10-Q - UCLE - Equibles

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended JUNE 30, 2022

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

Commission file number: 000-54617

(Exact name of registrant as specified in its charter)

Delaware	45-4535739

| State or other jurisdiction of | (I.R.S. Employer |

| Incorporation or organization | Identification No.) |

7051 Eton Avenue

Canoga Park, CA 91303

(Address of principal executive offices)

(818) 883-7043

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ 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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting 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 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

The number of shares of the Registrant’s common stock outstanding as of September 26, 2022 was 29,764,020.

TABLE OF CONTENTS

PART I		1
Item 1.	Financial Statements (Unaudited)	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22
PART II		23
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	23
Item 4.	Mine Safety Disclosures	23
Item 5.	Other Information	23
Item 6.	Exhibits	24
	Signatures	25

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

US NUCLEAR CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

			December 31,
			2021
			(audited)
ASSETS
CURRENT ASSETS
Cash	420,907		$	246,317
Accounts receivable, net	87,448			163,577
Inventories	1,904,154			1,792,312
Prepaid expenses and other current assets	9,079			44,026
TOTAL CURRENT ASSETS	2,421,588			2,246,232
Property and equipment, net	7,584			9,719
Investments	10,059			10,059
Acquisition deposit	15,000			15,000
Goodwill	570,176			570,176
TOTAL ASSETS	3,024,407		$	2,851,186
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	76,931		$	91,859
Accounts payable - related party	198,500			128,500
Accrued liabilities	586,886			587,941
Accrued compensation - officers	690,000			590,000
Customer deposit	86,904			101,342
Note payable	20,613			48,541
Convertible debt, net of debt discount	291,218			-
Note payable to shareholder	850,260			576,260
Line of credit	305,965			285,474
TOTAL CURRENT LIABILITIES	3,107,277			2,409,917
TOTAL LIABILITIES	3,107,277			2,409,917
SHAREHOLDERS’ EQUITY:
Common stock, 0.0001 par value; 100,000,000 shares authorized, 29,414,020 and 28,353,215 shares issued and outstanding	2,941			2,836
Additional paid in capital	14,009,910			13,508,581
Accumulated deficit	(14,095,721	)		(13,070,148	)
TOTAL SHAREHOLDERS’ EQUITY	(82,870	)		441,269
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	3,024,407		$	2,851,186

All values are in US Dollars.

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

US NUCLEAR CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Sales	$	582,568		$	352,558		$	922,083		$	770,382
Cost of sales		319,814			196,702			432,052			413,354
Gross profit		262,754			155,856			490,031			357,028
Operating expenses
Selling, general and administrative expenses		534,753			620,854			1,408,256			1,481,005
Total operating expenses		534,753			620,854			1,408,256			1,481,005
Loss from operations		(271,999	)		(464,998	)		(918,225	)		(1,123,977	)
Other income (expense)
Interest expense		(2,523	)		(4,033	)		(5,940	)		(6,856	)
Equity loss in investment		-			(813,281	)		-			(815,040	)
Amortization of debt discount		(91,756	)		-			(91,756	)		-
Total other income (expense)		(94,279	)		(817,314	)		(97,696	)		(821,896	)
Loss before provision for income taxes		(366,278	)		(1,282,312	)		(1,015,921	)		(1,945,873	)
Provision for income taxes		-			-			-			-
Net loss	$	(366,278	)	$	(1,282,312	)	$	(1,015,921	)	$	(1,945,873	)
Deemed dividend for downround provision in warrants		(9,652	)		(52,861	)		(9,652	)		(52,861	)
Net loss attributed to common stockholders	$	(375,930	)	$	(1,335,173	)	$	(1,025,573	)	$	(1,998,734	)
Weighted average shares outstanding - basic and diluted		28,864,350			27,526,920			28,627,598			26,645,215
Loss per shares - basic and diluted	$	(0.01	)	$	(0.05	)	$	(0.04	)	$	(0.08	)

