UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 2003
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from __________ to __________
Commission File Number 0-32905
Nevada 98 - 0347883 ------ -------------- (State or other jurisdiction of (IRS Employer incorporation) Identification No.) |
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 43,000,816 shares of Common Stock issued and outstanding as of June 30, 2003.
**Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
Table of Contents
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Balance Sheet (unaudited) (F-1) 6
Statement of Operations (unaudited) (F-2) 7
Statement of Cash Flows (unaudited) (F-4) 9
Notes to Financial Statements (F-5) 10
Item 2. Management's Discussion and Analysis of Plan of
Operations 11
Item 3. Controls and Procedures 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 2. Changes in Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to Vote of Security Holders 19
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
Signatures 21
Certifications 22
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENERAL
The Company's unaudited financial statements for the six months ended June 30, 2003 are included with this Form 10-QSB. The unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the six months ended June 30, 2003 are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2003.
AMANASU ENVIRONMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
JUNE 30, 2003
(UNAUDITED)
AMANASU ENVIRONMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
JUNE 30, 2003
(UNAUDITED)
C O N T E N T S
Page
----
Balance Sheets F-1
Statements of Operations and Deficit Accumulated
During Development Stage F-2
Statements of Cash Flows F-4
Notes to Financial Statements F-5
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AMANASU ENVIRONMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
(UNAUDITED)
June 30, December 31,
2003 2002
------------ --------------
(Unaudited) (Audited)
ASSETS
------
Current Assets:
Cash $ 129,093 $ 78,432
------------ --------------
Total current assets 129,093 78,432
Fixed Assets:
Automotive equipment 25,859 25,859
Less accumulated depreciation 9,435 7,960
------------ --------------
Net fixed assets 16,424 17,899
Other Assets:
Licensing agreement, net of accumulated
amortization of $13,897 and $4,632 332,603 310,368
Equity investment 4,993,000 -
Rent deposit 8,028 8,028
------------ --------------
Total other assets 5,333,631 318,396
------------ --------------
Total Assets $ 5,479,148 $ 414,727
============ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Amount due for licensing agreement $ 95,000 $ 95,000
Stockholder advance 5,093,000 100
------------ --------------
Total current liabilities. 5,188,000 95,100
Stockholders' Equity:
Common stock: authorized 100,000,000 shares of
$.001 par value; issued and outstanding,
43,000,816 and 41,950,816, respectively 28,801 27,751
Additional paid-in capital 677,239 646,789
Deficit accumulated during the development stage (414,892) (354,913)
------------ --------------
Total stockholders' equity 291,148 319,627
------------ --------------
Total Liabilities and Stockholders' Equity $ 5,479,148 $ 414,727
============ ==============
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These statements should be read in conjunction with the year-end financial statements.
AMANASU ENVIRONMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND DEFICIT
ACCUMULATED DURING DEVELOPMENT STAGE
(UNAUDITED)
February 22, 1999
(Date of Inception)
Six Month Periods Ended June 30, To June 30, 2003
2003 2002
---------------------------------- ---------------------
Revenue:
Interest income $ 200 $ 28 $ 3,138
Expenses 60,179 16,955 418,030
---------------------------------- ---------------------
Loss accumulated
during development
stage $ (59,979) $ (16,927) $(414,892)
================================== ======================
Loss Per Share -
Basic and Diluted . $ - $ -
================================== ======================
Weighted average
number of shares
outstanding 41,991,424 41,247,816
================================== ======================
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These statements should be read in conjunction with the year-end financial statements.
AMANASU ENVIRONMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND DEFICIT
ACCUMULATED DURING DEVELOPMENT STAGE
(UNAUDITED)
February 22, 1999
(Date of Inception)
Quarter Ended June 30, To June 30, 2003
2003 2002
---------------------------------- ---------------------
Revenue:
Interest income $ 74 $ - $ 3,138
Expense 34,814 15,710 418,030
---------------------------------- ---------------------
Loss accumulated
during development
stage $ (34,740) $ (15,710) $ (414,892)
================================== ======================
Loss Per Share -
Basic and Diluted $ - $ -
==================================
Weighted average
number of shares
outstanding 42,031,585 41,247,816
==================================
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These statements should be read in conjunction with the year-end financial statements.
AMANASU ENVIRONMENT CORPORATION
A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
February 22, 1999
(Date of Inception)
Three Month Periods To June 30,
Ended June 30, 2003
2003 2002
-------------------------- -----------------
CASH FLOWS FROM OPERATIONS:
Net loss $ (59,979) $ (16,927) $ (414,892)
Changes not requiring the outlay of cash:
Depreciation and amortization 10,740 2,450 23,332
Services provided for common stock - - 70,000
Changes in assets and liabilities:
Increase in accounts payable - 960 -
-------------------------- -----------------
NET CASH CONSUMED BY
OPERATING ACTIVITIES (49,239) (13,517) (321,560)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of licensing agreement - - (155,000)
Purchase of automobile - - (25,859)
Rent deposit for warehouse lease - - (8,028)
Acquisition of equity investment (4,993,000) - (4,993,000)
-------------------------- -----------------
NET CASH CONSUMED BY
INVESTING ACTIVITIES (4,993,000) - (5,181,887)
-------------------------- -----------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Sales of common stock - 50,000 539,540
Advances received in anticipation of
common stock sales - - 100
Stockholder advances 5,092,900 - 5,092,900
-------------------------- -----------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 5,092,900 50,000 5,632,540
-------------------------- -----------------
Net change in cash . 50,661 36,483 129,093
Cash balance, beginning of period 78,432 35,287 -
-------------------------- -----------------
Cash balance, end of period $ 129,093 $ 71,770 $ 129,093
========================== =================
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These statements should be read in conjunction with the year-end financial statements.
