UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-K

 

(Mark One)

☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2022

 

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______________ to ______________

 

Commission file number 000-54617

 

US NUCLEAR CORP.

(Exact name of registrant as specified in its charter)

 

Delaware   45-4535739
State or other jurisdiction of
Incorporation or organization		   (I.R.S. Employer
Identification No.)

 

c/o Robert I. Goldstein

7051 Eton Avenue

Canoga Park, CA 91303

(Address of principal executive offices)

 

(818) 883-7043

(Registrant’s telephone number, including area code)

 

Securities registered under Section 12(b) of the Exchange Act:

None.

 

Securities registered under Section 12(g) of the Exchange Act:

 

Common Stock, $0.0001 par value per share

(Title of Class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes  ☐ No ☒

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer  ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company  ☐  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

 

If the securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

 

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

 

Indicate by check mark whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

  

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrants most recently completed second fiscal quarter. $2,938,723 as of June 30, 2022.

 

The number of shares of the Registrant’s common stock outstanding as of May 10, 2023, was 35,798,087.

 

 

 

 

 

 

US NUCLEAR CORP.

FORM 10-K

TABLE OF CONTENTS

 

      Page
  PART I    
       
Item 1. Business   1
Item 1A. Risk Factors   6
Item 1B. Unresolved Staff Comments   17
Item 2. Properties   17
Item 3. Legal Proceedings   17
Item 4. Mine Safety Disclosures   17
       
  PART II    
       
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities   18
Item 6. [ReseRved]   20
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations   20
Item 7A. Quantitative and Qualitative Disclosures About Market Risk   23
Item 8. Financial Statements and Supplementary Data   23
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure   23
Item 9A. Controls and Procedures   23
Item 9B. Other Information   24
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections   24
       
  PART III    
       
Item 10. Directors, Executive Officers and Corporate Governance   25
Item 11. Executive Compensation   28
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   30
Item 13. Certain Relationships and Related Transactions, and Director Independence   31
Item 14. Principal Accountant Fees and Services   31
       
  PART IV    
       
Item 15. Exhibits, Financial Statement Schedules   F-1
  SIGNATURES   33

 

i

 

 

PART I

 

Special Note Regarding Forward-Looking Statements

 

Information included or incorporated by reference in this Annual Report on Form 10-K contains forward-looking statements. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Forward-looking statements may contain the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions, and are subject to numerous known and unknown risks and uncertainties. Additionally, statements relating to implementation of business strategy, future financial performance, acquisition strategies, capital raising transactions, performance of contractual obligations, and similar statements may contain forward-looking statements.  In evaluating such statements, prospective investors and shareholders should carefully review various risks and uncertainties identified in this Report, including the matters set forth under the captions “Risk Factors” and in the Company’s other SEC filings. These risks and uncertainties could cause the Company’s actual results to differ materially from those indicated in the forward-looking statements. The Company disclaims any obligation to update or publicly announce revisions to any forward-looking statements to reflect future events or developments.

 

Although forward-looking statements in this Annual Report on Form 10-K reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading “Risk Factors Related to Our Business” below, as well as those discussed elsewhere in this Annual Report on Form 10-K. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. We file reports with the Securities and Exchange Commission (“SEC”). You can read and copy any materials we file with the SEC at the SEC’s Public Reference Room, 100 F. Street, NE, Washington, D.C. 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.

 

We disclaim any obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Annual Report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this Annual Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

 

ITEM 1. BUSINESS

 

Corporate History

 

US Nuclear Corp f/k/a APEX 3 Inc., was incorporated in the State of Delaware on February 14, 2012, and has since amended its name to US Nuclear Corp., (“US Nuclear”) on May 4, 2012 with the State of Delaware. US Nuclear Corp was formed as a vehicle to pursue a business combination with an operating company that would have perceived benefits of becoming a publicly traded corporation. Optron Scientific was incorporated in the State of California in 1971 and is the operating company of US Nuclear Corp with two divisions, Optron Scientific Company, Inc., doing business as (“DBA”) Technical Associates and Overhoff Technology Corporation, both of which design, manufacture and market detection and monitor systems that are used to detect and identify radioactive material, leaks, waste, contamination, biohazards, nuclear material, as well as products used in airports, cargo, screening as ports and borders, government buildings, hospitals, and other critical infrastructure, as well as by the military and emergency responder services The company uses a wide range of technologies including x-ray, trace detection, millimeter-wave, infra-red, tritium detection, and diagnostics in its product applications.

 

1

 

 

US Nuclear Corp is a smaller reporting company under SEC Rule 405 because it has a public float of less than $250 million and has annual revenues of less than $100 million during the most recently completed fiscal year for which audited financial statements are available.  As a smaller reporting company, pursuant to Rule 8-01 of Regulation S-X, the Company is only required to produce financial statements as follows: (a) audited balance sheet as of the end of each of the most recent two fiscal years, or as of a date within 135 days if the issuer has existed for a period of less than one fiscal year, (b) audited statements of income, cash flows and changes in stockholders’ equity for each of the two fiscal years preceding the date of the most recent audited balance sheet (or such shorter period as the registrant has been in business), and (c) interim reviewed financial statements for the current period if the filing is more than 135 days after the end of your fiscal year.  Any and all amendments shall include updated interim or audited financial statements if the financial statements in the prior filing are more than 135 days old.

 

On October 15, 2013, US Nuclear Corp f/k/a APEX 3 Inc., a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger between the Company, Robert I. Goldstein, US Nuclear Acquisition Corp (“Merger Sub”), a California corporation and Optron Scientific Company, Inc. dba Technical Associates, (“Optron Scientific”) a California corporation and the parent company of Overhoff Technology Corp. The Agreement and Plan of Merger provided for the acquisition by the Company of all of the outstanding shares of Optron Scientific through a reverse merger of Merger Sub into Optron Scientific, the surviving corporation. We have filed the Agreement and Plan of Merger as Exhibits 3.4 and 2.1 with this statement and with the State of California.

 

As part of the Agreement and Plan of Merger with Optron Scientific the parties agreed to an exchange of shares, in which all of the 98,372 issued and outstanding shares of Optron Scientific were exchanged for 9,150,000 shares of the Company.

 

Prior to the share exchange, Mr. Goldstein was the sole owner of 98,372 shares of Optron Scientific Company, Inc., which represented all of the outstanding shares of Optron Scientific Company, Inc. Mr. Goldstein was the owner of 9,150,000 shares of US Nuclear Corp prior to the merger, and 9,150,000 shares of US Nuclear Corp were issued to him as a result of the merger in exchange for 98,372 shares of Optron Scientific Company, Inc.

 

In conjunction with the Agreement and Plan of Merger, US Nuclear Corp, Optron Scientific and Robert I. Goldstein entered into a Cancellation Agreement which provided for the cancellation of 9,150,000 shares of US Nuclear Corp held by Robert I. Goldstein, in consideration of his entering into the Agreement and Plan of Merger, which provided for his right to acquire 9,150,000 shares of US Nuclear Corp after it had the value of the ownership of Optron Scientific. As part of the consideration for the merger transaction, the share value of Mr. Goldstein’s shares of the Company prior to the merger was estimated at the par value of the shares, or 9,150,000 times the par value of .0001 per share. After the merger, the newly issued 9,150,000 shares of the Company held by Mr. Goldstein had a value of 85.51 percent of the total value of the outstanding stock of the Company after its acquisition of all of the stock of Optron Scientific. The Agreement and Plan of Merger was signed by Mr. Goldstein in his individual capacity and as President and Chief Executive Officer of the Company and as President and Chief Executive Officer of Optron Scientific, and of Merger Sub. The Cancellation Agreement was signed by Mr. Goldstein in his individual capacity and as President, and Chief Executive Officer of the Company and of Optron Scientific. The Corporate Secretary of each of the companies, Darian B. Andersen, also signed on behalf of each of the companies. The remaining 1,550,000 outstanding shares of US Nuclear Corp, which are held by Richard Chiang, were unaffected by the Cancellation Agreement. 

 

2

 

 

Following the merger, we began to provide a full line of radiation detection equipment and services to clients’ industries that range from nuclear reactor plants, universities, local and state hospitals, government agencies, and emergency medical technicians or EMT/first responders. The Company’s nuclear radiation safety detection equipment company has its roots from the famous Manhattan Project of the 1940s. In 1971, Allen Goldstein, the father to our current President and CEO, Robert Goldstein, acquired the assets of Technical Associates and incorporated the company. The Company designed and built the first industrial grade radiation monitors and continues to innovate its legacy with new product engineering for radiation measurement and safety instruments. The Company designs and manufactures nuclear radiation detection and safety equipment, survey meters, air and water monitors, port security equipment and tritium air monitors. The Company’s customers are diverse groups such as Homeland Security, Lawrence Livermore Labs, Los Alamos National Labs, Department of Defense, FBI, CIA, US Navy, Chevron Corporation, Bechtel Corporation, Biotechnology Laboratories, Hospitals, Universities, and Civil Emergency Management departments such as Fire, Paramedics and Law Enforcement. The Company is headquartered in Canoga Park, California and the Company can be accessed through its websites on the Internet at usnuclearcorp.com, tech-associates.com and overhoff.com.

 

The Company’s four divisions consisting of Optron Scientific Company Inc., DBA Technical Associates, Overhoff Technology Corporation, Electronic Control Concepts, and Cali From Above, offer over 200 products that service and address the nuclear power industry, domestically and internationally. Technical Associates specializes in the design and manufacture of radiation detection equipment monitors and hand-held devices. Overhoff Technology Corporation specializes in the design and manufacture of tritium air monitors and water monitors. Electronic Control Concepts specializes in test and maintenance meters for x-ray machines for both medical and industrial users. Cali From Above offers specialized inspection services from height and difficult-to-access locations with the use of unmanned aerial vehicles (UAVs).

 

Technology and Products

 

The Company designs and develops both technologies in-house by its CEO, Robert I. Goldstein as well as offers products from other manufacturers. Mr. Goldstein’s extensive experience of over forty years in the field of nuclear radiation detection has allowed the Company to achieve significant recognition that has been approved by US Federal standards set by the Environmental Protection Agency (EPA), Food and Drug Administration (FDA) and the Nuclear Regulatory Commission (NRC). The Company has complete ownership of all of its technology and there are no licenses held by any outside party. No persons, company, vendor, distributor or contractor holds any title or claim to any of the Company’s work or technology. The Company believes that its technology and business is defensible due to the fact that the barriers of entry are high and technically complex. The Company has sought out niche markets in its business by becoming a leading category player in devices such as Tritium equipment. The Company’s products consist of radiation water monitors, tritium monitors, air and water monitors, nano-second x-ray monitors, and vehicle, personnel, exit and room monitors. The Company also offers handheld survey meters/dosimeters, and port security equipment, along with supporting software and services.

 

Radiation Water Monitors

 

US Nuclear Corp’s radiation water monitors allow detection of radioactive materials in drinking water, ground water, rainfall, rivers, and lakes. In order to detect radioactive materials, the emitted radiation must travel from the radiation emitter to the detector. Alpha, Beta, Gamma, and Neutron radiation moves well through air, but poorly through water. The complexity of detecting radiation in water and developing an efficient monitor has given the Company’s monitors a reasonable edge against competitors, and for this reason, has limited competition in the water monitor business. The Company has invested more than ten years developing highly sensitive detectors for this market, giving it a clear advantage over competitors. The Company’s radiation water monitors are used to check for radioactive materials being released as liquid effluent in drain pipes by universities, hospitals, pharmaceutical companies, oil and gas extraction facilities, industrial chemical plants, and nuclear reactor plants.

 

Tritium Monitors

 

US Nuclear Corp is one of very few companies that currently operate within the tritium space. The Company’s Overhoff Technology Corp unit is a leading manufacturer of tritium detection and monitors. The demand for tritium detection and monitors are steadily increasing as countries develop solutions to their energy needs.  In addition to CANDU reactors (Canada Deuterium Uranium), the next generation of nuclear reactors called Molten Salt Reactors, (MSR) and Liquid-Fluoride Thorium Reactors (LFTR) utilize fuels other than traditional uranium and plutonium sources. Thorium, which is more significantly abundant than uranium, is very difficult to use to create nuclear weapons, is favored by many governments, and as a source of conventional energy it has been proven to be highly effective. By way of energy production, MSR and LFTRs produce high amounts of tritium which need to be constantly monitored for detection. Additionally, the waste products of LFTR reactors are less hazardous than the current light-water uranium-plutonium reactors, and thus, LFTR reactors provide higher level of safety and security against terrorist threats. The Company expects that a significant portion of its future sales and business strategy is tied to the growth of MSR and LFTRs, as well as from CANDU reactors.

 

3

 

 

Tritium is produced naturally in the upper atmosphere when cosmic rays strike nitrogen molecules in the air. More commonly, tritium is produced during nuclear weapons explosions, and as a byproduct in reactors producing electricity.  Generally, tritium has several important uses; its most significant contribution is its use as a component in the triggering mechanism in thermonuclear weapons. Very large quantities of required for the maintenance of nuclear weapons capabilities. Tritium is also produced commercially in nuclear reactors, as well as used in various self-luminescent devices, such as exit signs in buildings, aircraft dials, gauges, luminous paints, and wristwatches. In the mid-1950s and early 1960s, tritium was widely dispersed during above-ground testing of nuclear weapons. Today, sources of tritium come from commercial nuclear reactors, research reactors, and government weapons production plants. Tritium may also be released as steam from these facilities or may leak into the underlying soil and ground water. Additionally, self-luminescent devices illegally disposed in municipal landfills come into contact with water which pass through water ways, carrying dangerous levels of tritium. Tritium holds a very dangerous health risk and high levels of exposure to tritium increases risk of developing cancer. To combat tritium leaks and to maintain acceptable levels, the Company has developed several tritium monitors to gauge tritium in water and in the air. 

 

Alpha, Beta, Gamma and Tritium Monitors

 

US Nuclear Corp’s radiation water monitors allow detection of radioactive materials in drinking water, ground water, rainfall, rivers, and lakes. In order to detect radioactive materials, the emitted radiation must travel from the radiation emitter to the detector. Alpha, Beta, Gamma, and Neutron radiation moves well through air, but poorly through water. The complexity of detecting radiation in water and developing an efficient monitor has given the Company’s monitors a reasonable edge against competitors, and for this reason, has limited competition in the water monitor business. The Company has invested more than ten years developing highly sensitive detectors for this market, giving it a clear advantage over competitors. The Company’s radiation water monitors are used to check for radioactive materials being released as liquid effluent in drain pipes by universities, hospitals, pharmaceutical companies, oil and gas extraction facilities, industrial chemical plants, and nuclear reactor plants.

