 31, 2009 was $ 0 compared to $(79,703) for the same period of 2008. There were no investments impaired during 2009.
Liquidity and Capital
Other than the provision of alternating business
planning costs discussed above, the Company's cash requirements for the
next 12 months are estimated to be $165,000. This amount is comprised of
the following estimate expenditures; $100,000 in annual salaries for
office personnel, office expenses and travel, $30,000 for rent, $20,000
for professional fees, and $15,000 for miscellaneous expenses. The
Company has sufficient cash on hand to support its overhead for the next
12 months but no material commitments for capital at this time other
than as described above. The Company and/or Amanasu Holdings will need
to issue and sell shares to gain capital for operations.
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
7
Item 8. Financial
Statements and Supplementary Data
AMANASU ENVIRONMENT CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
Report of Independent Registered Public Accounting Firm
Board of Directors
Amanasu Environment Corporation
We have audited the accompanying consolidated balance sheets of Amanasu Environment Corporation and Subsidiaries (A Development Stage Company) as of December 31, 2009 and 2008 and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for the years ended December 31, 2009 and 2008. These financial statements are the responsibility of the Company management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted the audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Amanasu Environment Corporation and Subsidiaries (A Development Stage Company) as of December 31, 2009 and 2008 and the results of its operations and its cash flows for the years ended December 31, 2009 and 2008 in conformity with U.S. generally accepted accounting principles.
/s/ Robert G. Jeffrey
ROBERT G. JEFFREY, Certified Public Accountants
June 18, 2010
Wayne, New Jersey
8
AMANASU ENVIRONMENT CORPORATION and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2009 and 2008
|
|
2009
|
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2008
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ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
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Cash
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$
8,467
|
|
$
7,583
|
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Certificates of deposit
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536,000
|
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696,000
|
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Prepaid expense
|
2,100
|
|
-
|
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Total current
assets
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546,567
|
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703,583
|
|
|
|
|
|
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Fixed
Assets:
|
|
|
|
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Machinery and equipment
|
25,859
|
|
25,859
|
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Less,
accumulated depreciation
|
21,560
|
|
19,785
|
|
Net fixed
assets
|
4,299
|
|
6,074
|
|
|
|
|
|
|
Other
Assets:
|
|
|
|
|
Investments
|
-
|
|
92,604
|
|
Employee advances
|
50,000
|
|
50,000
|
|
Due
from affiliate
|
37,944
|
|
38,724
|
|
Total other
assets
|
87,944
|
|
181,328
|
|
|
|
|
|
|
Total
Assets
|
$ 638,810
|
|
$ 890,985
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts payable
|
$
5,524
|
|
$
45,762
|
|
Accrued expenses
|
21,206
|
|
6,775
|
|
Payroll and other taxes payable
|
10,332
|
|
8,547
|
|
Loan from affiliate
|
2,060
|
|
24,341
|
|
Total current
liabilities
|
39,122
|
|
85,425
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity: Common
stock: authorized 100,000,000 shares of
.001 par value; 44,001,816 issued and outstanding
|
44,001
|
|
44,001
|
|
Additional paid in capital
|
|
|
4,634,223
|
|
Accumulated deficit
|
(4,140,655)
|
|
(3,879,122)
|
|
Other comprehensive income
|
|
|
1,130
|
|
Total Amanasu Environment Corporation Stockholders' Equity
|
596,650
|
|
800,232
|
|
Non controlling interest
|
3,038
|
|
5,328
|
|
Total Stockholders' equity
|
599,688
|
|
805,560
|
|
Total
Liabilities and Stockholders' Equity
|
$ 638,810
|
|
$ 890,985
|
The accompanying notes are an integral
part of these
9
AMANASU ENVIRONMENT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND
DEFICIT
ACCUMULATED DURING DEVELOPMENT STAGE
For the Years Ended December 31, 2009 and 2008
|
|
2009
|
|
2008
|
|
|
|
|
January 1, 2009 (Date of Commencement of Development Stage) to December 31,
2009
|
|
Expenses
|
(280,509
|
|
(610,114)
|
|
$ (280,509)
|
|
Impairment
of fixed assets
|
-
|
|
(66,285)
|
|
-
|
|
Impairment
of investments
|
-
|
|
(79,703)
|
|
-
|
|
Operating
loss
|
(280,509)
|
|
(756,102)
|
|
(280,509)
|
|
|
|
|
|
|
|
|
Other
Income:
|
|
|
|
|
|
|
Interest
Income
|
10,120
|
|
28,671
|
|
10,120
|
|
Profit
on sale of subsidiary
|
-
|
|
99,509
|
|
-
|
|
Miscellaneous
revenue
|
-
|
|
1,315
|
|
-
|
|
Total other income
|
10,121
|
|
129,495
|
|
10,120
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
(270,389)
|
|
(626,607)
|
|
(270,389)
|
|
Loss from discontinued operations
|
-
|
|
(30,883)
|
|
-
|
|
Net loss
|
|
|
(657,490)
|
|
(270,389)
|
|
Net loss attributable to noncontrolling
interest
|
8,856
|
|
28,874
|
|
8,856
|
|
Net loss attributable to Amanasu Environment Corporation
|
(261,533)
|
|
(628,616)
|
|
(261,533)
|
|
|
|
|
|
|
|
|
Other
