AMANASU ENVIRONMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash
|
$
5,009
|
$
5,433
|
|
Total
current assets
|
5,009
|
5,433
|
|
|
|
|
|
Total
Assets
|
$
5,009
|
$
5,433
|
|
|
|
|
|
LIABILITIES &
STOCKHOLDERS' DEFICIT
|
|
|
|
Current
Liabilities:
|
|
|
|
Accounts payable
and accrued expenses
|
$
6,526
|
$
6,385
|
|
Accrued expenses
– related parties
|
64,086
|
78,593
|
|
Accrued interest
– stockholders
|
44,318
|
36,067
|
|
Taxes
payable
|
30,453
|
29,933
|
|
Loans from
stockholders
|
343,870
|
278,255
|
|
Due to related
parties
|
2,341
|
17,238
|
|
Total
current liabilities
|
491,594
|
446,471
|
|
|
|
|
|
Stockholders'
Deficit:
|
|
|
|
|
|
|
|
Common Stock:
authorized 100,000,000 shares of $.001 par value;44,100,816 shares
issued and outstanding
|
44,101
|
44,101
|
|
Additional paid in
capital
|
4,793,552
|
4,793,552
|
|
Accumulated
deficit
|
(5,328,786
)
|
(5,283,423
)
|
|
Accumulated other
comprehensive income
|
4,834
|
5,001
|
|
Total
Amanasu Environment Corporation stockholders' deficit
|
(486,299
)
|
(440,769
)
|
|
Non-controlling
interest in subsidiary
|
(286
)
|
(269
)
|
|
Total
stockholders’ deficit
|
(486,585
)
|
(441,038
)
|
|
|
|
|
|
Total
Liabilities and Stockholders' Deficit
|
$
5,009
|
$
5,433
|
The
accompanying notes are an integral part of these consolidated
financial statements.
AMANASU ENVIRONMENT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
|
|
Three
Months
Ended
June 30,
|
Six
Months
Ended
June 30,
|
|
|
|
|
|
|
|
Revenue
|
$
-
|
$
-
|
$
-
|
$
-
|
|
Cost of
revenue
|
-
|
-
|
-
|
-
|
|
Gross
profit
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
General and
administrative expenses
|
20,363
|
18,464
|
37,112
|
71,132
|
|
Total operating
expenses
|
20,363
|
18,464
|
37,112
|
71,132
|
|
|
|
|
|
|
|
Operating
loss
|
(20,363
)
|
(18,464
)
|
(37,112
)
|
(71,132
)
|
|
|
|
|
|
|
|
Other
Expense:
|
|
|
|
|
Interest expense -
stockholders
|
(4,350
)
|
(3,991
)
|
(8,251
)
|
(6,614
)
|
|
|
|
|
|
|
|
Loss before income
taxes
|
(24,713
)
|
(22,455
)
|
(45,363
)
|
(77,746
)
|
|
|
|
|
|
|
|
Income
taxes
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
(24,713
)
|
(22,455
)
|
(45,363
)
|
(77,746
)
|
|
|
|
|
|
|
|
Net loss
attributable to non-controlling interest
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
Net loss
attributable to Amanasu Environment
Corporation
Stockholders
|
(24,713
)
|
(22,455
)
|
(45,363
)
|
(77,746
)
|
|
|
|
|
|
|
|
Other comprehensive
income (loss):
|
|
|
|
|
Foreign currency
translation adjustment
|
458
|
95
|
(184
)
|
(421
)
|
|
|
|
|
|
|
|
Total comprehensive
loss
|
(24,255
)
|
(22,360
)
|
(45,547
)
|
(78,167
)
|
|
Comprehensive
income (loss) attributable to
non-controlling
interest
|
41
|
8
|
(17
)
|
(38
)
|
|
|
|
|
|
|
|
Comprehensive loss
attributable to Amanasu
Environment
Corporation Stockholders
|
$
(24,296
)
|
$
(22,368
))
|
$
(45,530
)
|
$
(78,129
)
|
|
|
|
|
|
|
|
Net loss per share
– basic and diluted
|
$
(0.00
)
|
$
(0.00
)
|
$
(0.00
)
|
$
(0.00
)
|
|
Weighted average
number of shares outstanding – basic and diluted
|
44,100,816
|
44,100,816
|
44,100,816
|
44,100,816
|
The
accompanying notes are an integral part of these consolidated
financial statements.
