-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Imx+mzgRNSfmF/rL3gGFBg1w/OpsKXSsQkMsJPG8f51z5I/vOE5uyf0PyybQMyuI hEgyGzzOAAF6IgrkUs++6g== 0001010549-02-000706.txt : 20021121 0001010549-02-000706.hdr.sgml : 20021121 20021121093644 ACCESSION NUMBER: 0001010549-02-000706 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021121 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NUCLEAR SOLUTIONS INC CENTRAL INDEX KEY: 0001116112 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 880433815 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-31959 FILM NUMBER: 02835494 BUSINESS ADDRESS: STREET 1: 1050 CONNECTICUT AVENUE, N.W.,SUITE 1000 CITY: WASHINGTON STATE: DC ZIP: 20036 BUSINESS PHONE: 2027723133 MAIL ADDRESS: STREET 1: 1050 CONNECTICUT AVE., N.W. SUITE 1000 CITY: WASHINGTON STATE: DC ZIP: 20036 FORMER COMPANY: FORMER CONFORMED NAME: STOCK WATCHMAN INC DATE OF NAME CHANGE: 20000627 10QSB 1 nuclear10qsb093002.txt U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB (Mark One) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ending September 30, 2002 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to _______ Commission file number 000-31959 --------- NUCLEAR SOLUTIONS, INC. - -------------------------------------------------------------------------------- (Name of Small Business Issuer in its Charter) NEVADA 88-0433815 - ------------------------ --------------------------------- (State of Incorporation) (IRS Employer Identification No.) 1050 Connecticut Ave., N.W. Ste.1000, Washington,D.C. 20036 - ----------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Issuer's telephone number, ( 202 ) 772 - 3133 ---------- -------- -------- 1530 East Commercial St. Meridian, ID 838642 Former Name, former address and former fiscal year if changed since last report Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 --- --- Applicable only to issuers involved in bankruptcy proceedings during the preceding five years Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes No --- --- Applicable on to corporate issuers State the number of shares outstanding of each of the issuer's class of common equity, as of the latest practicable date: Transitional Small Business Disclosure Format (Check One) Yes No X --- --- PART I. FINANCIAL INFORMATION Item 1. Financial Statements................................. 1 Balance Sheet (unaudited)............................ 2 Statements of Operations (unaudited)................. 3 Statements of Cash Flows (unaudited)................. 4 Notes to Financial Statements........................ 5 Item 2. Management's Discussion and Analysis of Plan of Operation........................................ 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings.................................... 14 Item 2. Changes in Securities and Use of Proceeds............ 14 Item 3. Defaults upon Senior Securities...................... 14 Item 4. Submission of Matters to a Vote of Security Holders.................................. 15 Item 5. Other Information.................................... 15 Item 6. Exhibits and Reports on Form 8-K..................... 15 Signatures..................................................... 15 NUCLEAR SOLUTIONS, INC. FORM 10-QSB PART I-FINANCIAL INFORMATION Item 1. Financial Statements. (Unaudited) As prescribed by Item 310 of Regulation S-B, the independent auditor has reviewed these unaudited interim financial statements of the registrant for the six months ended September 30, 2002. The financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim period presented. The unaudited financial statements of registrant for the nine months ended September 30, 2002, follow. Nuclear Solutions, Inc. [formerly Stock Watch Man, Inc.] (a Development Stage Company) Balance Sheets (unaudited) September 30, 2002 ------------- Assets Current assets: Cash and equivalents $ 104,365 Prepaid consulting fees 12,500 ------------- Total current assets 116,865 ------------- Fixed assets, net 21,456 Other assets: Acquired technology, net 69,600 Security deposits 3,480 ------------- Total other assets 73,080 ------------- $ 211,401 ============= Liabilities and Stockholder's (Deficit) Current liabilities: Accounts payable $ 18,506 Accrued expenses 670,843 Accrued executive compensation 1,165,592 Accrued interest 20,825 Notes payable 508,000 ------------- Total current liabilities 2,383,766 ------------- Convertible debt - related party 39,000 Stockholder's (deficit): Preferred stock, $0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding -- Common stock, $0.0001 par value, 100,000,000 shares authorized, 20,850,000 shares issued and outstanding 2,185 Additional paid-in capital 817,815 Deferred compensation (237,882) (Deficit) accumulated during development stage (2,793,483) ------------- (2,211,365) ------------- $ 211,401 ============= The accompanying notes are an intergral part of these financial statements. 2
