What changed in KULR Technology Group, Inc.'s 2023 10-K compared to 2022?

Across the narrative sections we track, KULR Technology Group, Inc. (KULR) added 221 paragraphs, removed 195, and edited 100 between the 2022 and 2023 10-K filings. The biggest movers are Item 1. Business (+79/−75), Item 7. Management's Discussion & Analysis (+67/−70), Item 1A. Risk Factors (+70/−44).

Did KULR Technology Group, Inc. add new Risk Factors in the 2023 10-K?

Yes — Item 1A Risk Factors shows 70 new/edited paragraphs and 44 removed paragraphs versus the 2022 10-K.

What changed in KULR Technology Group, Inc.'s MD&A (Item 7) in 2023?

Item 7 Management's Discussion & Analysis shows 67 new/edited paragraphs and 70 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Where does this KULR 10-K diff come from?

The source filings are KULR Technology Group, Inc.'s official 2022 and 2023 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in KULR Technology Group, Inc.'s 10-K — 2022 vs 2023

Paragraph-level year-over-year comparison of KULR Technology Group, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+221 added−195 removedSource: 10-K (2024-04-12) vs 10-K (2023-03-28)

Top changes in KULR Technology Group, Inc.'s 2023 10-K

221 paragraphs added · 195 removed · 100 edited across 4 sections

Item 1. Business+79 / −75 · 36 edited
Item 7. Management's Discussion & Analysis+67 / −70 · 27 edited
Item 1A. Risk Factors+70 / −44 · 34 edited
Item 5. Market for Registrant's Common Equity+5 / −6 · 3 edited

Item 1. Business

Business — how the company describes what it does

36 edited+43 added−39 removed51 unchanged

2022 filing

2023 filing

Biggest changeKULR is partnering with leaders in the energy storage industry such as Volta Energy Products, the subsidiary of Buffalo NY based parent company, Viridi Parente, to increase deployments of safe, reliable, and durable energy storage safety systems to accelerate the broader energy transition. 5 Table of Contents Battery Recycling and Management KULR-Tech Safe Case provides a safe and cost-effective solution to commercially store and transport lithium batteries, which is increasing in frequency as supply chain challenges and ESG commitments necessitate battery recycling and end-of-lifecycle management.

Biggest changeKULR is partnering with leaders in the energy storage industry such as Volta Energy Products, the subsidiary of Buffalo NY based parent company, Viridi, to increase deployments of safe, reliable, and durable energy storage safety systems to accelerate the broader energy transition.

Our mission is advance and apply these technologies to make our world more sustainable by using less energy; using energy more efficiently; making energy consumption safer and cooler; using less materials to achieve these goals; and completing the circular economy through recycling.

Our mission is to advance and apply these technologies to make our world more sustainable by using less energy; using energy more efficiently; making energy consumption safer and cooler; using less materials to achieve these goals; and completing the circular economy through recycling.

KULR VIBE addresses one of the most challenging issues with advanced machinery today; excessive energy robbing vibrations that are destructive to both the machinery and in many cases the operator.

KULR VIBE addresses one the most challenging issues with advanced machinery today; excessive energy robbing vibrations that are destructive to both the machinery and in many cases the operator.

According to Fact.MR, an insights-driven global market intelligence company, the global vibration motor market is estimated at $6.5 billion in 2022 and is forecast to reach $24.1 billion by 2032, growing at a Compounded Annual Growth Rate (“CAGR”) of 14.1% during 2022-2032. The Future is Energy + AI We believe the future of KULR is Energy + AI.

According to Fact.MR, an insights-driven global market intelligence company, the global vibration motor market is estimated at $6.5 billion in 2023 and is forecast to reach $24.1 billion by 2032, growing at a Compounded Annual Growth Rate (“CAGR”) of 14.1% during 2023-2032. The Future is Energy + AI We believe the future of KULR is Energy + AI.

With KULR, automotive OEMs and battery manufacturers can increase the energy capacity of battery cells so less cells are needed, making for lighter vehicles that drive further before needing to be charged. Aerospace/Defense KULR’s thermal management solutions enable the defense and aerospace industries to safely deploy electronic technologies that support critical missions and protect national security.

With KULR, automotive OEMs and battery manufacturers can increase the energy capacity of battery cells so less cells are needed, making for lighter vehicles that drive further before needing to be charged. 5 Table of Contents Aerospace/Defense KULR’s thermal management solutions enable the defense and aerospace industries to safely deploy electronic technologies that support critical missions and protect national security.

It’s modular so that we can incorporate new capabilities and enhancements to the platform as the battery evolution accelerates in the coming years. This is another significant step to position KULR as a one-stop-shop total solutions provider of battery thermal energy and safety management. KULR-Tech Safe Case: This product was developed for the commercial transportation and storage of Li-ion batteries.

