0001262463-15-000494.txt : 20150813 0001262463-15-000494.hdr.sgml : 20150813 20150813160134 ACCESSION NUMBER: 0001262463-15-000494 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20150630 FILED AS OF DATE: 20150813 DATE AS OF CHANGE: 20150813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: US NUCLEAR CORP. CENTRAL INDEX KEY: 0001543623 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 454535739 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-54617 FILM NUMBER: 151050629 BUSINESS ADDRESS: STREET 1: 7051 ETON AVENUE CITY: CANOGA PARK STATE: CA ZIP: 91303 BUSINESS PHONE: 818-883-7043 MAIL ADDRESS: STREET 1: 7051 ETON AVENUE CITY: CANOGA PARK STATE: CA ZIP: 91303 FORMER COMPANY: FORMER CONFORMED NAME: APEX 3, INC. DATE OF NAME CHANGE: 20120301 10-Q 1 usnuclearq2.htm FORM 10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended JUNE 30, 2015

[ ]            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.)

 

 

Robert I. Goldstein

7051 Eton Avenue

Canoga Park, CA 91303

(Address of principal executive offices)

 

(818) 883-7043

(Registrant’s telephone number, including area code)

 

 

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

None.

 

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

 

Common Stock, $0.0001 par value per share

(Title of Class)

 

1 
 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [_]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, at www.usnuclearcorp.com, 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 [X] 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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer               [_] Accelerated filer                          [_]
Non-accelerated filer            [_] Smaller reporting company     [X]

(Do not check if a smaller reporting company.)

 

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

Yes [_] No [X]

 

The number of shares of the Registrant’s common stock outstanding as of August 13, 2015 was 13,275,000.

 

2 
 

 

 

TABLE OF CONTENTS

PART I    
Item 1. Financial Statements (Unaudited)   4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 17
Item 3. Quantitative and Qualitative Disclosures About Market Risk 21
Item 4. Controls and Procedures 21
PART II    
Item 1. Legal Proceedings 22
Item 1A. Risk Factors 22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 27
Item 3. Defaults Upon Senior Securities 27
Item 4. Mine Safety Disclosures 27
Item 5. Other Information 27
Item 6. Exhibits 28
  Signatures 28

 

 

 

 

 

3 
 


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

 

4 
 

 

US Nuclear Corp. and Subsidiaries

Financial Statements

(Unaudited)


AS OF JUNE 30, 2015

AND FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014

 

 

Contents

Financial Statements PAGE
   
Condensed Consolidated Balance Sheet as of June 30, 2015 (unaudited) and December 31, 2014 6
   

Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2015 and 2014 (unaudited)

7

   

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014 (unaudited)

8

   

 Notes to Unaudited Condensed Consolidated Financial Statements

9

 

 

 

 

 

 

5 
 

 

US NUCLEAR CORP. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS

 

    

June 30,

2015
(unaudited)

    December 31,
2014
 
CURRENT ASSETS          
Cash  $424,164   $140,253 
Accounts receivable, net   259,101    95,700 
Inventories   2,226,471    2,343,729 
Other current assets   300    1,800 
TOTAL CURRENT ASSETS   2,910,036    2,581,482 
           
EQUIPMENT, net   11,194    14,454 
GOODWILL   570,176    570,176 
TOTAL ASSETS  $3,491,406   $3,166,112 
           
LIABILITIES AND SHAREHOLDERS' EQUITY
           
CURRENT LIABILITIES          
Accounts payable  $106,277   $175,033 
Accounts payable, related party   72,000    24,000 
Accrued liabilities   106,625    93,431 
Customer deposit   16,273    196,185 
Line of credit   354,374    319,274 
TOTAL CURRENT LIABILITIES   655,549    807,923 
           
Note payable to shareholder   265,508    58,215 
TOTAL LIABILITIES   921,057    866,138 
           
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,          
  13,275,000 and 13,265,000 shares issued and outstanding   1,328    1,327 
Additional paid in capital   3,137,679    3,136,680 
Accumulated deficit   (568,658)   (838,033)
TOTAL SHAREHOLDERS' EQUITY   2,570,349    2,299,974 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $3,491,406   $3,166,112 

 

 

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

 

6 
 

 

 

US NUCLEAR CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
   Three Months Ended  Six Months Ended
   June 30,  June 30,
   2015  2014  2015  2014
   (unaudited)  (unaudited)  (unaudited)  (unaudited)
Sales  $1,102,894   $375,859   $1,550,378   $639,505 
Cost of sales   590,451    177,669    799,591    343,513 
Gross profit   512,443    198,190    750,787    295,992 
                     
Selling, general and administrative expenses   203,764    348,187    472,270    653,471 
                     
Income (loss) from operations   308,679    (149,997)   278,517    (357,479)
                     
Other expense                    
    Interest expense   (4,408)   (938)   (9,142)   (1,856)
    Total other expense   (4,408)   (938)   (9,142)   (1,856)
                     
Income (loss) before provision for income taxes   304,271    (150,935)   269,375    (359,335)
                     
Provision for income taxes   —      —      —      —   
                     
Net income (loss)  $304,271   $(150,935)  $269,375   $(359,335)
                     
                     
Weighted average shares outstanding - basic and diluted   13,271,703    11,150,000    13,268,370    11,115,193 
                     
Earnings (loss) per share - basic and diluted  $0.02   $(0.01)  $0.02   $(0.03)

 

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

 

7 
 

 

 

US NUCLEAR CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                  Six Months Ended
                  June 30,
                  2015   2014
                  (unaudited)   (unaudited)
OPERATING ACTIVITIES          
  Net income (loss)      $       269,375  $         (359,335)
  Adjustment to reconcile net income (loss) to net        
    cash provided by (used in) operating activities:        
      Depreciation and amortization               3,260                4,581
      Common stock issued for services             1,000                     -   
      Changes in:              
        Accounts receivable            (163,401)             463,787
        Inventory               117,258           (235,326)
        Other current assets                 1,500                2,600
        Accounts payable              (20,756)             (40,471)
        Accrued liabilities               13,194                5,976
        Customer deposits            (179,912)                8,415
                       
