Form 10-Q US NUCLEAR CORP. For: Mar 31

 

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended MARCH 31, 2020

 

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

 

Commission file number: 000-54617

 

 

(Exact name of registrant as specified in its charter)

 

Delaware		45-4535739
State or other jurisdiction of		(I.R.S. Employer
Incorporation or organization		Identification No.)

 

7051 Eton Avenue

Canoga Park, CA 91303

(Address of principal executive offices)

 

(818) 883-7043

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No  ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  ☐	Accelerated filer  ☐
Non-accelerated filer  ☒	Smaller reporting company  ☒
	Emerging Growth Company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

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

 

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

 

The number of shares of the Registrant’s common stock outstanding as of August 18, 2020 was 22,477,536.

 

 

 

TABLE OF CONTENTS

 

PART I		1
Item 1.	Financial Statements (Unaudited)	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23
PART II		24
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	25
	Signatures	26

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

US NUCLEAR CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

		March 31,				December 31,
		2020				2019
		(unaudited)				(audited)
ASSETS
CURRENT ASSETS
Cash		$	914,137			$	1,087,660
Accounts receivable, net			155,269				560,303
Inventories			1,218,733				1,098,250
Prepaid expenses and other current assets			3,000				3,000
TOTAL CURRENT ASSETS			2,291,139				2,749,213
Property and equipment, net			7,349				7,848
Right-of-use assets			173,783				211,799
Investments			837,420				2,000
Goodwill			570,176				570,176
TOTAL ASSETS		$	3,879,867			$	3,541,036
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable		$	82,090			$	55,493
Accrued liabilities			73,385				109,450
Accrued compensation - officer			275,000				250,000
Customer deposit			27,394				6,113
Acquisition contingency			5,926				10,594
Note payable			17,302				17,087
Operating lease liability			159,876				156,719
Line of credit			213,295				215,266
Convertible debenture, net of discount of $295,473			104,527				-
Derivative liability			406,323				418,781
TOTAL CURRENT LIABILITIES			1,365,118				1,239,503
Note payable, net of current portion			4,767				9,201
Note payable to shareholder			530,351				500,051
Convertible debenture, net of discount of $462,963			-				37,037
Operating lease liabillity, net of current portion			13,907				55,080
TOTAL LIABILITIES			1,914,143				1,840,872
COMMITMENTS & CONTINGENCIES			-				-
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, 21,647,837 and 20,067,371 shares issued and outstanding			2,165				2,007
Additional paid in capital			10,613,428				9,300,657
Accumulated deficit			(8,649,869	)			(7,602,500	)
TOTAL SHAREHOLDERS’ EQUITY			1,965,724				1,700,164
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	3,879,867			$	3,541,036

 

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

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

		Three Months Ended
		March 31,
		2020				2019
Sales		$	322,239			$	629,053
Cost of sales			155,912				311,136
Gross profit			166,327				317,917
Operating expenses
Selling, general and administrative expenses			894,842				499,233
Total operating expenses			894,842				499,233
Loss from operations			(728,515	)			(181,316	)
Other income (expense)
Interest expense			(13,395	)			(6,103	)
Amortization of debt discount			(167,490	)			-
Change in value of derivative liability			(137,162	)			-
Equity loss in investment			(807	)			-
Total other expense			(318,854	)			(6,103	)
Loss before provision for income taxes			(1,047,369	)			(187,419	)
Provision for income taxes			-				-
Net loss		$	(1,047,369	)		$	(187,419	)
Weighted average shares outstanding - basic and diluted			20,559,328				17,031,588
Loss per shares - basic and diluted		$	(0.05	)		$	(0.01	)

 

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

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(unaudited)

 

										Additional								Total
		Common Stock								Paid-in				Accumulated				Shareholders’
		Shares				Amount				Capital				Deficit				Equity
Balance, December 31, 2019			20,067,371			$	2,007			$	9,300,657			$	(7,602,500	)		$	1,700,164
Issuance of common stock for services			558,295				56				453,040				-				453,096
Issuance of common stock for conversion of convertible debenture and accrued interest			163,275				16				108,970				-				108,986
Issuance of common stock for investment			858,896				86				601,141				-				601,227
Derivative liability resolution			-				-				149,620								149,620
Net loss			-				-				-				(1,047,369	)			(1,047,369	)
Balance, March 31, 2020			21,647,837			$	2,165			$	10,613,428			$	(8,649,869	)		$	1,965,724
Balance, December 31, 2018			16,959,784			$	1,696			$	6,445,625			$	(4,441,727	)		$	2,005,594
Issuance of common stock for services			257,050				26				118,541				-				118,567
Net loss			-				-				-				(187,419	)			(187,419	)
Balance, March 31, 2019			17,216,834			$	1,722			$	6,564,166			$	(4,629,146	)		$	1,936,742

 