 

For the past 20 years, Overhoff Technology has been devoted exclusively to the design, manufacturing and servicing of Tritium monitors. Overhoff Technology has leading control over market share in the Tritium monitor space as the top maker of Tritium monitors. Tritium monitors are a highly delicate process and are particularly dependent on the selection of the finest materials such as Teflon for low leakage insulators and nafion membranes for separation of noble gas from Tritium. The Company’s Overhoff DC amplifiers called “electrometers” are stable with the ability to register small currents down to the femto-ampere level, 10-13 to 10-15ampre range. The Overhoff electrometer also has the unique ability to reject false counts from Radon gas. Because Tritium is a radioactive material, the Nuclear Regulatory Commission (“NRC”) regulations and state health agencies require Tritium to be measured at every nuclear power plant, all national laboratories, in the nuclear-powered Navies of the United States, France and the United Kingdom, at weapons facilities, at pharmaceutical and pesticide research facilities, and at Fusion Power research sites.

 

DroneRAD Aerial Radiation Detection

 

US Nuclear Corp has partnered with FlyCam UAV (a drone manufacturer). The two companies have married their two technologies with the NEO, an all-weather UAV octocopter capable of carrying a number of radiation and chemical detection sensors. With the advent of merging FlyCam UAV’s NEO and US Nuclear Corp sensor technology aerial radiation and chemical detection is now a reality. The DroneSensor system (the first of its kind) uses state-of-the-art industrial grade drones carrying radiation & chemical sensors. Wireless transmission to ground station provides real-time data. Having these UAV mounted sensors quickly and efficiently surveying large areas for contamination eliminates risk to human life.

 

4

 

 

Air and Water Monitors

 

The Company’s Overhoff Air Monitors come in both hand-held portables and mid-to large-sized air and stack monitors. These are classified as Dual Ion Chamber style detectors or Dual Proportional Detectors. The sample flows into one chamber where ionization current is measured, and at the same time a sealed background detector of the same volume measures the ionization current due to any external gamma emitters plus the addition of background from radioactive minerals in the soil with cosmic rays. The current from the background chamber is subtracted from the current in the main sample chamber to give the net tritium level without distortion from radon or gamma in the background. In nuclear power plants, radioactive noble gases are also in the air stream in small or large quantities. Overhoff combats this problem using Dow Chemical Nafion® tubing which physically separates the noble gases from the tritium oxide prior to measurement. The Company is currently expecting a large number of its users and larger numbers of its competitor’s customers will need to replace or supplement their current air and stack monitors to combat the two biggest pollution nuclides now coming out of nuclear power plants, tritium and C-14. As of today, only US Nuclear Corp offers these full-service monitors.

 

Vehicle Monitors, Personnel Monitors, Exit Monitors and Room Monitors

 

The Company’s suite of radiation monitors can be used in various scenarios where humans may come into contact with radiation contamination. The Company’s Vehicle Monitors, Personnel Monitors, Exit Monitors and Room Monitors are effective tools in detection of radiation in hospitals where radioactivity is used in many departments such as nuclear medicine, oncology, blood labs, and imaging. Since radiation is also used in diagnosing and treating cancer, and since some cancers can develop in any organ, each department in a hospital becomes involved, from ophthalmology to thoracic medicine. Additionally, the Company’s monitors are used to check hospital laundry to detect any radiation on clothes as well as in trash bins before they are picked up by the applicable waste management team. Lastly, the Company’s monitors can be placed in the entrance of hospitals in case there is an incident at a nearby nuclear power plant. These monitors are the first line of defense against further contamination, by providing early warning detection; doctors can provide treatment without placing other patients and staff in direct contact with patients who are contaminated with radiation.

 

Radon Air Monitors and Radon Switch Products

 

The Company produces a full line of radon air monitors and switches that are used to determine the radon content in the air in basements, mills, mines, buildings, or anywhere that radon concentration is a concern. The radon switch products activate and controls radon mitigation fans. These switches have a built-in computer storage with data storage. The Company also makes a radon tritium monitor that is a portable instrument used for detection and measurement of airborne Vadose zone, between the top of the ground surface to the water table.

 

Handheld Survey Meters and Personal Dosimeters, Pocket Micro-R Meters

 

The Company’s survey meters are light-weight, hand-held radiation detectors. They function as general-purpose radiation survey meters, but also serve as special purpose survey meters. For example, the Company’s radon monitors are used in mines where workers are at risk for breathing radon gas along with air. The Company’s surface monitors are used in hospitals, research labs, even in high school chemistry and physics labs to check for radioactive contamination on lab benches. Friskers are used to check if worker’s hands or shoe bottoms have picked up any radiation contamination and the Company’s Gamma survey meter check packages at post offices or airports for radiation, along with scrap metals at collection points and again before it is accepted for processing. 

 

Port Security Equipment

 

Due to increased terror threats from IED (Improvised Explosive Devices), dirty bombs and potential radioactive materials following 9/11 at shipping ports, we began utilizing passive detectors to review radiation emanating from inside containers. While other port security scanners generally use radioactive materials or x-ray generating machines to check everything from shipping containers, Federal Express, USPS (United States Postal Service) packages, and luggage for contraband, our scanner solutions do not use radiation, allowing for safe usage by investigators. We were approached by the FDA after the events of 9/11, and we designed our P-8Neon Quick-Scan X-ray detector to provide complete scanning without releasing any harmful radiation in the process. Our RAD-CANSCAN machines can measure which shipping containers hold radioactive materials by mapping inside the container so that TSA personnel will know the results without having to open each container. Additionally, our TBM-6SPE is a multi-detector system that lets an investigator check specifically for each of the four main emissions of radiation, Alpha, Beta, Gamma and Neutrons.

 

5

 

 

Software

 

The Company’s Overhoff Overview software program provides centralized radiation and environmental monitoring for entire facilities within one building or several square miles allowing monitoring of a nuclear power plant or subway station. Overview accepts data from networked radiation detectors, environmental monitors and webcams, and allows the user to view and generate reports on the data, as well as track maintenance due on instruments. Additionally, Overview lets the user see real-time monitoring for differential pressure on containment boxes or rooms. Our software measures gamma and neutron radiation levels, airborne radioactivity levels, temperature and humidity in the facility, status of security doors, wind speed and direction, and barometric pressure.

 

Risk Factors

 

Risks Related to Our Business and Industry

 

Our business is intensely competitive and our revenues are unpredictable as a small company.

 

We compete with a formidable group of competitors in our business, many of which have greater resources and capabilities than our company. There are numerous companies that have established businesses and command larger market share such as Thermo Fisher Scientific, Canberra Industries, and Mirion Technologies, Ludlum Measurements, Smiths Detection and Lab Impex Systems Ltd. Many of these companies have products and services that compete directly with ours and many of them are supported with larger marketing budgets and sales staff that can provide stronger sales coverage and support to customers than our capabilities. Furthermore, competitors may have technological advantages and may be able to implement new technologies more rapidly than our Company. Additionally, to the extent of our bookings, we cannot accurately predict to a large degree of certainty what annual revenues and income outlook may be. Due to our relatively small size, many factors may contribute to differences in the future and therefore cannot be assured in any manner. The market for nuclear radiation safety equipment is dependent upon a number of factors beyond the Company’s control, which cannot be accurately predicted. Some of these factors include pricing, competition from new entrants, newer technologies, market regulation and government policy, as well as overall market demand. Other factors include fossil fuel energy prices that may have an effect upon nuclear energy demand. Lower oil, natural gas, and coal prices may result in less favorable decisions to pursue nuclear energy as a source of energy.  

 

We rely heavily on our international customers for business and expect to continue to rely on international customers in the future.

 

Our international revenues were 26.57% of our total revenue in 2022. This was a decrease of 2.03% from 2021 and was a result of management’s inability to field new orders and inquires and engage new customers overseas due to political and economic reasons. We believe that South Korea and China will likely be larger contributors to revenue within the next few years. While we maintain steady growth domestically, the international side of our business may be a larger component as nuclear technology and rapid development for clean energy grows abroad. There can be no assurances as to our growth projections and our risk profile as we depend upon increased foreign customers for business.

 

Government Regulation

 

Although the sales of our equipment are not generally regulated by any local or federal government agency, the nuclear power industry itself is highly regulated by the Nuclear Regulatory Commission. As an independent agency of the United States government, the NRC is responsible for overseeing reactor safety, security, reactor licensing, renewal, radioactive material safety, and spent fuel disposal. The effects of the NRC’s policies therefore have an effect on our business. The impact of any negative decision in the nuclear power industry will ultimately affect us. We may also be affected by foreign government policy and regulation not covered by the NRC.

 

Nuclear Power, Fossil Fuel and Renewal Energy

 

While the nuclear power industry is a key component in the context of energy supply in the world today there are other competing energy sources that carry less potential risk hazards. Competing energy sources such as fossil fuels, solar, wind and water are strong threats to nuclear power. Each one has its benefits and conversely a negative side. The current landscape of nuclear power according to the Nuclear Regulatory Commission, or NRC, states that as of May 2022, there were 30 countries worldwide operating 439 nuclear reactors in operation in the world, with 53 new reactors under construction in 17 countries. Within the United States, there are 92 nuclear power plants providing 20% of the country’s total electric energy generation. Additionally, 28 of the 50 US states generate electricity from nuclear power plants, and four states, New Hampshire, South Carolina, Connecticut, and Illinois rely on nuclear power for more than 50 percent of their electricity. The United States produced approximately 30% of the world’s gross nuclear-generated electricity in 2022 with France at 14%, China 14%, Russia 8%, South Korea 5%, and the rest of the world at 29%. Nuclear energy is responsible for 8% of all US energy consumption. However, only one conventional nuclear power plant is now under construction, the Vogtie Plant, in eastern Georgia. China ranked first with 15 units, followed by India with 8 reactors under construction. In the 2021, 10 nuclear reactors were permanently shut down worldwide. In July 2022, the European Parliament endorsed labeling all nuclear energy projects “green”, allowing them access to loans and subsidies. In the context of emissions, nuclear power is considered to be clean. It produces zero carbon emissions and does not produce other noxious greenhouse gases. It is difficult to predict if these plans domestically and internationally will materialize or be postponed indefinitely if negative market forces develop. 

 

6

 

 

Opponents to Nuclear Energy are formidable due to concerns over safety.

 

Maintaining the demand for our products and future growth in demand will depend in part upon continued acceptance of nuclear technology as a means of generating electricity. In many cases, countries have embraced nuclear technology because alternate means of energy have either been at a high cost with heavy pollution, or other means have not been practical. However, incidents involving nuclear energy production, such as overheating reactors, radiation leaks and reactor melt-downs, can cause a significant decrease in public acceptance of nuclear technology. Events at the Fukushima Daiichi nuclear complex in Japan on March 11, 2011 may have adverse long-term effects in some countries decision to either continue using nuclear power or suspend its nuclear power program. While the long-term impact is unclear, several countries have suspended operations at existing nuclear power plants. Specifically, on May 30, 2011, Germany announced that in addition to the permanent closure of eight reactors and with only three nuclear power plants left with a license to operate at full capacity, the nuclear phase out in Germany is almost complete. Switzerland has made a policy decision to phase out of their 5 reactors by 2034. Italy, while not having any operating reactors, has implemented a moratorium on nuclear power. The ultimate results of these safety reviews and/or public resistance to nuclear technology may lead to suspension or cancellation of permitting and development activities, license extensions of existing nuclear facilities, and possibly even the closure of operating nuclear facilities by one or more countries. Lack of public acceptance of nuclear technology would adversely affect the demand for nuclear power and therefore demand for radiation detection equipment. 

 

Continued growth of CANDU reactors and rapid development of next generation Molten Salt (MSR) and Liquid-Fluoride Thorium Reactors (LFTR).

 

The Company relies on continued growth and orders from CANDU reactors (Canada Deuterium Uranium), and rapid development of the next generation of nuclear reactors called Molten Salt Reactors, (MSR) and Liquid-Fluoride Thorium Reactors (LFTR), for its tritium-based equipment. MSR and LFTR are new types of reactors that utilize thorium as a fuel rather than traditional uranium or plutonium. Thorium is a more abundant element than uranium. Many countries with heavy energy needs such as China have begun to adopt MSR and LFTR programs. However, the numbers of these types of reactors are still small in numbers and there can be no assurances that they will ever reach large numbers capable of sustaining rapid growth and development for nuclear-radiation safety products such as our tritium equipment. If CANDU reactors experience adverse events such as long-term inactivity due to political or environmental concerns, or economic issues, and if MSR and LFTR reactors fail to develop beyond its current growth forecasts worldwide, the Company will experience lower demand for its products which would have an adverse effect on the Company’s sales and profitability.

 

Failure to make accretive acquisitions and successfully integrate them could adversely affect our future financial results.

 

As part of our growth strategy, we plan to seek, when management deems advantageous to the Company, to acquire complementary (including competitive) businesses, facilities or technologies and enter into joint ventures.  Our goal is to make such acquisitions, integrate these acquired assets into our operations and reduce operating expenses.  The process of integrating these acquired assets into our operations may result in unforeseen operating difficulties and expenditures and may absorb significant management attention that would otherwise be available for the ongoing development of our business.  We cannot assure you that the anticipated benefits of any acquisitions will be realized.  In addition, future acquisitions by us could result in potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities and amortization expenses related to goodwill and other intangible assets, any of which can materially and adversely affect our operating results and financial position.  Acquisitions also involve other risks, including entering geographic markets in which we have no or limited prior experience and the potential loss of key employees.

 

7

 

 

We have filed a provisional patent for our product based on our tritium products but hold no current patents on our products, and our business employs proprietary technology and information which may be difficult to protect and may infringe on the intellectual property rights of third parties.

 

In general, we rely primarily on a combination of trade secrets, copyright and trademark laws, and confidentiality procedures to protect our technology. Due to the technological change that characterizes our business, we believe that the improvement of existing products, reliance upon trade secrets and unpatented proprietary know-how and the development of new products are generally as important as patent protection in establishing and maintaining a competitive advantage.

 

We have currently filed a provisional utility-type patent on our tritium products to protect our intellectual property, but currently rely on trade secrets, proprietary know-how and technology that we seek to protect, in part, by confidentiality agreements with prospective joint venture partners, employees and consultants.  We cannot assure you that these agreements will not be breached, that we will have adequate remedies for any breach, or that our trade secrets and proprietary know-how will not otherwise become known or be independently discovered by others. Other than the provisional patent, we currently do not hold patents from the United States Patent and Trademark Office on any of our products we manufacture. Our success depends, in part, on our ability to keep competitors from reverse engineering our products, maintain trade secrecy and operate without infringing on the proprietary rights of third parties.  We cannot assure you that the patents of others will not have an adverse effect on our ability to conduct our business, that any of our trade secrets and applications will be protected, that we will develop additional proprietary technology that is defensible against theft or will provide us with competitive advantages or will not be challenged by third parties.  Further, we cannot assure you that others will not independently develop similar or superior technologies, duplicate elements of our technology or design around it.

 

It is possible that we may need to acquire licenses to, or to contest the validity of, issued or pending patents or claims of third parties.  We cannot assure you that any license acquired under such patents would be made available to us on acceptable terms, if at all, or that we would prevail in any such contest.  In addition, we could incur substantial costs in defending ourselves in suits brought against us for alleged infringement of another party’s patents or in defending the validity or enforceability of any patents we may seek in the future, or in bringing patent infringement suits against other parties.

