UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10Q
| X | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the period ended June 30, 2008
| O | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE Act of 1934
For the transition period from ___ to ___.
Commission file number: 001-31261
AMANASU ENVIRONMENT CORPORATION
(Name of small business issuer as specified in its charter)
|
Nevada
|
|
98-0351508
|
|
(State or other jurisdiction of incorporation)
|
|
(IRS Employer Identification No.)
|
115 East 57th Street, 11th Floor New York, NY 10022
(Address of principal executive offices)
646-274-1274
(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 under a plan confirmed by a court. Yes O No O 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: 44,000,816 as of June 30, 2008.
Transitional Small Business Disclosure Format: Yes O No X
AMANASU ENVIRONMENT CORPORATION
QUARTERLY REPORT ON FORM 10Q
FOR THE THREE MONTHS ENDED June 30, 2008
TABLE OF CONTENTS
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENERAL
The Company's unaudited financial statements for the three and six months ended June 30, 2008
are included with this Form 10Q. The unaudited financial statements have been prepared
in accordance with the instructions to Form 10Q 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 three, and six months
ended June 30, 2008 are not necessarily indicative of the results that can be expected for the
fiscal year ending December 31, 2008.
3
AMANASU ENVIRONMENT CORPORATION
(A Development Stage Company)
BALANCE SHEETS
June 30, 2008 and December 31, 2007
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
Assets:
|
|
June 30, 2008 (Unaudited)
|
|
|
December 31, 2007 (Audited)
|
|
Cash
|
|
$
|
423
|
|
$
|
18,293
|
|
Certificate Of Deposit
|
|
|
721,000
|
|
|
771,000
|
|
Accounts and notes receivables
|
|
|
164,210
|
|
|
76,672
|
|
|
|
|
|
|
|
|
|
Raw Materials
|
|
|
599
|
|
|
566
|
|
Advance to Vendor
|
|
|
94,000
|
|
|
94,000
|
|
Accrued interest receivables
|
|
|
11,405
|
|
|
16,185
|
|
Total
current assets
|
|
|
991,637
|
|
|
976,716
|
|
|
|
|
|
|
|
|
|
Fixed
Assets:
|
|
|
|
|
|
|
|
Machinery and
equipment
|
|
|
272,760
|
|
|
263,681
|
|
Less,
accumulated depreciation
|
|
|
(133,400)
|
|
|
132,512
|
|
Net
fixed assets
|
|
|
139,360
|
|
|
131,169
|
|
|
|
|
|
|
|
|
|
Other
Assets:
|
|
|
|
|
|
|
|
Investments
|
|
|
332,362
|
|
|
290,875
|
|
Prepaid expenses
|
|
|
76,426
|
|
|
72,222
|
|
Security deposits
|
|
|
21,835
|
|
|
21,835
|
|
Miscellaneous receivables
|
|
|
187,236
|
|
|
175,501
|
|
Employee advances
|
|
|
-
|
|
|
44,504
|
|
Total
other assets
|
|
|
617,859
|
|
|
604,937
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
1,748,856
|
|
$
|
1,712,822
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts Payable
|
|
$
|
38,212
|
|
$
|
24,520
|
|
Advances from customers
|
|
|
43,141
|
|
|
-
|
|
Accrued expenses
|
|
|
204,593
|
|
|
91,685
|
|
Payroll and other taxes payable
|
|
|
5,534
|
|
|
26,109
|
|
Stockholders advances
|
|
|
61,223
|
|
|
24,033
|
|
Total
current liabilities
|
|
|
352,703
|
|
|
166,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank Loan Payable
|
|
|
90,622
|
|
|
84,548
|
|
Minority Interest
|
|
|
384,822
|
|
|
387,414
|
|
|
|
|
|
|
|
|
|
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
|
|
|
4,257,039
|
|
|
4,257,039
|
|
Retained deficit
|
|
|
(3,441,391
|
)
|
|
(3,279,954)
|
|
Accumulated other comprehensive income
|
|
|
61,060
|
|
|
53,427
|
|
|
|
|
|
|
|
|
|
Total
stockholders' equity
|
|
|
920,709
|
|
|
1,074,513
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
|
$
|
1,748,856
|
|
$
|
1,712,822
|
4
AMANASU ENVIRONMENT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICITs
(Unaudited)
|
|
|
