KULR Technology Group, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ 2023 2022 ​ ​ (unaudited) ​ ​ ​ Assets ​ ​ Current Assets: ​ ​ Cash ​ $ 7,186,034 ​ $ 10,333,563 Accounts receivable ​ 1,654,700 ​ 1,542,118 Inventory ​ 1,669,634 ​ 1,962,035 Inventory deposits ​ ​ 264,384 ​ ​ 285,260 Prepaid expenses and other current assets ​ 1,138,331 ​ 1,613,008 Total Current Assets ​ 11,913,083 ​ 15,735,984 Property and equipment, net ​ 5,750,672 ​ 3,193,041 Equipment deposits ​ ​ 1,238,486 ​ ​ 3,514,937 Security deposits ​ ​ 65,536 ​ ​ 60,441 Intangible assets, net ​ ​ 750,445 ​ ​ 720,768 Right of use asset ​ ​ 318,628 ​ ​ 328,941 Deferred financing costs ​ ​ 71,818 ​ ​ 71,818 Total Assets ​ $ 20,108,668 ​ $ 23,625,930 ​ ​ ​ ​ Liabilities and Stockholders' Equity ​ ​ ​ Current Liabilities: ​ ​ ​ Accounts payable ​ $ 895,372 ​ $ 1,408,017 Accrued expenses and other current liabilities ​ 2,758,595 ​ 2,142,277 Accrued issuable equity ​ ​ 271,478 ​ ​ 227,956 Lease liability, current portion ​ ​ 269,967 ​ ​ 223,645 Prepaid advance liability, net of discount, current portion ​ ​ 7,302,196 ​ ​ 5,655,612 Deferred revenue ​ ​ 1,141 ​ ​ 23,000 Total Current Liabilities ​ 11,498,749 ​ 9,680,507 Lease liability, non-current portion ​ ​ 39,427 ​ ​ 97,958 Prepaid advance liability, net of discount, non-current portion ​ ​ 345,376 ​ ​ 3,196,678 Accrued interest, non-current ​ ​ — ​ ​ 157,054 Total Liabilities ​ ​ 11,883,552 ​ ​ 13,132,197 ​ ​ ​ ​ Commitments and contingencies (Note 11) ​ ​ ​ ​ ​ 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 March 31, 2023 and December 31, 2022 ​ ​ — ​ ​ — Series B Convertible Preferred Stock, 31,000 shares designated; none issued and outstanding at March 31, 2023 and December 31, 2022 ​ — ​ — Series C Preferred Stock, 400 shares designated; none issued and outstanding at March 31, 2023 and December 2022 ​ ​ — ​ ​ — Series D Preferred Stock, 650 shares designated; none issued and outstanding at March 31, 2023 and December 31, 2022 ​ ​ — ​ ​ — Common stock, $ 0.0001 par value, 500,000,000 shares authorized; 117,959,793 shares issued and 117,828,631 shares outstanding at March 31, 2023; 113,202,749 shares issued and 113,071,587 shares outstanding at December 31, 2022 ​ 11,796 ​ 11,320 Treasury stock, at cost; 131,162 shares held at March 31, 2023 and December 31, 2022 ​ ​ ( 296,222 ) ​ ​ ( 296,222 ) Additional paid-in capital ​ ​ 57,706,441 ​ ​ 53,372,673 Accumulated deficit ​ ( 49,196,899 ) ​ ( 42,594,038 ) Total Stockholders' Equity ​ 8,225,116 ​ 10,493,733 Total Liabilities and Stockholders' Equity ​ $ 20,108,668 ​ $ 23,625,930 ​ 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 ​ ​ March 31, ​ 2023 2022 Revenue ​ $ 1,759,802 ​ $ 200,499 Cost of revenue ​ 1,116,414 ​ 122,918 Gross Profit ​ 643,388 ​ 77,581 ​ ​ ​ ​ ​ Operating Expenses ​ ​ ​ ​ Research and development ​ 1,388,215 ​ 721,347 Selling, general, and administrative ​ 5,515,891 ​ 3,534,923 Total Operating Expenses ​ 6,904,106 ​ 4,256,270 Loss From Operations ​ ( 6,260,718 ) ​ ( 4,178,689 ) ​ ​ ​ ​ ​ Other (Expense) Income ​ ​ ​ ​ Interest expense ​ ( 159,931 ) ​ ( 906 ) Amortization of debt discount ​ ​ ( 246,320 ) ​ ​ — Change in fair value of accrued issuable equity ​ ​ 64,108 ​ ​ 43,040 Total Other (Expense) Income, net ​ ( 342,143 ) ​ 42,134 Net Loss ​ $ ( 6,602,861 ) ​ $ ( 4,136,555 ) ​ ​ ​ ​ ​ ​ ​ Net Loss Per Share ​ ​ ​ ​ - Basic and Diluted ​ $ ( 0.06 ) ​ $ ( 0.04 ) ​ ​ ​ ​ ​ Weighted Average Number of Common Shares Outstanding ​ ​ ​ ​ - Basic and Diluted ​ 112,877,236 ​ 102,496,310 ​ 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 FOR THE THREE MONTHS ENDED MARCH 31, 2023 and 2022 (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FOR THE THREE MONTHS ENDED MARCH 31, 2023 ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common Stock ​ Paid-In ​ Treasury Stock ​ Accumulated ​ Stockholders' ​ Shares Amount Capital Shares Amount Deficit Equity Balance - January 1, 2023 113,202,749 ​ $ 11,320 ​ $ 53,372,673 ​ 131,162 ​ $ ( 296,222 ) ​ $ ( 42,594,038 ) ​ $ 10,493,733 Common stock issued for the repayment of prepaid advance liability and related interest accrual ​ 3,153,036 ​ ​ 315 ​ ​ 3,750,653 ​ — ​ ​ — ​ ​ — ​ ​ 3,750,968 Shares repurchased for payroll taxes and canceled ​ ( 175,000 ) ​ ​ ( 17 ) ​ ​ ( 229,232 ) ​ — ​ ​ — ​ ​ — ​ ​ ( 229,249 ) Stock-based