KULR Technology Group, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures As of the end of the period covered by this Annual Report on Form 10-K, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e)) (the “Exchange Act”). Based on the foregoing evaluation, our principal executive officer and principal financial officer concluded that, as of December 31, 2023, our disclosure controls and procedures were effective. Disclosure controls and procedures are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in its reports filed under the Exchange Act is accumulated and communicated to management, including the Company’s principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Management’s Report on Internal Control Over Financial Reporting Our management, including our principal executive officer and principal financial officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023, based on the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013 Framework). Based on this evaluation, our principal executive officer and principal financial officer have concluded that our internal control over financial reporting as of December 31, 2023 was effective. Changes in Internal Control Over Financial Reporting During the fourth fiscal quarter ended December 31, 2023, we concluded that the preventative controls that we established around electronic payments (wires, EFT’s, ACH’s and credit card payments) were operating effectively and would enable proper segregation of duties, thus remediating our prior material weakness related to the electronic payment process. Inherent Limitations of the Effectiveness of Controls Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. A control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. Attestation Report of Registered Public Accounting Firm This Annual Report does not contain an attestation report of our independent registered public accounting firm related to internal control over financial reporting because the rules for smaller reporting companies with less than $100 million of revenue provide an exemption from the attestation requirement. 30 Table of Contents ​ ITEM 9B. OTHER INFORMATION N o n e . ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None. ​ 31 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE Executive Officers and Directors Our executive officers and directors and their ages are as follows: ​ ​ ​ ​ ​ ​ Name Age Office Michael Mo 53 Chief Executive Officer and Chairman Shawn Canter ​ 53 ​ Chief Financial Officer Dr. William Walker 34 Chief Technical Officer Keith Cochran ​ 58 ​ President and Chief Operating Officer Michael Carpenter ​ 60 ​ Vice President of Engineering Dr. Joanna Massey 55 Lead Director Morio Kurosaki ​ 67 ​ Director ​ The term of office for each director is one year, or until the next annual meeting of the stockholders. Michael Mo was appointed CEO and Director of the Company on March 16, 2011, is a technology entrepreneur and successful investor with over 20 years of experience in technology management, product development and marketing. In 2013, he co-founded KULR and has been serving as its CEO since then. From 2007 to 2015, Mr. Mo served as Senior Director of Business Development at Amlogic, Inc., a California high-tech company. Mr. Mo received his Master of Science in Electrical Engineering from the University of California at Santa Barbara in 1995. Shawn Canter was appointed as Chief Financial Officer (“CFO”) effective as of March 31, 2023. Mr. Canter is a seasoned corporate executive and board member with over 25 years of experience leading teams in hands-on roles in both institutional and early/growth stage companies bringing solutions to complex situations. He gained significant financial and transactional experience as an executive in mergers and acquisitions (“M&A”) at Goldman Sachs and at Bank of America’s investment banking division where he also served as Chief Operating Officer of M&A. Mr. Canter will be responsible for financial management and driving a disciplined fiscal strategy while scaling the Company through its commercialization phase. Mr. Canter received a bachelor’s degree in economics and a master’s degree in organizational behavior from Stanford University, as well as a JD and an MBA from the University of Michigan. Dr. William Walker was appointed Chief Technical Officer, effective November 1, 2022. Dr. Walker who originally joined the Company in March 2022 as Director of Engineering, has significant experience in professional and research related activities focused on thermo-electrochemical testing and analysis of lithium-ion (Li-ion) battery assemblies and related thermal management products designed for space exploration applications. Prior to joining the Company, from October 2021 to March 2022, Dr. Walker was a Research Scientist at Underwriters Laboratories Inc. since October of 2021. From June 2012 to October 2021, Dr. Walker was employed by the National Aeronautics and Space Administration (NASA) Johnson Space Center (JSC) where he focused on designing battery assemblies for human spaceflight applications capable of safely mitigating the effects of thermal runaway and preventing cell-to-cell propagation. Dr. Walker was recognized with a NASA Trailblazer award and with the RNASA Stellar Award for early career contributions to Li-ion battery thermal analysis and calorimetry methods. Dr. Walker continues to be engaged in the academic and professional communities focused on battery safety. Dr. Walker received his B.S. in Mechanical Engineering at West Texas A&M University (WTAMU) and Ph.D. in Materials Science and Engineering at the University of Houston (UH). Keith Cochran was appointed President and Chief Operating Officer effective March 1, 2021. Mr. Cochran spent twenty-four years in various management roles at Jabil Greenpoint (NYSE: JBL) and most recently as Senior Vice President of its Global Business Unit in Singapore, where he led a smartphone technology division responsible for $3.7 billion in revenues. Mr. Cochran is based in the United States and has vast international experience working with partners in Singapore, India, Brazil, Mexico, China, France, Hungary and other countries. Mr. Cochran has a Bachelor of Science in Business Operations from Devry Institute of Technology. Michael Carpenter serves as KULR’s Vice President of Engineering. Mr. Carpenter has been employed by ESLI since December 1983, serving as Director of the PCM Heatsink Group, Quality Manager, Facility Security Officer (FSO) in the Defense Industrial Security Program from 1988 to 1995. He also has been served as Safety Officer since he joined ESLI in 1983. Mr. Carpenter received his B.S. in Applied Mechanics from the University of California, San Diego in 1983. 32 Table of Contents Non-Executive Directors Joanna Massey serves as a member of the Company’s board of directors since June 7, 2021 and was appointed Lead Director on November 1, 2022. Dr. Massey is a public company Board Director and former Fortune 500 C-level communications executive. She helps companies expand market share and appeal to institutional investors by advising them on corporate governance, managing change, and navigating risk around environmental and social issues. In her board roles for public and private companies, Dr. Massey serves as Chair of Nominations & Governance, and she sits on the Audit, Compensation and M&A Committees. Dr. Massey has a PhD in psychology and 30 years of experience advising Chairmen and CEOs. She spent her operating career in the media and digital technology industries strategizing on global brand reputation management as Head of Communications at Condé Nast Entertainment and Senior Vice President of Corporate Communications at Lions Gate Entertainment (NYSE: LGF.A; LGF.B) and at The Hub Network, a joint venture between Discovery, Inc. (Nasdaq: WBD) and Hasbro, Inc. (Nasdaq: HAS). She also held Senior Vice President positions in communications and media relations at CBS Corporation and Viacom, Inc., now Paramount Global (Nasdaq: PARA). As a corporate communications executive, Dr. Massey managed integration during major M&A transactions at Lionsgate, CBS, and Discovery; corporate turnaround as Condé Nast pivoted from print to video; and crisis communications with consumers, employees, investors, regulators, and politicians. She is based in the United States and has international experience working with partners in Europe, the UK, China and India. Morio Kurosaki serves as a member of the Company’s board of directors since June 7, 2021. Mr. Kurosaki founded IT-Farm Corporation (“IT-Farm”), a Japanese venture capital firm, in 1999. Mr. Kurosaki has been the President of IT-Farm since the company’s inception. Mr. Kurosaki has led early investments in notable companies such as Zoom Video Communications (Nasdaq: ZM); ContextLogic (Nasdaq: WISH); Treasure Data, acquired by ARM Holdings (Nasdaq: NVDA); Tubi, acquired by Fox Corporation (Nasdaq: FOX); Red Hot Labs, acquired by Google (Nasdaq: GOOGL); lvl5, acquired by DoorDash (NYSE: DASH); Accel Technology, acquired by Marvell Technology Group (Nasdaq: MRVL), and Extreme DA, acquired by Synopsis (Nasdaq: SNPS). Mr. Kurosaki has also served as Asia-Pacific advisory member of ARM Holdings, acquired by SoftBank Group Corporation (OTCMKTS: SFTBY). Mr. Kurosaki started his business career at Intel Japan, thereafter, joining Western Digital Corporation (Nasdaq: WDC) as one of the earliest members of WDC’s Japanese division. Board Composition The Company’s directors are elected at the annual meeting of shareholders to hold office until the annual meeting of shareholders for the ensuing year or until their successors have been duly elected and qualified. Officers are elected annually by the board of directors and serve at the discretion of the board. Our board currently consists of three directors, Michael Mo, Morio Kurosaki, and Joanna Massey. Mr. Kurosaki and Dr. Joanna Massey are “independent” as defined under the NYSE American rules (as discussed below). Family Relationships There are no family relationships between any director and executive officer. Director Independence Our board of directors has determined that Morio Kurosaki and Dr. Joanna Massey are “independent,” as defined under the NYSE American rules. For purposes of the NYSE American rules, an independent director means a person other than an executive officer or employee of our company or any other individual having a relationship which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, subject to certain additional limitations. Committees of the Board of Directors Our board of directors has established an audit committee, a compensation committee, and a nominating and corporate governance committee. The composition and responsibilities of each of the committees of our board of directors are described below. Members serve on these committees until their resignation or until otherwise determined by our board of directors. Our board of directors may establish other committees as it deems necessary or appropriate from time to time. Audit Committee The members of our Audit Committee are Morio Kurosaki and Dr. Joanna Massey, with Mr. Kurosaki serving as the Chairperson. Each of Morio Kurosaki and Dr. Joanna Massey, is independent under the rules and regulations of the SEC and the listing 33 Table of Contents standards of the NYSE American applicable to audit committee members. Our board of directors has determined that each of Morio Kurosaki and Dr. Joanna Massey qualify as an audit committee financial expert within the meaning of SEC regulations and meet the financial sophistication requirements of the NYSE American. Our Audit Committee has the responsibility for, among other things, (i) selecting, retaining and overseeing our independent registered public accounting firm, (ii) obtaining and reviewing a report by independent auditors that describe the accounting firm’s internal quality control, and any materials issues or relationships that may impact the auditors, (iii) reviewing and discussing with the independent auditors standards and responsibilities, strategy, scope and timing of audits, any significant risks, and results, (iv) ensuring the integrity of the Company’s financial statements, (v) reviewing and discussing with the Company’s independent auditors any other matters required to be discussed by PCAOB Auditing Standard No. 1301, (vi) reviewing, approving and overseeing any transaction between the Company and any related person and any other potential conflict of interest situations, (vii) overseeing the Company’s internal audit department, (viii) reviewing, approving and overseeing related party transactions, and (ix) establishing and overseeing procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters. Compensation Committee The members of our Compensation Committee are Morio Kurosaki and Dr. Joanna Massey, with Mr. Kurosaki and Dr. Massey serving as Co-Chairpersons. Our Compensation Committee has the responsibility for, among other things, (i) reviewing and approving the chief executive officer’s compensation based on an evaluation in light of corporate goals and objectives, (ii) reviewing and recommending to the Board the compensation of all other executive officers, (iii) reviewing and recommending to the Board incentive compensation plans and equity plans, (iv) reviewing and discussing with management the Company’s Compensation Discussion and Analysis and related information to be included in the annual report on Form 10-K and proxy statements, and (v) reviewing and recommending to the Board for approval procedures relating to Say on Pay Votes. Nominating and Corporate Governance Committee The members of our Nominating and Corporate Governance Committee are Morio Kurosaki and Dr. Joanna Massey, with Dr. Massey serving as the Chairperson. Our Nominating and Corporate Governance Committee has the responsibility relating to assisting the Board in, among other things, (i) identifying and screening individuals qualified to become members of our board of directors, consistent with criteria approved by our board of directors, (ii) recommending to the Board the approval of nominees for director, (ii) developing and recommending to our board of directors a set of corporate governance guidelines, and (iv) overseeing the evaluation of our board of director. Code of Ethics Our board of directors has adopted a Code of Business Conduct and Ethics (the “Code”). The Code applies to all of our directors, officers and employees. We have made the Code available on our website https://www.kulrtechnology.com/governance-documents/. We intend to disclose future amendments to, or waivers of, our Code, as and to the extent required by SEC regulations, at the same location on our website identified above or in public filings. Involvement in Certain Legal Proceedings Our directors, executive officers and control persons have not been involved in any of the following events during the past five years: ● any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; ● any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); ● being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or 34 Table of Contents ● being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. Section 16(a) Beneficial Ownership Compliance Section 16(a) of the Exchange Act requires our directors and executive officers and persons who own more than 10% of the issued and outstanding shares of our common stock to file reports of initial ownership of common stock and other equity securities and subsequent changes in that ownership with the SEC. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. To our knowledge, during the fiscal year ended December 31, 2023, our officers, directors and greater than 10% beneficial owners have complied with all applicable filing requirements of Section 16(a), except that a Form 4 for Timothy Ray Knowles was filed late, resulting in the late disclosure of one transaction in his spouse’s shares over which Mr. Knowles does not have direct voting or dispositive control. Nomination Process As of December 31, 2023, we did not affect any material changes to the procedures by which stockholders may recommend nominees to the Board of Directors. We do not have any defined policy or procedure requirements for stockholders to submit recommendations or nominations for directors. The Board of Directors believes that, given the current stage of our development, a specific nominating policy would be premature and of little assistance until our operations develop to a more advanced level. We do not currently have any specific or minimum criteria for the election of nominees to the Board of Directors and there is no specific process or procedure for evaluating such nominees. The Board of Directors assesses all candidates, whether submitted by management or stockholders, and makes recommendations for election or appointment. A stockholder who wishes to communicate with the Board of Directors may do so by directing a written request addressed to our Chief Executive Officer at the address appearing on the face page of this annual report. ​ 35 Table of Contents ITEM 11. EXECUTIVE COMPENSATION Summary Compensation Table The following Summary Compensation Table sets forth all compensation earned in all capacities during the fiscal years ended December 31, 2023 and 2022 by (i) our principal executive officer, (ii) our two most highly compensated executive officers, other than our principal executive officer, who were serving as executive officers as of December 31, 2023 and whose total compensation for the 2023 fiscal year, as determined by Regulation S-K, Item 402, exceeded $100,000, (iii) a person who would have been included as one of our two most highly compensated executive officers, other than our principal executive officer, but for the fact that he was not serving as one of our executive officers as of December 31, 2023 (the individuals falling within categories (i), (ii) and (iii) are collectively referred to as the “Named Executive Officers”): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock ​ Option ​ Total Name and Principal Position ​ Year Salary Bonus Awards Awards ​ Earned ​ Michael Mo 2023 ​ $ 333,649 ​ $ — ​ $ — ​ $ — ​ $ 333,649 ​ Chief Executive Officer 2022 ​ $ 306,159 ​ $ — ​ $ 1,443,000 ​ $ — ​ $ 1,749,159 (1) Shawn Canter 2023 ​ $ 188,369 ​ $ — ​ $ 1,380,000 ​ $ — ​ $ 1,568,369 (2) Chief Financial Officer 2022 ​ $ — ​ $ — ​ ​ ​ ​ $ — ​ $ — ​ William Walker 2023 ​ $ 223,703 ​ $ — ​ $ 266,000 ​ $ — ​ $ 489,703 (3) Chief Technology Officer ​ 2022 ​ $ 151,250 ​ $ 12,000 ​ $ 309,000 ​ $ — ​ $ 472,250 (4) (1) Includes the incremental value of an equity modification for 1,500,000 shares of the Company’s common stock previously deemed to be earned upon achieving market capitalization milestones up to $4 billion, which will now vest in four equal increments over four years. (2) Includes cash compensation earned from date of hire March 31, 2023 through December 31, 2023. Also includes 1,500,000 shares of the Company’s common stock which vest in five equal increments over five years. (3) Includes 350,000 shares of the Company’s common stock which vest in four equal increments over four years. (4) Includes cash compensation earned from date of hire March 16, 2022 through December 31, 2022. Also includes 150,000 shares of the Company’s common stock which vest in four equal increments over four years. Employment Contracts; Termination of Employment and Change-in-Control Arrangements We have not entered into employment agreements with our officers and directors and our Board of Directors has the sole discretion to pay salaries and incentive bonuses, including merit-based cash and equity bonuses. During the year ended December 31, 2023, the Board, at the recommendation of the Compensation Committee, approved the following compensation for each of the following officers of the Company: ● On February 2, 2023, the Board approved the appointment of Shawn Canter as the Chief Financial Officer. In connection with his appointment, the Board authorized an annual salary of $250,000 and granted Mr. Canter 1,500,000 shares of the company’s common stock, which shall vest in five equal annual installments. ● On July 12, 2023, the Board granted Dr. William Walker 350,000 shares of the Company’s common stock, which shall vest in four equal annual installments. Equity Compensation Plans On August 15 and November 5, 2018, the Board of Directors and a majority of the Company’s shareholders, respectively, approved the 2018 Equity Incentive Plan (the “2018 Plan”). Under the 2018 Plan, 15,000,000 shares of common stock of the Company are authorized for issuance. The 2018 Plan provides for the issuance of incentive stock options, non-statutory stock options, rights to purchase common stock, stock appreciation rights, restricted stock, and restricted stock units to employees, directors and consultants of the Company and its affiliates. The 2018 Plan requires the exercise price of stock options to be not less than the fair value of the Company’s common stock on the date of grant. Compensation of Directors On November 1, 2022, the Board of the Company appointed a Lead Independent Director (“Lead Director”) and a non-Lead Independent Director (“non-Lead Director”) of the Board, to hold office until the earlier of the expiration of the term of office of the director whom they have replaced, successors are duly elected and qualified, or the earlier of such director’s death, resignation, 36 Table of Contents disqualification, or removal. Furthermore, the Lead Director will receive annual cash compensation equal to $150,000 upon their appointment and the non-Lead Independent Director (“non-Lead Director”) will receive annual cash compensation equal to $95,000. Additionally, all independent Board members were granted 37,500 shares of common stock, which shares vested quarterly in 7,500 share installments and were fully vested as of December 31, 2023. ​ Compensation Recovery Policy We have adopted a compensation recovery policy, effective as of November 29, 2023, that complies with the new SEC rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Clawback Policy”). Subject to the terms of the Clawback Policy, the Clawback Policy requires us to recover certain cash or equity-based incentive compensation payments or awards made or granted to an executive officer in the event we are required to prepare an accounting restatement due to our material noncompliance with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. See Exhibit 97 which includes our full Clawback Policy. Outstanding Equity Awards at Fiscal Year-End The following table discloses information regarding outstanding equity awards granted or accrued as of December 31, 2023, for our named executive officers. ​ ​ ​ ​ ​ ​ ​ Outstanding Equity Awards Stock Awards ​ ​ Number of Shares or Units of ​ Market Value of Units of ​ ​ Stock that have not vested ​ Stock that have not vested Name ​ (#) ​ ($) Michael Mo (Chief Executive Officer) 1,125,000 ​ $ 213,750 Shawn Canter (Chief Financial Officer) ​ 1,500,000 ​ ​ 285,000 Dr. William Walker (Chief Technology Officer) ​ 450,000 ​ ​ 85,500 ​ ​ ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table provides the names and addresses of each person known to us who own more than 5% of the outstanding common stock as of the date of this annual report, and by our officers and directors as of April 9, 2024. Except as otherwise indicated, all shares are owned directly. Unless otherwise indicated, the address of each of the persons shown is c/o KULR Technology Group, Inc., 4863 Shawline Street, San Diego, CA 92111. Each record holder of Non-convertible Series A Voting Preferred Stock shall have that number of votes (identical in every other respect to the voting rights of the holders of Common Stock entitled to vote at any regular or special meeting of the shareholders or by written consent) equal to one hundred (100) votes per share of Non-convertible Series A Voting Preferred Stock held by such record holder. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount of ​ ​ ​ ​ Beneficial ​ Percentage ​ Vote With ​ Name of Beneficial Owner ​ Ownership ​ Ownership (1) Series A ​ Michael Mo (2) - CEO and Chairman 21,155,110 12.27 % 38.36 % Shawn Canter (3) - CFO ​ 300,000 ​ * ​ ​ ​ Dr. William Walker (4) - CTO 50,000 * ​ ​ ​ Keith Cochran (5) – President and COO 500,000 * ​ ​ ​ Michael Carpenter - VP of Engineering ​ 500,000 ​ * ​ ​ ​ Morio Kurosaki (6) - Director ​ 557,500 ​ * ​ ​ ​ Dr. Joanna Massey (7) - Director 67,500 * ​ ​ ​ All directors and executive officers as a group (7 persons) ​ 23,130,110 ​ 13.64 % 39.16 % Beneficial owners of more than 5% ​ ​ ​ ​ ​ ​ ​ Dr. Timothy Knowles (8) – Former Director, Executive Technical Fellow and Secretary ​ 14,938,387 ​ 8.66 % 6.09 % * Less than 1% (1) The percent of class is based on 172,469,307 shares outstanding and entitled to vote, as of April 9, 2024, which excludes 131,162 treasury shares and 465,000 outstanding shares that are not vested and are not entitled to vote. 37 Table of Contents (2) Consists of 19,755,110 shares held directly by Mr. Mo and 1,400,000 shares held jointly by Mr. Mo and his spouse, Linda Mo, and excludes shares held by Mr. Mo’s son Alexander Mo and shares held by Mr. Mo’s son Brandon Mo, over which shares Mr. Mo disclaims beneficial ownership, as Mr. Mo has no control over the dispositive or voting power over the shares and his sons no longer live in the same household as Mr. Mo. Does not include a restricted stock award of 1,500,000 shares of the Company’s common stock that does not vest within 60 days of April 9, 2024. (3) Does not include a restricted stock award of 1,200,000 shares of the Company’s common stock that does not vest or settle within 60 days of April 9, 2024. (4) Does not include 450,000 restricted stock grants that do not vest within 60 days of April 9, 2024. (5) Does not include a restricted stock award of 1,000,000 shares of the Company’s common stock that does not vest within 60 days of April 9, 2024. (6) Consists of 20,000 vested shares of common stock granted by the Company, on June 7, 2021, the effective date of Mr. Kurosaki’s appointment as a director of the Company, 37,500 vested shares of common stock granted by the Company on November 1, 2022, 400,000 shares of common stock acquired prior to being appointed director, and 100,000 shares held by IT-Farm Corporation, a Japanese venture and capital firm, of which Mr. Kurosaki is the founder and President. (7) Consists of 20,000 vested shares of common stock granted by the Company, on June 7, 2021, the effective date of Dr. Massey’s appointment as a director of the Company, 37,500 vested shares granted by the Company on November 1, 2022, and 10,000 shares of common stock acquired in open market purchases. (8) Consists of 14,268,027 shares held directly by Mr. Knowles, 670,360 shares held by Mr. Knowles’ wife, Marianne Knight who maintains all voting and dispositive control over shares she owns, and excludes 1,500,000 shares held by Mr. Knowles’ daughter, Sonja Irene Knowles, over which shares Mr. Knowles disclaims beneficial ownership, as Mr. Knowles has no control over the dispositive or voting power over the shares and his daughter no longer lives in the same household as Mr. Knowles. Change in Control We are not aware of any arrangement that might result in a change in control of the Company. ​ ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE Other than as set forth below and compensation arrangements, including employment, and indemnification arrangements, discussed, there have been no transactions since January 1, 2022, in which the amount involved in the transaction exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets as at the year-end for the last two completed fiscal years, and to which any of our directors, executive officers or beneficial holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest. Other Transactions None. Director Independence The Board evaluates the independence of each nominee for election as a director of our Company in accordance with the NYSE American rules. Pursuant to these rules, a majority of our Board must be “independent directors” within the meaning of the NYSE American Rules, and all directors who sit on our Audit Committee, Nominating and Corporate Governance Committee and Compensation Committee must also be independent directors. Our board of directors has determined that Morio Kurosaki and Dr. Joanna Massey are “independent,” as defined under the NYSE American rules. For purposes of the NYSE American rules, an independent director means a person other than an executive officer or employee of our company or any other individual having a relationship which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, subject to certain additional limitations. ​ ​ 38 Table of Contents ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The following is a summary of the fees billed or expected to be billed to us by Marcum LLP, our independent registered public accounting firm for professional services rendered with respect to the fiscal years ended December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Year Ended ​ ​ December 31, ​ ​ 2023 2022 Audit Fees ​ $ 339,025 ​ $ 208,060 Tax Fees ​ — ​ — Total ​ $ 339,025 ​ $ 208,060 ​ Audit Fees Audit fees consist of fees billed for services rendered by Marcum LLP during the years ended December 31, 2023 and 2022 for the annual audit and quarterly reviews of our financial statements, as well as registration statements and comfort letters. Tax Fees Tax fees consist of fees billed for services rendered by our independent auditors during the years ended December 31, 2023 and 2022 in connection with the preparation and filing of our income tax returns. Pre-Approval Policies Our Audit Committee has adopted a policy governing the pre-approval by the Board of Directors of all services, audit and non-audit, to be provided to our Company by our independent auditors. Under the policy, the Audit Committee has pre-approved the provision by our independent auditors of specific audit, audit related, tax and other non-audit services as being consistent with auditor independence. Requests or applications to provide services that require the specific pre-approval of the board of directors must be submitted to the Audit Committee by the independent auditors, and the independent auditors must advise the Audit Committee as to whether, in the independent auditor’s view, the request or application is consistent with the SEC’s rules on auditor independence. The Audit Committee has considered the nature and amount of the fees billed by Marcum and believes that the provision of the services for activities unrelated to the audit is compatible with maintaining the independence of Marcum. ​ ​ 39 Table of Contents PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES ​ Exhibit No. Description 2.1 ​ Share Exchange Agreement, dated June 8, 2017 (1) ​ ​ ​ 3.1 ​ Articles of Incorporation of the Company (2) ​ ​ ​ 3.2 ​ Bylaws of the Company (2) ​ ​ ​ 3.3 ​ Certificate of Incorporation of KULR Technology Corporation (3) ​ ​ ​ 3.4 ​ Amended and Restated Certificate of Incorporation of KULR Technology Corporation (3) ​ ​ ​ 3.5 ​ By-laws of KULR Technology Corporation (3) ​ ​ ​ 3.6 ​ Certificate of Designation of Series A Voting Preferred Stock, filed on June 6, 2017 (1) ​ ​ ​ 3.7 ​ Certificate of Amendment to the Certificate of Incorporation, effective August 30, 2018 (8) ​ ​ ​ 3.8 ​ Certificate of Designation of Series B Convertible Preferred Stock, filed on December 6, 2018 (9) ​ ​ ​ 3.9 ​ Certificate of Amendment to the Certificate of Incorporation, effective December 31, 2018 (10) ​ ​ ​ 3.10 ​ Certificate of Designation of Series C Convertible Preferred Stock, filed on August 19, 2019 (11) ​ ​ ​ 3.11 ​ Form of Certificate of Designation for Series D Convertible Preferred Stock (20) ​ ​ ​ 4.1 ​ Description of registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934* ​ ​ ​ 10.1 ​ License and Development Agreement, dated April 15, 2013 (3) ​ ​ ​ 10.2 ​ Consulting Agreement, dated April 15, 2013 (3) ​ ​ ​ 10.3 ​ Letter of Intent by and between the Company and E3 Enterprise, dated April 20, 2016 (4) ​ ​ ​ 10.4 ​ Letter of Intent by and between the Company and KULR Technology Corporation (5) ​ ​ ​ 10.5 ​ Patent Assignment Agreement, dated November 10, 2016 (3) ​ ​ ​ 10.6 ​ Promissory Note issued by KULR Technology Corporation, dated March 31, 2017 (6) ​ ​ ​ 10.7 ​ Promissory Note issued by KULR Technology Corporation, dated June 8, 2017 (1) ​ ​ ​ 10.8 ​ Consulting Agreement, dated March 15, 2018 (7) ​ ​ ​ 10.9 ​ 2018 KULR Technology Group Equity Incentive Plan (12) ​ ​ ​ 10.10 ​ Securities Purchase Agreement dated April 2, 2019 (13) ​ ​ ​ 10.11 ​ Subscription Agreement, as supplemented, for Common Stock Offering (14) ​ ​ ​ 10.12 ​ Rescission and Termination Agreement dated July 5, 2019 (15) ​ ​ ​ 10.13 ​ Form of Subscription Agreement (16) ​ ​ ​ 10.14 ​ Form of Warrant (16) ​ ​ ​ 10.15 ​ Standby Equity Distribution Agreement dated February 27, 2020 (17) 40 Table of Contents ​ ​ ​ 10.16 ​ Note Purchase Agreement dated February 27, 2020 (17) ​ ​ ​ 10.17 ​ Promissory Note dated February 27, 2020 (17) ​ ​ ​ 10.18 ​ Note Purchase Agreement dated July 20, 2020 (18) ​ ​ ​ 10.19 ​ Promissory Note dated July 20, 2020 (18) ​ ​ ​ 10.20 ​ Form of Securities Purchase Agreement (19) ​ ​ ​ 10.21 ​ Form of Warrant (19) ​ ​ ​ 10.22 ​ Co-Placement Agency Agreement (19) ​ ​ ​ 10.23 ​ Form of Securities Purchase Agreement dated May 19. 