What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-13 compared with 2026-05-14 · 172 added, 118 removed, 100 unchanged (74% of the section changed)

1 unchanged sentence

The following discussion and analysis of the results of operations and financial condition of KULR Technology Group, Inc.

(“KULR”) and its wholly-owned subsidiary, KULR Technology Corporation (“KTC”) (collectively referred to as “KULR” or the “Company”) as of March 31, 2026 and for the three months ended March 31, 2026 and 2025 should be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those unaudited condensed consolidated financial statements that are included elsewhere in this Quarterly Report.

(“KULR”) and its wholly-owned subsidiary, KULR Technology Corporation (“KTC”) (collectively referred to as “KULR” or the “Company”) as of June 30, 2026 and for the three and six months ended June 30, 2026 and 2025 should be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those unaudited condensed consolidated financial statements that are included elsewhere in this Quarterly Report.

References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us”, “we”, “our” and similar terms refer to the Company.

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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.

In June 2026, the Company communicated its strategy to position itself as an energy-systems platform for “physical AI,” prioritizing product revenue growth, gross margin improvement, and cost discipline across its target markets, which include space and defense, the low-altitude drone economy, AI data center backup power, Energy-as-a-Service for critical infrastructure, and robotics.

Recent Developments

Caban Asset Acquisition

On December 24, 2025 (the “Acquisition Date”), we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Caban Systems, Inc.

(“Caban”), a Miami-based renewable energy services and technology company, pursuant to which we acquired certain equipment and software used for the development, manufacture, and supply of Underwriters Laboratories (“UL”)-certified battery packs in exchange for a purchase price of $2,515,987 (the “Acquisition”).

We paid cash of $1,921,127 on the Acquisition Date, with the remainder of $594,860 (“Holdback Amount”) to be paid in cash during 2026 based on timing of completion of delivery and installation of the equipment at our facility.

If we suffer any damages related to the Acquisition for which we are indemnified and that are not cured by Caban, the Holdback Amount may be setoff against payments for such damages that would otherwise be paid by Caban.

As of March 31, 2026, the remaining balance of the Holdback Amount was $348,601.

In connection with the Purchase Agreement, we entered into a Transition Services Agreement (the “TSA”) with Caban, whereby both parties agreed to work together for approximately ninety days after the equipment is installed at our facility, to ensure a smooth transition of the manufacturing of the Battery Packs from Caban to KULR.

In consideration for the transition services, we will pay Caban service fees not to exceed $500,000 in the aggregate unless otherwise agreed in writing.

During the three months ended March 31, 2026, we incurred expenses in connection with the TSA of approximately $100,000.

Credit Agreement

In July 2025, we secured a $20 million credit facility (which has no fixed termination date) with Coinbase, our digital assets custodian (the “Custodian”).

Pursuant to the terms of the agreement, either party may terminate a loan on a termination date established by notice given to the other party prior to the close of business on any day that is a calendar day.

On July 8, 2025, we borrowed $8 million (“Initial Drawdown”) which was repaid on October 15, 2025.

On March 27, 2026, we borrowed $5 million (the “Second Drawdown”) against the facility.

The Second Drawdown bears a 7% loan fee, and we segregated 125 Bitcoin (“BTC”) as collateral against this loan.

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

As of March 31, 2026, the full $5 million of principal was outstanding and we incurred interest in the amount of $4,795 pursuant to the Second Drawdown.

On May 13, 2026, we borrowed an additional $15 million (the “Third Drawdown”) against the $20 million credit facility with Coinbase.

The Third Drawdown bears a 7% loan fee rate per annum, paid monthly, with no scheduled maturity date.

We segregated 300 BTC as collateral against this loan.

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

Subsequent to June 30, 2026, the Company repaid the outstanding principal balance of $20.0 million under its credit facility with Coinbase.

In accordance with the terms of the Master Loan Agreement, dated as of July 1, 2025, the repayment resulted in the automatic release of 565 BTC from the collateral account.