For The Six Month Periods Ended
|
|
|
|
June 30
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
227,603
|
|
$
|
439,837
|
|
Cost of Goods sold
|
|
|
191,766
|
|
|
336,623
|
|
Gross Profit
|
|
|
35,837
|
|
|
103,214
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
216,094
|
|
|
365,002
|
|
Operating
Loss
|
|
|
(180,257)
|
|
|
(261,788)
|
|
|
|
|
|
|
|
|
|
Other
Income (expense)
|
|
|
|
|
|
|
|
Interest Income
|
|
|
15,409
|
|
|
37,504
|
|
Equity in losses of investee companies
|
|
|
-
|
|
|
(57,089)
|
|
Other income
|
|
|
3,190
|
|
|
4,654
|
|
Interest expense
|
|
|
(2,371)
|
|
|
(529)
|
|
|
|
|
|
|
|
|
|
Loss Before Minority Interest
|
|
|
(164,029)
|
|
|
(277,248)
|
|
|
|
|
|
|
|
|
|
Minority Interest in Loss of Subsidiary
|
|
|
2,592
|
|
|
42,033
|
|
Net Loss
|
|
|
(161,437)
|
|
|
(235,215)
|
|
Other Comprehensive Income (loss):
|
|
|
|
|
|
|
|
Gain on foreign currency conversion
|
|
|
7,633
|
|
|
2,700
|
|
|
|
|
|
|
|
|
|
Total Comprehensive Loss
|
|
$
|
(153,804)
|
|
$
|
(232,515)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss Per Share - basic and diluted
|
|
$
|
-
|
|
$
|
(.01)
|
|
Weighted average number of shares outstanding
|
|
|
44,000,816
|
|
|
44,000,816
|
|
|
|
|
|
|
|
|
5
AMANASU ENVIRONMENT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICITs
(Unaudited)
|
|
|
For The Three Month Periods Ended
|
|
|
|
June 30
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
156,773
|
|
$
|
202,819
|
|
Cost of Goods sold
|
|
|
108,689
|
|
|
167,024
|
|
Gross Profit
|
|
|
48,084
|
|
|
35,795
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
78,704
|
|
|
207,995
|
|
Operating
Loss
|
|
|
(30,620)
|
|
|
(172,200)
|
|
|
|
|
|
|
|
|
|
Other
Income (expense)
|
|
|
|
|
|
|
|
Interest Income
|
|
|
4,787
|
|
|
13,438
|
|
Equity in losses of investee companies
|
|
|
-
|
|
|
(79,058)
|
|
Other income
|
|
|
1,935
|
|
|
1,661
|
|
Interest expense
|
|
|
(1,310)
|
|
|
(263)
|
|
|
|
|
|
|
|
|
|
Loss Before Minority Interest
|
|
|
(25,208)
|
|
|
(236,422)
|
|
|
|
|
|
|
|
|
|
Minority Interest in Loss of Subsidiary
|
|
|
764
|
|
|
39,332
|
|
Net Loss
|
|
|
(24,444)
|
|
|
(197,090)
|
|
Other Comprehensive Income (loss):
|
|
|
|
|
|
|
|
Gain on foreign currency conversion
|
|
|
(7,841)
|
|
|
2,198
|
|
|
|
|
|
|
|
|
|
Total Comprehensive Loss
|
|
$
|
(33,049)
|
|
$
|
(194,892)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss Per Share - basic and diluted
|
|
$
|
-
|
|
$
|
-
|
|
Weighted average number of shares outstanding
|
|
|
44,000,816
|
|
|
44,000,816
|
|
|
|
|
|
|
|
|
6
AMANASU ENVIRONMENT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASHFLOW
(Unaudited)
|
|
|
For The Six Month Periods Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM OPERATIONS:
|
|
|
|
|
|
Net
loss
|
|
$
|
(161,437)
|
|
$
|
(235,215)
|
|
Adjustments to reconcile net loss with net cash consumed by operating activities
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
6,426
|
|
|
50,057
|
Equity in results of investee companies
|
|
|
-
|
|
|
57,089
|
|
Minority interest in subsidiary loss
|
|
|
(2,592)
|
|
|
(42,033)
|
|
|
|
|
|
|
|
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
|
Increase in accounts and notes receivable
|
|
|
(87,538)
|
|
|
(18,234)
|
|
Increase in inventory
|
|
|
(33)
|
|
|
(2,602)
|
|
Increase in accrued expenses
|
|
|
112,908
|
|
|
77,518
|
|
Decrease in accrued interest receivable
|
|
|
4,780
|
|
|
347
|
|
Increase in advances to employees
|
|
|
44,504
|
|
|
-
|
|
Increase (decrease) in payroll and other taxes payable
|
|
|
(20,574)
|
|
|
12,545
|
|
Increase in accounts payable
|
|
|
13,692
|
|
|
10,769
|
|
Decrease
(increase) in prepaid expenses
|
|
|
(4,204)
|
|
|
12,309
|
|
Decrease (Increase) in other receivables
|
|
|
(11,735)
|