 

In December, 2013, we were granted a registered trademark of the US Nuclear Corp name and logo from the United States Patent and Trademark Office and consider it important to the protection of our US Nuclear Corp brands. We have not been nor are we currently involved in or aware of any litigation regarding any of our intellectual property.

 

Our failure to obtain capital may significantly restrict our proposed operations.

 

We will need to raise more capital to expand our business. It is anticipated that we will require an additional capital raise of $5 million dollars over the next twelve months to fund our business plans. Future sources of capital may not be available to us when we need it or may be available only on unacceptable terms. 

 

We are subject to the risk that certain key personnel, including key employees named below, on whom we depend, in part, for our operations, will cease to be involved with us.  The loss of any these individuals would adversely affect our financial condition and the results of our operations.

 

We are dependent on the experience, knowledge, skill and expertise of our President and CEO Robert I. Goldstein. We are also in large part dependent on current CFO, Richard Landry. The loss of any of the key personnel listed above could materially and adversely affect our future business efforts. Our success depends in substantial part upon the services, efforts and abilities of Robert I. Goldstein, our Chairman and Chief Executive Officer, due to his experience, history and knowledge of the nuclear radiation industry and his overall insight into our business direction. The loss or our failure to retain Mr. Goldstein, or to attract and retain additional qualified personnel, could adversely affect our operations.  We do not currently carry key-man life insurance on Mr. Goldstein or any of our officers and have no present plans to obtain this insurance.  See “Management.” 

 

The loss of any of our executive officers could adversely affect our business.

 

We depend to a large extent on the efforts and continued employment of our executive officers. The loss of any executive officer could adversely disrupt our operations.

 

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Competition from other radiation detection or related companies could result in a decrease of our business and a decrease in our financial performance.

 

We operate in a highly competitive industry. Many of our current and potential competitors, including larger multinational companies, domestic manufacturing companies with multiple product lines in radiation detection products have existed longer and have larger customer bases, greater brand recognition and significantly greater financial, marketing, personnel, technical and other resources than US Nuclear Corp. In addition, many of these competitors may be able to devote significantly greater resources to:

 

  ● research and development of new products

 

  ● attracting and retaining key employees;

 

  ● maintaining a large budget for marketing and promotional expenses

 

  ● providing more favorable credit terms to suppliers and channel distributors

 

Regulations, including those contained in and issued under the Sarbanes-Oxley Act of 2002 (“SOX”) and the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”), increase the cost of doing business and may make it difficult for us to retain or attract qualified officers and directors, which could adversely affect the management of our business and our ability to obtain or retain listing of our Common Stock.

 

We are a public company.  The current regulatory climate for public companies, even smaller reporting companies such as ours, may make it difficult or prohibitively expensive to attract and retain qualified officers, directors and members of board committees required to provide for our effective management in compliance with the rules and regulations which govern publicly-held companies, including, but not limited to, certifications from executive officers and requirements for financial experts on boards of directors. The perceived increased personal risk associated with these changes may deter qualified individuals from accepting these roles.  For example, the enactment of the Sarbanes-Oxley Act of 2002 has resulted in the issuance of a series of rules and regulations and the strengthening of existing rules and regulations by the SEC.  Further, proposed regulations under Dodd-Frank heighten the requirements for board or committee membership, particularly with respect to an individual’s independence from the corporation and level of experience in finance and accounting matters.  We may have difficulty attracting and retaining directors with the requisite qualifications. If we are unable to attract and retain qualified officers and directors, the management of our business could be adversely affected.

 

Limitations on director and officer liability and our indemnification of our officers and directors may discourage stockholders from bringing suit against a director.  

 

Our Certificate of Incorporation and By-Laws provide, with certain exceptions as permitted by Delaware corporation law, that a director or officer shall not be personally liable to us or our stockholders for breach of fiduciary duty as a director, except for acts or omissions which involve intentional misconduct, fraud or knowing violation of law, or unlawful payments of dividends. These provisions may discourage stockholders from bringing suit against a director for breach of fiduciary duty and may reduce the likelihood of derivative litigation brought by stockholders on our behalf against a director. In addition, our Certificate of Incorporation and By-Laws provide for mandatory indemnification of directors and officers to the fullest extent permitted by governing state law.   

 

9

 

 

We may incur a variety of costs to engage in future acquisitions of companies, products or technologies, to grow our business, to expand into new markets, or to provide new services.  As such, the anticipated benefits of those acquisitions may never be realized.

 

It is management’s intention to acquire other businesses to grow our customer base, to expand into new markets, and to provide new product lines.  We may make acquisitions of, or significant investments in, complementary companies, products or technologies, although no additional material acquisitions or investments are currently pending.  Acquisitions may be accompanied by risks such as: 

 

  ☐ difficulties in assimilating the operations and employees of acquired companies;

 

  ☐ diversion of our management’s attention from ongoing business concerns;

 

  ☐ our potential inability to maximize our financial and strategic position through the successful incorporation of acquired technology and rights into our products and services;

 

  ☐ additional expense associated with amortization of acquired assets;

 

  ☐ additional expense associated with understanding and development of acquired business;

 

  ☐ maintenance and implementation of uniform standards, controls, procedures and policies; and

 

  ☐ impairment of existing relationships with employees, suppliers and customers as a result of the integration of new management employees.

  

We must attract and retain skilled personnel.  If we are unable to hire and retain technical, sales and marketing, and operational employees, our business could be harmed.

 

Our revenues are generated by the sales of our radiation detection products from our direct sales, sales to catalogs, distributors and to a lesser extent, our website.  Our ability to manage our growth will be particularly dependent on our ability to develop and retain an effective sales force and qualified technical and managerial personnel. We intend to hire additional employees, including engineers, sales and marketing employees and operational employees.  The competition for engineers, qualified sales, technical, and managerial personnel in the technology and manufacturing community, is intense, and we may not be able to hire and retain sufficient qualified personnel.  In addition, we may not be able to maintain the quality of our operations, control our costs, maintain compliance with all applicable regulations, and expand our internal management, technical, information and accounting systems in order to support our desired growth, which could have an adverse impact on our operations. 

 

10

 

   

Our failure to manage growth effectively could harm our ability to attract and retain key personnel and adversely impact our operating results.

 

There can be no assurance that we will be able to manage our expansion through acquisitions effectively. Our current and planned personnel, systems, procedures and controls may not be adequate to support and effectively manage our future operations, especially as we employ personnel in multiple geographic locations. We may not be able to hire, train, retain, motivate and manage required personnel, which may limit our growth, damage our reputation and negatively affect our financial performance and harm our business. 

 

If we obtain financing, existing shareholder interests may be diluted.

 

If we raise additional funds by issuing equity or convertible debt securities, the percentage ownership of our shareholders will be diluted. In addition, any new securities could have rights, preferences and privileges senior to those of our common stock. Furthermore, we cannot assure you that additional financing will be available when and to the extent we require or that, if available, it will be on acceptable terms.

 

Risks Related to Our Common Stock

 

Our stock price may be volatile or may decline regardless of our operating performance, and the price of our common stock may fluctuate significantly.

 

The market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including:

 

  ☐ competition from other radiation detection companies or related businesses;

 

  ☐ changes in government regulations, general economic or market conditions or trends in our industry or the economy as a whole and, in particular, in the nuclear power industry;

 

  ☐ changes in key personnel;

 

  ☐ entry into new geographic markets;

 

  ☐ actions and announcements by us or our competitors or significant acquisitions, divestitures, strategic partnerships, joint ventures or capital commitments;

 

  ☐ changes in operating performance and stock market valuations of other radiation detection and related companies;

 

  ☐ investors’ perceptions of our prospects and the prospects of the nuclear power industry;

 

  ☐ fluctuations in quarterly operating results, as well as differences between our actual financial and operating results and those expected by investors;

 

  ☐ the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC;

 

  ☐ announcements relating to litigation;

 

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  ☐ financial guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;

 

  ☐ changes in financial estimates or ratings by any securities analysts who follow our common stock, our failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our common stock;

 

  ☐ the development and sustainability of an active trading market for our common stock;

 

  ☐ future sales of our common stock by our officers, directors and significant stockholders; and

 

  ☐ changes in accounting principles affecting our financial reporting.

 

These and other factors may lower the market price of our common stock, regardless of our actual operating performance.

 

The stock markets and trading facilities, including the OTC Bulletin Board, have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities in many companies. In the past, stockholders of some companies have instituted securities class action litigation following periods of market volatility. If we were involved in securities litigation, we could incur substantial costs and our resources and the attention of management could be diverted from our business.

 

Our Common Stock is subject to risks arising from restrictions on reliance on Rule 144 by shell companies or former shell companies.

 

Under a regulation of the SEC known as “Rule 144,” a person who has beneficially owned restricted securities of an issuer and who is not an affiliate of that issuer may sell them without registration under the Securities Act provided that certain conditions have been met. One of these conditions is that such person has held the restricted securities for a prescribed period, which will be 6 months or 1 year, depending on various factors. The holding period for our common stock would be 1 year if our common stock could be sold under Rule 144. However, Rule 144 is unavailable for the resale of securities issued by an issuer that is a shell company (other than a business combination related shell company) or that has been at any time previously a shell company. The SEC defines a shell company as a company that has (a) no or nominal operations and (b) either (i) no or nominal assets, (ii) assets consisting solely of cash and cash equivalents; or (iii) assets consisting of any amount of cash and cash equivalents and nominal other assets. Until the merger, we were a shell company.

 

The SEC has provided an exception to this unavailability if and for as long as the following conditions are met:

 

  ☐ The issuer of the securities that was formerly a shell company has ceased to be a shell company,

  

  ☐ The issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act,

 

  ☐ The issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Current Reports on Form 8-K; and

 

  ☐ At least one year has elapsed from the time that the issuer filed current comprehensive disclosure with the SEC reflecting its status as an entity that is not a shell company known as “Form 10 Information.”

 

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If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

 

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the trading price for our common stock would be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who cover us downgrades our common stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which could cause our stock price and trading volume to decline.

 

Our management and other affiliates have significant control of our Common Stock and could control our actions in a manner that conflicts with the interests of other stockholders.

 

Our executive officers, directors and their affiliated entities together will beneficially own approximately 37.3% of our Common Stock. As a result, these stockholders, acting together, will be able to exercise considerable influence over matters requiring approval by our stockholders, including the election of directors, and may not always act in the best interests of other stockholders. Such a concentration of ownership may have the effect of delaying or preventing a change in our control, including transactions in which our stockholders might otherwise receive a premium for their shares over then current market prices.

 

Penny Stock Considerations

 

Our shares likely will be “penny stocks” as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00. Our shares thus will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.

 

13

 

 

Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or accredited investor must make a special suitability determination regarding the purchaser and must receive the purchaser’s written consent to the transaction prior to the sale. Generally, an individual with a net worth in excess of $1,000,000 or annual income exceeding $200,000 individually or $300,000 together with his or her spouse is considered an accredited investor. In addition, under the penny stock regulations the broker-dealer is required to:

 

  ☐ Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;

 

  ☐ Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;

 

  ☐ Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer’s account, the account’s value and information regarding the limited market in penny stocks; and

 

  ☐ Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction, prior to conducting any penny stock transaction in the customer’s account.

 

Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and operating results. In addition, current and potential stockholders could lose confidence in our financial reporting, which could have an adverse effect on our stock price.

 

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud.  If we cannot provide reliable financial reports or prevent fraud, our operating results could be harmed.

 

During the course of our testing, we may identify deficiencies which we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404.  In addition, if we fail to maintain the adequacy of our internal accounting controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404.  Failure to achieve and maintain an effective internal control environment could cause us to face regulatory action and also cause investors to lose confidence in our reported financial information, either of which could have an adverse effect on our stock price.

 

We do not expect to pay any cash dividends for the foreseeable future.

 

The continued operation and growth of our business will require substantial cash. Accordingly, we do not anticipate that we will pay any cash dividends on shares of our Common Stock for the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, financial condition, contractual restrictions relating to indebtedness we may incur, restrictions imposed by applicable law and other factors our Board of Directors deems relevant. Accordingly, if you purchase shares in this offering, realization of a gain on your investment will depend on the appreciation of the price of our Common Stock, which may never occur. Investors seeking cash dividends in the foreseeable future should not purchase our Common Stock.

 

14

 

 

OTC Bulletin Board Qualification for Quotation

 

On February 6, 2015, we were issued our ticker symbol, UCLE on the OTC Bulletin Board from FINRA. On March 20, 2015, we were approved for DTC eligibility by the Depository Trust and Clearing Corporation,) (“DTCC”).

 

Holders

 

As of the date of this 10-K, we had 52 holders of record of our Common Stock.

 

Quantitative and Qualitative Disclosures about Market Risk

 

We have entered into derivative financial instruments such as futures contracts, options and swaps, forward foreign exchange contracts or interest rate swaps and futures. In 2022, we entered into two convertible debt instruments that included stock purchase warrants. Though there were no derivatives associated with the Notes, the instruments are affected by changes in market interest rates. We believe that adequate controls are in place to monitor any hedging activities. While we do have significant sales outside the United States, all of our sales are settled with US currency, and we do not currently own assets and operate facilities in countries outside the United States and, consequently, we are not affected by foreign currency fluctuations or exchange rate changes.  Overall, we believe that our exposure to interest rate risk and foreign currency exchange rate changes is not material to our financial condition or results of operations.

 

Off-Balance Sheet Arrangements

 

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Critical Accounting Policies

 

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As a “smaller reporting company,” we have the option to delay adoption of new or revised accounting standards until those standards would otherwise apply to private companies, until the earlier of the date that (i) we are no longer a smaller reporting company or (ii) we affirmatively and irrevocably opt out of the extended transition period for complying with such new or revised accounting standards. We have elected to opt out of this extended transition period. As noted, this election is irrevocable.  

 

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“US GAAP”). US GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expenses amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

 

We suggest that our significant accounting policies, as described in our financial statements in the Summary of Significant Accounting Policies, be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

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Income Taxes

 

The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes.” ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no effect on the Company’s consolidated financial statements.

 

Recent Accounting Pronouncements

   

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 was issued to improve financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in scope. The new standard represents significant changes to accounting for credit losses.  Full lifetime expected credit losses will be recognized upon initial recognition of an asset in scope.  The current incurred loss impairment model that recognizes losses when a probable threshold is met will be replaced with the expected credit loss impairment method without recognition threshold.  The expected credit losses estimate will be based upon historical information, current conditions, and reasonable and supportable forecasts.  This ASU as amended by ASU 2019-10, is effective for fiscal years beginning after December 15, 2022.  The Company is currently evaluating the effect of this ASU on the Company’s consolidated financial statements and related disclosures.