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

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

		Three Months Ended
		March 31,
		2020				2019
OPERATING ACTIVITIES
Net loss		$	(1,047,369	)		$	(187,419	)
Adjustment to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			499				285
Adjustment to acquisition contingency			3,389				(2,272	)
Issuance of common stock for services			453,096				118,567
Expenses paid directly by majority shareholder			30,000				-
Operating lease expense			38,016				35,103
Amortization of debt discounts			167,490				-
Change in value of derivative liability			137,162				-
Equity loss in investment			807				-
Changes in operating assets and liabilities:
Accounts receivable			405,034				(5,592	)
Inventories			(120,483	)			(220,277	)
Prepaid expenses and other current assets			-				-
Accounts payable			18,540				23,894
Accrued liabilities			(27,079	)			(884	)
Accrued compensation - officer			25,000				25,000
Customer deposits			21,281				12,356
Operating lease liability			(38,016	)			(35,103	)
Net cash provided by (used in) operating activities			67,367				(236,342	)
INVESTING ACTIVITIES
Cash paid for investment			(235,000	)			-
Net cash used in investing activities			(235,000	)			-
FINANCING ACTIVITIES
Net borrowings (repayments) under lines of credit			(1,971	)			(1,782	)
Repayments for note payable			(4,219	)			(4,015	)
Proceeds from note payable to shareholder			300				900
Repayments for note payable to shareholder			-				(15,000	)
Net cash used in financing activities			(5,890	)			(19,897	)
NET DECREASE IN CASH			(173,523	)			(256,239	)
CASH
Beginning of period			1,087,660				969,118
End of period		$	914,137			$	712,879
Supplemental disclosures of cash flow information
Taxes paid		$	-			$	-
Interest paid		$	4,431			$	6,103
Reclassification of acquisition contingency to accounts payable		$	(3,389	)		$	3,531
Right of use asset and operating lease liability recognized		$	-			$	356,508
Common stock issued for conversion of convertible debenture and accrued interest		$	108,986			$	-
Common stock issued for investment		$	601,227			$	-
Relief of derivative liability		$	149,620			$	-

 

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

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(unaudited)

 

Note 1 - Organization

 

Organization and Line of Business

 

US Nuclear Corp., formerly known as APEX 3, Inc., (the “Company” or “US Nuclear”) was incorporated under the laws of the State of Delaware on February 14, 2012.

 

On May 31, 2016, the Company entered into an Asset Purchase Agreement with Electronic Control Concepts (“ECC”) whereby the Company purchased certain tangible and intangible assets of ECC.

 

The Company is engaged in developing, manufacturing and selling radiation detection and measuring equipment. The Company markets and sells its products to consumers throughout the world.

 

Note 2 – Basis Presentation

 

Interim financial statements

 

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

 

These statements reflect all adjustment, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2019 and notes thereto included in the Company’s annual report on Form 10-K filed on July 2, 2020. The Company follows the same accounting policies in the preparation of interim report. Results of operations for the interim period are not indicative of annual results.

 

Principles of Consolidation

 

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.

 

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 March 31, 2020 and December 31, 2019.

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(unaudited)

 

Concentration of credit risk

 

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and cash equivalents. The Company places its cash with high quality financial institutions and at times may exceed the FDIC insurance limit. The Company has not and does not anticipate incurring any losses related to this credit risk.

 

Accounts Receivable

 

The Company maintains reserves for potential credit losses for accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.  Reserves are recorded based on the Company’s historical collection history. Allowance for doubtful accounts as of March 31, 2020 and December 31, 2019 were $5,000 and $5,000, respectively.

 

Inventories

 

Inventories are valued at the lower of cost (determined primarily by the average cost method) or net realizable value. Management compares the cost of inventories with the net realizable value and allowance is made for writing down their inventories to net realizable value, if lower. As of March 31, 2020 and December 31, 2019, there was no allowance for slow moving or obsolete inventory. The Company periodically assessed its inventory for slow moving and/or obsolete items. If any are identified an appropriate allowance for those items is made and/or the items are deemed to be impaired.

 

Property and Equipment

 

Property and Equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When equipment is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of equipment is provided using the straight-line method for substantially all assets with estimated lives as follows:

 

Furniture and fixtures	5 years
Leasehold improvement	Lesser of lease life or economic life
Equipment	5 years
Computers and software	5 years

 

 Long-Lived Assets

 

The Company applies the provisions of Accounting Standards Codification (“ASC”) Topic 360, Property, Plant, and Equipment, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. ASC 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal. Based on its review at March 31, 2020 and December 31, 2019, 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 March 31, 2020 and December 31, 2019 the Company performed the required impairment analysis which resulted in no impairment adjustments.

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(unaudited)

 

Derivative Financial Instruments

 

The Company evaluates all of its agreements to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. As of March 31, 2020 and December 31, 2019, the Company’s only derivative financial instruments were an embedded conversion feature associated with convertible notes payable due to certain provisions that allow for a change in the conversion price based on a percentage of the Company’s stock price at the date of conversion.

 

Investments

 

The Company accounts for investments in equity securities without a readily determinable fair value at cost, minus impairment. If the Company identifies observable price changes in orderly transactions for the identical or a similar investment of the same issuer, the Company measures the equity security at fair value as of the date that the observable transaction occurred (“the measurement alternative”) in accordance with ASC 321. The Company accounts for investments for which its owns 20% or more, but less than 50% on the equity method in accordance with ASC 323.