|
|
893
|
|
Increase in deposit liability
|
|
|
-
|
|
|
4,512
|
|
Increase in advances from customers
|
|
|
43,141
|
|
|
-
|
|
Net
Cash Consumed By
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
(62,663
|
)
|
|
(
72,045
)
|
|
CASH
FLOWS FROM INVESTING
ACTIVITIES:
|
|
|
|
|
|
|
|
Increases in investments
|
|
|
(47,025)
|
|
|
(84,307)
|
|
Redemption of certificate of deposit
|
|
|
50,000
|
|
|
-
|
|
Reduction of long term loans
|
|
|
-
|
|
|
105,090
|
|
Advance to affiliate
|
|
|
-
|
|
|
12,427
|
|
Net
Cash Provided (Consumed)
|
|
|
|
|
|
|
|
By
Investing Activities
|
|
|
2,975
|
|
|
33,210
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
|
Increase in short term laon
|
|
|
37,190
|
|
|
-
|
|
Increase in bank loan
|
|
|
6,074
|
|
|
-
|
|
Net
Cash Provided By
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
43,264
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Exchange on Cash of Exchange Rate Changes
|
|
|
(1,446)
|
|
|
2,700
|
|
|
|
|
|
|
|
|
|
Net
Change in Cash Balances
|
|
|
(17,870)
|
|
|
(36,135)
|
|
Cash
balance, beginning of period
|
|
|
18,293
|
|
|
102,763
|
|
Cash
balance, end of period
|
|
$
|
423
|
|
$
|
66,628
|
7
AMANASU ENVIRONMENT CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2008
(Unaudited)
1. BASIS OF PRESENTATION
The unaudited interim consolidated financial statements of Amanasu Environment Corporation and Subsidiaries ("the Company") as of June 30, 2008 and for the three and six month periods ended June 30, 2008 and 2007 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 of such periods. The results of operations of the three and six month periods ended June 30, 2008 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2008.
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-KSB for the year ended December 31, 2007.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND OR PLAN OF OPERATION
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, 2007.
COMPANY OVERVIEW
The Company was organized February 22, 1999.
Its operations to date have been limited to obtaining exclusive licensing rights
for technologies, conducting preliminary marketing efforts, and conducting
product testing.
As of August 4th, 2005, Kogure's six proprietary rights (See "Patents" below)
to the license of the technologies and parts in connection with constructing
the rotary kiln and its title w ere transferred to Amanasu Environment Corporation,
and the amount of $290,000 that the Company previously funded to Kogure for
marketing and promotion purposes replaced in as transfer fee. As a result,
the Company possesses the exclusive worldwide right to the product, and can
receive royalties from the sales of the rotary kiln by other companies including MINMETAL.
The Company business is in developing and marketing technologies
in various environmental industries such as waste management, water purification
, heat and energy production, and will continue to expand into other environmental technology markets.
Initially we began by acquiring the exclusive, worldwide license
rights to a high temperature furnace, a hot water boiler, and ring-tube
desalinization methodology. At present, the Company is not engaged in the
commercial sale of any of these licensed technologies. Our operations to date
have been limited to acquiring different 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. The Company has conducted various
internal tests on these units to determine their commercial viability.
With the 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 we can capitalize on the existing
infrastructure of such other companies: product design and engineering,
marketing and sales, and warranty and post-warranty service and repair to name a few.
