Nukkleus Inc. – Money Siphoning and Sibling Self-Dealing Current Price: ≈ 30 $ Our Price Target: < 1 $ On December 15 , 2024, Nukkleus Inc. acquired RIMON by acquiring 51% of “Star 26”. The PR was published on December 17 , 2024, 03:19 pm ET via PRNewswire. The day before, on December 16, 2024, 5 Insiders acquired stocks in Nukkleus Inc. via “Acquisition (Non-Open Market)”, which means the shares came directly from the company or another entity, probably for free. According to the News message from Nukkleus Inc., the acquisition of Star 26 was made because Star 26 owns 95% of the Company “RIMON”. RIMON, according to the message, “is a leading Israeli supplier of components for the Iron Dome missile defense system”. Star 26 Capital was founded in 2021 according to Crunchbase. Star 26 Capital is run, founded and owned by Shalom Menachem . Shalom Menachem has been CEO of Nukkleus Inc. since September 12, 2024. This means that the public company Menachem serves as CEO bought 51% of his other company with investors’ money for $26 million just 3 months after he was appointed as CEO. This represents nearly a $52 million valuation. The day before the announcement, the CEO, along with four others, acquired shares probably directly from the company. Shalom Menachem bought RIMON via Star 26 in February 2024, just 7 months before he was appointed CEO of NUKK. The transaction is mentioned in the 10k of NUKK, but it is not disclosed how much Shalom Menachem received in the transaction. This is an omission under Item 404(a), which requires disclosure of the “direct or indirect material interest” of the related person, including the dollar amount, if it is exceeding $120,000. This includes any equity they retained, any cash or stock they received personally and their position or control in the remaining business. The current CEO, Shalom Menachem, runs or has run at least 2 other public companies: Motomova (OTC: MTMV), Hold Me Ltd (OTC: HMELF), Star 26 Capital (Private Company, which he bought 51% of with Nukleus investors’ Money), furthermore he founded Star 26 VC (something very similar to Star 26 capital). All the public companies the CEO was involved with resulted in a huge loss for shareholders. NUKK promoted the acquisition to shareholders by claiming RIMON is a leading supplier to the iron dome missile system. We highly doubt that. The company looks more like a rental service for generators and light systems. RIMON is located in a building what we identify to be in bad condition. By buying 95% of Star 26, which then owns 51% of RIMON, NUKK bought less than 50% of RIMON and has no ownership control over the company. We believe this was arranged in a way that after NUKK goes bust, RIMON can easily be taken back to controlling interest by related parties or can be bled out by siphoning any cash reserves out of the parent, NUKK. We believe the transaction served the sole purpose of siphoning money out of the business, or, in other words, stealing money from investors. Further Red Flags include: 1. CEO changes: According to the website the following People were at least once CEO of the company in 2024: Emil Assentato, Jamie Khurshid, Shalom Menachem (since September 12, 2024), 3 CEOs in 1 year... (Source: Wayback machine) 2. Obscure handling of the website: There seemed to be at least 5 Insiders on December 16, 2024, the day Insider activity happened. However, only one Person appears on the Website as Team member that day: Shalom Menachem (Source: Wayback machine) 3. With little to no revenue the company is dramatically overvalued at $67 million. 4. NUKK was already a questionable business before Shalom Menachem took over. Roughly 100% of revenue and roughly 100% of costs went through related parties controlled by NUKK’s former CEO in FY 2022 and 2023. 