 

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes which amends ASC 740 Income Taxes (ASC 740). This update is intended to simplify accounting for income taxes by removing certain exceptions to the general principles in ASC 740 and amending existing guidance to improve consistent application of ASC 740. This update is effective for fiscal years beginning after December 15, 2021.  The guidance in this update has various elements, some of which are applied on a prospective basis and others on a retrospective basis with earlier application permitted.  The adoption had no effect on the Company’s consolidated financial statements and related disclosures.

 

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and clarify the scope and certain requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contract in entity’s own equity. ASU 2020-06 is effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company is currently evaluation the impact this ASU will have on its consolidated financial statements.

 

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Authorization of Preferred Stock

 

Our Certificate of Incorporation authorizes the issuance of up to 5,000,000 shares of preferred stock with designations, rights and preferences determined from time to time by its Board of Directors. Accordingly, our Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power or other rights of the holders of the common stock. In the event of issuance, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company. Although we have no present intention to issue any shares of its authorized preferred stock, there can be no assurance that we will not do so in the future.

 

Control by Management

 

As of December 31, 2022, management currently owns 37.3% of all the issued and outstanding capital stock of the Company. Consequently, management has the ability to control the operations of the Company and will have the ability to control substantially all matters submitted to stockholders for approval, including:

 

  ● Election of the board of directors;

 

  ● Removal of any directors;

 

  ● Amendment of the Company’s certificate of incorporation or bylaws; and

 

  ● Adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination.

 

This Report Contains Forward-Looking Statements and Information Relating to Us, Our Industry and To Other Businesses.

 

ITEM 1B- UNRESOLVED STAFF COMMENTS.

 

Not applicable.

 

ITEM 2. PROPERTIES

 

US Nuclear Corp is headquartered in Canoga Park, CA, and occupies a 6,000-square foot leased facility and 8,000 square foot leased facility in Milford, Ohio. The office is divided among the Company’s various disciplines: management, finance, sales, marketing and customer service, with 25% of the available space dedicated to inventory. Each location has a bookkeeper, production manager, assembly supervisor, production workers, and customer service staff.

 

The Company’s executive offices are located in Canoga Park, CA, at 7051 Eton Avenue, Canoga Park, California 91303. Per the Company’s lease agreement, the lease payment increased to $7,000 on August 1, 2016. Robert I. Goldstein, our President, Chief Executive Officer and Chairman of the Board of Directors also maintains a position as President of Gold Team Inc., a Delaware company that invests in industrial real estate properties for investment purposes. He holds an 8% interest in Gold Team Inc. The Company leases its current facilities from Gold Team Inc. which owns both the Canoga Park, CA and Milford, Ohio properties. The following table lists the locations of all its current locations.

 

Location  Address  Size
Canoga Park, California  7051 Eton Avenue  6,000 square feet
   Canoga Park, CA 91303   
       
Milford, Ohio  1160 U.S. Route 50  8,000 square feet
   Milford, OH 45150   

 

ITEM 3. LEGAL PROCEEDINGS.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

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PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS

 

Market Information

 

We have already been approved by FINRA for the Over-the-Counter Bulletin Board (“OTCBB”) trading and additionally have also been approved with the Depository Trust and Clearing Corporation or (“DTCC”) for DTC eligibility. Our stock ticker symbol is UCLE on the Over-the-Counter Bulletin Board. For information on shareholders who owns 5% or more of our common stock, as well as the ownership of our officers and directors, please see “Security Ownership of Certain Beneficial Owners and Management”.

 

Authorized Capital Stock

 

The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock, par value $0.0001 per share, (the “Common Stock”) and 5,000,000 shares of Preferred Stock, (the “Preferred Stock”) par value $0.0001 per share, of which none have been designated or issued. As of December 31, 2022 we had (i) 31,621,242 shares of common stock outstanding, held of record by 53 shareholders, and (ii) no shares of preferred stock outstanding. As of May 10, 2023 there are 35,798,087 shares of common stock outstanding, held of record by 52 shareholders.

 

Description of Capital Stock

 

The following is a summary of the rights of our capital stock and certain provisions of our articles of organization, as amended, and by-laws.  For more detailed information, please see our articles of organization, as amended, and by-laws filed as exhibits to this Current Report on Form 10-K. Each holder of the Company’s Common Stock is entitled to one vote for each share held on all matters submitted to a vote of shareholders and do not have cumulative voting rights.  An election of directors by our shareholders shall be determined by a plurality of the votes cast by the shareholders entitled to vote on the election.  The holders of Common Stock are entitled to receive pro rata dividends, when and as declared by the Board of Directors in its discretion, out of funds legally available therefore, but only if all dividends on the Preferred Stock have been paid in accordance with the terms of such Preferred Stock and there exists no deficiency in any sinking fund for the Preferred Stock.

 

Dividends on the Common Stock are declared by the Board of Directors. The payment of dividends on the Common Stock in the future, if any, will be subordinate to the Preferred Stock and will be determined by the Board of Directors. In addition, the payment of such dividends will depend on the Company’s financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant.  The Company has heretofore never paid any dividends and the Board has no plans for the payment of future dividends.  The Board presently plans for any future surplus income to be reinvested into growing the Company through additional investment.

 

Preferred Stock

 

The Board of Directors is authorized to provide for the issuance of shares of preferred stock in series and, by filing a certificate pursuant to the applicable law of Delaware, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof without any further vote or action by the shareholders. Any shares of preferred stock so issued would have priority over the common stock with respect to dividend or liquidation rights. Any future issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of our Company without further action by the shareholders and may adversely affect the voting and other rights of the holders of common stock. At present, we have no plans to neither issue any preferred stock nor adopt any series, preferences or other classification of preferred stock.

 

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The issuance of shares of preferred stock, or the issuance of rights to purchase such shares, could be used to discourage an unsolicited acquisition proposal. For instance, the issuance of a series of preferred stock might impede a business combination by including class voting rights that would enable the holder to block such a transaction, or facilitate a business combination by including voting rights that would provide a required percentage vote of the stockholders. In addition, under certain circumstances, the issuance of preferred stock could adversely affect the voting power of the holders of the common stock. Although the Board of Directors is required to make any determination to issue such stock based on its judgment as to the best interests of our stockholders, the Board of Directors could act in a manner that would discourage an acquisition attempt or other transaction that some, or a majority, of the stockholders might believe to be in their best interests or in which stockholders might receive a premium for their stock over the then market price of such stock. The Board of Directors does not at present intend to seek stockholder approval prior to any issuance of currently authorized stock, unless otherwise required by law or stock exchange rules. We have no present plans to issue any preferred stock.

 

The description of certain matters relating to the securities of the Company is a summary and is qualified in its entirety by the provisions of the Company’s Certificate of Incorporation and By-Laws, copies of which have been filed as exhibits to the Company’s Form 10 filed with the Securities Exchange Commission on March 2, 2012, as updated by the Company’s Form 8-K filed with the Securities Exchange Commission on October 15, 2013.

 

Dividends

 

We have not paid any dividends on our common stock and do not presently intend to pay cash dividends prior to the consummation of a business combination. The payment of cash dividends in the future, if any, will be contingent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to consummation of a business combination, if any. The payment of any dividends subsequent to a business combination, if any, will be within the discretion of our then existing board of directors. It is the present intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, the board of directors does not anticipate paying any cash dividends in the foreseeable future. 

 

Securities Authorized for Issuance under Equity Compensation Plans

 

The Company does not have any equity compensation plans or any individual compensation arrangements with respect to its common stock or preferred stock. The issuance of any of our common or preferred stock is within the discretion of our Board of Directors, which has the power to issue any or all of our authorized but unissued shares without stockholder approval.

 

Recent Sales of Unregistered Securities

 

During the year ending December 31, 2022, the Company issued 400,000 shares of common stock to Prashant Mehta in connection with the consulting services agreement entered into, by and between US Nuclear Corp and Prashant Mehta.

 

During the year ending December 31, 2022, the Company issued 625,000 shares of common stock in in relation to debt that was obtained.

 

During the year ending December 31, 2022, the Company issued 1,600,000 shares of common stock in satisfaction of principle, interest, and fees on a Convertible Note held by a third party.

 

During the year ending December 31, 2022, the Company issued 203,027 shares of common stock to Carter Terry & Co. in connection with investor relations services provided by the consultant.

 

During the year ending December 31, 2022, the Company issued 40,000 shares of common stock to Richard Cavalli in connection with investor relations services provided by the consultant.

 

During the year ending December 31, 2022, the Company issued 200,000 shares of common stock to Howard Isaacs in connection with investor relations services provided by the consultant.

 

Issuer Purchases of Equity Securities

 

None.

 

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ITEM 6. [Reserved]

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Overview

 

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand US Nuclear Corp, our operations and our present business environment. MD&A is provided as a supplement to—and should be read in conjunction with—our consolidated financial statements and the accompanying notes thereto contained in “Item 8. Financial Statements and Supplementary Data” of this report on Form 10-K. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements.

 

We were incorporated in Delaware on February 14, 2012, and on March 2, 2012, we filed a registration statement on Form 10 to register with the U.S. Securities and Exchange Commission as a public company.  We were originally organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation.

 

On April 18, 2012, Richard Chiang, then our sole director and shareholder, entered into a Stock Purchase Agreement whereby Mr. Goldstein of US Nuclear Corp purchased 10,000,000 shares of our common stock from Mr. Chiang, which constituted 100% of our issued and outstanding shares of common stock. Mr. Chiang then resigned from all positions. Subsequently, on May 18, 2012, the Registrant appointed Mr. Chiang to serve as a member of the Board of Directors. He resigned from this position on March 31, 2013.

 

Since our acquisition of Overhoff Technology in 2006, we have had discussions with other companies in our industry for an acquisition. While we targeted Overhoff due to its unique position in the tritium market, we had not commenced an acquisition since our Overhoff Technology acquisition; we believe in part the reason was due to lack of additional capital, our status as a privately-held entity at the time, and focus on developing our own products. We will seek out companies whom our management believes will provide value to our customers and will complement our business. We will focus on diversifying our product line into a larger range so that our customers and vendors may have a more expansive experience in type, choice, options, price and selection. We also believe that with a more diverse product line we will become more competitive as our industry is intensely competitive.

 

Generally, our product concentration places a heavy reliance on our Overhoff Technology division. In 2022, we derived 55.9% of our total revenues from sales made by Overhoff to two customers. We expect to encounter a continuation of this trend unless we are successful in diversifying our client base, executing our acquisition strategy and experience increases in business from our Technical Associates division.

 

Our international revenues were 26.57% of our total revenue in 2022. We expect this to increase over time as we continue to field new orders inquires and engage new customers overseas and recover post-pandemic. We believe that South Korea and China will likely be a larger contributor to revenue within the next few years. While we maintain steady growth domestically, the international side of our business may be a larger component as nuclear technology and rapid development for clean energy grows abroad. Additionally, the Company relies on continued growth and orders from CANDU reactors (Canada Deuterium Uranium), and rapid development of the next generation of nuclear reactors called Molten Salt Reactors, (MSR) and Liquid-Fluoride Thorium Reactors (LFTR), all of which purchase tritium detection and monitor products. There can be no assurances as to our growth projections and our risk profile as we depend upon increased foreign customers for business.

 

20

 

 

Robert I. Goldstein, our President, Chief Executive Officer and Chairman of the Board of Directors also maintains a position as President of Gold Team Inc., a Delaware company that invests in industrial real estate properties for investment purposes. He holds an 8% interest in Gold Team Inc. and spends approximately 5 hours per week with affairs related to Gold Team Inc. The Company leases its current facilities from Gold Team Inc. which owns both the Canoga Park, CA and Milford, Ohio properties at an expense of $7,000 for each facility per month. 

 

On May 31, 2016, we entered into an Asset Purchase Agreement with Electronic Control Concepts (“ECC”) whereby the Company purchased certain tangible and intangible assets of ECC. ECC a small manufacturer of test and maintenance meters for x-ray machines both medical and industrial. We acquired ECC to give a boost to our current x-ray related product and hospital/medical product sales. 

 

Cali From Above (“CFA”) is a US Nuclear Corp subsidiary which was formed and began operations on January 28, 2021. CFA is a commercially recognized aerial mapping, aerial surveying, and airborne inspections company. CFA was formed to expand the Company’s presence in the Unmanned Aerial Vehicle market. The Company believes this market is rapidly growing and changing and feel it is an important growth opportunity. Incorporating as its own subsidiary provides the opportunity to specialize specifically in UAVs and UAV services.

 

Results of Operations

 

For the year ended December 31, 2022 compared to the year ended December 31, 2021

 

   Year Ended December 31,   Change 
   2022   2021   $   % 
                 
Sales  $2,091,366   $2,137,607   $(46,241)   -2.21%
Cost of goods sold   1,303,298    760,955    542,343    41,61%
Gross profit   788,068    1,376,652    (588,584)   -74.69%
Selling, general and administrative expenses   2,284,099    2,738,841    (454,742)   -19.91%
Loss from operations   (1,496,031)   (1,362,189)   (133,842)   8.95%
                     
Other expense   (546,764)   (514,495)   (32,269)   5.90%
Loss before provision for income taxes   (2,042,795)   (1,876,684)   (166,111)   8.13%
                     
Provision for income taxes   —    —    —    — 
Net income (loss)  $(2,042,795)  $(1,876,684)  $(166,111)   8.13%

 

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Revenue for the year ended December 31, 2022, was $2,091,366 compared to $2,137,607 for the year ended December 31, 2021. The decrease of $46,241 or 2.21% is considered by management to be indicative of economic conditions as revenue across all subsidiaries post-Coronavirus pandemic remains constant, however growth was slowed in 2022 due to political and economic uncertainties. The revenue breakdown for the year ended December 31, 2022, is as follows:

 

North America 73.43%

Asia (including Japan) 25.03%

Other 1.54%

 

Our gross margin for the year ended December 31, 2022 was 37.68% as compared to 64.4% for the year ended December 31, 2021. The decrease in gross margin is due to a slight decrease in sales and an increase to cost of goods sold.

 

Selling and general and administrative expenses for the year ended December 31, 2022, decreased by $454,742 or 19.91% to $2,284,099; down from $2,738,841 for the year ended December 31, 2021. The decrease is largely attributed to a reduction in payroll costs.

 

Other expense for the year ended December 31, 2022, was $546,764, an increase of $32,269 from $514,495 for 2021. Other expense in 2022 consists of interest expense and amortization of debt discount. In 2021, other expense consisted of interest expense, write down of investments, interest expense, and equity loss in investment offset by a gain on forgiveness of debt.

 

Net loss for the year ended December 31, 2022, was $2,042,795 compared to net loss of $1,876,684 for the year ended December 31, 2021.

 

Liquidity and Capital Resources

 

Our operations have historically been financed by our majority stockholder. As funds were needed for working capital purposes, our majority stockholder would loan us the needed funds. During the year ended December 31, 2022, the Company’s majority shareholder paid expenses on behalf of the Company of $6,214 and loaned an additional $304,633 to the Company. We anticipate the growth of our business through the sale of our common stock and loans from our majority stockholder, if necessary.

