10QSB 1 nsol3q.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 ended September 30, 2001 ------------------------------------------------------------------------- [ ] Transition Report under Section 13 or 15(d)of the Exchange Act 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.) 1530 East Commercial St., Meridian, ID 83642 ----------------------------------------- ----------- (Address of principal executive offices) (Zip Code) Issuer's telephone number, (208) 846-7868 Stock Watch Man, Inc. 1016 Howard St., Las Vegas, NV 89104 -------------------------------------------------------------------------- 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 [ ] 1 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:20,850,000 Traditional Small Business Disclosure Format (check one) Yes [ ] No [X] 2 PART I. FINANCIAL INFORMATION Item 1. Item 1. Financial Statements................................. 4 Independent Accountants Review Letter................ 5 Balance Sheet (unaudited)............................ 6 Statements of Operations (unaudited)................. 7 Statements of Cash Flows (unaudited)................. 8 Notes to Financial Statements........................ 9-11 Item 2. Management's Discussion and Analysis of Plan of Operation................................. 12 PART II. OTHER INFORMATION Item 1. Legal Proceedings.................................... 15 Item 2. Changes in Securities and Use of Proceeds............ 15 Item 3. Defaults upon Senior Securities...................... 15 Item 4. Submission of Matters to a Vote of Security Holders.. 15 Item 5. Other Information..................................... 16 Item 6. Exhibits and Reports on Form 8-K...................... 16 Signatures...................................................... 17 3 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 June 30, 2001. 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 six months ended June 30, 2001, follow. 4 G. BRAD BECKSTEAD --------------------------- Certified Public Accountant 330 E. Warm Springs Las Vegas, NV 89119 702.528.1984 425.928.2877 (efax) INDEPENDENT ACCOUNTANT'S REVIEW REPORT -------------------------------------- Board of Directors Nuclear Solutions, Inc. (formerly Stock Watch Man, Inc.) (a Development Stage Company) Las Vegas, NV I have reviewed the accompanying balance sheet of Nuclear Solutions, Inc. (formerly Stock Watch Man, Inc.) (a Nevada corporation) (a development stage company) as of September 30, 2001 and the related statements of operations for the three and nine months ended September 30, 2001 and 2000 and for the period February 27, 1997 (Inception) to September 30, 2001, and statements of cash flows for the nine month period ending September 30, 2001 and 2000 and for the period February 27, 1997 (Inception) to September 30, 2001. These financial statements are the responsibility of the Company's management. I conducted my reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, I do not express such an opinion. Based on my reviews, I am not aware of any material modifications that should be made to the accompanying financial statements referred to above for them to be in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has had limited operations and has not commenced planned principal operations. This raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. I have previously audited, in accordance with generally accepted auditing standards, the balance sheet of Nuclear Solutions, Inc. (formerly Stock Watch Man, Inc.) (a development stage company) as of December 31, 2000, and the related statements of operations, stockholders' equity, and cash flows for the year then ended (not presented herein) and in my report dated January 22, 2001, I expressed an unqualified opinion on those financial statements. November 15, 2001 /s/ G. Brad Beckstead ---------------------- G. Brad Beckstead, CPA 5 Nuclear Solutions, Inc. [formerly Stock Watch Man, Inc.] (a Development Stage Company) Balance Sheet
BALANCE SHEET (unaudited) September 30, December 31, Assets 2001 2000 --------- ---------- Current assets: Cash $ - $ 11,419 Prepaid consulting fees 200,000 - --------- ---------- Total Current Assets 200,000 11,419 Fixed assets, net 1,442 280 Acquired technology, net 87,000 - Security deposit - 2,250 --------- ---------- $ 288,442 $ 13,949 ========= ========== Liabilities and Stockholders' Equity Current liabilities Accounts payable- related party $ 20,000 $ - --------- ---------- Total current liabilities 20,000 - --------- ---------- Stockholders' Equity: Preferred stock, $0.001 par value, 10,000,000 shares authorized, zero shares issued and outstanding - - Common stock, $0.001 par value, 100,000,000 shares authorized; 20,850,000 and 2,127,500 shares issued and outstanding as of 9/30/01 and 12/31/00 respectively 2,058 213 Additional paid-in capital 777,815 44,687 (Deficit) accumulated during development stage (511,458) (30,951) ---------- --------- 268,442 13,949 --------- --------- $ 288,442 $ 13,949 ========= =========
The accompanying notes are an integral part of these financial statements. 6 Nuclear Solutions, Inc. [formerly Stock Watch Man, Inc.] (a Development Stage Company) Statement of Operations (Unaudited) For the Three Months and Nine Months Ending September 30,2001 and 2000 and For the Period February 27, 1997 (Inception) to September 30,2001