Nuclear Solutions, Inc. [formerly Stock Watch Man, Inc.] (a Development Stage Company) (unaudited) Statements of Operations Three Months Ending Nine Months Ending September 30, September 30, February 27, 1997 ---------------------------- ---------------------------- (Inception) to 2002 2001 2002 2001 September 30, 2002 ------------ ------------ ------------ ------------ ------------------ Revenue $ -- $ -- $ -- $ -- $ -- ------------ ------------ ------------ ------------ ------------------ Expenses: Depreciation and amortization 5,424 55 15,810 125 20,579 Consulting fees 208,740 443,000 649,614 443,000 1,142,614 Legal fees 5,000 25,000 56,600 25,000 81,600 Executive compensation - related party 98,050 -- 450,225 -- 1,115,042 General and administrative expenses 45,463 5,948 251,297 12,382 412,823 ------------ ------------ ------------ ------------ ------------------ Total expenses 362,677 474,003 1,423,546 480,507 2,772,658 ------------ ------------ ------------ ------------ ------------------ Other (expense): Interest expense - related party (10,033) -- (20,583) -- (20,825) ------------ ------------ ------------ ------------ ------------------ Net (loss) $ (372,710) $ (474,003) $ (1,444,129) $ (480,507) $ (2,793,483) ============ ============ ============ ============ ================== Weighted average number of common shares outstanding - basic and fully diluted 20,850,000 2,127,500 20,850,000 2,127,500 ============ ============ ============ ============ Net (loss) per share - basic & fully diluted $ (0.02) $ (0.22) $ (0.07) $ (0.23) ============ ============ ============ ============
The accompanying notes are an intergral part of these financial statements. 3
Nuclear Solutions, Inc. [formerly Stock Watch Man, Inc.] (a Development Stage Company) (unaudited) Statements of Cash Flows Nine Months Ending September 30, February 27, 1997 ---------------------------- (Inception) to 2002 2001 September 30, 2002 ------------ ------------ ------------------ Cash flows from operating activities Net (loss) $ (1,444,129) $ (480,507) $ (2,793,483) Depreciation and amortization 15,810 125 104,954 Shares issued for consulting services -- 443,000 443,000 Shares issued for prepaid consulting services -- -- 200,000 Shares issued for legal fees 20,000 5,000 25,000 Adjustments to reconcile net (loss) to net cash (used) by operating activities: (Increase) decrease in prepaid consulting services 137,500 -- (12,500) (Increase) decrease in security deposits (3,480) 2,250 (3,480) Increase in accounts payable 2,326 20,000 18,506 Increase in accrued expenses 619,828 -- 670,843 (Decrease) in accrued payroll (26,568) -- -- Increase in accrued executive compensation 247,650 -- 1,081,217 Increase in accrued interest 20,583 -- 20,825 ------------ ------------ ------------------ Net cash (used) by operating activities (410,480) (10,132) (245,118) ------------ ------------ ------------------ Cash flows from investing activities Purchase of fixed assets (20,526) (1,287) (24,563) ------------ ------------ ------------------ Net cash (used) by investing activities (20,526) (1,287) (24,563) ------------ ------------ ------------------ Cash flows from financing activities Increase in notes payable 508,000 -- 508,000 Convertible debt - related party 10,000 -- 39,000 Issuances of common stock -- -- 44,828 Donated capital -- -- 20,100 (Increase) decrease in deferred compensation 15,243 -- (237,882) ------------ ------------ ------------------ Net cash provided by financing activities 533,243 -- 374,046 ------------ ------------ ------------------ Net increase (decrease) in cash 102,237 (11,419) 104,365 Cash - beginning 2,128 11,419 -- ------------ ------------ ------------------ Cash - ending $ 104,365 $ -- $ 104,365 ============ ============ ================== Supplemental disclosures: Interest paid $ -- $ -- $ -- ============ ============ ================== Income taxes paid $ -- $ -- $ -- ============ ============ ================== Non-cash transactions: Number of shares issued for consulting services -- -- 1,950,000 ============ ============ ================== Number of shares issued for legal fees -- -- 100,000 ============ ============ ================== Number of shares issued to acquire technology -- -- 17,872,500 ============ ============ ==================
The accompanying notes are an intergral part of these financial statements. 4 Nuclear Solutions, Inc. [formerly Stock Watch Man, Inc.] (a Development Stage Company) Notes Note 1 - Basis of presentation The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the period ended December 31, 2001 and notes thereto included in the Company's Form 10-KSB. The Company follows the same accounting policies in the preparation of interim reports. Results of operations for the interim periods are not indicative of annual results. Note 2 - Going concern These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As at September 30, 2002, the Company has not recognized revenue to date and has accumulated operating losses of approximately $2,787,908 since inception. The Company's ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations. Management plans to raise equity capital to finance the operating and capital requirements of the Company. Amounts raised will be used for further development of the Company's products, to provide financing for marketing and promotion, to secure additional property and equipment, and for other working capital purposes. While the Company is expending its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations. Note 3 - Prepaid consulting fees As of September 30, 2002, the Company had two consulting agreements valued at $230,000. Amortization expense totaled $167,500 for the nine-month period ended September 30, 2002. As of September 30, 2002, the balance of prepaid consulting fees was $12,500. Note 4 - Fixed assets The Company purchased fixed assets in the amount of $20,526 during the nine-month period ended September 30, 2002. Depreciation expense totaled $2,762 for the nine-month period ended September 30, 2002. Note 5 - Acquired technology As of March 31, 2002, the Company had licensed technology designed to render nuclear waste products environmentally harmless for a stated value of $87,000. Amortization expense totaled $13,050 for the nine-month period ended September 30, 2002. 