        Net cash provided by (used in) operating activities           41,518           (149,773)
                       
INVESTING ACTIVITIES          
  Purchases of equipment                     -                    (200)
                       
        Net cash used in investing activities                 -                    (200)
                       
FINANCING ACTIVITIES          
  Net borrowings (repayments) under lines of credit           35,100           (102,491)
  Proceeds from sale of common stock                   -                       45
  Proceeds from note payable to shareholder         243,293             158,567
  Repayments for note payable to shareholder          (36,000)                     -   
                       
        Net cash provided by financing activities         242,393              56,121
                       
NET INCREASE (DECREASE) IN CASH         283,911             (93,852)
                       
CASH                
  Beginning of the period             140,253             265,873
  End of the period      $       424,164  $           172,021
                       
Supplemental disclosures of cash flow information        
  Taxes paid        $               -     $                   -   
  Interest paid        $           9,142  $              1,856
                       
                       

 

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

 

8 
 

 

US Nuclear Corp. and Subsidiaries

Notes to Consolidated Financial Statements

For the Six months ended June 30, 2015 and 2014

(Unaudited)

 

Note 1 - Organization and Basis of Presentation

 

The unaudited consolidated financial statements were prepared by US Nuclear Corp. (the “Company”), pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) were omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The results for the six months ended June 30, 2015, are not necessarily indicative of the results to be expected for the year ending December 31, 2015.

 

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. Optron Scientific Company, Inc. (“Optron”) was incorporated in the State of California on December 24, 1971.

 

On October 15, 2013, the Company entered into a share exchange agreement and plan of merger with Optron. Pursuant to the agreement, the Company acquired from Optron all of the issued and outstanding capital stock consisting of 98,372 shares of common stock in exchange for 9,150,000 shares of the Company’s common stock.

 

Concurrently with the closing of the transactions, the Company entered into an agreement with the Company’s former majority stockholder, sole director and chief executive officer, pursuant to which he returned 9,150,000 shares of the Company’s common stock for cancellation. The Company’s former majority stockholder, sole director and chief executive officer was not compensated for the cancellation of his shares of the Company’s common stock. Upon completion of the foregoing transactions, the Company had an aggregate of 10,700,000 shares of common stock issued and outstanding.

 

The exchange of shares with Optron was accounted for as a reverse acquisition under the purchase method of accounting since Optron obtained control of the Company. Accordingly, the merger of Optron into the Company was recorded as a recapitalization of Optron, Optron being treated as the continuing entities. The historical financial statements presented are the financial statements of Optron. The share exchange agreement has been treated as a recapitalization and not as a business combination; therefore, no pro forma information is disclosed. At the date of this transaction, the net liabilities of the legal acquirer, US Nuclear, were $12,901.

 

As a result of the reverse merger transactions described above the historical financial statements presented are those of Optron, the operating entity.

 

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.

 

Going Concern

 

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the Company obtaining additional equity financing or continuing to receive debt financing from its majority shareholder until such time as the Company can return to generating income from operations. There is no guarantee that the Company will be able to raise adequate equity or debt financing or generate profitable operations. For the year ended December 31, 2014, the Company incurred a net loss of $321,505 and had negative cash flows from operations of $463,556. As of June 30, 2015 and December 31, 2014, the Company had an accumulated deficit of $568,658 and $838,033, respectively. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management intends to raise additional funds through equity or debt financing and to generate increased sales of the Company’s products over the next twelve months.

 

9 
 

 

US Nuclear Corp. and Subsidiaries

Notes to Consolidated Financial Statements

For the Six months ended June 30, 2015 and 2014

(Unaudited)

 

Basis of Presentation

 

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, 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.

 

Note 2 – Summary of Significant Accounting Policies

 

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.

 

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, 2015 and December 31, 2014.

 

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, 2015 and December 31, 2014 were $5,000 and $5,000, respectively. During the six months ended June 30, 2015 and 2014, the Company derived 36% and 22%, respectively, of its revenue from one customer.

 

Inventories

 

Inventories are valued at the lower of cost (determined primarily by the average cost method) or market. Management compares the cost of inventories with the market value and allowance is made for writing down their inventories to market value, if lower.

 

Equipment

 

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:

10 
 

US Nuclear Corp. and Subsidiaries

Notes to Consolidated Financial Statements

For the Six months ended June 30, 2015 and 2014

(Unaudited)  

 

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 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, 2015 and December 31, 2014, the Company believes there was no impairment of its long-lived assets.

 

Goodwill

 

Goodwill represents the excess of purchase price over the underlying net assets of businesses acquired. The entire goodwill balance in the accompanying financial statements resulted from the Company’s acquisition of Overhoff Technology Corporation in 2006. The Company complies with ASC 350, goodwill and other indefinite lived intangible assets, requiring that a test for impairment be performed at least annually. As of December 31, 2014 the Company performed the required impairment analysis which resulted in no impairment adjustments. 

 

Revenue Recognition

 

The Company’s revenue recognition policies comply with FASB ASC Topic 605. Revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. 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, 2015 and 2014. The Company does not provide unconditional right of return, price protection or any other concessions to its customers.

 

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.

 

11 
 

 

Basic and Diluted Earnings Per Share

 

Earnings per share is calculated in accordance with ASC Topic 260, “Earnings Per Share.” Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS is based on the assumption that all dilutive convertible shares and stock warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. There were no potentially dilutive securities outstanding during June 30, 2015 and December 31, 2014.

 

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 8.

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 April 2014, the FASB issued Accounting Standards Update No. 2014-08 (ASU 2014-08), Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360). ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company's operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. The Company is currently evaluating the impact of adopting ASU 2014-08 on the Company's results of operations or financial condition.

