What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-03-28 compared with 2021-03-19 · 927 added, 1508 removed, 335 unchanged (88% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

As of the end of the period

covered by this Annual Report on Form 10-K, we carried out an evaluation, under the supervision and with the participation of

our management, including our principal executive officer and principal financial officer, of the effectiveness of the design

and operation of our disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) (the “Exchange

Based on the foregoing evaluation, our principal executive officer and principal financial officer concluded that,

as of December 31, 2020, our disclosure controls and procedures were not effective at the reasonable assurance level because of

the material weakness discussed below.

A material weakness is

a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable

possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a

timely basis.

During the year ended December 31, 2020, we did not design or maintain effective

controls to ensure that there is an independent review and approval of electronic payments (wires, EFT’s, ACH’s and

credit card payments) as our policy of providing timely support to ensure completeness and accuracy of the payment was not followed.

We are in the process

of developing a detailed plan for remediation of the material weakness, including developing and maintaining preventative controls

around the electronic payment process to ensure proper segregation of duties.

In addition, subsequent to December 31, 2020, we

hired a Chief Operating Officer (“COO”) that will assist in providing additional segregation of duties and independent

reviews of the internal controls over financial reporting.

The COO will provide the leadership and organizational experience necessary

to ensure we have proper operational controls and procedures in place to effectively manufacture and automate on a mass scale

with sound operating efficiency.

We will continue to assess the design and effectiveness of our remediation efforts in connection

with our future assessments of internal control over financial reporting.

Notwithstanding the material

weakness in internal control over financial reporting described above, our management has concluded that our consolidated financial

statements included in the Annual Report on Form 10-K are fairly stated in all material respects in accordance with accounting

principles generally accepted in the United States of America.

As of the end of the period covered by this Annual Report on Form 10-K, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) (the “Exchange Act”).

Based on the foregoing evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2021, our disclosure controls and procedures were not effective at the reasonable assurance level because of the material weakness discussed below.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

During the year ended December 31, 2021, we did not design or maintain effective controls to ensure that there is an appropriate review and approval of electronic payments (wires, EFT’s, ACH’s and credit card payments).

We are in the process of developing a detailed plan for remediation of the material weakness, including developing and maintaining preventative controls around the electronic payment process to ensure proper segregation of duties.

As a first step we have committed to upgrading our enterprise software from QuickBooks to NetSuite which will provide more documented authorizations, options and workflow.

In addition, during 2021, we hired a Chief Operating Officer (“COO”) that will assist in providing additional segregation of duties and independent reviews our electronic payments.

The COO will provide the leadership and organizational experience necessary to ensure we have proper operational controls and procedures in place to effectively manufacture and automate on a mass scale with sound operating efficiency.

We will continue to assess the design and effectiveness of our remediation efforts in connection with our future assessments of internal control over financial reporting.

Notwithstanding the material weakness in internal control over financial reporting described above, our management has concluded that our consolidated financial statements included in the Annual Report on Form 10-K are fairly stated in all material respects in accordance with accounting principles generally accepted in the United States of America.

Management’s Report on Internal Control Over Financial Reporting

Our management, including

our principal executive officer and principal financial officer, is responsible for establishing and maintaining adequate internal

control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

Internal control over financial

reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation

of financial statements for external purposes in accordance with U.S.

Our internal control over financial reporting includes

those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly

reflect the transactions and dispositions of our assets;

(ii) provide reasonable assurance that transactions are recorded as necessary

to permit preparation of financial statements in accordance with U.S.

GAAP, and that our receipts and expenditures are being made

only in accordance with authorizations of our management and directors;

and (iii) provide reasonable assurance regarding prevention

or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial

Under the supervision

and with the participation of our management, including our principal executive officer and principal financial officer, we conducted

an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2020, based on the Internal

Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013

Based on this evaluation under the 2013 Framework, our principal executive officer and principal financial officer

have concluded that our internal control over financial reporting were not effective as of December 31, 2020 as a result of the

material weakness described above.

Our management, including our principal executive officer and principal financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

Our internal control over financial reporting includes those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S.

GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2021, based on the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013 Framework).

Based on this evaluation under the 2013 Framework, our principal executive officer and principal financial officer have concluded that our internal control over financial reporting was not effective as of December 31, 2021 as a result of the material weakness described above.

Changes in Internal Control Over Financial Reporting

Except as disclosed above,

there has been no change in our internal control over financial reporting that occurred during the fourth quarter of 2020 that

has materially affected, or is reasonably likely to materially affect, our internal control over current or future financial reporting.

Inherent Limitations of the Effectiveness

Management does not expect

that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error

A control system, no matter how well designed and operated, is based upon certain assumptions and can provide only

reasonable, not absolute, assurance that its objectives will be met.

Further, no evaluation of controls can provide absolute assurance

that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the

Company have been detected.

Attestation Report of Registered Public

Accounting Firm

This Annual Report does

not contain an attestation report of our independent registered public accounting firm related to internal control over financial

reporting because the rules for smaller reporting companies provide an exemption from the attestation requirement.

Except as disclosed above, there has been no change in our internal control over financial reporting that occurred during the fourth quarter of 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over current or future financial reporting.

Inherent Limitations of the Effectiveness of Controls

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud.

A control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met.

Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

Attestation Report of Registered Public Accounting Firm

This Annual Report does not contain an attestation report of our independent registered public accounting firm related to internal control over financial reporting because the rules for smaller reporting companies provide an exemption from the attestation requirement.

OTHER INFORMATION

DIRECTORS, EXECUTIVE OFFICERS,

AND CORPORATE GOVERNANCE

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Executive Officers and Directors

Our executive officers

and directors and their ages are as follows:

Chief Executive Officer

Our executive officers and directors and their ages are as follows:

Chief Executive Officer and Chairman

Timothy Knowles

Director, Chief Technical

Officer and Secretary

Director, Chief Technical Officer and Secretary

Simon Westbrook

1 unchanged sentence

Keith Cochran

President and Chief

Operating Officer

President and Chief Operating Officer

Michael Carpenter

Vice President of

The term of office for

each director is one year, or until the next annual meeting of the stockholders.

Michael Mo was

appointed CEO and Director of the Company on March 16, 2011, is a technology entrepreneur and successful investor with over 20

years of experience in technology management, product development and marketing.

In 2013, he co-founded KULR and has been serving

as its CEO since then.

Vice President of Engineering

Morio Kurosaki

Joanna Massey

The term of office for each director is one year, or until the next annual meeting of the stockholders.

Michael Mo was appointed CEO and Director of the Company on March 16, 2011, is a technology entrepreneur and successful investor with over 20 years of experience in technology management, product development and marketing.

In 2013, he co-founded KULR and has been serving as its CEO since then.

From 2007 to 2015, Mr.

Mo served as Senior Director of Business Development at Amlogic, Inc., a California

high-tech company.

Mo founded Sympeer Technology and served as its CEO until 2008.

In 1998, he founded Wish Solutions,

and served as its CEO until 2001.

Mo received his Master of Science in Electrical Engineering from the University of California

at Santa Barbara in 1995.

was appointed CTO and Director of the Company, has over 30 Years of Thermal Management R&D and product development experience

for the most challenging space and industrial applications.

He conducted research and built building products for various space

and industrial customers such as NASA, Boeing, Raytheon, Jet Propulsion Lab, and others.

Mo served as Senior Director of Business Development at Amlogic, Inc., a California high-tech company.

Mo received his Master of Science in Electrical Engineering from the University of California at Santa Barbara in 1995.

Knowles was appointed CTO and Director of the Company, has over 30 Years of Thermal Management R&D and product development experience for the most challenging space and industrial applications.

He conducted research and built building products for various space and industrial customers such as NASA, Boeing, Raytheon, Jet Propulsion Lab, and others.

Since 1983, Dr.

Knowles has been working

as President at ESLI.

Knowles has been working as President at ESLI.

In addition, in 2013, Dr.

Knowles co-founded KULR and has been serving as its CTO since then.

1983, he was a postdoctoral research physicist at Hamburg University.

From 1977 to 1983, he was a postdoctoral research physicist at Hamburg University.

Knowles received Ph.D.

in Physics from University of

California San Diego in 1977 and B.S.

in Physics from University of California San Diego in 1977 and B.S.

in Physics from University of Southern California in 1969.

Simon Westbrook

was appointed Chief Financial Officer on March 15, 2018.

Westbrook founded and has since served as an officer of

Aargo, Inc., a company specializing in financial consulting services to corporations in various tech-related industries.

to Aargo, Inc., Mr.

Simon Westbrook was appointed Chief Financial Officer on March 15, 2018.

Westbrook founded and has since served as an officer of Aargo, Inc., a company specializing in financial consulting services to corporations in various tech-related industries.

Prior to Aargo, Inc., Mr.

Westbrook was CFO of Amber Networks, Inc., and the Chief Financial Officer of Sage, Inc.

Silicon Valley company specializing in flat panel displays.

SAGI), a Silicon Valley company specializing in flat panel displays.

Before joining Sage, Mr.

Westbrook held a number of senior financial

positions at Creative Technology (NASDAQ:

Westbrook held a number of senior financial positions at Creative Technology (NASDAQ:

CREAF), a leading PC multimedia company, and Atari Corp (AMEX:

ATC), the video game

and home computer company both in the USA and overseas.

At various times, he has held positions as an advisory board member of

the Silicon Valley Financial Executives Institute, and various technology start-up companies where he has assisted in strategic

planning, fund raising and team development.

Simon is a Chartered Accountant and holds a Master’s in Economics from Trinity

College, Cambridge University.

Keith Cochran was

appointed President and Chief Operating Officer effective March 1, 2021.

Cochran spent twenty-four years in various management

roles at Jabil Greenpoint (NYSE:

JBL) and most recently as Senior Vice President of its Global Business Unit in Singapore, where

he led a smartphone technology division responsible for $3.7 billion in revenues.

Cochran is based in the United States and

has vast international experience working with partners in Singapore, India, Brazil, Mexico, China, France, Hungary and other

ATC), the video game and home computer company both in the USA and overseas.

At various times, he has held positions as an advisory board member of the Silicon Valley Financial Executives Institute, and various technology start-up companies where he has assisted in strategic planning, fund raising and team development.

Simon is a Chartered Accountant and holds a Master’s in Economics from Trinity College, Cambridge University.

Keith Cochran was appointed President and Chief Operating Officer effective March 1, 2021.

Cochran spent twenty-four years in various management roles at Jabil Greenpoint (NYSE:

JBL) and most recently as Senior Vice President of its Global Business Unit in Singapore, where he led a smartphone technology division responsible for $3.7 billion in revenues.

Cochran is based in the United States and has vast international experience working with partners in Singapore, India, Brazil, Mexico, China, France, Hungary and other countries.

Cochran has a Bachelor of Science in Business Operations from Devry Institute of Technology.

Carpenter serves

as KULR’s Vice President of Engineering.

Carpenter has been employed by ESLI since December 1983, serving as Director

of the PCM Heatsink Group, Quality Manager, Facility Security Officer (FSO) in the Defense Industrial Security Program from 1988

Carpenter serves as KULR’s Vice President of Engineering.

Carpenter has been employed by ESLI since December 1983, serving as Director of the PCM Heatsink Group, Quality Manager, Facility Security Officer (FSO) in the Defense Industrial Security Program from 1988 to 1995.

He also has been served as Safety Officer since he joined ESLI in 1983.

Carpenter received his B.S.

in Applied Mechanics

from the University of California, San Diego in 1983.

The Company’s directors

are elected at the annual meeting of shareholders to hold office until the annual meeting of shareholders for the ensuing year

or until their successors have been duly elected and qualified.

Officers are elected annually by the Board of Directors and serve

at the discretion of the Board.

Director Independence

Currently no directors

would qualify as independent as defined under NASDAQ Marketplace Rules.

Our directors believe that retaining one or more additional

directors who would qualify as independent as defined in the NASDAQ Marketplace Rules would be overly costly and burdensome and

not warranted in the circumstances given the current stage of the Company’s development.

in Applied Mechanics from the University of California, San Diego in 1983.

Non-Executive Directors

Morio Kurosaki serves as a member of the Company’s board of directors since June 7, 2021.

Kurosaki founded IT-Farm Corporation (“IT-Farm”), a Japanese venture capital firm, in 1999.

Kurosaki has been the President of IT-Farm since the company’s inception.

Kurosaki has led early investments in notable companies such as Zoom Video Communications (Nasdaq:

ContextLogic (Nasdaq:

Treasure Data, acquired by ARM Holdings (Nasdaq:

Tubi, acquired by Fox Corporation (Nasdaq:

Red Hot Labs, acquired by Google (Nasdaq:

lvl5, acquired by DoorDash (NYSE:

Accel Technology, acquired by Marvell Technology Group (Nasdaq:

MRVL), and Extreme DA, acquired by Synopsis (Nasdaq:

Kurosaki has also served as Asia-Pacific advisory member of ARM Holdings, acquired by SoftBank Group Corporation (OTCMKTS:

Kurosaki started his business career at Intel Japan, thereafter, joining Western Digital Corporation (Nasdaq:

WDC) as one of the earliest members of WDC’s Japanese division.

Joanna Massey serves as a member of the Company’s board of directors since June 7, 2021.

Massey is an experienced C-level communications marketing executive and board director, who advises executive teams at Fortune 500 companies, startups and nonprofits.

Massey is also an author and corporate speaker.

Massey has worked for over 25 years strategizing on global brand reputation management at companies, such as Condé Nast, Lionsgate, CBS, Viacom, Discovery and Hasbro.

Massey has been the CEO of The Marketing Communications Think Tank since she founded the company in May 2021.

Massey has also been an adjunct professor at Columbia University teaching a graduate-level course in corporate communication since 2019.

From 2017 to 2019, Dr.

Massey was the head of communications at Condé Nast.

During her time at Condé Nast, Dr.

Massey was responsible for all internal and external communications.

From 2015 to 2017, Dr.

Massey was the Senior Vice President of Lionsgate, During her time at Lionsgate, Dr.

Massey handled quarterly reporting, M&A activities and crisis communications, and managed corporation communications for the company’s motion picture, television, digital properties, games, location-based entertainment, streaming video on demand, home entertainment and ancillary businesses worldwide.

Massey has been President & CEO of J.D.

Massey Associates, Inc., a portfolio company with multiple divisions that manage marketing communications, executive training and publishing, since she founded the Company in 2012.

Massey received an M.B.A from the University of Southern California and a Ph.D.

in psychology from Sofia University.

Board Composition

The Company’s directors are elected at the annual meeting of shareholders to hold office until the annual meeting of shareholders for the ensuing year or until their successors have been duly elected and qualified.

Officers are elected annually by the board of directors and serve at the discretion of the board.

Our board currently consists of four directors, Michael Mo, Dr.

Timothy Knowles, Morio Kurosaki, and Joanna Massey.

Kurosaki and Dr.

Joanna Massey are “independent” as defined under the NYSE American rules (as discussed below).

Family Relationships

There are no family relationships

between any director and executive officer.

There are no family relationships between any director and executive officer.

Director Independence

Our board of directors has determined that Morio Kurosaki and Dr.

Joanna Massey are “independent,” as defined under the NYSE American rules.

For purposes of the NYSE American rules, an independent director means a person other than an executive officer or employee of our company or any other individual having a relationship which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, subject to certain additional limitations.

Committees of the Board of Directors

Our board of directors has established an audit committee, a compensation committee, and a nominating and corporate governance committee.

The composition and responsibilities of each of the committees of our board of directors are described below.

Members serve on these committees until their resignation or until otherwise determined by our board of directors.

Our board of directors may establish other committees as it deems necessary or appropriate from time to time.

Audit Committee

The members of our Audit Committee are Morio Kurosaki and Dr.

Joanna Massey, with Mr.

Kurosaki serving as the Chairperson.

Each of Morio Kurosaki and Dr.

Joanna Massey, is independent under the rules and regulations of the SEC and the listing standards of the NYSE American applicable to audit committee members.

Our board of directors has determined that each of Morio Kurosaki and Dr.

Joanna Massey qualify as an audit committee financial expert within the meaning of SEC regulations and meet the financial sophistication requirements of the NYSE American.

Our Audit Committee has the responsibility for, among other things, (i) selecting, retaining and overseeing our independent registered public accounting firm, (ii) obtaining and reviewing a report by independent auditors that describe the accounting firm's internal quality control, and any materials issues or relationships that may impact the auditors, (iii) reviewing and discussing with the independent auditors standards and responsibilities, strategy, scope and timing of audits, any significant risks, and results, (iv) ensuring the integrity of the Company's financial statements, (v) reviewing and discussing with the Company's independent auditors any other matters required to be discussed by PCAOB Auditing Standard No.

1301, (v1) reviewing, approving and overseeing any transaction between the Company and any related person and any other potential conflict of interest situations, (vii) overseeing the Company’s internal audit department, (v) reviewing, approving and overseeing related party transactions, and (viii) establishing and overseeing procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters.

Compensation Committee

The members of our Compensation Committee are Morio Kurosaki and Dr.

Joanna Massey, with Mr.

Kurosaki and Dr.

Massey serving as Co-Chairpersons.

Our Compensation Committee has the responsibility for, among other things, (i) reviewing and approving the chief executive officer’s compensation based on an evaluation in light of corporate goals and objectives, (ii) reviewing and recommending to the Board the compensation of all other executive officers, (iii) reviewing and recommending to the Board incentive compensation plans and equity plans, (iv) reviewing and discussing with management the Company’s Compensation Discussion and Analysis and related information to be included in the annual report on Form 10-K and proxy statements, and (v) reviewing and recommending to the Board for approval procedures relating to Say on Pay Votes.

Nominating and Corporate Governance Committee

The members of our Nominating and Corporate Governance Committee are Morio Kurosaki and Dr.

Joanna Massey, with Dr.

Massey serving as the Chairperson.

Our Nominating and Corporate Governance Committee has the responsibility relating to assisting the Board in, among other things, (i) identifying and screening individuals qualified to become members of our board of directors, consistent with criteria approved by our board of directors, (ii) recommending to the Board the approval of nominees for director, (ii) developing and recommending to our board of directors a set of corporate governance guidelines, and (iv) overseeing the evaluation of our board of director.

Code of Ethics

Our board of directors has adopted a Code of Business Conduct and Ethics (the “Code”).

The Code applies to all of our directors, officers and employees.

We have made the Code available on our website https://www.kulrtechnology.com/governance-documents/.

We intend to disclose future amendments to, or waivers of, our Code, as and to the extent required by SEC regulations, at the same location on our website identified above or in public filings.

Involvement in Certain Legal Proceedings

Our directors, executive

officers and control persons have not been involved in any of the following events during the past five years:

any bankruptcy petition filed by or against any business of

which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior

to that time;

any conviction in a criminal proceeding or being subject to

a pending criminal proceeding (excluding traffic violations and other minor offenses);

being subject to any order, judgment, or decree, not subsequently

reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending

or otherwise limiting his involvement in any type of business, securities or banking activities;

being found by a court of competent jurisdiction (in a civil

action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities

law, and the judgment has not been reversed, suspended, or vacated.