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

US NUCLEAR CORP. ANDSUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OFCHANGES IN SHAREHOLDERS’ EQUITY

(unaudited)

					Additional					Total
	Common Stock				Paid-in		Accumulated			Shareholders’
	Shares		Amount		Capital		Deficit			Equity
Balance, December 31, 2021		28,353,215	$	2,835	$	13,508,582	$	(13,070,148	)	$	441,269
Issuance of common stock for services		75,000		8		22,492					22,500
Net loss								(649,643	)		(649,643	)
Balance, March 31, 2022		28,428,215	$	2,843	$	13,531,074	$	(13,719,791	)	$	(185,874	)
Issuance of common stock for loan incentive		625,000		62		99,957					100,019
Issuance of common stock for services		360,805		36		57,709					57,745
Convertible note, net of debt discounts						311,519					311,519
Deemed dividend for downround provision in warrants						9,652		(9,652	)		-
Net loss								(366,278	)		(366,278	)
Balance, June 30, 2022		29,414,020	$	2,941	$	14,009,910	$	(14,095,721	)	$	(82,870	)
Balance, December 31, 2020		25,724,844	$	2,572	$	11,985,191	$	(11,140,603	)	$	847,160
Issuance of common stock for services		592,300		60		378,778		-			378,838
Net loss		-		-		-		(663,561	)		(663,561	)
Balance, March 31, 2021		26,317,144		2,632		12,363,969		(11,804,164	)		562,437
Issuance of common stock for cash		250,000		25		99,975		-			100,000
Issuance of common stock for services		200,000		20		166,630		-			166,650
Issuance of common stock for investment		1,121,071		112		633,293		-			633,405
Deemed dividend for downround provision in warrants						52,861		(52,861	)		-
Net loss		-		-		-		(1,282,312	)		(1,282,312	)
Balance, June 30, 2021		27,888,215	$	2,789	$	13,316,728	$	(13,139,337	)	$	180,180

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

US NUCLEAR CORP. ANDSUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Six Months Ended
	June 30,
	2022			2021
OPERATING ACTIVITIES
Net loss	$	(1,015,921	)		)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		14,764
Issuance of common stock for services		120,271
Debt discount amortizartion		91,756
Expenses paid directly by majority shareholder		-
Operating lease expense		-
Equity loss in investment		-
Changes in operating assets and liabilities:
Accounts receivable		76,129
Inventories		(111,842	)		)
Prepaid		(5,079	)
Accounts payable		(14,928	)
Accounts payable related party		70,000
Accrued liabilities		(1,055	)
Accrued compensation - officers		100,000
Customer deposits		(14,438	)		)
Operating lease liability		-			)
Net cash used in operating activities		(690,344	)		)
INVESTING ACTIVITIES
Purchase of property and equipment		(12,629	)		)
Payment of acquisition deposit		-			)
Net cash used in investing activities		(12,629	)		)
FINANCING ACTIVITIES
Net borrowings (repayments) under lines of credit		20,491
Proceeds from the sale of common stock		-
Proceeds from issuance of note payable shareholder		274,000
Payments on notes payable		(27,928	)
Proceeds from issuance of debt		611,000
Net cash provided by financing activities		877,563
NET INCREASE (DECREASE) IN CASH		174,590
CASH
Beginning of period		246,317
End of period	$	420,907
Supplemental disclosures of cash flow information
Taxes paid	$	-
Interest paid	$	5,940
Original issue debt discount	$	550,538

All values are in US Dollars.

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

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(unaudited)

Note 1 - Organization

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.

Note 2 – Basis Presentation

Interim financial statements

The unaudited interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosure are adequate to make the information presented not misleading.

These statements reflect all adjustment, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2021 and notes thereto included in the Company’s annual report on Form 10-K filed on April 15, 2022. The Company follows the same accounting policies in the preparation of interim report. Results of operations for the interim period are not indicative of annual results.

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 $983,657 for the six months ended June 30, 2022 and had an accumulated deficit of $14,053,805 as of June 30, 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.

