KULR Technology Group, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ 2024 2023 ​ ​ (unaudited) ​ ​ ​ Assets ​ ​ Current Assets: ​ ​ Cash ​ $ 1,016,943 ​ $ 1,194,764 Accounts receivable ​ 1,927,203 ​ 901,672 Inventory ​ 535,196 ​ 1,149,047 Inventory deposits ​ ​ 10,883 ​ ​ 27,500 Prepaid expenses and other current assets ​ 375,756 ​ 631,361 Total Current Assets ​ 3,865,981 ​ 3,904,344 Property and equipment, net ​ 3,774,695 ​ 4,698,144 Equipment deposits ​ ​ 1,360,092 ​ ​ 1,332,436 Security deposits ​ ​ 98,371 ​ ​ 10,228 Intangible assets, net ​ ​ 648,247 ​ ​ 719,395 Right-of-use asset, net ​ ​ 1,478,413 ​ ​ 129,202 Deferred financing costs, net ​ ​ 166,651 ​ ​ 70,607 Total Assets ​ $ 11,392,450 ​ $ 10,864,356 ​ ​ ​ ​ ​ ​ ​ Liabilities and Stockholders’ Equity (Deficit) ​ ​ ​ Current Liabilities: ​ ​ ​ Accounts payable ​ $ 1,060,694 ​ $ 2,769,544 Accrued expenses and other current liabilities ​ 3,750,871 ​ 3,463,344 Accrued issuable equity ​ ​ 82,116 ​ ​ 13,002 Lease liabilities, current portion ​ ​ 487,369 ​ ​ 102,186 Notes payable, net of discount, current portion ​ ​ 641,745 ​ ​ — Prepaid advance liability, net of discount, current portion ​ ​ — ​ ​ — Deferred revenue ​ ​ 224,664 ​ ​ 551,021 Total Current Liabilities ​ 6,247,459 ​ 6,899,097 Lease liabilities, non-current portion ​ ​ 1,059,898 ​ ​ — Notes payable, non-current portion ​ ​ 250,000 ​ ​ 250,000 Prepaid advance liability, net of discount ​ ​ — ​ ​ 5,892,056 Accrued interest ​ ​ — ​ ​ 5,899 Total Liabilities ​ ​ 7,557,357 ​ ​ 13,047,052 ​ ​ ​ ​ Commitments and contingencies (Note 11) ​ ​ ​ ​ ​ Stockholders’ Equity (Deficit) ​ ​ Preferred stock, $ 0.0001 par value, 20,000,000 shares authorized ​ ​ ​ ​ Series A Preferred Stock, 1,000,000 shares designated; 730,000 and 0 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively; ​ ​ 73 ​ ​ — Series B Convertible Preferred Stock, 31,000 shares designated; none issued and outstanding at June 30, 2024 and December 31, 2023 ​ — ​ — Series C Preferred Stock, 400 shares designated; none issued and outstanding at June 30, 2024 and December 31, 2023 ​ ​ — ​ ​ — Series D Preferred Stock, 650 shares designated; none issued and outstanding at June 30, 2024 and December 31, 2023 ​ ​ — ​ ​ — Common stock, $ 0.0001 par value, 500,000,000 shares authorized; 188,086,914 and 187,955,752 shares issued and outstanding at June 30, 2024, respectively; 134,031,669 and 133,900,507 shares issued and outstanding at December 31, 2023, respectively ​ 18,809 ​ 13,403 Additional paid-in capital ​ ​ 81,299,431 ​ ​ 64,387,717 Treasury stock, at cost; 131,162 shares held at June 30, 2024 and December 31, 2023. ​ ​ ( 296,222 ) ​ ​ ( 296,222 ) Accumulated deficit ​ ( 77,186,998 ) ​ ( 66,287,594 ) Total Stockholders’ Equity (Deficit) ​ 3,835,093 ​ ( 2,182,696 ) Total Liabilities and Stockholders’ Equity (Deficit) ​ $ 11,392,450 ​ $ 10,864,356 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 3 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ For the Six Months Ended ​ ​ June 30, ​ June 30, ​ 2024 2023 2024 2023 Revenue ​ $ 2,432,005 ​ $ 2,695,506 ​ $ 4,181,109 ​ $ 4,455,308 Cost of revenue ​ 1,859,377 ​ 1,693,318 ​ ​ 3,097,692 ​ ​ 2,809,732 Gross Profit ​ 572,628 ​ 1,002,188 ​ 1,083,417 ​ 1,645,576 ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Expenses ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ 1,305,186 ​ 1,924,138 ​ 2,259,811 ​ 3,729,153 Selling, general, and administrative ​ 4,594,500 ​ 5,158,030 ​ 8,807,401 ​ 10,257,121 Total Operating Expenses ​ 5,899,686 ​ 7,082,168 ​ 11,067,212 ​ 13,986,274 Loss From Operations ​ ( 5,327,058 ) ​ ( 6,079,980 ) ​ ( 9,983,795 ) ​ ( 12,340,698 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Other (Expense) Income ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ( 33,534 ) ​ ( 197,110 ) ​ ( 166,236 ) ​ ( 357,041 ) Amortization of debt discount ​ ​ ( 527,199 ) ​ ​ ( 214,554 ) ​ ​ ( 702,276 ) ​ ​ ( 460,874 ) Loss on debt extinguishment ​ ​ — ​ ​ — ​ ​ ( 31,358 ) ​ ​ — Change in fair value of accrued issuable equity ​ ​ ( 2,737 ) ​ ​ 156,652 ​ ​ ( 15,739 ) ​ ​ 220,760 Total Other Expense, net ​ ( 563,470 ) ​ ( 255,012 ) ​ ( 915,609 ) ​ ( 597,155 ) Net Loss ​ $ ( 5,890,528 ) ​ $ ( 6,334,992 ) ​ $ ( 10,899,404 ) ​ $ ( 12,937,853 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Loss Per Share ​ ​ ​ ​ ​ ​ ​ ​ - Basic and Diluted ​ $ ( 0.03 ) ​ $ ( 0.05 ) ​ $ ( 0.07 ) ​ $ ( 0.11 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average Number of Common Shares Outstanding ​ ​ ​ ​ ​ ​ ​ ​ - Basic and Diluted ​ 181,467,264 ​ 115,380,700 ​ 161,914,634 ​ 114,133,873 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ ​ 4 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 ​ ​ Series A ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Preferred Stock ​ Common Stock ​ Paid-In ​ Treasury Stock ​ Accumulated ​ Stockholders’ ​ Shares Amount Shares Amount Capital Shares Amount Deficit Equity (Deficit) Balance - January 1, 2024 ​ — ​ $ — 134,031,669 ​ $ 13,403 ​ $ 64,387,717 ​ 131,162 ​ $ ( 296,222 ) ​ $ ( 66,287,594 ) ​ $ ( 2,182,696 ) Preferred stock issued for no consideration ​ 730,000 ​ ​ 73 ​ — ​ ​ — ​ ​ ( 73 ) ​ — ​ ​ — ​ ​ — ​ ​ — Common stock issued for the repayment of prepaid advance liability and related interest accrual pursuant to Advance Notices (1) ​ — ​ ​ — ​ 21,798,830 ​ ​ 2,180 ​ ​ 6,052,650 ​ — ​ ​ — ​ ​ — ​ ​ 6,054,830 Common stock issued for cash pursuant to Advance Notices (2) ​ — ​ ​ — ​ 19,228,351 ​ ​ 1,923 ​ ​ 2,904,490 ​ — ​ ​ — ​ ​ — ​ ​ 2,906,413 Warrants issued in connection with note payable ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — Stock-based compensation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restricted stock awards exchanged for restricted stock units ​ — ​ ​ — ​ ( 2,168,508 ) ​ ​ ( 217 ) ​ ​ 217 ​ — ​ ​ — ​ ​ — ​ ​ — Restricted stock units vested ​ — ​ ​ — ​ 384,627 ​ ​ 38 ​ ​ ( 38 ) ​ — ​ ​ — ​ ​ — ​ ​ — Common stock issued for services ​ — ​ ​ — ​ 35,500 ​ ​ 4 ​ ​ 6,386 ​ — ​ ​ — ​ ​ — ​ ​ 6,390 Amortization of restricted common stock ​ — ​ ​ — ​ — ​ ​ — ​ ​ 781,496 ​ — ​ ​ — ​ ​ — ​ ​ 781,496 Amortization of stock options ​ — ​ ​ — ​ — ​ ​ — ​ ​ 32,041 ​ — ​ ​ — ​ ​ — ​ ​ 32,041 Net loss ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ ( 5,008,876 ) ​ ​ ( 5,008,876 ) Balance - March 31, 2024 ​ 730,000 ​ ​ 73 ​ 173,310,469 ​ ​ 17,331 ​ ​ 74,164,886 ​ 131,162 ​ ​ ( 296,222 ) ​ ​ ( 71,296,470 ) ​ ​ 2,589,598 Warrants isued in connection with note payable ​ — ​ ​ — ​ — ​ ​ — ​ ​ 112,863 ​ — ​ ​ — ​ ​ — ​ ​ 112,863 Common stock issued for cash pursuant to Advance Notices (3) ​ — ​ ​ — ​ 14,632,295 ​ ​ 1,464 ​ ​ 6,140,043 ​ — ​ ​ — ​ ​ — ​ ​ 6,141,507 Stock-based compensation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restricted stock units vested ​ — ​ ​ — ​ 70,000 ​ ​ 7 ​ ​ ( 7 ) ​ — ​ ​ — ​ ​ — ​ ​ — Common stock issued for services ​ — ​ ​ — ​ 74,150 ​ ​ 7 ​ ​ 38,143 ​ — ​ ​ — ​ ​ — ​ ​ 38,150 Amortization of restricted common stock ​ — ​ ​ — ​ — ​ ​ — ​ ​ 814,338 ​ — ​ ​ — ​ ​ — ​ ​ 814,338 Amortization of stock options ​ — ​ ​ — ​ — ​ ​ — ​ ​ 29,165 ​ — ​ ​ — ​ ​ — ​ ​ 29,165 Net loss ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ ( 5,890,528 ) ​ ​ ( 5,890,528 ) Balance - June 30, 2024 ​ 730,000 ​ $ 73 ​ 188,086,914 ​ $ 18,809 ​ $ 81,299,431 ​ 131,162 ​ $ ( 296,222 ) ​ $ ( 77,186,998 ) ​ $ 3,835,093 (1) Represents gross proceeds of $ 6,068,407 , less issuance costs of $ 13,577 . (2) Represents gross proceeds of $ 2,910,651 , less issuance costs of $ 4,238 . (3) Represents gross proceeds of $ 6,194,299 , less issuance costs of $ 52,792 . ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 5 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY, continued (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common Stock ​ Paid-In ​ Treasury Stock ​ Accumulated ​ Stockholders’ ​ Shares Amount Capital Shares Amount Deficit Equity Balance - January 1, 2023 113,202,749 ​ $ 11,320 ​ $ 53,372,673 ​ 131,162 ​ $ ( 296,222 ) ​ $ ( 42,594,038 ) ​ $ 10,493,733 Common stock issued for the repayment of prepaid advance liability and related interest accrual 3,153,036 ​ 315 ​ ​ 3,750,653 ​ — ​ ​ — ​ — ​ 3,750,968 Shares repurchased for payroll taxes and canceled ​ ( 175,000 ) ​ ​ ( 17 ) ​ ​ ( 229,232 ) ​ — ​ ​ — ​ ​ — ​ ​ ( 229,249 ) Stock-based compensation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restricted stock awards granted ​ 1,848,508 ​ ​ 185 ​ ​ ( 185 ) ​ — ​ ​ — ​ ​ — ​ ​ — Unvested restricted stock awards canceled ( 75,000 ) ​ ( 8 ) ​ ​ 8 ​ — ​ ​ — ​ — ​ — Common stock issued for services ​ 5,500 ​ ​ 1 ​ ​ 6,819 ​ — ​ ​ — ​ ​ — ​ ​ 6,820 Amortization of restricted common stock ​ — ​ ​ — ​ ​ 765,100 ​ — ​ ​ — ​ ​ — ​ ​ 765,100 Amortization of stock options — ​ ​ — ​ ​ 40,605 ​ — ​ ​ — ​ — ​ 40,605 Net loss ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ ( 6,602,861 ) ​ ​ ( 6,602,861 ) Balance - March 31, 2023 ​ 117,959,793 ​ ​ 11,796 ​ ​ 57,706,441 ​ 131,162 ​ ​ ( 296,222 ) ​ ​ ( 49,196,899 ) ​ ​ 8,225,116 Common stock issued for the repayment of prepaid advance liability and related interest accrual ​ 925,935 ​ ​ 93 ​ ​ 715,565 ​ — ​ ​ — ​ ​ — ​ ​ 715,658 Stock-based compensation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortization of restricted common stock ​ — ​ ​ — ​ ​ 823,540 ​ — ​ ​ — ​ ​ — ​ ​ 823,540 Amortization of stock options ​ — ​ ​ — ​ ​ 44,311 ​ — ​ ​ — ​ ​ — ​ ​ 44,311 Net loss ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ ( 6,334,992 ) ​ ​ ( 6,334,992 ) Balance - June 30, 2023 ​ 118,885,728 ​ $ 11,889 ​ $ 59,289,857 ​ 131,162 ​ $ ( 296,222 ) ​ $ ( 55,531,891 ) ​ $ 3,473,633 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ ​ 6 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Six Months Ended ​ ​ June 30, ​ 2024 2023 Cash Flows From Operating Activities: ​ ​ ​ Net loss ​ $ ( 10,899,404 ) ​ $ ( 12,937,853 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ Amortization of debt discount ​ ​ 702,276 ​ ​ 460,874 Non-cash lease expense ​ ​ 226,708 ​ ​ 123,749 Loss on debt extinguishment ​ ​ 31,358 ​ ​ — Depreciation and amortization expense ​ ​ 1,218,779 ​ ​ 862,086 Change in fair value of accrued issuable equity ​ 15,739 ​ ( 220,760 ) Stock-based compensation ​ ​ 1,754,955 ​ ​ 1,966,929 Loss on disposal of property and equipment ​ ​ 20,866 ​ ​ — Changes in operating assets and liabilities: ​ ​ ​ ​ Accounts receivable ​ ​ ( 1,025,531 ) ​ ​ ( 1,046,532 ) Inventory ​ ​ 613,851 ​ ​ 581,634 Inventory deposits ​ ​ 16,617 ​ ​ 240,532 Prepaid expenses and other current assets ​ 255,605 ​ ( 117,648 ) Security deposits ​ ( 88,143 ) ​ ( 5,095 ) Accounts payable ​ ( 1,768,098 ) ​ ( 643,578 ) Accrued expenses and other current liabilities ​ ​ 183,164 ​ ​ 1,029,513 Lease liabilities ​ ( 130,838 ) ​ ( 130,679 ) Deferred revenue ​ ( 326,357 ) ​ ( 21,859 ) Total Adjustments ​ 1,700,951 ​ 3,079,166 Net Cash Used In Operating Activities ​ ​ ( 9,198,453 ) ​ ​ ( 9,858,687 ) ​ ​ ​ ​ ​ ​ ​ Cash Flows From Investing Activities: ​ ​ ​ ​ ​ ​ Equipment deposits ​ ​ ( 27,656 ) ​ ​ ( 567,332 ) Purchases of property and equipment ​ ​ ( 135,367 ) ​ ​ ( 192,644 ) Acquisition of intangible assets ​ ​ — ​ ​ ( 135,000 ) Net Cash Used In Investing Activities ​ ( 163,023 ) ​ ( 894,976 ) ​ ​ ​ ​ ​ ​ ​ Cash Flows from Financing Activities: ​ ​ ​ ​ ​ ​ Proceeds from the SEPA ​ ​ 9,104,950 ​ ​ — Proceeds from prepaid advance liability ​ ​ — ​ ​ 2,000,000 Issuance costs on prepaid advance liability ​ ​ — ​ ​ ( 30,000 ) Net proceeds from notes payable (1) ​ ​ 1,730,000 ​ ​ — Issuance costs on notes payable ​ ​ ( 126,100 ) ​ ​ — Repayments of notes payable ​ ​ ( 1,525,195 ) ​ ​ — Repurchase of common stock ​ ​ — ​ ​ ( 229,249 ) Net Cash Provided By Financing Activities ​ ​ 9,183,655 ​ ​ 1,740,751 Net Decrease In Cash ​ ​ ( 177,821 ) ​ ​ ( 9,012,912 ) Cash - Beginning of Period ​ 1,194,764 ​ 10,333,563 Cash - End of Period ​ $ 1,016,943 ​ $ 1,320,651 (1) Face value of $ 2,309,200 , less $ 579,200 original issue discount. The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 7 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Six Months Ended ​ June 30, ​ 2024 2023 Supplemental Disclosures of Cash Flow