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FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
For the Fiscal Year Ended December 31, 2002
COMMISSION FILE NO. 0-23920
NEVADA 98 - 0347883
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(State or other jurisdiction of incorporation) (IRS Employer
Identification No.)
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Securities registered pursuant to Section 12(b) of the Exchange Act: NONE
Securities registered pursuant to Section 12(g) of the Exchange Act:
Title of each class: Name of each Exchange on which registered: -------------------- ------------------------------------------ Common Stock, no par value OTC Bulletin Board |
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for 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.
[ X ] Yes [ ] No
Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in part III of this form 10-KSB or any amendment to this Form 10-KSB. [ ]
State the issuer's revenues for its most recent fiscal year: $680.00.
The aggregate market value of the voting stock held by non-affiliates of the registrant on March 10, 2003, computed by reference to the price at which the stock was sold on that date: $2,058,811.
The number of shares outstanding of the registrant's Common Stock, no par value, as of March 10, 2003 was 41,950,816 common shares.
Documents incorporated by reference: See Exhibits.
Transitional Small Business Disclosure Format (Check one): Yes ( ) No (X).
PART I3
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ITEM 1. DESCRIPTION OF BUSINESS 3
GENERAL 3
BUSINESS OF THE COMPANY AND PRODUCTS 4
Overview and History 4
MARKETING 6
PATENTS, TRADEMARKS, LICENCES, FRANCHISES, CONCESSIONS, ROYALTY
AGREEMENTS, LABOR CONTRACTS, INCLUDING DURATION 7
RISK FACTORS 7
GOVERNMENT REGULATIONS 10
DEPENDENCE ON CERTAIN CUSTOMERS 10
RESEARCH AND DEVELOPMENT 10
COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS 10
NUMBER OF TOTAL EMPLOYEES AND NUMBER OF FULL-TIME EMPLOYEES 11
ITEM 2. DESCRIPTION OF PROPERTY 11
ITEM 3. LEGAL PROCEEDINGS 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 11
PART II 11
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 11
DIVIDEND POLICY 12
RECENT SALES OF UNREGISTERED SECURITIES 12
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS 12
LIQUIDITY AND CAPITAL RESOURCES 13
ITEM 7. FINANCIAL STATEMENTS 14
ITEM 8. CHANGES IN AND DISAGREEEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 14
PART III 14
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16 (a) OF THE
EXCHANGE ACT. 14
ITEM 10. EXECUTIVE COMPENSATION 15
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 18
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 19
ITEM 13(a). EXHIBITS. 19
ITEM 13(b). REPORTS ON FORM 8-K. 20
SIGNATURES 21
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THIS ANNUAL REPORT ON FORM 10-KSB, INCLUDING EXHIBITS THERETO, CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE FORWARD-LOOKING STATEMENTS ARE TYPICALLY IDENTIFIED BY THE WORDS "ANTICIPATES", "BELIEVES", "EXPECTS", "INTENDS", "FORECASTS", "PLANS", "FUTURE", "STRATEGY", OR WORDS OF SIMILAR MEANING. VARIOUS FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE FORWARD-LOOKING STATEMENTS, INCLUDING THOSE DESCRIBED IN "RISK FACTORS" IN THIS FORM 10-KSB. WE ASSUME NO OBLIGATION TO UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT ACTUAL RESULTS, CHANGES IN ASSUMPTIONS, OR CHANGES IN OTHER FACTORS, EXCEPT AS REGULATED BY LAW.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Amanasu Environment Corporation ("Company") was incorporated in the State of Nevada on February 22, 1999 under the name of Forte International Inc. On March 27, 2001, we changed our name to Amanasu Energy Corporation. On November 13, 2002, our name was changed to Amanasu Environment Corporation.
On June 8, 2000, we obtained the exclusive, worldwide license to a technology that disposes of toxic and hazardous wastes through a proprietary, high temperature combustion system, known as the Amanasu Furnace. The rights were obtained pursuant to an exclusive licensing agreement with the inventor of the technology for a period of 30 years. The combustion system is a low cost methodology of generating extremely high temperatures in excess of 2,000 degrees Celsius. Waste matter exposed to the extreme temperature system is instantly decomposed to a gaseous matter and a magna-like liquid. The process leaves a 1-2% residue of an inert, carbon substance and oxygen which is vented out of the system. The process produces no toxins, smoke, ash, or soot. We will require further financing to advance our business model.
Effective September 30, 2002, we entered into a license agreement with Sanyo Kogyo Kabushiki Gaisha and Ever Green Planet Corporation (collectively the "Licensors"), both Japanese companies, whereby we were granted a worldwide, exclusive license for the production and marketing of certain products currently produced and marketed by the Licensors. These products consist of a state of the art hot water boiler. Its function is to extract heat energy from waste tires. It is a safe, non-polluting and highly efficient boiler used for a variety of uses.
Our principal offices are located at 701 Fifth Avenue, 36th Floor, Seattle, WA 98109. Our telephone number is (206) 262-8188 and our facsimile number is (206) 262-8199. We do not have a website.
BUSINESS OF THE COMPANY AND PRODUCTS
Overview and History
We have the exclusive, worldwide license to a technology that disposes of toxic and hazardous wastes through a proprietary, high temperature combustion system, known as the Amanasu Furnace. The combustion system is a low cost methodology of generating extremely high temperatures in excess of 2,000 degrees Celsius. Waste matter exposed to the extreme temperature system is instantly decomposed to a gaseous matter and a magna-like liquid. The process leaves a 1-2% residue of an inert, carbon substance and oxygen which is vented out of the system. The process produces no toxins, smoke, ash, or soot. We will require further financing to advance our business model.
Background of Technology.
The technology, known as the Amanasu Furnace, is a process that disposes of toxic and hazardous waste, through a proprietary, high temperature combustion system. The combustion system is a low cost methodology of generating extremely high temperatures is excess of 2,000 Celsius. Waste matter exposed to the extreme temperature system is instantly decomposed to a gaseous matter and a magna-like liquid. The process leaves a 1-2% residue of an inert, carbon substance and oxygen which vented out of the system. The process produces no toxins, smoke, ash, or soot.
Mr. Masaichi Kikuchi, the inventor of the technology and a consultant to the Company, constructed the first and only Amanasu furnace in 1996. The unit is located on the island of Hokkaido, Japan, and has been operating since 1996 at a capacity of five tons per day.
Description of the Amanasu Furnace.
The Amanasu furnace is a waste disposal system that safely and efficiently disposes of toxic and hazardous wastes in a cost efficient manner. The system has three general features; the proprietary combustion burner, the furnace compartment, and the gas processing compartment.
The proprietary aspect of the Amanasu furnace is the unique combustion system that generates abnormally high temperatures in excess of 2,000 degrees Celsius within the furnace compartment. A proprietary formula of low cost metals, such as powered aluminum and iron, is combined with an air pressurized, hydrocarbon flame creating a superheated hydrogen combustion flame. A spray nozzle or burner injects the flame into the furnace compartment where the flame is irradiated with microwaves to create an ionized flame reaching a heat conversion temperature of 18,000 C but an actual measured temperature of 2 1,800-2,300 C inside the furnace compartment. By contrast, an ordinary burner, neutral flame reaches temperatures between 800 to 1,600 C. In order to raise the temperature to the 1,800 to 2,300 degrees C range, large amounts of additional energy is required, typically, electricity. The cost of this energy source is expensive and would be cost prohibitive to the operation of the furnace. The Company's proprietary system reaches these temperatures using approximately 20 gallons of kerosene or light oil per hour for each one ton of daily capacity. For example, a five ton daily capacity unit requires five times as much hydrocarbon use or 100 gallons, per hour. The furnace reaches maximum temperatures within four to
five hours after flame ignition. The resultant effect is a low cost methodology of generating extremely high temperatures within a confined furnace compartment.
The inner walls of furnace and the combustion burner itself are protected from the extreme heat by magnetrons and tokomak. Magnetrons are circular magnets that deflect the gaseous ions from the furnace walls to the center of the furnace. Tokomak is an insulating material that further protects the furnaces walls from the extreme heat. Waste matter enters a feed dump where a conveyor or overhead grapple continuously feeds the waste to the furnace compartment. Once inside the high temperature furnace compartment, the chemical compounds of waste matter are instantly ionize or disintegrated into gaseous matter and a magna-like liquid. The magna-like liquid is water cooled to form a dense, inert carbon matter. The combustion gases resulting from the ionization first receive a light irradiation process to prevent recombination. A primary high speed water dousing process follows whereby the gas is cooled to 1,300 C. A series of two to four reaction tanks, similar to water shower units, further cool the gases, and sulfuric acid and nitric acid are removed through processing. Finally, the cooled gas, in the form of oxygen, is filtered and vented from the system as warm air at below 60 degrees C. The process is unlike conventional waste incinerators, as it produces no toxins, smoke, ash, or soot. The vented oxygen has dioxin levels below 0.01 nanogram and dibenzoflan levels below 0.001 nanogram. The inert carbon matter produced in the form of pellets is no more than 2% of the original mass, and can be used for roadway surfaces or disposed of in landfills.
Furnaces will be sold in daily disposal capacities of; one-half ton to one ton, two tons to five tons, and greater than five tons.
Units with daily capacities of one-half ton to one ton will be priced between $200,000 to $800,000. These units will measure approximately up to seven feet in length, four feet in width, and eight feet in height. These units can be manufactured as stationary or portable. Portable units can be mounted on a portable chassis, which can be hauled by a mid-sized truck to desired locations.