The Company sold an aggregate of 333 BTC for total proceeds of approximately $21.5 million at an average price of approximately $64,467 per BTC, of which approximately $20.0 million (approximately 310 BTC) was used to fund the repayment.

Strategic Initiatives

KULR expects its existing liquidity, together with disciplined balance-sheet management, will support its planned operations and growth initiatives for the near term, which include:

Scale its flagship KULR ONE Space (K1S) architecture providing scalable, standardized battery solutions that meet rigorous human spaceflight safety standards.

Ramp production of its KULR ONE Air products for military and commercial drone applications.

Advance the development of its KULR ONE MAX battery backup solutions for AI data center and telecommunications applications.

Bitcoin Strategy

As of March 31, 2026, we had two machine lease agreements (“Machine Lease Agreements”) with digital asset mining services providers related to the operation of digital asset mining machines.

On July 30, 2025, we entered into a one-year mining services agreement and on October 1, 2025, we entered into a two-year mining services agreement with a digital asset mining services company.

During the three months ended March 31, 2026, the Company did not purchase BTC and 8.80 BTC were earned from mining operations at an average value of $75,263 per BTC.

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

Departure and Appointment of Directors

On April 28, 2026, the holder of a majority of the outstanding voting stock of the Company, acting by written consent in lieu of a stockholder meeting, removed Dr.

Joanna Massey, Donna Grier, Aron Schwartz, and Shawn Canter from the Company’s Board of Directors and appointed Mr.

Ben Frank, a Director of Workforce AI Solution Engineering at Microsoft Corporation, and Dr.

Mike Kimel, a specialist in pricing and profit optimization, as directors, effective immediately.

Each newly appointed director will serve until the Company’s next annual meeting of stockholders or until his successor has been duly elected and qualified.

As a result of these actions, the Company’s Board of Directors was reduced to three members, a majority of whom are independent.

These changes were undertaken as part of the Company’s ongoing efforts to reduce selling, general and administrative expenses and improve operating efficiency in 2026.

Facility Lease

On May 12, 2026, we executed a 3-year lease agreement for a new facility located in Houston, Texas.

The facility is approximately 24,700 rentable square feet and monthly rent is $30 thousand, which consists of base rent plus common area maintenance costs.

We will pay a security deposit of $70 thousand and secure a letter of credit in the amount of $0.3 million within sixty days of the effective date of the agreement.

On May 7, 2026, the Company’s Board of Directors authorized management to sell digital assets as deemed necessary to fund key business priorities in lieu of issuing equity.

During the period from July 9, 2026 through August 11, 2026, 333 BTC have been sold for net proceeds of $21.5 million.

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

At the Market Offering

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

During the three months ended March 31, 2026, the Company did not issue any shares of common stock pursuant to the ATM Agreement.

Reverse Stock Split

On June 23, 2025, the Company effected a reverse stock split wherein each 8 shares of common stock outstanding immediately prior to the effective date was combined and converted into one share of common stock.

All share and per share amounts have been adjusted to reflect the Reverse Stock Split.

The Company has an at-the-market offering program (“ATM”) pursuant to an ATM arrangement with Cantor Fitzgerald and Craig-Hallum, under which the Company previously announced it had decided to pause transactions through June 30, 2026.

During the three and six months ended June 30, 2026, the Company did not issue any shares of common stock pursuant to the ATM.

On June 26, 2026, the Company announced that it had extended the pause of ATM transactions through September 30, 2026.

Results of Operations

Three Months Ended March 31, 2026, Compared With Three Months Ended March 31, 2025

Three and Six Months Ended June 30, 2026, Compared With Three and Six Months Ended June 30, 2025

For the Three Months Ended

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Grant revenue

Mining of digital assets

Digital asset mining

Total Revenue

For the three months ended March 31, 2026 and 2025, we generated $4.8 million and $2.4 million, respectively, of revenues from 26 customers in each period.

We had 19 product sales customers in the first quarter of 2026, compared with 16 in the first quarter of 2025.