AMANASU ENVIRONMENT CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2003
(UNAUDITED)
1. BASIS OF PRESENTATION
The unaudited interim financial statements of Amanasu Environment Corporation ("the Company") as of June 30, 2003 and for the three month and six month periods ended June 30, 2003 and 2002, have been prepared in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, such information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for such periods. The results of operations for the quarter and six month period ended June 30, 2003 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2003.
Certain information and disclosures normally included in the notes to financial statements have been condensed or omitted as permitted by the rules and regulations of the Securities and Exchange Commission, although the Company believes the disclosure is adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2002.
2. 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 paid $155,000 and issued 650,000 shares of common stock; it is obligated to pay on demand an additional $95,000.
On June 30, 2003, the Company acquired the exclusive worldwide rights to produce and market a patented process that purifies seawater, and removes hazardous polutants from wastewater. As consideration for this acquisition, the Company issued 1,050,000 shares of common stock.
3. EQUITY INVESTMENT
During the second quarter the Company acquired for cash 10,000,000 shares of the common stock of Kyoei Reiki Industrial Corporation, Ltd., a Japanese company publicly traded on a Japanese exchange. The Company intends this to be a long term investment. This investment cost $4,993,000 and was financed by a non interest bearing advance by the controlling shareholder of the Company. An additional advance of $99,900 was made by the controlling shareholder for working capital needs.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This report on Form 10-QSB contains certain forward-looking statements within the meaning of section 21e of the Securities Exchange Act of 1934, as amended, and other applicable securities laws. All statements other than statements of historical fact are "forward-looking statements" for the purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.
The following discussion should be read in conjunction with the Company's Financial Statements, including the Notes thereto, appearing elsewhere in this Quarterly Report and in the Annual Report for the year ended December 31, 2002.
COMPANY OVERVIEW
Amanasu Environment Corporation (the "Company") has 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.
The Company entered into a license agreement with two Japanese companies (the "licensors"), whereby the Company was 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.
During the 2nd quarter, the Company acquired the exclusive worldwide license to a technology that purifies seawater through various fine ring tubes into drinking water. It also treats sewage and wastewater and removes hazardous pollutants. This system is known as the Ring-tube Desalinization Equipment. The process uses high temperature and pressure to break down harmful pollutants and bacteria.
During the 2nd quarter, the Company purchased 10,000,000 shares of Kyoei Reiki Industrial Corporation Ltd., a publicly traded company in Tokyo, Japan. The Company acquired these shares from Jipangu Inc., a private Japanese corporation which owned these shares. The shares were purchased for $4,993,000 of which Mr. Maki provided the necessary funds to the Company to acquire these shares. The funds were provided to the Company without interest or stated terms of repayment. The Company intends to hold these shares as a long- term investment.
MARKETS AND PRODUCTS
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.
The Company currently markets its hot water boiler through its licensors in Japan where it is marketed as a safe, non-polluting and highly efficient boiler, which derives its energy in a non-polluting chemical process from waste tires. The hot water boiler system will also be marketed throughout North America with particular attention 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.
On May 30, 2003, the Company entered into an agreement with Etsuro Sakagami (who was later appointed a director of the Company as of June 6, 2003) to license technology relating to the Ring-tube Desalinization Equipment ("Ring-tube").
This equipment is used as a filter to purify seawater into drinking water and also treats sewage and wastewater, removing pollutants and bacteria. The equipment filters bacteria and other impurities through its fine rings and comb type filter. The impurities are then destroyed by the high pressure and temperature in the Ring-tube. Other harsher pollutants are treated with Cinderelite (an artificial zeolite) in the ring tube. This substance is commonly used for purifying wastewater and sludge.
The license will remain in effect for 30 years from the date of the agreement. To obtain the technology, the Company issued 1,000,000 shares to Etsuro Sakagami and 50,000 shares to FC Giken Kabushikigahisha as a referral fee on June 23, 2003. The Company will pay a royalty of 2% of gross receipts to Mr. Sakagami within 60 days upon receipt of the royalty.
The Company primarily plans on marketing this product in Japan as approximately 40% of its waste materials consist of sludge that is mostly disposed of in landfills by mining and construction companies. Use of the Ring-tube will substantially reduce the level of pollutants and toxins, allowing for a safer means for disposing of waste.
PLAN OF OPERATIONS
The Company is a development stage corporation. It has not commenced its planned operations of manufacturing and selling its products.
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 non-polluting chemical process from waste tires. On May 30, 2003 the Company obtained a worldwide exclusive license to manufacture and sell the technology relating to the Ring-tube Desalinization Equipment.
On May 14, 2003, the Company entered into a Stock Purchase Agreement with Jipangu Inc ("Jipangu") to purchase 10,000,000 shares of Kyoei Reiki Industrial Corporation Ltd, held by Jipangu. The Company intends to hold these shares as a long term investment.
The Company raised $265,000 during fiscal year 2002 through the issuance of common stock. The Company intends to raise another $100,000 during the remainder of 2003 through private placements of its common stock or loans from its major shareholders. The proceeds of such private placements and loans will be used to continue the development and market planning of its products, and for other general working capital needs.
The Company has entered into discussions with a number of private investors concerning a 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. During the 2nd quarter, the Company's President and controlling shareholder, Mr. Maki loaned the Company $99,900 to meet its working capital needs and for further development and marketing of its products. This loan is without interest or stated terms of repayment.
The Company's activities over the next twelve months will be devoted to the construction of a limited number of demonstrational units of the furnace and Ring-tube equipment, the hiring of a limited staff to conduct its business, and the commencement of marketing activities; it will also explore the means for exploiting the license for the hot water boiler.
RESEARCH AND DEVELOPMENT
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.
Tests of the furnace have also been conducted at a California facility which, when marketing conditions are favourable, would be the primary source of manufacturing capability.
Testing of the Ring-tube Desalinization Equipment is being conducted in Japan by the inventor. Further testing and development will be performed to meet the needs of specific customers.
