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 MARCH 31, 2019

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

Commission file number: 000-54617

 

U S NUCLEAR CORP.

(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)

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 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 ☒

The number of shares of the Registrant’s common stock outstanding as of May 20, 2019 was 17,451,834.

TABLE OF CONTENTS

PART I
Item 1.	Financial Statements (Unaudited)	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15
Item 4.	Controls and Procedures	15
PART II
Item 1.	Legal Proceedings	16
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Mine Safety Disclosures	16
Item 5.	Other Information	16
Item 6.	Exhibits	17
	Signatures	18

i

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

US NUCLEAR CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)

	March 31,			December 31,
	2019			2018
ASSETS
CURRENT ASSETS
Cash	$	712,879		$	969,118
Accounts receivable, net		736,365			730,773
Inventories		1,267,889			1,047,612
Prepaid expenses		2,500			2,500
TOTAL CURRENT ASSETS		2,719,633			2,750,003
Property and equipment, net		5,467			5,752
Right-of-use assets		321,405
Investment		10,000			10,000
Goodwill		570,176			570,176
TOTAL ASSETS	$	3,626,681		$	3,335,931
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	120,688		$	93,263
Accrued liabilities		53,627			54,511
Accrued compensation - officer		375,000			350,000
Customer deposit		108,927			96,571
Acquisition contingency		51,339			57,142
Note payable		16,467			16,262
Operating lease liability		147,623
Line of credit		220,708			222,490
TOTAL CURRENT LIABILITIES		1,094,379			890,239
Note payable, net of current portion		22,323			26,543
Note payable to shareholder		399,455			413,555
Operating lease liability, net of current portion		173,782			-
TOTAL LIABILITIES		1,689,939			1,330,337
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, 17,216,834 and 16,959,784 shares issued and outstanding		1,722			1,696
Additional paid in capital		6,564,166			6,445,625
Accumulated deficit		(4,629,146	)		(4,441,727	)
TOTAL SHAREHOLDERS’ EQUITY		1,936,742			2,005,594
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	3,626,681		$	3,335,931

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

1

US NUCLEAR CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended
	March 31,
	2019			2018
Sales	$	629,053		$	999,777
Cost of sales		311,136			522,493
Gross profit		317,917			477,284
Opertating expenses
Selling, general and administrative expenses		499,233			1,012,546
Total operating expenses		499,233			1,012,546
Loss from operations		(181,316	)		(535,262	)
Other expense
Interest expense		(6,103	)		(6,879	)
Total other expense		(6,103	)		(6,879	)
Loss before provision for income taxes		(187,419	)		(542,141	)
Provision for income taxes		-			-
Net loss	$	(187,419	)	$	(542,141	)
Weighted average shares outstanding - basic and diluted		17,031,588			14,305,441
Loss per shares - basic and diluted	$	(0.01	)	$	(0.04	)

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

2

US NUCLEAR CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Three Months Ended
	March 31,
	2019			2018
OPERATING ACTIVITIES
Net loss	$	(187,419	)	$	(542,141	)
Adjustment to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		285			35,147
Adjustment to acquisition contingency		(2,272	)		2,300
Issuance of common stock for services		118,567			632,956
Expenses paid directly by majority shareholder		-			15,900
Operating lease expense		35,103			-
Changes in operating assets and liabilities:
Accounts receivable		(5,592	)		(243,569	)
Inventories		(220,277	)		160,768
Accounts payable		23,894			(25,878	)
Accrued liabilities		(884	)		(17,850	)
Accrued compensation - officer		25,000			25,000
Customer deposits		12,356			12,300
Operating lease liability		(35,103	)		-
Net cash provided by (used in) operating activities		(236,342	)		54,933
INVESTING ACTIVITIES
Cash paid for acquisition deposit		-			(22,500	)
Net cash used in investing activities		-			(22,500	)
FINANCING ACTIVITIES
Net borrowings (repayments) under lines of credit		(1,782	)		(13,295	)
Proceeds from sale of common stock		-			781,250
Repayments for note payable		(4,015	)		(3,818	)
Proceeds from note payable to shareholder		900			-
Repayments for note payable to shareholder		(15,000	)		-
Net cash provided by (used in) financing activities		(19,897	)		764,137
NET INCREASE (DECREASE) IN CASH		(256,239	)		796,570
CASH
Beginning of period		969,118			442,341
End of period	$	712,879		$	1,238,911
Supplemental disclosures of cash flow information
Taxes paid	$	-		$	-
Interest paid	$	6,103		$	6,879
Reclassification of acquisition contingency to accounts payable	$	3,531		$	4,171
Right of use asset and operating lease liability recognized	$	356,508		$	-

