Edgar Filing: AMANASU TECHNOLOGIES CORP

ITEM 1

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-KSB

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES ACT OF 1934

For the Fiscal Year Ended December 31, 2003

COMMISSION FILE NO. 0-49719

AMANASU TECHNOLOGIES CORPORATION

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(Name of small business issuer as specified in its charter)

NEVADA 98 - 0351508

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(State or other jurisdiction of incorporation) (IRS Employer

Identification No.)

701 FIFTH AVENUE, 42nd FLOOR, SEATTLE, WA 98104

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(Address of principal executive offices)

206-262-8188

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(Issuer's telephone number)

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Securities registered pursuant to Section 12(b) of the Exchange Act: NONE

Securities registered pursuant to Section 12(g) of the Exchange Act:

Title of each class:

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Common Stock, no par value

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[ X ] Yes [ ] No

Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in part III of this form 10-KSB or any amendment to this Form 10-KSB. [X]

State the issuer's revenues for its most recent fiscal year: $-0-.

The aggregate market value of the voting stock held by non-affiliates of the registrant on March 15, 2004, computed by reference to the price at which the stock was sold on that date: -0-

The number of shares outstanding of the registrant's Common Stock, no par value, as of March 15, 2004 was 46,506,300 common shares.

PART I

Item 1. Description Of Business.

General

Amanasu Technologies 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. The Company is a development stage company, and has not conducted any operations and generated any revenues since its inception.

The Company’s principal offices are located at 701 Fifth Avenue, 42nd Floor, Seattle, Washington 98109, and its telephone number is (206) 262-8188. The Company also maintains an office at 2-5-18 Kyobashi Chuo-ku, Tokyo, Japan 104-0031.

Overview and History.

The Company is a development stage company and significant risks exist with respect to its business (see “Cautionary Statements” below). The Company received the exclusive, worldwide rights to a high efficiency electrical motor and a high powered magnet both of which are used in connection with an electrical motor scooter. The technologies were acquired under a sub-license agreement with Amanasu Corporation, formerly Family Corporation. Amanasu Corporation, a Japanese company and the Company's largest shareholder, acquired the rights to the technologies under a licensing agreement with the inventors. Mr. Atsushi Maki, a director of the Company, is the sole shareholder of Amanasu Corporation. At this time, the Company is not engaged in the commercial sale of any of its licensed technologies. Its operations to date have been limited to acquiring the technologies, constructing four proto-type motor scooters and various testing of the technologies and the motor scooter. The Company must raise funds in order to commence the sale of its motor scooter.

License Agreement.

Effective February 10, 2000, Amanasu Corporation obtained the exclusive, worldwide rights to a high efficiency electrical motor and a high powered magnet pursuant to a licensing agreement with its inventors. Amanasu Corporation paid the inventors the sum of $160,000, and transferred to the one of the inventors 1,000,000 shares of common stock of the Company that it later received when it sub-licensed the technology to the Company, as described below. The term of the licensing agreement is 30 years, and is subject to a two percent royalty payable to the inventors on the gross receipts from the sale of products using the licensed technology. The agreement is assignable by Amanasu Corporation, provided that, the assignee assumes the other terms and conditions of the license agreement, including the payment of the two percent gross royalty to the licensors. The inventors may terminate the agreement if the licensees or its assigns fail to cure any default within 90 days after receiving notice of such default from the licensors.

Sub-license Agreement.

Effective March 10, 2000, Amanasu Corporation sub-licensed to the Company the exclusive, worldwide rights to the technologies, subject to the terms of the underlying license agreement. As required under the sub-license agreement, the Company:

- issued to Amanasu Corporation 17,000,000 shares of common stock and an option to acquire 20,000,000 shares of common stock at $0.02 per share, which was exercised by Amanasu Corporation in October 2001.

- agreed to pay Amanasu Corporation the sum of $160,000, of which $100,000 has been paid and the balance has been characterized as a capital contribution to the Company.

- issued an additional 6,350,000 shares of its common stock, valued at $6,350 to third parties. These shares consisted of: 1,000,000 shares to each of Wanxuan Lei, Shiyang Lei, and Jufang Zhang; 100,000 shares to Tokuo Goshima, 500,000 shares to Yamaguchi Takashi, and 50,000 shares to Machiaki Iwasaka; and 2,700,000 shares to Mr. Atsushi Maki.

The shares issued to Wanxuan Lei, Shiyang Lei, and Jufang Zhang were issued in exchange for product marketing services to be performed by these parties for the Company in respective countries of China, Korea, and Taiwan, as further described in Item 1 section Markets and Marketing below. None these individuals are affiliated with the inventors or Amanasu Corporation.

The shares issued to Tokuo Goshima, Yamaguchi Takashi, and Machiaki Iwasaka were issued as required under the sub-license agreement, however, not for any future services to be performed by these parties to the Company. Each of these individuals is a consultant of a Y.T. Magnet Corporation, a company owned by the principal inventor.

The shares issued to Mr. Maki were issued in exchange for product marketing services to be performed by Mr. Maki in Japan, as further described in Item 1 section Markets and Marketing below.

The sublicense agreement subjects the Company to the terms and conditions of the original license agreement, and as a result, it is required to pay the inventors a royalty of two percent of the gross receipts from the sale of products using the technology. The term of the sub-license agreement is 30 years from the date of the agreement between the Amanasu Corporation and the inventors. However, if the Company fails to comply with any provision of the agreement after a 90-day notice period, the licensors may terminate the agreement. The Company has valued the sub-license agreement at $160,000, which equals the cash amount paid by Amanasu Corporation to the inventors.

The Company intends to use the technologies to produce a lightweight, electrical motor scooter to compete in the emerging, light electric vehicle industry. The Company intends to manufacture and sell the motor scooter to its initial target markets of Japan, Taiwan and China, and Korea.

Background of Technology.

The high efficiency electrical motor and the high powered magnet technologies were developed by the principal inventor, Yasunori Takahashi. Mr. Takahashi subsequently transferred the rights to the technologies to his son, Yoshiaki Takahashi. Yoshiaki Takahashi patented the motor technology in the United States on January 19, 1999 (Patent #5,861,693) and in Canada on February 20, 2001 (Patent #2,164,745), and patented the magnet technology in the United States on November 24, 1998 (Patent # 5,480,133).

In the first half of 1996, the principal inventor entered into a distribution arrangement with a former business associate located in Taiwan, who agreed to market the scooter in Taiwan. Based on this arrangement, the inventor produced approximately 20,000 scooters at his manufacturing facility located in Japan using earlier versions of the technologies. The scooters were shipped directly to the distributor in Taiwan on a consignment basis. However, the distributor failed to pay the inventor for the delivered scooters and also failed to return the scooters. Consequently, the arrangement was terminated in late 1996. As of result of the actions of the Taiwan distributor, the inventor lacked sufficient working capital to continue to produce and market the scooter, and his operations ceased in late 1996. Following the cessation of operation until February 2000 when he entered into the licensing agreement with Amanasu Corporation as discussed above, no operations were conducted by the inventor other than to further refine the technologies.