Units with daily capacities of two to five tons will be priced between $1,200,000 to $2,000,000. These stationary units will measure approximately up to fourteen feet in length, five feet in width, and eight feet in height.
Units with daily capacities of greater than five ton, including plants for municipalities, will require specific plant design based upon the requirements of each user. The pricing and size of each unit will be subject to the specific design and user requirements.
The outer housing of the Amanasu furnace is constructed of fabricated steel. Ancillary equipment, other than as described above, includes feed hoppers, pipe conveyors, fuel polarization equipment, air polarization equipment, turbo fans, and an air compression system for the burner. The Company believes the furnace will have an estimated useful life of approximately 15 years. This estimate is based upon the Hokkaido, Japan unit that has been operating since 1996.
COMPETITION
Generally, the waste disposal industry is highly competitive. This industry is populated by many national or international companies, with significantly greater resources than that of the Company. Many of these competitors dispose of
toxic waste in tradition methods such as landfills, and incinerator use. Despite the fact that these methods may not be environmentally friendly, they are nonetheless in compliance with governing regulations, and therefore, represent significant competition to the Company. In addition, competition will include other waste disposal systems that handle toxic and environmental waste in a non-pollutant manner. Despite this competition, the Company believes it maintains certain competitive advantages in its market. In particular, the Company believes that its system disposes of toxic and hazardous waste in an environmentally safe and cost effective manner. Consequently, the Company believes due to its competitive advantages, it will be able to effectively compete in this market.
Manufacturing And Suppliers.
The proprietary combustion system of the Amanasu furnace will be manufactured by the inventor at his factory located on the island of Hokkaido, Japan. All other components of the furnace will be manufactured or supplied by various vendors located in the Hokkaido area in collaboration with the Company. The Company also will subcontract the assembly and production of the furnaces to one or more manufacturing companies in the Hokkaido area. It believes these arrangements will be sufficient to meet the Company's production needs for the foreseeable future. While the Company may maintain single sources for the manufacture or supply of various components, other than the combustion system, it believes that other sources for such components are available if necessary. The Company will rely solely upon the inventor for the manufacture of the proprietary combustion system, however, the Company has the technical know how to manufacture the combustion system, if necessary.
MARKETING
Markets and Marketing.
Hazardous and toxic waste generally consists of a large number of chemicals, metals, pesticides, biological agents, toxic pollutants, and other substances. The treatment of toxic and hazardous waste worldwide is a growing and diverse industry. Significant legislation and regulation worldwide has contributed to the growth of this industry. These regulations are directed at protecting the environment by requiring originating parties to be responsible for managing the hazardous wastes that they generate. Although the Company's proprietary furnace disposes of various forms of waste, the Company will seek to promote its product as a toxic and hazardous waste disposal system. This position is premised upon the higher disposal fees for hazardous and toxic compared with the disposal fees of non-toxic or hazardous waste.
During the second quarter of 2001, the Company's has initiated contact with a number of municipalities and private corporations for purposes of commercially selling its proprietary furnace. However, no contracts have arisen from these negotiations. At the end of June 2001, the Company in collaboration with Mr. Kikuchi, the inventor, conducted a demonstration at the Hokkaido facility to approximately 350 prospective customers from Japan and other Pacific Rim countries. The Company cannot predict whether any sales will result from the demonstration or the efforts of the Company's president.
The Company expects to establish of a network of distributors throughout the Pacific Rim. It is contemplated that distributors will be granted exclusive distribution rights to a designated territory and will be compensated based on a negotiated percentage of sales. It is expected that distributors will be required to reach minimum sales levels in order maintain exclusive territorial distribution rights.
PATENTS, TRADEMARKS, LICENCES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS, LABOR CONTRACTS, INCLUDING DURATION
Pursuant to the license agreement with the inventor, Mr. Kikuchi, the Company obtained the world-wide rights to the Amanasu furnace for a period of 30 years. The Company considers its waste treatment technologies and know-how as proprietary and will use a combination of trade secrets, non disclosure agreements, license agreements, and patent laws to protect its proprietary rights. In 1996, Mr. Kikuchi, the inventor and a consultant to the Company, received a patent in Japan for the combustion technology, which expires in 2016. The Company anticipates that it will file for patent protection in other countries prior to any marketing efforts in such country.
RISK FACTORS
You should carefully consider the following risks and the other information in this Report and our other filings with the SEC before you decide to invest in us or to maintain or increase your investment.
The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties may also adversely impact and impair our business. If any of the following risks actually occur, our business, results of operations, or financial condition would likely suffer. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment.
Developmental Stage Company. We were incorporated on February 22, 1999. We are a development stage company. In a development stage company, management devotes most of its activities to establishing a new business. Planned principal activities have not yet produced significant revenues and we have suffered recurring operating losses as is normal in development stage companies. These factors raise substantial doubt about our ability to continue as a going concern. Our ability to emerge from the development stage with respect to our planned principal business activity is dependent upon our successful efforts to raise additional equity financing, receive funding from affiliates and controlling shareholders, and develop a market for our products.
Ability to develop product. We have no assurance at this time that a commercially feasible design will ever be perfected, or if it is, that it will become profitable. Our profitability and survival will depend upon our ability to develop a technically and commercially feasible product which will be accepted by end users. Our products which we are developing must be technologically superior or at least equal to other similar products that competitors offer and must have a competitive price/performance ratio to adequately penetrate its potential markets. If we are not able to achieve this condition or if we do not remain technologically competitive, we may be unprofitable and our investors could lose their entire investment. There can be no assurance that we or potential licensees will be able to achieve and maintain end user acceptance.
Need for Additional Capital. We rely on our ability to raise capital through the sale of our securities. Our the ultimate success will depend upon our ability to raise additional capital or to have other par-ties bear a portion of the required costs to further develop or exploit the potential market for our products.
Dependence on Consultants and Outside Manufacturing Facilities. Since our present plans do not provide for a significant technical staff or the establishment of manufacturing facilities, we will be primarily dependent on others to perform these functions and to pro-vide the requisite expertise and quality control. There is no assurance that such persons or institutions will be available when needed at affordable prices. It will likely cost more to have independent companies do research and manufacturing than for us to handle these resources.
Product/Market Acceptance. Our profitability and survival will depend upon our ability to develop a technically and commercially feasible product which will be accepted by end users. Our furnace must be technologically superior or at least equal to other waste disposal furnaces which our competitors may offer and must have a competitive price/performance ratio to adequately penetrate our potential markets. If we are not able to achieve this condition or if we do not remain technologically competitive, we may be unprofitable and our investors could lose their entire investment. There can be no assurance that we or our potential licensees will be able to achieve and maintain end user acceptance of our furnace.
Competition. Generally, the waste disposal industry is highly competitive. This industry is populated by many national or international companies, with significantly greater resources than that of the Company. Many of these competitors dispose of toxic waste in tradition methods such as landfills, and incinerator use. Despite the fact that these methods may not be environmentally friendly, they are nonetheless in compliance with governing regulations, and therefore, represent significant competition to the Company. In addition, competition will include other waste disposal systems that handle toxic and environmental waste in a non-pollutant manner. There is no assurance that we will be successful in meeting or over-coming our current or future competition.
Protection of Intellectual Property. Our business depends on the protection of our intellectual property and may suffer if we are unable to adequately protect our intellectual property. Currently, we have been granted a patent in Japan for the combustion technology, which expires in 2016. We cannot provide assurance that our patents will not be invalidated, circumvented or challenged, that the rights granted under the patents will give us competitive advantages or that our patent applications will be granted.
History of Losses. We have a history of operating losses, and an accumulated deficit, as of December 31, 2002, of $354,913. Our ability to generate revenues and profits is subject to the risks and uncertainties encountered by development stage companies.
Our future revenues and profitability are unpredictable. We currently have no signed contracts that will produce revenue and we do not have an estimate as to when we will be entering into such contracts. Furthermore, we cannot provide assurance that management will be successful in negotiating such contracts.
Rapid Technological Changes could Adversely Affect Our Business. The market for our furnaces is characterized by rapidly changing technology, evolving industry standards and changing customer demands. Accordingly, if we are unable to adapt to rapidly changing technologies and to adapt our product to evolving industry standards, our business will be adversely affected.
Management and Conflicts of Interest. Our present officers and directors have other unrelated full-time positions or part-time employment. Some officers and directors will be available to participate in management decisions on a
part-time or as-needed basis only. Our management may devote time to other companies or projects which may compete directly or indirectly with us.
Need for Additional Key Personnel. At the present, we employ one full time employees. Our success will depend, in part, upon the ability to attract and retain qualified employees. We believe that we will be able to attract competent employees, but no assurance can be given that we will be successful in this regard. If we are unable to engage and retain the necessary personnel, our business would be materially and adversely affected.
Indemnification of Officers and Directors for Securities Liabilities. The Company's By-Laws eliminates personal liability in accordance with the Nevada Revised Statutes. Section 78.7502 of the NRS provides that a corporation may eliminate personal liability of an officer or director to the corporation or its stockholders for breach of fiduciary duty as an officer or director provided that such indemnification is limited if such party acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the corporation.
In so far as indemnification for liability arising from the Securities Act of 1933 may be permitted to Directors, Officers or persons controlling the Company, it has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.
General Factors. Our areas of business may be affected from time to time by such matters as changes in general economic conditions, changes in laws and regulations, taxes, tax laws, prices and costs, and other factors of a general nature which may have an adverse effect on our business.