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

The increase in product revenue is primarily due to large sales of FTI and KULR One products to three new customers with whom we did not have contracts during the three months ended March 31, 2025.

We had 12 contract services customers in each of the first quarters of 2026 and 2025.

Although the number of customers was unchanged, the decrease in revenue was primarily driven by two large long term contracts that were completed during the three months ended March 31, 2025.

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

Grant revenue during the three months ended March 31, 2026 was $1.4 million related to the reimbursement of R&D expenses.

For the Six Months Ended

Product sales

Contract services

Grant revenue

Digital asset mining

Total Revenue

For the three months ended June 30, 2026 and 2025, we generated $2.1 million and $3.7 million, respectively, of revenues from 26 and 30 customers in each period.

For the six months ended June 30, 2026 and 2025, we generated $6.0 million and $6.1 million, respectively, of revenues from 39 and 43 customers in each period.

Our customers and prospective customers for product and service revenue 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.

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

Product Revenue

Product sales consist of battery systems delivered through our KULR ONE platform — including space, defense and aviation battery assemblies (“KULR ONE products”), battery management system hardware and lithium iron phosphate (“LFP”) battery packs — together with internal short circuit (“ISC”) cells and devices and battery storage and transport products (“Safe Cases”).

We had 16 product sales customers during the three months ended June 30, 2026, compared with 25 during the three months ended June 30, 2025.

Product sales for the period were driven principally by two large orders, each of which was to a new customer and consisted of a new battery product configuration — custom lithium-ion battery assemblies and LFP battery packs.

The decrease in product sales compared to the prior year period was primarily due to supply chain disruptions related to battery cell supply and power electronics during the period, which delayed the sale, production and delivery of certain battery products.

We had 29 product sales customers during the six months ended June 30, 2026, compared with 32 during the six months ended June 30, 2025.

Product sales for the 2026 six-month period were driven principally by our largest order of the period, an FTI program delivered to a new defense customer during the first quarter of 2026, together with custom lithium-ion battery assemblies and LFP battery packs sold to two additional new customers.

Service Revenue

Contract services consists of battery engineering and design services, including non-recurring engineering (“NRE”);

cell screening and characterization;

pack-level qualification and abuse testing, including calorimetry and propagation resistance testing;

and KULR VIBE vibration services.

We had 10 contract services customers during the three months ended June 30, 2026, compared with 12 during the three months ended June 30, 2025.

Contract services revenue for the 2026 period was driven principally by engineering services performed for our two largest services customers for the period, together with qualification and abuse testing services performed for several other customers.

The decrease in contract services revenue was primarily attributable to the substantial completion of engineering services contracts that were in progress during the three months ended June 30, 2025, including a government-funded engineering program and two other significant engineering services contracts that did not recur in the 2026 period, partially offset by testing services performed for new customers during the 2026 period.

We had 17 contract services customers during the six months ended June 30, 2026, compared with 23 during the six months ended June 30, 2025.

Contract services revenue for the 2026 six-month period was driven principally by NRE performed for our largest services customer and vibration testing and qualification services performed for our second largest services customer, together with engineering services performed for several other customers.

The decrease in contract services revenue was primarily attributable to the substantial completion of engineering services contracts that were in progress during the six months ended June 30, 2025, including a large government-funded engineering program and three other significant engineering services contracts that did not recur at a comparable scale in the 2026 period.

The decrease was partially offset by an increased volume of qualification and abuse testing services performed for new customers.

Grant Revenue

Grant revenue during the three and six months ended June 30, 2026 was $0.5 million and $0.9 million related to the reimbursement of R&D expenses.

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.

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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 for the three months ended March 31, 2025.

Revenue from mining of digital assets during the three months ended March 31, 2026 was $0.7 million.

The Company continued its mining operations pursuant to existing Machine Lease Agreements entered into during 2025.

For the three months ended March 31, 2026, the Company earned 8.80 BTC from mining operations.

For the three months ended March 31, 2025, the Company earned 2.97 BTC from mining operations pursuant to the initial Machine Lease Agreement entered into on March 7, 2025.

