KULR Technology Group, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ 2022 2021 ​ ​ (unaudited) ​ ​ ​ Assets ​ ​ Current Assets: ​ ​ Cash ​ $ 12,991,732 ​ $ 14,863,301 Accounts receivable ​ 564,229 ​ 136,326 Inventory ​ 284,572 ​ 191,311 Prepaid expenses and other current assets ​ 1,786,145 ​ 570,360 Total Current Assets ​ 15,626,678 ​ 15,761,298 Property and equipment, net ​ 409,992 ​ 374,475 Vendor deposits ​ ​ 2,582,958 ​ ​ 2,153,950 Security deposits ​ ​ 58,941 ​ ​ 58,941 Intangible assets, net ​ ​ 210,663 ​ ​ 216,952 Right of use asset ​ ​ 419,142 ​ ​ 665,687 Deferred financing costs ​ ​ 72,800 ​ ​ — Total Assets ​ $ 19,381,174 ​ $ 19,231,303 ​ ​ ​ ​ Liabilities and Stockholders' Equity ​ ​ ​ Current Liabilities: ​ ​ ​ Accounts payable ​ $ 301,480 ​ $ 454,507 Accrued expenses and other current liabilities ​ 1,571,755 ​ 1,163,227 Accrued issuable equity ​ ​ 148,801 ​ ​ 290,721 Lease liability, current portion ​ ​ 214,166 ​ ​ 262,379 Loan payable, current portion ​ ​ 56,744 ​ ​ 155,226 Deferred revenue ​ ​ 20,000 ​ ​ 132,303 Notes payable, net of debt discount ​ ​ 4,836,019 ​ ​ — Total Current Liabilities ​ 7,148,965 ​ 2,458,363 Lease liability, non-current portion ​ ​ 212,852 ​ ​ 407,898 Loan payable, non-current portion ​ ​ 98,482 ​ ​ — Total Liabilities ​ ​ 7,460,299 ​ ​ 2,866,261 ​ ​ ​ ​ Commitments and contingencies (Note 10) ​ ​ ​ ​ ​ 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 June 30, 2022 and December 31, 2021 ​ ​ — ​ ​ — Series B Convertible Preferred Stock, 31,000 shares designated; none issued and outstanding at June 30, 2022 and December 31, 2021 ​ — ​ — Series C Preferred Stock, 400 shares designated; none issued and outstanding at June 30, 2022 and December 31, 2021 ​ ​ — ​ ​ — Series D Preferred Stock, 650 shares designated; none issued and outstanding at June 30, 2022 and December 31, 2021 ​ ​ — ​ ​ — Common stock, $ 0.0001 par value, 500,000,000 shares authorized; 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 ​ 10,722 ​ 10,479 Additional paid-in capital ​ 44,824,151 ​ 39,512,122 Treasury stock, at cost; 161,704 and 0 shares held at June 30, 2022 and December 31, 2021 ​ ​ ( 365,199 ) ​ ​ — Accumulated deficit ​ ( 32,548,799 ) ​ ( 23,157,559 ) Total Stockholders' Equity ​ 11,920,875 ​ 16,365,042 Total Liabilities and Stockholders' Equity ​ $ 19,381,174 ​ $ 19,231,303 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ ​ 3 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ For the Six Months Ended ​ ​ June 30, ​ June 30, ​ 2022 2021 2022 2021 Revenue ​ $ 587,546 ​ $ 628,244 ​ $ 788,045 ​ $ 1,046,149 Cost of revenue ​ 423,672 ​ 439,206 ​ ​ 546,590 ​ ​ 714,474 Gross Profit ​ 163,874 ​ 189,038 ​ 241,455 ​ 331,675 ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Expenses ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ 999,484 ​ 352,741 ​ 1,720,831 ​ 475,724 Selling, general, and administrative ​ 4,326,162 ​ 2,723,303 ​ 7,861,085 ​ 4,216,114 Total Operating Expenses ​ 5,325,646 ​ 3,076,044 ​ 9,581,916 ​ 4,691,838 Loss From Operations ​ ( 5,161,772 ) ​ ( 2,887,006 ) ​ ( 9,340,461 ) ​ ( 4,360,163 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Other (Expense) Income ​ ​ ​ ​ ​ ​ ​ ​ Interest expense, net ​ ( 42,374 ) ​ ( 766 ) ​ ( 43,280 ) ​ ( 1,631 ) Debt redemption costs ​ ​ — ​ ​ ( 140,000 ) ​ ​ — ​ ​ ( 140,000 ) Amortization of debt discount ​ ​ ( 103,219 ) ​ ​ ( 20,074 ) ​ ​ ( 103,219 ) ​ ​ ( 128,198 ) Change in fair value of accrued issuable equity ​ ​ 52,680 ​ ​ 20,703 ​ ​ 95,720 ​ ​ ( 111,874 ) Total Other (Expense) Income, net ​ ( 92,913 ) ​ ( 140,137 ) ​ ( 50,779 ) ​ ( 381,703 