What changed in this filing

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Item 1. Business

2022-03-28 compared with 2021-03-19 · 196 added, 1052 removed, 23 unchanged (98% of the section changed)

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.

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.

Battery safety technology

is becoming increasingly vital to our world in which battery-operated devices are everywhere.

Li-ion batteries are widely used

in consumer electronics, aerospace, marine and automotive applications.

In recent months, KULR has developed a total battery safety

solution for its customers that spans a wide array of industries and applications.

KULR has seen great success in using our patented

thermal runaway shield (“TRS”) technology to prevent cell to cell thermal runaway propagation as well as module to

module propagation.

We have designed a total solution for customers from the design stages incorporating our materials all the

way to testing their passive propagation resistant (“PPR”) battery packs.

We are flexible and can work with different

battery pack configurations across various industries.

We developed a PPR reference design for CubeSat battery in December 2019.

Based on this reference design platform, we were awarded a dual-use technology development agreement from NASA’s Marshall

Space Flight Center to build 3D printed battery systems for manned and robotic space applications in August 2020.

and testing, as well as working alongside battery experts at NASA Johnson Space Center, has positioned us for further advancements

at the forefront of battery safety.

Hundreds of millions of

Li-ion cells are produced and transported annually and even those packaged to prevent external shorting can still experience thermal

runaway (“TR”) due to internal shorts, caused by latent defects, when fully charged.

In these dangerous cases, a torch-like

fire is released as energy escapes from the cell and sends nearby cells into TR resulting in a large fire.

As part of our total

battery safety solution, we have designed a bag out of our TRS material to suppress the flames and prevent the TR event.

placed, the TRS provides a means of protection not only from adjacent batteries but also outside fires of arbitrary origin.

at NASA’s Propulsion & Power Division found our TRS successful at extinguishing the fire generated by cells when

they intentionally triggered the batteries into dangerous failures.

Our TRS bag is currently being used on the International Space

Station (“ISS”) through a project with Leidos, for storing laptop batteries in order to reduce the risk of TR.

Another key element of

our battery safety solution is KULR internal short circuit (“ISC”) device and trigger cells which are used for cell

testing and screening.

Our patented ISC device, licensed from NASA/NREL, can be inserted by OEMs or manufacturers into cells to

mimic failure conditions in a cell.

Once the trigger device is placed inside the cell, it can be intentionally triggered on demand

causing the cell to short circuit.

Currently, we provide ISC devices to OEMs and cell manufacturers, as well as ready-made ISC

trigger cells to customers to identify failure modes and safety issues within their systems.

Currently we are creating an ecosystem

based on our technology which can be applied to different battery architectures and chemistries.

Our management believes

that within commercial markets, aerospace and defense, and high-value applications, cell safety testing and screening has become

a topic of focus.

Therefore, we plan to expand our capabilities to include full battery analysis and testing as outlined by NASA

Johnson Space Center.

We plan to fully incorporate this into our holistic approach to battery safety along with our PPR battery

pack design and testing services, ISC device and trigger cell products and TRS bags.

With increasing regulations and pressure

from government bodies to mitigate the dangers of battery fires and TR, we plan to further develop our capabilities in this arena.

Our management expects

high growth in the aerospace and defense sectors, specifically in regards to hypersonic vehicle programs, space missions and directed

energy programs.

Thermal management is a critical component of both hypersonic weapons programs and space missions.

fiber solutions are used for thermal management in missile defense programs and are particularly effective because of their survivability

at very high temperatures.

They are also very effective at transferring heat and mitigate the risk of overheating in such high-risk

environments.

Historically we have provided value to this sector and we expect to further develop our relationships with the Airforce

Research Lab, the Naval Research Lab and prime contractors to market our solutions.

Directed energy is currently in the spotlight

as experts predict it will greatly impact the future of national security.

Our CRUX cathode generates powerful electron pulses

by field emission from the tops of our carbon fiber coating and has the potential to further develop the current technology.

In addition to evolving

demands led by aerospace and defense, we have observed trending manufacturer-led opportunities in industries such as electric

motor vehicles (“EV”) that have become increasingly more reliant on the Cloud, portability and high-demand processing

KULR’s high performance thermal interface materials can be used to accelerate 5G communications development due to

our material’s core properties:

high thermal conductivity, light weight, and low contact pressure.

5G is one of the biggest

opportunities going forward for transportation technology and we plan to take part in testing of digital and RF tests for 5G.

Testing is still in early phases for both digital and RF communication chips, however, we are seeing a big growth opportunity

for thermal management for 5G.

Cloud computing is also an application of interest since high power communications chips and optical

communication modules require cooling.

We have not yet achieved

profitability and expect to continue to incur cash outflows from operations, as a result, we will eventually need to generate

significant revenues to achieve profitability.

Until that time we shall have to continue to raise cash as and when required through

the sale of stock.

KULR was incorporated

in the State of Delaware in December 2015 and was formerly known as “KT High-Tech Marketing, Inc.” and, prior to that,

as “Grant Hill Acquisition Corporation.” In April 2016, KULR implemented a change of control by issuing shares to

new shareholders, redeeming shares of existing shareholders, electing new officers and directors and accepting the resignations

of its then existing officers and directors.

Our wholly-owned subsidiary,

KULR Technology Corp, was formed in 2013 and is based in San Diego California.

Since its inception, KTC primarily focused on developing

and commercializing its thermal management technologies, which it acquired through assignment from and license with KTC’s

co-founder Dr.

Overview and Market Opportunities

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.

As the global economy becomes increasingly electrified and connected, KULR is addressing the rising demand for cooler, lighter, and safer batteries, and electronic systems.

Leveraging the company’s roots in developing breakthrough cooling solutions for NASA space missions and backed by a strong intellectual property portfolio, KULR provides customers with industry-leading battery safety technologies as well as cost-effective cooling technologies that outperform traditional solutions.

The world’s leading aerospace, electronics, energy storage, 5G infrastructure, and electric vehicle manufacturers trust KULR to solve safety, reliability, and efficiency challenges in an ethical and environmentally sustainable manner.

Active government initiatives propelled by industry and regulatory tailwinds are increasing demand for battery recycling and clean energy, resulting in an expanding total addressable market for KULR’s solutions.

The Company’s disruptive technologies strive to fulfill an addressable $24 billion thermal management systems market (estimated based on market data projections published by Converged Markets stating that the thermal management systems market size was projected to grow from $11.1 billion in 2017 to $24.8 billion by 2025.

The Company’s integrated design approach offers comprehensive solutions in thermal interface materials, lightweight heat exchangers, and protection against lithium-ion battery thermal runaway propagation.

Its high-performance solutions can be designed to fit demanding configurations and applications.

As companies and governments around the world pledge to meet net zero emissions over the next few decades, KULR is uniquely positioned to accelerate the adoption of clean energy solutions and sustainable products and facilitate the migration to a global circular economy.

The Company’s goal is to provide total battery safety solutions for more efficient battery systems, increased sustainability, and end-of-life battery management, making KULR a key technology solutions provider in the migration to a global circular economy.

Energy Storage

doubled its energy storage capacity in 2021 and is expected to increase 17x by 2030, according to Wood Mackenzie.

Lithium-ion batteries are the dominant technology on the market for energy storage because of their cost and availability but do carry well documented safety risks.

While rare, cell to cell thermal runaway in lithium-ion batteries can cause a fire or explosion.

For example, an explosion at Arizona Public Service’s McMicken battery plant injured four emergency responders in 2019 and overheating caused the 1.2 GWh Moss Landing storage facility in California to go off-line.

To reach net zero by mid-century will require an additional 245 GWh of battery capacity each year until 2030, but incidents of the like distill trust in battery technologies and threaten to slow the pace which is needed to achieve decarbonization goals.

KULR’s passive propagation resistant (PPR) and thermal runaway shield (TRS) technologies prevent cell to cell thermal runaway propagation and inhibit fire and ejecta of a single cell from exiting the battery enclosure, making battery energy storage packs safe for homes, hospitals, schools, and universities, and more.

KULR is partnering with leaders in the energy storage industry such as Volta Energy Products, the subsidiary of Buffalo NY based parent company, Viridi Parente, to increase deployments of safe, reliable, and durable energy storage safety systems to accelerate the broader energy transition.

Battery Recycling and Management

KULR-Tech Safe_Case provides a safe and cost-effective solution to commercially store and transport lithium batteries, which is increasing in frequency as supply chain challenges and ESG commitments necessitate battery recycling and end-of-lifecycle management.

Whether shipping a single battery, a battery-powered device or a load shipment of batteries, KULR’s technology mitigates the impacts of cell-to-cell thermal runaway propagation and ensures a safe journey.

KULR’s Thermal Runaway Shield (TRS) technology is trusted by NASA to ship and store astronauts’ laptop batteries on the International Space Station.

In addition, KULR combines its Passive Propagation Resistant (PPR) solutions with its new CellCheck intelligent battery management system to extend battery life.

The CellCheck modular battery management system platform is KULR’s AI-powered battery safety technology for e-mobility, energy storage and fleet applications.

It captures real time and lifetime battery intelligence, sensing adverse electrical, environmental, and physical events to analyze and control for maximum battery safety, reliability, and performance.

As commercial industries across the board face greater scrutiny to comply with ESG standards, KULR is serving a total addressable market for a circular economic model for batteries that will reach over $21 billion by 2025 (estimated based on market data projections published by Grand View Research, Inc.

stating that the global battery recycling market size is expected to reach $21.04 billion by 2025).

KULR is supporting the shift to electrified transport by enabling safer, lighter, and faster charging lithium-ion batteries for electric vehicles and micro mobility solutions.

KULR’s passive propagation resistant (PPR) battery pack solutions increase battery energy capacity while preventing thermal runaway events that can lead to hazardous explosions, helping the transportation industry to address growing public safety concerns around electric vehicles, electric aviation and micro-mobility markets.

Vehicle technology advancements and EV range anxiety requires more battery capacity to expand the range and power of existing platforms while adding new, power-demanding components for advances such as 5G data networks.