Information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid during the period for: ​ ​ ​ ​ ​ ​ Interest ​ $ — ​ $ — Taxes ​ $ — ​ $ — ​ ​ ​ ​ ​ ​ ​ Non-cash investing and financing activities: ​ ​ ​ ​ ​ ​ Right-of-use asset for lease liability ​ $ 1,575,919 ​ $ 51,154 Restricted stock awards converted to restricted stock units ​ $ 217 ​ $ — Restricted stock units vested ​ $ 45 ​ $ — Original issue discount on indebtedness ​ $ 579,200 ​ $ 105,263 Common stock issued in satisfaction of prepaid advance liability and interest ​ $ 6,068,407 ​ $ 4,466,626 Deposits applied to purchases of property and equipment ​ $ — ​ $ 2,716,057 Additions to property and equipment included in accounts payable and accrued expenses ​ $ 109,681 ​ $ 166,663 Equipment deposits included in accounts payable ​ $ — ​ $ 171,444 Deferred financing costs charged to additional paid-in capital ​ $ 70,607 ​ $ — Value of warrants issued in connection with notes payable ​ $ 112,863 ​ $ — Accrued deferred financing costs ​ $ 166,651 ​ $ — Preferred shares issued for no consideration ​ $ 73 ​ $ — ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ ​ 8 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1 ORGANIZATION, NATURE OF OPERATIONS AND BASIS OF PRESENTATION Organization and Operations KULR Technology Group, Inc., through its wholly-owned subsidiary, KULR Technology Corporation (collectively referred to as “KULR” or the “Company”), develops and commercializes high-performance thermal management technologies for electronics, batteries, and other components across a range of applications. Currently, the Company is focused on targeting both high performance aerospace and 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, fifth generation (“5G”) communication, cloud computer infrastructure, consumer and industrial devices. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of June 30, 2024, and for the three and six months ended June 30, 2024 and 2023. The results of operations for the three and six months ended June 30, 2024, are not necessarily indicative of the operating results for the full year ending December 31, 2024, or any other period. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related disclosures as of December 31, 2023 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on Form 10-K on April 12, 2024. The accompanying condensed consolidated balance sheet as of December 31, 2023, has been derived from the audited financial statements included in the Form 10-K. ​ NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Since the date of the Annual Report on Form 10-K for the year ended December 31, 2023, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note. Going Concern and Management’s Liquidity Plans As of June 30, 2024, the Company had cash of $ 1,016,943 and a working capital deficit of $ 2,381,478 . For the six months ended June 30, 2024, the Company incurred a net loss of $ 10,899,404 and used cash in operating activities of $ 9,198,453 . 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 condensed 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 $ 4,811,565 for accounts payable and accrued expenses, $ 784,006 for secured promissory notes (see Note 9 – Notes Payable) and $ 487,369 for future payments under operating leases. Future cash requirements for long-term liabilities include $ 1,059,898 for future payments under operating leases and $ 250,000 for unsecured promissory notes. 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 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. 9 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) On March 5, 2024, the Company received a notification from the NYSE that the Company’s plan to regain compliance with Section 1003 (a)(iii) of the Company Guide was accepted and so long as the Company meets its interim objectives, the Company will have until June 20, 2025, to regain compliance with the minimum stockholders’ equity requirement. On May 1, 2024, the Company received a notification from the NYSE stating that the Company had regained compliance with Section 1003 (f)(v) of the Company Guide, given the increase in the trading price of the Company’s securities. 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, and (iii) raising additional funds through future financings. On July 3, 2024, the Company entered into an At the Market Offering agreement (the “ATM”) with an agent (the “Agent”), pursuant to which the Company may, from time to time, sell shares of common stock having an aggregate offering price of up to $ 20,000,000 in “at the market” offerings through or to the Agent. Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of the sale, or as otherwise agreed with the Agent. The Agent will receive a commission from the Company of 3 % of the gross proceeds of any shares of common stock sold under the Sales Agreement. During the period from July 3, 2024, through August 9, 2024, the Company issued a total of 4,953,867 shares of common stock pursuant to the Sales Agreement for aggregate proceeds of $ 1,416,940 . See Note 12 – Subsequent Events – At the Market Offering for additional information. The Company’s ability to continue as a going concern is dependent upon its ability to successfully execute the aforementioned initiatives. There is 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. These unaudited condensed 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. Use of Estimates Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant estimates used in these unaudited condensed consolidated financial statements include, but are not limited to, fair value calculations for 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 $ 516,943 and $ 694,764 as of June 30, 2024 and December 31, 2023, respectively. 