Limited Public Market for the Common Stock. At present, only a limited public market exists for the Common Stock on the over-the-counter bulletin board maintained by the National Association of Securities Dealers and there is no assurance that a more active trading market will develop, or, if developed, that it will be sustained.
Estimates and Financial Statements. The information in this Form 10-KSB consists of and relies upon evaluation and estimates made by management. Even though management believes in good faith that such estimates are reasonable, based upon market studies and data provided by sources knowledgeable in the field, there can be no assurance that such estimates will ultimately be found to be accurate or even based upon ac-curate evaluations.
No Foreseeable Dividends. We have not paid dividends on our Common Stock and do not anticipate paying dividends on our Common Stock in the foreseeable future.
Possible Volatility of Securities Prices. The market price for our Common Stock traded on the over-the-counter bulletin board has been highly volatile since it began trading and will likely to continue to behave in this manner in the future. Factors such as our operating results and other announcements regarding our development work and business operations may have a significant impact on the market price of our securities. Additionally, market prices for securities of many smaller companies have experienced wide fluctuations not necessarily related to the operating performance of the companies themselves.
GOVERNMENT REGULATIONS
Generally, the Company will be required to receive regulatory approval from various governmental agencies to conduct its operations. These regulatory approvals will require the Company to obtain and retain numerous governmental permits to conduct various aspects of its operations, any of which may be subject to revocation, modification or denial. Extensive and evolving environmental protection laws and regulations have been adopted worldwide during recent decades in response to public concern over the environment. The Company's operations and those of its future customers are subject to these evolving laws and regulations. The requirements of these laws and regulations 4 could impose substantial potential liabilities to the Company and its customers. If the operations of the Company's furnace result in a toxic spill or other mishap, the Company and its customers could be subject to substantial fines, suspension of operation, or other significant penalties. The Company makes a continuing effort to anticipate regulatory, political, and legal developments in its principal markets in the Pacific Rim that might affect its operations, but it is not always able to do so. The Company cannot predict the extent to which any legislation or regulation that may be enacted, amended, repealed, reinterpreted, or enforced in the future may affect its operations. Such actions could adversely affect the Company's operations or impact its future financial condition or earnings. The Company however does expect that its proprietary furnace will comply with all governing regulations in those countries that it intends to sell its product. This premise is based upon the fact that the furnace is not an incinerator and produces no toxins, smoke, ash, or soot. Moreover, the Hokkaido facility received a permit from a division of the Japanese Ministry of Labor in 1996 and since that time has been operating in compliance with the governing laws and regulations without incident.
DEPENDENCE ON CERTAIN CUSTOMERS
Although we have no key customers at the present time, we expect that if our development work is successful, we will likely become dependent, at least initially, upon one or very few key customers. Such dependence could prove to be risky in the event that one or more such potential customers were to be lost and not replaced.
RESEARCH AND DEVELOPMENT
We plan to contract with outside individuals, institutions and companies to perform any additional research and development work which we may require.
During the last two fiscal years, we spent $0 on research and development and $44,000 on equipment testing.
COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS
At the present time there is no direct financial or competitive effect upon our business as a result of any need to comply with any federal, state or local provisions which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment.
NUMBER OF TOTAL EMPLOYEES AND NUMBER OF FULL-TIME EMPLOYEES
As of December 31, 2002, the Company had one employee. In addition, the Company has entered into a consulting agreement with Mr. Kikuchi, the inventor of the technology to receive a royalty based on sales arising from his technology. The Company has no collective bargaining agreements with its employees and believes its relations with its employees are good.
ITEM 2. DESCRIPTION OF PROPERTY
We own no properties. The Company's executive offices are located at 701 Fifth Avenue, 36th Floor, Seattle, WA 98109. The premises are 1,500 square feet and are subleased from the Company's president on a month to month basis at a monthly rental amount of $1,500. The Company leases a Seattle apartment under an operating least that expires August 31, 2003. In addition, the Company maintains an office at 2-18 Kyobashi Chuo-ku, Tokyo, Japan 104-0031. The premises are 2,000 square feet and approximately 600 square feet are subleased by the Company from its president rent free on a month to month basis.
ITEM 3. LEGAL PROCEEDINGS
We are not a party to any legal proceedings or litigation, nor are we aware that any litigation is presently being threatened or contemplated against us or any officer, director or affiliate.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There was no matter submitted to a vote by our security holders during the fourth quarter of our fiscal year ended December 31, 2002, through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is a limited public market for our Common Stock which currently trades on the OTC Bulletin Board under the symbol "AMSU" where it has been traded since September 11, 2002. The Common Stock has traded between $1.05 and $0.12 per share since that date.
The following table sets forth the high and low prices for our Common Stock as reported on the Bulletin Board for the quarters presented. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions, and may not reflect actual transactions.
Bid Price Asked Price
High $ Low $ High $ Low $
Quarter Ended September 30, 2002 (1) .0 .0 .0 .0
Quarter Ended December 31, 2002 1.25 .11 4.00 .27
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(1) The Company commenced trading on the Over the Counter Bulletin Board on September 11, 2002. There were no trades until October, 2002.
(Information provided by The Over The Counter Bulletin Board. The quotations reflect inter-dealer prices, without retail mark-up, markdown, or commission and may not represent actual transactions.)
As of February 28, 2003, there were 41,950,816 shares of Common Stock outstanding, held by 51 shareholders of record.
DIVIDEND POLICY
To date we have not paid any dividends on our Common Stock and do not expect to declare or pay any dividends on our Common Stock in the foreseeable future. Payment of any dividends will be dependent upon future earnings, if any, our financial condition, and other factors as deemed relevant by our Board of Directors.
RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information regarding the issuance and sales of our securities without registration during the last fiscal year. No such sales involved the use of an underwriter. See Note 1 and Note 2 to our audited financial statements for the fiscal year ended December 31, 2002 for more information on recent sales of unregistered securities.
License Acquisition
On September 30, 2002 the Company acquired the exclusive worldwide rights to produce and market a patented product known as Firebird PD 5000, which is a hot water boiler that collects heat from waste tires. As consideration for this acquisition, the Company is obligated to pay $250,000 and to issue 650,000 shares of common stock. A copy of the agreement is attached as an exhibit to this 10-KSB filing. These shares were paid personally by Mr. Maki, our President. The shares were issued on October 17, 2002. These sales were exempt under Regulation S under the Securities Act of 1933, as amended, due to the foreign nationality of the relevant purchasers.
Private Placement
During the year, the Company issued 53,000 shares of common stock, realizing cash proceeds of $265,000. These sales were exempt under Regulation S under the Securities Act of 1933, as amended, due to the foreign nationality of the relevant purchasers.
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the Company's Financial Statements, including the Notes thereto, appearing elsewhere in this Annual Report.
The Company was organized February 22, 1999. Its operations to date have been limited to obtaining licensing for the production and sale of two products, conducting preliminary marketing efforts, and conducting testing for one of the products.
The Company is a development stage corporation. It has not commenced its planned operations of manufacturing and selling two products: a toxic and hazardous waste disposal system, and a hot water boiler.
During the year 2001, the Company obtained a license to manufacture and sell the Amanasu furnace, a toxic waste disposal system. On September 30, 2002 it obtained a license to manufacture and sell a state of the art hot water boiler, which derives its energy in a nonpolluting chemical process from waste tires.
The Company raised $274,540 during the year 2001, and $265,000 during 2002, through the issuance of common stock. The Company intends to raise another $300,000 during 2003 through the private placement of its common stock. The proceeds of such private placements will be used to continue the development and market planning of its two products, and for other general working capital needs.
The Amanasu furnace has undergone rigorous testing and adjustments to meet UL and EPA requirements, as well as requirements of specific potential customers. Additional research is also being conducted in Japan by the inventor of this product.
The hot water boiler system will be marketed throughout North America. Particular attention is being focused on Mexico. A complete system has been shipped to Mexico to undergo testing for compliance with government regulations. A formal agreement for marketing this product in Mexico is expected to be executed upon completion of this testing.
The Company has entered into discussions with a number of private investors concerning the private placement of its common stock. At this time, however, it has not received commitments from any source. Although the Company is encouraged by its discussions, it cannot predict whether it will be successful in raising capital, which capital is essential to its plan of operations.
The results of operations during the year 2002 was a loss of $76,387 compared with a loss of $224,737 in the comparable 2001 period. Significant expenses for consulting and testing of the Amanasu furnace were not repeated in 2002.
LIQUIDITY AND CAPITAL RESOURCES
During 2002, we financed our operations mainly through the issuance of 53,000 shares of common stock, which yielded proceeds of $265,000. The loss for the year of $76,387 included $9,532 of non-cash items.
As at December 31, 2002, we had a cash balance of $78,432, and current liabilities of $95,100.
ITEM 7. FINANCIAL STATEMENTS
Our consolidated financial statements are included and begin immediately following the signature page to this report. See Item 13 for a list of the financial statements and financial statement schedules included.
ITEM 8. CHANGES IN AND DISAGREEEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT.
Directors and Executive Officers of the Registrant
The following table sets forth the name, age and position of each of our Executive Officers and Directors:
Name Age Position Atsushi Maki (1) 56 Chairman, President, CFO and Director Lina Lei (1) 43 Secretary Takahashi Yamaguchi (1) 70 Director (1) Member of the Audit Committee |
BUSINESS EXPERIENCE AND PRINCIPAL OCCUPATION OF DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
Atsushi Maki has been the President, Chairman and Chief Financial Officer of the Company since November 10, 1999. All officers currently devote part-time services to our operations.