The additional strain on batteries increases the risk for overheating and serious failures and can damage sensitive chip architecture.

In addition, overheating has been a key limiting factor for advancing fast charging battery technology.

KULR’s carbon fiber thermal management technologies reduce the thermal resistance inside battery cells while increasing electrical conductivity to dissipate heat more efficiently to enable the safe deployment of fast charging batteries.

With KULR, automotive OEMs and battery manufacturers can increase the energy capacity of battery cells so less cells are needed, making for lighter vehicles that drive further before needing to be charged.

Aerospace/Defense

KULR’s thermal management solutions enable the defense and aerospace industries to safely deploy electronic technologies that support critical missions and protect national security.

Technology in this sector is developing at increasing rates - the space industry alone will be worth nearly $3 trillion in 30 years.

The electronic devices being placed into aircrafts, satellites, and missiles are becoming ever smaller and more powerful.

Lithium-ion batteries, which are already prone to overheating and propagation, are exposed to harsh thermal environments as well as shock and vibration during aerospace and defense operations.

The Company has partnered with Lockheed Martin, Leidos and other prime contractors to develop and supply mission-critical technologies for hypersonic vehicles, high-power magnetic wave, and other defense systems.

High-Powered Computing & 5G

Demand for improved, cost-effective cooling solutions in the rapidly growing 5G and cloud computing industries is ever-increasing.

KULR’s portfolio of thermal management solutions target air and liquid-cooling of high-performance computing applications such as crypto mining, cloud computing, AI, and AR/VR simulations to maximize performance, energy efficiency and safety.

KULR’s proprietary carbon fiber-based suite of thermal interface materials leverage advanced carbon fiber based heatsink technology that offers customers highly customizable, lightweight, and cost-effective solutions with industrial-level reliability due to their high thermal conductivity, lightweight, and low contact pressure.

New Battery Cell Development

KULR started a research and development initiative using carbon fiber structures to produce battery cells with higher energy density and faster charging capabilities.

Fast-charging will be the killer app for next-gen batteries.

Right now, overheating is a key limiting factor in advancing fast-charging battery technology.

There may be a way to solve that problem by using carbon fiber inside the battery cell to reduce thermal and electrical resistance which can dissipate heat more effectively.

The R&D initiatives include thicker cathode with higher loading factor, silicon anode, lithium metal anode and solid-state electrolyte development.

This is a long-term strategic development for KULR.

Commercial Partnerships

KULR has a long-term technology and developmental partnership with Andretti Technologies (ATEC), the advanced technology arm of racing team Andretti Autosport.

The alliance will establish a thermal management testing and design platform for high-performance battery solutions with the highest safety ratings that will be adapted to the technical requirements of Andretti’s racing enterprise with the goal of transferring solutions to mass-market electric vehicle (EV) applications.

New Facility and IT-Systems

KULR relocated in October 2021 to a new facility located at 4863 Shawline St, San Diego, CA.

The facility is 3 times larger than the previous facility with adequate room to support our new automated battery cell testing capability that will launch in Q322 as well as personnel growth.

Additionally, we installed independently enclosed areas to support the machine shop, testing lab, battery lab, and Fiber Thermal Interface Material (“FTI”) manufacturing lab.

We have implemented a 5S standard for the entire facility and will seek ISO 9001 certification in June 2022.

KULR has engaged with Managed Solutions to enhance our IT infrastructure and improve all aspects of Cyber Security.

As a sub-contractor for DOD programs, it was vital that KULR have state of the art IT systems and controls.

We believe the best path based on the current scale of the company is to outsource this activity to a professional IT services organization.

The result of this activity was an improvement of our NIST score of over 140 points.

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

Until that time we shall have to continue to use cash reserves or raise additional cash through equity or debt financings.

KULR was incorporated in the State of Delaware in December 2015 and was formerly known as “KT High-Tech Marketing, Inc.” and, prior to that, as “Grant Hill Acquisition Corporation.” In April 2016, KULR implemented a change of control by issuing shares to new shareholders, redeeming shares of existing shareholders, electing new officers and directors and accepting the resignations of its then existing officers and directors.

Our wholly-owned subsidiary, KULR Technology Corp, was formed in 2013 and is based in San Diego California.

Since its inception, KTC primarily focused on developing and commercializing its thermal management technologies, which it acquired through assignment from and license with KTC’s co-founder Dr.

Timothy Knowles.

Prior to 2013, KTC’s technologies were used in numerous advanced space and industrial applications

for NASA, Boeing, and Raytheon.

A few notable achievements were the use of KTC’s technologies in the X-31 aircraft (battery

heat sink), Mercury Messenger (battery heat sink), and X-51 Scramjet (heat exchanger).

On June 19, 2017, KULR

closed a share exchange with KTC and 100% of the shareholders of KTC (the “KTC Shareholders”) whereby the KTC Shareholders

agreed to transfer an aggregate of 25,000,000 shares of KTC’s common stock to KULR in exchange for the issuance of an aggregate

of 50,000,000 shares of KULR’s common stock to the KTC Shareholders (the “Share Exchange”), resulting in KTC

becoming a wholly-owned subsidiary of KULR and KTC’s business of developing and commercializing its thermal management technologies

becoming KULR’s main operation.

The Share Exchange was

accounted for as a reverse recapitalization i n accordance with generally accepted accounting

principles in the United States of America, with K TC being treated as the acquiring

company for accounting purposes.

Accordingly, the financial statements included in this Annual Report reflect the assets,

liabilities and historical results of KTC prior to the completion of the Share Exchange .

August 30, 2018, KULR changed its name from “KT High-Tech Marketing, Inc.” to “KULR Technology Group, Inc.”

by filing a certificate of amendment to its Certificate of Incorporation with the office of the Secretary of State of the State

December 4, 2018, KULR filed a definitive Information Statement on Form 14C (the “December Information Statement”),

giving notice to KULR’s shareholders that on November 5, 2018, KUTG executed a written consent in lieu of shareholder meeting

authorizing KULR to:

(i) amend KULR’s Articles of Incorporation to increase the number of authorized shares of common stock

from 100,000,000 shares of common stock to 500,000,000 shares of common stock;

(ii) adopt and ratify the KULR Technology Group

2018 Equity Incentive Plan and (iii) ratify the authorization of the issuance of 1,000,000 shares (the “Voting Preferred

Shares”) of Series A Voting Preferred Stock to Michael Mo, KULR’s Chief Executive Officer.

On December 28, 2018, twenty

(20) days after the mailing date of the December Information Statement, KUTG was deemed authorized by ratifying vote of its majority

shareholders and the authorization granted by its Board of Directors to issue the Voting Preferred Shares, which KULR has not

but expects to do in the near future.

On December 31, 2018, KULR filed a certificate of amendment with the Secretary of State

of the State of Delaware, to increase the number of authorized shares of its common stock from 100,000,000 to 500,000,000.

a result, the aggregate number of the Company’s authorized capital stock became 520,000,000 shares.

Prior to 2013, KTC’s technologies were used in numerous advanced space and industrial applications for NASA, Boeing, and Raytheon.

A few notable achievements were the use of KTC’s technologies in the X-31 aircraft (battery heat sink), Mercury Messenger (battery heat sink), and X-51 Scramjet (heat exchanger).

On June 19, 2017, KULR closed a share exchange with KTC and 100% of the shareholders of KTC (the “KTC Shareholders”) whereby the KTC Shareholders agreed to transfer an aggregate of 25,000,000 shares of KTC’s common stock to KULR in exchange for the issuance of an aggregate of 50,000,000 shares of KULR’s common stock to the KTC Shareholders (the “Share Exchange”), resulting in KTC becoming a wholly-owned subsidiary of KULR and KTC’s business of developing and commercializing its thermal management technologies becoming KULR’s main operation.

The Share Exchange was accounted for as a reverse recapitalization in accordance with generally accepted accounting principles in the United States of America, with KTC being treated as the acquiring company for accounting purposes.

Accordingly, the financial statements included in this Annual Report reflect the assets, liabilities and historical results of KTC prior to the completion of the Share Exchange.

On August 30, 2018, KULR changed its name from “KT High-Tech Marketing, Inc.” to “KULR Technology Group, Inc.” by filing a certificate of amendment to its Certificate of Incorporation with the office of the Secretary of State of the State of Delaware.

On December 31, 2018, KULR filed a certificate of amendment with the Secretary of State of the State of Delaware, to increase the number of authorized shares of its common stock from 100,000,000 to 500,000,000.

As a result, the aggregate number of the Company’s authorized capital stock became 520,000,000 shares.

Recent Developments

In January 2020,

an outbreak of a new strain of coronavirus, COVID-19, was identified in Wuhan, China.

Through the first quarter of 2020, the disease

became widespread around the world, and on March 11, 2020, the World Health Organization declared a pandemic.

is dependent on developing new markets and new products to be used on a global basis, thus restrictions on travel could lead to

reduced demand for our products and interruptions to supply chains.

Also, the local regulations such as “Shelter in Place”

will affect our ability to maintain regular R&D and manufacturing schedules as well as the capability to meet customer demands

in a timely manner.

Given the uncertainty around the extent and timing of the potential future spread or mitigation of the Coronavirus

and around the imposition or relaxation of protective measures, we cannot reasonably estimate the impact to our future results

of operations, cash flows, or financial condition.

Standby Equity

Distribution Agreement and Notes Payable

On February 27, 2020,

we entered into a Standby Equity Distribution Agreement (“SEDA”) with YAII PN, Ltd., a Cayman Island exempt limited

partnership (“YAII”).

Under the terms of this Agreement, the Company raised an aggregate of $2,292,695 from the facility.

As of December 31, 2020, the Company had approximately $5,707,000 available in connection with the SEDA, however, so long as warrants

issued on December 31, 2020 in an unrelated transaction remain outstanding, the Company may not issue shares in connection with

variable rate transactions.

During the year ended December 31, 2020, the Company issued notes to YAII in the aggregate amount

of $4,000,000, of which the Company repaid principal on the notes in the aggregate amount of $1,550,000 ($791,000 was repaid from

proceeds from the SEDA).

