ITEM 1. FINANCIAL STATEMENTS
AMANASU ENVIRONMENT CORPORATION
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
|
March 31,
2
013
|
|
|
December 31,
2012
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
Cash
|
|
$
|
29,242
|
|
|
$
|
3,600
|
|
|
Certificates of deposit
|
|
|
1,000
|
|
|
|
4,000
|
|
|
Total current assets
|
|
|
30,242
|
|
|
|
7,600
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Assets:
|
|
|
|
|
|
|
|
|
|
Automotive equipment
|
|
|
25,859
|
|
|
|
25,859
|
|
|
Less, accumulated depreciation
|
|
|
25,859
|
|
|
|
25,859
|
|
|
Net fixed assets
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets:
|
|
|
|
|
|
|
|
|
|
Due from shareholder
|
|
|
-
|
|
|
|
40,744
|
|
|
Total other assets
|
|
|
-
|
|
|
|
40,744
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
30,242
|
|
|
$
|
48,344
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDER'S EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
57,944
|
|
|
$
|
62,871
|
|
|
Payroll and other taxes payable
|
|
|
29,368
|
|
|
|
32,223
|
|
|
Due to shareholder
|
|
|
12,866
|
|
|
|
-
|
|
|
Advances from related parties
|
|
|
12,500
|
|
|
|
9,546
|
|
|
Total current liabilities
|
|
|
112,678
|
|
|
|
104,640
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholder's Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock: authorized 100,000,000 shares of $.001 par value; 44,000,816 issued and outstanding
|
|
|
44,001
|
|
|
|
44,001
|
|
|
Additional paid in capital
|
|
|
4,693,652
|
|
|
|
4,693,652
|
|
|
Deficit accumulated during development stage
|
|
|
(944,521
|
)
|
|
|
(917,774
|
)
|
|
Deficit accumulated prior to development stage
|
|
|
(3,879,122
|
)
|
|
|
(3,879,122
|
)
|
|
Accumulated other comprehensive income
|
|
|
3,244
|
|
|
|
2,637
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Amanasu Environment Corporation stockholders’ equity
|
|
|
(82,746
|
)
|
|
|
(56,606
|
)
|
|
Non controlling interest
|
|
|
310
|
|
|
|
310
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholder's equity
|
|
|
(82,436
|
)
|
|
|
(56,296
|
)
|
|
Total Liabilities and Stockholder's Equity
|
|
$
|
30,242
|
|
|
$
|
48,344
|
|
The accompanying notes are an integral part of these financial statements.
AMANASU ENVIRONMENT CORPORATION
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Month Periods Ended March 31,
(Unaudited)
|
|
|
2013
|
|
|
2012
|
|
|
January 1,
2009
(Date of
Commencement of
Development Stage) to
March 31,
2013
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Expenses
|
|
|
(27,135
|
)
|
|
|
(40,006
|
)
|
|
|
(983,502
|
)
|
|
Operating Loss
|
|
|
(27,135
|
)
|
|
|
(40,006
|
)
|
|
|
(983,502
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
|
|
|
388
|
|
|
|
|
|
|
|
14,169
|
|
|
Interest income
|
|
|
-
|
|
|
|
11
|
|
|
|
13,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
|
(26,747
|
)
|
|
|
(39,995
|
)
|
|
|
(956,226
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Attributable to Noncontrolling Interest
|
|
|
-
|
|
|
|
989
|
|
|
|
11,584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Attributable to Amanasu Environment Corporation
|
|
|
(26,747
|
)
|
|
|
(39,006
|
)
|
|
|
(944,642
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on foreign currency conversion
|
|
|
608
|
|
|
|
(774
|
)
|
|
|
9,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Comprehensive Loss
|
|
$
|
(26,139
|
)
|
|
|
(39,780
|
)
|
|
$
|
(934,817
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Per Share - basic and diluted
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
|
44,000,816
|
|
|
|
44,000,816
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
AMANASU ENVIRONMENT CORPORATION
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
For the Three Month Periods Ended March 31,
(Unaudited)
|
|
|
2013
|
|
|
2012
|
|
|
January 1,
2009
(Date of
Commencement of
Development Stage) to
March 31,
2013
|
|
|
CASH FLOWS FROM OPERATIONS:
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(26,747
|
)
|
|
$
|
(39,995
|
)
|
|
$
|
(956,226
|
)
|
|
Adjustments to reconcile net loss to net cash consumed by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges not requiring the outlay of cash:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
-
|
|
|
|
444
|
|
|
|
6,074