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Loss ​ ​ ( 5,254,685 ) ​ ​ ( 3,027,143 ) ​ ​ ( 9,391,240 ) ​ ​ ( 4,741,866 ) Deemed dividend to Series D preferred stockholders ​ ​ — ​ ​ ( 2,624,326 ) ​ ​ — ​ ​ ( 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 ​ ​ ​ ​ ​ ​ ​ ​ - Basic and Diluted ​ $ ( 0.05 ) ​ $ ( 0.06 ) ​ $ ( 0.09 ) ​ $ ( 0.08 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average Number of Common Shares Outstanding ​ ​ ​ ​ ​ ​ ​ ​ - Basic and Diluted ​ 104,545,799 ​ 92,513,238 ​ 103,537,473 ​ 91,302,814 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ ​ 4 Table of Contents ​ KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common Stock ​ Paid-In ​ Treasury Stock ​ Accumulated ​ Stockholders' ​ Shares Amount Capital Shares Amount Deficit Equity Balance - January 1, 2022 104,792,072 ​ $ 10,479 ​ $ 39,512,122 ​ — ​ $ — ​ $ ( 23,157,559 ) ​ $ 16,365,042 Treasury stock held upon the vesting of restricted common stock ​ — ​ ​ — ​ ​ — ​ 194,704 ​ ​ ( 439,728 ) ​ ​ — ​ ​ ( 439,728 ) Common stock issued upon the exercise of warrants 70,143 ​ 7 ​ 87,672 ​ — ​ ​ — ​ — ​ 87,679 Common stock issued upon the exercise of options ​ 2,500 ​ ​ — ​ ​ 5,075 ​ — ​ ​ — ​ ​ — ​ ​ 5,075 Stock-based compensation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common stock issued for services ​ 6,000 ​ ​ 1 ​ ​ 43,159 ​ — ​ ​ — ​ ​ — ​ ​ 43,160 Amortization of restricted common stock ​ — ​ ​ — ​ ​ 519,231 ​ — ​ ​ — ​ ​ — ​ ​ 519,231 Amortization of stock options ​ — ​ ​ — ​ ​ 15,883 ​ — ​ ​ — ​ ​ — ​ ​ 15,883 Amortization of market-based awards ​ — ​ ​ — ​ ​ 730,048 ​ — ​ ​ — ​ ​ — ​ ​ 730,048 Net loss ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ ( 4,136,555 ) ​ ​ ( 4,136,555 ) Balance - March 31, 2022 104,870,715 ​ ​ 10,487 ​ ​ 40,913,190 ​ 194,704 ​ ​ ( 439,728 ) ​ ​ ( 27,294,114 ) ​ ​ 13,189,835 Treasury stock issued upon the exercise of options ​ — ​ ​ — ​ ​ ( 46,305 ) ​ ( 33,000 ) ​ ​ 74,529 ​ ​ — ​ ​ 28,224 Common stock issued upon the exercise of warrants ​ 2,346,525 ​ ​ 234 ​ ​ 2,932,922 ​ — ​ ​ — ​ ​ — ​ ​ 2,933,156 Stock-based compensation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common stock issued for services ​ 6,000 ​ ​ 1 ​ ​ 10,260 ​ — ​ ​ — ​ ​ — ​ ​ 10,261 Amortization of restricted common stock ​ — ​ ​ — ​ ​ 422,128 ​ — ​ ​ — ​ ​ — ​ ​ 422,128 Amortization of stock options ​ — ​ ​ — ​ ​ 26,535 ​ — ​ ​ — ​ ​ — ​ ​ 26,535 Amortization of market-based awards ​ — ​ ​ — ​ ​ 565,421 ​ — ​ ​ — ​ ​ — ​ ​ 565,421 Net loss ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ ( 5,254,685 ) ​ ​ ( 5,254,685 ) Balance - June 30, 2022 107,223,240 ​ $ 10,722 ​ $ 44,824,151 ​ 161,704 ​ $ ( 365,199 ) ​ $ ( 32,548,799 ) ​ $ 11,920,875 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 ​ ​ Series B Convertible ​ Series D Convertible ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ Total ​ ​ Preferred Stock ​ Preferred Stock ​ Common Stock ​ Paid-In ​ Accumulated ​ Stockholders' ​ Shares Amount Shares Amount Shares Amount Capital Deficit Equity Balance - January 1, 2021 13,972 ​ $ 1 ​ — ​ $ — ​ 89,908,600 ​ $ 8,991 ​ $ 17,355,968 ​ $ ( 11,246,408 ) ​ $ 6,118,552 Common stock issued upon conversion of Series B Convertible Preferred Stock ( 13,972 ) ​ ( 1 ) ​ — ​ ​ — ​ 698,600 ​ 70 ​ ( 69 ) ​ — ​ — Stock-based compensation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common stock issued for services — ​ — ​ — ​ ​ — ​ 20,000 ​ 2 ​ 49,798 ​ — ​ 49,800 Restricted common stock issued ​ — ​ ​ — ​ — ​ ​ — ​ 2,000,000 ​ ​ 200 ​ ​ ( 200 ) ​ ​ — ​ ​ — Amortization of restricted common stock — ​ — ​ — ​ ​ — ​ — ​ — ​ 126,625 ​ — ​ 126,625 