The hot water boiler 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. Further developments of the product is expected to meet specific customer needs.
CRITICAL ACCOUNTING POLICIES
The following discussion and analysis of the Company's financial condition and results of operations are based upon the financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates these estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
RESULTS OF OPERATIONS
Total revenues for the three month period ending June 30,2003 was $ 74. There were no revenues in the same period of 2002. The increase was due to earnings in the 2003 period on bank deposits.
Total revenues for the six month period ending June 30, 2003 was $200 compared to $ 28 for the same period of 2002. The increase was due to higher interest on bank deposits.
Total expenses for the three month period ending June 30,2003 were $ 34,814 compared to $ 15,710 for the same period of 2002. The increase was primarily due to higher professional fees and charges for amortization of the licensing agreement.
Total expenses for the six month period ending June 30, 2003 were $ 60,179 compared to $ 16,955 for the same period in 2002. The increase was due to higher costs for travel and professional fees and charges for amortization of the licensing agreement.
Net loss for the three month period ending June 30,2003 was $ 34,740 compared to $15,710 for the same period 2002. The increase was due to higher expenses.
Net loss for the six month period ending June 30, 2003 was $ 59,979 compared to $16,927 for the same period in 2002. The increase was also due to higher expenses.
In the event that the Company's revenues do not increase in the next 12 months, the Company plans to obtain additional private placements and loans from the Company's President, Atsushi Maki. The Company does anticipate business opportunities, however those opportunities remain uncertain to date.
LIQUIDITY AND CAPITAL RESOURCES
The Company believes that the liquidity and capital resources are sufficient to support operations at the present level given that the Company recently obtained a loan from Mr. Maki in the amount of $99,900.
In the six months ended June 30, 2003, cash used in operating activities was $ 49,239 compared to $ 13,517 for the same period in 2002. This increase was due to higher expenses.
In the six months ended June 30, 2003, cash used in investing activities was $ 4,993,000. There was no cash used for investing activities for the same period of 2002. In the 2003 period, the Company made an investment in the stock of a publicly owned Japanese Company.
In the six months ended June 30, 2003, there was no cash used for financing activities. The Company raised $5,092,900 during the 2003 period from advances from the controlling shareholder. During the 2002 period it raised $50,000 from the sale of common stock.
The Company will require a minimum of $250,000 to satisfy its cash requirements for the next twelve months. If the Company is not successful in raising $250,000, it may not be able to complete its plan of operations.
FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS
The Company was formed in 1999 and since then, the Company has raised initial capital, developed a business plan and commenced marketing efforts and initiated contracts to obtain licenses for various technologies. As a result, the Company has a limited operating history on which to evaluate its proposed business and prospects. The Company's prospects must be considered in light of the risks, uncertainties and difficulties frequently encountered by companies in their early stages of development. The Company cannot guarantee that it will be successful in accomplishing its objectives. The Company's risk factors include and are not limited to the following:
THE COMPANY EXPECTS TO CONTINUE TO HAVE BOTH OPERATING AND NET LOSSES FOR THE FORESEEABLE FUTURE
Until the Company can obtain the necessary capital to begin full production of its products, it does not expect to realize a net profit. The Company does anticipate business opportunities, however those opportunities remain uncertain to date. Until those opportunities materialize, the Company does not expect to begin production of the Company's products. However, research and development and marketing efforts are still in progress in hopes of bettering the Company's product and attracting potential customers.
THE COMPANY HAS RAISED LIMITED CAPITAL THIS QUARTER AND WILL NEED ADDITIONAL CAPITAL TO MAINTAIN CURRENT LEVELS OF OPERATION
This quarter, the Company has not raised capital by selling the Company's common stock. The Company's working capital needs are currently being funded by a loan from the Company's President, Atsushi Maki. The Company will need to raise additional funds, either in the form of equity and debt to maintain current levels of operation, which, include research and development, and marketing of the Company's products.
OWNERSHIP OF THE COMPANY'S COMMON STOCK IS CONCENTRATED AMONG THE COMPANY'S PRINCIPAL SHAREHOLDERS, OFFICERS AND DIRECTORS WHO CAN CONTROL ALL SIGNIFICANT CORPORATE TRANSACTIONS
The Company's directors, officers and principal shareholders beneficially own approximately 86% of its outstanding common stock. As a result, these shareholders can exercise control over all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control of the Company.
THE COMPANY'S ABILITY TO MAINTAIN CURRENT LEVELS OF PRODUCTION DEPENDS ON THE COMPANY'S ABILITY TO RETAIN KEY PERSONNEL
The Company's current and future success will depend to a significant extent on the continued service of the Company's President, Mr. Maki. The loss of Mr. Maki would have a significantly detrimental effect on the Company business. The Company does not have a employment contract with Mr. Maki and does not maintain life insurance policies for any of the Company's officers, directors or controlling shareholders.
At the present, the Company has employed one full time employee. The Company's success will depend, in part, upon the ability to attract and retain qualified employees. The Company believes that it will be able to attract competent employees, but no assurance can be given that it will be successful in this regard. If the Company is unable to engage and retain the necessary personnel, its business would be materially and adversely affected.
THE COMPANY'S ABILITY TO DEVELOP AN ECONOMICALLY FEASIBLE PRODUCT
The Company has no assurance at this time that a commercially feasible design will ever be perfected, or if it is, that it will become profitable. The Company's profitability and survival will depend upon its ability to develop a technically and commercially feasible product which will be accepted by end users. The products that the Company is 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 the Company is not able to achieve this condition or if the Company does not remain technologically competitive, the Company may be unprofitable and our investors could lose their entire investment. There can be no assurance that the Company or potential licensees will be able to achieve and maintain end user acceptance.