AMANASU ENVIRONMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Six Months
Ended
June 30,
2018
|
Six Months
Ended
June 30,
2017
|
|
CASH
FLOWS FROM OPERATIONS
|
|
|
|
Net
loss
|
$
(45,363
)
|
$
(77,746
)
|
|
|
|
|
|
Changes
in assets and liabilities:
|
|
|
|
Accounts payable
and accrued expenses
|
63
|
696
)
|
|
Accrued expenses
– related parties
|
(14,633
)
|
20,750
|
|
Accrued interest -
stockholders
|
8,251
)
|
6,614
)
|
|
Net
cash used in operating activities
|
(51,682
)
|
(49,686
)
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
Advances from
stockholders, net of repayment
|
65,615
|
30,450
|
|
Due to related
parties
|
(14,357
)
|
18,327
|
|
Net
Cash Provided by Financing Activities
|
51,258
|
48,777
|
|
|
|
|
|
Net Change In
Cash
|
(424
)
|
(909
)
|
|
|
|
|
|
Cash balance,
beginning of period
|
5,433
|
6,038
|
|
|
|
|
|
Cash balance, end
of period
|
$
5,009
|
$
5,129
|
Supplemental disclosures of cash flow information:
|
Cash paid for
interest
|
$
-
|
$
-
|
|
Cash paid for
income taxes
|
$
-
|
$
-
|
The
accompanying notes are an integral part of these consolidated
financial statements.
AMANASU ENVIRONMENTAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)
1. BASIS OF PRESENTATION
The
unaudited consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States for interim financial information and the rules and
regulations of the Securities and Exchange Commission. Accordingly,
they do not include all of the information and footnotes required
by GAAP for complete financial statements. In the opinion of
management, the accompanying unaudited financial statements contain
all adjustments (consisting of normal recurring accruals) necessary
to present fairly the financial position of the Company as of June
30, 2018, the results of operations for the three and six months
ended June 30, 2018 and 2017, and cash flows for the six months
ended June 30, 2018 and 2017. These results are not
necessarily indicative of the results to be expected for the full
year or any other period. The December 31, 2017 balance sheet
included herein was derived from the audited financial statements
included in the Company’s Annual Report on Form 10-K as of
that date. Accordingly, the financial statements
included herein should be reviewed in conjunction with the
financial statements and notes thereto included in the
Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2017, as filed with the Securities and Exchange
Commission (“SEC”) on April 10, 2018.
2. GOING CONCERN
The
accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As shown in the
financial statements, the Company had a working capital deficiency
of $486,585 and an accumulated deficit of $5,328,786 at June 30,
2018, and a record of continuing losses. These factors, among
others, raise substantial doubt about the ability of the Company to
continue as a going concern. The financial statements do not
include adjustments relating to the recoverability of assets and
classification of liabilities that might be necessary should the
Company be unable to continue in operation.
The
Company's present plans, the realization of which cannot be
assured, to overcome these difficulties include, but are not
limited to, a continuing effort to investigate business
acquisitions and joint ventures. As such, the Company may need to
pursue additional sources of financing. There can be no assurances
that the Company can secure additional financing.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
During
the six months ended June 30, 2018, there have been no material
changes in the Company’s significant accounting policies to
those previously disclosed in the Annual Report.
No
recently issued accounting pronouncements had or are expected to
have a material impact on the Company’s consolidated
financial statements.
