Amanasu Technologies 10QSB 3-31-2005
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-QSB
 
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the period ended March 31, 2005
 
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 TECHNOLOGIES CORPORATION
(Exact name of small business issuer as specified in its charter)

Nevada
98-0351508
(State or other jurisdiction of organization)
(IRS Employer Identification No.)

701 Fifth Avenue, 42nd Floor, Seattle, WA 9810&#-236;
(Address of principal executive offices)

206-262-8188
(Issuer's telephone number)

(Former name, former address and former fiscal year, if changed since last　 report)

Check whether issuer (1) filed all reports to be filed by Section 13 or 15(d) of　the Exchange Act during the past 12 months (or such shorter period that the　registrant was required to file such reports), and (2) has been subject to such　filing requirements for the past 90 days.   Yes x No o

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be　filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of　securities under a plan confirmed by a court.  Yes o  Noo 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: 46,676,400 as of May 10, 2005.

Transitional Small Business Disclosure Format:   Yes o  No x
 

AMANASU TECHNOLOGIES CORPORATION
QUARTERLY REPORT ON FORM 10QSB
FOR THE THREE MONTHS ENDED MARCH 31, 2005
TABLE OF CONTENTS

PART1-FINANCIAL INFORMATION
 

 
Page #
   
 
   
4
   
6
   
7
   
9
   
10
   
Item 3:     Controls and Procedures
13
   
PART2-OTHER INFORMATION
  
   
Item 1:     Legal Proceedings
14
Item 2:     Changes in Securities
14
14
14
Item 5:     Other Information
14
14
   
15

ITEM1.
 FINANCIAL STATEMENTS

GENERAL

The Company's unaudited financial statements for the Three months ended March 31, 2005 are included with this Form 10-QSB. The unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the Three months ended March 2005 are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2005.
 
 
AMANASU TECHNOLOGIES CORPORATION
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)

   
March 31,
  
December 31,
  
   
2005
  
2004
  
 
  
(Unaudited)
  
(Audited)
  
ASSETS
          
Current Assets:
          
Cash
  
$
10,809
  
$
44,560
  
Total current assets
    
10,809
    
44,560
  
               
Fixed Assets:
              
Automobile
    
1,500
    
1,500
  
Less accumulated depreciation
    
1,038
    
987
 
Net fixed assets
    
462
    
513
  
               
Other Assets:
              
Licensing agreement
    
160,000
    
160,000
  
Less accumulated amortization
    
40,001
    
37,648
  
Total other assets
    
119,999
    
122,352
  
 
          
 
  
Total Assets
  
$
131,270
  
$
167,425
  
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
              
Current Liabilities:
              
Advance from affiliates
  
$
1,525
  
$
1,525
  
Total current liabilities
    
1,525
    
1,525
  
               
Stockholders’ Equity:
              
Common Stock: authorized 100,000,000 shares of $.001 par value; 46,676,400 shares issued and outstanding
    
46,676
    
46,676
  
Additional paid-in capital
    
650,624
    
650,624
  
Deficit accumulated during development stage
    
(567,555
)
  
(531,400
)
Total stockholders’ equity
    
129,745
    
165,900
  
Total Liabilities and Stockholders’ Equity
  
$
131,270
  
$
167,425
  
 
The accompanying notes are an integral part of these financial statements.


AMANASU TECHNOLOGIES CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS AND DEFICIT
ACCUMULATED DURING DEVELOPMENT STAGE
(Unaudited)
 
      December 1, 1997   
   
Quarters Ended  March 31,
  
(Date of Inception)
  
   
2005 
  
2004 
  
To March 31, 2005
  
               
Revenue
  
$
-
  
$
-
  
$
91,912
  
Expenses
    
36,155
    
42,039
    
662,889
  
Operating loss
    
(36,155
)
  
(42,039
)
  
(570,977
)
Other Income - Interest
    
-
    
33
    
3,422
  
Loss accumulated during development stage
  
$
(36,155
)
$
(42,006
)
$
(567,555
)
                     
Loss Per Share -
                    
Basic and Diluted
  
$
-
  
$
-
        
                     
Average shares outstanding
   
46,676,400
    
46,676,400
        
 
These accompanying notes are an integral part of these financial statements.