compensation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restricted stock awards granted ​ 1,848,508 ​ ​ 185 ​ ​ ( 185 ) ​ — ​ ​ — ​ ​ — ​ ​ — Unvested restricted stock awards forfeited ​ ( 75,000 ) ​ ​ ( 8 ) ​ ​ 8 ​ — ​ ​ — ​ ​ — ​ ​ — Common stock issued for services ​ 5,500 ​ ​ 1 ​ ​ 6,819 ​ — ​ ​ — ​ ​ — ​ ​ 6,820 Amortization of restricted common stock ​ — ​ ​ — ​ ​ 765,100 ​ — ​ ​ — ​ ​ — ​ ​ 765,100 Amortization of stock options ​ — ​ ​ — ​ ​ 40,605 ​ — ​ ​ — ​ ​ — ​ ​ 40,605 Net loss ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ ( 6,602,861 ) ​ ​ ( 6,602,861 ) Balance - March 31, 2023 ​ 117,959,793 ​ $ 11,796 ​ $ 57,706,441 ​ 131,162 ​ $ ( 296,222 ) ​ $ ( 49,196,899 ) ​ $ 8,225,116 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FOR THE THREE MONTHS ENDED MARCH 31, 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 ​ 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 Three Months Ended ​ ​ March 31, ​ 2023 2022 Cash Flows From Operating Activities: ​ ​ ​ Net loss ​ $ ( 6,602,861 ) ​ $ ( 4,136,555 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ Amortization of debt discount ​ ​ 246,320 ​ ​ — Non-cash lease expense ​ ​ 61,467 ​ ​ 51,144 Depreciation and amortization expense ​ ​ 250,189 ​ ​ 41,461 Change in fair value of accrued issuable equity ​ ( 64,108 ) ​ ( 43,040 ) Stock-based compensation ​ ​ 920,155 ​ ​ 1,242,922 Changes in operating assets and liabilities: ​ ​ ​ ​ Accounts receivable ​ ​ ( 112,582 ) ​ ​ ( 56,766 ) Inventory ​ ​ 292,401 ​ ​ ( 96,017 ) Prepaid expenses and other current assets ​ ​ 474,677 ​ ​ ( 1,347,651 ) Inventory deposits ​ 20,876 ​ — Security deposits ​ ( 5,095 ) ​ — Accounts payable ​ ( 715,200 ) ​ ( 265,770 ) Accrued expenses and other current liabilities ​ ​ 559,944 ​ ​ 197,262 Lease liability ​ ( 63,363 ) ​ ( 49,177 ) Deferred revenue ​ ( 21,859 ) ​ ( 112,303 ) Total Adjustments ​ 1,843,822 ​ ( 437,935 ) Net Cash Used In Operating Activities ​ ​ ( 4,759,039 ) ​ ​ ( 4,574,490 ) Cash Flows From Investing Activities: ​ ​ ​ ​ ​ ​ Deposits for purchase of property and equipment ​ ​ — ​ ​ ( 227,538 ) Purchases of property and equipment ​ ​ ( 298,490 ) ​ ​ ( 21,351 ) Acquisition of intangible assets ​ ​ ( 60,000 ) ​ ​ — Net Cash Used In Investing Activities ​ ( 358,490 ) ​ ( 248,889 ) Cash Flows from Financing Activities: ​ ​ ​ ​ ​ ​ Net proceeds from the prepaid advance liability ​ 2,000,000 ​ — Issuance costs on prepaid advance liability ​ ( 30,000 ) ​ — Proceeds from the exercise of options ​ ​ — ​ ​ 5,075 Proceeds from the exercise of warrants ​ ​ — ​ ​ 87,679 Net Cash Provided By Financing Activities ​ ​ 1,970,000 ​ ​ 92,754 Net Decrease In Cash ​ ( 3,147,529 ) ​ ( 4,730,625 ) Cash - Beginning of Period ​ 10,333,563 ​ 14,863,301 Cash - End of Period ​ $ 7,186,034 ​ $ 10,132,676 ​ 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 Three Months Ended ​ March 31, ​ 2023 2022 Supplemental Disclosures of Cash Flow Information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid during the year for: ​ ​ ​ ​ ​ ​ Interest ​ $ — ​ $ 642 Taxes ​ $ — ​ $ — ​ ​ ​ ​ ​ ​ ​ Non-cash investing and financing activities: ​ ​ ​ ​ ​ ​ Right of use asset for lease liability ​ $ 51,154 ​ $ — Shares repurchased for payroll taxes (not paid as of period-end) and canceled ​ $ 229,249 ​ $ — Common stock held in treasury upon the vesting of restricted common stock ​ $ — ​ $ ( 439,728 ) Original issue discount on prepaid advance liability ​ $ 105,263 ​ $ — Common stock issued in satisfaction of prepaid advance liability and interest ​ $ 3,750,968 ​ $ — Deposits applied to purchase of property and equipment ​ $ 2,276,451 ​ $ — Additions to property and equipment included in accounts payable ​ $ 202,554 ​ $ — ​ 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 BASIS OF PRESENTATION 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 United States Department of Defense (“DOD”) applications, such as space exploration, satellite communications, and underwater 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 March 31, 2023 and for the three months ended March 31, 2023 and 2022. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the operating results for the full year ending December 31, 2023 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, 2022 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on Form 10-K on March 28, 2023. The accompanying condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited financial statements included in the Form 10-K. ​ NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Since the date of the Annual Report on Form 10-K for the year ended December 31, 2022, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note. Liquidity As of March 31, 2023, the Company had cash of $ 7,186,034 and working capital of $ 414,334 . For the three months ended March 31, 2023, the Company incurred a net loss of $ 6,602,861 and used cash in operations of $ 4,759,039 . Subsequent to the three months ended March 31, 2023, the Company issued 493,972 shares of common stock in satisfaction of the Initial Advance liability in the amount of $ 350,000 and interest accrued through March 2023 in the amount of $ 20,479 (see Note 8, Prepaid Advance Liability). As a result, $ 345,376 of Prepaid Advance Liability at March 31, 2023 (consisting of $ 350,000 of Initial Advance balance, plus $ 18,421 original issue discount, less $ 23,045 of unamortized debt discount), is classified as a non-current liability on the accompanying consolidated balance sheet. The Company’s primary source of liquidity has historically been cash generated from equity and debt offerings. Under ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet future financial obligations as they become due within one year after the date that the financial statements are issued. The above conditions are indicators that there is substantial doubt about the Company’s ability to continue as a going concern as the Company has a history of recurring net losses, recurring use of cash in operations and declining working capital. Despite these conditions, the Company has a successful track record of raising capital as needed and continues to have a positive, ongoing relationship with a financial institution that has provided access to capital and will continue to support KULR. Accordingly, management’s plans alleviate the substantial doubt about the Company’s ability to continue as a going concern. 8 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 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 described in Note 8, will be sufficient to meet our working capital and capital expenditure requirements for a period of at least twelve months after the filing date of these condensed consolidated 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 Balances 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 $ 6,686,034 and $ 9,709,169 as of March 31, 2023 and 2022, respectively. Customer and Revenue Concentrations The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenues ​ Accounts Receivable ​ ​ For the Three Months Ended ​ ​ ​ ​ ​ ​ March 31, ​ As of As of ​ 2023 2022 March 31, 2023 ​ December 31, 2022 Customer A * ​ * ​ * ​ 34 % Customer B * ​ 43 % * ​ * ​ Customer C * ​ 37 % * ​ * ​ Customer D 86 % * ​ 91 % 61 % Total 86 % 80 % 91 % 95 % * 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 of 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. 9 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Vendor Concentrations Vendor purchase concentrations are as follows for the three months ended March 31, 2023 and 2022, respectively: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ March 31, ​ 2023 2022 Vendor A * ​ 69 % Vendor B 12 % * ​ Vendor C * ​ 14 % ​ 12 % 83 % * 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, as well as raw materials and work in process related primarily to the manufacture of safe cases. Inventories are stated at the lower of cost or net realizable value. Cost is determined using the standard costing method, which approximates cost determined on a first-in, first-out basis. 