Amortization of stock options ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 9,112 ​ ​ — ​ ​ 9,112 Amortization of market-based awards ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 130,245 ​ ​ — ​ ​ 130,245 Net loss — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ( 1,714,723 ) ​ ( 1,714,723 ) Balance - March 31, 2021 ​ — ​ ​ — ​ — ​ ​ — ​ 92,627,200 ​ ​ 9,263 ​ ​ 17,671,479 ​ ​ ( 12,961,131 ) ​ ​ 4,719,611 Issuance of Series D Convertible Preferred Stock, Common Stock, and warrants for cash (1) ​ — ​ ​ — ​ 650 ​ ​ — ​ 1,300,000 ​ ​ 130 ​ ​ 6,134,870 ​ ​ — ​ ​ 6,135,000 Common stock issued upon the conversion of Series D Convertible Preferred Stock ​ — ​ ​ — ​ ( 650 ) ​ ​ — ​ 3,170,730 ​ ​ 317 ​ ​ ( 317 ) ​ ​ — ​ ​ — Common stock issued upon the exercise of warrants ​ — ​ ​ — ​ — ​ ​ — ​ 3,000,000 ​ ​ 300 ​ ​ 3,712,200 ​ ​ — ​ ​ 3,712,500 Stock-based compensation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common stock issued for services ​ — ​ ​ — ​ — ​ ​ — ​ 55,000 ​ ​ 6 ​ ​ 109,994 ​ ​ — ​ ​ 110,000 Restricted common stock issued ​ — ​ ​ — ​ — ​ ​ — ​ 415,000 ​ ​ 42 ​ ​ ( 42 ) ​ ​ — ​ ​ — Amortization of restricted common stock ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 433,689 ​ ​ — ​ ​ 433,689 Amortization of stock options ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 15,779 ​ ​ — ​ ​ 15,779 Amortization of market-based awards ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ 489,774 ​ ​ — ​ ​ 489,774 Net loss ​ — ​ ​ — ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 3,027,143 ) ​ ​ ( 3,027,143 ) Balance - June 30, 2021 ​ — ​ $ — ​ — ​ $ — ​ 100,567,930 ​ $ 10,058 ​ $ 28,567,426 ​ $ ( 15,988,274 ) ​ $ 12,589,210 (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. ​ ​ 5 Table of Contents ​ KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Six Months Ended ​ ​ June 30, ​ 2022 2021 Cash Flows From Operating Activities: ​ ​ Net loss ​ $ ( 9,391,240 ) ​ $ ( 4,741,866 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ Amortization of debt discount ​ ​ 103,219 ​ ​ 128,198 Non-cash lease expense ​ ​ 102,905 ​ ​ — Depreciation and amortization expense ​ 88,548 ​ 9,908 Change in fair value of accrued issuable equity ​ ​ ( 95,720 ) ​ ​ 111,874 Stock-based compensation ​ 2,286,467 ​ 1,473,863 Changes in operating assets and liabilities: ​ ​ ​ ​ Accounts receivable ​ ( 427,903 ) ​ ( 559,292 ) Inventory ​ ( 93,261 ) ​ ( 127,006 ) Prepaid expenses and other current assets ​ ( 1,187,561 ) ​ ( 338,070 ) Security deposits ​ ​ — ​ ​ ( 50,213 ) Right of use asset ​ ​ — ​ ​ 21,048 Accounts payable ​ ( 153,028 ) ​ 53,140 Accrued expenses and other current liabilities ​ ( 31,199 ) ​ ( 51,986 ) Lease liability ​ ​ ( 99,619 ) ​ ​ ( 20,392 ) Deferred revenue ​ ​ ( 112,303 ) ​ ​ 9,229 Total Adjustments ​ 380,545 ​ 660,301 Net Cash Used In Operating Activities ​ ​ ( 9,010,695 ) ​ ( 4,081,565 ) Cash Flows From Investing Activities: ​ ​ ​ ​ ​ ​ Vendor deposits for property and equipment ​ ​ ( 429,008 ) ​ ​ — Purchases of property and equipment ​ ​ ( 117,776 ) ​ ​ ( 36,492 ) Net Cash Used In Investing Activities ​ ​ ( 546,784 ) ​ ​ ( 36,492 ) Cash Flows from Financing Activities: ​ ​ ​ ​ Repayments of notes payable ​ — ​ ( 2,450,000 ) Proceeds from notes payable (1) ​ ​ 4,750,000 ​ ​ — Payment of issuance costs ​ ​ ( 17,200 ) ​ ​ — Payment of financing costs incurred in connection with the SEPA ​ ​ ( 72,800 ) ​ ​ — Proceeds from the sale of Series D convertible preferred stock, common stock and warrants ​ ​ — ​ ​ 6,500,000 Proceeds from the exercise of options ​ ​ 5,075 ​ ​ 3,712,500 Proceeds from the exercise of warrants ​ ​ 3,020,835 ​ ​ — Payment of financing costs ​ ​ — ​ ​ ( 365,000 ) Net Cash Provided By Financing Activities ​ 7,685,910 ​ 7,397,500 Net (Decrease) Increase In Cash ​ ( 1,871,569 ) ​ 3,279,443 Cash - Beginning of Period ​ 14,863,301 ​ 8,880,140 Cash - End of Period ​ $ 12,991,732 ​ $ 12,159,583 (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. ​ 6 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Six Months Ended ​ June 30, ​ 2022 2021 Supplemental Disclosures of Cash Flow Information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid during the period for: ​ ​ ​ ​ ​ ​ Interest ​ $ 43,553 ​ $ 735 ​ ​ ​ ​ ​ ​ ​ Non-cash investing and financing activities: ​ ​ ​ ​ ​ ​ Right of use asset for lease liability ​ $ 143,640 ​ $ 814,817 Beneficial conversion feature on Series D convertible preferred stock ​ $ — ​ $ 2,624,326 Common stock issued upon the conversion of Series D convertible preferred stock ​ $ — ​ $ 317 Common stock held in treasury upon the vesting of restricted common stock ​ $ ( 439,728 ) ​ $ — Common stock issued upon the conversion of Series B Convertible Preferred Stock ​ $ — ​ $ 70 Treasury stock issued upon the exercise of stock options ​ $ 74,529 ​ $ — Receivable recorded for pending cash deposit of stock option exercise proceeds ​ $ 28,224 ​ $ — ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ ​ 7 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1 ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTANTIES Organization and Operations 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. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. 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 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. Risks and Uncertainties 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. For example, in response to an outbreak of infection in Shanghai, beginning in March 2022, governmental authorities in China implemented a lockdown order in that city, significantly slowing economic and business activity in that region. We continue to monitor the rapidly evolving situation and guidance from international and domestic authorities and may take additional actions based on their recommendations and requirements or as we otherwise see fit to protect the health and safety of our employees, customers, partners and suppliers. 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. ​ 8 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 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. Liquidity During April 2022, the Company received an aggregate of $ 2,933,156 of gross proceeds upon the exercise of warrants. On May 13, 2022, the Company issued a $ 5,000,000 promissory note to an investor for gross proceeds of $ 4,750,000 . 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 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. 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 unaudited condensed consolidated 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. 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 payable. Cash Concentrations 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 institution. There were uninsured balances of $ 12,491,732 and $ 14,363,301 as of June 30, 2022 and December 31, 2021, respectively. 