UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended June 30, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE Act of 1934
For the transition period from ___ to ___.
Commission file number: 0-49719
AMANASU ENVIRONMENT CORPORATION
---------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 98-0347883
- -------------------------------------------------------------------------
(State or other jurisdiction of organization) (IRS Employer
Identification No.)
701 Fifth Avenue, 42nd Floor, Seattle, WA 98109
------------------------------------------------------
(Address of principal executive offices)
206-262-8188
------------
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report)
Check whether issuer (1) filed all reports to be filed by Section 13
or 15(d) of the Exchange Act during the past 12 months (or such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ] N/A [X]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 43,000,816 as of August 10, 2004.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
********************************************************************************
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 capital contribution should be considered a liability until such
shares have been issued. This transactions was previously recorded as a capital
transaction in error. The Company will rectify this discrepancy prior to the end
of the next quarter ended September 30, 2004. Please refer to Note 2 of the
notes to financial statements and Item 2. Changes in Securities- Recent Sales of
Unregistered Securities.
********************************************************************************
1
AMANASU ENVIRONMENT CORPORATION
QUARTERLY REPORT ON FORM 10QSB
FOR THE SIX MONTHS ENDED JUNE 30, 2004
TABLE OF CONTENTS
PART 1-FINANCIAL INFORMATION
--------------------------
Item 1: Financial Statements Page #
Balance Sheets as of June 30, 2004 (unaudited)
and December 31, 2003 (audited) 4
Statement of Operations for the six months
ended June 30, 2004, 2004 and 2003 (unaudited) 5
Statement of Operations for the three months
ended June 30, 2004, 2004 and 2003 (unaudited) 6
Statement of Cash Flows for the six months
ended June 30, 2004 and 2003 (unaudited) 7
Notes to Financial Statements (unaudited) 8
Item 2: Management Discussion & Analysis of
Financial Condition and Results of Operations 9
Item 3: Controls and Procedures 16
PART 2-OTHER INFORMATION
----------------------
Item 1: Legal Proceedings 16
Item 2: Changes in Securities 16
Item 3: Defaults upon Senior Securities 17
Item 4: Submission of Matters to Vote of Security holders 17
Item 5: Other Information 17
Item 6: Exhibits and Reports on Form 8-K 17
Signatures 17
2
ITEM 1. FINANCIAL STATEMENTS
GENERAL
The Company's unaudited financial statements for the six months ended June 30,
2004 are included with this Form 10-QSB. The unaudited financial statements have
been prepared in accordance with the instructions to Form 10-QSB 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
months ended June, 2004 are not necessarily indicative of the results that can
be expected for the fiscal year ending December 31, 2004.
3
AMANASU ENVIRONMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
(UNAUDITED)
June 30, December 31,
2004 2003
(Unaudited) (Audited)
ASSETS
- ------
Current Assets:
Cash $ 45,293 $ 92,055
Miscellaneous receivables 1,985 1,585
--------------------------
Total current assets 47,278 93,640
Fixed Assets:
Automotive equipment 25,859 25,859
Less accumulated depreciation 11,784 10,910
--------------------------
Net fixed assets 14,075 14,949
Other Assets:
Rent deposit 5,000 5,000
Licensing agreement, net of accumulated
amortization of $29,183 and $24,088 312,221 322,412
--------------------------
Total other assets 317,221 327,412
--------------------------
Total Assets $ 378,574 $ 436,001
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accrued expenses $ 432 $ -
Stockholder advance 100 100
Deposits for Common Stock 99,900 99,900
--------------------------
Total current liabilities 100,432 100,000
Stockholders' Equity:
Common stock: authorized 100,000,000 shares of
$.001 par value; issued and outstanding 43,000,816 28,801 28,801
Additional paid-in capital 772,239 772,239
Deficit accumulated during the development stage (522,898) (465,039)
--------------------------
Total Stockholders' equity 278,142 336,001
--------------------------
Total Liabilities and Stockholders' Equity $ 378,574 $ 436,001
==========================
These statements should be read in conjunction with the year-end financial statements.
4
AMANASU ENVIRONMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND DEFICIT
ACCUMULATED DURING DEVELOPMENT STAGE
(UNAUDITED)
February 22, 1999
Six Month Periods (Date of Inception)
Ended June 30, To June 30, 2004
2004 2003
Expenses $58,065 $60,179 $526,414
------------------------------------------------------
Operating loss (58,065) (60,179) (526,414)
Other Income -
Interest 206 200 3,516
------------------------------------------------------
Loss accumulated
during development
stage ($57,859) ($59,979) ($522,898)
====================================================
Loss Per Share -
Basic and Diluted $ - $ -
Weighted average number of shares 43,000,816 41,993,091
outstanding ==================================
These statements should be read in conjunction with the year-end financial
statements.