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. Finished goods inventory is held on-site at the Company’s San Diego, California location. Certain raw materials are held off-site with our contract manufacturers. Inventory at March 31, 2023 and December 31, 2022 was comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, December 31, ​ ​ 2023 ​ 2022 Raw materials ​ $ 732,623 ​ $ 1,075,310 Work-in-process ​ ​ — ​ ​ 2,977 Finished goods ​ 937,011 ​ 883,748 Total inventory ​ $ 1,669,634 ​ $ 1,962,035 ​ 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; 10 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ● 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 condensed consolidated statements of operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ ​ March 31, ​ 2023 2022 Product sales ​ $ 1,629,258 ​ $ 172,599 Contract services ​ 130,544 ​ 27,900 Total revenue ​ $ 1,759,802 ​ $ 200,499 ​ 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. The Company expects to satisfy the remaining performance obligations related to its deferred revenue balance within the next twelve months. During the three months ended March 31, 2023 and 2022, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods. As of March 31, 2023 and December 31, 2022, the Company had $ 34,402 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. ​ 11 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The following table presents the computation of basic and diluted net loss per common share: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ ​ March 31, ​ ​ 2023 2022 Numerator: ​ ​ Net loss attributable to common stockholders ​ $ ( 6,602,861 ) ​ $ ( 4,136,555 ) ​ ​ ​ ​ ​ ​ ​ Denominator (weighted average quantities): ​ ​ ​ ​ Common stock issued ​ 115,055,115 ​ 104,843,100 Less: Treasury shares purchased ​ ( 131,162 ) ​ ( 64,901 ) Less: Unvested restricted shares ​ ( 2,170,717 ) ​ ( 2,357,889 ) Add: Accrued issuable equity ​ ​ 124,000 ​ ​ 76,000 Denominator for basic and diluted net loss per share ​ ​ 112,877,236 ​ ​ 102,496,310 ​ ​ ​ ​ ​ Basic and diluted net loss per common share ​ $ ( 0.06 ) ​ $ ( 0.04 ) ​ The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ 2023 2022 Unvested issued restricted stock awards ​ 3,276,008 ​ 1,925,000 Unvested market-based equity awards ​ — ​ 3,000,000 Restricted stock units ​ 3,000,000 ​ — Options 765,216 462,716 Warrants ​ 2,524,410 ​ 2,524,410 Total 9,565,634 7,912,126 ​ Recently Adopted Accounting Pronouncements In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This update requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Since June 2016, the FASB issued clarifying updates to the new standard including changing the effective date for smaller reporting companies. The guidance is effective for the Company for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption permitted. The Company adopted this ASU on January 1, 2023, using the modified retrospective approach and it did not have a material impact on its condensed consolidated financial statements. ​ ​ NOTE 3 INVENTORY DEPOSITS Inventory deposits consists of amounts paid in advance to vendors to secure future deliveries of specific finished goods and raw materials which will be received and sold in future periods. As of March 31, 2023 and December 31,2022, the Company had outstanding inventory deposits of $ 264,384 and $ 285,260 , respectively. 12 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ​ NOTE 4 PREPAID EXPENSES AND OTHER CURRENT ASSETS As of March 31, 2023 and December 31, 2022, prepaid expenses and other current assets consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, December 31, ​ 2023 2022 Marketing and sponsorships ​ $ 610,572 ​ $ 574,636 Compensation costs ​ ​ 250,000 ​ ​ 375,000 Dues and subscriptions ​ ​ 120,224 ​ ​ 75,889 Conferences and seminars ​ ​ 46,416 ​ ​ — Deferred labor costs ​ ​ 34,402 ​ ​ 34,402 Professional fees ​ ​ 24,467 ​ ​ 25,787 Insurance ​ ​ 13,813 ​ ​ 12,776 Vendor receivables ​ ​ — ​ ​ 368,069 Research and development ​ ​ — ​ ​ 62,329 Other ​ ​ 38,437 ​ ​ 84,120 Total prepaid expenses and other current assets ​ $ 1,138,331 ​ $ 1,613,008 ​ Prepaid marketing and sponsorships shown in the table above includes $ 531,250 of prepaid marketing expenses pursuant to certain sponsorship agreements which will be amortized over the respective service periods of the agreements. ​ NOTE 5 EQUIPMENT 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, 2023 and December 31,2022, the Company had outstanding deposits of $ 1,238,486 and $ 3,514,937 , respectively, in connection with these agreements. ​ NOTE 6 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES As of March 31, 2023 and December 31, 2022, accrued expenses and other current liabilities consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ 2023 2022 Professional fees ​ $ 1,320,800 ​ $ 1,180,000 Payroll and vacation ​ ​ 818,099 ​ ​ 464,453 Research and development ​ ​ 364,549 ​ ​ 196,409 Inventory ​ 104,204 ​ ​ 