 

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management is currently assessing the impact the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting.

 

In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern , which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued.  An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern.  The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact the adoption of ASU 2014-15 on the Company’s financial statement presentation and disclosures.

 

12 
 

 

US Nuclear Corp. and Subsidiaries

Notes to Consolidated Financial Statements

For the Six months ended June 30, 2015 and 2014

(Unaudited)

 

In November 2014, the FASB issued Accounting Standards Update No. 2014-16 (ASU 2014-16), Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity . The amendments in this ASU do not change the current criteria in U.S. GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. The amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of the host contract. The ASU applies to all entities that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share and is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted.

 

In January 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-01 (Subtopic 225-20) - Income Statement - Extraordinary and Unusual Items. ASU 2015-01 eliminates the concept of an extraordinary item from GAAP. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-01 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted.

 

In February, 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-02 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted

 

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the “SEC”) did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

 

Note 3 – Inventories

 

Inventories at June 30, 2015 and December 31, 2014 consisted of the following:

 

    June 30,   December 31,
    2015   2014
Raw materials $ 728,737 $ 782,732
Work in Progress   599,093   931,686
Finished goods   898,641   629,311
  $ 2,226,471 $ 2,343,729

 

13 
 

 

US Nuclear Corp. and Subsidiaries

Notes to Consolidated Financial Statements

For the Six months ended June 30, 2015 and 2014

(Unaudited)

 

Note 4 – Property and Equipment

 

The following are the details of the property, equipment and improvements at June 30, 2015 and December 31, 2014:

 

    June 30,   December 31,
    2015   2014
Furniture and fixtures $ 146,684 $ 146,684
Leasehold Improvements   50,091   50,091
Equipment   212,076   212,076
Computers and software   27,259   27,259
    436,110   436,110
Less accumulated depreciation            (424,916)            (421,656)
Property and equipment, net $ 11,194 $ 14,454

 

Note 5 – Note Payable Shareholder

 

Robert Goldstein, the owner of the Company, has loaned funds to the Company from time to time. These loans are evidenced by unsecured, non-interest bearing notes due on December 31, 2016. The amounts due to Mr. Goldstein are $265,508 and $58,215 as of June 30, 2015 and December 31, 2014, respectively. During six months ended June 30, 2015, the Company received $243,293 from its majority shareholder and repaid another $36,000 to its majority shareholder under this note payable agreement.

 

Note 6– Lines of Credit

 

As of June 30, 2015 the Company had four lines of credit with a maximum borrowing amount of amount of $400,000 and interest ranging from 3.25% to 9.25%. As of June 30, 2015 and December 31, 2014, the amounts outstanding under these four lines of credit were $354,374 and $319,274, respectively.

 

Note 7 – Shareholders’ Equity

 

During the six months ended June 30, 2015, the Company issued 10,000 shares of its common stock to one of its board members for services valued at $1,000. The value of the shares was determined based on recent sales of the Company’s common stock. 

 

Note 8 –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.

 

  

14 
 

 

US Nuclear Corp. and Subsidiaries

Notes to Consolidated Financial Statements

For the Six months ended June 30, 2015 and 2014

(Unaudited)

 

The following tables summarize the Company’s segment information for the three and six months ended June 30, 2015 and 2014:

 

      Three Months Ended June 30,   Six Months Ended June 30,
      2015   2014   2015   2014
                   
 Sales                
   Optron $ 168,274 $ 87,766 $ 329,401 $ 184,964
   Overhoff   934,620   288,093   1,220,977   454,541
   Corporate   -   -   -   -
    $ 1,102,894 $ 375,859 $ 1,550,378 $ 639,505
                   
 Gross profit                
   Optron $ 36,747 $ 67,330 $ 128,580 $ 79,561
   Overhoff   475,696   130,860   622,207   216,431
   Corporate   -   -   -   -
    $ 512,443 $ 198,190 $ 750,787 $ 295,992
                   
 Income (loss) from operations                
   Optron $ (9,614) $ (111,598) $ (9,234) $ (259,606)
   Overhoff   339,325   (24,785)   344,249   (66,889)
   Corporate   (21,032)   (13,614)   (56,498)   (30,984)
    $ 308,679 $ (149,997) $ 278,517 $ (357,479)
                   
 Interest Expenses                
   Optron $ 4,408 $ 938 $ 9,142 $ 1,856
   Overhoff   -   -   -   -
   Corporate   -   -   -   -
    $ 4,408 $ 938 $ 9,142 $ 1,856
                   
 Net income (loss)                
   Optron $ (14,022) $ (112,536) $ (18,376) $ (261,462)
   Overhoff   339,325   (24,785)   344,249   (66,889)
   Corporate   (21,032)   (13,614)   (56,498)   (30,984)
    $ 304,271 $ (150,935) $ 269,375 $ (359,335)
                   
              As of   As of
               June 30,    December 31,
              2015   2014
 Total Assets                
   Optron         $ 1,294,598 $ 1,129,316
   Overhoff           2,178,790   1,949,043
   Corporate           18,018   87,753
            $ 3,491,406 $ 3,166,112
                   
 Goodwill                
   Optron         $ - $ -
   Overhoff           570,176   570,176
   Corporate           -   -
            $ 570,176 $ 570,176

 

15 
 

 

US Nuclear Corp. and Subsidiaries

Notes to Consolidated Financial Statements

For the Six months ended June 30, 2015 and 2014

(Unaudited)

 

Note 9 - Geographical Sales

 

The geographical distribution of the Company’s sales for the three and six months ended June 30, 2015 and 2014 is as follows:

 

      Three Months Ended June 30,   Six Months Ended June 30,
      2015   2014   2015   2014
                   
 Geographical sales                
   United States $ 427,733 $ 181,290 $ 620,151 $ 390,098
   Asia   506,517   56,447   573,640   102,321
   South America   119,769   11,050   261,422   11,050
   Other   48,875   127,072   95,165   136,036
    $ 1,102,894 $ 375,859 $ 1,550,378 $ 639,505
                   

 

Note 10 – Related Party Transactions

 

The Company leases its current facilities from Gold Team Inc. which owns both the Canoga Park, CA and Milford, Ohio. Rent expense for the six months ended June 30, 2015 and 2014 were $60,000 and $72,000, respectively. As of June 30, 2015 and December 31, 2014, payable to Gold Team Inc. in connection with the above leases amount to $72,000 and $24,000, respectively.