2021 (20) ​ ​ ​ 10.24 ​ Form of Warrant (20) ​ ​ ​ 10.25 ​ Standby Equity Purchase Agreement, dated May 13, 2022, by and between KULR Technology Group, Inc. and YA II PN, Ltd. (21) ​ ​ ​ 10.26 ​ Note Purchase Agreement, dated May 13, 2022, by and between KULR Technology Group, Inc. and YA II PN, Ltd. (21) ​ ​ ​ 10.27 ​ Promissory Note, dated May 13, 2022 (21) ​ ​ ​ 10.28 ​ Amendment, dated June 3, 2022, to the Standby Equity Purchase Agreement by and between KULR Technology Group, Inc. and YA II PN, Ltd. (22) ​ ​ ​ 10.29 ​ Supplemental Agreement dated as of September 23, 2022 to the Standby Equity Purchase Agreement dated as of May 16, 2022 between KULR Technology Group, Inc. and YA II PN, LTD. (23) ​ ​ ​ 10.30 ​ Asset Purchase Agreement, effective as of October 6, 2022, by and among KULR Technology Group, Inc., Vibetech International, LLC, and Norman Serrano (24) ​ ​ ​ 10.31 ​ Underwriting Agreement dated December 20, 2023 by and between KULR Technology Group, Inc. and R.F. Lafferty & Co., Inc. (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on September 13, 2023) ​ ​ ​ 10.32 ​ Letter Agreement dated August 16, 2023, by and among KULR Technology Group, Inc., YA II PN, LTD, and Yorkville Advisors Global, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 16, 2023) ​ ​ ​ 10.33 ​ Amendment Letter Agreement dated August 22, 2023, by and among KULR Technology Group, Inc., YA II PN, LTD, and Yorkville Advisors Global, L.P. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 22, 2023) ​ ​ ​ 10.34 ​ Amendment Letter Agreement dated August 30, 2023, by and among KULR Technology Group, Inc., YA II PN, LTD, and Yorkville Advisors Global, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 30, 2023) ​ ​ ​ 10.35 ​ Amendment Letter Agreement dated December 19, 2023, by and among KULR Technology Group, Inc., YA II PN, LTD, and Yorkville Advisors Global, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 19, 2023) ​ ​ ​ 10.36 ​ Amendment Letter Agreement dated January 9, 2024, by and among KULR Technology Group, Inc., YA II PN, LTD, and Yorkville Advisors Global, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 9, 2024) 41 Table of Contents ​ ​ ​ 10.37 ​ Amendment Letter Agreement dated February 13, 2024, by and among KULR Technology Group, Inc., YA II PN, LTD, and Yorkville Advisors Global, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 13, 2024) ​ ​ ​ 21.1 ​ List of Subsidiaries (3) ​ ​ ​ 23.1* ​ Consent of Marcum LLP* ​ ​ ​ 31.1* ​ Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. ​ ​ ​ 31.2* ​ Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. ​ ​ ​ 32.1** ​ Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ​ ​ ​ 97* ​ Clawback Policy, effective November 29, 2023 ​ ​ ​ 101.INS ​ Inline XBRL Instance* ​ ​ ​ 101.SCH ​ Inline XBRL Taxonomy Extension Schema* ​ ​ ​ 101.CAL ​ Inline XBRL Taxonomy Extension Calculation* ​ ​ ​ 101.DEF ​ Inline XBRL Taxonomy Extension Definition* ​ ​ ​ 101.LAB ​ Inline XBRL Taxonomy Extension Labels* ​ ​ ​ 101.PRE ​ Inline XBRL Taxonomy Extension Presentation* ​ ​ ​ 104 ​ Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit)* * Filed herewith. ** Furnished herewith. (1) Previously filed as an exhibit to Form 8-K on June 12, 2017 and incorporated herein by this reference. (2) Previously filed as an exhibit on Form 10-12G on January 7, 2016 (File No.: 000-55564) and incorporated herein by this reference. (3) Previously filed as an exhibit to Form 8-K on June 19, 2017 and incorporated herein by this reference. (4) Previously filed on Form S-1 on June 28, 2016 (File No.: 333-212272) and incorporated herein by this reference. (5) Previously filed as an exhibit to Form 8-K on November 3, 2016 and incorporated herein by this reference. (6) Previously filed as an exhibit to Form 8-K on April 5, 2017 and incorporated herein by this reference. (7) Previously filed as an exhibit to Form 8-K on March 15, 2018 and incorporated herein by this reference. (8) Previously filed as an exhibit to Form 8-K on August 30, 2018 and incorporated herein by this reference. (9) Previously filed as an exhibit to Form 8-K on December 6, 2018 and incorporated herein by this reference. (10) Previously filed as an exhibit to Form 8-K on January 7, 2019 and incorporated herein by this reference. (11) Previously filed as an exhibit to Form 8-K on August 23, 2019 and incorporated herein by this reference. 42 Table of Contents (12) Previously filed as an exhibit to Form S-8 on October 9, 2018 and incorporated herein by this reference. (13) Previously filed as an exhibit to Form 8-K on April 3, 2019 and incorporated herein by this reference. (14) Previously filed as an exhibit to Form 10-Q on May 14, 2019 and incorporated herein by this reference. (15) Previously filed as an exhibit to Form 8-K on July 5, 2019 and incorporated herein by this reference. (16) Previously filed as an exhibit to Form 8-K on December 5, 2019 and incorporated herein by this reference. (17) Previously filed as an exhibit to Form 8-K on March 4, 2020 and incorporated herein by this reference. (18) Previously filed as an exhibit to Form 8-K on July 21, 2020 and incorporated herein by this reference. (19) Previously filed as an exhibit to Form 8-K on December 31, 2020 and incorporated herein by this reference. (20) Previously filed as an exhibit to Form 8-K on May 20, 2021 and incorporated herein by this reference. (21) Previously filed as an exhibit to Form 8-K on May 16, 2022 and incorporated herein by this reference. (22) Previously filed as an exhibit to Form 8-K on June 3, 2022 and incorporated herein by this reference. (23) Previously filed as an exhibit to Form 8-K on September 23, 2022 and incorporated herein by this reference. (24) Previously filed as an exhibit to Form 8-K on October 6, 2022 and incorporated herein by this reference. ​ ITEM 16. FORM 10-K SUMMARY None. ​ 43 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ​ April 12, 2024 KULR Technology Group, Inc. By: /s/ Michael Mo Michael Mo Chief Executive Officer and Chairman ​ ​ (Principal Executive Officer) By: /s/ Shawn Canter Shawn Canter Chief Financial Officer ​ ​ (Principal Financial and Accounting Officer) ​ Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. ​ Signature Title Date By: /s/ Michael Mo Chief Executive Officer and Chairman April 12, 2024 Michael Mo By: /s/ Shawn Canter Chief Financial Officer April 12, 2024 Shawn Canter ​ ​ ​ ​ ​ ​ By: /s/ Joanna Massey ​ Lead Director ​ April 12, 2024 ​ Joanna Massey ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ By: /s/ Morio Kurosaki ​ Director ​ April 12, 2024 ​ Morio Kurosaki ​ ​ ​ ​ ​ ​ ​ 44 Table of Contents KULR TECHNOLOGY GROUP INC. AND SUBSIDIARY CONSOLIDATED FINANCIAL STATEMENTS TABLE OF CONTENTS Report of Independent Registered Public Accounting Firm (PCAOB ID: 688 ) F-2 Consolidated Balance Sheets as of December 31, 2023 and 2022 F-3 Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022 F-4 Consolidated Statement of Changes in Stockholders’ Equity (Deficit) for the Year Ended December 31, 2023 F-5 ​ ​ Consolidated Statement of Changes in Stockholders’ Equity for the Year Ended December 31, 2022 F-6 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022 F-7 Notes to Consolidated Financial Statements F-9 ​ ​ ​ F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of KULR Technology Group, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of KULR Technology Group, Inc. (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph – Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has a working capital deficit, has incurred losses from operations, and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ Marcum LLP Marcum LLP We have served as the Company’s auditor since 2018. Los Angeles, CA April 12, 2024 ​ F-2 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 2022 Assets ​ ​ Current Assets: ​ ​ Cash ​ $ 1,194,764 ​ $ 10,333,563 Accounts receivable ​ 901,672 ​ 1,542,118 Inventory ​ 1,149,047 ​ 1,962,035 Inventory deposits ​ ​ 27,500 ​ ​ 285,260 Prepaid expenses and other current assets ​ 631,361 ​ 1,613,008 Total Current Assets ​ 3,904,344 ​ 15,735,984 Property and equipment, net ​ 4,698,144 ​ 3,193,041 Equipment deposits ​ 1,332,436 ​ 3,514,937 Security deposits ​ ​ 10,228 ​ ​ 60,441 Intangible assets, net ​ ​ 719,395 ​ ​ 720,768 Right of use asset, net ​ ​ 129,202 ​ ​ 328,941 Deferred financing costs, net ​ ​ 70,607 ​ ​ 71,818 Total Assets ​ $ 10,864,356 ​ $ 23,625,930 ​ ​ ​ ​ Liabilities and Stockholders’ (Deficit) Equity ​ ​ Current Liabilities: ​ ​ Accounts payable ​ $ 2,769,544 ​ $ 1,408,017 Accrued expenses and other current liabilities ​ ​ 3,463,344 ​ ​ 2,142,277 Accrued issuable equity ​ 13,002 ​ 227,956 Lease liability, current portion ​ ​ 102,186 ​ ​ 223,645 Prepaid advance liability, net of discount, current portion ​ ​ — ​ ​ 5,655,612 Deferred revenue ​ ​ 551,021 ​ ​ 23,000 Total Current Liabilities ​ 6,899,097 ​ 9,680,507 Notes payable, non-current portion ​ ​ 250,000 ​ ​ — Lease liability, non-current portion ​ ​ — ​ ​ 97,958 Prepaid advance liability, net of discount, non-current portion ​ ​ 5,892,056 ​ ​ 3,196,678 Accrued interest, non-current ​ ​ 5,899 ​ ​ 157,054 Total Liabilities ​ ​ 13,047,052 ​ 13,132,197 Commitments and contingencies (Note 16) ​ ​ ​ ​ ​ ​ ​ Stockholders ’ (Deficit) Equity ​ ​ ​ ​ ​ Preferred stock, $ 0.0001 par value, 20,000,000 shares authorized ​ ​ ​ Series A Preferred Stock, 1,000,000 shares designated; none issued and outstanding at December 31, 2023 and 2022 ​ — ​ — Series B Convertible Preferred Stock, 31,000 shares designated; none issued and outstanding at December 31, 2023 and 2022 ​ — ​ ​ — Series C Preferred Stock, 400 shares designated; none issued and outstanding at December 31, 2023 and 2022 ​ ​ — ​ — Series D Preferred Stock, 650 shares designated; none issued and outstanding at December 31, 2023 and 2022 ​ ​ — ​ ​ — Common stock, $ 0.0001 par value, 500,000,000 shares authorized; 134,031,669 and 133,900,507 shares issued and outstanding at December 31, 2023, respectively; 113,202,749 and 113,071,587 shares issued and outstanding at December 31, 2022, respectively ​ 13,403 ​ 11,320 Additional paid-in capital ​ 64,387,717 ​ 53,372,673 Treasury stock, at cost; 131,162 shares held at December 31, 2023 and 2022. ​ ​ ( 296,222 ) ​ ​ ( 296,222 ) Accumulated deficit ​ ( 66,287,594 ) ​ ( 42,594,038 ) Total Stockholders ’ (Deficit) Equity ​ ( 2,182,696 ) ​ 10,493,733 Total Liabilities and Stockholders ’ (Deficit) Equity ​ $ 10,864,356 ​ $ 23,625,930 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ F-3 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ December 31, ​ 2023 2022 Revenue ​ $ 9,830,166 ​ $ 3,994,634 Cost of revenue ​ 6,164,310 ​ 1,630,527 Gross Profit ​ 3,665,856 ​ 2,364,107 ​ ​ ​ ​ Operating Expenses ​ ​ ​ Research and development ​ 6,195,400 ​ 4,196,313 Selling, general, and administrative ​ 19,882,402 ​ 16,453,776 Total Operating Expenses ​ 26,077,802 ​ 20,650,089 Loss From Operations ​ ( 22,411,946 ) ​ ( 18,285,982 ) ​ ​ ​ Other (Expense) Income ​ ​ Interest expense ​ ( 718,420 ) ​ ( 935,874 ) Gain on forgiveness of PPP loan and interest ​ ​ — ​ ​ 158,675 Amortization of debt discount ​ ​ ( 730,230 ) ​ ​ ( 511,825 ) Loss on debt extinguishment ​ ​ — ​ ​ ( 8,508 ) Change in fair value of accrued issuable equity ​ 167,040 ​ 147,035 Total Other Expense, net ​ ( 1,281,610 ) ​ ( 1,150,497 ) Net Loss ​ $ ( 23,693,556 ) ​ $ ( 19,436,479 ) ​ ​ ​ ​ ​ ​ ​ Net Loss Per Share - Basic and Diluted ​ $ ( 0.20 ) ​ $ ( 0.18 ) ​ ​ ​ Weighted Average Number of Common Shares Outstanding - Basic and Diluted ​ 117,820,740 ​ 105,655,773 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ F-4 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE YEAR ENDED DECEMBER 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common Stock ​ Paid-In ​ Treasury Stock ​ Accumulated ​ Stockholders ’ ​ Shares Amount Capital Shares Amount Deficit Equity (Deficit) 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 pursuant to Investor Notices ​ 4,078,971 ​ 408 ​ 4,466,219 ​ — ​ ​ — ​ — ​ 4,466,627 Common stock issued for the repayment of prepaid advance liability and related interest accrual pursuant to Advance Notices (1) ​ 905,833 ​ 90 ​ 165,036 ​ — ​ ​ — ​ — ​ 165,126 Shares repurchased for payroll taxes and canceled ​ ( 175,000 ) ​ ( 17 ) ​ ( 229,232 ) ​ — ​ ​ — ​ — ​ ( 229,249 ) Common stock issued pursuant to the equity financing for cash, net of issuance costs (2) ​ 13,389,285 ​ ​ 1,339 ​ ​ 3,062,631 ​ — ​ ​ — ​ ​ — ​ ​ 3,063,970 Stock-based compensation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restricted stock awards granted ​ 2,218,508 ​ 222 ​ ( 222 ) ​ — ​ ​ — ​ — ​ — Unvested restricted stock awards canceled ​ ( 140,000 ) ​ ​ ( 14 ) ​ ​ 14 ​ — ​ ​ — ​ ​ — ​ ​ — Common stock issued for services ​ 551,323 ​ ​ 55 ​ ​ 268,765 ​ — ​ ​ — ​ ​ — ​ ​ 268,820 Amortization of restricted common stock ​ — ​ ​ — ​ ​ 3,124,174 ​ — ​ ​ — ​ ​ — ​ ​ 3,124,174 Amortization of stock options ​ — ​ — ​ 157,659 ​ — ​ ​ — ​ — ​ 157,659 Net loss ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ ( 23,693,556 ) ​ ​ ( 23,693,556 ) Balance - December 31, 2023 ​ 134,031,669 ​ $ 13,403 ​ $ 64,387,717 ​ 131,162 ​ $ ( 296,222 ) ​ $ ( 66,287,594 ) ​ $ ( 2,182,696 ) (1) Represents gross proceeds of $ 166,337 less $ 1,211 amortization of deferred financing costs. (2) Represents gross proceeds of $ 3,910,000 less issuance costs of $ 846,030 . The accompanying notes are an integral part of these consolidated financial statements. ​ F-5 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE YEAR ENDED DECEMBER 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 ) Treasury stock issued upon the exercise of options ​ — ​ ​ — ​ ​ ( 95,124 ) ​ ( 63,542 ) ​ ​ 143,506 ​ ​ — ​ ​ 48,382 Common stock issued upon the exercise of options ​ 2,500 ​ ​ — ​ ​ 5,075 ​ — ​ ​ — ​ ​ — ​ ​ 5,075 Common stock issued upon the exercise of warrants 2,416,668 ​ 242 3,020,594 — ​ — ​ — ​ 3,020,836 Common stock issued pursuant to the SEPA and Supplemental SEPA agreements: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For cash, net of issuance costs (1) ​ 160,782 ​ ​ 16 ​ ​ 249,002 ​ — ​ ​ — ​ ​ — ​ ​ 249,018 In satisfaction of notes payable ​ 94,458 ​ ​ 9 ​ ​ 149,991 ​ — ​ ​ — ​ ​ — ​ ​ 150,000 For the repayment of prepaid advance liability (2) ​ 5,375,269 ​ ​ 538 ​ ​ 6,440,305 ​ — ​ ​ — ​ ​ — ​ ​ 6,440,843 Stock-based compensation: ​ ​ ​ ​ ​ Restricted stock awards ​ 310,000 ​ ​ 31 ​ ​ ( 31 ) ​ — ​ ​ — ​ ​ — ​ ​ — Common stock issued for services 51,000 ​ 5 109,845 — ​ — ​ — ​ 109,850 Amortization of restricted stock units — ​ — 1,945,272 — ​ — ​ — ​ 1,945,272 Amortization of stock options — ​ — 103,220 — ​ — ​ — ​ 103,220 Amortization of market-based award — ​ — 1,932,402 — ​ — ​ — ​ 1,932,402 Net loss — ​ — — — ​ — ​ ( 19,436,479 ) ​ ( 19,436,479 ) Balance - December 31, 2022 113,202,749 ​ $ 11,320 $ 53,372,673 131,162 ​ $ ( 296,222 ) ​ $ ( 42,594,038 ) ​ $ 10,493,733 (1) Represents gross proceeds of $ 250,000 less $ 982 for amortization of deferred issuance costs. (2) Represents gross proceeds of $ 6,693,976 less $ 253,133 for amortization of debt discount. ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ ​ ​ F-6 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ December 31, ​ 2023 2022 Cash Flows From Operating Activities: ​ ​ Net loss ​ $ ( 23,693,556 ) ​ $ ( 19,436,479 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ Amortization of debt discount ​ ​ 730,230 ​ ​ 511,825 Non-cash lease expense ​ ​ 250,893 ​ ​ 193,106 Loss on debt extinguishment ​ ​ - ​ ​ 8,508 Depreciation and amortization expense ​ 2,214,095 ​ 259,399 Gain on forgiveness of PPP loan and interest ​ ​ — ​ ​ ( 158,675 ) Change in fair value of accrued issuable equity ​ ( 167,040 ) ​ ( 147,035 ) Non-cash interest expense ​ ​ — ​ ​ 576,932 Stock-based compensation ​ 3,502,736 ​ 4,175,014 Provision for credit losses ​ 16,978 ​ 15,026 Inventory write down ​ ​ 293,941 ​ ​ — Changes in operating assets and liabilities: ​ ​ ​ Accounts receivable ​ 623,473 ​ ( 1,420,818 ) Inventory ​ 519,047 ​ ( 1,770,724 ) Inventory deposits ​ ​ 257,760 ​ ​ ( 3,072 ) Prepaid expenses and other current assets ​ ​ 981,647 ​ ​ ( 1,324,836 ) Security deposits ​ 50,213 ​ ( 1,500 ) Accounts payable ​ 754,056 ​ 658,715 Accrued expenses and other current liabilities ​ 1,442,690 ​ 824,826 Lease liability ​ ( 270,571 ) ​ ( 205,034 ) Deferred revenue ​ ​ 528,021 ​ ​ ( 109,303 ) Total Adjustments ​ 11,728,169 ​ 2,082,354 Net Cash Used In Operating Activities ​ ( 11,965,387 ) ​ ( 17,354,125 ) ​ ​ ​ ​ ​ ​ ​ Cash Flows From Investing Activities: ​ ​ Deposits for purchase of property and equipment ​ ( 644,963 ) ​ ( 1,421,432 ) Purchases of property and equipment ​ ( 266,150 ) ​ ( 2,682,970 ) Acquisition of intangible assets ​ ( 135,000 ) ​ ( 543,572 ) Net Cash Used In Investing Activities ​ ( 1,046,113 ) ​ ( 4,647,974 ) ​ ​ ​ Cash Flows from Financing Activities: ​ ​ Proceeds from equity financing ​ ​ 3,910,000 ​ ​ — Issuance costs on equity financing ​ ​ ( 453,050 ) ​ ​ — Proceeds from the SEPA ​ ​ — ​ ​ 250,000 Proceeds from prepaid advance liability ​ ​ 2,000,000 ​ ​ 10,573,068 Issuance costs on prepaid advance liability ​ ​ ( 30,000 ) ​ ​ ( 85,000 ) Repayments of prepaid advance liability ​ ​ ( 1,575,000 ) ​ ​ — Proceeds from notes payable (1) ​ ​ 250,000 ​ ​ 4,750,000 Issuance costs on notes payable ​ ​ — ​ ​ ( 17,200 ) Repayments of note payable ​ ​ — ​ ​ ( 1,000,000 ) Payment of financing costs incurred in connection with the SEPA ​ ​ — ​ ​ ( 72,800 ) Repurchase of common stock ​ ​ ( 229,249 ) ​ ​ - Proceeds from the exercise of stock options ​ ​ — ​ ​ 53,457 Proceeds from the exercise of warrants ​ ​ — ​ ​ 3,020,836 Net Cash Provided By Financing Activities ​ 3,872,701 ​ 17,472,361 ​ ​ ​ ​ ​ ​ ​ Net Decrease In Cash ​ ( 9,138,799 ) ​ ( 4,529,738 ) Cash - Beginning of Year ​ 10,333,563 ​ 14,863,301 Cash - End of Year ​ $ 1,194,764 ​ $ 10,333,563 (1) Face value of $ 5,000,000 , less $ 250,000 original issue discount for 2022. The accompanying notes are an integral part of these consolidated financial statements . F-7 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ December 31, ​ 2023 2022 Supplemental Disclosures of Cash Flow Information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid during the period for: ​ ​ ​ ​ Interest ​ $ 314,731 ​ $ 86,062 Income taxes ​ $ — ​ $ — ​ ​ ​ ​ ​ ​ ​ Non-cash investing and financing activities: ​ ​ ​ ​ ​ ​ Right of use asset for lease liability ​ $ 51,154 ​ $ — Common stock held in treasury upon the vesting of restricted common stock ​ $ — ​ $ 439,728 Original issue discount on prepaid advance liability ​ $ 105,263 ​ $ 789,474 Common stock issued for the repayment of prepaid advance liability and related interest accrual pursuant to Investor Notices ​ $ 4,466,627 ​ $ 6,440,843 Common stock issued for the repayment of prepaid advance liability and related interest accrual pursuant to Advance Notices ​ $ 165,126 ​ $ — Prepaid advance for repayment of note payable ​ $ — ​ $ 3,850,000 Shares issued in satisfaction of note payable ​ $ — ​ $ 150,000 Deposits applied to purchases of property and equipment ​ $ 2,827,464 ​ $ 60,445 Additions to property and equipment included in accounts payable ​ $ 489,211 ​ $ 294,794 Common stock issued in satisfaction of accrued issuable equity ​ $ 206,047 ​ $ — Accrual of equity financing issuance costs ​ $ 392,980 ​ $ — Deferred financing costs charged to additional paid-in capital ​ $ 1,211 ​ $ 982 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ F-8 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION, NATURE OF OPERATIONS, AND RISKS AND UNCERTANTIES Organization and Operations KULR Technology Group, Inc. was incorporated on December 11, 2015 under the laws of the State of Delaware as KT High-Tech Marketing, Inc. Effective August 30, 2018, KT High-Tech Marketing, Inc. changed its name to KULR Technology Group, Inc. KULR Technology Group, Inc., through its wholly-owned subsidiary, KULR Technology Corporation (collectively referred to as “KULR” or the “Company”), develops and commercializes high-performance thermal management technologies for electronics, batteries, and other components across a range of applications. Currently, the Company is focused on targeting both high performance aerospace and Department of Defense (“DOD”) applications, such as 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. Risks and Uncertainties The Company operates in a dynamic and highly competitive industry and believes that changes in any of the following areas could have a material adverse effect on the Company’s future financial position, results of operations, or cash flows: ability to obtain future financing; advances and trends in new technologies and industry standards; regulatory approval and market acceptance of the Company’s products; development of sales channels; certain strategic relationships; litigation or claims against the Company based on intellectual property, patent, product, regulatory, or other factors; and the Company’s ability to attract and retain employees necessary to support its growth. ​ NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of Presentation The consolidated financial statements of the Company include the accounts of KULR Technology Group, Inc. and its wholly-owned subsidiary, KULR Technology Corporation. All significant intercompany transactions have been eliminated in the consolidation. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Going Concern and Management’s Liquidity Plans As of December 31, 2023, the Company had cash of $ 1,194,764 and working capital deficit of $ 2,994,753 . During the year ended December 31, 2023, the Company incurred a net loss in the amount of $ 23,693,556 and used cash in operations of $ 11,965,387 . The Company’s primary source of liquidity has historically been cash generated from equity and debt offerings along with cash flows from revenue. 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 these financial statements are issued. The accompanying consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. However, since the Company’s inception we have had a history of recurring net losses from operations, recurring use of cash in operating activities and working capital deficits. Future cash requirements for our current liabilities include $ 6,232,888 for accounts payable and accrued expenses, $ 1,609,200 for merchant cash advances (see Note 18 – Subsequent Events – Merchant Cash Advance Agreement), $ 1,323,963 for capital expenditures and $ 102,186 for future payments under operating leases. Future cash requirements for long-term liabilities include $ 250,000 for promissory notes. See Note 14 – Notes Payable for additional information. The non-current Prepaid Advance Liability balance (see Note 11 – Prepaid Advance Liability) of $ 5,892,056 was paid in full subsequent to December 31, 2023 from proceeds raised from the Company’s subsequent equity issuances. On December 20, 2023, the Company received a notice of noncompliance from NYSE Regulation (“NYSE”) stating it is not in compliance with Section 1003(a)(iii) in the NYSE American Company Guide (the “Company Guide”) since the Company reported stockholders’ equity of $ 1,200,172 at September 30, 2023, and losses from continuing operations and/or net losses in its five most recent F-9 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS fiscal years. On February 12, 2024, the Company received a second notice letter from NYSE stating it is not in compliance with Section 1003 (f)(v) of the Company guide since the Company’s securities were trading at an average of less than $ 0.20 per share for 30 days. The factors above raise substantial doubt about the Company’s ability to meet its obligations as they become due within the twelve months from the date these condensed consolidated financial statements are issued. Management’s plans to mitigate the factors which raise substantial doubt include (i) revenue growth, (ii) reducing operating expenses through careful cost management, (iii) raising additional funds through future financings, and (iv) negotiating an extension and/or conversion to equity of the Company’s prepaid advance liability (see Note 11 – Prepaid Advance Liability). The Company’s ability to continue as a going concern is dependent upon its ability to successfully execute the aforementioned initiatives. Subsequent to December 31, 2023, the Company issued 40,276,430 shares of common stock, at purchase prices per share ranging from $ 0.13 to $ 0.41 , pursuant to Advance Notices submitted by the Company to Yorkville for aggregate proceeds of $ 8,326,457 . Of the gross proceeds, $ 2,610,650 was retained by the Company to help fund operations. The remaining proceeds were applied against the remaining principal and accrued interest owed in connection with the Prepaid Advance Liability. See Note 11 – Prepaid Advance Liability and Note 15 – Stockholders’ (Deficit) Equity for additional information. During the first quarter of 2024, the Company entered into two agreements whereby the Company received $ 1,007,100 of cash (net of underwriting fees of $ 72,900 ) with the obligation to repay a total of $ 1,609,200 over a total of thirty-two weekly payments. See Note 18 – Subsequent Events – Merchant Cash Advance Agreement for additional details. On January 9, 2024, the Company announced that it had completed a reduction of its total workforce of approximately 15 % in an effort to allocate its resources to key business priorities to focus on improving the profitability of commercial customer engagements. On April 2, 2024, the Company received cash proceeds of $ 440,000 related to a Promissory Note comprised of an initial principal amount of $ 500,000 and discount of $ 60,000 . The Promissory Note carries an annual interest rate of 0 % and increases to 15 % in the event of default, and shall be repaid in cash representing all outstanding principal and accrued and unpaid interest due on October 2, 2024, as defined by the terms of the agreement. See Note 18 – Subsequent Events – Promissory Notes for additional information. On April 9, 2024, the Company received cash proceeds of $ 200,000 related to a Promissory Note which matures on the first anniversary of its issuance and carries an annual interest rate of 16 %. In the event the promissory note is prepaid within 9 months of its issuance, the holder is entitled to the repayment of principal and cash payment of interest equal to 12 % of the prepayment amount. See Note 18 – Subsequent Events – Promissory Notes for additional information. As of the date of the issuance of these consolidated financial statements, the Company has no additional commitments to obtain additional funding through future debt or equity financings, or that the Company will be able to obtain additional funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations. The aforementioned factors indicate that management’s plans do not alleviate the substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. The consolidated financial statements do not include any adjustments relating to the recoverability of assets and the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern. F-10 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO 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 financial statements include, but are not limited to, fair value calculations for intangible assets, 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 and accounts receivable. The Company’s concentrations of credit risk also include concentrations from key customers and vendors. 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 $ 694,763 and $ 9,833,541 as of December 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenue ​ Accounts Receivable ​ ​ For the Years Ended ​ As of ​ As of ​ ​ December 31, ​ December 31, ​ December 31, ​ 2023 ​ 2022 2023 2022 Customer A 51 % 32 % * ​ 61 % Customer B 9 % * ​ * ​ * ​ Customer C * ​ * ​ 14 % * ​ Customer D * ​ 13 % 52 % 34 % Customer E * ​ * ​ 20 % * ​ Customer F ​ * ​ 42 % * ​ * ​ Total 60 % 87 % 86 % 95 % * Less than 10% There is no assurance the Company will continue to receive significant revenue 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. F-11 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Vendor Concentrations The Company had vendors whose purchases of inventory individually represented 10% or more of the Company’s total purchases of inventory, as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ December 31, ​ ​ 2023 ​ 2022 Vendor A 23 % * ​ Vendor B 15 % * ​ ​ 38 % 0 % * Less than 10% Accounts Receivable Accounts receivable are carried at their contractual amounts, less an estimate for credit losses. As of December 31, 2023 and 2022, no allowances for credit losses were determined to be necessary. Management estimates the allowance for credit losses based on existing economic conditions, the financial conditions of the customers, and the amount and age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for bad debts only after all collection attempts have been exhausted. Inventory The Company capitalizes inventory costs associated with products when future commercialization is considered probable, and a future economic benefit is expected to be realized. These costs consist of finished goods, raw materials, manufacturing – related costs, transportation and freight, and other indirect overhead costs. 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. Safe cases provide a safe and cost-effective solution to commercially store and transport lithium batteries and mitigate the impacts of cell-to-cell thermal runway propagation. 