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 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.

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(unaudited)

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 June 30, 2022 and December 31, 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 June 30, 2022 and December 31, 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 June 30, 2022 and December 31, 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.

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 June 30, 2022 and December 31, 2021, the Company believes there was no impairment of its long-lived assets.

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(unaudited)

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 IndefiniteLived Intangible Assets, requiring that a test for impairment be performed at least annually. As of December 31, 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. As of June 30, 2022 and December 31, 2021, there are no derivative financial instruments as all convertible notes payable were converted into shares of the Company’s common stock during 2020.

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.

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(unaudited)

Revenue from the product sales are 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.

Sales returns and allowances was $0 for the six months ended June 30, 2022 and 2021. The Company provides a one-year warranty on all sales. Warranty expense for the six months ended June 30, 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.

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(unaudited)

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 assumes 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 June 30, 2022 and December 31, 2021 there were 333,333 and 333,333 warrants outstanding, respectively, to purchase shares of common. Basic and diluted earnings per share are the same during the six months ended June 30, 2022 and 2021 due to the net loss incurred.

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 stockholders’ equity.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. ASU 2016-02 and additional ASUs are now codified as Accounting Standards Codification Standard (“ASC”) 842 - Leases (“ASC 842”). ASC 842 supersedes the lease accounting guidance in ASC 840 Leases, and requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional disclosures about leasing arrangements. The Company adopted ASC 842 on January 1, 2019 and used the modified retrospective transition approach and did not restate its comparative periods. As of the date of implementation on January 1, 2019, the impact of the adoption of ASC 842 resulted in the recognition of a right of use asset and lease payable obligation on the Company’s consolidated balance sheets of $356,508. As the right of use asset and the lease payable obligation were the same upon adoption of ASC 842, there was no cumulative effect impact on the Company’s accumulated deficit.

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(unaudited)

In June 2016, the FASB issued ASU 2016-13, FinancialInstruments—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, Simplifyingthe 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 Company is currently evaluating the effect of this ASU 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 OwnEquity (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

Inventories at June 30, 2022 and December 31, 2021 consisted of the following:

****	June 30,		December 31,
****	2022		2021
Raw materials	$	1,013,338	$	972,759
Work in Progress		142,547		157,024
Finished goods		332,610		662,529
Total inventories	$	1,488,495	$	1,792,312

At June 30, 2022 and December 31, 2021 the inventory reserve was $0.

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(unaudited)

Note 4 – Property and Equipment

The following are the details of the property and equipment at June 30, 2022 and December 31, 2021:

****	June 30,		****	December 31,		****
****	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		(467,440	)		(465,305	)
Property and equipment, net	$	7,584		$	9,719

Depreciation expense for the six months ended June 30, 2022 and 2021 was $2,135 and $2,571 respectively. At June 30, 2022, the Company has $440,628 of fully depreciated property and equipment that is still in use.

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 June 30, 2022 and December 31, 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 options 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 June 30, 2021 and December 31, 2020 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.

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(unaudited)

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 accordance with ASC 323.

Information regarding Grapheton as of and for the six months ended June 30, 2022 is below:

Current assets	$	18,457
Total assets		18,457
Current liabilities		3,017
Total liabilities		3,017
Total stockholders’ equity	$	15,440
Revenue	$	-
Operating expenses		102,528
Other expenses		-
Net loss	$	102,528

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 June 30, 2022 and December 31, 2021, the amount outstanding under this note payable was $20,619 and $48,541, respectively. The Company repaid $0 during the six months ended June 30, 2022.

In June 2020 the Company received a loan under the Paycheck Protection Program (“PPP”) 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 addition, in February 2021, the Company received an additional $221,431 under the PPP loan program with the same terms as the June 2020 PPP loan. The Company expects some or all of this loan to be forgiven as provided by in 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 the date of the conversion, the amount owed by the Company was $43,269.