9 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenues ​ Accounts Receivable ​ ​ For the Three Months Ended ​ For the Six Months Ended ​ ​ ​ ​ ​ ​ June 30, ​ June 30, ​ As of As of ​ 2022 2021 2022 2021 June 30, 2022 ​ December 31, 2021 Customer A * ​ 69 % 12 % 62 % * ​ 42 % Customer B 56 % * ​ 42 % * ​ 59 % * ​ Customer C 28 % * ​ 21 % * ​ 30 % 34 % Customer D * ​ 20 % * ​ 14 % * ​ * ​ Customer E * ​ * ​ * ​ 12 % * ​ * ​ Customer F * ​ * ​ 11 % * * ​ * ​ Customer G ​ * ​ * ​ * ​ * ​ * ​ 21 % Total 84 % 89 % 86 % 88 % 89 % 97 % * 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 customers. Vendor Concentrations 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 ​ ​ June 30, June 30, ​ ​ 2022 2021 2022 2021 ​ Vendor A 65 % * ​ 51 % * ​ Vendor B * ​ 85 % * 43 % Vendor C * ​ * ​ * ​ 48 % Vendor D * ​ * ​ 17 % * ​ ​ 65 % 85 % 68 % 91 % * Less than 10% Inventory 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 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. 10 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Inventory at June 30, 2022 and December 31, 2021 was comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2022 ​ 2021 Work-in-process ​ $ 91,188 ​ $ 5,500 Finished goods ​ 193,384 ​ 185,811 Total inventory ​ $ 284,572 ​ $ 191,311 ​ 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: ● Step 1: Identify the contract with the customer; ● Step 2: Identify the performance obligations in the contract; ● Step 3: Determine the transaction price; ● Step 4: Allocate the transaction price to the performance obligations in the contract; and ● Step 5: 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 Three Months Ended ​ For the Six Months Ended ​ ​ June 30, ​ June 30, ​ 2022 2021 2022 2021 Product sales ​ $ 557,664 ​ $ 577,360 ​ $ 730,263 ​ $ 755,609 Contract services ​ 29,882 ​ 50,884 ​ 57,782 ​ 290,540 Total revenue ​ $ 587,546 ​ $ 628,244 ​ $ 788,045 ​ $ 1,046,149 ​ 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 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. 11 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 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. 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. 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. ​ 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 ​ ​ June 30, ​ June 30, ​ ​ 2022 2021 ​ 2022 2021 Numerator: ​ ​ ​ ​ Net loss attributable to common stockholders ​ $ ( 5,254,685 ) ​ $ ( 5,651,469 ) ​ $ ( 9,391,240 ) ​ $ ( 7,366,192 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: ​ ​ ​ ​ Weighted-average common shares outstanding ​ 106,348,239 ​ 94,513,238 ​ 105,578,313 ​ 92,639,830 Less: weighted-average unvested restricted shares ​ ( 2,019,011 ) ​ ( 2,000,000 ) ​ ( 2,187,514 ) ​ ( 1,337,017 ) Add: weighted average accrued issuable equity ​ 216,571 ​ — ​ 146,674 ​ — Denominator for basic and diluted net loss per share ​ ​ 104,545,799 ​ ​ 92,513,238 ​ ​ 103,537,473 ​ ​ 91,302,814 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss per share: ​ ​ ​ ​ Basic and diluted ​ $ ( 0.05 ) ​ $ ( 0.06 ) ​ $ ( 0.09 ) ​ $ ( 0.08 ) ​ The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ 2022 2021 Unvested restricted stock ​ 1,957,500 ​ 2,475,000 Unvested market -based equity awards ​ 3,000,000 ​ 3,000,000 Options 482,216 540,000 Warrants ​ 2,524,410 ​ 6,387,911 Total 7,964,126 12,402,911 ​ Recently Adopted Accounting Pronouncements 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 adopted ASU 2020-10 effective January 1, 2022 and its adoption did not have a material impact on its condensed consolidated financial statements. 