 

Also see Note 5.

 

16 
 

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

 

You should read the following discussion of our financial condition and results of operations and the notes to the financial statements included in this Quarterly Report on Form 10-Q. 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. The audited financial statements for our fiscal year ended December 31, 2014 and the audited financial statements filed with the Securities Exchange Commission on Form 10-K on April 15, 2015, include a summary of our significant accounting policies and should be read in conjunction with the discussion below. 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.

 

Our current product concentration places a heavy reliance on our Overhoff Technology division; where we derived 39% of our total revenues in 2014 from 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 57% of our total revenue in 2014. 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.

 

Additionally, we are inexperienced as a public company and may find it difficult to meet all of the challenges and expenses of being a public company.  As we commence as a public company, we plan to raise capital by offering shares of our common stock or convertible debt to investors.  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.

 

17 
 

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 $6,000 for each facility per month. 

 

On September 30, 2014, we entered into a Forgiveness of Debt and Conversion Agreement with our President, Chief Executive Officer and Chairman of the Board of Directors, Robert I. Goldstein. We owed Mr. Goldstein, $868,828 in related party debt. Pursuant to this Agreement, Mr. Goldstein agreed to forgive $668,828 and we agreed to convert the balance of the debt, $200,000 into restricted shares of our Company at $0.20 cents per share. We then issued Mr. Goldstein 1,000,000 shares of our restricted common stock. With this Agreement, we had eliminated our related party debt from our balance sheet and financial statements at the time of execution.

 

On October 16, 2014, our Chief Financial Officer, and Secretary, Darian B. Andersen resigned, effective, October 31, 2014. Mr. Andersen has been of service to the Company for more than 2 years. Our relationship with him was considered to be positive and his departure from our company was because of his desire to continuing pursuing his work as a legal attorney. On that same day, we retained the services of Rachel Boulds, as our Chief Financial Officer, and Secretary to fill the void left by Mr. Andersen. Ms. Boulds is an experienced accountant and former auditor for public companies having been employed at PCAOB member firms. Ms. Boulds has agreed to begin providing services to the Company upon the effective date of Mr. Andersen’s resignation date.

 

On November 4, 2014, we entered into a five year Employment Agreement with our President, Chief Executive Officer and Chairman of the Board of Directors, Robert I. Goldstein. The Agreement calls for a salary of $100,000 per year, payable at the end of the fiscal year , with his compensation beginning in fiscal 2015 and payable in January 2016.

 

On April 30, 2015, we issued 10,000 shares of restricted stock in US Nuclear Corp. to Dr. Gerald Entine for services as a director.

 

 

Results of Operations

For the three months ended June 30, 2015 compared to the three months ended June 30, 2014

 

    Three Months Ended June 30,   Change
    2015   2014   $   %
                 
Sales $ 1,102,894 $ 375,859 $ 727,035   193.4%
Cost of sales   590,451   177,669   412,782   232.3%
Gross profit   512,443   198,190   314,253   158.6%
Selling, general and administrative expenses 203,764   348,187   (144,423)   -41.5%
Income (loss) from operations   308,679   (149,997)   458,676   -305.8%
Other income (expense)   (4,408)   (938)   (3,470)   369.9%
Income (loss) before provision for income taxes 304,271   (150,935)   455,206   -301.6%
Provision for income taxes   -   -   -    
Net income (loss) $ 304,271 $ (150,935) $ 455,206   -301.6%

 

18 
 

 

Sales for the three months ended June 30, 2015 was $1,102,894 compared to $375,859 for the same period in 2014. The increase of $727,035 or 193.4% is a result of an increase in sales from our Overhoff and Optron subsidiaries of $646,527 and $80,508, respectively. The increase in sales from our Overhoff subsidiary is due to some large orders being completed and shipped during the second quarter of 2015. The increase in sales from our Optron subsidiary is due to increase in service revenue. The revenue breakdown for the three months ended June 30, 2015 is as follows:


North America 39%

Asia (Including Japan) 46%

South America 11%

Other 4%

 

Our gross margins for the three months ended June 30, 2015 were 46.5% as compared to 52.7% for the same period in 2014. The decrease in gross margin is due to slightly higher overhead costs incurred in the manufacturing process.

 

Selling, general and administrative expense for the three months ended June 30, 2015 decreased by 41.5% over 2014 to $203,764 down from $348,187 for the same period in 2014. The decrease is a result our overall efforts to reduce operating expense.

 

Other expense for the three months ended June 30, 2015 was $4,408, an increase of $3,470 from $938 for the same period in 2014. The increase is due to interest being paid on higher outstanding loan balances.

 

Net income for the three months ended June 30, 2015 was $304,271 compared to a net loss of $150,935 for the same period in 2014. The increase in net income of $455,206 was attributed to a significant increase in sales, lower operating expenses and higher other income.