STATEMENT OF OPERATIONS Three Months Ending Nine Months Ending Feb. 27, 1997 September 30, September 30, (Inception) to ------------------- ------------------ September 30, 2001 2000 2001 2000 2001 ---------- ------- -------- -------- -------------- Revenue $ - $ - $ - $ - $ - -------- -------- --------- --------- -------- Expenses: Depreciation expense 55 - 125 - 217 Consulting fees 443,000 - 443,000 - 443,000 Legal fees 25,000 - 25,000 - 25,000 General and administrative expenses 5,948 20,888 12,382 21,290 43,241 -------- -------- --------- --------- -------- Total expenses 474,003 20,888 480,507 21,290 511,458 -------- -------- --------- --------- -------- Net (loss) $(474,003) $(20,888) $(480,507) $(21,290) $(511,458) ========== ========= ========== ========= ========== Weighted average number of common shares outstanding 20,850,000 1,927,500 20,850,000 1,927,500 20,850,000 ========== ========= ========== ========= ========== Net (loss) per share $ (0.02) $ (0.01) $ (0.02) $ (0.01) $ (0.02) ========= ========= ========= ========= =========
The accompanying notes are an integral part of these financial statements. 7 Nuclear Solutions, Inc. [formerly Stock Watch Man, Inc.] (a Development Stage Company) Statement of Cash Flows (Unaudited) For the Nine Months Ending September 30,2001 and 2000 and For the Period February 27, 1997 (Inception) to September 30,2001
STATEMENT OF CASH FLOWS Nine Months Ending Feb. 27, 1997 September 30, (Inception) to -------------------- September 30, 2001 2000 2001 --------- --------- ------------ Net (loss) $(480,507) $(21,290) $(511,458) Depreciation expense 125 - 217 Shares issued for consulting services 443,000 - 443,000 Shares issued for legal fees 5,000 5,000 Adjustments to reconcile net (loss) to net cash (used) by operating activities: Security deposit 2,250 (2,250) - Increase in accounts payable 20,000 - 20,000 --------- -------- --------- Net cash (used) by operating activities (10,132) (23,540) (43,241) --------- -------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets (1,287) - (1,587) --------- -------- --------- Net cash (used) by investing activities (1,287) - (1,587) --------- -------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Issuance of common stock - 42,700 44,828 --------- -------- --------- Net cash provided by financing activities - 42,700 44,828 --------- -------- --------- Net (decrease) increase in cash (11,419) 19,160 - --------- -------- --------- Cash - beginning 11,419 670 - --------- -------- --------- Cash - ending cash $ - $ 19,830 $ - ========= ======== ========= Supplemental disclosures: Interest paid $ - $ - $ - ========= ======== ========= Income taxes paid $ - $ - $ - ========= ======== ========= Non-Cash financing activities: Number of shares issued for consulting services 750,000 - 1,950,000 ========= ======== ========= Number of shares issued for legal services 100,000 - 100,000 ========= ======== ========= Number of shares issued to acquire technology 17,872,500 - 17,872,500 ========== ======== ==========
8 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 consolidated interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2000 and notes thereto included in the Company's 10-KSB annual report. 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. On August 8, 2001, the Company amended its Articles of Incorporation to change its name to Nuclear Solutions, Inc. Note 2 - Going concern These consolidated 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, 2001, the Company has not recognized revenue to date and has accumulated operating losses of approximately $511,000 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 to 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. 9 Nuclear Solutions, Inc. [formerly Stock Watch Man, Inc.] (a Development Stage Company) Notes These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty. Note 3 - Related party transactions The Company issued 17,872,500 shares of its $0.0001 par value common stock to Global Atomics, Inc., a company owned solely by Paul M. Brown, the Company's president, pursuant to an Asset Purchase Agreement dated August 8, 2001. The Company does not lease or rent any property. Office services are provided without charge by a director. Such costs are immaterial to the financial statements and, accordingly, have not been reflected therein. The officers and directors of the Company 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 4 - Prepaid consulting fees The Company issued 250,000 shares of its $0.0001 par value common stock to TJ Jesky pursuant to a one-year contract for consulting services. The prepaid fees of $200,000 will be amortized over a twelve-month period. Note 5 - Acquired technology On August 8, 2001, the Company entered into an Asset Purchase Agreement to acquire licensed technology designed to render nuclear waste products environmentally harmless. Pursuant to the Agreement the Company issued 17,872,500 shares of its $0.0001 par value common stock to Global Atomics, Inc., a company owned solely by Paul M. Brown, the Company's president, for a stated value of $87,000. Note 6 - Shareholders equity The Company amended its Articles of Incorporation on August 8, 2001 to increase its authorized common stock to 100,000,000 shares and to decrease its par value from $0.001 to $0.0001. The number of shares issued and outstanding have been retroactively restated to reflect the changes. On July 28, 2001, the Company issued 100,000 shares of its $0.0001 par value common stock to Greg Wilson, Esq., the Company's legal counsel, for a stated value of $5,000. 10 Nuclear Solutions, Inc. [formerly Stock Watch Man, Inc.] (a Development Stage Company) Notes On August 8, 2001, the Company issued 17,872,500 shares of its $0.0001 par value common stock to Global Atomics, Inc., a company owned solely by Paul M. Brown, the Company's president, pursuant to an Asset Purchase Agreement valued at $87,000. On September 1, 2001, the Company issued 200,000 shares of its $0.0001 par value common stock to Smart Street, Inc. for consulting services valued at $202,000. On September 1, 2001, the Company issued 100,000 shares of its $0.0001 par value common stock to Princeton Research, Inc. for consulting services valued at $101,000. On September 14, 2001, the Company issued 250,000 shares of its $0.0001 par value common stock to TJ Jesky, an individual, for consulting services valued at $200,000. On September 20, 2001, the Company issued 200,000 shares of its $0.0001 par value common stock to Igor Litopsky, an individual, for consulting services valued at $140,000. Note 7 - Commitments On August 8, 2001, the Company entered into an Employment Agreement with Paul M. Brown, it's president, whereby the Company is to pay Mr. Brown an annual base salary of $250,000. 