Our directors, executive officers and control persons have not been involved in any of the following events during the past five years:

● any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

● any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

● being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;

● being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Exchange

Act requires our directors and executive officers and persons who own more than 10% of the issued and outstanding shares of our

common stock to file reports of initial ownership of common stock and other equity securities and subsequent changes in that ownership

with the SEC.

Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with

copies of all Section 16(a) forms they file.

To our knowledge, during the fiscal year ended December 31, 2020, our officers, directors

and greater than 10% beneficial owners have complied with all applicable filing requirements of Section 16(a).

Code of Ethics

We do not currently have

a Code of Ethics, as defined under the rules and regulations of the Exchange Act.

The Company does not believe a Code of Ethics

is necessary at this time.

Section 16(a) of the Exchange Act requires our directors and executive officers and persons who own more than 10% of the issued and outstanding shares of our common stock to file reports of initial ownership of common stock and other equity securities and subsequent changes in that ownership with the SEC.

Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.

To our knowledge, during the fiscal year ended December 31, 2021, our officers, directors and greater than 10% beneficial owners have complied with all applicable filing requirements of Section 16(a).

Nomination Process

As of December 31, 2020,

we did not affect any material changes to the procedures by which stockholders may recommend nominees to the Board of Directors.

As of December 31, 2021, we did not affect any material changes to the procedures by which stockholders may recommend nominees to the Board of Directors.

We do not have any defined policy or procedure requirements for stockholders to submit recommendations or nominations for directors.

The Board of Directors believes that, given the current stage of our development, a specific nominating policy would be premature

and of little assistance until our operations develop to a more advanced level.

We do not currently have any specific or minimum

criteria for the election of nominees to the Board of Directors and there is no specific process or procedure for evaluating such

The board of directors assesses all candidates, whether submitted by management or stockholders, and makes recommendations

for election or appointment.

A stockholder who wishes

to communicate with the Board of Directors may do so by directing a written request addressed to our Chief Executive Officer at

the address appearing on the face page of this annual report.

Committees of the Board

We currently do not have

nominating, compensation or audit committee, or committees performing similar functions, nor do we have a written nominating,

compensation or audit committee charter.

The Board of Directors does not believe that it is necessary to have such committees

at this time because it believes that the functions of such committees can be adequately performed by the Board of Directors.

The Board of Directors believes that, given the current stage of our development, a specific nominating policy would be premature and of little assistance until our operations develop to a more advanced level.

We do not currently have any specific or minimum criteria for the election of nominees to the Board of Directors and there is no specific process or procedure for evaluating such nominees.

The board of directors assesses all candidates, whether submitted by management or stockholders, and makes recommendations for election or appointment.

A stockholder who wishes to communicate with the Board of Directors may do so by directing a written request addressed to our Chief Executive Officer at the address appearing on the face page of this annual report.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following Summary

Compensation Table sets forth all compensation earned in all capacities during the fiscal years ended December 31, 2020 and 2019

by (i) our principal executive officer, (ii) our two most highly compensated executive officers, other than our principal executive

officer, who were serving as executive officers as of December 31, 2020 and whose total compensation for the 2019 fiscal year,

as determined by Regulation S-K, Item 402, exceeded $100,000, (iii) a person who would have been included as one of our two most

highly compensated executive officers, other than our principal executive officer, but for the fact that he was not serving as

one of our executive officers as of December 31, 2020 (the individuals falling within categories (i), (ii) and (iii) are collectively

referred to as the “Named Executive Officers”):

The following Summary Compensation Table sets forth all compensation earned in all capacities during the fiscal years ended December 31, 2021 and 2020 by (i) our principal executive officer, (ii) our two most highly compensated executive officers, other than our principal executive officer, who were serving as executive officers as of December 31, 2021 and whose total compensation for the 2020 fiscal year, as determined by Regulation S-K, Item 402, exceeded $100,000, (iii) a person who would have been included as one of our two most highly compensated executive officers, other than our principal executive officer, but for the fact that he was not serving as one of our executive officers as of December 31, 2021 (the individuals falling within categories (i), (ii) and (iii) are collectively referred to as the “Named Executive Officers”):

Name and Principal Position

$ 137,931 (1)

Chief Executive Officer

$ 161,785 (2)

Timothy Knowles

Chief Technology Officer

$ 141,353 (4)

Michael Carpenter

VP of Engineering

compensation paid during 2020 was $356,895, of which $137,931 and $218,964 was earned in 2020 and prior years, respectively,

and none remains unpaid as of December 31, 2020.

Of the aggregate

$161,785 earned during 2019, cash compensation paid during 2019 and 2020 was $28,154 and $135,425, respectively, and none

Keith Cochran

President and Chief Operating Officer

(1) Includes a grant date fair value of $2,579,000 attributable to an award of unvested options to purchase of up to 1,500,000 shares of the Company’s common stock at an exercise price of $2.60 per share, which will be incrementally earned based upon achieving certain market capitalization milestones up to $4 billion.

Represents the full fair value at grant date computed in accordance with the Financial Accounting Standards Codification (“FASB”) Topic 718.

The assumptions applied in determining the fair value of the award are discussed in Note 13 to our audited consolidated financial statements for the year ended December 31, 2021.

(2) Of the aggregate $137,931 earned during 2020, cash compensation paid during 2020 was $356,895, of which $218,964 was earned in prior years.

$0 remains unpaid as of December 31, 2020.

Of the aggregate $56,893 earned during

2020, cash compensation paid during 2020 was $56,893.

As of December 31, 2020, $108,910 remains unpaid, which includes unpaid

compensation that was earned in 2019 and prior years

Of the aggregate

$141,353 earned during 2019, cash compensation paid during 2019 was $70,680 and $70,673 remains unpaid as of December 31,

Any bonuses granted in

the future will relate to meeting certain performance criteria that are directly related to areas within the named executive’s

responsibilities with the Company.

As we continue to grow, more defined bonus programs may be established to attract

and retain our employees at all levels.

(3) Of the aggregate $70,680 earned during 2021, cash compensation paid during 2021 was $179,590, of which $108,910 was earned in prior years.

$0 remains unpaid as of December 31, 2021.

(4) Includes a grant date fair value of $2,911,420 attributable to an award of 1,500,000 unvested shares of the Company’s common stock which will be incrementally earned based upon achieving certain market capitalization milestones up to $4 billion.

Also includes a grant date fair value of $5,220,000 attributable to an award of 2,000,000 unvested shares of the Company’s common stock which will vest in four equal annual increments, with the first vest beginning in March of 2022.

Represents the full fair value at grant date computed in accordance with the Financial Accounting Standards Codification (“FASB”) Topic 718.

The assumptions applied in determining the fair value of the award are discussed in Note 13 to our audited consolidated financial statements for the year ended December 31, 2021.

Employment Contracts;

Termination of Employment and Change-in-Control Arrangements

We have not entered into employment agreements with our officers and directors and our Board of Directors has the sole discretion to pay salaries and incentive bonuses, including merit-based cash and equity bonuses.

On June 9, 2021, the Board, at the recommendation of the Compensation Committee, approved the following compensation for each of the following officers of the Company:

● Michael Carpenter shall receive an annual salary of $160,000 for his services rendered as Vice President of Engineering of the Company;

● Michael Mo shall receive (1) an annual salary of $285,000 for his services rendered as Chief Executive Officer of the Company, and (2) a five-year, non-qualified stock option grant to purchase up to 1,500,000 shares of the Company’s common stock at a purchase price equal to $2.60 per share, which options shall vest in increments upon the Company’s achievement of various market capitalization milestones.

Any bonuses granted in the future will relate to meeting certain performance criteria that are directly related to areas within the named executive’s responsibilities with the Company.

As we continue to grow, more defined bonus programs may be established to attract and retain our employees at all levels.

Equity Compensation Plans

On August 15 and November

5, 2018, the Board of Directors and a majority of the Company’s shareholders, respectively, approved the 2018 Equity Incentive

Plan (the “2018 Plan”).

On August 15 and November 5, 2018, the Board of Directors and a majority of the Company’s shareholders, respectively, approved the 2018 Equity Incentive Plan (the “2018 Plan”).

Under the 2018 Plan, 15,000,000 shares of common stock of the Company are authorized for issuance.

The 2018 Plan provides for the issuance of incentive stock options, non-statutory stock options, rights to purchase common stock,

stock appreciation rights, restricted stock, and restricted stock units to employees, directors and consultants of the Company

and its affiliates.

The 2018 Plan requires the exercise price of stock options to be not less than the fair value of the Company’s

common stock on the date of grant.

The 2018 Plan provides for the issuance of incentive stock options, non-statutory stock options, rights to purchase common stock, stock appreciation rights, restricted stock, and restricted stock units to employees, directors and consultants of the Company and its affiliates.

The 2018 Plan requires the exercise price of stock options to be not less than the fair value of the Company’s common stock on the date of grant.

Compensation of Directors

Because we are still in

the development stage, our directors do not receive any compensation other than reimbursement for expenses incurred during the

performance of their duties or their separate duties as officers of the Company.

Employment Contracts;

Termination of Employment

and Change-in-Control Arrangements

have not entered into employment agreements with our officers and directors and our Board of Directors has the sole discretion

to pay salaries and incentive bonuses, including merit-based cash and equity bonuses.

OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table provides

the names and addresses of each person known to us who own more than 5% of the outstanding common stock as of the date of

this annual report, and by our officers and directors.

On June 7, 2021, our Board of Directors approved the following compensation for Morio Kurosaki and Dr.

Joanna Massey, the independent directors of the Board.

Each independent director shall receive (1) $10,000 cash compensation per quarter, beginning on June 7, 2021;

(2) 20,000 shares of the Company’s restricted common stock, which shares shall vest equally in 5,000 share increments per quarter, with the first quarterly vest due to be achieved 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.

Outstanding Equity Awards at Fiscal Year-End

The following table discloses information regarding outstanding equity awards granted or accrued as of December 31, 2021, for our named executive officers.

Michael Mo (Chief Executive Officer)

Keith Cochran (President and Chief Operating Officer)

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table provides the names and addresses of each person known to us who own more than 5% of the outstanding common stock as of the date of this annual report, and by our officers and directors.

Except as otherwise indicated, all shares are owned directly.

Unless otherwise

indicated, the address of each of the persons shown is c/o KULR Technology Group, Inc., 1999 S.

Unless otherwise indicated, the address of each of the persons shown is c/o KULR Technology Group, Inc., 4863 Shawline Street, San Diego, CA 92111.

Name of Beneficial Owner

Beneficial Ownership

Percentage Ownership (1)

Ownership (1)

Michael Mo (2) - CEO and Chairman

1 unchanged sentence

Simon Westbrook - CFO (4)

Keith Cochran (4) –

President and COO

Keith Cochran (5) – President and COO

Michael Carpenter - VP of Engineering

Morio Kurosaki (6) - Director

Joanna Massey (7) - Director

All directors and executive officers as a group (7 persons)

The percent of class is based on 90,567,200 shares of common

stock issued and outstanding as of March 18, 2021 but does not include 2,060,000 shares that are not vested and cannot be

* Less than 1%

(1) The percent of class is based on 104,864,715 shares of common stock issued and outstanding as of March 28, 2022 but does not include 1,925,000 shares that are not vested and cannot be voted.

(2) Consists of:

19,251,539 shares held directly by Mr.

Mo and 1,400,000 shares held jointly

Mo and 1,400,000 shares held jointly by Mr.

Mo and his spouse, Linda Mo, and excludes shares held by Mr.

Mo’s son Alexander Mo and shares held by Mr.

son Brandon Mo, over which shares Mr.

Mo’s son Alexander Mo and shares held by Mr.

Mo’s son Brandon Mo, over which shares Mr.

Mo disclaims beneficial ownership, as Mr.

Mo has no control over the dispositive or voting

power over the shares and his sons no longer live in the same household as Mr.

Mo has no control over the dispositive or voting power over the shares and his sons no longer live in the same household as Mr.

Does not include an option for the purchase of up to 1,500,000 shares of the Company’s common stock that do not vest within 60 days.

(3) Consists of 15,600,000 shares held directly by Mr.

excludes 1,500,000 shares held by Mr.

Knowles, 870,000 shares held by Mr.

Knowles wife, Marianne Knight who maintains all voting and dispositive control over shares she owns, and excludes 1,500,000 shares held by Mr.

Knowles daughter, Sonja Irene Knowles, over which shares Mr.

Knowles disclaims beneficial

ownership, as Mr.

Knowles has no control over the dispositive or voting power over the shares and his daughter no longer lives

in the same household as Mr.

Does not include 2,000,000 restricted stock grants that vest

in four equal annual installments beginning on March 1, 2022.

Knowles disclaims beneficial ownership, as Mr.

Knowles has no control over the dispositive or voting power over the shares and his daughter no longer lives in the same household as Mr.

(4) Does not include 72,000 shares which have been earned but not issued.

(5) Does not include 1,500,000 restricted stock grants that do not vest within 60 days.

(6) Consists of 15,000 vested shares of common stock granted by the Company, on June 7, 2021, the effective date of Mr.

Kurosaki’s appointment as a director of the Company (excluding 5,000 shares that do not vest within 60 days), 400,000 shares of common stock previously acquired, and 100,000 shares held by IT-Farm Corporation, a Japanese venture and capital firm, of which Mr.

Kurosaki is the founder and President.

(7) Consists of 15,000 vested shares of common stock granted by the Company, on June 7, 2021, the effective date of Dr.

Massey’s appointment as a director of the Company (excluding 5,000 shares that do not vest within 60 days).

Change in Control

We are not aware of any

arrangement that might result in a change in control of the Company.

CERTAIN RELATIONSHIPS AND RELATED

PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE

On June 19, 2017, we acquired

all the issued and outstanding shares of KULR pursuant to the Share Exchange Agreement in exchange for the issuance of 50,000,000

of our Common Stock and KULR became our wholly owned subsidiary.

Our Chief Executive Officer and Director, Michael Mo, and various

members of his family were among the shareholders of KULR that entered into the Share Exchange Agreement along with our Chief

Technical Officer and Director, Timothy Knowles, and various members of his family.

Furthermore, Mr.

Mo was an officer and director

of both the Company and KULR prior to and after entering into the Share Exchange Agreement.

Knowles was an officer and director

of KULR prior to and after entering into the Share Exchange Agreement and became an officer and director of the Company after

the closing of the Share Exchange Agreement.

December 28, 2018, the Company’s Board of Directors authorized the issuance of one million (1,000,000) shares of its Series

A Preferred Stock to its Chief Executive Officer, Michael Mo, in the future as a measure to protect the Company from an uninvited

The rights, limitations and preferences of the Series A Preferred Stock, including the rights of its holders to cast

one hundred (100) votes for each share of Series A Preferred Stock, are set forth in the Certificate of Designation of Series A

Voting Preferred Stock, which was filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the

SEC as of June 12, 2017 and is incorporated herein by reference.

PRINCIPAL ACCOUNTING FEES AND

The following is a summary

of the fees billed or expected to be billed to us for professional services rendered with respect to the fiscal years ended December

31, 2020 and 2019:

We are not aware of any arrangement that might result in a change in control of the Company.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Other than as set forth below and compensation arrangements, including employment, and indemnification arrangements, discussed, there have been no transactions since January 1, 2020, in which the amount involved in the transaction exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets as at the year-end for the last two completed fiscal years, and to which any of our directors, executive officers or beneficial holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest.

Other Transactions

Director Independence

The Board evaluates the independence of each nominee for election as a director of our Company in accordance with the NYSE American rules.

Pursuant to these rules, a majority of our Board must be “independent directors” within the meaning of the NYSE American Rules, and all directors who sit on our Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee must also be independent directors.

Our board of directors has determined that Morio Kurosaki and Dr.

Joanna Massey are “independent,” as defined under the NYSE American rules.

PRINCIPAL ACCOUNTING FEES AND SERVICES

The following is a summary of the fees billed or expected to be billed to us for professional services rendered with respect to the fiscal years ended December 31, 2021 and 2020:

For the Fiscal Year Ended

Audit fees consist of

fees billed for services rendered by our independent auditors during the years ended December 31, 2020 and 2019 for the audit

and review of our financial statements.

Tax fees consist of fees

billed for services rendered by our tax preparers during the years ended December 31, 2020 and 2019 in connection with the preparation

and filing of our income tax returns.

Audit fees consist of fees billed for services rendered by our independent auditors during the years ended December 31, 2021 and 2020 for the audit and review of our financial statements.

Tax fees consist of fees billed for services rendered by our tax preparers during the years ended December 31, 2021 and 2020 in connection with the preparation and filing of our income tax returns.

Pre-Approval Policies

Our Board of Directors,

who acts as our audit committee, has adopted a policy governing the pre-approval by the Board of Directors of all services, audit

and non-audit, to be provided to our Company by our independent auditors.

Under the policy, the Board of Directors has pre-approved

the provision by our independent auditors of specific audit, audit related, tax and other non-audit services as being consistent

with auditor independence.

Requests or applications to provide services that require the specific pre-approval of the board of

directors must be submitted to the Board of Directors by the independent auditors, and the independent auditors must advise the

board of directors as to whether, in the independent auditor’s view, the request or application is consistent with the SEC’s

rules on auditor independence.

The Board of Directors

has considered the nature and amount of the fees billed by Marcum and believes that the provision of the services for activities

unrelated to the audit is compatible with maintaining the independence of Marcum.

EXHIBITS, FINANCIAL STATEMENT

Exchange Agreement, dated June 8, 2017 (1)

of Incorporation of the Company (2)

of the Company (2)

of Incorporation of KULR Technology Corporation (3)

and Restated Certificate of Incorporation of KULR Technology Corporation (3)

of KULR Technology Corporation (3)

of Designation of Series A Voting Preferred Stock, filed on June 6, 2017 (1)

of Amendment to the Certificate of Incorporation, effective August 30, 2018 (8)

of Designation of Series B Convertible Preferred Stock, filed on December 6, 2018 (9)

of Amendment to the Certificate of Incorporation, effective December 31, 2018 (10)

of Designation of Series C Convertible Preferred Stock, filed on August 19, 2019 (11)

of registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934*

and Development Agreement, dated April 15, 2013 (3)

Agreement, dated April 15, 2013 (3)

of Intent by and between the Company and E3 Enterprise, dated April 20, 2016 (4)

of Intent by and between the Company and KULR Technology Corporation (5)

Assignment Agreement, dated November 10, 2016 (3)

Note issued by KULR Technology Corporation, dated March 31, 2017 (6)

Note issued by KULR Technology Corporation, dated June 8, 2017 (1)

Agreement, dated March 15, 2018 (7)

Our Board of Directors, who acts as our audit committee, has adopted a policy governing the pre-approval by the Board of Directors of all services, audit and non-audit, to be provided to our Company by our independent auditors.

Under the policy, the Board of Directors has pre-approved the provision by our independent auditors of specific audit, audit related, tax and other non-audit services as being consistent with auditor independence.

Requests or applications to provide services that require the specific pre-approval of the board of directors must be submitted to the Board of Directors by the independent auditors, and the independent auditors must advise the board of directors as to whether, in the independent auditor’s view, the request or application is consistent with the SEC’s rules on auditor independence.