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.

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.

There was no grant revenue recognized for the three and six months ended June 30, 2025.

Revenue for the six months ended June 30, 2026 reflects the correction of an immaterial error in previously reported grant revenue for the three months ended March 31, 2026.

See Note 3 – Immaterial Revision of Previously Reported Financial Information, to the condensed consolidated financial statements for further information.

Mining of Digital Assets Revenue

For the three months ended June 30, 2026, the decrease in revenue from mining of digital assets was primarily due to fewer BTC earned, as the Company operated under two machine lease agreements during the three months ended June 30, 2026, compared to three agreements in effect during the three months ended June 30, 2025.

The decrease was further driven by a lower average fair value of BTC on the dates earned in 2026.

For the six months ended June 30, 2026, the decrease in revenue from mining of digital assets was primarily due to fewer BTC earned, as the Company operated under two machine lease agreements during the six months ended June 30, 2026, compared to three agreements in effect during the six months ended June 30, 2025.

The decrease was further driven by a lower average fair value of BTC on the dates earned in 2026.

The two machine lease agreements in effect during the six months ended June 30, 2026 have both since concluded.

The first agreement became effective July 30, 2025 and expired by its terms on July 30, 2026, and the Company did not renew or extend it.

The second agreement was originally scheduled to continue through October 31, 2027;

however, in July 2026, the Company and the mining services provider under that agreement agreed to terminate it prior to its stated term, and the Company has no further obligations thereunder.

As a result, the Company no longer operates under any machine lease or mining services agreement.

See Note 13 – Subsequent Events for further information.

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, and lease and non-lease costs incurred pursuant to Machine Lease Agreements in connection with mining digital assets.

The following tables present the gross profit and gross profit margin by revenue type for the periods presented.

The following tables present the gross profit (loss) and gross profit (loss) margin by revenue type for the periods presented.

For the Three Months Ended

March 31, 2026

June 30, 2026

Gross Profit (Loss)

Gross Margins

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For the Three Months Ended

March 31, 2025

June 30, 2025

Gross Profit (Loss)

Gross Margins

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Mining of digital assets

For the Six Months Ended

June 30, 2026

Gross Profit (Loss)

Gross Margins

Product sales

Contract services

Grant revenue

Mining of digital assets

For the Six Months Ended

June 30, 2025

Gross Profit (Loss)

Gross Margins

Product sales

Contract services

Mining of digital assets

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

Because we are introducing new revenue streams 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 decreased compared to the prior year period, driven primarily by reduced margins recognized on various product lines during the period as a result of product mix.

Gross profit margin on contract services improved slightly in the first quarter of 2026, driven primarily by the completion of two projects that had been impacted by excess labor hours and created negative margins in the first quarter of 2025.

Mining of digital asset margins decreased during the period.

The decrease was primarily driven by the decline in BTC prices, which were down significantly in March 2026 relative to March 2025, reducing the value of BTC mined relative to the fixed costs associated with machine lease obligations.

Product Revenue Margins

For the three months ended June 30, 2026, the gross profit margin on product sales decreased compared to the prior year period, driven primarily by lower product sales from supply chain disruptions related to battery cell supply and power electronics in the second quarter of 2026, while expenses associated with direct labor, outsourced labor and other production costs did not decline proportionately.

For the six months ended June 30, 2026, the gross profit margin on product sales decreased compared to the prior year period, driven primarily by reduced margins recognized on various product lines during the period, and by lower product sales in the second quarter of 2026 from supply chain disruptions related to battery cell supply and power electronics without a proportionate decline in associated expenses.

Service Revenue Margins

For the three months ended June 30, 2026, the gross loss on contract services increased slightly from the prior year period in dollar terms, and the gross profit margin percentage on contract services declined, driven primarily by lower contract services revenue recognized relative to depreciation and project labor costs during the period, including excess labor and material costs on a customer engineering program that generated a gross loss during the period.

Substantially all other contract services projects generated positive gross margins during the period.

In the prior year period, gross losses on contract services were concentrated in two other customer engineering programs.