Mr. Maki and Ms. Lei are husband and wife. Other than that relationship, there are no family relationships between any director or executive officer and any other director or executive officer.
The present and principal occupations of our directors and executive officers during the last five years are set forth below:
Atsushi Maki has been the President, Chief Financial Officer, Chairman and Director of the Company since November 10, 1999. During the past ten years, Mr. Maki has been an independent businessman involved mainly in real estate development projects in Japan. In 1995, he served as a Director of the Japan-Korea Cooperation Committee along with the former Prime Minister of Japan who acted as the Chairman of the committee. In 1999, he was responsible for establishing the Japan-China Association, a foundation for fostering better relations between the two nations. He served as a director of the association,
along with the Chairman of Sony Corporation and the Honorary Chairman of Toyota Motor Corporation. Mr. Maki is the husband of Lina Lei, the Secretary and a director of the Company.
Lina Lei has been the Secretary of the Company since November 10, 1999. Ms. Lei was appointed a director in November 1999 and resigned from the board on August 21, 2002. From May 1990 to November 1999, Ms. Lei was employed by Thunder Company Ltd, Tokyo, Japan, in various capacities including as its managing director. Ms. Lei completed her university studies in Shanghai, China in 1982, and obtained a master's degree from Hitotsubashi University in Tokyo in 1990. Ms. Lei is the wife of Atsushi Maki, the Chairman and President of the Company.
Takashi Yamaguchi has been a Director of the Company since October 1, 2001. During the past ten years, Mr. Yamaguchi has been involved mainly in real estate development projects in Japan. Between 1988 and 1998 he served as a director of the Tokyo Bay Hilton, Inc. During the same period, he was also an inspector with Nihon BCG Production Inc. Between 1991 and 1998 he served as an inspector with Toyo Futo Inc. Mr. Yamaguchi received a Liberal Arts degree from Tokyo University in 1952 and graduated with a law degree from Tokyo University in 1958.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of Forms 3, 4 and 5 furnished to us, we might determine that none of our officers, directors or beneficial owners of more than ten percent of the Common Stock failed to file on a timely basis reports required to be filed by Section 16(a) of the Exchange Act during the most recent fiscal year.
However, we have knowledge that the following person failed to timely file reports required to be filed by Section 16(a) as follows:
Number of late reports:
Each of Messrs. Maki and Yamaguchi and Ms. Lei failed to file a Form 3 on a
timely basis upon the Company becoming a reporting company on October 1, 2001.
However, each of Ms. Lei, Mr. Maki and Mr. Yamaguchi have now filed a Form 3 and
a Form 5.
Number of transactions that were not reported on a timely basis:
The number of transactions which were not reported on a time basis was 2 for each of Ms. Lei, Mr. Maki and Mr. Yamaguchi.
As at the date of this report, all Forms 3, 4 and 5 are current.
Audit Committee Financial Expert
Our board of directors has determined that we have at least one audit committee financial expert serving on our audit committee. In particular, Messrs. Maki and Yamaguchi have experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing or evaluation of financial statements.
ITEM 10. EXECUTIVE COMPENSATION
No executive officer had an annual salary and bonus in excess of $100,000 during the past fiscal year.
Annual Compensation Long Term Compensation
Awards Payouts
Securities
Under-
lying
Other Annual Restricted Stock Options/ LTIP (2) All Other
Name and Principal Salary Bonus Compensation Award(s) SARs Payout Compensation
Position Year ($) (3) ($) ($) (#) (1)(#) ($) ($)
Atsushi Maki, 2002 Nil Nil Nil Nil Nil Nil Nil
President and CEO 2001 14,769 Nil Nil Nil Nil Nil Nil
2000 14,769 Nil Nil Nil Nil Nil Nil
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(1) "SARS" or "stock appreciation right" means a right granted by US, as compensation for services rendered, to receive a payment of cash or an issue or transfer of securities based wholly or in part on changes in the trading price of our publicly traded securities.
(2) "LTIP" or "long term incentive plan" means any plan which provides compensation intended to serve as incentive for performance to occur over a period longer than one financial year, but does not include option or stock appreciation right plans or plans for compensation through restricted shares or restricted share units.
(3) Mr. Maki received salary compensation in the form of 3,200,000 shares of common stock of the Company for the period from November 1999 through fiscal 2001. The shares were valued at $0.01 per share. Of the total amount of shares, 246,200 shares were allocated for fiscal 1999, with the balance allocated equally between 2000 and 2001.
The Company and its officers have agreed that the officers of the Company will not receive any other compensation beyond year 2001 until such time as the Company reaches profitability for a full fiscal quarter. The terms of any such compensation arrangement have not been determined at this time. Other than as indicated above, the Company did not have any other form of compensation payable to its officers or directors, including any stock option plans, stock appreciation rights, or long term incentive plan awards for the periods during the fiscal years 2002 and 2001.
The Company's directors received no fees for their services in such capacity, however, they will be reimbursed for expenses incurred by them in connection with the Company's business. Our President will receive a salary if and when the company's operations become profitable.
We may in the future create retirement, pension, profit sharing, insurance and medical reimbursement plans covering our Officers and Directors. At the present time, no such plans exist. No advances have been made or are contemplated by us to any of our Officers or Directors. Directors receive no compensation for their service as such. Compensation of officers and directors is determined by our Board of Directors and is not subject to shareholder approval.
The following table sets forth certain information with respect to options exercised during the fiscal year ended December 31, 2002 by our Chief Executive Officer, and with respect to unexercised options held by our Chief Executive Officer at the end of fiscal 2002.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
Number of
Unexercised Value of
Options at Unexercised
Years End Options at Year End
Shares Acquired Exercisable / Exercisable /
Name On Exercise (#) Value realized ($) Unexercisable Unexercisable
------------ ---------------- -------------------- ------------- -------------
Atsushi Maki -0- -0- -0- -0-
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We do not have any Long Term Incentive Plans.
We do not have any employment contracts, termination of employment and change of control arrangements.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table will identify, as of December 31, 2002, the number and percentage of outstanding shares of common stock of the Company owned by (i) each person known to the Company who owns more than five percent of the outstanding common stock, (ii) each officer and director, and (iii) and officers and directors of the Company as a group. The following information is based upon 41,950,816 shares of common stock of the Company which are issued and outstanding as of December 31, 2002. The address for each individual below is 701 Fifth Avenue, 36th Floor, Seattle, WA 98109, the address of the Company.
Title of Security Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership (1) Percent of Class
Amanasu Corporation(2)
#902 Ark Towers,
1-3-40
Roppongi, Minatoku
Common Stock Tokyo, Japan 33,000,000 78.66%
Common Stock Atsushi Maki(3)(4) 35,496,000 84.61%
Common Stock Lina Lei(4) 362,500 *%
Common Stock Takashi Yamaguchi 210,000
Officers and Directors
as a Group (3 persons) 36,068,500 85.98%
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* Less than one percent.
(1). "Beneficial ownership" means having or sharing, directly or indirectly (i)
voting power, which includes the power to vote or to direct the voting, or
(ii) investment power, which includes the power to dispose or to direct the
disposition, of shares of the common stock of an issuer. The definition of
beneficial ownership includes shares underlying options or warrants to
purchase common stock, or other securities convertible into common stock,
that currently are exercisable or convertible or that will become
exercisable or convertible within 60 days. Unless otherwise indicated, the
beneficial owner has sole voting and investment power.
(2). Mr. Atsushi Maki, the Company's Chairman and President, is the sole shareholder of Amanasu Corporation (formerly named Family Corporation, the name was changed during fiscal 2002) and is deemed the beneficial owner of such shares.
(3). Includes 2,496,000 shares of common stock held individually by Mr. Maki and 33,000,000 shares of common stock held by Amanasu Corporation.
(4). Atsushi Maki and Lina Lei are husband and wife. Each spouse disclaims beneficial ownership of the shares of the other spouse.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 15, 1999, the Company entered into an agreement with Amanasu Corporation, a Japanese corporation, under which Amanasu Corporation agreed to arrange the grant of a license to Amanasu Furnace to the Company. In exchange for obtaining the license to the Technology, the Company agreed to issue to Amanasu Corporation 13,000,000 shares of its common stock and stock purchase options to acquire another 20,000,000 shares of common stock at a price per share of $0.01. In addition under the terms of the agreement, the Company agreed to issue 1,000,000 shares of common stock to the inventor of the technology, and 200,000 shares of common stock to the executive director of the inventor. In May 2001, Amanasu Corporation exercised its option to acquire 20,000,000 shares of common stock of the Company and paid the sum of $200,000 to the Company. Mr. Atsushi Maki, the Company's Chairman and President, is the president and sole shareholder of Amanasu Corporation.
Mr. Maki received salary compensation in the form of 3,200,000 shares of common stock of the Company for the period from November 1999 through fiscal 2001. The shares were valued at $0.01 per share or a total of $32,000. Ms. Lei received salary compensation in the form of 312,500 shares of common stock of the Company for the period from November 1999 through fiscal 2001. The shares were valued at $0.01 per share or a total of $3,125.
On June 8, 2000, the Company entered into an exclusive licensing agreement with the inventor of the Amanasu Furnace. Under the licensing agreement, the Company obtained the worldwide production and marketing rights of the Technology for 30 years, and the Company is required to pay the inventor a royalty of 2% on gross sales of the Technology.
