What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-03-31 compared with 2025-03-31 · 256 added, 106 removed, 55 unchanged (87% of the section changed)

7 unchanged sentences

Actual results could differ materially because of the factors discussed in “Risk Factors” elsewhere in this Annual Report, and other factors that we may not know.

KULR Technology Group, Inc., through our wholly-owned subsidiary KULR Technology Corporation, develops and commercializes high-performance thermal management technologies for batteries, electronics, and other components across an array of battery-powered applications.

For aerospace and Department of Defense (“DOD”) applications, our solutions target high performance applications in direct energy, hypersonic vehicles and satellite communications.

For commercial applications, our main focus is a total solution to battery safety and sustainability by which we aim to mitigate the effects of thermal runaway propagation which has been

known to cause random fires in lithium-ion (“Li-ion”) batteries.

This total battery safety solution can be used for electric vehicles, energy storage, battery recycling transportation, cloud computing and 5G communication devices.

Our proprietary core technology is a carbon fiber material that provides what we believe to be superior thermal conductivity and heat dissipation for an ultra-lightweight and pliable material.

By leveraging our proprietary cooling solutions that have been developed through longstanding partnerships with advanced technology users like NASA, the Jet Propulsion Lab and others, our products and services make commercial battery powered products safer and electronics systems cooler and lighter.

KULR’s business model continues to evolve from being a component supplier, to providing more design and testing services to our customers.

The next step of evolution is to provide total system solutions to address market needs.

In order to scale up as a systems provider more quickly and efficiently in (i) the Li-ion battery energy storage and recycling markets, (ii) battery cell design and safety testing, and (iii) advanced thermal management systems, such as hypersonic vehicles, KULR will actively seek partners for joint venture, technology licensing and other strategic partnership models.

The goal is to leverage the Company’s thermal design technology expertise to create market leading products, which KULR will take to market directly to capture more value for KULR shareholders.

We have not yet achieved profitability and expect to continue to incur cash outflows from operations, and as a result, we will eventually need to generate significant revenues to achieve profitability.

Until that time, we may continue to raise cash, as and when required, through equity or debt financings.

KULR designs and builds advanced battery systems for autonomous platforms, digital infrastructure, e-mobility and Space – sold as a product or delivered as service subscription.

The Company addresses two primary constraints in electrification:

thermal management and safety.

As energy and power density increase across aerospace, autonomous machines, digital infrastructure and industrial applications, managing heat generation, current density, and propagation risk becomes essential to system reliability and survivability.

KULR is establishing a fully integrated battery energy storage system design and production infrastructure in Houston, Texas.

KULR brings battery pack design, prototyping, testing, certification, and manufacturing;

as well as battery management system software and electronics design capabilities together under one roof.

This full-stack approach enables faster development cycles and rapid transition from prototype to cost-effective volume production.

The facility is designed to build high-power and high-energy battery packs that require advanced thermal, mechanical, and safety engineering.

With domestic supply chain alignment and scalable production capacity, KULR is positioning itself as a leading manufacturer of advanced battery packs for mission-critical and high-performance applications in the United States.

KULR VIBE is a vibration-reduction technology designed to improve performance and reliability in high-speed and rotor-driven systems.

Derived from vibration management solutions used in defense helicopters for over 20 years, it addresses excess vibration that reduces efficiency, increases mechanical wear, and shortens vehicle lifespan.

KULR VIBE enables motors, rotating assemblies, and sensitive electronics to operate more smoothly and efficiently across a range of applications, including helicopters, drones, performance vehicles, wind turbines, and other electric and autonomous systems.

Recent Developments

1 unchanged sentence

The Company reported record annual revenues of $16.2 million for 2025, as compared to its previous revenues of $10.7 million for 2024.

Bitcoin Strategy

On December 4, 2024, the Board approved, and the Company publicly announced its decision to include Bitcoin (“BTC”) as a primary asset in its treasury program.

On December 22, 2024, the Company completed its initial acquisition of BTC through Coinbase (the primary broker) and a total of 217.18 bitcoin was purchased at a weighted average price of approximately $96,696 per bitcoin, or an aggregate cost of $21 million.

Subsequent to December 31, 2024, the Company purchased 449.45 Bitcoin via trade orders on Coinbase, at an average cost of $99,008 per Bitcoin for an aggregate $44,499,352.

Additionally, on March 7, 2025, the Company entered into a sixty-day Machine Lease Agreement with a bitcoin mining services company to operate 2,500 S-19 bitcoin mining machines on KULR’s behalf, at a total lease cost of $850,000.

As of March 27, 2025, 2.48 bitcoin have been mined pursuant to the Machine Lease Agreement, at an average cost of $84,225 per bitcoin.

At the Market Offering

On July 3, 2024, the Company entered into an At the Market Offering agreement (the “Sales Agreement”) with an agent (the “Agent”), pursuant to which the Company may, from time to time, sell shares of common stock for aggregate gross proceeds of up to $20,000,000 in “at the market” offerings through or to the Agent (the “ATM”).

Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of the sale, or as otherwise agreed with the Agent.

The Agent will receive a commission from the Company of 3% of the gross proceeds of any shares of common stock sold pursuant to the ATM.

Investments, Impairment and Credit Losses

During the year ended December 31, 2025, the Company made two investments in a private German entity (the “Investee”), including Series A7 Preferred Shares and a convertible loan receivable of $3.3 million and $2.1 million, respectively.

In addition, the Company had accounts receivable of $0.8 million due from Investee, who was also a customer.

On November 13, 2025, the Investee filed an application with a German insolvency court to open insolvency proceedings.

As a result, as of December 31, 2025, the Company has fully impaired or recognized credit losses associated with the Company’s investments and accounts receivable associated with the Investee.