It’s modular so that we can incorporate new capabilities and enhancements to the platform as the battery evolution accelerates in the coming years. This is another significant step to position KULR as a one-stop-shop total solutions provider of battery thermal energy and safety management. KULR SafeCase: This product was developed for the commercial transportation and storage of Li-ion batteries.

CRUX Cathode : The CRUX Cathode is composed of a carbon fiber velvet, providing a means of generating powerful electron pulses by field emission from the tops of the carbon fibers. CRUX Cathodes can be customized for different applications 10 Table of Contents including the generation of microwaves, x-rays, and laser radiation.

CRUX Cathode : The CRUX Cathode is composed of a carbon fiber velvet, providing a means of generating powerful electron pulses by field emission from the tops of the carbon fibers. CRUX Cathodes can be customized for different applications including the generation of microwaves, x-rays, and laser radiation.

Prior to 2013, KTC’s technologies were used in numerous advanced space and industrial applications for NASA, Boeing, and Raytheon. A few notable achievements were the use of KTC’s technologies in the X-31 aircraft (battery heat sink), Mercury Messenger (battery heat sink), and X-51 Scramjet (heat exchanger).

Prior to 2013, KTC’s technologies were used in numerous 6 Table of Contents advanced space and industrial applications for NASA, Boeing, and Raytheon. A few notable achievements were the use of KTC’s technologies in the X-31 aircraft (battery heat sink), Mercury Messenger (battery heat sink), and X-51 Scramjet (heat exchanger).

We achieve this by putting together a modular architecture that is built on large data sets, performing an array of analytics, and then layering on top of it AI algorithms to provide predictive and preventative intelligence to our customers.

We achieve this by putting together a modular architecture that is built on large data 9 Table of Contents sets, performing an array of analytics, and then layering on top of it AI algorithms to provide predictive and preventative intelligence to our customers.

For nearly twenty years, the 4 Table of Contents primary application has been aviation. However, advances in measurement and computing technologies have allowed KULR VIBE to provide transformative and scalable solutions across transportation, renewable energy (wind farm), manufacturing, industrial, performance racing and autonomous aerial (drone) applications among others.

For nearly twenty years, the primary application has been aviation. However, advances in measurement and computing technologies have allowed KULR VIBE to provide transformative and scalable solutions across transportation, renewable energy (wind farm), manufacturing, industrial, performance racing and autonomous aerial (drone) applications among others.

We also seek to maintain our trade secrets and confidential information by implementing organizational nondisclosure policies and through the use of appropriate confidentiality agreements. As of December 31, 2022, we held eight U.S. patents and six non-provisional pending U.S. patent applications with expiration dates ranging from 2022 to 2035.

We also seek to maintain our trade secrets and confidential information by implementing organizational nondisclosure policies and through the use of appropriate confidentiality agreements. As of December 31, 2023, we held six U.S. patents and six non-provisional pending U.S. patent applications with expiration dates ranging from 2024 to 2035.

We use a combination of marketing approaches to reach prospects and customers, such as leveraging employee, representative, and strategic partner relationships, maintaining an informative website, attending industry conferences, and conducting market research. Recently, we expanded our direct sales and marketing teams, and we are excited to welcome Mr.

We also have trademarks that are used in the conduct of our business to distinguish genuine KULR products; KULR has been granted trademarks for Class 9 and Class 17 applications. 11 Table of Contents

We also have trademarks that are used in the conduct of our business to distinguish genuine KULR products; KULR has been granted trademarks for Class 9 and Class 17 applications.

The Company’s disruptive technologies strive to fulfill an addressable $24 billion thermal management systems market (estimated based on market data projections published by Converged Markets stating that the thermal management systems market size was projected to grow from $11.1 billion in 2017 to $24.8 billion by 2025.

This fully automated system is believed to be the only fully automated system capable of such performance. We have designed the system to be modular and have installed a minimum of 500K cell capacity annually capable of handling 18650 and 21700 cells. Volume processing will start in February 2023.

Employees As of December 31, 2022, we had 62 full time employees and 16 contractors. We believe that we maintain a good working relationship with our employees, and we have not experienced any significant labor disputes. In addition, KULR leverages outsource partners for IT management, Software Development, Battery Cell R&D, and Machine Automation.

Employees As of December 31, 2023, we had 57 full time employees and 3 contractors (after the Workforce Reduction discussed below). We believe that we maintain a good working relationship with our employees, and we have not experienced any significant labor disputes. In addition, KULR leverages outsource partners for IT management, Software Development, Battery Cell R&D, and Machine Automation.

KULR’s proprietary carbon fiber-based suite of thermal interface materials leverage advanced carbon fiber based heatsink technology that offers customers highly customizable, lightweight, and cost-effective solutions with industrial-level reliability due to their high thermal conductivity, lightweight, and low contact pressure.

