What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-08-14 compared with 2025-05-15 · 325 added, 211 removed, 548 unchanged (49% of the section changed)

10 unchanged sentences

Digital assets

Accounts receivable, non-current portion

Equity investments

Accounts receivable billed, non-current portion

Accounts receivable unbilled, non-current portion

Property and equipment, net

23 unchanged sentences

Series A Preferred Stock, 1,000,000 shares designated;

1,000,000 and 730,000 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively;

1,000,000 and 730,000 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively;

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

none issued and outstanding at March 31, 2025 and December 31, 2024

none issued and outstanding at June 30, 2025 and December 31, 2024

Series C Preferred Stock, 400 shares designated;

none issued and outstanding at March 31, 2025 and December 31, 2024

none issued and outstanding at June 30, 2025 and December 31, 2024

Series D Preferred Stock, 650 shares designated;

none issued and outstanding at March 31, 2025 and December 31, 2024

none issued and outstanding at June 30, 2025 and December 31, 2024

Common stock, $ 0.0001 par value, 500,000,000 shares authorized;

284,679,792 and 284,521,094 shares issued and outstanding at March 31, 2025, respectively;

39,475,214 and 39,453,292 shares issued and outstanding at June 30, 2025, respectively;

33,100,207 and 33,083,812 shares issued and outstanding at December 31, 2024, respectively

1 unchanged sentence

Treasury stock, at cost;

158,698 and 131,162 shares held at March 31, 2025 and December 31, 2024, respectively.

21,922 and 16,395 shares held at June 30, 2025 and December 31, 2024, respectively.

Accumulated deficit

8 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Cost of revenue

2 unchanged sentences

Selling, general, and administrative

Impairment expense

Total Operating Expenses

2 unchanged sentences

( 5,327,058 )

Other (Expense) Income

Interest expense

( 18,894,845 )

( 9,983,795 )

Other Income (Expense)

Change in fair value of digital assets

Interest income

Change in fair value of accrued issuable equity

Interest expense

Amortization of debt discount

Gain (loss) on debt extinguishment, net

Change in fair value of accrued issuable equity

Change in fair value of digital assets

( 9,748,600 )

Total Other Expense, net

Total Other Income (Expense), net

Net Income (Loss)

( 5,890,528 )

2 unchanged sentences

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 condensed consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2025

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025

Preferred Stock

7 unchanged sentences

Common stock issued for at the market offering (1)

Common stock issued upon vesting of restricted stock units

Shares withheld for employee payroll tax obligations

1 unchanged sentence

Common stock issued for services

Common stock issued upon vesting of restricted stock units

Amortization of restricted common stock

4 unchanged sentences

( 102,617,881 )

Common stock issued upon the exercise of options

Common stock issued for at the market offering (2)

Shares returned to treasury for employee payroll tax obligations

Shares withheld for employee payroll tax obligations

Stock-based compensation:

Common stock issued for services

Common stock issued upon vesting of restricted stock units

Amortization of restricted common stock

Amortization of stock options

Effect of reverse stock split

Balance - June 30, 2025

( 94,475,732 )

(1) Represents gross proceeds of $ 51,152,353 , less issuance costs of $ 1,509,423 .

The accompanying notes are an integral part of these condensed consolidated financial statement

(2) Represents gross proceeds of $ 38,331,721 , less issuance costs of $ 1,081,712 .

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

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED MARCH 31, 2024

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024

Preferred Stock

10 unchanged sentences

Restricted stock awards exchanged for restricted stock units

( 2,168,508 )

Restricted stock units vested and issued

Common stock issued upon vesting of restricted stock units

Common stock issued for services

5 unchanged sentences

( 71,296,470 )

Warrants isued in connection with note payable

Common stock issued for cash pursuant to Advance Notices (3)

Stock-based compensation:

Common stock issued upon vesting of restricted stock units

Common stock issued for services

Amortization of restricted common stock

Amortization of stock options

( 5,890,528 )

Balance - June 30, 2024

( 77,186,998 )

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

(2) Represents gross proceeds of $ 2,910,651 , less issuance costs of $ 4,238 .

(3) Represents gross proceeds of $ 6,194,299 , less issuance costs of $ 52,792 .

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

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended

For the Six Months Ended

Cash Flows From Operating Activities:

4 unchanged sentences

Non-cash operating lease expense

Gain on debt extinguishment

(Gain) loss on debt extinguishment

Depreciation and amortization expense

2 unchanged sentences

Change in fair value of digital assets

( 7,619,060 )

Stock-based compensation

Mining of digital assets

( 1,688,849 )

Loss on disposal of property and equipment

Changes in operating assets and liabilities:

Accounts receivable billed

( 1,205,992 )

( 1,025,531 )

Accounts receivable unbilled

1 unchanged sentence

Prepaid expenses and other current assets

( 4,236,870 )

Security deposits

Accounts payable

( 1,768,098 )

Accrued expenses and other current liabilities

2 unchanged sentences

Total Adjustments

( 11,056,208 )

Net Cash Used In Operating Activities

2 unchanged sentences

Cash Flows From Investing Activities:

Equity investments

( 3,325,045 )

Equipment deposits

13 unchanged sentences

Repayments of notes payable

( 1,525,195 )

Payments for deferred financing costs

Repayment of finance lease liabilty

Repayment of finance lease liability

Net Cash Provided By Financing Activities

3 unchanged sentences

Cash - End of Period

(1) Excludes $ 228,697 amortization of deferred financing costs.

(1) Excludes $ 351,400 of deferred financing costs.

(2) Face value of $ 2,309,200 , less $ 579,200 original issue discount.