Subsequent to December 31, 2020, the Company repaid principal on the notes in the aggregate amount of

Registered Direct Offering

On December 31, 2020,

we closed a registered direct offering conducted pursuant to a securities purchase agreement (“Purchase Agreement”)

with the purchasers set forth on the signature page thereto (the “Purchasers”) for the purchase and sale of an aggregate

of 6,400,001 shares of our common stock (the “Shares”), and warrants to purchase an aggregate of up to 6,400,001 shares

of common stock (“Warrants”), at a combined purchase price of $1.25 per Share and Warrant.

The aggregate gross proceeds

to us were equal to approximately $8 million.

The Warrants are immediately exercisable and may be exercised at any time until

December 31, 2025, at an exercise price of $1.25 per share.

Lake Street Capital Markets, LLC and Maxim Group LLC acted as co-placement

agents in connection with the registered direct offering.

We paid the co-placement agents a cash fee of 7.0% of the gross proceeds

we received under the Purchase Agreement.

We also reimbursed the co-placement agents for certain out-of-pocket accountable expenses

incurred by them in connection with this offering of $50,000.

We paid total approximate offering expenses, other than the placement

agent fees, of approximately $170,000, which includes the co-placement agents’ reimbursable expenses, legal, financial advisory

fees, accounting, printing costs, listing fees, and various other expenses associated with registering and issuing the shares.

We intend to use the net proceeds from this offering for capital expenditures, as well as for working capital and general corporate

The Shares and Warrants

(and underlying shares) were offered, and will be issued, pursuant to the Prospectus Supplement, dated December 29, 2020, to the

Prospectus included in our Registration Statement on Form S-3 (Registration No.

333- 232614) filed with the Securities and Exchange

Commission on July 11, 2019 and declared effective on August 1, 2019.

Appointment of Keith Cochran

On March 8, 2021, our

Board of Directors (the “Board”) appointed Keith Cochran as President and Chief Operating Officer of the Company,

to hold office until the earlier of the expiration of the term of office, a successor is duly elected and qualified, or the earlier

of such officer’s death, resignation, disqualification, or removal.

As compensation for his

services as President and Chief Operating Officer of the Company, Mr.

In March 2020, the World Health Organization declared COVID-19, a novel strain coronavirus, a pandemic.

During 2020 and continuing into 2022, the global economy has been, and continues to be, affected by COVID-19.

While the Company continues to see signs of economic recovery as certain governments begin to gradually ease restrictions, provide economic stimulus and accelerate vaccine distribution, the rate of recovery on a global basis has been affected by resurgence of the virus or its variants in certain jurisdictions.

The Company continues to monitor the impact of COVID-19 on its business and operational assumptions and estimates and has determined there were no material adverse impacts on the Company’s results of operations and financial position at December 31, 2021, although the full extent of the future impact of COVID-19 on the Company’s operations and financial condition remains uncertain.

Appointment of Officers and Management

On March 8, 2021, our Board of Directors (the “Board”) appointed Keith Cochran as President and Chief Operating Officer of the Company, to hold office until the earlier of the expiration of the term of office, a successor is duly elected and qualified, or the earlier of such officer’s death, resignation, disqualification, or removal.

As compensation for his services as President and Chief Operating Officer of the Company, Mr.

Cochran will receive:

(1) a salary of $250,000 per annum

and commensurate benefits;

(2) 2,000,000 restricted shares of the Company’s common stock, which shares shall vest, so long

Cochran remains employed by the Company, in four (4) equal yearly installments, with the first installment amount to vest

on March 1, 2022 and annually thereafter;

(1) a salary of $250,000 per annum and commensurate benefits;

(2) 2,000,000 restricted shares of the Company’s common stock, which shares shall vest, so long as Mr.

Cochran remains employed by the Company, in four (4) equal yearly installments, with the first installment amount to vest on March 1, 2022 and annually thereafter;

and (3) eligibility, also subject to Mr.

Cochran’s continued employment with the

Company, for incentive based grants of up to 1,500,000 shares, which shall be earned upon the Company achieving certain market

capitalization milestones.

Appointment of Independent Directors

On February 20, 2021,

the Board, contingent upon the Company’s common stock being approved for uplisting to a national exchange, approved the

appointment of Morio Kurosaki as an independent member of the Board.

Kurosaki will also serve as chair of the Audit Committee.

As such, the Board has determined that Mr.

Kurosaki is a financial expert within the meaning of SEC regulations.

Additionally,

Kurosaki will serve as a member of both the Compensation Committee and the Nominating and Governance Committee.

In connection with his

appointments, Mr.

Kurosaki will be compensated (1) $10,000 per quarter, beginning on and subject to approval for uplisting, and

(2) 20,000 restricted shares of the Company’s common stock, which shares shall vest equally in 5,000 share increments per

quarter beginning on and subject to approval for uplisting.

On February 20, 2021,

the Board, contingent upon the Company’s common stock being approved for uplisting to a national exchange, approved the

appointment of Stayce D.

Harris as an independent member of the Board.

Harris will also serve as chair of the Compensation

Additionally, Ms.

Harris will serve as a member of both the Audit Committee and the Nominating and Governance Committee.

In connection with her

appointments, Ms.

Harris will be compensated (1) $10,000 per quarter, beginning on and subject to approval for uplisting, and

(2) 20,000 restricted shares of the Company’s common stock, which shares shall vest equally in 5,000 share increments per

quarter beginning on and subject to approval for uplisting.

On February 20, 2021,

the Board, contingent upon the Company’s common stock being approved for uplisting to a national exchange, approved the

appointment of Joanna D.

Massey as an independent member of the Board.

Massey will also serve as chair of the Nominating and

Governance Committee.

Additionally, Ms.

Massey will serve as a member of both the Audit Committee and the Compensation Committee.

In connection with her

appointments, and subject to the receipt of her acknowledgment of the same, Ms.

Massey will be compensated (1) $10,000 per quarter,

beginning on and subject to approval for uplisting, and (2) 20,000 restricted shares of the Company’s common stock, which

shares shall vest equally in 5,000 share increments per quarter beginning on and subject to approval for uplisting.

Conversion of Series C Preferred Stock

During the year ended

December 31, 2020, KULR issued an aggregate of 56,778 shares of our common stock upon voluntary conversions of 5.11 shares of

our Series C Preferred Stock.

Effective as of December

31, 2020, KULR issued an aggregate of 177,885 shares of our common stock and warrants to purchase an aggregate of 177,885 shares

of our common stock at an exercise price of $1.25 per share, upon a deemed automatic conversion of 18.90 shares of our Series

C Preferred Stock, after which there remained no further Series C Preferred Stock outstanding.

Although the conversion shares

were issued subsequent to the deemed automatic conversion, in connection with a registered direct offering that closed on December

31, 2020, the conversions were made effective as of December 31, 2020 pursuant to an automatic conversion feature of the Series

C Preferred Stock under which the stated value of each share was converted into the same securities issued in the registered direct

offering at an effective conversion price of 85% of the aggregate purchase price of such securities.

Cochran’s continued employment with the Company, for incentive based grants of up to 1,500,000 shares, which shall be earned upon the Company achieving certain market capitalization milestones.

In addition, during 2021, we hired Antonio Martinez as our new Vice President of Operations on April 19, 2021 and Greg Provenzano as our new Vice President of Sales and Marketing on June 10, 2021.

Appointment and Resignation of Independent Directors

Effective June 7, 2021, in connection with our uplisting to the NYSE American exchange, Morio Kurosaki, Joanna D.

Massey and Stayce D.

Harris were appointed as directors to our Board of Directors.

In connection with their appointments, each of Mr.

Kurosaki, Dr.

Massey and Ms.

Harris were granted compensation equal to (1) $10,000 per quarter;

(2) 20,000 shares of the Company’s restricted common stock, vesting in equal 5,000 share increments per quarter, with the first quarterly vest on September 7, 2021, subject to the respective director’s continued services to the Company;

(3) $5,000 per year ($10,000 for respective chairpersons), beginning on June 7, 2021, for each directors’ positions on each of the Compensation Committee and Nominating and Corporate Governance Committee of the Board;

(4) $8,000 per year ($17,000 for the chairperson), beginning on June 7, 2021, for each directors’ position on the Audit Committee of the Board;

and (5) customary per diems and/or expense reimbursements for attending meetings of the Board.

Effective as of December 13, 2021, Ms.

Harris resigned as an independent member of the Board.

Conversion of Series B Preferred Stock

During the year ended

December 31, 2020, KULR issued an aggregate of 25,758 shares of our common stock upon conversion of 515 shares of our Series B

Preferred Stock.

Subsequent to the year

ended December 31, 2020, KULR issued an aggregate of 698,600 shares of our common stock upon conversion of 13,972 shares of our

Series B Preferred Stock, after which there remained no further Series B Preferred Stock outstanding.

Market Opportunity and Strategy

The world of electronics

continues to become more and more demanding and performance driven.

The increasing demand for reliability of microelectronics

and Li-ion batteries has pushed thermal management to the forefront of many industries.

We target our solutions to serve the following

markets and applications:

PPR battery design, Battery Storage and Transportation, Electrical Transportation, 5G Mobile and Cloud

Computing Infrastructure, Aerospace and Defense.

Lithium-Ion Battery,

Energy Storage and Battery Transportation Market .

According to Prescient & Strategic Intelligence, Li-ion battery market

was valued at $34 billion in 2018, the global Li-ion battery market is projected to surpass

$106 billion by 2024, witnessing a CAGR of 21.8% between 2019 and 2024.

The stationary battery storage market is forecasted to

ramp from $11 billion in 2018 to $170 billion by

2030, according to a 2019 Global Market Insights, Inc.

Favorable regulatory policies pertaining to sustainable energy

technologies coupled with upsurge in investments toward large scale storage units with increased power output will drive the market

According to Market Research

Future, the global thermal management market is expected to reach approximately $15 billion by end of 2023 with 7% compound annual

growth rate during the forecast period from 2017 to 2023.