The Board of Directors has considered the nature and amount of the fees billed by Marcum and believes that the provision of the services for activities unrelated to the audit is compatible with maintaining the independence of Marcum.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Share Exchange Agreement, dated June 8, 2017 (1)

Articles of Incorporation of the Company (2)

Bylaws of the Company (2)

Certificate of Incorporation of KULR Technology Corporation (3)

Amended and Restated Certificate of Incorporation of KULR Technology Corporation (3)

By-laws of KULR Technology Corporation (3)

Certificate of Designation of Series A Voting Preferred Stock, filed on June 6, 2017 (1)

Certificate of Amendment to the Certificate of Incorporation, effective August 30, 2018 (8)

Certificate of Designation of Series B Convertible Preferred Stock, filed on December 6, 2018 (9)

Certificate of Amendment to the Certificate of Incorporation, effective December 31, 2018 (10)

Certificate of Designation of Series C Convertible Preferred Stock, filed on August 19, 2019 (11)

Form of Certificate of Designation for Series D Convertible Preferred Stock (20)

Description of registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934*

License and Development Agreement, dated April 15, 2013 (3)

Consulting Agreement, dated April 15, 2013 (3)

Letter of Intent by and between the Company and E3 Enterprise, dated April 20, 2016 (4)

Letter of Intent by and between the Company and KULR Technology Corporation (5)

Patent Assignment Agreement, dated November 10, 2016 (3)

Promissory Note issued by KULR Technology Corporation, dated March 31, 2017 (6)

Promissory Note issued by KULR Technology Corporation, dated June 8, 2017 (1)

Consulting Agreement, dated March 15, 2018 (7)

2018 KULR Technology Group Equity Incentive Plan (12)

Purchase Agreement dated April 2, 2019 (13)

Agreement, as supplemented, for Common Stock Offering (14)

and Termination Agreement dated July 5, 2019 (15)

of Subscription Agreement (16)

of Warrant (16)

Equity Distribution Agreement dated February 27, 2020 (17)

Purchase Agreement dated February 27, 2020 (17)

Note dated February 27, 2020 (17)

Purchase Agreement dated July 20, 2020 (18)

Note dated July 20, 2020 (18)

Securities Purchase Agreement (19)

Agency Agreement (19)

of Subsidiaries (3)

of Marcum LLP*

Certification

pursuant to 18 U.S.C.

Securities Purchase Agreement dated April 2, 2019 (13)

Subscription Agreement, as supplemented, for Common Stock Offering (14)

Rescission and Termination Agreement dated July 5, 2019 (15)

Form of Subscription Agreement (16)

Form of Warrant (16)

Standby Equity Distribution Agreement dated February 27, 2020 (17)

Note Purchase Agreement dated February 27, 2020 (17)

Promissory Note dated February 27, 2020 (17)

Note Purchase Agreement dated July 20, 2020 (18)

Promissory Note dated July 20, 2020 (18)

Form of Securities Purchase Agreement (19)

Form of Warrant (19)

Co-Placement Agency Agreement (19)

Form of Securities Purchase Agreement dated May 19.

Form of Warrant (20)

List of Subsidiaries (3)

Consent of Marcum LLP*

Certification pursuant to 18 U.S.C.

Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

Certification

pursuant to 18 U.S.C.

Certification pursuant to 18 U.S.C.

Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

Certification

pursuant to 18 U.S.C.

Certification pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

XBRL Instance*

XBRL Taxonomy Extension

Presentation*

Inline XBRL Instance*

Inline XBRL Taxonomy Extension Schema*

Inline XBRL Taxonomy Extension Calculation*

Inline XBRL Taxonomy Extension Definition*

Inline XBRL Taxonomy Extension Labels*

Inline XBRL Taxonomy Extension Presentation*

Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit)*

* Filed herewith.

Previously filed as an exhibit to Form 8-K on June 12, 2017

and incorporated herein by this reference.

Previously filed as an exhibit on Form 10-12G on January 7,

2016 (File No.:

000-55564) and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on June 19, 2017

(1) Previously filed as an exhibit to Form 8-K on June 12, 2017 and incorporated herein by this reference.

(2) Previously filed as an exhibit on Form 10-12G on January 7, 2016 (File No.:

000-55564) and incorporated herein by this reference.

(3) Previously filed as an exhibit to Form 8-K on June 19, 2017 and incorporated herein by this reference.

(4) Previously filed on Form S-1 on June 28, 2016 (File No.:

333-212272) and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on November 3, 2016

and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on April 5, 2017

and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on March 15,

2018 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on August 30,

2018 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on December 6, 2018

and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on January 7, 2019

and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on August 23, 2019

and incorporated herein by this reference.

Previously filed as an exhibit to Form S-8 on October 9, 2018

and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on April 3, 2019

and incorporated herein by this reference.

Previously filed as an exhibit to Form 10-Q on May 14, 2019

and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on July 5, 2019 and

incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on December 5, 2019

and incorporated herein by this reference.

Previously filed as an exhibit to

Form 8-K on March 4, 2020 and incorporated herein by this reference.

Previously filed as an exhibit to

Form 8-K on July 21, 2020 and incorporated herein by this reference.

Previously filed as an exhibit to

Form 8-K on December 31, 2020 and incorporated herein by this reference.

(5) Previously filed as an exhibit to Form 8-K on November 3, 2016 and incorporated herein by this reference.

(6) Previously filed as an exhibit to Form 8-K on April 5, 2017 and incorporated herein by this reference.

(7) Previously filed as an exhibit to Form 8-K on March 15, 2018 and incorporated herein by this reference.

(8) Previously filed as an exhibit to Form 8-K on August 30, 2018 and incorporated herein by this reference.

(9) Previously filed as an exhibit to Form 8-K on December 6, 2018 and incorporated herein by this reference.

(10) Previously filed as an exhibit to Form 8-K on January 7, 2019 and incorporated herein by this reference.

(11) Previously filed as an exhibit to Form 8-K on August 23, 2019 and incorporated herein by this reference.

(12) Previously filed as an exhibit to Form S-8 on October 9, 2018 and incorporated herein by this reference.

(13) Previously filed as an exhibit to Form 8-K on April 3, 2019 and incorporated herein by this reference.

(14) Previously filed as an exhibit to Form 10-Q on May 14, 2019 and incorporated herein by this reference.

(15) Previously filed as an exhibit to Form 8-K on July 5, 2019 and incorporated herein by this reference.

(16) Previously filed as an exhibit to Form 8-K on December 5, 2019 and incorporated herein by this reference.

(17) Previously filed as an exhibit to Form 8-K on March 4, 2020 and incorporated herein by this reference.

(18) Previously filed as an exhibit to Form 8-K on July 21, 2020 and incorporated herein by this reference.

(19) Previously filed as an exhibit to Form 8-K on December 31, 2020 and incorporated herein by this reference.

(20) Previously filed as an exhibit to Form 8-K on May 20, 2021 and incorporated herein by this reference.

FORM 10-K SUMMARY

Pursuant to the requirements of Section 13

or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the

undersigned, thereunto duly authorized.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

March 28, 2022

6 unchanged sentences

Chief Financial Officer

(Principal Financial and Accounting

Pursuant to the requirements of the Securities

Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities

and on the dates indicated.

(Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Michael Mo

9 unchanged sentences

Simon Westbrook

/s/ Keith Cochran

Keith Cochran

President and Chief Operating Officer

March 28, 2022

/s/ Joanna Massey

Joanna Massey

March 28, 2022

/s/ Morio Kurosaki

March 28, 2022

Morio Kurosaki

KULR TECHNOLOGY GROUP, INC.

1 unchanged sentence

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of December 31, 2021 and 2020

Consolidated Statements of Operations for the Years Ended

December 31, 2020 and 2019

Consolidated Statements of Changes in Stockholders’

Equity (Deficiency) for the Years Ended December 31, 2020 and 2019

Consolidated Statements of Cash Flows for the Years Ended

December 31, 2020 and 2019

Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020

Consolidated Statements of Changes in Stockholders’ Equity (Deficiency) for the Years Ended December 31, 2021 and 2020

Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

KULR Technology Group, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of KULR Technology Group, Inc.

and Subsidiary (the “Company”) as of December 31, 2020 and 2019, the

related consolidated statements of operations, changes in stockholders’

equity (deficiency) and cash flows for each of the

two years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of

December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the period ended

December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of KULR Technology Group, Inc.

and Subsidiary (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in stockholders’ equity (deficiency) and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility

of the Company's management.

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with

the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether

the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have,

nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required

to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the

effectiveness of the Company's internal control over financial reporting.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures

to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made

by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a

reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising

from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,

subjective, or complex judgments.

We determined that there are no critical audit matters.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

Description of the Matter

As described in Note 13 to the consolidated financial statements, during the year ended December 31, 2021, the Company entered into a Securities Purchase Agreement with an investor, pursuant to which the Company agreed to issue to the investor an aggregate of 650 shares of Series D convertible 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 “Offering”).

The Company also agreed to pay the investor a commitment fee of 1,300,000 shares of common stock at the closing of the Offering.

In addition, during the year ended December 31, 2021, the Company issued 1,500,000 shares of restricted common stock and 1,500,000 options to purchase common stock to officers of the Company.

Both grants will vest based on the achievement of certain market capitalization milestones by the Company.

We identified the valuation of the Series D convertible preferred stock and the market-based share based compensation awards to be a critical audit matter as the valuations of such instruments are complex and can require judgement on the part of management.

How We Addressed the Matter in Our Audit

Our audit procedures to address this critical audit matter included the following:

(i) we evaluated the terms and conditions of the preferred stock as outlined in the preferred stock certificate of designation, (ii) we evaluated the terms and conditions of each of the market-based awards granted to the officers, and (iii) with the assistance of our internal valuation specialists, we tested the models and inputs used by management to estimate the fair value of the preferred stock and market-based awards through a combination of reperforming the Company’s model and performing an independent model using a Monte Carlo simulation.

/s/ Marcum LLP

We have served as the Company’s auditor since 2018.

Los Angeles, CA

2 unchanged sentences

AND SUBSIDIARY

BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS

Current Assets:

Accounts receivable

Prepaid expenses and other current

Prepaid expenses and other current assets

Total Current Assets

Property and equipment, net

Liabilities and Stockholders' Equity (Deficiency)

Vendor deposits

Security deposits

Intangible assets, net

Right of use asset

Liabilities and Stockholders’ Equity

Current Liabilities:

Accounts payable

Accounts payable - related party

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities - related

Notes payable, net of debt discount of $ 0 and $ 128,198 at December 31, 2021 and 2020, respectively

Accrued issuable equity

Notes payable, net of debt discount

of $128,198 and $0 at December 31, 2020 and 2019, respectively

Loans payable, current portion

Lease liability, current portion

Loan payable, current portion

Deferred revenue

Total Current Liabilities

Loans payable, non-current portion

Lease liability, non-current portion

Loan payable, non-current portion

Total Liabilities

Commitments and contingencies ( Note 14)

Stockholders' Equity (Deficiency):

Stockholders' Equity

Preferred stock, $ 0.0001 par value, 20,000,000 shares authorized;

Series A Preferred Stock, 1,000,000

shares designated;

none issued and outstanding at December 31, 2020 and 2019

Series B Convertible Preferred Stock,

31,000 shares designated;

13,972 and 14,487 shares issued and outstanding and liquidation preference of $13,972 and $14,487

at December 31, 2020 and 2019, respectively

Series C Preferred Stock, 400 shares

0.00 and 24.01 shares issued and outstanding and liquidation preference of $0 and $240,100 at December 31, 2020

and 2019, respectively

Series A Preferred Stock, 1,000,000 shares designated;

none issued and outstanding at December 31, 2021 and 2020, respectively

Series B Convertible Preferred Stock, 31,000 shares designated;

0 and 13,972 shares issued and outstanding and liquidation preference of $ 0 and $ 13,972 at December 31, 2021 and 2020, respectively

Series C Preferred Stock, 400 shares designated;

none issued and outstanding at December 31, 2021 and 2020, respectively

Series D Preferred Stock, 650 shares designated;

none issued and outstanding at December 31, 2021 and 2020, respectively

Common stock, $ 0.0001 par value, 500,000,000 shares authorized;

89,908,600 and 81,071,831 shares issued

and outstanding at December 31, 2020 and 2019, respectively

104,792,072 and 89,908,600 shares issued and outstanding at December 31, 2021 and 2020, respectively

Additional paid-in capital

1 unchanged sentence

( 23,157,559 )

Total Stockholders' Equity (Deficiency)

Total Liabilities and Stockholders'

Equity (Deficiency)

The accompanying notes are an

integral part of these consolidated financial statements.

TECHNOLOGY GROUP, INC.

( 11,246,408 )

Total Stockholders' Equity

Total Liabilities and Stockholders' Equity

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

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS

OF OPERATIONS

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended

5 unchanged sentences

Loss From Operations

Other (Expenses) Income

( 11,513,415 )

( 2,340,432 )

Other Expense

Interest expense, net

Debt redemption costs

Amortization of debt discount

Change in fair value of accrued issuable

Total Other Expenses

Deemed dividend

to Series C Preferred Stockholders

Net Loss Attributable

to Common Stockholders

Change in fair value of accrued issuable equity

Loss on foreign currency transactions

Total Other Expense, net

( 11,911,151 )

( 2,850,096 )

Net Loss Per Share

- Basic and Diluted

Weighted Average Number of Common Shares Outstanding

- Basic and Diluted

The accompanying notes are an

integral part of these consolidated financial statements.

TECHNOLOGY GROUP, INC.

Deemed dividend to Series C preferred stockholders

Deemed dividend to Series D preferred stockholders

( 2,624,326 )

Net Loss Attributable to Common Stockholders

( 14,535,477 )

( 2,851,787 )

Net Loss Per Share - Basic and Diluted

Weighted Average Number of Common Shares Outstanding - Basic and Diluted

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

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS

OF CHANGES IN STOCKHOLDERS’

(DEFICIENCY) EQUITY

FOR THE YEARS ENDED DECEMBER

31, 2020 AND 2019

B Convertible

C Convertible

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIENCY) EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Series B Convertible

Series C Convertible

Series D Convertible

Stockholders’

Preferred Stock

Balance - January 1, 2020

( 8,396,312 )

Common stock and warrants issued for cash, net of issuance costs [1]

Common stock issued for the commitment fee pursuant to the SEDA agreement

Common stock issued pursuant to the SEDA agreement:

For cash, net of issuance costs [2]

In satisfaction of notes payable

Common stock issued upon conversion of Series B Convertible Preferred Stock

Common stock issued upon conversion of Series C Convertible Preferred Stock

Stock-based compensation:

Common stock issued for cash

Common stock issued upon conversion of Series

B Convertible Preferred Stock

Series C Convertible Preferred Stock

and warrants issued for cash, net of issuance costs [1]

Forgiveness of accrued expenses by related party

( 2,850,096 )

Balance - December 31, 2020

Common stock and warrants issued for cash, net

of issuance costs [2]

Common stock issued for the commitment fee pursuant

to the SEDA agreement

Common stock issued pursuant to the SEDA agreement:

For cash, net of issuance

In satisfaction of

notes payable

Common stock issued upon conversion of Series

B Convertible Preferred Stock

Common stock issued upon conversion of Series

C Convertible Preferred Stock

( 11,246,408 )

Common stock issued upon conversion of Series B Convertible Preferred Stock

Issuance of Series D Convertible Preferred Stock, common stock and warrants for cash [3]

Common stock issued upon the conversion of Series D Convertible Preferred Stock

Common stock issued upon the exercise of warrants

Common stock issued upon the exercise of options

Common stock issued as partial consideration for intangible asset

Stock-based compensation:

Common stock issued for services

Restricted common stock issued

Restricted common stock cancelled

Amortization of restricted common stock

Amortization of stock options

Amortization of market-based award

( 11,911,151 )

Balance - December 31, 2021

[1] Includes gross

proceeds of $216,000, less cash issuance costs of $62,000.

gross proceeds of $8,000,001, less issuance costs of $730,152 ($705,300 of cash and $24,852 of non-cash).

represents gross proceeds of $1,501,696 less $78,259 issuance costs.

The accompanying notes are an

integral part of these consolidated financial statements.

TECHNOLOGY GROUP, INC.

( 23,157,559 )

[1] Includes gross proceeds of $ 8,000,001 , less issuance costs of $ 730,152 ( $ 705,300 of cash and $ 24,852 of non-cash).

[2] Amount represents gross proceeds of $ 1,501,696 less $ 78,259 issuance costs.

[3] Represents $ 6,500,000 of relative fair value of preferred stock issued, net of cash issuance costs of $ 365,000 .

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

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOW

For the Years Ended

2 unchanged sentences

( 2,850,096 )

Adjustments to reconcile net loss to net cash used in operating

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of debt discount

Depreciation expense

Non-cash lease expense

Depreciation and amortization expense

Bad debt expense

Write-down of inventory

Change in fair value of accrued issuable equity

3 unchanged sentences

Prepaid expenses and other current assets

Security deposits

Accounts payable

Accounts payable - related party

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities - related

Lease liability

Deferred revenue

Total Adjustments

Net Cash Used In

Operating Activities

Net Cash Used In Operating Activities

( 6,805,674 )

( 2,730,253 )

Cash Flows From Investing Activities:

Purchase of property and equipment

Net Cash Used In

Investing Activities

Vendor deposits for the purchase of property and equipment

( 2,153,950 )

Purchases of property and equipment

Purchase of intangible asset

Net Cash Used In Investing Activities

( 2,737,235 )

Cash Flows from Financing Activities:

Proceeds from Paycheck Protection Program loan

Proceeds from notes payable

Payment of financing costs

Repayments of notes payable

( 2,450,000 )

Payment of debt issuance costs

Proceeds from Paycheck Protection Program loan

Proceeds from sale of Series C Convertible Preferred Stock

and warrants [1]

Payment of offering costs in connection with sale of Series

C Convertible

Preferred Stock and warrants

Proceeds from sale of common stock issued pursuant to the

SEDA agreement [2]

Payment of offering costs in connection with the SEDA agreement

Proceeds from the exercise of options

Proceeds from the exercise of warrants

Proceeds from sale of common stock and warrants

Payment of offering costs in connection

with sale of common stock and warrants

Net Cash Provided

By Financing Activities

Net Increase (Decrease) In Cash

Payment of offering costs in connection with sale of common stock and warrants

Proceeds from sale of common stock issued pursuant to the SEDA agreement [1]

Proceeds from sale of Series D Convertible Preferred Stock, common stock and warrants

Net Cash Provided By Financing Activities

Net Increase In Cash

Cash - Beginning of Period

Cash - End of Period

[1] Includes gross

proceeds of $216,000 less withheld cash issuance costs of $32,000.

[2] Includes gross proceeds of $2,292,695 less $791,000

withheld by the investor to pay down a portion of the notes payable held by the same

The accompanying

notes are an integral part of these consolidated financial statements.

KULR TECHNOLOGY GROUP,

[1] Includes gross proceeds of $ 2,292,696 less $ 791,000 withheld by the investor to pay down a portion of the notes payable held by the same investor.

