What changed in this filing

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Item 9A. Controls and Procedures

2025-03-31 compared with 2024-04-12 · 740 added, 578 removed, 878 unchanged (60% of the section changed)

16 unchanged sentences

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.

There has been no change in our internal control over financial reporting that occurred during the fourth quarter of 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of the Effectiveness of Controls

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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.

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 provide an exemption from the attestation requirement.

OTHER INFORMATION

Insider Trading Arrangements

During the three months ended December 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted, modi fied or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5 -1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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Chief Executive Officer and Chairman

Chief Financial Officer

William Walker

Chief Technical Officer

Keith Cochran

President and Chief Operating Officer

Director, Chief Technology Officer

Chief Financial Officer

Michael Carpenter

2 unchanged sentences

Lead Director

Morio Kurosaki

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.

Michael Mo was appointed CEO and Director of the Company on March 16, 2011.

Mo 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.

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in Materials Science and Engineering at the University of Houston (UH).

Keith Cochran was appointed President and Chief Operating Officer effective March 1, 2021.

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.

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.

Cochran has a Bachelor of Science in Business Operations from Devry Institute of Technology.

Michael Carpenter serves as KULR’s Vice President of Engineering.

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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.

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.

Joanna Massey is a public company Board Director and communications executive at global Fortune 500 companies.

She specializes in enterprise risk management, governance, and guiding organizations through transformative periods.

Massey helps companies with operational efficiency, aligning strategic initiatives, and navigating complex transitions.

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.

Massey serves as Chair of Nominations & Governance, Chair of Compensation, and she sits on the Audit and M&A Committees.

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.B) and at The Hub Network, a joint venture between Discovery, Inc.

She also held Senior Vice President positions in communications and media relations at CBS Corporation and

Viacom, Inc., now Paramount Global (Nasdaq:

PARA), as well as at a joint venture between Discovery, Inc.

WBD) and Hasbro, Inc.

She also held Senior Vice President positions in communications and media relations at CBS Corporation and Viacom, Inc., now Paramount Global (Nasdaq:

As a corporate communications executive, Dr.

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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.

Kurosaki founded IT-Farm Corporation (“IT-Farm”), a Japanese venture capital firm, in 1999.

Kurosaki has been the President of IT-Farm since the company’s inception.

Kurosaki has led early investments in notable companies such as Zoom Video Communications (Nasdaq:

ContextLogic (Nasdaq:

Treasure Data, acquired by ARM Holdings (Nasdaq:

Tubi, acquired by Fox Corporation (Nasdaq:

Red Hot Labs, acquired by Google (Nasdaq:

lvl5, acquired by DoorDash (NYSE:

Accel Technology, acquired by Marvell Technology Group (Nasdaq:

MRVL), and Extreme DA, acquired by Synopsis (Nasdaq:

Kurosaki has also served as Asia-Pacific advisory member of ARM Holdings, acquired by SoftBank Group Corporation (OTCMKTS:

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.

Donna Grier has been a member of the Company’s Board of Directors since April 15, 2024, serving as Chair of the Audit Committee and a member of both the Nominating and Corporate Governance and Compensation Committees of the Board.

Grier is a seasoned SEC-Qualified Financial Expert with extensive Audit Committee experience.

She has held two Executive Finance leadership positions:

Vice President-Treasurer and Vice President-General Auditor & Chief Ethics and Compliance Officer with E.

DuPont de Nemours (NYSE:

At the time, DuPont was a diversified agricultural and manufacturing Fortune 100 Company focused on seed, crop chemicals, specialty chemicals and industrial materials.

In addition to CFO roles in global and diverse business units, Ms.

Grier has significant strategic M&A transaction experience, driving shareholder value.

She also has international financial leadership experience in Europe and South America with demonstrated success in leading organizations and driving strategic and operational change while continuously improving cost and cash productivity.

Grier currently serves as Board Director and Audit & Risk Management Committee Chair for Global Advanced Metals, a privately held tantalum producer.

She previously served as Board Director and Audit Committee Chair of Pyxus International, a global agricultural company (NYSE:PYX until 2020).

She also serves as Chair of the Board of Trustees for Washington & Jefferson College.

Grier earned her MBA from the Booth School of Business at the University of Chicago and a BA in Economics and Psychology from Washington & Jefferson College.

Board Composition

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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.

Kurosaki and Dr.

Joanna Massey are “independent” as defined under the NYSE American rules (as discussed below).

Our board currently consists of three directors, Michael Mo, Joanna Massey, and Donna Grier.

Joanna Massey and Ms.

Donna Grier are “independent” as defined under the NYSE American rules (as discussed below).

Family Relationships

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Director Independence

Our board of directors has determined that Morio Kurosaki and Dr.

Our board of directors has determined that Donna Grier and Dr.

Joanna Massey are “independent,” as defined under the NYSE American rules.

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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

standards of the NYSE American applicable to audit committee members.

Our board of directors has determined that each of Morio Kurosaki and Dr.

The members of our Audit Committee are Donna Grier and Dr.

Joanna Massey, with Ms.

Grier serving as the Chairperson.

Each of Donna Grier and Dr.

Joanna Massey, is independent under the rules and regulations of the SEC and the listing standards of the NYSE American applicable to audit committee members.

Our board of directors has determined that each of Donna Grier 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.

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.

The members of our Compensation Committee are Donna Grier and Dr.

Joanna Massey, with Ms.

Grier and Dr.

Massey serving as Co-Chairpersons.

1 unchanged sentence

Nominating and Corporate Governance Committee

The members of our Nominating and Corporate Governance Committee are Morio Kurosaki and Dr.

The members of our Nominating and Corporate Governance Committee are Donna Grier and Dr.

Joanna Massey, with Dr.

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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.

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.

To our knowledge, during the fiscal year ended December 31, 2024, our officers, directors and greater than 10% beneficial owners have complied with all applicable filing requirements of Section 16(a).

Nomination Process

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Chief Technology Officer

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.

Keith Cochran

Former Chief Operating Officer*

(1) Includes 286,230 shares of the Company’s common stock which vests over one year.

(2) Includes cash compensation earned from date of hire March 31, 2023 through December 31, 2023.

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(3) Includes 350,000 shares of the Company’s common stock which vest in four equal increments over four years.

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.

(4) Includes severance payment of $99,551.

* Resigned effective August 20, 2024

Employment Contracts;

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During the year ended December 31, 2024, 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.

● Effective May 23, 2024, the Board approved a $112,344 reduction in Michael Mo’s salary and granted 286,230 of the Company’s restricted stock units, which shall vest in one year.

On December 26, 2024, the Board approved a cash bonus to Michael Mo in the amount of $100,000.

● On October 4, 2024, the Board approved a cash bonus to Shawn Canter in the amount of $45,000.

● On December 26, 2024, the Board approved a cash bonus to William Walker in the amount of $50,000.

Equity Compensation Plans

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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,

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 $70,000.

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.

Additionally, the Lead Director and non-Lead Director were each granted 140,000 shares of restricted stock units, which vested quarterly in 35,000 share installments, of which 105,000 units were fully vested as of December 31, 2024.

The Lead Director also received 15,000 immediately vested shares of common stock.

Outstanding Equity Awards at Fiscal Year-End

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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.

Unless otherwise indicated, the address of each of the persons shown is c/o KULR Technology Group, Inc., 555 Forge River Road, Suite 100, Webster, TX.

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.

4 unchanged sentences

William Walker (4) - CTO

Keith Cochran (5) – President and COO

Michael Carpenter (5) - VP of Engineering

Morio Kurosaki (6) - Director

Donna Grier (6) - Director

Joanna Massey (7) - Director

All directors and executive officers as a group (6 persons)

Beneficial owners of more than 5%

Timothy Knowles (8) – Former Director, Executive Technical Fellow and Secretary

* Less than 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.

(1) The percent of class is based on 284,389,637 shares outstanding and entitled to vote, which excludes 158,698 treasury shares and 62,500 outstanding shares that are not vested and are not entitled to vote.

A person is considered to beneficially own any shares:

(a) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (b) of which such person has the right to acquire beneficial ownership at any time within 60 days through the vesting of restricted equity grants.

Shares underlying such equity grants, however, are only considered outstanding for the purpose of computing the percentage ownership of that person and are not considered outstanding when computing the percentage ownership of any other person.

(2) Consists of 20,327,570 shares held directly by Mr.

5 unchanged sentences

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.

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.

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.

Does not include 450,000 restricted stock grants that do not vest within 60 days of April 9, 2024.

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.

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.

Does not include a restricted stock award of 3,500,000 shares of the Company’s common stock that does not vest or settle within 60 days.

Mo beneficially owns an aggregate of 1,000,000 shares of Non-Convertible Series A Voting Preferred Stock (the “Preferred Stock”).

Each share of the Preferred Stock entitles Mr.

Mo to votes equal to one hundred votes per share of Preferred Stock held.