 

Fair Value of Financial Instruments

 

For certain of the Company’s financial instruments, including cash, accounts receivable, accounts payable, accrued liabilities, customer deposits, and line of credit, the carrying amounts approximate their fair values due to their short maturities. In addition, the Company has a note payable to shareholder that the carrying amount also approximates fair value.

 

Revenue Recognition

 

Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), became effective for the Company on January 1, 2018. The Company’s revenue recognition disclosure reflects its updated accounting policies that are affected by this new standard. The Company applied the “modified retrospective” transition method for open contracts for the implementation of  Topic 606. As   sales are and have been primarily from the sale of products to customers, and the Company has no significant post-delivery obligations, this new standard did not   result in a material recognition of revenue on the Company’s accompanying consolidated financial statements for the cumulative impact of applying this new standard. The Company made no adjustments to its previously-reported total revenues, as those periods continue to be presented in accordance with its historical accounting practices under  Topic 605, Revenue Recognition.

 

Revenue from the product sales are recognized under  Topic 606  in a manner that reasonably reflects the delivery of its products to customers in return for expected consideration and includes the following elements:

 

●

executed contracts with the Company’s customers that it believes are legally enforceable;

 

●

identification of performance obligations in the respective contract;

 

●

determination of the transaction price for each performance obligation in the respective contract;

 

●

allocation the transaction price to each performance obligation; and

 

●

recognition of revenue only when the Company satisfies each performance obligation.

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(unaudited)

 

These five elements, as applied to each of the Company’s revenue category, is summarized below:

 

●

Product sales - revenue is recognized when the Company performs its obligations under the contracts it has with its customers to deliver products at an agreed upon price and it is generally when the control of the product has been transferred to the customer.

 

Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as customer deposits.

 

Sales returns and allowances was $0 for the three months ended March 31, 2020 and 2019. The Company provides a one-year warranty on all sales. Warranty expense for the three months ended March 31, 2020 and 2019 was insignificant. The Company does not provide unconditional right of return, price protection or any other concessions to its customers.

 

See Notes 13 and 14 for disclosures of revenue disaggregated by geographical area and product line.

 

Customer Deposits

 

Customer deposits represent cash paid to the Company by customers before the product has been completed and shipped.

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no effect on the Company’s consolidated financial statements.

 

Stock-Based Compensation

 

The Company records stock-based compensation in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation.” FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees.

 

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. As of March 31, 2020 and December 31, 2019 there were 333,333 and 333,333 warrants outstanding, respectively, to purchase shares of common stock and the Company had an outstanding convertible debenture that is convertible into 862,069 and 892,857 shares of common stock, respectively. Basic and diluted earnings per share are the same during the three months ended March 31, 2020 and 2019 due to the net loss incurred.

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(unaudited)

 

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 13.

 

Related Parties

 

The Company accounts for related party transactions in accordance with ASC 850, Related Party Disclosures. A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

 

Reclassifications

 

Certain prior period amounts were reclassified to conform to the manner of presentation in the current period. These reclassifications had no effect on the net loss or stockholders’ equity.

 

Recent Accounting Pronouncements

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers.  ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing 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 interim and annual periods beginning after December 15, 2017.   Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein.  Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company adopted this ASU beginning on January 1, 2018 and used the modified retrospective method of adoption. The adoption of this ASC did not have a material impact on the Company’s financial statements and disclosures.

 

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

 

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

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(unaudited)

 

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes which amends ASC 740 Income Taxes (ASC 740). This update is intended to simplify accounting for income taxes by removing certain exceptions to the general principles in ASC 740 and amending existing guidance to improve consistent application of ASC 740. This update is effective for fiscal years beginning after December 15, 2021.  The guidance in this update has various elements, some of which are applied on a prospective basis and others on a retrospective basis with earlier application permitted.  The Company is currently evaluating the effect of this ASU on the Company’s consolidated financial statements and related disclosures.

 

 Note 3 – Inventories

 

Inventories at March 31, 2020 and December 31, 2019 consisted of the following:

 

		March 31,				December 31,
		2020				2019
Raw materials		$	813,290			$	860,901
Work in Progress			121,633				39,511
Finished goods			283,810				197,838
Total inventories		$	1,218,733			$	1,098,250

 

At March 31, 2020 and December 31, 2019 the inventory reserve was $0.

 

Note 4 – Property and Equipment

 

The following are the details of the property and equipment at March 31, 2020 and December 31, 2019:

 

		March 31,				December 31,
		2020				2019
Furniture and fixtures		$	148,033			$	148,033
Leasehold Improvements			50,091				50,091
Equipment			237,418				237,418
Computers and software			33,036				33,036
			468,578				468,578
Less accumulated depreciation			(461,229	)			(460,730	)
Property and equipment, net		$	7,349			$	7,848

 

Depreciation expense for the three months ended March 31, 2020 and 2019 was $499 and $285, respectively. At March 31, 2020, the Company has $440,628 of fully depreciated property and equipment that is still in use.