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued

For the Three Months Ended

For the Six Months Ended

Supplemental Disclosures of Cash Flow Information:

1 unchanged sentence

Non-cash investing and financing activities:

Right-of-use asset for lease liability

Deferred financing costs charged to additional paid-in capital

Shares withheld for employee payroll tax obligations

Accounts payable and accrued expenses for property and equipment

Common stock issued in satisfaction of accrued issuable equity

Shares withheld for employee payroll tax obligations

Shares returned to treasury for employee payroll tax obligations

Common shares issued for restricted stock units vested

Accounts payable and accrued expenses for property and equipment purchases

Preferred shares issued for no consideration

Right-of-use asset for lease liability

Common shares issued for restricted stock units vested

Restricted stock awards converted to restricted stock units

1 unchanged sentence

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

Additions to property and equipment included in accrued purchases

Accrued underwriting fees for notes payable

Accrued deferred financing costs

Value of warrants issued in connection with notes payable

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

6 unchanged sentences

Currently, the Company is focused on targeting both high performance aerospace and Department of Defense (“DOD”) applications, such as space exploration, satellite communications, and underwater vehicles, and applying them to mass market commercial applications, such as lithium-ion battery energy storage, electric vehicles, fifth generation (“5G”) communication, cloud computer infrastructure, consumer and industrial devices.

In December 2024, the Company adopted bitcoin as a primary treasury reserve asset.

The treasury strategy includes acquiring and holding bitcoin using cash that exceeds its working capital requirements, and from time to time, subject to market conditions, issuing equity or debt securities or engaging in other capital raising transactions with the objective of using the proceeds to purchase bitcoin.

During the first quarter of 2025, the Company commenced digital asset mining operations.

Reverse Stock Split

On June 23, 2025, the Company effected a reverse stock split wherein each 8 shares of common stock outstanding immediately prior to the effective date was combined and converted into one share of common stock (the “Reverse Stock Split”).

All share and per share amounts in this Quarterly Report have been adjusted to reflect the effect of the Reverse Stock Split as if the Reverse Stock Split occurred as of the earliest period presented.

Risks and Uncertainties

7 unchanged sentences

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.

The “Tariff War”, especially with European Union, 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.

16 unchanged sentences

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.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

Basis of Presentation

3 unchanged sentences

GAAP for annual financial statements.

In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of March 31, 2025, and for the three months ended March 31, 2025 and 2024.

The results of operations for the three months ended March 31, 2025, are not necessarily indicative of the operating results for the full year ending December 31, 2025, or any other period.

In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of June 30, 2025, and for the three and six months ended June 30, 2025 and 2024.

The results of operations for the three and six months ended June 30, 2025, are not necessarily indicative of the operating results for the full year ending December 31, 2025, or any other period.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related disclosures as of December 31, 2024 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on Form 10-K on March 31, 2025.

15 unchanged sentences

Cash held in US bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution.

There were uninsured balances of $ 23,949,297 and $ 29,331,858 as of March 31, 2025 and December 31, 2024, respectively.

There were uninsured balances of $ 20,070,107 and $ 29,331,858 as of June 30, 2025 and December 31, 2024, respectively.

KULR TECHNOLOGY GROUP, INC.

5 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Less than 10%

4 unchanged sentences

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

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

based, institutional-grade custodian 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 digital assets 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 digital assets and this may ultimately result in the loss of the value related to some or all of such digital assets.

Additionally, the digital assets 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.

If the Company’s custodially-held digital assets were considered to be the property of the custodian’s estate 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 digital assets and this may ultimately result in the loss of the value related to some or all of such digital assets.

Additionally, the digital assets the Company holds with our custodian and transacts with our trade execution partners do 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.

KULR TECHNOLOGY GROUP, INC.

4 unchanged sentences

For the Three Months Ended

For the Six Months Ended

* Less than 10%

1 unchanged sentence

Accounts receivable are carried at their contractual amounts, less an estimate for credit losses.

As of March 31, 2025 and December 31, 2024, 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.

As of June 30, 2025 and December 31, 2024, no allowances for credit losses were determined to be necessary.

Management estimates the allowance for credit losses based on historical credit loss experience, 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.

6 unchanged sentences

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.

The Company reflects digital assets held at fair value on the condensed consolidated balance sheets and condensed consolidated statements of cash flows, the activity from the remeasurement of digital assets at fair value on the condensed 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.

1 unchanged sentence

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.

Equity Investments

The Company holds an investment in non-marketable equity securities of a company that does not have a readily available fair value.

The investment is measured under the measurement alternative provided in Accounting Standards Codification (“ASC”) 321 on the Company’s condensed consolidated balance sheets.

Under the measurement alternative method, the equity investment is carried at cost less impairment losses, adjusted for price changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

The Company performs a qualitative assessment at each reporting period considering impairment indicators to evaluate whether the fair value of the investment is less than its carrying amount.

If the qualitative assessment indicates that an investment is impaired, a loss is recorded equal to the difference between the fair value and carrying value of the investment.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Mining of Digital Assets

The Company leased digital asset mining equipment, which provides hashrates to a mining pool operator.

The Company leases digital asset mining equipment, which provides hashrates to a mining pool operator.

The Company derives a portion of its revenue from its digital asset mining activities by providing hashrates as part of transaction verification services within the digital currency networks of cryptocurrencies, such as bitcoin, commonly termed “cryptocurrency mining.” In consideration for these services, the Company receives digital awards which are recorded as revenue, based on the daily amount of bitcoin earned.

2 unchanged sentences

Lease costs associated with the digital asset mining operation are recorded as cost of revenue.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

These costs consist of finished goods, raw materials, manufacturing-related costs, transportation and freight, and other indirect overhead costs.

Inventory is comprised of carbon fiber velvet 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.

Inventory is comprised of carbon fiber velvet thermal interface solutions and internal short circuit batteries, which are available for sale, exoskeleton devices, 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.

6 unchanged sentences

These payments are recorded as inventory deposits until the goods are received and these costs are included in the current asset section of the condensed consolidated balance sheet.

