10-Q 1 sep02q.txt FORM 10-Q 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 September 30, 2002 ( ) 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 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 Check whether the issuer (1) 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 3

PAGE 4

PAGE 5 AMERICAN NUCLEAR CORPORATION NOTES TO FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (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 $84,421 and $86,938 at September 30, 2002 and December 31, 2001 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 discontinued the licensing requirements by transferring this responsibility to the Wyoming DEQ. 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 PAGE 6 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 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, 2001. 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. 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 PAGE 7 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. The Company is aware of occasional trades on the electronic bulletin board. The basis of these transactions is unknown. 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. General and administrative expenses were $4,870 and $14,148 for the three months and nine months ended September 30, 2002 compared to $4,347 and $16,575 for the comparable periods ended September 30, 2001. There was $286 and $788 interest income for the three months and nine months ended September 30, 2002, compared to $453 and $1,465 for the comparable periods ending September 30, 2001. The interest is due to the reimbursement of DOE funds to the Company. These funds will be used for ongoing expenses as long as possible. A net profit of $1,482 was recognized during the first nine months of 2002 compared to a loss of $1,591 for the same period in 2001. The profit in 2002 is due to a $14,842 DOE reimbursement. The company does not expect to receive any more DOE reimbursements in the future. Liquidity and Capital Resources The Company's working capital at September 30, 2002, was $84,421 while at December 31, 2001 it was $86,938. The decrease in working capital at September 30, 2002 was due to the Company's ongoing general and administrative expenses. 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 8 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 $46,000 from this program during 1999 and approximately $107,000 during 2000, $13,000 during 2001, and $15,000 during 2002. 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) November 13, 2002 By: --------------------------------- William C. Salisbury President (signature) November 13, 2002 By: --------------------------------- Dennis A. Eckerdt Secretary and Treasurer

AMERICAN NUCLEAR CORP 10-Q