Additionally, KULR has further increased its Cybersecurity initiatives by hiring FRSecure to act as a VCISO and provide continuous cyber threat training to our personnel. They also will audit our current level of threat sophistication and ensure any weak link is addressed immediately.

The result of this activity was an improvement of our NIST score of over 140 points. Additionally, KULR has further increased its Cybersecurity initiatives by hiring FRSecure to act as a VCISO and provide continuous cyber threat training to our personnel. They also will audit our current level of threat sophistication and ensure any weak link is addressed immediately.

For example, an explosion at Arizona Public Service’s McMicken battery plant injured four emergency responders in 2019 and overheating caused the 1.2 GWh Moss Landing storage facility in California to go off-line.

While rare, cell to cell thermal runaway in lithium-ion batteries can cause a fire or explosion. For example, an explosion at Arizona Public Service’s McMicken battery plant injured four emergency responders in 2019 and overheating caused the 1.2 GWh Moss Landing storage facility in California to go off-line.

KULR ONE and KULR ONE Design Solutions (K1DS) The KULR ONE family of battery packs represent a groundbreaking innovation that is driving the world's transition to a more sustainable electrification economy. These revolutionary designs offer a unique combination of cutting-edge features, including unparalleled safety, exceptional performance, intelligent functionality, modular construction, reliability, and customizability.

Internally, KULR has leveraged K1-DS to develop off the shelf KULR ONE architectures which represent a groundbreaking innovation that is driving the world’s transition to a more sustainable electrification economy. These revolutionary designs offer a unique combination of cutting-edge features, including unparalleled safety, exceptional performance, intelligent functionality, modular construction, reliability, and customizability.

As of December 31, 2022, we have twelve patents granted and assigned to KULR, an exclusive license to four third party patents, and ten pending nonprovisional and provisional patent applications. 9 Table of Contents Product and Services In addition to KULR ONE and KULR VIBE, here are some of the technologies and products we offer to customers: Lithium-Ion Battery Thermal Runaway Shield (“TRS”) : KULR has developed a thermal insulation technology aimed at passive resistance to thermal runaway propagation in Li-ion batteries in partnership with National Aeronautics and Space Administration Johnson Space Center (“NASA JSC”).

Product and Services In addition to KULR ONE and KULR VIBE, here are some of the technologies, products and services we offer to customers: Lithium-Ion Battery Thermal Runaway Shield (“TRS”) : KULR has developed a thermal insulation technology aimed at passive resistance to thermal runaway propagation in Li-ion batteries in partnership with National Aeronautics and Space Administration Johnson Space Center (“NASA JSC”).

As a sub-contractor for DOD programs, it is vital that KULR have state of the art IT systems and controls. We believe the best path based on the current scale of the company is to outsource this activity to a professional IT services organization. The result of this activity was an improvement of our NIST score of over 140 points.

KULR has engaged with Managed Solutions to enhance our IT infrastructure and improve all aspects of Cybersecurity. As a sub-contractor for DOD programs, it is vital that KULR have state-of-the-art IT systems and controls. We believe the best path based on the current scale of the company is to outsource this activity to a professional IT services organization.

The KULR ONE battery packs have been engineered to meet the exacting demands of the world's most demanding applications. They offer a comprehensive solution that addresses the critical need for safe and reliable energy storage in a wide range of industries, from aerospace and defense to electric vehicles and consumer electronics.

These architectures collectively offer a comprehensive solution that addresses the critical need for safe and reliable energy storage in a wide range of industries, from aerospace and defense to electric vehicles and consumer electronics. One of the key features of the KULR ONE family of battery packs is the modularity and consistency of the architectures.

This facility provides 4800 ft2 space in an industrial complex where KULR will focus on research and development related activities for lithium-ion battery systems. This space will provide room for additional personnel office space, an engineering design and prototyping sandbox, a 3D printing room, an electrical room for tab welding operations, and a small warehouse for storage.

The facility will support research and development related activities for lithium-ion battery systems. This expanded space will provide room for additional personnel office space, an engineering design and prototyping sandbox, a 3D printing room, an electrical room for tab welding operations, an expanded CNC capability, Laser welding, Volume TRS manufacturing and a large warehouse for storage.

Governmental Regulation and Environmental Compliance Certain substances we use in our manufacturing process are subject to federal governmental regulations (such as Environmental Protect Agency regulations). We believe we are in material compliance with all applicable governmental regulations, and that the cost and effect of compliance with environmental laws is not material.

We believe we are in material compliance with all applicable governmental regulations, and that the cost and effect of compliance with environmental laws is not material.

Accordingly, the financial statements included in this Annual Report reflect the assets, liabilities and historical results of KTC prior to the completion of the Share Exchange. 7 Table of Contents On August 30, 2018, KULR changed its name from “KT High-Tech Marketing, Inc.” to “KULR Technology Group, Inc.” by filing a certificate of amendment to its Certificate of Incorporation with the office of the Secretary of State of the State of Delaware.