According to the report, in recent years, electronic devices and systems

have undergone tremendous technological growth.

Advancements in the electronics industry have led to an increased need for innovative

thermal management technologies, which serve to improve performance and reliability.

The report states that technological progress

has come on two fronts:

increased functionality on a single device unit and miniaturization of each unit.

As a result, there has

been an increased demand for thermal management technologies.

The report analyzes the thermal market by four segments, including

hardware, software, interfaces, and substrates.

Electrical Transportation

According to Frost & Sullivan’s recently released “Global Electric Vehicle Market Outlook EV industry

will need to overcome major challenges related to battery technology and charging infrastructure, both of which have fallen far

short of the pace set by global EV sales.

Computing Market .

The next generation mobile computing platform, also known as the “5G” mobile wireless standard,

presents new challenges and demands to improve the performance and reliability of mobile infrastructures and consumer devices.

According to the IHS Markit’s global study, in 2035, when 5G’s full economic benefit should be realized across the

globe, a broad range of industries – from retail to education, transportation to entertainment, and everything in between

– could produce up to $12.3 trillion worth of goods and services enabled by 5G.

Cloud Computing Market .

A key area of cloud computing is optical data transfer and communications connections and lines.

Optical data is faster and more

efficient and, as cloud computing banks move to acquire and utilize optical data, thermal management will play a pivotal role

in maintaining the peak performance and safety of these expensive and highly sensitive computer connections.

The processing demands

of artificial intelligence (“AI”) technology in the cloud requires advanced thermal management solutions for processors

and memory modules.

Space Exploration and

Communications Market .

Demand for nano-satellites and re-usable launch vehicle systems

is anticipated to be driven by the massive investment made by governments and private enterprises.

The overall trend

in space investment is stable financially but explosive numerically, providing vastly more opportunity for space technology providers.

Increasingly, investments in space exploration and commercialization are being led by well-funded private companies with most

focused-on satellite development and deployment.

KULR’s heritage in space thermal management technology positions us well

in this market.

We believe KULR’s

technology solution excels in a number of categories important in the world of thermal management.

KULR’s proprietary carbon

fiber-based solutions are generally more thermally conductive, lighter weight, require less contact pressure, and offer greater

design flexibility and durability compared to traditional solutions.

As a result, we believe KULR has real potential to offer

a unique value proposition to customers in the multibillion-dollar thermal management industry.

KULR aims to provide cost-effective,

superior thermal management solutions for a group of electronic manufacturers.

During the year ended December 31, 2021, KULR issued an aggregate of 698,600 shares of our common stock upon conversion of 13,972 shares of our Series B Preferred Stock, after which there remained no further Series B Preferred Stock outstanding.

Series D Preferred Stock

On May 20, 2021, we sold an aggregate of 650 shares of Series D Preferred pursuant to a new designation of preferred stock, and one-year warrants to purchase 2,600,000 shares of common stock at a price of $2.50 per share, for aggregate gross proceeds of $6,500,000.

The Series D Preferred shares were convertible into an aggregate of 3,170,732 shares of common stock at a fixed conversion price of $2.05 and had the right to vote on an as-converted basis.

We also paid the investor a commitment fee of 1,300,000 shares of common stock in connection with the sale of the Series D Preferred.

Notes payable obligations in the aggregate amount of $1,540,000, were paid in full upon the closing of the sale of the Series D Preferred.

On June 17, 2021, we issued an aggregate of 3,170,730 shares of our common stock upon conversion of 650 shares of our Series D Preferred Stock, after which no Series D Preferred shares remained outstanding.

Operating Lease

On April 5, 2021, we entered into an agreement to lease office space for a thirty-six-month period, commencing June 1, 2021 with the option to renew for an additional 5 years.

Monthly rental payments under the new lease total $23,787, which are comprised of $18,518 of base rent plus $5,269 for common area costs, with annual escalation of 3.5%.

Exercise of Warrants

During the year ended December 31, 2021, we issued 6,793,358 shares of common stock upon the exercise of warrants for proceeds of $11,719,204.

NYSE American Exchange Listing

On June 7, 2021, the Company’s common stock was up listed and now trades on the NYSE American Exchange.

Sales and Marketing Strategy

The Company markets and

sells products and solutions directly to customers.

We believe that our direct relationship with end customers allows us to have

more in-depth technical interactions with our customers and faster turnaround time.

We market to our customers through our website,

industry conferences, and industry market research reports.

In 2021, we plan to expand our sales network by working with sales

agents and distributors for more mature and off-the-shelf products such as FTI and Cathode products.

For PPR design service, we

will continue to work with customers directly.

The Company markets and sells products and solutions directly to customers and through representatives.

We believe that a direct relationship with Key Accounts allows us to have more in-depth technical interactions, faster turnaround time and provides valuable information directly to our Engineering and Marketing teams we use to improve our product features and roadmap.

We market to our customers through our website, industry conferences, and industry market research reports.

In the first half of 2022, we are expanding our direct sales and support team for Key Account coverage and to support an expanded representative and distributor network in the second half of 2022.

Advertising and Communications Strategy

We plan to utilize all

forms of advertising and communications tools at our disposal.

This includes commissioning unbiased white papers and technical

papers, attending, sponsoring, and guest speaking at industry events, conferences, and symposiums.

We have hired a public relations

consultant who will oversee our press releases and media relations interface with newspapers, magazines, and blogs.

hired a SEO specialist for social media outreach activities and will also rely on the company’s pedigree within the thermal

management community to spread high praise via word of mouth.

To date, as a result of these efforts, we have been mentioned in

WSJ, Cheddar TV, CNBC, Forbes, EETimes, USA Today, Business Insider and others.

We plan to utilize all forms of advertising and communications tools at our disposal.

This includes commissioning unbiased white papers and technical papers, attending, sponsoring, and guest speaking at industry events, conferences, and symposiums.

We have hired a public relations consultant who will oversee our press releases and media relations interface with newspapers, magazines, and blogs.

We have also hired a SEO specialist for social media outreach activities and will also rely on the company’s pedigree within the thermal management community to spread high praise via word of mouth.

To date, as a result of these efforts, we have received coverage in WSJ, Cheddar TV, CNBC, Forbes, EE Times, USA Today, Business Insider and others.

Intellectual Property and Patent Strategy

Our intellectual property

strategy includes pursuing patent protection for new innovations in core carbon fiber architecture development, application development,

acquisition of intellectual property, and licensing of third-party patents and intellectual property.

December 31, 2020, we have eight pending nonprovisional and provisional patent applications and we have four

patents granted and assigned to KULR.

We also have an exclusive license to four third party patents.

Our intellectual property strategy includes pursuing patent protection for new innovations in core carbon fiber architecture development, application development, acquisition of intellectual property, and licensing of third-party patents and intellectual property.

As of December 31, 2021, we have five patents granted and assigned to KULR, an exclusive license to four third party patents, and eight pending nonprovisional and provisional patent applications.

Product and Services

Our heat management products and services

can be divided into the following categories, subcategories and functionalities:

Lithium-Ion Battery Thermal Runaway

Shield (“TRS”) :

KULR has developed a thermal insulation technology aimed at passive resistance to thermal runaway

propagation in Li-ion batteries in partnership with National Aeronautics and Space Administration Johnson Space Center (“NASA

HYDRA TRS acts as a heat sink during normal Li-ion battery pack operation but also prevents thermal runaway propagation,

which is a serious concern for aerospace and defense customers and electric vehicle manufacturers.

The HYDRA is a vaporizing thermal

capacitor that provides passive prevention of thermal runaway propagation (“TRP”) in Li-ion battery packs.

runaway can occur spontaneously in a Li-ion cell due to a short.

This can trigger an explosive release of electric energy that

ruptures the end cap resulting in a flare and combustion of cell materials.

Released heat drives the triggered cell temperatures

to > 500°C, causing a dramatic increase in neighboring cell temperatures.

Temperatures above the critical 130°C greatly

increases the chance for a short in adjacent cells and result in TRP.

TRS keeps neighboring cell temperatures from rising above

100°C (well below the 130°C threshold) and prevents TRP.

Fiber Thermal Interface Material

KULR thermal interface materials (“TIMs”) consist of vertically oriented carbon fiber velvets

attached to a film of polymer or metal.

The fiber packing density and orientation are selected to serve a wide range of applications,

including hostile thermal and chemical environments, sliding interfaces, and interfaces with widely varying gaps.

coated for electrical isolation.

Our heat management products and services can be divided into the following categories, subcategories and functionalities:

Lithium-Ion Battery Thermal Runaway Shield (“TRS”) :

KULR has developed a thermal insulation technology aimed at passive resistance to thermal runaway propagation in Li-ion batteries in partnership with National Aeronautics and Space Administration Johnson Space Center (“NASA JSC”).

HYDRA TRS acts as a heat sink during normal Li-ion battery pack operation but also prevents thermal runaway propagation, which is a serious concern for aerospace and defense customers and electric vehicle manufacturers.

The HYDRA is a vaporizing thermal capacitor that provides passive prevention of thermal runaway propagation (“TRP”) in Li-ion battery packs.

Thermal runaway can occur spontaneously in a Li-ion cell due to a short.

This can trigger an explosive release of electric energy that ruptures the end cap resulting in a flare and combustion of cell materials.

Released heat drives the triggered cell temperatures to > 500°C, causing a dramatic increase in neighboring cell temperatures.

Temperatures above the critical 130°C greatly increases the chance for a short in adjacent cells and result in TRP.

TRS keeps neighboring cell temperatures from rising above 100°C (well below the 130°C threshold) and prevents TRP.

KULR Battery Cell Screening and Testing Automation System:

A new automated battery cell testing platform in the second quarter of 2021 to support the stringent requirements of NASA and the DOD.

This platform has been designed to meet the entire specifications of NASA WI-037 battery testing requirements.

The automated equipment is modular and the initial processing capability is 500K cells annually.

Based on current commitments for the equipment, we intend to have the system installed and validated in the third quarter of 2022.

A scalable battery management platform to provide a new level of safety, performance optimization and regulatory compliance capabilities to our customers.