On May 5, 2022, the Company received a loan in connection with the issuance 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. The total debt discount amortization recorded for the six months ended June 30, 2022 was $91,756.

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(unaudited)

Future maturities of notes payable as of June 30, 2022 are as follows:

Years ended December 31,
2022	$	320,094
2023		-
2024		-
2025		-
2026		-
Thereafter		-
	$	320,094

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 notes due on December 31, 2022. During the three months ended June 30, 2022, the Company’s majority shareholder paid expenses on behalf of the Company of $0 and loaned an additional $274,000 to the Company. The amounts due to Mr. Goldstein are $850,260 and $576,260 as of June 30, 2022 and December 31, 2021, respectively.

Note 8 – Line of Credit

As of June 30, 2022, the Company had five lines of credit with a maximum borrowing amount of $350,000 with interest ranging from 5.5% to 11.5% and are unsecured. As of June 30, 2022 and December 31, 2021, the amounts outstanding under these lines of credit were $316,005 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, 2022 is $98,000. Effective January 1, 2019, the Company adopted the provision of ASC 842 Leases.

The lease expense for the three months ended June 30, 2022 and 2021 was $42,000 and $42,000, respectively. The cash paid under operating leases during the three months ended June 30, 2022 and 2021 was $0 and $0, respectively. At June 30, 2022, the weighted average remaining lease terms were 0.6 years and the weighted average discount rate was 8%

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(unaudited)

Note 10 – Shareholders’ Equity

Common Stock

During the six months ended June 30, 2022, the Company issued:

●	625,000 shares of common stock valued at $151,250 in relation to the debt that was obtained;
●	435,805 shares of common stock to consultants for services rendered valued at $80,245. The fair value was determined based on the Company’s stock price on the grant date; and
---	---

During the six months ended June 30, 2021, the Company issued:

●	558,295 shares of common stock to consultants for services rendered valued at $453,096. The fair value was determined based on the Company’s stock price on the grant date;
●	163,275 shares of common stock for convertible notes and accrued interest of $100,000 and $8,986; and
---	---
●	858,896 shares of common stock for an investment in Grapheton valued at $601,227. The fair value was determined based on the Company’s stock price on the grant date.
---	---

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, 2021		333,333	$	0.36		0.90	$	-
Granted		1,500,000		0.75		2.75
Forfeited		-
Exercised		-
Outstanding, June 30, 2022		1,833,333	$	0.68		2.41	$	-
Exercisable, June 30, 2022		1,833,333	$	0.15		0.40	$	36,667

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 six months ended June 30, 2022, the Company issued shares of common stock for $0.15 therefore, the exercise price of these warrants was adjusted from $0.36 to $0.15. 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 $9,652. This amount is recorded as a deemed dividend in the accompanying consolidated financial statements during the six months ended June 30, 2022

The following table summarizes information about warrants outstanding and exercisable as of June 30, 2022:

Outstanding and Exercisable
Number of		Exercise
Warrants		Price
	333,333	$	0.15
	1,500,000		0.75
	1,833,333

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(unaudited)

In May 2022, the Company issued new warrants to purchase up to 1,500,000 shares of common stock in conjunction with the loan described in Note 3. The exercise price of the warrants is $0.75 per share and they are exercisable through May 5, 2025.

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.

The following tables summarize the Company’s segment information for the three and six months ended June 30, 2022 and 2021:

