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, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-1764
AMERICAN NUCLEAR CORPORATION
(Exact Name of Registrant as Specified In Its Charter)
Colorado 83-0178457
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(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 ten pages including one page constituting the cover
page.
PAGE
PAGE 2
AMERICAN NUCLEAR CORPORATION
STATEMENTS OF OPERATION
FOR THE THREE MONTHS AND NINE MONTHS ENDED
SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
------ ------ ------ ------
NET LOSS BEFORE DISCONTINUED
OPERATIONS $ -0- $ -0- $ -0- $ -0-
REVENUE FROM DISCONTINUED
OPERATIONS
Reclamation Reimbursement 175,555 -0- 175,555 -0-
Sale of Assets 10,000 -0- 10,000 10,000
---------- ---------- ---------- ----------
Total revenue from
discontinued operations 185,555 -0- 185,555 10,000
DISCONTINUED EXPENSES
General and administrative 23,406 13,889 42,904 46,962
Reclamation expense 100,694 1,726 137,434 48,216
Interest income <787> -0- <2,345> <2,549>
---------- ---------- ---------- ----------
Total discontinued expenses 123,313 15,615 177,993 92,629
NET INCOME (LOSS) $ 62,242 $ <15,615> 7,562 <82,629>
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> $ 0.00 $ <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
PAGE 3
AMERICAN NUCLEAR CORPORATION
BALANCE SHEETS
September 30, 1996 and December 31, 1995
September 30, Dec. 31,
1996 1995
(Unaudited) (Unaudited)
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ASSETS
Current assets:
Cash $ 6,683 $ 3,974
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Total current assets 6,683 3,974
Other assets:
Other 306,443 214,590
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Total other assets 306,443 214,590
Total assets $ 313,126 $ 218,564
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable 53,980 53,980
Other current liabilities 200,232 113,232
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Total current liabilities 254,212 167,212
Common Stockholders' equity:
Common stock 314,080 314,080
Additional paid-in capital 13,304,849 13,304,849
Retained earnings <12,930,889> <12,938,451>
Less cost of treasury stock <629,126> <629,126>
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Common stockholders' equity 58,914 51,352
Total liabilities and stockholders'
equity $ 313,126 $ 218,564
============ ============
/TABLE
PAGE
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AMERICAN NUCLEAR CORPORATION
STATEMENTS OF CASH FLOW
FOR THE NINE MONTHS ENDED September 30, 1996 AND 1995
(UNAUDITED)
Nine Months Ended
September 30
1996 1995
---------- ----------
Cash flows from discontinued operations:
Net loss $ 7,562 $ <82,629>
Adjustments to reconcile net loss to net
cash used by operating activities:
(Increase) Decrease in other assets <91,853> 40,164
(Decrease) Increase in accounts payable 87,000 30,000
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Total adjustments <4,853> 70,164
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Net cash used in operating activities 2,709 <12,465>
Net increase (decrease) in cash during the
period 2,709 <12,465>
Cash at the beginning of the period 3,974 16,121
Cash at the end of the period $ 6,683 $ 3,656
=========== ===========
/TABLE
PAGE
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AMERICAN NUCLEAR CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS AND NINE MONTHS ENDED
SEPTEMBER 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 $247,529 and $163,238 at
September 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 $3.0 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 its has limited 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 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.
PAGE
PAGE 6
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 leaving the Company a
right of redemption for one year. See the "Liquidity and Capital
Resources" section of this report regarding the company's sale of its
redemption right to Power Resources, Inc.
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.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Company discontinued operations during May 1994. See the
"Discontinuance of Operations" and the "Liquidation and Capital Resources"
sections regarding additional information about the Company's cessation of
operations.
During the third quarter of 1996, the Company received $175,555 from
the U.S. Department of Energy under provisions of Title X funds. This
represents a reimbursement of a portion of past reclamation expense paid by
the Company. These funds are obligated to both the Wyoming Department of
Environmental Quality (DEQ) and to the Tennessee Valley Authority under
certain prior agreements. The Company is still due approximately $275,000
in future payments which are also obligated. Also, during the third
quarter of 1996, the Company received a $10,000 non-refundable deposit from
Power Resources, Inc. (PRI) for an assignment of the Company's right to
redeem the Peach Properties from the foreclosure by Cycle Resources
Investment Corp. (CRIC). The agreement provides for a second payment of
approximately $136,000. PRI will also assume the Company's obligations for
reclamation of the Peach Properties. By the right of redemption, PRI has
the right to redeem the Peach Properties from foreclosure by paying the
foreclosure sum. The proceeds from sale of the redemption right will be
used by the Company to continue meeting its reclamation obligations set
forth by the NRC and the Wyoming DEQ.
General and administrative expenses were $23,406 and $42,904 for the
three months and the nine month periods ended September 30,1996 compared to
$13,889 and $46,962 for the comparable periods of 1995. This represents an
increase of 69% and a decrease of 9% for the three month and the nine month
periods ended September 30,1996 from the comparable 1995 periods. The
increase in General and Administrative expense are the direct result of
negotiating agreements with the Wyoming Department of Environmental
Quality, the Nuclear Regulatory Commission, Tennessee Valley Authority, and
Power Resources, Inc.
Reclamation expenses of $137,434 and $48,216 for the nine months ended
September 30, 1996 and 1995 were recognized because of the continuing
reclamation obligations of the Company. The 1996 expense includes a
$87,000 payment to the Wyoming DEQ for funds received from the Department
of Energy for certain allowable expense reimbursements. The additional
costs represent the ongoing costs of monitoring the reclamation site.
PAGE
PAGE 8
Interest income for the nine months of 1996 declined by $204 or 8%
from the comparable period of 1995. This decrease is due to the reduced
interest rate paid on a certificate of deposit representing the Company's
reclamation deposit now held by the Wyoming Department of Environmental
Quality.
A net profit of $7,562 was recognized during the first nine months of
1996 compared to a $82,629 loss for the same period in 1995. Losses are
expected in the future while liquidation continues.
Liquidity and Capital Resources
The Company's working capital deficit at September 30,1996 was
$247,529, while at December 31, 1995 it was $163,238. The decreased
working capital deficit at September 30,1996 was due to a $87,000 increase
in other current liabilities. This increase is payable to the Wyoming DEQ
upon finalization of agreement between the two parties. The Company
received approximately $136,000 from PRI during November 1996, as final
cash payment for assignment to Power Resources, Inc. of the right to redeem
the Company's Peach Properties from foreclosure. These funds will be
retained by the Company to continue its reclamation obligations. Because
of the continued reclamation obligations and the excess of liabilities over
assets, there will be no shareholder distributions.
During May 1994, the Company discontinued operations because of its
lack of funds. Before that decision was made, the Company used its best
efforts to obtain additional loans, raise equity funds through a proposed
private placement of its common stock, secure byproduct disposal contracts,
or sell its mineral properties. 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 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 may not cover all the expenses for which the Company
is obligated. During the fourth quarter of 1996, certain conditions of the
Company's NRC license are expected to be assumed by the state of Wyoming;
however, 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
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 approximately $176,000 during
the third quarter of 1996. If Congress continues funding this Title X
program, of which there is no assurance, the Company may receive
approximately $275,000 during 1997. 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
PAGE
PAGE 9
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
the funds that become available. The Tennessee Valley Authority has
asserted a right to the funds based on its 1984 contract with the Company
and might sue the Company 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 Title X 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)
November 13, 1996 By: -----------------------------------
William C. Salisbury
President
(signature)
November 13, 1996 By: -----------------------------------
Dennis A. Eckerdt
Secretary and Treasurer