10 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Customer and Revenue Concentrations The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenue ​ Accounts Receivable ​ ​ For the Three Months Ended ​ For the Six Months Ended ​ As of ​ As of ​ ​ June 30, ​ June 30, ​ June 30, December 31, ​ 2024 2023 2024 2023 2024 ​ 2023 Customer A 31 % * ​ 18 % * ​ 43 % * ​ Customer B 19 % * ​ 11 % * ​ 24 % * ​ Customer C 10 % * ​ * ​ * ​ * ​ 52 % Customer D ​ * ​ 46 % * ​ 63 % * ​ 20 % Customer E ​ * ​ 19 % * ​ * ​ * ​ 14 % Customer F ​ * ​ 17 % * ​ 10 % * ​ * ​ Customer G ​ * ​ * ​ 17 % * ​ * ​ * ​ Total 60 % 82 % 46 % 73 % 67 % 86 % * 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. Vendor Concentrations The Company had vendors whose purchases of inventory individually represented 10% or more of the Company’s total purchases of inventory, for the three and six months ended June 30, 2024 and 2023, as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended For the Six Months Ended ​ ​ June 30, June 30, ​ ​ 2024 2023 2024 2023 ​ Vendor A 19 % * ​ 29 % * ​ Vendor B 19 % * ​ 28 % * ​ Vendor C ​ * ​ 16 % * ​ 14 % Vendor D * ​ 10 % * ​ * ​ ​ 38 % 26 % 57 % 14 % * Less than 10% Accounts Receivable Accounts receivable are carried at their contractual amounts, less an estimate for credit losses. As of June 30, 2024 and December 31, 2023, 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 credit losses only after all collection attempts have been exhausted. 11 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 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 revenue 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. 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 condensed consolidated balance sheets. As of June 30, 2024 and December 31, 2023, inventory deposits were $ 10,883 and $ 27,500 , 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 June 30, 2024 and December 31, 2023 was comprised of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2024 ​ 2023 Raw materials ​ $ 409,168 ​ $ 322,111 Finished goods ​ 126,028 ​ 826,936 Total inventory ​ $ 535,196 ​ $ 1,149,047 ​ 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. 12 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) ● 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. 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 by type of contract in its condensed consolidated statements of operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ For the Six Months Ended ​ ​ June 30, ​ June 30, ​ 2024 2023 2024 2023 Revenue Recognized at a Point in Time: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product sales ​ $ 1,134,769 ​ $ 1,957,370 ​ $ 1,749,862 ​ $ 3,586,628 Contract services ​ ​ 1,185,236 ​ ​ 270,476 ​ ​ 1,701,707 ​ ​ 401,020 Total ​ ​ 2,320,005 ​ ​ 2,227,846 ​ ​ 3,451,569 ​ ​ 3,987,648 Revenue Recognized Over Time: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contract services ​ 112,000 ​ 467,660 ​ 729,540 ​ 467,660 Total Revenue ​ $ 2,432,005 ​ $ 2,695,506 ​ $ 4,181,109 ​ $ 4,455,308 ​ Net Loss Per Common Share Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common and dilutive common-equivalent shares outstanding during each period. ​ The following table presents the computation of basic and diluted net loss per common share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended For the Six Months Ended ​ ​ June 30, ​ June 30, ​ ​ 2024 2023 ​ 2024 2023 Numerator: ​ ​ ​ ​ Net loss ​ $ ( 5,890,528 ) ​ $ ( 6,334,992 ) ​ $ ( 10,899,404 ) ​ $ ( 12,937,853 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator (weighted average quantities): ​ ​ ​ ​ ​ ​ ​ ​ Common shares issued ​ 182,151,812 ​ 118,617,860 ​ 162,824,020 ​ 116,846,331 Less: Treasury shares purchased ​ ( 131,162 ) ​ ( 131,162 ) ​ ( 131,162 ) ​ ( 131,162 ) Less: Unvested restricted shares ​ ( 690,248 ) ​ ( 3,240,679 ) ​ ( 880,871 ) ​ ​ ( 2,708,655 ) Add: Accrued issuable equity ​ ​ 136,862 ​ ​ 134,681 ​ ​ 102,647 ​ ​ 127,359 Denominator for basic and diluted net loss per share ​ ​ 181,467,264 ​ ​ 115,380,700 ​ ​ 161,914,634 ​ ​ 114,133,873 ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic and diluted net loss per common share ​ $ ( 0.03 ) ​ $ ( 0.05 ) ​ $ ( 0.07 ) ​ $ ( 0.11 ) ​ 13 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ 2024 2023 Prepaid advance liability (1) ​ — ​ 10,168,469 Unvested restricted stock awards ​ 650,000 ​ 3,116,008 Unvested restricted stock units ​ 4,825,111 ​ 3,000,000 Options 702,716 795,216 Warrants ​ 2,714,587 ​ 2,524,410 Total 8,892,414 19,604,103 (1) Shares issuable estimated using the floor price of $ 0.75 per share pursuant to the supplemental agreement to the SEPA (see Note 6 – 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 any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, any unamortized initial direct costs, and any impairment of the right-of-use-asset. Operating lease expense consists of a single lease cost calculated so that the remaining cost of the lease is allocated over the remaining lease term on a straight-line basis, variable lease payments not included in the lease liability, and any impairment of the right-of-use asset. The Company elected the accounting policy to include both the lease and non-lease components of the agreements as a single component and account for them as a lease. Reclassifications Certain prior period balances have been reclassified 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 these unaudited condensed 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 condensed consolidated financial statements, except as disclosed in Note 12 – 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. The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023-07. 