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

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS

OF CASH FLOWS, CONTINUED

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

For the Years Ended

Supplemental Disclosures of Cash Flow Information:

Cash paid during the year for:

Cash paid during the period for:

Non-cash investing and financing activities:

Common stock issued for repayment

of note payable

Common stock issued upon conversion

of Series B Convertible Preferred Stock

Common stock issued upon conversion

of Series C Convertible Preferred Stock

Forgiveness of accrued expenses by

related party

Original issuance discount on notes

Value of common stock issued as a

commitment fee for the SEDA agreement

Disposal of fully depreciated property

and equipment

The accompanying

notes are an integral part of these consolidated financial statements.

Right of use asset for lease liability

Original issuance discount on notes payable

Disposal of fully depreciated property and equipment

Common stock issued for repayment of notes payable

Beneficial conversion feature on Series D Convertible Preferred Stock

Common stock issued as a commitment fee for the SEDA agreement

Common stock issued upon the conversion of Series B Convertible Preferred Stock

Common stock issued upon the conversion of Series C Convertible Preferred Stock

Common stock issued upon the conversion of Series D Convertible Preferred Stock

Common stock issued in satisfaction of accrued issuable equity

Common shares issued as partial consideration for intangible asset

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

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

1 BUSINESS ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTANTIES

ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTANTIES

Organization and Operations

Technology Group, Inc.

was incorporated on December 11, 2015 under the laws of the State of Delaware as KT High-Tech Marketing,

KULR Technology Group, Inc.

was incorporated on December 11, 2015 under the laws of the State of Delaware as KT High-Tech Marketing, Inc.

Effective August 30, 2018, KT High-Tech Marketing, Inc.

changed its name to KULR Technology Group, Inc.

KULR Technology Group, Inc., through its wholly-owned

subsidiary, KULR Technology Corporation (collectively referred to as “KULR” or the “Company”), develops

and commercializes high-performance thermal management technologies for electronics, batteries, and other components across a

range of applications.

Currently, the Company is focused on targeting both, high performance aerospace and Department of Defense

(“DOD”) applications, such as satellite communications, directed energy system and hypersonic vehicle, and applying

them to mass market commercial applications, such as lithium-ion battery energy storage, electrical vehicle, 5G communication,

cloud computer infrastructure, consumer and industrial devices.

KULR Technology Group, Inc., through its wholly-owned subsidiary, KULR Technology Corporation (collectively referred to as “KULR” or the “Company”), develops and commercializes high-performance thermal management technologies for electronics, batteries, and other components across a range of applications.

Currently, the Company is focused on targeting both, high performance aerospace and Department of Defense (“DOD”) applications, such as satellite communications, directed energy systems and hypersonic vehicles, and applying them to mass market commercial applications, such as lithium-ion battery energy storage, electric vehicles, 5G communication, cloud computer infrastructure, consumer and industrial devices.

Risks and Uncertainties

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.

Our business is dependent on

developing new markets and new products to be used on a global basis, thus restrictions on travel led to reduced demand for our

products and interruptions to supply chains.

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

NOTE 2 SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of

The consolidated financial statements of the

Company include the accounts of KULR Technology Group, Inc.

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.

The full extent of the future impact of COVID-19 on the Company’s operations and financial condition is uncertain.

Accordingly, COVID-19 could have a material adverse effect on the Company’s business, results of operations, financial condition and prospects during 2022 and beyond, including the demand for its products, interruptions to supply chains, ability to maintain regular research and development and manufacturing schedules as well as the capability to meet customer demands in a timely manner.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The consolidated financial statements of the Company include the accounts of KULR Technology Group, Inc.

and its wholly-owned subsidiary, KULR Technology Corporation.

significant intercompany transactions have been eliminated in the consolidation.

The consolidated financial statements have been

prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.

The Company has previously disclosed that there was substantial

doubt about its ability to continue as a going concern as a result of its past working capital balances, operating losses, and

cash used in operations.

During the year ended December 31, 2020, the Company raised aggregate gross proceeds of approximately

$8.0 million, $1.5 million, and $3.9 million in connection with the sale of common stock and warrants in a public offering, the

sale of common stock issued pursuant to a Standby Equity Distribution Agreement, and the issuances of notes payable, respectively.

As of December 31, 2020, the Company had cash and working capital of approximately $8.9 million and $6.2 million, respectively.

As a result of these capital raising efforts, the Company has alleviated the previously reported substantial doubt about its ability

to continue as a going concern.

For the year ended December 31, 2020, the Company incurred a net loss of approximately $2.9 million

and used cash in operations of approximately $2.7 million.

While the Company anticipates it will continue to incur operating losses

and use cash in operating activities for the foreseeable future, the Company believes that its current working capital is sufficient

in comparison to its anticipated cash usage for a period of at least the next twelve months subsequent to the filing date of these

financial statements.

Use of Estimates

Preparation of financial statements in conformity

GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities,

revenues and expenses, together with amounts disclosed in the related notes to the financial statements.

The Company’s significant

estimates used in these financial statements include, but are not limited to, fair value calculations for equity securities, stock-based

compensation, the collectability of receivables, inventory valuations, the recoverability and useful lives of long-lived assets,

and the valuation allowance related to the Company’s deferred tax assets.

Certain of the Company’s estimates could

be affected by external conditions, including those unique to the Company and general economic conditions.

It is possible that

these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those

See Note 2 – Summary of Significant

Accounting Policies, Stock-Based Compensation for additional discussion of the use of estimates in estimating the fair value of

the Company’s common stock.

All significant intercompany transactions have been eliminated in the consolidation.

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.

During the year ended December 31, 2021, the Company raised gross proceeds of $ 6,500,000 in connection with the sale of preferred stock, common stock and warrants, and raised proceeds of $ 11,841,070 in connection with the exercise of options and warrants to purchase common stock.

During the year ended December 31, 2021, the Company repaid outstanding notes payable in the amount of $ 2,450,000 and paid financing costs in the amount of $ 365,000 .

As of December 31, 2021, the Company had cash of $ 14,863,301 and working capital of $ 13,302,935 .

While the Company anticipates it will continue to incur operating losses and use cash in operating activities for the foreseeable future, the Company believes that its current working capital is sufficient in comparison to its anticipated cash usage for a period of at least twelve months subsequent to the filing date of these financial statements.

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Use of Estimates

Preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements.

The Company’s significant estimates used in these financial statements include, but are not limited to, fair value calculations for equity securities, stock-based compensation and the valuation allowance related to the Company’s deferred tax assets.

Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions.

It is possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates.

See Note 2 – Summary of Significant Accounting Policies, Stock-Based Compensation for additional discussion of the use of estimates in estimating the fair value of the Company’s common stock.

Concentrations of Credit Risk

Financial instruments that potentially subject

the Company to significant concentrations of credit risk consisted primarily of cash, accounts receivable, revenue and accounts

Financial instruments that potentially subject the Company to significant concentrations of credit risk consisted primarily of cash, accounts receivable, revenue and accounts payable.

Cash Concentrations

A significant portion of the Company’s

cash is held at one major financial institution.

A significant portion of the Company’s cash is held at one major financial institution.

The Company has not experienced any losses in such accounts.

Cash held in US

bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each

There was an uninsured balance of $8,513,010 as of December 31, 2020 and no uninsured cash balances as of December

Cash held in US bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 at each institution.

There were uninsured balances of $ 14,363,301 and $ 8,513,010 as of December 31, 2021 and 2020, respectively.

Customer and Revenue Concentrations

The Company had certain customers whose revenue

individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually

represented 10% or more of the Company’s total accounts receivable, as follows:

Accounts Receivable

The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows:

Account Receivables

For the Years Ended

1 unchanged sentence

* Less than 10%

There is no assurance the Company will continue

to receive significant revenues from any of these customers.

Any reduction or delay in operating activity from any of the Company’s

significant customers, or a delay or default in payment by any significant customer, or termination of agreements with significant

customers, could materially harm the Company’s business and prospects.

As a result of the Company’s significant customer

concentrations, its gross profit and results from operations could fluctuate significantly due to changes in political, environmental,

or economic conditions, or the loss of, reduction of business from, or less favorable terms with any of the Company’s significant

Accounts Receivable

Accounts receivable are carried at their contractual

amounts, less an estimate for uncollectible amounts.

As of December 31, 2020 and 2019, no allowances for uncollectable amounts

were determined to be necessary.

Management estimates the allowance for bad debts based on existing economic conditions, the financial

conditions of the customers, and the amount and age of past due accounts.

Receivables are considered past due if full payment

is not received by the contractual due date.

Past due accounts are generally written off against the allowance for bad debts only

after all collection attempts have been exhausted.

There is no assurance the Company will continue to receive significant revenues from any of these customers.

Any reduction or delay in operating activity from any of the Company’s significant customers, or a delay or default in payment by any significant customer, or termination of agreements with significant customers, could materially harm the Company’s business and prospects.

As a result of the Company’s significant customer concentrations, its gross profit and results from operations could fluctuate significantly due to changes in political, environmental, or economic conditions, or the loss of, reduction of business from, or less favorable terms with any of the Company’s significant customers.

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Inventory is comprised of carbon fiber

velvet (“CFV”) thermal interface solutions and internal short circuit batteries, which are available for sale.

are stated at the lower of cost or net realizable value.

Vendor Concentrations

Vendor concentrations are as follows for the years ended December 31, 2021 and 2020:

For the Years Ended

* Less than 10%

Accounts Receivable

Accounts receivable are carried at their contractual amounts, less an estimate for uncollectible amounts.

As of December 31, 2021 and 2020, no allowances for uncollectible amounts were determined to be necessary.

Management estimates the allowance for bad debts based on existing economic conditions, the financial conditions of the customers, and the amount and age of past due accounts.

Receivables are considered past due if full payment is not received by the contractual due date.

Past due accounts are generally written off against the allowance for bad debts only after all collection attempts have been exhausted.

Inventory is comprised of carbon fiber velvet (“CFV”) thermal interface solutions and internal short circuit batteries, which are available for sale.

Inventories are stated at the lower of cost or net realizable value.

Cost is determined by the first-in, first-out method.

The cost of inventory

that is sold to third parties is included within cost of sales and the cost of inventory that is given as samples is included within

operating expenses.

The cost of inventory that is sold to third parties is included within cost of sales and the cost of inventory that is given as samples is included within operating expenses.

The Company periodically reviews for slow-moving, excess or obsolete inventories.

Products that are determined

to be obsolete, if any, are written down to net realizable value.

As of December 31, 2020, and 2019, the Company’s inventory

was comprised solely of finished goods.

Products that are determined to be obsolete, if any, are written down to net realizable value.

As of December 31, 2021, and 2020, the Company’s inventory was comprised solely of finished goods.

Property and Equipment

Property and equipment are stated at cost,

net of accumulated depreciation which is recorded commencing at the in-service date using the straight-line method at rates sufficient

to charge the cost of depreciable assets to operations over their estimated useful lives, which range from 3 to 7 years.

improvements are amortized over the shorter of (a) the useful life of the asset;

Property and equipment are stated at cost, net of accumulated depreciation which is recorded commencing at the in-service date using the straight-line method at rates sufficient to charge the cost of depreciable assets to operations over their estimated useful lives, which range from 3 to 7 years (see Note 4 – Property and Equipment for additional details).

Leasehold improvements are amortized over the shorter of (a) the useful life of the asset;

or (b) the remaining lease term.

and repairs are charged to operations as incurred.

The Company capitalizes cost attributable to the betterment of property and

equipment when such betterment extends the useful life of the assets.

The Company reviews for the impairment of

long-lived assets annually and whenever events or changes in circumstances indicate that the carrying amount of an asset may not

be recoverable.

An impairment loss would be recognized when the present value of estimated future cash flows expected to result

from the use of the asset and its eventual disposition is less than its carrying value.

Fair Value of Financial Instruments

The Company measures the fair value of financial

assets and liabilities based on the guidance of Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements

and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and

expands disclosures about fair value measurements.

ASC 820 defines fair value as the exchange

price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous

market for the asset or liability in an orderly transaction between market participants on the measurement date.

establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of

unobservable inputs when measuring fair value.

ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets

for identical assets or liabilities

Level 2 — quoted prices for similar

assets and liabilities in active markets or inputs that are observable

Level 3 — inputs that are unobservable

(for example, cash flow modeling inputs based on assumptions)

The carrying amounts of the Company’s

financial instruments, such as cash, accounts receivable, accrued expenses and other current liabilities, notes payable and loans

payable approximate fair values due to the short-term nature of these instruments.

Maintenance and repairs are charged to operations as incurred.

The Company capitalizes cost attributable to the betterment of property and equipment when such betterment extends the useful life of the assets.

The Company reviews for the impairment of long-lived assets annually and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

An impairment loss would be recognized when undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying value.

Intangible assets are stated at fair value as of the date acquired, less accumulated amortization.

Amortization is calculated based on the estimated useful lives of the assets, which were determined to be 20 years , using the straight-line method or another method that more fairly represents the utilization of the assets.

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

The Company periodically evaluates the remaining useful lives of our intangible assets to determine whether events or circumstances warrant a revision to the remaining periods of amortization.

In the event that the estimate of an intangible asset’s remaining useful life has changed, the remaining carrying amount of the intangible asset is amortized prospectively over that revised remaining useful life.

If it is determined that an intangible asset has an indefinite useful life, that intangible asset would be subject to impairment testing annually or whenever events or circumstances indicate that its carrying value may not, based on future undiscounted cash flows or market factors, be recoverable.

An impairment loss, the recorded amount of which would be based on the fair value of the intangible asset at the measurement date, would be recorded in the period in which the impairment determination was made.

Fair Value of Financial Instruments

The Company measures the fair value of financial assets and liabilities based on the guidance of Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

The carrying amounts of the Company’s financial instruments, such as cash, accounts receivable, accrued expenses and other current liabilities, notes payable and loans payable approximate fair values due to the short-term nature of these instruments.

Preferred Stock

The Company applies the accounting standards

for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock.

The Company’s

Preferred shares are classified as stockholders’ equity because they are not subject to mandatory redemption, which would

result in liability classified instruments measured at fair value and are not conditionally redeemable preferred shares (including

preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon

the occurrence of uncertain events not solely within the Company’s control) which would result in temporary equity classified

The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock.

The Company’s preferred shares are classified as stockholders’ equity because they are not subject to mandatory redemption, which would result in liability classified instruments measured at fair value, and because they are not conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) which would result in temporary equity classified instruments.

Convertible Instruments

The Company evaluates its convertible instruments

to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately

accounted for in accordance with Topic 815 of the FASB ASC.

The accounting treatment of derivative financial instruments requires

that the Company record embedded conversion options and any related freestanding instruments at their fair values as of the inception

date of the agreement and at fair value as of each subsequent balance sheet date.

Any change in fair value is recorded as non-operating,

non-cash income or expense for each reporting period at each balance sheet date.

The Company reassesses the classification of

its derivative instruments at each balance sheet date.

If the classification changes as a result of events during the period,

the contract is reclassified as of the date of the event that caused the reclassification.

Embedded conversion options and any

related freestanding instruments are recorded as a discount to the host instrument.

If the instrument is determined not to be

a derivative liability, the Company then evaluates for the existence of a beneficial conversion feature by comparing the market

price of the Company’s common stock as of the commitment date to the effective conversion price of the instrument.

Accrued Issuable Equity

The Company records accrued issuable equity

when it is contractually obligated to issue shares and there has been a delay in the issuance of such shares.

Accrued issuable

equity is recorded and carried at fair value with changes in its fair value recognized in the Company’s consolidated statements

of operations.

Once the underlying shares of common stock are issued, the accrued issuable equity is reclassified as of the share

issuance date at the then current fair market value of the common stock.

Offering Costs

Deferred offering costs, which primarily consist

of direct, incremental professional fees incurred in connection with a debt or equity financing, are capitalized as non-current

assets on the balance sheet.

Once the financing closes, the Company reclassifies such costs as either discounts to notes payable

or as a reduction of proceeds received from equity transactions so that such costs are recorded as a reduction of additional paid-in

If the completion of a contemplated financing was deemed to be no longer probable, the related deferred offering costs

would be charged to general and administrative expense in the consolidated financial statements.

Revenue Recognition

The Company recognizes revenue in accordance

with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC

The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods

or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange

for those goods or services.

ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible

more judgment and estimates may be required within the revenue recognition process, including identifying performance obligations

in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction

price to each separate performance obligation.

The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with Topic 815 of the FASB ASC.

The accounting treatment of derivative financial instruments requires that the Company record embedded conversion options and any related freestanding instruments at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date.

Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date.

The Company reassesses the classification of its derivative instruments at each balance sheet date.

If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification.

Embedded conversion options and any related freestanding instruments are recorded as a discount to the host instrument.

If the instrument is determined not to be a derivative liability, the Company then evaluates for the existence of a beneficial conversion feature by comparing the market price of the Company’s common stock as of the commitment date to the effective conversion price of the instrument.

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

The following five steps are applied to achieve

that core principle:

Accrued Issuable Equity

The Company records accrued issuable equity when it is contractually obligated to issue shares and there has been a delay in the issuance of such shares.

Accrued issuable equity is recorded and carried at fair value with changes in its fair value recognized in the Company’s consolidated statements of operations.

Once the underlying shares of common stock are issued, the accrued issuable equity is reclassified as of the share issuance date at the then current fair market value of the common stock.

Offering Costs

Offering costs, which primarily consist of direct, incremental professional fees incurred in connection with a debt or equity financing, are capitalized as deferred offering costs (a non-current asset) on the balance sheet.

Once the financing closes, the Company reclassifies such costs as either discounts to notes payable or as a reduction of proceeds received from equity transactions so that such costs are recorded as a reduction of additional paid-in capital.

If the completion of a contemplated financing was deemed to be no longer probable, the related deferred offering costs would be charged to general and administrative expense in the consolidated financial statements.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”).

The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.

ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation.

The following five steps are applied to achieve that core principle:

Identify the contract with the customer;

1 unchanged sentence

Determine the transaction price;

Allocate the transaction price to the performance

obligations in the contract;

Recognize revenue when the company satisfies

a performance obligation.

The Company recognizes revenue primarily from

the following different types of contracts:

Product sales – Revenue is recognized at the point

in time the customer obtains control of the goods and the Company satisfies its performance obligation, which is generally

at the time it ships the product to the customer.

Contract services – Revenue is recognized at the

point in time that the Company satisfies its performance obligation under the contract, which is generally at the time the

services are fulfilled and/or accepted by the customer.

The following table summarizes the Company’s revenue

recognized in its consolidated statements of operations:

Allocate the transaction price to the performance obligations in the contract;

Recognize revenue when the company satisfies a performance obligation.

The Company recognizes revenue primarily from the following different types of contracts:

● Product sales – Revenue is recognized at the point in time the customer obtains control of the goods and the Company satisfies its performance obligation, which is generally at the time it ships the product to the customer.

● Contract services – Revenue is recognized at the point in time that the Company satisfies its performance obligation under the contract, which is generally at the time the services are fulfilled and/or accepted by the customer.

The following table summarizes the Company’s revenue recognized in its consolidated statements of operations:

For the Years Ended

2 unchanged sentences

Total revenue

As of December 31, 2020 and 2019, the Company

had $ 20,000 and $15,000 of deferred revenue, respectively, from contracts with customers.

The contract liabilities represent payments received from customers for which the Company had not yet satisfied its performance

obligation under the contract, or the customers have not officially accepted the goods or services provided under the contract.

