What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-15 compared with 2022-05-16 · 228 added, 122 removed, 325 unchanged (52% of the section changed)

12 unchanged sentences

Right of use asset

Deferred financing costs

Liabilities and Stockholders' Equity

4 unchanged sentences

Lease liability, current portion

Loan payable, current portion

Deferred revenue

Notes payable, net of debt discount

Total Current Liabilities

Lease liability, non-current portion

Loan payable, non-current portion

Total Liabilities

3 unchanged sentences

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

none issued and outstanding at March 31, 2022 and December 31, 2021

none issued and outstanding at June 30, 2022 and December 31, 2021

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

none issued and outstanding at March 31, 2022 and December 31, 2021

none issued and outstanding at June 30, 2022 and December 31, 2021

Series C Preferred Stock, 400 shares designated;

none issued and outstanding at March 31, 2022 and December 31, 2021

none issued and outstanding at June 30, 2022 and December 31, 2021

Series D Preferred Stock, 650 shares designated;

none issued and outstanding at March 31, 2022 and December 31, 2021

none issued and outstanding at June 30, 2022 and December 31, 2021

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

104,870,715 shares issued and 104,792,072 outstanding at March 31, 2022, respectively, and 104,792,072 shares issued and outstanding at December 31, 2021

107,223,240 shares issued and 107,061,536 outstanding at June 30, 2022 respectively, and 104,792,072 shares issued and outstanding at December 31, 2021

Additional paid-in capital

Treasury stock, at cost;

194,704 and 0 shares held at March 31, 2022 and December 31, 2021

161,704 and 0 shares held at June 30, 2022 and December 31, 2021

Accumulated deficit

8 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Cost of revenue

6 unchanged sentences

( 2,887,006 )

Other Income (Expense)

( 9,340,461 )

( 4,360,163 )

Other (Expense) Income

Interest expense, net

Debt redemption costs

Amortization of debt discount

Change in fair value of accrued issuable equity

Total Other Income (Expense), net

Total Other (Expense) Income, net

( 5,254,685 )

( 3,027,143 )

( 9,391,240 )

( 4,741,866 )

Deemed dividend to Series D preferred stockholders

( 2,624,326 )

Net Loss Attributable to Common Stockholders

( 5,254,685 )

( 5,651,469 )

( 9,391,240 )

( 7,366,192 )

Net Loss Per Share

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2022

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022

Treasury Stock

14 unchanged sentences

( 27,294,114 )

FOR THE THREE MONTHS ENDED MARCH 31, 2021

Treasury stock issued upon the exercise of options

Common stock issued upon the exercise of warrants

Stock-based compensation:

Common stock issued for services

Amortization of restricted common stock

Amortization of stock options

Amortization of market-based awards

( 5,254,685 )

Balance - June 30, 2022

( 32,548,799 )

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021

Series B Convertible

Series D Convertible

Preferred Stock

Stockholders'

12 unchanged sentences

( 12,961,131 )

Issuance of Series D Convertible Preferred Stock, Common Stock, and warrants for cash (1)

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

Common stock issued upon the exercise of warrants

Stock-based compensation:

Common stock issued for services

Restricted common stock issued

Amortization of restricted common stock

Amortization of stock options

Amortization of market-based awards

( 3,027,143 )

Balance - June 30, 2021

( 15,988,274 )

(1) Represents relative fair value of preferred stock issued, net of cash issuance costs of $ 365,000 .

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

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended

For the Six Months Ended

Cash Flows From Operating Activities:

11 unchanged sentences

( 1,187,561 )

Security deposits

Right of use asset

Accounts payable

13 unchanged sentences

( 2,450,000 )

Proceeds from notes payable (1)

Payment of issuance costs

Payment of financing costs incurred in connection with the SEPA

Proceeds from the sale of Series D convertible preferred stock, common stock and warrants

Proceeds from the exercise of options

Proceeds from the exercise of warrants

Net Cash Provided By (Used In) Financing Activities

( 1,050,000 )

Net Decrease In Cash

( 4,730,625 )

Payment of financing costs

Net Cash Provided By Financing Activities

Net (Decrease) Increase In Cash

( 1,871,569 )

1 unchanged sentence

Cash - End of Period

(1) Face value of $ 5,000,000 , less $ 250,000 original issue discount.