11 Item 2. Management's Discussion and Analysis or Plan of Operation. Plan of Operation The Company's current Plan of Operation, as set forth in this quarterly report will focus on the Company's new nuclear waste remediation business. Presently, the Company will focus its efforts on Phase I, the Monte Carlo Nuclear Modeling (MCNP) process. The Company has a four-phased strategy to bring the Hypercon" ADS (accelerator driven system) Photodeactivation technology to the marketplace. The phases involve completion of the MCNP modeling process, experimental validation of the process on an industrial level and the design engineering of a pilot plant, and the construction of the pilot plant demonstration facility. Phase 1 MCNP Modeling The Hypercon" ADS Photodeactivation process is founded on established and accepted principles of physics. The Company's approach will continue to apply those accepted principles to an industrial setting. Monte Carlo Nuclear modeling is the accepted standard in the industry for computer simulations of nuclear processes. The MCNP computer modeling of the photon reactor and the Hypercon" ADS treatment of fission waste products needs to be completed. This MCNP model will demonstrate the end results of Hypercon" ADS treatment of nuclear waste products in a manner acceptable to the nuclear industry and the scientific community. This model will further serve as a tool for the design and engineering phase. Phase 2--Empirical Study The empirical study involves industrial scale validation. The Company w ill rent accelerator time in either France or Russia and retain an internationally recognized engineering firm of the stature of Bechtel or ABB to perform the analysis and certify the results. This effort will also establish the initial design specifications for the demonstration facility. Phase 3-- 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. 12 Upon completion of Phases 1 and 2, the company will then contract a professional nuclear engineering firm of the stature of General Atomics to perform the design engineering of the pilot plant facility. Estimates for construction and engineering costs for the initial pilot plant are approximately US$50M to US$55M. This estimate is based on construction of a plant with an annual 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 4-- Licensing At the completion of Phase 3, 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 Hypercon" 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. During the next twelve months, the Company will need to raise sufficient funds in order to implement Phase I process. Management does not believe the company will generate any revenues for the foreseeable future. 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 techologies will be commercially successful. 13 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 "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-QSB 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. 14 PART II-OTHER INFORMATION Item 1. Legal Proceedings. The Company is not a party to any pending or threatened legal proceedings. Item 2. Changes in Securities and Use of Proceeds Recent Sales of Unregistered Securities During the third quarter of 2001, the Company offered and sold the following securities pursuant to a securities transaction exemption from the registration requirements of the Securities Act of 1933, as amended. On August 8, 2001, the Company authorized the issuance 17,872,500 common shares to Global Atomics, Inc. pursuant to the Asset Purchase Agreement valued at $78,000. On September 1, 2001, the Company authorized the issuance of 200,000 common shares to Smart Street, Inc. for consulting services valued at $202,000. On September 1, 2001, the Company authorized the issuance of 100,000 common shares to Princeton Research, Inc. for consulting services valued at $101,000. On September 14, 2001, the Company authorized the issuance of 250,000 common shares to T. J. Jesky, an individual, for consulting services valued at $200,000. All shares were issued in private transactions pursuant to Section 4(2) of the Securities Act of 1933, as amended, (the "Securities Act"). Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. On August 6, 2001, the Company's majority shareholders, in lieu of a special meeting of the shareholders, consented to: (1) a corporate name change from Stock Watch Man, Inc. to Nuclear Solutions, Inc. and, (2) an increase in authorized common stock from 15,000,000 shares, par value $0.001 per share to 100,000,000 shares, par value $0.0001 per share. The shareholder consent represented 61.1% of the issued and outstanding voting common stock. 15 Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: None (b) Reports on Form 8-K. (1) On September 20, 2001 an 8-K report was filed dealing with Item 5 (Other Events). (2) On August 9, 2001 an 8-K report was filed dealing with Item 2 (Acquisition or Disposition of Assets) and Item 5, (Other Events). 16 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 13, 2001 NUCLEAR SOLUTIONS, INC. /s/ Paul M. Brown /s/ Jackie Brown ----------------------- -------------------- By: Paul M. Brown, Ph.D. By: Jackie Brown Title: President Title: Secretary 17