AMANASU ENVIRONMENT CORP - Quarter Report: 2021 March (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended: March
31, 2021
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number: 000-32905
AMANASU ENVIRONMENT CORPORATION
(Exact name of registrant as specified in its charter)
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Nevada
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98-0347883
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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224 Fifth Avenue, 2nd
Floor
New York, NY 10022
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(Address of principal executive offices)
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(604) 790-8799
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(Registrant’s telephone number, including area
code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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N/A
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N/A
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N/A
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Securities registered pursuant to Section 12(g) of the
Act:
Common Stock $.001 par value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by section 13 or 15(d) of the
Securities Exchange Act of 1934 during the past 12 months, and (2)
has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such
files. Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, smaller reporting company, or an
emerging growth company. See the definitions of
“large accelerated filer,” “accelerated
filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of
the Exchange Act.
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☒
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Smaller reporting company
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☒
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Emerging growth company
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☐
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 7(a)(2)(B) of the
Securities Act. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No ☒
As of May 13, 2021, there were 44,100,816 shares outstanding of the
registrant’s common stock.
AMANASU ENVIRONMENT CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED MARCH 31, 2021
TABLE OF CONTENTS
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15
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15
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15
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15
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15
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2
PART I
ITEM 1. CONSOLIDATED
FINANCIAL STATEMENTS
AMANASU ENVIRONMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
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March
31,
2021
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December
31,
2020
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ASSETS
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Current
Assets:
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Cash
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$1,161
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$47
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Total
current assets
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1,161
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47
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Operating lease
right-of-use assets
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7,392
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11,019
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Total
Assets
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$8,553
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$11,066
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LIABILITIES
& STOCKHOLDERS' DEFICIT
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Current
Liabilities:
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Accounts payable
and accrued expenses
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$21,154
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$11,165
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Accrued expenses
– related parties
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114,714
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108,312
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Accrued interest
– stockholders and officers
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97,705
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92,766
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Taxes
payable
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30,464
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32,668
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Operating lease
liabilities – current
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7,392
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11,019
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Due to
affiliate
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14,238
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11,338
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Loans from
stockholders and officers
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445,159
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441,622
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Total
current liabilities
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730,826
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708,890
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Total
Liabilities
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730,826
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708,890
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Commitments
and contingencies
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Stockholders'
Deficit:
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Common Stock:
authorized 100,000,000 shares of $.001 par value;44,100,816 shares
issued and outstanding
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44,101
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44,101
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Additional paid in
capital
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4,793,552
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4,793,552
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Accumulated
deficit
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(5,564,468)
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(5,539,235)
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Accumulated other
comprehensive income
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4,828
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4,115
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Total
Amanasu Environment Corporation stockholders' deficit
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(721,987)
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(697,467)
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Non-controlling
interest in subsidiary
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(286)
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(357)
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Total
stockholders’ deficit
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(722,273)
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(697,824)
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Total
Liabilities and Stockholders' Deficit
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$8,553
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$11,066
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The
accompanying notes are an integral part of these consolidated
financial statements.
3
AMANASU ENVIRONMENT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
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Three Months
Ended
March
31,
2021
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Three Months
Ended
March
31,
2020
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Revenue
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$-
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$-
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Cost of
revenue
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-
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-
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Gross
profit
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-
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-
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General and
administrative expenses
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20,294
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21,052
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Operating
loss
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(20,294)
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(21,052)
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Other
Expense:
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Interest expenses
– stockholders and officers
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(4,939)
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(4,955)
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Net loss before
income taxes
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(25,233)
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(26,007)
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Income
taxes
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-
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-
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Net
loss
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(25,233)
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(26,007)
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Net loss
attributable to non-controlling interest
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-
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-
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Net loss
attributable to Amanasu Environment Corporation
Stockholders
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(25,233)
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(26,007)
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Other comprehensive
income (loss):
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Foreign currency
translation adjustment
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784
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(109)
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Comprehensive
loss
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(24,449)
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(26,116)
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Less: Comprehensive
income (loss) attributable to non-controlling interest
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71
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(10)
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Comprehensive loss
attributable to Amanasu Environment Corporation
Stockholders
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$(24,520)
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$(26,106)
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Net loss per share
– basic and diluted
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$(0.00)
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$(0.00)
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Average number of
shares outstanding – basic and diluted
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44,100,816
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44,100,816
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The
accompanying notes are an integral part of these consolidated
financial statements.