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

3

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, 2018 and notes thereto included in the Company’s annual report on Form 10-K filed on April 17, 2019. 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.

Recent Accounting Pronouncements

In June 2018, the FASB issued Accounting Standards Update (“ASU”) ASU 2018-07, Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting , which simplifies the accounting for share-based payments granted to nonemployees for goods and services and aligns most of the guidance on such payments to nonemployees with the requirements for share-based payments granted to employees. ASU 2018-07 is effective on January 1, 2019. Early adoption is permitted. The Company adopted this ASU on January 1, 2019 with no material impact on the Company’s financial statements.

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.

Note 3 – Inventories

Inventories at March 31, 2019 and December 31, 2018 consisted of the following:

	March 31,		December 31,
	2019		2018
Raw materials	$	828,453	$	591,970
Work in Progress		131,832		25,353
Finished goods		307,604		430,289
Total inventories	$	1,267,889	$	1,047,612

At March 31, 2019 and December 31, 2018 the inventory reserve was $0.

4

Note 4 – Property and Equipment

The following are the details of the property and equipment at March 31, 2019 and December 31, 2018:

	March 31,			December 31,
	2019			2018
Furniture and fixtures	$	148,033		$	148,033
Leasehold Improvements		50,091			50,091
Equipment		233,826			233,826
Computers and software		33,036			33,036
		464,986			464,986
Less accumulated depreciation		(459,519	)		(459,234	)
Property and equipment, net	$	5,467		$	5,752

Depreciation expense for the three months ended March 31, 2019 and 2018 was $285 and $2,842, respectively. At March 31, 2019, the Company has $437,044 of fully depreciated property and equipment that is still in use.

Note 5 – Investment

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 no impairment was necessary during the three months ended March 31, 2019.

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 March 31, 2019 and December 31, 2018, the amount outstanding under this note payable was $38,790 and $42,805, respectively. The Company repaid $4,015 during the three months ended March 31, 2019.

Future maturities of notes payable as of March 31, 2019 are as follows:

Twelve months ending March 31,
2020	$	16,262
2021		17,303
2022		5,225
	$	38,790

5

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, 2020. During the three months ended March 31, 2019, the Company’s majority shareholder loaned an additional $900 to the Company and was repaid $15,000. The amounts due to Mr. Goldstein are $399,455 and $413,555 as of March 31, 2019 and December 31, 2018, respectively.

Note 8 – Line of Credit

As of March 31, 2019, 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 March 31, 2019 and December 31, 2018, the amounts outstanding under these lines of credit were $220,708 and $222,490, 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.

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 expire on April 30, 2020 and the Company expects to exercise a renewal option for an additional 12 months. Effective January 1, 2019, the Company adopted the provision of ASC 842 Leases.

The table below presents the lease related assets and liabilities recorded on the Company’s consolidated balance sheets as of March 31, 2019:

	Classification on Balance Sheet	March 31, 2019
Assets
Operating lease assets	Operating lease right of use assets	$	321,405
Total lease assets		$	321,405
Liabilities
Current liabilities
Operating lease liability	Current operating lease liability	$	147,623
Noncurrent liabilities
Operating lease liability	Long-term operating lease liability		173,782
Total lease liability		$	321,405

Lease obligations at March 31, 2019 consisted of the following:

Twelve months ending March 31,
2020	$	168,000
2021		168,000
2022		14,000
Total payments		350,000
Amount representing interest		(28,595	)
Lease obligation, net		321,405
Less lease obligation, current portion		(147,623	)
Lease obligation, long-term portion	$	173,782