5. The di Ư erence between costs and revenue by the related parties was only a few percent, pointing to revenue inflation to justify valuation. Disclaimer: The use of this report is at your own risk. You should do your own research before making any investment decisions. In no event should we be liable for any direct or indirect trading losses caused by any information in this report. Our Research is not investment advice nor a recommendation or solicitation to buy or sell securities. Everything in this report represents our own opinion and underlies the First Amendment to free speech. We do not profit it any way from this report. RIMON Acquisition On December 16, 2024, NUKK announced the Acquisition of RIMON with the following promoter PR: “Nukkleus Inc. (NASDAQ: NUKK), a pioneer in the fintech sector traditionally focused on the cryptocurrency market, announced that it has successfully acquired a 51% controlling stake in Star 26 Capital Inc., a defense acquisition company holding 95% ownership in RIMON. RIMON is a leading Israeli supplier of components for the Iron Dome missile defense system, as well as other defense and tactical solutions. The transaction, finalized on December 15, 2024, involved cash, a promissory note, Nukkleus's common stock and warrants to purchase additional shares of common stock of Nukkleus. This acquisition also includes an option agreement allowing Nukkleus to acquire the remaining equity in Star 26 at a later date. With this acquisition, Nukkleus gains control over RIMON's diversified operations, which include two key business lines: Distribution of Generators, masts and Lighting Solutions: RIMON operates through exclusive distributorship agreements with leading suppliers. Development of Tactical Vehicles: RIMON designs, engineers, and integrates tactical vehicles, including reconnaissance vehicles, mobile command and control units, and satellite broadcast platforms, serving special defense forces, intelligence agencies, and the Israeli Defense Forces (IDF). Manny Shalom, the newly appointed CEO of Nukkleus stated "This merger positions Nukkleus at the forefront of a booming defense industry. Our acquisition of Star 26 and RIMON aligns with our strategic pivot to capitalize on opportunities in the defense sector, which has seen rapid growth due to geopolitical shifts in the Middle East and the war in Ukraine. This has resulted in a surge of investments and acquisitions in Israeli defense firms such as PARAGON and PROTEGO, alongside a 120% increase in Israel's defense indices and a 38% rise in similar indices in the US." He added "RIMON's expertise in defense products, coupled with its established relationships with defense exporters like Rafael and Elbit Systems, strengthens Nukkleus's capabilities in delivering innovative defense solutions." As part of its expansion strategy, Nukkleus plans to integrate Star 26 operations into its business structure while exploring further growth opportunities. The company also plans to broaden its activities into other sectors like financial services, real estate, and technology, leveraging its financial expertise to seize emerging opportunities in the changing region of the middle east.” Note that NUKK did not mention in the PR that Shalom Menachem owns Star 26... The company address according to the NUKK website for RIMON is: Beit Rimon, Yad Harutsim 14, New Netanya, Israel RIMON looks like a power and lighting equipment company, it is in an old and simple garage-like building according to Google Maps and Earth Pro. The building looks very bad; however, Google Street View images are from 2018. New images can only be found via Satellite, but there did not appear to have changed much. We can confirm that this is the correct building by validating the logo on the building. Investors may evaluate if this looks like a $50 million business. Figure 1 : RIMON , valuation: $ 50 million In its 10k, NUKK makes the following statement apart from Shalom Menachem being CEO of both parties: “On February 15, 2024, Star executed an assignment and assumption agreement with Mr. Shalom, pursuant to which Star, through its wholly owned subsidiary, Billio, acquired all of the issued and outstanding capital stock of Rimon. Under the terms of that agreement, Star agreed to assume all of Mr. Shalom’s rights and obligations toward the sellers of Rimon, as outlined in earlier agreements by and between the same, dated December 22, 2023, and February 15, 2024. Additionally, Star agreed to reimburse Mr. Shalom for his out-of-pocket costs related to the acquisition of Rimon, and for operating loans which he made to Rimon thereafter. To do so, Star issued him a demand grid promissory note with an initial principal of $155,405, which increased to $280,857 by August 28, 2024, with the initial principal being advanced to cover Mr. Shalom’s out-of-pocket costs, and the increase therein related to the advance for operations. The grid note bears interest at 8% per annum and matures 60 days after the earlier of one year from the issuance date or upon the closing of a private placement