58,804 Board compensation ​ ​ 85,000 ​ ​ 122,500 Other ​ 58,321 ​ ​ 49,112 Marketing and advertising fees ​ 6,026 ​ ​ 3,999 Legal fees ​ 1,596 ​ ​ 2,000 Subscriptions ​ — ​ ​ 65,000 Total accrued expenses and other current liabilities ​ 2,758,595 ​ ​ 2,142,277 Add: Accrued interest, non-current ​ ​ — ​ ​ 157,054 Total accrued expenses and other current liabilities ​ $ 2,758,595 ​ $ 2,299,331 ​ ​ 13 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 7 ACCRUED ISSUABLE EQUITY A summary of the accrued issuable equity activity during the three months ended March 31, 2023 is presented below: ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ March 31, 2023 Beginning balance ​ $ 227,956 Grant date value of share obligations ​ ​ 107,630 Mark-to-market ​ ​ ( 64,108 ) Ending balance ​ $ 271,478 ​ During the three months ended March 31, 2023, 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 $ 107,630 . During the three months ended March 31, 2023 and 2022, the Company recorded gains (losses) in the aggregate amount of $ 64,108 and $ 43,040 , respectively, related to changes in the fair value of accrued issuable equity (see Note 12 – Stockholders’ Equity, Stock-Based Compensation for additional details). The fair value of the accrued but unissued shares as of March 31, 2023 was $ 271,478 . ​ 14 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 8 PREPAID ADVANCE LIABILITY ​ The Company’s prepaid advance liability consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Amount of Original Less: Prepaid Advance ​ ​ Prepaid Advance ​ Issue ​ Debt ​ Liability, ​ ​ Liability ​ Discount ​ Discount ​ net of discount Balance, December 31, 2022 ​ $ 9,000,000 ​ $ 473,631 ​ $ ( 621,341 ) ​ $ 8,852,290 Proceeds from prepaid advance ​ 2,000,000 ​ — ​ — ​ 2,000,000 Original issue discount on prepaid advance ​ — ​ 105,263 ​ ( 105,263 ) ​ — Legal fees ​ — ​ — ​ ( 30,000 ) ​ ( 30,000 ) Repayments in cash ​ — ​ — ​ — ​ — Repayments in shares of common stock ​ ( 3,250,000 ) ​ ( 171,038 ) ​ — ​ ( 3,421,038 ) Amortization of original issue discount ​ ​ — ​ ​ — ​ ​ — ​ ​ — Amortization of debt discount ​ — ​ — ​ 246,320 ​ 246,320 Outstanding, March 31, 2023 ​ $ 7,750,000 ​ $ 407,856 ​ $ ( 510,284 ) ​ $ 7,647,572 ​ On September 23, 2022, the Company entered into a Supplemental Agreement (the “Supplemental Agreement”) to its Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd. (“Yorkville”). Under the Supplemental Agreement, the Company may from time-to-time request advances of up to $ 15,000,000 (each, a “Prepaid Advance”) from Yorkville with a limitation on the aggregate amount of such advances of $ 50,000,000 . At any time that there is a balance outstanding under a Prepaid Advance, the Company is not permitted to deliver Advance Notices (as defined in Note 12, Stockholders’ Equity) under the SEPA. Each Prepaid Advance matures 12 months after the date of the closing of such advance (the “Prepaid Advance Date”), and accrues interest at 10 % per annum, subject to an increase to 15 % per annum upon events of default as defined. Any Prepaid Advance balance that remains outstanding at maturity must be repaid in cash. Pursuant to the terms of the Supplemental Agreement, Yorkville has the right to receive shares to pay down Prepaid Advances, and may select the timing and delivery of such shares (via an “Investor Notice”), in an amount up to the balance of the Prepaid Advance at a price equal to the lower of (a) 135 % of the volume weighted average price (“VWAP”) of the Company’s common stock on the day immediately prior the closing of the Prepaid Advance, or (b) 95 % of the lowest VWAP during the three days immediately prior to the Investor Notice. On March 10, 2023, the Company and Yorkville agreed and closed on a second Prepaid Advance (the “Second Advance”). The Company recorded additional prepaid advance liability in the amount of $ 2,105,263 , which consisted of $ 2,000,000 cash proceeds received, plus an original issue discount of $ 105,263 . Interest accrues on the outstanding balance of each Prepaid Advance at an annual rate of 10 %, subject to an increase to 15 % upon events of default, as defined. During the three months ended March 31, 2023, the Company issued 3,153,036 shares of common stock, at purchase prices per share ranging from $ 0.90 to $ 1.20 , pursuant to Investor Notices submitted by Yorkville for aggregate proceeds of $ 3,750,968 . The proceeds were applied against the principal and interest due for Initial Advance in the aggregate amounts of $ 3,250,000 and $ 500,968 , respectively. As of March 31, 2023, the remaining principal balance on the Initial Advance and Second Advance is $ 5,750,000 and $ 2,000,000 , respectively. During the three months ended March 31, 2023, the Company recorded interest expense in the amount of $ 159,931 and recorded amortization of debt discount in the amount of $ 246,320 in connection with the Prepaid Advance liability. 