On August 30, 2018, KULR changed its name from “KT High-Tech Marketing, Inc.” to “KULR Technology Group, Inc.” by filing a certificate of amendment to its Certificate of Incorporation with the office of the Secretary of State of the State of Delaware.

One of the key features of the KULR ONE family of battery packs is its modular design. This allows for greater flexibility as customers can easily adjust the size and configuration of the battery pack to suit their specific application requirements.

This allows for greater flexibility as customers can easily adjust the size and configuration of the battery pack to suit their specific application requirements while still also benefitting from testing previously conducted by the KULR team for their specific architecture.

This product is to target the following markets: ● Aerospace and defense systems, such as CubeSat batteries meeting JSC 20793 safety requirements by NASA ● Power tools and industrial equipment ● High-performance electric vehicles ● Electric vertical take-off and landing (“eVOTL”) ● Electric micro-mobility vehicles ● Residential and commercial energy storage systems Through our partnership with MoliCel, KULR has access to best-in-class Li-ion battery cells with high power and energy to build battery modules with the highest safety ratings.

This product is to target the following markets: ● Aerospace and defense systems, such as CubeSat batteries meeting JSC 20793 safety requirements by NASA ● Power tools and industrial equipment ● High-performance electric vehicles ● Electric vertical take-off and landing (“eVOTL”) ● Electric micro-mobility vehicles ● Residential and commercial energy storage systems Energy Storage Lithium-ion batteries are the dominant technology on the market for energy storage because of their cost and availability but do carry well documented safety risks.

This energy management platform consists of high-performance thermal management technologies for batteries and electronics, AI-powered battery management and vibration mitigation software solutions, and reusable energy storage modules.

Historically, KULR, focused on thermal energy management solutions for space and Department of Defense (DoD) applications, with recent expansion into energy storage and vibration reduction markets as the logical next step. Combined, this energy management platform consists of high-performance thermal management technologies for batteries and electronics, AI-powered battery management and vibration mitigation software solutions, and reusable energy storage modules.

The foregoing is a summary description of certain terms of the RSUs. Sales and Marketing Strategy The Company employs various channels to market and sell its products and solutions, including direct sales to customers, as well as sales through representatives and strategic partners.

The resolution was approved by shareholders holding in aggregate of 55.72% of outstanding shares as of February 9, 2024. Sales and Marketing Strategy The Company employs various channels to market and sell its products and solutions, including direct sales to customers, as well as sales through representatives and strategic partners.

They incorporate state-of-the-art thermal management technology to prevent overheating and ensure safe operation even in the most challenging environments. Overall, the KULR ONE family of battery packs is at the forefront of the global drive towards sustainable electrification.

In addition to offering exceptional performance and reliability, the KULR ONE battery packs are also designed with safety as a top priority. They incorporate state-of-the-art thermal management technology to prevent overheating and ensure safe operation even in the most challenging environments.

ISC does not rely on mechanically damaging the battery exterior to activate the short, as do most of the other evaluation methodologies. Instead, the ISC devices trigger true internal shorts. This makes it possible to accurately pinpoint and fix problems leading to malfunctions, an ability that we believe will give us a competitive advantage over other testing solutions.

ISC does not rely on mechanically damaging the battery exterior to activate the short, as do most of the other evaluation methodologies. Instead, the ISC devices trigger true internal shorts.

We are building our AI infrastructure on industry leading Nvidia and AMD semiconductor platforms, and they are hosted on a hybrid of private cloud and Microsoft Azure.

We are building our AI infrastructure on industry leading Nvidia and AMD semiconductor platforms, and they are hosted on a hybrid of private cloud and Microsoft Azure. As the world faces shortages of both 4 Table of Contents technical expertise to design batteries and raw materials to build batteries, KULR aims to address this need with KULR ONE AI (K1AI).

Once fully operational, activities will be completed to have the new location included in KULR’s existing ISO 9001 certification. KULR TRS (Thermal Runaway Shield) Manufacturing: KULR will be onboarding a fully automated TRS manufacturing system in our Texas facility in early Q323.

Once fully operational, necessary actions will be completed to have the new location included in KULR’s existing ISO 9001 certification. Our testing facility in San Leon, TX, will be consolidated into KULR Texas during the second quarter of 2024.

With its unparalleled combination of safety, performance, intelligence, modularity, reliability, and customizability, KULR ONE is positioned to revolutionize the way we think about energy storage and powering the world's most demanding applications. 3 Table of Contents K1DS offers a comprehensive approach to designing safe and reliable battery solutions for a wide range of applications.