4
AMANASU ENVIRONMENT CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
DEFICIT
(Unaudited)
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Common
Stock
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Paid
In
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Accumulated
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Comprehensive
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Non-controlling
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Shares
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Amount
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Capital
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Deficit
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Income
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Interest
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Total
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Balance January 1,
2021
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44,100,816
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$44,101
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$4,793,552
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$(5,539,235)
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$4,115
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$(357)
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$(697,824)
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Net loss
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(25,233)
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(25,233)
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Other comprehensive
income
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713
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71
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784
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Balance March 31,
2021
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44,100,816
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$44,101
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$4,793,552
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$(5,564,468)
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$4,828
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$(286)
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$(722,273)
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Common
Stock
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Paid
In
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Accumulated
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Comprehensive
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Non-controlling
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Shares
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Amount
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Capital
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Deficit
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Income
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Interest
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Total
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Balance January 1,
2020
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44,100,816
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$44,101
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$4,793,552
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$(5,456,421)
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$4,636
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$(305)
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$(614,437)
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Net loss
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(26,007)
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(26,007)
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Other comprehensive
loss
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(99)
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(10)
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(109)
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Balance March 31,
2020
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44,100,816
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$44,101
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$4,793,552
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$(5,482,428)
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$4,537
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$(315)
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$(640,553)
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The
accompanying notes are an integral part of these consolidated
financial statements.
5
AMANASU ENVIRONMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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Three Months
Ended March
31,
2021
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Three Months
Ended
March
31,
2020
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CASH
FLOWS FROM OPERATIONS
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Net
loss
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$(25,233)
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$(26,007)
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Changes
in assets and liabilities:
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Accounts payable
and accrued expenses
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10,320
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10,572
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Accrued expenses
– related parties
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6,938
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10,375
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Accrued interest
– stockholders and officers
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4,939
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4,955
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Net
Cash Used in Operating Activities
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(3,036)
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(105)
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CASH
FLOWS FROM FINANCING ACTIVITIES
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Loans from
stockholders and officers
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1,250
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-
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Due to
affiliate
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2,900
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(30)
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Net
Cash Provided by ( Used in) Financing Activities
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4,150
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(30)
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Net Change In
Cash
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1,114
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(135)
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Cash balance,
beginning of period
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47
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211
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Cash balance, end
of period
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$1,161
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$76
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Supplemental disclosures of cash flow
information:
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Cash paid for
interest
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$-
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$-
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Cash paid for
income taxes
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$-
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$-
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The
accompanying notes are an integral part of these consolidated
financial statements.
6
AMANASU ENVIRONMENTAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021
(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 March
31, 2021, the results of operations for the three months ended
March 31, 2021 and 2020, and cash flows for the three months ended
March 31, 2021 and 2020. These results are not necessarily
indicative of the results to be expected for the full year or any
other period. The December 31, 2020 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, 2020, as
filed with the Securities and Exchange Commission
(“SEC”) on March 30, 2021.
2. GOING CONCERN UNCERTAINTY
The
accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As shown in the
financial statements, the Company had a working capital deficiency
of $729,665 and an accumulated deficit of $5,564,468 at March 31,
2021, 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 that might result from the outcome of this
uncertainty.
The
Company’s operations to date
have been limited to conducting various tests on its technologies
and seeking financing. The Company will continue to develop
and market its technologies, which the Company believes have great
market potential. As such, the Company continues to pursue
additional sources of financing. Currently the company is exploring various
potential investment partners in Japan, as well as China.