5
AMANASU ENVIRONMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND DEFICIT
ACCUMULATED DURING DEVELOPMENT STAGE
(UNAUDITED)
February 22, 1999
Quarter Month Periods (Date of Inception)
Ended June 30, To June 30, 2004
2004 2003
Expenses $35,407 $34,814 $526,414
------------------------------------------------------
Operating loss (35,407) (34,814) (526,414)
Other Income -
Interest 50 74 3,516
------------------------------------------------------
Loss accumulated
during development
stage ($35,357) ($34,740) ($522,898)
====================================================
Loss Per Share -
Basic and Diluted $ - $ -
Weighted average number of shares 43,000,816 42,034,918
outstanding ==================================
These statements should be read in conjunction with the year-end financial
statements.
6
AMANASU ENVIRONMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Month Periods February 22, 1999
Ended June 30, (Date of Inception)
2004 2003 To June 30 2004
---------------------------------------------------------
CASH FLOWS FROM OPERATIONS:
Net Loss (57,859) (59,979) (522,898)
Changes Not Requiring the Outlay of Cash:
Depreciation and amortization 11,065 10,740 46,063
Services provided for common stock - - 70,000
Changes in Assets and Liabilities:
Increase in accrued expenses 432 - 432
Increase in miscellaneous receivables (400) - (1,985)
---------------------------------------------------------
NET CASH CONSUMED BY
OPERATING ACTIVITIES (46,762) (49,239) (408,388)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of licensing agreement - - (155,000)
Purchase of automobile - - (25,859)
Rent deposit for warehouse lease - - (5,000)
---------------------------------------------------------
NET CASH CONSUMED BY
INVESTING ACTIVITIES - - (185,859)
CASH FLOWS FROM FINANCING ACTIVITIES:
Sales of common stock - - 539,540
Advances received in anticipation of
common stock sales - 99,900 100,000
---------------------------------------------------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES - 99,900 639,540
Net change in cash (46,762) 50,661 45,293
Cash balance, beginning of period 92,055 78,432 -
---------------------------------------------------------
Cash balance, end of period 45,293 129,093 45,294
=========================================================
7
AMANASU ENVIRONMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2004
(UNAUDITED)
1. BASIS OF PRESENTATION
The unaudited interim financial statements of Amanasu Environment Corporation
("the Company") as of June 30, 2004 and for the three and six month periods
ended June 30, 2004 and 2003, have been prepared in accordance with accounting
principles generally accepted in the United State 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 for such
periods. The results of operations for the quarter ended June 30, 2004 are not
necessarily indicative of the results to be expected for the full fiscal year
ending December 31, 2004.
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 for the year ended
December 31, 2003.
2. DEPOSITS FOR COMMON STOCK
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. The Company will
rectify this discrepancy prior to the end of the next quarter ended September
30, 2004.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND OR PLAN OF OPERATION
Cautionary Statement
SAFE HARBOR
This Form 10QSB 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.
See the Company's Annual Report on Form 10-KSB for the period ending December
31, 2003 ("Form 10-KSB") filed on March 20, 2004 for additional statements
concerning operations and future capital requirements. Certain risks exist with
respect to the Company and its business, which risks include the need for
additional capital, and lack of commercial product, among other risks. Readers
are urged to refer to the section entitled "Risk Factors" in the Company's Form
10-KSB for a broader discussion of such risks and uncertainties. In addition to
the risks described therein, the Company has incurred a significant loss with
respect to a transaction which the Company entered into during the second
quarter of 2003 ("Company Overview - Capital Stock of Kyoei Reiki Industrial
Corporation Ltd.").
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, 2003.
COMPANY OVERVIEW
Amanasu Environment Corporation, formerly known as Amanasu Energy Corporation
(the "Company"), is a development stage company. It has acquired the exclusive,
worldwide licensee 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 and testing
9
the technologies for commercial sale. For each such technology, the Company has
acquired proto-type or demonstrational units from the respective licensor of the
technology. The Company also has conducted preliminary testing on these units to
determine the commercial viability of the underlying technology. As a result of
such testing, the Company believes that its technologies are commercially
viable. It is the present intention of the Company not to engage in the actual
production and sale of its products. Rather, it is seeking 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 warranty and post-warranty service and repair. The Company
can not predict whether it will be successful in establishing affiliations with
any such company, or whether it will be able to successfully produce and market
its products. To date the Company has entered into negotiations with various
companies however terms have not been finalized.