|
|
|
Cancellation of debts
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,781
|
)
|
|
Write offs of bad debts
|
|
|
-
|
|
|
|
-
|
|
|
|
138,931
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in accounts payable and accrued expenses
|
|
|
(4,411
|
)
|
|
|
(3,389
|
)
|
|
|
51,696
|
|
|
(Decrease) increase in taxes payable
|
|
|
-
|
|
|
|
(1,654
|
)
|
|
|
27,269
|
|
|
Increase in employee loan
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,900
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Consumed By Operating Activities
|
|
|
(31,158
|
)
|
|
|
(44,594
|
)
|
|
|
(748,937
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash transferred on sale of subsidiary
|
|
|
-
|
|
|
|
-
|
|
|
|
(270
|
)
|
|
Redemptions of certificates of deposit
|
|
|
3,000
|
|
|
|
10,000
|
|
|
|
695,000
|
|
|
Loans to officer
|
|
|
-
|
|
|
|
-
|
|
|
|
(68,635
|
)
|
|
Officer repayments
|
|
|
-
|
|
|
|
40,051
|
|
|
|
53,260
|
|
|
Advances to shareholder
|
|
|
-
|
|
|
|
-
|
|
|
|
(882
|
)
|
|
Repayments of advances to shareholder
|
|
|
-
|
|
|
|
-
|
|
|
|
17,189
|
|
|
Net Cash Provided By Investing Activities
|
|
|
3,000
|
|
|
|
50,051
|
|
|
|
695,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances from shareholder
|
|
|
50,000
|
|
|
|
-
|
|
|
|
50,000
|
|
|
Advance from affiliate
|
|
|
3,800
|
|
|
|
-
|
|
|
|
4,975
|
|
|
Repayments of shareholder loans
|
|
|
-
|
|
|
|
-
|
|
|
|
7,893
|
|
|
Repayment of shareholder advances
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,330
|
)
|
|
Short term loans
|
|
|
-
|
|
|
|
2,593
|
|
|
|
14,212
|
|
|
Net Cash Provided By Financing Activities
|
|
|
53,800
|
|
|
|
2,593
|
|
|
|
74,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on Cash of Exchange Rate Changes
|
|
|
-
|
|
|
|
(67
|
)
|
|
|
184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Change in Cash Balances
|
|
|
25,642
|
|
|
|
7,983
|
|
|
|
21,659
|
|
|
Cash balance, beginning of period
|
|
|
3,600
|
|
|
|
9,193
|
|
|
|
7,583
|
|
|
Cash balance, end of period
|
|
$
|
29,242
|
|
|
$
|
17,176
|
|
|
$
|
29,242
|
|
The accompanying notes are an integral part of these financial statements.
AMANASU ENVIRONMENT CORPORATION
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2013
(Unaudited)
1. BASIS OF PRESENTATION
The unaudited interim consolidated financial statements of Amanasu Environment Corporation ("the Company") as of March 31, 2013 and 2012 and for the three month periods ended March 31, 2013 and 2012, have been prepared in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, such information contains all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results of such periods. The results of operations of the three month period ended March 31, 2013 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2013.
Certain information and disclosures normally included in the notes to financial statements have been condensed or omitted as permitted by the rules and regulations of the Securities and Exchange Commission, although the Company believes the disclosure is adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements of the Company included in the annual report on Form 10-K for the year ended December 31, 2012.
2. SUPPLEMENTAL CASH FLOWS INFORMATION
There were no cash payments for interest or income taxes during either of the periods presented. In addition, there were no non-cash investing or financing activities during these periods.
3. GOING CONCERN UNCERTAINTY
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the financial statements, the Company had an accumulated deficit at March 31, 2013, and a record of continuing losses. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue in operation.
4. EXPENSES
Major items included in expense are presented below.
|
|
|
THREE MONTH PERIODS
|
|
|
|
|
2013
|
|
|
2012
|
|
|
Travel
|
|
$
|
4,193
|
|
|
$
|
13,487
|
|
|
Rent
|
|
|
8,400
|
|
|
|
19,259
|
|
|
Professional Fees
|
|
|
10,000
|
|
|
|
-
|
|
5. RELATED PARTY TRANSACTIONS
During the three month period ended March 31, 2013, the Company received advances of $50,000 and $3,800, respectively, from its parent company and a sister company. At March 31, 2013 the balances are: due to parent company $12,866 and due related parties $12,500.