(3) Does not include a restricted stock award of 2,400,000 shares of the Company’s common stock that does not vest or settle within 60 days.

(4) Does not include 1,325,000 restricted stock grants that do not vest within 60 days.

(5) Does not include a restricted stock grant of 200,000 shares of the Company’s common stock that does not vest or settle within 60 days.

(6) Consists of 140,000 vested shares granted by the Company on April 15, 2024.

(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.

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.

Massey’s appointment as a director of the Company, 37,500 vested shares granted by the Company on November 1, 2022, 155,000 vested shares granted by the Company on April 15, 2024, and 10,000 shares of common stock acquired in open market purchases.

Securities Authorized for Issuance Under Equity Compensation Plans

On November 5, 2018, KULR adopted and ratified the KULR Technology Group 2018 Equity Incentive Plan (the “2018 Plan”).

Subject to certain adjustments, the 2018 Plan, the total number of shares of common stock which may be purchased or granted directly under the plan shall not exceed fifteen million (15,000,000).

The 2018 Plan is generally administered by the Board or a committee of two (2) or more independent, non-employee directors (the “Plan Committee”).

The Board or the Plan Committee, as applicable, has the power to determine the participants (the “Participants”) to whom awards under the 2018 Plan (the “Plan Awards”) shall be made.

The 2018 Plan allows for the award of, stock, stock options, and shares of restricted stock.

Stock options granted under the Plan may be either incentive stock options (an “ISO”) qualifying under Section 422 of the Internal Revenue Codes of 1986, as amended (the “Code”) or non-qualified stock options (a “NQSO”).

An ISO may only be issued to employees of KULR.

ISOs may be granted to officers or directors, provided they are also employees of KULR.

The following table sets forth, as of December 31, 2024, our securities authorized for issuance under any equity compensation plans approved by our stockholders:

Number of securities

remaining available for

to be issued upon

Weighted-average

future issuance under equity

compensation plans

(excluding securities

outstanding options,

warrants and rights

Plan Category

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

Change in Control

6 unchanged sentences

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.

Our board of directors has determined that Dr.

Joanna Massey and Ms.

Donna Grier 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.

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:

The following is a summary of the fees billed or expected to be billed to us for professional services rendered with respect to the fiscal years ended December 31, 2024 and 2023:

For the Fiscal Year Ended

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 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.

Audit fees consist of fees billed for services rendered by our independent auditors during the years ended December 31, 2024 and 2023 for the audit and review of our financial statements.

Tax fees consist of fees billed for services rendered by our tax preparers during the years ended December 31, 2024 and 2023 in connection with the preparation and filing of our income tax returns.

Pre-Approval Policies

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EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Share Exchange Agreement, dated June 8, 2017 (1)

Articles of Incorporation of the Company (2)

Bylaws of the Company (2)

Certificate of Incorporation of KULR Technology Corporation (3)

Amended and Restated Certificate of Incorporation of KULR Technology Corporation (3)

By-laws of KULR Technology Corporation (3)

Certificate of Designation of Series A Voting Preferred Stock, filed on June 6, 2017 (1)

Certificate of Amendment to the Certificate of Incorporation, effective August 30, 2018 (8)

Certificate of Designation of Series B Convertible Preferred Stock, filed on December 6, 2018 (9)

Certificate of Amendment to the Certificate of Incorporation, effective December 31, 2018 (10)

Certificate of Designation of Series C Convertible Preferred Stock, filed on August 19, 2019 (11)

Form of Certificate of Designation for Series D Convertible Preferred Stock (20)

Share Exchange Agreement, dated June 8, 2017 (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 12, 2017 and incorporated herein by reference)

Certificate of Incorporation of the Company (previously filed as Exhibit 3 to the General form for Registration of Securities on Form 10-12G, filed with the SEC on January 7, 2016 and incorporated herein by reference)

Bylaws of the Company (previously filed as Exhibit 4 to the General form for Registration of Securities on Form 10-12G, filed with the SEC on January 7, 2016 and incorporated herein by reference

Certificate of Incorporation of KULR Technology Corporation (previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 19, 2017 and incorporated herein by reference)

Amended and Restated Certificate of Incorporation of KULR Technology Corporation (previously filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the SEC on June 19, 2017 and incorporated herein by reference)

By-laws of KULR Technology Corporation (previously filed as Exhibit 3.3 to the Company’s Current Report on Form 8-K, filed with the SEC on June 19, 2017 and incorporated herein by reference)

Certificate of Designation of Series A Voting Preferred Stock, filed on June 6, 2017 (previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 12, 2017 and incorporated herein by reference)

Certificate of Amendment to the Certificate of Incorporation, effective August 30, 2018 (previously filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed with the SEC on August 30, 2018 and incorporated herein by reference)

Certificate of Designation of Series B Convertible Preferred Stock, filed on November 30, 2018 (previously filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on December 6, 2018 and incorporated herein by reference)

Certificate of Amendment to the Certificate of Incorporation, effective December 31, 2018 (previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on January 7, 2019 and incorporated herein by reference)

Certificate of Designation of Series C Convertible Preferred Stock, filed on August 19, 2019 (previously filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on August 23, 2019 and incorporated herein by reference)

Form of Certificate of Designation for Series D Convertible Preferred Stock (previously filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on May 20, 2021 and incorporated herein by reference)

Description of registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934*

License and Development Agreement, dated April 15, 2013 (3)

Consulting Agreement, dated April 15, 2013 (3)

Letter of Intent by and between the Company and E3 Enterprise, dated April 20, 2016 (4)

Letter of Intent by and between the Company and KULR Technology Corporation (5)

Patent Assignment Agreement, dated November 10, 2016 (3)

Promissory Note issued by KULR Technology Corporation, dated March 31, 2017 (6)

Promissory Note issued by KULR Technology Corporation, dated June 8, 2017 (1)

Consulting Agreement, dated March 15, 2018 (7)

2018 KULR Technology Group Equity Incentive Plan (12)

Securities Purchase Agreement dated April 2, 2019 (13)

Subscription Agreement, as supplemented, for Common Stock Offering (14)

Rescission and Termination Agreement dated July 5, 2019 (15)

Form of Subscription Agreement (16)

Form of Warrant (16)

Standby Equity Distribution Agreement dated February 27, 2020 (17)

Note Purchase Agreement dated February 27, 2020 (17)

Promissory Note dated February 27, 2020 (17)

Note Purchase Agreement dated July 20, 2020 (18)

Promissory Note dated July 20, 2020 (18)

Form of Securities Purchase Agreement (19)

Form of Warrant (19)

Co-Placement Agency Agreement (19)

License and Development Agreement, dated April 15, 2013 (previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on June 19, 2017 and incorporated herein by reference)

Letter of Intent by and between the Company and E3 Enterprise, dated April 20, 2016 (previously filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-1, filed with the SEC on June 28, 2016 and incorporated herein by reference)

Letter of Intent by and between the Company and KULR Technology Corporation (previously filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed with the SEC on November 3, 2016 and incorporated herein by reference)

Patent Assignment Agreement, dated November 10, 2016 (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on June 19, 2017 and incorporated herein by reference)

2018 KULR Technology Group Equity Incentive Plan (previously filed as Exhibit 4.8 to the Company’s Registration Statement on Form S-8, filed with the SEC on October 9, 2018 and incorporated herein by reference)

Form of Subscription Agreement (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on December 5, 2019 and incorporated herein by reference)

Form of Securities Purchase Agreement (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on December 31, 2020 and incorporated herein by reference)

Form of Warrant (previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on December 31, 2020 and incorporated herein by reference)

Form of Securities Purchase Agreement dated May 19.

Form of Warrant (20)

2021 (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on May 20, 2021 and incorporated herein by reference)

Form of Warrant (previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on May 20, 2021 and incorporated herein by reference)

Standby Equity Purchase Agreement, dated May 13, 2022, by and between KULR Technology Group, Inc.

and YA II PN, Ltd.

(previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on May 16, 2022 and incorporated herein by reference)

Note Purchase Agreement, dated May 13, 2022, by and between KULR Technology Group, Inc.

and YA II PN, Ltd.

Promissory Note, dated May 13, 2022 (21)

(previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on May 16, 2022 and incorporated herein by reference)

Promissory Note, dated May 13, 2022 (previously filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the SEC on May 16, 2022 and incorporated herein by reference)

Amendment dated June 3, 2022, to the Standby Equity Purchase Agreement by and between KULR Technology Group, Inc.

and YA II PN, Ltd.

(previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on June 03, 2022 and incorporated herein by reference)

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.

Asset Purchase Agreement, effective as of October 6, 2022, by and among KULR Technology Group, Inc., Vibetech International, LLC, and Norman Serrano (24)

(previously filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the SEC on September 23, 2022 and incorporated herein by reference)

Asset Purchase Agreement, effective as of October 6, 2022, by and among KULR Technology Group, Inc., Vibetech International, LLC, and Norman Serrano (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on October 6, 2022 and incorporated herein by reference)

Underwriting Agreement dated December 20, 2023 by and between KULR Technology Group, Inc.