14 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 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 annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023–09. Recently Adopted Accounting Pronouncements 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 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. The Company adopted this ASU on January 1, 2024, and the adoption did not have a material impact on its condensed consolidated financial statements. ​ NOTE 3 – PREPAID EXPENSES AND OTHER CURRENT ASSETS As of June 30, 2024 and December 31, 2023, prepaid expenses and other current assets consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ 2024 2023 Compensation costs ​ $ 225,000 ​ $ 375,000 Dues and subscriptions ​ ​ 55,189 ​ ​ 50,689 Deferred expenses ​ ​ 53,247 ​ ​ 59,089 Professional fees ​ ​ 13,506 ​ ​ 24,125 Vendor receivables ​ ​ 7,389 ​ ​ 1,995 Security deposits ​ ​ 5,095 ​ ​ 55,308 Insurance ​ ​ 116 ​ ​ 32,606 Conferences and seminars ​ ​ — ​ ​ 19,338 Investor relations ​ ​ — ​ ​ 1,512 Other ​ ​ 16,214 ​ ​ 11,699 Total prepaid expenses and other current assets ​ $ 375,756 ​ $ 631,361 ​ ​ 15 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 4 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES As of June 30, 2024 and December 31, 2023, accrued expenses and other current liabilities consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ 2024 2023 Professional fees ​ $ 2,094,938 ​ $ 1,875,000 Research and development ​ ​ 441,192 ​ ​ 441,192 Payroll and vacation ​ ​ 412,974 ​ ​ 504,748 Inventory purchases ​ 291,925 ​ ​ 145,949 Sales tax payable ​ ​ 110,473 ​ ​ 46,901 Legal fees ​ 110,000 ​ ​ 117,640 Royalties ​ ​ 58,841 ​ ​ 17,505 Board compensation ​ 37,500 ​ ​ 23,750 Securities fees ​ 37,500 ​ ​ — Refund due to customer ​ — ​ ​ 171,960 Cost of sales ​ ​ — ​ ​ 28,663 Other ​ ​ 155,528 ​ ​ 90,036 Total accrued expenses and other current liabilities ​ 3,750,871 ​ ​ 3,463,344 Add: Accrued interest, non-current ​ ​ — ​ ​ 5,899 Total accrued expenses and other liabilities ​ $ 3,750,871 ​ $ 3,469,243 ​ ​ NOTE 5 – ACCRUED ISSUABLE EQUITY A summary of the accrued issuable equity activity during the six months ended June 30, 2024 is presented below: ​ ​ ​ ​ ​ ​ ​ For the Six Months Ended ​ June 30, 2024 Beginning balance at January 1, 2024 ​ $ 13,002 Additions ​ ​ 53,375 Mark-to-market ​ ​ 15,739 Fair value at June 30, 2024 ​ $ 82,116 ​ During the six months ended June 30, 2024, the Company became obligated to issue a fixed number of shares of common stock of the Company as consideration for services provided by an employee pursuant to a contractual arrangement previously entered into with the employee. On the date the contract was entered into, the estimated fair value of the shares to be issued was an aggregate of $ 53,375 based on the quoted market prices of the shares. The Company recorded losses in the aggregate amount of $ 2,737 and $ 15,739 during the three and six months ended June 30, 2024, respectively, and recorded gains in the aggregate amount of $ 156,652 and $ 220,760 during the three and six months ended June 30, 2023, respectively, related to changes in the fair value of accrued issuable equity (see Note 10 – Stockholders’ Equity, Stock-Based Compensation for additional details). The fair value of the accrued but unissued shares as of June 30, 2024, was $ 82,116 , based on Level 1 inputs, which consist of quoted prices for the Company’s common stock in active markets. ​ 16 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 6 – PREPAID ADVANCE LIABILITY, NET OF DISCOUNT ​ The Company’s prepaid advance liability, net of discount, consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Amount of Less: Prepaid Advance ​ ​ Prepaid Advance ​ Debt ​ Liability, ​ ​ Liability ​ Discount ​ net of discount Balance, January 1, 2024 ​ $ 5,918,430 ​ $ ( 26,374 ) ​ $ 5,892,056 Repayments pursuant to Advance Notices ​ ( 5,918,430 ) ​ — ​ ( 5,918,430 ) Amortization of debt discount ​ — ​ 26,374 ​ 26,374 Balance, June 30, 2024 ​ $ — ​ $ — ​ $ — ​ 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. During the six months ended June 30, 2024, the Company issued 55,659,476 shares of common stock pursuant to SEPA Advance Notices submitted by the Company to Yorkville for aggregate proceeds of $ 15,173,357 . Of the shares issued pursuant to the SEPA Advance Notices, 21,798,830 shares valued at $ 6,068,407 were issued in satisfaction of $ 5,918,430 of principal and $ 118,619 of accrued interest owed in connection with the Company’s prepaid advance liability. The Company recorded $ 31,358 in extinguishment loss and charged $ 13,577 of deferred financing costs to additional paid-in capital in connection with the shares issued in satisfaction of the prepaid advance liability. As of June 30, 2024, the Prepaid Advance Liability and the related accrued interest has been repaid in full and the SEPA has been terminated. See Note 10 – Stockholders’ Equity (Deficit) - Standby Equity Purchase Agreement (“SEPA”) and Supplemental SEPA for additional information. The remaining 33,860,646 shares issued pursuant to the SEPA Advance Notices were issued for cash proceeds of $ 9,104,950 , which was used to fund the operations of the Company. Deferred financing costs in the amount of $ 57,030 were charged to additional paid-in capital in connection with the shares issued for cash. ​ NOTE 7 – LEASES On January 31, 2024, the initial lease for Webster, Texas dated January 18, 2023, expired. On January 27, 2024, the Company entered into a lease agreement for new office space in Webster, Texas. The initial lease term is 63 months . The lease contains an option to renew for an additional 36 months , which is not reasonably certain to be exercised and therefore is not included in the measurement of the ROU asset and lease liability. Monthly rental payments under the new lease are $ 33,086 , 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. The Company determined that the value of the lease liability and related right-of-use asset at inception was $ 1,085,497 , using an incremental borrowing rate of 10 %. The Company paid a security deposit of $ 37,930 in connection with the Webster lease agreement which is recorded within the security deposits section of the balance sheet as of June 30, 2024. The Company also leases office space at 4863 Shawline Street, San Diego, CA 92111, pursuant to an operating lease which expired May 31, 2024 (the “San Diego Lease”). 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 (the “First Renewal”). 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 . The Company determined that the value of the modified lease liability and related right-of-use asset to be $ 490,422 , using an incremental borrowing rate of 10 %. As of June 30, 2024, the Company does not have any financing leases. 