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. During the year ended December 31, 2023, certain inventory was written down to its net realizable value by taking a charge to cost of revenue of $ 293,941 . On occasion, the Company pays for inventory prior to receiving the goods. These payments are recorded as inventory deposits until the goods are received and these costs are included in the current asset section of the consolidated balance sheet. As of December 31, 2023 and 2022, inventory deposits were $ 27,500 and $ 285,260 , respectively. Finished goods inventory is held on-site at the San Diego, California and Webster, Texas locations. Certain raw materials are held off-site with certain contract manufacturers. Inventory at December 31, 2023 and 2022 consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2023 ​ 2022 Raw materials ​ $ 322,111 ​ $ 1,075,310 Work-in-process ​ — ​ 2,977 Finished goods ​ 826,936 ​ 883,748 Total inventory ​ $ 1,149,047 ​ $ 1,962,035 ​ Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation, which is recorded commencing at the in-service date using the straight-line method at rates sufficient to charge the cost of depreciable assets to operations over their estimated useful lives, which range from 3 to 7 years (see Note 6 – Property and Equipment for additional details). Leasehold improvements are amortized over the shorter of (a) the useful life of the asset; or (b) the remaining lease term. Maintenance and repairs are charged to operations as incurred. F-12 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company capitalizes costs attributable to the betterment of property and equipment when such betterment extends the useful life of the assets. Vendor deposits toward the purchase of property and equipment are reflected as equipment deposits on the accompanying balance sheets. The Company reviews property and equipment assets for impairment on an annual basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying value. As of December 31, 2023 and December 2022, the Company determined there was no impairment of property and equipment. Intangibles Intangible assets are stated at cost as of the date acquired, less accumulated amortization. Amortization is calculated based on the estimated useful lives of the assets, using the straight-line method or another method that more fairly represents the utilization of the assets, as follows: ​ ​ ​ ​ ​ Estimated Useful Life Patent 17.3 years Intellectual property 5.0 years Technology license ​ 10.0 years ​ The Company periodically evaluates the remaining useful lives of our intangible assets to determine whether events or circumstances warrant a revision to the remaining periods of amortization. In the event that the estimate of an intangible asset’s remaining useful life has changed, the remaining carrying amount of the intangible asset is amortized prospectively over that revised remaining useful life. If it is determined that an intangible asset has an indefinite useful life, that intangible asset would be subject to impairment testing annually or whenever events or circumstances indicate that its carrying value may not, based on future undiscounted cash flows or market factors, be recoverable. An impairment loss, the recorded amount of which would be based on the fair value of the intangible asset at the measurement date, would be recorded in the period in which the impairment determination was made. As of December 31, 2023 and December 31, 2022, the Company determined there was no impairment of intangible assets. Fair Value of Financial Instruments The Company measures the fair value of financial assets and liabilities based on the guidance of Accounting Standards Codification (“ASC”) 820, “Fair Value Measurement” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 — quoted prices in active markets for identical assets or liabilities Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) The carrying amounts of the Company’s financial instruments, such as cash, accounts receivable, accrued expenses and other current liabilities, notes payable and Prepaid Advance Liability approximate fair values due to the short-term nature of these instruments. Treasury Stock The Company records repurchases of its own common stock at cost. Repurchased common stock is presented as a reduction of equity in the consolidated balance sheets. Subsequent reissuances of treasury stock are accounted for on a weighted average cost basis. Gains resulting from differences between the cost of treasury stock and the re-issuance proceeds are credited to additional paid-in capital. Losses resulting from differences between the cost of treasury stock and the re-issuance proceeds are debited to additional paid-in capital. F-13 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Convertible Instruments The Company evaluates embedded conversion features within convertible debt to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If an embedded derivative is bifurcated from share-settled convertible debt, the Company records the debt component at cost less a debt discount equal to the bifurcated derivative’s fair value. If the conversion feature is not required to be accounted for separately as an embedded derivative, the convertible debt instrument is accounted for wholly as debt. The Company amortizes the debt discount over the life of the debt instrument as additional non-cash interest expense utilizing the effective interest method. Debt issuance and offering costs are recorded as debt discount, reducing the carrying value of the debt instrument, and are amortized as interest expense over the term of the convertible debt instrument using the effective interest method. Accrued Issuable Equity The Company records accrued issuable equity when it is contractually obligated to issue shares and there has been a delay in the issuance of such shares. Accrued issuable equity is recorded and carried at fair value with changes in its fair value recognized in the Company’s consolidated statements of operations. Once the underlying shares of common stock are issued, the accrued issuable equity is reclassified to equity as of the share issuance date at the then current fair value of the common stock. Deferred Financing Costs Direct, incremental fees incurred in connection with a debt or equity financing, are capitalized as deferred financing costs (a non-current asset) on the balance sheet. Once the financing closes, the Company reclassifies such costs as either discounts to notes payable or as a reduction of proceeds received from equity transactions so that such costs are recorded as a reduction of additional paid-in capital. If the completion of a contemplated financing was deemed to be no longer probable, the related deferred financing costs would be charged to general and administrative expense in the consolidated financial statements. Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The following five steps are applied to achieve that core principle: ● 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 pursuant to the terms of each individual contract when the Company satisfies the respective performance obligations, which could be recognized at a point in time or over the term of the contract. F-14 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Contract services revenue that is recognized over time, may be recognized using the input method, based on labor hours expended, or using the output method based on milestones achieved, depending on the contract. The following table summarizes the Company’s revenue recognized in its consolidated statements of operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ December 31, ​ 2023 2022 Revenues Recognized at a Point in Time: ​ ​ ​ ​ ​ ​ Product sales ​ $ 6,903,988 ​ $ 2,643,325 Contract services ​ 1,167,391 ​ 1,351,309 Total ​ ​ 8,071,379 ​ ​ 3,994,634 Revenues Recognized Over Time: ​ ​ ​ ​ ​ ​ Contract services ​ ​ 1,758,787 ​ ​ — Total Revenues ​ $ 9,830,166 ​ $ 3,994,634 ​ Deferred Revenue As of December 31, 2023 and 2022, the Company had $ 551,021 and $ 23,000 of deferred revenue, respectively, from contracts with customers. The contract liabilities included in deferred revenue 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 and recognize the revenue related to its deferred revenue balance within the next twelve months. During the year ended December 31, 2023, $ 3,000 was recognized for performance obligations satisfied in previous periods. During the year ended December 31, 2022, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods. Deferred Labor Costs As of December 31, 2023 and 2022, the Company had $ 41,625 and $ 34,402 , respectively, of deferred labor costs, which is included in prepaid expenses and other current assets in the Company’s consolidated balance sheets. Deferred labor costs represent costs incurred to fulfill the Company’s deferred contract service revenue. The Company will recognize the deferred labor costs as cost of revenue at the point in time that the Company satisfies its performance obligation under the respective contract, which is generally at the time the services are fulfilled and/or accepted by the customer. Shipping and Handling Costs Shipping and handling fees billed to a customer in a sales transaction related are recorded as revenue. The Company has adopted a policy of accounting for shipping and handling activities as a fulfillment cost rather than a performance obligation. Costs incurred for shipping and handling are included as cost of revenue on the accompanying consolidated statements of operations. Research and Development Research and development include compensation and other expenses incurred in connection with the research and development of our CFV thermal management solution, high-areal-capacity battery electrodes, 3D engineering for a rechargeable battery, including non-cash stock-based compensation expenses. Research and development expenses are recognized as incurred. Advertising Costs Advertising costs are expensed in the period incurred. Advertising costs charged to operations for the years ended December 31, 2023 and 2022 were $ 1,801,144 and $ 874,398 , respectively, and are included in selling, general and administrative expenses in the consolidated statements of operations. Stock-Based Compensation The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award since the fair value of the award is more readily determinable than the value of the services. The fair value of the award is measured on F-15 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Upon the exercise of an award, the Company generally issues new shares of common stock out of its authorized shares, but may issue treasury stock when available. 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, if applicable, 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 Years Ended ​ ​ December 31, ​ 2023 2022 Numerator: ​ ​ ​ ​ ​ ​ Net loss attributable to common stockholders ​ $ ( 23,693,556 ) ​ $ ( 19,436,479 ) ​ ​ ​ ​ ​ ​ ​ Denominator (weighted average quantities): ​ ​ ​ Common shares issued ​ 120,756,776 ​ 107,683,574 Less: Treasury shares purchased ​ ( 131,162 ) ​ ( 125,015 ) Less: Unvested restricted shares ​ ( 3,079,374 ) ​ ( 2,005,109 ) Add: Accrued issuable equity ​ 274,500 ​ 102,323 Denominator for basic and diluted net loss per share ​ 117,820,740 ​ 105,655,773 ​ ​ ​ ​ ​ ​ ​ Basic and diluted net loss per common share ​ $ ( 0.20 ) ​ $ ( 0.18 ) ​ The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 2022 Prepaid advance (1) ​ 28,015,465 ​ 6,867,791 Unvested restricted stock awards ​ 3,381,008 ​ 5,042,500 Restricted stock units ​ 2,250,000 ​ — Options ​ 722,716 ​ 640,216 Warrants ​ 2,524,410 ​ 2,524,410 Total 36,893,599 15,074,917 (1) Shares to be issued if the Company defaults on any of its cash payment obligations. The shares are estimated using the effective floor price at the end of each period (see Note 11 – Prepaid Advance Liability). Operating Leases The Company leases properties under operating leases. For leases in effect upon adoption of Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” at January 1, 2020 and for any leases commencing thereafter, the Company recognizes a liability to make lease payments, the “lease liability”, and an asset representing the right to use the underlying asset during the lease term, the “right-of-use asset”. The lease liability is measured at the present value of the remaining lease payments, discounted at the Company’s incremental borrowing rate. The right-of-use asset is measured at the amount of the lease liability adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, any unamortized initial direct costs, and any impairment of the right-of-use-asset. Operating lease expense consists of a single lease cost calculated so that the remaining cost of the lease is allocated over the remaining lease term on a straight-line basis, variable lease payments not included in the lease liability, and any impairment of the right-of-use asset. F-16 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Income Taxes The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in the financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s financial statements as of December 31, 2023 and 2022. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as selling, general and administrative expenses in the consolidated statements of operations. Reclassifications Certain prior period balances have been reclassified in order to conform to the current period presentation. These reclassifications have no effect on previously reported results of operations or loss per share. Subsequent Events The Company has evaluated subsequent events through the date on which the consolidated financial statements were issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements, except as disclosed in Note 18 – Subsequent Events. Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (the “FASB”) FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” These amendments require a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Public entities with a single reporting segment are required to provide both the new disclosures and all of the existing disclosures required under ASC 280. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Since this new ASU addresses only disclosures, the Company does not expect the adoption of this ASU to have any material effects on its financial condition, results of operations or cash flows. The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023-07. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in ASU 2023 – 09 are effective for the Company on December 15, 2024, with early adoption permitted. Since this new ASU addresses only disclosures, the Company does not expect the adoption to have any material effects on its financial condition, results of operation or cash flows. The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023–09. In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity; Own Equity (“ASU 2020-06”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the F-17 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Company’s current accounting treatment under the current guidance. The guidance is effective for the Company in financial statements issued for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year. Management does not expect the adoption of this pronouncement will have a material effect on the Company’s financial statements. 