Comprehensive Income Gain on foreign exchange conversion
|
6,232
|
|
28,022
|
|
6,252
|
|
Total
comprehensive loss
|
$(255,301)
|
|
$(600,594)
|
$
|
(255,301)
|
|
|
|
|
|
|
|
|
Net loss per share - basic and diluted
|
$.01
|
|
$(.01)
|
|
|
|
|
|
|
|
|
|
|
Average
number of shares outstanding
|
44,001,816
|
|
44,001,816
|
|
|
The accompanying notes are an integral
part of these
10
AMANASU
ENVIRONMENT CORPORATION and SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For
the Years Ended December 31, 2009 and 2008
|
|
|
|
|
|
|
Additional
|
|
Accumulated
|
|
|
|
|
|
|
|
Common
Stock
|
Paid
In
|
Accumulated
|
Other Comprehensive
|
Noncontrolling
|
|
|
|
|
|
|
Shares
|
Amount
|
Capital
|
Deficit
|
Income
|
Interest
|
Total
|
|
Balance, December
31, 2007
|
44,000,816
|
$44,001
|
$4,634,223
|
$ (3,250,506)
|
$109
|
$34,100
|
$1,461,927
|
|
Net loss for
period
|
-
|
-
|
-
|
(628,616)
|
|
(28,874)
|
(657,490)
|
|
Transfer on sale of subsidiary
|
|
|
|
|
(27,001)
|
(2,700)
|
(29,701)
|
|
Other comprehensive income
|
-
|
-
|
-
|
-
|
28,022
|
2,802
|
30,824
|
|
|
|
|
|
|
|
|
|
|
Balance, December
31, 2008
|
44,000,816
|
44,001
|
$4,634,223
|
(3,879,122)
|
1,130
|
5,328
|
$805,560
|
|
Net loss for
period
|
|
|
|
(261,533)
|
|
(8,856)
|
(270,389)
|
|
Transfer upon sale
of subsidiary
|
|
|
59,429
|
|
6,232
|
623
|
6,855
|
|
Other comprehensive income (loss)
|
|
|
|
|
(7,710)
|
5,943
|
57,662
|
|
Balance, December
31, 2009
|
44,000,816
|
$44,001
|
$4,693,652
|
|
$(348)
|
$3,038
|
$599,688
|
The accompanying notes are an integral
part of these
11
AMANASU ENVIRONMENT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2009 and 2008
|
|
Year 2009
|
|
Year 2008
|
January 1, 2009
(Date of Commencement of Development Stage) To December 31, 2009
|
|
CASH
FLOWS FROM OPERATIONS
|
$(270,389)
|
|
$(657,490)
|
$ (270, 389)
|
|
Net
loss
|
|
|
|
|
|
Adjustments
to reconcile net loss to net cash
|
|
|
|
|
|
consumed by operating activities:
|
|
|
|
|
|
Charges and
credits not involving use of cash:
|
|
|
|
|
Depreciation and amortization
|
1,775
|
|
39,138
|
1,775
|
Write down of machinery
|
|
|
|
-
|
Write down of investments
|
|
|
|
-
|
Write offs of bad debts
|
86,031
|
|
211,594
|
86,031
|
Profit on sale of subsidiary
|
|
|
(99,509)
|
-
|
|
|
|
|
|
|
|
Change
in current assets and liabilities:
|
|
|
|
|
Decrease (increase) in notes and accounts
receivable
|
-
|
|
76,672
|
-
|
Decrease (increase) in prepaid expenses
|
(2,100)
|
|
69,115
|
(2,100)
|
Decrease in raw materials
|
-
|
|
566
|
-
|
Increase accounts payable
|
5,443
|
|
21,242
|
5,443
|
Increase (decrease) in payroll and other taxes payable
|
3,958
|
|
(17,562)
|
3,958
|
Increase (decrease) in accrued expenses
|
14,408
|
|
(84,910)
|
14,408
|
|
Net
Cash Consumed By Operating Activities
|
|
|
(289,074)
|
(160,874)
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
Redemptions of
certificates of deposit
|
|
|
75,000
|
160,000
|
Cash received on sale
of subsidiary
|
-
|
|
148,898
|
-
|
Cash Transferred on sale of subsidiary
|
(270)
|
|
-
|
(270)
|
|
Net
Cash Provided By Investing Activities
|
|
|
223,898
|
159,730
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
Proceeds of shareholder loan
|
|
|
-
|
855
|
|
Advances from
affiliate
|
|
|
23,642
|
1,175
|
|
|
|
|
|
|
|
Net
Cash Provided By Financing Activities
|
|
|
26,642
|
2,030
|
|
|
|
|
|
|
|
Exchange Rate
Effect on Cash
|
|
|
30,824
|
(2)
|
|
Net
Change in Cash Balances
|
884
|
|
(10,710)
|
884
|
|
Balance,
beginning of period
|
7,583
|
|
18,293
|
7,583
|
|
|
|
|
|
|
|
Balance, end of period
|
$8,467
|
|
$7,583
|
8,467
|
The accompanying notes are an integral
part of these
12
AMANASU ENVIRONMENT CORPORATION and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009
1. ORGANIZATION AND BUSINESS
Organization of Company
The Company is a Nevada Corporation, formed February 22, 1999, as
Forte International, Inc. The name was changed to Amanasu Energy
Corporation on March 27, 2001, and to Amanasu Environment Corporation on
October 18, 2002.
Business
On October 19, 2004, the Company invested $100,000 for a 100% interest in a newly formed subsidiary, Amanasu Shinwa Corporation (Shinwa), which is located in Gunma, Japan. On December 16, 2005, a second 100% owned subsidiary was formed, Amanasu Holdings, Inc. (Holdings), which is located in Tokyo, Japan. Holdings made investments in five other Japanese companies during 2005, including an $84,288 investment in Shinwa. The investee companies were involved in a variety of businesses. Shinwa performed fabricating services, principally welding, on stainless steel piping; it has also developed, and continues development of, systems for cleaning the waters of rivers, streams and lakes.
Investments in the five companies mentioned above have either been repaid, written off by the absorption of accumulated losses, or written off because of abandonment. In addition to the investments, advances had been made to two of these companies. These advances had been guaranteed by a company controlled by the Company president. This guarantee was withdrawn during 2009 and write offs were made totaling $86,031.
On September 21, 2006, Soae Corporation, a Japanese electronics manufacturer, invested $426,014 for a 9% interest in Holdings. Also on September 21, 2006, Holdings formed another subsidiary, named Amanasu Water Corporation (Water). Water's plan of operation was to market a new type of water called "Hydrogen-ion water". Hydrogen-ion water is believed to have effective anti-oxidant properties.