We achieve this by putting together a modular architecture that's built on large data sets, performing an array of analytics, and then layering on top of it AI algorithms to provide predictive and preventative intelligence to our customers.

It’s modular so that we can incorporate new capabilities and enhancements to the platform as the battery evolution accelerates in the coming years.

This is another significant step to position KULR as a one-stop-shop total solutions provider of battery thermal energy and safety management.

KULR-Tech Safe Case:

This product was developed for the commercial transportation and storage of Li-ion batteries.

It is an extension of the product jointly developed with NASA, the TRS Bags which safely store and transport Li-ion batteries to and in the International Space Station.

The cases have been tested and granted special permits by the Department of Transportation (DOT) for shipment of Li-ion batteries up to 2.1KWh for shipment of batteries classified as DDR (damaged, defective or recall), recycling and prototype.

Fiber Thermal Interface Material (“FTI”) :

KULR thermal interface materials (“TIMs”) consist of vertically oriented carbon fiber velvets attached to a film of polymer or metal.

The fiber packing density and orientation are selected to serve a wide range of applications, including hostile thermal and chemical environments, sliding interfaces, and interfaces with widely varying gaps.

They can be coated for electrical isolation.

They require low contact pressure and provide high thermal conductivity.

Their light weight and

high compliance make them uniquely suited for aerospace, industrial and high-performance commercial devices.

Phase Change Material (“PCM”)

KULR PCM composite heat sinks consisting of a conductive carbon fiber velvet embedded with a suitable alkane (“paraffin”)

having high latent heat at its melting point.

Such heat sinks offer passive thermal control for instruments that would otherwise

overheat or under-cool during periodic operations.

A typical application involves lasers that dissipate heat but need tight thermal

control where active cooling is unavailable.

HYDRA TRS Battery Storage Bag :

KULR developed the HYDRA TRS Bag to safely store and transport Li-ion batteries in partnership with NASA Johnson Space Center

for the International Space Stations.

Between January and June 2019 experts with NASA’s Propulsion & Power Division

tested storage and use of rechargeable lithium-ion laptop batteries.

The tests intentionally triggered the batteries into dangerous

failures in order to study what storage methods may stop battery fires from spreading battery to battery in thermal runaway propagation.

As a result, KULR TRS bags are currently in service on the International Space Station for storage of spare laptop batteries,

having flown November 2, 2019 on the CRS2 NG-12 resupply mission.

KULR is developing a commercial version for mass market applications.

Internal Short Circuit (“ISC”)

In March 2018, KULR reached an agreement with the National Renewable Energy Laboratory (“NREL”), a national

laboratory of the U.S.

Department of Energy, to be the exclusive manufacturing and distribution partner for the patented ISC device,

which causes predictable battery cell failures in Li-ion batteries, making them easier to study and, therefore, safer.

batteries are the industry and consumer standard for portable power;

billions of individual battery cells exist and billions more

are planned for production.

Their light weight and high compliance make them uniquely suited for aerospace, industrial and high-performance commercial devices.

Phase Change Material (“PCM”) Heat Sink :

KULR PCM composite heat sinks consisting of a conductive carbon fiber velvet embedded with a proprietary heat dissipation medium having high latent heat at its melting point.

Such heat sinks offer passive thermal control for instruments that would otherwise overheat or under-cool during periodic operations.

A typical application involves lasers that dissipate heat but need tight thermal control where active cooling is unavailable.

Internal Short Circuit (“ISC”) Device :

In March 2018, KULR reached an agreement with the National Renewable Energy Laboratory (“NREL”), a national laboratory of the U.S.

Department of Energy, to be the exclusive manufacturing and distribution partner for the patented ISC device, which causes predictable battery cell failures in Li-ion batteries, making them easier to study and, therefore, safer.

Li-ion batteries are the industry and consumer standard for portable power;

billions of individual battery cells exist and billions more are planned for production.

They provide power for everything from smart phones and laptops to electric cars and space crafts.

But Li-ion batteries fail, sometimes with catastrophic results.

Due to the relative rarity of cell failures, scientists and researchers

had been unable to reliably or accurately replicate latent defect cell failures in lab settings, impeding research into safer

battery technology.

In 2020, KULR has produced and sold both ISC devices and ISC trigger cells to customers.

Due to the relative rarity of cell failures, scientists and researchers had been unable to reliably or accurately replicate latent defect cell failures in lab settings, impeding research into safer battery technology.

CRUX Cathode :

The CRUX Cathode

is composed of a carbon fiber velvet, providing a means of generating powerful electron pulses by field emission from the tops

of the carbon fibers.

CRUX Cathodes can be customized for different applications including the generation of microwaves,

x-rays, and laser radiation.

They can be fabricated in a wide variety of physical configurations, ranging from simple planar and

cylindrical forms to more complex lobed shapes.

Currently, the battery

industry uses a number of solutions to mitigate thermal runaway propagation that are offered by Unifrax, Lydall, LHS, 3M, Engineered

Syntactic Systems, Celono, AllCell and others.

The CRUX Cathode is composed of a carbon fiber velvet, providing a means of generating powerful electron pulses by field emission from the tops of the carbon fibers.

CRUX Cathodes can be customized for different applications including the generation of microwaves, x-rays, and laser radiation.

They can be fabricated in a wide variety of physical configurations, ranging from simple planar and cylindrical forms to more complex lobed shapes.

Currently, the battery industry uses a number of solutions to mitigate thermal runaway propagation that are offered by Unifrax, Lydall, LHS, 3M, Engineered Syntactic Systems, Celono, AllCell and others.

Each of their solutions offer unique features and benefits for a specific application.

We do not believe, however, that there is a one-size-fits-all solution across all applications.

We believe our PPR design solution

offers competitive light-weight and effective solutions for high energy battery cells because it is more flexible and can fit

into different design configurations.

For applications that require passive, light-weight solutions for high energy density battery

cells, TRS offers a competitive solution.

Thermal interface material

is a large and fragmented market with many large suppliers including:

Henkel Bergquist, Fujipoly, Laird, 3M, Honeywell and others.

We believe our PPR design solution offers competitive light-weight and effective solutions for high energy battery cells because it is more flexible and can fit into different design configurations.

For applications that require passive, light-weight solutions for high energy density battery cells, TRS offers a competitive solution.

Thermal interface material is a large and fragmented market with many large suppliers including Henkel Bergquist, Fujipoly, Laird, 3M, Honeywell and others.

These solutions are typically based on silicone and thermal particles.

KULR’s FTI offers high bulk thermal conductivity

and low contact pressure requirements, which we believe gives us a competitive advantage over other thermal interface solutions.

Our licensed ISC device

offers a reliable way to trigger battery cell thermal runaway compared to nail penetration, over-charging or over-heating the

ISC d oes not rely on mechanically damaging the battery exterior to activate the short,

as do most of the other evaluation methodologies.

KULR’s FTI offers high bulk thermal conductivity and low contact pressure requirements, which we believe gives us a competitive advantage over other thermal interface solutions.

Our licensed ISC device offers a reliable way to trigger battery cell thermal runaway compared to nail penetration, over-charging or over-heating the cell.

ISC does not rely on mechanically damaging the battery exterior to activate the short, as do most of the other evaluation methodologies.

Instead, the ISC devices trigger true internal shorts.

This makes it possible

to accurately pinpoint and fix problems leading to malfunctions, an ability that we believe will give us a competitive advantage

over other testing solutions.

Governmental Regulation and Environmental

substances we use in our manufacturing process are subject to federal governmental regulations (such as Environmental Protect

Agency regulations).

We believe we are in material compliance with all applicable governmental regulations, and that the

cost and effect of compliance with environmental laws is not material.

As a small generator

of hazardous substances, we are subject to local governmental regulations relating to the storage, discharge, handling, emission,

generation, manufacture and disposal of toxic or other hazardous substances, such as acetone that is used in very small quantities

to manufacture our products.

This makes it possible to accurately pinpoint and fix problems leading to malfunctions, an ability that we believe will give us a competitive advantage over other testing solutions.

Governmental Regulation and Environmental Compliance

Certain substances we use in our manufacturing process are subject to federal governmental regulations (such as Environmental Protect Agency regulations).

We believe we are in material compliance with all applicable governmental regulations, and that the cost and effect of compliance with environmental laws is not material.

As a small generator of hazardous substances, we are subject to local governmental regulations relating to the storage, discharge, handling, emission, generation, manufacture and disposal of toxic or other hazardous substances, such as acetone that is used in very small quantities to manufacture our products.

We are currently in compliance with these regulations.

Most new materials sold in the U.S

or in many other countries require regulation by government authorities.

In most other countries, there are no specific regulations

that require additional regulation, but some countries do have registration requirements with which we comply to the best our

As of December 31, 2020,

we had 9 employees and 4 consultants.

We believe that we maintain a good working relationship with our employees and we have not

experienced any significant labor disputes.

Most new materials sold in the U.S or in many other countries require regulation by government authorities.

In most other countries, there are no specific regulations that require additional regulation, but some countries do have registration requirements with which we comply to the best our ability.

As of December 31, 2021, we had 52 full time employees and 5 contractors.

We believe that we maintain a good working relationship with our employees, and we have not experienced any significant labor disputes.

In addition, KULR leverages outsource partners for IT management, Software Development, Battery Cell R&D, and Machine Automation.

Intellectual Property

We seek to establish and

maintain our proprietary rights in our technology and products through the use of patents, copyright, trademarks and trade secrets.

We have, and will continue to, file applications for and/or obtain patents, copyrights and trademarks in the United States and

selected foreign countries where we believe filing for such protection is appropriate.

We also seek to maintain our trade secrets

and confidential information by implementing organizational nondisclosure policies and through the use of appropriate confidentiality

As of December 31, 2020, we held four U.S.

We seek to establish and maintain our proprietary rights in our technology and products through the use of patents, copyright, trademarks and trade secrets.

We have, and will continue to, file applications for and/or obtain patents, copyrights and trademarks in the United States and selected foreign countries where we believe filing for such protection is appropriate.