4. RELATED PARTY TRANSACTIONS
The
Company receives periodic advances from its principal stockholders
and officers based upon the Company’s cash flow needs. There
is no written loan agreement between the Company and the
stockholders and officers. All advances bear interest at 4.45% and
no repayment terms have been established. As a result, the amount
is classified as a current liability. During the six months ended
June 30, 2018, the Company borrowed $65,615 from a stockholder. The
balance due as of June 30, 2018 and December 31, 2017 were $343,870
and $278,255, respectively. Interest expense associated with these
loans were $3,787 and $7,133for the three and six months ended June
30, 2018, respectively, as compared to $3,991 and $6,614 for the
three and six months ended June 30, 2018, respectively. Accrued
interest on these loans were $36,494 and $29,361 at June 30, 2018
and December 31, 2017, respectively.
The
Company has an arrangement with Lina Maki, a stockholder of the
Company, for her management consulting time. The agreement is not
written and no payment terms have been established. The fee is
$10,000 annually. As of June 30, 2018 and December 31, 2017 amounts
due to the stockholder were $15,000 and $10,000, respectively. For
the most part, these payments are made by the Company’s
affiliate. As such, when the payments are made by the
Company’s affiliate or the lease payments are made by the
Company on behalf of the affiliate, such amounts are shown as a
reduction in or addition to the amount due from affiliate in the
accompany balance sheets.
AMANASU ENVIRONMENTAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018
(Unaudited)
4. RELATED PARTY TRANSACTIONS (continued)
The
Company also leases it office space from a stockholder of the
Company. At June 30, 2018 and December 31, 2017, amounts due to the
stockholder were $40,683 and $56,433, respectively. As such, when
the lease payments are made by the Company’s affiliate or the
lease payments are made by the Company on behalf of the affiliate,
such amounts are shown as a reduction in or addition to the amount
due from affiliate in the accompany balance sheets. During the six
months ended June 30, 2018, the Company paid the stockholder
$31,500 for accrued rent.
Amanasu
Corp. is the principal stockholder of the Company. The balance
due to Amanasu Corp. was $50,000 and $50,000 at June 30, 2018 and
December 31, 2017, respectively. No terms for repayment have been
established. Interest expense associated with this loan were $563
and $1,118 for the three and six months ended June 30, 2018 as
compared to $1,113 and $1,113 for the three and six months ended
June 30, 2017. As a result, the amount is classified as a current
liability. Accrued interest on this loan were $7,824 and $6,706 at
June 30, 2018 and December 31, 2017, respectively.
5.
INCOME TAXES
Deferred
income taxes are recorded to reflect the tax consequences or
benefits to future years of any temporary differences between the
tax basis of assets and liabilities, and of net operating loss
carryforwards. The Company has experienced losses since its
inception. As a result, it has incurred no Federal income
tax.
The Company can carry forward net operating losses (NOL's) generate
before December 31, 2017 to be applied against future profits for a
period of twenty years in the U.S. and 80% of the NOL can be
carried forward for nine years in Japan. The available NOL’s
totaled approximately $3.6 million in the U.S. and $36,000 in Japan
at December 31, 2017, which will expire in the years 2018 through
2037.
The
Company had approximately $45,000 NOL generated in the six months
ended June 30, 2018 in the U.S., which can be used to offset 80
percent of future taxable income and can be carried forward
indefinitely.
In assessing the realization of deferred tax assets, management
considers whether it is more likely than not that some portion or
all of the deferred tax assets will be realized. The ultimate
realization of deferred tax assets us dependent upon the generation
of future taxable income during the periods in which those
temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future
taxable income and tax planning strategies in making this
assessment. Based on the assessment, management has established a
full valuation allowance against all of the deferred tax assets
relating to the NOL’s for every period because it is more
likely than not that all of the deferred tax assets will not be
realized.