 

Note 5 – Investment

 

On August 3, 2018, the Company closed an agreement by and among, MIFTEC Laboratories, Inc. (“MIFTEC”), a licensee of Magneto-Inertial Fusion Technologies, Inc., (“MIFTI”), and the Company. MIFTEC is a licensee of MIFTI radionuclide technology. MIFTEC will engage the Company to manufacture equipment pursuant to MIFTEC’s specifications and designs and have the Company as a sales representative for the manufactured equipment. The Company will be the exclusive manufacturer and supplier to MIFTEC of equipment in North America and Asia. In addition, the Company received a 10% ownership interest in MIFTEC. The consideration for the exclusive manufacturing rights and a 10% ownership interest in MIFTEC was $500,000 and 300,000 shares of the Company’s common stock valued at $594,000. The fair value was determined based on the Company’s stock price on August 3, 2018. The Company recorded the value of the 10% interest in MIFTEC at $10,000 and recorded $1,084,000 as the acquisition of manufacturing and supply rights in the accompanying consolidated statement of operations during the year ended December 31, 2018. The Company evaluated this investment for impairment and determined that an impairment of $9,000 was necessary during the year ended December 31, 2019. The carrying value of this investment at March 31, 2020 and December 31, 2019 was $1,000 and $1,000, respectively.

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(unaudited)

 

In April 2019, the Company also entered into a Cooperative Agreement with MIFTI whereby the Company acquired certain exclusive manufacturing and supply rights, including thermonuclear fusion-powered reactor for production of electricity per MIFTI designs in return for $500,000, of which $100,000 is payable upon signing, $200,000 within four months of the agreement and $200,000 within nine months of the agreement. The $500,000 is an option to buy a 10% interest in MIFTI for $2,700,000, if completed with 24 months of the agreement date. If the options expires, MIFTI shall issue the Company 500,000 shares of common stock and rescind all other exclusive rights contained in the agreement. The option was rescinded and the Company received 500,000 shares of MIFTI common stock which represents an ownership of approximately 0.56% for its $500,000 investment. The Company evaluated this investment for impairment and determined that an impairment of $499,000 was necessary during the year ended December 31, 2019. The carrying value of this investment at March 31, 2020 and December 31, 2019 was $1,000 and $1,000, respectively.

 

On February 5, 2020, the Company entered into a Stock Purchase Agreement (“SPA”) with Grapheton, Inc., a California corporation (“Grapheton”). The transaction was closed on March 12, 2020. Grapheton is a start-up company that focuses on building energy storage devises, known as supercapacitors, from a new material system. The technology utilized by Grapheton has been proven to provide a compelling advantage in microelectrode arrays with superior electrical and electrochemical properties.

 

Pursuant to the terms of the SPA, the Corporation will acquire a total of 2,552 shares of Grapheton’s common stock over a two years period. At closing, the Company was issued at total of 1,452 shares of Grapheton’s common stock for $235,000 and 858,896 shares of the Company’s common stock valued at $601,227.

 

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

 

An additional “true up” issuance of the Compnay’s common stock to Grapheton may be made on the second anniversary of the closing of the SPA, based on the valuation of the Company’s common stock on that date by a third-party valuator.

 

The Company currently owns 24% of Grapheton and accounts for its investment in Grapheton using the equity method of accounting is accordance with ASC 323.

 

Information regarding Grapeheton as of and for the three months ended March 31, 2020 is below:

 

Current assets		$	131,264
Total assets			131,264
Current liabilities			5,999
Total liabilities			5,999
Total stockholders’ equity			125,265
Revenue		$	-
Operating expenses			20,090
Other expenses			-
Net loss			(20,090	)

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(unaudited)

 

Note 6 – Notes Payable

 

In connection with the acquisition of assets from ECC, the Company issued a note payable to the owner of ECC. The note accrued interest at 5% per annum, requires quarterly principal and interest payments of $4,518 and is due on April 15, 2021. At March 31, 2020 and December 31, 2019, the amount outstanding under this note payable was $22,069 and $26,288, respectively. The Company repaid $4,219 during the three months ended March 31, 2020.

 

Future maturities of notes payable as of March 31, 2020 are as follows:

 

Twelve Months Ending March 31,
2021		$	17,302
2022			4,767
		$	22,069

 

Note 7 – Convertible Debenture

 

Convertible debentures consisted of the following at March 31, 2020 and December 31, 2019:

 

		March 31,				December 31,
		2020				2019
Issued on November 25, 2019; accrues interest at 8% per annum; due March 25, 2021; convertible at the lower of $1.50 or 80% of the lowest volume weighted average price 5days prior to conversion		$	400,000			$	500,000
Total convertible debenture			400,000				500,000
Unamortized debt discount			(295,473	)			(462,963	)
Convertible debenture, net		$	104,527			$	37,037

 

The following is a roll-forward of the Company’s convertible debentures and related discounts:

 

		Principal				Debt
		Balance				Discount				Total
Balance, December 31, 2019		$	500,000			$	(462,963	)		$	37,037
Conversion to common stock			(100,000	)			-				(100,000	)
Amortization			-				167,490				167,490
Balance, March 31, 2020		$	400,000			$	(295,473	)		$	104,527

 

In connection with the above mention convertible debenture, the Company also issued 333,333 warrants to the investor. The warrants have an exercise price of $1.50 per share and expire three year after issuance. The Company allocated the principal balance of the investment of $500,000 between the relative fair value of the convertible debenture and the warrants of $323,616 and $176,384, respectively. As a result of the allocation of a portion of the principal amount of the convertible debenture and the derivative liability associated with the variable conversion feature, the Company recognized a loss on the issuance of the convertible debenture of $183,978.