During the fourth quarter of 2025, the Company determined that it would not pursue additional sales of exoskeleton products and, accordingly, recorded an inventory reserve of $0.5 million, bringing the net carrying value of its on-hand exoskeleton inventory down to zero.

Bitcoin Treasury Strategy

On December 4, 2024, the Board approved, and the Company publicly announced its decision to include BTC as a primary asset in its treasury program.

During the year ended December 31, 2025, the Company purchased 783.81 BTC via trade orders on Coinbase (the “Custodian”), at an average cost of $101,683 per BTC, inclusive of fees and expenses, for an aggregate cost of $79.7 million.

Bitcoin accounting guidance has been evolving.

According to the American Institute of Certified Public Accountants “Accounting for and auditing of Digital Assets practice aid,” bitcoin would satisfy the definition of an indefinite-lived intangible asset and would be accounted for under ASC 350, Intangibles - Goodwill and Other issued by the Financial Accounting Standards Board, or FASB.

Under these guidelines, bitcoin holdings would be accounted for initially at cost and subject to impairment losses if their fair value fell below carrying value.

In December 2023, the FASB issued Accounting Standards Update No.

2023-08, Accounting for and Disclosure of Crypto Assets (ASU 2023-08), which revised bitcoin accounting treatment.

Under this new guidance, the valuation of bitcoin is to be measured based on fair value.

Mining of Digital Assets

Beginning in March 2025, the Company expanded its bitcoin treasury strategy to include BTC mining operations.

Management determined that participating in mining activities could (i) increase BTC holdings through internally generated production, (ii) provide potential exposure to favorable mining economics, and (iii) enhance long-term treasury value through vertical participation in the bitcoin ecosystem.

The Company’s mining activities are conducted pursuant to fixed-term machine lease agreements.

As of March 27, 2026, 81.72 BTC have been mined pursuant to the Machine Lease Agreements, at an average cost of $103,545 per BTC.

See the section “Our Bitcoin Acquisition Strategy” below for further information regarding our BTC purchases, including the source of capital used to purchase BTC.

At the Market Offerings

On July 3, 2024, the Company entered into an At the Market Offering Agreement (the “First ATM Agreement”) with an agent (the “First ATM Agent”), pursuant to which the Company may, from time to time, sell shares of common stock for aggregate gross proceeds of up to $20 million in “at the market” offerings through or to the First ATM Agent (the “ATM”).

Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of the sale, or as otherwise agreed with the First ATM Agent.

The First ATM Agent was entitled to a commission from the Company of 3% of the gross proceeds of any shares of common stock sold pursuant to the ATM.

On December 4, 2024, the Company increased the maximum aggregate offering amount of the shares of the Company’s common stock issuable under the ATM from approximately $20 million to $46 million.

On December 26, 2024, the Company increased the maximum aggregate offering amount of the shares of the Company’s common stock issuable under the ATM by an additional $50 million, to $96 million, and the Company entered into an amendment (the “Amendment”) to the Sales Agreement with the Agent, entered into on July 3, 2024, to provide that the Agent’s compensation payable under the Sales Agreement shall be 2.5% of gross proceeds of any sales of shares of common stock sold under the Sales Agreement.

During the year ended December 31, 2024, the Company issued a total of 74,781,217 shares of common stock pursuant to the ATM for aggregate gross proceeds of $61,912,798.

During the period from January 2, 2025, through March 27, 2025, the Company has sold 19,387,610 shares of common stock pursuant to this offering, with gross proceeds of $51,122,190.

On December 26, 2024, the Company increased the maximum aggregate offering amount of the shares of the Company’s common stock issuable under the ATM by an additional $50 million, to $96 million.

On July 3, 2024, the Company entered into an amendment to the First ATM Agreement to reduce the First ATM Agent’s commission to 2.5% of gross proceeds of any sales of shares of common stock sold pursuant to the ATM.

On January 24, 2025, the Company increased the maximum aggregate offering amount of the shares of the Company’s common stock issuable under the First ATM Agreement by an additional $50 million, bringing the total aggregate offering amount to $146 million.

On May 30, 2025, the Company completed its initial ATM offering pursuant to the First ATM Agreement, issuing an aggregate of 14,783,401 shares of common stock for gross proceeds of approximately $146 million.

Of these shares, 9,347,652 were issued for gross proceeds of $61.9 million in 2024, and 5,435,749 were issued for gross proceeds of $84.1 million in 2025.

On June 9, 2025, the Company entered into a second At the Market Offering Agreement (the “Second ATM Agreement”) with two sales agents (the “Second ATM Agents”), pursuant to which the Company may, from time to time, sell shares of common stock for aggregate gross proceeds of up to $300 million in ATM offerings through or to the Second ATM Agents.

On September 30, 2025, the Company reduced the aggregate offering amount to $150 million.

Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of the sale, or as otherwise agreed with the Second ATM Agents.

The Second ATM Agents will receive a commission from the Company of up to 3.0% of the gross proceeds of any shares of common stock sold pursuant to the Second ATM Agreement.

During the year ended December 31, 2025, the Company issued a total of 7,243,562 shares of common stock pursuant to the Second ATM Agreements for aggregate gross proceeds of $39.1 million.

As of December 22, 2025, the Company decided to pause its ATM transactions through June 30, 2026.

License and Opportunities for KULR VIBE Fan Balancing Applications

On September 29, 2024, we entered into a licensing agreement for our proprietary vibration reduction technology named KULR Xero Vibe (“KXV”).

The $2.35M agreement includes a $1.1M minimum guaranteed license and royalty fee, a unique opportunity for the licensee to purchase proprietary balancing equipment directly from the Company and additional revenue upside to the Company based on volume and technology upgrades.

The licensee, a leading Japanese corporation, specializing in systems integration and the

distribution of advanced semiconductor solutions, intends to use the KXV technology to balance industrial-scale fan systems used in data center computer cooling, HVAC and other industrial applications.

