PAGE 1
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 June 30, 1996
( ) 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 83-0178457
- ------------------------------ --------------------
(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 nine pages including one page constituting the cover
page.
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AMERICAN NUCLEAR CORPORATION
STATEMENTS OF OPERATION
FOR THE THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 1996 AND JUNE 30, 1995
(UNAUDITED)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
------ ------ ------ ------
NET LOSS BEFORE DISCONTINUED
OPERATIONS $ -0- $ -0- $ -0- $ -0-
REVENUE FROM DISCONTINUED
OPERATIONS
Sale of Assets -0- -0- -0- 10,000
------ ------ ------ ------
Total revenue from
discontinued operations -0- -0- -0- 10,000
DISCONTINUED EXPENSES
General and administrative 12,249 24,078 19,498 33,073
Reclamation expense 18,621 38,540 36,740 46,490
Interest income <779> <594> <1,558> <2,549>
-------- ------ ------- ------
Total discontinued expenses 30,091 62,024 54,680 77,014
NET INCOME (LOSS) $<30,091> <62,024> <54,680> <67,014>
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) $<0.01> $ <0.01> $ <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
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AMERICAN NUCLEAR CORPORATION
BALANCE SHEETS
June 30, 1996 and December 31, 1995
June 30, Dec. 31,
1996 1995
(Unaudited) (Unaudited)
----------- -----------
ASSETS
Current assets:
Cash $ 5,479 $ 3,974
------------ ------------
Total current assets 5,479 3,974
Other assets:
Other 158,406 214,590
------------ ------------
Total other assets 158,406 214,590
Total assets $ 163,885 $ 218,564
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable 53,980 53,980
Other current liabilities 113,232 113,232
------------ ------------
Total current liabilities 167,212 167,212
Common Stockholders' equity:
Common stock 314,080 314,080
Additional paid-in capital 13,304,849 13,304,849
Retained earnings <12,993,130> <12,938,451>
Less cost of treasury stock <629,126> <629,126>
------------ ------------
Common stockholders' equity <3,327> 51,352
Total liabilities and stockholders'
equity $ 163,885 $ 218,564
============ ============
/TABLE
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AMERICAN NUCLEAR CORPORATION
STATEMENTS OF CASH FLOW
FOR THE SIX MONTHS ENDED June 30, 1996 AND 1995
(UNAUDITED)
Six Months Ended
June 30
1996 1995
------------ ------------
Cash flows from discontinued operations:
Net loss $ <54,680> $ <67,014>
Adjustments to reconcile net loss to net
cash used by operating activities:
(Increase) Decrease in other assets 56,185 25,930
(Decrease) Increase in accounts payable 0 30,000
---------- ------------
Total adjustments 56,185 55,930
----------- ------------
Net cash used in operating activities 1,505 <11,084>
Net increase (decrease) in cash during the
period 1,505 <11,084>
Cash at the beginning of the period 3,974 16,121
Cash at the end of the period $ 5,479 $ 5,037
============ ===========
/TABLE
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AMERICAN NUCLEAR CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 1996 AND 1995
(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
liabilities exceeded its current assets by $172,691 and $163,238 at June
30, 1996 and December 31, 1995 respectively. Due to continued
unfavorable uranium market conditions, and despite extensive marketing
efforts that continued through May 1994, the Company did not receive
purchase offers for its mineral properties that exceeded the mortgage
against the properties. Therefore, these financial statements show the
mineral properties being lost through foreclosure at June 30, 1994 to
Cycle Resource Investment Corporation (CRIC) to satisfy CRIC's mortgage
against the properties in the approximate balance of $2.9 million.
Inability to sell the mineral properties after exhausting efforts
to market them meant that the Company was not able to produce the
capital necessary to fund future operations. The Company was not able
to obtain additional waste disposal revenues or waste disposal
contracts. Because of its inability to generate sufficient cash to
continue operations, the Company announced on May 9, 1994 that it was
discontinuing operations immediately due to lack of funds. The
Company's reclamation bond fund in the approximate amount of $3.2
million was declared forfeited by the Wyoming Department of
Environmental Quality (DEQ). The Company expects that the DEQ will
complete reclamation of the Company's Gas Hills mill site, using the
forfeited bond fund.
The Company remains liable for completion of its reclamation
obligations even though it has no assets with which to complete those
obligations. The U.S. Nuclear Regulatory Commission (NRC) has served
the Company with notice 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 intends to monitor its
reclamation site for as long as possible in order to comply with
requirements of its license.
The Company has liquidated all its assets, which consisted
primarily of office furniture and equipment and other miscellaneous
property, to pay outstanding expenses and liabilities, and the Company
has prepared these financial statements on the basis that all such
marketable assets have been liquidated. Because liabilities exceed
assets, there will be no distribution of assets to shareholders.