	Three<br> Months Ended<br><br> June 30,						Six<br> Months Ended<br><br> June 30,
	2022			2021			2022			2021
Sales
Optron	$	22,176		$	89,009		$	79,213		$	111,825
Overhoff		560,349			263,549			842,870			658,557
Corporate		-			-			-			-
	$	582,525		$	352,558		$	922,083		$	770,382
Gross<br> profit
Optron	$	127		$	54,958		$	44,209		$	68,382
Overhoff		262,627			100,898			445,822			288,646
Corporate		-			-			-			-
	$	262,754		$	155,856		$	490,031		$	357,028
Income<br> (loss) from operations
Optron	$	(353,012	)	$	(167,915	)	$	(571,850	)	$	(362,408	)
Overhoff		193,058			(49,227	)		(122,294	)		(71,882	)
Corporate		(106,045	)		(247,856	)		(224,081	)		(689,687	)
	$	(265,999	)	$	(464,998	)	$	(918,225	)	$	(1,123,977	)
Interest<br> Expenses
Optron	$	1,411		$	2,389		$	3,856		$	5,212
Overhoff		1,112			1,644			2,084			1,644
Corporate		-			-			-			-
	$	2,523		$	4,033		$	5,940		$	6,856
Net<br> income (loss)
Optron	$	(348,423	)	$	(170,304	)	$	(563,706	)	$	(361,620	)
Overhoff		179,946			(50,871	)		(136,378	)		(79,526	)
Corporate		(349,051	)		(1,061,137	)		(415,856	)		(1,504,727	)
	$	(	)	$	(1,282,312	)	$	(1,115,940	)	$	(1,945,873	)

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(unaudited)

	As of<br> <br>June 30,<br> <br>2022		As of<br> <br>December 31,<br> <br>2021
Total Assets
Optron	$	1,030,968	$	1,027,669
Overhoff		1,915,639		1,754,485
Corporate		35,467		69,032
	$	2,982,074	$	2,851,186
Goodwill
Optron	$	-	$	-
Overhoff		570,176		570,176
Corporate		-		-
	$	570,176	$	570,176

Note 12 - Geographical Sales

The geographical distribution of the Company’s sales for the three and six months ended June 30, 2022 and 2021 is as follows:

	Three Months Ended June 30,				Six Months Ended<br><br> June 30,
	2022		2021		2022		2021
Geographical sales
North America	$	231,681	$	269,236	$	527,600	$	563,787
Asia		236,094		55,730		244,229		166,827
Other		113,875		27,592		15,212		39,768
	$	581,650	$	352,558	$	922,041	$	770,382

Note 13 – 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 six months ended June 30, 2022 and 2021 were $84,000 and $84,000, respectively. As of June 30, 2022 and December 31, 2021, payable to Gold Team Inc. in connection with the above leases amount to $0 and $0, respectively. (See Note 9) The lease expired on April 30, 2021 and is currently on a month-to-month basis.

In addition, as of June 30, 2022 and December 31, 2021, the Company had accrued compensation payable to its majority shareholder of $500,000 and $450,000, respectively.

Also see Note 7.

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(unaudited)

Note 14 – Concentrations

Two customers accounted for 35% and 25% of the Company’s sales for the six months ended June 30, 2022 and two customer accounted for 34% and 27% of the Company’s sales for the six months ended June 30, 2021.

No vendors accounted for more than 10% of the Company’s purchases for the six months ended June 30, 2022 and 2021.

Note 15 – 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:

During July 2022, the company issued 275,000 shares for services provided at the market prices as of the date of issuance for $55,250.

During August 2022, the Company issued 75,000 shares for services provided at the market price as of the date of issuance for $12,000

During September 2022, the company issued 200,000 shares for services provided at the market prices as of the date of issuance for $54,000.

Item 2. Management’s Discussion and Analysis of FinancialCondition and Results of Operations

The following Management’s Discussionand Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand US NuclearCorp, our operations and our present business environment. MD&A is provided as a supplement to—and should be read in conjunctionwith—our consolidated financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q. Theaudited financial statements for our fiscal year ended December 31, 2020 filed with the Securities Exchange Commission on Form 10-K onJuly 29, 2021 should be read in conjunction with the discussion below. This discussion contains forward-looking statements thatreflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements.In the opinion of management, all material adjustments necessary to present fairly the results ofoperations for such periods have been included in these unaudited financial 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.

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; however, in 2020 we derived 46.9% of our total revenues from sales made by Overhoff and Optron to one customer. 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 23% of our total revenue in 2020. We expect this to increase over time as we continue to field new orders inquires and engage new customers overseas. We believe that 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.