 

At December 31, 2022, total assets increased by $257,551 or 8.28% from $2,851,186 at December 31, 2021 due to an increase in accounts receivable and inventory.

 

At December 31, 2022, total liabilities increased by 30.29% to $3,457,041 from $2,409,917 at December 31, 2021 due to an increase in accrued liabilities, accounts payable, accrued compensation paid to officers, convertible notes, note payable to shareholder, and an increase in our line of credit balances.

 

Critical Accounting Policies

 

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“US GAAP”). US GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expenses amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

 

22

 

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes.” ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no effect on the Company’s consolidated financial statements.

 

Off-Balance Sheet Arrangements

 

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Contractual Obligations

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

Please see the financial statements beginning on page F-1 located elsewhere in this annual report on Form 10-K and incorporated herein by reference.

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. The disclosure controls and procedures ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rule and forms; and (ii) accumulated and communicated to our management, including our Chief Executive Officer as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2022, these disclosure controls and procedures were ineffective.

 

23

 

 

Management’s Annual Report on Internal Control over Financial Reporting

 

Our management is responsible to establish and maintain adequate internal control over financial reporting. Our Officers are responsible to design or supervise a process that provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The policies and procedures include:

 

  ● maintenance of records in reasonable detail to accurately and fairly reflect the transactions and dispositions of assets,

 

  ● reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors, and

 

  ● reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

 

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of the end of the period December 31, 2022. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the fiscal year December 31, 2022, our internal controls over financial reporting were not effective due to the following.

 

  ● Lack of proper segregation of duties.

 

  ● No formal documentation of our internal controls

 

  ● Lack of multiple levels of supervision and review

 

Changes in Internal Controls over Financial Reporting

 

Our management has determined that there were no changes made in the implementation of our internal controls over financial reporting during the fourth quarter of the year ended December 31, 2022.

 

Attestation Report of Independent Public Accounting Firm

 

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting because as a smaller reporting company we are not subject to attestation by our independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

 

ITEM 9B. OTHER INFORMATION

 

Not applicable

 

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 

Not applicable

 

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PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE 

 

On June 30, 2022, US Nuclear Corp, a Delaware corporation (the “Company”) received notice of resignation by its Chief Financial Officer, Rachel Boulds. Ms. Boulds’ resignation did not result from any disagreement with the Company.

 

On the same day, the Company appointed its Chief Operating Officer, Richard Landry, to serve as the Chief Financial Officer of the Company effective as of June 30, 2022. Mr. Landry’s compensation will not be altered as a result of his appointment to CFO.

 

The following table contains information concerning our directors and executive officers through the date of filing of this report.

 

Name  Age  Position
       
Robert I. Goldstein  74  President, Chief Executive Officer, and Chairman of the Board of Directors
       
Richard Landry  27  Chief Financial Officer
       
Michael Hastings  80  Member of the Board of Directors
       
Dell Williamson  66  Member of the Board of Directors

 

Officers and Directors

 

Robert I. Goldstein –President, Chief Executive Officer and Chairman of the Board of Directors: Mr. Goldstein entered the radiation detection industry in 1972 as an applications engineer, production manager, and then general manager for Optron Scientific Company, Inc. DBA, Technical Associates. Mr. Goldstein is a physicist and an award- winning specialist in the nuclear radiation detection industry and has more than 30 years of experience in the field. He has authored more than 20 white papers and abstract presentations on industrial research use of radiation measurement equipment and instruments. His work has been approved by US Federal standards set by the EPA (Environmental Protection Agency), FDA (Food and Drug Administration), and NRC (Nuclear Regulatory Commission). Mr. Goldstein has also worked closely with and continues ongoing joint development programs with Los Alamos National Lab and Jefferson National Lab. He was instrumental in the acquisition of Overhoff Technology Corp, at the time, the world’s only tritium detection company, in 2006. His experience in the field of radiation detection ranges from development of instrumentation to design and development for air, water and surface applications. He is also an accomplished inventor having invented miniature radiation detectors for use during surgery. Mr. Goldstein graduated from MIT with a BS in Physics and from Stanford University with an MS in Mechanical Engineering. Mr. Goldstein is affiliated with the following scientific groups: Health Physics Society, American Nuclear Society, DOE (US Department of Energy) Tritium Focus Group, Air Monitoring User’s Group and Health Physics Instrument Committee.

 

25

 

 

Richard Landry – Chief Financial Officer, Director of Investor Relations and Business Development Consultant: Mr. Landry began his career in the financial world as a proprietary trader while in college; majoring in Mathematics and Applied Physics. Through an investment banking internship, Mr. Landry furthered his experience in Finance, which eventually lead him to Source 1 Capital, where he spear-headed the business development, marketing and assisted in structuring capital for public and private companies. This included advising, marketing, sourcing, evaluating, and conducting due diligence on new opportunities. Mr. Landry has been instrumental in assisting in raising/structuring almost $1.5B worth in new capital & deal flow. He has built-out and devised algorithms/trading strategies for top hedge funds, implemented CRMs for emerging tech companies, established sales growth strategies while maintaining regulatory requirements, worked with some of the largest asset management firms in the world such as; Fosun International and CIM, and was the Chief Compliance Officer of a Chinese tech firm where he assisted in their $150 million capital raise, as well as maintaining their compliance with China’s One Belt One Road Initiative. His responsibilities at US Nuclear Corp include marketing, research on new technologies, oversight of day-to-day activities, raising capital, procuring new contracts, and evaluating/structuring new acquisitions for the company.

 

Michael Hastings– Member of the Board of Directors: Mr. Hastings has been a corporate finance officer for over thirty years in the medical device industry with C.R. Bard, Inc. (predecessor to Becton Dickinson), and in the industrial battery industry with EnerSys, Inc. (NYSE: ENS). Mr. Hastings retired from EnerSys in 2011 as its Vice President and Treasurer with company revenue of $2 billion and operations in all parts of the world. His responsibilities included global treasury operations including debt and capital transactions; corporate tax; hedging of currencies, interest rate exposures and the price of raw materials; credit management; pension plan investments; and investor relations. He participated fully in due diligence, valuation and negotiation of numerous acquisitions. Mr. Hastings was also a member of the Board of Directors and Chief Financial Officer of MegaGraphite, Inc. - a private graphite exploration company in Canada between 2011 and when it was sold in 2014. Mr. Hastings was a member of the Board of Directors of Organic Transit, Inc., a private solar electric vehicle company in the United States, from 2018 until the company was sold in 2020. Mr. Hastings has no prior business relationship with the Company. 

 

Dell Williamson– Member of the Board of Directors: Mr. Williamson began his career at Overhoff Technology Corporation (“Overhoff”) in 1982. As set forth in prior disclosures, Overhoff is an operating division of the Company, and thus an affiliate or related party of the Company. Mr. Williamson is currently the Vice President for production at Overhoff Technology Corporation. His duties include design, engineering and calibration as well as managing production. Mr. Williamson graduated from Cincinnati Technical College with a degree in electronics technology. He furthered his education and attended the University of Cincinnati where he majored in industrial management and mechanical engineering. Mr. Williamson has become an expert in the use, design and construction of Tritium measurement systems. He serves as the technical interface between the user/scientist and the Overhoff factory. He is a member of the following scientific groups: Health Physics Society, American Nuclear Society, DOE (US Department of Energy) Tritium Focus Group, DOE (US Department of Energy) Air Monitoring User’s Group, DOE (US Department of Energy) Health Physics Instrument Committee. Mr. Williamson has no prior experience in serving as a director of a publicly reporting company.

 

In particular,

 

  ● With respect to Mr. Goldstein, the board considered his perspective and experience with our ongoing strategy and operations that he has obtained through his service to the Company and his ability to evaluate and assist with potential acquisitions and business opportunities.

 

  ● With respect to Mr. Hastings, the board considered his extensive managerial and financial expertise, as well as his experience in the medical device industry and his previous experience serving on a board of directors.

 

  ● With respect to Mr. Williamson, the board considered his long tenure as Vice President of Overhoff Technology Corporation, as well as his technical and engineering expertise and knowledge he has obtained through his service to the Company.

 

26

 

 

The Board of Directors and Committees

 

As of the date of this Report, we had one independent director.  We anticipate appointing additional independent directors as required in the future.  

 

Audit Committee

 

As of the date of this Report, we did not have a standing Audit Committee.  We intend to establish an Audit Committee of the Board of Directors, which will consist of independent directors, of which at least one director will qualify as a qualified financial expert as defined in the regulations of the SEC.  The Audit Committee’s duties would be to recommend to our Board of Directors the engagement of independent auditors to audit our consolidated financial statements and to review our accounting and auditing principles.  The Audit Committee would review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors, if any, and independent public accountants, including their recommendations to improve the system of accounting and internal control.  The Audit Committee would at all times be composed exclusively of directors who are, in the opinion of our Board of Directors, free from any relationship that would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles.  As of the date of this Report, we did not have an audit committee financial expert, in light of our size, although we intend to review this issue as the Company grows, especially as the Company implements a standing Audit Committee.

 

Compensation Committee

 

As of the date of this Report, we did not have a standing Compensation Committee.  We intend to establish a Compensation Committee of the Board of Directors.  The Compensation Committee would review and approve our salary and benefits policies, including compensation of executive officers.  The Compensation Committee would also administer any stock option plans that we may adopt and recommend and approve grants of stock options under such plans.

 

Nominating and Corporate Governance Committee 

 

As of the date of this Report, we did not have a standing Nominating and Corporate Governance Committee.  We intend to establish a Nominating and Corporate Governance Committee of the Board of Directors to assist in the selection of director nominees, approve director nominations to be presented for stockholder approval at our annual meeting of stockholders and fill any vacancies on our Board of Directors, consider any nominations of director candidates validly made by stockholders, and review and consider developments in corporate governance practices.

 

Compliance with Section 16(A) of the Securities Exchange Act Of 1934

 

Section 16(a) of the Securities Exchange Act of 1934, as amended (“Section 16(a)”), requires our Directors and executive officers, and persons who beneficially own more than ten percent of a registered class of our equity securities (collectively, “Section 16 reporting persons”), to file with the SEC initial reports of ownership and reports of changes in ownership of our Common Stock and other equity securities. Section 16 reporting persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

 

To our knowledge, based solely on a review of the copies of any such reports furnished to us, none of the Section 16 reporting persons failed to file on a timely basis reports required by Section 16(a) of the Exchange Act with respect to our most recent fiscal year ended December 31, 2022.

 

Code of Ethics

 

As of the date of this Report, we had not adopted a formal, written code of conduct (“Code of Ethics”) within the specific guidelines promulgated by the SEC, although we intend to adopt a Code of Ethics. 

 

27

 

 

ITEM 11. EXECUTIVE COMPENSATION

 

Executive Compensation

 

Our President, CEO and Chairman of the Board of Directors, Robert I. Goldstein and our Chief Financial Officer, Richard Landry are compensated for their services to the Company; no other officer receives compensation from the Company. Until the Company acquires additional capital, it is not anticipated that any other officer other than these three individuals will receive compensation from the Company other than reimbursement for out-of-pocket expenses incurred on behalf of the Company.

 

The Company has no stock option, retirement, pension, or profit-sharing programs for the benefit of directors, officers or other employees, but our officers and directors may recommend adoption of one or more such programs in the future.

 

Employment Agreements and Compensation

 

On November 4, 2014, we entered into a five-year Employment Agreement with our President, Chief Executive Officer and Chairman of the Board of Directors, Robert I. Goldstein. The Agreement calls for a salary of $100,000 per year, with his compensation beginning in fiscal 2015 and payable in January 2016. Mr. Goldstein later agreed to temporarily reduce his compensation to $50,000 for 2015. Compensation for 2016 increased to $100,000 as authorized by the Board of Directors and has remained $100,000 through December 31, 2022.

 

On February 27, 2019, we entered into an employment agreement with Richard Landry, our COO. Mr. Landry is entitled to receive monthly compensation of $10,000. During 2022, Mr. Landry became our CFO and his monthly compensation has remained the same.

 

Summary Compensation Table

 

The following table provides information regarding the compensation of our named executive officers for the years ended December 31, 2022 and 2021. 

 

Name and Principal Position  Year   Salary   Stock
Awards		   Option
Awards		   Non-Equity
Incentive
Plan
Compensation		   Other
Compensation		   Total 
Robert I. Goldstein President,   2022   $100,000   $              -0-   $            -0-   $                -0-   $               -0-   $100,000 
Chief Executive Officer, and Chairman of the Board of Directors (1)   2021   $100,000   $-0-   $-0-   $-0-   $-0-   $100,000 
                                    
Richard Landry,   2022   $120,000   $-0-   $-0-   $-0-   $-0-   $120,000 
Chief Financial Officer (2)   2021   $100,000   $-0-   $-0-   $-0-   $-0-   $100,000 

 

(1) Mr. Goldstein has accrued unpaid salary.

 

(2) Mr. Landry has accrued unpaid salary.

 

28

 

 

Equity Incentive Plan

 

As of the date of this Report, the Registrant has not entered into any Equity Incentive Plans.

 

Option Grants in the Last Fiscal Year

 

No Stock Appreciation Rights (“SARs”) or options to purchase our stock were granted to the Named Executive Officers during fiscal year ended December 31, 2022.

 

Retirement Plan

 

We do not currently have any retirement plan, but we expect to adopt one in the near term.

 

Director Compensation

 

The following table provides information concerning the compensation of the directors of the Company for the past fiscal year:

 

Name  Fees Earned or
Paid in Cash		   Stock
Awards		   All Other
Compensation		   Total 
Robert I. Goldstein  $          0   $          0   $          0   $          0 
Michael Hastings  $0   $0   $0   $0 
Dell Williamson  $0   $0   $0   $0 

 

Audit Committee Financial Expert

 


The Company does not have an audit committee financial expert. 

 

29

 

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

As of the date of this Report, there were 35,798,087 shares of common stock issued and outstanding. The following table sets forth certain information regarding the beneficial ownership of the outstanding shares as of the date of this Report, (i) each of our executive officers and directors; and (ii) all of our executive officers and directors as a group.

 

Except as otherwise indicated, each such person has investment and voting power with respect to such shares, subject to community property laws where applicable. The address for all individuals for whom an address is not otherwise indicated is 7051 Eton Avenue, Canoga Park, CA 91303.

 

Name of Beneficial Owner  Amount  and
Nature of
Beneficial
Ownership		   Percent (%) of
Common
Stock		 
         
Robert I. Goldstein, President & CEO, Chairman   10,850,000    34.3%
           
Richard Landry, CFO   242,823    * 
           
Michael Hastings, Board Member   639,051    2.0%
           
Dell Williamson, Board Member   60,000    * 
           
All Directors and Officers as a Group (5 persons)   11,791,874    37.3%

 

*indicates less than 1%

 

Significant Employees

 

We are dependent on the experience, knowledge, skill and expertise of our President and CEO Robert I. Goldstein. We are also in large part dependent on Dell Williamson, Manager of the Overhoff Division, and Ivan Mitev, our Chief Engineer at the Overhoff Division, Ian Embry in sales, and Rowena Paredes in accounting. The loss of any of the key personnel listed above could materially and adversely affect our future business efforts. Our success depends in substantial part upon the services, efforts and abilities of Robert I. Goldstein, our Chairman and Chief Executive Officer, due to his experience, history and knowledge of the nuclear radiation industry and his overall insight into our business direction. The loss or our failure to retain Mr. Goldstein, or to attract and retain additional qualified personnel, could adversely affect our operations.  We do not currently carry key-man life insurance on Mr. Goldstein or any of our officers and have no present plans to obtain this insurance.