5 Nuclear Solutions, Inc. [formerly Stock Watch Man, Inc.] (a Development Stage Company) Notes Note 6 - Accrued executive compensation The Company had an Employment Agreement with Paul M. Brown, its president, whereby the Company is to pay Mr. Brown an annual base salary of $250,000. For the nine-month period ended September 30, 2002, the amount accrued until Mr. Brown's death was $142,667 and at Ms. Brown's discretion will be paid back either in cash or common stock at a price of $1 per share. The Company had an Employment Agreement with Dr. Qi Ao, the vice president of research & development, whereby the Company is to pay Mr. Ao an annual base salary of $175,000 which began on November 15, 2001. Also, as part of the agreement he will receive a $50,000 signing bonus which is due by August 15, 2002 and has stock options. Mr. Ao has to choose either 170,000 shares of the Company's $0.0001 par value common stock or the option to purchase 200,000 shares of the Company's $0.0001 par value common stock at $0.05 per share exercisable over three years. For the nine-month period ended September 30, 2002, the amount accrued was $50,000. The Company hired Patrick Herda as the vice president of business development whereby the Company is to pay Mr. Herda an annual base salary of $150,000. For the nine-month period ended September 30, 2002, the amount accrued was $130,425 and at Mr. Herda's discretion will be paid back either in cash or common stock at a price of $1 per share. The Company appointed Bry Behrmann as the licensing specialist of the Company and the director of licensing development whereby the Company is to pay Mr. Behrmann an annual amount of 150,000 shares of the Company's $0.0001 par value common stock valued at $337,500. For the nine-month period ended September 30, 2002, the amount accrued was $337,500 to be paid back with common stock. The Company appointed 6 individuals to the Company's Executive Advisory Board for a term of 1 year. Each individual is to receive 20,000 shares of the Company's $0.0001 par value common stock valued at $63,000 and the option to purchase 20,000 shares of the Company's $0.0001 par value common stock at $1 per share exercisable over one year. For the nine-month period ended September 30, 2002, the amount accrued was $378,000 to be paid back with common stock. The Company hired Adrian Joseph as the vice president of special projects whereby the Company is to pay Mr. Joseph an annual base salary of $144,000. For the nine-month period ended September 30, 2002, the amount accrued was $84,000 and at Mr. Joseph's discretion will be paid back either in cash or common stock at a price of $1 per share. On January 23, 2002, the Company hired John Dempsey as the president whereby the Company is to pay Mr. Dempsey an annual base salary of $120,000. During the nine-month period ended September 30, 2002, Mr. Dempsey was paid $39,585. For the nine-month period ended September 30, 2002, the amount accrued was $84,000 and at Mr. Dempsey's discretion will be paid back either in cash or common stock at a price of $1 per share. Note 7 - Convertible debt - related party On November 24, 2001 the Company executed a promissory note with Global Atomics, Inc. (GAI), a company owned solely by Paul M. Brown, the Company's president, in the amount of $14,000. The note bears an interest rate of 10% per annum and is due upon demand. At the request of GAI, any unpaid balance of principal and interest due will be converted in common stock at a rate of $1 per share. During the nine-month period ended September 30, 2002, the Company paid GAI $10,000. As of September 30, 2002, the amount due is $4,000 in principal and $1,000 in accrued interest. 6 Nuclear Solutions, Inc. [formerly Stock Watch Man, Inc.] (a Development Stage Company) Notes On December 11, 2001 the Company executed a promissory note with International Fission Fuels, Inc. (IFFI), a company owned solely by Paul M. Brown, the Company's president, in the amount of $15,000. The note bears an interest rate of 10% per annum and is due upon demand. At the request of IFFI, any unpaid balance of principal and interest due will be converted in common stock at a rate of $1 per share. As of September 30, 2002, the amount due is $15,000 in principal and $1,250 in accrued interest. On April 16, 2002, the Company received $20,000 from Jackie Brown, the wife of the former Company's president. The note bears no interest and is due upon demand. At the request of Ms. Brown, any unpaid balance of principal due will be converted in common stock at a rate of $1 per share. On July 7, 2002, the Company executed a promissory note with Patrick Herda, vice president of business development, in the amount of $5,000. The note bears an interest rate of 