THE COMPANY'S DEPENDENCE ON CONSULTANTS AND OUTSIDE MANUFACTURING FACILITIES
Since the Company's present plans does not provide for a significant technical staff or the establishment of manufacturing facilities, the Company will be primarily dependent on others to perform these functions and to provide 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 the Company to handle these resources.
THE COMPANY IS SUBECT TO A HIGHLY COMPETITIVE INDUSTRY
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 traditional 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 the Company will be successful in meeting or overcoming its current or future competition.
THE COMPANY IS DEPENDENT ON ITS PROTECTION OF ITS INTELLECTUAL PROPERTY
The Company depends on the protection of its intellectual property and may suffer if it is unable to adequately protect its intellectual property. Currently, the Company has been granted a patent in Japan for the combustion technology relating to the Amanasu Furnace, which expires in 2016. The Company cannot provide assurance that its patents will not be invalidated, circumvented or challenged, that the rights granted under the patents will give it competitive advantages or that its patent applications will be granted.
THE COMPANY IS SUBJECT TO RAPID TECHNOLOGICAL CHANGE, WHICH COULD RENDER THE COMPANY'S PRODUCTS AND SERVICES OBSOLETE
The market for the Company's furnaces is characterized by rapidly changing technology, evolving industry standards and changing customer demands. Accordingly, if it is unable to adapt to rapidly changing technologies and to adapt its product to evolving industry standards, its business will be adversely affected.
THE COMPANY HAS A LIMITED PUBLIC MARKET FOR ITS 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.
THE COMPANY MAY NOT BE ABLE TO PAY DIVIDENDS TO THE SHAREHOLDERS FOR THE FORESEEABLE FUTURE
The Company has not paid dividends on its Common Stock and does not anticipate paying dividends on its Common Stock in the foreseeable future.
THE COMPANY'S COMMON STOCK PRICES MAY BECOME VOLATILE
The market price for the Company's Common Stock trades 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 operating results and other announcements regarding development work and business operations may have a significant impact on the market price of its 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.
OTHER RISKS
The Company's 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.
Item 3. Controls and Procedures
Within the 90-day prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to the Securities Exchange Act Rule 13a-14 and 15d-4. Based upon that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Company's periodic SEC filings. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the date of the evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
The Company made no amendments or modifications of any instruments governing or affecting the rights of any security holders during the period of this report.
Furthermore, on June 23, 2003, the Company issued 1,000,000 shares to Etsuro Sakagami pursuant to the licensing of technology relating to the Ring Tube Desalinization Equipment on an exclusive worldwide basis for 30 years.
The Company issued another 50,000 shares to F.C. Giken Kabushikigaisha as a referral fee.
These share issuances were exempt under Regulation S under the Securities Act, as the sales were made in offshore transactions to non-U.S. persons.
Item 3. Defaults Upon Senior Securities:
None
Item 4. Submission of Matters to a Vote of Security Holders:
None
Item 5. Other Information:
None
Item 6. Exhibits and Reports on Form 8K
(a) Exhibits
10.1 Stock Purchase Agreement acquiring 10,000,000 shares of Kyoei Reiki Industrial Corporation Ltd., held by Jipangu Inc.
10.2 License Agreement acquiring "Ring Tube Desalinization Equipment" from Etsuro Sakagami
99.1 Certification of Atsushi Maki, President (Principal
Executive Officer), and Chief Financial Officer
(Principal Financial Officer) pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
(i) On June 2, 2003 the Company filed a report on Form 8-K wherein the Company reported that it entered into an agreement with Jipangu Inc. to purchase 10,000,000 shares of Kyoei Reiki Industrial Corporation Ltd. held by Jipangu Inc. for 580,000,000 Japanese Yen, approximately $4,993,000 US.
(ii) On June 3, 2003, the Company filed a report on Form 8-K wherein the Company reported that it entered into an agreement with Etsuro Sakagami to license technology relating to the Ring Tube Desalinization Equipment on an exclusive worldwide basis for 30 years.
(iii) On June 13, 2003, the Company filed a report on Form 8-K wherein the Company reported the appointment of Etsuro Sakagami as a director of the Company.
(iv) On July 22, 2003, the Company filed a report on Form 8-K wherein the Company reported the resignations of various directors.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: August 11, 2003
AMANASU ENVIRONMENT CORPORATION
By: /s/ Atsushi Maki Atsushi Maki, Chairman, President and Chief Financial Officer |
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 Quarterly Report of AMANASU ENVIRONMENT CORPORATION (the "Company") on Form 10-QSB for the period ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Atsushi Maki, 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 this 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;
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;
4. The Company'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 Company and have:
a. designed such disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
b. evaluated the effectiveness of the Company's disclosure controls and procedures as of a date within 90 days prior to the filing date of this Report (the Evaluation Date"); and
c. presented in this Report the Company's conclusions about the effectiveness of the disclosure controls and procedures based on the Company's evaluation as of the Evaluation Date;
5. The Company's other certifying officers and I have disclosed, based on the Company's most recent evaluation, to the Company's auditors and the audit committee of Company's board of directors (or persons performing the equivalent function):
a. all significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company'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 Company's internal controls; and
6. The Company's other certifying officers and I have indicated in this 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 the Company's most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
/s/ Atsushi Maki ------------------ Atsushi Maki, President and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) |
STOCK PURCHASE AGREEMENT
This Agreement is made and is effective this 14th day of May, 2003.
BETWEEN: AMANASU ENVIRONMENT CORPORATION, a Nevada corporation with its office
at 701 5th Avenue, 36th floor, Seattle, Washington 98109,
U.S.A.
( hereinafter called " A " )
AND: JIPANGU INC., a Japanese corporation with its office at 3-6-9
Kitashinagawa Shinagawa-Ku, Tokyo, Japan
( hereinafter called " B" )
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WHEREAS, "B" holds 10,000,000 common shares of Kyoei Reiki Industrial Corporation Ltd., a publicly traded Company in Tokyo, Japan (hereinafter called " the Company")
AND WHEREAS "A" wishes to purchase 10,000,000 of the Company's shares from "B" at a price of 580,000,000 Japanese Yen (Equivalent to approximately US $4,993,000 as of May 14, 2003).