ITEM 13(a). EXHIBITS.
Number Description
3.1 Articles of Incorporation of the Company (1)
3.2 Certificate of Amendment to Articles of Incorporation (1)
3.3 Amended and Restated By - Laws of the Company (1)
3.4 Certificate of Amendment to Articles of Incorporation (3)
10.1 Agreement between Family Corporation and the Company dated December
15, 1999 (1)
10.2 License agreement between Masaichi Kikuchi and the Company dated June 8,
2000 (1)
10.3 Technical Consulting Agreement the Company and Masaichi Kikuchi dated
June 9, 2001 (1)
10.4 License Agreement dated June 8, 2000 (2)
10.5 License Agreement made as of September 30, 2002 (3)
20
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10.6 Addendum to September 30, 2002 License Agreement made as of November
18, 2002 (3)
99.1 Certification of Atsushi Maki, Chairman, President, Secretary, Chief Financial
Officer (Principal Executive Officer), pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (3)
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(1) Incorporated by reference from Form 10-SB Registration Statement filed June
20, 2001.
(2) Incorporated by reference from Form 10-KSB filed April 15, 2002.
(3) Filed herein.
Independent Auditor's Report
Independent Auditor's Report
Balance Sheets
Statements of Operations
Statement of Stockholders' Equity
Statements of Cash Flows
Notes to the Financial Statements
ITEM 13(b). REPORTS ON FORM 8-K.
None.
ITEM 14. CONTROLS AND PROCEDURES
The Company's Chief Executive Officer and Chief Financial Officer have evaluated the Company's disclosure controls and procedures within 90 days prior to the date of filing of this Annual Report on Form 10-KSB. Management believes that the Company's current internal controls and procedures are effective and designed to ensure that information required to be disclosed by the Company in its perioiodic reports is recorded, processed, summarized and reported, within the appropriate time periods specified by the SEC, and that such information is accumulated and communicated to the Company's CEO and CFO as appropriate to allow timely decisions to be made regarding required disclosure.
As of February 28, 2003, there were no significant corrective actions taken by the Company or other changes made to these internal controls. Management of the Company does not believe there were changes in other factors that could significantly affect these controls subsequent to the date of the evaluation.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report or amendment to be signed on its behalf by the undersigned, thereunto duly authorized.
AMANASU ENVIRONMENT CORPORATION
By: /s/ Atsushi Maki
-----------------------
Atsushi Maki, Chairman, President
and Director
Dated: March 21, 2003
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In accordance with the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated below.
Signature Title Date
/s/ Atsushi Maki
------------------
Atsushi Maki President, Chairman, Chief 3 / 21 / 03
Officer and Director
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I, Atsushi Maki, certify that:
1. I have reviewed this annual report on Form 10-KSB of Amanasu Environment Corporation;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit 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;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) presented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: March 21, 2003 /s/ Atsushi Maki ------------------ Atsushi Maki Chairman, President and Chief Financial Officer |
EXHIBIT INDEX
Number Description
3.1 Articles of Incorporation of the Company (1)
3.2 Certificate of Amendment to Articles of Incorporation (1)
3.3 Amended and Restated By - Laws of the Company (1)
3.4 Certificate of Amendment to Articles of Incorporation (3)
10.1 Agreement between Family Corporation and the Company dated December
15, 1999 (1)
10.2 License agreement between Masaichi Kikuchi and the Company dated June 8,
2000 (1)
10.3 Technical Consulting Agreement the Company and Masaichi Kikuchi dated
June 9, 2001 (1)
10.4 License Agreement dated June 8, 2000 (2)
10.5 License Agreement made as of September 30, 2002 (3)
10.6 Addendum to September 30, 2002 License Agreement made as of November
18, 2002 (3)
99.1 Certification of Atsushi Maki, Chairman, President, Secretary, Chief Financial
Officer (Principal Executive Officer), pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (3)
|
(1) Incorporated by reference from Form 10-SB Registration Statement filed June
20, 2001.
(2) Incorporated by reference from Form 10-KSB filed April 15, 2002.
(3) Filed herein.
Independent Auditor's Report
Independent Auditor's Report
Balance Sheets
Statements of Operations
Statement of Stockholders' Equity
Statements of Cash Flows
Notes to the Financial Statements
Financial Statements
AMANASU ENVIRONMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 2002
Page
----
Accountant's Audit Report 1
Balance Sheets 2
Statements of Operations 3
Statements of Changes in Stockholder's Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6
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Board of Directors
Amanasu Environment Corporation
I have audited the accompanying balance sheets of Amanasu Environment Corporation (a development stage company) as of December 31, 2002 and 2001, and the related statements of operations and deficit accumulated during development stage, changes in stockholders' equity, and cash flows for the years ended December 31, 2002, 2001, and 2000. These financial statements are the responsibility of the Company management. My responsibility is to express an opinion on these financial statements based on my audit.
I conducted the audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Amanasu Environment Corporation as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years ended December 31, 2002 and 2001, and 2000 in conformity with accounting principles generally accepted in the United States of America.
/s/ Robert G. Jeffrey ROBERT G. JEFFREY March 29, 2003 Wayne, New Jersey |
AMANASU ENVIRONMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31,
2002 2001
---------- ----------
ASSETS
-------
Current Assets:
Cash $ 78,432 $ 35,287
---------- ----------
TOTAL CURRENT ASSETS 78,432 35,287
Fixed Assets:
Automotive equipment 25,859 25,859
Less accumulated depreciation 7,960 3,060
---------- ----------
NET FIXED ASSETS 17,899 22,799
Other Assets:
Rent deposit 8,028 8,028
Licensing agreement, net of accumulated
amortization of $4,632 310,368 -
---------- ----------
TOTAL OTHER ASSETS 318,396 8,028
---------- ----------
TOTAL ASSETS $ 414,727 $ 66,114
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------
Current Liabilities:
Shareholder advance $ 100 $ 100
Amount due for licensing agreement 95,000 -
---------- ----------
TOTAL CURRENT LIABILITIES 95,100 100
---------- ----------
Stockholders' Equity:
Common stock: authorized 100,000,000 shares of $0.001
par value; 41,950,816 and 41,247,816 respectively, issued
and outstanding 27,751 27,048
Additional paid-in capital 646,789 317,492
Deficit accumulated during development stage (354,913) (278,526)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 319,627 66,014
---------- ----------
Total Liabilities and Stockholders' Equity $ 414,727 $ 66,114
========== ==========
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The accompanying notes are an integral part of these financial statements.
AMANASU ENVIRONMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND DEFICIT
ACCUMULATED DURING DEVELOPMENT STAGE
February 22, 1999
Year Year Year (Date of Inception)
2002 2001 2000 To December 31, 2002
--------- ---------- --------- ----------------------
Revenue:
---------
Interest income $ 680 $ 2,258 $ - $ 2,938
Expenses 77,067 226,995 51,086 357,851
--------- ---------- --------- ----------------------
Loss accumulated
during development stage $(76,387) $(224,737) $(51,086) $ (354,913)
========= ========== ========= ======================
Net loss per share -
Basic and Diluted $ - $ - $ (.01)
========= ========== =========
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The accompanying notes are an integral part of these financial statements.
AMANASU ENVIRONMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
Deficit
Accumulated
Common Stock Additional During
Shares Amount Paid in Capital Development Stage Total
----------- ---------- ---------------- ------------------- ---------
Balance, December 31, 1999 - $ - $ - $ (2,703) $ (2,703)
Shares issued as fees connected with
acquisition of licensing agreement 13,000,000
Shares issued as compensation 3,512,500 3,512 31,613 35,125
Shares issued for services 3,487,500 3,488 31,387 34,875
Net loss for period (51,086) (51,086)
----------- ----------
Balance, December 31,2000 20,000,000 7,000 63,000 (53,789) 16,211
Sales of common stock 47,816 48 74,492 74,540
Shares issued on exercise of option 20,000,000 20,000 180,000 200,000
Shares issued as fees connected with
acquisition of licensing agreement 1,200,000
Net loss of period (224,737) (224,737)
----------- ----------
Balance, December 31, 2001 41,247,816 27,048 317,492 (278,526) 66,014
Sales of common stock 53,000 53 264,947 265,000
Shares issued as fees connected with
licensing agreement 650,000 650 64,350 65,000
Net loss for period (76,387) (76,387)
----------- ----------
Balance, December 31, 2002 41,950,816 $ 27,751 $ 646,789 $ ( 354,913) $319,627
=========== ========== ================ =================== =========
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The accompanying notes are an integral part of these financial statements.
AMANASU ENVIRONMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
February 22,
1999 (Date of
Inception)
Year Year Year to December
2002 2001 2000 31, 2002
---------- ----------
CASH FLOWS FROM OPERATIONS:
Net loss $ (76,387) $(224,737) $ (51,086) $(354,913)
Charges not requiring the outlay of cash:
Depreciation and amortization 9,532 3,060 12,592
Common stock issued for services - 16,211 51,086 70,000
---------- ---------- ------------ ----------
NET CASH CONSUMED BY
Operating Activities (66,855) (205,466) - (272,321)
---------- ---------- ------------ ----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of licensing agreement (155,000) - - (155,000)
Purchase of automobile - (25,859) - (25,859)
Rent deposit for warehouse lease - (8,028) - (8,028)
---------- ---------- ------------ ----------
NET CASH CONSUMED BY
INVESTING ACTIVITIES (155,000) (33,887) - (188,887)
---------- ---------- ------------ ----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuances of common stock 265,000 274,540 - 539,540
Advances received in anticipation of
common stock sales - 100 - 100
---------- ---------- ------------ ----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 265,000 274,640 - 539,640
----------------------------------------- ---------- ---------- ------------ ----------
NET CHANGE IN CASH BALANCES 43,145 35,287 - 78,432
---------- ---------- ------------ ----------
Cash balance, beginning of period 35,287 - - -
---------- ---------- ------------ ----------
Cash balance, end of period $ 78,432 $ 35,287 $ - $ 78,432
========== ========== ============ ==========
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The accompanying notes are an integral part of these financial statements.
