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, 2021, as filed
with the Securities and Exchange Commission ("SEC") on April 5, 2022 (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 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 consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As shown in the consolidated
financial statements, the Company had a working capital deficiency of $852,261
and an accumulated deficit of $5,682,408 at September 30, 2022, 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 consolidated
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 or will need to rely on loans from stockholders and
officers to support the operations. There can be no assurances that the Company
can secure additional financing.
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.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
Plan of Operation
The Company has three main objectives during the fiscal year ending December 31,
2022. 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 continue to
assist 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 and nine months ended September 30, 2022
and 2021.
General and administrative expenses decreased $2,306 (15.2%) to $12,831 for the
three months ended September 30, 2022 as compared to $15,137 for the three
months ended September 30, 2021, as a result of lower professional fees. General
and administrative expenses increased $2,616 (5.6%) to $48,920 for the nine
months ended September 30, 2022 as compared to $46,304 for the nine months ended
September 30, 2021, as a result of higher travel expenses.
As a result of the above, the Company incurred losses from operations of $12,831
and $48,920 for the three and nine months ended September 30, 2022,
respectively, as compared to $15,137 and $46,304 for the three and nine months
ended September 30, 2021, respectively.
For the three and nine months ended September 30, 2022, interest expense
increased $75 and $219 to $5,163 and $15,260, respectively, as compared to
$5,088 and $15,041 for the three and nine months ended September 30, 2021,
respectively.
As a result of the above, the Company incurred net losses of $17,994 and $64,180
for the three and nine months ended September 30, 2022, respectively, as
compared to $20,225 and $61,345 for the three and nine months ended September
30, 2021, respectively.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
LIQUIDITY AND CAPITAL RESOURCES
Total current assets at September 30, 2022 were $268 as compared to $37 at
December 31, 2021. This increase is the result of a slightly higher cash
balance. Total current liabilities as of September 30, 2022 were $852,529 as
compared to $789,722 at December 31, 2021.This increase is primarily due to
increases in accrued expenses - related parties, accrued interest-stockholders
and officers, loans from stockholders and officers and amount due to affiliate.
The Company's minimum cash requirements for the next twelve months are estimated
to be $60,250, 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 $62,576 to $852,261 at September 30, 2022
as compared to $789,685 at December 31, 2021 primarily due to increases in
accrued expenses - related parties, accrued interest - stockholders and
officers, loans from stockholders and officers as well as an increase in amount
due to affiliate.
During the nine months ended September 30, 2022, the Company had a net increase
in cash of $231. The Company's principal sources and uses of funds were as
follows:
Cash used in operating activities. For the nine months ended September 30, 2022,
the Company used $27,953 in cash for operations as compared to using $25,118 in
cash for the nine months ended September 30, 2021, primarily as a result of the
higher net loss.
Cash provided by financing activities. Net cash provided by financing activities
for the nine months ended September 30, 2022 was $28,184 as compared to $25,353
for the nine months ended September 30, 2021 primarily as a result of the
increase in amount due to affiliate.
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 Consolidated
Financial Statements included in our Annual Report on Form 10-K for the year
ended December 31, 2021, as filed with the SEC on April 5, 2022 (the "Annual
Report"). There have been no changes in our critical accounting policies.
RECENTLY ISSUED ACCOUNTING STANDARDS
No recently issued accounting pronouncements had or are expected to have a
material impact on the Company's consolidated financial statements.
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