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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, 1995. 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 due to CRIC that is secured by the mortgage against
the properties. Inability to sell the mining properties and lack of
capital or 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 a portion of its current
liabilities and other expenses associated with an orderly closing of
business operations. These financial statements were prepared on the
basis that the mineral properties were foreclosed upon as of June 30,
1994, when the debt was due, because the Company was unable to pay the
mortgage and continues to be unable to pay it.
Note Payable to Stockholder
The Company has two separate loans from Cycle Resource Investment
Corporation (CRIC), a stockholder, evidenced by promissory notes. The
two notes total $2,031,200 plus interest and were due on June 30, 1994.
The notes are collateralized by a mortgage against the Peach uranium
properties plus revenues from certain contracts for byproduct disposal,
which contracts are no longer in effect. These financial statements are
prepared on the basis that the Company has lost its most valuable
assets, the "Peach" mineral properties, through foreclosure by CRIC.
See the "Discontinuance of Operations" and "Liquidity and Capital
Resources" sections of this report for further details about these
circumstances and the Company's financial condition. CRIC began formal
foreclosure proceedings during the third quarter of 1995. The Peach
mineral properties were sold at a foreclosure sale on November 28, 1995.
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.
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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 or
second quarters of 1996 or 1995. See the "Discontinuance of Operations"
and the "Liquidation and Capital Resources" sections regarding
additional information about the Company's termination of operations.
General and administrative expenses were $12,249 and $19,498 for
the three months and the six month periods ended June 30,1996 compared
to $24,078 and $33,073 for the comparable periods of 1995. This
represents decreases of 49% and 41% for the three month and the six
month periods ended June 30,1996 from the comparable 1995 periods. The
continued reductions are due to the discontinuance of operations.
Reclamation expenses of $36,740 and $46,490 for the six months
ended June 30, 1996 and 1995 were recognized because of the continuing
reclamation obligations of the Company. These costs represent the
ongoing costs of monitoring the mill site as required by federal and
state requirements.
Interest income for the first half of 1996 declined by $991 or 38%
from the comparable period of 1995. This decrease is due to the
forfeiture of the certificates of deposit in the Company's reclamation
deposit held by the Wyoming Department of Environmental Quality.
A net loss of $54,680 was recognized during the first six months of
1996 compared to a $67,014 loss for the same period in 1995. The losses
are expected to remain in this range as long as the Company continues
its minimal activities.
Liquidity and Capital Resources
The Company's working capital deficit at June 30,1996 was $161,733,
while at December 31, 1995 it was $163,238. The decreased working
capital deficit at June 30,1996 was due to a partial distribution of the
DOE restricted cash trust account.
During May 1994, the Company discontinued operations because of
the lack of funds. Before that decision was made, the Company used its
best efforts to obtain additional loans, raise equity funds through a
private placement of its common stock, secure byproduct disposal
contracts, and sell its mineral properties. Liabilities exceed assets,
and therefore there will be no shareholder distributions. These
financial statements are prepared on the basis that CRIC foreclosed upon
the mineral properties when the Company did not pay the mortgage due
June 30, 1994. In addition, the Wyoming Department of Environmental
Quality (DEQ) declared forfeiture of the $3.2 million reclamation bond
PAGE 8
fund to the DEQ in order for the DEQ to complete 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 may not
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 reclaim its mining and
milling site. The DOE program has been funded by Congress, and money
has been allocated for the reimbursements. The Company received
approximately $229,000 from this program during the last quarter of 1995
and expects to receive a similar payment during the last quarter of
1996. If Congress continues funding this program, of which there is no
assurance, the Company may receive approximately $220,000 during 1997.
Under the prevailing law and under 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 maintenance 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 any of those funds that become available. The DEQ
has asserted a right to the funds in order to cover the total
anticipated reclamation expenses of the Gas Hills mill site. The
Tennessee Valley Authority has asserted a right to the funds based on
its 1984 contract with the Company and might sue the Company in an
attempt to enforce its claim or attach the funds. Such a claim by TVA or
other unsecured general creditors would be contrary to the NRC order to
the Company that controls use of its funds and, the Company expects to
resist such claims. If litigation does occur, the Company might file for
dissolution under bankruptcy law, after which the bankruptcy court would
control use and distribution of any reclamation funds that might have
been received. Upon bankruptcy or any other dissolution, the Company
would cease to be able to hold the NRC license and would thereupon
become ineligible to obtain any additional reimbursements of reclamation
funds under the DOE program.
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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)
July 31, 1996 ----------------------------------
William C. Salisbury
President
(signature)
July 31, 1996 ----------------------------------
Dennis A. Eckerdt
Secretary and Treasurer