10% per annum and is due upon demand. At the request of Mr. Herda, any unpaid balance of principal and interest due will be converted in common stock at a rate of $1 per share. On July 11, 2002, the Company executed a promissory note with Patrick Herda, vice president of business development, in the amount of $18,000. The note bears an interest rate of 10% per annum and is due upon demand. At the request of Mr. Herda, any unpaid balance of principal and interest due will be converted in common stock at a rate of $1 per share. Note 8 - Notes payable On January 2, 2002, the Company executed a promissory note with DMB Enterprises (DMB) whereby DMB loaned $275,000. The note will accrue an interest rate of 10% per annum and will begin accruing interest on April 1, 2002. This note is due upon demand and may be paid back in cash or common stock at a price of $0.75 per share. On May 1, 2002, the Company executed a promissory note with DMB Enterprises (DMB) whereby DMB loaned $100,000. The note will accrue an interest rate of 10% per annum and will begin accruing interest on May 1, 2002. This note is due upon demand and may be paid back in cash or common stock at a price of $1.00 per share. On August 19, 2002, the Company executed a promissory note with DMB Enterprises (DMB) whereby DMB loaned $10,000. The note will accrue an interest rate of 10% per annum and will begin accruing interest on September 1, 2002. This note is due upon demand and may be paid back in cash or common stock at a price of $1.00 per share. On September 30, 2002, the Company executed a promissory note with DMB Enterprises (DMB) whereby DMB loaned $100,000. The note will accrue an interest rate of 10% per annum and will begin accruing interest on October 1, 2002. This note is due upon demand and may be paid back in cash or common stock at a price of $1.00 per share. As of September 30, 2002, the total amount due is $485,000 in principal and $18,000 in accrued interest. 7
Nuclear Solutions, Inc. [formerly Stock Watch Man, Inc.] (a Development Stage Company) Notes Note 9 - Stock options The Company has reserved for issuance an aggregate of 120,000 shares of common stock to six members of the Company's Executive Advisory Board for a period of one year at an exercise price of $1 per share. Nine Months ended Nine Months ended September 30, 2002 September 30, 2001 ----------------------------- -------------------------------- Weighted Average Weighted Average Shares Exercise Price Shares Exercise Price ----------------------------- --------------------------------- Outstanding at beginning of period -- -- -- -- Granted 120,000 $ 1.00 -- -- Exercised -- -- -- -- Lapsed or cancelled -- -- -- -- ------------- ------------- --------------- --------------- Outstanding at end of period 120,000 $ 1.00 -- $ -- ============= ============= =============== =============== Options exercisable at end of period 120,000 -- Options available for future grant -- -- Weighted average minimum fair value of options granted during the period -- --
The Company accounts for stock-based compensation using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", under which no compensation cost for stock options is recognized for stock options awards granted at or above fair market value. Had compensation expense for the Company's Stock Option Plan been determined based upon fair values at the grant dates for awards under those plans in accordance with Statement of Financial Accounting Standards No. 123 ("SFAS 123") "Accounting for Stock-Based Compensation", the Company's net loss available to common stockholders would have been increased to the pro forma amounts indicated below. Additional stock option awards are anticipated in future years. 8
Nuclear Solutions, Inc. [formerly Stock Watch Man, Inc.] (a Development Stage Company) Notes Nine Months ended Nine Months ended September 30, 2002 September 30, 2001 ------------------ ------------------ Net loss available To common stockholders: As reported $ (2,787,908) $ (480,507) Pro Forma $ (2,907,908) $ (480,507) The weighted average minimum fair value of options granted during the three years in the three-month period ended September 30, 2002, estimated on the date of grant were determined using the Black-Scholes option-pricing model and the following assumptions: dividend yield of 0%, expected volatility of 109%, risk-free interest rate range of 5.81% to 6.09% depending on the grant date, and an expected life of five years. The following table presents summarized information about stock options outstanding as of September 30, 2002. Options Outstanding Options Exercisable ------------------------------------------------- -------------------------------- Weighted Average Weighted Exercise Number Remaining Weighted Number Average Prices Outstanding at Contractual Average Outstanding at Exercise 6/30/02 Life Exercise Price 6/30/02 Price - ----------------------------------------------------------------------------------------------------- $1.00 120,000 1 year $1.00 120,000 $1.00