Inventory at March 31, 2025 and December 31, 2024 was comprised of the following:

Inventory at June 30, 2025 and December 31, 2024 was comprised of the following:

Raw materials

1 unchanged sentence

Total inventory

As of March 31, 2025 and December 31, 2024, inventory deposits were $ 787,626 and $ 0 , respectively, which consists of inventory purchases of goods that were paid for but not received as of period end.

As of June 30, 2025 and December 31, 2024, inventory deposits were $ 198,604 and $ 0 , respectively, which consists of inventory purchases of goods that were paid for but not received as of period end.

Finished goods inventory is held on-site at the San Diego, California and Webster, Texas locations.

8 unchanged sentences

Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

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.

KULR TECHNOLOGY GROUP, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The carrying amounts of the Company’s financial assets, such as cash, accounts receivable, accrued expenses and other current liabilities and notes payable approximate fair values due to the short-term nature of these instruments.

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

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

The Company accounts for its equity investments under the measurement alternative provided in ASC 321, whereby the equity investment is initially recorded at cost, (including transaction costs), and is subsequently remeasured at fair value in accordance with the provisions on ASC 820 when it is impaired, or when the Company identifies observable price changes in orderly transactions for the identical or similar investment of the same issuer.

Revenue Recognition

8 unchanged sentences

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.

During the three months ended March 31, 2025 and 2024, the Company recognized revenue primarily from the following different types of contracts:

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 condensed consolidated statements of operations and included in other income.

During the three and six months ended June 30, 2025 and 2024, the Company recognized revenue primarily from the following different types of contracts:

● Product sales – Revenue is recognized at the point in time the customer obtains control of the goods and the Company satisfies its performance obligation, which is generally at the time it ships the product to the customer.

For certain product sales contracts, the Company acts as an agent and revenue in connection with these contracts is presented net of the related costs.

The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service before transfer to the customer.

When the Company concludes that it controls the good or service before transfer to the customer, the Company is considered a principal in the transaction and records revenue on a gross basis.

When the Company concludes that it does not control the good or service before transfer to the customer but arranges for another entity to provide the good or service, the Company acts as an agent and records revenue on a net basis in the amount it earns for its agent service.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

● Contract services – Revenue is recognized pursuant to the terms of each individual contract when the Company satisfies the respective performance obligations, which could be recognized at a point in time or over the term of the contract.

Contract services revenue that is recognized over time may be recognized using the input method, based on labor hours expended, or using the output method based on milestones achieved, depending on the contract.

● Mining of digital assets – The Company has entered into a lease agreement with a digital asset mining services company to operate digital asset mining machines on behalf of the Company and provide mining pool operating and hosting services.

Pursuant to the agreement, the Company provides computing power to the mining pool operator.

● Mining of digital assets – The Company has entered into lease agreements with a digital asset mining services company to operate digital asset mining machines on behalf of the Company and provide mining pool operating and hosting services.

Pursuant to these agreements, the Company provides computing power to the mining pool operator.

The Company is entitled to digital asset awards once it begins to perform hash calculations for the pool operator in accordance with the operator’s specifications.

1 unchanged sentence

Revenue from digital assets is considered non-cash consideration.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

For the Three Months Ended

For the Six Months Ended

Revenue Recognized at a Point in Time:

6 unchanged sentences

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.

As of March 31, 2025, the Company had billed accounts receivable of $ 4,346,111 and unbilled accounts receivable of $ 196,695 .

As of June 30, 2025, the Company had billed accounts receivable of $ 3,872,267 and unbilled accounts receivable of $ 1,712,189 .

As of December 31, 2024, the Company had billed accounts receivable of $ 3,431,007 and unbilled accounts receivable of $ 660,672 .

Deferred revenues were $ 21,141 and $ 32,768 as of March 31, 2025 and December 31, 2024, respectively.

Net Loss Per Common Share

Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period.

Diluted net loss per common share is computed by dividing net loss by the weighted average number of common and dilutive common-equivalent shares outstanding during each period.

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

Deferred revenues were $ 23,641 and $ 32,768 as of June 30, 2025 and December 31, 2024, respectively.

Net Loss Per Share of Common Stock

Basic net loss per share of common stock is computed by dividing net loss by the weighted average number of vested shares of common stock outstanding during the period.

Diluted net loss per share of common stock is computed by dividing net loss by the weighted average number of common and dilutive common-equivalent shares outstanding during each period.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

For the Three Months Ended

For the Six Months Ended

Net Income (Loss)

( 5,890,528 )

( 10,664,509 )

( 10,899,404 )

Denominator (weighted average quantities):

1 unchanged sentence

Treasury shares purchased

Unvested restricted shares

( 1,071,495 )

Unvested restricted stock awards

Accrued issuable equity

Vested unissued restricted stock units

Denominator for basic and diluted net loss per share

Basic and diluted net loss per common share

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Denominator for basic net loss per share

Denominator for diluted net loss per share

Net Income (Loss) Per Share

The following shares were excluded from the calculation of weighted average dilutive shares of common stock for the six months ended June 30, 2025 and for the three and six months ended June 30, 2024 because their inclusion would have been anti-dilutive:

For the Three and Six

June 30, 2025

June 30, 2024

Unvested restricted stock awards

Unvested restricted stock units

Reclassifications

Certain prior period balances have been reclassified in order to conform to the current period presentation.

These reclassifications have no effect on previously reported results of operations or loss per share.

For the purposes of the three-month diluted net income per share calculation, common stock warrants, unvested restricted stock units and stock options were considered to be potentially dilutive securities and were included in the calculation of diluted net income per share for the three months ended June 30, 2025.

Subsequent Events

2 unchanged sentences

Segment Reporting

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by management in deciding how to allocate resources and in assessing performance.

Operating segments are components of an enterprise for which separate financial information is available and regularly reviewed by management in deciding how to allocate resources and evaluate performance.