The inventor conducted his prior operation in compliance will all governmental rules and regulations. In this regard, the inventor received approvals from the Japanese Regional Land and Transportation Bureau, and the Taiwanese Department of Finance in the Ministry of Economic Development. He also received approval from the local prefecture (government) in Tokyo for his assembly operations.

Description of Technology.

The technologies sub-licensed by the Company consist of a high efficiency electric motor and a high powered magnet. Both technologies have been patented by the inventor under separate patent filings in the United States. The motor technology also was patented in Canada. The Company expects to manufacture and sell a proprietary electric motor scooter which incorporates the advantages of the two technologies. Management believes the competitive advantages of the electric motor scooter are its ability to travel longer distances between each battery recharge, as well as a significantly shorter battery recharge time than other electric motor scooters in the market. The belief of management is premised upon the comparison of results between independent tests conducted by Sanwa Electronics Co., Inc., on behalf of the Company, with respect to its electric scooter and data published by Honda regarding its electric scooter. This comparison is discussed in "Description of Products" below.

Conventional electric motors convert electric energy received from a power source such as a battery to mechanical energy for use in the desired motorized application. However, the conversion efficiency, that is, the amount of energy actually converted to mechanical energy generally is reduced due to a number of factors such as motor friction and vibration, and electro-magnetic loss. This inefficient use of energy, or energy deficit, depletes the energy supply stored in the battery causing motor stoppages. Therefore, frequent battery recharging is required to maintain successive operation of a conventional electrical motor. The proprietary motor to be used by the Company supports longer motor usage intervals between battery re-charges. It also accomplishes this operation on a significantly shorter battery re-charge time. The properties of this brushless motor, exclusive of the high-powered magnet, are such that it generates electricity with the first power supply, storing it in a regenerative condenser and recycling it as electrical power. By connecting parallel condensers, it reduces consumption of electrical power. The patented magnet is a low cost, glass bonded magnet that has a magnetic force 10 times greater than a conventional ferrite magnet resulting is a substantially lower electro-magnetic loss during operation. The electric motor to be manufactured by the Company employing the combined technologies is expected to exhibit greater operational efficiencies than other conventional electric motors. The Company, in marketing its product, expects to leverage upon the operational efficiencies of its technologies, as well as to capitalize upon the growing trend towards environmentally friendly vehicles.

Description of Products.

The Company intends to participate in the emerging electric vehicle market by using its sub-licensed technologies to design, manufacture, and sell lightweight, electric motor scooters. The Company may expand its product line in the future to include other electronic vehicles, such as electric bicycles.

The Company's principal product will be a lightweight motor scooter that features the Company's proprietary electric motor. The one passenger scooter also will feature a stepless transmission, an electromotive brake, and is expected to weigh 107 kg. The Company will use an otherwise standard leaded battery. Due to the unique features of the licensed technologies, the scooter is expected to deliver improved operational efficiencies over competitive products. On December 26, 2001, Sanwa Electronics Co., Inc. performed two independent tests on one of the Company's scooters. The test results indicated that the motor scooter can travel 65 to 85 km on a full battery charge, at an average running speed of 30 km/hour. The battery charge time to travel these distances approximated 2 hours. Sanwa Electronics conducted the tests on a relatively flat road grade with limited traffic density. These results contrast with Honda's electric scooter (Year 2001-Model #A-AF36). According to product literature published by Honda, the scooter travels approximately 60 km at 30 km/hour, and a full recharge requires approximately 8 hours. Conditions, such as road grade and travel density, regarding the its scooter were not contained in the Honda information.

The Company recognizes there have been major barriers to widespread adoption of electric motor scooters. These barriers include higher retail pricing of electric motor scooters compared to gas-powered versions. In addition, electric motor scooters have labored under its operational limitations, such as limited travel range and lengthy battery charge time. The Company believes that its product will favorably respond to these barriers. The Company expects to competitively price its scooter with others in the marketplace. For example, despite the unique features of its motor, the Company expects its motor scooter to retail slightly higher than gas powered versions, however, at discount of between 20% to 30% to the Honda model identified above. It believes that the operational efficiencies of its scooter, that is its longer travel range and shorter charge time, will overcome some of the operational limitations that have plagued other electric scooters.

Gas powered scooters while generally an inexpensive mode of transportation, typically are powered by two-stroke engines fueled by an oil and gasoline mixture. These engines are small with compressed power, and therefore ideally suited for scooter use. However, two stroke engines are commonly identified by clouds of oily smoke trailing the engine, which evidences its major disadvantages. Two stroke engines use fuel inefficiently and, more importantly, have high pollution emissions. They generate pollution from two sources; the combustion of oil in the fuel, and the leaking of fuel through the exhaust port during engine use. In promoting its product to its targeted markets, the Company will seek to capitalize on its strong operational efficiencies of the technology compared with other electric scooters, while championing its product's environmental advantages to gas powered versions.

Competition.

The Company expects to confront intense competition in electric vehicle market. The major manufacturers in the electrical bicycle/scooter market are Honda, Suzuki, Sanyo and Yamaha which sell their products principally in the Far East and Europe. In addition, other smaller manufacturers exist in this market throughout the world. Despite the robust competition, the Company believes that it maintain certain competitive advantages in this market. Specifically, it believes that its scooter's ability to travel longer distances on an existing charge as well the shorter charge time are important competitive advantages. In addition, the Company expects to sell its scooter at prices ranging from 20 to 30% less than a comparable product manufactured by the major manufacturers. Consequently, the Company believes due to these competitive advantages, it will be able to effectively compete in this market.

Manufacturing And Suppliers.

The Company has entered into discussions with Tahara Denki Co., located Tokyo, Japan to manufacture the scooter, however, no formal arrangements have been made by the parties. The Company does not intend to formalize a manufacturing arrangement until such time as it has raised at least $500,000 in working capital (See “Plan of Operations”). In any such manufacturing arrangement, the manufacturer will have to demonstrate satisfactorily that it will protect the Company’s proprietary technology. In this regard, the Company will seek relationships with well established and reputable manufacturers. In March, 2003, the Company terminated arrangements with a Beijing scooter manufacturer due to concerns regarding the protection of its technology. The principal inventor will supply the proprietary motor magnet, and will assemble the motor from the manufactured components at his Tokyo factory. The non-magnet motor components will specially manufactured in accordance with Company specifications by Tahara Denki. The principal inventor also will supply the battery, which will be manufactured in Beijing, China. The Company has not entered into any written contracts with providers of equipment or services related to the scooter. While the Company may maintain single sources for the manufacture or supply of various components, other than the motor or the magnet, it believes that other sources for such components are available if necessary. The Company may also consider other sites for manufacturing, however, no determination has been made at this time.