17 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) During the three and six months ended June 30, 2024, operating lease expense was $ 111,591 and $ 226,708 , respectively. During the three and six months ended June 30, 2023, operating lease expense was $ 65,873 and $ 131,746 , respectively. Maturities of lease liabilities as of June 30, 2024, were as follows: ​ ​ ​ ​ ​ Year ​ July 1, 2024 through December 31, 2024 ​ $ 307,722 2025 ​ ​ 601,196 2026 ​ ​ 280,228 2027 ​ 289,008 2028 ​ ​ 297,788 Thereafter ​ ​ 101,703 Total future minimum lease payments ​ 1,877,645 Less: amount representing imputed interest ​ ​ ( 330,378 ) Present value of lease liabilities ​ ​ 1,547,267 Less: current portion ​ ​ ( 487,369 ) Lease liabilities, non current portion ​ $ 1,059,898 ​ Supplemental cash flow information related to the lease was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Six Months Ended ​ June 30, ​ ​ ​ 2024 2023 ​ Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ ​ ​ ​ ​ Operating cash flows used in operating activities ​ $ 130,838 ​ $ 130,678 ​ Right-of-use assets obtained in exchange for lease obligations ​ ​ ​ ​ ​ ​ ​ Operating leases ​ $ 1,575,919 ​ $ 51,154 ​ Weighted Average Remaining Lease Term (Years) ​ ​ ​ ​ ​ ​ ​ Operating leases ​ ​ 3.77 years ​ 0.88 years Weighted Average Discount Rate ​ ​ ​ ​ ​ ​ ​ Operating leases ​ ​ 10.0 % ​ 5.0 % ​ ​ NOTE 8 – RELATED PARTY TRANSACTIONS During the three and six months ended June 30, 2023, the Company recognized expenses of $ 16,755 and $ 27,210 , respectively, for consulting services provided by the father of the company’s Chief Technology Officer, which are included within selling, general and administrative expenses on the unaudited condensed consolidated statements of operations. For the three and six months ended June 30, 2024, there were no expenses with related parties. As of June 30, 2024 and December 31, 2023, the Company did no t have any accounts payable outstanding with related parties. 18 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 9-NOTES PAYABLE A summary of the notes payable activity during the six months ended June 30, 2024 is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Notes Debt ​ ​ ​ ​ Payable ​ Discount ​ Total Outstanding, January 1, 2024 ​ $ — ​ $ — ​ — Proceeds from merchant cash advances ​ 1,609,200 ​ ( 529,200 ) ​ 1,080,000 Proceeds from promissory notes ​ ​ 700,000 ​ ​ ( 50,000 ) ​ ​ 650,000 Issuance costs paid in cash ​ — ​ ( 53,200 ) ​ ( 53,200 ) Issuance costs to be paid in equity ​ — ​ ​ ( 112,863 ) ​ ( 112,863 ) Underwriting fees paid in cash ​ — ​ ​ ( 72,900 ) ​ ( 72,900 ) Repayments in cash ​ ( 1,525,195 ) ​ — ​ ( 1,525,195 ) Amortization of debt discount ​ — ​ 675,902 ​ 675,902 Notes payable, current-portion ​ 784,006 ​ ( 142,261 ) ​ 641,745 Add: Notes payable, non-current portion ​ 250,000 ​ — ​ 250,000 Total notes payable as of June 30, 2024 ​ $ 1,034,006 ​ $ ( 142,261 ) ​ $ 891,745 ​ 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 additional finder’s fees to be issued in equity, with the obligation to repay a total of $ 804,600 over thirty-two weekly payments of $ 25,143.75 , beginning January 30, 2024. The difference between the total repayment amount and the net proceeds received was accounted for as debt discount, and along with the finder’s fees, is being amortized over thirty-two weeks using the effective interest rate method and an annualized effective interest rate of 217 %. The Cash Advance Agreement was secured by the Company’s accounts receivable and related cash receipts. 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. The Company did not take advantage of the early payoff discount and will continue making weekly payments over the original thirty-two-week term. On July 11, 2024, the Company used proceeds from a new merchant cash advance to repay this cash advance in full. See Note 12 – Subsequent Events – Merchant Cash Advance for additional information. On February 26, 2024, the Company entered into a merchant cash advance agreement (the “Second Cash Advance Agreement”) with the same 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 additional finder’s fees to be issued in equity, with the obligation to repay a total of $ 804,600 over thirty weekly payments of $ 26,820 , beginning February 29, 2024. The difference between the total repayment amount and the net proceeds received was accounted for as debt discount, and along with the finder’s fees, is being amortized over thirty weeks using the effective interest rate method and an annualized effective interest rate of 249 %. The Second Cash Advance is secured by the Company’s accounts receivable and related cash receipts. On July 11, 2024, the terms of the agreement were revised whereby the weekly repayment amounts will be reduced from $ 26,820 to $ 15,620 and the repayment period will be extended from September 27, 2024, to November 15, 2024. On April 4, 2024, the Company and the finder of the First and Second Cash Advance Agreements determined that the equity compensation would be by issuance of warrants to purchase up to 81,788 shares (the “First Warrant”) and up to 108,389 shares (the “Second Warrant”), respectively, of the Company’s common stock at an exercise price of $ 0.1852 per share and $ 0.139 per share, respectively. The First Warrant and the Second Warrant (collectively the “Warrants”) were exercisable immediately and expire on January 22, 2027 and February 26, 2027, respectively. The Warrants had a grant date fair value of $ 112,863 . The value of the Warrants was recognized as additional debt discount, which will be amortized over the repayment period. The Warrants contain a cashless exercise provision in the form of a net share settlement, whereby, if, at the time the holder exercises the Warrants, there is no effective registration statement registering the common stock subject to the Warrants, the holder may elect to receive the number of shares of the Company’s common stock determined according to a formula set forth in the warrant agreements. ​ 19 