Management has determined that the Company has two significant operating segments:

1 unchanged sentence

In determining the appropriateness of segment definition, the Company considers the criteria of Accounting Standards Codification (“ASC”) 280, Segment Reporting.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Recent Issued Accounting Pronouncements

5 unchanged sentences

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.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company expects that the adoption of ASU 2023-09 will require certain additional income tax disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures.

ASU 2024-03 is intended to improve disclosures about a public business entity’s expenses and provide more detailed information to investors about the types of expenses in commonly presented expense captions.

The amendments in this ASU will be applied retrospectively and are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of implementing this guidance.

NOTE 3 – DIGITAL ASSETS

2 unchanged sentences

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 March 31, 2025 and as of December 31, 2024.

Digital assets held:

Digital assets purchased

Digital assets mined

During the first three months of March 31, 2025, the Company purchased 449.45 Bitcoin at an average cost of $ 99,008 per Bitcoin, inclusive of fees and expenses, for an aggregate cost of $ 44,499,352 .

Additionally, on March 7, 2025, the Company entered into a sixty-day lease agreement (the “Machine Lease Agreement”) with a digital asset mining services company to operate digital assets mining machines on KULR’s behalf, at a total lease cost of $ 850,000 .

As of March 31, 2025, 2.97 Bitcoin have been earned pursuant to the Machine Lease Agreement, at an average value of $ 84,186 per Bitcoin.

During the three months ended March 31, 2025, the Company recognized revenue of $ 249,754 , and recognized a loss of $ 90,237 , in connection with its digital assets mining operations.

The following table presents a reconciliation of the fair values of the Company’s Bitcoin as of March 31, 2025:

Beginning balance at January 1, 2025

As of June 30, 2025, the Company held 928.28 digital assets with a cost basis of $ 92,588,858 , and a fair value of $ 99,489,102 .

The following table is a summary of Bitcoin activity during the six months ended June 30, 2025:

Digital Assets

Beginning balance at December 31, 2024

Additions - purchased

Additions - mined

Unrealized loss, net

( 9,748,600 )

Balance, March 31, 2025

Change in fair value

Balance, June 30, 2025

During the three months ended June 30, 2025, the Company purchased 244.36 Bitcoin via trade orders on Coinbase (the prime broker) at an average cost of $ 103,949 per Bitcoin, inclusive of fees and expenses, for an aggregate cost of $ 25,400,657 .

During the six months ended June 30, 2025, the Company purchased 693.81 Bitcoin via trade orders on Coinbase at an average cost of $ 100,748 per Bitcoin, inclusive of fees and expenses, for an aggregate cost of $ 69,900,009 .

On March 7, 2025, the Company entered into a sixty-day lease agreement (the “First Machine Lease Agreement”) with a digital asset mining services company to operate digital assets mining machines on KULR’s behalf, at a total lease cost of $ 850,000 .

Additionally, on May 16, 2025, the Company entered into a two hundred and twenty eight-day lease agreement (the “Second Machine Lease Agreement”) with the same digital asset mining services company to operate digital assets mining machines on KULR’s behalf, at a total lease cost of $ 3,200,000 .

Furthermore, on June 20, 2025, the Company entered into a one hundred and three-day lease agreement (the “Third Machine Lease Agreement”) with a new digital asset mining services company to operate digital assets mining machines on KULR’s behalf, at a total lease cost of $ 2,756,795 .

During the three and six months ended June 30, 2025, the Company recognized revenue of $ 1,439,095 and $ 1,688,849 , respectively, in connection with its digital assets mining operations.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of March 31, 2025 and December 31, 2024, prepaid expenses and other current assets consisted of the following:

As of June 30, 2025 and December 31, 2024, prepaid expenses and other current assets consisted of the following:

Bitcoin mining lease

Deferred expenses

Digital assets mining lease

Compensation costs

Marketing and advertising

Research and development

Professional fees

Marketing and advertising

Compensation costs

Security deposits

Board compensation

Vendor receivables

1 unchanged sentence

Total prepaid expenses and other current assets

NOTE 5 – EQUITY INVESTMENTS

On May 7, 2025, the Company purchased Series A7 Preferred Shares (the “Preferred Shares”) of a German entity (“Investee”) for an aggregate purchase price of $ 3.3 million.

The Preferred Shares rank senior to all outstanding preferred as well as common shares of Investee, and are convertible on a 1 :1 basis into common shares of Investee at the Company’s option, subject to anti-dilution adjustments.

The Company also has the right to one voting advisory board seat and one non-voting observer seat on Investee’s advisory board.

The Investee Preferred Shares have a liquidation preference equal to the purchase price of the shares plus any accrued and unpaid dividends thereon.

The Company’s purchase of Preferred Shares represents an investment in non-marketable equity securities of a company without a readily determinable fair value.

The Company accounts for this investment under the measurement alternative in ASC 321, whereby the equity investment is recorded at cost, and is subsequently remeasured to its fair value in accordance with the provisions of ASC 820 when observable price changes occur or when it is impaired (see Note 2, Significant Accounting Policies, Equity Investments).

There were no changes to the carrying value of Preferred Shares during the three and six months ended June 30, 2025.

NOTE 6 – EQUIPMENT DEPOSITS

Equipment deposits at June 30, 2025 and December 31, 2024 are $ 77,340 and $ 1,355,174 , respectively.

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

The System was never delivered to the Company.

After negotiation, and in an effort to come to a resolution on the matter, the Company agreed to forfeit the equipment deposit while the vendor retained the unfinished equipment.

During the three and six months ended June 30, 2025, the Company recorded a write-down of $ 786,397 and $ 1,355,174 , respectively, related to the equipment deposits.