SECTION 1- TERMS OF PAYMENT
1.00 "A" will pay 116,000,000 Japanese Yen (US $1,377,000); 20% of the purchase price of 580,000,000 Japanese Yen by cashier's check on or before May 31, 2003. The balance of 464,000,000 Japanese Yen is to be paid on or before June 25, 2003.
1.02 As security for payment of the remaining balance of 464,000,000 Japanese Yen, a major shareholder of "A" (Amanasu Corporation) will transfer 500,000 shares of "A" (listed on the OTC) to "B", at the same time Section 1.00 is consummated. Such shares are to be kept in escrow by "B".
1.03 When "B" receives the remaining balance of 464,000,000 Japanese Yen, the 500,000 shares of "A" will be returned immediately to Amanasu Corporation.
1.04 In the event that the Company becomes bankrupt, or is under receivership for bankruptcy before the final amount of 464,000,000 Japanese Yen is paid, "B" waives the right to collect this final amount.
SECTION 2 - TRANSFER OF VOTING RIGHTS
2.00 Subject to "A" meeting the payment terms in Section 1 of this agreement, on June 30, 2003, "B" will transfer to "A" proxies for another 10,000,000 shares owned by "B" to vote at the annual general meeting of the Company, to be held on June 27, 2003.
SECTION 3 - REPRESENTATIONS BY "A"
3.00 As of the date of this agreement, "A" declares that the following facts are true and accurate:
(i) "A" has sufficient funds to comply with the terms of payment as set
out in section 1 of this agreement
(ii) This contract is not in violation of any laws that are applicable
to "A"
SECTION 4 - REPRESENTATIONS BY "B"
4.00 As of the date of this agreement, "B" declares that the following facts are true and accurate:
(i) "B" is authorized by the board of directors and corporate
regulations to enter into this agreement
(ii) This contract is not in violation of any laws that are
applicable to "B"
SECTION 5 - CANCELLATION OF THE AGREEMENT
5.00 "A" and "B" shall have the right to terminate this agreement if either party has breached any terms of this contract. After this agreement is cancelled, moneys paid by "A" to "B" will be returned to "A", and shares transferred by "B" to "A" will be returned by "B".
SECTION 6 - CONFIDENTIALITY AND DISCLOSURE
6.00 "A" and "B" will not disclose any information of this agreement to third parties.
SECTION 7 - COMPENSATION FOR DAMAGES
7.00 "A" and "B" will compensate for all damages that may result from breach of contract by either party or indirectly by third parties.
SECTION 8 - SUBMISSION TO JURISDICTION
8.00 Any conflicts arising from the terms of this contact will be resolved at the Tokyo local court house.
SECTION 9 - GOVERNING LAW
9.00 The agreement is governed under Japanese 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 "A" in the presence of: AMANASU ENVIRONMENT CORPORATION
Masafumi Hata /s/ Atsushi Maki
_________________________ ___________________________
Witness Atsushi Maki, President and CEO
701 5th Avenue, 42nd Floor
Seattle, WA 98104
Signed, Sealed and Delivered
by "B" in the presence of: JIPANGU INC.
/seal/ /s/ Tamishuke Matsufuji
__________________________ __________________________
Witness Tamishuke Matsufuji
President and CEO
3-6-9 Kita-shinagawa Shinagawa-ku
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Tokyo, Japan 140-0001
DESALINIZATION LICENSE AGREEMENT
This Agreement is made and is effective this 30th day of May, 2003.
BETWEEN : ETSURO SAKAGAMI, whose address is 6-11-14 Mirami Naruse, Machida City,
Tokyo, Japan
( hereinafter called " Licensor " ), of the First Part,
AND: AMANASU ENVIRONMENT CORPORATION, whose address is 701 5th Avenue,
36th Floor, Seattle, Washington 98109, U.S.A.
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( hereinafter called "Licensee" ), of the Second Part,
WHEREAS "Licensor" owns the patented Ring-tube Seawater Desalinization Equipment hereinafter referred to as "The Product" (see Definition 1.00), and would like to license the worldwide production and marketing rights of such technology to the Licensee.
WHEREAS "Licensee", a publicly listed Company in the United States, desires to establish an exclusive licensing agreement with the Licensor for the production and marketing of the Product throughout the world.
AND WHEREAS the Licensor and Licensee have subject to the terms and conditions set forth in this Agreement, agreed to the licensing of the Product and Technology for the production and marketing of the Product from the Technology on an exclusive basis throughout the world.
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 Product, Product(s) and Technology relates to the Ring-tube Desalinization Equipment which is described, including the Patents detailed out in Schedule A and B, which is an integral part of this agreement.
The Technology described above and " Patent / Patent Rights " means the patent rights to any subject matter claimed in or covered in Japan, United States and Canadian patent applications that have been assigned to the Licensor or, any containing applications thereof, any patents issuing on said applications or continuing applications including re-issue, improvement and any corresponding foreign patents or patent applications and other related technology know how, intellectual property, trade secrets whether patentable or not now or in the future developed by the Licensor.
1.01 "Licensed Products " means any manner of chemical or other derivative that is covered by the Technology and/or Patent/Patent Rights, or whose use constitute but for this license granted to Licensee pursuant to this Agreement, an infringement of any claim within the Patent/Patent Rights or unauthorized use of the Technology, trade secrets or know how of the Licensor.
1.02 " Licensed Method " means any method that is covered by the Technology and/or Patent/Patent Rights, Patent application or whose use or practice would constitute but for this license granted to Licensee pursuant to this Agreement, an infringement of the Patent/Patent Rights or unauthorized use of the Technology, intellectual property, trade secrets or know how of the Licensor.
