REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders of
Amanasu
Techno Holdings Corporation
Opinion on the Financial Statements
We have
audited the accompanying consolidated balance sheet of Amanasu
Techno Holdings Corporation (the “Company”) as of
December 31, 2018, and the related consolidated statements of
operations, changes in stockholders’ deficit, and cash flows
for the year then ended, and the related notes (collectively
referred to as the financial statements). In our opinion, the
financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2018, and the
results of its operations and its cash flows for the years then
ended, in conformity with accounting principles generally accepted
in the United States of America.
Going Concern
The
accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As described in Note
2 to the financial statements, the Company had a working capital
deficit of $566,719 and an accumulated deficit of $2,166,566 at
December 31, 2018, and a record of continuing losses. These
factors, among others, raise substantial doubt about the
Company’s ability to continue as a going concern.
Management’s plans in regards to these matters are described
in Note 2 to the financial statements. The financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.
Basis for Opinion
These
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a
public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required
to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the
PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting.
As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the
purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
/s/ Prager Metis CPAs, LLC
We have
served as the Company’s auditor since 2018
Hackensack,
New Jersey
April
1, 2019
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders of
Amanasu
Techno Holdings Corporation
Opinion on the Financial Statements
We have
audited the accompanying consolidated balance sheet of Amanasu
Techno Holdings Corporation (the “Company”) as of
December 31, 2017, and the related consolidated statement of
operations, changes in stockholders’ deficit, and cash flows
for the year then ended, and the related notes (collectively
referred to as the financial statements). In our opinion, the
financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2017, and the
results of its operations and its cash flows for the year then
ended, in conformity with accounting principles generally accepted
in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. The Company had
a working capital deficit of $481,263, and accumulated deficit of
$2,081,110 as of December 31, 2017, and a record of continuing
losses. These factors, among others, raise substantial doubt about
the Company’s ability to continue as a going concern.
Management’s plans in regards to these matters are described
in Note 2 to the financial statements. The financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.
Basis for Opinion
These
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a
public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required
to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the
PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting.
As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the
purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
|
We have
served as the Company’s auditor since 2016.
|
|
|
|
|
Hackensack,
NJ
|
|
|
|
|
April
9, 2018
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018 and 2017
1. ORGANIZATION AND BUSINESS
Organization of Company
Amanasu
Techno Holdings Corporation ("Company") was incorporated in the
State of Nevada on December 1, 1997 under the name of Avani
Manufacturing (China) Inc. The Company changed its name to Genesis
Water Technology on August 17, 1999, and to Supreme Group
International, Inc. on December 24, 2000. On June 7, 2001, it
changed its name to Amanasu Technologies Corporation. It changed
its name again on December 21, 2007 to Amanasu Techno Holdings
Corporation. The Company is a development stage company, and has
not conducted any operations or generated any revenue since its
inception.
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 since inception.
Business
The
Company continues to investigate and develop technologies, which
the Company believes have great market potential.
2. GOING CONCERN
The
accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As
shown in the consolidated financial statements, the Company had a
working capital deficiency of $566,719 and an accumulated deficit
of $2,166,566 at December 31, 2018, and a record of continuing
losses. These factors, among others, raise substantial doubt about
the ability of the Company to continue as a going concern. The
consolidated financial statements do not include any adjustments
that might result from the outcome of this
uncertainty.
The
Company's present plans, the realization of which cannot be
assured, to overcome these difficulties include, but are not
limited to, a continuing effort to investigate business
acquisitions and joint ventures. The Company will also continue to
investigate and develop technologies, which the Company believes
have great market potential. As such, the Company may need to
pursue additional sources of financing. There can be no assurances
that the Company can secure additional financing.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation:
The consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States, and include the Company and its wholly-owned
subsidiary. All significant inter-company accounts and transactions
have been eliminated.
Use of Estimates:
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires that management make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Development Stage Company:
The
Company is considered to be in the development stage as defined in
ASC 915 “Development Stage
Entities.” The Company is devoting substantially all
of its efforts to the development of its business plans. The
Company has elected to adopt Accounting Standards Update No.