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

NOTE 7 – ACCRUED EXPENSES AND OTHER LIABILITIES

As of March 31, 2025 and December 31, 2024, accrued expenses and other current liabilities consisted of the following:

As of June 30, 2025 and December 31, 2024, accrued expenses and other current liabilities consisted of the following:

Payroll and vacation

2 unchanged sentences

Sales tax payable

Business development

Equipment purchases

Shipping fees

Research and development

6 unchanged sentences

NOTE 8 – ACCRUED ISSUABLE EQUITY

A summary of the accrued issuable equity activity during the three months ended March 31, 2025 is presented below:

For the Three Months Ended

March 31, 2025

A summary of the accrued issuable equity activity during the six months ended June 30, 2025 is presented below:

For the Six Months Ended

June 30, 2025

Beginning balance at January 1, 2025

Mark-to-market

Gain from mark-to-market

Shares issued in satisfaction of accrued issuable equity

Fair value at March 31, 2025

During the three months ended March 31, 2025, the Company entered into certain contractual arrangements for services in exchange for a fixed number of shares of common stock of the Company.

Fair value at June 30, 2025

During the six months ended June 30, 2025, the Company entered into certain contractual arrangements for services in exchange for a fixed number of shares of common stock of the Company.

The estimated fair value of the shares to be issued was an aggregate of $ 151,319 based on the quoted market prices of the shares as of the respective contract dates.

During the three months ended March 31, 2025, the Company settled certain of its accrued issuable equity obligations through the issuance of an aggregate of 50,000 of its shares of common stock with an aggregate fair value of $ 69,500 , remeasured as of the date of settlement based on the quoted market prices of the shares.

During the three months ended March 31, 2025 and 2024, the Company recorded gains (losses) in the aggregate amount of $ 260,598 and $( 13,002 ), respectively, related to changes in the fair value of accrued issuable equity (see Note 9 – Stockholders’ Equity (Deficit), Stock-Based Compensation for additional details).

The fair value of the accrued but unissued shares as of March 31, 2025, was $ 180,658 , based on Level 1 inputs, which consist of quoted prices for the Company’s common stock in active markets.

During the six months ended June 30, 2025, the Company settled certain of its accrued issuable equity obligations through the issuance of an aggregate of 6,250 of its shares of common stock with an aggregate fair value of $ 69,500 , remeasured as of the date of settlement based on the quoted market prices of the shares.

During the three and six months ended June 30, 2025, the Company recorded gains in the aggregate amount of $ 58,678 and $ 319,276 , respectively, and recorded losses in the aggregate amount of $( 2,737 ) and $( 15,739 ) during the three and six months ended June 30, 2024, respectively, related to changes in the fair value of accrued issuable equity (see Note 12 – Stockholders’ Equity, Stock-Based Compensation for additional details).

The fair value of the accrued but unissued shares as of June 30, 2025, was $ 182,970 , based on Level 1 inputs, which consist of quoted prices for the Company’s common stock in active markets.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 – LEASES

5 unchanged sentences

Monthly rental payments under the new lease are $ 33,818 , which is comprised of $ 22,682 of base rent and $ 11,136 of common area maintenance fees.

No cash payments are due for the first three months of the lease.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

No cash payments were 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 March 31, 2025.

The Company paid a security deposit of $ 37,930 in connection with the Webster lease agreement which is recorded within the security deposits section of the balance sheet as of June 30, 2025.

On April 15, 2025, the Company amended its original lease dated January 27, 2024 (the First Amendment”), for the property located at 555 Forge River Road, Webster, TX, to expand the rentable square footage by approximately 13,535 square feet (the “Expansion Premises) for a total rentable space of 31,095 square feet.

The First Amendment is effective May 1, and expires April 30, 2029.

Monthly payments for the Expansion Premises are $ 17,483 .

No cash payments are due for the first two months of the lease.

The Company determined that the value of the operating lease liability and related right-of-use asset at inception was $ 691,852 , using an incremental borrowing rate of 10 %.

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”).

1 unchanged sentence

Pursuant to the amendment, the lease was extended for a period of eighteen months commencing June 1, 2024, and terminating November 30, 2025.

The Company does not plan to renew this lease upon its expiration.

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 March 31, 2025.

During the three months ended March 31, 2025 and 2024, operating lease expense was $ 150,846 and $ 111,902 , respectively.

During the three and six months ended June 30, 2025, operating lease expense was $ 186,328 and $ 337,175 , respectively.

During the three and six months ended June 30, 2024, operating lease expense was $ 111,591 and $ 226,708 , respectively.

Finance Lease

The Company recorded depreciation expense in the amount of $ 388 in connection with ROU assets held under the finance lease during the three months ended March 31, 2025.

The Company recorded interest expense of $ 117 during the three months ended March 31, 2025, in connection with its finance lease liability.

Maturities of lease liabilities as of March 31, 2025, were as follows:

The Company recorded depreciation expense in the amount of $ 388 and $ 777 in connection with ROU assets held under the finance lease during the three and six months ended June 30, 2025.

The Company recorded interest expense of $ 46 and $ 97 during the three and six months ended June 30, 2025, in connection with its finance lease liability.

No depreciation or interest expenses were recorded as of June 30, 2024.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Supplemental Information

Maturities of lease liabilities as of June 30, 2025, were as follows:

Operating Lease

7 unchanged sentences

Supplemental cash flow information related to the leases are as follows:

For the Three Months Ended

For the Six Months Ended

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

10 unchanged sentences

Financing leases

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10-NOTES PAYABLE

A summary of the notes payable activity during the three months ended March 31, 2025, is presented below:

A summary of the notes payable activity during the six months ended June 30, 2025, is presented below:

Outstanding, January 1, 2025

1 unchanged sentence

Amortization of debt discount

Total notes payable as of March 31, 2025

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 which is amortized over the term of the Third Cash Advance Agreement.

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

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

Total notes payable as of June 30, 2025

NOTE 11 – INCOME TAX

The Company’s effective tax rate was zero for the three and six months ended June 30, 2025 and 2024, respectively.