 

Note 8 – Derivative Liability

 

The Company determined that the conversion features of the convertible debentures represented embedded derivatives since the notes are convertible into a variable number of shares upon conversion. Accordingly, the notes are not considered to be conventional debt and the embedded conversion feature is bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of these derivative instruments is recorded as liabilities on the balance sheet with the corresponding amount recorded as a discount to each note, with any excess of the fair value of the derivative component over the face amount of the note recorded as an expense on the issue date. Such discounts are amortized from the date of issuance to the maturity dates of the notes. The change in the fair value of the derivative liabilities are recorded in other income or expenses in the statements of operations at the end of each period, with the offset to the derivative liabilities on the balance sheet.

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(unaudited)

 

The Company uses a weighted average Black-Scholes option pricing model with the following assumptions to measure the fair value of derivative liability at March 31, 2020 and December 31, 2019:

 

		March 31,				December 31,
		2020				2019
Risk free rate			0.17	%			1.59	%
Volatility			127	%			166	%
Terms (years)			0.98				1.23
Dividend rate			0	%			0	%

 

The following table represents the Company’s derivative liability activity for the three months ended March 31, 2020:

 

Derivative liability balance, December 31, 2019		$	418,781
Relief of derivative liability			(149,620	)
Change in derivative liability during the period			137,162
Derivative liability balance, March 31, 2020		$	406,323

 

Note 9 – Note Payable to Shareholder

 

Robert Goldstein, the CEO and majority shareholder, has loaned funds to the Company from time to time to cover general operating expenses. These loans are evidenced by unsecured, non-interest bearing notes due on December 31, 2020. During the three months ended March 31, 2020, the Company’s majority shareholder paid expenses on behalf of the Company of $30,000 and loaned an additional $300 to the Company. During the three months ended March 31, 2019, the Company’s majority shareholder loaned an additional $900 to the Company and was repaid $15,000. The amounts due to Mr. Goldstein are $530,351 and $500,051 as of March 31, 2020 and December 31, 2019, respectively.

 

Note 10 – Line of Credit

 

As of March 31, 2020, the Company had four lines of credit with a maximum borrowing amount of $400,000 with interest ranging from 5.5% to 11.5% and are unsecured. As of March 31, 2020 and December 31, 2019, the amounts outstanding under these lines of credit were $213,295 and $215,266, respectively.

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(unaudited)

 

Note 11 – Leases

 

The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company must discount lease payments based on an estimate of its incremental borrowing rate which is based on the interest rate of similar debt outstanding.

 

The Company leases its current facilities from Gold Team Inc., a company owned by the Company’s CEO, which owns both the Canoga Park, CA and Milford, Ohio locations. The leases expire on April 30, 2020 and the Company expects to exercise a renewal option for an additional 12 months. Effective January 1, 2019, the Company adopted the provision of ASC 842 Leases.

 

The table below presents the lease related assets and liabilities recorded on the Company’s consolidated balance sheets as of March 31, 2020 and December 31, 2019:

 

				March 31,				December 31,
		Classification on Balance Sheet		2020				2019
Assets
Operating lease assets		Operating lease right of use assets		$	173,783			$	211,799
Total lease assets				$	173,783			$	211,799
Liabilities
Current liabilities
Operating lease liability		Current operating lease liability		$	159,876			$	156,719
Noncurrent liabilities
Operating lease liability		Long-term operating lease liability			13,907				55,080
Total lease liability				$	173,783			$	211,799

 

Lease obligations at March 31, 2020 consisted of the following:

 

Twelve Months Ending March 31,
2021		$	168,000
2022			14,000
Total payments			182,000
Amount representing interest			(8,217	)
Lease obligation, net			173,783
Less lease obligation, current portion			(159,876	)
Lease obligation, long-term portion		$	13,907

 

The lease expense for the three months ended March 31, 2020 and 2019 was $42,000 and $42,000, respectively. The cash paid under operating leases during the three months ended March 31, 2020 and 2019 was $42,000 and $42,000, respectively. At March 31, 2020, the weighted average remaining lease terms were 1.1 years and the weighted average discount rate was 8%

 

Note 12 – Shareholders’ Equity

 

Common Stock

 

During the three months ended March 31, 2020, the Company issued:

 

●

558,295 shares of common stock to consultants for services rendered valued at $453,096. The fair value was determined based on the Company’s stock price on the grant date;

 

●

163,275 shares of common stock for convertible notes and accrued interest of $100,000 and $8,986; and

 

●

858,896 shares of common stock for an investment in Grapheton valued at $601,227. The fair value was determined based on the Company’s stock price on the grant date.