For the next twelve months, we anticipate we will need approximately $5,000,000 in additional capital to fund our business plans. If we do not raise the required capital we may not meet our expenses and there can be no assurance that we will be able to do so and if we do, we may find the cost of such financing to be burdensome on the Company. Additionally, we may not be able to execute on our business plans due to unforeseen market forces such as lower natural gas prices, difficulty attracting qualified executive staff, general downturn in our sector or by competition as we operate in an extremely competitive market for all of our product offerings.

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.

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.

On the one-year anniversary of the closing of the SPA, the Company shall receive an additional 1,100 shares of Grapheton’s common stock in exchange for shares of the Company’s common stock in an amount equal to $707,777, as valued by an independent third-party valuator.

Novel Coronavirus(COVID-19)

While we are still operating, our business has been and will continue to be adversely impacted by the effects of the Novel Coronavirus (COVID-19). In addition to global macroeconomic effects, the COVID-19 outbreak and any other related adverse public health developments will cause disruption to our operations and sales activities. Our third-party manufacturers, suppliers, third-party distributors, sub-contractors and customers have been and will be disrupted by worker absenteeism, quarantines and restrictions on our employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures, or other travel or health-related restrictions. Depending on the magnitude of such effects on our manufacturing, assembling, and testing activities or the operations of our suppliers, third-party distributors, or sub-contractors, our supply chain, manufacturing and product shipments will be delayed, which could adversely affect our business, operations and customer relationships. In addition, COVID-19 or other disease outbreak will in the short-run and may over the longer term adversely affect the economies and financial markets of many countries, resulting in an economic downturn that will affect demand for our products and impact our operating results. There can be no assurance that any decrease in sales resulting from COVID-19 will be offset by increased sales in subsequent periods. Although the magnitude of the impact of the COVID-19 outbreak on our business and operations remains uncertain, the continued spread of COVID-19 or the occurrence of other epidemics and the imposition of related public health measures and travel and business restrictions will adversely impact our business, financial condition, operating results and cash flows. In addition, we have experienced and will experience disruptions to our business operations resulting from quarantines, self-isolations, or other movement and restrictions on the ability of our employees to perform their jobs that may impact our ability to develop and design our products in a timely manner or meet required milestones or customer commitments.

Results of Operations

For the three months ended June 30, 2022 comparedto the three months ended June 30, 2021:

	Three Months Ended <br><br>June 30,
	2022			2021				%
Sales	$	582,525		$	352,558				65.2	%
Cost of goods sold		319,814			196,702				62.6	%
Gross profit		262,754			155,856				68.6	%
Selling, general and administrative expenses		534,753			620,854		)		-13.9	%
Loss from operations		(271,999	)		(464,998	)			-41.5	%
Other income (expense)		(194,298	)		(817,314	)			-76.2	%
Loss before provision for income taxes		(466,297	)		(1,282,312	)			-63.6	%
Provision for income taxes		-			-
Net loss	$	(466,297	)	$	(1,282,312	)			-63.6	%

All values are in US Dollars.

Sales for the three months ended June 30, 2022 were $582,525 compared to $352,558 for the same period in 2021. The increase of $230,010 or 65.2% is a result of an increase in sales from our Overhoff subsidiary of $296,800 and a decrease in sales from our Optron subsidiary of $66,833. The overall increase in sales is principally due to us starting to recover from the impact of COVID-19. The sales breakdown for the three months ended June 30, 2022 is as follows:

North America 39.8%

Asia (Including Japan) 40.6%

Other 19.6%

Our gross margins for the three months ended June 30, 2022 were 45.1% as compared to 44.2% for the same period in 2021. Gross margins were consistent for the three months ended June 30, 2022 as compared to the same period in 2021.

