{"url_path":"/sec/ucle/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 MANAGEMENT’S DISCUSSION AND","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-23","source_url":"https://www.sec.gov/Archives/edgar/data/1543623/0001213900-26-070875-index.html","accession_number":"0001213900-26-070875","cik":"0001543623","ticker":"UCLE","issuer_name":"US NUCLEAR CORP.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1543623/0001213900-26-070875-index.html","primary_entity_key":"0001543623","primary_entity_name":"US NUCLEAR CORP."},"word_count":1897,"has_tables":true,"body_markdown":"ITEM 7. MANAGEMENT’S DISCUSSION AND\nANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS\n\n \n\nOverview\n\n \n\n*The following Management’s Discussion\nand Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand US Nuclear\nCorp, our operations and our present business environment. MD&A is provided as a supplement to—and should be read in conjunction\nwith—our consolidated financial statements and the accompanying notes thereto contained in “Item 8. Financial Statements\nand Supplementary Data” of this report on Form 10-K. This discussion contains forward-looking statements that reflect our plans,\nestimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements.*\n\n \n\nWe were incorporated in Delaware on February\n14, 2012, and on March 2, 2012, we filed a registration statement on Form 10 to register with the U.S. Securities and Exchange Commission\nas a public company. We were originally organized as a vehicle to investigate and, if such investigation warrants, acquire a target\ncompany or business seeking the perceived advantages of being a publicly held corporation.\n\n \n\nOn April 18, 2012, Richard Chiang, then our sole\ndirector and shareholder, entered into a Stock Purchase Agreement whereby Mr. Goldstein of US Nuclear Corp purchased 10,000,000 shares\nof our common stock from Mr. Chiang, which constituted 100% of our issued and outstanding shares of common stock. Mr. Chiang then resigned\nfrom all positions. Subsequently, on May 18, 2012, the Registrant appointed Mr. Chiang to serve as a member of the Board of Directors.\nHe resigned from this position on March 31, 2013.\n\n \n\nSince our acquisition of Overhoff Technology\nin 2006, we have had discussions with other companies in our industry for an acquisition. While we targeted Overhoff due to its unique\nposition in the tritium market, we have not commenced an acquisition since our Overhoff Technology acquisition; we believe in part the\nreason was due to lack of additional capital, our status as a privately-held entity at the time, and focus on developing our own products.\nWe will seek out companies whom our management believes will provide value to our customers and will complement our business. We will\nfocus on diversifying our product line into a larger range so that our customers and vendors may have a more expansive experience in\ntype, choice, options, price and selection. We also believe that with a more diverse product line we will become more competitive as\nour industry is intensely competitive.\n\n \n\n 19 \n\n \n\nGenerally, our product concentration places a\nheavy reliance on our Overhoff Technology division. In 2025, we derived 74.57% of our total revenues from sales made by Overhoff. We\nexpect to encounter a continuation of this trend unless we are successful in diversifying our customer base, executing our acquisition\nstrategy, and experience increases in business from our Technical Associates division.\n\n \n\nOur international revenues were 7.85% of our\ntotal revenue in 2025. We expect this to increase over time as we continue to field new orders, inquires, and engage new customers overseas\nand recover post-pandemic. We believe that South Korea and China will likely be a larger contributor to revenue within the next few years.\nWhile we maintain steady growth domestically, the international side of our business may be a larger component as nuclear technology\nand rapid development for clean energy grows abroad. Additionally, the Company relies on continued growth and orders from CANDU reactors\n(Canada Deuterium Uranium), and rapid development of the next generation of nuclear reactors called Molten Salt Reactors, (MSR) and Liquid-Fluoride\nThorium Reactors (LFTR), all of which purchase tritium detection and monitor products. There can be no assurances as to our growth projections\nand our risk profile as we depend upon increased foreign customers for business.\n\n \n\nRobert I. Goldstein, our President, Chief Executive\nOfficer and Chairman of the Board of Directors also maintains a position as President of Gold Team Inc., a Delaware company that invests\nin industrial real estate properties for investment purposes. He holds an 8% interest in Gold Team Inc. and spends approximately 5 hours\nper week with affairs related to Gold Team Inc. The Company leases its current facilities from Gold Team Inc., which owns both the Canoga\nPark, CA and Milford, Ohio properties.\n\n \n\nOn May 31, 2016, we entered into an Asset Purchase\nAgreement with Electronic Control Concepts (“ECC”) whereby the Company purchased certain tangible and intangible assets of\nECC. ECC is a small manufacturer of test and maintenance meters for x-ray machines both medical and industrial. We acquired\nECC to give a boost to our current x-ray related product and hospital/medical product sales. \n\n \n\nResults of Operations\n\n \n\n*For the year ended December 31, 2025, compared\nto the year ended December 31, 2024*\n\n \n\n  \nYear Ended December 31,  \nChange \n\n  \n2025  \n2024  \n$  \n% \n\n  \n   \n   \n   \n  \n\nSales \n$2,168,999  \n$2,190,398  \n$(21,399) \n -1.0%\n\nCost of goods sold \n 1,078,697  \n 1,174,769  \n (96,072) \n -8.2%\n\nGross profit \n 1,090,302  \n 1,015,629  \n 74,673  \n 7.4%\n\nSelling, general and administrative expenses \n 2,029,741  \n 2,550,782  \n (521,041) \n -20.4%\n\nLoss from operations \n (939,439) \n (1,535,153) \n 595,714  \n -38.8%\n\n  \n    \n    \n    \n   \n\nOther expense \n (299,612) \n (204,773) \n (94,839) \n 46.3%\n\nLoss before provision for income taxes \n (1,239,051) \n (1,739,926) \n 500,875  \n -28.8%\n\n  \n    \n    \n    \n   \n\nProvision for income taxes \n -  \n -  \n    \n   \n\nNet income (loss) \n$(1,239,051) \n$(1,739,926) \n$500,875  \n -28.8%\n\n \n\nRevenue for the year ended December 31, 2025,\nwas $2,168,999 compared to $2,190,398 for the year ended December 31, 2024, a decrease of $21,399 or 1.0%. The revenue breakdown for\nthe year ended December 31, 2025, is as follows:\n\n \n\nNorth America 92.15%\n\nAsia (including Japan) 2.25%\n\nOther 5.60%\n\n \n\nOur gross margin for the year ended December\n31, 2025, was 50.27% as compared to 46.37% for the year ended December 31, 2024. The increase in gross margin is due to the mix of products\nsold during the period and their respective costs.