For the six months ended June 30, 2015 compared to the six months ended June 30, 2014

    Six Months Ended June 30,   Change
    2015   2014   $   %
                 
Sales $ 1,550,378 $ 639,505 $ 910,873   142.4%
Cost of sales   799,591   343,513   456,078   132.8%
Gross profit   750,787   295,992   454,795   153.7%
Selling, general and administrative expenses 472,270   653,471   (181,201)   -27.7%
Income (loss) from operations   278,517   (357,479)   635,996   -177.9%
Other income (expense)   (9,142)   (1,856)   (7,286)   392.6%
Income (loss) before provision for income taxes 269,375   (359,335)   628,710   -175.0%
Provision for income taxes   -   -   -    
Net income (loss) $ 269,375 $ (359,335) $ 628,710   -175.0%

 

Sales for the six months ended June 30, 2015 was $1,550,378 compared to $639,505 for the same period in 2014. The increase of $910,873 or 142.4% is a result of an increase in sales from our Overhoff and Optron subsidiaries of $766,436 and $144,437, respectively. The increase in sales from our Overhoff subsidiary is due to some large orders being completed and shipped during the first half of 2015. The increase in sales from our Optron subsidiary is due to increase in service revenue. The revenue breakdown for the six months ended June 30, 2015 is as follows:


North America 40%

Asia (Including Japan) 37%

South America 17%

Other 6%

 

Our gross margins for the six months ended June 30, 2015 were 48.4% as compared to 46.3% for the same period in 2014. The increase in gross margin is due to lower labor and overhead costs incurred in the manufacturing process.

 

General and administrative expense for the six months ended June 30, 2015 decreased by 27.7% over 2014 to $472,270 down from $653,471 for the same period in 2014. The decrease is a result our overall efforts to reduce operating expense.

19 
 

 

Other expense for the six months ended June 30, 2015 was $9,142, an increase of $7,286 from $1,856 for the same period in 2014. The increase is due to interest being paid on higher outstanding loan balances.

 

Net income for the six months ended June 30, 2015 was $269,375 compared to a net loss of $359,335 for the same period in 2014. The increase in net income of $628,710 was attributed to a significant increase in sales, better margins, lower operating expenses and higher other income.

 

Liquidity and Capital Resources

 

Our operations have historically financed by our majority stockholder. As funds were needed for working capital purposes, our majority stockholder would loan us the needed funds. During 2014, our majority stockholder converted $200,000 of debt into 1,000,000 shares of common stock and also forgave $688,828 in debt that has been accounted for as a capital contribution. In addition, in 2014 we sold 1,540,000 shares of our common stock for $108,545. We anticipate funds the growth of our business through the sales of shares of our common stock and loans from our majority stockholder if necessary. During the six months ended June 30, 2015 we received funding from our majority stockholder in the net amount of $207,293.

 

At June 30, 2015, total assets increased by 10%, to $3,491,406 from $3,166,112 at December 31, 2014 principally related to an increase in cash and accounts receivable.

 

At June 30, 2015, total liabilities increased by 6.3% to $921,057 from $866,138 at December 31, 2014 principally related to an increase in indebtedness to our principal stockholder offset by a decrease in customer deposits.

 

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.

 

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.

 

20 
 

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. 

 

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 June 30, 2015.

 

21 
 

 

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 June 30, 2015.  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 June 30, 2015 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

Our business is subject to many risks. Set forth below are the most significant risks that we face.

 

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

 

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

 

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

 

Our international revenues were 57% of our total revenue in 2014. We expect this to continue to increase as we continue to field new orders inquires and engage new customers overseas. We believe that South Korea and China will likely be larger contributors to revenue within the next few years. While we maintain steady growth domestically, the international side of our business may be a larger component as nuclear technology and rapid development for clean energy grows abroad. There can be no assurances as to our growth projections and our risk profile as we depend upon increased foreign customers for business.

 

22 
 

 

Government Regulation

 

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

 

Nuclear Power, Fossil Fuel and Renewal Energy

 

While the nuclear power industry is a key component in the context of energy supply in the world today there are other competing energy sources that carry less potential risk hazards. Competing energy sources such as fossil fuels, solar, wind and water are strong threats to nuclear power. Each one has its benefits and conversely a negative side. The current landscape of nuclear power according to the Nuclear Regulatory Commission, or NRC, states that as of May 2014, there were 30 countries worldwide operating 435 nuclear reactors in operation in the world, with 72 new reactors under construction in 15 countries. Within the United States, there are 100 nuclear power plants providing 20% of the country’s total electric energy generation. Additionally, 31 of the 50 US states generate electricity from nuclear power plants, and four states, New Jersey, South Carolina, Connecticut, and Vermont rely on nuclear power for more than 50 percent of their electricity. The United States produced approximately 27% of the world’s gross nuclear-generated electricity in 2010 with France at 17%, Japan 12%, Russia 6%, Germany 5%, South Korea 5%, Ukraine 3%, Canada 3%, Sweden 2%, Spain 2%, the United Kingdom 3% and the rest of the world at 15%. The growth in new nuclear power plant construction in the United States has been slower due to issues related to domestic policy and the effects of the Fukushima Dai-ichi nuclear plant accident, foreign countries such as Russia have plans to build 26 new plants by 2020. It is difficult to predict if these plans domestically and internationally will materialize or be postponed indefinitely if negative market forces develop.

 

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

 

Maintaining the demand for our products and future growth in demand will depend in part upon continued acceptance of nuclear technology as a means of generating electricity. In many cases, countries have embraced nuclear technology because alternate means of energy have either been at a high cost with heavy pollution, or other means have not been practical. However, incidents involving nuclear energy production, such as overheating reactors, radiation leaks and reactor melt-downs, can cause a significant decrease in public acceptance of nuclear technology. Events at the Fukushima Daiichi nuclear complex in Japan on March 11, 2011 may have adverse long term effects in some countries decision to either continue using nuclear power or suspend its nuclear power program. While the long term impact is unclear, several countries have suspended operations at existing nuclear power plants. Specifically, on May 30, 2011, Germany announced that in addition to the permanent closure of eight reactors, an additional six reactors will be taken off-line by 2021 and that all remaining reactors to be shut-down by 2022. Switzerland has made a policy decision to phase out of their 5 reactors by 2034. Italy, while not having any operating reactors, has implemented a moratorium on nuclear power. The ultimate results of these safety reviews and/or public resistance to nuclear technology may lead to suspension or cancellation of permitting and development activities, license extensions of existing nuclear facilities, and possibly even the closure of operating nuclear facilities by one or more countries. Lack of public acceptance of nuclear technology would adversely affect the demand for nuclear power and therefore demand for radiation detection equipment. 