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)

(previously filed as Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed with the SEC on September 13, 2023 and incorporated herein by reference)

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)

(previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on August 16, 2023 and incorporated herein by reference)

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)

(previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on August 22, 2023 and incorporated herein by reference)

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)

(previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on August 30, 2023 and incorporated herein by reference)

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)

(previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on December 19, 2023 and incorporated herein by reference)

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)

(previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on January 9, 2024 and incorporated herein by reference)

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)

(previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on February 13, 2024 and incorporated herein by reference)

At The Market Offering Agreement, dated July 3, 2024, by and between the Company and Craig-Hallum Capital Group LLC (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 3, 2024 and incorporated herein by reference)

Severance Agreement and General Release, dated August 20, 2024 (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on August 21, 2024 and incorporated herein by reference)

Amendment Agreement dated December 26, 2024 (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on December 26, 2024 and incorporated herein by reference)

Insider Trading Policy

List of Subsidiaries

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Clawback Policy, effective November 29, 2023

Clawback Policy, effective November 29, 2023 (previously filed as Exhibit 97 to the Company’s Annual Report on Form 10-K, filed with the SEC on April 12, 2024 and incorporated herein by reference)

Inline XBRL Instance*

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Furnished herewith.

Previously filed as an exhibit to Form 8-K on June 12, 2017 and incorporated herein by this reference.

Previously filed as an exhibit on Form 10-12G on January 7, 2016 (File No.:

000-55564) and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on June 19, 2017 and incorporated herein by this reference.

Previously filed on Form S-1 on June 28, 2016 (File No.:

333-212272) and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on November 3, 2016 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on April 5, 2017 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on March 15, 2018 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on August 30, 2018 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on December 6, 2018 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on January 7, 2019 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on August 23, 2019 and incorporated herein by this reference.

Previously filed as an exhibit to Form S-8 on October 9, 2018 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on April 3, 2019 and incorporated herein by this reference.

Previously filed as an exhibit to Form 10-Q on May 14, 2019 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on July 5, 2019 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on December 5, 2019 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on March 4, 2020 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on July 21, 2020 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on December 31, 2020 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on May 20, 2021 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on May 16, 2022 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on June 3, 2022 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on September 23, 2022 and incorporated herein by this reference.

Previously filed as an exhibit to Form 8-K on October 6, 2022 and incorporated herein by this reference.

FORM 10-K SUMMARY

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

March 31, 2025

KULR Technology Group, Inc.

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Chief Executive Officer and Chairman

April 12, 2024

March 31, 2025

/s/ Shawn Canter

Chief Financial Officer

April 12, 2024

March 31, 2025

/s/ William Walker

Chief Technology Officer

March 31, 2025

William Walker

/s/ Joanna Massey

Lead Director

April 12, 2024

March 31, 2025

Joanna Massey

/s/ Morio Kurosaki

April 12, 2024

Morio Kurosaki

/s/ Donna Grier

March 31, 2025

KULR TECHNOLOGY GROUP INC.

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Consolidated Statement of Changes in Stockholders’ Equity (Deficit) for the Year Ended December 31, 2024

Consolidated Statement of Changes in Stockholders’ Equity for the Year Ended December 31, 2022

Consolidated Statement of Changes in Stockholders’ Equity (Deficit) for the Year Ended December 31, 2023

Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023

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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”).

and Subsidiary (the “Company”) as of December 31, 2024 and 2023, 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, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, 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

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Los Angeles, CA

April 12, 2024

March 31, 2025

KULR TECHNOLOGY GROUP, INC.

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Current Assets:

Accounts receivable

Accounts receivable billed, current portion

Accounts receivable unbilled, current portion

Inventory deposits

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Total Current Assets

Digital assets

Accounts receivable, non-current portion

Property and equipment, net

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Intangible assets, net

Right of use asset, net

Deferred financing costs, net

Liabilities and Stockholders’ (Deficit) Equity

Operating lease right-of-use assets

Finance lease right-of-use asset, net

Deferred financing costs

Liabilities and Stockholders’ Equity (Deficit)

Current Liabilities:

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Accrued issuable equity

Lease liability, current portion

Prepaid advance liability, net of discount, current portion

Operating lease liabilities, current portion

Finance lease liability, current portion

Notes payable, net of discount, current portion

Deferred revenue

Total Current Liabilities

Operating lease liabilities, non-current portion

Finance lease liability, non-current portion

Notes payable, non-current portion

Lease liability, non-current portion

Prepaid advance liability, net of discount, non-current portion

Accrued interest, non-current

Prepaid advance liability, net of discount

Accrued interest

Total Liabilities

Commitments and contingencies (Note 19)

Stockholders ’ (Deficit) Equity

Stockholders’ Equity (Deficit)

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

730,000 and 0 shares issued and outstanding at December 31, 2024 and 2023, respectively

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

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( 66,287,594 )

Total Stockholders ’ (Deficit) Equity

Total Stockholders’ Equity (Deficit)

( 2,182,696 )

Total Liabilities and Stockholders ’ (Deficit) Equity

Total Liabilities and Stockholders’ Equity (Deficit)

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

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Interest expense

Gain on forgiveness of PPP loan and interest

Interest income

Amortization of debt discount

Loss on debt extinguishment

( 1,151,659 )

Gain on debt extinguishment, net

Change in fair value of accrued issuable equity

Change in fair value of digital assets

Total Other Expense, net

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( 23,693,556 )

Net Loss Per Share - Basic and Diluted

Weighted Average Number of Common Shares Outstanding - Basic and Diluted

Net Loss Per Share

- Basic and Diluted

Weighted Average Number of Common Shares Outstanding

- Basic and Diluted

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

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FOR THE YEAR ENDED DECEMBER 31, 2024

Preferred Stock

Treasury Stock

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( 66,287,594 )

Common stock issued for the repayment of prepaid advance liability and related interest accrual pursuant to Investor Notices

( 2,182,696 )

Preferred stock issued for no consideration

Common stock issued upon the exercise of options

Common stock issued upon the exercise of warrants

Common stock issued for the repayment of prepaid advance liability and related interest accrual pursuant to Advance Notices (1)

Shares repurchased for payroll taxes and canceled

Common stock issued pursuant to the equity financing for cash, net of issuance costs (2)

Common stock issued for cash pursuant to Advance Notices (2)

Common stock issued for at the market offering (3)

Shares repurchased and canceled

Warrants issued in connection with notes payable

Stock-based compensation:

Restricted stock awards granted

Unvested restricted stock awards canceled

Restricted stock awards granted converted to restricted stock units

( 2,168,508 )

Restricted stock awards forfeited and returned to the Company

Restricted stock units vested

Common stock issued for services

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( 83,811,223 )

( 2,182,696 )

(1) Represents gross proceeds of $ 166,337 less $ 1,211 amortization of deferred financing costs.

(1) Represents gross proceeds of $ 6,068,407 less issuance costs of $ 13,577 .

(2) Represents gross proceeds of $ 9,104,950 less issuance costs of $ 57,031 .

(3) Represents gross proceeds of $ 61,912,798 less issuance costs of $ 2,031,594 .

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

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AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE YEAR ENDED DECEMBER 31, 2023

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Stockholders’

Equity (Deficit)

Balance - January 1, 2023

( 42,594,038 )

Treasury stock held upon the vesting of restricted common stock

Treasury stock issued upon the exercise of options

Common stock issued upon the exercise of options

Common stock issued upon the exercise of warrants

Common stock issued pursuant to the SEPA and Supplemental SEPA agreements:

For cash, net of issuance costs (1)

In satisfaction of notes payable

For the repayment of prepaid advance liability (2)

Common stock issued for the repayment of prepaid advance liability and related interest accrual pursuant to Investor Notices

Common stock issued for the repayment of prepaid advance liability and related interest accrual pursuant to Advance Notices (1)

Shares repurchased for payroll taxes and canceled

Common stock issued pursuant to the equity financing for cash, net of issuance costs (2)

Stock-based compensation:

Restricted stock awards

Restricted stock awards granted

Unvested restricted stock awards canceled

Common stock issued for services

Amortization of restricted stock units

Amortization of restricted common stock

Amortization of stock options

Amortization of market-based award

( 23,693,556 )

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( 296,222.00 )

Represents gross proceeds of $ 250,000 less $ 982 for amortization of deferred issuance costs.

Represents gross proceeds of $ 6,693,976 less $ 253,133 for amortization of debt discount.

( 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.