Selling, general and administrative expense for the three months ended June 30, 2022 were $534,753 compared to $620,854 for the same period in 2021. The decrease of $86,101 or 13.9% was principally due to a loan and was offset with a decrease in stock-based compensation in 2022. During the three months ended June 30, 2022, stock-based compensation was $57,745 compared to $166,650 during the same period in 2021.

Other expense for the three months ended June 30, 2022 was $1194,298 a decrease of $623,016 from other income of $817,314 for the same period in 2021. The decrease was due to an equity loss on investments in 2021 offset by a decrease the amortization of the debt discount associated with the convertible debenture and by the change in value of the derivative liability.

Net loss for the three months ended June 30, 2022 was $446,297 compared to $1,282,312 for the same period in 2021. The change was principally attributed to the factors described above.

For the six months ended June 30, 2022 comparedto the six months ended June 30, 2021:

	Six Months Ended<br><br>June 30,
	2022			2021				%
Sales	$	922,083		$	770,382				19.7	%
Cost of goods sold		432,052			413,354				4.5	%
Gross profit		490,031			357,028				37.3	%
Selling, general and administrative expenses		1,408,256			1,481,005		)		-4.9	%
Loss from operations		(918,225	)		(1,123,977	)			-18.3	%
Other expense		(197,715	)		(821,896	)			-75.9	%
Loss before provision for income taxes		(1,115,940	)		(1,945,873	)			-42.7	%
Provision for income taxes		-			-
Net loss	$	(1,115,940	)	$	(1,945,873	)			-42.7	%

All values are in US Dollars.

Sales for the six months ended June 30, 2022 were $922,083 compared to $770,382 for the same period in 2021. The increase of $151,701 or 19.7% is a result of an increase in sales from our Overhoff subsidiary of $184,313; offset by a decrease in sales from our Optron subsidiary of $32,655. The overall increase in sales is principally due to us starting to recover from the impact of COVID-19. The sales breakdown for the six months ended June 30, 2022 is as follows:

North America 57.2%

Asia (Including Japan) 26.5%

Other 16.3%

Our gross margins for the six months ended June 30, 2022 were 53.1% as compared to 46.3% for the same period in 2021. The decrease in gross margin is due to overhead allocations.

Selling, general and administrative expense for the six months ended June 30, 2022 were $1,408,256 compared to $1,481,005 for the same period in 2021. The decrease of $72,749 or 4.9% was principally due to the company issuing stock for additional consideration in relation to a loan and the expenses associated with it being amortized over the life of the loan. During the six months ended June 30, 2022, stock-based compensation was $80,245 compared to $545,488 during the same period in 2021.

Other expense for the six months ended June 30, 2022 was $197,715 a decrease of $624,181 from $821,896 for the same period in 2021. The decrease was due to an equity loss on investments in 2021 offset by a decrease in the amortization of the debt discount.

Net loss for the six months ended June 30, 2022 was $1,115,940 compared to $1,945,873 for the same period in 2021. The change was principally attributed to the factors described above.

Liquidity and Capital Resources

Our operations have historically been financed by our majority shareholder and more recently from proceeds from the sale of our common stock. As funds were needed for working capital purposes, our majority shareholder would loan us the needed funds. We anticipate funding the growth of our business through the sales of additional shares of our common stock and loans from our majority stockholder if necessary.

At June 30, 2022, total assets increased by 0.3% to $2,982,074 from $2,851,186 at December 31, 2021 principally related to a increase in accounts receivable and right-of-use assets offset by an increase in inventory.

At June 30, 2022, total liabilities increased by 22.4% to $3,107,277 from $2,409,917 at December 31, 2021. The increase is principally related to an increase in accrued liabilities, notes payable, line of credit and accrued compensation - officers, offset by a decrease in operating lease liability.

Net cash used in operating activities for the six months ended June 30, 2022 was $790,363 compared to $404,025 for the same period in 2021. The change in cash from operations was principally due to changes in working capital accounts, principally, accounts receivable.