 

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

 

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

 

23 
 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

24 
 

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

 

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

 

We depend to a large extent on the efforts and continued employment of our executive officers, one of these officers, Rachel Boulds maintains employment at other companies, and her other responsibilities could take precedence over her duties to us. The time Ms. Boulds plans to devote to our business will primarily be based upon the financial accounting duties as CFO and Secretary. 

 

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

 

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

 

  research and development of new products
     
  attracting and retaining key employees;
     
  maintaining a large budget for marketing and promotional expenses
     
  providing more favorable credit terms to suppliers and channel distributors

  

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

 

We may not be able to hire, train, retain, motivate and manage required personnel, which may limit our growth, damage our reputation and negatively affect our financial performance and harm our business.

 

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

 

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

 

Risks Related to Our Common Stock

 

We have been approved by FINRA for the Over-the-Counter Bulletin Board ("OTCBB") trading and additionally have also been approved with the Depository Trust and Clearing Corporation or ("DTCC") for DTC eligibility. Our stock ticker symbol is UCLE on the Over-the-Counter Bulletin Board. Pursuant to our Form S-1 registration statement which became effective on January 13, 2015, we have 3,090,000 shares of unrestricted and free trading stock. For information on shareholders who owns 5% or more of our common stock, as well as the ownership of our officers and directors, please see “Security Ownership Of Certain Beneficial Owners And Management” within our most recently filed Form 10-K with the US Securities and Exchange Commission on April 15, 2015.

 

25 
 

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

 

Once our shares begin trading, the market price for our common stock is likely to be volatile, in part because our shares have not been traded publicly. In addition, the market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including:

 

·competition from other radiation companies or related business;
·changes in government regulations, general economic or market conditions or trends in our industry or the economy as a whole and, in particular, in the nuclear power industry;
  · changes in key personnel;
  · entry into new geographic markets;
  · actions and announcements by us or our competitors or significant acquisitions, divestitures, strategic partnerships, joint ventures or capital commitments;
  · changes in operating performance and stock market valuations of other radiation detection and related companies;
  · investors’ perceptions of our prospects and the prospects of the nuclear power industry;
  · fluctuations in quarterly operating results, as well as differences between our actual financial and operating results and those expected by investors;
  · the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC;
  · announcements relating to litigation;
  · financial guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;
  · changes in financial estimates or ratings by any securities analysts who follow our common stock, our failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our common stock;
  · the development and sustainability of an active trading market for our common stock;
  · future sales of our common stock by our officers, directors and significant stockholders; and
  · changes in accounting principles affecting our financial reporting.

 

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

 

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

 

We have not paid dividends on our common stock and have no plans to pay dividends on our common stock in the future.

 

We have no plans to pay dividends on our common stock in the foreseeable future. We anticipate that any funds available for payment of dividends will be re-invested into the Company to further its business strategy.

 

Issuance of Preferred Stock could result in dilution to existing shareholders.

 

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

 

Control by management reduces the ability of minority shareholders to affect changes in management, corporate structure, or business strategy. 

26 
 

Management currently owns 77% of all the issued and outstanding capital stock of the Company. Consequently, management has the ability to control the operations of the Company and will have the ability to control substantially all matters submitted to stockholders for approval, including:

 

  Election of the board of directors;
     
  Removal of any directors;
     
  Amendment of the Company’s certificate of incorporation or bylaws; and
     
  Adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination.

 

Robert I. Goldstein, our Chief Executive Officer and Director, is the beneficial owner of 10,150,000 shares of our common stock. Accordingly, this concentration of ownership by itself may have the effect of impeding a merger, consolidation, takeover or other business consolidation, or discouraging a potential acquirer from making a tender offer for the common stock.

 
This report contains forward-looking statements and information relating to us, our industry and to other businesses.


These forward-looking statements are based on the beliefs of our management, as well as assumptions made by and information currently available to our management. When used in this prospectus, the words “estimate,” “project,” “believe,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are subject to risks and uncertainties that may cause our actual results to differ materially from those contemplated in our forward-looking statements. We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events.

 

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

None

 

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information.

None.

 

27 
 

Item 6. Exhibits. 

 

    Incorporated by reference    
Exhibit Exhibit Description Filed herewith Form Period ending Exhibit Filing date  
3.1 Certificate of Incorporation   10   3.1 02/14/2012  
3.2 By-Laws   10   3.2 02/14/2012  
3.3 Amendment to Certificate of Incorporation   8-K   3.3 05/29/2012  
4.1 Specimen Stock Certificate   10   4.1 02/14/2012  
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          
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 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          

 

 

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:  August 13, 2015

 

 

 

 

28 
 

 

EX-31 2 ex311.htm EXHIBIT 31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AS ADOPTED 
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Robert I. Goldstein, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of US Nuclear Corp.;

 

2. 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;

 

3. 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;

 

4. 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 the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our 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:  August 13, 2015

 

By: /s/ Robert I. Goldstein

Robert I. Goldstein

Chief Executive Officer,

(Principal Executive Officer)

 

 

EX-31 3 ex312.htm EXHIBIT 31.2


EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER AS ADOPTED 
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Rachel Boulds, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of US Nuclear Corp.;

 

2. 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;

 

3. 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;

 

4. 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 the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our 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:  August 13, 2015

 

By: /s/ Rachel Boulds

Rachel Boulds

Chief Financial Officer

(Principal Financial Officer)

 

 

 

 

EX-32 4 ex321.htm EXHIBIT 32.1

Exhibit 32.1

 

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 on Form 10-Q of US Nuclear Corp. (the “Company”) for the quarter ending June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Robert I. Goldstein, Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

 

(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.