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Amortization of debt discount

Non-cash lease expense

Loss on debt extinguishment

Non-cash operating lease expense

Gain on debt extinguishment

Depreciation and amortization expense

Gain on forgiveness of PPP loan and interest

Change in fair value of accrued issuable equity

Non-cash interest expense

Change in fair value of digital assets

Stock-based compensation

Provision for credit losses

Inventory write down

Write down inventory to net realizable value

Loss on disposal of property and equipment

Changes in operating assets and liabilities:

Accounts receivable

( 1,420,818 )

Accounts receivable billed

( 2,529,335 )

Accounts receivable unbilled

Inventory deposits

Prepaid expenses and other current assets

( 1,324,836 )

Security deposits

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Accrued expenses and other current liabilities

Lease liability

( 2,216,387 )

Operating lease liabilities

Deferred revenue

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Cash Flows From Investing Activities:

Deposits for purchase of property and equipment

( 1,421,432 )

Equipment deposits

Purchases of property and equipment

( 2,682,970 )

Acquisition of intangible assets

Purchases of digital assets

( 21,000,010 )

Net Cash Used In Investing Activities

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Issuance costs on equity financing

Proceeds from ATM equity financing

Issuance costs on ATM equity financing

( 1,780,982 )

Proceeds from the SEPA

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( 1,575,000 )

Proceeds from exercise of stock options

Proceeds from notes payable (1)

Issuance costs on notes payable

Repayments of note payable

Repayments of notes payable

( 3,341,597 )

Payment of financing costs incurred in connection with the SEPA

Repurchase of common stock

Proceeds from the exercise of stock options

Proceeds from the exercise of warrants

Repurchase and cancellation of common stock

Payments for deferred financing costs

Repayment of finance lease liability

Net Cash Provided By Financing Activities

Net Decrease In Cash

( 9,138,799 )

Net Increase (Decrease) In Cash

( 9,138,799 )

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Non-cash investing and financing activities:

Right of use asset for lease liability

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

Common stock issued in satisfaction of prepaid advance liability and interest pursuant to Investor Notices

Right-of-use asset for operating lease liability

Original issue discount on indebtedness

Common stock issued in satisfaction of accrued issuable equity

Warrants issued in connection with notes payable

Deferred financing costs charged to additional paid-in capital

Accounts payable and accrued expenses for property and equipment

Notes payable for property and equipment

Right-of-use asset for finance lease liability

Restricted stock awards converted to restricted stock units

Common shares issued for restricted stock units vested

Preferred shares issued for no consideration

Common stock issued pursuant to cashless warrant exercises

Common stock issued in satisfaction of prepaid advance liability and interest pursuant to Advance Notices

Original issue discount on prepaid advance liability

Common stock issued for the repayment of prepaid advance liability and related interest accrual pursuant to Investor Notices

Common stock issued for the repayment of prepaid advance liability and related interest accrual pursuant to Advance Notices

Prepaid advance for repayment of note payable

Shares issued in satisfaction of note payable

Deposits applied to purchases of property and equipment

Additions to property and equipment included in accounts payable

Common stock issued in satisfaction of accrued issuable equity

Accrual of equity financing issuance costs

Deferred financing costs charged to additional paid-in capital

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

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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.

Currently, the Company is focused on targeting both high performance aerospace and Department of Defense 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.

Risks and Uncertainties

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and the Company’s ability to attract and retain employees necessary to support its growth.

The “Tariff War”, especially with China, Canada and Mexico, could have an adverse effect on the Company’s supply chain potentially causing financial difficulty for the Company’s direct or indirect customers and reduced demand of the Company’s products.

A continuation of these conflicts could have adverse changes in international trade policies and relations.

Tariffs could increase the cost of the Company’s products and the components that go into making them.

These increased costs could adversely impact the gross margin that the Company earns on its products.

Tariffs could also make the Company’s products more expensive for customers, which could make the Company’s products less competitive and reduce consumer demand.

Changing the Company’s operations in accordance with new or changed trade restrictions can be expensive, time-consuming and disruptive to the Company’s operations.

In addition, the Company has invested in Bitcoin, which is a digital asset.

Digital assets are loosely regulated and there is no central marketplace for asset exchange.

Supply is determined by a computer code, not by a central bank, and prices have been extremely volatile.

Certain digital asset exchanges have been closed due to fraud, failure or security breaches.

Any of the Company’s digital assets that reside on an exchange that shuts down may be lost.

Several factors may affect the price of digital assets, including, but not limited to:

supply and demand, investors’ expectations with respect to the rate of inflation, interest rates, currency exchange rates or future regulatory measures (if any) that restrict the trading of digital assets, and the use of digital assets as a form of payment.

There is no assurance that digital assets will maintain their long-term value in terms of purchasing power in the future, or that acceptance of digital asset payments by mainstream retail merchants and commercial businesses will continue to grow.

As digital assets have grown in popularity and market size, various countries and jurisdictions have begun to develop regulations governing the digital asset industry.

To the extent future regulatory actions or policies limit the ability to exchange digital assets or utilize them for payments, the demand for digital assets could be reduced.

Furthermore, regulatory actions may limit the ability of end-users to convert digital assets into fiat currency (e.g., U.S.

dollars) or use digital assets to pay for goods and services.

Such regulatory actions or policies could result in a reduction of demand, and in turn, a decline in the underlying digital asset unit prices.

The effect of any future regulatory change on digital assets in general is impossible to predict, but such change could be substantial and adverse to the Company and the value of the Company’s investments in digital assets.

Digital assets are not insured or protected under the Federal Deposit Insurance Corporation (“FDIC”) or the Securities Investor Protection Company (“SIPC”).

Accordingly, with respect to its Bitcoin investment, the Company does not enjoy the same protection as other assets covered by the FDIC or SIPC.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.

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

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.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Use of Estimates

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Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consisted primarily of cash and accounts receivable.

Financial assets that potentially subject the Company to significant concentrations of credit risk consisted primarily of cash, accounts receivable and Bitcoin held at Coinbase.

The Company’s concentrations of credit risk also include concentrations from key customers and vendors.

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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.

Cash held in US bank institutions is currently insured by the FDIC up to $250,000 at each institution.

There were uninsured balances of $ 29,331,858 and $ 694,763 as of December 31, 2024 and 2023, respectively.

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Accounts Receivable

For the Years Ended

For the Year Ended

* Less than 10%

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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.

During the year ended December 31, 2024, the Company had two customers that made up 100 % of its license revenue.

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,

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environmental, or economic conditions, or the loss of, reduction of business from, or less favorable terms with any of the Company’s significant customers.

Custody of Bitcoin

The Company currently holds and intends to continue to hold all of its bitcoin in a custodial account at a U.S.

based, institutional-grade custodian (who may hold the Company’s bitcoin in the United States or other territories) that has demonstrated records of regulatory compliance and information security.

The custodian may also serve as a liquidity provider.

If the Company’s custodially-held bitcoin were considered to be the property of the custodian’s estates in the event that the custodian were to enter bankruptcy, receivership or similar insolvency proceedings, the Company could be treated as a general unsecured creditor of the custodian, inhibiting the Company’s ability to exercise ownership rights with respect to such bitcoin and this may ultimately result in the loss of the value related to some or all of such bitcoin.

Additionally, the bitcoin the Company holds with our custodian and transact with our trade execution partners does not enjoy the same protections as are available to cash or securities deposited with or transacted by institutions subject to regulation by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation.

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

* Less than 10%

During the year ended December 31, 2023, the Company had vendors whose purchases individually represented 23 % and 15 % of the Company’s total purchases of inventory.

There were no vendors whose purchases represented more than 10% of the Company’s total purchases of inventory during the year ended December 31, 2024.

Accounts Receivable

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As of December 31, 2024 and 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.

Management estimates the allowance for bad debts 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.

Digital Assets

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60):

Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”), which provides an update to existing digital asset guidance and requires an entity to measure certain digital assets at fair value.

In addition, this guidance requires disclosures related to digital assets once it is adopted.

As of January 1, 2024, the Company has adopted ASU 2023-08.

The Company reflects digital assets held at fair value on the consolidated balance sheets and consolidated statements of cash flows, the activity from the remeasurement of digital assets at fair value on the consolidated statements of operations, and the required expanded disclosures in Note 3, Digital Assets.

There was no cumulative effect adjustment to the Company’s retained earnings balance as a result of the adoption of ASU 2023-08.

Digital assets are generally valued using prices as reported on reputable and liquid exchanges and may involve using an average of bid and ask quotes using closing prices provided by such exchanges as of the date and time of determination.

Since the digital assets are traded on a 24-hour period, the Company uses the price at 4:00pm Eastern Standard Time (“EST”) to value its digital assets.

The Company capitalizes inventory costs associated with products when future commercialization is considered probable, and a future economic benefit is expected to be realized.

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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.

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

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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 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.

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.

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 sheets.

As of December 31, 2024 and 2023, inventory deposits were $ 0 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 December 31, 2024 and 2023 consisted of the following:

Raw materials

Work-in-process

Finished goods

Total inventory

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.

Property and Equipment

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Maintenance and repairs are charged to operations as incurred.

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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.

Vendor deposits toward the purchase of property and equipment are reflected as equipment deposits on the accompanying balance sheets (See Note 9 - Equipment Deposits).