On July 1, 2008, the Company sold its equity interest in Shinwa to the president of Shinwa for cash. On the same day, Holdings sold its equity interest in Shinwa to the president of Shinwa for a cash payment of $56,655 and the right to collect a $37,780 debt that was owed to Shinwa by a corporation controlled by the Company president. The Company realized a profit on these transactions of $99,509.
In March 2005, the Company made a $290,000 equity investment in Kogure Susakusho Ltd., (Kogure), a Japanese company which held patents for an industrial incinerator, called the Swing Melter. The original intention was that the Company would receive 20% of the profits on sales of the incinerator. In April 2005, the Company purchased, for $400,000, a demonstration model of the Swing Melter for use in attracting customers. Subsequently, Kogure ceased doing business and the Company exchanged its investment for the Kogure patents. In October 2005, a new company, now named Echo Frontier Corp., was formed by former employees of Kogure to produce the Swing Melter. On December 16, 2005, the
13
1. ORGANIZATION AND BUSINESS (CONT'D) Business (CONT'D)
Company made a $143,187 investment in the new company. In addition to its equity interest in the new company, the Company was to receive patent royalties on sales of the Swing Melter. During 2006, 2007, and 2008, the values of the investment and the demonstration model were reviewed and in each case impairment was found to have occurred, and write downs were made. The remaining balances of these investments were written off in 2008.
In September 2006 a new Japanese subsidiary, Amanasu Water Corporation (Water) was formed by Holdings to package and sell bottled water in the Far East. Water was 100% owned by Holdings. It was sold on April 27, 2009 to a corporation controlled by the Company president.
Basis of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries; the operating results of Shinwa and Water are included up to the dates of their sales. All significant intercompany balances and transactions have been eliminated in consolidation.
The equity interest in each of the five investee companies mentioned above was not more than 50% and the companies were not consolidated in these financial statements; they were accounted for by the equity method of accounting.
2. RESTATEMENTS
On May 20, 2010, the Company determined that a restatement of its financial statements for the year ended December 31, 2009 was necessary to properly report the balance sheet, statement of operations and statement of cash flows as at December 31, 2009 and for the year then ended. A series of mistakes occurred in the preparation of these financial statements. The effects of these restatements on the financial statements previously issued are presented below.
|
Balance Sheet
|
|
Year Ended December 31, 2009
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
Reported
|
Adjustments
|
As Restated
|
|
Accrued Expenses
|
$
31,206
|
$(
10,000
)(A)
|
$
21,206
|
|
Total current liabilities
|
49,122
|
(10,000
)
|
39,122
|
|
Additional paid in capital
|
4,707,483
|
(13,831)(C)
|
4,693,652
|
|
Accumulated deficit
|
(4,228,816)
|
88,161(D)
|
(4,140,665)
|
|
Other comprehensive income
|
75,507
|
(75,855)(E)
|
(348)
|
|
Total Amanasu Environment
|
|
|
|
|
Corporation stockholders'
|
|
_________
|
|
|
equity
|
598,175
|
(1,525)
|
596,650
|
|
Noncontrolling interest
|
(8,487)
|
11,525
(B)
|
3,038
|
|
Total stockholders' equity
|
589,688
|
10,000
|
599,688
|
|
Total Liabilities and Stockholders' Equity
|
$
638,810
|
$
-
|
$
638,810
|
|
Statement of Operations
|
|
Year Ended December 31, 2009
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
Reported
|
Adjustments
|
As Restated
|
|
Expenses
|
$(290,510)
|
$
10,001
(A)
|
$(280,509)
|
|
Operating loss
|
(290,510)
|
10,001
|
(280,509)
|
|
Loss from continuing operations
|
(280,389)
|
10,000
|
(270,389)
|
|
Minority interest in loss
|
8,856
|
(8,856
)(B)
|
-
|
|
Net loss
|
(271,533)
|
1,144
|
(270,389)
|
|
Net loss attributable to noncontrolling
interest
|
-
|
8,856(B)
|
8,856
|
|
Net loss attributable to Amanasu Environment
Corporation
|
(271,533)
|
10,000
|
(261,533)
|
|
Other comprehensive income
|
20,957
|
(
14,725
)(E)
|
6,232
|
|
|
$(
250,576
)
|
$
(4,725
)
|
$(
255,301
)
|
Statement of Operations
January 1, 2009 (Date of Commencement of Development
Stage) to December 31, 2009.
This statement was erroneously omitted from the original filing. It has now been included.