 

Family Relationships

 

There are no family relationships among directors, executive officers, or persons nominated or chosen by the issuer to become directors or executive officers.

 

Involvement in Certain Legal Proceedings

 

There have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any director, executive officer, promoter or control person of Registrant during the past five years.

 

30

 

 

Meetings of the Board of Directors

 

Mr. Goldstein was elected director by the former sole stockholder of the Company in April 18, 2012.  On March 28, 2014, Dr. Gerald Entine was elected to serve on the Board of Directors. On May 22, 2018, Gerald Entine died, leaving a vacancy on the Board of Directors for the Company. In order to fill the vacancy resulting from Mr. Entine’s death, the Board of Directors consented in lieu of a meeting to nominate Dell Williamson for appointment to the Board of Directors following receipt and review from Mr. Williamson his Confidential Bad Actor Disqualifying Event Statement confirming no “disqualifying event,” as defined under Rule 506(e) of Regulation D under the 1933 Securities Act and confirmation of receipt of the Company’s Insider Trading Policy and related memorandum regarding the same (as disclosed in prior filings). In addition, pursuant to Article IV of the Company’s Bylaws, as amended, the Board of Directors nominated Michael G. Hastings to serve as a director on the Board of Directors following receipt and review of the same disclosures and documents produced by Mr. Williamson, as identified herein. By signing the consent resolution, Mr. Williamson and Mr. Hastings accepted appointment as directors on the Board of Directors. The Board establishes policy and provides strategic direction, oversight, and control of the Company.  As of the date of this Form 10-K, the Board of Directors had no standing audit, compensation, nominating or other committees, although the Board intends to establish such committees in the future.  

 

Nominating Committee

 

We have not adopted any procedures by which security holders may recommend nominees to our Board of Directors.

 

Retirement Plan

 

We do not currently have any retirement plan, but we expect to adopt one in the near term.

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

As stated in our Item 2, Properties disclosure on this Form 10-K, the Company’s executive offices are located in Canoga Park, CA, at 7051 Eton Avenue, Canoga Park, California 91303. The lease payment for each facility was $6,000, paid monthly through July 31, 2016. Per the Company’s lease agreement, the lease payment increased to $7,000 on August 1, 2016. Robert I. Goldstein, our President, Chief Executive Officer and Chairman of the Board of Directors also maintains a position as President of Gold Team Inc., a Delaware company that invests in industrial real estate properties for investment purposes. Mr. Goldstein holds an 8% interest in Gold Team Inc. The Company leases its current facilities from Gold Team Inc. which owns both the Canoga Park, CA and Milford, Ohio properties.

 

During the year ended December 31, 2022, the Company’s majority shareholder paid expenses on behalf of the Company of $6,214 and loaned an additional $304,633. The amounts due to Mr. Goldstein are $874,679 and $576,260 as of December 31, 2022 and 2021, respectively.

 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

Audit Fees 

 

The aggregate fees billed by the Company’s current auditor Fruci & Associates II, PLLC, for professional services rendered for the audit of our annual financial statements, review of our quarterly financial statements or services that are normally provided in connection with statutory and regulatory filings were $83,958 and $82,500 for the years ended December 31, 2022 and 2021, respectively.

 

Audit Related Fees

 

There were no fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements for the year ended December 31, 2022 or 2021.

 

Tax Fees

 

There were no fees billed for professional services for tax compliance, tax advice, tax planning for the year December 31, 2022 or 2021.

 

All Other Fees

 

There were no fees billed for other products and services for the year ended December 31, 2022 or 2021.

 

31

 

 

PART IV

 

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 

15(a)(1). Financial Statements

 

The following consolidated financial statements, and related notes and Report of Independent Registered Public Accounting Firm are filed as part of this Annual Report:

 

US Nuclear Corp. and Subsidiaries

Consolidated Financial Statements

For The Years Ended December 31, 2022 and 2021

 

Contents

 

    Page
Reports of Independent Registered Public Accounting Firms (PCAOB ID: 05525)   F-2
     
Report of Fruci & Associates II, PLLC   F-2
     
Consolidated Financial Statements:    
     
Consolidated Balance Sheets as of December 31, 2022 and 2021   F-4
     
Consolidated Statements of Operations for the years ended December 31, 2022 and 2021   F-5
     
Consolidated Statement of Changes in Shareholders’ Equity for the years ended December 31, 2022 and 2021   F-6
     
Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021   F-7
     
Notes to Consolidated Financial Statements   F-8

 

F-1

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Shareholders of US Nuclear Corp.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of US Nuclear Corp. and Subsidiaries (“the Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021 and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has an accumulated deficit and net losses. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

F-2

 

 

Critical Audit Matters

 

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 

Valuation of Goodwill

 

Description of the Critical Audit Matter

 

As discussed in Note 2 to the consolidated financial statements, the Company has goodwill with a carrying value of $570,176 and is tested for impairment annually, or more frequently if impairment indicators arise. During the year ended December 31, 2022, the Company recorded no impairment charge.

 

Auditing management’s goodwill impairment test was complex and highly judgmental due to the significant estimation required to determine the fair value of the goodwill and underlying business unit. In particular, the fair value estimate was sensitive to significant assumptions, such as the Company’s financial forecast, discount rate, and operating costs, which are impacted by expectations about future market and economic conditions.

 

How the Critical Audit Matter Was Addressed in the Audit

 

To test the estimated fair value of the Company’s goodwill and underlying business unit, we performed audit procedures that included, among other things:

 

●Developed an independent expectation and performed independent assessment of balance.

 

●Reviewed current financial forecast in light of management’s current plans, and the historical basis of management’s estimates based on its current operating results that would result from changes in the assumptions.

 

 

We have served as the Company’s auditor since 2019.

 

Spokane, Washington

May 11, 2023  

  

F-3

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2022 AND 2021

 

   2022   2021 
ASSETS        
CURRENT ASSETS        
Cash  $126,109   $246,317 
Accounts receivable, net   329,858    163,577 
Inventories   2,024,664    1,792,312 
Prepaid expenses and other current assets   26,370    44,026 
TOTAL CURRENT ASSETS   2,507,001    2,246,232 
           
Property and equipment, net   6,501    9,719 
Investments   10,059    10,059 
Acquisition deposit   15,000    15,000 
Goodwill   570,176    570,176 
TOTAL ASSETS  $3,108,737   $2,851,186 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
CURRENT LIABILITIES          
Accounts payable  $100,398   $91,859 
Accounts payable - related party   280,000    128,500 
Accrued liabilities   688,422    587,941 
Accrued compensation - officers   695,000    590,000 
Customer deposit   88,694    101,342 
Notes payable   9,574    48,541 
Convertible notes payable, net of debt discount   412,953    
-
 
Note payable to shareholder   874,679    576,260 
Line of credit   307,321    285,474 
TOTAL CURRENT LIABILITIES   3,457,041    2,409,917 
           
Note payable, net of current portion   
-
    
-
 
TOTAL LIABILITIES   3,457,041    2,409,917 
           
COMMITMENTS & CONTINGENCIES   
-
    
-
 
           
SHAREHOLDERS’ EQUITY:          
           
Preferred stock, $0.0001 par value, 5,000,000 shares authorized; none issued and outstanding   
-
    
-
 
Common stock, $0.0001 par value; 100,000,000 shares authorized, 31,621,242 and 28,353,215 shares issued and outstanding   3,162    2,836 
Common shares to be issued   39,000    
-
 
Additional paid in capital   14,740,401    13,508,581 
Accumulated deficit   (15,130,867)   (13,070,148)
TOTAL SHAREHOLDERS’ EQUITY   (348,304)   441,269 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  $3,108,737   $2,851,186 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-4

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

 

   2022   2021 
Sales  $2,091,366   $2,137,607 
Cost of sales   1,303,298    760,955 
Gross profit   788,068    1,376,652 
           
Operating expenses          
Consulting expense   
-
    592,659 
Professional fees   326,118    171,024 
Officer compensation   170,000    372,978 
Payroll and related expense   957,954    939,061 
Selling, general and administrative expenses   830,027    663,119 
Total operating expenses   2,284,099    2,738,841 
           
Loss from operations   (1,496,031)   (1,362,189)
           
Other income (expense)          
Interest expense   (63,912)   (11,001)
Other income   
-
    2,950 
Amortization of debt discount   (482,852)   
-
 
Gain on forgiveness of debt   
-
    329,018 
Equity loss in investment   
-
    (835,462)
Total other income (expense)   (546,764)   (514,495)
           
Loss before provision for income taxes   (2,042,795)   (1,876,684)
           
Provision for income taxes   
-
    
-
 
           
Net loss  $(2,042,795)  $(1,876,684)
           
Deemed dividend for down-round provision in warrants   (17,924)   (52,861)
           
Net loss attributed to common stockholders  $(2,060,719)  $(1,929,545)
           
Weighted average shares outstanding - basic and diluted
   29,504,433    27,375,508 
           
Loss per share – basic and diluted
  $(0.07)  $(0.07)

 

The accompanying notes are an integral part of these consolidated financial statements

 

F-5

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

 

   Common Stock   Common
Shares to be		   Additional
Paid in		   Accumulated   Total
Shareholders’		 
   Shares   Amount   Issued   Capital   Deficit   Equity 
Balance, December 31, 2020   25,724,844   $2,572   $-   $11,985,191   $(11,140,603)  $847,160 
Issuance of common stock for services   1,257,300    126    -    737,262    
-
    737,388 
Issuance of common stock for conversion of convertible debenture and accrued interest   250,000    25    -    99,975    
-
    100,000 
Issuance of common stock for investment   1,121,071    112    -    633,293    
-
    633,405 
Deemed dividend for down round provision in warrants   -    
-
    -    52,861    (52,861)   
-
 
Net loss   -    
-
    -    
-
    (1,876,684)   (1,876,684)
Balance, December 31, 2021   28,353,215   $2,835   $-   $13,508,582   $(13,070,148)  $441,269 
                               
Issuance of common stock for services   1,043,027    105    -    197,865    
-
    197,970 
Issuance of common stock for loan incentive   625,000    62    -    99,957    
-
    100,019 
Issuance of common stock for conversion of debt and accrued interest   1,600,000    160    -    259,840    
-
    260,000 
Debt discount on issuance of convertible debt   -    
-
    -    656,233    
-
    656,233 
Deemed dividend for down-round provision in warrants   -    
-
    -    17,924    (17,924)   
-
 
Common stock to be issued for services   -    
-
    39,000    
-
    
-
    39,000 
Net loss   -    
-
    -    
-
    (2,042,795)   (2,042,795)
Balance, December 31, 2022   31,621,242   $3,162   $39,000   $14,740,401   $(15,130,867)  $(348,304)

  

The accompanying notes are an integral part of these consolidated financial statements.

 

F-6

 

  

US NUCLEAR CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

 

   2022   2021 
         
OPERATING ACTIVITIES        
Net loss  $(2,042,795)  $(1,876,684)
Adjustment to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   3,218    2,571 
Bad debt expense   
-
    11,000 
Issuance of common stock for services   267,246    673,617 
Expenses paid directly by majority shareholder   
-
    87,410 
Operating lease expense   
-
    55,079 
Amortization of debt discounts   482,852    
-
 
Forgiveness of PPP Loan   
-
    (329,018)
Finance costs   8,750    
-
 
Equity loss in investment   
-
    835,462 
Write-down of investments   
-
    
-
 
Changes in operating assets and liabilities:          
Accounts receivable   (166,281)   80,625 
Inventories   (232,352)   (474,625)
Prepaid expenses and other current assets   (12,620)   
-
 
Accounts payable   8,539    30,882 
Accounts payable - related parties   151,500    128,500 
Accrued liabilities   115,532    322,203 
Accrued compensation - officers   105,000    160,000 
Customer deposits   (12,648)   (92,969)
Operating lease liability   
-
    (55,079)
Net cash used in operating activities   (1,324,059)   (441,026)
           
INVESTING ACTIVITIES          
Purchase of property and equipment   
-
    (6,446)
Payment of acquisition deposit   
-
    (15,000)
Cash paid for investment   
-
    
-
 
Net cash used in investing activities   
-
    (21,446)
           
FINANCING ACTIVITIES          
Net borrowings (repayments) under lines of credit   26,149    119,600 
Proceeds from sale of common stock   
-
    100,000 
Proceeds from notes payable   
-
    221,431 
Repayments for notes payable   (37,217)   (4,546)
Proceeds from convertible notes payable   916,500    
-
 
Proceeds from note payable to shareholder   304,633    608,010 
Repayments for note payable to shareholder   (6,214)   (563,010)
           
Net cash provided by (used in) financing activities   1,203,851    481,485 
           
NET INCREASE (DECREASE) IN CASH   (120,208)   19,013 
           
CASH          
Beginning of period   246,317    227,304 
End of period  $126,109   $246,317 
           
Supplemental disclosures of cash flow information          
Taxes paid  $
-
   $
-
 
Interest paid  $11,973   $11,001 
Non-Cash investing and financing activities          
Beneficial conversion feature on down-round provision  $239,044   $
-
 
Common shares issued for future services  $39,000    135,859 
Deemed dividend on down round provision  $17,924   $52,861 
Common stock issued for conversion of convertible debt and accrued interest  $260,000   $
-
 
Original issue debt discount  $751,026   $
-
 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-7

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

 

Note 1 – Organization and Basis of Presentation

 

Organization and Line of Business

  

US Nuclear Corp., formerly known as APEX 3, Inc., (the “Company” or “US Nuclear”) was incorporated under the laws of the State of Delaware on February 14, 2012.

 

On May 31, 2016, the Company entered into an Asset Purchase Agreement with Electronic Control Concepts (“ECC”) whereby the Company purchased certain tangible and intangible assets of ECC.

 

The Company is engaged in developing, manufacturing and selling radiation detection and measuring equipment. The Company markets and sells its products to consumers throughout the world.

 

Basis of Presentation

 

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company recorded a net loss of $2,042,795 for the year ended December 31, 2022 and had an accumulated deficit of $15,130,867 as of December 31, 2022, which raises substantial doubt about its ability to continue as a going concern. 

 

The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has plans to seek additional capital through some private placement offerings of debt and equity securities. These plans, if successful, will mitigate the factors which raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty. 