 

 

 

Dated: August 13, 2015

 

By: /s/ Robert I. Goldstein

Robert I. Goldstein

Chief Executive Officer (Principal Executive Officer) and Chairman of the Board of Directors

(Principal Executive Officer)

 

 

 

This certification accompanies each Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

 

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

 

 

EX-32 5 ex322.htm EXHIBIT 32.2

Exhibit 32.2

 

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 on Form 10-Q of US Nuclear Corp. (the “Company”) for the quarter ending June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Rachel Boulds, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

 

(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.

 

 

 

Dated: August 13, 2015

 

By:  /s/ Rachel Boulds
Rachel Boulds

Chief Financial Officer

(Principal Financial Officer)

 

 

 

This certification accompanies each Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

 

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

 

 

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Related Party Transactions (Narrative) (Details) - USD ($)
6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Dec. 31, 2014
Related Party Transaction [Line Items]      
Accounts payable, related party for leases $ 72,000   $ 24,000
Robert I. Goldstein - A Position As President Of Gold Team Inc      
Related Party Transaction [Line Items]      
Rent expense 60,000 $ 72,000  
Accounts payable, related party for leases $ 72,000   $ 24,000

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Property And Equipment (Details) - USD ($)
Jun. 30, 2015
Dec. 31, 2014
Property, Plant and Equipment [Line Items]    
Property and equipment, gross $ 436,110 $ 436,110
Less accumulated depreciation 424,916 421,656
Property and equipment, net 11,194 14,454
Furniture And Fixtures [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross 146,684 146,684
Leasehold Improvements [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross 50,091 50,091
Equipment [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross 212,076 212,076
Computers And Software [Member]    
Property, Plant and Equipment [Line Items]    
Property and equipment, gross $ 27,259 $ 27,259
XML 17 R9.htm IDEA: XBRL DOCUMENT v3.2.0.727
Property and Equipment
6 Months Ended
Jun. 30, 2015
Property And Equipment  
Property and Equipment

Note 4 – Property and Equipment

  

The following are the details of the property, equipment and improvements at June 30, 2015 and December 31, 2014:

 

   June 30,  December 31,
   2015  2014
Furniture and fixtures  $146,684   $146,684 
Leasehold Improvements   50,091    50,091 
Equipment   212,076    212,076 
Computers and software   27,259    27,259 
    436,110    436,110 
Less accumulated depreciation   (424,916)   (421,656)
Property and equipment, net  $11,194   $14,454 
XML 18 R29.htm IDEA: XBRL DOCUMENT v3.2.0.727
Summary Of Significant Accounting Policies (Narrative) (Details) - USD ($)
6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Dec. 31, 2014
Allowances for doubtful accounts receivable $ 5,000   $ 5,000
Sales returns and allowances $ 0 $ 0  
One Customer [Member] | Revenue [Member]      
Revenue concentration risk percentage 36.00% 22.00%  
XML 19 R28.htm IDEA: XBRL DOCUMENT v3.2.0.727
Organization And Basis Of Presentation (Narrative) (Details) - USD ($)
3 Months Ended 6 Months Ended 12 Months Ended
Oct. 15, 2013
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Dec. 31, 2014
Common stock, shares issued   13,275,000   13,275,000   13,265,000
Common stock, shares outstanding   13,275,000   13,275,000   13,265,000
Net loss   $ 304,271 $ (150,935) $ 269,375 $ (359,335) $ (321,505)
Net cash used in operating activities       $ 41,518 $ (149,773) $ (463,556)
Optron [Member]            
Net liabilities at reverse merger $ (12,901)          
Common Stock [Member]            
Common stock, shares issued 10,700,000          
Common stock, shares outstanding 10,700,000          
Common Stock [Member] | Former Majority Shareholder, Sole Director And Chief Executive Officer [Member]            
Cancellation of common stock, shares 9,150,000          
Common Stock [Member] | Optron [Member]            
Share exchage agreement and plan of merger description

Pursuant to the agreement, the Company acquired from Optron all of the issued and outstanding capital stock consisting of 98,372 shares of common stock in exchange for 9,150,000 shares of the Company’s common stock.

         
XML 20 R30.htm IDEA: XBRL DOCUMENT v3.2.0.727
Note Payable Shareholder (Narrative) (Details) - USD ($)
6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Dec. 31, 2014
Debt Instrument [Line Items]      
Note payable - shareholder $ 265,508   $ 58,215
Proceeds from note payable to shareholder 243,293 $ 158,567  
Repayment of note payable 36,000    
Note Payable [Member] | Robert Goldstein, owner of the company      
Debt Instrument [Line Items]      
Note payable - shareholder $ 265,508   $ 58,215
Debt instrument due date Dec. 31, 2016    
Notes payable terms

These loans are evidenced by unsecured, non-interest bearing notes

   
Proceeds from note payable to shareholder $ 243,293    
Repayment of note payable $ 36,000    
XML 21 R31.htm IDEA: XBRL DOCUMENT v3.2.0.727
Lines Of Credit (Narrative) (Details) - USD ($)
Jun. 30, 2015
Dec. 31, 2014
Line of Credit Facility [Line Items]    
Line of credit $ 354,374 $ 319,274
Four Lines Of Credit [Member]    
Line of Credit Facility [Line Items]    
Line of credit maximum borrowing amount 400,000  
Line of credit $ 354,374 $ 319,274
Four Lines Of Credit [Member] | Minimum [Member]    
Line of Credit Facility [Line Items]    
Interest rate on line of credit 3.25%  
Four Lines Of Credit [Member] | Maximum [Member]    
Line of Credit Facility [Line Items]    
Interest rate on line of credit 9.25%  
XML 22 R8.htm IDEA: XBRL DOCUMENT v3.2.0.727
Inventories
6 Months Ended
Jun. 30, 2015
DisclosureInventoryAbstract  
Inventories