|
Statement of Operations
|
|
Year Ended December 31, 2008
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
Reported
|
Adjustments
|
As Restated
|
|
Sales
|
$225,697
|
$(225,697)(F)
|
$-
|
|
Cost of goods sold
|
(191,766)
|
191,766(F)
|
-
|
|
Gross profit
|
33,931
|
(33,931)(F)
|
-
|
|
Expenses
|
(675,755)
|
65,641(F)
|
(610,114)
|
|
Operating loss
|
(787,812)
|
31,710
|
(756,102)
|
|
Interest income
|
28,682
|
(11)(F)
|
28,671
|
|
Miscellaneous revenue
|
4,502
|
(3,187)(F)
|
1,315
|
|
Interest expense
|
(2,371)
|
2,371(F)
|
-
|
|
Total other income
|
130,322
|
(827)
|
129,495
|
|
Net loss before minority interest
|
(657,490)
|
30,883(F)
|
(626,607)
|
|
Loss from discontinued operations
|
-
|
(30,883)(F)
|
(30,883)
|
|
Minority interest in net loss
|
28,874
|
(28,874)(B)
|
-
|
|
Net loss
|
(628,616)
|
(28,874)
|
(657,490)
|
|
Net loss attributable to noncontrolling
interest
|
-
|
28,874(B)
|
28,874
|
|
Net loss attributable to Amanasu Environment
Corporation
|
(628,616)
|
-
|
(628,616)
|
|
Other comprehensive income
|
30,824
|
(2,802)(E)
|
28,022
|
|
Total comprehensive income
|
$
597,792
|
$
(2,802)
|
$
(600,594
)
|
|
Changes in Stockholders' Equity
|
|
Year Ended December 31, 2008
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
Reported
|
Adjustments
|
As Restated
|
|
Accumulated Deficit:
|
|
|
|
|
Opening balance
|
$(3,298,967)
|
$
48,461(D)
|
$(3,250,506)
|
|
Ending balance
|
$
(3,927,583)
|
$
(48,461)
|
$
(3,879,122)
|
|
Changes in Stockholders' Equity
|
|
Year Ended December 31, 2008
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
Reported
|
Adjustments
|
As Restated
|
|
Comprehensive Income:
|
|
|
|
|
Opening balance
|
$53,427
|
$(53,318)(E)
|
$109
|
|
Provision of 2008
|
30,824
|
(2,802)(E)
|
28,022
|
|
Transfer upon sale of
subsidiary
|
(29,701)
|
2,700(B)
|
(27,001)
|
|
Error in addition
|
29,700
|
(29,700)
|
|
|
Ending balance
|
$
84,250
|
$
(83,120)
|
$
1,130
|
|
Changes in Stockholders' Equity
|
|
Year Ended December 31, 2009
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
Reported
|
Adjustments
|
As Restated
|
|
Additional Paid in Capital:
|
|
|
|
|
Opening balance
|
$4,634,223
|
$-
|
$4,634,223
|
|
Provision of 2009
|
$73,260
|
$
13,831(C)
|
$59,429
|
|
Ending balance
|
$
(4,707,483)
|
$(13,831)
|
$
4,693,652
|
|
Changes in Stockholders' Equity
|
|
Year Ended December 31, 2009
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
Reported
|
Adjustments
|
As Restated
|
|
Accumulated Deficit:
|
|
|
|
|
Opening balance
|
$(3,927,583)
|
$48,461
|
$(3,879,122)
|
|
Net loss for period
|
(271,533)
|
10,000(A)
|
(261,533)
|
|
Error in addition
|
(29,000)
|
29,000
|
-
|
|
Ending balance
|
$
(4,228,116)
|
$
87,461
|
$
(4,140,655)
|
|
|
|
|
|
|
Changes in Stockholders' Equity
|
|
Year Ended December 31, 2009
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
Reported
|
Adjustments
|
As Restated
|
|
Other Comprehensive Income:
|
|
|
|
|
Opening balance
|
$84,250
|
$(83,120)(E)
|
$1,130
|
|
Gain for the period
|
20,957
|
(14,725)(E)
|
6,232
|
|
Transfer on sale of
subsidiary
|
-
|
(7,710)(B)
|
(7,710)
|
|
Correction of addition error
|
(29,700)
|
29,700
|
-
|
|
Ending balance
|
$
75,507
|
$
(75,855)
|
$
(
348)
|
|
|
|
|
|
|
Changes in Stockholders' Equity
|
|
Years Ended December 31, 2009 and 2008
|
|
Noncontrolling
interest
|
|
This statement was erroneously omitted from the original filing. It has now been included.
|
|
Statement of Cash Flows
|
|
Year Ended December 31, 2009
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
Reported
|
Adjustments
|
As Restated
|
|
Net loss
|
$(271,533)
|
$ 1,144
|
$(270,389)
|
|
Profit on sale of subsidiary
|
(8,856)
|
8,856
|
-
|
|
Decrease (increase) in prepaid expense
|
5,568
|
(7,668)
|
(2,100)
|
|
Increase in other payables
|
4,772
|
(4,772)
|
-
|
|
Increase in taxes payable
|
3,957
|
1
|
3,958
|
|
Increase in accounts payable
|
-
|
5,443
|
5,443
|
|
Increase in accrued expenses
|
16,469
|
(2,061)
|
14,408
|
|
Increase in deposits
|
671
|
(671)
|
-
|
|
Cash consumed by operating activities
|
(161,146)
|
272
|
(160,874)
|
|
Cash transferred on sale of subsidiary
|
-
|
(270)
|
(270)
|
|
Net cash provided by investor activities
|
160,000
|
(270)
|
159,730
|
|
Exchange rate effect on cash
|
-
|
(2)
|
(2)
|
|
Net change in cash balance
|
$
884
|
$
-
|
$
884
|
|
Statement of Cash Flows
|
|
Year Ended December 31, 2008
|
|
|
|
|
|
|
|
Previously
|
|
|
|
|
Reported
|
Adjustments
|
As Restated
|
|
Net loss
|
$(628,616)
|
$(28,874)(H)
|
$(657,490)
|
|
Minority interest in losses
|
(28,874)
|
28,874(H)
|
-
|
|
Net cash consumed by operating activities
|
$
(289,074)
|
$
58,461
|
$
289,074
|
|
Statement of Cash Flows
|
|
January 1, 2009 (Date of Commencement of Development Stage) To December
31, 2009
|
|
|
|
This statement was erroneously omitted from the original filing. It has now been included.
|
14
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash
For purposes of the statements of cash flows, the Company considers all short term debt securities purchased with a maturity of three months or less to be cash equivalents.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, miscellaneous receivables, and miscellaneous payables. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.
Fixed Assets
Fixed assets are recorded at cost. Depreciation is computed using the Modified Accelerated Cost Recovery System, with lives of five years for vehicles, seven years for machinery and equipment, ten years for tools, and fifteen years for building improvements. Use of this method has produced results that are not significantly different than the results that would be achieved by use of another acceptable method.
Income Taxes
Deferred income taxes are recorded to reflect the tax consequences or benefits to future years of any temporary differences between the tax bases and the book values of assets and liabilities, and of net operating loss carryforwards.
Recognition Of Revenue
Revenue has been realized from sales of products and services. Recognition occurs upon delivery. In determining recognition, the following criteria are considered: persuasive evidence exists that there is an arrangement between the buyer and seller; delivery has occurred; the sales price is fixed or determinable; and collectability is reasonably assured.
Use Of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimated.