PRODUCTS
Amanasu Furnace
- --------------
The Amanasu furnace is a waste disposal system that safely and efficiently
disposes of toxic and hazardous wastes. The system has three general features;
the proprietary combustion burner, the furnace compartment, and the gas
processing compartment.
The proprietary aspect of the Amanasu furnace is the unique combustion system
that generates abnormally high temperatures in excess of 2,000 degrees Celsius
within the furnace compartment. A proprietary formula of low cost metals, such
as powered aluminum and iron, is combined with an air pressurized, hydrocarbon
flame creating a superheated hydrogen combustion flame. A spray nozzle or burner
injects the flame into the furnace compartment where the flame is irradiated
with microwaves to create an ionized flame reaching a heat conversion
temperature of 18,000 C but an actual measured temperature of 1,800-2,300 C
inside the furnace compartment. By contrast, an ordinary burner, neutral flame
reaches temperatures between 800 to 1,600 C. In order to raise the temperature
to the 1,800 to 2,300 degrees C range, large amounts of energy is
required, typically, electricity. The cost of this energy source is expensive
and generally would be cost prohibitive to the operation of a furnace. The
Company's proprietary system reaches these temperatures using approximately 20
gallons of kerosene or light oil per hour for each one ton of daily capacity.
For example, a five ton daily capacity unit requires five times as much
hydrocarbon use or 100 gallons, per hour. The furnace reaches maximum
temperatures within four to five hours after flame ignition. The resultant
effect is a low cost methodology of generating extremely high temperatures
within a confined furnace compartment.
The inner walls of furnace and the combustion burner itself are protected from
the extreme heat by magnetrons and tokomak. Magnetrons are circular magnets
10
that deflect the gaseous ions from the furnace walls to the center of the
furnace. Tokomak is an insulating material that further protects the furnaces
walls from the extreme heat. Waste matter enters a feed dump where a conveyor or
overhead grapple continuously feeds the waste to the furnace compartment. Once
inside the high temperature furnace compartment, the chemical compounds of waste
matter are instantly ionize or disintegrated into gaseous matter and a
magna-like liquid. The magna-like liquid is water cooled to form a dense, inert
carbon matter. The combustion gases resulting from the ionization first receive
a light irradiation process to prevent recombination. A primary high speed water
dousing process follows whereby the gas is cooled to 1,300 C. A series of two to
four reaction tanks, similar to water shower units, further cool the gases, and
sulfuric acid and nitric acid are removed through processing. Finally, the
cooled gas, in the form of oxygen, is filtered and vented from the system as
warm air at below 60 degrees C. The process is unlike conventional waste
incinerators, as it produces no toxins, smoke, ash, or soot. The vented oxygen
has dioxin levels below 0.01 nanogram and dibenzoflan levels below 0.001
nanogram. The inert carbon matter produced in the form of pellets is no more
than 2% of the original mass, and can be used for roadway surfaces or disposed
of in landfills.
The outer housing of the Amanasu furnace is constructed of fabricated steel.
Ancillary equipment, other than as described above, includes feed hoppers, pipe
conveyors, fuel polarization equipment, air polarization equipment, turbo fans,
and an air compression system for the burner. The Company believes the furnace
will have an estimated useful life of approximately 15 years. This estimate is
based upon the results of the unit that operated in Hokkaido, Japan.
Fire Bird Boiler.
- -----------------
The Fire Bird Boiler technology is a patented process which incinerates whole
waste tires in a non polluting manner emitting heat or steam in the incineration
process. The technology provides for combustion efficiency and seeks to minimize
dioxin generation which is generally a by-product of imperfect combustion.
11
The boiler is comprised of a "combustion room" for combusting, a "water jacket"
for protecting and cooling metals in the combustion room, and an "air layer" for
insulating the heat radiation. The combustion chamber is circular, with a power
forced ventilation device which accelerates a more efficient combustion, and hot
steam in introduced at the burn point which increases the oxygen capacity
creating the high burning temperatures in the combustion chamber. During the
incineration process, temperature can reach as high as 1,000 degrees C. In other
boiler or incineration technologies, reaching temperatures of 1,000 degrees C or
more generally takes 4 hours to prevent any internal damage caused by a rapid
rise in temperature. However, due to the heat protection attributes of the water
jacket, the boiler can reach 1,000 degrees C in approximately two minutes
without causing damage to any of the internal components of the boiler. The high
temperatures enable the waste tire to be incinerated with minimal waste, odor,
and gas dioxins. Prior technologies have required that waste tire be pulverized
prior to incineration. This process is designed to accept whole waste tire s
though a conveyor and sensor which manages the condition of the combustion
operation calculating the number of tires delivered the timing of the dumping
along with the condition of water supply temperature, quantities of hot water,
and heater temperature. The unit has a combustion capacity of 100 kilograms per
hour, and can generate 932,000 kcal per hour. The Company believes that the
operating costs of the boiler are minimal due to the fact that the fuel source
is the waste tires.
