Amanasu Environment (AMSU) 10-Q 2010 Q2 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the period ended June 30, 2010

[     ] 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)

Nevada	98-0347883
(State of other jurisdiction of incorporation or organization)	(I.R.S. Eployer Identification No.)

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:

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.

Yes X No

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

Large accelerated filer		Accelerated filer
Non-accelerated filer	(Do not check if a smaller reporting company)	Smaller reporting company	X

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No X

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.

Yes No

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 August 23, 2010.

AMANASU ENVIRONMENT CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 2010
TABLE OF CONTENTS

Reference	Section Name	Page
PART I
Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Conditions and Results of Operations	7
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9
Item 4.	Controls and Procedures	9
Item 4T.	Controls and Procedures	9
PART II
Item 1.	Legal Proceedings	10
Item 1A.	Risk Factors	10
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	10
Item 3.	Default Upon Senior Securities	10
Item 4.	Submission Of Matters To A Vote Of Security Holders	10
Item 5.	Other Information	10
Item 6.	Exhibits	10
Signatures	Signatures	11

Part I

Item 1. Financial Statements

The Company's unaudited consolidated financial statements for the three month and six month periods ended June 30, 2010 are included with this Form 10-Q. The unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the six month period ended June 30, 2010 are not necessarily indicative of the results that can be expected for

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AMANASU ENVIRONMENT CORPORATION and SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	June 30, 2010	December 31, 2009
	(Unaudited)	(Audited)
ASSETS
Current Assets:
Cash	$        46,961	$        8,467
Certificates of deposit	402,000	536,000
Prepaid expense	-	2,100
Total current assets	448,961	546,567
Fixed Assets:
Machinery and equipment	25,859	25,859
Less, accumulated depreciation	22,447	21,560
Net fixed assets	3,412	4,299
Other Assets:
Advances to employees	55,000	50,000
Due from affiliate	39,476	37,944
Total other assets	94,476	87,944
Total Assets	$   546,849	$   638,810
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$       5,038	$       4,843
Accrued expenses	38,500	31,206
Taxes payable	10,749	10,332
Shareholder advance	902	867
Loan from affiliate	1,241	1,193
Deposits	709	681
Total current liabilities	57,139	49,122
Stockholders' 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	4,707,483	4,707,483
Accumulated deficit	(4,329,605)	(4,228,816)
Accumulated other comprehensive income	76,318	75,507
	_________	________
Equity attributable to Amanasu Environment
Corporation	498,197	598,175
Noncontrolling interest	(8,487)	(8,487)
Net equity	489,710	589,688
Total Liabilities and Stockholders' Equity	$546,849	$638,810

The accompanying notes are an integral part of these financial statements.

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AMANASU ENVIRONMENT CORPORATION and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Six Month Periods Ended June 30, 2010 and 2009

(Unaudited)

	2010	2009
Revenue	$ -	$ -
Expenses	(102,679)	(83,204)
Operating Loss	(102,679)	(83,204)
Other Income (Expense):
Interest income	1,890	4,170
Other income	-	70,053
Net Loss	(100,789)	(8,981)
Net Loss Attributable to Noncontrolling Interest	-	(5,979)
Net Loss Attributable to Amanasu Environment Corporation	(100,789)	(14,960)
Other Comprehensive Loss:
Gain (loss) on foreign currency conversion	811	26,808
Total Comprehensive Loss:	$(99,978)	$11,848
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.

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AMANASU ENVIRONMENT CORPORATION and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Month Periods Ended June 30, 2010 and 2009

(Unaudited)

	2010	2009
Revenue	$            -	$            -
Expenses	(31,985)	(30,414)
Operating Loss	(31,985)	(30,414)
Other Income (Expense):
Interest income	374	1,014
Other income	-	70,053
Net Income (loss)	(31,611)	40,653
Net Loss Attributable to Noncontrolling Interest	-	(5,984)
Net Loss Attributable to Amanasu Environment Corporation	(31,611)	(34,669)
Other Comprehensive Loss:
Gain (loss) on foreign currency conversion	813	30,565
Total Comprehensive Loss:	$(30,798)	$65,234
Net Loss Per Share - basic and diluted	$         -	$        -
Weighted average number of shares outstanding

The accompanying notes are an integral part of these financial statements

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AMANASU ENVIRONMENT CORPORATION and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Month Periods Ended June 30, 2010 and 2009

(Unaudited)