 

Note 2 – Summary of Significant Accounting Policies

 

Principles of Consolidation 

 

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Cali From Above, LLC, and Optron and its wholly-owned subsidiary, Overhoff Technology Corporation (“Overhoff”), and its wholly-owned subsidiary, Electronic Control Concepts (“ECC”), have been prepared in conformity with accounting principles generally accepted in the United States of America. All significant intercompany transactions and balances have been eliminated.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. It is possible that accounting estimates and assumptions may be material to the Company due to the levels of subjectivity and judgment involved.

 

F-8

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

 

Cash and Cash Equivalents

 

Cash and cash equivalents include cash on hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. There were no cash equivalents as of December 31, 2022 and 2021.

 

Concentration of Credit Risk

 

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and cash equivalents. The Company places its cash with high quality financial institutions and at times may exceed the FDIC insurance limit. The Company has not and does not anticipate incurring any losses related to this credit risk. 

 

Accounts Receivable

 

The Company maintains reserves for potential credit losses for accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.  Reserves are recorded based on the Company’s historical collection history. Allowance for doubtful accounts as of December 31, 2022 and 2021 were $5,000 and $16,000, respectively.

 

Inventories

 

Inventories are valued at the lower of cost (determined primarily by the average cost method) or net realizable value. Management compares the cost of inventories with the net realizable value and allowance is made for writing down their inventories to net realizable value, if lower. As of December 31, 2022 and 2021, there was no allowance for slow moving or obsolete inventory. The Company periodically assessed its inventory for slow moving and/or obsolete items. If any are identified an appropriate allowance for those items is made and/or the items are deemed to be impaired.

 

F-9

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

 

Property and Equipment

 

Property and Equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When equipment is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of equipment is provided using the straight-line method for substantially all assets with estimated lives as follows:

 

Furniture and fixtures 5 years
Leasehold improvement Lesser of lease life or economic life
Equipment 5 years
Computers and software 5 years

 

Long-Lived Assets

 

The Company applies the provisions of Accounting Standards Codification (“ASC”) Topic 360, Property, Plant, and Equipment, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. ASC 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal. Based on its review at December 31, 2022 and 2021, the Company believes there was no impairment of its long-lived assets.

 

Goodwill

 

Goodwill represents the excess of purchase price over the underlying net assets of businesses acquired. The entire goodwill balance in the accompanying financial statements resulted from the Company’s acquisition of Overhoff Technology Corporation in 2006. The Company complies with ASC 350, Goodwill and Other Indefinite Lived Intangible Assets, requiring that a test for impairment be performed at least annually. As of December 31, 2022 and 2021 the Company performed the required impairment analysis which resulted in no impairment adjustments. Although the Company experienced a significant decline in revenue due to the effects of COVID-19, management expects that it is more likely than not that its revenue and cost of goods sold will be more in-line with pre-COVID-19 levels in upcoming periods. Significant estimates used in the goodwill impairment analysis may change in the upcoming year if revenues do not rebound and cost of materials continue to increase.

 

Derivative Financial Instruments

 

The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. During the years ended December 31, 2022 and 2021, there were no derivative liabilities associated with our convertible notes payable.

 

F-10

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

 

Investments

 

The Company accounts for investments in equity securities without a readily determinable fair value at cost, minus impairment. If the Company identifies observable price changes in orderly transactions for the identical or a similar investment of the same issuer, the Company measures the equity security at fair value as of the date that the observable transaction occurred (“the measurement alternative”) in accordance with ASC 321. The Company accounts for investments for which it owns 20% or more, but less than 50% on the equity method in accordance with ASC 323. 

 

Fair Value of Financial Instruments

 

For certain of the Company’s financial instruments, including cash, accounts receivable, accounts payable, accrued liabilities, customer deposits, and line of credit, the carrying amounts approximate their fair values due to their short maturities. In addition, the Company has a note payable to shareholder that the carrying amount also approximates fair value.

 

Revenue Recognition

 

Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), became effective for the Company on January 1, 2018. The Company’s revenue recognition disclosure reflects its updated accounting policies that are affected by this new standard. The Company applied the “modified retrospective” transition method for open contracts for the implementation of Topic 606. As sales are and have been primarily from the sale of products to customers, and the Company has no significant post-delivery obligations, this new standard did not result in a material recognition of revenue on the Company’s accompanying consolidated financial statements for the cumulative impact of applying this new standard. The Company made no adjustments to its previously-reported total revenues, as those periods continue to be presented in accordance with its historical accounting practices under Topic 605, Revenue Recognition.

 

Revenue from the product sales is recognized under Topic 606 in a manner that reasonably reflects the delivery of its products to customers in return for expected consideration and includes the following elements:

 

  ● executed contracts with the Company’s customers that it believes are legally enforceable;

 

  ● identification of performance obligations in the respective contract;

 

  ● determination of the transaction price for each performance obligation in the respective contract;

 

  ● allocation the transaction price to each performance obligation; and

 

  ● recognition of revenue only when the Company satisfies each performance obligation.

 

These five elements, as applied to each of the Company’s revenue category, is summarized below:

 

  ● Product sales - revenue is recognized when the Company performs its obligations under the contracts it has with its customers to deliver products at an agreed upon price and it is generally when the control of the product has been transferred to the customer.

 

Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as customer deposits.

 

F-11

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

 

Sales returns and allowances was $0 and $0 for the years ended December 31, 2022 and 2021, respectively. The Company provides a one-year warranty on all sales. Warranty expense for the years ended December 31, 2022 and 2021 was insignificant. The Company does not provide unconditional right of return, price protection or any other concessions to its customers.

 

See Notes 11 and 12 for disclosures of revenue disaggregated by geographical area and product line.

 

Customer Deposits

 

Customer deposits represent cash paid to the Company by customers before the product has been completed and shipped.

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no effect on the Company’s consolidated financial statements.

 

Stock-Based Compensation

 

The Company records stock-based compensation in accordance with FASB ASC Topic 718,” Compensation – Stock Compensation.” FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees.

 

F-12

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

 

Basic and Diluted Earnings Per Share

 

Earnings per share is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS is based on the assumption that all dilutive convertible shares and stock warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. As of December 31, 2022 and 2021 there were 2,500,000 and 333,333 warrants outstanding, respectively, to purchase shares of common stock. Basic and diluted earnings per share are the same during the years ended December 31, 2022 and 2021 due to the net loss incurred. As of December 31, 2022, the number of potentially dilutive shares issuable on our convertible notes and accrued interest was 6,430,544.

 

Segment Reporting

 

FASB ASC Topic 280, Segment Reporting, requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company determined it has two reportable segments. See Note 11. 

 

Related Parties

 

The Company accounts for related party transactions in accordance with ASC 850, Related Party Disclosures. A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

 

Reclassifications

 

Certain prior period amounts were reclassified to conform to the manner of presentation in the current period. These reclassifications had no effect on the net loss or shareholders’ equity.

 

Recent Accounting Pronouncements    

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 was issued to improve financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in scope. The new standard represents significant changes to accounting for credit losses.  Full lifetime expected credit losses will be recognized upon initial recognition of an asset in scope.  The current incurred loss impairment model that recognizes losses when a probable threshold is met will be replaced with the expected credit loss impairment method without recognition threshold.  The expected credit losses estimate will be based upon historical information, current conditions, and reasonable and supportable forecasts.  This ASU as amended by ASU 2019-10, is effective for fiscal years beginning after December 15, 2022.  The Company is currently evaluating the effect of this ASU on the Company’s consolidated financial statements and related disclosures.

 

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes which amends ASC 740 Income Taxes (ASC 740). This update is intended to simplify accounting for income taxes by removing certain exceptions to the general principles in ASC 740 and amending existing guidance to improve consistent application of ASC 740. This update is effective for fiscal years beginning after December 15, 2021.  The guidance in this update has various elements, some of which are applied on a prospective basis and others on a retrospective basis with earlier application permitted.  The adoption had no effect on the Company’s consolidated financial statements and related disclosures.

 

F-13

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

 

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and clarify the scope and certain requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contract in entity’s own equity. ASU 2020-06 is effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company is currently evaluation the impact this ASU will have on its consolidated financial statements.

 

Note 3 – Inventories

 

Inventory at December 31, 2022 and 2021 consisted of the following:

 

   2022   2021 
Raw materials  $1,244,880   $972,759 
Work in Progress   409,637    157,024 
Finished goods   370,127    662,529 
Total inventories  $2,024,664   $1,792,312 

 

At December 31, 2022 and 2021 the inventory reserve was $0.

 

Note 4 – Property and Equipment

 

The following are the details of property and equipment at December 31, 2022 and 2021:

 

   2022   2021 
Furniture and fixtures  $148,033   $148,033 
Leasehold Improvements   50,091    50,091 
Equipment   237,418    237,418 
Computers and software   39,482    39,482 
    475,024    475,024 
Less accumulated depreciation   (468,523)   (465,305)
Property and equipment, net  $6,501   $9,719 

 

Depreciation expense for the years ended December 31, 2022 and 2021 was $3,218 and $2,571, respectively. At December 31, 2022 and 2021, the Company had $440,628 of fully depreciated property and equipment that is still in use.

 

F-14

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

 

Note 5 – Investments

 

MIFTEC

 

On August 3, 2018, the Company closed an agreement by and among, MIFTEC Laboratories, Inc. (“MIFTEC”), a licensee of Magneto-Inertial Fusion Technologies, Inc., (“MIFTI”), and the Company. MIFTEC is a licensee of MIFTI radionuclide technology. MIFTEC will engage the Company to manufacture equipment pursuant to MIFTEC’s specifications and designs and have the Company as a sales representative for the manufactured equipment. The Company will be the exclusive manufacturer and supplier to MIFTEC of equipment in North America and Asia. In addition, the Company received a 10% ownership interest in MIFTEC. The consideration for the exclusive manufacturing rights and a 10% ownership interest in MIFTEC was $500,000 and 300,000 shares of the Company’s common stock valued at $594,000. The fair value was determined based on the Company’s stock price on August 3, 2018. The Company recorded the value of the 10% interest in MIFTEC at $10,000 and recorded $1,084,000 as the acquisition of manufacturing and supply rights in the accompanying consolidated statement of operations during the year ended December 31, 2018. The Company evaluated this investment for impairment and determined that an impairment of $9,000 was necessary during the year ended December 31, 2019. The carrying value of this investment at December 31, 2022 and 2021 was $1,000 and $1,000, respectively.

 

MIFTI

 

In April 2019, the Company also entered into a Cooperative Agreement with MIFTI whereby the Company acquired certain exclusive manufacturing and supply rights, including thermonuclear fusion-powered reactor for production of electricity per MIFTI designs in return for $500,000, of which $100,000 is payable upon signing, $200,000 within four months of the agreement and $200,000 within nine months of the agreement. The $500,000 is an option to buy a 10% interest in MIFTI for $2,700,000, if completed with 24 months of the agreement date. If the option expires, MIFTI shall issue the Company 500,000 shares of common stock and rescind all other exclusive rights contained in the agreement. The option was rescinded and the Company received 500,000 shares of MIFTI common stock which represents an ownership of approximately 0.56% for its $500,000 investment. The Company evaluated this investment for impairment and determined that an impairment of $499,000 was necessary during the year ended December 31, 2019. The carrying value of this investment at December 31, 2022 and 2021 was $1,000 and $1,000, respectively.

 

Grapheton

 

On February 5, 2020, the Company entered into a Stock Purchase Agreement (“SPA”) with Grapheton, Inc., a California corporation (“Grapheton”). The transaction was closed on March 12, 2020. Grapheton is a start-up company that focuses on building energy storage devises, known as supercapacitors, from a new material system. The technology utilized by Grapheton has been proven to provide a compelling advantage in microelectrode arrays with superior electrical and electrochemical properties.

 

Pursuant to the terms of the SPA, the Corporation will acquire a total of 2,552 shares of Grapheton’s common stock over a two-year period. At closing, the Company was issued at total of 1,452 shares of Grapheton’s common stock for $235,000 and 858,896 shares of the Company’s common stock valued at $601,227.

 

In connection with the SPA, during the second quarter of 2021 the Company received an additional 1,100 shares of Grapheton’s common stock in exchange for the Company’s issuing an additional 1,121,071 shares of common stock valued at $633,405. In addition, Grapheton fulfilled its requirements under the earn out provision and the Company is obligated to make the first earn out payment of $192,500. This amount is recorded as accrued expense in the accompanying consolidated balance sheet.

 

An additional “true up” issuance of the Company’s common stock to Grapheton may be made on the second anniversary of the closing of the SPA, based on the valuation of the Company’s common stock on that date by a third-party valuator.

 

The Company currently owns 35.8% of Grapheton and accounts for its investment in Grapheton using the equity method of accounting is in accordance with ASC 323.

 

F-15

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

 

Information regarding Grapheton as of and for the year ended December 31, 2022 is below:

 

Current assets  $17,396 
Total assets   25,691 
Current liabilities   593,333 
Total liabilities   593,333 
Total stockholders’ equity   (567,642)
      
Revenue  $- 
Operating expenses   (760,257)
Other expenses   (246,154)
Net loss   (1,006,411)

 

The Company evaluated this investment and recorded a loss attributed to equity investment of $0 during the year ended December 31, 2022. The carrying value of this investment at December 31, 2022 was $8,059. 

 

Note 6 – Notes Payable

 

In connection with the acquisition of assets from ECC the Company issued a note payable to the owner of ECC. The note accrued interest at 5% per annum, requires quarterly principal and interest payments of $4,518 and is due on April 15, 2021. At December 31, 2022 and 2021, the amount outstanding under this note payable was $5,272 and $5,272, respectively.   The Company was in default on payment of the note payable as of December 31, 2022. The Company has communicated with the debt holder, and the amount is considered payable on demand as of December 31, 2022.

 

In June 2020 the Company received a loan under the Paycheck Protection Program of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act for $107,587.  The loan has terms of 24 months and accrues interest at 1% per annum. In February of 2021, the Company received two additional loans totaling $221,431 under the Paycheck Protection Program of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. As of December 31, 2021, the Company has had these loans forgiven in the amount of $329,018 as provided by the CARES Act. 

 

On December 26, 2020, a line of credit held by the company had matured, and based on the terms of the line of credit agreement was converted to a note payable upon demand. The obligation accrues interest at the rate of $10.89 per day until the bank receives full payment. As of December 31, 2022, the balance owed by the Company was $4,302.

 

On May 5, 2022, the Company received a loan in connection with the issuance of stock warrants in the amount of $750,000. The loan has terms of 12 months and accrues interest at 5% per annum. As part of the issuance of the loan, the company identified debt discounts related to the warrants issued, the incentive shares issued as discussed at Note 10, the beneficial conversion feature of the debt, and the expenses paid as part of the issuance. The total debt discounts recorded as of the date of the note was $550,538. At December 31, 2022 and pursuant to the down-round provision of the note and associated warrants, the Company reevaluated the beneficial conversion feature which resulted in additional debt discount recorded of $183,422.