 
AMANASU TECHNOLOGIES CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
 
   
 
  
December 1, 1997
  
   
Quarters Ended March 31,
  
(Date of Inception)
  
   
2005
  
2004
  
To March 31, 2004
  
CASH FLOWS FROM OPERATIONS:
              
Net loss
  
$
(36,155
)
$
(42,006
)
$
(567,555
)
Charges not requiring the outlay of cash:
                    
Depreciation and amortization
    
2,404
    
2,439
    
41,039
  
Services provided for common stock
    
-
    
-
    
21,300
  
Changes in assets and liabilities:
                    
Increase in advance from affiliate
   
-
    
-
    
1,525
  
                     
Net Cash Consumed By Operating Activities
    
(33,751
)
  
(39,567
)
  
(503,691
)
                     
CASH FLOWS FROM INVESTING ACTIVITIES:
                    
Purchase of automobile
    
-
    
-
    
(1,500
)
Payment of amount due for licensing agreement
    
-
    
-
    
(160,000
)
                     
Net Cash Consumed By Investing Activities
    
-
    
-
    
(161,500
)
                     
CASH FLOWS FROM FINANCING ACTIVITIES:
                    
Issuances of common stock
    
-
    
-
    
616,000
  
Shareholder capital contribution
    
-
    
-
    
60,000
  
                     
Net Cash Provided By Financing Activities
    
-
    
-
    
676,000
  
                     
Net Change In Cash
    
(33,751
)
  
(39,567
)
  
10,809
  
                     
Cash balance, beginning of period
    
44,560
    
54,985
    
-
  
 
          
 
    
 
  
Cash balance, end of period
  
$
10,809
  
$
15,418
  
$
10,809
  
 
These accompanying notes are an integral part of these financial statements.

 
AMANASU TECHNOLOGIES CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2005
(Unaudited)


 
1.
BASIS OF PRESENTATION

The unaudited interim financial statements of Amanasu Technologies Corporation (“the Company”) as of March 31, 2005 and for the three month periods ended March 31, 2005 and 2004, have been prepared in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, such information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for such periods. The results of operations for the quarter ended March 31, 2005 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2005.

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 Form 10-KSB for the year ended December 31, 2004.
 

MANAGEMENT'S DISCUSSION AND OR PLAN OF OPERATION
Cautionary Statement

SAFE HARBOR

This Form 10QSB contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "may," "future," "plan" or "planned," "will" or "should," "expected," "anticipates," "draft," "eventually" or "projected." You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors, and other risks identified in a companies' annual report on Form 10-KSB and other filings made by such company with the United States Securities and Exchange Commission. You should consider these factors in evaluating the forward-looking statements included herein, and not place undue reliance on such statements.

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, 2004.

COMPANY OVERVIEW

The Company is a development stage company and significant risks exist with respect to its business. The Company received the exclusive, worldwide rights to a high efficiency electrical motor and a high powered magnet both of which are used in connection with an electrical motor scooter. The technologies were acquired under a sub-license agreement with Amanasu Corporation, formerly Family Corporation. Amanasu Corporation, a Japanese company and the Company’s largest shareholder, acquired the rights to the technologies under a licensing agreement with the inventors. Mr. Atsushi Maki, a director of the Company, is the sole shareholder of Amanasu Corporation. At this time, the Company is not engaged in the commercial sale of any of its licensed technologies. Its operations to date have been limited to acquiring the technologies, constructing four proto-type motor scooters and various testing of the technologies and the motor scooter.

