UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED September 30, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- ----------------
Commission File Number 0-1764
AMERICAN NUCLEAR CORPORATION
(Exact Name of Registrant as Specified In Its Charter)
Colorado 83-0178547
------------------------------ --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. Box 2713
Casper, Wyoming 82602
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (307) 265-7912
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 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. Yes X. No .
Indicate the number of share outstanding of each of the issuer's
classes of common stock, as of the close of the period covered by this
report.
4 cents par value common stock: 7,696,739 shares
This report consists of 9 pages including one page constituting the
cover page.
PAGE
<TABLE>
<CAPTION> PAGE 2
AMERICAN NUCLEAR CORPORATION
STATEMENTS OF OPERATION
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30 September 30,
1998 1997 1998 1997
------ ------ ---- ----
<S> <C> <C> <C> <C>
NET LOSS BEFORE DISCONTINUED
OPERATIONS $ -0- $ -0- $ -0- $ -0-
REVENUE FROM DISCONTINUED
OPERATIONS
Reclamation Reimbursement -0- -0- 115,916 21,048
---------- ---------- ---------- ----------
Total revenue from
discontinued operations -0- -0- 115,916 21,048
DISCONTINUED EXPENSES
General and administrative 10,012 15,517 35,292 44,315
Reclamation expense 17,045 10,399 141,798 30,121
Interest income <591> <454> <2,198> <2,675>
---------- ---------- ---------- ----------
Total discontinued expenses 26,466 25,462 174,892 71,761
NET INCOME (LOSS) $ <26,466> $ <25,462> $ <58,976> $ <50,713>
PER SHARE:
NET PROFIT (LOSS) BEFORE
DISCONTINUED OPERATIONS PER
SHARE $ 0.00 $ 0.00 $ 0.00 $ 0.00
DISCONTINUED OPERATIONS PER
SHARE NET PROFIT (LOSS) $ 0.00 $ 0.00 <0.01> $ <0.01>
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 7,696,739 7,696,739 7,696,739 $ 7,696,739
DIVIDENDS PER SHARE $ 0.00 $ 0.00 0.00 0.00
</TABLE>
<PAGE>
PAGE 3
<TABLE>
<CAPTION>
AMERICAN NUCLEAR CORPORATION
BALANCE SHEETS
September 30, 1998 and December 31, 1997
September 30, Dec. 31,
1998 1997
(Unaudited) (Unaudited)
-------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 112,119 $ 134,096
----------- ------------
Total current assets $ 112,119 $ 134,096
Other assets:
Other 75,366 112,366
----------- ------------
Total other assets 75,366 112,366
Total assets $ 187,485 $ 246,462
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable -0- -0-
Other current liabilities -0- -0-
----------- ------------
Total current liabilities -0- -0-
Common Stockholders' equity:
Common stock 314,080 314,080
Additional paid-in capital 13,304,849 13,304,849
Retained earnings <12,802,318> <12,743,341>
Less cost of treasury stock <629,126> <629,126>
----------- ------------
Common stockholders' equity 187,485 246,462
Total liabilities and stockholders'
equity $ 187,485 $ 246,462
=========== ============
</TABLE>
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PAGE 4
<TABLE>
<CAPTION>
AMERICAN NUCLEAR CORPORATION
STATEMENTS OF CASH FLOW
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
Nine Months Ended
September 30
1998 1997
---------- ----------
<S> <C> <C>
Cash flows from discontinued operations:
Net loss $ <58,976> $ <50,713>
Adjustments to reconcile net loss to net
cash used by operating activities:
(Increase) Decrease in other assets 37,000 20,794
----------- -----------
Total adjustments 37,000 20,794
----------- -----------
Net cash used in operating activities <21,976> <29,919>
Net increase (decrease) in cash during the
period <21,976> <29,919>
Cash at the beginning of the period 134,095 154,138
Cash at the end of the period $ 112,119 $ 124,219
=========== ===========
</TABLE>
PAGE
PAGE 5
AMERICAN NUCLEAR CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS AND NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Liquidation Basis
The accompanying financial statements have been prepared on a
liquidation basis, which recognized the realization of assets and the
satisfaction of a portion of the liabilities. The Company's current
assets exceeded its current liabilities by $112,119 and $134,096 at
September 30, 1998 and December 31, 1997 respectively. During 1994 the
Company discontinued operations due to lack of operating capital. For
financial reporting purposes, the Company has offset contractual
liabilities totaling $392,000. These liabilities were recognized as
income because the Company has no means of repaying the obligations
under liquidation basis accounting. The remaining Company cash
deposits are being utilized to maintain compliance as long as possible
with U.S. Nuclear Regulatory Commission (NRC) license requirements
pertaining to the Company's uranium mining reclamation site. The
Company expects to be able to continue in compliance with the licensing
requirements through 2000.