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

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued

For the Three Months Ended

For the Six Months Ended

Supplemental Disclosures of Cash Flow Information:

1 unchanged sentence

Non-cash investing and financing activities:

Right of use asset for lease liability

Beneficial conversion feature on Series D convertible preferred stock

Common stock issued upon the conversion of Series D convertible preferred stock

Common stock held in treasury upon the vesting of restricted common stock

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

Treasury stock issued upon the exercise of stock options

Receivable recorded for pending cash deposit of stock option exercise proceeds

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

5 unchanged sentences

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.

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.

Basis of Presentation

3 unchanged sentences

GAAP for annual financial statements.

In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of March 31, 2022 and for the three months ended March 31, 2022 and 2021.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the operating results for the full year ending December 31, 2022 or any other period.

In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021.

The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the operating results for the full year ending December 31, 2022 or any other period.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related disclosures as of December 31, 2021 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on Form 10-K on March 28, 2022.

8 unchanged sentences

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

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Since the date of the Annual Report on Form 10-K for the year ended December 31, 2021, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note.

KULR TECHNOLOGY GROUP, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2022, the Company had cash of $ 10,132,676 and working capital of $ 9,975,086 .

For the three months ended March 31, 2022, the Company incurred a net loss of $ 4,136,555 and used cash in operations of approximately $ 4,574,490 .

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

During April 2022, the Company received an aggregate of $ 2,933,156 of gross proceeds upon the exercise of warrants.

1 unchanged sentence

On the same date, the Company entered into a Standby Equity Purchase Agreement, which gives the Company the right, but not the obligation, to sell up to $ 50,000,000 of its shares of common stock to the same investor during the commitment period.

See Note 10 – Subsequent Events for additional information on the aforementioned transactions.

See Note 9 – Stockholders’ Equity for additional information on the aforementioned transactions.

As of June 30, 2022, the Company had cash of $ 12,991,732 and working capital of $ 8,477,713 .

During the six months ended June 30, 2022, the Company incurred a net loss of $ 9,391,240 and used cash in operations of $ 9,010,695 .

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, combined with the cash availability pursuant to the Standby Equity Purchase Agreement, is sufficient in comparison to its anticipated cash usage for a period of at least twelve months after the filing date of these financial statements.

11 unchanged sentences

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 $ 9,709,169 and $ 5,659,918 as of March 31, 2022 and 2021, respectively.

There were uninsured balances of $ 12,491,732 and $ 14,363,301 as of June 30, 2022 and December 31, 2021, respectively.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Customer and Revenue Concentrations

2 unchanged sentences

For the Three Months Ended

March 31, 2022

For the Six Months Ended

June 30, 2022

December 31, 2021

Less than 10%

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

2 unchanged sentences

Vendor Concentrations

Vendor concentrations are as follows for the three months ended March 31, 2022 and 2021, respectively:

Vendor concentrations are as follows for the three and six months ended June 30, 2022 and 2021, respectively:

For the Three Months Ended

For the Six Months Ended

Less than 10%

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

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.

3 unchanged sentences

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

Inventory at March 31, 2022 and December 31, 2021 was comprised of the following:

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Inventory at June 30, 2022 and December 31, 2021 was comprised of the following:

Work-in-process

7 unchanged sentences

Identify the contract with the customer;

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Identify the performance obligations in the contract;

7 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Product sales

1 unchanged sentence

Total revenue

As of March 31, 2022 and December 31, 2021, respectively, the Company had $ 20,000 and $ 132,303 of deferred revenue, respectively, from contracts with customers.

As of June 30, 2022 and December 31, 2021, respectively, the Company had $ 20,000 and $ 132,303 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 three months ended March 31, 2022, the Company recognized $ 112,303 of revenues that were included in deferred revenue in a previous period.