Additionally, at March 31, 2013 there are included in accrued expenses amounts due to related parties for services by the Company secretary $20,000 and rent for a facility owned by the Company president $8,400.
During the three month period ended March 31, 2012, the Company received payments totaling $38,630 of the amount due from an officer of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Form 10Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "may," "future," "plan" or "planned," "will" or "should," "expected," "anticipates," "draft," "eventually" or "projected." You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors, and other risks identified in a companies' annual report on Form 10-KSB and other filings made by such company with the United States Securities and Exchange Commission. You should consider these factors in evaluating the forward-looking statements included herein, and not place undue reliance on such statements.
The following discussion should be read in conjunction with the Company's Financial Statements, including the Notes thereto, appearing elsewhere in this Quarterly Report and in the Annual Report for the year ended December 31, 2012.
COMPANY OVERVIEW
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.
Current
During the recent years, the Company has embarked on a mission to achieve a 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, 2013.
Aside from capital raising efforts, the Company has been supporting Amanasu Maritek Corporation, in the development and required regulatory approval for the Commercial Cargo Ship Ballast Water Purification System. The Company and Amanasu Maritek Corporation have been working through the approval process of this type of product with the Japanese regulatory bodies. Also, required documentation, and translations have been prepared for additional approval by the main global governing body for marine technologies, IMO the International Marine Organization. So far, the Company has been unable to obtain approval for the Commercial Cargo Ship Ballast Water Purification System. In adhering to the guidelines set by the IMO and the Japanese Ministry of Land, Infrastructure, Transport and Tourism, the Company needs to collaborate with a shipbuilding company to conduct experiments and tests, requiring 2-3 years and a minimum budget of $10,000,000. Due to a lack of resources, the Company is currently seeking partners who are interested in developing such businesses and technologies acquired by Amanasu Maritek Corporation, the Company's subsidiary.
Furthermore, the Company is making plans to enter the reforestation industry in Japan, through Amanasu Maritek Corporation. Following the Great East Japan Earthquake, approximately 1 million houses need to be rebuilt, causing wood to be in high demand. Also, the Japanese Government currently subsidizes new firms entering the reforestation industry, giving the Company an opportunity to enter an industry that is reflective of its vision.
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: 604-790-8799. The Tokyo branch has relocated from 1-7-10 Motoakasaka Minato-Ku Tokyo Japan to 3-7-11 Azabujuubann Minato-Ku Tokyo Japan. Telephone: 03-3451-8870.
PRODUCTS
Currently the Company is supporting Amanasu Maritek Corporation in development and required regulatory approval for a Commercial Cargo Ship Ballast Water Purification System. No licensing agreements with partners have been made at this time, as the Company is also in the process of raising capital for this project. Currently the company is negotiating with its partners for a worldwide manufacturing and sales agreement. The Company cannot guarantee if the negotiations will succeed.
PLAN OF OPERATION
The Company has 3 main objectives during the fiscal year ending December 31, 2013. Firstly, the Company will continue in its goal to meet the capital objective of $30,000,000. 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.
Secondly the Company will continue to support the efforts of Amanasu Maritek Corporation to enter into marine technologies. The Company will assist for another 2 years in the 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 Maritek 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.
Thirdly, the Company is making plans to enter the reforestation industry in Japan, through Amanasu Maritek Coporation. The Company must first reach an agreement with the relevant government agencies in Japan. The Company intends to focus on the prefectures of Miyagi, Iwate and Niigata and begin operations within 12 months. The Company cannot predict whether it will be successful with its objective.
FINANCIAL RESULTS
Total Current Assets as of March 31, 2013 was $30,242, compared to $7,600 as of December 31, 2012.
Total Other Assets as of March 31, 2013 was - nil -, compared to $40,744 as of December 31, 2012.
Interest Income for the quarter ended March 31, 2013 was $ 0, compared to $ 11 for the same period of 2012. The decrease is due to the decreased balance in certificates of deposit.
The net loss of the three month period ended March 31, 2013 was $26,747, compared to $39,995 for the same period of 2012.
LIQUIDITY AND CAPITAL RESOURCES
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. There are no material commitments for capital at this time other than as described above. The Company and/or Amanasu Maritek will need to issue and sell shares to gain capital for operations.
OFF-BALANCE SHEET ARRANAGEMENTS
The Company has no off-balance sheet arrangements.