The Company will rely solely upon the inventor for the manufacture of the motor and magnet, however, the Company has the technical know-how to manufacture these products, if necessary. The inventor will supply the motor, including the magnet, and the battery at a cost equal to the actual component cost plus 10% to cover labor and overhead. The cost for all other components will be a fixed price per item.

Markets And Marketing.

Motor scooters have been one of the primary modes of transportation worldwide for many years with particular widespread use in congested cities of Europe and the Far East. Recently, motor scooter use has descended upon many cities in the United States. Scooter use in these geographical areas initially has been gas-powered models, however, in recent years electrical powered scooters have been introduced to these areas. The growth of the market for electric vehicles in the United States has been led by federal, state, and local laws aimed at reducing pollution levels from conventional gas powered vehicles, including two-stroke vehicles like motorcycles and scooters. The U.S. Energy Policy Act of 1992 provides that federal, state and public utility fleets must begin to purchase alternative fuel vehicles in 1993 with major acceleration of these purchases to begin in 1998. The State of California has mandated that 10% of all new car sales in the state must be zero emission vehicles by the year 2003, and other states have enacted similar directives. In addition, municipalities in California and Colorado are offering $250 rebates to buyers of electric vehicles. Globally, a similar effort is underway. The Republic of China seemingly has embraced electric vehicle usage. China gives buyers of electric scooters a rebate equivalent to $200 (US). During 1999, it sponsored a $12 million program to put three to five thousand electric vehicles on the road by 2000. Finally, it recently banned the licensing of new gas-powered bicycles in the cities of Shanghai and Beijing. In Europe, France has agreed to provide rebates of the additional cost of electric vehicles over conventional vehicles and is providing free parking to electric vehicles in Paris. The Company believes that the its plan of operations of manufacturing and selling electric scooters will benefit from these legislative efforts.

The Company's strategic focus for the next 12 months is to establish a distribution network in North America and Japan, subject to the Company raising sufficient working capital for its operations. The Company will use independent marketing representatives to identify prospective distributors and other potential users such as local and regional governments within designated territories. Formal agreements with distributors will be negotiated with assistance from Company officers. Wanxuan Lei, Shiyang Lei, and Jufang Zhang are the Company's independent marketing representatives for the territories of China, Korea, and Taiwan, respectively In exchange for their services, the Company has issued 1,000,000 shares of its common stock to each party. In North America, the President and an independent consultant will lead the marketing efforts in North America. Once an arrangement is formalized with a distributor, the marketing representative will make sales directly to the distributor, subject to a commission structure to be established by the Company. The efforts of these representatives currently are supported by the Company's president. However, upon receipt of sufficient working capital funds as described in the Item 2. Plan of Operations below, the Company intends to hire a vice president of sales who will be located in the Company's Seattle office, and a regional sales manager who will be located in the Company's Tokyo office. Once hired, the new employees will supervise and support the efforts of the marketing representatives. Mr. Maki, a director and controlling shareholder of the Company, received 2,700,000 shares of common stock to assist the Company in marketing the product in Japan and North America, including the governmental agencies. The Company does not expect to expend any funds on marketing until such time as it raised sufficient funds for working capital, which is estimated to be $500,000.

Each distributor for the Company likely will be an existing distributor of motor scooters, and will be granted a designated territory on an exclusive or non-exclusive basis. In order to maintain exclusivity, each distributor will be required to purchase a minimum number of scooters annually, the amount of which will be commensurate with the size of the designated territory. The Company believes that these principal markets are attractive because of the high demand for motor scooters coupled with the growing worldwide effort to limit emissions from gas-powered vehicles. The Company will seek to leverage its operating advantages to sell its products to existing scooter distributors in these territories.

Proprietary Rights.

Pursuant to the sub-license agreement with the Amanasu Corporation, the Company obtained the exclusive world-wide rights to the proprietary motor and magnet technologies for a period of 30 years. The Company considers the technologies and know-how as proprietary and will use a combination of trade secrets, non-disclosure agreements, license agreements, and patent laws to protect its licensed proprietary rights.

Although the Company received the exclusive worldwide rights under the sub-licensing agreement, the technology is patented only in the United States and Canada. The magnet technology was patented by the inventor in the United States in November 1998 (Patent #: 5,840,133-filed February 7, 1997) and motor technology was patented by the inventor in the United States in January 1999 (Patent #: 5,861,693-filed November 17, 1995) and in Canada in February 2001 (Patent #: 2,164,745-filed December 8, 1995). The patents expire in both the United States and Canada 20 years from the respective original filing date. The Company anticipates that it will file for patent protection in other countries prior to any marketing efforts in such country, and no other patents regarding the technologies are pending or planned.

Government Regulations

Generally, the Company will be required to receive regulatory approval from various governmental agencies to conduct its operations. These regulatory approvals will require the Company to obtain and retain numerous governmental permits to conduct various aspects of its operations, any of which may be subject to revocation, modification or denial. The Company makes a continuing effort to anticipate regulatory, political, and legal developments in its principal markets in the Asian, North and South American markets that might affect its operations, but it is not always able to do so. The Company cannot predict the extent to which any legislation or regulation that may be enacted, amended, repealed, reinterpreted, or enforced in the future may affect its operations. Such actions could adversely affect the Company's operations or impact its future financial condition or earnings. The Company however does expect that its scooter will comply with all governing regulations in those countries that it intends to sell its product.

Employees.

As of December 31, 2003, the Company has no full time employees. During 2003, the Secretary of the Company has rendered consulting services to the Company in the amount of $35,000.

Item 2. Description Of Property.

The Company's executive offices are located at 701 Fifth Avenue, 42nd Floor, Seattle, Washington 98104. The premises are 1,500 square feet and are subleased at a monthly rate of $1,550 from Amanasu Environment Corporation, a reporting company under the Securities Exchange Act of 1934, and a company controlled by the Company’s majority shareholder. The underlying lease expires September 30, 2005. The Company sub-leases a Seattle apartment from Amanasu Environment Corporation for a monthly rental of $625. The underlying lease expires March 15, 2004. The rental amounts for both premises are shared equally with Amanasu Environment Corporation. In addition, the Company maintains an office at 2-18 Kyobashi Chuo-ku, Tokyo, Japan 104-0031. The premises are 2,000 square feet and are leased on a month to month basis at a monthly rental of $2,750 per month. Amanasu Environment Corporation occupies the same premises and pays the same rental amount. The Company believes additional lease space at this location will be available to support its future growth.

The above agreements between the Company and Mr. Maki are oral arrangements. Other than as indicated, no other rental expenses will be charged to the Company by Mr. Maki for such periods. The conditions of both premises are good.

Item 3. Legal Proceedings.

None.