6

The lease expense for the three months ended March 31, 2019 was $42,000 which consisted of amortization expense of $35,103 and interest expense of $6,897. The cash paid under operating leases during the three months ended March 31, 2019 was $42,000. At March 31, 2019, the weighted average remaining lease terms were 2.1 years and the weighted average discount rate was 8%

Note 10 – Shareholders’ Equity

Information regarding the Company’s shareholders’ equity for the three months ended March 31, 2019 and 2018 is below:

					Additional					Total
	Common Stock				Paid-in		Accumulated			Shareholders’
	Shares		Amount		Capital		Deficit			Equity
Balance, December 31, 2018		16,959,784		1,696		6,445,625		(4,441,727	)		2,005,594
Issuance of common stock for services		257,050		26		118,541		-			118,567
Net loss for the three months		-		-		-		(187,419	)		(187,419	)
Balance, March 31, 2019		17,216,834	$	1,722	$	6,564,166	$	(4,629,146	)	$	1,936,742
Balance, December 31, 2017		14,047,403	$	1,405	$	3,342,953	$	(2,034,657	)	$	1,309,701
Issuance of common stock for services		386,410		38		632,918		-			632,956
Issuance of common stock for cash		1,270,000		127		781,123		-			781,250
Net loss for the three months		-		-		-		(542,141	)		(542,141	)
Balance, March 31, 2018		15,703,813	$	1,570	$	4,756,994	$	(2,576,798	)	$	2,181,766

During the three months ended March 31, 2019, the Company issued:

● 252,000 shares of common stock to consultants for services rendered valued at $187,900. The fair value was determined based on the Company’s stock price on the grant date

● 5,050 shares of common stock to employees for compensation valued at $2,525. The fair value was determined based on the Company’s stock price on the grant date;

The Company recorded a total of stock based compensation of $118,567 during the three months ended March 31, 2019, as common stock issued to consultants have various vesting terms; and therefore, the company amortized the fair value on grant date over vesting term.

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.

7

The following tables summarize the Company’s segment information for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31,
	2019			2018
Sales
Optron	$	117,064		$	159,061
Overhoff		511,989			840,716
Corporate		-			-
	$	629,053		$	999,777
Gross profit
Optron	$	52,792		$	71,089
Overhoff		265,125			406,195
Corporate		-			-
	$	317,917		$	477,284
Income (loss) from operations
Optron	$	(111,223	)	$	(51,747	)
Overhoff		79,250			205,139
Corporate		(149,343	)		(688,654	)
	$	(181,316	)	$	(535,262	)
Interest Expenses
Optron	$	5,523		$	6,122
Overhoff		49			757
Corporate		531			-
	$	6,103		$	6,879
Net income (loss)
Optron	$	(110,746	)	$	(57,869	)
Overhoff		70,201			204,382
Corporate		(146,874	)		(688,654	)
	$	(187,419	)	$	(542,141	)
	As of			As of
	March 31,			December 31,
	2019			2018
Total Assets
Optron	$	1,361,555		$	1,324,707
Overhoff		2,113,683			1,811,483
Corporate		151,443			199,741
	$	3,626,681		$	3,335,931
Goodwill
Optron	$	-		$	-
Overhoff		570,176			570,176
Corporate		-			-
	$	570,176		$	570,176

8

Note 12 – Geographical Sales

The geographical distribution of the Company’s sales for the three months ended March 31, 2019 and 2018 is as follows:

	Three Months Ended March 31,
	2019		2018
Geographical sales
North America	$	289,823	$	809,241
Asia		331,803		153,408
South America		586		4,115
Other		6,841		33,013
	$	629,053	$	999,777

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 three months ended March 31, 2019 and 2018 were $42,000 and $42,000, respectively. As of March 31, 2019 and December 31, 2018, payable to Gold Team Inc. in connection with the above leases amount to $0 and $0, respectively. (See Note 9)

In addition, as of March 31, 2019 and December 31, 2018, the Company had accrued compensation payable to its majority shareholder of $375,000 and $350,000, respectively.