AMANASU ENVIRONMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization of Company
The Company is a Nevada Corporation, formed February 22, 1999, as Forte
International, Inc. The name was changed to Amanasu Energy Corporation on March
27, 2001, and to Amanasu Environment Corporation on October 18, 2002.
Business
During the year 2000, the Company acquired worldwide licensing rights for
nuclear incinerator technology, known as "The Amanasu Furnace". The Furnace is
a positive ion breeder incinerator process that converts domestic and industrial
wastes to ions through high temperature exposure. The resultant residue
consists of oxygen gas and inert slag pellets. On September 30, 2002, the
Company was granted a worldwide exclusive license for the production and
marketing of a hot water boiler which extracts heat energy from waste tires.
Development Stage Accounting
The Company is a development stage company, as defined in Statement of Financial
Accounting Standards No. 7. Generally accepted accounting principles that apply
to established operating enterprises govern the recognition of revenue by a
development stage enterprise and the accounting for costs and expenses. From
inception to December 31, 2002, the Company has been in the development stage
and all its efforts have been devoted to obtaining the worldwide licensing
rights describe above, and to testing the related equipment. Except for
interest on bank deposits no revenue had been realized through December 31,
2002.
Basis Of Presentation
The Company has incurred losses from inception to December 31, 2002 of $354,913.
Capital was raised during 2001 and 2002 in the amounts of $274,540 and $265,000,
respectively, through the issuance of 20,047,816 shares and 53,000 shares,
respectively, of common stock. This is expected to provide adequate financing
to allow the Company to begin using its licensing rights.
Cash
For purposes of the statements of cash flows, the Company considers all short
term debt securities purchased with a maturity of three months or less to be
cash equivalents.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Fixed Assets
Fixed assets are recorded at cost. Depreciation is computed using accelerated
methods, with lives of seven years for furniture and equipment and five years
for computers and automobiles.
Licensing Agreement
During the year 2000, the Company issued 13,000,000 shares of common stock to a
company that is wholly owned by the Company's president as a fee for arranging
for the acquisition of the licensing agreement for the nuclear incinerator
technology. Another 1,200,000 shares was issued in 2001 in connection with the
acquisition of this agreement. No value has been assigned to this intangible
asset.
The license for the hot water boiler was acquired at a cost of $250,000 cash and 650,000 shares of common stock. The stock was valued at $.10 per share, bringing the total cost to $315,000. Amortization of this cost is provided by the straight line method using a life of 17 years, which is based on patent life.
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.
Use Of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimated.
Advertising Costs
The Company will expense advertising costs when the advertisement occurs. There
has been no spending thus far on advertising.
Segment Reporting
Management will treat the operations of the Company as one segment.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Common Stock
During 2000, the Company issued 13,000,000 shares of its common stock to a
corporation wholly owned by the Company's president in connection with obtaining
a license of the nuclear incinerator technology. An additional 1,200,000 shares
of common stock was issued during 2001 in connection with obtaining the
agreement. In addition, during 2000 the Company issued 7,000,000 shares of
common stock as compensation for salaries to its officers and for services
provided by consultants. Of this total, 3,512,500 shares were issued to two
officers as salaries for the period from November 1, 1999 to December 31, 2001
which were valued in the aggregate at $35,125. Of this amount, 270,300 shares
($2,703) were allocated to the 1999 period, with the balance of such shares
allocated equally between 2000 and 2001. The remaining 3,487,500 shares of
common stock issued for services went to various consultants in connection with
services rendered during the 2000 period. These shares were valued at $34,875.
During the year 2002, 650,000 were issued as part of the consideration for obtaining the license for the hot water boiler technology. These shares were valued at $65,000.
2. RELATED PARTY TRANSACTIONS
A total of 13,000,000 shares was issued during the year 2000 to a corporation which is controlled by the president of the Company. These shares were issued as compensation for arranging the acquisition of the licensing agreement for the nuclear incinerator technology. An additional 3,512,500 shares was issued to officers of the Company during the year 2000 as compensation for the period November 1, 1999 to December 31, 2001.
An option for an additional 20,000,000 shares was issued to the corporation which is controlled by the president of the Company in connection with the acquisition of the licensing agreement. The exercise price of this option was $.01 per share. This option was exercised in May 2001.
3. INCOME TAXES
The Company experienced losses during 2000, 2001, and 2002 which totaled $352,210. As a result, it has incurred no Federal income tax. The Internal Revenue Code allows net operating losses (NOL's) to be carried forward and applied against future profits for a period of twenty years. The potential benefit of the NOL has been recognized on the books of the Company, but it has been offset by a valuation allowance. If not used, a portion of the NOL carryforward will expire each year during the years 2019 to 2022.
Under Statement of Financial Accounting Standards No. 109, recognition of deferred tax assets is permitted unless it is more likely than not that the assets will not be realized. The Company has recorded noncurrent deferred tax assets as follows:
Deferred Tax Assets $117,638
Valuation Allowance 117,638
-------
Balance Recognized $ -
=======
4. EARNINGS PER SHARE
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Year 2002
NET LOSS AVERAGE SHARES OUTSTANDING PER SHARE AMOUNT
LOSS ALLOCABLE TO
COMMON SHAREHOLDERS $ (76,387) 41,401,483 $ -
|
Year 2001
NET LOSS AVERAGE SHARES OUTSTANDING PER SHARE AMOUNT
LOSS ALLOCABLE TO
COMMON SHAREHOLDERS $(224,737) 35,581,866 $ (.01)
|
Year 2000
NET LOSS AVERAGE SHARES OUTSTANDING PER SHARE AMOUNT
LOSS ALLOCABLE TO
COMMON SHAREHOLDERS $ (51,086) 6,819,672 $ (.01)
|
Options to purchase common stock were outstanding at the end of 2000 but were not included in the computation of earnings per share because such inclusion would have an antidilutive effect.
5. RENTALS UNDER OPERATING LEASES
The Company conducts its operations from leased office and warehouse facilities in Seattle, Washington under noncancelable operating leases which expire September 30, 2003 and October 31, 2004, respectively. In addition, the Company leases a Seattle apartment under an operating lease that expires August 31, 2003.
The following is a schedule of future minimum rental payments required under the above operating leases as of December 31, 2002.
Year ending
December 31, Amount
------------- ------
2003 $43,118
2004 16,507
-------
59,625
--------
|
6. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
There was no cash paid for interest or income taxes during any of the periods presented.
The following non-cash financing and investing activity occurred:
Shares of common stock were issued for services during the year 2000, totaling 20,000,000. Of this total, 13,000,000 shares were treated as the cost of obtaining the nuclear incinerator licensing agreement, and the remainder were treated as the cost of other services.
An additional 1,200,000 shares were issued during 2001 in connection with obtaining the licensing agreement.
During the year 2002, 650,000 shares were issued in connection with obtaining the hot water boiler licensing agreement. In addition, the Company obligated itself to pay $250,000 as part of the consideration for this agreement. As of December 31, 2002, $95,000 had not been paid.
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORIATION
FOR PROFIT NEVADA CORPORATION
(PURSUANT TO NRS 78.385 AND 78.390 - AFTER ISSUANCE OF STOCK)
REMIT IN DUPLICATE
1. NAME OF CORPORATION : AMANASU ENERGY CORPORATION
2. THE ARTICLES HAVE BEEN AMENDED AS FOLLOWS:
THE NAME OF THE COMPANY IS NOW CHANGED TO AMANASU ENVIRONMENT
CORPORATION.
3. THE VOTE BY WHICH THE STOCKHOLDERS HOLDING SHARES IN THE CORPORATION ENTITLING THEM EXERCISE A MAJORITY OF THE VOTING POWER, OR SUCH GREATER PROPORTION OF THE VOTING POWER AS MAY BE REQUIRED IN THE CASE OF A VOTE BY CLASSES OR SERIES, OR MAY BE REQUIRED BY THE PROVISIONS OF THE ARTICLES OF INCORPORATION HAVE VOTED IN FAVOUR OF THE AMENDMENT IS OVER 80%.
4. SIGNATURES :
/S/ ATSUSHI MAKI ------------------ PRESIDENT /S/ L. LEI ------------------ SECRETARY DATED: THE 17TH DAY OF OCTOBER, 2002. |
Exhibit 10.5
LICENSE AGREEMENT
This Agreement is made and is effective this 30th day of September, 2002.
BETWEEN: AMANASU ENERGY CORPORATION, a Nevada corporation with its office at 701 5th Avenue, 36th floor, Seattle, Washington 98109, U.S.A.
( hereinafter called " Licensee " )
AND: SANYO KOGYO KABUSHIKI GAISHA, A Japanese corporation with its office at 2-39-13 Higashitokura, Kokubunji, Tokyo 185- 0002, Japan.