On December 22, 2017, legislation commonly known as the Tax Cuts
and Jobs Act, or the Tax Act, was signed in to law. The Tax Act,
among other changes, reduces the U.S. federal corporate tax rate
from 35% to 21%, requires taxpayers to pay a one-time transition
tax on earnings of certain foreign subsidiaries that were
previously tax deferred and creates new taxes on certain foreign
sourced earnings. On December 31, 2017, we did not have any
earnings from foreign subsidiaries and the international aspects of
the Tax Act are not applicable.
In connection with the initial analysis of the impact of the Tax
Act, we remeasured certain deferred tax assets and liabilities
based on the rates at which they are expected to reverse in the
future, which is generally 21%. As a result, we recorded a decrease
in net deferred tax assets of approximately $500,000 with a
corresponding net adjustment to deferred income tax expense. These
adjustments were fully offset by a decrease in the valuation
allowance. We have completed and recorded the adjustments necessary
under Staff Accounting Bulletin No. 118 related to the Tax
Act.
6.
NEW AUTHORITATIVE ACCOUNTING
GUIDANCE
The
Company does not expect recent accounting pronouncements to have a
material effect on its financial position, results of operations or
cash flows.
7. SUBSEQUENT EVENTS
The Company evaluated subsequent events, which are events or
transactions that occurred after June 30, 2018 through the issuance
of the accompanying financial statements and determined that no
significant subsequent event need to be recognized or
disclosed.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Form 10Q contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E the Securities Exchange Act of 1934, as amended and
such forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. "Forward-looking statements" describe future expectations,
plans, results, or strategies and are generally preceded by words
such as "may," "future," "plan" or "planned," "will" or "should,"
"expected," "anticipates," "draft," "eventually" or "projected."
You are cautioned that such statements are subject to a multitude
of risks and uncertainties that could cause future circumstances,
events, or results to differ materially from those projected in the
forward-looking statements, including the risks that actual results
may differ materially from those projected in the forward-looking
statements as a result of various factors, and other risks
identified in a companies' annual report on Form 10-K 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 financial statements and notes thereto included in the
Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2017, as filed with the Securities and Exchange
Commission (“SEC”) on April 10, 2018 (the “Annual
Report”).
Please note that t
he accompanying financial statements have
been prepared assuming that the Company will continue as a going
concern. As shown in the financial statements, the Company had a
material working capital deficiency and an accumulated deficit at
June 30, 2018, and a record of continuing losses. These factors
raise substantial doubt about the ability of the Company to
continue as a going concern. The financial statements do not
include adjustments relating to the recoverability of assets and
classification of liabilities that might be necessary should the
Company be unable to continue in operation.
The
Company's present plans, the realization of which cannot be
assured, to overcome these difficulties include but are not limited
to a continuing effort to investigate business acquisitions and
joint ventures.
General
Management’s discussion and analysis of results of operations
and financial condition is intended to assist the reader in the
understanding and assessment of significant changes and trends
related to the results of operations and financial position of the
Company together with its subsidiary. This discussion and analysis
should be read in conjunction with the consolidated financial
statements and accompanying financial notes, and with the Critical
Accounting Policies noted below.
Plan of Operation
The Company has three main objectives. Firstly, the Company will
continue in its goal to meet the capital objective of $30,000,000.
Currently the company is exploring various potential investment
partners in Japan, as well as China. The Company cannot predict
whether it will be successful with its objective.
Second the Company will continue to support Amanasu Maritek
Corporation's efforts on entering into marine technologies. The
Company will assist for another 2 years in the design, and approval
process for the product from at least two regulatory bodies: the
Japanese Government, and the IMO (International Marine
Organization). This approval process requires capital for
additional product testing, documentation, and documentation
translations. The Company believes that Amanasu Maritek
Corporation's most significant hurdle will be in capital raising.
The Company has already initiated documentation and application
processes, and is now looking for capital to fund the project. The
Company cannot predict whether it will be successful with its
capital raising efforts.
Third, the Company is making plans to enter the reforestation
industry in Japan, through Amanasu Maritek Corporation. The Company
must first reach an agreement with the relevant government agencies
in Japan. The Company intends to focus on the prefectures of
Miyagi, Iwate and Niigata and begin operations within two years.