Note 10 - Stockholders' equity On August 31, 2002, the Company executed a nine-month agreement with its corporate attorney for legal services to be provided effective through December 31, 2002. The attorney will receive 100,000 shares of the Company's $0.0001 par value common stock valued at $20,000. Note 11 - Commitments On February 28, 2002, the Company entered into an agreement with Los Alamos National Labs to provide support services for our MCNP computer simulation effort. The term is for one year and the Company paid $30,000. During the nine-month period ended September 30, 2002, the amount expensed was $10,000. On March 4, 2002, the Company entered into a Research and License Agreement with Industrial Mathematics, Ltd. (IIM) in exchange for $325,000. The initial payment due is $40,000 with nineteen monthly payments of $15,000. The expected term of the research is 12 - 15 months and if the project is delivered on time and is successful, then the Company will issue shares of its $0.0001 par value common stock valued at $100,000 based on the fair market value of the shares. IIM will receive royalties of 4% of net sales of the products. 9 Nuclear Solutions, Inc. [formerly Stock Watch Man, Inc.] (a Development Stage Company) Notes On March 28, 2002, the Company executed an investment banking agreement with I-Capital Investment (IC). The Company paid $25,000 as a retainer and upon the close of a financial deal will pay IC $125,000. In additional, IC will receive 50,000 shares of the Company's $0.0001 par value common stock. On June 1, 2002, the Company began a month-to-month lease agreement for office space. The base monthly rent is $1,800 plus additional fees for occupying the office space such as utilities, telephone, copies, postage, etc). During the nine-months ended September 30, 2002, the Company had rent expense of $7,171. Note 12 - Related party transactions On January 23, 2002, the Company hired John Dempsey as the president whereby the Company is to pay Mr. Dempsey an annual base salary of $120,000. During the nine-month period ended September 30, 2002, Mr. Dempsey was paid $39,585. For the nine-month period ended September 30, 2002, the amount accrued was $84,000 and at Mr. Dempsey's discretion will be paid back either in cash or common stock at a price of $1 per share. The officers and directors are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts. Note 13 - Subsequent events On October 15, 2002, the Company authorized the issuance 1,000,000 shares of its $0.0001 par value common stock to an officer and director in exchange for services valued at $50,000. On October 15, 2002, the Company authorized the issuance options to purchase a total of 2,750,000 shares of its $0.0001 par value common stock to the officers and directors of the Company. On October 16, 2002, the Company executed note payable / line of credit agreement with an individual for $650,000. The repayment will begin upon the first revenue positive year of operation and the payback will be 1% of the profit derived from the operations for a period of five years. If the Company's profits are less than the amount of the loan, the amount is due upon demand. If the Company does not utilize the entire $650,000, then the fifth year's payment will be prorated. On November 3, 2002, the Company executed a scientific consulting agreement with Dr. Boris Muchnik for consulting services to be rendered for a period of one year in exchange for 300,000 shares of its $0.0001 par value common stock valued at $60,000 and $10,000 which was paid upon execution of the agreement. On November 3, 2002, the Company executed a consulting agreement with SAC Management for consulting services to be rendered for a period of one year in exchange for 650,000 and an additional 250,000 shares of its $0.0001 par value common stock are due once the Company is approved for trading on the AMEX or the NASDAQ. On November 8, 2002, the Company issued 150,000 shares of the Company's $0.0001 par value common stock to Bry Behrmann in exchange for cancellation of $337,500 of accrued expenses. 10 Item 2. Management's Discussion and Analysis or Plan of Operation. Plan of Operation ----------------- Nuclear Solutions, Inc. is a development stage company engaged in research and development, organizational efforts, raising capital, and commercialization of theoretical, commercially unproven and development stage technologies intended for remediation and treatment of various forms of radioactive waste. This discussion provides an analysis of our plan of operation for the next twelve months. The Company's current Plan of Operation, as set forth in this annual report will reflect a change in the plan of operation since the death of the company President and CEO, on April 7, 2002. The company intends to apply significant effort over the next twelve months to commercialize certain technologies and related businesses that management believes to be within two years of revenue generation. The company also intends to continue research and development in to the Hypercon(TM) ADS system for nuclear waste transmutation. We anticipate that we will incur significant capital costs for the continued development and marketing of our technologies. We will require additional financing to continue our planned operations during 2002. Management believes that it will be able to raise the necessary financing to continue planned operations. There is no guarantee that we will be able to successfully raise the required funds for operations, or that such funds will be available on terms satisfactory to us. Any inability to raise additional funds would