We also seek to maintain our trade secrets and confidential information by implementing organizational nondisclosure policies and through the use of appropriate confidentiality agreements.

As of December 31, 2021, we held five U.S.

patents and eight non-provisional pending U.S.

patent applications with

expiration dates ranging from 2022 to 2035.

patent applications with expiration dates ranging from 2022 to 2035.

In addition, KULR has exclusive license on four patents from its partnerships.

can be no assurance, however, that the rights obtained can be successfully enforced against infringing products in every jurisdiction.

While our patents, copyrights, trademarks, and trade secrets provide some advantage and protection, we believe our competitive

position and future success is largely determined by such factors as the system and application knowledge, innovative skills,

technological expertise and management ability and experience of our personnel;

the range and success of new products being developed

There can be no assurance, however, that the rights obtained can be successfully enforced against infringing products in every jurisdiction.

While our patents, copyrights, trademarks, and trade secrets provide some advantage and protection, we believe our competitive position and future success is largely determined by such factors as the system and application knowledge, innovative skills, technological expertise and management ability and experience of our personnel;

the range and success of new products being developed by us;

our market brand recognition and ongoing marketing efforts;

and customer service and technical support.

We also have trademarks

that are used in the conduct of our business to distinguish genuine KULR products;

KULR has been granted trademarks for Class

9 and Class 17 applications.

An investment in the Company’s

common stock involves a high degree of risk.

In determining whether to purchase the Company’s common stock, an investor

should carefully consider all of the material risks described below, together with the other information contained in this report

before deciding to purchase the Company’s securities.

An investor should only purchase the Company’s securities if

he or she can afford to suffer the loss of his or her entire investment.

Risks Related to Our Business and Our

We are a young company

with a limited operating history, making it difficult for you to evaluate our business and your investment.

KULR was formed in 2015

and KTC was formed in 2013.

The Company, as a whole, has limited operating history.

We have not yet demonstrated sales of products

at a level capable of covering our fixed expenses.

Since inception, we have not demonstrated the capability to produce sufficient

materials to generate the ongoing revenues necessary to sustain our operations in the long-term.

Nor have we demonstrated the

ability to generate sufficient sales to sustain the business.

There can be no assurance that the Company will ever produce a profit.

Many of the Company’s

products represent new products that have not yet been fully tested in commercial product settings and for which manufacturing

operations have not yet been fully scaled.

This means that investors are subject to all the risks incident to the creation and

development of multiple new products and their associated manufacturing processes, and each investor should be prepared to withstand

a complete loss of their investment.

Because we are subject

to these uncertainties, there may be risks that management has failed to anticipate and you may have a difficult time evaluating

our business and your investment in our Company.

Our ability to become profitable depends primarily on our ability to successfully

commercialize our products in the future.

Even if we successfully develop and market our products, we may not generate sufficient

or sustainable revenue to achieve or sustain profitability, which could cause us to cease operations.

We have no sustainable

base of products approved for commercial use by our customers, have never generated significant product revenues and may never

achieve sufficient revenues for profitable operations, which could cause us to cease operations.

KULR primarily sells bulk

materials or products made with these materials to other companies for incorporation into their products.

Although KULR’s

technologies were previously used in numerous advanced space and industrial applications for NASA, there has been no significant

incorporation of our materials or products into customer products that are released for commercial sale as of the date of this

Because there is no demonstrated history of large-scale commercial success for our products, it is possible that such

commercial success may never happen and that we will never achieve the level of revenues necessary to sustain our business.

We will need to

raise substantial additional capital in the future to fund our operations and we may be unable to raise such funds when needed

and on acceptable terms, which could have a materially adverse effect on our business.

We anticipate that we

will incur operating losses for the foreseeable future.

We may require additional funds for our anticipated operations and if

we are not successful in securing additional financing, we may be required to delay significantly, reduce the scope of or eliminate

one or more of our research or development programs, downsize our general and administrative infrastructure, or seek alternative

measures to avoid insolvency, including arrangements with collaborative partners or others that may require us to relinquish rights

to certain of our technologies, product candidates or products.

We have limited

experience in higher volume manufacturing that will be required to support profitable operations, and the risks associated with

scaling to larger production quantities may be substantial.

We have limited experience

manufacturing our products.

We have established small-scale commercial or pilot-scale production facilities for our carbon-based

thermal management products, but these facilities do not have the existing production capacity to produce sufficient quantities

of materials for us to reach sustainable sales levels.

In order to develop the capacity to produce much higher volumes, it will

be necessary to produce multiples of existing processes or engineer new production processes in some cases.

There is no guarantee

that we will be able to economically scale-up our production processes to the levels required.

If we are unable to scale-up our

production processes and facilities to support sustainable sales levels, the Company may be forced to curtail or cease operations.

We have a long and

complex sales cycle and have not demonstrated the ability to operate successfully in this environment.

It has been our experience

since our inception that the average sales cycle for our products can range from one to five years from the time a customer begins

testing our products until the time that they could be successfully used in a commercial product.

We have only demonstrated a

limited track record of success in completing customer development projects, which makes it difficult for you to evaluate the

likelihood of our future success.

The sales and development cycle for our products is subject to customer budgetary constraints,

internal acceptance procedures, competitive product assessments, scientific and development resource allocations, and other factors

beyond our control.

If we are not able to successfully accommodate these factors to enable customer development success, we will

be unable to achieve sufficient sales to reach profitability.

In this case, the Company may not be able to raise additional funds

and may be forced to curtail or cease operations and you could lose all or a significant part of your investment.

We are dependent

on customers and partners to design and test our solution into new applications which may not be brought to market successfully.

The Company targets its

thermal management solution for new applications and devices that require high performance and unique features offered by its

Developing new applications and devices involves a lengthy and complex process, and they may not be commercialized on

a timely basis, or at all.

The Company’s success is directly related to the success of these new products.

because the Company’s solutions are relatively new to mass market consumer electronics, the design and testing time is longer

than traditional solutions.

Moreover, in transitioning to new technologies and products, we may not achieve design wins, our customers

may delay transition to these new technologies, our competitors may transition more quickly than we do, or we may experience product

delays, cost overruns or performance issues that could harm our operating results and financial condition.

We could be adversely

affected by our exposure to customer concentration risk.

We are subject to customer

concentration risk as a result of our reliance on a relatively small number of customers for a significant portion of our revenues.

For 2020, we had 2 customers whose purchases accounted for 50% of total revenues.

Due to the nature of our business and the relatively

large size of many of the applications our customers are developing, we anticipate that we will be dependent on a relatively small

number of customers for the majority of our revenues for the next several years.

It is possible that only one or two customers

could place orders sufficient to utilize most or all of our existing manufacturing capacity.

In this case, there would

be at risk of significant loss of future revenues if one or more of these customers were to stop ordering our materials, which

could in turn have a material adverse effect on our business and on your investment.

We operate in an

advanced technology arena where hypothesized properties and benefits of our products may not be achieved in practice, or in which

technological change may alter the attractiveness of our products.

Because there is no sustained

history of successful use of our products in commercial applications, there is no assurance that broad successful commercial applications

may be technically feasible.

Some of the scientific and engineering data related to our products has been generated in our own

laboratories or in laboratory environments at our customers or third-parties.

It is well known that laboratory data is not always

representative of commercial applications.

Likewise, we operate in

a market that is subject to rapid technological change.

Part of our business strategy is to monitor such change and take steps

to remain technologically current, but there is no assurance that such strategy will be successful.

If the Company is not able

to adapt to new advances in materials sciences, or if unforeseen technologies or materials emerge that are not compatible with

our products and services or that could replace our products and services, our revenues and business prospects would likely be

adversely affected.

Such an occurrence may have severe consequences, including the potential for our investors to lose all of

their investment.

Competitors that

are larger and better funded may cause the Company to be unsuccessful in selling its products.

The Company operates in

a market that is expected to have significant competition in the future.

Global research is being conducted by substantially larger

companies who have greater financial, personnel, technical, and marketing resources.

There can be no assurance that the Company’s

strategy of offering better thermal management solutions based on the Company’s proprietary carbon fiber-based products

will be able to compete with other companies, many of whom will have significantly greater resources, on a continuing basis.

the event that we cannot compete successfully, the Company may be forced to cease operations.

Because of our small

size and limited operating history, we are dependent on key employees.

The Company’s operations

and development are dependent upon the experience and knowledge of Michael Mo, our Chief Executive Officer, Simon Westbrook our

Chief Financial Officer, Dr.

Timothy Knowles, our Chief Technical Officer, Keith Cochran, our President and Chief Operating Officer,

and Michael Carpenter, our Vice President of Engineering.

If the services of any of these individuals should become unavailable,

the Company’s business operations might be adversely affected.

If several of these individuals became unavailable at the

same time, the ability of the Company to continue normal business operations might be adversely affected to the extent that revenue

or profits could be diminished, and you could lose all or a significant amount of your investment.

Our success depends

in part on our ability to protect our intellectual property rights, and our inability to enforce these rights could have a material

adverse effect on our competitive position.

We rely on the patent,

trademark, copyright and trade-secret laws of the United States and to protect our intellectual property rights.

We may be unable

to prevent third parties from using our intellectual property without our authorization.

The unauthorized use of our intellectual

property could reduce any competitive advantage we have developed, reduce our market share or otherwise harm our business.

the event of unauthorized use of our intellectual property, litigation to protect or enforce our rights could be costly, and we

may not prevail.

Many of our technologies

are not covered by any patent or patent application, and our issued and pending U.S.

patents may not provide us with any competitive

advantage and could be challenged by third parties.

Our inability to secure issuance of our pending patent applications may limit

our ability to protect the intellectual property rights these pending patent applications were intended to cover.

Our competitors

may attempt to design around our patents to avoid liability for infringement and, if successful, our competitors could adversely

affect our market share.

Furthermore, the expiration of our patents may lead to increased competition.

Our pending trademark

applications may not be approved by the responsible governmental authorities and, even if these trademark applications are granted,

third parties may seek to oppose or otherwise challenge these trademark applications.