Market place of electric scooter has become intensely competitive. Offering shorter recharging time and more economical sales price are the primal keys. The Company conducted a procedure of manufacturing the product in China due to cutting down on the cost, and hoped it would work through to meet the Company’s expectation. However the significant issue which was difficulty of protecting the proprietary technology unwillingly emerged. Additionally there were some major concerns which were securing follow-ups, warrant and maintenance of the product due to safety and protection of incidents from the result of its deficiency, and handling and managing such matters perfectly is overwhelming. To solve the 2 major issues, the Company has come to the potential solution in connection with making a revenue and profit, which is cooperation with a company who has already produced complete product of electric scooter in successful marketing condition. The Company has encountered Evader Motorcycle, Inc. (U.S.A) who has commercially produced their electric scooters and sold it in 20 countries. The Company has entered into an International Distributor Agreement with Evader Motorcycle, Inc. whereby the Company is appointed as an exclusive agent for the products of Evader. The Company is granted the exclusive rights for the motorcycle retail industry or vertical markets in Japan, with the right to include other channels as agreed to between the parties. The Company considers Evader as a prospective company that the Company might share its technology with and create more improved and advanced technology of electric scooter which would make a strong impact to the market.
 

PRODUCT

The Company intends to participate in the emerging electric vehicle market by using its sub-licensed technologies to design, manufacture, and sell lightweight, electric motor scooters. The Company may expand its product line in the future to include other electronic vehicles, such as electric bicycles.
The Company is planning to provide its own technology of battery charging system to Evader Motorcycle, Inc. and develop better and advanced product of electric scooter in cooperation. The Company aims to open the market in Japan and mainly in Southeast Asia.

The Company's principal product will be a lightweight motor scooter that features the Company's proprietary electric motor. The one passenger scooter also will feature a stepless transmission, an electromotive brake, and is expected to weigh 107 kg. The Company will use an otherwise standard leaded battery. Due to the unique features of the licensed technologies, the scooter is expected to deliver improved operational efficiencies over competitive products. On December 26, 2001, Sanwa Electronics Co., Inc. performed two independent tests on one of the Company's scooters. The test results indicated that the motor scooter can travel 65 to 85 km on a full battery charge, at an average running speed of 30 km/hour. The battery charge time to travel these distances approximated 2 hours. Sanwa Electronics conducted the tests on a relatively flat road grade with limited traffic density. These results contrast with Honda's electric scooter (Year 2001-Model #A-AF36). According to product literature published by Honda, the scooter travels approximately 60 km at 30 km/hour, and a full recharge requires approximately 8 hours. Conditions, such as road grade and travel density, regarding the its scooter were not contained in the Honda information.

Gas powered scooters while generally an inexpensive mode of transportation, typically are powered by two-stroke engines fueled by an oil and gasoline mixture. These engines are small with compressed power, and therefore ideally suited for scooter use. However, two stroke engines are commonly identified by clouds of oily smoke trailing the engine, which evidences its major disadvantages. Two stroke engines use fuel inefficiently and, more importantly, have high pollution emissions. They generate pollution from two sources; the combustion of oil in the fuel, and the leaking of fuel through the exhaust port during engine use. In promoting its product to its targeted markets, the Company will seek to capitalize on its strong operational efficiencies of the technology compared with other electric scooters, while championing its product's environmental advantages to gas powered versions.
 
PLAN OF OPERATION
The Company is a development stage corporation. It has not commenced its planned operations of manufacturing and marketing a lightweight electrical motor scooter. Its operations to date have been limited to conducting various tests on its technologies.