require that we significantly scale back our planned operations and would lengthen the period of time required to bring technologies to the marketplace. Nuclear Wastewater Treatment Nuclear Solutions will undertake effort for the marketing and industrial optimization of GHR technology over the next twelve months. The company has entered into a research and licensing agreement with The Institute for Industrial Mathematics, Inc (IIM), of Beer-Sheva, Israel for the acquisition of GHR technology in March 2002. GHR is a proprietary technology that is intended for the removal of radioactive contaminants from water. It is a filterless chemical-physical reactor that can extract Tritium and Deuterium from contaminated water. The agreement between Nuclear Solutions and The Institute for Industrial Mathematics stipulates a 12 to 15 month development timeframe whereby optimal parameters and system design for high volume industrial processing of nuclear wastewater through GHR are to be determined. Management estimates that the cost to bring GHR technology to commercial readiness will be approximately $550,000. The company intends to fund the GHR program as a matter of priority over the next twelve months, financing is intended through the use of debt and/or equity financing. During the optimization phase for GHR, the company will actively seek out an operating partner for the commercialization phase and investigate business opportunities for the implementation of GHR worldwide. Upon completion of the commercial optimization phase, management intends to manufacture GHR wastewater processing equipment and begin treatment of contaminated water with an experienced operator in the field of nuclear waste remediation. 11 Photodeactivation of Nuclear Waste Over the course of the next year the company will continue development of a photonuclear waste transmutation system, which is referred to as photodeactivation, or the Hypercon(TM) ADS Transmutation System. The development effort will focus on two different aspects of this technology: A.) Photonuclear waste transmutation without heat recovery is being developed for use as a nuclear waste treatment system that can process materials contaminated with certain levels and types of radioisotopes. The system could reduce the levels of radioisotope contamination present in many expendable items that are used in the handling and processing of nuclear materials. The company is currently preparing a joint venture partnership to develop specific solutions based on this technology for the nuclear industry. The joint venture partnership intends to generate revenues by initially being paid to develop specific photonuclear transmutation solutions via contract with an end-user. Over the course of the next twelve months the company will market this service to the nuclear industry. Upon the execution of a development contract, the company will require up-front and ongoing payments to function as a project developer for the customer. Upon completion of the development contract, the company will then collect revenues based on predetermined negotiations that are calculated upon percentage of cost savings or percentage of revenue formulas. B.) Photonuclear waste transmutation with heat recovery is being developed for use as an accelerator driven reactor system that could perform photonuclear transmutation of nuclear waste as well as reproduce usable energy in the form of electricity. This system is referred to as the HyperconTM ADS system. Hypercon ADS {trademark}, is a patented and patent-pending technique that uses photons to yield gamma-neutron and gamma-fission reactions which result in a change to the atomic structure of the target radioisotope. The process is referred to as photo-transmutation (atomic transmutation via photon induced gamma-neutron and gamma-fission reactions). The Company has a Three-phased strategy to bring the Hypercon(TM) ADS (accelerator driven system) Photodeactivation technology to the marketplace. The phases involve completion of the computer simulation process, design engineering of a pilot plant, and the construction of the pilot plant demonstration facility. Phase 1 Computer Simulation The HyperconTM ADS Photodeactivation process is a Photon-induced nuclear waste transmutation process. Key performance data such as rates of transmutation, thermal heat liberated and overall efficacy with various mixed waste streams and reactor configurations needs to be determined before the design of a demonstration reactor system can begin. In order to benchmark the key data that is required in the least amount of time and with the most efficient use of capital. The company is employing specific nuclear modeling software called Monte Carlo N-Particle Transport Code (MCNPX) that is developed by Los Alamos National Labs. MCNPX was developed as a scientific research tool by the U.S. government to supplant the need for extensive empirical nuclear research experiments, in order to reduce the time and cost of generating preliminary data for nuclear research projects, reactor and weapons designs. MCNPX is regarded as the most comprehensive nuclear modeling tool in the industry. During the next twelve months the company will work with Los Alamos National Laboratories to upgrade and include several key functions into MCNPX code to accommodate