15 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Subsequent to the three months ended March 31, 2023, the Company issued 493,972 shares of common stock in satisfaction of the Initial Advance liability in the amount of $ 350,000 and interest accrued through the date of issuance in the amount of $ 20,479 (see Note 13, Subsequent Events). As a result, $ 345,376 of Prepaid Advance Liability at March 31, 2023 (consisting of $ 350,000 of Initial Advance balance, plus $ 18,421 original issue discount, less $ 23,045 of unamortized debt discount), is classified as a non-current liability on the accompanying condensed consolidated balance sheet. ​ NOTE 9 LEASES On January 18, 2023, the Company entered into a new lease agreement for office space in Webster, Texas. The initial lease term is twelve months and thirteen days. Monthly rental payments under the new lease are $ 5,047 , which is comprised of $ 4,245 of base rent plus $ 802 of common area maintenance fees. The Company determined that the value of the lease liability and the related right-of-use asset at inception was $ 51,154 , using an estimated incremental borrowing rate of 5 %. The Company also leases office space in San Diego, California pursuant to an operating lease which expires May 31, 2024. As of March 31, 2023, the Company does not have any financing leases. During the three months ended March 31, 2023 and 2022, operating lease expense was $ 65,873 and $ 74,080 , respectively. Maturities of lease liabilities as of March 31, 2023 were as follows: ​ ​ ​ ​ ​ Maturity Date ​ ​ 2023 ​ ​ 215,399 2024 ​ 103,432 Total lease payments ​ 318,831 Less: Imputed interest ​ ( 9,438 ) Present value of lease liabilities ​ 309,394 Less: current portion ​ ( 269,967 ) Lease liabilities, non-current portion ​ $ 39,427 ​ Supplemental cash flow information related to the leases was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ March 31, ​ ​ 2023 ​ 2022 Cash paid for amounts included in the measurement of lease liabilities ​ ​ ​ ​ ​ ​ Operating cash flows for operating lease ​ $ 63,363 ​ $ 49,176 Right-of-use asset obtained in exchange for lease obligations ​ ​ ​ ​ ​ ​ Operating lease ​ $ 51,154 ​ $ — ​ ​ NOTE 10 RELATED PARTY TRANSACTIONS The Company entered into an eight-month consulting agreement with the father of the Company’s Chief Technology Officer (the “Related Consultant”), to perform due diligence support for a potential research and development facility in Texas. The Company agreed to compensate the Related Consultant at a rate of $ 30 /hour for services performed. Total expense recognized for services provided by the Related Consultant was $ 10,455 during the three months ended March 31, 2023. No related party expense was recognized during the three months ended March 31, 2022. As of March 31, 2023 and December 31, 2022, the Company did no t have material accounts payable outstanding with related parties. 16 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 11 COMMITMENTS AND CONTINGENCIES Patent License Agreement During February 2023, the Company entered into a licensing agreement whereby the Company obtained an exclusive license to commercialize its patented Format Fractional Thermal Runaway Calorimeter. The agreement is effective as long as the licensed patents are enforceable, subject to certain early termination provisions specified in the agreement. In consideration, the Company agreed to pay the following: (i) a cash payment of $ 60,000 payable upon the execution of this agreement was capitalized as an intangible asset and will be amortized over its useful life, (ii) royalties of 5.5 % on the net sales price of royalty-based products and services for each accounting period, as defined in the agreement, with minimum annual royalty