Item 4. Submission Of Matters To A Vote Of Security Holders.

None

PART II

Item 5. Market For Common Equity And Related Stockholder Matters.

There is no public market for the Company's equity securities. The Company intends to establish a public market for its common stock in the United States. The Company will seek a market maker to file a Form 211 application with the NASD in order for its common stock to be quoted on the over the counter bulletin board of the NASD. The application will be subject to the review and approval of NASD. As of December 31, 2003, (i) there are no outstanding warrants or options to purchase, or securities convertible into common stock of the Company and (ii) 45,989,650 shares of common stock can be sold pursuant to Rule 144, of which 5,446,600 shares can be sold pursuant to Rule 144 (k). The remaining shares are held by control person and, as such, are subject to the other limitations of Rule 144, including the 1% limitation discussed below. Under Rule 144, shareholders whose restricted shares meet the rule's one year holding provisions, including persons who may be deemed affiliates of the Company, may resell restricted securities in broker's transactions or directly to market makers, provided the number of shares sold by such holder in any three month period is not more than the greater of 1% of the total shares of common stock then outstanding or the average weekly trading volume for the four calendar week period immediately prior to each such sale. After a non affiliated shareholder meets the two year holding period of the rule, restricted securities may be resold without regard to the above restrictions. Restricted securities held by affiliates must continue, even after the two year holding period, to meet the resale limitations discussed above.

If and when the Company's securities are traded, the securities may likely be deemed a "penny stock". The Securities and Exchange Commission had adopted Rule 15g-9 which establishes the definition of a "penny stock," for purposes relevant to the Company, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person's account for transactions in penny stocks and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must: (i) obtain financial information and investment experience and objectives of the person and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading, and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

As of March 15, 2004, there are 85 shareholders of record of the Company's common stock. . Although there are no restrictions on the Company's ability to declare or pay dividends, the Company has not declared or paid any dividends since its inception' and does not anticipate paying dividends in the future.

Equity Compensation Plan Information.

Equity Compensation Plan Information
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders (1)	-0-	-0-	-0-
Equity compensation plans not approved by security holders (2)	-0-	-0-	-0-
Total	-0-	-0-	-0-

Recent Sales Of Unregistered Securities

On June 16, 2003, the Company sold 20,000 shares of its common stock to a company controlled by the Company’s President for a total consideration of $100,000. The common stock issuance was exempt from registration pursuant to Section 3(b) and 4(2) of the Securities Act of 1933, as amended (the “Act”), including Rule 506 of Regulation D and Regulation S promulgated under the Act. The Company has complied with the requirements of Regulation S by having no directed selling efforts made in the United States, ensuring that the investor is a non-U.S. person with address in a foreign country and having the investor make representation to the Company certifying that he or she is not a U.S. person and is not acquiring the common stock for the account or benefit of a U.S. person other than persons who purchased common stock in transactions exempt from the registration requirements of the Securities Act; and also agrees only to sell the common stock in accordance with the registration provisions of the Act or an exemption therefrom, or in accordance with the provisions of the Regulation.

Item 6: Management's Discussion And Analysis Or Plan Of Operations.

The following discussion should be read in conjunction with the Company's Financial Statements, including the Notes thereto, appearing elsewhere in this Annual Report.

Company Overview

The Company was organized on December 1, 1997. Its operations to date have been limited to obtaining the sub-license to the technology described below, and conducting preliminary marketing efforts.

Plan Of Operations

The Company is a development stage corporation. It has not commenced its planned operations of manufacturing and marketing a lightweight electrical motor scooter. Its operations to date have been limited to conducting various tests on its technologies, and constructing four prototypes of its scooter.

During 2003, the Company has constructed four prototypes of its scooter, which the Company intends to use as demonstrational units for marketing and sale, and testing purposes. However, the Company does not expect to initiate the manufacture and sale of its scooter until such time as it raises sufficient working capital as described below.

The Company’s plan of operations for the next 12 months is to conduct limited product refinement of its technologies, which includes product improvements, redesign of the exterior, and additional testing of the scooter, which will be required prior to commercial production. The Company's cash requirements for the next 12 months are estimated to be $500,000. This amount is comprised of the following estimate expenditures; $160,000 for administrative salaries, office expenses and travel, $320,000 for product development, and testing, and $20,000 for parts inventory. Administrative salaries includes salaries payable to existing and projected staff personnel, and office expenses represents overhead, including rent, for its Seattle and Tokyo offices. Product development includes additional refinements that the Company may make to its technologies to improve its operating efficiencies and appearance. Product inventory represents an initial supply of limited parts for repairs.

The Company is seeking to raise a minimum of $500,000 in the next 12 months to support its working capital needs as described above. The funds may be procured through the public or private offering of its debt or equity securities. In addition to the above described capital requirements, the Company will be required to raise additional funds in order for it to commence full scale production. The amount of such funds is estimated to be $400,000. The funds will be allocated to parts ands component inventory required in advance of production, and costs for manufacturing and specialty component production. The Company cannot predict whether it will be successful in raising any capital efforts.

The Company has no material commitments for capital at this time other than as described above. The Company expects to outsource the construction of component parts of its products to third parties as well as the scooter assembly. The Company believes that it can meet product demand from available manufacturing and assembly resources in Japan and elsewhere.

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 $500,000, it may not be able to complete its plan of operations as discussed above.

During the fiscal 2003 and 2003, the Company spent $-0- and $-0- respectively on research and development.

Liquidity And Capital Resources

In October 2001, the Company received $46,000 from four investors and $400,000 resulting from the exercise of stock options for 20,000,000 shares of common stock by the Company's principal shareholder. During the 2003 period, the Company raised $100,000 from the sale of 20,000 shares of its common stock to a company controlled by the Company’s President. The Company intends to raise additional funds in the near future through private placements of its common stock. The proceeds from such private placements will be allocated for administrative salaries, office expenses and travel, product development and testing, and parts inventory, as discussed below.

Working capital as of December 31, 2003 was $54,985. Total assets as of December 31, 2003 were $187,604.

Forward Looking Statements. Certain of the statements contained in this Annual Report on Form 10-KSB include forward looking statements. All statements other than statements of historical facts included in this Form 10-KSB regarding the Company's financial position, business strategy, and plans and objectives of management for future operations and capital expenditures, and other matters, are forward looking statements. These forward looking statements are based upon management's expectations of future events. Although the Company believes the expectations reflected in such forward looking statements are reasonable, there can be no assurances that such expectations will prove to be correct. Additional statements concerning important factors that could cause actual results to differ materially from the Company's expectations ("Cautionary Statements") are disclosed below in the Cautionary Statements section and elsewhere in this Form 10-KSB. All written and oral forward looking statements attributable to the Company or persons acting on behalf of the Company subsequent to the date of this Form 10-KSB are expressly qualified in their entirety by the Cautionary Statements.