On December 29, 2024 the Company entered into a ten-year licensing agreement with a customer located in Japan, for the use of intellectual property in connection with its CF Cathode Design technology (including the specifications, diagrams, schematics and instructions (together the “KULR CF Intellectual Property”) for the production of the CF Cathode (the “License”).

The Agreement gives the customer the exclusive license to use the KULR CF Intellectual Property to manufacture CF Cathodes in Japan, and a non-exclusive license to manufacture CF Cathodes in several other countries, including Taiwan, China, India and Korea.

The Company is exploring additional license opportunities based on geographic regions in tangential power-consuming applications, where the Company expects substantial upside revenue potential as product sales and royalty income scales along with its customers’ growth.

Change in Address of Principal Executive Offices

In the third quarter of 2024, we moved our principal executive offices to 555 Forge River Road, Suite 100, Webster, Texas 77598.

Issuance of Non-Convertible Series A Voting Preferred Stock

On January 26, 2024, the Board of Directors (“Board”) of the Company, following extensive strategic evaluation, including consultation with advisors, approved, authorized, and ratified the issuance of 730,000 shares of previously designated Non-convertible Series A Voting Preferred Stock to the Chairman and Chief Executive Officer of the Company, Michael Mo, subject to certain limitations as set forth below, for no consideration.

The issuance of up to 1,000,000 shares of Non-convertible Series A Voting Preferred Stock was previously approved and authorized by a vote of the majority stockholders of the Company.

On January 16, 2025, the Board of Directors approved the issuance of an additional 270,000 shares of Non-convertible Series A Voting Preferred Stock (“Series A Voting Preferred”) to the Chief Executive Officer, bringing his total holdings up to 1,000,000 shares of Series A Voting Preferred Stock.

The issuance is subject to the Board reserving the full and unequivocal right to revoke, rescind, transfer or otherwise cancel the issued Non-convertible Series A Voting Preferred Stock in the event Michael Mo is removed from any position with the Company or resigns from all positions with the Company.

This conditional arrangement is designed to ensure that the voting power conferred by the Non-convertible Series A Voting Preferred Stock remains tied to the active leadership of the Company.

This underscores the Board’s commitment to maintaining alignment with the long-term interests of the Company and its stockholders.

The Independent Members of the Board have determined that the issuance represents a pivotal strategic move to reinforce and enhance the Company’s flexibility to optimize the Company’s negotiating position in any potential current and/or future engagements with commercial, financial, and/or strategic parties, and to provide defenses against potential hostile third-party actions.

The deal includes a $1.1 million minimum guaranteed license and royalty fee, a unique opportunity for the licensee to purchase proprietary balancing equipment directly from the Company and additional revenue upside to the Company based on volume and technology upgrades.

The licensee is a Japanese corporation specializing in systems integration and the distribution of advanced semiconductor solutions.

During the year ended December 31, 2025, the Company entered into a Master Vehicles Agreement that permits the application of its Zero Vibe technology in automotive platforms.

The Company continues to explore additional license opportunities.

License and Opportunities for CF Cathode Design Technology

The agreement gives the customer the exclusive license to use the KULR CF Intellectual Property to manufacture and sell CF Cathodes in Japan, and a non-exclusive license to manufacture and sell CF Cathodes in several other countries, including Taiwan, China, India and Korea.

Pursuant to this license agreement, the total contract value is $1.8 million, of which the Company recognized $1.7 million in revenue for the year ended December 31, 2024.

There was no revenue recognized for the year ended December 31, 2025 under this license agreement.

In addition, $0.1 million will be recognized as interest income over the term of the agreement as a result of a significant financing component.

Reverse Stock Split

On June 20, 2025, the Company filed a Certificate of Amendment to its Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect a 1-for-8 reverse stock split of the shares of the Company’s common Stock, effective on June 23, 2025 (the “Reverse Stock Split”).

As a result of the Reverse Stock Split, every eight shares of issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock, without any change in the par value per share.

No fractional shares were issued as a result of the Reverse Stock Split, and any fractional shares that would otherwise have resulted from the Reverse Stock Split were rounded up to the next whole number.

The number of authorized shares of common stock under the Company’s Certificate of Incorporation, as amended, remained unchanged.

All references to share and per share amounts for all periods presented in the audited consolidated financial statements have been retrospectively restated to reflect the Reverse Stock Split.

All rights to receive shares of common stock under outstanding securities, including but not limited to, warrants, options, and restricted stock units (“RSUs”) were adjusted to give effect to the Reverse Stock Split.

Furthermore, proportionate adjustments were made to the per share exercise price and the number of shares of common stock that may be purchased upon exercise of outstanding stock options granted by the Company, and the number of shares of common stock reserved for future issuance under the Company’s 2018 Equity Incentive Plan.

Credit Agreement

On July 1, 2025, the Company entered into a Master Loan Agreement (the “Master Loan Agreement”) with Coinbase Credit, Inc., a Delaware corporation, and Coinbase, Inc., a Delaware corporation, acting in its principal capacity and as agent for each of its affiliates (each, a “Coinbase Entity” and together the “Lender”).

The Master Loan Agreement governs separate loan transactions (each, a “Loan”) whereby the Lender may, from time to time, lend to the Company (i) specified quantities of digital assets or (ii) cash in U.S.

dollars (collectively, “Loaned Assets”).

Each Loan will be documented by a written confirmation setting forth the asset type, principal amount, loan fee rate, maturity profile and any other negotiated terms.

The Master Loan Agreement provides for a multiple-draw term facility up to $20 million.

A Loan shall only be deemed to commence once the Lender transfers the Loaned Assets to the Company, and the Company simultaneously pledges the required collateral.

On July 8, 2025, the Company borrowed $8.0 million in cash (the “Initial Drawdown”) under the Master Loan Agreement.

The Initial Drawdown is the first advance against the revolving credit facility established by the Master Loan Agreement.