The effective tax rates for all periods differs from the statutory rate of 21 % as a result of the net change in valuation allowance against the net deferred tax asset that the Company believes is not more likely than not to be realized.

The Company continues to carry a full valuation allowance on its net deferred tax assets.

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Tax Law Change

On July 4th, 2025, the President signed into law significant federal tax legislation, H.R.1 (the “Tax Reform Act of 2025”).

The legislation includes numerous changes to U.S.

corporate income tax law, including but not limited to:

permanent 100% bonus depreciation for qualified property, immediate expensing of domestic research and experimental expenditures, modifications to the limitation on business interest expense, increased Section 179 expensing limits, changes to the international tax regime, and expanded limitations on the deductibility of executive compensation under IRC Section 162(m).

Most provisions are effective for tax years beginning after December 31, 2024, with certain transition rules and exceptions.

The Company is currently evaluating the impact of the Tax Reform Act of 2025 on its condensed consolidated financial statements.

The effects of the new law, including remeasurement of deferred tax assets and liabilities and changes to current and future tax expense, will be reflected in the period of enactment and in future periods as additional guidance is issued and the Company completes its analysis.

NOTE 12 - STOCKHOLDERS’ EQUITY (DEFICIT)

Authorized Capital

The Company is authorized to issue 500,000,000 shares of common stock, par value of $ 0.0001 per share, and 20,000,000 shares of preferred stock, par value of $0.0001 per share.

The holders of the Company’s common stock are entitled to one vote per share.

The preferred stock is designated as follows:

1,000,000 shares designated as Series A Preferred Stock, 31,000 shares designated as Series B Convertible Preferred Stock, 400 shares designated as Series C Preferred Stock, and 650 shares designated as Series D Convertible Preferred Stock.

Equity Incentive Plan

3 unchanged sentences

The 2018 Plan requires the exercise price of stock options to be not less than the fair value of the Company’s common stock on the date of grant.

As of March 31, 2025, there were 718,457 shares available for issuance under the 2018 Plan.

As of June 30, 2025, there were 98,767 shares available for issuance under the 2018 Plan.

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 its At the Market Offering agreement (the “ATM Agreement”) by an additional $ 50 million.

During the three months ended March 31, 2025, the Company issued a total of 19,407,622 shares of common stock pursuant to the ATM Agreement for aggregate gross proceeds of $ 51,152,353 with cash issuance costs of $ 1,509,423 .

During the three months ended March 31, 2025, the Company issued an aggregate of 61,000 shares of common stock valued at $ 82,040 for legal and consulting services, of which 50,000 shares valued at issuance at $ 69,500 were accrued at January 1, 2025 for services rendered in prior years.

During the three months ended March 31, 2025, the Company issued 8,500 shares of common stock upon the exercise of stock options for gross proceeds of $ 7,565 .

On May 30, 2025, the Company completed its initial ATM Agreement offering agreement with a total of 14,783,393 shares issued for gross proceeds of $ 146 million.

On June 9, 2025, the Company entered into a second At the Market Offering agreement (the “second 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 $ 300 million in an “At the Market” offering 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 up to 3.0 % of the gross proceeds of any shares of common stock sold pursuant to the ATM Agreement.

During the six months ended June 30, 2025, the Company issued a total of 6,258,415 shares of common stock pursuant to the ATM Agreements for aggregate gross proceeds of $ 89,484,074 , with cash issuance costs of $ 2,239,735 .

During the six months ended June 30, 2025, the Company issued an aggregate of 9,000 shares of common stock valued at $ 95,570 for legal and consulting services, of which 6,250 shares valued at issuance at $ 69,500 were accrued at January 1, 2025 for services rendered in prior years.

During the six months ended June 30, 2025, the Company issued 1,688 shares of common stock upon the exercise of stock options for gross proceeds of $ 10,815 .

KULR TECHNOLOGY GROUP, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the three months ended March 31, 2025, the Company issued 500,877 shares of common stock upon the vesting of restricted stock units previously granted, of which 127,393 shares were withheld to cover payroll tax obligations.

During the six months ended June 30, 2025, the Company issued 129,951 shares of common stock upon the vesting of restricted stock units previously granted, of which 29,635 shares were withheld to cover payroll tax obligations.

See At The Market Offering, above , for share issuances pursuant to the Company’s ATM Agreement.

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.

The Company’s equity-based compensation plan allows for the grant of 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 at cost.

During the three months ended March 31, 2025, the Company withheld 27,536 shares valued at $ 63,332 in connection with the vesting of restricted common stock units during the period.

The Company had 158,698 and 131,162 shares held in treasury as of March 31, 2025 and December 31, 2024, respectively, recorded at their cost of $ 359,554 and $ 296,222 , respectively.

Generally, the shares withheld are then transferred to the Company’s treasury stock at cost.

During the six months ended June 30, 2025, the Company withheld 5,527 shares recorded at their cost of $ 97,522 in connection with the vesting of restricted common stock units during the period.

The Company had 21,922 and 16,395 shares held in treasury as of June 30, 2025 and December 31, 2024, respectively, recorded at their cost of $ 393,744 and $ 296,222 , respectively.

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 CEO, such that the total shares of Series A Preferred held by the CEO as of March 31, 2025 is 1,000,000 shares.

The issuance of up to 1,000,000 shares of Non-convertible Series A Voting Preferred Stock to the CEO was previously approved and authorized by a vote of the majority stockholders of the Company, 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 the CEO is removed from any position with the Company or resigns from all positions with the Company.

1 unchanged sentence

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.

A summary of warrants activity during the three months ended March 31, 2025, is presented below:

Outstanding, January 1, 2025

Outstanding, March 31, 2025

Exercisable, March 31, 2025

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of outstanding and exercisable warrants as of March 31, 2024, is presented below:

There was no warrant activity during the three and six months ended June 30, 2025.