The Company reviews long-lived 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.

Intangible assets are stated at cost as of the date acquired, less accumulated amortization.

There was no impairment charge during the years December 31, 2024 and 2023, respectively.

Intangible assets are stated at fair value as of the date acquired, less accumulated amortization for finite-lived intangible assets.

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:

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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.

The Company’s finite-lived intangible assets are tested for impairment based on undiscounted cash flows when triggering events occur.

Indefinite-lived intangible assets are 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, is recorded in the period in which an impairment determination is made.

There was no impairment charge during the years ended December 31, 2024 and 2023, respectively.

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Fair Value Measurements

The Company measures the fair value of financial assets and liabilities based on the guidance of Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures” (“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.

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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.

The carrying amounts of the Company’s financial assets, 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.

The carrying amount of the Company’s digital assets are recorded at fair value in accordance with ASC 820, Fair Value Measurement (“ASC 820”), based on quoted prices on the active exchange(s) that the Company has determined is the principal market for such assets (Level I inputs).

The cost basis of digital assets is determined using the specific identification of each unit received.

Realized and unrealized gains and losses are now recorded to other (expense) income, net in our consolidated statement of operations.

Treasury Stock

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Losses resulting from differences between the cost of treasury stock and the re-issuance proceeds are debited to additional paid-in capital.

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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

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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.

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 market value of the common stock.

Deferred Financing Costs

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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.

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The following five steps are applied to achieve that core principle:

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Recognize revenue when the company satisfies a performance obligation.

For sales contracts with terms of more than one year, the Company recognizes any significant financing component as revenue over the contractual period using the effective interest method, and the associated interest income is reflected accordingly on the consolidated statements of operations and included in other income.

The Company recognizes revenue primarily from the following different types of contracts:

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● 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.

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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.

● IP license – Revenue is recognized pursuant to the type of intellectual property (“IP”) being licensed for 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.

IP license revenue for the right to access IP is recognized over time and the right to use IP is recognized at a point in time.

a) License fees – revenue from the right to use IP is recognized immediately at the point in time that the control of the license is transferred to the customer

b) Minimum royalty fees – revenue is recognized at the point in time that control of the license is transferred to the customer.

c) Sales based royalty fees above the minimum – are recognized when the sale occurs.

IP license agreements (“License Agreements”) have payment terms of 3 - 5 years.

As a result, the License Agreements contain a significant financing component.

Accordingly, a portion of the consideration in connection with the License Agreements is recognized as interest income.

The following table summarizes the Company’s revenue recognized in its consolidated statements of operations:

For the Years Ended

Revenues Recognized at a Point in Time:

Revenue Recognized at a Point in Time:

Product sales

Contract services

Revenues Recognized Over Time:

Revenue Recognized Over Time:

Contract services

Total Revenues

Total Revenue

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Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and deferred revenues (contract liabilities) on the Consolidated Balance Sheet.

Generally, billing occurs subsequent to revenue recognition, resulting in contract assets.

However, we sometimes receive advances or deposits from our customers resulting in contract liabilities (See Deferred Revenue , below).

As of December 31, 2024, the Company had billed accounts receivable of $ 1,984,518 and unbilled accounts receivables of $ 660,672 .

As of December 31, 2023, the Company had billed accounts receivable of $ 901,672 and no unbilled accounts receivable.

Deferred revenues were $ 32,768 and $ 551,021 as of December 31, 2024 and 2023, respectively.

IP License Agreements

On September 29, 2024, the Company entered into a three-year licensing agreement (the “KULR VIBE Agreement”) with a customer located in Japan to use its KULR VIBE software to measure and reduce fan vibration levels.

The Agreement gives the customer the exclusive license to use the software in Japan (for Japanese customers) for the sole purpose of operating the Balancer.

The Balancer is a hardware device used to measure vibration levels.

Pursuant to this Agreement, the Company received a one-time, non-refundable license fee for the right to use the IP of $ 500,000 for which revenue was recognized immediately.

The customer will pay royalty fees to the Company of $ 0.20 per unit of any rotational system balanced by a Balancer, and 3 % of gross sales of all Balancers the customer manufactures and sells to a third party.

The customer will make quarterly royalty payments to the company which may vary from period to period, but the minimum payment of $ 50,000 per quarter ($ 600,000 over the three-year life of the Agreement) is guaranteed.

Since the payment of the minimum royalty occurs significantly after performance, this indicates a significant financing component.

Therefore, the Company immediately recognized revenue in an amount equal to the present value ($ 528,767 ) of the $ 600,000 minimum royalty to be received, using the prevailing interest rate in the relevant market (prime rate) of 8.0 %.

Royalty fees above the minimum amount will be recognized when and if amounts become probable and estimable.

While the Agreement contains a software maintenance provision, the Company expects the resources that will be dedicated to the software maintenance services to be negligible and determined an amount to be allocated to this software maintenance performance obligation to be de minimis.

On December 29, 2024, the Company entered into a ten-year licensing agreement (the “CF Cathode Agreement”) with a different customer located in Japan, for the use of intellectual property in connection with its CF Cathode Design technology (including the specifications, diagrams, schematics and instructions (together the “KULR CF Intellectual Property”) for the production of the CF Cathode.

The Agreement provides an exclusive license to use the KULR CF Intellectual Property to manufacture and sell CF Cathodes in Japan, and a non-exclusive license to manufacture and sell CF Cathodes in several other countries, including Taiwan, China, India and Korea.

The license fee is $ 1.8 million to be paid over 5 years as follows:

● 2/15/25 $ 300,000

● 6/15/25 $ 150,000

● 12/15/25 $ 150,000

Then $ 150,000 on each of 6/15 and 12/15 in 2026 through 2029 (the last $ 150,000 payment is due 12/15/2029).

The CF Cathode Agreement contains a significant financing component.

Therefore, the Company immediately recognized revenue in an amount equal to the present value ($ 1,658,451 ) of the $ 1,800,000 license fee, using the prevailing interest rate in the relevant market (prime rate) of 7.5 %.

Deferred Revenue

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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.

During the year ended December 31, 2024 and 2023, the Company recognized $ 529,880 and $ 3,000 of revenue that was deferred at the previous year end.

The Company did not recognize revenue from performance obligations satisfied in prior periods during the years ended December 31, 2024 or 2023.

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Deferred Labor Costs

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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.

The Company has elected to treat shipping and handling activities as fulfillment costs.

Accordingly, amounts billed to a customer in a sales transaction related to shipping and handling are recorded as revenue.

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 include expenses incurred in connection with the research and development of our CFV thermal management solution, high-areal-capacity battery electrodes and 3D engineering for a rechargeable battery.

Research and development expenses are recognized as incurred.

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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.

Advertising costs charged to operations for the years ended December 31, 2024 and 2023 were $ 2,825,351 and $ 1,801,144 , respectively, and are included in selling, general and administrative expense 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

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the grant date.

The fair value of the award is measured on 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.

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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.

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.

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

For the Years Ended

Net loss attributable to common stockholders

( 17,523,629 )

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( 3,079,374 )

( 2,005,109 )

Accrued issuable equity

Vested unissued restricted stock units

Denominator for basic and diluted net loss per share

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The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:

Prepaid advance (1)

Prepaid advance liability (1)

Unvested restricted stock awards

Restricted stock units

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.

Unvested restricted stock units

Shares issuable estimated using the floor price of $ 0.75 per share pursuant to the supplemental agreement to the SEPA (see Note 12 – Prepaid Advance Liability).

Operating and Finance Leases

The Company determines if an arrangement is a lease or contains a lease at inception.

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 lease liability is measured at the present value of the remaining lease payments, discounted at either (1) the rate implicit in the lease, if available, or (2) 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.

Classification criteria in Topic 842 is applied in order to determine whether the lease is a finance lease or an operating lease.

Operating lease expense is recorded on a straight-line basis over the life of the lease and is included in research and development and general and administrative expenses on the accompanying statements of operations.

Finance lease right-of-use assets are depreciated on a straight-line base over the estimated useful life of the asset;

the depreciation expense is included in research and development expense on the accompanying statements of operations.

Finance lease liabilities are subsequently remeasured by increasing the liability to reflect interest accrued during a period and decreasing the liability to reflect payments made during the period.

Interest expense incurred on finance leases is included in interest expense on the statements of operations.

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

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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.

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.

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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.

See Note 20 – 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):

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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 amendments in ASU 2023 – 09 are effective for annual periods 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 impact 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 2023–09.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses.

The ASU requires, among other items, additional disaggregated disclosures in the notes to financial statements for certain categories of expenses that are included on the consolidated Statements of Operations.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively.

The Company is currently evaluating the effect of adopting the ASU on its disclosures.

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity;

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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

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Company’s current accounting treatment under the current guidance.

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.

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).

The Company adopted this ASU on January 1, 2024, and the adoption did not have a material impact on the Company’s consolidated financial statements.