The Company cannot predict whether it will be successful with its
objective.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
Results of Operations
There were no revenues for the three and six months ended June 30,
2018 and 2017.
General and administrative expenses increased $1,899 (10.3%) to
$20,363 for the three months ended June 30, 2018, as compared to
$18,464 for the three months ended June 30, 2017, primarily as a
result of higher utility expense and consulting and professional
fees offset partially by lower entertainment and rent expenses.
General and administrative expenses decreased $34,020 (47.8%) to
$37,112 for the six months ended June 30, 2018, as compared to
$71,132 for the six months ended June 30, 2017, primarily as a
result of lower consulting and professional fees offset partially
by higher automobile and utility expenses.
As a result of the above, the Company incurred losses from
operations of $20,363 and $37,112 for the three and six months
ended June 30, 2018 as compared to $18,464 and $71,132 for the
three and six months ended June 30, 2017.
Interest expense for the three and six months ended June 30, 2018
were $4,350 and $8,251, respectively, as compared to $3,991 and
$6,614 for the three and six months ended June 30, 2017,
respectively. These increases are primarily the result of the
increase in advances from stockholders and officers.
As a result of the above, the Company incurred net losses of
$24,713 and $45,363 for the three and six months ended June 30,
2018 as compared to $22,455 and $77,746 for the three and six
months ended June 30, 2017.
LIQUIDITY AND CAPITAL RESOURCES
Total current assets at June 30, 2018 were $5,009 as compared to
$5,433 at December 31, 2017.
Total current liabilities as of June 30, 2018 were $491,594 as
compared to $446,471 at December 31, 2017.This increase is
primarily due to increases in advances from
stockholders.
The Company's minimum cash requirements for the next twelve months
are estimated to be $60,000, including rent, audit and professional
fees. The Company does not have sufficient cash on hand to support
its overhead for the next twelve months and there are no material
commitments for capital at this time other than as described above.
The Company will need to acquire debt or issue and sell shares to
gain capital for operations or arrange for additional stockholder
or related party loans. There is no current commitment
for either of these fund sources.
Our working capital deficit increased $45,547 to $486,585 at June
30, 2018 as compared to $441,038 at December 31, 2017 primarily due
to an increase in advances from stockholders.
During the six months ended June 30, 2018, the Company had a net
decrease in cash of $424. The Company’s principal sources and
uses of funds were as follows:
Cash used in operating activities.
For the six months ended June 30, 2018, the
Company used $51,682 in cash for operations as compared to using
$49,686 in cash for the six months ended June 30, 2017, primarily
as a result of the decrease in accrued expenses – related
parties offset mostly by the lower net loss.
Cash provided by financing activities.
Net cash provided by financing activities for the
six months ended June 30, 2018 was $51,258 as compared to $48,777
for the six months ended June 30, 2017 primarily as a result of
higher advances from stockholders and officers offset partially by
a decrease in amounts due to related parties.
OFF-BALANCE SHEET ARRANAGEMENTS
The Company has no off-balance sheet arrangements.
CRITICAL ACCOUNTING POLICIES
The
Company prepares its financial statements in accordance with
accounting principles generally accepted in the United States of
America. Preparing financial statements in accordance with
generally accepted accounting principles requires the Company to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities as of the date of the financial statements and the
reported amounts of revenue and expenses during the reported
period.
Our critical accounting policies are described in the Notes to the
Financial Statements included in our Annual Report on Form 10-K for
the year ended December 31, 2017, as filed with the SEC on April
10, 2018 (the “Annual Report”). There have been no
changes in our critical accounting policies. Our significant
accounting policies are described in our notes to the 2017
consolidated financial statements included in our Annual
Report.
RECENTLY ISSUED ACCOUNTING STANDARDS
No recently issued accounting pronouncements had or are expected to
have a material impact on the Company’s condensed
consolidated financial statements.