The weight of the 5 ton/day capacity boiler, which is similar to the inventor's
operating unit, is 1,939 kg, and measures 3,850 mm in length and 1,650 mm in
width. The Company will attempt to re-design the boiler to accept waste products
such as non-toxic bulk waste, in addition to waste tires. The Company believes
that this redesign, if successful, will increase demand of the product due to
its increased use versatility. At this time, the Company does not have projected
prices for a re-designed unit, although the Company will seek to achieve,
through its re-design efforts, a retail price of $100,000 for each ton of
capacity. The Company can not predict whether it will be successful in it
redesign efforts and achieve its desired pricing.
Ring-tube Desalinization Equipment
- ----------------------------------
Large scale desalination is conducted mainly by distillation or reverse osmosis
methodologies. In the past, distillation has been used for large scale
desalination, while reverse osmosis had been used for medium size and small
desalination. However, recent developments in reverse osmosis have increased
output and are now used for large scale desalination. In both methods, the
technologies condense the seawater to make fresh water. However, in their
processes, calcium carbonate and magnesium hydroxide is created in the form of
scales which adheres to the equipment and pipes. The amount of scales increase
with temperature. The condition is more common with distillation process than a
reverse osmosis (RO)
12
process. Scale inhibitors or other cleaning methods are introduced to the
process to control or lessen the amount of scales on the equipment and pipes,
however oftentimes, they are not completely effective, and are generally costly
to use. R O is performed in a single step or two step methods. The single step
method requires more pressure to separate the fresh water from the impurities,
while the two step method use less pressure but more energy to separate the
fresh water. As a result of these pressures, special sealing technologies and
materials for piping and pumps are required to withstand these pressures, which
are generally expensive.
The Ring-Tube technology is used as a filter to purify seawater into drinking
water and also treats sewage and wastewater, by removing pollutants and
bacteria. The technology is different than both methodologies (distillation and
RO) described above. The equipment filters bacteria and other impurities through
its fine rings and comb type filter and reduces the presence of inhibiting
scales on the equipment. The impurities are then destroyed by the high pressure
and temperature in the ring-tube. The Company believes that its technology is
more cost efficient to construct and operate than conventional RO equipment. Its
fresh water recovery rate is 95% compared with less than 40% for a RO method.
Moreover, water produced from the Company's technology retains a certain amount
of salt and minerals and does not required a pH adjustment. RO filtration
removes all minerals and salt, requiring minerals to be added to improve flavor,
and an adjustment to reduce pH levels. The reject brine resulting from RO
filtration is discharged in the ocean creating higher salt concentrations in
such areas, however, the by-product from the Company's technology is
sufficiently condensed allowing it to be sold as a salt product.
PLAN OF OPERATION
The Company's plan of operations for the next 12 months is to initiate, and if
successful, complete the product refinement of the three of the acquired
technologies through joint venture or other affiliations with companies
competitive in each respective product market in order to minimize expenditures.
Product refinement includes product redesign, improvements, or enhancements, and
testing of existing technologies. The product refinement costs of the three
technologies are estimated to be $1,500,000. The Company will be required to
raise funds in order fund the projected refinement costs. The Company is
presently in discussions with an engineering design firm and a furnace company
both located in Japan. The parties are discussing potential arrangements where
the Company would acquire an equity interest in both companies. The terms of
such arrangements have not been finalized at this time. If successful, the
Company would seek to capitalize on the engineering expertise of companies, and
sales, marketing, and warranty repair of the furnace company. The Company cannot
predict whether it will be successful in raising the necessary capital or
whether it will be successful in its current negotiations or other negotiations
with prospective companies. Until such time as it completes the product
refinements of its
13
technologies as discussed herein, the Company does not expect to generate any
revenues from operations.
Given sufficient funds are raised, the Company plans on refining the Amanasu
Furnace first as sales of similar furnaces in Japan have increased over the past
year. The Company will compete in the market by lowering its manufacturing costs
and thus selling price by locating alternate suppliers that are less costly than
currently identified suppliers and attempting to re-design certain components of
the furnace so as to reduce the manufacturing cost per component. To date the
Company has entered into negotiations with various suppliers and affiliations
with companies competitive in each respective product market however terms have
not been finalized at this time. The Company will market the Amanasu furnace
with a two ton capacity which would be expected to retail for approximately
$400,000. The Company can not predict whether it will be successful in it
redesign efforts and achieve its desired pricing.