In November 2023, the 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

KULR TECHNOLOGY GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 adopted this ASU as of December 31, 2024.

Since this new ASU addresses only disclosures, the adoption of this ASU did not have a material effect on the Company’s financial position, results of operations or cash flows.

In December 2023, the FASB issued Accounting Standards Update (“ASU”) No.

2023-08, Intangibles - Goodwill and Other - Crypto Assets (Subtopic 350-60):

Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”), which provides an update to existing crypto asset guidance and requires (1) crypto assets measured at fair value separately from other intangible assets in the balance sheet and (2) changes from the remeasurement of crypto assets separately from changes in the carrying amounts of other intangible assets in the income statement and (3) specific presentation of cash receipts arising from crypto assets that are received as noncash consideration in the ordinary course of business and are converted nearly immediately into cash.

The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years.

Early adoption is permitted for both interim and annual financial statements that have not yet been issued (or made available for issuance).

The Company adopted ASU 2023-08 as of January 1, 2024.

NOTE 3 – DIGITAL ASSETS

The Company’s digital assets are comprised solely of Bitcoin.

In accordance with ASC Topic 820, Fair Value Measurement, the Company measures the fair value of its Bitcoin based on the quoted price at 4:00pm EST on the measurement date for a single Bitcoin on an active trading platform, Coinbase.

Management has determined that Coinbase, an active exchange market, represents a principal market for Bitcoin and at 4:00pm EST, the price is both readily available and representative of fair value (Level 1 inputs).

The following table sets forth the units held, cost basis, and fair value of Bitcoin held, as shown on the consolidated balance sheet as of December 31, 2024.

There was no Bitcoin held as of December 31, 2023.

Crypto assets held:

The following table presents a reconciliation of the fair values of the Company’s Bitcoin as of December 31, 2024:

Beginning balance at January 1, 2024

Unrealized loss, net

Balance, December 31, 2024

Additions are the result of the Company acquiring Bitcoin with cash, while dispositions are the result of sales of Bitcoin.

During the year ended December 31, 2024, the Company had no Bitcoin dispositions.

Bitcoin is included in non-current assets in the consolidated balance sheet due to the Company’s intent to not liquidate its Bitcoin to support operations in the next twelve to fifteen months.

The Company has ownership and control over its Bitcoin and uses third-party custodial services at Coinbase.

NOTE 4 – ASSET ACQUISITION

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.

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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.

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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 5 – INVENTORY DEPOSITS

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As of December 31, 2024 and 2023, prepaid expenses and other current assets consisted of the following:

As of December 31,

Compensation costs

Deferred expenses

Marketing and advertising

Compensation costs

Other receivables

Security deposits

Dues and subscriptions

Professional fees

Conferences and seminars

Dues and subscriptions

Vendor receivables

Marketing and sponsorships

Research and development

Conferences and seminars

Investor relations

Total prepaid expenses and other current assets

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.

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NOTE 7 – PROPERTY AND EQUIPMENT

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Estimated Useful Life

Construction in progress

Machinery & equipment

Leasehold improvements

Leasehold improvement

Lesser of the useful life of the asset or remaining life of the lease

Computer equipment

Construction in progress

Research and development equipment

Computer equipment

Research and development laboratory

Furniture and fixtures

accumulated deprecation

accumulated depreciation

( 4,075,199 )

( 2,420,699 )

Property and equipment, net

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.

Depreciation expense amounted to $ 1,656,988 and $ 2,077,722 , respectively, for the years ended December 31, 2024 and 2023, respectively, which is included in selling, general and administrative, cost of revenue, and research and development expenses in the consolidated statements of operations.

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NOTE 8 – INTANGIBLE ASSETS

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Intangible assets, net

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).

The technology license asset is being amortized on a straight-line basis over its useful life of ten years .

On May 4, 2023, the Company acquired intellectual property with an aggregate cost of $ 75,000 (see Note 4 - Asset Acquisition).

The intellectual property is being amortized on a straight-line basis over its useful life of five years .

During the years ended December 31, 2024 and 2023, the Company recognized amortization expense related to intangible assets of $ 142,296 and $ 136,373 , respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the years ended December 31, 2024 and 2023, the Company had no impairments of its intangible assets.

The weighted average remaining amortization period of the Company’s intangible assets is 6.83 years.

Future amortization of intangible assets is as follows:

For the Years Ending December 31,

For the Years Ended December 31,

NOTE 9 – 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.

The Company entered into an agreement with a third party contractor for the design and construction of an automated manufacturing system.

To date, this equipment has not been delivered.

The Company is involved in continuing discussions with the vendor regarding delivery of this equipment.

As of December 31, 2024 and 2023, the Company had outstanding deposits of $ 1,355,174 and $ 1,332,436 , respectively, in connection with these agreements.

See Note 19 – Commitment and Contingencies – Contingent Loss.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

As of December 31, 2024 and 2023, accrued expenses and other current liabilities consisted of the following:

Professional fees

Payroll and vacation

Inventory purchases

Professional fees

Sales tax payable

Research and development

Interest payable

Refund due to customer

Tools and supplies

Cost of sales

Board compensation

Marketing and advertising fees

Subscriptions

Total accrued expenses and other current liabilities

Accrued interest, non-current

Total accrued expenses and other liabilities

On December 16, 2024, the Company settled $ 241,192 of outstanding liabilities in connection with a research agreement for $ 200,000 and recorded a gain on extinguishment of debt in the amount of $ 41,192 .

NOTE 11 – ACCRUED ISSUABLE EQUITY

A summary of the accrued issuable equity activity during the years ended December 31, 2024 and 2023 is presented below:

For the Years Ended

As of December 31,

Fair value at January 1

Cancellation of accrued issuable equity

For the Year Ended December 31,

Beginning balance at January 1, 2024

Mark-to-market

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Fair value at December 31, 2024

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the years ended December 31, 2024 and 2023, 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 $ 565,164 and $ 158,133 , 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, 2024, the Company settled certain of its accrued issuable equity obligations through the issuance of an aggregate of 553,723 of its shares with an aggregate fair value of $ 386,516 , remeasured as of the date of settlement based on the quoted market prices of the shares.

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The fair value of the accrued but unissued shares as of December 31, 2024 was $ 420,427 , based on Level 1 inputs, which consist of quoted prices for the Company’s common stock in active markets.

NOTE 11 – PREPAID ADVANCE LIABILITY

KULR TECHNOLOGY GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 – PREPAID ADVANCE LIABILITY, NET OF DISCOUNT

The Company’s prepaid advance liability consists of the following:

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net of discount

Balance, January 1, 2022

Balance, December 31, 2022

Proceeds from prepaid advance

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Repayments in cash

( 1,575,000 )

Repayments pursuant to Advance Notices

Repayments pursuant to Investor Notices

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Balance, December 31, 2023

Proceeds from prepaid advance

Original issue discount on prepaid advance

Repayments in cash

( 1,575,000 )

Repayments pursuant to Advance Notices

Repayments pursuant to Investor Notices

( 5,918,430 )

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Balance, December 31, 2024

The current portion of this liability was $ 5,655,612 as of December 31, 2022.

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.

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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 17, 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

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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.

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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.

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During the year ended December 31, 2023, the Company recorded interest expense in the amount of $ 714,117 and recorded amortization of debt discount in the amount of $ 730,230 in connection with the Prepaid Advance liability.

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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.

KULR TECHNOLOGY GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the year ended December 31, 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 (see note 17 – Stockholders’ Equity (Deficit)).

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 December 31, 2024, the Prepaid Advance Liability and the related accrued interest has been repaid in full and the SEPA has been terminated.

See Note 17 – 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 13 – LEASES

On January 18, 2023, the Company entered into a new lease agreement for office space in Webster, Texas.

On January 18, 2023, the Company entered into a 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.

Monthly rental payments under the 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 %.

On January 31, 2024, the initial lease for Webster, Texas dated January 18, 2023, expired.

On January 27, 2024, the Company entered into a new 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 operating lease ROU asset and related 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 operating lease liability and related right-of-use asset at inception was $ 1,085,498 , 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 December 31, 2024.

The Company also leases office space at 4863 Shawline Street, San Diego, CA 92111, pursuant to an operating lease which originally 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 was 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 operating lease liability and related right-of-use asset to be $ 449,404 , using an incremental borrowing rate of 10 %.

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, 2024.

During the years ended December 31, 2024 and 2023, operating lease expense was $ 576,332 and $ 265,457 , respectively.

As of December 31, 2023, the Company did not have any financing leases.

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During July 2024, the Company entered into a three - year lease agreement, (the “Equipment Lease”) for the lease of a copy machine (the “Equipment”).

The lease term began on July 18, 2024.

The monthly fixed lease payment is $ 220 .

The Equipment Lease includes a purchase option pursuant to which the Company can purchase the Equipment at the end of the lease term for $ 1 .

The Company recorded a finance lease ROU asset and related lease liability in the amount of $ 7,768 upon the commencement of the Equipment Lease.