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The following assumptions were used in the Black-Scholes Model to measure the fair value of the warrants: ​ ​ ​ ​ ​ ​ Market price at measurement date $ 0.70 Exercise price ​ $ 0.14 - $ 0.19 ​ Risk free interest rate ​ 4.52 % Expected term (years) ​ 2.8 - 2.9 ​ Expected volatility ​ 93 % ​ On April 2, 2024, the Company entered into an agreement (the “Promissory Note”), with a lender (the “Lender”), pursuant to which the Lender purchased an unsecured promissory note with an initial principal amount of $ 500,000 , for cash proceeds of $ 440,000 . The Company recorded a debt discount of $ 60,000 , which consists of an original issue discount of $ 50,000 and cash 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 May 28, 2024, the Company repaid the Promissory Note in full, and recognized $ 60,000 of amortization expense related to the debt discount. ​ On April 9, 2024, the Company entered into a note purchase agreement pursuant to which the Company issued an unsecured 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 instead of 16 %. ​ NOTE 10 - STOCKHOLDERS’ EQUITY (DEFICIT) 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 had the right, but not the obligation, to sell to Yorkville up to an aggregate of $ 50,000,000 of its shares of common stock, at the Company’s request any time during the commitment period commencing on May 13, 2022, and terminating on June 1, 2024. 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 volume-weighted average price (“VWAP”) 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 number of shares registered under the registration statement in effect at the time of the Advance. During the six months ended June 30, 2024, the Company issued 55,659,476 shares of common stock pursuant to SEPA Advance Notices submitted by the Company to Yorkville for aggregate gross proceeds of $ 15,173,357 . Of the gross proceeds, $ 9,104,950 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 the related accrued interest has been repaid in full and the SEPA terminated on June 1, 2024. See Note 6 – Prepaid Advance Liability, for details related to a supplemental agreement to the SEPA. Common Stock ​ During the six months ended June 30, 2024, the Company issued an aggregate of 79,650 shares of immediately vested common stock with a grant date value of $ 27,141 for legal services. During the six months ended June 30, 2024, the Company issued 454,627 shares of common stock upon the vesting of restricted stock units previously granted. 20 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) During the six months ended June 30, 2024, the Company issued 30,000 shares of immediately vested common stock with a grant date value of $ 17,400 as equity compensation to its independent members of the Board of Directors. See Restricted Stock Awards , for details related to restricted equity grants and Note 6 - Prepaid Advance Liability for details related to additional share issuances. Preferred Stock ​ 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. Holders of Non-Convertible Series A Voting Preferred Stock shall not be entitled to dividends, shall not convert into another series or class of stock of the Company and have no rights to distributions in the event of any liquidation. 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. Treasury Stock As of June 30, 2024 and December 31, 2023, the Company has 131,162 shares held in treasury recorded at their cost of $ 296,222 . Warrants A summary of warrants activity during the six months ended June 30, 2024, is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Weighted ​ ​ ​ ​ ​ ​ Average ​ Average ​ ​ ​ ​ ​ Number of ​ Exercise ​ Remaining ​ Intrinsic ​ Warrants Price Term (Yrs) Value Outstanding, January 1, 2024 2,524,410 ​ $ 1.02 ​ Issued 190,177 ​ 0.16 ​ Exercised — ​ — ​ Expired — ​ — ​ Forfeited — ​ — ​ Outstanding, June 30, 2024 2,714,587 ​ $ 0.96 1.6 ​ $ 45,858 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable, June 30, 2024 2,714,587 ​ $ 0.96 1.6 ​ $ 45,858 ​ 21 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) A summary of outstanding and exercisable warrants as of June 30, 2024, 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 ​ 1.5 ​ 177,885 $ 1.00 ​ 2,346,525 ​ 1.5 ​ 2,346,525 $ 0.19 ​ 81,788 ​ 2.6 ​ 81,788 $ 0.14 ​ 108,389 ​ 2.7 ​ 108,389 ​ ​ 2,714,587 ​ 1.6 ​ 2,714,587 ​ See Note 9 – Notes Payable for additional details related to the 2024 warrant issuances. ​ Stock Options A summary of stock options activity during the six months ended June 30, 2024, is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Weighted ​ ​ ​ ​ ​ Average ​ Average ​ ​ ​ ​ ​ Number of ​ Exercise ​ Remaining ​ Intrinsic ​ ​ Options ​ Price ​ Term (Yrs) ​ Value Outstanding, January 1, 2024 722,716 ​ $ 1.26 ​ Granted 55,000 ​ 0.27 ​ Forfeited ( 75,000 ) ​ 0.89 ​ Outstanding, June 30, 2024 702,716 ​ $ 1.22 2.5 ​ $ 7,328 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable, June 30, 2024 357,715 ​ $ 0.84 1.2 ​ $ — ​ The following table presents information related to stock options as of June 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ Options Outstanding ​ Options Exercisable ​ ​ ​ ​ Weighted ​ ​ ​ ​ Outstanding ​ Average ​ Exercisable Exercise ​ Number of ​ Remaining Term ​ Number of Price Options In Years Options $ 0.19 - $ 0.99 322,986 0.4 201,735 $ 1.21 - $ 1.50 145,000 3.5 36,250 $ 1.55 - $ 1.99 80,000 2.8 30,000 $ 2.05 - $ 2.44 154,730 2.5 89,730 ​ 702,716 1.2 357,715 ​ For the three and six months ended June 30, 2024, the weighted average grant date fair value per share of options granted was $ 0.21 and $ 0.20 , respectively, compared to $ 0.48 and $ 0.74 , for the three and six months ended June 30, 2023. 