During the years ended December 31, 2020, and 2019, the Company recognized $15,000 and $0, respectively, of revenues that were

included in deferred revenue in previous periods.

As of December 31, 2020 and 2019, the Company

recorded $31,212 and $0, respectively, of deferred labor costs, which is included in prepaid expenses and other current assets

in the Company’s consolidated balance sheets.

Deferred labor costs represented costs to fulfill the Company's contract service

The Company will recognize the deferred labor costs as cost of revenues at the point in time that the Company satisfies

its performance obligation under the respective contract, which is generally at the time the services are fulfilled and/or accepted

by the customer.

Shipping and Handling Costs

Shipping and handling costs incurred by the

Company as well as fees received by customers for products shipped to customers are included in selling, general and administrative

expenses in the consolidated statements of operations.

For the years ended December 31, 2020 and 2019, shipping and handling costs

amounted to $18,887 and $3,172, respectively.

Research and Development

Research and development include expenses

incurred in connection with the R&D of our CFV thermal management solution and non-cash stock-based compensation expenses.

Research and development expenses are charged to operations as incurred.

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

As of December 31, 2021 and 2020, the Company had $ 132,303 and $ 20,000 of deferred revenue, respectively, from contracts with customers.

The contract liabilities represent payments received from customers for which the Company had not yet satisfied its performance obligation under the contract, or the customers have not officially accepted the goods or services provided under the contract.

During the year ended December 31, 2021, the Company did no t recognize any revenues that were included in deferred revenue in a previous period.

During the year ended 2020, the Company recognized $ 15,000 of revenues that were included in deferred revenue in previous periods.

As of December 31, 2021 and 2020, the Company had $ 84,324 and $ 31,212 , respectively, of deferred labor costs, which is included in prepaid expenses and other current assets in the Company’s consolidated balance sheets.

Deferred labor costs represent costs to fulfill the Company’s contract service revenue.

The Company will recognize the deferred labor costs as cost of revenues at the point in time that the Company satisfies its performance obligation under the respective contract, which is generally at the time the services are fulfilled and/or accepted by the customer.

Shipping and Handling Costs

Amounts billed to a customer in a sales transaction related to shipping and handling are recorded as revenue.

Costs incurred for shipping and handling are included as cost of revenues on the accompanying consolidated statements of operations.

As of December 31, 2021, the Company reclassed $ 18,887 of shipping and handling costs from selling, general and administrative expense to cost of revenue for the year ended December 31, 2020.

Research and Development

Research and development include expenses incurred in connection with the research and development of our CFV thermal management solution, high-areal-capacity battery electrodes, 3D engineering for a rechargeable battery and non-cash stock-based compensation expenses.

Research and development expenses are charged to operations as incurred.

Advertising Costs

Advertising costs are expensed in the period

Advertising costs charged to operations for the years ended December 31, 2020 and 2019 were $123,846 and $49,300, respectively,

and are included in selling, general and administrative in the consolidated statements of operations.

Advertising costs are expensed in the period incurred.

Advertising costs charged to operations for the years ended December 31, 2021 and 2020 were $ 145,025 and $ 123,846 , respectively, and are included in selling, general and administrative in the consolidated statements of operations.

Stock-Based Compensation

The Company measures the cost of services

received in exchange for an award of equity instruments based on the fair value of the award since the fair value of the award

is more readily determinable than the value of the services.

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award since the fair value of the award is more readily determinable than the value of the services.

The fair value of the award is measured on the grant date.

value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually

the vesting period.

The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period.

Upon the exercise of an award, the Company issues new shares of common stock out of its authorized shares.

During the year ended December 31, 2019

and the period from January 1, 2020 through June 17, 2020, it was determined that the Company’s common stock had a fair value

of $0.66 per share, which was based on a number of factors, such as the examination of the sales of common stock for cash and the

convertible preferred stock for cash etc.

All of the shares of common stock sold during the year ended December 31, 2019 were sold

at $0.66 per share, therefore the value of the equity instruments issued during the stated periods were determined using a common

stock fair value of $0.66 per share.

For the period from June 18, 2020 through

December 31, 2020, the Company estimated the fair value of the awards granted in this period to be based on the market value of

its freely tradable common stock as reported on the OTCQB market.

The Company determined the freely tradable common stock price

became a reliable and accurate representation of its fair market value during this period as a result of increased share volume

and dollar trading volume.

During the period from January 1, 2020 through June 17, 2020, it was determined that the Company’s common stock had a fair value of $ 0.66 per share, which was based on a number of factors, such as the examination of the sales of common stock for cash and the convertible preferred stock for cash etc.

For the period from June 18, 2020 through December 31, 2021, the Company estimated the fair value of the awards granted in this period based on the market value of its freely tradable common stock as reported on the OTCQB market.

The Company determined the freely tradable common stock price became a reliable and accurate representation of its fair market value during this period as a result of increased share volume and dollar trading volume.

Net Loss Per Common Share

Basic net loss per common share is computed

by dividing net loss by the weighted average number of vested common shares outstanding during the period.

Diluted net loss per

common share is computed by dividing net loss by the weighted average number of common and dilutive common-equivalent shares outstanding

during each period.

Dilutive common-equivalent shares consist of shares of non-vested restricted stock, if not anti-dilutive.

The following shares were excluded from the

calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:

For the Years Ended

Series B Convertible Preferred Stock

Series C Convertible Preferred Stock

Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period.

Diluted net loss per common share is computed by dividing net loss by the weighted average number of common and dilutive common-equivalent shares outstanding during each period.

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:

Series B Convertible Preferred Stock

Unvested restricted stock

Unvested market -based equity awards

Operating Leases

The Company leases

properties under operating leases.

For leases in effect upon adoption of Accounting Standards Update (“ASU”) 2016-02,

“Leases (Topic 842)” at January 1, 2019 and for any leases commencing thereafter, the Company recognizes a liability

to make lease payments, the “lease liability”, and an asset representing the right to use the underlying asset during

the lease term, the “right-of-use asset”.

The lease liability is measured at the present value of the remaining lease

payments, discounted at the Company’s incremental borrowing rate.

The right-of-use asset is measured at the amount of the

lease liability adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if

the lease payments are uneven throughout the lease term, any unamortized initial direct costs, and any impairment of the right-of-use-asset.

Operating lease expense consists of a single lease cost calculated so that the remaining cost of the lease is allocated over the

remaining lease term on a straight-line basis, variable lease payments not included in the lease liability, and any impairment

of the right-of-use asset.

The Company evaluated their operating lease

and elected to apply the short-term lease measurement and recognition exemption in which the right of use asset and lease liability

are not recognized for short-term leases.

The adoption of this pronouncement did not have a material impact on the Company’s

consolidated financial statements.

The Company recognizes deferred tax assets

and liabilities for the expected future tax consequences of items that have been included or excluded in the financial statements

or tax returns.

Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets

and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in

effect for the years in which the temporary differences are expected to reverse.

The Company utilizes a recognition threshold

and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in

a tax return.

Management has evaluated and concluded that

there were no material uncertain tax positions requiring recognition in the Company’s financial statements as of December

31, 2020 and 2019.

The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of

the reporting date.

The Company’s policy is to classify

assessments, if any, for tax related interest as interest expense and penalties as selling, general and administrative expenses

in the consolidated statements of operations.

The Company leases properties under operating leases.

For leases in effect upon adoption of Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” at January 1, 2020 and for any leases commencing thereafter, the Company recognizes a liability to make lease payments, the “lease liability”, and an asset representing the right to use the underlying asset during the lease term, the “right-of-use asset”.

The lease liability is measured at the present value of the remaining lease payments, discounted at the Company's incremental borrowing rate.

The right-of-use asset is measured at the amount of the lease liability adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, any unamortized initial direct costs, and any impairment of the right-of-use-asset.

Operating lease expense consists of a single lease cost calculated so that the remaining cost of the lease is allocated over the remaining lease term on a straight-line basis, variable lease payments not included in the lease liability, and any impairment of the right-of-use asset.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in the financial statements or tax returns.

Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse.

The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s financial statements as of December 31, 2021 and 2020.

The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date.

The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as selling, general and administrative expenses in the consolidated statements of operations.

Reclassifications

Certain prior period balances have been reclassified

in order to conform to the current period presentation.

These reclassifications have no effect on previously reported results

of operations or loss per share.

Certain prior period balances have been reclassified in order to conform to the current period presentation.

These reclassifications have no effect on previously reported results of operations or loss per share.

Subsequent Events

The Company has evaluated subsequent events

through the date which the consolidated financial statements were issued.

Based upon the evaluation, the Company did not identify

any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial

statements, except as disclosed.

The Company has evaluated subsequent events through the date which the consolidated financial statements were issued.

Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements, except as disclosed.

KULR TECHNOLOGY GROUP, INC.

3 unchanged sentences

Recently Issued Accounting Pronouncements

In November 2019, the FASB issued ASU No.

2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses (“ASU 2019-11”).

2019-11 is an accounting pronouncement that amends ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.” The amendments update guidance on reporting credit losses for financial

These amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit

exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right

to receive cash.

The amendments in this ASU are effective, as revised by ASU 2019-10, for annual reporting periods beginning after

December 15, 2022, as extended, including interim periods within those fiscal years.

All entities may adopt the amendments through

a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is

effective (that is, a modified-retrospective approach).

The Company is currently evaluating ASU 2019-11 and its impact on its

consolidated financial statements and financial statement disclosures.

In December 2019, the FASB issued ASU 2019-12,

“Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects

related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also

clarifies and amends existing guidance to improve consistent application.

ASU 2019-12 is effective for the Company beginning in

fiscal years after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021.

The Company is

currently assessing the impact that this pronouncement will have on its consolidated financial statements.

In October 2020, the FASB issued ASU 2020-10

"Codification Improvements", which improves consistency by amending the Codification to include all disclosure guidance

in the appropriate disclosure sections and clarifies application of various provisions in the Codification by amending and adding

new headings, cross referencing to other guidance, and refining or correcting terminology.

The guidance is effective for the Company

beginning in the first quarter of fiscal year 2022 with early adoption permitted.

The Company is currently assessing the impact

that this pronouncement will have on its consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity.

ASU 2020-06 requires entities to provide expanded disclosures about the terms and features of convertible instruments and amends certain guidance in ASC 260, Earnings per Share, relating to the computation of earnings per share for convertible instruments and contracts in an entity’s own equity.

The guidance becomes effective for the Company on January 1, 2024, with early adoption permitted.

The Company is currently evaluating the impact of this new standard on its consolidated financial statements.

In October 2020, the FASB issued ASU 2020-10 “Codification Improvements”, which improves consistency by amending the Codification to include all disclosure guidance in the appropriate disclosure sections and clarifies application of various provisions in the Codification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology.

The guidance is effective for the Company beginning in the first quarter of fiscal year 2022 with early adoption permitted.

The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

On May 3, 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options.

This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange.

This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard.

Early adoption is permitted, including adoption in an interim period.

If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period.

The Company does not expect this new standard to have a material impact on its financial statements.

Recently Adopted Accounting Pronouncements

In November 2018, the FASB issued Accounting

Standards Update No.

2018-18, Collaborative Arrangements (Topic 808):

Clarifying the Interaction between Topic 808 and Topic

606 (“ASU 2018-18”), which clarifies that certain transactions between participants in a collaborative arrangement

should be accounted for under ASC 606 when the counterparty is a customer.

In addition, ASU 2018-18 precludes an

entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers

if the counterparty is not a customer for that transaction.

For public business entities, the amendments in this update are effective

for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

For all other entities, the

amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning

after December 15, 2021.

Early adoption is permitted, including adoption in any interim period, (1) for public business entities

for periods for which financial 3 statements have not yet been issued and (2) for all other entities for periods for which financial

statements have not yet been made available for issuance.

The Company adopted ASU 2018-18 effective January 1, 2020 and its adoption

did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU 2020-03,

“Codification Improvements to Financial Instruments” (“ASU 2020-03”).

ASU 2020-03 improves and clarifies

various financial instruments topics.

ASU 2020-03 includes seven different issues that describe the areas of improvement and the

related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing

clarifications.

The Company adopted ASU 2020-03 upon issuance, which did not have a material effect on the Company’s consolidated

financial statements.

In December 2019, the Financial Accounting Standards Board (the “FASB”) issued ASU 2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

The Company adopted ASU 2019-12 effective January 1, 2021 and its adoption did not have a material impact on the Company's consolidated financial statements and related disclosures.

PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of December 31, 2021 and 2020, prepaid expenses and other current assets consisted of the following:

As of December 31,

Inventory deposits

Deferred labor costs

Professional fees

Total prepaid expenses

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

NOTE 3 PREPAID

EXPENSES AND OTHER CURRENT ASSETS

As of December 31, 2020 and 2019, prepaid

expenses and other current assets consisted of the following:

Deferred labor costs

Security deposit

Total prepaid expenses and other current assets

NOTE 4 PROPERTY

AND EQUIPMENT

As of December 31, 2020 and 2019, property and equipment consisted

of the following:

PROPERTY AND EQUIPMENT

As of December 31, 2021 and 2020, property and equipment consisted of the following:

Estimated Useful Life

Computer equipment

Leasehold improvement

15 years or the remaining life of the lease

Leasehold improvements

Lesser of the useful life of the asset or remaining term of the lease

Machinery & equipment

2 unchanged sentences

accumulated deprecation

Property and equipment;

Depreciation expense amounted to $15,746 and

$17,275 for the years ended December 31, 2020 and 2019, respectively, which is included in selling, general and administrative

expenses in the consolidated statements of operations.

During the year ended December 31, 2020, the

Company disposed of $1,829 of fully depreciated property and equipment.

NOTE 5 ACCRUED

EXPENSES AND OTHER CURRENT LIABILITIES

As of December 31, 2020 and 2019, accrued

expenses and other current liabilities consisted of the following:

Payroll and vacation

Property and equipment, net

Depreciation expense amounted to $ 66,667 and $ 15,746 for the years ended December 31, 2021 and 2020, respectively, which is included in selling, general and administrative and research and development expenses in the consolidated statements of operations.

INTANGIBLE ASSETS

In December 2021, the Company acquired a patent for consideration of $ 218,000 .

This long-lived intangible asset has a useful life of approximately 20 years , which is being amortized on a straight-line basis and tested for impairment on an annual basis.

As of December 31, 2021, the Company had no impairments of intangibles and recognized amortization expense related to the intangible of $ 1,048 .

VENDOR DEPOSITS

The Company entered into agreements with third party contractors for facility improvements, the design and build of a battery packaging and inspection automation system, and automated robotic tending system.

As of December 31, 2021, the Company had outstanding deposits of $ 2,153,950 in connection with these agreements.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

As of December 31, 2021 and 2020, accrued expenses and other current liabilities consisted of the following:

As of December 31,

Legal and professional fees

Payroll and vacation

Research and development

Accrued cost of sales

Board compensation

Marketing and advertising fees

Total accrued expenses and other current liabilities

3 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

NOTE 6 ACCRUED

ISSUABLE EQUITY

A summary of the accrued issuable equity activity

during the year ended December 31, 2020, is presented below:

Balance, January 1, 2020

Reclassifications to equity

Related Party Transactions

Accrued expenses and other current liabilities include $ 0 and $ 2,628 as of December 31, 2021 and 2020, respectively, payable to Energy Science Laboratories, Inc.

(“ESLI”), a company controlled by the Company’s Chief Technology Officer (“CTO”), in connection with consulting services provided to the Company associated with the development of the Company’s CFV thermal management solutions in prior periods.

On September 30, 2021, ESLI agreed to forgive $ 2,628 of previously billed consulting fees.

As a result, the Company accounted for the forgiveness by reducing accrued expenses and other current liabilities by $ 2,628 and recording a corresponding credit to research and development expense.

As of December 31, 2021, the Company reclassed $ 2,628 of accounts payable-related party liabilities to accrued expenses and other current liabilities for the year ended December 31, 2020.

ACCRUED ISSUABLE EQUITY

A summary of the accrued issuable equity activity during the year ended December 31, 2021, is presented below:

As of December 31,

Beginning Balance

Reclassifications to equity upon issuance

Mark-to market

Balance, December 31, 2020

Ending Balance

Accrued Issuable Equity for Services

During the year ended December 31, 2020, the

Company entered into certain contractual arrangements for services in exchange for a fixed number of shares of common stock of

On the respective dates the contracts were entered into, the estimated fair value of the shares to be issued was

an aggregate of $205,297.

During the year ended December 31, 2020, the

Company settled certain of its accrued issuable equity obligations through the issuance of an aggregate of 100,000 of its shares

with an aggregate fair value of $79,511, remeasured as of the date of settlement.

During the year ended December 31, 2020, the

Company recorded an aggregate of $2,594 of losses related to the change in fair value of accrued issuable equity (see Note 12

– Stockholders’ Deficiency, Stock-Based Compensation for additional details).

The fair value of the accrued

but unissued shares as of December 31, 2020 was $128,380.

NOTE 7 RELATED

PARTY TRANSACTIONS

Accounts Payable – Related Party

Accounts payable –

related party

consists of a liability of $2,628 and $4,253 as of December 31, 2020 and December 31, 2019, respectively, to Energy Science

Laboratories, Inc.

(“ESLI”), a company controlled by the Company’s Chief Technology Officer (“CTO”),

in connection with consulting services provided to the Company associated with the development of the Company’s CFV thermal

management solutions in prior periods.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities

– related party consisted of a liability of $0 and $10,419 as of December 31, 2020 and 2019, respectively, to ESLI.

On September 30, 2019, ESLI agreed to forgive

$35,000 of previously accrued consulting fees.

As a result, the Company accounted for the forgiveness as a capital contribution

by reducing accrued expenses and other current liabilities by $35,000 with a corresponding credit to additional paid-in capital.

During the years ended December 31, 2021 and 2020, the Company entered into certain contractual arrangements for services in exchange for a fixed number of shares of common stock of the Company.

On the respective dates the contracts were entered into, the estimated fair value of the shares to be issued was an aggregate of $ 245,720 and $ 205,297 , respectively.

During the years ended December 31, 2021 and 2020, the Company settled certain of its accrued issuable equity obligations through the issuance of an aggregate of 100,000 of its shares with an aggregate fair value of $ 209,200 and $ 79,511 , respectively, remeasured as of the date of settlement.

During the years ended December 31, 2021 and 2020, the Company recorded an aggregate of $ 125,821 and $ 2,594 , respectively, of losses related to the change in fair value of accrued issuable equity (see Note 13 – Stockholders’ Equity, Stock-Based Compensation for additional details).

The fair value of the accrued but unissued shares as of December 31, 2021 and 2020 was $ 290,721 and $ 128,380 , respectively.

The Company leases office space in San Diego, California.

The lease, as amended, provided for monthly rental payments of $ 5,127 , and the lease term expired on June 30, 2021.

Subsequent to the expiration of the lease term, the Company entered into a verbal agreement with the landlord to continue occupying the space on a month-to-month basis until the Company eventually moved out in October 2021.

The Company evaluated this operating lease and determined that the short-term exemption available under ASC 842 applied since the lease term is less than 12 months and the lease does not include a purchase option whose exercise is reasonably certain.