15
AMANASU ENVIRONMENT CORPORATION and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONT'D)
Foreign Currency Translation
Substantial Company assets are located in Japan. These assets and related liabilities are recorded on the books of the Company in the currency of Japan (Yen), which is the functional currency. They are translated into US dollars as follows:
a. Assets and liabilities at the rates of exchange in effect at balance sheet dates;
b. Equity accounts at the exchange rates prevailing at the time of the transactions that established the equity accounts; and
c. Revenues and expenses, at the average rates of exchange for each reporting period.
Other Comprehensive Income
The Company reports as other comprehensive income revenues, expenses, and gains and losses that are not included in the determination of net income. Principal among these has been unrealized gains and losses from exchange rate fluxuation.
Advertising Costs
The Company will expense advertising costs when an advertisement occurs. There were no expenditures for advertising during either of the periods reported.
Segment Reporting
Management treats the operations of the Company as one segment.
Fair Value of Financial Instruments
The carrying amounts of the Company's financial instruments, which include cash and certificates of deposit, approximate their fair values at December 31, 2009.
Net Income (Loss) Per Share
The Company computes net income (loss) per common share in accordance with pronouncements of the Financial Accounting Standards Board (FASB) and SEC Staff Accounting Bulletin No. 98 ("SAB 98"). Under these pronouncements, basic and diluted net income (loss) per common share are computed by dividing the net income (loss) available to common shareholders for each period by the weighted average number of shares of common stock outstanding during the period. Accordingly, the number of weighted average shares outstanding as well as the amount of net income (loss) per share are presented for basic and diluted per share calculations for all periods reflected in the accompanying consolidated financial statements.
Recent Accounting Pronouncements
SUBSEQUENT EVENTS
In May 2009, the FASB issued a pronouncement which established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The Company included the requirements of this guidance in the preparation of the accompanying consolidated financial statements, and concluded its review on the date of issuance of these financial statements.
The Company does not anticipate the adoption of other recently issued accounting pronouncement will have a significant effect on the Company's results of operations, financial position or cash flows.
16
AMANASU ENVIRONMENT CORPORATION and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009
4. RELATED PARTY TRANSACTIONS
The Company president made an advance to Holdings during 2009 of $867. This advance is due on demand and does not bear interest. A corporation controlled by the Company president (Affiliate) made advances to the Company in 2007, 2008 and 2009 that totaled $6,614. Part of the proceeds of the sale of Shinwa (see Note 1) was the right to collect a $43,365 advance that had been made to Affiliate by Shinwa. Thus, at December 31, 2009, Affiliate was indebted to the Company for $35,884. These advances is due on demand and do not bear interest.
Affiliate also made advances to Water of $6,638 during 2007 and $17,702 during 2008. Thus, $24,341 was owed to Affiliate by Water at the date of the sale of Water; these obligations were eliminated by the sale of Water. These advances were due on demand and did not bear interest.
The Company shares office space in Vancouver, New York, and Tokyo with a company that is controlled by the Company president. This arrangement is on a month to month basis. Until 2006, the two companies shared the cost of operating these offices. There has been no cost sharing since 2006, as the other company is largely inactive.
The president of Shinwa and two of his sons received advances from Shinwa totaling $44,504. These advances did not bear interest and were being repaid by monthly installments of $1,259. These advances were eliminated with the sales of the equity interests of Shinwa.
5. INCOME TAXES
The Company has experienced losses since inception. As a result, it has incurred no Federal income tax. The Internal Revenue Code allows net operating losses (NOL's) to be carried forward and applied against future profits for a period of twenty years. The Japanese Tax Code permits such carryforwards for a period of seven years. The total of these NOL's at December 31, 2009 was $1,385,694 in Japan and $2,453,216 in the U.S. The potential benefit of these NOL's has been recognized on the books of the Company, but it has been offset by valuation allowances.
Under provisions of the pronouncements of the FASB, recognition of deferred tax assets is permitted unless it is more likely than not that the assets will not be realized. The Company has recorded noncurrent deferred tax assets as presented below. These deferred tax assets increased during 2009 by $25,946 in the U.S., and by $29,224 in Japan, the result of adding the potential benefit of 2009 losses.
|
|
U.S.
|
JAPAN
|
|
Deferred Tax Assets
|
$
|
433,566
|
$
|
415,708
|
|
Valuation Allowance
|
|
433,566
|
|
415,708
|
|
Balance Recognized
|
$
|
-
|
$
|
-
|
17
5. INCOME TAXES (CONT'D)
If not used, these carryforwards will expire as follows:
|
|
U.S.
|
JAPAN
|
|
2012
|
$
|
-
|
$
|
302,911
|
|
2013
|
$
|
-
|
$
|
454,366
|
|
2014
|
$
|
-
|
$
|
240,805
|
|
2015
|
$
|
-
|
$
|
290,197
|
|
2016
|
$
|
-
|
$
|
97,415
|
|
2017
|
|
-
|
|
-
|
|
2018
|
|
-
|
|
-
|
|
2019
|
|
|
|
2,703
|
|
|
-
|
|
2020
|
|
|
|
51,086
|
|
|
-
|
|
2021
|
|
224,737
|
|
-
|
|
2022
|
|
|
|
73,550
|
|
|
-
|
|
2023
|
|
|
|
110,126
|
|
|
-
|
|
2024
|
|
107,443
|
|
-
|
|
2025
|
|
598,417
|
|
-
|
|
2026
|
|
|
|
332,988
|
|
|
-
|
|
2027
|
|
|
|
553,371
|
|
|
-
|
|
2028
|
|
363,595
|
|
-
|
|
2029
|
|
135,200
|
|
-
|
6. RENTALS UNDER OPERATING LEASES
The Company conducts its operations from leased office facilities in Vancouver, British Columbia, New York City, and Tokyo, under month to month arrangements. During 2009 and 2008, the Company incurred rent expense of $34,944 and $38,731, respectively.
7. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash payments were made for interest during 2008 of $2,371. There was no cash paid for income taxes during those years, and there was no cash paid for interest during 2009. Except for the sale of Water (see Note 4) there were no non-cash financing or investing activity during these years.
8. SUBSEQUENT EVENTS
During the first quarter of 2010 $36,760 was paid to relocate the Tokyo office.
18
Item 9. Changes in
and Disagreements With Accountants on Accounting and Financial
Disclosure
None.
Item 9A.
Controls and Procedures
As of the end of the period covered by this Annual Report on Form
10-K, an evaluation was performed under the
supervision and with the participation of our management,
including the Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures
(as defined in Rules 13a-15 and 15d-15 of the Securities Exchange
Act of 1934 ("Exchange Act"). For purposes
of the foregoing, the term disclosure controls and procedures
means controls and other procedures of an issuer
that are designed to ensure that information required to be
disclosed by the issuer in the reports that it files
or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods
specified in the rules and forms of the Securities and Exchange
Commission ("SEC"). Disclosure controls and
procedures include, without limitation, controls and procedures
designed to ensure that information required
to be disclosed by an issuer in the reports that it files or
submits under the Exchange Act is accumulated and
communicated to the issuer's management, including its principal
executive and principal financial officer,
or persons performing similar functions, and is appropriate to
allow timely decisions regarding required disclosure.
Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that these disclosure
controls and procedures are effective.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f)
of the Exchange Act) during the most recent fiscal quarter that
have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
Management's Annual Report on Internal Control over Financial
Reporting
Management is responsible for establishing and maintaining
adequate internal control over financial reporting,
as such term is defined in Rule 13a-15 under the Exchange Act, as
amended. As of December 31, 2009, under the
supervision and with the participation of management, including
the Company's Chief Executive Officer and Chief
Financial Officer, an evaluation was conducted of the
effectiveness of the Company's internal control over
financial reporting based on the framework in Internal Control -
Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).
Based on that evaluation, management of the
Company, including the chief executive officer and the chief
financial officer, concluded that the Company's
internal control over financial reporting was effective as of
December 31, 2009.
Because of its inherent limitations, a system of internal control
over financial reporting can provide only
reasonable assurance and may not prevent or detect misstatements.
Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies
or procedures may deteriorate.
This Annual Report does not include an attestation report of the
Company's registered public accounting firm
regarding internal controls over financial reporting.
Management's Report was not subject to attestation by
the Company's public accounting firm pursuant to temporary rules
of the SEC that permit the Company to provide
only Management's Report in this Annual Report.
Item 9A (T). Controls and
Procedures
Not Applicable.
Item 9B. Other Information
Not Applicable.
20
Part III
Item 10. Directors,
Executive Officers and Corporate Governance
The directors and executive officers of the Company,
their ages, and the positions
they hold are set forth below. The directors of the
Company hold office until
the next annual meeting of stockholders of the
Company and until their
successors in office are elected and qualified. All
officers serve at the
discretion of the Board of Directors.
Directors / Officers
|
Name
|
Age
|
Since
|
Position
|
|
Atsushi Maki
|
62
|
1999
|
Chairman
& Chief Executive Officert
|
|
Lina Lei
|
49
|
1999
|
Secretary
|
Atsushi Maki has been
the President, Chief Financial Officer, Chairman and
Director of the Company
since November 10, 1999. During the past ten years,
Mr. Maki has been an
independent businessman involved mainly in real
estate development projects in
Japan. In 1995, he served as a Director of the
Japan-Korea Cooperation Committee
along with the former Prime Minister of Japan who
acted as the Chairman of the
committee. In 1999, he was responsible for
establishing the Japan-China
Association, a foundation for fostering better
relations between the two
nations. He served as a director of the association,
along with the Chairman of
Sony Corporation and the Honorary Chairman of Toyota
Motor Corporation.
Lina Lei has been
the Secretary of the Company since November 10,
1999. Ms. Lei was appointed a
director in November 1999 and resigned from the
board on August 21, 2002. From
May 1990 to November 1999, Ms. Lei was employed by
Thunder Company Ltd, Tokyo,
Japan, in various capacities including as its
managing director. Ms. Lei
completed her university studies in Shanghai, China
in 1982, and obtained a
master's degree from Hitotsubashi University in
Tokyo in 1990. During the past
five years, Ms. Lei's work involvement has been
limited to activities of the
Company and that of Amanasu Technologies
Corporation.
Takashi Yamaguchi was a Director of the Company
between October 1, 2001 and May 26,
2004. From 1999 to June 2001, he was president of
Daiichi Building Corporation,
a construction company located in Tokyo, Japan, and
form June 2001 to June 2002,
he acted as a consultant for the same company. From
June 2002 to the present,
Mr. Yamaguchi has provided managerial consulting
services to a variety of
companies located in Japan, and he is an individual
adviser of the Company at
present.
Item 11.
Executive Compensation
The compensation for all directors and officers individually for
services rendered to the
Company for the fiscal years ended December 31,2009, 2008, 2007,
and 2006 respectively:
Compensation Summary
|
|
Annual Compensation
|
|
Name
and Principle Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Other ($)
|
|
Atsushi Maki
(Chairman, President)
|
2009
|
-0-
|
-0-
|
-0-
|
|
|
2008
|
-0-
|
-0-
|
-0-
|
|
|
2007
|
-0-
|
-0-
|
-0-
|
|
|
2006
|
-0-
|
-0-
|
-0-
|
|
|
|
|
|
|
|
Lina Lei
(Secretary, Treasurer)
|
2009
|
-0-
|
-0-
|
-0-
|
|
|
2008
|
-0-
|
-0-
|
-0-
|
|
|
2007
|
-0-
|
-0-
|
-0-
|
|
|
2006
|
-0-
|
-0-
|
20,000
|
21
(2). Ms. Lei received salary compensation in the form of 312,500
shares of common stock of the Company
for the period from November 1999 through fiscal 2001. The shares
were valued at $0.01 per share. Of the
total amount of shares, 24,100 shares were allocated for fiscal
1999, with the balance allocated equally
between 2000 and 2001. In 2003, Ms. Lei received $10,000 in
exchange for consulting services performed for the Company.