The state of Wyoming declared the Company in default of its
reclamation obligations when the Company terminated its business
operations in May 1994. Subsequently the reclamation bond fund of
$3,213,255 was acquired by the Wyoming DEQ through forfeiture
proceedings. The state of Wyoming has consented to perform certain
reclamation obligations, but has declined to assume the NRC license and
the associated obligations. The reclamation requirements have changed
to require more work since the bond forfeiture, and the cash
requirements to continue reclamation have increased by an undetermined
amount. There is the potential of a cost overrun in the range of $3
million or considerably more. The Company has not recognized a
contingent liability for this amount because the Wyoming DEQ and NRC
have not agreed upon a final reclamation plan upon which to base a cost
estimate. By state of Wyoming statute, the Company is liable for any
cost overruns.
The Company remains liable for completion of its reclamation
obligations even though it does not have enough assets with which to
complete those obligations. The NRC has served the Company with notice
PAGE
PAGE 6
that the Company's deliberate abandonment of its reclamation site would
constitute an intentional violation of the Atomic Energy Act of 1954
and could subject the Company to NRC enforcement actions and criminal
sanctions. The Company is complying with a NRC order to maintain and
comply with the terms of its NRC license. Further, the Company has an
agreement with the Wyoming DEQ to maintain its corporate existence in
order to receive Title X reclamation reimbursement funds from the U.S.
Department of Energy and transfer agreed upon amounts to the Wyoming
DEQ. The Company intends to monitor its reclamation site for as long
as possible in order to comply with the requirements of its license.
For these reasons, the Company is unable to dissolve. The Company has
no intention of entering into other businesses or continuing its
limited operations beyond the time when it has fulfilled its
obligations under the NRC license and those required by the state of
Wyoming.
Interim Financial Statements
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
for Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The
accompanying statements should be read in conjunction with the
unaudited financial statements included in the Company's Report on Form
10-K for the year ended December 31, 1997. In the opinion of
management, all adjustments (consisting only of normal recurring
accruals) considered necessary for a fair presentation have been
included.
Per Share Amounts
Earnings per share calculations are computed on the weighted
average number of common shares outstanding during the respective
periods. Shares under option and warrants have been disregarded
because their effect is anti-dilutive.
Discontinuance of Operations
Management began seeking a purchaser for its mining properties in
the third quarter of 1993. While potential purchasers continued to
express interest, the Company did not receive any offer greater than
the amount of the debt that was secured by the mortgage against the
properties. Inability to sell the mining properties, depletion of
capital and lack of revenues deprived the Company of operating capital.
The Company determined to discontinue operations during May 1994 and to
liquidate its miscellaneous property and to pay and discharge its
current liabilities and other expenses associated with an orderly
closing of business operations.
PAGE
PAGE 7
Marketability of Common Stock on NASDAQ Small Cap Market
Effective May 9, 1994 the Company's common stock was removed from
listing on the NASDAQ Small Cap Market. There are no trading markets
for the Company's common stock. Salt Ridge Energy, Inc., a corporation
owned by Mr. Salisbury, President, acquired 2,893,072 shares of common
stock during June 1998 and now owns 37.6% of the Company's
outstanding stock.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Company discontinued operations during May 1994. There were
no operating revenues or operating losses reported during the first
three quarters of 1998 or 1997. See the "Discontinuance of Operations"
and the "Liquidity and Capital Resources" sections in this report
regarding additional information about the Company's cessation of
operations.
General and administrative expenses were $35,292 and $10,012 for
the nine months and three months ended September 30, 1998 compared to
$44,315 and $15,517 for the comparable periods ended September 30,
1997. This represents a 20% and 35% decrease for the nine and three
months ended September 30, 1998 from the comparable periods ended
September 30, 1997. The decrease was due to the reduced activity
between the Company, the NRC and Wyoming DEQ.
Reclamation expenses were $141,798 and $17,045 for the nine and
three months ended September 30, 1998 and $30,121 and $10,399 for the
comparable 1997 periods. These costs represent the ongoing costs of
monitoring the Company's mill site and related activities during
reclamation. In the previous quarter the Company received a $115,916
reimbursement from the Department of Energy and paid $101,820 to the
Wyoming Department of Environmental Quality.
There was $2,198 interest income for the first three quarters of
1998, compared to $2,675 for the comparable period ending September 30,
1997. The interest is due to the reimbursement of DOE funds to the
Company. These funds will be used to monitor the reclamation site.
A net loss of $58,976 was recognized during the first three
quarters of 1998 compared to a loss of $50,713 for the same period in
1997. The losses are expected to remain in the range of $15,000 per
quarter as long as the Company continues to receive some of the
reclamation reimbursements for continued monitoring of the reclamation
site.
PAGE
PAGE 8
Based upon a recent assessment, the Company believes the software
it uses would present limited Year 2000 Issues. The Year 2000 Issue is
the result of computer programs that are written using two digits rather
than four to define the applicable year. Any computer programs that
affect the Company's activities and that have date-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000.