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(unaudited)

 

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

 

●

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

 

●

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

 

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

 

Warrants

 

The following table summarizes the activity related to warrants:

 

										Weighted
						Weighted				Average
						Average				Remaining				Aggregate
		Warrants				Exercise				Contractual				Intrinsic
		Outstanding				Price				Life				Value
Outstanding, December 31, 2019			333,333			$	1.50				2.90			$	-
Granted			-
Forfeited			-
Exercised			-
Outstanding, March 31, 2020			333,333			$	1.50				2.65			$	-
Exercisable, March 31, 2020			333,333			$	1.50				2.65			$	-

 

The following table summarizes information about warrants outstanding and exercisable as of March 31, 2020:

 

Outstanding and Exercisable
Number of				Exercise
Warrants				Price
	333,333			$	1.50
	333,333

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(unaudited)

 

Note 13 – Segment Reporting

 

ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company has two reportable segments: Optron and Overhoff. Optron is located in Canoga Park, California and Overhoff is located in Milford, Ohio. The assets and operations of the Company’s recent acquisition of the assets of Electronic Control Concepts are included with Overhoff in the table below.

 

The following tables summarize the Company’s segment information for the three and three months ended March 31, 2020 and 2019:

 

		Three Months Ended March 31,
		2020				2019
Sales
Optron		$	90,680			$	117,064
Overhoff			231,559				511,989
Corporate			-				-
		$	322,239			$	629,053
Gross profit
Optron		$	48,862			$	52,792
Overhoff			117,465				265,125
Corporate			-				-
		$	166,327			$	317,917
Income (loss) from operations
Optron		$	(140,995	)		$	(111,223	)
Overhoff			(65,025	)			79,250
Corporate			(522,495	)			(149,343	)
		$	(728,515	)		$	(181,316	)
Interest Expenses
Optron		$	4,440			$	5,523
Overhoff			-				49
Corporate			8,955				531
		$	13,395			$	6,103
Net income (loss)
Optron		$	(139,435	)		$	(110,746	)
Overhoff			(74,025	)			70,201
Corporate			(833,909	)			(146,874	)
		$	(1,047,369	)		$	(187,419	)

 

		March 31,				December 31,
		2020				2019
Total Assets
Optron		$	1,153,912			$	1,272,480
Overhoff			1,763,946				2,113,626
Corporate			962,009				154,930
		$	3,879,867			$	3,541,036
Goodwill
Optron		$	-			$	-
Overhoff			570,176				570,176
Corporate			-				-
		$	570,176			$	570,176

 

  

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(unaudited)

 

- Geographical Sales

 

The geographical distribution of the Company’s sales for the three months ended March 31, 2020 and 2019 is as follows:

 

		Three Months Ended March 31,
		2020				2019
Geographical sales
North America		$	185,668			$	289,823
Asia			97,627				331,803
South America			-				586
Other			38,944				6,841
		$	322,239			$	629,053

 

Note 15 – Related Party Transactions

 

The Company leases its current facilities from Gold Team Inc., a company owned by the Company’s CEO, which owns both the Canoga Park, CA and Milford, Ohio locations. Rent expense for the three months ended March 31, 2020 and 2019 were $42,000 and $42,000, respectively. As of March 31, 2020 and December 31, 2019, payable to Gold Team Inc. in connection with the above leases amount to $0 and $0, respectively. (See Note 11)

 

In addition, as of March 31, 2020 and December 31, 2019, the Company had accrued compensation payable to its majority shareholder of $275,000 and $250,000, respectively.

 

Also see Note 9.

 

Note 16 – Concentrations

 

One customer accounted for 32% of the Company’s sales for the three months ended March 31, 2020 and two customers accounted for 27% and 22% of the Company’s sales for the three months ended March 31, 2019.

 

No vendors accounted for more than 10% of the Company’s purchases for the three months ended March 31, 2020 and 2019.

 

Note 17 – Fair Value Measurements

 

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

 

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

 

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

 

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

 

The Company categorizes its fair value measurements within the hierarchy based on the lowest level input that is significant to the fair value measurement in its entirety. The following table presents the amount and level in the fair value hierarchy of each of its assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019. The contingent liability is for the earn-out related to the purchase of Electronic Control Concepts.