The Company’s plan of operations for the next 12 months is to consider providing its patented fast battery charging technology adopting Evader’s existing electric scooter and develop and improve Evader’s scooter to be competitive, rather than only working on the Company’s product struggling with raising capital and delay of its commercial production. Because, compare to other electric scooters, the electric scooter produced by Evader Motorcycle, Inc. is relatively systemized fast battery charging time, and most of all, Evader already has its production line and establishes the after-care- service management. Cooperating with Evader may benefit the Company that the Company may just focus on marketing and sales promotion. The Company considers opening the market in Japan for the next 12 months and then the countries of Southeast Asia, which may be the main market place of the improved Evader’s scooter in the future. The sales price of the scooter will be $1,300-1,850/unit and sales quantity will be 2,000units. The Company will primarily invest $150,000 for the marketing and sales promotion of Evader’s electric scooter. The Company is expecting a profit of $400,000 ($200/unit (profit) X 2,000 units (prospective sales)) for next 12 months.
The Company has also encountered an opportunity to consider marketing healthy food productions such as cheese, butter, salad dressing, mayonnaise, bread, beverage, processed with soy bean. The Company is estimating $350,000 of investment for this project whether investing existing company for cooperation or establishing a new company which produces healthy products.

The Company's cash requirements for the next 12 months are estimated to be $500,000. This amount is comprised of the following estimate expenditures; $100,000 in annual salaries for office personnel, office expenses and travel, $60,000 for rent, $20,000 for professional fees, and $10,000 for miscellaneous expenses.

As stated above, the Company cannot predict whether or not it will be successful in its capital raising efforts, and, thus, be able to satisfy its cash requirements for the next 12 months. If the Company is unsuccessful in raising at least $500,000, it may not be able to complete its plan of operations as discussed above.


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company did not generate any revenues for the three months ended March 31, 2005 or for the same period in 2004 except for interest earned in bank deposits in the amount of $ 0 and $33 respectively. The decrease was due to a term deposit being closed in the previous quarter.

Total expenses for the 3 month period ending March 31, 2005 was $ 36155 compared to $42039 for the same period in 2004. The decrease was due to decreased professional fees.

The Company is expecting to generate revenues of $400,000 from the sales of Evader’s products in the next 12 months. The Company intends to raise additional funds in the near future through private placements of its common stock.


LIQUIDITY AND CAPITAL RESOURCES

In the three months ended March 31, 2005 cash used in operating activities was $33,751 compared to $ 39,567 for the same period in 2004. This decrease was due to reduced expenses.
 
The Company intends to raise additional funds in the near future through private placements of its common stock. The proceeds from such private placements will be allocated for administrative salaries, office expenses and travel, product development and testing, and product promotion.

Total assets as of March 31, 2005 were $131,270 representing a decrease of $36,155 from total assets of $167,425 as of December 31, 2004.

The Company's ability to continue in existence is dependent upon obtaining the necessary $150,000 for the marketing and sales promotion of Evader’s electric scooter and $350,000 needed to fund working capital of either cooperation or establishing a new company which pro9duces healthy products. The Company’s cash requirements for the next 12 months are estimated to be $500,000. If the Company is unsuccessful in raising at least $500,000, it may not be able to complete its plan of operations as discussed above.

 
OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements.


Effectiveness of the registrant's disclosure 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 10QSB. Based on and as of the date of such evaluation, the aforementioned officers have concluded that the Company's disclosure controls and procedures have functioned effectively so as to provide information necessary whether:

(i)
this quarterly report on Form 10 QSB contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report on Form 10 QSB, and(ii) the financial statements, and other financial information included in this quarterly report on Form 10 QSB, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this quarterly report on Form 10 QSB.
(ii)  
 
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

Legal Proceedings.
None

Changes in Securities.
None

Defaults upon Senior Securities.
None

Submission of Matters to a Vote of Security holders.
None

Other Information.
None

Item 6.
Exhibits.
(a).   Furnish the Exhibits required by Item 601 of Regulation S-B.

Exhibit 31 - Certification Pursuant To Section 302 Of The Sarbanes-Oxley Act Of 2002.

Exhibit 32 - Certification Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002.

(b)   Reports on Form 8-K.
None
 
 
SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AMANASU TECHNOLOGIES CORPORATION

Date: May 10, 2005

/s/ Hideyuki Shiraishi

Hideyuki Shiraishi
Chief Executive Officer
Chief Financial Officer
Chief Accounting Officer
 
13