2014-10, Development Stage Entities (Topic 915): Elimination of
Certain Financial Reporting Requirements; and does not present or
disclose inception-to-date information and other remaining
disclosure requirements of Topic 915.
AMANASU TECHNO HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2018 and 2017
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Cash and Cash Equivalents:
For
purposes of the statements of cash flows, the Company considers all
short term debt securities purchased with an original maturity of
three months or less to be cash equivalents.
Fair Value of Financial Instruments:
The
Company has adopted the provisions of ASC Topic 820, Fair Value
Measurements and Disclosures”, which defines the fair value
as used in numerous pronouncements, establishes a framework for
measuring fair value and expands disclosure of fair value
measurements. ASC 820 defines fair value as the exchange price that
would be received for an asset or paid to transfer a liability (an
exit price) in the principal or most advantageous market for the
asset or liability in an orderly transaction between market
participants on the measurement date. ASC 820 also establishes a
fair value hierarchy, which requires an entity to maximize the use
of observable inputs and minimize the use of unobservable inputs
when measuring fair value. ASC 820 describes three levels of inputs
that may be used to measure fair value:
Level 1 – quoted prices in active markets for identical assets or liabilities.
Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable.
Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions).
The
estimated fair value of certain financial instruments, including
cash, accrued expenses and advances from stockholder and officers
are carried at historical cost basis, which approximates fair
values because of the short-term maturing of these instruments. We
have no financial assets or liabilities measured at fair value on a
recurring basis.
Income Taxes:
The Company accounts for income taxes under the provisions of FASB
ASC Topic 740, “Income Tax,” which requires recognition
of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the consolidated
financial statements or tax returns. Deferred tax assets and
liabilities are recognized for the future tax consequence
attributable to the difference between the tax bases of assets and
liabilities and their reported amounts in the financial statements.
Deferred tax assets and liabilities are measured using the enacted
tax rate expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that
includes the enactment date. The Company establishes a valuation
when it is more likely than not that the assets will not be
recovered.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in
income taxes recognized in an enterprise’s financial
statements and prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return.
ASC Topic 740.10.40 provides guidance on derecognition,
classification, interest and penalties, accounting in interim
periods, disclosure, and transition. We have no material uncertain
tax positions for any of the reporting periods
presented.
Recently Adopted Accounting Pronouncements:
The Company does not expect the adoption of recently issued
pronouncements to have a significant effect on the Company’s
results of operations, financial position or cash
flows.
AMANASU TECHNO HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2018 and 2017
4. RELATED PARTY TRANSACTIONS
The
Company receives periodic advances from its principal stockholders
and officers based upon the Company’s cash flow needs. There
is no written loan agreement between the Company and stockholders
and officers. The balances due as
of December 31, 2018 and 2017 were $313,630 and $292,475,
respectively. All advances bear interest at 4.45%.
During
the years ended December 31, 2018 and 2017, the Company borrowed
$$21,955 and $30,900, respectively, from a
stockholder.
Interest
expense associated with these loans were $13,793 and $12,635 for
the years ended December 31, 2018 and 2017, respectively. Accrued
interest on these loans were $77,913 and $64,120 at December 31,
2018 and 2017, respectively. No terms for repayment have been
established. As a result, the amount is classified as a current
liability.
The
Company has an arrangement with Lina Maki, a stockholder of the
Company, for her management consulting time. The agreement is not
written and no payment terms have been established. The fee is
$10,000 annually. As of December 31, 2018 and 2017 amounts due to
the stockholder were $40,000 and $30,000,
respectively.
The
Company also leases it office space from a stockholder of the
Company. At December 31, 2018 and 2017, amounts due to the
stockholder were $3,630. For the
most part, lease payments are made by the Company’s
affiliate. As such, when the lease payments are made by the
Company’s affiliate or the lease payments are made by the
Company on behalf of the affiliate, such amounts are shown as a
reduction in or addition to the amount due from affiliate in the
accompany balance sheets (see Note 6).