Cautionary Statements. Certain risks and uncertainties are inherent in the Company's business. In addition to other information contained in this Form 10-KSB, the following Cautionary Statements should be considered when evaluating the forward looking statements contained in this Form 10-KSB:

Developmental Stage Company. The Company was incorporated on February 22, 1999, and is a development stage company. Presently, it has acquired certain technologies relating to an electrical motor scooter, however, the Company scooter is not available for commercial sale. As a development stage enterprise, the Company may be subject to the many pitfalls commonly associated with development stage enterprises, such as testing and proving technologies. These risks are in addition to normal business risks. The Company’s ability to emerge from the development stage with respect to its planned principal business activity is dependent upon a number of factors, including product development of existing technologies and successfully raising additional financing to meet its working capital needs.

Need For Additional Capital. The Company will require additional capital immediately and long term to meet its ongoing operating requirements. The immediate need includes funds for product development of its scooter. Product development includes product refinements, re-design, or enhancements as well as additional testing. In the future, in order to initiate full-scale production, the Company will require significant funds for inventory, manufacturing costs and for other working capital needs. The Company intends to raise the capital through a private or public financing of debt or equity. Presently, the Company has no commitment for any such funding. The Company can not predict whether it will be successful in obtaining such financing on terms acceptable to the Company or on any terms. The inability to obtain such financing will have a material adverse affect on the Company and its ability to develop and commercial sell its products.

Ability To Develop Commercial Product. The Company presently maintains proto-type versions of its scooter. The Company must undertake limited product development with respect its product in order for it to be commercially available for sale. The Company estimates that approximately $500,000 will be needed in product development, and other expenditures. The Company can not predict that even with such expenditures, it will be successful in developing ca product ready for commercial sale in the near future or at any time.

Rapid Technological Changes. The industry in which the Company intends to compete is subject to rapid technological changes. No assurances can be given that the any technological advantages which may be enjoyed by the Company in respect of its technologies can not or will not be overcome by technological advances by competitors rendering the Company’s technologies obsolete or non–competitive.

Lack Of Indications Of Product Acceptability. The success of the Company will be dependent upon its ability to develop commercially acceptable products and to sell such products in quantities sufficient to yield profitable results. To date, the Company has received no indications of the commercial acceptability of any of its scooter. Accordingly, the Company can not predict whether its products can be marketed and sold in a commercial manner.

Lack Of Established Distribution Channels. The Company does not have an established channel of distribution for any of its scooter. It intends on establishing a network of designated dealers in targeted markets at such time as it has completed its product development and its scooter is ready for commercial sale. The Company can not predict whether it will be successful in establishing its intended dealer network.

Management. The ability of the Company to successfully conduct its business affairs will be dependent upon the capabilities and business acumen of current management including Mr. Masafumi Hata, the Company's President. Accordingly, shareholders must be willing to entrust all aspects of the business affairs of the Company to its current management. Further, the loss of any one of the Company's management team could have a material adverse impact on its continued operation.

Control Exercised By Management. As of March 15, 2004, the existing officers and directors, and affiliates will control approximately 87% of the shareholder votes. Consequently, management will control the vote on all matters brought before shareholders, and holders of common stock may have no power in corporate decisions usually brought before shareholders.

Conflicts of Interest. The officers of the Company are not full time employees. Presently, the Company does not have a formal conflicts of interest policy governing its officers and directors. In addition, the Company does not have written employment agreements with its officers. Its officers intend to devote sufficient business time and attention to the affairs of the Company to develop the Company’s business in a prudent and business-like manner. However, the principal officer is engaged in other businesses related and unrelated to the business of the Company, and in the future, will engage in other business ventures. As a result, the principal officer and other officer of the Company may have a conflict of interest in allocating their respective time, services, and future resources, and in exercising independent business judgment with respect to their other businesses and that of the Company.

Reliance upon Third Parties. The Company does not intend on maintaining a significant technical staff nor does it intend on manufacturing its products. Rather it will rely heavily on consultants, contractors and manufacturers to design, develop and manufacture its products. Accordingly, there is no assurance that such third parties will be available when needed at affordable prices.

Competition. Although management believes its product has significant competitive advantages to other products in the industry. However, the Company will be competing in industries where enormous competition exists. Competitors in these industries have greater financial, engineering and other resources than the Company. No assurances can be given that any advances or developments made by such companies will not supersede the competitive advantages of the Company's products.

Protection Of Intellectual Property. The success of the Company will be dependent, in part, upon the protection of its proprietary of its various technologies from competitive use. Certain of its technologies are the subject of various patents in varying jurisdictions (See “Description of Business – Proprietary Rights”). In addition to the patent applications, the Company relies on a combination of trade secrets, nondisclosure agreements and other contractual provisions to protect its intellectual property rights. Nevertheless, these measures may be inadequate to safeguard the Company’s underlying technologies. If these measures do not protect the intellectual property rights, third parties could use the Company’s technologies, and its ability to compete in the market would be reduced significantly. In addition, if the sale of the Company’s product extends to foreign countries, the Company may not be able to effectively protect its intellectual property rights in such foreign countries.

In the future, the Company may be required to protect or enforce its patents and patent rights through patent litigation against third parties, such as infringement suits or interference proceedings. These lawsuits could be expensive, take significant time, and could divert management's attention from other business concerns. These actions could put the Company’s patents at risk of being invalidated or interpreted narrowly, and any patent applications at risk of not issuing. In defense of any such action, these third parties may assert claims against the Company. The Company cannot provide any assurance that it will have sufficient funds to vigorously prosecute any patent litigation, that it will prevail in any of these suits, or that the damages or other remedies awarded, if any, will be commercially valuable. During the course of these suits, there may be public announcements of the results of hearings, motions and other interim proceedings or developments in the litigation which could result in the negative perception by investors, which could cause the price of the Company’s common stock to decline dramatically.

Indemnification of Officers and Directors for Securities Liabilities. The Company's By-Laws eliminates personal liability in accordance with the Nevada Revised Statutes (NRS). Section 78.7502 of the NRS provides that a corporation may eliminate personal liability of an officer or director to the corporation or its stockholders for breach of fiduciary duty as an officer or director provided that such indemnification is limited if such party acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the corporation. In so far as indemnification for liability arising from the Securities Act of 1933 (“Act”)may be permitted to Directors, Officers or persons controlling the Company, it has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

Penny Stock Regulation. The Company's common stock may be deemed a "penny stock" under federal securities laws. The Securities and Exchange Commission has adopted regulations that define a "penny stock" generally to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These regulations impose additional sales practice requirements on any broker/dealer who sell such securities to other than established investors and accredited investors. For transactions covered by this rule, the broker/dealer must make certain suitability determinations and must receive the purchaser's written consent prior to purchase. Additionally, any transaction may require the delivery prior to sale of a disclosure schedule prescribed by the Commission. Disclosure also is required to be made of commissions payable to the broker/dealer and the registered representative, as well as current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account of the customers and information on the limited market in penny stocks. These requirements generally are considered restrictive to the purchase of such stocks, and may limit the market liquidity for such securities.

