UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1999
( ) 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 83-0178547
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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
PAGE 2
AMERICAN NUCLEAR CORPORATION
STATEMENTS OF OPERATION
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 1999 AND JUNE 30, 1998
(UNAUDITED)
Three Months Ended Six Months Ended
June 30 June 30
1999 1998 1999 1998
------ ------ ------ ------
NET LOSS BEFORE DISCONTINUED
OPERATIONS $ -0- $ -0- $ -0- $ -0-
REVENUE FROM DISCONTINUED
OPERATIONS
Reclamation Reimbursement 45,671 115,916 45,671 115,916
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Total revenue from
discontinued operations 45,671 115,916 45,671 115,916
DISCONTINUED EXPENSES
General and administrative 14,317 14,725 24,378 25,280
Reclamation expense 29,964 116,638 38,197 124,753
Interest income <271> <699> <603> <1,607>
---------- ---------- ---------- ---------
Total discontinued expenses 44,010 130,664 61,972 148,426
NET INCOME (LOSS) $ 1,661 $ <14,748> <16,301> <32,510>
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 $ 0.00 $ 0.00
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
June 30, 1999 and December 31, 1998
June 30, Dec. 31,
1999 1998
(Unaudited) (Unaudited)
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ASSETS
Current assets:
Cash $ 49,753 $ 35,555
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Total current assets $ 49,753 $ 35,555
Other assets:
Other 93,707 124,207
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Total other assets 93,707 124,207
Total assets $ 143,460 $ 159,762
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable -0- -0-
Other current liabilities -0- -0-
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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 <12,846,343> <12,830,041>
Less cost of treasury stock <629,126> <629,126>
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Common stockholders' equity 143,460 159,762
Total liabilities and stockholders'
equity $ 143,460 $ 159,762
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PAGE 4
AMERICAN NUCLEAR CORPORATION
STATEMENTS OF CASH FLOW
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
Six Months Ended
June 30
1999 1998
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Cash flows from discontinued operations:
Net loss $ <16,301> $ <32,510>
Adjustments to reconcile net loss to net
cash used by operating activities:
(Increase) Decrease in other assets 30,499 21,301
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Total adjustments 30,499 21,301
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Net cash used in operating activities <11,209>
Net increase (decrease) in cash during the
period 14,198 <11,209>
Cash at the beginning of the period 35,555 134,095
Cash at the end of the period $ 49,753 $ 122,886
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PAGE 5
AMERICAN NUCLEAR CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 1999 AND 1998
(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 $45,671 and $35,555 at
June 30, 1999 and December 31, 1998 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 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, 1998. 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 7
Marketability of Common Stock
Effective May 9, 1994 the Company's common stock was removed from
listing on the NASDAQ SmallCap 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. The Company
had no operating revenues during the period subject to this report or the
earlier comparable period. 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.
Reclamation reimbursement of $45,671 and $115,916 was received for
the three and six months ended 1999 and 1998 respectively. This 60%
reduction in 1999 is based upon the reduced amount of work the Company
performed on site reclamation. The reimbursements will continue to
decrease each year.
General and administrative expenses were $14,317 and $24,378 for the
three and six months ended June 30, 1999 compared to $14,725 and $25,280
for the comparable period ended June 30, 1998. This represents less than
a 1% decrease for the three and six months ended June 30, 1999 from the
comparable periods ended June 30, 1999.
Reclamation expenses were $29,964 and $38,197 for the three and six
months ended June 30, 1999 and $116,638 and $124,753 for the comparable
1998 periods. These costs represent the ongoing costs of monitoring the
Company's mill site and related activities during reclamation. These
expenses include $22,835 and $101,175 payments to the Wyoming DEQ for the
1999 and 1998 periods, respectively.
There was $603 interest income for the first six months of 1999,
compared to $1,607 for the comparable period ending June 30, 1998. 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 $16,301 was recognized during the first half of 1999
compared to a loss of $32,510 for the same period in 1998. The losses
PAGE 8
are expected to remain in the range of $18,000 per quarter as long as the
Company continues to receive some of the reclamation reimbursements for
continued monitoring of the reclamation site.
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, the Company may
experience delays and difficulties in receiving funds from the Department
of Energy, if any remain due after December 31, 1999, 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 June 30, 1999, was $49,753
while at December 31, 1998 it was $35,555. The increase in working
capital at June 30, 1999 was due to the Company receiving a reclamation
reimbursement from the U.S. Department of Energy (DOE). 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
PAGE 9
the federal program administered by the 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 $116,000 from this program during 1998 and approximately
$46,000 during 1999. If Congress continues funding this Title X
program, of which there is no assurance, the Company may receive
additional DOE reimbursements during 2000. 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.
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)
August __, 1999 By: -----------------------------------
William C. Salisbury
President
(signature)
August __, 1999 By: -----------------------------------
Dennis A. Eckerdt
Secretary and Treasurer