Quarterly Report for Quarter Ending MARCH 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help the reader understand US Nuclear Corp, our operations and our present business environment. MD&A is provided as a supplement to-and should be read in conjunction with-our consolidated financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q. The audited financial statements for our fiscal year ended December 31, 2024, filed with the Securities Exchange Commission on Form 10-K on June 25, 2025, should be read in conjunction with the discussion below. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have been included in these unaudited financial statements.

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

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

Generally, our product concentration places a heavy reliance on our Overhoff Technology division. During the three months ending March 31, 2026, we derived 61% of our total revenues from sales made by Overhoff. Our international revenues were 42% of our total revenue during the three months ended March 31, 2026. We expect this to increase over time as we continue to field new order inquiries and engage new customers overseas. We believe that South Korea and China will likely be a larger contributor to revenue within the next few years. While we maintain steady growth domestically, the international side of our business may be a larger component as nuclear technology and rapid development for clean energy grows abroad. Additionally, the Company relies on continued growth and orders from CANDU reactors (Canada Deuterium Uranium), and rapid development of the next generation of nuclear reactors called Molten Salt Reactors, (MSR) and Liquid-Fluoride Thorium Reactors (LFTR), all of which purchase tritium detection and monitor products. There can be no assurances as to our growth projections and our risk profile as we depend upon increased foreign customers for business.

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

Robert I. Goldstein, our President, Chief Executive Officer and Chairman of the Board of Directors also maintains a position as President of Gold Team Inc., a Delaware company that invests in industrial real estate properties for investment purposes. He holds an 8% interest in Gold Team Inc. and spends approximately 5 hours per week on 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.

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

On March 3, 2023, the Company divested itself of its wholly owned subsidiary, Cali From Above, through a Membership Interest Purchase Agreement with the Company's President and Chief Executive Officer, Robert Goldstein. Consideration received by the Company was 65,000,000 shares of Averox, Inc. (OTC:AVRI), resulting in the Company owning 26% of the issued and outstanding shares of common stock of AVRI. The Company and Cali From Above also signed a Cooperation Agreement whereby the Company holds exclusive sourcing and manufacturing rights for Cali From Above products, thus making Cali From Above a new customer of the Company.

Results of Operations

For the three months ended March 31, 2026, compared to the three months ended March 31, 2025:

		Three Months Ended March 31,								Change
		2026				2025				$				%
Sales		$	352,209			$	476,705			$	(124,496	)			-26.1	%
Cost of goods sold			197,214				127,788				69,426				54.3	%
Gross profit			154,995				348,917				(193,922	)			-55.6	%
Selling, general and administrative expenses			300,898				872,797				(571,899	)			-65.5	%
Loss from operations			(145,903	)			(523,880	)			377,977				-72.1	%
Other expense			(41,183	)			(36,352	)			(4,831	)			13.3	%
Loss before provision for income taxes			(187,086	)			(560,232	)			373,146				-66.6	%
Provision for income taxes			-				-				-
Net loss		$	(187,086	)		$	(560,232	)		$	373,146				-66.6	%

Sales for the three months ended March 31, 2026, were $352,209 compared to $476,705 for the same period in 2025. The decrease of $124,496 or 26.1% is largely a result of a decrease in sales at our Overhoff subsidiary of $135,369 offset by an increase in sales at our Optron facility of $10,873. Sales from period to period are also dependent on the mix of products and services sold during the period. The geographic breakdown in sales during the three months ending March 31, 2026, is as follows:

North America 57.76%

Asia (Including Japan) 8.54%

Other 33.7%

Our gross margins for the three months ended March 31, 2026, were 44.01% as compared to 73.19% for the same period in 2025. Gross margins decreased for the three months ending March 31, 2026, by $193,922. This compression was primarily driven by an approximate $65,000 increase in indirect labor costs allocated to manufacturing overhead during the current quarter, which resulted in unfavorable production cost absorption. The remaining variance was driven by a shift in revenue mix between lower-margin services and higher-margin products, as well as inflationary fluctuations in raw material costs.

Selling, general and administrative expenses for the three months ended March 31, 2026, were $300,898 compared to $872,797 for the same period in 2025. The decrease of $571,899 or 65.5% was principally due to $451,099 in stock-based compensation as well as decreases in professional fees and commissions. Stock based compensation is issued for advisory services and as an incentive to consultants to increase revenues through the acquisition of new customers.

Other expense for the three months ended March 31, 2026, was $41,183 compared to $36,352 for the same period in 2025 and reflects interest expense incurred during the period.

Liquidity and Capital Resources

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

Total assets decreased by $282,934 to $1,638,950 at March 31, 2026, compared to $1,921,883 at December 31, 2025. This decrease was primarily driven by lower accounts receivable balances and a reduction in inventories.

Total liabilities decreased by $56,553 to $2,379,021 at March 31, 2026, compared to $2,435,574 at December 31, 2025. This net decrease was primarily driven by reductions in customer deposits, accounts payable, and notes payable, which were partially offset by increases in accrued liabilities, accrued officer compensation, and credit facility borrowings.

Net cash used in operating activities for the three months ended March 31, 2026, was $126,563 compared to $92,486 for the same period in 2025. The change in cash used in operations was principally due to changes in inventory, accounts receivable, accounts payable, and customer deposit working capital accounts.

Net cash used in investing activities was $0 for both the three months ended March 31, 2026, and March 31, 2025.

Net cash provided by financing activities for the three months ended March 31, 2026, was $59,102 compared to $30,135 for the same period in 2025. The increase in cash from financing activities was primarily driven by increases to borrowing under our lines of credit and notes payable, offset by a reduction in proceeds from the sale of common stock.

Critical Accounting Policies

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

We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently applied. Our significant accounting policies are summarized in Note 2 to our consolidated 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.

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.