The weighted average exercise price of warrants outstanding at June 30, 2025 was $ 8.50 .

A summary of outstanding and exercisable warrants as of June 30, 2025, is presented below:

Warrants Outstanding

1 unchanged sentence

Remaining Life

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Stock-Based Compensation

The following table presents information related to stock-based compensation for the three months ended March 31, 2025 and 2024:

The following table presents information related to stock-based compensation for the three and six months ended June 30, 2025 and 2024:

For The Three Months Ended

For The Six Months Ended

Shares issued for legal services

Shares issued to board members

Accrued issuable equity (common stock)

1 unchanged sentence

Amortization of restricted stock awards and units

During the three months ended March 31, 2025 and 2024, the Company recognized stock-based compensation expense of $ 1,637,368 and $ 845,930 respectively, of which $ 1,233,235 and $ 808,106 , respectively, are included within selling, general and administrative expenses, and $ 404,133 and $ 37,824 , respectively are included within research and development expenses in the condensed consolidated statements of operations.

During the three and six months ended June 30, 2025, the Company recognized stock-based compensation expense of $ 1,584,799 and $ 3,222,167 respectively, of which $ 1,162,910 and $ 2,396,145 , respectively, are included within selling, general and administrative expenses, and $ 421,889 and $ 826,022 , respectively are included within research and development expenses in the condensed consolidated statements of operations.

During the three and six months ended June 30, 2024, the Company recognized stock-based compensation expense of $ 909,026 and $ 1,754,955 , respectively, of which $ 870,837 and $ 1,678,942 , respectively, is included within selling, general and administrative expenses, and $ 38,189 and $ 76,013 , respectively is included within research and development expenses in the unaudited condensed consolidated statements of operations.

Stock Options

A summary of stock options activity during the three months ended March 31, 2025, is presented below:

A summary of stock options activity during the six months ended June 30, 2025, is presented below:

Outstanding, January 1, 2025

Outstanding, March 31, 2025

Exercisable, March 31, 2025

Outstanding, June 30, 2025

Exercisable, June 30, 2025

KULR TECHNOLOGY GROUP, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents information related to stock options as of March 31, 2025:

The following table presents information related to stock options as June 30, 2025:

Options Outstanding

5 unchanged sentences

$ 16.40 - $ 19.52

For the three months ended March 31, 2025 and 2024, the weighted average grant date fair value per share of options was $ 1.06 and $ 0.14 , respectively.

No options were granted during the three months ended June 30, 2025.

The weighted average grant date fair value per share of options granted during the six months ended June 30, 2025 was $ 8.47 .

The weighted average grant date fair value per share for options granted during the three and six months ended June 30, 2024 was $ 1.68 and $ 1.58 , respectively.

The Company has computed the fair value of stock options granted using the Black-Scholes option pricing model.

1 unchanged sentence

For The Three Months Ended

For The Six Months Ended

Risk free interest rate

4.75 % - 4.81

4.27 % - 4.81

Expected term (years)

7 unchanged sentences

Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

As of March 31, 2025, there was $ 141,372 of unrecognized stock-based compensation expense related to the above stock options, which will be recognized over the weighted average remaining vesting period of 2.4 years.

As of June 30, 2025, there was $ 97,223 of unrecognized stock-based compensation expense related to the above stock options, which will be recognized over the weighted average remaining vesting period of 2.52 years.

Restricted Stock Awards

The following table presents information related to restricted stock awards activity during the three months ended March 31, 2025:

The following table presents information related to restricted stock awards activity during the six months ended June 30, 2025:

Weighted Average

1 unchanged sentence

Non-vested RSAs, January 1, 2025

Non-vested RSAs, March 31, 2025

As of March 31, 2025, there was $ 108,646 of unrecognized stock-based compensation expense related to restricted stock awards that will be recognized over the weighted average remaining vesting period of 1.4 years.

Non-vested RSAs, June 30, 2025

As of June 30, 2025, there was $ 89,333 of unrecognized stock-based compensation expense related to restricted stock awards that will be recognized over the weighted average remaining vesting period of 1.21 years.

KULR TECHNOLOGY GROUP, INC.

2 unchanged sentences

Restricted Stock Units

The following table presents information related to restricted stock units (“RSUs”) activity during the three months ended March 31, 2025:

The following table presents information related to restricted stock units (“RSUs”) activity during the six months ended June 30 2025:

Weighted Average

1 unchanged sentence

Non-vested RSUs, January 1, 2025

Non-vested RSUs, March 31, 2025

Vested RSUs undelivered March 31, 2025

Non-vested RSUs, June 30, 2025

Vested RSUs undelivered June 30, 2025

To date, RSUs have only been granted to employees and consultants 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 March 31, 2025, there was $ 17,228,607 of unrecognized stock-based compensation expense related to restricted stock units that will be recognized over the weighted average remaining vesting period of 3.5 years.

As of June 30, 2025, there was $ 15,352,732 of unrecognized stock-based compensation expense related to restricted stock units that will be recognized over the weighted average remaining vesting period of 3.37 years.

NOTE 13 – COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

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

As of March 31, 2025, the Company was not involved in any ongoing litigation.

As of June 30, 2025, 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.

Contingent Loss

Equipment deposits at March 31, 2025 and December 31, 2024 primarily includes 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.

In an effort to come to a resolution on the matter, the Company has offered to reduce its original demand for full reimbursement by $ 568,777 , which has not yet been accepted by the counterparty.

During the three months ended March 31, 2025, the Company recorded a write-down of $ 568,777 related to the equipment deposits, which is included in selling, general and administrative expense on the accompany unaudited condensed consolidated statement of operations.

The carrying value of equipment deposits of $ 883,335 represents the net realizable value of the asset as of March 31, 2025.

At this time, an additional loss is not considered probable, but negotiations with the vendor are ongoing and we are unable to estimate the dollar amount of any additional potential loss, if any.