The Initial Drawdown bears an 8% loan fee.

The Company’s obligations are secured by a first-priority security interest at a collateral-coverage ratio of about 156.25% of the outstanding principal amount.

The Initial Drawdown is subject to the terms and conditions of the Master Loan Agreement.

As of December 31, 2025, the balance on the loan was repaid in full.

On March 27, 2026, the Company borrowed $5.0 million in cash (the “March 2026 Drawdown”) under the Master Loan Agreement.

The March 2026 Drawdown bears a 7% loan fee.

The Company’s obligations under the March 2026 Drawdown are secured under the same terms and collateral-coverage ratio as the Initial Drawdown.

The March 2026 Drawdown is subject to terms and conditions of the Master Loan Agreement.

After giving effect to the March 2026 Drawdown, $15.0 million of the $20.0 million credit facility remains available.

Consolidated Results of Operations

4 unchanged sentences

Contract services

Grant revenue

Mining of digital assets

Total Revenue

For the years ended December 31, 2024 and 2023, we generated $10,737,481 and $9,830,166 of revenue from 71 and 53 customers, respectively, representing an increase of $907,315, or 9%.

Revenue from product sales during the year ended December 31, 2024 decreased by $3,259,748 or 47% compared to the year ended December 31, 2023.

For the years ended December 31, 2025 and 2024, we generated $16.2 million and $10.7 million of revenue from 60 and 71 customers, respectively.

We had 47 product sales customers in 2025, compared with 53 in 2024.

The decline in product revenue can be attributed to several expected 2024 orders, which management now expects to receive in a later period.

We can provide no assurance as to when we will receive the expected orders.

Product sales during these periods include sales of our component product, carbon fiber

velvet (“CFV”) thermal management solution, internal short circuit (“ISC”) battery cells and devices, patented TRS technology, and thermal fiber thermal interface (“FTI”) materials.

Revenue from contract services during the year ended December 31, 2024 increased by $1,479,845 or 51% compared to the year ended December 31, 2023.

The increase in revenue for the year ended December 31, 2024 is primarily due to growth in customers to 34 in 2024 from 17 in 2023.

This work includes unique engineering design and testing projects customized for specific customers.

Revenue from IP licensing during the year ended December 31, 2024, was $2,687,218.

Product sales during these periods include sales of our component product, battery production, internal short circuit battery cells and devices, patented thermal runaway shield technology (“TRS”), phase change material (“PCM”) heatsinks, KULR SafeCases, and exoskeleton devices.

Although the number of customers decreased, the increase in product revenue was driven primarily by our new client base generating more significant revenue per contract during the year ended December 31, 2025, as compared to the same period in 2024.

Additionally, there was a significant increase in revenue generated from one of the Company’s existing customers.

We had 34 contract services customers in 2025, compared with 34 in 2024.

The decrease in revenue is primarily due to a large contract earned during 2024 which generated $0.7 million of service revenues, along with a significant reduction in two other contracts in 2025.

Service revenue includes unique engineering design and testing projects customized for specific customers.

Revenue from IP licensing during the year ended December 31, 2024, was $2.6 million.

License revenue consists of contracts with customers for the rights to use our patented KULR VIBE technology and CF Cathode Design technology.

This includes revenue from minimum royalty fees of $600,000.

Minimum royalty fees consist of guaranteed amounts due to the Company for contracts with customers for the rights to use its patented KULR VIBE technology.

License revenue consists of certain guaranteed minimum royalty amounts.

These contracts were executed during the year ended December 31, 2024.

There was no license revenue recognized prior to this period.

Our customers and prospective customers are large organizations with multiple levels of management, controls/procedures, and contract evaluation/authorization.

Furthermore, our solutions are new and do not necessarily fit into pre-existing patterns of purchase commitments.

There was no license revenue recognized during the year ended December 31, 2025.

Our solutions are new and do not necessarily fit into pre-existing patterns of purchase commitments.

Accordingly, the business activity cycle between expression of initial customer interest to shipping, acceptance and billing can be lengthy, unpredictable, and lumpy, which can influence the timing, consistency and reporting of sales growth.

Revenue from mining of digital assets mined during the year ended December 31, 2025 was $7.0 million.

The initial mining contract was entered into on March 7, 2025 and mining activities increased through December 31, 2025, with additional leases being executed during the period.

Two new mining contracts were entered into during the second quarter of 2025, followed by a fourth and fifth mining contract in the third and fourth quarters of 2025, respectively.

For the year ended December 31, 2025, we earned 65.79 BTC from mining operations.

There was no mining of digital assets revenue recognized prior to March 7, 2025.

Grant revenue during the year ended December 31, 2025 was $1.9 million related to the reimbursement of equipment purchases totaling $0.3 million, R&D expenses totaling $1.4 million and prepayments of $0.2 million.

Grant revenue consists of an award from the Texas Space Commission to perform research and development of cold-temperature lithium-ion battery solutions for the next generation of Lunar and Martian missions which is part of our ongoing major or central activities.

The contract award was executed on September 23, 2025.

Revenue is earned on the award once specific grant conditions have been met, which is generally when the costs relevant to the condition have been incurred by the Company.

There was no grant revenue recognized prior to this period.

Cost of Revenue, Gross Profit and Gross Profit Margin

Cost of revenue consists of the cost of our products as well as labor expenses directly related to product sales or contract services.

The following table presents the dollar and percentage variances in cost of revenue for the periods presented.

For the Year Ended

December 31, 2025

Gross Margins

Product sales

Contract services

Grant revenue

Mining of digital assets

For the Year Ended

December 31, 2024

Gross Margins

Product sales

Contract services

Product mix plays an important part in our reported average margins for any period.

Because we are introducing new products at an early stage in our development cycle and the margins earned can vary significantly between periods, customers, products and services due to the learning process, customer negotiating strengths, and product mix.