This could result in a system failure or miscalculations causing
disruptions of operations that depend upon such date sensitive software
or computer hardware, including, among other things, a temporary
inability to process transactions, send invoices and transfer funds, or
engage in similar normal business activities.
The Company's activities are limited and it does not rely upon
complex computer software or hardware for its own activities. The
Company has been unable to evaluate as of this date whether the software
and computer equipment that the Company's banks and other contract
parties rely upon, including the State of Wyoming and the U.S. Department
of Energy, are Year 2000 compliant. If they are not, and to the extent
that the Company is conducting activities after December 31, 1999, the
Company may experience delays and difficulties in receiving funds from
the Department of Energy, if any remain due after that time, and in
paying funds necessary to satisfy the Company's various financial and
legal obligations. These and related difficulties could have material
adverse consequences for the Company and its financial condition.
Liquidity and Capital Resources
The Company's working capital at September 30, 1998 was $112,119
while at December 31, 1997 it was $134,096. The decrease in working
capital at September 30, 1998 was due to the ongoing cost of limited
operations. During May 1994, the Company discontinued operations
because of its lack of funds. Before that decision was made, the
Company attempted to obtain additional loans, raise equity funds
through a private placement of its common stock, secure byproduct
disposal contracts, or sell its mineral properties. None of these
efforts were successful. In addition, the Wyoming Department of
Environmental Quality (DEQ) declared forfeiture of the $3.2 million
reclamation bond fund to the DEQ to be used by the DEQ for completing
reclamation of the Company's Gas Hills mill site. The total cost of
the reclamation work will not be known for many years, and the funds
held by the DEQ are not expected to cover all the expenses. The
Company remains the licensee and owner of the reclamation site, and
the Company will not be released from the obligations of reclamation
that are imposed by the license until reclamation work is completed and
accepted by the regulatory agencies. The Company has applied, under
the federal program administered by the U.S. Department of Energy
(DOE), for reimbursement of some of the reclamation work it has
previously performed to clean up its mining and milling site. The DOE
PAGE
PAGE 9
program has been funded by Congress and money has been allocated for
the reimbursements. The Company received approximately $116,000 from
this program during 1998. If Congress continues funding this Title X
program, of which there is no assurance, the Company may receive
additional DOE reimbursements during 1999. Under the prevailing law
and the terms of the order of the U.S. Nuclear Regulatory Commission
that directs the Company to continue to reclaim and monitor its
reclamation site, the funds and any future funds that could be received
under this program will be applied to ongoing monitoring and
reclamation obligations over the next several years, including payments
to the Company's independent contractors to perform such services.
None of the money will be applied to claims of creditors, and no funds
will be available for distribution to shareholders because the
reclamation obligations are projected to substantially exceed the funds
that become available. The DEQ has entered into an agreement with the
Company providing that the state will not bring a deficiency action in
court if the Company transfers Title X funds to the state to be applied
to the deficiency for use by the state to perform reclamation. The
Tennessee Valley Authority (TVA), which had asserted a right to the
funds based on its 1984 contract with the Company, released the Company
from such claims due to an agreement between TVA and the state. The
agreement between the Company and DEQ provides that the Company and DEQ
will use the DOE Title X funds toward monitoring and reclamation of the
mill site in accordance with the NRC license.
<PAGE>
PAGE 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on their behalf
by the undersigned thereunto being authorized.
AMERICAN NUCLEAR CORPORATION
Registrant
(signature)
November 10, 1998 By: -----------------------------------
William C. Salisbury
President
(signature)
November 10, 1998 By: -----------------------------------
Dennis A. Eckerdt
Secretary and Treasurer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statement of financial condition at September 30, 1998
(unaudited) and the consolidated statement of income for the nine
months ended September 30, 1998 (unaudited) and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Sep-30-1998
<CASH> 112,119
<SECURITIES> -0-
<RECEIVABLES> -0-
<ALLOWANCES> -0-
<INVENTORY> -0-
<CURRENT-ASSETS> 112,119
<PP&E> -0-
<DEPRECIATION> -0-
<TOTAL-ASSETS> 187,485
<CURRENT-LIABILITIES> -0-
<BONDS> -0-
-0-
-0-
<COMMON> 314,080
<OTHER-SE> <126,595>
<TOTAL-LIABILITY-AND-EQUITY> 187,485
<SALES> -0-
<TOTAL-REVENUES> 115,916
<CGS> -0-
<TOTAL-COSTS> -0-
<OTHER-EXPENSES> 174,892
<LOSS-PROVISION> -0-
<INTEREST-EXPENSE> -0-
<INCOME-PRETAX> -0-
<INCOME-TAX> -0-
<INCOME-CONTINUING> -0-
<DISCONTINUED> <58,976>
<EXTRAORDINARY> -0-
<CHANGES> -0-
<NET-INCOME> <58,976>
<EPS-PRIMARY> <0.01>
<EPS-DILUTED> 0.00
</TABLE>