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 consolidated financial statements. ​ NOTE 3 – ASSET ACQUISITION On October 6, 2022 (the “Asset Purchase Date”), KULR Technology Group, Inc. (the “Company”) entered into an agreement (the “Asset 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 $ 3,500,000 (the “Total Consideration”), of which, $ 2,000,000 (the “Cash Consideration”) will be paid in cash, and the Company will issue shares of common stock with an aggregate fair value of $ 1,500,000 , valued as of the Asset Purchase Date (the “Equity Consideration”). The Asset 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 paid the Cash Consideration of $ 1,000,000 on October 6, 2022, $ 500,000 on April 5, 2023 and $ 500,000 on October 5, 2023. In addition to total consideration, the seller has been employed by the Company with an annual salary of $ 216,000 . If the Seller terminates his employment with the Company less than four years after the Asset Purchase Date for reasons other than severe health problems or other extenuating circumstances that would render the Seller unable to perform his employment obligations, the Seller is required to pay back to the Company a pro rata portion of the Cash Consideration (the “Clawback”), based upon the length of the Seller’s employment as percentage of the four year employment requirement. A partial year is considered a full year for purposes of calculating the Clawback amount. The Company will issue the Equity Consideration in four equal installments of 279,852 common shares, valued as of the Asset Purchase Date at $ 1.34 per share, on the following dates: (i) October 5, 2023, (ii) October 5, 2024, (iii) October 5, 2025, and (iv) October 5, 2026, provided that the Seller has not terminated his employment with the Company as of the date of payment. All of the Equity Consideration is contingent upon the continued employment of the Seller; further, 75 % of the Cash Consideration is subject to Clawback, based on the term of the Seller’s employment by the Company. As such, an aggregate of $ 3,000,000 of the Total Consideration is accounted for as compensation, which will be recognized on a pro rata basis over the employment term requirement. During the years ended December 31, 2023 and 2022, the Company recognized compensation expense of $ 500,000 and $ 125,000 , respectively, which are included within the research and development expenses in the consolidated statements of operations. The remaining $ 500,000 of Total Consideration was accounted for as consideration for the Acquired Assets. Management determined that the remaining $ 500,000 of consideration attributable to fair value of the Acquired Assets was concentrated into a single identifiable asset, namely, intellectual property. As a result, this transaction was accounted for as an asset acquisition. The Company incurred legal costs in connection with the execution of the Asset Purchase Agreement, in the aggregate amount of $ 43,572 . The total cost of the intellectual property acquired of $ 543,572 is included in intangible assets on the accompanying consolidated balance sheet and is being amortized over its estimated useful life of 5 years (see Note 7 – Intangible Assets for additional details). F-18 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On May 4, 2023, the Company entered into an agreement (the “Asset Purchase Agreement”) with a seller (the “Seller”), pursuant to which the Company purchased all of the assets, primarily intellectual property, of the Seller (the “Acquired Assets”) for consideration of $ 75,000 (the “Total Consideration”), which was paid in cash on May 11, 2023. In addition, the Seller has been employed by the Company. The total cost of the intellectual property acquired of $ 75,000 is included in intangible assets on the accompanying consolidated balance sheet and is being amortized over its estimated useful life of 5 years. The Asset Purchase Agreement includes customary representations, warranties and covenants of the Company and the Seller. The Asset 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 determined that the transaction should be accounted for as an asset acquisition because substantially all of the fair value of the Acquired Assets is concentrated in a single asset. The total cost of the intellectual property acquired of $ 75,000 is included in intangible assets on the accompanying consolidated balance sheet and is being amortized over its estimated useful life of 5 years (see Note 7 – Intangible Assets for additional details). ​ NOTE 4 – INVENTORY DEPOSITS Inventory deposits consist 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 December 31, 2023 and December 31,2022, the Company had outstanding inventory deposits of $ 27,500 and $ 285,260 , respectively. ​ NOTE 5 – PREPAID EXPENSES AND OTHER CURRENT ASSETS As of December 31, 2023 and 2022, prepaid expenses and other current assets consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2023 2022 Compensation costs ​ $ 375,000 ​ $ 375,000 Deferred expenses ​ ​ 59,089 ​ ​ 34,402 Security deposits ​ ​ 55,308 ​ ​ — Dues and subscriptions ​ ​ 50,689 ​ ​ 75,889 Insurance ​ ​ 32,606 ​ ​ 12,776 Professional fees ​ ​ 24,125 ​ ​ 25,787 Conferences and seminars ​ ​ 19,338 ​ ​ — Vendor receivables ​ ​ 1,995 ​ ​ 368,069 Marketing and sponsorships ​ 1,512 ​ 574,636 Research and development ​ ​ — ​ ​ 62,329 Other ​ ​ 11,699 ​ ​ 84,120 Total prepaid expenses and other current assets ​ $ 631,361 ​ $ 1,613,008 ​ Prepaid marketing and sponsorship costs as of December 31, 2022, primarily consist of two sponsorship agreements with a marketing partner whereby the Company is required to make upfront payments which were amortized over the respective service periods of the agreements. As of December 31, 2023, the sponsorship costs were fully amortized. ​ ​ F-19 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 – PROPERTY AND EQUIPMENT As of December 31, 2023 and 2022, property and equipment consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ 2023 2022 Estimated Useful Life Construction in progress ​ $ 408,076 ​ $ 1,428,217 ​ ​ Machinery & equipment ​ 3,864,009 ​ 1,374,293 ​ 5 – 7 years Leasehold improvements ​ 2,043,672 ​ 345,709 ​ Lesser of the useful life of the asset or remaining life of the lease Computer equipment ​ 212,616 ​ 152,699 ​ 3 years Software ​ 314,932 ​ 127,193 ​ 3 years Research and development equipment ​ 167,517 ​ 100,939 ​ 3 years Research and development laboratory ​ ​ 101,053 ​ ​ — ​ 10 years Furniture and fixtures ​ 6,968 ​ 6,968 ​ 5 years ​ ​ 7,118,843 ​ 3,536,018 ​ ​ Less: accumulated deprecation ​ ​ ( 2,420,699 ) ​ ​ ( 342,977 ) ​ ​ Property and equipment, net ​ $ 4,698,144 ​ $ 3,193,041 ​ ​ ​ Depreciation expense amounted to $ 2,077,722 and $ 219,643 for the years ended December 31, 2023 and 2022, respectively, which is included in cost of revenue, selling, general and administrative and research and development expenses in the consolidated statements of operations. ​ NOTE 7 – INTANGIBLE ASSETS The Company’s intangible assets consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 2022 Patent ​ $ 218,000 ​ $ 218,000 Intellectual property ​ 618,572 ​ 543,572 Technology license ​ ​ 60,000 ​ ​ — ​ ​ 896,572 ​ 761,572 Less: accumulated amortization ​ ( 177,177 ) ​ ( 40,804 ) Intangible assets, net ​ $ 719,395 ​ $ 720,768 ​ On October 5, 2022, the Company acquired intellectual property with an aggregate cost of $ 543,572 (see Note 3 – Asset Acquisition). This long-lived intangible asset has a useful life of 5 years and is being amortized on a straight-line basis and tested for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. In February 2023, the Company entered into an agreement and paid $ 60,000 for exclusive use of a technology license. This long-lived asset has a useful life of ten years and is being amortized on a straight-line basis and tested for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. On May 4, 2023, the Company acquired intellectual property with an aggregate cost of $ 75,000 (see Note 3 – Asset Purchase). This long-lived intangible asset has a useful life of 5 years and is being amortized on a straight-line basis and tested for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. During the years ended December 31, 2023 and 2022, the Company recognized amortization expense related to intangible assets of $ 136,373 and $ 39,756 , respectively. F-20 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The weighted average remaining amortization period of the Company’s intangible assets is 7.3 years. Future amortization of intangible assets is as follows: ​ ​ ​ ​ ​ For the Years Ending December 31, ​ ​ 2024 ​ $ 142,293 2025 ​ 142,293 2026 ​ 142,293 2027 ​ 115,113 2028 ​ 23,579 Thereafter ​ ​ 153,824 ​ ​ $ 719,395 ​ ​ NOTE 8 – EQUIPMENT DEPOSITS The Company entered into agreements with third party contractors for the design and construction of a battery packaging and inspection automation system, and automated robotic tending system. As of December 31, 2023 and 2022, the Company had outstanding deposits of $ 1,332,436 and $ 3,514,937 , respectively, in connection with these agreements. ​ NOTE 9 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES As of December 31, 2023 and 2022, accrued expenses and other current liabilities consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2023 2022 Professional fees ​ $ 1,875,000 ​ $ 1,180,000 Payroll and vacation ​ ​ 504,748 ​ ​ 464,453 Research and development ​ ​ 441,192 ​ ​ 196,409 Refund due to customer ​ ​ 171,960 ​ ​ — Inventory ​ 145,949 ​ 58,804 Legal fees ​ ​ 117,640 ​ ​ 2,000 Tools and supplies ​ ​ 28,663 ​ ​ — Board compensation ​ ​ 23,750 ​ ​ 122,500 Royalties ​ ​ 17,505 ​ ​ 3,861 Marketing and advertising fees ​ — ​ 3,999 Subscriptions ​ ​ — ​ ​ 65,000 Other ​ ​ 136,937 ​ ​ 45,251 Total accrued expenses and other current liabilities ​ ​ 3,463,344 ​ ​ 2,142,277 Add: Accrued interest, non-current ​ 5,899 ​ 157,054 Total ​ $ 3,469,243 ​ $ 2,299,331 ​ ​ NOTE 10 – ACCRUED ISSUABLE EQUITY A summary of the accrued issuable equity activity during the years ended December 31, 2023 and 2022, is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ As of December 31, ​ 2023 2022 Fair value at January 1 ​ $ 227,956 ​ $ 290,721 Additions ​ ​ 158,133 ​ ​ 176,270 Cancellation of accrued issuable equity ​ — ​ ( 92,000 ) Mark-to-market ​ ​ ( 167,040 ) ​ ​ ( 147,035 ) Shares issued in satisfaction of accrued issuable equity ​ ( 206,047 ) ​ ​ — Fair value at December 31 ​ $ 13,002 ​ $ 227,956 ​ F-21 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS During the years ended December 31, 2023 and 2022, the Company entered into certain contractual arrangements for consulting 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 $ 158,133 and $ 176,270 , respectively, based on the quoted market prices of the shares. During the year ended December 31, 2022, the Company cancelled certain of its accrued issuable equity obligations of an aggregate of 33,333 of its shares with an aggregate fair value of $ 92,000 , due to a reduction in investor relation services. During the year ended December 31, 2023, the Company settled certain of its accrued issuable equity obligations through the issuance of an aggregate of 409,723 of its shares with an aggregate fair value of $ 206,047 , remeasured as of the date of settlement based on the quoted market prices of the shares. During the years ended December 31, 2023 and 2022, the Company recorded gains (losses) in the aggregate amount of $ 167,040 and $ 147,035 , respectively, related to the changes in fair value of accrued issuable equity (see Note 16 – Stockholders’ (Deficit) Equity, Stock-Based Compensation for additional details). The fair value of the accrued but unissued shares as of December 31, 2023 was $ 13,002 , based on Level 1 inputs, which consist of quoted prices for the Company’s common stock in active markets. ​ NOTE 11 – PREPAID ADVANCE LIABILITY The Company’s prepaid advance liability consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Amount of ​ Less: ​ Prepaid Advance ​ ​ ​ Prepaid Advance ​ Debt ​ Liability, ​ ​ Liability Discount net of discount ​ Balance, January 1, 2022 ​ $ — ​ $ — ​ $ — ​ Proceeds from prepaid advance ​ ​ 15,000,000 ​ ​ ​ ​ ​ 15,000,000 ​ Original issue discount on prepaid advance ​ ​ 789,474 ​ ​ ( 789,474 ) ​ ​ — ​ Legal fees ​ ​ — ​ ​ ( 85,000 ) ​ ​ ( 85,000 ) ​ Repayments in cash ​ ​ — ​ ​ — ​ ​ — ​ Repayments pursuant to Investor Notices ​ ​ ( 6,315,843 ) ​ ​ — ​ ​ ( 6,315,843 ) ​ Amortization of debt discount ​ ​ — ​ ​ 253,133 ​ ​ 253,133 ​ Balance, December 31, 2022 ​ ​ 9,473,631 ​ ​ ( 621,341 ) ​ ​ 8,852,290 (1) 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 ​ ​ ( 1,575,000 ) ​ ​ — ​ ​ ( 1,575,000 ) ​ Repayments pursuant to Advance Notices ​ ​ ( 52,806 ) ​ ​ — ​ ​ ( 52,806 ) ​ Repayments pursuant to Investor Notices ​ ​ ( 4,032,658 ) ​ ​ — ​ ​ ( 4,032,658 ) ​ Amortization of debt discount ​ ​ — ​ 730,230 ​ 730,230 Balance, December 31, 2023 ​ $ 5,918,430 ​ $ ( 26,374 ) ​ $ 5,892,056 (2) (1) The current portion of this liability was $ 5,655,612 as of December 31, 2022. (2) The current portion of this liability was $ 0 as of December 31, 2023. 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 16, Stockholders’ (Deficit) Equity) under the SEPA, without prior consent from Yorkville. 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 F-22 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. Each Prepaid Advance accrues interest at 10 % per annum, subject to an increase to 15 % per annum upon events of default as defined and matures 12 months after the date of the closing of such advance. Any advance balance that remains outstanding at maturity must be repaid in cash. On September 23, 2022, the Company recorded an initial Prepaid Advance liability in the amount of $ 15,789,474 , which consisted of $ 15,000,000 of gross cash proceeds (the “Initial Advance”), plus an original issue discount of $ 789,474 . Of the $ 15,000,000 Initial Advance amount, $ 3,850,000 was used to repay amounts due under a Note Purchase Agreement with Yorkville. The Company incurred $ 85,000 of legal and professional fees in connection with its entry into the Supplemental Agreement. The original issue discount and legal and professional fees incurred were recorded as a debt discount, which is being amortized ratably over the term of the Initial Advance. 