There can be no assurances that the Company can secure additional
financing. . The present plans,
the realization of which cannot be assured, to overcome these
difficulties also include, but are not limited to, a continuing
effort to investigate business acquisitions and joint
ventures.
The Company’s operations may be affected by the recent and
ongoing outbreak of the coronavirus disease 2019 (COVID-19) which
in March 2020, was declared a pandemic by the World Health
Organization. The ultimate disruption which may be caused by the
outbreak is uncertain; however, it may result in a material adverse
impact on the Company’s financial position, operations and
cash flows. Possible areas that may be affected include, but are
not limited to, disruption to the Company’s ability to obtain
funding and performing further research on certain
projects.
7
AMANASU ENVIRONMENTAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021
(Unaudited)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
New Accounting Pronouncements
During
the three months ended March 31, 2021, there have been no other
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 loans 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 loans 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 three months ended March 31,
2021, the Company borrowed $1,250 from a stockholder. The balances
due as of March 31, 2021 and December 31, 2020 were $395,350 and
$394,100, respectively. Interest expense associated with these
loans were $4,383 for the three months ended March 31, 2021 as
compared to $4,392 for the three months ended March 31, 2020.
Accrued interest on these loans were $83,669 and $79,286 at March
31, 2021 and December 31, 2020, 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 March 31, 2021 and December 31, 2020
amounts due to the stockholder were $42,500 and $40,000,
respectively.
The
Company leases its office space in Vancouver from a stockholder of
the Company at a monthly rate of $2,500 under a lease agreement
which expires October 1, 2021. At March 31, 2021 and December
31, 2020 amounts due to the stockholder were $64,308 and $60,371,
respectively. The Company shares the space with Amanasu Techno
Holdings Corp (“ATH”), a reporting company under the
Securities Exchange Act of 1934. ATH Corp is responsible for 50% of
the rent.
8
AMANASU ENVIRONMENTAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021
(Unaudited)
4. RELATED PARTY TRANSACTIONS
(continued)
The
office in New York is rented at the rate of approximately $360 each
year and is also shared with ATH. In addition, the Company
maintains an office at Suite 905, 1-6-1 Senzoku Taito-Ku Tokyo
Japan.
Amanasu
Corp. is the principal stockholder of the Company. The balance
due to Amanasu Corp. was $50,000 and $50,000 at March 31, 2021 and
December 31, 2020, respectively. Interest expense associated with
this loan were $556 for the three months ended March 31, 2021, as
compared to $563 for the three months ended March 31, 2020,
respectively. No terms for repayment have been established. As a
result, the amount is classified as a current liability in due to
related parties. Accrued interest on this loan were $14,036 and
$13,480 at March 31, 2021 and December 31, 2020,
respectively.
5. INCOME TAXES
In
accordance with the current tax laws in the U.S., the Company is
subject to a corporate tax rate of 21% on its taxable income. No
provision for taxes is made for U.S. income tax for the three
months ended March 31, 2020 and 2020 as it has no taxable income in
the U.S. The Company can carry forward
net operating losses (NOL's) 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 three years in Japan.
The
Company had NOL carryforwards of approximately $3.76 million in the
U.S. at March 31, 2021. Approximately $3.48 million in the U.S.
will expire in the years 2021 through 2037, and $0.28 million can
be carried forward indefinitely.
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. 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.
6. OPERATING LEASE LIABILITY
The
Company's executive offices are located at 244 Fifth Avenue 2nd
Floor New York, NY 10001 and Vancouver, British Columbia. The total
premises in Vancouver are 2,000 square feet and are leased at a
monthly rate of $2,500 under a lease agreement between the Company
and the Secretary of the Company which expires October 1, 2021. The
Company shares the space with ATH, a reporting company under the
Securities Exchange Act of 1934. Our major stockholder and officer
own approximately 86% of ATH’s outstanding shares of common
stock. ATH is responsible for 50% of the rent or $1,250 each
month.