With its unparalleled combination of safety, performance, intelligence, modularity, reliability, and customizability, KULR ONE is positioned to revolutionize the way we think about energy storage and powering the world’s most demanding applications. KULR VIBE Solution During 2022, we acquired intellectual property from Vibetech International, LLC (“Vibetech”), which allows KULR to expand itself as a vertically integrated energy management company focused on sustainable energy solutions.

ITEM 1. BUSINESS Overview and Market Opportunities KULR Technology Group, Inc., through our wholly owned subsidiary KULR Technology Corporation, develops and commercializes an energy management platform to accelerate the global transition to a sustainable electrification economy.

ITEM 1. BUSINESS Overview and Market Opportunities KULR Technology Group, Inc., through our wholly owned subsidiary KULR Technology Corporation, maintains expertise in three key technology domain areas: (1) energy storage systems and recycling, (2) thermal management solutions, and (3) rotary system vibration reduction.

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The Company’s integrated design approach offers comprehensive solutions in thermal interface materials, lightweight heat exchangers, and protection against lithium-ion battery thermal runaway propagation. Its high-performance solutions can be designed to fit demanding configurations and applications.

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Additionally, the domain driving the growth of KULR’s battery design and production capabilities is the private space exploration market sector, which requires highly custom, safe, and reliable energy storage systems, and is expected to reach $1,110.8B by 2030 according to CoherentMI.

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The intelligent functionality of the KULR ONE packs also allows for real-time monitoring and optimization of battery performance, ensuring optimal efficiency and longevity. In addition to offering exceptional performance and reliability, the KULR ONE battery packs are also designed with safety as a top priority.

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E-aviation growth and continued reliance on traditional aviation vehicles drives an aircraft maintenance market size that is expected to reach $127.2B by 2032, an increase from $82.7B in 2023, according to Precedence Research. KULR VIBE, the Company’s rotary system vibration reduction software, positions KULR to access this market area.

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Our services start with the quality and reliable cell supply from North American sources to ensure that our customers receive high-performing and long-lasting batteries. To ensure the performance and safety of our batteries, we have various cell testing capabilities, including cell screening to NASA 37A.

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KULR ONE and KULR ONE Design Solutions (K1DS) KULR’s primary technical domain that is shaping the future landscape of the Company is safe, high-performance energy storage solutions. To effectively support and provide energy storage solutions, a holistic approach is necessary.

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We also conduct extensive cell testing to ensure that our batteries meet the highest standards for safety and reliability. Our Multiphysics modeling capabilities, which include the use of GTC Suite software, enable us to optimize battery performance and minimize the risk of failure. Our battery design services focus on designing custom solutions that meet our customers' specific needs.

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Batteries are an interdisciplinary technology which require: (1) Multi-disciplinary expertise to address related electrical, thermal, mechanical, and electrochemical requirements, (2) Cell supply access to top-tier OEMs, (3) Cell level testing capabilities to characterize performance, quality, and safety behavior at the cell level, (4) Expertise in early concept design, modeling, and analysis, (5) Rapid prototyping and production capabilities, (6) Pack and system level thermal, mechanical, electrical, and abuse testing capabilities, (7) Expertise in battery management, controls, and monitoring, 2 Table of Contents (8) Ability to support beginning of life to end of life requirements for transport and recycling. To address the need for a holistic approach, KULR developed a battery product and service portfolio over the course of the last decade that provides products, safety testing services, modeling and analysis services, electrical testing services, transport and recycling packaging and logistics, and battery design solutions.

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We conduct rigorous testing of those battery packs to ensure reliability and safety, including systems-level testing that helps customers understand the safety and reliability of their applications. Additionally, we provide real-time monitoring of their batteries to ensure battery health and safety in the field, minimizing the risk of failure and prolonging battery life.

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Collectively, this is referred to as KULR ONE Design Solutions (K1-DS), which is actively leveraged by the Company to facilitate engagement with customers no matter the battery life cycle phase they are in.

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In summary, KULR ONE design services offer a comprehensive approach to battery design and testing, ensuring that our customers receive high-performing and safe battery solutions that meet their unique needs.

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Currently, the primary aspects of K1-DS utilized by industry are product sales of trigger cells and TRS, the safety testing methodologies, and the utilization of the K1-DS platform as a whole to develop customized energy storage solutions.

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We strive to be the go-to provider for reliable and innovative battery solutions that accelerate the global transition to a sustainable electrification economy. KULR VIBE Solution During 2022, we acquired intellectual property from Vibetech International, LLC (“Vibetech”), which allows KULR to expand itself as a vertically integrated energy management company focused on sustainable energy solutions.

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The KULR ONE battery packs have been engineered to meet the exacting demands of the 3 Table of Contents world’s most demanding applications.

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As the world faces shortages in supply of raw materials to produce enough Li-ion batteries to power everything from EV’s to smartphones, KULR is developing a modular battery storage architecture that can be used across multiple applications with real-time monitoring by AI-powered CellCheck.