AMANASU TECHNO HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2018 and 2017
5. 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 carry forward and apply
against future profits for a period of twenty years. The available
NOL's totaled approximately $1.3 million at December 31, 2018. The
NOL can be carried forward to offset taxable income, if any, in
future years which expire in the years 2020 through
2038.
In
assessing the realization of deferred tax assets, management
considers whether it is more likely than not that some portion or
all of the deferred tax assets will be realized. The ultimate
realization of deferred tax assets is dependent upon the generation
of future taxable income during the periods in which those
temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future
taxable income and tax planning strategies in making this
assessment. Based on the assessment, management has established a
full valuation allowance against all of the deferred tax asset
relating to NOLs for every period because it is more likely than
not that all of the deferred tax asset will not be
realized.
On December 22, 2017, legislation commonly known as the Tax Cuts
and Jobs Act, or the Tax Act, was signed in to law. The Tax Act,
among other changes, reduces the U.S. federal corporate tax rate
from 35% to 21%, requires taxpayers to pay a one-time transition
tax on earnings of certain foreign subsidiaries that were
previously tax deferred and creates new taxes on certain foreign
sourced earnings. On December 31, 2018, we did not have any foreign
subsidiaries and the international aspects of the Tax Act are not
applicable.
In connection with the initial analysis of the impact of the Tax
Act, we re-measured certain deferred tax assets and liabilities
based on the rates at which they are expected to reverse in the
future, which is generally 21%. As a result, we recorded a decrease
in net deferred tax assets of $160,000 with a corresponding net
adjustment to deferred income tax expense. These adjustments were
fully offset by a decrease in the valuation allowance for the year
ended December 31, 2018. We have completed and recorded the
adjustments necessary under Staff Accounting Bulletin No. 118
related to the Tax Act.
The tax
return for the years 2015, 2016 and 2017 are subject to audit by
the Internal Revenue Service.
The
reconciliation of income tax expense at the U.S. statutory rate of
34% to the Company’s effective tax rate is as
follows:
|
|
|
|
|
Income tax expense
at statutory rate
|
21%
|
34%
|
|
Change in valuation
allowance
|
(21%)
|
(34%)
|
|
Income tax
expense
|
-
|
-
|
The tax
effects of temporary differences that give rise to the
Company’s net deferred tax assets as of December 31, 2018 and
2017 are as follows:
|
|
|
|
|
Net Operating Loss
Carryforwards
|
$276,817
|
$258,548
|
|
Valuation
Allowance
|
(276,817)
|
(258,548)
|
|
Deferred Tax
Asset
|
$-
|
$-
|
AMANASU TECHNO HOLDINGS CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 2018 and 2017
6. RENTALS UNDER OPERATING LEASE
The
Company's executive offices are located at 445 Park Avenue Center
10th Floor New York, NY 10022, and Vancouver, British Columbia. The
total premises in Vancouver are 2,000 square feet and are leased at
a monthly rate of $2,625 under a lease agreement between the
Company and the Secretary of the Company which expires October 1,
2019. The Company shares the space with Amanasu Environment
Corporation (“AEC”), a reporting company under the
Securities Exchange Act of 1934. Our major shareholder and officer
own approximately 81% of AEC’s outstanding shares of common
stock. AEC is responsible for 50% of the rent. The office in New
York is rented at the rate of $328 each year. In addition, the
Company maintains an office at Suite 905, 1-6-1 Senzoku Taito-Ku
Tokyo Japan, and the Company pays no rent.
The
following is a schedule of approximate future minimum rental
payments for operating leases subsequent to the year ended December
31, 2018 based on the Company’s share of rent:
Year
Amount
2019
$11,813
7. DEPOSIT ON STOCK PURCHASE
During 2015, the Company received $61,030 for a deposit for the
purchase of common stock, this amount is classified as a current
liability in the accompanying balance sheet as of December 31, 2018
and 2017. No shares have been issued for these deposits as of
December 31, 2018.
8. SUBSEQUENT EVENT
The Company has evaluated subsequent events that have occurred
after the date of the balance sheet through the date of issuance of
these consolidated financial statements and determined that no
subsequent event requires recognition or disclosure to the
consolidated financial statements.