payments of $ 20,000 . Appointment of Vice President, Sales On January 16, 2023, the Company appointed a Vice President of Sales (the “VP of Sales”), upon which the Company issued 298,507 shares of restricted common stock with a grant date fair value of $ 400,000 , which vest in four equal annual installments beginning January 16, 2024. The grant date fair value will be amortized ratably over the vesting period. In addition, the Company committed to a one-year guaranteed commission of $ 200,000 , payable in four quarterly installments as well as a severance package of $ 250,000 and one-year of family health insurance if the VP of Sales is terminated without cause (as defined) within one year of hire. Appointment of Chief Financial Officer On March 31, 2023, the Company appointed an individual to serve as Chief Financial Officer (the “CFO”) of the Company, upon which the Company issued 1,500,000 shares of restricted stock with an aggregate grant date fair value of $ 1,380,000 , which vest in five equal annual installments beginning March 31, 2024. ​ NOTE 12 STOCKHOLDERS’ EQUITY Standby Equity Purchase Agreement (“SEPA”) and Supplemental SEPA On May 13, 2022, the Company entered into the SEPA with Yorkville. Pursuant to the SEPA, the Company has the right, but not the obligation, to sell to Yorkville up to an aggregate of $ 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 first day of the month following the 24-month anniversary of the SEPA. Each sale (an “Advance”) that the Company requests under the SEPA (via an “Advance Notice”) may be for a number of shares of common stock with an aggregate value of up to $ 5,000,000 . Shares are sold under the SEPA at 98.0 % of the average of the VWAPs during each of the three consecutive trading days commencing on the trading day following the Company’s submission of an Advance Notice to Yorkville. Advances are subject to certain limitations, including that Yorkville will 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, or more than the amount of shares registered under the registration statement in effect at the time of the Advance. Further, the aggregate amount of shares purchased under the SEPA (as defined) cannot exceed 19.9 % of the Company’s outstanding common stock as of the date of the SEPA. See Note 8 – Prepaid Advance Liability, for details related to a supplemental agreement to the SEPA. Common Stock ​ During the three months ended March 31, 2023 and 2022, the Company issued an aggregate of 5,500 and 6,000 shares of immediately vested common stock with a grant date value of $ 6,820 and $ 13,859 , respectively, for legal and consulting services. 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 Three Months Ended ​ ​ March 31, ​ ​ 2023 2022 Risk free interest rate ​ 3.92 % - 4.52 % ​ 1.18 % - 2.28 % ​ Expected term (years) ​ 3.5 ​ 3.5 - 3.8 ​ Expected volatility ​ 105 % ​ 116 % ​ Expected dividends ​ 0 % ​ 0 % ​ ​ For the three months ended March 31, 2023 and 2022, the weighted average grant date fair value per share of options was $ 0.67 and $ 3.23 , respectively. A summary of options activity during the three months ended March 31, 2023 is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Weighted ​ ​ ​ ​ ​ ​ Average ​ Average ​ ​ ​ ​ ​ Number of ​ Exercise ​ Remaining ​ Intrinsic ​ Options Price Term (Yrs) Value Outstanding, January 1, 2023 640,216 ​ $ 1.72 ​ Granted 135,000 ​ 1.18 ​ Exercised — ​ — ​ Expired — ​ — ​ Forfeited ( 10,000 ) ​ 2.08 ​ Outstanding, March 31, 2023 765,216 ​ $ 1.62 3.6 ​ $ 24,307 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable, March 31, 2023 220,216 ​ $ 1.51 2.1 ​ $ 23,665 ​ The following table presents information related to stock options as of March 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ Options Outstanding ​ Options Exercisable ​ ​ ​ ​ Weighted ​ ​ ​ Outstanding ​ Average ​ Exercisable Exercise ​ Number of ​ Remaining Life ​ Number of Price Options In Years Options $0.66 - $0.99 ​ 135,486 ​ 0.1 ​ 107,570 $1.21 - $1.50 ​ 250,000 ​ — ​ — $1.55 - $1.99 ​ 90,000 ​ 3.2 ​ 5,833 $2.05 - $2.44 ​ 289,730 ​ 3.3 ​ 106,813 ​ ​ 765,216 ​ 2.1 ​ 220,216 ​ As of March 31, 2023, there was $ 505,926 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. 