For the six months ended June 30, 2026, the gross loss on contract services decreased compared to the prior year period in dollar terms, driven primarily by the completion of two projects that had been impacted by excess labor hours and generated negative margins during the first quarter of 2026, partially offset by excess labor and material costs on a customer engineering program during the second quarter

The gross profit margin percentage on contract services improved compared to the prior year period, as contract services cost of revenue decreased at a faster rate than contract service revenue compared to the prior period.

Mining of Digital Asset Revenue Margins

For the three months ended June 30, 2026, the gross profit margin on mining of digital assets decreased compared to the prior year period, driven primarily by the decline in BTC prices relative to the prior year period, which reduced the value of BTC mined relative to the fixed costs associated with machine lease obligations.

For the six months ended June 30, 2026, the gross profit margin on mining of digital assets decreased compared to the prior year period, driven primarily by the decline in BTC prices relative to the prior year period, which reduced the value of BTC mined relative to the fixed costs associated with machine lease obligations.

Additionally, the 2026 period includes a full six months of lease and hosting costs, while the 2025 period includes four months due to mining operations beginning in March 2025.

Grant Revenue Margins

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

The related costs include $1.4 million primarily classified within research and development expenses.

The related costs include $0.5 million and $0.9 million, respectively, for the three and six months ended June 30, 2026 and are classified within research and development expenses.

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, as well as costs incurred under the Texas Space Commission award, which are reimbursed through grant revenue.

R&D expenses are charged to operations as incurred.

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Research and development

Total research and development

For the Six Months Ended

Operating Expenses

Research and development

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

The decrease in research and development expenses was primarily attributable to progress made on several key initiatives in the prior year, including third-party engineering and development services, testing equipment purchases, and investments to support manufacturing expansion, which resulted in lower activity levels and associated costs during the current period.

The increase in research and development expenses for the three months ended June 30, 2026 was primarily attributable to costs incurred under the Texas Space Commission grant, which are reimbursed through grant revenue.

The decrease in research and development expenses for the six months ended June 30, 2026 was primarily attributable to progress made on several key initiatives in the prior year, including third-party engineering and development services, testing equipment purchases, and investments to support manufacturing expansion, which resulted in lower activity levels and associated costs during the current period, partially offset by R&D expenses incurred related to the Texas Space Commission grant in the 2026 periods.

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 member compensation, accounting and tax, consulting fees, travel and entertainment, rent expense, office expenses, and legal and professional fees.

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.

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Selling, general, and administrative

Total selling, general, and administrative

The decrease in selling, general and administrative expenses was primarily attributable to the conclusion of strategic investment and corporate development activities that drove costs higher during 2025, including a minority investment in an external company that did not recur during the three months ended March 31, 2026.

For the Six Months Ended

Operating Expenses

Selling, general, and administrative

The decrease in selling, general and administrative expenses for the three and six months ended June 30, 2026 was primarily attributable to the conclusion of strategic investment and corporate development activities that drove costs higher during 2025, including a minority investment in an external company that did not recur during the three and six months ended June 30, 2026.

Accounting, legal, consulting, and other professional fees decreased as these activities wound down.

Marketing, travel, insurance, and personnel-related expenses similarly reflect lower activity levels in the current period compared to the elevated investment and expansion efforts undertaken throughout 2025.

Impairment Expense

There were no impairment expenses for the three and six months ended June 30, 2026.

For the three and six months ended June 30, 2025, impairment expenses were $786,397 and $1,355,174, respectively, due to the write-off of equipment deposits.

Credit Losses

During the three months ended March 31, 2026, the Company recorded a credit loss of $500,000 on Auto-Vibe assets.

During the six months ended June 30, 2026, the Company recorded a credit loss of $500,000 on Auto-Vibe assets.

There was no comparable charge in the prior year period.

For the three and six months ended June 30, 2026, credit losses on accounts receivable were approximately $1.3 million, which related to a single customer and was determined based on a specific assessment of that customer’s ability to pay.