Since the short-term exemption applies, lease payments are recognized as an expense and no right of use asset or lease liability was recorded related to this lease.

On April 5, 2021, the Company entered into a new lease agreement for office space in San Diego, California, effective June 1, 2021.

The initial lease term is three years and there is an option to renew for an additional five years .

Management does not expect to exercise

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

On February 18, 2020, the Company entered

into a financing agreement (the “Line of Credit”) wherein it may borrow up to $10,000.

The repayment terms (interest

rate, repayment amount and number of consecutive weekly periodic installments) are determined at the time the Company borrows

proceeds under the Line of Credit.

On February 19, 2020, the Company borrowed

and received gross proceeds of $10,000 under the Line of Credit for its working capital needs, which was being repaid weekly over

the 26-week period following the date of receipt at a weekly interest rate of 1.7%.

The line of credit, including interest thereon,

was repaid in July 2020.

During the year ended December 31, 2020, the Company recorded interest expense of $2,292 related to the

Line of Credit.

A summary of the notes payable activity during

the year ended December 31, 2020, is presented below:

Outstanding, January 1, 2020

its option to renew.

Monthly rental payments under the new lease begin at $ 23,787 , which is comprised of $ 18,518 of base rent plus $ 5,268 of common area maintenance fees, with annual escalation of 3.5 %.

The Company paid a security deposit of $ 50,213 in connection with the new lease agreement.

The Company determined that the value of the lease liability and the related right-of-use asset at inception was $ 814,817 , using an estimated incremental borrowing rate of 5 % based on information available at the commencement date of the lease.

During the years ended December 31, 2021 and 2020, operating lease expense was $ 223,548 and $ 63,751 , respectively.

As of December 31, 2021, the Company does not have any financing leases.

Maturities of lease liabilities as of December 31, 2021 were as follows:

Maturity Year

Total lease payments

Imputed interest

Present value of lease liabilities

current portion

Lease liabilities, non-current portion

Supplemental cash flow information related to the lease was as follows:

For the Years Ended

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from operating lease

Right-of-use asset obtained in exchange for lease obligations

Operating lease

NOTES PAYABLE

A summary of the notes payable activity during the years ended December 31, 2021 and 2020, is presented below:

Balance, January 1, 2020

Repayments in cash

1 unchanged sentence

Amortization of debt discount

Balance, January 1, 2021

Repayments in cash

( 2,450,000 )

Amortization of debt discount

Outstanding, December 31, 2021

During the year ended December 31, 2020, the

Company entered into note purchase agreements with the YAII PN, Ltd., a Cayman Island exempt limited partnership (the “Investor”),

pursuant to which the Investor purchased full recourse promissory notes (the “Notes”) in the original aggregate principal

amount of $4,000,000 (“Principal Amount”) for cash proceeds of $3,710,000.

The Notes included an original issue discount

of $290,000, which represents the difference between the principal and proceeds received.

The original issue discount, along with

the $340,000 advisory fees were recorded as a debt discount which are being amortized over the term of the respective Notes using

the effective interest rate method.

The Notes bears no coupon interest (original

issue discount only) and will become immediately due and payable on May 31, 2021 or June 30, 2021, depending on the Note,

or upon acceleration, redemption or otherwise upon the occurrence of an event of default, as set forth in the Notes and which

includes the early termination of a standby equity distribution agreement with the Investor (see Note 12 – Stockholders’

(Deficiency) Equity, Standby Equity Distribution Agreement ).

The Company is required to repay the Principal Amount

in monthly installments as set forth in the agreements.

The Company may, at its discretion, prepay any installment amount or the

principal amount, subject to a payment premium equal to the 10% of the amount being prepaid.

Further, pursuant to the terms of

the Notes, the Company may decrease any installment payment, up to three times per Note, by up to 50%, of which the decreased

amount is added to the final installment due on the maturity date.

The Company elected to decrease the monthly

installment payments due during May and August 2020 by an aggregate of $225,000.

The decrease of $225,000 will be added to the

final monthly installment due on the respective maturity date.

On April 27, 2020, the Company received

$155,226 of cash proceeds pursuant to an unsecured loan (the “PPP” Loan) provided in connection with the Paycheck

Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security Act and applicable regulations

(“CARES Act”).

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Under the terms of the CARES Act, as amended

by the Paycheck Protection Program Flexibility Act of 2020, the Company is eligible to apply for and receive forgiveness for all

or a portion of the PPP Loan.

Such forgiveness will be determined, subject to limitations, based on the use of the loan proceeds

for certain permissible purposes as set forth in the PPP, including, but not limited to, payroll costs (as defined under the PPP)

and mortgage interest, rent or utility costs (collectively, “Qualifying Expenses”) incurred during the 24 weeks subsequent

to funding, and on the maintenance of employee and compensation levels, as defined, following the funding of the PPP Loan.

Company used the proceeds of the PPP Loan for Qualifying Expenses.

However, no assurance is provided that KULR will be able to

obtain forgiveness of the PPP Loan in whole or in part.

Any amounts not forgiven incur interest at 1.0% per annum and monthly

repayments of principal and interest are deferred to the earlier of (i) when the Small Business Administration remits the forgiven

amount to the lender or notifies the lender that no forgiveness is allowed or (ii) October 31, 2021.

While the Company’s

PPP Loan currently has a two-year maturity, the amended law will permit the Company to request a five-year maturity, subject to

the approval of the counterparty.

During the year ended December 31, 2020, the Company entered into note purchase agreements with the YAII PN, Ltd., a Cayman Island exempt limited partnership (the “Investor”), pursuant to which the Investor purchased full recourse promissory notes (the “Notes”) in the original aggregate principal amount of $ 4,000,000 (“Principal Amount”) for cash proceeds of $ 3,710,000 .

The Notes included an original issue discount of $ 290,000 , which represents the difference between the principal and proceeds received.

The original issue discount, along with the $ 340,000 advisory fees were recorded as a debt discount which were amortized over the term of the respective Notes using the effective interest rate method.

During the year ended December 31, 2020, the Company repaid principal on the Notes in the aggregate amount of $ 1,550,000 and during the year ended December 31, 2021, the Company repaid principal on the Notes in the aggregate amount of $ 2,450,000 , such that the balance on the Notes is $ 0 at December 31, 2021.

The Company paid debt redemption costs in the aggregate amount of $ 140,000 , which were recognized as expense during the year ended December 31, 2021.

See Note 13 – Stockholders’ Equity (Deficiency) for additional details.

The Company recorded amortization expense related to the debt discount of $ 128,198 and $ 501,802 during the years ended December 31, 2021 and 2020, respectively.

On April 27, 2020, the Company received $ 155,226 of cash proceeds pursuant to an unsecured loan (the “PPP” Loan) provided in connection with the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security Act and applicable regulations (“CARES Act”).

Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of 2021, the Company is eligible to apply for and receive forgiveness for all or a portion of the PPP Loan.

Such forgiveness will be determined, subject to limitations, based on the use of the loan proceeds for certain permissible purposes as set forth in the PPP, including, but not limited to, payroll costs (as defined under the PPP) and mortgage interest, rent or utility costs (collectively, “Qualifying Expenses”) incurred during the 24 weeks subsequent to funding, and on the maintenance of employee and compensation levels, as defined, following the funding of the PPP Loan.

The Company used the proceeds of the PPP Loan for Qualifying Expenses.

However, no assurance is provided that KULR will be able to obtain forgiveness of the PPP Loan in whole or in part.

Any amounts not forgiven incur interest at 1.0 % per annum and monthly repayments of principal and interest are deferred to the earlier of (i) when the Small Business Administration remits the forgiven amount to the lender or notifies the lender that no forgiveness is allowed or (ii) October 31, 2021.

While the Company’s PPP Loan currently has a two-year maturity, the amended law will permit the Company to request a five-year maturity, subject to the approval of the counterparty.

The Company recorded interest expense of $ 1,701 and $ 923 during the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, the Company’s accrued interest related to the PPP Loan was $ 2,624 .

NOTE 11 INCOME

The income tax provision for the years ended

December 31, 2020 and 2019 consists of the following:

The income tax provision for the years ended December 31, 2021 and 2020 consists of the following:

For the Years Ended

( 2,359,473 )

State and local:

( 3,355,568 )

Change in valuation allowance

Income tax provision

A reconciliation of the statutory federal income tax rate to the

Company’s effective tax rate is as follows:

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:

For the Years Ended

2 unchanged sentences

Permanent differences

Incremental research and development tax credits

Other and prior year true-ups

1 unchanged sentence

Effective income tax rate

The Company has determined that a valuation

allowance for the entire net deferred tax asset is required.

A valuation allowance is required if, based on the weight of evidence,

it is more likely than not that some or the entire portion of the deferred tax asset will not be realized.

After consideration

of all the evidence, management has determined that a full valuation allowance is necessary to reduce the deferred tax asset to

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

The tax effects of temporary differences that give rise to deferred

tax assets and liabilities are presented below:

The Company has determined that a valuation allowance for the entire net deferred tax asset is required.

A valuation allowance is required if, based on the weight of evidence, it is more likely than not that some or the entire portion of the deferred tax asset will not be realized.

After consideration of all the evidence, management has determined that a full valuation allowance is necessary to reduce the deferred tax asset to zero.

The tax effects of temporary differences that give rise to deferred tax assets and liabilities are presented below:

For the Years Ended

5 unchanged sentences

Valuation allowance

( 6,285,046 )

( 2,929,478 )

Deferred tax asset, net of valuation allowance

Changes in valuation allowance

At December 31, 2020 and 2019, the Company

had federal net operating loss carry forwards of approximately $10.4 million and $7.3 million, respectively.

At December 31, 2020,

approximately $3.9 million of federal net operating losses will expire from 2033 to 2037, and approximately $6.5 million will

have no expiration.

At December 31, 2020 and 2019, the Company had state net operating loss carry forwards of approximately $10.2

million and $7.1 million, respectively, which will begin to expire in 2024.

The net operating loss carryovers may be subject

to annual limitations under Internal Revenue Code Section 382, and similar state provisions, should there be a greater than 50%

ownership change as determined under the applicable income tax regulations.

The amount of the limitation would be determined based

on the value of the company immediately prior to the ownership change and subsequent ownership changes could further impact the

amount of the annual limitation.

An ownership change pursuant to Section 382 may have occurred in the past or could happen in

the future, such that the NOLs available for utilization could be significantly limited.

The Company files federal and state (California)

tax returns which are subject to audit for the years ending on or after December 31, 2016.

No tax audits were commenced or were

in process during the years ended December 31, 2020 and 2019.

NOTE 12 STOCKHOLDERS'

EQUITY (DEFICIENCY)

Authorized Capital

The Company is authorized to issue 500,000,000

shares of common stock, par value of $0.0001 per share, and 20,000,000 shares of preferred stock, par value of $0.0001 per share.

The holders of the Company’s common stock are entitled to one vote per share.

The preferred stock is designated as

1,000,000 shares designated as Series A Preferred Stock, 31,000 shares designated as Series B Convertible Preferred Stock

and 400 shares designated as Series C Preferred Stock.

At December 31, 2021 and 2020, the Company had federal net operating loss carry forwards of approximately $ 18.6 million and $ 10.0 million, respectively.

At December 31, 2021, approximately $ 3.9 million of federal net operating losses will expire from 2033 to 2037 , and approximately $ 14.7 million will have no expiration.

At December 31, 2021 and 2020, the Company had state net operating loss carry forwards of approximately $ 18.1 million and $ 9.5 million, respectively, which will begin to expire in 2024.

The net operating loss carryovers may be subject to annual limitations under Internal Revenue Code Section 382, and similar state provisions, should there be a greater than 50 % ownership change as determined under the applicable income tax regulations.

The amount of the limitation would be determined based on the value of the company immediately prior to the ownership change and subsequent ownership changes could further impact the amount of the annual limitation.

An ownership change pursuant to Section 382 may have occurred in the past or could happen in the future, such that the NOLs available for utilization could be significantly limited.

The Company files federal and state (California) tax returns which are subject to audit for the years ending on or after December 31, 2017.

No tax audits were commenced or were in process during the years ended December 31, 2021 and 2020.

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

On November 16, 2020, the Company’s

board of directors (the “Board”) approved, by unanimous written consent, to amend (the “Amendment”) the

Company’s Certificate of Incorporation effecting a reverse split of its issued and outstanding common stock at a ratio no

greater than one-for-eight, with such ratio to be determined at the sole discretion of the Board (or its designee or designees)

and with such reverse split to be effected at such time and date, if at all, as determined by the Board in its sole discretion

(provided that it is effected within one year of the date on which the stockholders of the Corporation approve the Reverse Split).

On November 16, 2020, the voting stockholders, acting by written consent, approved the Amendment and the Reverse Split.

14 – Subsequent Events for additional details.

Equity Incentive

On August 15 and November 5, 2018, the

Board of Directors and a majority of the Company’s shareholders, respectively, approved the 2018 Equity Incentive Plan

(the “2018 Plan”).

STOCKHOLDERS’ EQUITY (DEFICIENCY)

Authorized Capital

The Company is authorized to issue 500,000,000 shares of common stock, par value of $ 0.0001 per share, and 20,000,000 shares of preferred stock, par value of $ 0.0001 per share.

The holders of the Company’s common stock are entitled to one vote per share.

The preferred stock is designated as follows:

1,000,000 shares designated as Series A Preferred Stock, 31,000 shares designated as Series B Convertible Preferred Stock, 400 shares designated as Series C Preferred Stock, and 650 shares designated as Series D Convertible Preferred Stock.

Equity Incentive Plan

On August 15 and November 5, 2018, the Board of Directors and a majority of the Company’s shareholders, respectively, approved the 2018 Equity Incentive Plan (the “2018 Plan”).

Under the 2018 Plan, 15,000,000 shares of common stock of the Company are authorized for issuance.

The 2018 Plan provides for the issuance of incentive stock options, non-statutory stock options, rights to purchase common stock,

stock appreciation rights, restricted stock and restricted stock units to employees, directors and consultants of the Company and

its affiliates.

The 2018 Plan requires the exercise price of stock options to be not less than the fair value of the Company’s

common stock on the date of grant.

As of December 31, 2020, there were 13,841,047 shares available for issuance under the 2018

The 2018 Plan provides for the issuance of incentive stock options, non-statutory stock options, rights to purchase common stock, stock appreciation rights, restricted stock and restricted stock units to employees, directors and consultants of the Company and its affiliates.

The 2018 Plan requires the exercise price of stock options to be not less than the fair value of the Company’s common stock on the date of grant.

As of December 31, 2021, there were 12,336,047 shares available for issuance under the 2018 Plan.

Standby Equity Distribution Agreement

On February 27, 2020, KULR Technology Group, Inc.

entered into a Standby Equity Distribution Agreement (“SEDA”) with an investor (the “Investor”), pursuant to which the Company may, at its discretion, sell to the Investor up to $ 8,000,000 of shares of the Company’s common stock (the “Offering”), par value $ 0.0001 per share (the “Common Stock”).

For each share of Common Stock purchased under the SEDA (the “Shares”), the Investor will pay the Company 80 % of the lowest daily volume weighted average price of the Common Stock on the OTC Markets OTCQB or other principal market on which the Common Stock is traded for the five days immediately following the date the Company delivers notice requiring the Investor to purchase the Shares under the SEDA.

The commitment period under the SEDA commenced on February 27, 2020 (the “Effective Date”) and expires on the earliest to occur of (i) first day of the month following the twenty-four months after the Effective Date, (ii) the date on which the Investor has purchased an aggregate amount of $ 8,000,000 of Shares under the SEDA, or (iii) the date the SEDA is earlier terminated.

As of December 31, 2021 and 2020, the Company was prohibited from issuing shares pursuant to the SEDA as a result of it being a Variable Rate Transaction pursuant to the Public Offering Purchase Agreement, described below.

Effective March 1, 2022, the SEDA expired, and shares are no longer issuable under the agreement.

The Company paid cash of $ 15,000 and issued 95,847 shares of Common Stock to the Investor as consideration for entering into the SEDA.

The shares of common stock issued to the Investor had an issuance date fair value of $ 63,259 .

The aggregate consideration of $ 78,259 was recorded as deferred offering costs and additional paid in capital on the consolidated balance sheet.

During the year ended December 31, 2020 the Company issued an aggregate of 1,841,548 shares of common stock, at prices between $ 0.72 - $ 1.65 per share, for aggregate proceeds of $ 2,214,437 , in connection with notices submitted to the Investor under the SEDA, of which $ 791,000 of the proceeds, were applied directly against the Notes.

As of December 31, 2020, the Company had approximately $ 5,707,305 available in connection with the SEDA, however, as a result of warrants issued during 2020 in an unrelated transaction which were outstanding, the Company could not issue shares in connection with Variable Rate Transactions pursuant to the Public Offering Purchase Agreement, described below.

Series A Preferred Stock

record holder of Series A Preferred Stock shall have the right to vote on any matter with holders of the Company’s common

stock and other securities entitled to vote, if any, voting together as one (1) class.

Each record holder of Series A Preferred

Stock is entitled to one-hundred (100) votes per share of Series A Preferred Stock held by such holder.

The Series A Preferred Stock is not convertible

into any series or class of stock of the Company.

In addition, holders of the Series A Preferred Stock shall not be entitled to

receive dividends, nor do they have a right to distribution from the assets of the Company in the event of any liquidation, dissolution,

or winding up of the Company.

On November 5, 2018, the Company received

a written consent of the majority of the stockholders to issue 1,000,000 shares of the Company’s Series A Preferred Stock

Mo, as a measure to protect the Company from an uninvited takeover.

As of the date of filing, the shares of Series A Preferred

Stock have not been issued.

Series B Convertible Preferred Stock

On November 30, 2018, the Company filed with

the Secretary of State of the State of Delaware the Certificate of Designation of Series B Convertible Preferred Stock (the “Certificate

of Designation”), which became effective upon filing.

The Company designated 31,000 shares as Series

B Convertible Preferred Stock out of the authorized and unissued preferred stock of the Company, par value $0.0001 per share.

The Series B Convertible Preferred Stock does not contain any redemption provisions or other provisions requiring cash settlement

within control of the holder.

Series B Convertible Preferred Stock is senior in liquidation preference to common stock.

of shares of Series B Convertible Preferred Stock are not entitled to voting rights and dividend rights.

Each share of Series

B Convertible Preferred Stock, after 181 days after issuance and without the payment of additional consideration, shall be convertible

at the option of the holder into fifty (50) fully paid and non-assessable shares of common stock.

It was determined that the embedded

conversion option is clearly and closely related to the equity host, therefore it is not bifurcated and not accounted for as a

Each share of Series B Convertible Preferred Stock shall have a stated value of $1.00 per share.

During the year ended December 31, 2019, holders

of Series B Convertible Preferred Stock elected to convert an aggregate of 16,371 shares of Series B Convertible Preferred Stock

into an aggregate of 818,550 shares of common stock.

Each record holder of Series A Preferred Stock shall have the right to vote on any matter with holders of the Company’s common stock and other securities entitled to vote, if any, voting together as one (1) class.

Each record holder of Series A Preferred Stock is entitled to one-hundred (100) votes per share of Series A Preferred Stock held by such holder.

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

During the year ended December 31, 2020, a

holder of 515 shares of Series B Convertible Preferred Stock elected to convert their shares into 25,758 shares of common stock.