the demands of modeling an exothermic, photonuclear transmutation process. When the code augmentation is completed further transmutation performance data can be generated. The completed MCNPX model will demonstrate the end results and key performance parameters of the HyperconTM ADS in a manner acceptable to the nuclear industry and the scientific community. The data obtained from this modeling effort will them be employed in the design and engineering for a planned 20 Megawatt Demonstration reactor. Management does anticipate that phase 1 will require at least twelve months to complete 12 Phase 2-- Design Engineering of the Pilot Plant This phase involves design engineering for the construction of a prototype facility pilot plant to be used for demonstrations of the waste elimination and power generation capabilities of the Hypercon ADS processes. Upon completion of Phase 1, the company will then contract a professional nuclear engineering firm of the stature of General Electric to perform the design engineering of the pilot plant facility. Estimates for construction and engineering costs for the initial 20 Megawatt pilot plant are approximately US$50M to US$55M. This estimate is based on construction of a plant with an annual transmutation capacity of ten tons using construction/materials costs from existing, contemporary nuclear facilities. Here is a brief breakdown of estimated costs: Engineering - US$4M to US$7M, based on contemporary experience. Linear Accelerator - US$5M based on contemporary data. Reaction Vessel - US$10M based on Canadian "slowpoke Reactor". Heat Recovery System - US$20M based on $1 per watt at 20 megawatts heat. Building - US$5M based on contemporary power industry estimates. Materials Handling - US$8M based on logistics tools in use at the Hanford, Washington nuclear facility. Phase 3-Licensing At the completion of Phase 2, the pilot plant facility design will be ready for licensing. The Nuclear Regulatory Commission (NRC) regulates licensing for this type of plant construction and operation. The primary business of the Company will be the licensing of its proprietary HyperconTM ADS photodeactivation process and plant design specifications to private industry and agencies of governments. In addition, professional services such as consulting, design, testing and validation will be offered to future Company clients. The Company also anticipates providing a broader and deeper selection of professional services including: Construction Engineering Support Construction Project Management Support On-going Operational Support Testing Training On-going Research and Development The Company may also enter into agreements with the US Department of Energy (and their foreign counterparts) for the neutralization of radioactive waste within the scope of their responsibility. The licensing phase is dependent upon several key factors that are outside of the twelve-month scope of this plan. During the next twelve months, the Company will need to raise sufficient funds in order to implement the HyperconTM ADS Phase I development plan. During the period of the plan, we do not anticipate any significant changes in the numbers of employees employed by us. However, the strategic acquisition of an operating company may unexpectedly increase the number of employees significantly in the next 12 months. We may incur substantial expenses associated with the development of our technologies. The amount and type of expenses incurred will vary depending on the technology being developed. We estimate requiring five million dollars of operating capital to sustain operations over the next twelve months. We have not generated any revenue from operations since our inception and we have not been profitable since our inception. Although we believe that we may recognize revenues during the next twelve months based on expressions of interest from third parties to purchase our design services, there can be no assurances as to when and whether we will be able to commercialize our products and technologies and realize any revenues. Our technologies have never been utilized on a large-scale commercial basis. We expect that we will continue to generate losses until at least such time as we can commercialize our technologies, if ever. No assurance can be given that we can complete the development of any technology or that, if any technology is fully developed, it can be manufactured and marketed on a commercially viable basis. Furthermore, no assurance can be given that any technology will receive market acceptance. Being a development stage company, we are subject to all risks inherent in the establishment of a developing or new business. 