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As of now, the Company is focused on the KULR ONE Space for space exploration, the KULR ONE Guardian for military applications, and the KULR ONE Max for rack-style grid energy storage systems, also referred to as Battery Energy Storage Systems (BESS).

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As part of the strategic relationship, KULR has access to over 700MWh of battery energy capacity to further accelerate its production and supply chain localization initiatives within North America. Securing this MoliCel battery cell supply accelerates our ability to provide total solutions to high value customer applications with revenue potential that could exceed $350 million annually in five years.

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Overall, the KULR ONE family of battery packs, depicted with the following picture, is at the forefront of the global drive towards sustainable electrification.

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Energy Storage Lithium-ion batteries are the dominant technology on the market for energy storage because of their cost and availability but do carry well documented safety risks. While rare, cell to cell thermal runaway in lithium-ion batteries can cause a fire or explosion.

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The Company is collecting large quantities of performance and safety test datasets for the most highly used commercial lithium-ion cells and combining that data with AI techniques to drive battery design and reduce engineering touch time to market.

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New Battery Cell Development KULR started a research and development initiative using carbon fiber structures to produce battery cells with higher energy density and faster charging capabilities. Fast-charging will be the killer app for next-gen batteries. Right now, overheating is a key limiting factor in advancing fast-charging battery technology.

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Battery Recycling and Management KULR-Tech Safe Case provides a safe and cost-effective solution to commercially store and transport lithium batteries, which is increasing in frequency as supply chain challenges and ESG commitments necessitate battery recycling and end-of-lifecycle management.

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There may be a way to solve that problem by using carbon fiber inside the battery cell to reduce thermal and electrical resistance which can dissipate heat more effectively. The R&D initiatives include thicker cathode with higher loading factor, silicon anode, lithium metal anode and solid-state electrolyte development.

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KULR California, located at 4863 Shawline St, San Diego, CA., supports our fully automated battery cell screening line and remains the only U.S. automated facility capable of executing the test requirements of NASA Work Instruction 37(WI37). WI37 is the testing standard required for battery cells used on all manned missions for NASA.

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This is a long-term strategic development for KULR. 6 Table of Contents Commercial Partnerships KULR has a long-term technology and developmental partnership with Andretti Technologies (ATEC), the advanced technology arm of racing team Andretti Autosport.

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Additionally, the facility produces our patented Thermal Runaway Shields, Fiber Thermal Interface materials, Cathodes, Phase Change Materials, and heatsinks. KULR, on February 1 st , 2024, relocated the KULR Texas facility previously located at 1692 N. Texas Avenue, Webster, TX to a significantly larger facility located at 555 Forge River Road, Suite 100, Webster, TX.

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The alliance will establish a thermal management testing and design platform for high-performance battery solutions with the highest safety ratings that will be adapted to the technical requirements of Andretti’s racing enterprise with the goal of transferring solutions to mass-market electric vehicle (EV) applications.

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The previous location provided 4800 ft 2 , whereas the new facility provides 17,560 ft 2 supporting the growth of our customer base and engineering team. The facility is conveniently located 2.1 miles from NASA Johnson Space Center and is surrounded by a large number of KULR existing and targeted customers.

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New Facility and IT-Systems KULR relocated in October 2021 to a new facility located at 4863 Shawline St, San Diego, CA. The facility is 3 times larger than the previous facility with adequate room to support our new automated battery cell testing capability that will launch in Q123 as well as personnel growth.

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This consolidation allows for maximum efficiency of operations of our engineering talent while creating a showcase of advanced Fractional Thermal Runaway Calorimetry (FTRC), Bomb Calorimetry, Thermal Modeling, Destructive Battery pack testing, and SafeCase verification testing. This new location provides for greater customer engagements both on site and via live feed internationally.

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Additionally, we installed independently enclosed areas to support the machine shop, testing lab, battery lab, and Fiber Thermal Interface Material (“FTI”) manufacturing lab. We have implemented a 5S standard for the entire facility and received ISO 9001 certification in July 2022. KULR opened a new facility in January 2023 at 1692 N. Texas Avenue, Webster, TX.

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See Item 1C - Cybersecurity for additional information.

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The intent of this system is to further onshore the manufacturing of TRS thereby reducing supply chain risks, costs, and improve LT performance for our customers. This is another example of KULR nearshoring/onshoring our manufacturing of products to gain further direct control of manufacturing.

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Recent Developments Revenues The Company reported record annual revenues of $9.8 million for 2023, as compared to its previous record revenues of $4.0 million for 2022. Liability Repayment Subsequent to December 31, 2023, the Company repaid in full all remaining principal and interest owed in connection with the prepaid advance liability.

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By developing automated systems, we are capable of being very competitive, and in certain cases, more competitive than offshore manufacturing we considering total cost of ownership. KULR has engaged with Managed Solutions to enhance our IT infrastructure and improve all aspects of Cybersecurity.