During the three months ended March 31, 2021, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods.

As of March 31, 2022 and December 31, 2021, the Company had $ 101,868 and $ 84,324 , respectively, of deferred labor costs, which is included in prepaid expenses and other current assets in the Company’s unaudited condensed consolidated balance sheets.

During the three and six months ended June 30, 2022, the Company recognized $ 0 and $ 112,303 , respectively, that was included in deferred revenue in a previous period.

During the three and six months ended June 30, 2021, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2022 and December 31, 2021, the Company had $ 29,887 and $ 84,324 , respectively, of deferred labor costs, which is included in prepaid expenses and other current assets in the Company’s unaudited condensed consolidated balance sheets.

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

3 unchanged sentences

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.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the computation of basic and diluted net loss per common share:

For the Three Months Ended

For the Six Months Ended

Net loss attributable to common stockholders

1 unchanged sentence

( 5,651,469 )

( 9,391,240 )

( 7,366,192 )

Weighted-average common shares outstanding

1 unchanged sentence

( 2,019,011 )

( 2,000,000 )

( 2,187,514 )

( 1,337,017 )

weighted average accrued issuable equity

9 unchanged sentences

The Company adopted ASU 2020-10 effective January 1, 2022 and its adoption did not have a material impact on its condensed consolidated financial statements.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In May 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):

6 unchanged sentences

The Company adopted ASU 2021-04 effective January 1, 2022 and its adoption did not have a material impact on its condensed consolidated financial statements.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of March 31, 2022 and December 31, 2021, prepaid expenses and other current assets consisted of the following:

As of June 30, 2022 and December 31, 2021, prepaid expenses and other current assets consisted of the following:

Inventory deposits

Deferred labor costs

Professional fees

Subscriptions

Deferred labor costs

Receivable for option exercise

Total prepaid expenses

Includes $ 958,188 of prepaid marketing expenses pursuant to certain sponsorship agreements which will be amortized over the respective service periods of the agreements.

See Note 9 – Commitments and Contingencies.

Prepaid marketing costs consist of two sponsorship agreements with a marketing partner whereby the Company is required to make upfront payments.

These agreements expire in September 2022 and December 2022.

As of June 30, 2022, total prepayments made towards such contracts were $ 2,000,000 , of which $ 722,321 remains unamortized and is included in prepaid marketing costs.

See Note 10 – Commitments and Contingencies for additional information.

NOTE 4 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 March 31, 2022, the Company had outstanding deposits of $ 2,381,488 in connection with these agreements.

As of June 30, 2022, the Company had outstanding deposits of $ 2,582,958 in connection with these agreements.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

As of March 31, 2022 and December 31, 2021, accrued expenses and other current liabilities consisted of the following:

As of June 30, 2022 and December 31, 2021, accrued expenses and other current liabilities consisted of the following:

Legal and professional fees

2 unchanged sentences

Board compensation

Accrued cost of sales

Marketing and advertising fees

Accrued cost of sales

Total accrued expenses and other current liabilities

NOTE 6 ACCRUED ISSUABLE EQUITY

A summary of the accrued issuable equity activity during the three months ended March 31, 2022 is presented below:

For the Three Months Ended

March 31, 2022

A summary of the accrued issuable equity activity during the six months ended June 30, 2022 is presented below:

For the Six Months Ended

June 30, 2022

Beginning Balance

2 unchanged sentences

Ending Balance

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Accrued Issuable Equity for Services

During the three months ended March 31, 2022, the Company entered into certain contractual arrangements for services in exchange for a fixed number of shares of common stock of the Company.

During the six months ended June 30, 2022, 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 $ 45,800 .

During the three months ended March 31, 2022, the Company cancelled certain of its accrued issuable equity obligations of an aggregate of 33,333 of its shares with an aggregate fair value of $ 92,000 due to a reduction in investor relation services.