For the years ended December 31, 2024 and 2023, cost of revenues was $5,254,283 and $6,164,310, respectively, representing a decrease of $910,027, or 15%.

During the years ended December 31, 2024 and 2023, gross profit was $5,483,198 and $3,665,856, respectively, an increase of $1,817,342 or 50%.

Our gross profit margins were 51% and 37%, during the years ended December 31, 2024 and 2023, respectively.

The increase in the current period profit margin resulted primarily from our licensing agreements that generated $2,687,218 of revenue in 2024, which had no corresponding cost of revenue.

Because we are introducing new products at an early stage in our development cycle, the margins earned can vary significantly between periods, customers, products and services due to the learning process, customer negotiating strengths, and product mix.

Gross profit margin on product sales declined sharply year-over-year.

The decline was driven primarily by a write-off of approximately $0.7 million of inventory following the customer’s cessation of business operations, against which minimal revenue was generated.

The inventory write-off, combined with low revenue from the related product line, resulted in significant margin reduction during the period.

Gross profit margin on contract services deteriorated from a positive margin in 2024 to a negative margin in 2025.

The decline reflects increased labor hours incurred on service contracts relative to revenue recognized during the period.

Margins were further pressured by approximately $0.7 million of depreciation expense on a revenue-generating machine that was placed into storage following the expiration of the Shawline lease in November 2025, resulting in limited revenue being generated against an otherwise fixed cost base.

Mining of digital assets is a new segment in 2025 with no comparable prior year period.

Gross margins were negative during the period, reflecting the early-stage nature of the operations where hosting, energy, and lease costs exceeded mining revenue during the initial ramp-up period.

Margins were further pressured by the decline in BTC prices experienced from March 2025 through December 2025, which reduced the value of BTC mined relative to the fixed costs of leasing the machines, compressing margins throughout the majority of the year.

Grant revenue, which represents a reimbursement of costs, reflected a full gross margin contribution.

The related costs include $1.5 million classified within research and development expenses, and $0.4 million which were capitalized as fixed assets or prepaid expenses.

IP licensing generated a full margin contribution in 2024 as it carried no associated cost of revenue.

No IP licensing revenue was recognized in 2025, and its absence was a significant driver of the overall decline in gross profit year-over-year.

Research and Development

Research and development (“R&D”) includes expenses incurred in connection with the R&D of our CFV thermal management solution, high-areal-capacity battery electrodes, and 3D engineering for a rechargeable battery.

Research and development expenses are charged to operations as incurred.

For the years ended December 31, 2024 and 2023, R&D expenses were $4,738,305 and $7,135,452, respectively, representing a decrease of $2,397,147 or 34%.

The decrease was comprised primarily of $2,193,643 of engineering labor and other costs charged that were reduced or redeployed to revenue-generating activities and were charged to costs of revenue, $784,827 related to a planned decrease in R&D consulting services, partially offset by an increase in building related expenses of $335,142 for the new, larger facility in Texas, and an increase in stock-based compensation of $98,525.

R&D expenses are charged to operations as incurred.

The following table presents the dollar and percentage variances in R&D expenses for the periods presented.

For the Years Ended

Operating Expenses

Research and development

Total research and development

The increase was primarily attributable to planned increases in R&D services and personnel during 2025, including approximately $4.5 million of higher costs associated with third-party engineering and development services related to balancing fans to optimize vibration signature and acoustic studies, the purchase of testing equipment, and investments to support manufacturing expansion.

Stock-based compensation increased by approximately $1.2 million as a result of new equity awards granted during the year.

In addition, employee benefits related to health insurance increased by approximately $0.2 million, driven by expanded coverage and overall market pricing increases.

We expect that our R&D expenses will increase as we expand our future operations.

Selling, General and Administrative

Selling, general and administrative expenses consisted primarily of stock-based compensation, marketing and advertising, salaries, payroll taxes and other benefits, Board compensation, accounting and tax, consulting fees, travel and entertainment, rent expense, office expenses, and legal and professional fees.

For the years ended December 31, 2024 and 2023, selling, general and administrative expenses were $15,979,852 and $18,942,350, respectively, a decrease of $2,962,498, or 16%.

The decrease is primarily due to a decrease in stock-based compensation of $908,574 primarily due to forfeited restricted stock units, a decrease of $881,950 in depreciation expense primarily due to leasehold improvements for the San Diego facility being fully depreciated as of June 30, 2024, a planned decrease in advertising and marketing services of $466,254, and a planned decrease in outsourced professional services of $399,508.

Other (Expense) Income

For the years ended December 31, 2024 and 2023, other expenses, net, were $2,288,670 and $1,281,610, respectively, representing an increase of $1,007,060 or 79%.

The change is primarily attributable to an increase of $718,826 for the unrealized loss on Bitcoin holdings, an increase of $421,429 for amortization of debt discount in connection with merchant cash advances, an increase of $395,817 for the change in fair value of accrued issuable equity, partially offset by a decrease of $508,603 in interest expense due to the full repayment of the prepaid advance liability on March 27, 2024.

Selling, general and administrative expenses consisted primarily of stock-based compensation, marketing and advertising, salaries, payroll taxes and other benefits, Board member compensation, accounting and tax, consulting fees, travel and entertainment, rent expense, office expenses, and legal and professional fees.

The following table presents the dollar and percentage variances in selling, general and administrative expenses for the periods presented.

For the Years Ended

Operating Expenses

Selling, general, and administrative

Total selling, general, and administrative

The increase was primarily attributable to higher operating costs associated with the Company’s expanded activities during 2025.

Accounting, legal, consulting, and other professional fees increased by approximately $4.3 million, primarily related to strategic investment and business and corporate development related activities.

Marketing expense increased by approximately $2.0 million,

reflecting increased corporate and product awareness activity, advertising and promotional efforts.