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Equity Financing On September 15, 2023, the Company completed a public offering of 8,214,285 shares of common stock, priced at $0.35 per share, with gross proceeds of $2,875,000 less issuance costs of $588,230, for net proceeds of $2,286,770.

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On December 31, 2018, KULR filed a certificate of amendment with the Secretary of State of the State of Delaware, to increase the number of authorized shares of its common stock from 100,000,000 to 500,000,000. As a result, the aggregate number of the Company’s authorized capital stock became 520,000,000 shares.

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Recent Developments COVID-19 In December 2019, an outbreak of a novel strain of coronavirus, COVID-19, was identified in Wuhan, China. Since then, COVID-19 has spread across the globe, including the U.S., and other countries in which the Company or its affiliates operate, and was recognized as a pandemic by the World Health Organization.

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Compliance with NYSE American Continued Listing Requirements On December 20, 2023, the Company received a notice of noncompliance (the “Stockholders’ Equity Notice”) from NYSE Regulation (“NYSE”) stating that it is not in compliance with Section 1003(a)(i) in the NYSE American Company Guide (the “Company Guide”) since the Company reported stockholders’ equity of $1,200,172 at September 30, 2023, and losses from continuing operations and/or net losses in its five most recent fiscal years.

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The COVID-19 pandemic resulted in a sharp contraction in many areas of the global economy and increased volatility and uncertainty in the capital markets.

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Section 1003(a)(iii) of the Company Guide requires a listed company to have stockholders’ equity of $6 million or more if the listed company has reported losses from continuing operations and/or net losses in its five most recent fiscal years.

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In response to the pandemic, the governments of many countries, provinces, states, municipalities, and other geographic regions took preventative or protective actions, including closures of certain businesses, mandatory quarantines, limits on individuals’ time outside of their homes, travel restrictions and social distancing or other preventative measures.

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As required by the Stockholders’ Equity Notice, on January 19, 2024, the Company submitted a plan (the “Plan”) to NYSE advising of actions it has taken or will take to regain compliance with the continued listing standards by June 20, 2025. NYSE staff will review the Company periodically for compliance with the initiatives outlined in the Plan.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

34 edited+36 added−10 removed104 unchanged

2022 filing

2023 filing

Biggest changeOur articles of incorporation allow for our board to create a new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our Common Stock. Our Board of Directors has the authority to fix and determine the relative rights and preferences of preferred stock.

Biggest changeSo long as he continues to own a significant amount of our equity, he will continue to be able to strongly influence or effectively control our decisions. 20 Table of Contents Our articles of incorporation allow for our board to create a new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our Common Stock.

The standards that must be met for management to assess the internal controls over financial reporting as effective are evolving and complex, and require significant documentation, testing, and possible remediation to meet the detailed standards. We expect to incur significant expenses and to devote resources to Section 404 compliance on an ongoing basis.

The standards that must be met for management to assess the internal controls over financial reporting as effective are complex, and require significant documentation, testing, and possible remediation to meet the detailed standards. We expect to incur significant expenses and to devote resources to Section 404 compliance on an ongoing basis.

The impact of geopolitical tension, such as a deterioration in the bilateral relationship between the US and China or an escalation in conflict between Russia and Ukraine, including any resulting sanctions, export controls or other restrictive actions that may be imposed by the US and/or other countries against governmental or other entities in, for example, Russia, also could lead to disruption, instability and volatility in global trade patterns, which may in turn impact our ability to source necessary reagents, raw materials and other inputs for our research and development operations.

The impact of geopolitical tension, such as a deterioration in the bilateral relationship between the US and China or an escalation in conflict between Russia and Ukraine and the Israel-Hamas war, including any resulting sanctions, export controls or other restrictive actions that may be imposed by the US and/or other countries against governmental or other entities in, for example, Russia, also could lead to disruption, instability and volatility in global trade patterns, which may in turn impact our ability to source necessary reagents, raw materials and other inputs for our research and development operations.

If this were to occur, we could face significant material adverse consequences, including: ● a limited availability of market quotations for our securities; ● reduced liquidity for our securities; ● a determination that our common stock are a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; ● a limited amount of news and analyst coverage; and ● a decreased ability to issue additional securities or obtain additional financing in the future.

If this were to occur, we could face significant material adverse consequences, including: ● a limited availability of market quotations for our securities; ● reduced liquidity for our securities; 18 Table of Contents ● a determination that our common stock are a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; ● a limited amount of news and analyst coverage; and ● a decreased ability to issue additional securities or obtain additional financing in the future.

Since inception, we have not demonstrated the capability to produce sufficient materials to generate the ongoing revenues necessary to sustain our operations in the long-term. Nor have we demonstrated the ability to generate sufficient sales to sustain the business. There can be no assurance that the Company will ever produce a profit.