	2010	2009
CASH FLOWS FROM OPERATIONS:
Net Loss	$(100,789)	$(14,960)
Adjustments to reconcile net loss to net cash consumed by operating
activities:
Charges not requiring the outlay of cash:
Depreciation and amortization	887	888
Noncontrolling interest in subsidiary loss	-	5,979
Gain on sale of subsidiary	-	(70,053)
Changes in assets and liabilities:
Increases in accrued expenses	7,294	28,883
Increase in accounts payable	-	1,653
Decrease in taxes payable	-	(3,864)
Decrease (increase) in prepaid expenses	2,100	(161)
Decrease in short term loan	-	(1,211)
Increase in other liabilities	-	1,495
Net Cash Consumed By Operating Activities	(90,508)	(51,351)
CASH FLOWS FROM INVESTING ACTIVITIES:
Redemptions of certificates of deposit	134,000	85,000
Increase in advances to employees	(5,000)	-
Increase in miscellaneous receivables	-	(27,671)
Cash transferee on sale of subsidiary	-	(175)
Net Cash Provided By Investing Activities	129,000	62,254
CASH FLOWS FROM FINANCING ACTIVITIES:	-	-
Effect on Cash of Exchange Rate Changes	2	26,808
Net Change in Cash Balances	38,494	37,711
Cash balance, beginning of period	8,467	7,583
Cash balance, end of period	$46,961	$45,294

The accompanying notes are an integral part of these financial statements.

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AMANASU ENVIRONMENT CORPORATION and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2010

(Unaudited)

1.  BASIS OF PRESENTATION

The unaudited interim consolidated financial statements of Amanasu Environment Corporation and Subsidiaries ("the Company") as of June 30, 2010 and 2009 and for the three and six month periods ended June 30, 2010 and 2009, 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 only of normal recurring adjustments, necessary for a fair presentation of the results of such periods.  The results of operation of the six month period ended June 30, 2010 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2010.

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, 2009.

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

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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 ot her 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, 2009.

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 c apitalize 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.

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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 begin_of_the_skype_highlighting 212-836-4727 end_of_the_skype_highlighting. 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.

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.

PRODUCTS

Currently the Company is supporting Amanasu Maritech 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 world wide manufacturing and sales agreement. The Company cannot guarantee if the negotiations will succeed, or

PLAN OF OPERATION

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. The Company

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.

FINANCIAL RESULTS

Total Current Assets for the quarter ended June 30, 2010 was $448,961 compared to $546,567 for the fiscal period ending December 31, 2009. The decrease is due primarily to the transfer of funds from certificate of deposits to expense accounts, and the subsequent use of those funds for operational expenses.

Total Other Assets for the quarter ended June 30, 2010 was $94,476 compared to $87,944 for the fiscal period ending December 31, 2009. The increase is due primarily to increase in advances to employees.

Interest Income for the quarter ended June 30, 2010 was $ 1,890 compared to $4,170 for the same period of 2009. The decrease is due primarily to the decrease in interest rates during 2009 as well as the decreased balance in certificate of deposits.

Net Cash Consumed By Operating Activities for the quarter ended June 30, 2010 was $(90,508) compared to $(51,315) for the same period of 2009. The decrease is due primarily to the absense of Amanasu Water Corporation, of which ownership was transferred to Amanasu Techno Holdings with an agreement executed on April 27th, 2009.

8

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. 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.

OFF-BALANCE SHEET ARRANAGEMENTS

The Company has no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

Item 4. Controls and Procedures

The Company carried out an evaluation of the effectiveness of the Company's disclosure controls and procedures (as defined by Rule 13a-15(e) under the Securities Exchange Act of 1934) under the supervision and with the participation of the Company's Chief Executive Officer and Chief Financial Officer as of a date within 90 days of the filings date of Form 10Q. Based on and as of the date of such evaluation, the aforementioned officers have concluded that the Company's disclosure controls and procedures have functioned effectively so as to provide information necessary whether:

(i) this quarterly report on Form 10 Q contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report on Form 10 Q, and (ii) the financial statements, and other financial information included in this quarterly report on Form 10 Q, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report on Form 10 Q.

Item 4T. Controls and Procedures

CHANGES IN INTERNAL CONTROLS

There have been no significant changes in the Company's internal controls or in other factors since the date of the Chief Executive Officer's, Chief Financial Officer's and Chief Accounting Officer's evaluation that could significantly affect these internal controls, including any corrective actions with regards to significant deficiencies and material weaknesses.

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Part II

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

Item 6. Exhibits

Furnish the Exhibits required by Item 601 of Regulation S-K (229.407 of this chapter).

Exhibit 31 - Certification Pursuant To Section 302 Of The Sarbanes-Oxley Act Of 2002.

Exhibit 32 - Certification Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused his report to be signed on its behalf by the undersigned thereunto duly authorized.

Amanasu Techno Holdings Corporation

Date: August 23, 2010

/s/ Atsushi Maki

Atsushi Maki
Chief Executive Officer
Chief Financial Officer
Chief Accounting Officer

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