1.03 " Sub-license " means the right of the Licensee to enter into agreements with third parties and to assign all or part of this Agreement without further permission from the Licensor.
1.04 " Gross Receipts " means the total of the gross invoice prices of Licensee's Products 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 LICENSE
2.00 Subject to the conditions of this Agreement, the Licensor grants to Licensee the exclusive right to use the Technology to make, have made, use and sell the Licensed Product(s) and practice Licensed Method on an exclusive basis world wide.
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 without further permission from the Licensor.
2.02 To the extent applicable, such sub-licenses shall include all the rights of and obligations due to the Licensor that are contained in this Agreement.
SECTION 3 - ROYALTY
3.00 Licensee is to pay the Licensor a royalty equal to two ( 2 ) percent of Licensee's Gross Receipts from Licensed Products or Licensed method payable to the Licensor, within sixty (90) days upon receipt of royalty by Licensee or from Sub-licensees.
3.01 All monies due to the Licensor 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 the Licensor's account in a bank or other depository in such country.
SECTION 4 - REPRESENTATIONS, WARRANTIES AND COVENANTS OF LICENSOR
4.00 The Licensor hereby represent and warrant to, and covenants with Licensee, now and during the term of this Agreement that ;
(a) The Licensor have the sole and exclusive right to grant the rights,
licenses and authorities granted to Licensee herein and it is the sole
and exclusive owner of all Patent/Patent Rights.
(b) The licenses herein granted are unencumbered by any lien, mortgage,
prior assignment, charge, other encumbrance, commitment or interest of
any other person.
(c) The Licensor 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 Licensor's knowledge, the claims for the Technology
and/or Patent/Patent Rights, do not infringe any Japanese, Canadian or
U.S. patents or patent applications of any other party.
(e) The Licensor have the power and capacity to enter into this Agreement
and carry out its terms to the full extent.
(f) The Licensor 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.
4.01 The Licensor will to their best ability assist the Licensee in all matters pertaining to the Technologies and in all technical matters concerning the production and repair of the final Product from the Technology mentioned above. Such technical assistance will be given by the Licensor at no extra cost other than what is stated in this Agreement, for a minimum period of ten (20) years from date of Agreement.
4.02 In the event that the Licensor makes improvements and/or new enhancements to the above described Technology, the Licensor will license the same to Licensee at no extra cost, and such additional license will expire the same period as this Agreement.
4.03 During the term of this license agreement, any new inventions of any kind emanating from the licensor will be licensed exclusively to the licensee under the same terms and conditions of this agreement. All patent costs pertaining to such new inventions will be the responsibility of the licensee.
SECTION 5 - LICENSEE'S OBLIGATIONS
5.00 Licensee shall keep books and records showing all Licensed Products 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 the Licensor at reasonable times.
5.01 Licensee shall at all times diligently proceed with the manufacture and sale of Licensed Products 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 Products, contract/ employ or cause to be employed, those persons or contractors who have the necessary skills, care and experience to manufacture the Licensed Products, to a reliability and safety standards that are established by the Licensor.
(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 the Licensor with results of such testing.
(c) In the manufacturing of the Licensed Product it shall use only those parts and materials that will meet the minimum specifications of the Licensor.
(d) At all reasonable times and on reasonable notice, permit the Licensor and/or authorized representatives of the Licensor to inspect any facilities in which any parts or materials are manufactured.
(e) Properly report to the Licensor any occurrence involving the use of the Licensed Product or Licensed Method that in the reasonable judgment of Licensee may give rise to a claim against the License, the Licensor or any user of the Licensed Product or Licensed Method. It shall continue to keep the Licensor 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 the Licensed Product is sold or Licensed method is practiced.
5.03 (a) Licensee to allot immediately and issue by June 30, 2003, 1,000,000 fully paid and non assessable common shares of Licensee to Licensor.
(b) Licensee to allot immediately and issued by June 30, 2003, 50,000 fully paid common shares of Licensee to F.C. Giken Kabushikigaisha, whose address is SCC Building, 5-4-10 Kibu Koto-ku, Tokyo, Japan
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 LICENSOR
7.00 If Licensee should violate or fail to perform any term or covenant of this Agreement, then the Licensor 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, the Licensor shall have the right to terminate this Agreement and the License 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 the Licensor.
SECTION 8 - TERMINATION BY LICENSEE
8.00 Licensee shall have the right to terminate this Agreement by giving notice in writing to the Licensor. 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 the Licensor hereunder prior to the time such termination became effective, and such termination shall effect in any manner any rights of the Licensor 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 the Licensor.
9.01 The Licensor shall diligently prosecute and maintain the United States and Canadian Patents comprising the Licensor's Patent Rights using counsel of its choice. The Licensor 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 The Licensor 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 The Licensor shall co-operate with Licensee in applying for an extension of the term of any Patent included with Licensor's Patent Rights. The Licensor agrees 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 the Licensee.
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 the Licensor in writing and shall provide the Licensor 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 the Licensor take legal action against the infringement of the Licensor's 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, the Licensor shall have the right to :
- commence legal suit on their own account; or
- refuse to participate in such suit, and the Licensor shall give notice of
its 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 the Licensor
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, the Licensor 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 the Licensor may be represented by counsel of their choice pursuant to the Licensor's 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 the Licensor. 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 in the presence of : )
Witness )
/s/ETSURO SAKAGAMI
---------------------
/s/SHRO SAKAGAMI ) ETSURO SAKAGAMI
Address:
1-28-1 Tamagaradai, Seengaya-ku )
Tokyo, Japan )
Signed, Sealed and Delivered
by Lessee in the presence of AMANASU ENVIRONMENT CORPORATION
/s/Youzo Kitahara
Address:
4-23-5 Kitasakae, Urayasu City /s/ATSUSHI MAKI
----------------
UBA, Japan
ATSUSHI MAKI
President and CEO
10
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SCHEDULE A
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APPLIED PATENT SUMMARY LIST
1. PATENT APPLICATION NO. 2002-207837; SEAWATER DESALINIZATION METHOD AND SEAWATER DESALINIZATION SYSTEM
This seawater desalinization method is different from the conventional multi-stage flush method and reverse osmosis method. The running cost of this equipment is low. The patent was applied to establish the treatment system of the ring-tube metal surface.