Travel expense increased by approximately $0.5 million, primarily related to increased marketing, business development and operational activities.

Insurance expense increased by approximately $0.7 million, driven by expanded coverage and overall market pricing increases.

SG&A expenses also increased primarily due to higher stock-based compensation expense of approximately $3.0 million related to additional equity awards granted during 2025, as well as approximately $0.7 million of increased personnel costs driven by higher headcount and employee bonuses.

Credit Losses on Accounts Receivable

For the year ended December 31, 2025, credit losses on accounts receivable were approximately $2.2 million, comprised of a $0.8 million direct write-off of accounts receivable associated with the Investee, as a result of their financial condition, and a $1.4 million allowance for credit losses determined using an aging-based method that groups accounts receivable into pools based on shared risk characteristics.

There were no credit losses for the year ended December 31, 2024.

Impairment of Equipment Deposits, Intangible Assets, ROU Assets and Property and Equipment

For the year ended December 31, 2025, impairment expense was $3.1 million, as detailed in the table below:

For the Years Ended

Operating Expenses

Impairment of finance lease right-of-use asset

Impairment of property and equipment

Impairment of intangible assets

Impairment of equipment deposits

Total impairment expense

Each of these impairments resulted from a triggering event that required us to review the assets for impairment, which resulted in the determination that the de minimis fair value of the assets were not recoverable, and the assets were fully impaired.

We recorded an impairment charge of $0.9 million on our finance lease right-of-use (“ROU”) asset related to our digital asset mining operations.

The impairment was driven by a significant decline in the market price of bitcoin, which reduced the expected future cash flows attributable to the asset below its carrying value.

We recorded an impairment charge of $0.6 million related to certain property and equipment.

Upon evaluation of property and equipment, the undiscounted future cash flows associated with the affected assets were determined to be insufficient to recover their carrying value.

The fair value of these assets was determined to be zero, and accordingly they were written down to zero.

We recorded an impairment charge of $0.2 million related to certain intangible assets that no longer had expected future cash flows, and the fair value of these intangibles was determined to be zero, therefore these assets were written down to zero.

Write-off of equipment deposits of $1.4 million, represented deposits paid to a vendor as a downpayment for the manufacture of an automated manufacturing system.

This system was never delivered to the Company.

After negotiation, and in an effort to come to a resolution on the matter, we agreed to forfeit the equipment deposit while the vendor retained the unfinished equipment.

There was no impairment expense for the year ended December 31, 2024.

Other Income (Expense)

The following table presents the dollar and percentage variances in other income (expense) for the periods presented.

For the Years Ended

Other income (expense)

Unrealized loss on digital assets

Impairment of equity investment

Credit loss on loan receivable

Amortization of debt discount

Interest income (expense), net

Change in fair value of accrued issuable equity

Total other expense

The change is primarily attributable to the $13.1 million unrealized loss on BTC holdings due to the twelve-month change in market price of BTC, from $93,384 on December 31, 2024, to $87,502 on December 31, 2025, an increase of $3.3 million for an impairment of an equity investment, an increase of $2.1 million from a credit loss on a convertible loan receivable, partially offset by a decrease of $1.1 million in amortization of debt discount in connection with short-term financing, an increase of $0.6 million from interest earned from the savings account and licensing agreements, and an increase of $0.2 million for the change in fair value of accrued issuable equity.

Our Bitcoin Acquisition Strategy

In December 2024, we adopted bitcoin as our primary treasury reserve asset on an ongoing basis, subject to market conditions and our anticipated cash needs.

Our strategy includes acquiring and holding bitcoin using cash that exceeds our working capital requirements, and from time to time, subject to market conditions, issuing equity or debt securities or engaging in other capital raising transactions with the objective of using the proceeds to purchase bitcoin.

For example, we began issuing shares under our “at-the-market” offering program in the second half of 2024, and used proceeds from this capital markets transaction to acquire bitcoin.

We view our bitcoin holdings as long term holdings and expect to continue to accumulate bitcoin.

We have not set any specific target for the amount of bitcoin we seek to hold, and we will continue to monitor market conditions in determining whether to engage in additional bitcoin purchases.

This overall strategy also contemplates that we may periodically sell bitcoin for general corporate purposes or in connection with strategies that generate tax benefits in accordance with applicable law, enter into additional capital raising transactions, including those that could be collateralized by our bitcoin holdings, and consider pursuing strategies to create income streams or otherwise generate funds using our bitcoin holdings.

The following table presents a summary of our bitcoin holdings, including additional information related to our bitcoin purchases and change in fair value within the period.

Average Fair Value

In December 2024, we adopted BTC as our primary treasury reserve asset on an ongoing basis, subject to market conditions and our anticipated cash needs.

Our strategy includes acquiring and holding BTC using cash that exceeds our working capital requirements, and from time to time, subject to market conditions, issuing equity or debt securities or engaging in other capital raising transactions with the objective of using the proceeds to purchase BTC.

For example, we began issuing shares under our ATM offering program in the second half of 2024, and used proceeds from these capital markets transactions to acquire BTC.

We view our BTC holdings as long term holdings and will continue to assess the merits of accumulating additional BTC.

We have not set any specific target for the amount of BTC we seek to hold, and we will continue to monitor market conditions in determining whether to engage in additional BTC purchases.

This overall strategy also contemplates that we may periodically sell BTC for general corporate purposes or in connection with strategies that generate tax benefits in accordance with applicable law, enter into additional capital raising transactions, including those that could be collateralized by our BTC holdings, and consider pursuing strategies to create income streams or otherwise generate funds using our BTC holdings.

Beginning in March 2025, the Company expanded its bitcoin treasury strategy to include BTC mining operations.

The Company’s mining activities are conducted pursuant to fixed-term machine lease agreements.