The Company believes that the marketing efforts to sell any of our products
will be limited until such time as we 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.
The Company's current business plan is the result of recent operational results
during the fiscal year of 2007 and may change due to the amount of risk accompanied by the
nature of its business. The Company's business is run through four subsidiary branches, with each respective
branch focused on a particular environmental market: Amanasu Echo Frontier is involved in waste management technologies;
Amanasu Energy, formerly Felice, is involved in solar panel technology;
Amanasu Shinwa, formerly Shinwa Yosetsu, is involved in water purification; and finally as of September 21st 2006
a newly formed Amanasu Water which is involved
in drinking water. All 4 branches are at various ownership levels managed through a 91% controlled holdings
company, Amanasu Holdings established in December 2005.
Amanasu Shinwa.
Amanasu Shinwa, was formerly a subcontractor for the Company. Originally, Shinwa Yosetsu was
to refine and manufacture the Ring-Tube Desalinization technology held by Amanasu Environment; however, with
lack of commercial viability Shinwa Yosetsu was fully acquired by Amanasu Environment under Amanasu Holdings
and Shinwa Yosetsu's existing operations were put into priority. Amanasu Shinwa is primarily involved in
manufacturing water purification plants for use in pools, fitness centres etc, and seawater to fresh water
purification plants. It also continues its previous steel pipe whelding operations, and retains all its previous customers.
Amanasu Water.
Keeping in line with the Company's goal of creating a cleaner and healthier future, a big part of the earth's future is water.
Water is likely the single most important part of our daily lives. Amanasu Water will be involved in the sale of Amanasu Sui-So-Sui, or Amanasu Hydrogen-ion water.
Hydrogen-ion water is a new product and is said to have effective and efficient anti-oxidant properties.
Even when compared with well know anti-oxidants such as Vitamin C, Vitamin E, Co-enzyme Q10,
is much more effective due to Hydrogen-ion water's unique ability to enter into the cell's mitochondria, the cell's power plant.
There it acts as an anti-oxidant, without interfering with the bodies normal oxidation reactions.
9
PRODUCTS
Amanasu Environment
Amanasu Furnace
The technology, known as the Amanasu Furnace, is a process that disposes of toxic
and hazardous waste, through a proprietary, high temperature combustion system.
The combustion system is a low cost methodology generating extremely high
temperatures in excess of 2,000 Celsius. Waste matter exposed to the extreme
temperature system is instantly decomposed to a gaseous matter and a magna-like
liquid. The process leaves a 1-2% residue of an inert, carbon substance and
oxygen which is vented out of the system. The process produces no toxins, smoke,
ash, or soot.
The Company believed that the prior pricing structure for its furnaces was not competitive,
and was seeking ways to lower its manufacturing costs. The Company was attempting to locate
alternate suppliers that were more cost effective than currently identified ones. At the same
time the Company also attempted to re-design certain components of the furnace so as to reduce
the manufacturing cost per component. The aim was to alter the function of the original furnace,
which managed daily waste to one that managed specific waste (i.e. industrial, and/or medical
waste); however, the Company was confronted with several difficulties and started to reconsider
the alteration. At the same time, the Company was also seeking affiliations with companies
competitive in the furnace market in Japan. Kogure Works, had an established infrastructure,
manufacturing more developed furnaces, comparatively lower in cost. The Company then entered
into an agreement with Kogure Works Co sharing its technologies and marketing resources, while
making use of Kogure's manufacturing expertise. The pricing of the product to be developed was
$100,000/t and eventually reducing the price by 20% was ideal.
As discussed above, the Company expected to alter the function of the Amanasu Furnace in order
to specify its market place; however, there has not been a strong demand for their product due
to the cost of manufacturing a unit. The Company did not reach the successful and complete
refinement and cost reduction as they had planned; therefore, no further production and
investment on this technology has been determined, and there is no further business relation
with Kogure Works Co., Ltd. ("Kogure") on this project. The Company does not know whether the
project will continue into the future; however, the exclusive rights of manufacturing and sales
of the Amanasu Furnace will remain with the Company.
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 Fire Bird Boiler provides combustion efficiency and seeks to minimize
dioxin generation which is generally a by-product of imperfect combustion.
