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 March 31, 1998
( ) 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
------------------------------ --------------------
(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
PAGE 2
AMERICAN NUCLEAR CORPORATION
STATEMENTS OF OPERATION
FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND MARCH 31, 1997
(UNAUDITED)
Three Months Ended
March 31
1998 1997
------ ------
NET LOSS BEFORE DISCONTINUED
OPERATIONS $ -0- $ -0-
REVENUE FROM DISCONTINUED
OPERATIONS
Reclamation Reimbursement -0- 21,048
Sale of Assets -0- -0-
---------- ----------
Total revenue from
discontinued operations -0- 21,048
DISCONTINUED EXPENSES
General and administrative 10,555 12,806
Reclamation expense 8,115 8,086
Interest income <908> -0-
---------- ----------
Total discontinued expenses 17,762 20,892
NET INCOME (LOSS) $ <17,762> $ 156
PER SHARE:
NET PROFIT (LOSS) BEFORE
DISCONTINUED OPERATIONS PER
SHARE $ <0.00> $ <0.00>
DISCONTINUED OPERATIONS PER
SHARE NET PROFIT (LOSS) $ <0.00> $ 0.00
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 7,696,739 7,696,739
DIVIDENDS PER SHARE $ 0.00 $ 0.00
PAGE 3
AMERICAN NUCLEAR CORPORATION
BALANCE SHEETS
March 31, 1998 and December 31, 1997
March 31, Dec. 31,
1998 1997
(Unaudited) (Unaudited)
--------------
---------------
ASSETS
Current assets:
Cash $ 125,334 $ 134,096
----------- ------------
Total current assets $ 125,334 $ 134,096
Other assets:
Other 103,366 112,366
----------- ------------
Total other assets 103,366 112,366
Total assets $ 228,700 $ 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 <12,761,103> <12,743,341>
Less cost of treasury stock <629,126> <629,126>
----------- ------------
Common stockholders' equity 228,700 246,462
Total liabilities and stockholders'
equity $ 228,700 $ 246,462
=========== ============
/TABLE
PAGE
PAGE 4
AMERICAN NUCLEAR CORPORATION
STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
Three Months Ended
March 31
1998 1997
---------- ----------
Cash flows from discontinued operations:
Net loss $ <17,762> $ 156
Adjustments to reconcile net loss to net
cash used by operating activities:
(Increase) Decrease in other assets 9,000 <14,206>
(Decrease) Increase in accounts payable -0- -0-
----------- -----------
Total adjustments 9,000 <14,206>
----------- -----------
Net cash used in operating activities <8,762> <14,050>
Net increase (decrease) in cash during the
period <8,762> <14,050>
Cash at the beginning of the period 134,096 154,136
Cash at the end of the period $ 125,334 $ 140,086
=========== ===========
/TABLE
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AMERICAN NUCLEAR CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS AND NINE MONTHS ENDED
MARCH 31, 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 $125,334 and $134,096 at
March 31, 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 1999.
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
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.
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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, 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.
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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. There were
no operating revenues or operating losses reported during the first
three quarters of 1997 or 1996. 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 $10,555 for the three
months ended March 31, 1998 compared to $12,806 for the period ended
March 31, 1997. This represents a 17% decrease for the three months
ended March 31, 1998 from the comparable 1997 period. The decrease was
due to the reduced activity between the Company, the NRC and Wyoming
DEQ.
Reclamation expenses of $8,115 and $8,086 for the three months
ended March 31, 1998 and 1997 were recognized because of the continuing
reclamation work of the Company. These costs represent the ongoing
costs of monitoring the Company's mill site and related activities
during reclamation.
There was $908 interest income for the first quarter of 1998,
compared to zero for the comparable period ending March 31, 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 $17,762 was recognized during the first quarter of
1998 compared to a $156 profit for the same period in 1997. The losses
are expected to remain in the range of $25,000 per quarter as long as
the Company continues to receive some of the reclamation reimbursements
for continued monitoring of the reclamation site.
Liquidity and Capital Resources
The Company's working capital at March 31, 1998 was $125,334,
while at December 31, 1997 it was $134,096. The decrease in working
capital at March 31, 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. These financial statements are prepared on the basis that
PAGE
PAGE 8
the mineral properties were foreclosed when the Company did not pay the
mortgage due June 30, 1994. The foreclosure was completed in 1996. 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 program has been funded by Congress and money
has been allocated for the reimbursements. The Company received
approximately $120,000, $176,000 and $229,000 from this program during
1997, 1996 and 1995, respectively. If Congress continues funding this
Title X program, of which there is no assurance, the Company may
receive additional DOE reimbursements during 1998. 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.
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PAGE 9
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)
May 13, 1998 By: -----------------------------------
William C. Salisbury
President
(signature)
May 13, 1998 By: -----------------------------------
Dennis A. Eckerdt
Secretary and Treasurer