9
AMANASU ENVIRONMENTAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021
(Unaudited)
6. OPERATING LEASE LIABILITY (continued)
The
Company's lease does not provide an implicit rate, and therefore
the Company uses an estimated incremental borrowing rate as the
discount rate when measuring operating lease liabilities. The
incremental borrowing rate represents an estimate of the interest
rate the Company would incur at lease commencement to borrow an
amount equal to the lease payments on a collateralized basis over
the term of a lease. The Company used incremental borrowing rate of
5% for the calculation of operating leases
liabilities.
The
following table reconciles the undiscounted future minimum lease
under the non-cancelable operating leases with terms of more than
one year to the total lease liabilities recognized on the
consolidated balance sheet as of March 31, 2021:
|
2021-
six months
|
$7,500
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Total
undiscounted future minimum lease payments
|
7,500
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Less:
Difference between undiscounted lease payments and discounted lease
liabilities
|
(108)
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Total
operating lease liabilities
|
7,392
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Less
current portion
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(7,392)
|
|
Long-term
lease liabilities
|
$-0-
|
Total
rent expense under operating leases for the three months ended
March 31, 2021 was $3,750, as compared to $3,750 for the three
months ended March 31, 2020.
7. COMMITMENTS AND CONTINGENCIES
The
Company is involved in various legal proceedings, claims and
litigation arising in the ordinary course of business. The Company
does not believe that the disposition of matter that are pending
will have a material effect on its condensed consolidated financial
statements.
8. SUBSEQUENT EVENTS
The Company evaluated subsequent events, which are events or
transactions that occurred after March 31, 2021 through the
issuance of the accompanying financial statements and determined
that no significant subsequent event need to be recognized or
disclosed.
10
ITEM 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This
quarterly report on Form 10-Q and other reports filed by Amanasu
Environmental Corporation and its wholly owned subsidiaries,
collectively the “Company”, “we”,
“our”, and “us”) from time to time with the
U.S. Securities and Exchange Commission (the “SEC”)
contain or may contain forward-looking statements and information
that are based upon beliefs of, and information currently available
to, the Company’s management as well as estimates and
assumptions made by Company’s management. Readers
are cautioned not to place undue reliance on these forward-looking
statements, which are only predictions and speak only as of the
date hereof. When used in the filings, the words
“anticipate,” “believe,”
“estimate,” “expect,” “future,”
“intend,” “plan,” or the negative of these
terms and similar expressions as they relate to the Company or the
Company’s management identify forward-looking
statements. Such statements reflect the current view of
the Company with respect to future events and are subject to risks,
uncertainties, assumptions, and other factors, including the risks
contained in the “Risk Factors” section of the
Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2020, as filed with the Securities and Exchange
Commission (“SEC”) on March 30, 2021 (the “Annual
Report”), relating to the Company’s industry, the
Company’s operations and results of operations, and any
businesses that the Company may acquire. Should one or
more of these risks or uncertainties materialize, or should the
underlying assumptions prove incorrect, actual results may differ
significantly from those anticipated, believed, estimated,
expected, intended, or planned.
Although
the Company believes that the expectations reflected in the
forward-looking statements are reasonable, the Company cannot
guarantee future results, levels of activity, performance, or
achievements. Except as required by applicable law,
including the securities laws of the United States, the Company
does not intend to update any of the forward-looking statements to
conform these statements to actual results.
Our
unaudited condensed consolidated financial statements are prepared
in accordance with accounting principles generally accepted in the
United States (“GAAP”). These accounting principles
require us to make certain estimates, judgments and assumptions. We
believe that the estimates, judgments and assumptions upon which we
rely are reasonable based upon information available to us at the
time that these estimates, judgments and assumptions are
made. These estimates, judgments and assumptions can
affect the reported amounts of assets and liabilities as of the
date of the consolidated financial statements as well as the
reported amounts of revenues and expenses during the periods
presented. Our consolidated financial statements would be affected
to the extent there are material differences between these
estimates and actual results. In many cases, the accounting
treatment of a particular transaction is specifically dictated by
GAAP and does not require management’s judgment in its
application. There are also areas in which management’s
judgment in selecting any available alternative would not produce a
materially different result. The following discussion should
be read in conjunction with our consolidated financial statements
and notes thereto appearing elsewhere in this report.