Item 7. Financial Statements.

The Financial Statements that constitute Item 7 of this Annual Report on Form 10-KSB are included immediately following Item 14 below.

Item 8. Changes In And Disagreements With Accountants On Accounting And Financial Disclosure.

None.

Item 8A. Controls and Procedures.

Within the 90-day period prior to the filing of this annual report on Form 10-KSB, the Company carried out an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined by Rule 13a-14(c) under the Securities Exchange Act of 1934) under the supervision and with the participation of the Company’s chief executive officer and chief financial officer. Based on and as of the date of such evaluation, the aforementioned officers have concluded that the Company’s disclosure controls and procedures have functioned effectively so as to provide those officers the information necessary whether:

(i) this annual report on Form 10-KSB contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report on Form 10-KSB, and(ii) the financial statements, and other financial information included in this annual report on Form 10-KSB, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this annual report on Form 10-KSB.

There have been no significant changes in the Company's internal controls or in other factors since the date of the Chief Executive Officer's and Principal Financial Officer's evaluation that could significantly affect these internal controls, including any corrective actions with regards to significant deficiencies and material weaknesses.

PART III

Item 9. Directors, Executive Officers, Promoters And Control Persons.

The directors and executive officers of the Company, their ages, and the positions they hold are set forth below. The directors of the Company hold office until the next annual meeting of stockholders of the Company and until their successors in office are elected and qualified. All officers serve at the discretion of the Board of Directors.

Name

Age

Position

Atsushi Maki

Director

Lina Lei

Secretary

Masafumi Hata

Chairman, President, and

Chief Financial Officer

Charlie Lan

Former Chairman, President,

Chief Financial Officer

---------------------------------------------------------------------------------------------------------------------

Atsushi Maki has been the a Director of the Company since June 1, 2001. During the past ten years, Mr. Maki has been an independent businessman involved mainly in real estate development projects in Japan. In 1995, he served as a Director of the Japan-Korea Cooperation Committee along with the former Prime Minister of Japan who acted as the Chairman of the committee. In 1999, he was responsible for establishing the Japan-China Association, a foundation for fostering better relations between the two nations. He served as a director of the association, along with the Chairman of Sony Corporation and the Honorary Chairman of Toyota Motor Corporation. Mr. Maki is the husband of Lina Lei, the Secretary of the Company. Mr. Maki also is a director of Amanasu Environment Corporation, a reporting company under the federal securities laws.

Lina Lei has been the Secretary of the Company since 2001. Ms. Lei was appointed a director in November 1999 and resigned from the board on August 21, 2002. From May 1990 to November 1999, Ms. Lei was employed by Thunder Company Ltd, Tokyo, Japan, in various capacities including as its managing director. Ms. Lei completed her university studies in Shanghai, China in 1982, and obtained a master's degree from Hitotsubashi University in Tokyo in 1990. During the past five years, Ms. Lei’s work involvement has been limited to activities of the Company and that of Amanasu Technologies Corporation. Ms. Lei is the wife of Atsushi Maki, the Chairman and President of the Company.

Masafumi Hata has been Chairman, President, Chief Financial Officer since May 15, 2003. From March 1996 to December 2001, he was employed by Sony Corporation, Tokyo, Japan. In December 2001, he founded Reraise Ltd., a life insurance consulting company located in Tokyo, Japan, and has acted as its Chief Executive Officer from inception to the present.

Charlie Lan was Chairman, President, Chief Financial Officer, and a director of the Company from October 10, 2001 to May 15, 2003. From 1998 to August 2001, Mr. Lan was the director and president of New Century Ltd., a British Columbia company providing business consulting and financial services to companies located primarily in Canada and in the Pacific Rim. From 1996 to 1998, he was Vice President of Le Heng International Corp., a Hong Kong corporation, and was responsible for marketing real estate properties internationally. In addition, during these periods, he was involved in real estate development projects in Hong Kong and British Columbia.

Item 10. Executive Compensation.

Ms. Lina Lei, an officer of the Company, received $35,000 in exchange for consulting services rendered to the Company. No other form of compensation or remuneration was paid to any officer or director during fiscal 2003. Future services to be rendered by Ms. Lei will be subject to the approval of the Board of Directors. Other than as indicated above, the Company did not have any other form of compensation payable to its officers or directors, including any stock option plans, stock appreciation rights, or long term incentive plan awards for the periods during the above fiscal years.

The officers of the Company are not full time employees. Presently, the Company does not have a formal conflicts of interest policy governing its officers and directors. In addition, the Company does not have written employment agreements with its officers. Its officers intend to devote sufficient business time and attention to the affairs of the Company to develop the Company’s business in a prudent and business-like manner. However, the principal officer is engaged in other businesses related and unrelated to the business of the Company, and in the future, will engage in other business ventures.

Item 11. Security Ownership Of Certain Beneficial Owners And Management.

The following table will identify, as of March 15, 2004, the number and percentage of outstanding shares of common stock of the Company owned by (i) each person known to the Company who owns more than five percent of the outstanding common stock, (ii) each officer and director, and (iii) and officers and directors of the Company as a group. The following information is based upon 46,506,300 shares of common stock of the Company which are issued and outstanding as of March 15, 2004. The address for each individual below is Suite 701 Fifth Avenue, 42nd Floor, Seattle, Washington 98109, the address of the Company.

Title Name and Address Amount and nature Percent

of Security of Beneficial Owner Beneficial Ownership(1) of Class

------------ ----------------------- -------------------------- ----------

Common Amanasu Corporation(2) 35,000,000 75.3%

Stock #902 Ark Towers, 1-3-40,

Roppongi, Minatoku,

Tokyo, Japan

Common Stock Atsushi Maki(3) 40,373,700 86.8%

Common Stock Lina Lei(4) 40,373,700 86.8%

Common Stock Masafumi Hata 20,000 <1%

Officers and

Directors, as a

group (3 persons) 40,393,700 86.8%

------------------------------------------------------------------------------------------------------------------------

(1). “Beneficial ownership" means having or sharing, directly or indirectly (i) voting power, which includes the power to vote or to direct the voting, or (ii) investment power, which includes the power to dispose or to direct the disposition, of shares of the common stock of an issuer. The definition of beneficial ownership includes shares underlying options or warrants to purchase common stock, or other securities convertible into common stock, that currently are exercisable or convertible or that will become exercisable or convertible within 60 days. Unless otherwise indicated, the beneficial owner has sole voting and investment power.

(2). Mr. Atsushi Maki, a director of the Company, is the sole shareholder of Amanasu Corporation and is deemed the beneficial owner of such shares.