There were no credit losses on accounts receivable for the three and six months ended June 30, 2025.

Other Income (Expense)

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For the Three Months Ended

Other Expense (Income)

Other Income (Expense)

Change in fair value of digital assets

Interest income

Miscellaneous income

Interest expense

Change in fair value of accrued issuable equity

Total Other Income (Expense), net

For the Six Months Ended

Other Income (Expense)

Change in fair value of digital assets

Interest income

Miscellaneous income

Interest expense

Change in fair value of accrued issuable equity

Amortization of debt discount

Gain on debt extinguishment, net

Total Other Expense, net

The change is primarily attributable to the $11.0 million increase in unrealized loss on BTC holdings reflecting the change in market price of BTC, from $82,559 on March 31, 2025, to $68,228 on March 31, 2026, $0.3 million due to the change in fair value of accrued issuable equity, $0.1 million due to the decrease in interest income, $0.1 million due to the gain on debt extinguishment, partially offset by amortization of debt discount of $0.1 million.

Total Other Income (Expense), net

The three month change is primarily attributable to the $28.0 million unfavorable change in the fair value of BTC holdings, reflecting the change in market price of BTC, from $68,228 on April 1, 2026, to $58,554 on June 30, 2026, compared to the change from $82,560 on April 1, 2025, to $107,176 on June 30, 2025.

The six month change is primarily attributable to the $39.0 million unfavorable change in the fair value of BTC holdings, reflecting the change in market price of BTC, from $87,502 on January 1, 2026, to $58,554 on June 30, 2026, compared to the change from $93,384 on January 1, 2025, to $107,176 on June 30, 2025.

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.

We view our Bitcoin holdings as long-term holdings however, for the foreseeable future, the Company does not expect to allocate surplus cash to Bitcoin as it prioritizes scaling its operating business, including KULR ONE and related products and services.

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 could periodically leverage or 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.

To date, KULR has not sold any Bitcoin from its treasury holdings.

As of March 31, 2026, we had contractual commitments with digital asset mining services providers related to the operation of digital asset mining machines.

On July 30, 2025, we entered into a one-year mining services agreement with a digital asset mining services company, with total committed payments of $2.6 million, of which $0.7 million remained as commitments as of March 31, 2026.

In addition, on October 1, 2025, we entered into a two-year mining services agreement with a digital asset mining services company, that included certain non-lease operating expense commitments and the remaining commitments as of March 31, 2026 for future operating expenses associated with this lease totaled $2.5 million.

For the three months ended March 31, 2026, the Company earned 8.80 BTC from mining operations.

As of March 31, 2026, we held 1,083.14 BTC with a fair value of $73.9 million.

The following table presents BTC activity during the three months ended March 31, 2026 and 2025.

Digital Assets(1)

Fair value as of December 31, 2025

Digital assets purchased

Digital assets mined

Digital assets received as lease incentive

Change in fair value of digital assets

Fair value as of March 31, 2026

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 included 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.

However, for the foreseeable future, we do not expect to allocate surplus cash to BTC as we prioritize scaling our operating business, including KULR ONE and related products and services.

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 transactions.

This overall strategy also contemplates that we could periodically leverage or 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.

Through June 30, 2026, KULR had not sold any BTC from its treasury holdings.

On May 7, 2026, our Board of Directors authorized management to sell digital assets as deemed necessary to fund operations and key business priorities in lieu of issuing equity.

Accordingly, rather than issue equity under the ATM at current levels, we intend to sell BTC to fund our planned operations and growth initiatives, including scaling our KULR ONE Space architecture, ramping production of our KULR ONE Air products, and advancing development of our KULR ONE MAX battery backup solutions.

Subsequent to June 30, 2026, we repaid the remaining outstanding principal and interest balance under our $20.0 million loan agreement with Coinbase, which resulted in the automatic release of the 565 BTC held in the collateral account.

To fund the repayment, we sold an aggregate of approximately 333 BTC for total proceeds of approximately $21.5 million, at an average price of approximately $64,467 per BTC, of which we used proceeds of approximately $20.0 million to fund the principal repayment.