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 $729,665 and an accumulated deficit of $5,564,468 at March 31,
2021, 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 that might result from the outcome of this
uncertainty.
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. The Company will also continue to
investigate and develop technologies, which the Company believes
have great market potential. As such, the Company may need to
pursue additional sources of financing. There can be no assurances
that the Company can secure additional financing.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
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.
The Company’s operations may be affected by the recent and
ongoing outbreak of the coronavirus disease 2019 (COVID-19) which
in March 2020, was declared a pandemic by the World Health
Organization. The ultimate disruption which may be caused by the
outbreak is uncertain; however, it may result in a material adverse
impact on the Company’s financial position, operations and
cash flows. Possible areas that may be affected include, but are
not limited to, disruption to the Company’s ability to obtain
funding and performing further research on certain
projects.
Results of Operations
There were no revenues for the three months ended March 31, 2021
and 2020.
General and administrative expenses decreased $758 (3.6%) to
$20,294 for the three months ended March 31, 2021 as compared to
$21,052 for the three months ended March 31, 2020. These decreases
are mostly attributed mostly to the lower travel expenses and
professional fees.
As a result of the above, the Company incurred a loss from
operations of $20,294 for the three months ended March 31, 2021 as
compared to a loss from operations of $21,052 for the three months
ended March 31, 2020.
For the three months ended March 31, 2021, interest expense
decreased $16 to $4,939 as compared to $4,955 for the three months
ended March 31, 2020.
As a result of the above, the Company incurred a net loss of
$25,233 for the three months ended March 31, 2021 as compared to
$26,007 for the three months ended March 31, 2020.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
LIQUIDITY AND CAPITAL RESOURCES
Total current assets at March 31, 2021 were $1,161 as compared to
$47 at December 31, 2020. This increase is the result of a slightly
higher cash balance. Total current liabilities as of March 31, 2021
were $730,826 as compared to
$708,890 at December 31, 2020.This increase is primarily due to
increases in accrued expenses to related parties, accounts payable
and accrued expenses.
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 $20,822 to $729,665at March 31,
2021 as compared to $708,843 at December 31, 2020 primarily due to
increases in accrued expenses to related parties, accounts payable
abd accrued expenses to related parties.
During the three months ended March 31, 2021, the Company had a net
increase in cash of $1,114. The Company’s principal sources
and uses of funds were as follows:
Cash used in operating activities. For the three months ended March 31, 2021, the
Company used $3,036 in cash for operations as compared to using
$105 in cash for the three months ended March 31, 2020, primarily
as a result of the lower increase in accrued expenses to related
parties.
Cash provided by financing activities. Net cash provided by financing activities for the
three months ended March 31, 2021 was $4,150 as compared to using
$30 for the three months ended March 31, 2020 primarily as a result
of the increase in amounts due to affiliate and loans from
stockholders and officers.
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, 2020, as filed with the SEC on March
30, 2021 (the “Annual Report”). There have been no
changes in our critical accounting policies. Our significant
accounting policies are described in our notes to the 2020
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.
13
ITEM 3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
ITEM 4. MANAGEMENT'S REPORT ON
DISCLOSURE CONTROLS AND PROCEDURES
We
maintain disclosure controls and procedures designed to ensure that
information required to be disclosed in the reports we file
pursuant to the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) are recorded, processed, summarized and
reported within the time periods specified in the rules and forms
of the SEC, and that such information is accumulated and
communicated to our Principal Executive Officer (“PEO”)
and Principal Accounting Officer (“PAO”), to allow
timely decisions regarding required disclosure. In designing and
evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well
designed and operated, can only provide a reasonable assurance of
achieving the desired control objectives, and in reaching a
reasonable level of assurance, management necessarily was required
to apply its judgment in evaluating the cost-benefit relationship
of possible controls and procedures. Management designed the
disclosure controls and procedures to provide reasonable assurance
of achieving the desired control objectives.