2. PATENT APPLICATION NO. 2002-228609; DESULPHURIZATION METHOD AND DESULPHURIZATION SYSTEM
An extremely large-scale facility is presently required to desulphurize low-quality heavy oil containing sulfa and insoluble pyrrhotite, such as crude oil and fuel oil C. In the ring-tube metal surface treatment method, the viscosity of heavy oil is lowered to 2,000cps to 10cps by a heating pre-treatment process at the temperature of approximately 150'C. When high-frequency current is charged to the pre-treated heavy oil, sulfide and iron sulfide (pyrrhotite) in the oil precipitate. When the oil flows through the ring tube, precipitated substance is completely removed. The series of the process procedures is built into the system.
3. PATENT APPLICATION NO. 2002-239789; FILTRATION EQUIPMENT AND I FILTRATION METHOD
The ring-tube method is used to filter solid substance in liquid and quickly separate the solid and liquid. This equipment can not only separate solid and liquid, but also has an extremely effective dewatering capability with lower cost than conventional equipment, such as a conventional screw decanter, centrifugal separator and filter press equipment. The high-pressure pump can control the water content.
4. PATENT APPLICATION NO. 2002-311460: ZEOLITE MANUFACTURING METHOD ' WITH CINDERS AND THE EQUIPMENT
Effective use of cinders from urban garbage incineration is very limited only for manufacturing cement. Most of cinders are disposed of by burying
at controlled disposal sites. However, securing of disposal sites is becoming more difficult each year. This is a big problem for most municipalities in Japan. There is no other effective use of cinders. The main reason for this is that cinders from garbage incinerators contain a large amount of heavy metals, although only selected garbage is incinerated. Removal of heavy metals at low cost is impossible. To solve the problem, this equipment was developed to make garbage-incinerated cinders harmless by the superconductive non-liquid type magnetic method and the artificial zeolite method. Coal fly ash is one type of cinder. The patent was applied as to be applicable to any kind of cinders.
5. PATENT APPLICATION NO. 2000-396165: ARTIFICIAL ZEOLITE COMPOUND CONTINUOUS-MANUFACTURING METHOD AND EQUIPMENT BY HEAT REACTION TUBE CONTACTING
This equipment, not like the conventional autoclave method, is to manufacture white color artificial zeolite by making the mixture of waste material containing aluminum and waste material containing silica in a certain ratio react in the reaction pipe. This equipment was developed to produce zeolite from waste fluid, such as fluid from aluminum sash frame cleaning, Alumite manufacturing, and other aluminum dross by the alkali liquid reaction. The batch method by autoclave is used for manufacturing zeolite from coal ash or garbage- incinerated cinders. But, this equipment can continuously produce artificial zeolite from waste liquid if the mixing ratio is controlled at a certain ratio.
6. PATENT APPLICATION NO. 2000-376462: MANUFACTURING METHOD OF ARTIFICIAL ZEOLITE FROM THE RAW MATERIAL OF ALUMINUM DROSS
This method is to produce white color artificial zeolite by mixing aluminum dross and a medium of alkali solution then adding silicic additive, such as silicon, and applying cavitation effects of the ultrasonic generator. No one ever thought to produce artificial zeolite from aluminum dross.
7. PATENT APPLICATION NO.: 2001 -79135: FLOCCULATING AGENT OF ARTIFICIAL ZEOLITE COMPOSITION AND ITS APPLICATION FOR SEWAGE TREATMENT
The manufacturing method of the flocculating agent mixed with
biologically friendly artificial zeolite, without using aluminum, is the first technology of its kind in the world. This agent is regarded as an innovative instantaneous flocculating agent from various fields that fully utilizes the adsorption and ion-exchanging capability of artificial zeolite without using pH adjustment.
8. PATENT APPLICATION NO. 2003-72657: PORTABLE-TYPE WATER PURIFICATION EQUIPMENT
This equipment does not require a power supply source. The equipment is operated with a small size generator. This is small-size portable seawater desalinization equipment having a small high-pressure pump and can produce drinking water not only from seawater but also from muddy water. The equipment is designed so that this can be installed on a ship. This equipment can be used to quickly produce drinking water from muddy water for emergency use during a natural calamity, such as an earthquake.
SCHEDULE B
WHAT IS THE RING-TUBE METHOD SEAWATER DESALINIZATION EQUIPMENT?
1. This seawater desalinization system is an application of a comb-type filter. There are two methods to remove sodium (Na) in seawater 1) To make the size of crystal of sodium (Na) molecules large by charging high voltage electricity and 2) to remove chorine (Cl) in seawater by a minus ion exchanger. This method seems to be rough, but it is applicable to various types of liquids such as high temperature liquids, acid and alkali containing liquids, etc., without regarding their harsh qualities.
2. By changing the length or width of the equipment or using pipe bends, the equipment can be installed in a small limited space. It can also be installed in a standing position or a laid down position.
3. The pressure of seawater to be treated varies depending upon the precision of the plate rings, thickness of rings and the clearance between the rings. It can be very easily adjusted by simple means.
4. The openings of the plate rings can be changed by the expansion and contraction mechanism of the comb portions. This structure is suitable for back washing the rings. It is also possible to install a glass fiber or heat resistance filter between the plate ring unit and the outside casing as an option.
5. Semi automatic or full automatic type of equipment can be selected depending upon the preference of the customer. The full automatic equipment can control the water content of a dewatered cake at a desired percentage by its computer.