See Note 13 – Subsequent Events for further information regarding sales of BTC subsequent to June 30, 2026.

As of June 30, 2026, we had contractual commitments with digital asset mining services providers related to the operation of digital asset mining machines.

On July 30, 2025, we entered into a one-year mining services agreement, which was not renewed, with a digital asset mining services company, with total committed payments of $2.6 million, of which all were made as of June 30, 2026.

In addition, on October 1, 2025, we entered into a two-year mining services agreement with a digital asset mining services company, that included certain non-lease operating expense commitments and the remaining commitments as of June 30, 2026 for future operating expenses associated with this lease totaled $2.1 million (see Note 13 – Subsequent Events, related to the termination of this agreement in July 2026).

For the three and six months ended June 30, 2026, the Company earned 8.44 and 17.23 BTC from mining operations.

As of June 30, 2026, we held 1,091.69 BTC with a fair value of $63.9 million, of which 565 BTC with a fair value of $33.1 million were pledged as collateral under the Company’s loan agreement with Coinbase and are presented as digital assets, pledged as collateral, on the condensed consolidated balance sheets.

The following table presents BTC activity during the six months ended June 30, 2026:

Digital Assets(1)

2 unchanged sentences

Digital assets mined

Digital assets received as lease incentive

Received as downtime credits

Change in fair value of digital assets

Fair value as of March 31, 2025

Fair value as of June 30, 2026

Digital assets, pledged as collateral

Digital assets, net

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

Liquidity and Capital Resources

As of May 13, 2026, March 31, 2026 and December 31, 2025, we had cash balances of $19.0 million, $7.7 million and $13.3 million, respectively.

As of March 31, 2026 and December 31, 2025, working capital was $6.9 million and $19.2 million, respectively.

As of March 31, 2026 and December 31, 2025, we also had BTC holdings of $73.9 million and $94.0 million, respectively.

On May 13, 2026, we borrowed an additional $15 million against the $20 million credit facility with Coinbase.

For the three months ended March 31, 2026 and 2025, net cash used in operating activities was $8.7 million and $9.6 million, respectively.

Our net cash used in operations for the three months ended March 31, 2026 was primarily attributable to our net loss of $28.1 million, adjusted for non-cash expenses in the aggregate amount of $22.4 million, as well as $3.0 million of net cash used to fund changes in the levels of operating assets and liabilities.

Our net cash used in operations for the three months ended March 31, 2025 was primarily attributable to our net loss of $18.8 million, adjusted for non-cash expenses in the aggregate amount of $11.9 million plus $2.7 million of net cash used to fund changes in the levels of operating assets and liabilities.

For the three months ended March 31, 2026 and 2025, net cash used in investing activities was $1.5 million and $44.7 million, respectively.

Net cash used in investing activities during the three months ended March 31, 2026, was related to deposits paid for purchases of property and equipment of $1.1 million, plus purchases of property and equipment of $0.2 million and payment of holdback amount related to the Caban asset acquisition of $0.2 million.

Net cash used in investing activities during the three months ended March 31, 2025, was related to investments in digital assets of $44.5 million, purchases of property and equipment of $0.1 million and deposits paid for purchases of property and equipment of $0.1 million.

For the three months ended March 31, 2026 and 2025, net cash provided by financing activities was $4.6 million and $49.0 million, respectively.

Financing activities during the three months ended March 31, 2026 were primarily due to proceeds from the loan payable totaling $5.0 million, which represents a drawdown of our collateralized credit facility with Coinbase, partially offset by payment of employee tax withholding from shares withheld of $0.4 million.

Net cash provided by financing activities during the three months ended March 31, 2025, was primarily due to net proceeds from ATM equity financing totaling $49.9 million, partially offset by notes payable repayments of $0.6 million and payments for deferred financing costs of $0.2 million.

Future cash requirements for our March 31, 2026 current liabilities include approximately $4.6 million for accounts payable and accrued expenses, $5.0 million to repay our loan payable and $2.6 million for future payments under operating and finance leases.