( hereinafter called " Licensor # 1" )
AND: EVER GREEN PLANET CORPORATION, a Japanese corporation with its office at 985- 0853 Wiyagiken, Ishinomakishi, Kadonowaki, Aza Washizuka 170- 1, Japan
( hereinafter called " Licensor # 2 " )
WHEREAS Licensor # 1 and Licensor # 2 are both referred to collectively as " Licensors " from here onwards.
WHEREAS, Licensors are in the business of developing, manufacturing and marketing a state of the art hot water boiler system to extract heat energy from waste tires, referred to as the Product (see definition of Product in Section 1).
AND WHEREAS Licensee wishes to establish production and marketing centers throughout the world for the production and marketing of such Product invented, and presently produced and marketed by Licensors.
AND WHEREAS Licensors and Licensee have subject to the terms and conditions set forth in this Agreement, agreed to the licensing to the Licensee of the Technology ( see definition of Technology in Section 1 ) for the production and marketing of the Product throughout the world. For such exclusive rights, before October 30, 2002, Licensee will allot and issue to :
(1) Licensor # 1 a total of 500,000 common shares of Licensee and 30,000,000
Japanese Yen ( equivalent to US $250,000 ),
(2) Licensor # 2, a total of 100,000 common shares of Licensee, and
(3) 50,000 common shares of Licensee to Motohiko Kogetsu, whose address is
4-41-10-104 Nishi-Shinjuku, Shinjuku - ku, Tokyo 160- 0023, Japan.
NOW THEREFORE this Agreement witnesses that in consideration of the premises hereto and covenants and agreements hereinafter contained, the parties hereto covenant and agree to each other as follows :
SECTION 1 - DEFINITIONS
1.00 Technology relates to the Product produced from such a technology described below.
1.02 " Licensed Product " means any manner of chemical or other derivative that is used by the Technology and/or Patent/Patent Rights ( if applicable ), for the production of the Product. The Product that is ready for production and marketed is referred to as FireBirdPDC5000, which is a hot water boiler that collects heat from waste tires. It is a safe, non polluting and highly efficient boiler for a variety of uses. It uses petrol product wastes to generate heat.
1.03 " Sub-license " means the right to enter into agreements with third parties to assign all or part of this Agreement.
1.04 " Gross Receipts " means the total of the gross invoice prices of Licensee's Product without any deductions and allowances for discounts, tariff, duties, excise taxes, transportation charges, credits to customers for rejected Products, etc. In relation to Licensed Method means any amount received or receivable by Licensee for the sale and or use from Third Parties of the right to practice " Licensed Method ".
1.05 " Third Parties " means any person, corporation or entity recognized by law that is dealing at arms length.
SECTION 2 - GRANT OF LICENSES
2.00 Subject to the conditions of this Agreement, Licensors grant to Licensee the exclusive right to use the Technology to make, have made, use and sell the Licensed Product and practice Licensed Method on a world wide basis.
2.01 It is understood that Licensee shall have the right to issue sub-licenses to Third Parties on such terms and conditions as Licensee in its discretion may bona-fide determine in all areas of the world.
2.02 To the extent applicable, such sub-licenses shall include all the rights of and obligations due to Licensors that are contained in this Agreement.
SECTION 3 - ROYALTY
3.00 Licensee is to pay Licensors, a royalty equal to two ( 2 ) percent of Licensee's Gross Receipts from Licensed Product or Licensed method payable to Licensors, within sixty (60) days upon receipt of royalty by Licensee or from Sub-licensees.
3.01 All monies due to Licensors shall be payable in U.S. funds. The earned royalties will be determined in the foreign currency of the country in which such are made and converted into equivalent U.S. funds, and remitted likewise.
3.02 If at any time legal restrictions prevent the prompt remittance of any or all of the royalties by Licensee with respect to any country of sale, Licensee shall have the right and option to make such payment by depositing the amount thereof in local currency at Licensors' account in a bank or other depository in such country.
SECTION 4 - REPRESENTATIONS, WARRANTIES AND COVENANTS OF LICENSORS
4.00 Licensors hereby represents and warrants to, and covenants with Licensee, now and during the term of this Agreement that ;
(a) Licensors have the sole and exclusive right to grant the rights,
licenses and authorities granted to Licensee herein and they are the
sole and exclusive owner of all Patent/Patent Rights ( if applicable).
(b) The licenses herein granted are unencumbered by any lien, mortgage,
prior assignment, charge, other encumbrance, commitment or interest of
any other person.
(c) Licensors will not directly or indirectly enter into, negotiate or
solicit any agreement or arrangement for the creation or imposition of
any encumbrance or restriction of any nature which may be inconsistent
with the rights, licenses and authorities granted to Licensee herein.
(d) To the best of Licensors' knowledge, the claims for the Technology
and/or Patent/Patent Rights ( if applicable), do not infringe any
Canadian or U.S. patents or patent applications of any other party.
(e) Licensors are corporations and they have the power and capacity to
enter into this Agreement and carry out its terms to the full extent.
(f) Licensors and their employees will not disclose to any person other
than the legal advisors of the parties hereto, any information
pertaining to Licensee or this Agreement that has not been generally
disclosed to the public.
SECTION 5 - LICENSEE'S OBLIGATIONS
5.00 Licensee shall keep books and records showing all Licensed Product and License Method used and/or sold under the terms of this Agreement. Such records shall be open for inspection by representatives or agents of Licensor at reasonable times.
5.01 Licensee shall at all times diligently proceed with the manufacture and sale of Licensed Product and Licensed Method and shall earnestly and diligently market same and in quantities sufficient to meet market demands. Licensee shall be entitled to exercise prudent and reasonable business judgment in meeting its due diligent obligations.
5.02 Licensee covenants and agrees that during the life of this Agreement it shall :
(a) In the manufacturing of the Licensed Product, contract/ employ or cause to be employed, those persons or contractors who have the necessary skills, care and experience to manufacture the Licensed Product, to a reliability and safety standards that are established by Licensors.
(b) Conduct product testing both prior to and after commercial production to ensure the reliability and safety of the Licensed Product and Licensed Method, and shall furnish Licensors with results of such testing.
(c) In the manufacturing of Licensed Product it shall use only those parts and materials that meet or exceed the specification established by Licensors.
(d) At all reasonable times and on reasonable notice, permit Licensor and/or authorized representatives of Licensors to inspect any facilities in which any parts or materials are manufactured.
(e) Properly report to Licensors any occurrence involving the use of Licensed Product or Licensed Method that in the reasonable judgment of Licensee may give rise to a claim against the License, Licensors or any user of Licensed Product or Licensed Method. It shall continue to keep Licensors abreast of any subsequent report, investigation, inquest or legal proceeding arising therefrom.
(f) Comply with the patent, and all applicable laws, regulations, decrees or requirements of those countries in which Licensed Product is sold or Licensed method is practiced.
SECTION 6 - LIFE OF AGREEMENT
6.00 Unless otherwise terminated by operation of law or acts of the parts in accordance with the terms of this Agreement, this Agreement shall be in force from the effective date recited on page one, and shall remain in effect for thirty ( 30 ) years.
SECTION 7 - TERMINATION BY LICENSORS
7.00 If Licensee should violate or fail to perform any term or covenant of this Agreement, then Licensors may give written notice of such default ( Notice of Default ) to Licensee. If Licensee shall fail to repair such default within ninety days of the effective date of such notice, Licensors will have the right to terminate this Agreement and the Licenses herein, by a second written Notice ( Notice of Termination ) to Licensee.
If Notice of Termination is sent to Licensee, this Agreement shall automatically terminate on the effective date of such Notice. Such termination should not relieve Licensee of its obligation to pay any royalty at the time of such termination and shall not impair any accrued right of Licensors.
SECTION 8 - TERMINATION BY LICENSEE
8.00 Licensee shall have the right to terminate this Agreement by giving notice in writing to Licensors. Such notice of termination of this Agreement shall be effective ninety ( 90 ) days from the effective date of such notice.
8.01 Any termination pursuant to the above paragraph, shall not relieve Licensee of any obligation or liability accrued hereunder prior to such termination or rescind anything done by Licensee or any payments made to Licensors hereunder prior to the time such termination became effective, and such termination shall effect in any manner any rights of Licensors arising under this Agreement prior to such termination. Furthermore, upon termination of Licensee, all rights of Licensee hereunder shall be surrendered effective upon such date that termination becomes effective.
SECTION 9 - PATENT PROSECUTION AND MAINTENANCE
9.00 The following sub-sections will only be applicable, if and when, Patent(s) are applied for, at the sole discretion of Licensors.
9.01 Licensors shall diligently prosecute and maintain the United States and Canadian Patents ( if any ) comprising Licensor's Patent Rights using counsel of its choice. Licensors shall provide Licensee with copies of all relevant documentation so that Licensee may be informed and apprised of the continuing prosecution. Licensee agrees to keep this documentation confidential and shall at the request of Licensee, apply for patent protection in any country that Licensee markets the Licensed Products and Licensed Method.
9.02 Licensors shall use all reasonable efforts to amend any Patent application to include claims reasonably requested by licensee to protect the products contemplated to be sold under this Agreement.
9.03 Licensors shall co-operate with Licensee in applying for an extension of the term of any Patent included with Licensors' Patent Rights ( if any ). Licensors agree to execute such documents and take such additional action as Licensee may reasonably request in connection therewith.