The Series A Preferred Stock is not convertible into any series or class of stock of the Company.

In addition, holders of the Series A Preferred Stock shall not be entitled to receive dividends, nor do they have a right to distribution from the assets of the Company in the event of any liquidation, dissolution, or winding up of the Company.

On November 5, 2018, the Company received a written consent of the majority of the stockholders to issue 1,000,000 shares of the Company’s Series A Preferred Stock to Mr.

Mo, if necessary, as a measure to protect the Company from an uninvited takeover.

As of the date of filing, the shares of Series A Preferred Stock have not been issued.

Series B Convertible Preferred Stock

Holders of shares of Series B Convertible Preferred Stock are not entitled to voting rights or dividend rights.

The Series B Convertible Preferred Stock does not contain any redemption provisions or other provisions requiring cash settlement within control of the holder.

Series B Convertible Preferred Stock is senior in liquidation preference to common stock.

Each share of Series B Convertible Preferred Stock, after 181 days after issuance and without the payment of additional consideration, is convertible at the option of the holder into fifty ( 50 ) fully paid and non-assessable shares of common stock.

It was determined that the embedded conversion option is clearly and closely related to the equity host, therefore it is not bifurcated and not accounted for as a derivative.

During the year ended December 31, 2020, a holder of 515 shares of Series B Convertible Preferred Stock elected to convert their shares into 25,758 shares of common stock.

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

Series C Convertible Preferred Stock

On August 19, 2019, the Company filed with

the Secretary of State of the State of Delaware the Certificate of Designation of Series C Convertible Preferred Stock (the “Certificate

of Designation”), which became effective upon filing.

Pursuant to the Certificate of Designation, the Company designated

400 shares as Series C Convertible Preferred Stock out of the authorized and unissued preferred stock of the Company, par value

$0.0001 per share.

Series C Convertible Preferred Stock is senior

in liquidation preference to the Company’s common stock for an amount equal to the stated value per share of $10,000 (“Stated

Holders of shares of Series C Convertible Preferred Stock shall vote on an as-if-converted-to-common-stock basis

with the common stockholders.

Holders of shares of Series C Convertible Preferred Stock are entitled to receive dividends when,

as and if declared by the Board of Directors, at an annual rate of twelve percent (12%) beginning one year after each share’s

Series C Convertible Preferred Stock is senior in liquidation preference to the Company’s common stock for an amount equal to the stated value per share of $ 10,000 (“Stated Value”).

Holders of shares of Series C Convertible Preferred Stock shall vote on an as-if-converted-to-common-stock basis with the common stockholders.

Holders of shares of Series C Convertible Preferred Stock are entitled to receive dividends when, as and if declared by the Board of Directors, at an annual rate of twelve percent ( 12 )% beginning one year after each share's issuance.

The Company may elect to redeem all or part of each share of Series C Convertible Preferred Stock for the Stated Value.

Each share of Series C Convertible Preferred

Stock, if converted within 180 days of such share’s initial issuance, is convertible into a number of shares of common stock

equal to the product determined by multiplying (i) the number of shares of Series C Convertible Preferred Stock being converted

and any accrued dividends thereon and (ii) $1.00 per share.

Each share of Series C Convertible Preferred Stock, if converted on

or after the 181 st day of its initial issuance, is convertible into a number of shares of common stock equal to the

product determined by multiplying (i) the number of shares of Series C Convertible Preferred Stock being converted and any accrued

dividends thereon and (ii) 75% of the average of the trading prices five days prior to conversion but in no case less than $0.90

In addition, all outstanding shares of Series C Convertible Preferred Stock shall be automatically converted upon the

occurrence of a qualified offering of at least $5 million of gross proceeds (“Qualified Offering”) or an approved

listing of common stock on a national stock exchange (“Uplisting”).

In the event of a Qualified Offering, each share

of Series C Convertible Preferred Stock would be converted into the securities offered in the Qualified Offering determined by

dividing (i) the Stated Value of the number of shares of Series C Convertible Preferred Stock being converted and any accrued

dividends thereon and (ii) 85% of the price of the securities sold in the Qualified Offering.

In the event of an Uplisting, each

share of Series C Convertible Preferred Stock would be converted into a number of shares of common stock equal to the product

determined by dividing (i) the Stated Value of the number of shares of Series C Convertible Preferred Stock being converted and

any accrued dividends thereon and (ii) if converted within 180 days of such share’s initial issuance, $1.00 per share, and

if converted on or after the 181 st day of its initial issuance, 75% of the average of the trading prices five days

prior to conversion but in no case less than $0.90 per share.

The Series C Convertible Preferred Stock is

redeemable at the Company’s option;

therefore, it has been classified within stockholders’ equity (deficiency) on

the consolidated balance sheet.

An overall analysis of its features performed by the Company determined that the Series C Convertible

Preferred Stock was more akin to equity.

As a result, while the embedded conversion option (“ECO”) contained certain

anti-dilution price protection mechanisms, since the ECO was clearly and closely related to the equity host, it was not required

to be bifurcated and accounted for as a derivative liability under ASC 815.

The Company determined that the Series C Convertible

Preferred Stock did not contain a beneficial conversion feature at issuance since the conversion price exceeded the estimated

fair value of the Company’s common stock as of the commitment date, however, the Company did recognize a contingent beneficial

conversion feature in connection with a Qualified Offering, as described below within this footnote.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

During the year ended December 31, 2019, the

Company sold to certain investors an aggregate of 24.01 shares of Series C Convertible Preferred Stock and two-year immediately

vested warrants to purchase an aggregate of 60,025 shares of the Company’s common stock at an exercise price of $1.50 per

share for aggregate gross proceeds of $216,000, less cash issuance costs of $32,000, for aggregate net proceeds of $184,000.

warrants, which were determined to be classified within stockholders’ equity (deficiency), had an aggregate issuance date

fair value of $12,515.

The Company has computed the fair value of warrants using the Black-Scholes pricing model with the following

risk free interest rate:

1.53% - 1.74%;

expected term – 2 years, expected volatility - 97%, expected dividends

During the year ended December 31, 2020, certain

holders of 5.11 shares of Series C Convertible Preferred stock elected to convert their shares into an aggregate of 56,777 shares

of common stock.

During the year

ended December 31, 2020, a Qualified Offering occurred and 18.90 shares of Series C Convertible Preferred Stock were mandatorily

converted into an aggregate of 177,885 shares of common stock of the Company and warrants for the purchase of an aggregate of

177,855 shares of common stock of the Company.

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.

As a result of the Series C Preferred Stock having an effective

conversion price that was lower than the market price on the commitment date, the Company immediately recognized a beneficial

conversion feature of $1,735 as a deemed dividend, which increased the net loss attributable to common stockholders.

Additionally,

since the Company had an accumulated deficit, the impact was equity neutral to its additional paid-in capital.

During the year ended December 31, 2019, the

Company sold an aggregate of 1,361,059 shares of common stock at $0.66 per share to accredited investors for aggregate gross proceeds

During the year ended December 31, 2019, the

Company issued 140,000 shares of common stock under the 2018 Plan and 45,966 shares of restricted common stock to consultants

in exchange for services, which vested immediately.

The grant date value of the common stock and restricted common stock were

$133,660 during the year ended December 31, 2019.

During the year ended December 31, 2020, the

Company issued an aggregate of 238,953 shares of common stock with a grant date value of $275,500 for legal and consulting services,

of which (i) 166,453 shares were immediately vested, (ii) 12,500 shares vest on the six-month anniversary following the respective

issuance date, and (iii) 60,000 shares vest on the two-year anniversary following the respective issuance date upon completion

of the service period, subject to the Company’s claw back, based upon the satisfaction of meeting general performance parameters

which as of December 31, 2020 were probable to be achieved.

The grant date fair value of the common stock will be recognized as

stock-based compensation expense ratably over the respective vesting periods.

See Stock-Based Compensation section within

this footnote for additional details.

During the year ended December 31, 2020, certain holders of 5.11 shares of Series C Convertible Preferred stock elected to convert their shares into an aggregate of 56,777 shares of common stock.

During the year ended December 31, 2020, a Qualified Offering occurred and 18.90 shares of Series C Convertible Preferred Stock were mandatorily converted into an aggregate of 177,885 shares of common stock of the Company and warrants for the purchase of an aggregate of 177,855 shares of common stock of the Company.

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.

As a result of the Series C Preferred Stock having an effective conversion price that was lower than the market price on the commitment date, the Company immediately recognized a beneficial conversion feature of $ 1,691 as a deemed dividend, which increased the net loss attributable to common stockholders.

Additionally, since the Company had an accumulated deficit, the impact was equity neutral to its additional paid-in capital.

There are no Series C Convertible shares outstanding at December 31, 2021 or 2020.

Series D Convertible Preferred Stock

On May 19, 2021, the Company entered into a Securities Purchase Agreement (“SPA”) with an investor, pursuant to which the Company agreed to issue to the investor an aggregate of 650 shares of Series D convertible preferred stock (the “Series D Preferred”) pursuant to a new designation of preferred stock, and one-year warrants to purchase 2,600,000 shares of common stock (the “Warrants”) at a price of $ 2.50 per share, for aggregate gross proceeds of $ 6,500,000 (the “Offering”).

The Company also agreed to pay the investor a commitment fee of 1,300,000 shares of common stock at the closing of the Offering.

The closing of the Offering occurred on May 20, 2021.

In connection with the closing of the financing, the Company repaid in full its aggregate remaining notes payable obligation of $ 1,400,000 .

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

The Series D Preferred have a fixed conversion price of $ 2.05 , are convertible into an aggregate of 3,170,730 shares of common stock and have the right to vote on an as-converted basis.

Holders of the Series D Preferred shall be entitled to receive cumulative dividends annually at an annual rate equal to ten percent ( 10 %).

Dividends shall be payable in cash or, at the option of the holder of the Series D Preferred, converted into shares of common stock as provided in the certificate of designation for the Series D Preferred.

Provided that the shares of common stock issuable upon conversion of the Series D Preferred is registered pursuant to an effective registration statement, the Company shall have the option, but not the obligation, to redeem, in cash, all or part of the Series D Preferred.

The Company determined that the Series D Preferred was permanent equity given that there was no redemption provision at the holder’s option and it was determined that the conversion option was clearly and closely related to the equity host, so it didn’t need to be bifurcated.

The Company further determined that the $ 10,000 cash structuring fee, debt redemption costs of $ 140,000 , and the remaining notes payable obligation of $ 1,400,000 paid to the investor, would be accounted for as a reduction of the $ 6,500,000 of gross proceeds.

The remaining proceeds of $ 6,490,000 were allocated on a relative fair value basis to the Series D Preferred ($ 3,875,675 ), the commitment shares ($ 1,339,582 ) and the Warrant ($ 1,274,743 ).

The Company used the Black-Scholes option pricing model to determine the fair value of the Warrant using the following assumptions:

exercise price of $ 2.50 per share, market price of $ 2.05 per share, expected term of 1.0 year, volatility of 142 % and a risk-free interest rate of 0.05 %.

Finally, the Company determined that the Series D Preferred had a beneficial conversion feature equal to $ 2,624,326 which is a deemed dividend and represents an adjustment to the numerator in the loss per share calculation.

The cash issuance costs of $ 365,000 (inclusive of the $ 10,000 cash structuring fee) were charged to additional paid-in-capital.

On June 17, 2021, all of the outstanding shares of Series D Preferred were converted into 3,170,730 shares of common stock, after which no Series D Convertible Preferred Stock remained outstanding.

During the year ended December 31, 2021, the Company issued an aggregate of 176,000 shares of immediately vested common stock with a grant date value of $ 394,909 for legal and consulting services, of which, 6,000 shares with a grant date value of $ 18,000 has been applied to the total cost of the intangible asset acquired during the year ended December 31, 2021.

Public Offering

On December 29, 2020, the Company

entered into a securities purchase agreement (the “Public Offering Purchase Agreement”) with investors for the purchase

and sale of an aggregate of 6,400,001 shares of the Company’s common stock (the “Shares”) and warrants to purchase

an aggregate of up to 6,400,001 shares of common stock (“Warrants”), in a registered direct offering at a combined

purchase price of $1.25 per Share and Warrant, for aggregate gross proceeds to the Company of $8,000,001.

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.

were determined to be classified within stockholders’

equity (deficiency) at their fair value.

The Company intends to use

the net proceeds from this offering for working capital and general corporate purposes, as well as for capital expenditures.

registered direct offering closed on December 31, 2020.

Additionally, pursuant to the Public Offering Purchase Agreement,

the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company of common stock

involving a variable rate transaction (“Variable Rate Transaction”) until such time as no Purchaser holds any of the

Pursuant to a co-placement agency agreement

(the “Placement Agreement”) dated December 29, 2020 by and among the Company, Lake Street Capital Markets, LLC

(“Lake Street”) and Maxim Group LLC (“Maxim”) (together with Lake Street, the “Co-Placement Agents”),

the Company retained Lake Street and Maxim to act as the Company’s co-placement agents in connection with the registered

direct offering.

Pursuant to the Placement Agreement, the Company agreed to pay the co-placement agents a cash fee of 7.0% of

the gross proceeds the Company receives under the Purchase Agreement.

The Company also agreed to reimburse the co-placement agents

for certain out-of-pocket accountable expenses incurred by them in connection with this offering, which amounted to $50,000.

total offering expenses incurred by the Company, other than the placement agent fees, were $170,152, which included 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.

As of December 31, 2020, of the offering costs described above, an

aggregate of $24,852 of offering costs remained unpaid and were accrued for.

Standby Equity Distribution Agreement

On February 27, 2020, KULR Technology

entered into a Standby Equity Distribution Agreement (“SEDA”) with the Investor, pursuant to which

the Company may, at its discretion, sell to the Investor up to $8,000,000 of shares of the Company’s common stock (the “Offering”),

par value $0.0001 per share (the “Common Stock”).

For each share of Common Stock purchased under the SEDA (the “Shares”),

the Investor will pay the Company 80% of the lowest daily volume weighted average price of the Common Stock on the OTC Markets

OTCQB or other principal market on which the Common Stock is traded for the five days immediately following the date the Company

delivers notice requiring the Investor to purchase the Shares under the SEDA.

The commitment period under the SEDA commenced

on February 27, 2020 (the “Effective Date”) and expires on the earliest to occur of (i) first day of the

month following the twenty-four months after the Effective Date, (ii) the date on which the Investor has purchased an aggregate

amount of $8,000,000 of Shares under the SEDA, or (iii) the date the SEDA is earlier terminated.

As of December 31, 2020,

the Company was prohibited from issuing shares pursuant to the SEDA as a result of it being a Variable Rate Transaction pursuant

to the Public Offering Purchase Agreement, described above.

Among other things, the Investor’s obligation

to purchase the Shares under the SEDA is subject to certain conditions, including the Company maintaining the effectiveness of

a registration statement for the securities sold under the SEDA, and is subject to the Investor’s approval for amounts over

In addition, the Company may not request advances if the Shares to be issued would result in the Investor owning more

than 4.99% of the Company’s outstanding Common Stock, with any such request being automatically modified to reduce the advance

The Company shall not be able to request advances under the SEDA if the Registration Statement is not effective or if

any issuances of Common Stock pursuant to any Advances would violate any rules.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

The SEDA contains customary representations,

warranties and agreements of the Company and the Investor, indemnification rights and other obligations of the parties.

has the right to terminate the SEDA at any time upon prior written notice, at no cost to the Company, provided that (i) there

are no outstanding advances which have yet to be issued and (ii) the Company has paid all amounts owed to the Investor, including

amounts borrowed under the Note.

The Investor has covenanted not to cause or engage in any manner whatsoever, any direct or indirect

short selling or hedging of the Company’s shares of Common Stock.

The Company paid cash of $15,000 and issued

95,847 shares of Common Stock to the Investor as consideration for entering into the SEDA.

The shares of common stock issued to

the Investor had an issuance date fair value of $63,259.

The aggregate consideration of $78,259 was recorded as deferred offering

costs and additional paid in capital on the consolidated balance sheet.

During the year ended December 31, 2020

the Company issued an aggregate of 1,841,548 shares of common stock, at prices between $0.72 - $1.65 per share, for aggregate proceeds

of $2,214,437, in connection with notices submitted to the Investor under the SEDA, of which $791,000 of the proceeds, were applied

directly against the Notes.

As of December 31, 2020, the Company had approximately $5,707,305 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 pursuant to the Public Offering Purchase Agreement, described above.

On June 10, 2019, the Company issued two-year

immediately vested warrants to purchase an aggregate of 150,000 shares of the Company’s common stock at an exercise price

of $1.00 per share to certain vendors in connection with consulting agreements.

The warrants vested immediately on the date of

The warrants, which were determined to be classified within stockholders’ deficiency, had an aggregate issuance

date fair value of $40,974.

The Company has computed the fair value of the warrants using the Black Scholes option pricing model

with the following valuation assumptions:

risk free interest rate – 1.90%, contractual term – 2.0 years, expected

volatility –97%, expected dividends – 0%.

During the year ended December 31, 2019, the

Company issued two-year immediately vested warrants to purchase an aggregate of 60,025 shares of the Company’s common stock

at an exercise price of $1.50 per share to certain investors in connection with the Series C Convertible Preferred Stock sales.

(See Note 12 – Stockholders’ Deficiency, Series C Convertible Preferred Stock).

For details regarding the issuance of warrants

for the purchase of an aggregate of 177,885 and 6,400,001 shares of common stock of the Company during the year ended December

31, 2020, see Note 12 – Stockholders’ Equity (Deficiency), Series C Convertible Preferred Stock and Common Stock,

respectively.

On December 29, 2020, the Company entered into a securities purchase agreement (the “Public Offering Purchase Agreement”) with investors for the purchase and sale of an aggregate of 6,400,001 shares of the Company’s common stock (the “Shares”) and warrants to purchase an aggregate of up to 6,400,001 shares of common stock (“Warrants”), in a registered direct offering at a combined purchase price of $ 1.25 per Share and Warrant, for aggregate gross proceeds to the Company of $ 8,000,001 .

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.

The Warrants were determined to be classified within stockholders’ equity at their fair value.

The Company intends to use the net proceeds from this offering for working capital and general corporate purposes, as well as for capital expenditures.

This registered direct offering closed on December 31, 2020.

Additionally, pursuant to the Public Offering Purchase Agreement, the Company is prohibited from effecting or entering into an agreement to effect any issuance by the Company of common stock involving a variable rate transaction (“Variable Rate Transaction”) until such time as no Purchaser holds any of the Warrants.

Pursuant to a co-placement agency agreement (the “Placement Agreement”) dated December 29, 2020 by and among the Company, Lake Street Capital Markets, LLC (“Lake Street”) and Maxim Group LLC (“Maxim”) (together with Lake Street, the “Co-Placement Agents”), the Company retained Lake Street and Maxim to act as the Company’s co-placement agents in connection with the registered direct offering.

Pursuant to the Placement Agreement, the Company agreed to pay the co-placement agents a cash fee of 7.0 % ($560,000) of the gross proceeds the Company receives under the Purchase Agreement.

The total offering expenses incurred by the Company, other than the placement agent fees, were $ 170,152 , which included 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.