(3). Includes 4,873,700 shares of common stock held individually by Mr. Maki, 35,000,000 shares of common stock held by Amanasu Corporation, and 500,000 shares of common stock held by Mr. Maki’s wife, Lina Lei. Mr. Maki disclaims beneficial ownership of the shares held by his wife.

(4). Includes 500,000 shares of common stock held individually by Ms. Lei, and 39,873,700 shares of common stock beneficially owned by Ms. Lei’s husband, Atsushi Maki. Ms. Lei disclaims beneficial ownership of the shares held by her husband.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Effective February 10, 2000, Amanasu Corporation, formerly Family Corporation, the Company's largest shareholder, obtained the exclusive, worldwide rights to the technologies pursuant to a licensing agreement with its inventors. Amanasu Corporation paid the inventors the sum of $160,000, and transferred to the inventors 1,000,000 shares of common stock of the Company that it later received when it sub-licensed the technology to the Company.

Thereafter, on March 10, 2000, Amanasu Corporation sub-licensed to the Company the exclusive, worldwide rights to the technologies, subject to the terms of the underlying license agreement. As required under the sub-license agreement, the Company:

- issued to Amanasu Corporation 17,000,000 shares of common stock and an option to acquire 20,000,000 shares of common stock at $0.02 per share.

- agreed to pay Amanasu Corporation the sum of $160,000.

- issued an additional 6,350,000 shares of its common stock, valued at $6,350

to third parties. These shares consisted of: 2,700,000 shares to Mr. Atsushi Maki, 3,000,000 shares to three persons to perform marketing services for the Company, and 650,000 shares to three technical consultants of a company owned by the principal inventor.

In October 2001, Amanasu Corporation exercised its option to acquire 20,000,000 shares of common stock of the Company and paid the sum of $400,000 to the Company. In connection with the $160,000 amount due Amanasu Corporation under the sub-license agreement, $100,000 has been paid and the balance has been characterized as a capital contribution to the Company. The amount is due on demand. Mr. Atsushi Maki is a director and a majority shareholder of the Company and the sole shareholder of Amanasu Corporation. The Company has valued the sub-license agreement at $160,000, which equals the cash amount paid by Amanasu Corporation to the inventors.

During 2003, Lina Lei, an officer of the Company, received $10,000 in exchange for performing consulting services for the Company.

The Company shares office space for its Seattle and Tokyo offices and shares an apartment in Seattle with Amanasu Environment Corporation, a reporting company under the Securities Exchange Act of 1934, and a company controlled by Atsushi Mai, a director of the he Company (See “Part I – Item 2 Description of Property”).

Item 13. Exhibits and Reports on Form 8-K.

Exhibit Description

3(i)(a) Articles of Incorporation of the Company. (Incorporated by reference to the Company's Form 10-SB/A filed on June 21, 2002).

3(i)(b) Certificate of Amendment to Articles of Incorporation. (Incorporated by reference to the Company's Form 10-SB/A filed on June 21, 2002).

3(i)(c) Certificate of Amendment to Articles of Incorporation. (Incorporated by reference to the Company's Form 10-SB/A filed on June 21, 2002).

3(i)(d) Certificate of Amendment to Articles of Incorporation. (Incorporated by reference to the Company's Form 10-SB/A filed on June 21, 2002).

3(ii)(a) Amended and Restated By – Laws of the Company. (Incorporated by reference to the Company's Form 10-SB/A filed on June 21, 2002).

10(i) License agreement between the Company and Yasunori Takahashi, Yoshiaki Takahashi and Y.T. Magnet Corporation, dated February 10, 2000. (Incorporated by reference to the Company's Form 10-SB/A filed on June 21, 2002).

10(ii) Agreement between Family Corporation and the Company dated March 10, 2000. (Incorporated by reference to the Company's Form 10-SB/A filed on June 21, 2002).

31 Certification under Section 906 of the Sarbanes-Oxley Act.

32 Certification under Section 906 of the Sarbanes-Oxley Act.

(b). Reports on Form 8-K.

None

Item 14. Principal Accountant Fees and Services.

(1). Audit fees for 2003 were $8,470 and for 2002 were $7,507.

(2) Audit Related Fees for 2003 and 2002 were $0.

(3) Tax Fees for 2003 were $0 and 2002 were $0.

(4) All Other Fees were $0.

(5) N/A

(6) Not greater than 50% for 2003 and 2002.

FINANCIAL STATEMENTS

DECEMBER 31, 2003

CONTENTS

Page

Accountant’s Audit Report

F-1

Balance Sheet

F-2

Statements of Operations and Deficit Accumulated

During Development Stage

F-3

Statements of Changes in Stockholder’s Equity

F-4

Statements of Cash Flows

F-5

Notes to Financial Statements

F-6

Independent Auditor’s Report

Board of Directors

Amanasu Technologies Corporation (A Development Stage Company)

I have audited the accompanying balance sheet of Amanasu Technologies Corporation (a development stage company) as of December 31, 2003, and the related statements of operations and deficit accumulated during development stage, changes in stockholders’ equity, and cash flows for each of the two years ended December 31, 2003 and for the period from December 1, 1997 (Inception) to December 31, 2003.These financial statements are the responsibility of the Company management. My responsibility is to express an opinion on these financial statements based on my audit.

I conducted the audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Amanasu Technologies Corporation (A Development Stage Company) as of December 31, 2003, and the results of its operations and its cash flows for each of the two years ended December 31, 2003 and for the period from December 1, 1997 (Inception) to December 31, 2003 in conformity with accounting principles generally accepted in the United States of America.

/s/ Robert G. Jeffrey

Robert G. Jeffrey

Certified Public Accountant

March 29, 2004

Wayne, New Jersey

F-1

AMANASU TECHNOLOGIES CORPORATION

(A Development Stage Company)

BALANCE SHEET

December 31, 2003

ASSETS

Current Assets:

Cash

$ 54,985

Total current assets

54,985

Fixed Assets:

Automobile

1,500

Less, accumulated depreciation

645

Net fixed assets

855

Other Assets:

Licensing agreement

160,000

Less, accumulated amortization

28,236

Total other assets

131,764

Total Assets

$187,604

LIABILITIES AND STOCKHOLDERS’ EQUITY

Stockholders’ Equity:

Common stock: authorized 100,000,000 shares

of $.001 par value; 46,676,400 issued and

outstanding

46,676

Additional paid in capital

650,624

Deficit accumulated during development stage

(509,696)

Total stockholders’ equity

187,604

Total Liabilities and Stockholders’ Equity

$187,604

The accompanying notes are an integral part of these financial statements.