9.04 The cost of preparing, filing, prosecuting and maintaining all Patent applications contemplated by this agreement, shall be borne by Licensors.
SECTION 10 - PATENT / PATENT RIGHTS INFRINGEMENT
10.00 In the event that Licensee shall learn of substantial infringement of any Patent /Patent Rights licensed under this Agreement, Licensee shall notify Licensors in writing and shall provide Licensors with reasonable evidence of such infringement.
Both parties shall use their best efforts in co-operation with each other to terminate such infringement without litigation.
10.01 Licensee may request that Licensors take legal action against the infringement of Licensors' Patent/Patent Rights. Such request shall be made in writing and shall include reasonable evidence of such infringement and damages to Licensee. If the infringing activity has not been abated within thirty (30) days following the effective date of such request, Licensors shall have the right to :
- commence legal suit on their own account; or
- refuse to participate in such suit, and Licensors shall give notice of
their election in writing to Licensee by the end of the ninetieth
(90th) day after receiving notice of such request from Licensee.
Licensee may thereafter bring suit for patent infringement if and only if Licensors elects not to commence legal suit ( other than as nominal party plaintiff ), and if the infringement occurred during the period.
However, in the event Licensee elects to bring legal suit in accordance with this paragraph, Licensors may thereafter join such legal suit at its own expense.
10.02 Such legal action is decided upon shall be at the expense of the party on account of whom suit is brought, and all recoveries recovered thereby, shall belong to such party, provided, however, that legal action brought jointly by Licensee and fully participated in by both, shall be at the joint expense of the parties, and all recoveries shall be shared jointly by them in proportion to the share of expense paid by each party.
10.03 Each party agrees to co-operate with the other in litigation proceedings instituted hereunder but at the expense of the party on account of whom suit is brought. Such litigation shall be controlled by the party bringing the suit, except that Licensors may be represented by counsel of their choice pursuant to Licensors' determination in any suit brought by Licensee.
SECTION 11 - COMMON COVENANTS OF LICENSOR AND LICENSEE
11.00 Governing Law & Submission to Jurisdiction
This Agreement shall be interpreted and construed in accordance with the laws of Nevada of the United States, and the parties hereto submit to the jurisdiction of the Courts of Nevada, but the scope of any patent or patent applicable shall be governed by the applicable laws of the country of such patent or patent application.
11.01 Conformity with Local Laws
Any provision or provisions of this Agreement which in any way contravene the law of any State or Country in which this Agreement is effective, shall in such State or Country, to the extent of such contravention of law, be deemed severable and shall not affect any provision or provisions of this Agreement. The parties shall each at its own expense in its own countries, take such steps as may be required to satisfy the laws and requirements of the respective countries with respect to declaring, recording, or otherwise rendering this Agreement valid.
11.02 Arbitration
Both parties shall act in good faith and utilize their best efforts to resolve any dispute, controversy or difference arising in connection with this Agreement, to their mutual satisfaction.
All disputes, controversies or differences arising in connection which are not resolved mutually, shall be finally settled by arbitration under the Rules of Conciliation and Arbitration of the International Chamber of Commerce, by a panel of three arbitrators each of whom shall speak fluent English and shall be appointed in accordance with the said Rules. Any award made by the arbitrators shall be made as promptly as possible and shall state the reasons for their decisions taking into account all aspects of the dispute, controversy or difference.
Any such arbitration shall be held in Nevada. The laws to be applied by the arbitrators shall be the laws of the United States. The decision of the arbitrators shall be final and binding on both parties. Judgment upon any award rendered by the arbitrators may be entered in any court having
jurisdiction or application may be made to such court for a judicial acceptance of the award, and an order of enforcement as the case may be. Such an arbitration shall be a condition precedent to the institution of any such suit, claim, action or other legal proceeding arising in connection with this Agreement.
11.03 Notice
Any notice, consent, request, demand or other communication required or permitted to be given or delivered under this Agreement, shall be in writing and delivered by registered mail, facsimile or telegram, addressed to the party at its address first set out above. Each notice shall be deemed to have been received upon delivery to the addressee, provided that such notice shall be deemed to have been received upon expiration of 12 days from the date of mailing, or within 24 hours if sent by facsimile or telegram.
11.04 Assignment and Succession
Licensee can assign or transfer this Agreement or any of its rights or the performance of its obligations under this Agreement, without the prior written consent of Licensors. All rights and obligations of the parties shall be binding upon and shall endure to the benefit of their respective successors and permitted assigns.
11.05 Entire Agreement
This Agreement constitute the entire agreement between the parties hereto relating to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussion, whether oral or written, of the parties, and there are no general or specific warranties, representations or other agreements by or among the parties in connection with the entering of this Agreement or the subject matter hereof except as specifically set forth herein.
11.06 Unenforceable terms
If any term, covenant or condition of this Agreement or the application thereof to any party or circumstance shall be invalid or unenforceable to any extent, the remainder of this Agreement or application of such term, covenant or condition to a party or circumstance other than those to which it is held invalid or unenforceable, shall not be affected thereby and each remaining term, covenant or condition of this Agreement, shall be valid and shall be enforceable to the fullest extent permitted by law.
11.07 Counterparts
This Agreement may be executed in several counterparts, each of which when so executed, shall be deemed to be an original and such counterparts shall constitute one and the same instrument and notwithstanding their date of execution, shall be deemed to bear date as of the date of this Agreement.
11.08 Force Majeure
The parties to this Agreement shall be excused from any performance required hereunder if such performance is rendered impossible or unfeasible due to any catastrophes or other major events beyond their reasonable control, including, without limitation, war, riot, and insurrection, laws, proclamations, edicts, ordinances or regulations; strikes, lock-outs or other serious labour disputes; and floods, fires, explosions, or other
natural disasters. When such events have abated, the parties' respective obligations hereunder shall resume.
11.09 Waiver
No provision of this Agreement shall be waived and no breach excused, unless such waiver or consent excusing the breach shall be in writing signed by the party to be charged with such waiver or consent. A waiver of a provision of this Agreement shall not be construed to be a waiver of a further breach. All rights, remedies, and benefits contained in this Agreement shall be cumulative and none of them shall be a limitation or exclusion of any other remedy, right, or benefit provided by this Agreement or by law.
IN WITNESS WHEREOF the parties hereby executed this Agreement as of the day, month and year first above written.
Signed, Sealed and Delivered
by Lessor # 1 in the presence of : SANYO KOGYO KABUSHIKI GAISHA
Karuo Ferada
-------------------
Witness
/s/ Yotaro Uchida
------------------- ------------------
Address Yotaro Uchida - President
-------------------
Address
|
Signed, Sealed and Delivered
by Lessor # 2 in the presence of : EVER GREEN PLANET CORPORATION
/s/ Tanokura Harumasa
------------------- -----------------------
Address Tanokura Harumasa
-------------------
Address
|
Signed, Sealed and Delivered
by Lessee in the presence of : AMANASU ENERGY CORPORATION
Takeshi Yamaguchi
------------------
Witness
/s/ Atsushi Maki
------------------- ------------------
Address Atsushi Maki - President
-------------------
Address
|
EXHIBIT 10.6
AMANASU ENERGY CORPORATION
701 5th Avenue, 36th Floor, Seattle Washington, 98101 USA
Tel: 206-263-8188 FAX: 1-206-262 8199
November 18, 2002
-----------------
Attention: The President - Sanyo Kogyo Kabushiki Gaisha, Tokyo The
President - Every Green Planet Corporation, Tokyo
|
Gentlemen:
This letter is to acknowledge that under the terms of The License Agreement made
between Amansu Energy Corporation (called "the Corporation") and your companies,
dated September 30, 2002, 500,000 fully paid and non assessable common shares of
the Company were issued to Sanyo Kogyo Kabushiki Gaisa, 100,000 common shares
were issued to Ever Green Planet Corporation, and 50,000 Common shares were
issued to Motohiko Kugetsu- As well, 30,000,000 Yen (US$250,000) have been paid
to Sanyo Kohyo Kabuahiki Gaisha, Therefore, the Company has complied with all
its obligations under the above mentioned License Agreement.
It is also intended between all the parties that any new inventions and technologies, present and future, emanating from the Licensors of the Agreement will be, whether they relate to the Product or otherwise, made available to the Licensee exclusively for the production and marketing of the products from such inventions and technologies, based on the same terms as the above mentioned Agreement- Such an intention will form part of the above Agreement.
Sincerely,
/s/ Atsushi Maki ------------------ Atsushi Maki President |
Above contents are acknowledged and accepted as correct by; Sanyo Kogyo Kabushiki Gaisha Ever Green Planet Corporation
/s/Yotaro Uchida /s/ Tanokura Harumasa ----------------- ----------------------- Yotaro Uchida Tanokura Harumasa President President /s/ Motohiko Kogetsu ---------------------- Motohiko Kogetsu Dated this 26th day of November, 2002 |
EXHIBIT 99.1
CERTICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Amanasu Environment Corporation (the "Company") on Form 10-KSB for the year-ended December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Atsushi Maki, Chairman, President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
1. I have reviewed the Report;
2. based on my knowledge, the Report does not contain any untrue statement of a material fact or omit 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 the Report; and
3. based on my knowledge, the financial statements, and other financial information included in the Report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in the Report.
/s/ Atsushi Maki ------------------ Atsushi Maki, Chairman, President and Chief Financial Officer (Principal Executive Officer) (Principal Financial Officer) |