The Company believes that the Fire Bird Boiler is an effective dual purpose technology for
incinerating waste tires and generating heat; however, the Company has recognized that the
supply of waste tires in certain markets, including the United States, has been greatly
reduced due to the effect of recent efforts to recycle waste tires. Thus, the reduction
in the available supply of waste tires in these markets has limited the market potential
of the boiler. As a result, the Company has been confronted with severe marketing difficulties
for Fire Bird at present, and will seek to refine the boiler to accept other forms of waste,
such as hazardous waste.
Even though the Company decided to seek refinement to the boiler to accept other forms of
waste, to be flexible in the market, the Company has determined no further production and/
or investment on this technology. The estimated refinement time was not feasible for the
Company, thus no further business relations will continue with Kogure on this project.
The Company does not know whether the project will continue into the future; however,
the exclusive rights of manufacturing and sales for the Fire Bird Boiler will still remain
with the Company
Ring-tube Desalinization Equipment
The Ring-Tube technology is used as a filter to purify seawater into drinking water
and also treats sewage and waste water, by removing pollutants and bacteria. 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 the
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.
10
Amanasu Water
Amanasu Hydrogen-ion Water (Sui-So-Sui)
Amanasu Water's principle product is a soon to be launched drinking water called "Sui-So-Sui",
or Hydrogen-ion water. Amanasu Hydrogen-ion water will be primarily marketed through fitness clubs,
and professional sports arenas, and pachinko parlors across Japan, with future plans to expand its
operation into North America. Processing and packing will be done by utilizing BMD Co, facilities
in Japan.
Hydrogen ion water is said to have anti-oxidant properties that rival those of which have
been scientifically established anti-oxidants. Vitamin C, Vitamin E, and Co-Enzyme Q10 are
to name a few. Hydrogen-ion water, being water, has the ability to pass straight into the
cell and into the mitochondria (the power plant of the cell). There it prevents disease
promoting oxidation reactions , while leaving the 2% of oxidation reactions needed in daily
life. Vitamin C and other minerals are not able to penetrate the cell wall. Vitamin E, and
Co-enzyme Q10, are able to enter the cell wall, however, remain unable to enter the mitochondria.
Hydrogen-ion water has various applications apart from normal consumption. It can be used as a
hair tonic after showering, an eye rinse, and for other daily uses. Amanasu Hydrogen-ion Water
will be sold in 300 ml pouches starting November 2006.
PLAN OF OPERATION
Amanasu Environment
. The Company's main management focus for the fiscal year ending
December 31, 2008 will be the activities of Amanasu Water and Amanasu Energy.
The Company will utilise it's business network connections to support sales and
marketing activities of both Amanasu Water and Amanasu Energy in Japan.
The Company will also utilise it's business network in order to establish
sales and marketing channels in the United States and South East Asia. For
Amanasu Water in Japan, the Company has provided connections to Pachinko, hotel,
drug store, beauty salon, and restaurant chains. On the North American front,
the Company is currently gathering information on material availability, and
also researching various sales channels: hospital chains, restaurant chains,
hotels, and any companies related to the health and beauty industry are being compiled.
The Company's activities for the next two fiscal quarters will be to directed to
raising the capital necessary to enter the NASDAQ Global market. During the capital
raising process the Company will also be implementing more internal control structures
to better the flow of information, and also restructure management in Japan where most
of the Company's activities are at present.
Management's main objectives in 2008, will be to solidify company wide information systems
to increase transparency of financial information, including implementing XBRL (eXtensible
Business Reporting Language) to increase flow of information from department to department;
and to strengthen the sales force by introducing new sales management and training.
Amanasu Holdings
. As of December 16th, 2005, the Company established ,
Amanasu Holdings Corporation ("Amanasu Holdings"), located at 1-5 Suda-cho,
Chiyoda-ku, Tokyo, as a subsidiary company of Amanasu Environment Corporation
with 100 % control. On September 21st 2006 an electronics manufacturer Soae
invested 50,000,000 Yen ($500,000) into Amanasu holdings, thus holding 9% of
Amanasu holdings. On the same day Amanasu Holdings Corporation has begun to
implement plans to reorganize its subsidiary companies in an effort to concentrate
the entire organization on environmental technologies/methodologies. As explained
briefly above in the Company overview, Amanasu Holdings subsidiary companies
will focus on four main markets within the environmental technology industry:
Energy production, waste management, water purification, and drinking water.