During the three months ended March 31, 2022, the Company recorded an aggregate of $ 43,040 of gains related to the reduction in fair value of accrued issuable equity (see Note 8 – Stockholders’ Equity, Stock-Based Compensation for additional details).

The fair value of the accrued but unissued shares as of March 31, 2022 was $ 182,281 .

During the six months ended June 30, 2022, the Company cancelled certain of its accrued issuable equity obligations of an aggregate of 33,333 of its shares, respectively, with an aggregate fair value of $ 92,000 , respectively, due to a reduction in investor relation services.

During the six months ended June 30, 2022, the Company recorded an aggregate of $ 95,720 of gains related to the reduction in fair value of accrued issuable equity (see Note 9 – Stockholders’ Equity, Stock-Based Compensation for additional details).

The fair value of the accrued but unissued shares as of June 30, 2022 was $ 148,801 .

NOTE 7 LEASES

The Company leases office space in San Diego, California.

During the three months ended March 31, 2022 and 2021, operating lease expense was $ 74,080 and $ 15,598 , respectively.

As of March 31, 2022, the Company does not have any financing leases.

Maturities of lease liabilities as of March 31, 2022 were as follows:

During the three and six months ended June 30, 2022, operating lease expense was $ 57,849 and $ 131,930 , respectively.

During the three and six months ended June 30, 2021, operating lease expense was $ 39,805 and $ 55,207 , respectively.

As of June 30, 2022, the Company did not have any financing leases.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Maturities of lease liabilities as of June 30, 2022 were as follows:

Maturity Date

April 1 through December 31, 2022

July 1 through December 31, 2022

Total lease payments

4 unchanged sentences

Supplemental cash flow information related to the lease was as follows:

For the Three Months Ended

March 31, 2022

For the Six Months Ended

June 30, 2022

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from operating lease

NOTE 8 NOTES AND LOANS PAYABLE

Note Purchase Agreement

On May 13, 2022, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with YAII PN, Ltd., a Cayman Island exempt limited partnership (the “Investor”), pursuant to which the Investor purchased a full recourse promissory note with an initial principal amount equal to $ 5,000,000 (the “Promissory Note”) for cash proceeds of $ 4,750,000 .

The Promissory Note included an original issue discount of $ 250,000 , a structuring fee of $ 10,000 , and legal fees of $ 7,200 , which represents the difference between the principal and proceeds received.

The original issue discount, along with structuring fees were recorded as a debt discount which is being amortized over the term of the Note using the effective interest rate method.

The Promissory Note carries an interest rate of 10 % per annum.

The Company is required to repay the principal and interest in monthly installments by the maturity date of November 13, 2022.

A summary of notes payable activity during the six months ended June 30, 2022 is presented below:

Balance, January 1, 2022

Proceeds from promissory note

Debt discount

Amortization of debt discount

Outstanding, June 30, 2022

Paycheck Protection Program Loan

On April 27, 2020, the Company received approximately $ 155,000 of cash proceeds pursuant to an unsecured 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.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 their respective PPP Loans.

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 initial term of the loan was two years and has been extended to five years with a maturity date of April 27, 2025.

The Company has applied for forgiveness of the PPP loan, which was approved by the Small Business Administration and the PPP loan was fully forgiven effective July 18, 2022.

During the three and six months ended June 30, 2022, the Company recognized interest expense of $ 387 and $ 651 , respectively, related to the PPP loan.

As of June 30, 2022 and December 31, 2021, the Company’s accrued expense related to the loan was $ 2,352 and $ 1,701 , respectively.

NOTE 9 STOCKHOLDERS’ EQUITY

During the three months ended March 31, 2022 and 2021, the Company issued an aggregate of 6,000 and 20,000 shares of immediately vested common stock with a grant date value of $ 43,160 and $ 49,800 , respectively, for legal and consulting services.

Treasury Stock

The Company's equity-based compensation plan allows for the grant of non-vested stock options, RSUs and RSAs to its employees pursuant to the terms of its equity incentive plan.

Under the provision of the plan, unless otherwise elected, participants fulfill their related income tax withholding obligation by having shares withheld at the time of vesting.