18 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Restricted Stock Awards The following table presents information related to restricted stock awards as of March 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ Restricted ​ Grant Date ​ ​ Stock Awards ​ Fair Value Non-vested RSAs, January 1, 2023 2,042,500 ​ $ 2.50 Granted 1,848,508 ​ 1.00 Vested ( 540,000 ) ​ 2.57 Canceled ( 75,000 ) ​ 2.08 Non-vested RSAs, March 31, 2023 3,276,008 ​ $ 1.84 ​ As previously reported, as compensation for his services as President and Chief Operating Officer, Keith Cochran was granted 2,000,000 shares of our common stock, subject to four (4) equal annual vesting installments, the first installment of which vested on March 1, 2023. On March 31, 2023, and effective as of March 1, 2023, the Company withheld and cancelled 175,000 shares of its common stock to satisfy an aggregate of $ 229,249 of payroll tax withholdings and remittance obligations in connection with the net settlement of 325,000 shares. The withholding and cancellation of the 175,000 shares represented a retirement of shares at a price per share equal to $ 1.31 , the closing price per share of our common stock on the trading day prior to the March 1, 2023, the effective date of the share cancellation. ​ As of March 31, 2023, there was $ 5,052,687 of unrecognized stock-based compensation expense related to restricted stock awards that will be recognized over the weighted average remaining vesting period of 3.0 years. ​ Restricted Stock Units ​ The following table presents information related to restricted stock units (“RSUs”) as of March 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ Restricted ​ Average ​ ​ Stock ​ Grant Date ​ Units Fair Value Non-vested RSUs, January 1, 2023 3,000,000 ​ $ 2.05 Granted — ​ ​ — Vested — ​ ​ — Canceled ​ — ​ ​ — Non-vested RSUs, March 31, 2023 ​ 3,000,000 ​ $ 2.05 ​ As of March 31, 2023, there was $ 3,780,078 of unrecognized stock-based compensation expense related to restricted stock units that will be recognized over the weighted average remaining vesting period of 3.6 years. Stock-Based Compensation ​ During the three months ended March 31, 2023 and 2022, the Company recognized stock-based compensation expense of $ 920,155 and $ 1,242,922 , respectively, related to restricted common stock, warrants and stock options, of which $ 903,995 and $ 1,234,814 , respectively are included within selling, general and administrative expenses, and $ 16,160 and $ 8,108 , 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 March 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ March 31, ​ 2023 2022 Common stock issued for services ​ $ 6,820 ​ $ 43,160 Accrued issuable equity (common stock) ​ 107,630 ​ ( 65,400 ) Amortization of stock options ​ 40,605 ​ 15,883 Amortization of market-based awards ​ — ​ 730,048 Amortization of restricted stock awards and units ​ 765,100 ​ 519,231 Total ​ $ 920,155 ​ $ 1,242,922 ​ ​ NOTE 13 SUBSEQUENT EVENTS Supplemental Agreement to the SEPA Subsequent to the three months ended March 31, 2023, the Company issued 493,972 shares of common stock in partial satisfaction of the Initial Advance liability in the amount of $ 350,000 and interest accrued through March 2023 in the amount of $ 20,479 (see Note 8, Prepaid Advance Liability). As a result, $ 345,376 of Prepaid Advance Liability at March 31, 2023 (consisting of $ 350,000 of Initial Advance balance, plus $ 18,421 original issue discount, less $ 23,045 of unamortized debt discount), is classified as a non-current liability on the accompanying condensed consolidated balance sheet. Purchase Agreement On May 4, 2023, the Company entered into an agreement (the “Purchase Agreement”) with a seller (the “Seller”), pursuant to which the Company purchased all of the assets, including intellectual property, of the Seller (the “Acquired Assets”) for consideration of $ 75,000 . The Purchase Agreement includes customary representations, warranties and covenants of the Company and the Seller. The Purchase Agreement also contains post-closing indemnification provisions pursuant to which the parties have agreed to indemnify each other against losses resulting from certain events, including breaches of representations and warranties, covenants and certain other matters. The Company is evaluating whether this agreement meets the criteria of a business combination in accordance with the applicable accounting guidance. ​ ​ ​ ​ 20 Table of Contents