Amanasu Echo Frontier will continue its operations with its waste incineration
technologies (Rotary Kiln, and Swing Melter). Amanasu Shinwa will also continue
its operations in water purification plants for pools, and fitness clubs, as
well as its sea water purification plants operations. Felice, originally
running beauty salons under a membership system, will change its business
plan to become Amanasu Energy Development. Amanasu Energy Development will
be involved in the sale and marketing Sanyo HIT solar panels in Japan. Newly
formed Amanasu Water will be involved in sales of Amanasu Hydrogen-ion water,
a drinking water beginning its sales in Japan on November 2006 with future
plans to expand into North America, and South East Asia. The remaining
subsidiary companies BJSS, Petstyle, and Japan Amanasu Project Support were not
able to be accommodated within the newly organized plans, thus will be open for
sale to any organization that have interest in its respective industry.
Amanasu Holdings
Amanasu Echo Frontier
.Amanasu Holdings and the former employees of Kogure jointly
established Amanasu Echo Frontier Corporation ("Amanasu Echo Frontier"), with a
capital of $240,000 (28,000,000 Yen) of which Amanasu Holdings invested $103,000
(12,000,000 Yen) in December, 2005, with 10 former technicians of Kogure. Amanasu
Echo Frontier mainly produces incinerator, furnace, and medical waste treatment plants
using the 6 proprietary rights purchased from Kogure as stated above at a
location of 1-24-8 Iwagami-cho, Maebashi, Gunma, Japan.
Amanasu Eco Frontier has stopped operations as the fiscal quarter ending September 30,
2007, for corporate restructing. New management and new products will be announced
during the fiscal quarter ending June 30, 2008.
11
Amanasu Shinwa
.Amanasu Holdings invested $84,228 (10,000,000 Yen) on December 16th,
2005 into Amanasu Shinwa for the follow items.
-
(i) The Production of a model water purification plant managed by Amanasu Shinwa.
-
(ii) 5 Water purification units ($85,000 (10,000,000 Yen) per unit) for pools at sports
clubs, which will be produced and distributed in Japan for the next 12 months
Amanasu Shinwa has also started developing a new plant using ozone sterilization technologies ,
and are expecting an increase of sales by the new development. The new plant will be used for
swimming pools, public bathing houses, kitchens and the wide range of other market places are
being prospected.
During the quarter ended June 30, 2007, Amanasu Shinwa launched sales of the ceramic ball with
JA (Japan Agriculture). The ceramic ball has a wide variety of applications in water purifications
, as well as increasing gas mileage in cars. The ceramic ball has also been incorporated into
all of Shinwa's water purification technologies. Each ball is to be sold at a retail price of
between 1250 to 1800 Yen depending on volume.
Amanasu Shinwa and the Company have come to an agreement for Amanasu Shinwa Corporation to buy its own ownership very for original investment of 10,000,000 Yen, or $84,228. This agreement and the transfer of funds should be completed during the quarter ending September 30, 2008.
Amanasu Energy (formerly Felice)
. Amanasu Holdings invested 10,000,000 Yen and loaned
5,000,000 Yen into Felice Ltd;, located at 3-41 Akebono-chou Senju Adachi-ku Tokyo, on
December 16th ,2005. Felice ran beauty salons on a membership system; however, operational
results were unsatisfactory, and along with the reorganization of Amanasu Holdings
(see page 11 for details), Amanasu Environment and Felice decided to change Felice's
business entirely. Felice will direct its focus on the solar panels industry under the
new name Amanasu Energy. Amanasu Energy will begin its operations with promoting the
sales of Sanyo's HIT solar panels in Japan. The sale agreement with Sanyo is a
commission base of 150,000 Yen/unit for sales under 20 units, and 200,000 Yen/unit for sales
of 20 units and above. 50,000 Yen/unit of each sale will be transferred into Amanasu Holdings.
Amanasu Energy's 2 year sales target is 100 units/month and is planning to establish 6 offices
in the Tokyo area. The first Amanasu Energy office was established in Saitama-Ken Saitama-shi
Omiya-ku Sakuragi-cho 4-80-1 AS Building 3F.