The Company recorded depreciation expense in the amount of $ 1,554 in connection with ROU assets held under the finance lease during the year ended December 31, 2024.

The Company recorded interest expense of $ 118 during the year ended December 31, 2024, in connection with its finance lease liability.

Lease liabilities mature during the year ended December 31, 2024, as follows:

For the years ended December 31,

Operating Lease

Financing Lease

Total future minimum lease payments

1 unchanged sentence

Present value of lease liabilities

current portion

Lease liabilities, non-current portion

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

1 unchanged sentence

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows used in operating activities

Operating cash flows from operating lease

Repayment of finance lease liability

Right-of-use assets obtained in exchange for lease obligations

Operating leases

Financing leases

Weighted Average Remaining Lease Term (Years)

Operating leases

Financing leases

Weighted Average Discount Rate

Operating leases

Financing leases

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NOTE 14 – RELATED PARTY TRANSACTIONS

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On July 24, 2023, the Related Consultant accepted an employment offer by the Company, which became effective on August 7, 2023.

As of December 31, 2024 and December 31, 2023, the Company did no t have material accounts payable outstanding with related parties.

NOTE 15 – NOTES PAYABLE

A summary of the notes payable activity during the year ended December 31, 2024 is presented below:

Outstanding, January 1, 2024

Obligations in connection with merchant cash advances

( 1,148,163 )

Proceeds from promissory notes

Repayments in cash

( 3,341,597 )

Amortization of debt discount

Total notes payable as of December 31, 2024

notes payable, current portion

Notes payable, noncurrent as of December 31, 2024

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 $ 25,144 , 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, were 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 continued making weekly payments over the original thirty-two week term.

On July 11, 2024, the Company used proceeds from the Third Cash Advance Agreement to repay this cash advance in full.

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 ranging from 240 % to 249 %.

The Second Cash Advance is secured by the Company’s accounts receivable and related cash receipts.

On July 11, 2024, the terms of this agreement were revised whereby the weekly repayment amounts were reduced from $ 26,820 to $ 15,620 and the repayment period was extended from September 27, 2024, to November 15, 2024.

On November 15, 2024, this merchant cash advance was repaid in full.

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 debt discount was amortized using the effective interest rate method and an annualized effective interest rate of 26 %.

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.

KULR TECHNOLOGY GROUP, INC.

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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.

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 was 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.

The following assumptions were used in the Black-Scholes Model to measure the fair value of the warrants:

Market price at measurement date

Exercise price

Risk free interest rate

Expected term (years)

Expected volatility

On December 27, 2024, the holder elected the cashless exercise and exercised all the Warrants and received 183,882 shares of the Company’s common stock.

Pursuant to the cashless exercise, 6,295 shares were withheld from the holder to cover taxes and fees.

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 %.

On October 31, 2024, this promissory note was repaid in full.

On April 9, 2024, the Company entered into a Conditional Sale Agreement (the “Agreement”) to purchase a Haas Vertical Machining Center (the “Equipment”), pursuant to which the Company issued a promissory note with an initial principal amount of $ 42,788 .

The promissory note carries an imputed interest rate of 10 %.

The Company will make twenty-four consecutive monthly installments of $ 2,003 , beginning thirty days after the delivery of the Equipment.

The Equipment was received on June 17, 2024.

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 difference between the total repayment amount and the net proceeds received was accounted for as debt discount and is being amortized over forty - three weeks using the effective interest rate method and an annualized effective interest rate of 86 %.

The Third Cash Advance Agreement is secured by the Company’s accounts receivable and related cash receipts.

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 did not take advantage of the early payoff discount and continued 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 were reduced from $ 26,820 to $ 15,620 and the repayment period was extended from September 27, 2024, to November 15, 2024.

This Third Cash Advance was repaid in full on January 8, 2025.

See Note 20 – Subsequent Event, for full repayment disclosure.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16 – INCOME TAXES

6 unchanged sentences

( 5,177,720 )

( 5,101,200 )

Change in valuation allowance

5 unchanged sentences

Permanent differences

Stock-based compensation

Other and prior year true-ups

10 unchanged sentences

For The Years Ended

Deferred Tax Assets (Liabilities):

Deferred Tax Assets:

Net operating loss carryforwards

4 unchanged sentences

Intangible assets

Debt discount

Lease liability

Accruals and other

3 unchanged sentences

( 16,563,966 )

Deferred tax asset, net of valuation allowance

Deferred tax assets, net of allowance

Deferred Tax Liabilities:

Right of use asset

Debt discount

Net deferred tax liabilities

Changes in valuation allowance

1 unchanged sentence

At December 31, 2024, approximately $ 3.3 million of federal net operating losses will expire from 2033 to 2037 , and approximately $ 57.7 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.

At December 31, 2024 and 2023, the Company had state net operating loss carry forwards of approximately $ 34.9 million and $ 33.3 million, respectively, of which $ 33.5 million of which will expire between 2034 and 2044 and $ 1.3 million have no expiration.

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.

4 unchanged sentences

The Company’s federal and state income tax returns beginning with the year ended December 31, 2021 remain subject to examination.

NOTE 16 – STOCKHOLDERS’ (DEFICIT) EQUITY

NOTE 17 – STOCKHOLDERS’ EQUITY (DEFICIT)

Authorized Capital

4 unchanged sentences

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”).

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.

11 unchanged sentences

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.

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 (“Exchange Cap”).

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.

The remaining 33,860,646 shares were issued for cash proceeds of $ 9,104,950 , which was retained by the Company to fund operations.

Deferred financing costs in the amount of $ 57,030 were charged to additional paid-in capital in connection with the shares issued for cash.

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 12 – Prepaid Advance Liability, for details related to a supplemental agreement to the SEPA.

At the Market Offering

On July 3, 2024, the Company entered into an At the Market Offering agreement (the “ATM Agreement”) 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” (“ATM”) 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 Agreement.

On December 4, 2024, the Company increased the maximum aggregate offering amount of the shares of the Company’s common stock issuable under the ATM Agreement from approximately $ 20 million to $ 46 million.

On December 26, 2024, the Company increased the maximum aggregate offering amount of the shares of the Company’s common stock issuable under the ATM Agreement by an additional $ 50 million and the Company entered into an amendment (the “Amendment”) to the ATM Agreement, to provide that the Agent’s compensation payable under the Sales Agreement shall be 2.5 % of gross proceeds of any sales of shares of common stock sold under the ATM Agreement.

During the year ended December 31, 2024, the Company issued a total of 74,781,217 shares of common stock pursuant to the ATM Agreement for aggregate gross proceeds of $ 61,912,798 .

(See Note 20, Subsequent Events)

Series A Preferred Stock

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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.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

Series B Convertible Preferred Stock

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The Company may elect to redeem all or part of each share of Series C Convertible Preferred Stock for the Stated Value.

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, 2024.

2 unchanged sentences

There are no Series D Convertible shares outstanding or available at December 31, 2024.

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 .

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.

During the year ended December 31, 2024, the Company issued an aggregate of 795,373 shares of common stock valued at $ 447,677 for legal and consulting services, of which 68,431 shares valued at issuance at $ 13,002 were accrued at January 1, 2024 for services rendered in prior years.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the year ended December 31, 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.

During the year ended December 31, 2024, the Company issued 1,472,460 shares of common stock upon the cashless exercise of 2,003,368 warrants with a weighted average exercise price of $ 0.92 .

During the year ended December 31, 2024, the Company issued 25,841 shares of common stock upon the exercise of stock options.

During the year ended December 31, 2024, the Company issued 1,102,127 shares of common stock upon the vesting of restricted stock units previously granted.

See At The Market Offering, above, and Note 12 - Prepaid Advance Liability for details related to additional share issuances.

During the year ended December 31, 2024, the Company repurchased and cancelled 875,000 shares issued in connection with vested equity awards held by the Company’s Former COO in exchange for a cash payment of $ 500,000 .

In addition, 3,005 shares withheld for payroll taxes were cancelled by the Company.

Treasury Stock

2 unchanged sentences

Outstanding, January 1, 2024

( 2,003,368 )

Outstanding, December 31, 2024

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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

Common stock for services (includes accrued, unissued shares)

Stock-Based Compensation

The following table presents information related to stock-based compensation expense for the years ended December 31, 2024 and 2023:

For The Year Ended

Shares issued for legal services

Shares issued to Directors

Accrued issuable equity (common stock)

Amortization of stock options

Amortization of restricted stock awards and units

Amortization of market-based awards

See Note 18 – Subsequent Events – Warrants for information related to warrants issued subsequent to December 31, 2023.

During the years ended December 31, 2024 and 2023, the Company recognized stock-based compensation expense of $ 2,692,687 and $ 3,502,736 , respectively, of which $ 2,319,207 and $ 3,227,782 , respectively, are included within selling, general and administrative expenses, and $ 373,480 and $ 274,954 , respectively are included within research and development expenses in the consolidated statements of operations.