6. The equipment can be easily transported by mounting on a vehicle.
7. The equipment requires almost no maintenance.
APPLICATION OF RING-TUBE METHOD SEAWATER DESALINIZATION EQUIPMENT
1. USE AS A FILTER:
The equipment is provided either with a metal filter or resin filter. The filter utilizes the characteristics of the finishing precision of the ring surface filter precision that changes in accordance with pressure difference between the inside and outside of the filter unit, and filter capacity. The level of liquid treatment can be easily changed by changing the filter precision and pressure difference depending upon the type of liquid to be treated. The filter rings are made of material that can withstand high temperatures in the range of 160 to 190 C, and acid and basic chemicals.
2. USE AS DEWATERING EQUIPMENT:
The equipment can be used for dewatering of liquid and sludge. The equipment structure is simple. Clogging of the filter can be easily prevented by back washing. Dewatered cake can be automatically pushed out through the metal rings by the rotor thereby making back washing intervals longer.
3. SPECIAL CASE FOR HIGH-LEVEL TREATMENT:
When a special mono pump is used, the shaft should be made of stainless steel and the casing of isobutylene-isoprene rubber. In addition, heat-resisting gaskets should be used. By setting the maximum pressure at 10Mpa (lOOkg/cm2), it is possible to increase the level of liquid and solid separation treatment.
4. USE OF STERILIZING FUNCTION:
The equipment can prevent the intrusion of bacteria by the fine rings as well as collect bacteria. The collected bacteria are either destroyed or made inactive by high pressure and high temperature. By adding ozone, the equipment can be used as a sterilizing filter that completely destroys bacteria.
5. USE-AS AN OIL AND ODOR REMOVER:
When oily and odorous particles in the air are washed with water, the cleaning water becomes emulsion form liquid containing oily and odorous waste. The oily and odorous waste coagulates when instantaneous artificial flocculating agent CINDERELITE is added. The coagulated substances containing oily and odorous, particles can be removed as sludge by the ring-tube method seawater desalinization equipment.
The equipment can be used for treating wastewater in kitchens and food processing factories.
6. USE AS DUST REMOVING EQUIPMENT IN CLEAN ROOMS
The equipment can separate, dust, C02, NOx, O2, and H2O in the air. The conventional method for dehumidifying a refrigeration system requires high balance-adjustment costs. It is possible to collect dust by misting the air and wash out the misted dust by water. The ring-tubes of the equipment system clarify the wastewater and produce clean air then return the clean air into the clean rooms. It is possible to set up a system to provide clean rooms with clean air produced by the ring-tube method seawater desalinization equipment.
7. USE FOR TREATING DRINKING WATER, SEWAGE AND WASTEWATER:
By using this equipment as supplemental equipment for ordinary wastewater and drinking water treatment facilities it is possible to improve the treatment efficiency of the existing facilities thereby contributing to reduce the running costs as well as the initial investment costs of the facilities.
8. CLARIFICATION OF RESERVOIR, RIVER AND LAKE WATERS AND TREATMENT OF POLLUTED WATER PRODUCED AT CONSTRUCTION SITES:
By the combined use of the instantaneous flocculating agent of artificial zeolite Cinderelite and the equipment, the size of a polluted water treatment facility can be reduced and, as a result, reduction of energy consumption and initial facility construction costs may be achieved.
9. COMPARISON WITH ORDINARY EQUIPMENT AND ENVIRONMENTAL PROBLEMS:
Most of ordinary equipment is made of materials that are not strong enough to withstand high temperatures, acid and basic chemicals. Further, these materials are physically not strong. Equipment filters are easily clogged and are difficult to replace. In addition, used filters cannot be recycled and thus become industrial waste thereby causing environmental problems. The filter unit of this equipment consists either of stainless steel rings or titanium rings that can withstand high temperatures, acid and basic chemicals. Different types of filters can be selected to suit the type of liquid to be treated by this equipment.
10. APPLICATION FOR EXHAUST GAS TREATMENT:
Smoke and soot produced when-burning fuel or incinerating waste- materials are normally treated by a scrubbing mist separator. The wastewater from the
separator can be treated by adding instantaneous flocculating agent of artificial zeolite Cinderelite then solid particles in the wastewater can be removed by the ring-tubes of the equipment. This system is applicable to treat cleaning water of various coating booths. By making the system a smaller size it may be possible to utilize the equipment to treat exhaust gas from trucks. The application to automobiles is being tested.
11. DEWATERING AND VOLUME REDUCTION OF SLUDGE MATERIALS:
Approximately 40% of major waste materials presently produced in Japan are sludge. Sludge can be classified into organic sludge and inorganic sludge. The disposal methods of sludge are as follows:
1) Landfill 2) Make compost 3) Use as fertilizer 4) Use as animal feed
5) Burning and solidification 6) Conversion into chemical products
through chemical treatment
As sludge contains a large amount of water, most of the combustion heat is consumed for evaporating water. In the case of sewage sludge, approximately 50% of costs for disposing the sludge that contains 80% of water are consumed for dewatering. For the case of slurry produced by mining and construction industries, it's volume reduction may result in transportation cost reduction. In view of the above reasons, economical dewatering and volume reduction methods of sludge and waste materials have been urgently sought. The combined use of the artificial zeolite instantaneous flocculating agent CINDERELITE and this equipment will be extremely effective for these purposes.
12. THE EQUIPMENT CAN EFFECTIVELY SEPARATE AND REMOVE SULFUR AND IRON SULFIDE (INSOLUBLE PYRRHOTITE) IN HEAVY OIL.
By charging high-voltage electricity to C fuel oil by an ion charger then processing with a certain heat treatment method, the C fuel oil can be converted into a high quality fuel oil having a quality level equivalent to A fuel oil by the ring tubes of this equipment.