Net cash used in investing activities for the six months ended June 30, 2022 was $12,629 compared to $21,446 for the same period in 2021. The decrease in cash used in investing activities was principally due to the purchase of property and equipment of $12,629 in 2022 and $21,446 in 2021.

Net cash provided by financing activities for the six months ended June 30, 2022 was $977,582 compared to $427,177 for the same period in 2021. The change in cash from financing activities was principally from the debt that the Company incurred and the stock given on top of the warrants issued related to the loan.

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.

We believe the following is among the most critical accounting policies that impact our consolidated 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.

Income Taxes

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.

Item 3. Quantitative and Qualitative DisclosuresAbout Market Risk.

None

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, we are responsible for conducting an evaluation of the effectiveness of the design and operation of our internal controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the fiscal quarter covered by this report. Disclosure controls and procedures means that the material information required to be included in our Securities and Exchange Commission (“SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, particularly during the period when this report was being prepared. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were not effective as of June 30, 2021.

Changes in internal controls

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, performed an evaluation to determine whether any change in our internal controls over financial reporting occurred during the three-month period ended June 30, 2022. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that no change occurred in the Company’s internal controls over financial reporting during the six months ended June 30, 2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

There are not presently any material pending legal proceedings to which the Company is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.

Item 1A. Risk Factors

See our Form 10K filed on April 15, 2022 for Risk Factors.

Item 2. Unregistered Sales of Equity Securitiesand Use of Proceeds.

On May 6, 2022, the Company issued 625,000 shares of common stock to an investor on top of securing a loan with attached warrants.

On May 11, 2022, the Company issued 120,805 shares of common stock to Carter Terry & Co in connection with the consulting services agreement entered by and between US Nuclear and Carter Terry & Co

On May 20, 2022, the Company issued 40,000 shares of common stock to Richard Cavali in connection with the consulting services agreement entered by and between US Nuclear Corp and Richard Cavali.

On May 20, 2022, the Company issued 200,000 shares of common stock to Howard Isaacs in connection with the consulting services agreement entered by and between US Nuclear Corp and Howard Isaacs

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

		Incorporated by reference
Exhibit	Exhibit Description	Filedherewith	Form	Periodending	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
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
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
32.1	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
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
32.2	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

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.

USNuclear Corp

By:	/s/<br> Robert Goldstein
	President,<br> Chief Executive Officer, Chairman of the Board of Directors
By:	/s/<br> Richard Landry
	Chief<br> Financial Officer and Secretary

Date: September 26, 2022

EXHIBIT 31.1

US Nuclear Corp.

OFFICER’S CERTIFICATE PURSUANT TO SECTION 302

I, Robert I. Goldstein, certify that:

I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2022 (the “report”);
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: September 26, 2022

By:	/s/ Robert I. Goldstein
	Robert I. Goldstein
	President, Chief Executive Officer, Chairman
	(Principal Executive Officer)

EXHIBIT 31.2

US Nuclear Corp.

OFFICER’S CERTIFICATE PURSUANT TO SECTION 302

I, Rachel Boulds, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2022 (the “report”);

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

The registrant’s other certifying officer(s) and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: September 26, 2022

By:	/s/ Ricard Landry
	Richard Landry
	Chief Financial Officer
	(Chief Operations Offricer)

EXHIBIT 32.1

US Nuclear Corp.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of US Nuclear Corp. (the Registrant) on Form 10-Q for the period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Robert I. Goldstein, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to Robert I. Goldstein and will be retained by US Nuclear Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

Dated: September 26, 2022

By:	/s/ Robert I. Goldstein
	Robert I. Goldstein
	President, Chief Executive Officer, Chairman
	(Principal Executive Officer)

EXHIBIT 32.2

US Nuclear Corp.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of US Nuclear Corp. (the Registrant) on Form 10-Q for the period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Rachel Boulds Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to Rachel Boulds and will be retained by US Nuclear Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

Dated: September 26, 2022

By:	/s/ Richard Landry
	Richard Landry
	Chief Financial Officer
	(Chief Operations Officer)