The officers of the Company are not full time employees.
Presently, the Company does not have a formal
conflicts of interest policy governing its officers and directors.
In addition, the Company does not have
written employment agreements with its officers. Its officers
intend to devote sufficient business time
and attention to the affairs of the Company to develop the
Company's business in a prudent and business-like
manner. However, the principal officer is engaged in other
businesses related and unrelated to the business
of the Company, and in the future, will engage in other business
ventures. A future arrangement will be
subject to the approval of the Company's board of directors.
Except for the arrangement with Ms. Lei,
the Company and its officers have agreed that the officers of the
Company will not receive any other
compensation until such time as the Company reaches profitability
for a full fiscal quarter. The terms
of any such employment arrangement have not been determined at
this time. Other than as indicated above,
the Company did not have any other form of compensation payable to
its officers or directors, including
any stock option plans, stock appreciation rights, or long term
incentive plan awards for the periods during the above fiscal years.
The Company's directors received no fees for their services in
such capacity; however, they will be reimbursed
for expenses incurred by them in connection with the Company's
business.
Item 12. Security Ownership of
Certain benficial Owners and Management and Related Stockholder Matters
The following table will identify, as of March 15, 2006, the
number and percentage of outstanding shares of
common stock of the Company owned by (i) each person known to the
Company who owns more than five percent of
the outstanding common stock, (ii) each officer and director, and
(iii) and officers and directors of the
Company as a group. The following information is based upon
44,000,816 shares of common stock of the Company
which are issued and outstanding as of March 15, 2006. The address
for each individual below is 445 Park Avenue Center 10th Floor New
York, NY 10022, the address of the Company.
|
Title of Security
|
Name and Address of Beneficial Owner
|
Amount and Nature of Beneficial Ownership
(1)
|
Percent of Class
|
|
Common Stock
|
Amanasu Corporation (2) #902 Ark Towers 1-3-40 Roppongi
Minato-ku Tokyo Japan
|
33,000,000
|
72.6%
|
|
Common Stock
|
Atsushi Maki (3) (4)
|
35,858,500
|
78.80%
|
|
Common Stock
|
Lina Lei (4)
|
35,858,500
|
78.80%
|
|
Common Stock
|
Officers and Directors, as a group (2 persons)
|
35,858,500
|
78.80%
|
(1). "Beneficial ownership" means having or sharing, directly or
indirectly (i) voting power, which includes the
power to vote or to direct the voting, or (ii) investment power,
which includes the power to dispose or to direct
the disposition, of shares of the common stock of an issuer. The
definition of beneficial ownership includes
shares underlying options or warrants to purchase common stock, or
other securities convertible into common
stock, that currently are exercisable or convertible or that will
become exercisable or convertible within
60 days. Unless otherwise indicated, the beneficial owner has sole
voting and investment power.
(2). Mr. Atsushi Maki, the Company's Chairman and President, is
the sole shareholder of Amanasu Corporation
and is deemed the beneficial owner of such shares.
(3). Includes 1,496,000 shares of common stock held individually
by Mr. Maki, 1,000,000 shares of common
stock deposited with a third party (see "Item 12 "Certain
Relationships and Related Transactions"), 33,000,000
shares of common stock held by Amanasu Corporation, and 362,500
shares of common stock held by
Lina Lei. Mr. Maki disclaims beneficial ownership of the shares
held by Lina Lei.
(4). Includes 362,500 shares of common stock held individually by
Ms. Lei, and 35,490,000 shares of
common stock beneficially owned by Atsushi Maki. Ms. Lei disclaims
beneficial ownership
of the shares held by Atsushi Maki.
22
Item 13. Certain
Relationships and Related Transactions, and Director Independence
On December 15, 1999, the Company entered into an agreement with
Amanasu Corporation, a Japanese corporation,
under which Amanasu Corporation agreed to arrange a granting of a
license to the Amanasu Furnace, to the Company.
In exchange for obtaining the license to the Technology, the
Company agreed to issue Amanasu Corporation 13,000,000
shares of its common stock and stock purchase options to acquire
another 20,000,000 shares of common stock at a
price per share of $0.01. In addition under the terms of the
agreement, the Company agreed to issue 1,000,000
shares of common stock to the inventor of the technology, and
200,000 shares of common stock to the executive
director of the inventor's Company. In May 2001, Amanasu
Corporation exercised its option to acquire 20,000,000
shares of common stock of the Company and paid the sum of
$200,000 to the Company. Mr. Atsushi Maki, the
Company's Chairman and President, is the sole shareholder of
Amanasu Corporation.
Mr. Maki received salary compensation in the form of 3,200,000
shares of common stock of the Company for the
period from November 1999 through fiscal 2001. The shares were
valued at $0.01 per share or a total of $32,000.
Ms. Lei received salary compensation in the form of 312,500
shares of common stock of the Company for the period
from November 1999 through fiscal 2001. The shares were valued at
$0.01 per share or a total of $3,125.
On June 8, 2000, the Company entered into an exclusive licensing
agreement with the inventor of the
Amanasu Furnace. Under the licensing agreement, the Company
obtained the worldwide production and marketing
rights of the Technology for 30 years, and the Company is
required to pay the inventor a royalty of 2% on
gross sales of the Technology.
Effective September 30, 2002, the Company entered into a license
agreement with Sanyo Kogyo Kabushiki Gaisha
and Ever Green Planet Corporation, both Japanese companies,
whereby the Company received the worldwide,
exclusive license for a term of 30 years for the production and
marketing of a hot water boiler, which
incinerates waste tires in a safe and non-polluting manner and
extracts heat energy from the incineration
process. As consideration for this acquisition, the Company paid
the licensors $250,000, of which the
Company's President paid $95,000, issued to them 600,000 shares
of common stock, and issued to an affiliate
of the licensors 50,000 shares of common stock. The $95,000 paid
by the Company's President is a contribution
of capital to the Company. The licensors are entitled to receive a
two percent royalty on the gross receipts
from the sale of the products related to the technology.