Note 3 – Inventories

 

Inventories at June 30, 2015 and December 31, 2014 consisted of the following:

 

   June 30,  December 31,
   2015  2014
Raw materials  $728,737   $782,732 
Work in Progress   599,093    931,686 
Finished goods   898,641    629,311 
   $2,226,471   $2,343,729 
XML 23 R32.htm IDEA: XBRL DOCUMENT v3.2.0.727
Shareholders' Equity (Narrative) (Details) - 6 months ended Jun. 30, 2015 - Common Stock [Member] - USD ($)
Total
Stock issued for services, shares 10,000
Stock issued for services, value $ 1,000
XML 24 R2.htm IDEA: XBRL DOCUMENT v3.2.0.727
Condensed Consolidated Balance Sheets - USD ($)
Jun. 30, 2015
Dec. 31, 2014
CURRENT ASSETS    
Cash $ 424,164 $ 140,253
Accounts receivable, net 259,101 95,700
Inventories 2,226,471 2,343,729
Other current assets 300 1,800
TOTAL CURRENT ASSETS 2,910,036 2,581,482
EQUIPMENT, net 11,194 14,454
GOODWILL 570,176 570,176
TOTAL ASSETS 3,491,406 3,166,112
CURRENT LIABILITIES    
Accounts payable 106,277 175,033
Accounts payable, related party 72,000 24,000
Accrued liabilities 106,625 93,431
Customer deposit 16,273 196,185
Line of credit 354,374 319,274
TOTAL CURRENT LIABILITIES 655,549 807,923
Note payable to shareholder 265,508 58,215
TOTAL LIABILITIES $ 921,057 $ 866,138
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, 13,275,000 and 13,265,000 shares issued and outstanding $ 1,328 $ 1,327
Additional paid in capital 3,137,679 3,136,680
Accumulated deficit (568,658) (838,033)
TOTAL SHAREHOLDERS' EQUITY 2,570,349 2,299,974
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,491,406 $ 3,166,112
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Organization And Basis Of Presentation
6 Months Ended
Jun. 30, 2015
Organization And Basis Of Presentation  
Organization and Basis of Presentation

Note 1 – Organization and Basis of Presentation

 

The unaudited consolidated financial statements were prepared by US Nuclear Corp. (the “Company”), pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) were omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. The results for the six months ended June 30, 2015, are not necessarily indicative of the results to be expected for the year ending December 31, 2015.

 

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. Optron Scientific Company, Inc. (“Optron”) was incorporated in the State of California on December 24, 1971.

 

On October 15, 2013, the Company entered into a share exchange agreement and plan of merger with Optron. Pursuant to the agreement, the Company acquired from Optron all of the issued and outstanding capital stock consisting of 98,372 shares of common stock in exchange for 9,150,000 shares of the Company’s common stock.

 

Concurrently with the closing of the transactions, the Company entered into an agreement with the Company’s former majority stockholder, sole director and chief executive officer, pursuant to which he returned 9,150,000 shares of the Company’s common stock for cancellation. The Company’s former majority stockholder, sole director and chief executive officer was not compensated for the cancellation of his shares of the Company’s common stock. Upon completion of the foregoing transactions, the Company had an aggregate of 10,700,000 shares of common stock issued and outstanding.

 

The exchange of shares with Optron was accounted for as a reverse acquisition under the purchase method of accounting since Optron obtained control of the Company. Accordingly, the merger of Optron into the Company was recorded as a recapitalization of Optron, Optron being treated as the continuing entities. The historical financial statements presented are the financial statements of Optron. The share exchange agreement has been treated as a recapitalization and not as a business combination; therefore, no pro forma information is disclosed. At the date of this transaction, the net liabilities of the legal acquirer, US Nuclear, were $12,901.

 

As a result of the reverse merger transactions described above the historical financial statements presented are those of Optron, the operating entity.

 

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.

 

Going Concern

 

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the Company obtaining additional equity financing or continuing to receive debt financing from its majority shareholder until such time as the Company can return to generating income from operations. There is no guarantee that the Company will be able to raise adequate equity or debt financing or generate profitable operations. For the year ended December 31, 2014, the Company incurred a net loss of $321,505 and had negative cash flows from operations of $463,556. As of June 30, 2015 and December 31, 2014, the Company had an accumulated deficit of $568,658 and $838,033, respectively. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management intends to raise additional funds through equity or debt financing and to generate increased sales of the Company’s products over the next twelve months.

 

Basis of Presentation

 

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, 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.

XML 26 R22.htm IDEA: XBRL DOCUMENT v3.2.0.727
Geographical Sales (Tables)
6 Months Ended
Jun. 30, 2015
Geographical Sales Tables  
Schedule of Geographical Distribution of Comapany's Sales

The geographical distribution of the Company’s sales for the three and six months ended June 30, 2015 and 2014 is as follows:

 

   Three Months Ended June 30,  Six Months Ended June 30,
   2015  2014  2015  2014
             
 Geographical sales                     
 United States  $427,733   $181,290   $620,151   $390,098 
 Asia   506,517    56,447    573,640    102,321 
 South America   119,769    11,050    261,422    11,050 
 Other   48,875    127,072    95,165    136,036 
   $1,102,894   $375,859   $1,550,378   $639,505 
XML 27 R24.htm IDEA: XBRL DOCUMENT v3.2.0.727
Inventories (Details) - USD ($)
Jun. 30, 2015
Dec. 31, 2014
Inventories Details    
Raw materials $ 728,737 $ 782,732
Work in Progress 599,093 931,686
Finished goods 898,641 629,311
Inventories, net $ 2,226,471 $ 2,343,729
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