Stock Options

A summary of options activity (excluding market-based option awards) during the year ended December 31, 2023 is presented below:

A summary of options activity during the year ended December 31, 2024 is presented below:

Outstanding, January 1, 2024

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Exercisable, December 31, 2024

The following table presents information related to stock options (excluding market-based option awards) as of December 31, 2023:

The following table presents information related to stock options as of December 31, 2024:

Options Outstanding

Options Exercisable

Remaining Life

Remaining Term

$ 0.28 - $ 0.99

2 unchanged sentences

$ 2.05 - $ 2.44

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2024 and 2023, the weighted average grant date fair value per share of options was $ 0.20 and $ 0.52 , 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:

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

For The Year Ended

5 unchanged sentences

Expected dividends

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Option forfeitures are accounted for at the time of occurrence.

10 unchanged sentences

Non-vested RSAs, January 1, 2024

RSAs exchanged for RSUs

( 2,168,508 )

( 1,287,500 )

Non-vested RSAs, December 31, 2024

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.

On March 31, 2023, the Company granted 1,500,000 restricted shares of common stock with a grant date 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.

During the year ended December 31, 2023, the Company granted RSAs of 668,508 restricted shares of common stock with an aggregate grant date value of $ 685,400 to employees which vest in four (4) equal annual installments.

As of August 20, 2024, the President and Chief Operating Officer (the “Former COO”) resigned from all positions held with the Company, and the Company agreed to provide the Former COO with certain separation benefits, which include accelerated vesting of the final tranche of his restricted stock award (“RSA”), consisting of 500,000 unvested shares, previously granted.

The Company recorded a credit in the amount of $ 325,000 to stock-based compensation as a result of this modification, consisting of reversal of $ 435,000 of amortization related to the unvested award, net of $ 110,000 equal to the fair value of shares vested on an accelerated basis.

See Note - 19 Commitment and Contingencies - Separation and General Release Agreement.

During the year ended December 31, 2024, the Company issued 2,168,508 restricted stock units (“RSUs”) 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 December 31, 2024, there was $ 127,958 of unrecognized stock-based compensation expense related to restricted stock that will be recognized over the weighted average remaining vesting period of 1.69 years.

Restricted Stock Units

The following table presents information related to restricted stock units (“RSUs”) as of December 31, 2023:

KULR TECHNOLOGY GROUP, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock Units

The following table presents information related to RSUs as of December 31, 2024:

Weighted Average

Shares of Restricted

Non-vested RSUs, January 1, 2024

RSAs exchanged for RSUs

( 1,092,127 )

( 1,125,000 )

Non-vested RSUs, December 31, 2024

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.

Risk free interest rate

Expected volatility

Expected dividend yield

Expected term

Vested RSUs undelivered December 31, 2024

During the year ended December 31, 2024, the Company granted RSUs of 3,441,230 restricted shares of common stock with an aggregate grant date value of $ 4,382,643 to employees and consultants which vest in four (4) equal annual installments.

During the year ended December 31, 2024, the Company granted RSUs of 100,000 restricted shares of common stock with an aggregate grant date value of $ 118,000 to employees which vest in two (2) biannual installments.

During the year ended December 31, 2024, the Company cancelled 1,125,000 of unvested restricted stock units, upon the resignation of the Former COO.

See Note 19 – Commitments and Contingencies – Separation and General Release Agreement .

To date, RSUs have only been granted to employees in accordance with the Company’s 2018 Equity Incentive Plan.

Pursuant to the terms of the restricted stock unit agreements, the vested but undelivered units are to be settled on January 1, 2026.

As of December 31, 2024, there was $ 6,543,446 of unrecognized stock-based compensation expense related to restricted stock units that will be recognized over the weighted average remaining vesting period of 3.35 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.

NOTE 18 – SEGMENT REPORTING

The Company has one operating and reporting segment (energy management platform), namely, the development and commercialization of energy management technologies, batteries and other components across a range of applications.

The accounting policies of the segment are the same as those described in the summary of significant accounting policies.

The chief operating decision maker (“CODM”), who is the Company’s chief executive officer, reviews profit and loss information on a consolidated basis in order to assess performance, make decisions about the allocation of operating and capital resources, and evaluate pricing strategies.

The CODM is not regularly provided disaggregated expense information, other than the expense information included in the consolidated statements of operations.

The measure of segment assets is reported on the balance sheet as total assets.

The Company does not have intra-entity sales or transfers.

Effective December 2024, digital assets became a primary asset of the Company’s treasury program.

The CODM does not consider gains and losses associated with digital assets when reviewing the results of, or allocating resources to, the energy management platform segment.

Gains and losses associated with the Company’s digital assets (which is not considered an operating segment) are presented separately from segment net income.

Geographic Information

As of December 31, 2024, all the Company’s license revenue is generated from Japan.

As of December 31, 2024, the Company’s long-lived assets are located in the U.S.

KULR TECHNOLOGY GROUP, INC.

6 unchanged sentences

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.

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 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.

(i) a cash payment of $ 60,000 payable upon the execution of the agreement (which was capitalized as an intangible asset and will be 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.

As of December 31, 2024, the Company owed a total of $ 20,000 pursuant to this agreement.

Legal Matters

The Company may be involved in litigation and arbitrations from time to time in the ordinary course of business.

As of December 31, 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.

Separation and General Release Agreement

On August 20, 2024, the Company entered into a Separation and General Release Agreement (“Separation Agreement”) with the Former COO of the Company, and resignation from all other appointments and positions held with the Company and any of its affiliated entities.

The Former COO released the Company from any and all claims he may have against the Company, and the Company agreed to provide certain separation benefits, including (i) a one-time payment of $ 99,551 , subject to legally required payroll withholdings/deductions, (ii) early settlement of 375,000 of vested RSUs previously granted and (iii) accelerated vesting of the final tranche of a restricted stock award (“RSA”), consisting of 500,000 unvested shares, previously granted.

On November 27, 2024, the Company and Former COO amended the Separation Agreement and agreed to settle the equity component with a cash payment of $ 500,000 in lieu of the 875,000 shares of common stock and these shares are deemed canceled.

Contingent Loss

Equipment deposits at December 31, 2024, represent amounts paid to a vendor as a downpayment for the manufacture of an automated manufacturing system (the “System”).

To date, the System has not been delivered and the Company and the vendor are in continuing discussions.

There can be no assurance that the Company will recover the full amount of the equipment deposit.

At this time, a loss is not considered probable.

Even if a loss were to occur, at this time the Company is not able to estimate the dollar amount of a potential loss.

KULR TECHNOLOGY GROUP, INC.

1 unchanged sentence

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.

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 .

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.

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 .

NOTE 20 – SUBSEQUENT EVENTS

Repayment of Merchant Cash Advances

During January 2025, the remaining $ 577,675 balance on the third merchant cash advance was paid in full.

At the Market Offering

On January 24, 2025, the Company increased the maximum aggregate offering amount of the shares of the Company’s common stock, issuable under the ATM by an additional $ 50 million.

During the period from January 1, 2025 through March 27, 2025, the Company issued 19,387,610 shares of common stock for gross proceeds of $ 51,122,190 pursuant to the ATM.

Digital Assets

During the period from January 1, 2025 through March 27, 2025, the Company purchased 449.45 Bitcoin, at an average cost of $ 99,008 per Bitcoin.

As of March 27, 2025, the Company owns 666.63 Bitcoin with a current market value of approximately $ 58.1 million.

Adjustments to Executive Cash Compensation and RSU Grants

On January 16, 2025, the Board of Directors approved certain adjustments to the cash compensation, and the grant of restricted stock units to the executive officers of the Company.

The following Restricted Stock Units (“RSUs”) grants were approved;

(i) the Chief Executive Officer, Chief Financial Officer and Chief Technology Officer were granted an aggregate of 4,700,000 RSUs that vest over four years;

and (ii) the VP of Engineering was granted 200,000 RSU’s that vest on June 30, 2025.

Issuance of Non-Convertible Series A Voting Preferred Stock

On January 16, 2025, the Board of Directors approved the issuance of an additional 270,000 shares of Non-convertible Series A Voting Preferred Stock (“Series A Preferred”) to the Chief Executive Officer, bringing his total holdings up to 1,000,000 shares of Series A Preferred Stock.

Bitcoin Mining

On March 7, 2025, the Company entered into a sixty-day Machine Lease Agreement with a bitcoin mining services company to operate 2,500 S-19 bitcoin mining machines on KULR’s behalf, at a total lease cost of $ 850,000 .

As of March 27, 2025, the Company has earned a total of 2.48 Bitcoin from mining services.

Treasury Stock

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

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

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

On January 16, 2025, the Company withheld 27,536 shares in connection with the vesting of restricted common stock units.

As of March 27, 2025, the Company holds 158,698 treasury shares.

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

What changed 10-K

Item 9A. Controls and Procedures