NOTE 14 – SEGMENT REPORTING

5 unchanged sentences

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

The CODM reviews financial information for mining digital assets separately

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

from the financial information related to the energy management platform for making decisions, allocating resources and assessing financial performance, as well as making strategic operational decisions and managing the organization.

The CODM reviews financial information for mining digital assets separately from the financial information related to the energy management platform for making decisions, allocating resources and assessing financial performance, as well as making strategic operational decisions and managing the organization.

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

The CODM does not consider gains and losses associated with digital assets when reviewing the results of operations, or allocating resources to the Company’s operating segments.

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

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

Beginning in 2025, the Company has broken out a Corporate & Other category, which is not considered an operating segment, and includes the changes in fair value of the Company’s digital asset holdings.

The following table presents the breakout of the operations of the energy management and digital asset mining segments for the three months ended March 31, 2025 and 2024:

KULR TECHNOLOGY GROUP, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the breakout of the operations of the energy management and digital asset mining segments for the three and six months ended June 30, 2025 and 2024:

For the Three Months Ended

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

Cost of revenue

2 unchanged sentences

Selling, general, and administrative

Impairment expense

Total Operating Expenses

7 unchanged sentences

Change in fair value of digital assets

Total Other Expense, net

( 9,241,342 )

( 5,890,528 )

Total Other Expense, net

( 5,890,528 )

For the Six Months Ended

June 30, 2025

June 30, 2024

Cost of revenue

Operating Expenses

Research and development

Selling, general, and administrative

Impairment expense

Total Operating Expenses

Segment Net Loss

( 18,820,430 )

Consolidated Net Loss

( 18,894,845 )

1 unchanged sentence

( 9,983,795 )

Other (Expense) Income

Other segment (expense) income (1)

Change in fair value of digital assets

Total Other Expense, net

( 18,209,154 )

( 10,664,509 )

March 31, 2025

( 10,899,404 )

June 30, 2025

December 31, 2024

4 unchanged sentences

Geographic Information

As of March 31, 2025, the Company’s long-lived assets are located in the U.S.

During the three months ended March 31, 2025, $ 1,039,423 of revenue was generated from foreign entities.

As of June 30, 2025, $ 107,090,334 of the Company’s long-lived assets are located in the U.S., and $ 3,325,045 are in a foreign nation.

KULR TECHNOLOGY GROUP, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

During the three and six months ended June 30, 2025, $ 1,117,959 and $ 2,166,368 of revenue was generated from foreign entities.

During the three and six months ended June 30, 2024, $ 288,888 and $ 417,449 of revenue was generated from foreign entities.

NOTE 15 - SUBSEQUENT EVENTS

Investment In Preferred Stock

On May 7, 2025, the Company purchased Series A7 Preferred Shares (the “GB Preferred Shares”) of German Bionic Systems GMBH for an aggregate purchase price of $ 3.3 million.

The GB Preferred Shares rank senior to all outstanding preferred as well as common shares of GB, and are convertible on a 1 :1 basis into common shares of GB at the Company’s option, subject to anti-dilution adjustments.

The Company also has the right to one voting advisory board seat and one non-voting observer seat on GB’s advisory board.

The GB Preferred Shares have a liquidation preference equal to the purchase price of the shares plus any accrued and unpaid dividends thereon.

Lease Amendment

On April 15, 2025, the Company amended its original lease dated January 27, 2024 (the “First Amendment”), for the property located at 555 Forge River Road, Webster, TX, to expand the rentable square footage by approximately 13,535 square feet (the “Expansion Premises”) for a total rentable space of 31,095 square feet.

The First Amendment is effective May 1, 2025 and shall be coterminous with the original lease and shall expire April 30, 2029.

Monthly payments for the Expansion Premises are $ 17,483 , which is comprised of base rent.

No cash payments are due for the first two months of the lease.

Loan Agreement

In early July 2025 the Company secured a $ 20 million credit facility with its digital assets custodian (the “Custodian”).

On July 8, 2025, the Company entered into an agreement (the “Loan Agreement”) pursuant to which the Company borrowed $ 8 million and segregated 232 bitcoin as collateral against this loan.

Of the $ 8 million borrowed, $ 6.7 million was used to purchase 61.4 Bitcoin.

As of August 12, 2025 the Company repaid $ 1.2 million and $ 42 thousand in principal and interest, respectively.

At the Market Offering

During the period from April 23, 2025 through May 15, 2025, the Company issued 13,945,241 shares of common stock for gross proceeds of $ 19,827,210 pursuant to the ATM.

During the period from July 1, 2025 through August 12, 2025, the Company issued 1.6 million shares of common stock for gross proceeds of $ 10.7 million pursuant to the ATM.

Digital Assets

During the period from April 1, 2025 through May 13, 2025, the Company purchased 42.37 Bitcoin, at an average cost of $ 94,403 per Bitcoin.

As of May 13, 2025, the Company has purchased and holds 709 Bitcoin with a current market value of approximately $ 74 million.

Bitcoin Mining

During the period from April 1, 2025 through May 13, 2025, the Company has earned 4.48 Bitcoin from mining services.

As of May 13, 2025, the company holds 7.45 Bitcoin from mining services with a current market value of approximately $ 777,000 .

During the period from July 1, 2025 through August 12, 2025, the Company purchased 90.0 Bitcoin, at an average cost of $ 108,889 per Bitcoin.

During the period from July 1, 2025 through August 12, 2025, the Company has earned 17.69 Bitcoin from mining services.

Digital Asset Mining Lease Agreement

On July 30, 2025, the Company entered into a one year lease agreement (the “Fourth Machine Lease Agreement”) with a digital asset mining services company to operate digital assets mining machines on KULR’s behalf, at a total lease cost of $ 2.6 million.

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-Q

Item 1. Financial Statements