12 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 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): 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 adopted ASU 2021-04 effective January 1, 2022 and its adoption did not have a material impact on its condensed consolidated financial statements. ​ ​ NOTE 3 PREPAID EXPENSES AND OTHER CURRENT ASSETS As of June 30, 2022 and December 31, 2021, prepaid expenses and other current assets consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ 2022 2021 Marketing ​ $ 726,422 ​ $ 10,231 Inventory deposits ​ ​ 691,006 ​ ​ 309,688 Professional fees ​ ​ 164,558 ​ ​ 65,118 Subscriptions ​ ​ 71,774 ​ ​ — Insurance ​ ​ 40,733 ​ ​ 69,925 Other ​ ​ 33,541 ​ ​ 31,074 Deferred labor costs ​ ​ 29,887 ​ ​ 84,324 Receivable for option exercise ​ ​ 28,224 ​ ​ — Total prepaid expenses ​ $ 1,786,145 ​ $ 570,360 ​ 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 June 30, 2022, the Company had outstanding deposits of $ 2,582,958 in connection with these agreements. 13 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 5 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES As of June 30, 2022 and December 31, 2021, accrued expenses and other current liabilities consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ 2022 2021 Legal and professional fees ​ $ 862,047 ​ $ 418,154 Payroll and vacation ​ ​ 397,809 ​ ​ 302,101 Research and development ​ 194,444 ​ 146,158 Board compensation ​ ​ 56,541 ​ ​ 45,680 Other ​ 38,160 ​ 84,824 Marketing and advertising fees ​ ​ 20,563 ​ ​ 37,810 Accrued cost of sales ​ ​ 2,191 ​ ​ 128,500 Total accrued expenses and other current liabilities ​ $ 1,571,755 ​ $ 1,163,227 ​ ​ NOTE 6 ACCRUED ISSUABLE EQUITY 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 ​ $ 290,721 Additions ​ ​ 45,800 Cancelled accrued issuable equity obligations ​ ​ ( 92,000 ) Mark-to market ​ ​ ( 95,720 ) Ending Balance ​ $ 148,801 ​ Accrued Issuable Equity for Services 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 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 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. ​ 14 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Maturities of lease liabilities as of June 30, 2022 were as follows: ​ ​ ​ ​ ​ Maturity Date ​ July 1 through December 31, 2022 ​ $ 114,999 2023 ​ 234,694 2024 ​ 99,187 Total lease payments ​ 448,880 Less: Imputed interest ​ ( 21,862 ) Present value of lease liabilities ​ 427,018 Less: current portion ​ ( 214,166 ) Lease liabilities, non-current portion ​ $ 212,852 ​ Supplemental cash flow information related to the lease was as follows: ​ ​ ​ ​ ​ ​ 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 ​ $ 99,619 ​ ​ ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Notes Debt ​ ​ ​ Payable ​ Discount ​ Total Balance, January 1, 2022 ​ $ — ​ $ — ​ $ — Proceeds from promissory note ​ 5,000,000 ​ — ​ 5,000,000 Debt discount ​ — ​ ( 267,200 ) ​ ( 267,200 ) Amortization of debt discount ​ — ​ 103,219 ​ 103,219 Outstanding, June 30, 2022 ​ $ 5,000,000 ​ $ ( 163,981 ) ​ $ 4,836,019 ​ 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”). 15 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 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 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. Common Stock ​ 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 %. ​ 16 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 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 . Warrants A summary of warrants activity during the six months ended June 30, 2022 is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ Weighted ​ ​ ​ ​ ​ ​ ​ Average ​ Average ​ ​ ​ ​ ​ Number of ​ Exercise ​ Remaining ​ Intrinsic ​ Warrants Price Term (Yrs) Value Outstanding, January 1, 2022 2,594,553 ​ $ 1.25 ​ Issued 2,346,525 ​ 1.00 ​ Exercised ( 2,416,668 ) ​ ( 1.25 ) ​ Expired — ​ — ​ Forfeited — ​ — ​ Outstanding, June 30, 2022 2,524,410 ​ $ 1.02 3.5 ​ $ 1,343,954 