On March 7, 2025, the Company entered into a 60 day Machine Lease Agreement with a BTC mining services company to operate 2,500 S-19 BTC mining machines on our behalf, at a total lease cost of $.9 million.

Additionally, on May 16, 2025, the Company entered into a 228 day lease agreement with the same digital asset mining services company to operate the 2,500 digital assets mining machines on KULR’s behalf, at a total lease cost of $3.2 million.

On June 20, 2025, the Company entered into a one hundred and three-day lease agreement with a new digital asset mining services company to operate 3,570 Bitmain Antminer S19 digital assets mining machines on KULR’s behalf, at a total lease cost of $2.8 million.

Furthermore, on July 30, 2025, the Company entered into a one year lease agreement with a digital asset mining services company to operate digital assets mining machines on KULR’s behalf, at a total lease cost of $2.6 million.

On October 1, 2025, the Company entered into a two year lease agreement with a digital asset mining services company to operate digital assets mining machines on KULR’s behalf, at a total lease cost of $4.2 million, of which $0.9 million represents costs attributable to the machines (see Note 13 – Leases for additional details).

Through December 31, 2025, 65.79 BTC have been earned pursuant to the Machine Lease Agreements, at an average value of $106,854 per BTC.

The following table presents BTC activity during the year ended December 31, 2025.

Digital Assets (1)

Per Bitcoin (in $)

Beginning balance at January 1, 2024

Fair value of digital assets purchased

Cost to acquire digital assets

Cost basis of digital assets held

Fair value as of December 31, 2024

Digital assets purchased

Digital assets mined

Digital assets received as downtime credits

Change in fair value of digital assets

Balance as of December 31, 2024

(1) The source of capital used to purchase Bitcoin was primarily proceeds from ATM offerings.

Fair value as of December 31, 2025

(1) The source of capital used to purchase BTC was primarily proceeds from ATM offerings.

Liquidity and Capital Resources

As of December 31, 2024 and 2023, we had cash balances of $29,831,858 and $1,194,764, respectively, and working capital (deficit) of $29,498,421 and $(2,994,753), respectively.

As of December 31, 2024 and 2023, we had Bitcoin holdings of $20,281,184 and $0, respectively.

For the years ended December 31, 2024 and 2023, cash used in operating activities was $17,341,675 and $11,965,387, respectively.

Our cash used in operations for the year ended December 31, 2024 was primarily attributable to our net loss of $17,523,629, adjusted for non-cash expenses in the aggregate amount of $7,087,296, as well as $6,905,342 of net cash used to fund changes in the levels of operating assets and liabilities.

Our cash used in operations for the year ended December 31, 2023 was primarily attributable to our net loss of $23,693,556, adjusted for non-cash expenses in the aggregate amount of $6,841,833, as well as $4,886,336 of net cash generated by changes in the levels of operating assets and liabilities.

For the years ended December 31, 2024 and 2023, cash used in investing activities was $21,596,192 and $1,046,113, respectively.

Cash used in investing activities during the year ended December 31, 2024 was related to investments in digital assets of $21,000,010, purchases of property and equipment of $573,444 and deposits paid for purchases of property and equipment of $22,738.

Cash used in investing activities during the year ended December 31, 2023 was related to deposits paid for purchases of property and equipment of $644,963, purchases of property and equipment of $266,150, and an acquisition of intangible assets of $135,000.

For the years ended December 31, 2024 and 2023, cash provided by financing activities was $67,574,961 and $3,872,701, respectively.

Financing activities during the year ended December 31, 2024 was primarily due to net proceeds from ATM equity financing totaling $60,131,816, proceeds from SEPA Advance Notices totaling $9,104,949, net proceeds from notes payable totaling $2,563,900, and proceeds from the exercise of stock options totaling $23,455, partially offset by notes payable repayments of $3,341,597, repurchase of common stock of $500,000, and payments for deferred financing costs of $406,109.

Financing activities during the year ended December 31, 2023 consisted primarily of net proceeds from equity financing totaling $3,456,950, net proceeds from prepaid advance liability debt financing totaling $1,970,000, and proceeds from notes payable of $250,000, partially offset by debt repayments totaling $1,575,000 and the repurchase of common stock totaling $229,249.

As of December 31, 2024, future cash requirements for our current liabilities include $3,199,961 for accounts payable and accrued expenses, $599,425 for secured promissory notes and $495,931 for future payments under operating and finance leases.

Future cash requirements for long-term liabilities include $822,602 for future payments under operating and finance leases.

As of December 31, 2025 and 2024, we had cash balances of $13.3 million and $29.8 million, respectively, and working capital of $19.3 million and $29.5 million, respectively.

As of December 31, 2025 and 2024, we had BTC holdings of $94.0 million and $20.3 million, respectively.

For the years ended December 31, 2025 and 2024, cash used in operating activities was $45.0 million and $17.3 million, respectively.

Our cash used in operations for the year ended December 31, 2025 was primarily attributable to our net loss of $61.9 million, adjusted for non-cash expenses in the aggregate amount of $25.3 million, as well as $8.3 million of net cash used to fund changes in the levels of operating assets and liabilities.

Our cash used in operations for the year ended December 31, 2024 was primarily attributable to our net loss of $17.5 million, adjusted for non-cash expenses in the aggregate amount of $7.1 million, as well as $6.9 million of net cash used to fund changes in the levels of operating assets and liabilities.

For the years ended December 31, 2025 and 2024, cash used in investing activities was $89.0 million and $21.6 million, respectively.

Cash used in investing activities during the year ended December 31, 2025 was related to investments in digital assets of $79.7 million, investment in preferred stock of $3.3 million, purchases of property and equipment of $3.0 million, issuance of convertible loan receivable of $2.1 million, deposits paid for purchases of property and equipment of $0.8 million, and purchase of intangible asset for $0.1 million.