The shares withheld are then transferred to the Company's treasury stock at cost.

During the three months ended March 31, 2022, the Company withheld 194,704 shares valued at $ 439,728 in connection with the vesting of restricted common stock awards during the period.

Standby Equity Purchase Agreement

On May 13, 2022, KULR Technology Group, Inc.

(the “Company”) entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd.

(“Yorkville”).

Pursuant to the SEPA, the Company shall have the right, but not the obligation, to sell to Yorkville up to $ 50,000,000 of its shares of common stock, par value $ 0.0001 per share, at the Company’s request any time during the commitment period commencing on May 13, 2022 and terminating on the earliest of (i) the first day of the month following the 24-month anniversary of the SEPA and (ii) the date on which Yorkville shall have made payment of any advances requested pursuant to the SEPA for shares of the Company’s common stock equal to the commitment amount of $ 50,000,000 .

Each sale the Company requests under the SEPA (an “Advance”) may be for a number of shares of common stock with an aggregate value of up to $ 5,000,000 .

The shares would be purchased at 98.0 % of the Market Price (as defined below) and would be subject to certain limitations, including that Yorkville could not purchase any shares that would result in it owning more than 4.99 % of the Company’s outstanding common stock at the time of an Advance (the “Ownership Limitation”) or a cumulative aggregate of 19.9 % of the Company’s outstanding common stock as of the date of the SEPA (the “Exchange Cap”).

The Exchange Cap will not apply under certain circumstances, including to any sales of common stock under the SEPA that equal or exceed the Minimum Price (as defined in Section 312.03 of the NYSE Listed Company Manual).

“Market Price” is defined in the SEPA as the average of the VWAPs (as defined below) during each of the three consecutive trading days commencing on the trading day following the Company’s submission of an Advance notice to Yorkville.

“VWAP” is defined in the SEPA to mean, for any trading day, the daily volume weighted average price of the Company’s common stock for such date on the NYSE American as reported by Bloomberg L.P.

during regular trading hours.

There were no issuances pursuant to the SEPA during the three and six months ended June 30, 2022.

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.

During April 2022, the Company issued an aggregate of 2,346,525 shares of common stock upon the exercise of warrants pursuant to which the Company received an aggregate of $ 2,933,156 of gross proceeds.

In connection with an inducement offer from the Company, the Company issued new warrants to purchase an aggregate of 2,346,525 shares of common stock at an exercise price of $ 1.00 per share (the “New Warrants”).

The New Warrants expire on December 31, 2025.

The value of the New Warrants provided to the exercising warrant holders was deemed to be an offering cost associated with an equity financing to raise capital, pursuant to ASU 2021-04.

Because the New Warrants were determined to be classified as equity, the credit to additional paid-in capital associated with the issuance of the New Warrants is offset by the debit to additional paid-in capital related to the offering cost.

The warrants had a grant date value of $ 3,657,763 , calculated using the Black Scholes pricing model with the following assumptions used:

risk free rate – 2.88 %, expected term – 3.69 , expected volatility – 100 %, expected dividends – 0 %.

KULR TECHNOLOGY GROUP, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of warrants activity during the three months ended March 31, 2022 is presented below:

During the three and six months ended June 30, 2022, the Company issued an aggregate of 6,000 and 12,000 shares of immediately vested common stock with a grant date value of $ 10,261 and $ 53,421 , respectively, for legal services.

During the six months ended June 30, 2022, the Company issued an aggregate of 35,500 shares of common stock upon the exercise of stock options, of which 33,000 shares were issued from treasury stock.

Treasury Stock

The 2018 KULR Technology Group Equity Incentive Plan (the “Plan”) allows for the grant of non-vested stock options, RSUs and RSAs to the Company’s employees pursuant to the terms of the Plan.

Under the provision of the Plan, unless otherwise elected, participants fulfill their related income tax withholding obligation by having shares withheld at the time of vesting.

The shares withheld are then transferred to the Company’s treasury stock at cost.

During the six months ended June 30, 2022, the Company withheld 194,704 shares valued at $ 439,728 in connection with the vesting of restricted common stock awards during the period.

Pursuant to the exercise of options, the Company transferred 33,000 shares that were held in treasury for an aggregate of $ 28,224 gross proceeds.

As of June 30, 2022, the Company has 161,704 shares of held in treasury valued at $ 365,199 .

A summary of warrants activity during the six months ended June 30, 2022 is presented below:

Outstanding, January 1, 2022

Outstanding, March 31, 2022

Exercisable, March 31, 2022

A summary of outstanding and exercisable warrants as of March 31, 2022 is presented below:

( 2,416,668 )

Outstanding, June 30, 2022

Exercisable, June 30, 2022

See the Common Stock discussion above for additional information.

A summary of outstanding and exercisable warrants as of June 30, 2022 is presented below:

Warrants Outstanding

1 unchanged sentence

Remaining Life

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Stock Options

1 unchanged sentence

In applying the Black-Scholes option pricing model, the Company used the following assumptions:

For The Three Months Ended

For The Six Months Ended

Risk free interest rate

3 unchanged sentences

Expected dividends

For the three months ended March 31, 2022 and 2021, the weighted average grant date fair value per share of options was $ 3.23 and $ 0.36 , respectively.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of options activity (excluding Market-Based Awards) during the three months ended March 31, 2022 is presented below:

For the six months ended June 30, 2022 and 2021, the weighted average grant date fair value per share of options was $ 1.47 and $ 0.66 , respectively.

A summary of options activity (excluding Market-Based Awards) during the six months ended June 30, 2022 is presented below:

Outstanding, January 1, 2022

Outstanding, March 31, 2022

Exercisable, March 31, 2022

The following table presents information related to stock options (excluding market-based option awards) as of March 31, 2022:

Outstanding, June 30, 2022

Exercisable, June 30, 2022

The following table presents information related to stock options (excluding market-based option awards) as of June 30, 2022:

Options Outstanding

1 unchanged sentence

Remaining Life

As of March 31, 2022, there was $ 233,996 of unrecognized stock-based compensation expense related to the above stock options, which will be recognized over the weighted average remaining vesting period of 3.0 years.

KULR TECHNOLOGY GROUP, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2022, there was $ 292,920 of unrecognized stock-based compensation expense related to the above stock options, which will be recognized over the weighted average remaining vesting period of 3.2 years.

Restricted Common Stock

The following table presents information related to restricted common stock (excluding Market-Based Awards) as of March 31, 2022:

The following table presents information related to restricted common stock (excluding Market-Based Awards) as of June 30, 2022:

Weighted Average

1 unchanged sentence

Non-vested balance, January 1, 2022

Non-vested shares, March 31, 2022

As of March 31, 2022, there was $ 4,475,834 of unrecognized stock-based compensation expense related to restricted stock that will be recognized over the weighted average remaining vesting period of 2.9 years.

Non-vested shares, June 30, 2022

As of June 30, 2022, there was $ 4,365,706 of unrecognized stock-based compensation expense related to restricted stock that will be recognized over the weighted average remaining vesting period of 2.7 years.

Market-Based Awards

The following table presents information related to market-based awards outstanding as of March 31, 2022:

The following table presents information related to market-based awards outstanding as of June 30, 2022:

Restricted stock units

1 unchanged sentence

The grant date value for the market-based awards is being amortized over the derived service periods of the awards.

As of March 31, 2022, there was $ 2,648,528 of unrecognized stock-based compensation expense related to market-based awards which will be amortized over the remaining weighted average vesting period of 1.44 years.

As of March 31, 2022, none of the market-based awards have vested.

As of June 30, 2022, there was $ 2,083,108 of unrecognized stock-based compensation expense related to market-based awards which will be amortized over the remaining weighted average vesting period of 1.4 years.

As of June 30, 2022, none of the market-based awards have vested.