The Company's cash requirements for the next 12 months other than product
refinement costs are estimated to be $145,000. This amount is comprised of the
following estimate expenditures:
- - $ 43,000 for administrative salaries including salaries paid to current
and projected staff and consultants,
- - $ 81,000 for office expenses including meals and entertainment, travel,
and rental of office in Seattle,
- - $ 21,000 for audit and other professional fees,
The Company is seeking to raise a minimum of $500,000 in the next 12 months
through shareholder advances from Mr. Atsushi Maki, a principle shareholder and
Director, to support its working capital needs as described above. The Company
also plans on raising a further $200,000 through the public or private offering
of its debt or equity securities.
In addition to the above described capital requirements, the Company will be
required to raise additional funds in order for it to commence full scale
production. The amount of such funds is estimated to be $1,500,000. The Company
cannot predict whether it will be successful in raising any capital efforts. If
the Company is unsuccessful in raising at least $500,000, it may not be able to
complete its plan of operations as discussed above.
The Company has no material commitments for capital at this time other than as
described above.
The Company does not expect to acquire new or sell its existing technologies
within the next 12 months.
The Company expects to hire additional employees in its office in Japan to fill
positions relating to sales and marketing of its products.
14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The Company did not generate any revenues for the quarter ended June, 2004 or
for the same period in 2003 except for interest earned in bank deposits in the
amount of $ 206 and $200 respectively.
Total expenses for the six month period ending June 30, 2004 was $ 58,065
compared to $ 60,179 for the same period of 2003. The decrease was due to
reduced professional fees.
Total expenses for the 3 month period ending June 30, 2004 was $ 35,407 compared
to $34,814 for the same period in 2003. The increase was due to an increase in
salaries.
In the event that the Company does not generate revenues in the next 12
months, the Company plans to obtain additional private placements and
loans from the Company's Director, Atsushi Maki in the amount of $500,000
without interest or stated terms of repayment. The Company does anticipate
business opportunities, however those opportunities remain uncertain to
date.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2004, working capital was negative $ 53,154. The negative working
capital is mostly attributed to deposits received for common stock in the amount
of $99,900. This transaction occurred in June 2003 where shares were allotted to
Reraise Corporation but were not issued when consideration of $99,900 was
received. The Company expects to issue these shares before the quarter ended
September 2004. Once the shares are issued, the Company will treat this
transaction as a capital contribution. Please refer to Note 2 of the financial
statements and Item 2. Changes in Securities-Recent Sales of Unregistered
Securities.
The Company incurred an accumulated deficit of $ 522,898. Past recurring losses
and inability to generate sufficient cash flow from normal operations to meet
its obligations as they become due, raises doubt about the Company's ability to
continue as a going concern. The Company's ability to continue in existence is
dependent upon obtaining the necessary $500,000 needed to fund working capital
needs and the further $1,500,000 needed to commence full scale production.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
Item 3. Effectiveness of the registrant's disclosure controls and
procedures
15
EVALUATION OF DISCLOSURE 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 10QSB. 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 QSB 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 QSB, and(ii) the financial statements, and other financial information
included in this quarterly report on Form 10 QSB, 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 QSB.
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.
Part II OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities-Recent Sales of Unregistered Securities
The Company made no amendments or modifications of any instruments
governing or affecting the rights of any security holders during the period
of this report.
The Company issued the following shares which were exempt under Regulation S
under the Securities Act, as the sales were made in offshore transactions to
non-U.S. persons.
June 2003-20,000 shares were allotted for subsequent issuance to Reraise
Corporation, private Japanese company for consideration of $99,900. To date
these shares have not been issued due to pending documentation needed to affect
a new share issuance. As a result, the $99,900 capital contribution is
considered a liability. This transaction was previously recorded as a capital
transaction in error. The Company anticipates on resolving this matter before
the end of the next quarter ended September 30, 2004.
16
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.
(a). Furnish the Exhibits required by Item 601 of Regulation S-B.
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.
(b) Reports on Form 8-K.
On June 1, 2003, the Company filed Form 8-K items 6 and 7 reporting Takashi
Yamaguchi's resignation as one of the Company's directors. Mr. Yamaguchi's
resignation was owing to personal reasons and is not as a result from any
disagreements with the Company on any matter relating to the Company's
operations, policies or practices.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMANASU ENVIRONMENT CORPORATION
Date: August 20, 2004
/s/ Atsushi Maki
____________________________
Atsushi Maki
Chief Executive Officer
Chief Financial Officer
Chief Accounting Officer
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