As of December 31, 2020, of the offering costs described above, an aggregate of $ 24,852 of offering costs remained unpaid and are included in accrued expenses and other current liabilities on the accompanying consolidated balance sheet.

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

A summary of warrants activity during the

year ended December 31, 2020 is presented below:

A summary of warrants activity during the year ended December 31, 2021 is presented below:

Outstanding, January 1, 2021

( 6,793,358 )

Outstanding, December 31, 2021

Exercisable, December 31, 2021

A summary of outstanding

and exercisable warrants as of December 31, 2020 is presented below:

A summary of outstanding and exercisable warrants as of December 31, 2021 is presented below:

Warrants Outstanding

2 unchanged sentences

Stock Options

On September 20, 2019, the Company granted

five-year options to purchase a total of 100,000 shares of common stock at an exercise price of $0.66 per share to employees pursuant

to the 2018 Plan.

The options vested one-fifth on the first anniversary of the employment date and the remaining options vest

monthly over three years.

The options had an aggregate grant date value of $35,510 which is recognized over the vesting period.

On January 1, 2020, the Company granted five-year

options to purchase a total of 10,000 shares of common stock at an exercise price of $0.66 per share to an employee pursuant to

the 2018 Plan.

One-fourth of the options will vest on the first-year anniversary of the grant date and the remaining options vest

monthly over three years.

The options had an aggregate grant date value of $3,609 which is recognized over the vesting period.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

The Company has computed the fair value of

stock options granted using the Black-Scholes option pricing model.

In applying the Black-Scholes option pricing model, the Company

used the following assumptions:

The Company has computed the fair value of stock options granted using the Black-Scholes option pricing model.

In applying the Black-Scholes option pricing model, the Company used the following assumptions:

For the Years Ended

Risk free interest rate

0.20 % - 0.85

Expected term (years)

1 unchanged sentence

Expected dividends

Option forfeitures are accounted for at the

time of occurrence.

Option forfeitures are accounted for at the time of occurrence.

The expected term used is the estimated period of time that options granted are expected to be outstanding.

The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla”

employee option grants.

The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants.

The Company does not yet have a trading history to support its historical volatility calculations.

the Company is utilizing an expected volatility figure based on a review of the historical volatility of comparable entities over

a period of time equivalent to the expected life of the instrument being valued.

The risk-free interest rate was determined from

the implied yields from U.S.

Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument

being valued.

The weighted average grant date fair value

per share of options granted during both years ended December 31, 2020 and 2019 was $0.36.

A summary of options activity during the year

ended December 31, 2020 is presented below:

Accordingly, the Company is utilizing an expected volatility figure based on a review of the historical volatility of comparable entities over a period of time equivalent to the expected life of the instrument being valued.

The risk-free interest rate was determined from the implied yields from U.S.

Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

For the years ended December 31, 2021 and 2020, the weighted average grant date fair value per share of options was $ 0.80 and $ 0.36 , respectively.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

A summary of options activity during the year ended December 31, 2021 is presented below:

Outstanding, January 1, 2021

1 unchanged sentence

Exercisable, December 31, 2021

The following table presents information related

to stock options as of December 31, 2020:

The following table presents information related to stock options (excluding market-based option awards) as of December 31, 2021:

Options Outstanding

1 unchanged sentence

Remaining Life

As of December 31, 2021, there was $ 152,948 of unrecognized stock-based compensation expense related to the above stock options, which will be recognized over the weighted average remaining vesting period of 2.7 years.

Restricted Common Stock

The following table presents information related to restricted common stock (excluding Market-Based Awards) as of December 31, 2021:

Weighted Average

Shares of Restricted

Non-vested balance, January 1, 2021

Non-vested shares, December 31, 2021

As of December 31, 2021, there was $ 4,995,064 of unrecognized stock-based compensation expense related to restricted stock that will be recognized over the weighted average remaining vesting period of 3.1 years.

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Stock-Based Compensation

During the years ended December 31, 2020 and

2019, the Company recognized stock-based compensation expense of $343,854 and $220,625, respectively, related to restricted common

stock, warrants and stock options which are included within selling, general and administrative expenses and research and development

expenses on the consolidated statements of operations.

During the years ended December 31, 2020 and 2019, the Company recognized

stock-based compensation related to research and development of $30,932 and $36,022, respectively.

During the years ended December

31, 2020 and 2019, the Company recognized stock-based compensation related to selling, general and administrative expenses of

$312,922 and $184,603, respectively.

As of December 31, 2020, there was $47,021 of unrecognized stock-based compensation expense

that will be recognized over the weighted average remaining vesting period of 1.50 years.

The following table presents information related

to stock-based compensation for the years ended December 31, 2020 and 2019:

For the Years Ended

Common stock (issued)

Market-Based Awards

The following table presents information related to market-based awards as of December 31, 2021:

Restricted Stock Units

Stock Options

Accrued issuable equity (common stock)

NOTE 13 COMMITMENTS

AND CONTINGENCIES

Operating Lease

On December 30, 2018, KULR Technology Group,

entered into a lease addendum to extend its lease of 5,296 square feet of space located in San Diego, California with respect

to its research and development activities until December 31, 2019.

The base rent was $4,452 per month plus association fees of

$555 per month.

In connection with the lease, the Company paid the landlord a security deposit of $8,729.

The lease was renewed

on January 1, 2020 under a six-month lease agreement ending June 30, 2020.

The base rent was increased to $4,552 per month plus

association fees of $555 per month.

On June 15, 2020, the Company entered into an agreement to extend the term of its original

office space lease from June 30, 2020 to December 31, 2020.

Monthly rental payments under the renewed lease total $5,107,

which are comprised of $4,552 of base rent plus $555 of association fees.

The lease was renewed subsequent to December 31, 2020

(see Note 14 – Subsequent Events).

The Company evaluated this operating lease and determined that the short-term exemption

available under ASC 842 applied since the lease term is less than 12 months and the lease does not include a purchase option whose

exercise is reasonably certain.

Since the short-term exemption applies, lease payments are recognized as expense and no right

of use asset or lease liability is recorded.

On March 8, 2018, KULR Technology Corporation

took over ESLI’s lease agreement and entered into a one-year lease agreement to lease 6,754 square feet of space located

in San Diego, California with respect to its research and development activities starting May 1, 2018.

The base rent was $8,150

In connection with the lease, the Company recorded a liability to ESLI in connection with the security deposit of $8,150.

The aggregate base rent payable over the lease term was recognized on a straight-line basis.

On March 22, 2019, the Company extended

the lease for 8 months with a base rent of $8,442 starting May 1, 2019.

The Company moved out of the space as of December 15,

During the years

ended December 31, 2020 and 2019, operating lease expense was $63,751 and $162,520, respectively.

As of December 31, 2020, the

Company does not have any financing leases.

On March 1, 2021, in connection with the appointment of the Company’s Chief Operating Officer (the “COO”), the COO became eligible to receive of up to 1,500,000 shares of the Company’s common stock which will be earned based upon achieving certain market capitalization milestones up to $ 4 billion.

The grant date value of this award of $ 2,911,420 was determined using a Monte Carlo valuation model for market-based vesting awards and will be amortized over each of the tranches’ prospective derived service period.

On June 10, 2021, the Chief Executive Officer (the “CEO”) received an option for the purchase of up to 1,500,000 shares of the Company’s common stock at an exercise price of $ 2.60 per share, which will be earned based upon achieving certain market capitalization milestones up to $ 4 billion.

The grant date value of this award of $ 2,579,000 was determined using a Monte Carlo valuation model for market-based vesting awards and will be amortized over each of the tranches’ prospective derived service period.

As of December 31, 2021, no shares of the market-based awards have vested.

Shares shall vest for each award in the following increments upon the Company’s market capitalization reaching the respective amounts as follows:

● $ 500 million market capitalization:

250,000 shares

● $ 1 billion market capitalization:

250,000 shares

● $ 1.5 billion market capitalization:

250,000 shares

● $ 2 billion market capitalization:

250,000 shares

● $ 3 billion market capitalization:

250,000 shares

● $ 4 billion market capitalization:

250,000 shares

The following assumptions were used in applying the Monte Carlo valuation model to the Company’s market-based awards described above.

Risk free interest rate

Expected volatility

Expected dividend yield

Expected term

Fair value of common stock on date of grant

As of December 31, 2021, there was $ 3,378,576 of unrecognized stock-based compensation expense related to market-based awards which will be amortized over the remaining weighted average vesting period of 1.69 years.

Stock-Based Compensation

During the years ended December 31, 2021 and 2020, the Company recognized stock-based compensation expense of $ 4,200,091 and $ 343,854 , respectively, related to restricted common stock, warrants and stock options, of which $ 4,171,241 and $ 312,922 , respectively are included within selling, general and administrative expenses, and $ 28,850 and $ 30,932 , respectively are included within research and development expenses on the consolidated statements of operations.

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

The following table presents information related to stock-based compensation for the years ended December 31, 2021 and 2020:

For the Years Ended

Common stock for services

Amortization of restricted common stock

Amortization of market-based awards

Stock options

Accrued issuable equity (common stock)

COMMITMENTS AND CONTINGENCIES

Patent License Agreement

On March 21, 2018, the Company entered into

an agreement with the National Renewable Energy Laboratory (“NREL”) granting the Company an exclusive license to commercialize

its patented Internal Short Circuit technology.

The agreement is effective for as long as the licensed patents are enforceable,

subject to certain early termination provisions specified in the agreement.

In consideration, the Company agreed to pay to NREL

the following:

(i) a cash payment of $12,000 payable over one year, (ii) royalties ranging from 1.5% to 3.75% on the net sales

price of the licensed products, as defined in the agreement, with minimum annual royalty payments ranging from $0 to $7,500.

addition, the Company shall use commercially reasonable efforts to bring the licensed products to market through a commercialization

program that requires that certain milestones be met, as specified in the agreement.

During the years ended December 31, 2020

and 2019, the Company recorded royalties of $1,906 and $1,290, respectively, which were included within cost of revenues.

States impose sales tax on certain sales to

nonexempt customers.

As of December 31, 2020, the Company collected and owes state sales tax to its home state of California in

the amount of $3,330.

Majority, of the Company’s sales during the year ended December 31, 2020 were not taxable as a result

of the following:

(i) a certain portion of the Company's sales are design and engineering services which are not subject to sales

tax, (ii) certain product sales are shipped to non-US countries, states outside of California, or tax-exempt government agencies,

(iii) the Company’s customers are licensed resellers of the products and accordingly are exempt from the pass through of

The Company did not collect or owe sales taxes during the year ended December 31, 2019.

If, during an inspection

by a tax authority, the Company was unable to support its customers’ tax exemption status, the Company may be subject to

a liability for sales taxes not collected.

Consulting Agreement

On September 30, 2020, the Company entered

into a 2-year consulting agreement with a contractor to provide services as an Advisory Board Member related to government and

defense acquisitions in exchange for 60,000 shares of restricted common stock.

Pursuant to the consulting agreement, the shares

are subject to the Company’s claw back, based upon the satisfaction of meeting general performance parameters.

As of December

31, 2020, it was probable the contractor would satisfy the performance parameters and, as a result, the grant date fair value

of the common stock is being recognized as stock-based compensation expense ratably over the vesting period.

See Note 12 –

Stockholders’ Equity (Deficiency) for additional details.

NOTE 14 SUBSEQUENT

Repayments of the

Notes Payable

Subsequent to December

31, 2020, the Company repaid principal on the Notes in the aggregate amount of $1,050,000.

Election of Directors

and Appointment of Certain Officers

Subsequent to December 31, 2020, the Board

of the Company appointed Joanna D.

Massey, Morio Kurosaki and Stayce D.

Harris as directors on the Board, to hold office until

the earlier of the expiration of the term of office of the director whom they have replaced, a successor is duly elected and qualified,

or the earlier of such director’s death, resignation, disqualification, or removal.

Massey’s, Mr.

Kurosaki’s

Harris’

appointment is contingent upon the Company’s common stock being approved for uplisting to a national

Furthermore, subject to approval for uplisting to a national exchange, each director will receive quarterly cash compensation

equal to $10,000 and each director will be granted 20,000 shares of common stock, which shares shall vest quarterly in 5,000 share

installments with the first installment vesting immediately upon approval for uplisting to a national exchange.

On March 21, 2018, the Company entered into an agreement with the National Renewable Energy Laboratory (“NREL”) granting the Company an exclusive license to commercialize its patented Internal Short Circuit technology.

The agreement is effective for as long as the licensed patents are enforceable, subject to certain early termination provisions specified in the agreement.

In consideration, the Company agreed to pay to NREL the following:

(i) a cash payment of $ 12,000 payable over one year, (ii) royalties ranging from 1.5 % to 3.75 % on the net sales price of the licensed products, as defined in the agreement, with minimum annual royalty payments ranging from $ 0 to $ 7,500 .

In addition, the Company shall use commercially reasonable efforts to bring the licensed products to market through a commercialization program that requires that certain milestones be met, as specified in the agreement.

During the years ended December 31, 2021 and 2020, the Company recorded royalty expense of $ 2,558 and $ 2,876 , respectively, which were included within cost of revenues.

Technology Development and Sponsorship Agreement

On March 31, 2021, the Company entered into a multi-year technology development and sponsorship agreement, pursuant to which the Company has committed to spend an aggregate of $ 900,000 in sponsorship fees, payable in three installments, of which $ 250,000 was paid on April 1, 2021, $ 300,000 is payable on January 1, 2022, and $ 350,000 is payable on January 1, 2023.

The April 1, 2021 payment of $ 250,000 was recorded as a prepaid expense and is being amortized over the performance period.

During the year ended December 31, 2021, $ 250,000 of sponsorship fees expense was recognized related to the agreement.

In addition, the Company has committed to paying an aggregate of $ 750,000 related to technology development fees, which is to be paid in three equal installments.

As of December 31, 2021, the co-development technologies had not been agreed to and no portion of the technology fees has been paid.

Research and Development Agreements

On April 5, 2021, the Company entered into a two-year research and development agreement to develop high-areal-capacity battery electrodes to increase the energy density of batteries.

Pursuant to the terms of the agreement, the Company has committed to spend an aggregate amount of $ 580,375 , payable in eight quarterly installments of $ 72,547 .

During the year ended December 31, 2021, $ 217,641 of expense was recognized related to this agreement.

On August 18, 2021, the Company entered into a multi-year research and development agreement for a solid-state rechargeable battery, pursuant to which the Company has committed to spend an aggregate amount of $ 592,196 in eight quarterly payments of $ 74,025 .

During the year ended December 31, 2021, $ 123,375 of expense was recognized related to the agreement.

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Subsequent to December 31, 2020, the Company

entered into a consulting agreement with Keith Cochran to act in the capacity of Executive Vice President.

The consultant provided

management and business development services to the Company.

In consideration for services provided in January and February 2021,

the Company compensated the consultant with $10,000 per month and 10,000 shares of its common stock per month.

Effective March

1, 2021, the Company appointed Keith Cochran as President and Chief Operating Officer (“COO”) 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.

The COO will receive cash compensation of $250,000 per annum

and received an aggregate of 2,000,000 shares of its common stock, which shares will vest in four equal annual installments beginning

on March 1, 2022.

Additionally, the COO is eligible for incentive based share grants totaling up to 1,500,000 shares of the Company’s

common stock, which will be earned based on certain market cap achievement up to $4 billion.

Subsequent to December 31, 2020, the Company

entered into an at-will employment arrangement with its Senior Director of Product Development.

In connection with the hire of

its Senior Director of Product Development the Company agreed to issue 50,000 shares of its common stock which shares will vest

in four equal annual installments beginning on the first-year anniversary of the hire date.

Additionally, the Company granted

a five-year option to purchase 100,000 shares of common stock at an exercise price of $2.44 per share, pursuant to the 2018 Plan.

One-fourth of the options will vest on the first-year anniversary of the grant date and the remaining options vest monthly over

Operating Lease Renewal

to December 31, 2020, the Company entered into a lease addendum to extend the term of its original lease, located in San Diego,

California with respect to its research and development activities, from December 31, 2020 to June 30, 2021.

Monthly rental payments

under the renewed lease total $5,127, which is comprised of $4,572 of base rent plus $555 of association fees.

Series B Convertible Preferred Stock

Subsequent to December 31, 2020, the Company

issued 698,600 shares of common stock upon conversion of 13,972 shares of the Company’s Series B Preferred Stock.

Consulting Agreement

On September 30, 2020, the Company entered into a 2-year consulting agreement with a contractor to provide services as an Advisory Board Member related to government and defense acquisitions in exchange for 60,000 shares of restricted common stock.

Pursuant to the consulting agreement, the shares are subject to the Company’s claw back, based upon the satisfaction of meeting general performance parameters.

As of December 31, 2021 and 2020, it was probable the contractor would satisfy the performance parameters and, as a result, the grant date fair value of the common stock is being recognized as stock-based compensation expense ratably over the vesting period.

See Note 13 – Stockholders’ Equity (Deficiency) for additional details.

On October 1, 2021, the Company entered into a three-month consulting agreement with a contractor to provide corporate advisory and financial relations services in exchange for 30,000 shares of restricted common stock and a minimum of $ 60,000 .

Following the initial term, this contract shall be automatically renewed for a six month period, pursuant to which the Company will be obligated to pay a minimum of $ 120,000 and issue an additional 100,000 shares of restricted common stock as compensation.

Election of Directors and Appointment of Certain Officers

On June 10, 2021, the Board of Directors of the Company appointed three new independent directors to the Board, to hold office until the earlier of the expiration of the term of office of the director whom they have replaced, a successor is duly elected and qualified, or the earlier of such director’s death, resignation, disqualification, or removal.

Each director will receive quarterly cash compensation equal to $ 10,000 and each director will be granted 20,000 shares of common stock, which shares shall vest quarterly in 5,000 share installments with the first installment vesting immediately upon approval for uplisting to a national exchange.

On March 3, 2021, the Company entered into a consulting agreement with Keith Cochran to act in the capacity of Executive Vice President.

The consultant provided management and business development services to the Company.

In consideration for services provided in January and February 2021, the Company compensated the consultant with $ 10,000 per month and 10,000 shares of its common stock per month.

Effective March 1, 2021, the Company appointed Keith Cochran as President and Chief Operating Officer (“COO”) 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.

The COO will receive annual cash compensation and received an aggregate of 2,000,000 shares of its common stock, which shares will vest in four equal annual installments beginning on March 1, 2022.

Additionally, the COO is eligible for incentive-based share grants totaling up to 1,500,000 shares of the Company’s common stock, which will be earned based on certain market capitalization achievement up to $ 4 billion.

Sponsorship Agreement

On December 16, 2021, the Company entered into a one-year sponsorship agreement which provides the Company with the right to display its name and logo during certain events during the period from January 1, 2022 through December 31, 2022.

The Company paid an aggregate amount of $ 1,350,000 in sponsorship fees related to this agreement during the first quarter of 2022, which have been recorded as prepaid expenses and will be amortized over the performance period.

SUBSEQUENT EVENTS

During March 2022, the Company issued an aggregate of 70,143 shares of common stock upon the exercise of warrants pursuant to which the Company received an aggregate of $ 87,679 of gross proceeds.

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 9A. Controls and Procedures