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable, June 30, 2022 2,524,410 ​ $ 1.25 3.5 ​ $ 1,343,954 ​ 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 ​ Warrants Exercisable ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ Outstanding ​ Average ​ Exercisable Exercise ​ Number of ​ Remaining Life ​ Number of Price Warrants In Years Warrants $ 1.25 177,885 3.5 177,885 $ 1.00 2,346,525 3.5 2,346,525 ​ ​ 2,524,410 3.5 2,524,410 ​ 17 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Stock Options ​ 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 Six Months Ended ​ ​ June 30, ​ 2022 2021 Risk free interest rate ​ 1.18 % - 2.94 % 1.58 % Expected term (years) ​ 3.5 - 3.9 ​ 2.5 - 3.5 ​ Expected volatility ​ 116 % 93 % - 109 % Expected dividends ​ 0 % 0 % ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Weighted ​ ​ ​ ​ ​ Average ​ Average ​ ​ ​ ​ ​ Number of ​ Exercise ​ Remaining ​ Intrinsic ​ Options Price Term (Yrs) Value Outstanding, January 1, 2022 405,216 ​ $ 2.29 ​ Granted 130,000 ​ 2.03 ​ Exercised ( 35,500 ) ​ 0.76 ​ Expired — ​ — ​ Forfeited ( 17,500 ) ​ 2.03 ​ Outstanding, June 30, 2022 482,216 ​ $ 1.65 3.5 ​ $ 167,783 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable, June 30, 2022 207,355 ​ $ 1.19 2.4 ​ $ 125,267 ​ The following table presents information related to stock options (excluding market-based option awards) as of June 30, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ Options Outstanding ​ Options Exercisable ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Outstanding ​ Average ​ Exercisable Exercise ​ Number of ​ Remaining Life ​ Number of Price Options In Years Options $ 0.66 152,486 1.7 140,750 $ 1.28 ​ 10,000 ​ — ​ — $ 1.55 ​ 20,000 ​ — ​ — $ 1.99 ​ 10,000 ​ 3.9 ​ 3,958 $ 2.05 ​ 50,000 ​ 4.1 ​ 3,333 $ 2.08 10,000 3.9 3,958 $ 2.13 ​ 20,000 ​ 4.2 ​ 6,250 $ 2.25 ​ 10,000 ​ 4.6 ​ 625 $ 2.27 ​ 29,730 ​ 4.0 ​ 10,980 $ 2.31 ​ 50,000 ​ — ​ — $ 2.43 ​ 20,000 ​ 4.2 ​ 6,250 $ 2.44 100,000 3.7 31,250 ​ ​ ​ 482,216 ​ 2.4 ​ 207,355 ​ 18 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 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 June 30, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ Grant Date ​ ​ Shares of Restricted ​ Fair Value ​ Common Stock Per Share Non-vested balance, January 1, 2022 2,590,000 ​ $ 2.52 Granted 150,000 ​ 2.08 Vested ( 782,500 ) ​ 2.48 Non-vested shares, June 30, 2022 1,957,500 ​ $ 2.50 ​ 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 June 30, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ Grant Date Award Shares Fair Value Restricted stock units 1,500,000 ​ $ 2,911,420 Stock options 1,500,000 ​ ​ 2,579,000 Total 3,000,000 ​ $ 5,490,420 ​ The grant date value for the market-based awards is being amortized over the derived service periods of the awards. 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 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. 19 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 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 ​ June 30, ​ June 30, ​ 2022 2021 2022 2021 Common stock for services ​ $ 10,261 ​ $ 110,000 ​ $ 53,421 ​ $ 159,800 Amortization of restricted common stock ​ 422,128 ​ 433,689 ​ 941,359 ​ 560,314 Amortization of market-based awards ​ 565,421 ​ 489,774 ​ 1,295,469 ​ 620,019 Stock options ​ 26,535 ​ 15,779 ​ 42,418 ​ 24,891 Accrued issuable equity (common stock) ​ ​ 19,200 ​ ​ 36,649 ​ ​ ( 46,200 ) ​ ​ 108,839 Total ​ $ 1,043,545 ​ $ 1,085,891 ​ $ 2,286,467 ​ $ 1,473,863 ​ ​ ​ NOTE 10 COMMITMENTS AND CONTINGENCIES Sponsorship Agreement 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 . ​ ​ ​ 20 Table of Contents