 

 

US NUCLEAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(unaudited)

 

		Fair Value				Fair Value Measurements at
		As of				March 31, 2020
Description		March 31, 2020				Using Fair Value Hierarchy
						Level 1				Level 2				Level 3
Derivative liability - conversion feature on convertible debenture		$	406,323			$	-			$	-			$	406,323
Contingent liability			5,926				-				-				5,926

 

		Fair Value				Fair Value Measurements at
		As of				December 31, 2019
Description		December 31, 2019				Using Fair Value Hierarchy
						Level 1				Level 2				Level 3
Derivative liability - conversion feature on convertible debenture		$	418,781			$	-			$	-			$	418,781
Contingent liability			10,594				-				-				10,594

 

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

 

Contingent liability at December 31, 2019		$	10,594
Change in fair value			3,389
Reclassification to accounts payable			(8,057	)
Contingent liability at March 31, 2020		$	5,926

 

Note 18 – Commitments

 

Future payment under all of the Company obligations as of March 31, 2020:

 

		Twelve Months Ending March 31,
		2021				2022				2023				2024				Total
Note payable		$	17,302			$	4,767			$	-			$	-			$	22,069
Note payable - shareholder			-				530,351				-				-				530,351
Convertible debenture			400,000				-				-				-				400,000
Operating lease obligations			168,000				14,000				-				-				182,000
Line of credit			213,295				-				-				-				213,295
		$	798,597			$	549,118			$	-			$	-			$	1,347,715

 

Note 19 – Subsequent Events

 

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date the financial statements were available to be issued and has determined that no material subsequent events exist other than the following.  

 

Subsequent to March 31, 2020, the Company issued a total of 829,699 shares for professional services rendered.

 

In June, 2020 the Company received a loan under the Paycheck Protection Program of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act for approximately $82,000.  The loan has terms of 24 months and accrues interest at 1% per annum.  The Company expects some or all of this loan to be forgiven as provided by in the CARES Act.

 

 

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

 

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand US Nuclear Corp, our operations and our present business environment. MD&A is provided as a supplement to—and should be read in conjunction with—our consolidated financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q. The audited financial statements for our fiscal year ended December 31, 2019 filed with the Securities Exchange Commission on Form 10-K on July 2, 2020 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.

 

Our international revenues were 42.3% of our total revenue in 2020. We expect this to increase over time as we continue to field new orders inquires and engage new customers overseas. We believe that Korea and China will likely be a larger contributor to revenue within the next few years. While we maintain steady growth domestically, the international side of our business may be a larger component as nuclear technology and rapid development for clean energy grows abroad. Additionally, the Company relies on continued growth and orders from CANDU reactors (Canada Deuterium Uranium), and rapid development of the next generation of nuclear reactors called Molten Salt Reactors, (MSR) and Liquid-Fluoride Thorium Reactors (LFTR), all of which purchase tritium detection and monitor products. There can be no assurances as to our growth projections and our risk profile as we depend upon increased foreign customers for business.

 

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

 

Robert I. Goldstein, our President, Chief Executive Officer and Chairman of the Board of Directors also maintains a position as President of Gold Team Inc., a Delaware company that invests in industrial real estate properties for investment purposes. He holds an 8% interest in Gold Team Inc. and spends approximately 5 hours per week with affairs related to Gold Team Inc. The Company leases its current facilities from Gold Team Inc. which owns both the Canoga Park, CA and Milford, Ohio properties at an expense of $7,000 for each facility per month. 

 

On February 5, 2020, the Company entered into a Stock Purchase Agreement (“SPA”) with Grapheton, Inc., a California corporation (“Grapheton”). The transaction was closed on March 12, 2020. Grapheton is a start-up company that focuses on building energy storage devises, known as supercapacitors, from a new material system. The technology utilized by Grapheton has been proven to provide a compelling advantage in microelectrode arrays with superior electrical and electrochemical properties.

 

 

Pursuant to the terms of the SPA, the Corporation will acquire a total of 2,552 shares of Grapheton’s common stock over a two years period. At closing, the Company was issued at total of 1,452 shares of Grapheton’s common stock for $235,000 and 858,896 shares of the Company’s common stock valued at $601,227.

 

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

 

An additional “true up” issuance of the Compnay’s common stock to Grapheton may be made on the second anniversary of the closing of the SPA, based on the valuation of the Company’s common stock on that date by a third-party valuator

 

Novel Coronavirus (COVID-19)

 

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

 

Results of Operations

 

For the three months ended March 31, 2020 compared to the three months ended March 31, 2019:

 

		Three Months Ended March 31,								Change
		2020				2019				$				%
Sales		$	322,239			$	629,053			$	(306,814	)			-48.8	%
Cost of goods sold			155,912				311,136				(155,224	)			-49.9	%
Gross profit			166,327				317,917				(151,590	)			-47.7	%
Selling, general and administrative expenses			894,842				499,233				395,609				79.2	%
Loss from operations			(728,515	)			(181,316	)			(547,199	)			301.8	%
Other expense			(318,854	)			(6,103	)			(312,751	)			5124.5	%
Loss before provision for income taxes			(1,047,369	)			(187,419	)			(859,950	)			458.8	%
Provision for income taxes			-				-				-
Net loss		$	(1,047,369	)		$	(187,419	)		$	(859,950	)			458.8	%

 

 

Sales for the three months ended March 31, 2020 were $322,239 compared to $629,053 for the same period in 2019. The decrease of $306,814 or 48.8% is a result of a decrease in sales from both our Overhoff and Optron subsidiaries of $280,430 and $18,384, respectively. The decrease in sales is principally due to the impact of COVID-19 had on our company and on our customers. The sales breakdown for the three months ended March 31, 2020 is as follows:

North America 57.6%

Middle East 0%

Asia (Including Japan) 30.3%

South America 0%

Other 12.1%

 

Our gross margins for the three months ended March 31, 2020 were 50.3% as compared to 50.5% for the same period in 2019. The decrease in gross margin is not significant.