On June 30, 2003, the Company acquired the exclusive worldwide
rights to produce and market a patented
process that purifies seawater, and removes hazardous pollutants
from wastewater. The term of the license
is 30 years from the date of the agreement. As consideration for
obtaining the license, the Company issued
1,000,000 shares to Etsuro Sakagami, the licensor, and 50,000
shares to a finder. The licensor is entitled
to receive a two percent royalty on the gross receipts from the
sale of the products related to the technology.
On May 14, 2003, the Company entered into a Stock Purchase
Agreement to acquire from Jipangu Inc. ("Jipangu"),
a private, unaffiliated Japanese company, 10,000,000 shares of
Kyoei Reiki Industrial Corporation Ltd ("Kyoei"),
a publicly traded company in Tokyo, Japan. The purchase price for
the shares is $4,993,000. The agreement
called for the payment of 20% of the purchase price on May 31,
2003, and the balance was due on June 25,
2003. On or about May 31, 2003, Atsushi Maki, the Company's
President and controlling shareholder, deposited
with Jipangu 1,000,000 shares of common stock of the Company
owned by Mr. Maki. However, the Stock Purchase
Agreement with Jipangu stated that if Kyoei becomes bankrupt or
is under receivership for bankruptcy before
the remaining amount (80%) is due, Jipangu waives the right to
collect the final amount. On June 25, 2003,
Kyoei was placed under receivership with Tokyo District Court.
The Company believes that it is not required
to pay Jipangu the remaining amount due under the Stock Purchase
Agreement. The deposit of common stock made
to Jipangu by Mr. Maki was made on behalf of the Company. On
December 10, 2003, the Company transferred its
rights under the agreement with Jipangu to Mr. Maki, and Mr. Maki
has released and indemnified the Company
from any obligation under the Jipangu agreement.
23
Item 14. Principal
Accounting Fees and Services
-
Audit Fees during 2009 and 2008 were $25,000.00 and $25,000.00
respectively.
-
Audit Related Fees during 2009 and 2008 were $6,930.00 and
$7,020.00 respectively.
-
Caption Tax Fees during 2009 and 2008 were $690.00 and $675.00
respectively.
-
All Other Fees during 2009 and 2008 were $-0- and $-0-
respectively.
-
N/A
(i) Disclose the audit committee's pre-approval policies and
procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation
S-X. (ii) Disclose the percentage of services described in each of Items
9(e)(2) through 9(e)(4) of Schedule 14A that were approved by the audit
committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation
S-X.
-
Not greater than 50% for 2009 and 2008.
If greater than 50 percent, disclose the percentage of hours expended on
the principal accountant's engagement to audit the registrant's
financial statements for the most recent fiscal year that were
attributed to work performed by persons other than the principal
accountant's full-time, permanent employees.
24
Part IV
Item 15. Exhibits Financial
Statement Schedules
-
Financial Statements and Schedules
The financial statements are set forth under Item 8 of this
Annual Report on Form 10-K. Financial statement schedules have been
omitted
since they are either not required, not applicable, or the
information is otherwise included.
-
Exhibit Listing
-
3(i)(a) Articles of Incorporation of the Company (Incorporated
by reference to the Company's Form 10-SB filed on June 20, 2001).
3(i)(b) Certificate of Amendment to Articles of
Incorporation(Incorporated by reference to the Company's Form 10-SB
filed on June 20, 2001).
3(i)(c) Certificate of Amendment to Articles of Incorporation
(Incorporated by reference to the Company's Form 10-KSB filed on March
31, 2003).
3(ii)(a) Amended and Restated By - Laws of the Company (Incorporated by
reference to the Company's Form 10-SB filed on June 20, 2001).
10(i) Agreement between Family Corporation and the Company dated
December 15, 1999. (Incorporated by reference to the Company's Form
10-SB filed on June 20, 2001).
10(ii) License agreement between the Company and Masaichi Kikuchi dated
June 8, 2000. (Incorporated by reference to the Company's Form 10-SB
filed on June 20,2001).
10(iii) Technical Consulting Agreement the Company and Masaichi Kikuchi
dated June 9, 2001. (Incorporated by reference to the Company's Form
10-SB filed on June 20, 2001).
10(iv) Amendment No. 1 to Licensing Agreement dated July 30, 2001,
however, effective June 8, 2000 by and between the Company and Masaichi
Kikuchi. (Incorporated by reference to the Company's Form 10-SB/A filed
on August 9, 2001).
10(v) License Agreement made as of September 30, 2002 by and between the
Company and Sanyo Kogyo Kabushiki Gaisha and Ever Green Planet
Corporation. (Incorporated by reference to the Company's Form 10-KSB
filed on March 31, 2003).
10(vi) Addendum to License Agreement made as of September 30, 2002 by
and between the Company and Sanyo Kogyo Kabushiki Gaisha and Ever Green
Planet Corporation. (Incorporated by reference to the Company's Form
10-KSB filed on March 31, 2003).
10(vii) Stock Purchase Agreement dated May 14, 2003 by and between the
Company and Jipangu, Inc.
10(viii) Desalination License Agreement made as of May 30, 2003 by and
between the Company Etsuro Sakagami. (Incorporated by reference to the
Company's Form 10-QSB filed on August 13, 2003).
31 Certification under Section 906 of the Sarbanes-Oxley Act.
32 Certification under Section 906 of the Sarbanes-Oxley Act.
Signatures
In accordance with Section 13 or 15(d) of the Securities Exchange
Act of 1934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Amanasu Environment Corporation
/s/ Atsushi Maki
June 25, 2010
Chairman & Chief Executive Officer
Chief Financial Officer
In accordance with the Exchange Act, this report has been signed
below
by the following persons on behalf of the registrant and in the
capacities
and on the dates indicated.
/s/ Atsushi Maki
June 25, 2010
Director
25