\n\n \n\n 20 \n\n \n\nSelling and general and administrative expenses\nfor the year ended December 31, 2025, decreased by $521,041 or 20.4% to $2,029,741; down from $2,550,782 for the year ended December\n31, 2024. The decrease is largely attributed to a reduction in payroll expenses, professional fees, finance costs, and interest expense,\noffset by an impairment of Goodwill of $130,514.\n\n \n\nOther expense for the year ended December 31,\n2025, was $299,612, an increase of $94,839 from $204,773 for 2024. Other expense in 2025 included a loss of $589,177 on the write-down\nof inventory at the Optron facility and interest and dividend expenses, offset by proceeds of $475,000 received from MIFTI and MIFTEC\n(see Note 5). Other expense for the year ending December 31, 2024, was $204,773, consisting primarily of interest and dividend expenses.\n\n \n\nThe net loss for the year ended December 31,\n2025, was $1,239,051, compared to $1,739,926 for the year ended December 31, 2024.\n\n \n\nLiquidity and Capital Resources\n\n \n\nOur operations have historically been financed\nby our majority stockholder. As funds were needed for working capital purposes, our majority stockholder would loan us the needed funds.\nDuring the year ended December 31, 2025, the Company’s majority shareholder loaned $79,019 to the Company and was repaid $81,201.\nThe balance owed to our majority stockholder as of December 31, 2025, was $90,330. We anticipate meeting our capital needs through the\nsale of our common and preferred stock and increased borrowing, if necessary.\n\n \n\nAt December 31, 2025, total assets decreased\nby $724,964 or 27.39% from $2,646,847 at December 31, 2024, primarily due to the write-down of $589,177 of inventory at our California\nfacility and an impairment to Goodwill of $130,514.\n\n \n\nAt December 31, 2025, total liabilities decreased\nby 30.47% to $2,435,574 from $3,503,012 at December 31, 2024, due to decreases in customer deposits and deferred revenue, convertible\ndebt, and loans and notes payable.\n\n \n\nCash Flow\n\n \n\nThe following table summarizes our cash flows\nfor the periods indicated below:\n\n \n\n  \nFor the\nYear Ended  \nFor the\nYear Ended \n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nCash used in operating activities \n (199,343) \n (509,053)\n\nCash used in investing activities \n -  \n (30,767)\n\nCash provided by financing activities \n 203,282  \n 517,820 \n\n \n\n*Cash Used in Operating Activities*\n\n \n\nCash used in operating activities was $199,343\nand $509,053 for the years ending December 31, 2025, and 2024, respectively. The decrease in 2025 primarily reflected our net income\nfor the period, adjusted by increases in non-cash charges such as common stock issued for services, depreciation, and Goodwill impairment,\noffset by the net changes in accounts receivable, inventory, prepaid expenses, customer deposits, accounts payable, and accrued expenses.\n\n \n\n*Cash Used by Investing Activities*\n\n \n\nDuring the year ended December 31, 2025, and\nDecember 31, 2024, cash used in investing activities was $0. During the year ended December 31, 2024, cash used in investing activities\nwas $30,767, which consisted of an employee advance and a note receivable.\n\n \n\n*Cash Provided by Financing Activities*\n\n \n\nDuring the year ended December 31, 2025, cash\nprovided by financing activities was $203,282, which consisted of net borrowings from lines of credit, shareholder debt, and notes payable.\nDuring the year ended December 31, 2024, cash provided by financing activities was $517,820, which primarily consisted of net borrowings\nfrom lines of credit, notes payable, shareholder debt, and convertible notes.\n\n \n\n 21 \n\n \n\nCritical Accounting Policies\n\n \n\nOur financial statements and related public financial\ninformation are based on the application of accounting principles generally accepted in the United States (“US GAAP”). US\nGAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact\non the assets, liabilities, revenues and expenses amounts reported. These estimates can also affect supplemental information contained\nin our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates\nand underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical\nexperience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially\nfrom these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation\nof our financial statements.\n\n \n\nIncome Taxes\n\n \n\nThe Company accounts for income taxes in accordance\nwith ASC Topic 740, “Income Taxes.” ASC 740 requires a company to use the asset and liability method of accounting for income\ntaxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for\ntaxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their\ntax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that\nsome portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the\neffects of changes in tax laws and rates on the date of enactment.\n\n \n\nUnder ASC 740, a tax position is recognized as\na benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax\nexamination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being\nrealized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption\nhad no effect on the Company’s consolidated financial statements.\n\n \n\nOff-Balance Sheet Arrangements\n\n \n\nWe have not entered into any off-balance sheet\narrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,\nrevenues or expenses, results of operations, liquidity, capital expenditures or capital resources.\n\n \n\nContractual Obligations\n\n \n\nAs a “smaller reporting company”\nas defined by Item 10 of Regulation S-K, the Company is not required to provide this information."}