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. On September 18, 2023, the Company repaid an aggregate amount of $ 1,839,731 , consisting of a principal amount of $ 1,500,000 , accrued interest in the amount of $ 264,731 and a payment premium in the amount of $ 75,000 . During the year ended December 31, 2023, the Company issued 4,078,971 shares of common stock, at purchase prices per share ranging from $ 0.57 to $ 1.20 , pursuant to Investor Notices submitted by Yorkville for aggregate proceeds of $ 4,466,627 . The proceeds were applied against the principal and interest due for the Prepaid Advance Liability in the aggregate amounts of $ 4,032,657 and $ 433,970 , respectively. During the year ended December 31, 2023, the Company recorded interest expense in the amount of $ 728,318 and recorded amortization of debt discount in the amount of $ 730,230 in connection with the Prepaid Advance liability. On August 16, 2023, as amended on August 23, 2023, August 30, 2023, November 6, 2023 and December 19, 2023, the Company and Yorkville entered into letter agreements (the “Letter Agreement”), intended to supplement and modify the Supplemental Agreement to extend the repayment date of the Prepaid Advance Liability balance as follows: (i) an initial payment of $ 1,000,000 plus accrued interest as well as a 5 % cash payment premium on or before December 31, 2023 or the date of the closing of any financing conducted by the Company (the “December Payment”); (ii) $ 2,000,000 on or before February 29, 2024 plus accrued interest as well as a 5 % cash payment premium (the “February Payment”); (iii) the remaining principal amount of the Prepaid Advance Liability of $ 2,597,194 plus accrued interest as well as a 5 % cash payment premium on or before April 30, 2024 (the “April Payment”). On January 9, 2024, the Company entered into a letter agreement with Yorkville to defer the Company’s December 31, 2023 (the “December Payment”) payment of $ 2,000,000 plus accrued interest and a 5 % cash payment premium until February 29, 2024. On February 13, 2024, the Company and Yorkville entered into another agreement to extend all payment due dates and defer all payment obligations to December 31, 2024. See Note 18 – Subsequent Events – Prepaid Advance Liability for additional details. As of March 27, 2024, all remaining principal and accrued interest balances related to the Prepaid Advance Liability were repaid in full through the issuance of common stock (see Note 18 – Subsequent Events – Prepaid Advance Liability). Consequently, the outstanding balance as of December 31, 2023 is classified as non-current. ​ F-23 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 12 – 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 % (see Note 18 – Subsequent Events – Leases for information related to the new lease entered into subsequent to December 31, 2023). On April 5, 2021, the Company entered into a new lease agreement for office space in San Diego, California, effective June 1, 2021. The initial lease term is three years and there is an option to renew for an additional five years . Management does not expect to exercise its option to renew. Monthly rental payments under the new lease begin at $ 23,787 , which is comprised of $ 18,518 of base rent plus $ 5,268 of common area maintenance fees, with annual escalation of 3.5 % (see Note 18 – Subsequent Events – Leases for information related to the lease extension entered into subsequent to December 31, 2023). The Company determined that the value of the lease liability and the related right-of-use asset at inception was $ 814,817 , using an estimated incremental borrowing rate of 5 % based on information available at the commencement date of the lease. During the years ended December 31, 2023 and 2022, operating lease expense was $ 265,457 and $ 231,116 respectively. As of December 31, 2023, the Company did not have any financing leases. Lease liabilities mature during the year ended December 31, 2024, as follows: ​ ​ ​ ​ ​ ​ ​ Amount Total future minimum lease payments ​ $ 103,432 Less: amount representing imputed interest ​ ( 1,246 ) Present value of lease liabilities ​ $ 102,186 ​ The Company paid a security deposit of $ 50,213 in connection with the San Diego lease agreement which is recorded within the prepaid expenses and other current assets section of the balance sheet as of December 31, 2023. Supplemental cash flow information related to the lease was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ December 31, ​ ​ 2023 ​ 2022 Cash paid for amounts included in the measurement of lease liabilities: ​ ​ Operating cash flows used in operating activities ​ $ 270,570 ​ $ 205,034 Right-of-use assets obtained in exchange for lease obligations ​ ​ Operating leases ​ $ 51,154 ​ $ — ​ ​ ​ ​ ​ ​ ​ Weighted Average Remaining Lease Term (Years) ​ ​ ​ ​ ​ ​ Operating leases ​ ​ 0.4 years ​ ​ 1.4 years Weighted Average Discount Rate ​ ​ ​ ​ ​ ​ Operating leases ​ ​ 5.0 % ​ — ​ ​ NOTE 13 – RELATED PARTY TRANSACTIONS Effective August 26, 2022, the Company entered into an eight-month consulting agreement with the father of the Company’s Chief Technology Officer (the “Related Consultant”), which shall automatically renew for an additional four months unless otherwise terminated. During the years ended December 31, 2023 and 2022, expense recognized for services provided by the Related Consultant were $ 32,055 and $ 16,290 , respectively, and is included within selling, general and administrative expenses in the consolidated statements of operations. On July 24, 2023, the Related Consultant accepted an employment offer by the Company, which became effective on August 7, 2023. F-24 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2023 and December 31, 2022, the Company did no t have material accounts payable outstanding with related parties. ​ NOTE 14 – NOTES PAYABLE On November 29, 2023, the Company entered into an agreement (the “Promissory Note 1”) with an individual investor (the “Investor 1”), pursuant to which the Investor purchased a five-year Promissory Note with a principal amount of $ 150,000 . The Promissory Note carries an interest rate of 15 % per annum, with the first interest payment due on the one-year anniversary of the Promissory Note, and then every six months thereafter. The Company is required to repay the principal amount by the maturity date of November 29, 2028. There were no legal fees or issue discount associated with this Promissory Note. On December 6, 2023, the Company entered into an agreement (the “Promissory Note 2”) with an individual investor (the “Investor 2”), pursuant to which the Investor purchased a five-year Promissory Note with a principal amount of $ 100,000 . The Promissory Note carries an interest rate of 15 % per annum, with the first interest payment due on the one-year anniversary of the Promissory Note, and then every six months thereafter. The Company is required to repay the principal amount by the maturity date of December 6, 2028. There were no legal fees or issue discount associated with this Promissory Note. See Note 18 – Subsequent Events – Promissory Notes for information related to notes payable issued subsequent to December 31, 2023. ​ NOTE 15 – INCOME TAXES The income tax provision (benefit) for the years ended December 31, 2023 and 2022 consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For The Years Ended ​ ​ December 31, ​ 2023 2022 Federal ​ ​ Current ​ $ — ​ $ — Deferred ​ ( 4,772,247 ) ​ ( 3,967,600 ) ​ ​ ​ State and Local ​ ​ Current ​ — ​ — Deferred ​ ( 405,473 ) ​ ( 1,133,600 ) ​ ​ ( 5,177,720 ) ​ ( 5,101,200 ) Change in valuation allowance ​ 5,177,720 ​ 5,101,200 Income tax provision ​ $ — ​ $ — ​ A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ For The Years Ended ​ ​ December 31, ​ 2023 2022 ​ ​ ​ ​ ​ ​ Tax benefit at federal statutory rate ( 21.0 ) % ( 21.0 ) % State income taxes, net of federal benefit ( 3.5 ) % ( 6.0 ) % Permanent differences 0.9 % ( 0.1 ) % Other and prior year true-ups 2.3 % 0.9 % Rate and apportionment changes ​ ( 0.6 ) % 0.0 % Change in valuation allowance 21.9 % 26.2 % Effective income tax rate ( 0.0 ) % 0.0 % ​ The Company has determined that a valuation allowance for the entire net deferred tax asset is required. A valuation allowance is required if, based on the weight of evidence, it is more likely than not that some or the entire portion of the deferred tax asset will not be realized. After consideration of all the evidence, management has determined that a full valuation allowance is necessary to reduce the deferred tax asset to zero. F-25 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The tax effects of temporary differences that give rise to deferred tax assets and liabilities are presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For The Years Ended ​ ​ December 31, ​ 2023 2022 Deferred Tax Assets (Liabilities): ​ ​ Net operating loss carryforwards ​ $ 12,665,029 ​ $ 9,078,972 Research and development credit carryforwards ​ 101,422 ​ 101,422 Capitalized research and development costs ​ ​ 1,949,748 ​ ​ 953,675 Stock-based compensation ​ 1,687,091 ​ 1,587,800 Property and equipment ​ ​ 87,018 ​ ​ ( 382,819 ) Intangible assets ​ ​ 24,945 ​ ​ 4,320 Debt discount ​ ​ ( 1,436 ) ​ ​ ( 16,384 ) Accruals and other ​ 50,149 ​ 59,260 Gross deferred tax assets ​ 16,563,966 ​ 11,386,246 Valuation allowance ​ ( 16,563,966 ) ​ ( 11,386,246 ) Deferred tax asset, net of valuation allowance ​ $ — ​ $ — ​ ​ ​ ​ Changes in valuation allowance ​ $ 5,177,720 ​ $ 5,101,200 ​ At December 31, 2023 and 2022, the Company had federal net operating loss carry forwards of approximately $ 49.0 million and $ 32.3 million, respectively. At December 31, 2023, approximately $ 3.3 million of federal net operating losses will expire from 2033 to 2037 , and approximately $ 45.7 million will have no expiration. At December 31, 2023 and 2022, the Company had state net operating loss carry forwards of approximately $ 33.3 million and $ 33.6 million, respectively, which will begin to expire in 2024. The net operating loss carryovers may be subject to annual limitations under Internal Revenue Code Section 382, and similar state provisions, should there be a greater than 50% ownership change as determined under the applicable income tax regulations. The amount of the limitation would be determined based on the value of the company immediately prior to the ownership change and subsequent ownership changes could further impact the amount of the annual limitation. An ownership change pursuant to Section 382 may have occurred in the past or could happen in the future, such that the NOLs available for utilization could be significantly limited. No tax audits were commenced or were in process during the years ended December 31, 2023 and 2022. No tax related interest or penalties were incurred during the years ended December 31, 2023 and 2022. The Company’s federal and state income tax returns beginning with the year ended December 31, 2020 remain subject to examination. ​ NOTE 16 – STOCKHOLDERS’ (DEFICIT) EQUITY Authorized Capital The Company is authorized to issue 500,000,000 shares of common stock, par value of $ 0.0001 per share, and 20,000,000 shares of preferred stock, par value of $ 0.0001 per share. The holders of the Company’s common stock are entitled to one vote per share. The preferred stock is designated as follows: 1,000,000 shares designated as Series A Preferred Stock, 31,000 shares designated as Series B Convertible Preferred Stock, 400 shares designated as Series C Preferred Stock, and 650 shares designated as Series D Convertible Preferred Stock. Equity Incentive Plan On August 15 and November 5, 2018, the Board of Directors and a majority of the Company’s stockholders, respectively, approved the 2018 Equity Incentive Plan (the “2018 Plan”). Under the 2018 Plan, 15,000,000 shares of common stock of the Company are authorized for issuance. The 2018 Plan provides for the issuance of incentive stock options, non-statutory stock options, rights to purchase common stock, stock appreciation rights, restricted stock and restricted stock units to employees, directors and consultants of the Company and its affiliates. The 2018 Plan requires the exercise price of stock options to be not less than the fair value of the Company’s common stock on the date of grant. As of December 31, 2023, there were 7,601,405 shares available for issuance under the 2018 Plan. F-26 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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) could not initially exceed 19.9 % of the Company’s outstanding common stock as of the date of the SEPA. See Note 18 – Subsequent Events – Prepaid Advance Liability for additional information regarding the lifting of the 19.9 % restriction. During the year ended December 31, 2023, the Company issued 905,833 shares of common stock pursuant to Advance Notices to repay $ 166,337 of the Prepaid Advance Liability, of which $ 113,531 was applied to accrued interest, and $ 52,806 was applied to principal. See Note 11 – Prepaid Advance Liability, for details related to a supplemental agreement to the SEPA and Note 18 – Subsequent Events – Prepaid Advance Liability for information related to subsequent common stock issuances pursuant to Advance Notices. Series A Preferred Stock Each record holder of Series A Preferred Stock shall have the right to vote on any matter with holders of the Company’s common stock and other securities entitled to vote, if any, voting together as one class. Each record holder of Series A Preferred Stock is entitled to one-hundred votes per share of Series A Preferred Stock held by such holder. The Series A Preferred Stock is not convertible into any series or class of stock of the Company. In addition, holders of the Series A Preferred Stock shall not be entitled to receive dividends, nor do they have a right to distribution from the assets of the Company in the event of any liquidation, dissolution, or winding up of the Company. On November 5, 2018, the Company received a written consent of the majority of the stockholders to issue 1,000,000 shares of the Company’s Series A Preferred Stock to the Chief Executive Officer of the Company, if necessary, as a measure to protect the Company from an uninvited takeover. As of the date of filing, the shares of Series A Preferred Stock have not been issued. Please see Note 18 – Subsequent Events – Unregistered Sales of Equity Securities for additional information on the issuance of Series A Preferred Stock. Series B Convertible Preferred Stock Holders of shares of Series B Convertible Preferred Stock are not entitled to voting rights or dividend rights. The Series B Convertible Preferred Stock does not contain any redemption provisions or other provisions requiring cash settlement within control of the holder. Series B Convertible Preferred Stock is senior in liquidation preference to common stock. Each share of Series B Convertible Preferred Stock, after 181 days after issuance and without the payment of additional consideration, is convertible at the option of the holder into fifty ( 50 ) fully paid and non-assessable shares of common stock. There are no Series B Convertible shares outstanding or available to issue at December 31, 2023. Series C Convertible Preferred Stock Series C Convertible Preferred Stock is senior in liquidation preference to the Company’s common stock for an amount equal to the stated value per share of $ 10,000 (“Stated Value”). Holders of shares of Series C Convertible Preferred Stock shall vote on an as-if-converted-to-common-stock basis with the common stockholders. Holders of shares of Series C Convertible Preferred Stock are entitled to receive dividends when, as and if declared by the Board of Directors, at an annual rate of twelve percent ( 12 )% beginning one year after each share’s issuance. The Company may elect to redeem all or part of each share of Series C Convertible Preferred Stock for the Stated Value. F-27 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS There are no Series C Convertible shares outstanding or available to issue at December 31, 2023. Series D Convertible Preferred Stock Holders of the Series D Preferred shall vote on an as-if-converted basis and are entitled to receive cumulative dividends annually at an annual rate equal to ten percent ( 10 %). There are no Series D Convertible shares outstanding or available at December 31, 2023. Common Stock During the year ended December 31, 2022, the Company issued an aggregate of 51,000 shares of immediately vested common stock with a grant date value of $ 109,850 for legal and consulting services. During the year ended December 31, 2022, the Company issued an aggregate of 2,416,668 shares of common stock upon the exercise of warrants pursuant to which the Company received an aggregate of $ 3,020,836 of gross proceeds. During the year ended December 31, 2023, the Company issued an aggregate of 551,323 shares of common stock valued at $ 268,820 for legal and consulting services, of which 189,963 shares valued at issuance at $ 227,956 were accrued at January 1, 2023 for services rendered in prior years. During the year ended December 31, 2023, the Company issued an aggregate of 13,389,285 shares of common stock in public equity offerings for gross proceeds of $ 3,910,000 less issuance costs of $ 846,030 . Treasury Stock As of December 31, 2023 and 2022, the Company has 131,162 shares held in treasury recorded at their cost of $ 296,222 . Warrants A summary of warrants activity during the year ended December 31, 2023 is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ Weighted ​ ​ ​ ​ ​ ​ ​ Average ​ Average ​ ​ ​ ​ ​ Number of ​ Exercise ​ Remaining ​ Intrinsic ​ Warrants Price Term (Yrs) Value Outstanding, January 1, 2023 ​ 2,524,410 ​ $ 1.02 ​ ​ ​ Issued — ​ — ​ Exercised — ​ — ​ Expired ​ — ​ ​ — ​ ​ ​ ​ ​ Forfeited ​ — ​ ​ — ​ ​ ​ ​ ​ Outstanding, December 31, 2023 2,524,410 ​ $ 1.02 2.0 $ — Exercisable, December 31, 2023 2,524,410 ​ $ 1.02 2.0 $ — ​ A summary of outstanding and exercisable warrants as of December 31, 2023 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 2.0 177,885 $ 1.00 2,346,525 2.0 2,346,525 ​ ​ ​ 2,524,410 ​ 2.0 ​ 2,524,410 ​ F-28 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents information related to stock-based compensation for the years ended December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For The Years Ended ​ ​ December 31, ​ 2023 2022 Common stock for services (includes accrued, unissued shares) ​ $ 220,903 ​ $ 194,120 Amortization of stock options ​ ​ 157,659 ​ ​ 103,220 Amortization of restricted stock awards and units ​ ​ 3,124,174 ​ ​ 1,945,272 Amortization of market-based awards ​ — ​ 1,932,402 Total ​ $ 3,502,736 ​ $ 4,175,014 ​ See Note 18 – Subsequent Events – Warrants for information related to warrants issued subsequent to December 31, 2023. Stock Options A summary of options activity (excluding market-based option awards) during the year ended December 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 325,000 ​ 0.87 ​ Forfeited ( 242,500 ) ​ 1.97 ​ Outstanding, December 31, 2023 722,716 ​ $ 1.26 2.6 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable, December 31, 2023 389,522 ​ $ 0.74 1.2 ​ $ — ​ The following table presents information related to stock options (excluding market-based option awards) as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ Options Outstanding ​ Options Exercisable ​ ​ ​ ​ Weighted ​ ​ Range of ​ Outstanding ​ Average ​ Exercisable Exercise ​ Number of ​ Remaining Life ​ Number of Price Options In Years Options $ 0.62 - $ 0.99 ​ 325,486 ​ 0.5 ​ 253,542 $ 1.21 - $ 1.50 ​ 155,000 ​ 4.0 ​ 46,250 $ 1.55 - $ 1.99 ​ 82,500 ​ 3.3 ​ 27,500 $ 2.05 - $ 2.44 ​ 159,730 ​ 2.9 ​ 62,230 ​ ​ 722,716 ​ 1.2 ​ 389,522 ​ For the years ended December 31, 2023 and 2022, the weighted average grant date fair value per share of options was $ 0.52 and $ 1.23 , respectively. 