A failure to obtain trademark registrations

in the United States and in other countries could limit our ability to protect our products and their associated trademarks and

impede our marketing efforts in those jurisdictions.

In addition, effective

patent, trademark, copyright and trade secret protection may be unavailable or limited in some foreign countries.

on unpatented proprietary manufacturing expertise, continuing technological innovation and other trade secrets to develop and

maintain our competitive position.

Although we generally enter into confidentiality agreements with our employees and third parties

to protect our intellectual property, these confidentiality agreements are limited in duration and could be breached, and may

not provide meaningful protection of our trade secrets or proprietary manufacturing expertise.

Adequate remedies may not be available

if there is an unauthorized use or disclosure of our trade secrets and manufacturing expertise.

In addition, others may obtain

knowledge about our trade secrets through independent development or by legal means.

The failure to protect our processes, apparatus,

technology, trade secrets and proprietary manufacturing expertise, methods and compounds could have a material adverse effect

on our business by jeopardizing critical intellectual property.

Where a product formulation

or process is kept as a trade secret, third parties may independently develop or invent and patent products or processes identical

to our trade-secret products or processes.

This could have an adverse impact on our ability to make and sell products or use such

processes and could potentially result in costly litigation in which we might not prevail.

We could face intellectual

property infringement claims that could result in significant legal costs and damages and impede our ability to produce key products,

which could have a material adverse effect on our business, financial condition and results of operations.

If our technologies

conflict with the proprietary rights of others, we may incur substantial costs as a result of litigation or other proceedings

and we could face substantial monetary damages and be precluded from commercializing our products, which would materially harm

our business and financial condition.

Patents in the thermal

management solutions industry are numerous and may, at times, conflict with one another.

As a result, it is not always clear to

industry participants, including us, which patents cover the multitude of product types.

Ultimately, the courts must determine

the scope of coverage afforded by a patent and the courts do not always arrive at uniform conclusions.

A patent owner may claim

that we are making, using, selling or offering for sale an invention covered by the owner’s patents and may go to court

to stop us from engaging in such activities.

Such litigation is not uncommon in our industry.

Patent lawsuits can be expensive

and would consume time and other resources.

There is a risk that a court would decide that we are infringing a third party’s

patents and would order us to stop the activities covered by the patents, including the commercialization of our products.

addition, there is a risk that we would have to pay the other party damages for having violated the other party’s patents

(which damages may be increased, as well as attorneys’ fees ordered paid, if infringement is found to be willful), or that

we will be required to obtain a license from the other party in order to continue to commercialize the affected products, or to

design our products in a manner that does not infringe a valid patent.

We may not prevail in any legal action, and a required

license under the patent may not be available on acceptable terms or at all, requiring cessation of activities that were found

to infringe a valid patent.

We also may not be able to develop a non-infringing product design on commercially reasonable terms,

We may not obtain U.S.

Government contracts

to further develop our technology.

We can give no assurances

that we will be successful in obtaining government contracts.

The process of applying for government contracts is lengthy, and

we cannot be certain that we will be successful in complying with all requirements throughout such application process.

we cannot be certain that we will be awarded any U.S.

Government contracts utilizing our carbon fiber-based solutions.

Downturns in general

economic conditions could adversely affect our profitability.

Downturns in general economic

conditions can cause fluctuations in demand for our products, product prices, volumes and gross margins.

Future economic conditions

may not be favorable to our industry.

A decline in the demand for our products or a shift to lower-margin products due to deteriorating

economic conditions could adversely affect sales of our products and our profitability and could also result in impairments of

certain of our assets.

Furthermore, any uncertainty

in economic conditions may result in a slowdown to the global economy that could affect our business by reducing the prices that

our customers may be able or willing to pay for our products or by reducing the demand for our products.

An increase in the

cost of raw materials or electricity might affect our profits.

Any increase in the prices

of our raw materials or energy might affect the overall cost of our products.

If we are not able to raise our prices to pass on

increased costs to our customers, we would be unable to maintain our existing profit margins.

Our major cost components include

items such as production materials and electricity, which items are normally readily available industrial commodities.

our history as a business, we have not seen any material impact (as defined by GAAP) on our cost structure from fluctuations in

raw material or energy costs, but this could change in the future.

Our results of operations

could deteriorate if our manufacturing operations were substantially disrupted for an extended period.

Our manufacturing operations

may be subject to disruption due to extreme weather conditions, floods and similar events, major industrial accidents, strikes

and lockouts, adoption of new laws or regulations, changes in interpretations of existing laws or regulations or changes in governmental

enforcement policies, civil disruption, riots, terrorist attacks, war, and other events.

We cannot assure you that no such events

If such an event occurs, it could have a material adverse effect on us.

We may become subject

to liabilities related to risks inherent in working with hazardous materials.

Our development and manufacturing

processes involve the controlled use of hazardous materials, such as acetone.

We are subject to federal, provincial and local

laws and EPA regulations governing the use, manufacture, storage, handling and disposal of such materials and certain waste products.

Although we believe that our safety procedures for handling and disposing of such materials comply with the standards prescribed

by such laws and regulations, the risk of accidental contamination or injury from these materials cannot be completely eliminated.

In the event of such an accident, we could be held liable for any damages that result and any such liability could exceed our

We are not specifically insured with respect to this liability.

Although we believe that we are in compliance in all

material respects with applicable environmental laws and regulations and currently do not expect to make material capital expenditures

for environmental control facilities in the near-term, if we fail to comply with these regulations substantial fines could be

imposed on us and we could be required to suspend production, alter manufacturing processes or cease operations.

there can be no assurance that we will not be required to incur significant costs to comply with environmental laws and regulations

in the future, or that our operations, business or assets will not be materially adversely affected by current or future environmental

laws or regulations.

Future adverse regulations

could affect the viability of the business.

a small generator of hazardous substances, we are subject to local governmental regulations relating to the storage, discharge,

handling, emission, generation, manufacture and disposal of toxic or other hazardous substances, such as acetone that is used

in very small quantities to manufacture our products.

We are currently in compliance with these regulations.

However, there

can be no assurance that future regulations might not change or raise the compliance standards, of which the Company may become

in violate or for which we may incur substantial costs to comply.

In most cases, as far

as we are aware, there are no current regulations elsewhere in the world that prevent or prohibit the sale of the Company’s

However, there is no assurance that any regulations will not be enacted in the future to require the Company’s

products or production materials to be subject to test for toxicity or other health effects before they can be sold or used in

the production process, if such regulations are enacted in the future, the Company’s business could be adversely affected

because of the requirement for expensive and time-consuming tests or other regulatory compliance.

There can be no assurance that

future regulations might not severely limit or even prevent the sale of the Company’s products in major markets, in which

case the Company’s financial prospects might be severely limited, causing investors to lose some or all of their investment.

Our directors and

officers may be exposed to liability .

We currently maintain

a policy for director and officer liability insurance, also known as “D&O Insurance.” However, the maximum coverage

under our D&O Insurance policy may not be sufficient to cover all such liability exposure and, as a result, it may be more

difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers.

Compliance with

changing regulation of corporate governance and public disclosure will result in additional expenses and will divert time and

attention away from revenue generating activities.

Changing laws, regulations

and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and related SEC

regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing

the public markets and public reporting.

Our management team will need to invest significant management time and financial resources

to comply with both existing and evolving standards for public companies, which will lead to increased selling, general and administrative

expenses and a diversion of management time and attention from revenue generating activities to compliance activities, which could

have an adverse effect on our business.

we fail to maintain effective internal controls over financial reporting, the price of our common stock may be adversely affected.

Our management identified

weaknesses in our internal controls, as described in Item 9A here within.

Our internal control over financial reporting may still

or could in the future have weaknesses and conditions that could require correction or remediation, the disclosure of which and

continued existence of which may have an adverse impact on the price of our common stock.

We are required to establish and

maintain appropriate internal controls over financial reporting.

Failure to establish those controls, or any failure of those

controls once established, could adversely affect our public disclosures regarding our business, prospects, financial condition

or results of operations.

In addition, management’s assessment of internal controls over financial reporting may identify

weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may

raise concerns for investors.

Any actual or perceived weaknesses and conditions that need to be addressed in our internal

control over financial reporting or disclosure of management’s assessment of our internal controls over financial reporting

may have an adverse impact on the price of our common stock.

We are required

to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act of 2002 and if we fail to comply in a timely manner,

our business could be harmed and our stock price could decline.

Rules adopted by the SEC

pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require an annual assessment of internal controls over financial reporting,

and for certain issuers an attestation of this assessment by the issuer’s independent registered public accounting firm.

standards that must be met for management to assess the internal controls over financial reporting as effective are evolving and

complex, and require significant documentation, testing, and possible remediation to meet the detailed standards.

to incur significant expenses and to devote resources to Section 404 compliance on an ongoing basis.

It is difficult for

us to predict how long it will take or how costly it will be to complete the assessment of the effectiveness of our internal control

over financial reporting for each year and to remediate any deficiencies in our internal control over financial reporting.

a result, we may not be able to complete the assessment and remediation process on a timely basis.

In addition, although

attestation requirements by our independent registered public accounting firm are not presently applicable to us, we could become

subject to these requirements in the future and we may encounter problems or delays in completing the implementation of any resulting

changes to internal controls over financial reporting.

In the event that our Chief Executive Officer or Chief Financial Officer

determine that our internal control over financial reporting is not effective as defined under Section 404, we cannot predict

how regulators will react or how the market prices of our shares will be affected;

however, we believe that there is a risk that

investor confidence and share value may be negatively affected.

Risks Relating to Our Common Stock

The price of our

common stock is volatile and fluctuations in our operating results and announcements and developments concerning our business

affect our stock price, which may cause investment losses for our stockholders.

The market for our common

stock is highly volatile and the trading price of our stock quoted on the OTCQB is subject to wide fluctuations in response to,

among other things, operating results, the number of stockholders desiring to sell their shares, changes in general economic conditions

and the financial markets, the execution of new contracts and the completion of existing agreements and other developments affecting

In addition, statements or changes in opinions, ratings, or earnings estimates made by brokerage firms or industry analysts

relating to our market or relating to us could result in an immediate and adverse effect on the market price of our common stock.

