MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This quarterly report on Form 10-Q and other reports filed by Amanasu Techno Holdings Corporation and its wholly owned subsidiaries, collectively the “Company”, “we”, “our”, and “us”) from time to time with the U.S. Securities and Exchange Commission (the “SEC”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks contained in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the Securities and Exchange Commission (“SEC”) on April 5, 2022 (the “Annual Report”), relating to the Company’s industry, the Company’s operations and results of operations, and any businesses that the Company may acquire. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.
Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our consolidated financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.
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 $870,403 and an accumulated deficit of $2,455,829 at June 30, 2022, 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 adjustments relating to the recoverability of assets and 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. 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 or will have to rely on loans from stockholders and officers to support operations. There can be no assurances that the Company can secure additional financing.
Company Overview
The Company was incorporated in the State of Nevada on December 1, 1997. Its operations to date have been limited to obtaining the license to various environmental and other technologies, conducting preliminary marketing efforts and seeking financing. The Company’s principal offices are at 244 Fifth Avenue, 2nd Floor, New York, NY 10001 Telephone: 604-790-8799. The Tokyo branch is located at Suite 905, 1-6-1 Senzoku Taito-Ku Tokyo Japan. Telephone: 03-5808-3663.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
General
Management’s discussion and analysis of results of operations and financial condition is intended to assist the reader in the understanding and assessment of significant changes and trends related to the results of operations and financial position of the Company together with its subsidiary. This discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying financial notes, and with the Critical Accounting Policies noted below.
Plan of Operations
The Company is a development stage corporation. It has not commenced its planned operations of manufacturing and marketing. Its operations to date have been limited to conducting various tests on its technologies and seeking financing.
The Company’s present plans, the realization of which cannot be assured, to overcome its 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 or will have to rely on loans from stockholders and officers to support operations. There can be no assurances that the Company can secure additional financing.
The Company will continue to investigate and develop technologies, which the Company believes have great market potential. The first technology is an automated personal waste collection and cleaning machine Haruka (formerly “Heartlet”), developed by Nanomax Corporation in Japan. The Haruka is a machine used in retirement homes, hospitals, and even in private residences. The Haruka allows the patient maximum comfort. The Haruka lowers the burden on the caretaker with an automated cleaning system. This machine is the only machine in its class to have a 90% government rebate, which the company believes makes the technology, extremely competitive even in the current global economic crisis. The company obtained sales and manufacturing rights to the Haruka brand and is now seeking, manufacturing partners.
The second technology is Thoughts Routine Mechanism (“RUNE”) developed by the Company. We plan to develop this operating software to be used on electronic devices, such as smart phones, PC’s and gaming machines. We have secured technology and human resources that extend this technology to other applications outside the gaming sector. The Company has developed an alliance with Valhalla Game Studios (“VGS”) to jointly conduct game development and application development on “fate diagnosis based statistical theory, and “fate diagnosis” game service on mobile phones, smart phones, and tablets. We believe the collaboration between the Company and VGS may contribute to the future growth of the Company. Currently, Mr. Maki offers a wide range of advice as a special advisor, and this business continues to be evaluated and developed. In addition, cartoons, movies and games play a large role and influence world views and we believe that this technology be a very effective tool in this area.
The Company will also be concentrating its efforts on capital raising efforts to fund the development and marketing of these technologies.
As stated above, the Company cannot predict whether or not it will be successful in its capital raising efforts and, thus, be able to satisfy its cash requirements for the next 12 months. If the Company is unsuccessful in raising at least $150,000, it may not be able to complete its plan of expanding operations as discussed above. The Company is expecting to gain the capital from issuing and selling the shares of the Company. The Company has been able to fund its existing operations from the proceeds of loans from a stockholder.
The Company’s operations may be affected by the recent and ongoing outbreak of the coronavirus disease 2020 (COVID-19) which in March 2020, was declared a pandemic by the World Health Organization. The ultimate disruption which may be caused by the outbreak is uncertain; however, it may result in a material adverse impact on the Company’s financial position, operations and cash flows. Possible areas that may be affected include, but are not limited to, disruption to the Company’s ability to obtain funding and performing further research on certain projects.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Results of Operations
There were no revenues for the three and six months ended June 30, 2022 and 2021.
General and administrative expenses increased $4,964 (47.2%) and $4,801 (15.4%) to $15,482 and $35,947 for the three and six months ended June 30, 2022, as compared to $10,518 and $31,146 for the three and six months ended June 30, 2021 primarily as a result of higher professional fees and travel expenses.
As a result of the above, the Company incurred losses from operations of $15,482 and $35,947 for the three and six months ended June 30, 2022 as compared to losses from operations of $10,518 and $31,146 for the three and six months ended June 30, 2021.
For the three and six months ended June 30, 2022, interest expense increased $783 and $1,489 to $5,989 and $11,592, respectively, as compared to $5,206 and $10,103 for the three and six months ended June 30, 2021, as a result of the increased interest associated with additional loans from stockholders.
As a result of the above, the Company incurred net losses of $21,471 and $47,539 for the three and six months ended June 30, 2022 as compared to $15,724 and $41,249 for the three and months ended June 30, 2021.
Liquidity and Capital Resources
Total assets as of June 30, 2022 were $75,869, compared to $64,519 as of December 31, 2021. The increase is primarily due to an increase in amounts due from affiliate. Total liabilities as of June 30, 2022 were $931,851 compared to $872,962 at December 31, 2021, primarily as a result of an increase in loans from stockholders and officers and accrued expenses - stockholders and officers of the Company.
The Company’s minimum cash requirements for the next twelve months are estimated to be $60,250, including rent, audit fees, office expenses, interest and professional fees. The Company does not have sufficient cash on hand to support its overhead for the next twelve months and there are no material commitments for capital at this time other than as described above. The Company will need to issue and sell shares to gain capital for operations or arrange for additional stockholder or related party loans. There is no current commitment for either of these fund sources.
Our working capital deficit increased $47,895 to $870,403 at June 30, 2022 as compared to $822,508 at December 31, 2021 primarily due to an increase in loans from stockholders and officers and accrued expenses-stockholders and officers.
On June 30, 2022, the Company had a cash balance of $276. The Company’s principal sources and uses of funds were as follows:
Cash used in operating activities. For the six months ended June 30, 2022, the Company used $26,575 in cash for operations as compared to using $28,501 in cash for operations for the six months ended June 30, 2021, primarily as a result of the higher net loss offset partially by the increase in accrued expenses – stockholders and officers.
Cash provided by financing activities. Net cash provided by financing activities for the six months ended June 30, 2022 was $26,582 as compared to $28,864 for the six months ended June 30, 2021 primarily as a result of the increase in proceeds from loans from stockholders and officers offset partially by the increase in amounts due from affiliate.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
OFF-BALANCE SHEET ARRANAGEMENTS
The Company has no off-balance sheet arrangements.
CRITICAL ACCOUNTING POLICIES
The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements in accordance with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reported period.
Our critical accounting policies are described in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on April 5, 2022 (the “Annual Report”). There have been no changes in our critical accounting policies.
RECENTLY ISSUED ACCOUNTING STANDARDS
No recently issued accounting pronouncements had or are expected to have a material impact on the Company’s consolidated financial statements.