Also see Note 7.

Note 14 – Concentrations

Two customers accounted for 22% and 27.3% of the Company’s sales for the three months ended March 31, 2019 and one customer accounted for 54% of the Company’s sales for the three months ended March 31, 2018.

No vendors accounted for more than 10% of the Company’s purchases for the three months ended March 31, 2019 and 2018.

Note 15 – Fair Value Measurements

The Company follows a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to measurements involving unobservable inputs (Level 3). The three levels of the fair value hierarchy are as follows:

Level 1 inputs - observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 inputs - other inputs that are directly or indirectly observable in the marketplace.

Level 3 inputs - unobservable inputs which are supported by little or no market activity.

9

The Company categorizes its fair value measurements within the hierarchy based on the lowest level input that is significant to the fair value measurement in its entirety. The following table presents the amount and level in the fair value hierarchy of each of its assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018. The contingent liability is for the earn-out related to the purchase of Electronic Control Concepts.

	March 31, 2019
	Level 1		Level 2		Level 3		TOTAL
LIABILITES
Contingent Liability		-		-	$	51,339	$	51,339
	December 31, 2018
	Level 1		Level 2		Level 3		TOTAL
LIABILITES
Contingent Liability		-		-		57,142		57,142

A summary of the activity of the contingent liability is as follows:

Contingent liability at December 31, 2018	$	57,142
Change in fair value		(2,272	)
Reclassification to accounts payable		(3,531	)
Contingent liability at March 31, 2019	$	51,339

Note 16 – Commitments

Future payment under all of the Company obligations as of March 31, 2019:

	Twelve Months Ended March 31,
	2020		2021		2022		2023		Total
Note payable	$	16,262	$	17,303	$	5,225	$	-	$	38,790
Note payable - shareholder		-		399,455		-		-		399,455
Operating lease obligations		168,000		168,000		14,000		-		350,000
Line of credit		220,708		-		-		-		220,708
	$	404,970	$	584,758	$	19,225	$	-	$	1,008,953

Note 17 – Subsequent Events

Subsequent to March 31, 2019, the Company issued 235,000 shares of common stock for services. The Company also entered into a Cooperative Agreement with Magneto-Inertial Fusion Technologies, Inc (“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.

10

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

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 included in this Quarterly Report on Form 10-Q. The audited financial statements for our fiscal year ended December 31, 2018 filed with the Securities Exchange Commission on Form 10-K on April 17, 2019 should be read in conjunction with the discussion below. 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. In the opinion of management, all material adjustments necessary to present fairly the results of operations 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.

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; however, in 2018 we derived 26% 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 32% of our total revenue in 2018. 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.

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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.

On August 3, 2018, we closed an agreement by and among, MIFTEC Laboratories, Inc. (“MIFTEC”), a licensee of Magneto-Inertial Fusion Technologies, Inc., (“MIFTI”), and us. MIFTEC is a licensee of MIFTI radionuclide technology. MIFTEC will engage us to manufacture equipment pursuant to MIFTEC’s specifications and designs and have us as a sales representative for the manufactured equipment. We will be the exclusive manufacturer and supplier to MIFTEC of equipment in North America and Asia. In addition, we 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 our common stock.

On April 22, 2019 the Company entered into a Cooperative Agreement with Magneto-Inertial Fusion Technologies, Inc (“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.

Results of Operations

For the three months ended March 31, 2019 compared to the three months ended March 31, 2018

	Three Months Ended March 31,						Change
	2019			2018			$			%
Sales	$	629,053		$	999,777		$	(370,724	)		-37.1	%
Cost of goods sold		311,136			522,493			(211,357	)		-40.5	%
Gross profit		317,917			477,284			(159,367	)		-33.4	%
Selling, general and administrative expenses		499,233			1,012,546			(513,313	)		-50.7	%
Loss from operations		(181,316	)		(535,262	)		353,946			-66.1	%
Other income (expense)		(6,103	)		(6,879	)		776			-11.3	%
Loss before provision for income taxes		(187,419	)		(542,141	)		354,722			-65.4	%
Provision for income taxes		-			-			-
Net loss	$	(187,419	)	$	(542,141	)	$	354,722			-65.4	%