The highly volatile nature of our stock price may cause investment losses for our shareholders.

In the past, securities class

action litigation has been brought against companies following periods of volatility in the market price of their securities.

If securities class action litigation is brought against us, such litigation could result in substantial costs while diverting

management’s attention and resources.

Our common stock

is subject to the "Penny Stock"

rules of the SEC and the trading market in our securities is limited, which makes transactions

in our stock cumbersome and may reduce the value of an investment in our stock.

The Securities and Exchange

Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock,"

for the purposes relevant to

us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per

share, subject to certain exceptions.

For any transaction involving a penny stock, unless exempt, the rules require:

That a broker or dealer approve a person's account for transactions

in penny stocks;

The broker or dealer receives from the investor a written agreement

to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person's account for transactions in penny

stocks, the broker or dealer must:

Obtain financial information and investment experience objectives

of the person;

Make a reasonable determination that the transactions in penny

stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable

of evaluating the risks of transactions in penny stocks.

The broker or dealer must

also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny

stock market, which, in highlight form:

Sets forth the basis on which the broker or dealer made the

suitability determination;

That the broker or dealer received a signed, written agreement

from the investor prior to the transaction.

Generally, brokers may

be less willing to execute transactions in securities subject to the "penny stock"

This may make it more difficult

for investors to dispose of our common stock and cause a decline in the market value of our stock.

Financial Industry

Regulatory Authority, Inc.

(“FINRA”) sales practice requirements may limit a shareholder’s ability to buy and

sell our common stock.

In addition to the “penny

stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer

must have reasonable grounds for believing that the investment is suitable for that customer.

Prior to recommending speculative

low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information

about the customer’s financial status, tax status, investment objectives and other information.

Under interpretations of

these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at

least some customers.

FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common

stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

Our stock is thinly

traded, so you may be unable to sell your shares at or near the quoted bid prices if you need to sell a significant number of

The shares of our common

stock are thinly-traded on the OTCQB, meaning that the number of persons interested in purchasing our common stock at or near

bid prices at any given time may be relatively small or non-existent.

As a consequence, there may be periods of several days

or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and

steady volume of trading activity that will generally support continuous sales without an adverse effect on share price.

give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained,

or that current trading levels will be sustained.

Due to these conditions, we can give you no assurance that you will be able

to sell your shares at or near bid prices or at all if you need money or otherwise desire to liquidate your shares.

Shares eligible

for future sale may adversely affect the market.

From time to time, certain

of our stockholders may be eligible to sell all or some of their shares of common stock by means of ordinary brokerage transactions

in the open market pursuant to Rule 144 promulgated under the Securities Act, subject to certain limitations.

In general, pursuant

to amended Rule 144, non-affiliate stockholders may sell freely after six months subject only to the current public information

Affiliates may sell after six months subject to the Rule 144 volume, manner of sale (for equity securities), and

current public information and notice requirements.

Any substantial sales of our common stock pursuant to Rule 144 may have a

material adverse effect on the market price of our common stock.

If we sell shares of our common stock

under the Standby Equity Distribution Agreement, our stockholders will experience immediate dilution and, as a result, our stock

price may go down.

Pursuant to the Standby

Equity Distribution Agreement, we may sell up to $8,000,000 of shares of our common stock over a 24-month period at our discretion

and subject to certain limitations, and, as consideration for YA II PN, Ltd’s (“YA”) entering into the Standby

Equity Distribution Agreement, we issued to YA an aggregate of 95,847 commitment shares.

If we submit additional

advance notices to YA, the sale of shares of our common stock pursuant to the Standby Equity Distribution Agreement will have a

dilutive impact on our existing stockholders.

The number of shares ultimately offered for sale by YA is dependent upon the number

of shares we elect to sell to YA under the Standby Equity Distribution Agreement.

YA may ultimately purchase all or some of the

$8,000,000 of shares of common stock that, together with the commitment shares, are issuable in connection with the Standby Equity

Distribution Agreement.

YA may resell all, some

or none of the shares we issue to it under the Standby Equity Distribution Agreement.

Sales by YA of shares acquired pursuant

to the Standby Equity Distribution Agreement could cause the market price of our common stock to decline, which decline could

be significant.

The sale of a substantial number of shares of our common stock by YA, or the anticipation of such sales, could

make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might

otherwise wish.

We could issue additional

common stock, which might dilute the book value of our common stock.

Our Board of Directors

has authority, without action or vote of our shareholders, to issue all or a part of our authorized but unissued shares.

stock issuances could be made at a price that reflects a discount or a premium from the then-current trading price of our common

In addition, in order to raise capital, we have and may need to issue securities that are convertible into or exchangeable

for a significant amount of our common stock.

These issuances would dilute the percentage ownership interest, which would have

the effect of reducing your influence on matters on which our shareholders vote and might dilute the book value of our common

You may incur additional dilution if holders of stock options, whether currently outstanding or subsequently granted, exercise

their options, or if warrant holders exercise their warrants, whether currently outstanding or subsequently granted, to purchase

shares of our common stock.

Our common stock

could be further diluted as a result of the issuance of convertible securities, warrants or options.

In the past, we have issued

convertible securities (such as convertible debentures and notes), warrants and options in order to raise money or as compensation

for services and incentive compensation for our employees and directors.

We have shares of common stock reserved for issuance

upon the exercise of certain of these securities and may increase the shares reserved for these purposes in the future.

of these convertible securities, options and warrants could affect the rights of our stockholders, could reduce the market price

of our common stock or could result in adjustments to exercise prices of outstanding warrants (resulting in these securities becoming

exercisable for, as the case may be, a greater number of shares of our common stock), or could obligate us to issue additional

shares of common stock to certain of our stockholders.

We may experience volatility in our stock

price, which may adversely affect the trading price of our common stock.

The sale prices of our common stock as reported

on the OTCQB have and may continue to exhibit volatility.

Factors such as the following may affect the volatility in our stock

our quarterly operating results;

announcements of regulatory developments or technological innovations by us or our competitors;

changes in our relationship with our vendors, distributors or other strategic partners;

government regulation;

developments in patent or other technology ownership rights;

Other factors which may affect our stock price

include general changes in the economy, the financial markets or the industries in which we target our products and services.

Trading on the OTCQB is volatile and

sporadic, which could depress the market price of our common stock and make it difficult for our security holders to resell their

common stock.

Our common stock is quoted

on the OTCQB tier of the OTC Markets Group, Inc.

Trading in securities quoted on the OTCQB is often thin and characterized by

wide fluctuations in trading prices due to many factors, some of which may have little to do with our operations or business prospects.

This volatility could depress the market price of our common stock for reasons unrelated to our business or operating performance.

Moreover, the OTCQB is not a stock exchange, and trading of securities on the OTCQB is often more sporadic than the trading of

securities listed on a stock exchange like The Nasdaq Capital Market or the NYSE American.

These factors may result in investors

having difficulty reselling any shares of our common stock.

The outbreak of

Coronavirus has led to restrictions on travel and public meetings and has disrupted markets and shipping schedules.

The COVID-19 virus pandemic

has created global restrictions on travel and meetings, temporary and permanent closures of businesses and business activities,

unemployment, loss of customers and suppliers, and reluctance of business management to make critical commitments and, instead,

conserve cash.

For example, we have experienced delays in customer acceptance of delivered products and shipment delays from our

suppliers or customers’ suppliers, which delays have disrupted ours and our customers’ product development and testing

At this stage, we are unable to quantify the impact of the virus on our current or future business, but it could make

it extremely difficult to contract with new customers, sell our products or services and manage our supply chain.

We do not intend

to pay dividends.

We do not anticipate paying

cash dividends on our common stock in the foreseeable future.

We may not have sufficient funds to legally pay dividends.

if funds are legally available to pay dividends, we may nevertheless decide in our sole discretion not to pay dividends.

The declaration,

payment and amount of any future dividends will be made at the discretion of our board of directors, and will depend upon, among

other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other

factors our board of directors may consider relevant.

There is no assurance that we will pay any dividends in the future, and,

if dividends are paid, there is no assurance with respect to the amount of any such dividend.

Voting power of our shareholders is highly

concentrated by insiders.

Our officers, directors

and affiliates currently own approximately 41.43% of our outstanding Common Stock eligible to vote.

Such concentrated control

of the Company may adversely affect the value of our Common Stock.

If you acquire our Common Stock, you may have no effective

voice in our management.

Sales by our insiders or affiliates, along with any other market transactions, could affect the value

of our Common Stock.

Our articles of

incorporation allow for our board to create a new series of preferred stock without further approval by our stockholders, which

could adversely affect the rights of the holders of our Common Stock.

Our Board of Directors

has the authority to fix and determine the relative rights and preferences of preferred stock.

Our Board of Directors have the

authority to issue up to 20,000,000 shares of our preferred stock terms of which may be determined by the Board without further

stockholder approval.

As a result, our Board of Directors could authorize the issuance of a series of preferred stock that would

grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are

distributed to the holders of Common Stock and the right to the redemption of the shares, together with a premium, prior to the

redemption of our Common Stock.

In addition, our Board

of Directors could authorize the issuance of a series of preferred stock that has greater voting power than our Common Stock or

that is convertible into our Common Stock, which could decrease the relative voting power of our Common Stock or result in dilution

to our existing stockholders.

STAFF COMMENTS

Smaller reporting companies

such as us are not required to provide the information required by this item.

Our principal executive

office is located 1999 S.

Bascom Ave., Suite 700, Campbell, CA 95008, and the telephone number at such address is 408-663-5247.

The headquarters for KTC are located at 6355 Nancy Ridge Drive, San Diego CA 92121, and the telephone number at such address is

858-866-8478.

We also have trademarks that are used in the conduct of our business to distinguish genuine KULR products;

KULR has been granted trademarks for Class 9 and Class 17 applications.

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 1. Business