22 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 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 Three Months Ended For The Six Months Ended ​ ​ ​ June 30, June 30, ​ ​ ​ 2024 ​ 2023 2024 ​ 2023 ​ Risk free interest rate 4.75 % - 4.81 % 4.07 % - 4.52 % 4.27 % - 4.81 % 3.92 % - 4.52 % Expected term (years) 3.8 3.5 ​ 3.8 ​ 3.5 ​ Expected volatility 110 % 107 % 110 % - 114 % 105 % - 107 % Expected dividends 0 % 0 % 0 % 0 % ​ 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 June 30, 2024, there was $ 238,418 of unrecognized stock-based compensation expense related to the above stock options, which will be recognized over the weighted average remaining vesting period of 2.1 years. Restricted Stock Awards The following table presents information related to restricted stock awards activity during the six months ended June 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares of ​ Weighted Average ​ ​ Restricted ​ Grant Date ​ Common Stock Fair Value Non-vested RSAs, January 1, 2024 3,381,008 ​ $ 1.53 RSAs exchanged for RSUs ​ ( 2,168,508 ) ​ ​ 0.94 Granted — ​ — Vested ( 562,500 ) ​ 2.60 Forfeited — ​ — Non-vested RSAs, June 30, 2024 650,000 ​ $ 2.53 ​ During the six months ended June 30, 2024, the Company issued 2,168,508 restricted stock units in exchange for the same quantity of restricted stock awards. The exchange of RSAs for RSUs did not result in a modification of any other terms, such as the grant date fair value or vesting period. ​ As of June 30, 2024, there was $ 1,134,833 of unrecognized stock-based compensation expense related to restricted stock awards that will be recognized over the weighted average remaining vesting period of 0.91 years. ​ 23 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Restricted Stock Units The following table presents information related to restricted stock units (“RSUs”) activity during the six months ended June 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ Weighted Average ​ ​ Restricted ​ Grant Date ​ Common Units Fair Value Non-vested RSUs, January 1, 2024 2,250,000 ​ $ 2.05 RSAs exchanged for RSUs ​ 2,168,508 ​ ​ 0.94 Granted 851,230 ​ ​ 0.38 Vested ( 454,627 ) ​ ​ 0.94 Forfeited ​ — ​ ​ — Non-vested RSUs, June 30, 2024 ​ 4,815,111 ​ $ 1.36 ​ As of June 30, 2024, there was $ 4,202,362 of unrecognized stock-based compensation expense related to restricted stock units that will be recognized over the weighted average remaining vesting period of 2.68 years. Stock-Based Compensation During the three and six months ended June 30, 2024, the Company recognized stock-based compensation expense of $ 909,026 and $ 1,754,955 , respectively, related to restricted stock awards, restricted stock units, stock options and stock issued for services, of which $ 870,837 and $ 1,678,942 , respectively, is included within selling, general and administrative expenses, and $ 38,189 and $ 76,013 , respectively is included within research and development expenses in the unaudited condensed consolidated statements of operations. During the three and six months ended June 30, 2023, the Company recognized stock-based compensation expense of $ 964,201 and $ 1,966,929 , respectively, related to restricted stock awards, restricted stock units, stock options and stock issued for services, of which $ 927,375 and $ 1,831,370 , respectively, is included within selling, general and administrative expenses, and $ 36,826 and $ 52,986 , respectively is included within research and development expenses in the unaudited condensed consolidated statements of operations. The following table presents information related to stock-based compensation for the three and six months ended June 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For The Three Months Ended ​ For The Six Months Ended ​ June 30, ​ June 30, ​ 2024 2023 2024 2023 Common stock for services (includes accrued, unissued shares) ​ $ 65,523 ​ $ 96,350 ​ $ 97,915 ​ $ 210,800 Amortization of stock options ​ 29,165 ​ 44,311 ​ 61,206 ​ 84,916 Amortization of restricted stock awards and units ​ 814,338 ​ 823,540 ​ 1,595,834 ​ 1,588,640 Total ​ $ 909,026 ​ $ 964,201 ​ $ 1,754,955 ​ $ 1,884,356 ​ ​ NOTE 11 – COMMITMENTS AND CONTINGENCIES Legal Matters The Company may be involved in litigation and arbitrations from time to time in the ordinary course of business. As of June 30, 2024, the Company was not involved in any ongoing litigation. The Company records legal costs associated with loss contingencies as incurred. Settlements are accrued when, and if, they become probable and estimable. 24 Table of Contents KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 12 - SUBSEQUENT EVENTS At the Market Offering On July 3, 2024, the Company entered into an At the Market Offering agreement (the “ATM”) with an agent (the “Agent”), pursuant to which the Company may, from time to time, sell shares of common stock for aggregate gross proceeds of up to $ 20,000,000 in “at the market” offerings through or to the Agent. Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of the sale, or as otherwise agreed with the Agent. The Agent will receive a commission from the Company of 3 % of the gross proceeds of any shares of common stock sold pursuant to the ATM. During the period from July 3, 2024, through August 9, 2024, the Company issued a total of 4,953,867 shares of common stock pursuant to the ATM for aggregate proceeds of $ 1,416,940 . Merchant Cash Advance On July 11, 2024, the Company entered into a merchant cash advance agreement (the “Third Cash Advance Agreement”) whereby the Company received $ 758,850 of cash (net of underwriting fees of $ 40,000 and $ 201,150 used to pay the remaining balance of the first merchant cash advance), with the obligation to repay a total of $ 1,350,000 over forty-three weekly payments of $ 31,395 , beginning July 18, 2024. The agreement contains an early payoff discount whereby the Company will owe $ 1,230,000 if paid by August 11, 2024, or $ 1,310,000 if paid by September 11, 2024. The Company does not anticipate taking advantage of the early payoff discount and will continue making weekly payments over the original forty-three-week term. In addition, the Third Cash Advance Agreement amended the Second Cash Advance Agreement to revise the repayment terms, whereby the weekly repayment amounts will be reduced from $ 26,820 to $ 15,620 and the repayment period will be extended from September 27, 2024, to November 15, 2024. ​ ​ ​ 25 Table of Contents