During the quarter ended June 30, 2007, Amanasu Energy formed a sales agreement with Kyocera
in order to increase its market scope. Even though Sanyo's HIT product line has an industry
leading power conversion efficiency, the Kyocera Samurai and EconoRoots systems are more
economical. Thus, with the Kyocera product lines, Amanasu Energy can reach customers who
are looking for more economical products in exchange for more roof space.
Amanasu Water
. As of September 21, 2006 Amanasu Holdings invested 50,000,000 Yen
($500,000) establishing Amanasu Water, which will be involved in the sale and marketing
of "Amanasu Sui-So-Sui" or Amanasu Hydrogen-ion water. Amanasu water will subcontract
BMD Co's processing and packing facilities and will begin distribution of Amanasu Hydrogen-ion
water through fitness clubs and professional sports arenas across Japan launching on November
2006. Amanasu Hydrogen-ion water will be sold in 300 ml pouches, and 15 yen from each sale
will be transferred to Amanasu Holdings. From the 15 yen transferred 5 yen will be
transferred to Amanasu Environment. Amanasu Water is currently negotiating distribution
contracts with Maruhan Corp., Meihou Group, Yuko Corp., Yume Corporation, Okuwa Corp,
Kaguchi Yakuhin, Donki Houte and others. A distributing contract with 7-11 on the national
level is also being negotiated.
During the quarter ended June 30, 2007 Amanasu water negotiated with several Pachinko Parlor
groups, and found out that there was not enough space for the product in the stores,
and has decided to make special 150 ml pouches instead of the 300 ml for these stores.
7-11 has expressed great interest in the hydrogen water product, however, requires more
data. The Hydrogen water concept is also very new in Japan, thus Amanasu will be
providing information in hydrogen water development to 7-11 for a 6 month period
in order to solidify 7-11's confidence in the product.
BJSS
. Amanasu Holdings invested 11,000,000 Yen into BJSS Ltd; located at 1-5 Suda-Chou
Chitoda-ku Tokyo on December 16th 2005 and made an additional investment of 9,000,000
Yen on January 26th 2006. This is a temporary employment agency. with offices in Bangladesh
and Japan. BJSS sales are increasing and showing the highest sales record of 100,000,000
Yen by the end of March in 2006. Despite increasing sales, BJSS was still not able to
self sustain, and with reorganization plans no further investment will be made into
BJSS and Amanasu Environment will make BJSS available to any organization whom can
utilize its services.
During the quarter ended June 30, 2007, BJSS sold a divsion of its employment agency in
which Amanasu Holdings received 3,000,000 Yen in compensation. BJSS and Amanasu Holdings
will continue its efforts to sell the business to another entity completely.
Petstyle
. Amanasu Holdings invested 10,000,000 Yen into Petstyle Ltd;,
which runs a pet modeling business, located at #406, Mansion Kyassuru,13-8 Daikanyamacho,
Shibuya-ku Tokyo, on January 11th 2006. The company aimed to establish its business as a
pioneer of the total management for the pets in Japan; however, Pestyle was still not able
to self sustain, and with reorganization plans no further investment will be made into
Petstyle and Amanasu Environment will make BJSS available to any organization whom can
utilize its services.
During the quarter ended June 30, 2007, Petstyle launched a petfood delivery service.
This service will give customers an opportunity to purchase petfood through by phone and
have it delivered to their door at the same price as buying from a retail outlet.
Petstyle has issued 2000 new catalogues and a website to start this project. Catalogues
are issued through newspaper delivery and only houses with pets are targeted. Customers
who purchase 3000 Yen or more in Petfood receive delivery at no charge, or charged 315
Yen with purchases under 3000 Yen. The target sales for the remainder of 2007 with this
project is 4,800,000 Yen
12
Japan Amanasu Project Support
. Amanasu Holdings invested 5,000,000 Yen and loaned 5,000,000
Yen to Japan Amanasu Project Support Ltd;, located at 2-2-5 Nishikanda Chiyoda-ku Tokyo,
on January 26th 2006. This company was established to manage marketing for the incinerator
(Amanasu Eco Frontier) and other Amanasu Holdings' products. It was also planning to
produce a new bathing method, using rocks that have mineral elements, which radiate
far infrared rays via heat. The heat then spreads out through heated rocks in a closed
room similar to the sauna concept; however, due to unsatisfactory operational results
and the reorganization of Amanasu Holdings, Japan Amanasu Project Support can no longer
be accommodated for in the new business plan and will be made available for sale to any
organization whom can utilize its services.