We
carried out an evaluation, under the supervision and with the
participation of our management, including our PEO and PAO, of the
effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the period covered by
this Quarterly Report. Based upon that evaluation, the PEO and
PAO concluded that the Company’s disclosure controls and
procedures were ineffective for the reasons discussed below. In
addition, management identified the following material weaknesses
in its assessment of the effectiveness of disclosure controls and
procedures as of March 31, 2021.
The
Company did not effectively segregate certain accounting duties due
to the small size of its accounting staff. A material weakness is a
deficiency, or a combination of control deficiencies, in internal
control over financial reporting such that there is a reasonable
possibility that a material misstatement of our annual or interim
consolidated financial statements will not be prevented or detected
on a timely basis. Notwithstanding the determination that our
internal control over financial reporting was not effective, as of
March 31, 2021, and that there was a material weakness as
identified in this Quarterly Report, we believe that our financial
statements contained in this Quarterly Report fairly present our
financial position, results of operations and cash flows for the
years covered hereby in all material respects.
We plan
on increasing the size of our accounting staff at the appropriate
time for our business and its size to ameliorate our concern that
we do not effectively segregate certain accounting duties, which we
believe would resolve the material weakness in disclosure controls
and procedures, but there can be no assurances as to the timing of
any such action or that we will be able to do so.
(b) Changes in Internal Control over Financial
Reporting
There
were no changes in our internal control over financial reporting,
as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act,
during our most recently completed fiscal quarter that have
materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
14
PART II
ITEM 1. LEGAL PROCEEDINGS
We are
currently not involved in any litigation that we believe could have
a material adverse effect on our financial condition or results of
operations. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the
knowledge of the executive officers of our company or any of our
subsidiaries, threatened against or affecting our company, our
common stock, any of our subsidiaries or of our companies or our
subsidiaries’ officers or directors in their capacities as
such, in which an adverse decision could have a material adverse
effect.
ITEM 1A. RISK FACTORS
Not applicable to smaller reporting companies.
ITEM 2. UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS
There
were no unregistered sales of the Company’s equity securities
during the quarter ended March 31, 2021 other than those previously
reported in a Current Report on Form 8-K.
ITEM 3. DEFAULTS UPON SENIOR
SECURITIES
There
has been no default in the payment of principal, interest, sinking
or purchase fund installment, or any other material default, with
respect to any indebtedness of the Company.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
15
ITEM 6. EXHIBITS
Furnish the Exhibits required by Item 601 of Regulation S-K
(229.407 of this chapter).
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Certification
of the Principal Executive Officer of Registrant pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or
Rule 15d-14(a)).*Certification Pursuant To Section 302 Of The
Sarbanes-Oxley Act Of 2002.
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Certification
of the Principal Accounting Officer of Registrant pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or
Rule 15d-14(a)).*
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Certification
of the Principal Executive Officer pursuant to 18 U.S.C. 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.*
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Certification
of the Principal Accounting Officer pursuant to 18 U.S.C. 1350
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.*
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101
INS
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XBRL
Instance Document*
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101
SCH
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XBRL
Schema Document*
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101
CAL
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XBRL
Calculation Linkbase Document*
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101
DEF
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XBRL
Definition Linkbase Document*
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101
LAB
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XBRL
Labels Linkbase Document*
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101
PRE
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XBRL
Presentation Linkbase Document*
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* filed herewith
16
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused his report to be signed on its behalf by
the undersigned thereunto duly authorized.
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Amanasu
Environmental Corporation
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Date: May
17, 2021
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By:
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/s/
Atsushi Maki
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Atsushi
Maki
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Principal
Executive Officer
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Principal
Accounting Officer
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17