Cash used in investing activities during the year ended December 31, 2024 was related to investments in digital assets of $21.0 million, purchases of property and equipment of $0.6 million and deposits paid for purchases of property and equipment of $0.02 million.

For the years ended December 31, 2025 and 2024, cash provided by financing activities was $117.4 million and $67.6 million, respectively.

Financing activities during the year ended December 31, 2025 was primarily due to proceeds from ATM equity financing totaling $123.2 million, proceeds from the loan payable totaling $8.0 million and proceeds from the exercise of stock options totaling $0.01 million, partially offset by loan payable repayments of $8.0 million, issuance costs of ATM financing of $3.1 million, repayment of finance lease liabilities of $1.0 million, note payable repayment of $0.6 million, payment for deferred financing costs for $0.6 million, payment of employee tax withholding from shares withheld of $0.4 million, and repurchase of common stock of $0.1 million.

Financing activities during the year ended December 31, 2024 was primarily due to proceeds from ATM equity financing totaling $61.9 million, proceeds from SEPA Advance Notices totaling $9.1 million, proceeds from notes payable totaling $2.7 million, and proceeds from the exercise of stock options totaling $0.02 million, partially offset by notes payable repayments of $3.3 million, issuance costs of ATM financing of $1.8 million, repurchase of common stock of $0.5 million, payments for deferred financing costs of $0.4 million and issuance costs on notes payable of $0.2 million.

As of December 31, 2025, future cash requirements for our current liabilities include $5.8 million for accounts payable and accrued expenses, $3.3 million for future payments under operating and finance leases.

Future cash requirements for long-term liabilities include $2.4 million for future payments under operating and finance leases.

On October 15, 2025, the Company repaid in full the remaining balance of the loan payable, classified in the current liabilities section of our condensed consolidated balance sheet.

Our primary source of liquidity has historically been cash generated from equity and debt offerings.

1 unchanged sentence

We have a history of recurring net losses, recurring use of cash in operations and declining working capital.

During the year ended December 31, 2024, the Company received gross proceeds of $61,912,798 pursuant to the ATM.

Given our December 31, 2024 cash, Bitcoin and working capital balances, there is no substantial doubt about the Company’s ability to meet its obligations as they become due within the twelve months from the date these consolidated financial statements are available to be issued.

While no assurance can be provided that we will be successful in raising additional capital from the ATM.

During the year ended December 31, 2024, we received aggregate gross proceeds of $61,912,798.

During the period from January 1, 2025 through March 27, 2025, the Company issued 19,387,610 shares of common stock for gross proceeds of $51,122,190 pursuant to the ATM.

As of March 27, 2025, our cash and Bitcoin balances were approximately $25 million and $58 million, respectively.

During the year ended December 31, 2025, the Company received gross proceeds of $123.2 million pursuant to the

As of December 31, 2025, we believe our cash on hand, BTC holdings, cash flows from operations and working capital balances will be sufficient to satisfy our obligations over the next 12 months.

No assurance can be provided that we will be successful in raising additional capital from the ATM.

During the year ended December 31, 2025, the Company issued a total of 12,679,311 shares of common stock pursuant to the ATM agreements for aggregate gross proceeds of $123.2 million.

During the year ended December 31, 2024, the Company issued a total of 9,347,652 shares of common stock pursuant to the First ATM for aggregate gross proceeds of $61.9 million.

As of December 2025, the Company decided to pause its ATM transactions through June 30, 2026.

As of March 27, 2026, our cash and BTC balances were approximately $8.4 million and $71.5 million, respectively.

Off-Balance Sheet Arrangements

8 unchanged sentences

There are items within our financial statements that require estimation but are not deemed critical, as defined above.

We have identified one estimate within our consolidated financial statements that is considered to be a critical accounting estimate, as follows:

Impairment of Long-Lived Assets

We review long-lived assets, including property, plant and equipment, ROU lease assets and finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.

Such triggering events may include, but are not limited to, a significant decrease in the market price of an asset, a significant adverse change in the extent or manner in which an asset is being used, a significant adverse change in legal or business climate, or a current-period operating or cash flow loss combined with a history of such losses.

Recoverability Assessment

When a triggering event is identified, we assess recoverability by comparing the sum of the projected undiscounted future cash flows expected to be generated by the asset or asset group over its remaining useful life to its carrying amount.

If the undiscounted cash flows are less than the carrying amount, an impairment loss is recognized equal to the amount by which the carrying amount exceeds the estimated fair value of the asset or asset group.

Determination of Fair Value

We estimate fair value using an income approach, primarily through a discounted cash flow (“DCF”) model.

Key assumptions in our DCF model include:

● Projected revenue growth rates, which are based on historical performance, current customer orders, market conditions, and management’s outlook for the business

● Operating margin assumptions, which reflect anticipated cost structures, pricing trends, and operational efficiencies

● Discount rate, which represents a weighted average cost of capital (“WACC”) derived from observable market data for comparable companies and reflects the risk profile of the asset or asset group being tested

● Terminal growth rate, reflecting our long-term expectations for the industry and macroeconomic environment

The determination of fair value requires significant judgment and is sensitive to changes in underlying assumptions.

While we believe our current assumptions are reasonable, changes in market conditions, business performance, or macroeconomic factors could result in materially different estimates.

Results for the Period

During the year ended December 31, 2025, we identified triggering events related to certain intangible assets, property and equipment (including an equipment deposit) and a ROU asset.

As a result of our impairment analysis, we recorded a non-cash impairment charge of $3.1 million during the year ended December 31, 2025, which is reflected in Operating Expenses in our Consolidated Statements of Operations.

No impairment charges were recorded during the year ended December 31, 2024.

Recently Issued Accounting Pronouncements

1 unchanged sentence

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company, as defined by Rule 229.10(f)(1) and are not required to provide the information required by this Item.

As a smaller reporting company, we are not required to provide the information required by this Item.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis