NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012
1. ORGANIZATION AND BUSINESS
Organization of Company
The Company was formed December 1, 1997, as Avani Manufacturing (China), Inc. The name was changed to Genesis Water Technologies, Inc. on August 17, 1999, to Supreme Group International, Inc. on December 24, 2000, to Amanasu Technologies Corporation on May 30, 2001. The present name was adopted October 16, 2007.
On January 4, 2008, the Company invested $1,837 for a 100% interest in a newly formed subsidiary, Amanasu Techno Holdings Japan Corporation (Japan), which is located in Tokyo. This subsidiary is inactive and, through December 31, 2012, has had no transactions.
On April 27, 2009 the Company acquired 100% of the outstanding stock of Amanasu Water Corporation (Water).
This company has changed its name to Amanasu Support Corporation. That subsidiary was subsequently sold to the Company's parent corporation, Amanasu Corporation on February 7, 2012.
Business
The Company previously acquired worldwide licensing rights for certain patented magnetic and power generating technology. Until 2006, it was the intention of the Company to license these rights for use by others. The Company continues to pursue such licensing opportunities, but its primary efforts are now directed at other opportunities.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Development Stage Accounting
The Company is a development stage company, as defined in pronouncements of the Financial Accounting Standards Board (FASB). 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, 2012, the Company has been in the development stage.
Discontinued Operations
Upon sale or other termination of an operating unit, the operations of the terminated unit will be treated as a discontinued operation and accounted for separately on the financial statements.
Basis of Consolidation
The consolidated financial statements include the accounts of the Company and the accounts of its previous subsidiary until the time of its sale to its parent corporation. (See note 12)
Cash and Cash Equivalents
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.
AMANASU TECHNO HOLDINGS CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012
2. 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.
Intangible Assets
Intangible assets are recorded at cost. Amortization is provided by the straight line method, using lives which are based on the lives of the underlying assets.
Impairment of long-lived assets
The Company performs a review for potential impairment of long-lived assets whenever an event or changes in circumstances indicate the carrying value of a n asset may not be recoverable.
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 an advertisement occurs. There has been no spending thus far on advertising.
Other Comprehensive Income
The Company reports as other comprehensive income revenues, expenses, and gains and losses that are not included in the determination of net income; principal among these has been unrealized gains and losses from foreign exchange rate fluxuation.
Foreign Currency Translation
Substantial Company assets were previously located in Japan. On February 7, 2012, the Company sold its majority position in Water to its parent company, Amanasu Corporation. Previous to the transfer, amounts were translated to US dollars as follows:
a. Assets and liabilities, at the rates of exchange in effect as balance sheet dates;
b. Equity accounts, at the exchange rates prevailing at the time of the transactions that established the equity accounts; and
c. Revenues and expenses, at the average rates of exchange of each period reported.
AMANASU TECHNO HOLDINGS CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Segment Reporting
Management will treat the operations of the Company as one segment.
3. GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the financial statements, the Company had a material working capital deficiency and an accumulated deficit at December 31, 2012, and a record of continuing losses. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include adjustments relating to the recoverability of assets and the classification of liabilities that might be necessary should the Company be unable to continue in operation.
The Company's present plans, the realization of which cannot be assured, to overcome these difficulties include but are not limited to a continuing effort to investigate business acquisitions and joint ventures.
4. RELATED PARTY TRANSACTIONS
During the years 2006-2012, the Company president made advances to the Company totaling $190,000.
The Company secretary made advances during the years 2007-2010 totaling $23,550.
The parent corporation made advance of $12,285 during the period between 2007-2011.
All advances bear interest at 4.45%.
5. OTHER ADVANCES
During the year 2003, the Company received a $99,900 subscription for its common stock. Before the stock was issued, the subscriber cancelled the transaction, but has not demanded a refund. The Company intends to repay this obligation.
AMANASU TECHNO HOLDINGS CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012
6. ADMINISTRATIVE EXPENSES
Included in administrative expenses are the following items:
|
|
|
2012
|
|
|
2011
|
|
|
Professional fees
|
|
|
5,006
|
|
|
|
5,675
|
|
|
Filing fees
|
|
|
9,750
|
|
|
|
1,121
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
885
|
|
|
|
354
|
|
|
|
|
$
|
15,641
|
|
|
$
|
7,150
|
|
7. INCOME TAXES
The Company has experienced losses since its inception. 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 available NOL's totaled $ at December 31, 2012. The potential benefit of these NOL's has been recognized on the books of the Company, but it has been offset by a valuation allowance. If not used, the NOL carryforward will expire in the years 2016 through 2031.
Under pronouncements of the FASB, 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 presented below, offset by valuation allowance. The valuation increased by $8,557 during the year.
|
Deferred Tax Asset
|
|
$
|
311,946
|
|
|
Valuation Allowance
|
|
|
311,946
|
|
|
Balance Recognized
|
|
$
|
-
|
|
Following is a table of NOL expiration dates:
|
Expiring in
|
|
US
|
|
|
2020
|
|
$
|
555
|
|
|
2021
|
|
|
20,944
|
|
|
2022
|
|
|
100,922
|
|
|
2023
|
|
|
147,981
|
|
|
2024
|
|
|
11,520
|
|
|
5025
|
|
|
79,170
|
|
|
2026
|
|
|
356,735
|
|
|
2027
|
|
|
53,560
|
|
|
2028
|
|
|
26,711
|
|
|
2029
|
|
|
17,856
|
|
|
2030
|
|
|
56,595
|
|
|
2031
|
|
|
13,430
|
|
|
2032
|
|
|
25,166
|
|
|
|
|
$
|
917,165
|
|
AMANASU TECHNO HOLDINGS CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012
7. INCOME TAXES (CONT'D)
There are no transactions other than the NOL'S, mentioned above, which would create deferred tax assets or liabilities.
The years 2010, 2011, and 2012 are subject to audit by the Internal Revenue Service.
8. RENTALS UNDER OPERATING LEASE
The Company shares office space in Vancouver, New York and Tokyo with Amanasu Environment Corporation. This sharing arrangement is on a month to month basis. There was no rent expense incurred in 2012 or 2011.
9. SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
There was no cash paid for interest during either of the periods presented. Cash payments for income taxes during 2012 and 2011were $0 and $2,258, respectively. There were no non-cash investing or financing activities during either 2012 or 2011.
10.STOCK OPTIONS
On May 9, 2009, the Board of Directors approved the issuance of 1,000,000 options to purchase Company common stock. These options vested upon issuance and are exercisable for a period of ten years, expiring May 9, 2019. The fair value of these options at the date of issuance was $10,000, determined by a Black Sholes valuation model.
11. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant effect on the Company's results of operations, financial position or cash flows.
AMANASU TECHNO HOLDINGS CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012
12. SALE OF SUBSIDIARY
On February 7, 2012, the Company sold its majority position in Amanasu Support Corporation to its parent company, Amanasu Corporation (Japan) for $10,000. This transaction was treated as a sale involving companies under common control. Accordingly, no gain or loss was recorded. The liabilities of the subsidiary exceeded its assets at the date of sale. The excess ($438,454) was credited to paid in capital, calculated as follows.
|
Liabilities transferred
|
|
$
|
522,120
|
|
|
Cash transferred
|
|
|
(3
|
)
|
|
Other assets transferred
|
|
|
(721
|
)
|
|
Noncontrolling interest
|
|
|
(8,204
|
)
|
|
Accumulated other comprehensive income to date of sale
|
|
$
|
(74,728
|
)
|
|
Amount transferred to additional paid in capital
|
|
$
|
438,454
|
|