F-2

AMANASU TECHNOLOGIES CORPORATION

(A Development State Company)

STATEMENTS OF OPERATIONS AND DEFICIT

ACCUMULATED DURING DEVELOPMENT STAGE

December 1, 1997

Year

(Date of Inception)

2003

2002

To December 31, 2003

Expenses

$ 279,322

$ 193,000

$ 513,081

Operating loss

(279,322)

(193,000)

(513,081)

Other Income-interest

524

2,861

3,385

Loss accumulated

during development

stage

$(278,798)

$(190,139)

$(509,696)

Net loss per share –

Basic and Diluted

$ -

Average number of shares

outstanding

46,646,400

46,392,650

The accompanying notes are an integral part of these financial statements.

F-3

AMANASU TECHNOLOGIES CORPORATION

(A Development Stage Company)

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Periods Ended December 31, 2003 and 2002

Deficit Accumulated

Common Stock

Additional

During

Amount

Paid in Capital

Development Stage

Total

Balance, December 31, 2001

46,386,400

$ 46,386

$401,014

$ (40,759)

$ 406,641

Shares issued for services

50,000

4,950

5,000

Net loss for period

(190,139)

Balance, December 31, 2002

46,436,400

46,436

405,964

(230,898)

221,502

Shares issued for services

150,000

150

14,850

15,000

Shares issued to investors

90,000

169,810

169,900

Shareholder capital contribution

60,000

Net loss for period

(278,798)

Balance, December 31, 2003

46,676,400

$ 46,676

$650,624

$(509,696)

$ 187,604

The accompanying notes are an integral part of these financial statements.

F-4

AMANASU TECHNOLOGIES CORPORATION

(A Development State Company)

STATEMENTS OF CASH FLOWS

December 1, 1997

Year

(Date of Inception)

2003 2002 To December 31,2003

CASH FLOWS FROM OPERATIONS:

Net loss

$(278,798)

$(190,139)

$(509,696)

Charges not requiring the outlay of cash:

Depreciation of Amortization

9,982

9,487

28,881

Services provided for common stock

15,000

5,000

21,300

Net Cash Consumed By

Operating Activities

(253,816)

(175,652)

(459,515)

CASH FLOWS FROM INVESTING

ACTIVITIES:

Purchase of automobile

(1,500)

Payments of amount due for

licensing agreement

(60,000)

(100,000)

(160,000)

Net Cash Consumed By

Investing Activities

(60,000)

(101,500)

(161,500)

CASH FLOWS FROM FINANCING

ACTIVITIES:

Issuances of common stock to investors

99,900

546,000

Shareholder deposits for common stock

70,000

Shareholder capital contribution

60,000

Net Cash Provided By

Financing Activities

159,900

70,000

676,000

Net Change In Cash Balance

(153,916)

(207,152)

54,985

Cash balance, beginning of period

208,901

416,053

Cash balance, end of period

$ 54,985

$208,901

$ 54,985

The accompanying notes are an integral part of these financial statements.

F-5

AMANASU TECHNOLOGIES CORPORATION

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2003

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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, and to Supreme Group International, Inc. on December 24, 2000. The present name was adopted May 30, 2001.

Business

The Company has acquired worldwide licensing rights for certain patented magnetic and power generating technology. It is the intention of the Company to license these rights for use by others.

Development Stage Accounting

The Company is a development stage company, as defined in Financial Accounting Standards (FAS) Statement No. 7. Generally accepted accounting principles that apply to established operating enterprises govern the recognition of revenue by a development stage enterprise and the accounting for costs and expenses. From inception to December 31, 2003, the Company has been in the development stage and all its efforts have been devoted to obtaining worldwide licensing rights to the technology, which is described above, and planning for marketing its products. No revenue had been realized through December 31, 2003.

Basis Of Presentation

The Company has incurred losses from inception to December 31, 2003 of $509,696. Capital was raised in the amount of $446,100 in 2001 through the issuance of 20,036,400 shares of common stock. Additional capital totaling $229,900 was raised during 2002 and 2003 through the issuance of 90,000 shares and a capital contribution from a major shareholder. These funds are expected to provide adequate financing to allow the Company to begin using its licensing rights.

Cash

For purposes of the statements of cash flows, the Company considers all short term debt securities purchased with a maturity of three months or less to be cash equivalents.

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.

F-6

AMANASU TECHNOLOGIES CORPORATION

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2003

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Intangible Assets

Intangible assets are recorded at cost. Amortization is provided by straight line methods, using a life of 17 years for the sub-licensing agreement, which is based on the life of the underlying patent.

Licensing Agreement

During the year 2000, the Company acquired the world-wide licensing rights for certain patented magnetic and power generating technology from a corporation which is the majority owner of Company stock, at a cost of $160,000.

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.

Segment Reporting

Management will treat the operations of the Company as one segment.

F-7

AMANASU TECHNOLOGIES CORPORATION

(A Development Stage Company)

NOTE TO FINANCIAL STATEMENTS

December 31, 2003

RELATED PARTY TRANSACTIONS

During the year 2003, the majority shareholder made a $60,000 capital contribution by paying a Company obligation.

The Company contracted for administrative services during 2002 with the wife of the president of a corporation which owns a majority of the outstanding Company stock. Compensation for these services is $3,500 per month.

EXPENSES

Expenses consist of consulting services, professional fees, rent, travel, and amortization of the sub-licensing agreement.

INCOME TAXES

The Company has experienced losses since its inception which have totaled $509,696. As a result, it has incurred no Federal income tax. The Internal Revenue Code allows net operating losses (NOL’s) to be carried forward and applied against future profits for a period of twenty years. The potential benefit of 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 2021, 2022, and 2023.

Under Statement of Financial Accounting Standards No. 109, recognition of deferred tax assets is permitted unless it is more likely than not that the assets will not be realized. The Company has recorded noncurrent deferred tax assets as follows:

Deferred Tax Assets

$173,297

Valuation Allowance

173,297

Balance Recognized

$ -

F-8

AMANASU TECHNOLOGIES CORPORATION

(A Development Stage Company)

NOTE TO FINANCIAL STATEMENTS

December 31, 2003

RENTALS UNDER OPERATING LEASES

The Company has made its offices in quarters which are rented on a month to month basis. Rent expense totaled $49,809 during 2003 and $53,740 during 2002.

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

There was no cash paid for interest or income taxes during either of the periods presented.

The following non-cash investing and financing activities occurred during the year 2003.

The president and controlling shareholder of a company which is the majority owner of company stock paid a $60,000 obligation on behalf of the Company during 2003. This obligation was the balance due for the licensing agreement for the magnetic and power generating technology.

Seventy thousand shares of common sock were subscribed during 2002, but not issued at that time because of a restriction contained in the subscription agreement. That restriction was removed in 2003 and the shares were issued.

F-9

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Amanasu Technologies Corporation

/s/ Masafumi Hata

Masafumi Hata April 5, 2004

President

And Principal Accounting Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Atsushi Maki April 5, 2004

Atsushi Maki

Director

Masafumi Hata April 5, 2004

Masafumi Hata

Director