 

Selling, general and administrative expense for the three months ended March 31, 2020 were $894,842 compared to $499,233 for the same period in 2019. The increase of $395,609 or 79.2% was due to higher stock-based compensation in 2020. During the three months ended March 31, 2020, stock-based compensation was $453,096 compared to $118,567 during the same period in 2019.

 

Other expense for the three months ended March 31, 2020 was $318,854, an increase of $312,751 from $6,103 for the same period in 2019. The increase was due to the amortization of the debt discount associated with the convertible debenture and the change in value of the derivative liability.

 

Net loss for the three months ended March 31, 2020 was $1,407,369 compared to $187,419 for the same period in 2019. The change was principally attributed to the factors described above.

 

Liquidity and Capital Resources

 

Our operations have historically been financed by our majority shareholder and more recently from proceeds from the sale of our common stock. As funds were needed for working capital purposes, our majority shareholder would loan us the needed funds. During the three months ended March 31, 2020, our majority shareholder loaned the Company an additional $300 and paid expenses on the Company’s behalf of $30,000. We anticipate funding the growth of our business through the sales of additional shares of our common stock and loans from our majority stockholder if necessary.

 

At March 31, 2020, total assets increased by 9.6% to $3,879,867 from $3,541,036 at December 31, 2019 principally related to an increase in investments and inventory offset by a decrease in cash and accounts receivable.

 

At March 31, 2020, total liabilities increased by 4.0% to $1,914,143 from $1,840,872 at December 31, 2019. The increase is principally related to an increase in convertible notes.

 

Net cash provided by operating activities for the three months ended March 31, 2020 was $67,367 compared to cash used in operating activities of $236,342 for the same period in 2019. The change in cash from operations was principally due to changes in working capital accounts, principally inventory and accounts receivable.

 

Net cash used in investing activities for the three months ended March 31, 2020 was $235,000 compared to $0 for the same period in 2019. The increase in cash used in investing activities was principally due to the investment in Grapheton in 2020.

 

Net cash used in financing activities for the three months ended March 31, 2020 was $5,890 compared to $19,897 for the same period in 2019. The change in cash from financing activities was principally due to the repayment for notes payable to shareholder in 2019.

 

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.

 

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 March 31, 2020.

 

Changes in internal controls

 

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, performed an evaluation to determine whether any change in our internal controls over financial reporting occurred during the three-month period ended March 31, 2020.  Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that no change occurred in the Company’s internal controls over financial reporting during the three months ended March 31, 2020 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

 

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

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

 

Item 1A. Risk Factors

 

See our Form 10K filed on July 2, 2020, 2019 for Risk Factors.

 

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

 

During the three months ended March 31, 2020, the Company issued 558,295 shares of common stock to consultants for services rendered; 163,275 shares of common stock for the conversion of convertible notes and accrued interest and $858,896 for an investment in Grapheton.

 

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

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

 

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

32.1

Certification pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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 25, 2020

 

 

26

 

EXHIBIT 31.1

 

US Nuclear Corp.

OFFICER’S CERTIFICATE PURSUANT TO SECTION 302

  

I, Robert I. Goldstein, certify that:

  

1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended March 31, 2020 (the “report”);

 

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 an 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 my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

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

 

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

 

Dated: August 25 , 2020

 

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

EXHIBIT 31.2

 

US Nuclear Corp.

OFFICER’S CERTIFICATE PURSUANT TO SECTION 302

 

I, Rachel Boulds, certify that:

  

1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended March 31, 2020 (the “report”); 

 

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 an 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 my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

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

 

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

 

Dated: August 25, 2020

  

By:	/s/ Rachel Boulds
	Rachel Boulds
	Chief Financial Officer
	(Principal Financial Officer)

EXHIBIT 32.1

 

US Nuclear Corp.

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

AS ADOPTED PURSUANT TO SECTION 906 OF 

THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of US Nuclear Corp. (the Registrant) on Form 10-Q for the period ended March 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Robert I. Goldstein, Principal  Executive  Officer of the Company, certify,  pursuant to 18 U.S.C.  ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

  

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

  

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

  

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

 

Dated: August 25, 2020

 

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

EXHIBIT 32.2

 

US Nuclear Corp.

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

AS ADOPTED PURSUANT TO SECTION 906 OF 

THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of US Nuclear Corp. (the Registrant) on Form 10-Q for the period ended March 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Rachel Boulds Principal Financial Officer of the Company, certify,  pursuant to 18 U.S.C.  ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

  

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

  

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

  

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

 

Dated: August 25, 2020

 

By:	/s/ Rachel Boulds
	Rachel Boulds
	Chief Financial Officer
	(Principal Financial Officer)

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