13 The implementation of Company's business development phases outlined above will be dependent on successful financing. Financing options may include a combination of debt and equity financing. Equity financing may result in a substantial equity dilution to existing shareholders. No assurance can be given that the Company's nuclear remediation technologies will be commercially successful. Forward-Looking Statements This Form 10-QSB includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included or incorporated by reference in this Form 10-QSB which address activities, events or developments which the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), expansion and growth of the Company's business and operations, and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results or developments will conform with the Company's expectations and predictions is subject to a number of risks and uncertainties, general economic market and business conditions; the business opportunities (or lack thereof) that may be presented to and pursued by the Company; changes in laws or regulation; and other factors, most of which are beyond the control of the Company. This Form 10-QSB contains statements that constitute "forward-looking statements." These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as "intends", "believes," "anticipates," "expects," "estimates," "plans," "may," "will," or similar terms. These statements appear in a number of places in this report and include statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) trends affecting the Company's financial condition or results of operations for its limited history; (ii) the Company's business and growth strategies; (iii) the Internet and Internet commerce; and, (iv) the Company's financing plans. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward- looking statements as a result of various factors. Factors that could adversely affect actual results and performance include, among others, the Company's limited operating history, dependence on key management, financing requirements, technical difficulties building a commercially feasible nuclear waste remediating device, government regulation, technological change and competition. Consequently, all of the forward-looking statements made in this Form 10-KSB are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update any such forward-looking statements. PART II-OTHER INFORMATION Item 1. Legal Proceedings. The Company is not a party to any pending legal proceedings. Item 2. Changes in Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities. None. 14 Item 4. Submission of Matters to a Vote of Security Holders. No matter was submitted to a vote of the security holders, through the solicitation of proxies or otherwise, during the third quarter of the fiscal year covered by this report. Item 5. Other Information On November 3, 2002, the company retained the services of Dr. Boris Muchnik, an accomplished scientist with a strong nuclear and intellectual property development background, to continue the prosecution of pending patents to protect the intellectual property associated with Photoremediation technology. Furthermore, Dr. Muchnik will direct all activities geared towards securing of currently pending patents in the United States and Worldwide. The terms of the contract executed with Dr. Muchnik provide for 300,000 shares and 10,000 cash payable to Dr, Muchnik for one year of services. On November 4, 2002, the company executed a contract with SAC Management for business consulting and professional services, which include; strategic communication programs, industry awareness, marketing, advertising, and fulfillment. The terms of the contract provided for the payment of 650,000 shares of restricted stock. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 99.1 Chief Executive Officer Certification pursuant to Oxley-Sarbane Act. 99.2 Chief Financial Officer Certification pursuant to Oxley-Sarbane Act. (b) Reports on Form 8-K: None. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: November 19, 2002 NUCLEAR SOLUTIONS, INC. /s/ John Dempsey /s/ Patrick Herda - -------------------------- -------------------------- By: John Dempsey By: Patrick Herda Title: President, CEO Title: Secretary/Treasurer 15 EX-99.1 3 nuclear10qsbex991093002.txt CERTIFICATION OF CHIEF EXECUTIVE OFFICER Exhibit 99.1 Chief Executive Officer Certification CERTIFICATION I, John Dempsey, certify that: (1) I have reviewed this quarterly report on Form 10-Q of Nuclear Solutions, Inc. (2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; (3) Based on my knowledge, the financial statements and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; (4) The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; (5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing thequivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial date and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and (6) The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 19, 2002 By: /s/ John Dempsey ----------------------- John Dempsey Chief Executive Officer EX-99.2 4 nuclear10qsbex992093002.txt CERTIFICATION OF CHIEF FINANCIAL OFFICER Exhibit 99.2 Chief Financial Officer Certification CERTIFICATION I, Patrick Herda, certify that: (1) I have reviewed this quarterly report on Form 10-Q of Nuclear Solutions, Inc. (2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; (3) Based on my knowledge, the financial statements and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; (4) The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; (5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors(or persons perfoequivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial date and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and (6) The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 19, 2002 By: /s/ Patrick Herda ----------------------- Patrick Herda Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----