Future cash requirements for our March 31, 2026 long-term liabilities include $1.9 million for future payments under operating and finance leases.

As of August 11, 2026 and June 30, 2026, we had unrestricted cash balances of $8.7 million and $12.8 million, respectively.

As of June 30, 2026, we had working capital of $59.6 million.

As of June 30, 2026, we also had BTC holdings of $63.9 million.

For the six months ended June 30, 2026 and 2025, net cash used in operating activities was $17.7 million and $21.5 million, respectively.

Our net cash used in operations for the six months ended June 30, 2026, was primarily attributable to our net loss of $51.0 million, adjusted for non-cash expenses in the aggregate amount of $35.0 million, plus $1.7 million of net cash used to fund changes in the levels of operating assets and liabilities.

Our net cash used in operations for the six months ended June 30, 2025, was primarily attributable to our net loss of $10.7 million, adjusted for non-cash gains in the aggregate amount of $4.2 million, plus $6.6 million of net cash used to fund changes in the levels of operating assets and liabilities.

For the six months ended June 30, 2026 and 2025, net cash used in investing activities was $2.1 million and $73.6 million, respectively.

Net cash used in investing activities during the six months ended June 30, 2026, was primarily related to purchases of property and equipment of $1.5 million and the payment of a holdback amount related to an asset acquisition of $0.6 million.

Net cash used in investing activities during the six months ended June 30, 2025, was primarily related to purchases of digital assets of $69.9 million, equity investments of $3.3 million, and purchases of property and equipment of $0.3 million.

For the six months ended June 30, 2026 and 2025, net cash provided by financing activities was $19.6 million and $85.8 million, respectively.

Net cash provided by financing activities during the six months ended June 30, 2026, was primarily due to proceeds from our loan payable of $20.0 million, partially offset by payment of employee tax withholding on stock-based compensation of $0.4 million.

Net cash provided by financing activities during the six months ended June 30, 2025, was primarily due to proceeds from ATM equity financing of $89.5 million, partially offset by issuance costs on ATM equity financing of $2.2 million, repayments of notes payable of $0.6 million, payments for deferred financing costs of $0.6 million, and payment of employee tax withholding on stock-based compensation of $0.3 million.

Future cash requirements for our June 30, 2026 current liabilities include approximately $4.4 million for accounts payable and accrued expenses, $20.0 million to repay our loan payable, of which the outstanding balance was repaid subsequent to June 30, 2026, and $0.3 million for future payments under our operating leases to be made within the next year.

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

In July 2026, we terminated our digital asset mining services agreement and we were relieved of future commitments of $2.1 million in exchange for an early termination fee of $0.15 million.

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

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We have a history of recurring net losses and recurring use of cash in operations.

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

As of March 31, 2026, we believe that our cash on hand, BTC holdings, cash flows from operations and working capital balances and $15.0 million of available collateralized borrowing through Coinbase as of March 31, 2026, will be sufficient to meet our obligations as they become due over the next twelve months from the date these condensed consolidated financial statements were to be issued.

The Company’s ATM transactions remain paused as of the date of this filing.

The Company continues to evaluate market conditions to determine when to resume ATM transactions.

On December 22, 2025, the Company decided to pause its ATM transactions, and subsequently extended that pause through September 30, 2026.

During the six months ended June 30, 2026, the Company fully drew down its Master Loan Agreement with Coinbase Credit,

Inc., resulting in $20.0 million outstanding as of June 30, 2026, which was repaid in full subsequent to June 30, 2026, and accordingly, the full $20.0 million loan facility remains available as of the date of this filing.

As of June 30, 2026, we believe that our cash on hand, BTC holdings and working capital balances will be sufficient to meet our obligations as they become due over the next twelve months from the date these condensed consolidated financial statements were issued.

Our ATM transactions remain paused as of the date of this filing.

Off-Balance Sheet Arrangements

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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-Q

Item 2. Management’s Discussion and Analysis