In order to reduce expenses, Project Support has put a temporary stop to its operations,
for the 3rd quarter ending September 31, 2007.
"Patents"
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Rotary kiln (Patent number 3564012, as of July 2nd, 2005);
2. Rotary kiln-Taiwan (Patent number 131102, as of August 21st, 2001);
3. Gas lark (petition number 2000-358861, patent pending);
4. Ash melting furnace and incinerating system (petition number 2002-325560, patent pending);
5. The interior wall of the kiln (petition number 2004-208198, patent pending); and
6. The method of cooling down the kiln (petition number 2004-208199, patent pending)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10Q contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. All statements, other than statements
of historical fact, including statements regarding industry prospects and future results of
operations or financial position, made in this Quarterly Report on Form 10Q are forward
looking. We use words such as "anticipate", "believe", "expect", "intend", "estimate",
(and the negative of any of these terms), "future" and similar expressions to help identify
forward-looking statements. These forward-looking statements are subject to business and
economic risk and reflect management's current expectations, and involve subjects that
are inherently uncertain and difficult to predict. Our actual results could differ
materially. We will not necessarily update information if any forward-looking statement
later turns out to be inaccurate.
Three months ended June 30, 2008
The Company's sales for the three months ended June 30, 2008 were $156,773 compared to
$202,819 for the same period in 2007. The decrease in sales is due to reduced sales from
Amanasu Water Corporation, delayed management payments from Amanasu Shinwa Corporation,
and the halt of operations of Amanasu Eco Frontier Corporation.
Interest income for the three months ended June 30, 2008 was $4,787 compared to $13,438
for the same period in 2007. This decrease is due to the reduced investment in Certificate
of Deposits and reduced interest rates.
Minority interest in loss of subsidiary for the three months ended June 30, 2008 were
$764 compared to 39,332 for the same period in 2007. The decrease is principally due to the limited operations and sales in the quarter ending June 30, 2008.
Total expenses for the three months period ended June 30, 2008 was $78,704 compared to
$207,995 for the same period of 2007. The decrease was due to the absense attorney's fees
to settle a lawsuit in the second fiscal quarter ended June 30, 2007, and reduced operations of Amanasu Energy Corpration, and and halt of operations Amanasu Eco Frontier.
Cost of goods sold for the three months period ended June 30, 2008 was $108,689 compared
to $167,024 for the same period of 2007. The decrease was due principally to the
decreased production of water products from Amanasu Water Corporation.
LIQUIDITY AND CAPITAL RESOURCES
In the three months ended June 30, 2008 cash used in operating activities was $62,663
compared to $72,045 for the same period in 2007. The decrease was due principally to an
increase in accrued expenses.
Total current assets as of June 30, 2008 was $991,637 compared to $976,716 as of
December 31, 2007. This increase is due principly to an increase in accounts receivables.
Other than the provision of alternating business planning costs discussed above under
Plan of operation, the Company estimates that its operating overhead, which includes
general and administrative charges, will be approximately $1,120,000 for the next 12
months. This amount is comprised of the following estimated costs; $375,000 in annual
salaries for office personnel and consultants, $375,000 for rent, $150,000 for
professional fees and $220,000 for miscellaneous expenses. The Company believes that
the amount of liquidity and capital resources will be sufficient for the operation of
the Company for the next 12 months. 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 ARRANGEMENTS
The Company has no off-balance sheet arrangements.
13
Item 3: EFFECTIVENESS OF THE REGISTRANT'S DICLOSURE CONTROLS AND PROCEDURES
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 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.
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
-
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
-
-
(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.
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Exhibit 32 - Certification Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002.
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(b) Reports on Form 8-K.
-
None
14
Signatures
In accordance with the requirements of the Exchange Act,
the registrant caused this report to be signed on its behalf
by the undersigned, there unto duly authorized.
AMANASU ENVIRONMENT CORPORATION
Date: September 11, 2008
/s/ Atsushi Maki
Atsushi Maki
Chief Executive Officer
Chief Financial Officer
Chief Accounting Officer
15