or public o Ư ering of at least $5,000,000.” Concerning related party transactions, NUKK only states in its 10k: “Star 26 is owned and operated by Mr. Menachem Shalom, who is the Company’s Chief Executive O Ư icer. Accordingly, this acquisition is considered a related party transaction” . Summary of RIMON and NUKK relationship: Star 26 capital is owned by Shalom Menachem On February 15, 2024, Star 26 buys RIMON In September 2024, Shalom Menachem becomes CEO of NUKK On December 16, 5 insiders load up NUKK shares. On December 17, 2024, NUKK acquires Star 26 and promotes the acquisition to shareholders. On the day of the announcement, the share price increases 754%. The day before the announcement, on December 16, 2024, 5 insiders of NUKK acquired shares of NUKK. We believe that the insiders assumed that the share price would increase a lot by the sensationalized PR concerning the Acquisition, which it eventually did, probably because of the low market capitalization. SEC Reg. S-K 404(a) requires: "The name of the related person and the basis on which the person is a related person. The related person’s interest in the transaction... including the dollar amount of the amount involved and the amount of the related person’s interest." The SEC states that the amount must be disclosed if the dollar amount exceeds $120,000. This means that NUKK almost certainly violated its obligations disclosing related party transactions. According to the 10k, it seems like Star 26 was owned by Shalom Menachem entirely. What NUKK did right: Disclosed that Shalom was CEO of both firms. Labeled the deal with a related party transaction Mentioned the promissory note from Star to Shalom. What NUKK Omitted (Likely Material): Exact financial benefit to Shalom from the acquisition. Equity retained by Shalom in Star 26. Voting/control details for Star 26 post-deal. Any valuation basis for the $15M consideration. Explanation of how the Star equity was structured and priced. Apart from what we believe is almost certainly a material omission, the structure of the acquisition is very alarming. We believe that the deal was solely made to siphon money out of the business. Selling his own business to the public company he owns is a clear conflict of interest. Pre- Menachem Before the Star 26 acquisition, NUKK was already a very questionable business. Its former CEO, Emil Assentato, controlled the company’s biggest customer and service provider, TCM and FXDIRECT. NUKK booked revenues from TCM of $19.2 million in FY 2023 and costs to FXDIRECT of $18.78 million, with a very low margin. To us, this looks like self-dealing to inflate revenues, probably in connection with NUKK’s RTO in 2023. NUKK did the exact same in FY 2022, before the company did its De-Spac. We believe that before its “RIMON”-Strategy, NUKK massively inflated revenues. It is surprising how fast the company can change from a currency trading tech provider to a "leading supplier of Iron Dome components". Sources: Team/Management Nukleus Inc. on Website, Wayback Machine: January 2024: https://web.archive.org/web/20240117010748/https://www.nukk.com/team August 2024: https://web.archive.org/web/20240812103440/https://www.nukk.com/team/ Today: https://www.nukk.com/team/ Company address link to RIMON: https://www.google.com/maps/place/B.+RIMON+Agencies/@32.2804206,34.858946,2580m/d ata=!3m2!1e3!4b1!4m6!3m5!1s0x151d409cb4a7407f:0xf10113fd104cd63f!8m2!3d32.2804162! 4d34.8638169!16s%2Fg%2F1vzsj6mc?entry=ttu&g_ep=EgoyMDI0MTIxMS4wIKXMDSoJLDEwMjE xMjMzSAFQAw%3D%3D Insider Trades according to Nasdaq on December 16, 2024: https://www.nasdaq.com/market-activity/stocks/nukk/insider-activity Link to Star 26 Ventures information and Website: https://www.crunchbase.com/organization/star-26-ventures https://www.star26vc.com/ Link to view historical view of the website of star 26 Capital as of August 26, 2024: https://web.archive.org/web/20240826124323/https://www.star26.capital/about-us NUKK, 10k, FY 2024: https://www.sec.gov/ix?doc=/Archives/edgar/data/0001787518/000121390025011694/ea02263 98-10k_nukkleus.htm NUKK acquires RIMON: https://www.prnewswire.com/il/news-releases/nukkleus-inc-achieves-strategic-milestone- with-acquisition-of-a-controlling-stake-in-star-26-a-defense-focus-acquisition-company-and- a-provider-of-israels-iron-dome-missile-defense-system-302333946.html Use this Information at your own risk. 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