 

On October 10, 2022, the Company received a loan in connection with the issuance of stock warrants in the amount of $375,000. The loan has terms of 12 months and accrues interest at 5% per annum. As part of the issuance of the loan, the company identified debt discounts related to the warrants issued, the beneficial conversion feature of the debt, and the expenses paid as part of the issuance. The total debt discounts recorded as of the date of the note was $200,488. At December 31, 2022 and pursuant to the down-round provision of the note and associated warrants, the Company reevaluated the beneficial conversion feature recorded which resulted in additional debt discount recorded of $30,304.

 

The total debt discount amortization recorded on the Company’s notes for the twelve months ended December 31, 2022 was $482,852.

 

Future maturities of all notes payable as of December 31, 2022, are as follows: 

 

Years Ending December 31,    
2023   904,427 
2024   
-
 
2025   
-
 
2026   
-
 
2027   
-
 
Thereafter   
-
 
   $904,427 

 

F-16

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

 

Note 7 – Note Payable to Shareholder

 

Robert Goldstein, the CEO and majority shareholder, has loaned funds to the Company from time to time to cover general operating expenses. These loans are evidenced by unsecured, non-interest-bearing demand notes payable. During the year ended December 31, 2021, the Company’s majority shareholder paid expenses on behalf of the Company of $87,410 and loaned an additional $45,000 to the Company. During the year ended December 31, 2022, the Company’s majority shareholder loaned an additional $304,633 to the Company and was repaid $6,214.  The amounts due to Mr. Goldstein are $874,679 and $576,260 as of December 31, 2022 and 2021, respectively

 

Note 8 – Line of Credit 

 

As of December 31, 2022, the Company had four lines of credit with a maximum borrowing amount of $400,000 with interest ranging from 5.5% to 11.5%. As of December 31, 2022 and 2021, the amounts outstanding under these lines of credit were $307,321 and $285,474, respectively.

 

Note 9 – Leases

 

The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company must discount lease payments based on an estimate of its incremental borrowing rate which is based on the interest rate of similar debt outstanding.

 

The Company leases its current facilities from Gold Team Inc., a company owned by the Company’s CEO, which owns both the Canoga Park, CA and Milford, Ohio locations. The leases expired on April 30, 2020 and the Company exercised its renewal option for an additional 12 months. The new lease is not more than 12 months; therefore, the disclosures under ASC 842 are not required. Future minimum lease payments under this agreement for the twelve months ending December 31, 2023 is $168,000. Effective January 1, 2019, the Company adopted the provision of ASC 842 Leases.

 

F-17

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

 

The lease expense for the years ended December 31, 2022 and 2021 was $168,000 and $168,000, respectively. The cash paid under operating leases during the years ended December 31, 2022 and 2021 was $16,500 and $42,000, respectively. At December 31, 2022, $280,000 has been accrued and is shown on the balance sheet as accounts payable- related party. At December 31, 2022, the weighted average remaining lease terms were 0.3 years and the weighted average discount rate was 8%.

 

Note 10 – Shareholders’ Equity

 

Common stock

 

During the year ended December 31, 2022, the Company issued:

 

  ● 625,000 shares of common stock valued at $100,019 in relation to the debt that was obtained;

 

  ● 1,600,000 shares of common stock valued at $260,000 in satisfaction of convertible debt and interest;
     
  ● 1,043,027 shares of common stock to consultants for services rendered valued at $236,970; of which $39,000 is recorded as shares to be issued. Pursuant to ASC 718 the company has allocated a portion of stock-based compensation to prepaid expenses until the services are provided to the Company. The amount allocated to prepaid expense at December 31, 2022 is $9,750. The fair value was determined based on the Company’s stock price on the grant date.

 

During the year ended December 31, 2021, the Company issued:

 

  ● 1,252,300 shares of common stock to consultants for services rendered valued at $737,738. The fair value was determined based on the Company’s stock price on the grant date;

 

  ● 250,000 shares of common stock for cash; and

 

  ● 1,121,071 shares of common stock for an investment in Grapheton valued at $633,405. The fair value was determined based on the Company’s stock price on the grant date.

 

F-18

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

 

Warrants

 

The following table summarizes the activity related to warrants:

 

           Weighted     
       Weighted   Average     
       Average   Remaining   Aggregate 
   Warrants   Exercise   Contractual   Intrinsic 
   Outstanding   Price   Life   Value 
Outstanding, December 31, 2020   333,333   $0.40    1.50   $
      -
 
Granted   
-
                
Forfeited   
-
                
Exercised   
-
                
Outstanding, December 31, 2021   333,333   $0.36    0.90   $
-
 
Granted   2,500,000   $0.14    3.00   $
-
 
Forfeited   (333,333)               
Exercised   
-
                
Outstanding, December 31, 2022   2,500,000   $0.14    2.56   $
-
 
Exercisable, December 31, 2022   2,500,000   $0.14    2.56   $
-
 

 

The above warrants contain a down round provision that requires the exercise price to be adjusted if the Company sells shares of common stock below the current exercise price. During the twelve months ended December 31, 2022, the Company issued shares of common stock for $0.14 therefore, the exercise price of these warrants was adjusted from $0.75 and $0.475 to $0.14 pursuant to the down-round provision in the warrant agreement.  The change in fair value between the value of the warrants using the new exercise price versus the old exercise price was calculated to be $17,924. This amount is recorded as a deemed dividend in the accompanying consolidated financial statements during the year ended December 31, 2022.

 

The following table summarizes information about options outstanding and exercisable as of December 31, 2022

 

Outstanding and Exercisable 
Number of Warrants   Exercise Price 
 2,500,000   $0.14 
 2,500,000      

 

Note 11 – Segment Reporting

 

ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company has two reportable segments: Optron and Overhoff. Optron is located in Canoga Park, California and Overhoff is located in Milford, Ohio. The assets and operations of the Company’s recent acquisition of the assets of Electronic Control Concepts are included with Overhoff in the table below. The assets and operations of the Company’s newest subsidiary, Cali From Above are included with Optron in the table below.

 

F-19

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

 

The following tables summarize the Company’s segment information for the years ended December 31, 2022 and 2021:

 

   Years Ended
December 31,		 
   2022   2021 
Sales        
Optron  $220,368   $482,582 
Overhoff   1,870,998    1,655,025 
Corporate   
-
    
-
 
   $2,091,366   $2,137,607 
           
Gross profit          
Optron  $(547,531)  $101,447 
Overhoff   1,335,599    1,275,205 
Corporate   
-
    
-
 
   $788,068   $1,376,652 
           
Income (loss) from operations          
Optron  $(1,484,631)  $(799,837)
Overhoff   486,382    264,763 
Corporate   (497,782)   (1,757,739)
   $(1,496,031)  $(1,876,684)
Interest Expenses          
Optron  $21,725   $10,076 
Overhoff   6,545    
-
 
Corporate   35,643    925 
   $63,912   $11,001 
           
Net income (loss)          
Optron  $(1,506,356)  $(799,837)
Overhoff   479,837    680,892 
Corporate   (1,016,275)   (1,763,901)
   $(2,042,794)  $(1,882,846)

 

   As of December 31, 
   2022   2021 
Total Assets        
Optron  $1,021,817   $1,027,669 
Overhoff   2,037,988    1,754,485 
Corporate   48,932    69,032 
   $3,108,737   $2,851,186 
           
Goodwill          
Optron  $
-
   $
-
 
Overhoff   570,176    570,176 
Corporate   
-
    
-
 
   $570,176   $570,176 

 

F-20

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

 

Note 12 – Geographical Sales  

 

The geographical distribution of the Company’s sales for the years ended December 31, 2022 and 2021 is as follows:

 

   2022   2021 
Geographical sales        
North America  $1,535,671   $1,522,412 
Asia   523,434    473,157 
South America   5,475    4,932 
Other   26,786    137,106 
   $2,091,366   $2,137,607 

 

Note 13 – Income Taxes  

 

At December 31, 2022 and 2021, the significant components of the deferred tax assets are summarized below:

 

   2022   2021 
         
Approximate net operating loss carry forwards  $12,649,000   $10,605,000 
           
Deferred tax assets:          
Federal net operating loss  $2,031,310   $1,602,310 
State net operating loss   846,270    723,270 
Tax credit   49,740    49,740 
Goodwill   (148,373)   (148,373)
Total deferred tax assets   2,778,947    2,226,947 
Less valuation allowance   (2,778,947)   (2,226,947)
   $
-
   $
-
 

 

The valuation allowance increased by $552,000 and $526,103 in 2022 and 2021, respectively, due to the Company generating additional net operating losses. The Company’s remaining tax credit carryforwards of $49,740 begin to expire in 2027 and its net operating loss carryforward of approximately $12,649,000 begin to expire in 2027.

 

Income tax expense reflected in the consolidated statements of income consist of the following for 2022 and 2021:

 

   2022   2021 
Current          
Federal  $     -   $     - 
State   -    - 
    -    - 
Deferred          
Federal   -    - 
State   -    - 
    -    - 
Income tax expense  $-   $- 

 

F-21

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

 

The reconciliation of the effective income tax rate to the federal statutory rate for the years ended December 31, 2022 and 2021 is as follows:

 

   2022   2021 
         
Federal income tax rate   21.0%   21.0%
State tax, net of federal benefit   6.0%   6.0%
Net operating losses   -16.7%   -16.7%
Permanent differences   -10.6%   -10.6%
Amortization of goodwill   0.3%   0.3%
Effective income tax rate   0.0%   0.0%

 

The Company files income tax returns in the U.S. federal jurisdiction, and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2019.

 

The Company periodically evaluates the likelihood of the realization of deferred tax assets, and adjusts the carrying amount of the deferred tax assets by the valuation allowance to the extent the future realization of the deferred tax assets is not judged to be more likely than not. The Company considers many factors when assessing the likelihood of future realization of its deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future taxable income or loss, the carryforward periods available to the Company for tax reporting purposes, and other relevant factors.

 

Future changes in the unrecognized tax benefit will have no impact on the effective tax rate due to the existence of the valuation allowance. The Company estimates that the unrecognized tax benefit will not change significantly within the next twelve months. The Company will continue to classify income tax penalties and interest as part of general and administrative expense in its consolidated statements of operations. There were no interest or penalties accrued as of December 31, 2022 and 2021.

 

Note 14 – Related Party Transactions  

 

The Company leases its current facilities from Gold Team Inc., a company owned by the Company’s CEO, which owns both the Canoga Park, CA and Milford, Ohio locations. Rent expense for the year ended December 31, 2022 and 2021 were $168,000 and $168,000, respectively. As of December 31, 2022 and 2021, the payable to Gold Team Inc. in connection with the above leases was to $280,000 and $128,500, respectively. (See Note 9).

 

F-22

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021

 

As of December 31, 2022 and 2021, the Company had accrued compensation payable to its majority shareholder of $695,000 and $590,000, respectively.

 

During the year ended, December 31, 2021, the company issued 242,823 shares of common stock to Richard Landry in connection with the consulting services agreement entered by and between US Nuclear Corp and Richard Landry.

 

Also see Note 7. 

 

Note 15 – Concentrations  

 

For the year ended December 31, 2022, two customers accounted for more than 10% of the Company sales, 42.3% and 13.61%, respectively. At December 31, 2022 two customers accounted for more than 10% of the accounts receivable balance, 55.5% and 28.4%, respectively.

 

For the year ended December 31, 2021, two customers accounted for more than 10% of the Company sales, 30.7% and 15.2%, respectively. At December 31, 2021 two customers accounted for more than 10% of the accounts receivable balance, 23.9% and 15%, respectively.

 

No vendors accounted for more than 10% of the Company’s purchases for the years ended December 31, 2022 and 2021.

 

Note 16 – Subsequent Events

 

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date the financial statements were available to be issued and has determined that no material subsequent events exist other than the following:

 

On January 9, 2023, the Company issued 100,000 shares of common stock to a consultant. The shares were valued at their fair value on the date of grant, which is $11,100 or $0.111 per share.

 

On January 19, 2023, the Company issued 400,000 shares in satisfaction of principle, accrued interest, and fees on convertible debt. The value of the shares issued was $60,000 or $0.15 per share.

 

On January 23, the Company issued an aggregate of 260,000 shares to consultants as compensation for investor relations services. The shares were valued at their fair value on the date of grant, which was $37,960 or $0.146 per share.

 

On February 23, the Company issued 400,000 shares in satisfaction of principle, accrued interest, and fees on convertible debt. The value of the shares issued was $60,000 or $0.15 per share.

 

On February 24, the Company issued 200,000 shares of common stock to a consultant. The shares were valued at their fair value on the date of grant, which was $29,200 or $0.146 per share.

 

Effective March 3, 2023, the Company entered into a Membership Unit Purchase Agreement whereby the Company transferred, assigned, and conveyed the capital account of its wholly-owned subsidiary Cali From Above, in exchange for 65,000,000 shares of INNOVATION NATION, INC., a Nevada Corporation, owned and held by Robert Goldstein. As a result, the Company has divested itself of its ownership of Cali From Above and the Company now holds a 26% interest in Innovation Nation, an OTC reporting company under the symbol (OTC:AVRI).

 

On March 14, 2023, the Company issued an aggregate of 1,500,000 shares of common stock to our Board members. The shares were valued at their fair value on the date of grant, which was $175,500 or $0.117 per share.

 

On March 31, 2023, the Company issued 75,000 shares of common stock to a consultant. The shares were valued at their fair value on the date of grant, which was $8,550 or $0.114 per share.

 

On April 11, 2023, the Company issued 771,845 shares of common stock, by cashless exercise, pursuant to a Warrant Agreement associated with a convertible note payable entered into on May 5, 2022.

 

F-23

 

 

15(a)(2). Financial Statement Schedules.

 

None.

 

15(a)(3). Exhibits.

 

            Incorporated by reference
Exhibit   Exhibit Description   Filed herewith   Form   Period ending   Exhibit   Filing date
                         
3.1   Certificate of Incorporation       10       3.1   02/14/2012
3.2   By-Laws       10       3.2   02/14/2012
3.3   Amendment to Certificate of Incorporation       8-K       3.3   05/29/2012
4.1   Specimen Stock Certificate       10       4.1   02/14/2012
4.2   Description of Securities   X                
10.1   Robert I. Goldstein Employment Agreement       10-Q       10.1   11/11/2014
10.2   Forgiveness of Debt and Conversion Agreement       10-Q       10.2   11/11/2014
23.2   Consent of Independent Auditor   X          
31.1   Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002   X                
31.2   Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002   X                
32.1   Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   X                
32.2   Certification pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002   X                
                         
101.INS   Inline XBRL Instance Document   X                
101.SCH   Inline XBRL Taxonomy Extension Schema Document   X                
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document   X                
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document   X                
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document   X                
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document   X                
104   Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)   X                

 

32

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: May 11, 2023 US Nuclear Corp.
     
  By: /s/ Robert I. Goldstein
    Robert I. Goldstein
   

President, Chief Executive Officer,

Chairman of the Board of Directors

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Date: May 11, 2023 US Nuclear Corp
     
  By: /s/ Richard Landry
    Chief Financial Officer

 

 

33

 

 

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