Stock-Based Compensation

During the three months ended March 31, 2022 and 2021, the Company recognized stock-based compensation expense of $ 1,242,922 and $ 387,972 , respectively, related to restricted common stock, warrants and stock options, of which $ 1,234,814 and $ 380,567 , respectively are included within selling, general and administrative expenses, and $ 8,108 and $ 7,405 , respectively are included within research and development expenses on the unaudited condensed consolidated statements of operations.

The following table presents information related to stock-based compensation for the three months ended March 31, 2022 and 2021:

During the three and six months ended June 30, 2022, the Company recognized stock-based compensation expense of $ 1,043,545 and $ 2,286,467 , respectively, related to restricted common stock, warrants and stock options, of which $ 1,033,851 and $ 2,268,665 , respectively are included within selling, general and administrative expenses, and $ 9,694 and $ 17,802 , respectively are included within research and development expenses in the unaudited condensed consolidated statements of operations.

During the three and six months ended June 30, 2021, the Company recognized stock-based compensation expense of $ 1,085,891 and $ 1,473,863 , respectively, related to restricted common stock, warrants and stock options, of which $ 1,078,106 and $ 1,458,673 , respectively are included within selling, general and administrative expenses, and $ 7,785 and $ 15,190 , respectively are included within research and development expenses on the unaudited condensed consolidated statements of operations.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents information related to stock-based compensation for the three months ended June 30, 2022 and 2021:

For The Three Months Ended

For The Six Months Ended

Common stock for services

3 unchanged sentences

Accrued issuable equity (common stock)

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 COMMITMENTS AND CONTINGENCIES

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 has committed to pay an aggregate of $ 1,350,000 in sponsorship fees which will be amortized over the performance period.

The Company paid sponsorship fees of $ 900,000 during the three months ended March 31, 2022 and is recorded as prepaid expenses.

During the three months ended March 31, 2022, $ 199,107 of sponsorship fees expense was recognized related to the agreement.

NOTE 10 SUBSEQUENT EVENTS

In connection with the early exercise of such warrants, the Company issued new warrants to purchase an aggregate of 2,346,525 shares of common stock at an exercise price of $ 1.00 per share.

The new warrants expire on December 31, 2025.

Standy Equity Purchase Agreement

On May 13, 2022, KULR Technology Group, Inc.

(the “Company”) entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd.

(“Yorkville”).

Each sale the Company requests under the SEPA (an “Advance”) may be for a number of shares of common stock with an aggregate value of up to $ 5,000,000 .

The shares would be purchased at 98.0 % of the Market Price (as defined below) and would be subject to certain limitations, including that Yorkville could not purchase any shares that would result in it owning more than 4.99 % of the Company’s outstanding common stock at the time of an Advance (the "Ownership Limitation") or an aggregate of 19.9 % of the Company's outstanding common stock as of the date of the SEPA (the "Exchange Cap").

during regular trading hours.

Note Purchase Agreement

On May 13, 2022, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with Yorkville, pursuant to which the Company issued to the Investor a promissory note with an initial principal amount equal to $ 5,000,000 (the “Promissory Note”) at a purchase price equal to 95.0 % of the principal amount of the Convertible Debentures.

The Promissory Note carries an interest rate of 10 % per annum.

On June 15, 2022, the Company amended the Second Sponsorship Agreement (see Note 3 - Prepaid Expenses and Other Current Assets) to extend the term through December 31, 2023.

The agreement provides the Company with the right to publicize and highlight the sponsorship and display its name and logo during certain events and use digital marketing and social media platforms throughout the 2023 calendar year.

The Company has committed to pay an aggregate of $ 1,450,000 in sponsorship fees in three installments, which are due July 2022, January 2023, and April 2023.

On July 8, 2022, the Company paid $ 500,000 which will be recorded as a prepaid expense and amortized over the performance period of January 1, 2023 to December 31, 2023 using the straight-line method.

The total remaining commitment amount to be paid for sponsorship agreements is $ 950,000 .

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

What changed 10-Q

Item 1. Financial Statements