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 range of assumptions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For The Year Ended ​ ​ ​ December 31, ​ ​ 2023 2022 ​ Risk free interest rate ​ 3.92 % - 5.40 % ​ 1.18 % - 4.54 % Expected term (years) ​ 0.5 – 3.5 ​ 3.5 – 3.9 Expected volatility ​ 105 % - 109 % ​ 104 % - 116 % Expected dividends ​ 0 % ​ 0 % ​ F-29 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Option forfeitures are accounted for at the time of occurrence. The expected term used is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of employee option grants. The Company utilizes an expected volatility figure based on the historical volatility of its common stock over a period of time equivalent to the expected term of the instrument being valued. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued. As of December 31, 2023, there was $ 300,321 of unrecognized stock-based compensation expense related to the above stock options, which will be recognized over the weighted average remaining vesting period of 2.5 years. Restricted Stock Awards The following table presents information related to restricted stock awards as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ Shares of Restricted ​ Grant Date ​ ​ Common Stock ​ Fair Value Non-vested RSAs, January 1, 2023 2,042,500 ​ $ 2.50 Granted 2,218,508 ​ 0.96 Vested ( 740,000 ) ​ 2.41 Forfeited ​ ( 140,000 ) ​ ​ 2.06 Non-vested RSAs, December 31, 2023 3,381,008 ​ $ 1.53 ​ On March 31, 2021, the Company granted 2,000,000 restricted shares of common stock to the Company’s President and Chief Operating Officer with a grant date fair value of $ 5,220,000 . The restricted shares vest in four (4) equal annual 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 vesting of 500,000 shares of restricted stock, resulting in a 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. ​ During the year ended December 31, 2022, the Company issued as incentive shares to its employees, an aggregate of 250,000 shares of restricted common stock, of which, 75,000 shares were cancelled. On March 31, 2023, the Company granted 1,500,000 restricted shares of common stock with a grant date fair value of $ 1,380,000 to the Company’s Chief Financial Officer. The restricted shares vest in five (5) equal annual installments. During the year ended December 31, 2023, the Company granted RSAs of 668,508 restricted shares of common stock with an aggregate grant date fair value of $ 685,400 to employees which vest in four (4) equal annual installments. During the year ended December 31, 2023, the Company issued 50,000 shares of restricted common stock for marketing services subject to a 180 -day lock-up period. As of December 31, 2023, there was $ 3,642,659 of unrecognized stock-based compensation expense related to restricted stock that will be recognized over the weighted average remaining vesting period of 2.75 years. Restricted Stock Units The following table presents information related to restricted stock units (“RSUs”) as of December 31, 2023: ​ F-30 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ Restricted ​ Grant Date ​ ​ Stock Units ​ Fair Value Non-vested RSUs, January 1, 2023 ​ 3,000,000 ​ $ 2.05 Granted — ​ — Vested ( 750,000 ) ​ — Forfeited — ​ — Non-vested RSUs, December 31, 2023 2,250,000 ​ $ 2.05 ​ On March 1, 2021, in connection with the appointment of the Company’s Chief Operating Officer (the “COO”), the COO became eligible to receive of up to 1,500,000 shares of the Company’s common stock which would be earned based upon achieving certain market capitalization milestones up to $ 4 billion (the “Market-based RSU Award”). The grant date fair value of this award of $ 2,911,420 was determined using a Monte Carlo valuation model for market-based vesting awards, and was amortizable over each of the tranches’ prospective derived service period. On June 10, 2021, the Chief Executive Officer (the “CEO”) received an option for the purchase of up to 1,500,000 shares of the Company’s common stock at an exercise price of $ 2.60 per share (the “Market-based Option Award”, and together with the Market-based RSU Award, the “Market-based Awards”), which would be earned based upon achieving certain market capitalization milestones up to $ 4 billion. The grant date fair value of this award of $ 2,579,000 was determined using a Monte Carlo valuation model for market-based vesting awards, and was amortizable over each of the tranches’ prospective derived service period. On November 1, 2022 (the “Modification Date”), the Board approved the termination of the Market-Based Awards and approved the grant of 1,500,000 restricted stock units (the “RSUs”) with a grant date fair value of $ 3,075,000 , to each of the COO and CEO (the “Grantees”). The grant date value was determined using the stock price per share immediately preceding the Board approval of the grant. The RSUs will vest in four equal installments over the course of four years , the first of which vested on November 1, 2023. The exchange of RSUs for the Market-based Awards was accounted for as a modification of stock awards; as such, the amortizable value of the RSUs was determined to be $ 4,226,175 , which represents the unrecognized grant-date fair value of the Market-based awards of $ 1,446,175 , plus $ 2,780,000 representing the incremental fair value of the RSUs over the fair value of the Market Based Awards at the modification date. The following assumptions were used in applying the Monte Carlo valuation model to the Company’s market-based awards on each of the measurement dates described above. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ November 1, March 1, June 10, ​ ​ 2022 ​ 2021 ​ 2021 Risk free interest rate 4.33 % 0.71 % 0.73 % Expected volatility 100.0 % 98.9 % 98.5 % Expected dividend yield 0 % 0 % 0 % Expected term 3.3 years 2.1 years 2.2 years ​ ​ As of December 31, 2023, there was $ 2,970,061 of unrecognized stock-based compensation expense related to restricted stock units that will be recognized over the weighted average remaining vesting period of 3.09 years. Stock-Based Compensation During the years ended December 31, 2023 and 2022, the Company recognized stock-based compensation expense of $ 3,502,736 and $ 4,175,014 , respectively, related to restricted stock awards, restricted stock units, warrants and stock options, of which $ 3,227,782 and $ 4,136,494 , respectively, are included within selling, general and administrative expenses, and $ 274,954 and $ 38,520 , respectively are included within research and development expenses in the consolidated statements of operations. ​ ​ F-31 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 17 – COMMITMENTS AND CONTINGENCIES Patent License Agreement During April 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 the agreement (which was capitalized as an intangible asset and is being amortized over its useful life), and (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 beginning in the 2024 calendar year. Appointment of Vice President, Sales On January 16, 2023, the Company appointed a Vice President of Sales (the “VP of Sales”), and issued the VP of Sales 298,507 shares of restricted common stock. The restricted common stock had a grant date fair value of $ 400,000 , and vests in four equal annual installments beginning January 16, 2024 based solely on continued service. The grant date fair value is being amortized ratably over the vesting period. In addition, the Company committed to 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. NOTE 18 – SUBSEQUENT EVENTS Prepaid Advance Liability Subsequent to December 31, 2023, the Company issued 40,276,430 shares of common stock, at a purchase price per share ranging from $ 0.13 to $ 0.41 , pursuant to SEPA Advance Notices submitted by the Company to Yorkville for aggregate proceeds of $ 8,326,457 . Of the gross proceeds, $ 2,610,650 was retained by the Company to fund operations. The remaining proceeds were applied against the principal and interest owed in connection with the Prepaid Advance Liability. As of March 27, 2024, the Prepaid Advance Liability and related accrued interest has been repaid in full. See Note 11 – Prepaid Advance Liability for additional information. On January 9, 2024, the Company had entered into a letter agreement with Yorkville to defer the Company’s December 31, 2023 (the “December Payment”) payment of $ 2,000,000 plus accrued interest and a 5 % cash payment premium until February 29, 2024. On February 13, 2024, the Company entered into a letter agreement (the “Amendment Agreement”) with Yorkville to extend all payment due dates (including the December 2023, February 2024 and April 2024 payments) and to defer all payment obligations to December 31, 2024. Under the terms of the Supplemental Agreement, the aggregate number of shares purchased under the SEPA could not initially exceed 19.9 % of the Company’s outstanding common stock as of the date of the SEPA. Pursuant to its obligations under the agreement, on February 9, 2024, the Company obtained stockholder approval for the issuance of shares of common stock to Yorkville beyond the Exchange Cap. Merchant Cash Advance Agreement On January 22, 2024, the Company entered into a merchant cash advance agreement (the “Cash Advance Agreement”) whereby the Company received $ 504,900 of cash (net of underwriting fees of $ 35,100 ), and paid finder’s fees in cash of $ 21,600 and finder’s fees to be issued in equity with an aggregate value of $ 16,200 ,with the obligation to repay a total of $ 804,600 over thirty-two weekly payments of $ 25,143.75 , beginning January 30, 2024. On February 26, 2024, the parties added an addendum to the agreement for an early payoff discount whereby the Company will owe $ 756,000 if paid by March 22, 2024, or $ 783,000 if paid by April 22, 2024. On February 26, 2024, the Company entered into a merchant cash advance agreement (the “Second Cash Advance Agreement”) with the lender mentioned above whereby the Company received $ 502,200 of cash (net of underwriting fees of $ 37,800 ), and paid finder’s fees in cash of $ 21,600 and finder’s fees to be issued in equity with an aggregate value of $ 16,200 , with the obligation to repay a total of $ 804,600 over thirty weekly payments of $ 26,820 , beginning February 29, 2024. F-32 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Unregistered Sales of Equity Securities On January 26, 2024, the Board of Directors (“Board”), approved, authorized, and ratified the issuance of 730,000 shares of previously designated Non-convertible Series A Voting Preferred Stock to the Chairman and Chief Executive Officer of the Company, Michael Mo, for no consideration, subject to the Board reserving the full and unequivocal right to revoke, rescind, transfer or otherwise cancel the issued Non-convertible Series A Voting Preferred Stock in the event Michael Mo is removed from any position with the Company or resigns from all positions with the Company. The issuance of up to 1,000,000 shares of Non-convertible Series A Voting Preferred Stock was previously approved and authorized by a vote of the majority stockholders of the Company and reinforces and enhances the Company’s flexibility to optimize the Company’s negotiating position in any potential current and/or future engagements with commercial, financial, and/or strategic parties, and to provide defenses against potential hostile third-party actions. Leases On January 25, 2024, the Company entered into an amendment to the lease dated April 5, 2021 for the facility located at 4863 Shawline Street, San Diego, CA 92111. Pursuant to the amendment, the lease is extended for a period of eighteen months commencing June 1, 2024, and terminating November 30, 2025. Monthly rental payments under the amendment are $ 29,337.30 . On January 27, 2024, the Company entered into a new lease agreement for office space in Webster, Texas. The initial lease term is 63 months . Monthly rental payments under the new lease are $ 30,086 , which is comprised of $ 21,950 of base rent and $ 11,136 of common area maintenance fees. No cash payments are due for the first three months of the lease. Promissory Notes On April 2, 2024, the Company entered into an agreement (the “Promissory Note”), with a lender (the “Lender”), pursuant to which the Lender purchased a promissory note with an initial principal amount of $ 500,000 . The Company received cash proceeds of $ 440,000 , resulting in a discount of $ 60,000 , made up of an original issue discount of $ 50,000 and debt issuance costs of $ 10,000 . The Promissory Note carries an annual interest rate of 0 %, which shall increase to 15 % in the event of default, and has a maturity date of October 2, 2024, after which all outstanding principal and accrued interest will become immediately due. On April 9, 2024, the Company entered into a note purchase agreement pursuant to which the Company issued a promissory note with an initial principal amount of $ 200,000 and which matures on the first anniversary of its issuance. The Company received cash proceeds of $ 200,000 . The promissory note carries an annual interest rate of 16 %. In the event the promissory note is prepaid within 9 months of its issuance, the holder is entitled to the repayment of principal and cash payment of interest equal to 12 % of the prepayment amount. Warrants As part of the January 2024 and February 2024 Merchant Cash Advance Agreements (see Merchant Cash Advance Agreement above), on April 9, 2024, the Company issued and delivered a total of 190,177 warrants to the FINRA-registered financial advisor that assisted with arranging the facility. The warrants grant the advisor the right to purchase one share of common stock for each warrant, at prices ranging from $ 0.14 per share to $ 0.19 per share, with a final expiration date of February 26, 2027 . ​ ​ F-33