Sales for the three months ended March 31, 2019 were $629,053 compared to $999,777 for the same period in 2018. The decrease of $370,724 or 37.1% is a result of a decrease in sales from both our Overhoff and Optron subsidiaries of $328,727 and $41,997, respectively. The decrease in sales from our Overhoff and Optron subsidiaries was due to several large orders being manufactured during the first quarter. These orders are due to ship during the second quarter of 2019. We recognize revenue from the sale of our products when the orders are completed, and we ship the product to our customer. The sales breakdown for the three months ended March 31, 2019 is as follows:

North America 46%

Asia (Including Japan) 53%

South America 0%

Other 1%

Our gross margins for the three months ended March 31, 2019 were 50.5% as compared to 47.7% for the same period in 2018. The increase in gross margin is due to lower overhead costs.

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Selling, general and administrative expense for the three months ended March 31, 2019 were $499,233 compared to $1,012,546 for the same period in 2018. The decrease of $513,313 or 50.7% is due to lower stock-based compensation. During the three months ended March 31, 2019, the amortization of stock based compensation was $118,567 compared to $632,956 during the same period in 2018.

Other expense for the three months ended March 31, 2019 was $6,103, a decrease of $776 from $6,879 for the same period in 2018. The decrease was due to lower interest expense due to less debt outstanding.

Net loss for the three months ended March 31, 2019 was $187,419 compared to $542,141 for the same period in 2018. The change was principally attributed to lower selling, general and administrative expenses related to stock-based compensation and other 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. During the three months ended March 31, 2019, our majority shareholder loaned the Company an additional $900 and was repaid $15,000. 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 March 31, 2019, total assets increased by 8.7% to $3,626,681 from $3,335,931 at December 31, 2018 principally related to an increase in inventory and right-of use assets offset by a decrease in cash.

At March 31, 2019, total liabilities increased by 27.0% to $1,689,939 from $1,330,337 at December 31, 2018. The increase is principally related to the lease obligation associated with the right-of-use assets.

Net cash used in operating activities for the three months ended March 31, 2019 was $236,342 compared to cash provided by operating activities of $54,933 for the same period in 2018. The change in cash from operations was principally due to the changes in working capital accounts, principally inventory.

Net cash used in investing activities for the three months ended March 31, 2019 was $0 compared to $22,500 for the same period in 2018. The decrease in cash used in investing activities was principally due to an acquisition deposit paid in 2018.

Net cash used in financing activities for the three months ended March 31, 2019 was $19,897 compared to cash provided by financing activities of $764,137 for the same period in 2018. The change in cash from financing activities was principally due to the sale of 1,270,000 shares of our common stock for proceeds of $781,250 during the three months ended March 31, 2018.

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.

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.

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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.

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.

We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:

● have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

● comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

● submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and

● disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

We will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

As an emerging growth company, the company is exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes.

The Company is an Emerging Growth Company under the JOBS Act of 2012, but the Company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(B) of the JOBS Act.

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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 Disclosures About 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 March 31, 2019.

Changes in internal controls

Our management, with the participation 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 March 31, 2019.  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 three months ended March 31, 2019 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

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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 17, 2018 for Risk Factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the three months ended March 31, 2019, the Company issued 257,050 shares of common stock to consultants and an employee for services rendered.

The above shares were issued in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, for transactions not involving a public offering.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.

		Incorporated by reference
Exhibit	Exhibit Description	Filed herewith	Form	Period ending	Exhibit	Filing date
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 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	XBRL Instance Document	X
101.SCH	XBRL Taxonomy Extension Schema Document	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Definition	X

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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.

US Nuclear Corp
By:	/s/ Robert Goldstein
	President, Chief Executive Officer, Chairman of the Board of Directors
By:	/s/ Rachel Boulds
	Chief Financial Officer and Secretary

Date:  May 20, 2019

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