Since inception, we have demonstrated limited capability to produce sufficient materials to generate the ongoing revenues necessary to sustain our operations in the long-term. Nor have we demonstrated the ability to generate sufficient sales to sustain the business. There can be no assurance that the Company will ever produce a profit.

We cannot assure you that no such events will occur. If such an event occurs, it could have a material adverse effect on us. 15 Table of Contents We may become subject to liabilities related to risks inherent in working with hazardous materials. Our development and manufacturing processes involve the controlled use of hazardous materials, such as acetone.

We cannot assure you that no such events will occur. If such an event occurs, it could have a material adverse effect on us. We may become subject to liabilities related to risks inherent in working with hazardous materials. Our development and manufacturing processes involve the controlled use of hazardous materials, such as acetone.

Any delays, interruption or increased costs or manufacture of our products could have an adverse effect on our ability to meet customer demand for our products and result in lower net sales and operating income both in the 12 Table of Contents short and long term, which could in turn negatively impact our business, financial condition and the price of our shares.

Any delays, interruption or increased costs or manufacture of our products could have an adverse effect on our ability to meet customer demand for our products and result in lower net sales and operating income both in the short and long term, which could in turn negatively impact our business, financial condition and the price of our shares.

It is well known that laboratory data is not always representative of commercial applications. 13 Table of Contents Likewise, we operate in a market that is subject to rapid technological change. Part of our business strategy is to monitor such change and take steps to remain technologically current, but there is no assurance that such strategy will be successful.

It is well known that laboratory data is not always representative of commercial applications. Likewise, we operate in a market that is subject to rapid technological change. Part of our business strategy is to monitor such change and take steps to remain technologically current, but there is no assurance that such strategy will be successful.

If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. 18 Table of Contents Shares eligible for future sale may adversely affect the market.

If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Shares eligible for future sale may adversely affect the market.

In addition, although attestation requirements by our independent registered public accounting firm are not presently applicable to us, we could become subject to these requirements in the future and we may encounter problems or delays in completing the implementation of any resulting changes to internal controls over financial 17 Table of Contents reporting.

In addition, there is a risk that we would have to pay the other party damages for having violated the other party’s patents (which damages may be increased, as well as attorneys’ fees ordered paid, if infringement is found to be willful), or that we will be required to obtain a license from the other party in order to continue to commercialize the affected products, or to design our products in a manner that does not infringe a valid patent.

In addition, 14 Table of Contents there is a risk that we would have to pay the other party damages for having violated the other party’s patents (which damages may be increased, as well as attorneys’ fees ordered paid, if infringement is found to be willful), or that we will be required to obtain a license from the other party in order to continue to commercialize the affected products, or to design our products in a manner that does not infringe a valid patent.

The declaration, payment and amount of any future dividends will be made at the discretion of our board of directors, 19 Table of Contents and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors our board of directors may consider relevant.

The declaration, payment and amount of any future dividends will be made at the discretion of our board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors our board of directors may consider relevant.

This means that investors are subject to all the risks incident to the creation and development of multiple new products and their associated manufacturing processes, and each investor should be prepared to withstand a complete loss of their investment.

This means that investors are subject to all the risks incident to 11 Table of Contents the creation and development of multiple new products and their associated manufacturing processes, and each investor should be prepared to withstand a complete loss of their investment.

A failure of a depository institution to return deposits could impact access to our invested cash or cash equivalents and could adversely impact our operating liquidity and financial performance. 16 Table of Contents Future adverse regulations could affect the viability of the business.

A failure of a depository institution to return deposits could impact access to our invested cash or cash equivalents and could adversely impact our operating liquidity and financial performance. Future adverse regulations could affect the viability of the business.

We have begun building up the scale of our automated battery cell facilities in our new leased facility in San Diego but there is no guarantee that we will be able to economically scale-up our production processes to the levels required.

We have begun building up the scale of our automated battery cell facilities in our leased facility in San Diego but there is no guarantee that we will be able to economically scale-up our production 12 Table of Contents processes to the levels required.

Global economic uncertainty and financial market volatility caused by political instability, changes in international trade relationships and conflicts, such as the conflict between Russia and Ukraine, could make it more difficult for us to access financing and could adversely affect our business and operations.

Global economic uncertainty and financial market volatility caused by political instability, changes in international trade relationships and conflicts, such as the war in Ukraine and the Israel-Hamas war, could make it more difficult for us to access financing and could adversely affect our business and operations.

There can be no assurance that the Company’s strategy of offering better thermal management solutions based on the Company’s proprietary carbon fiber-based products will be able to compete with other companies, many of whom will have significantly greater resources, on a continuing basis. In the event that we cannot compete successfully, the Company may be forced to cease operations.

Our Board of Directors have the authority to issue up to 20,000,000 shares of our preferred stock terms of which may be determined by the Board without further stockholder approval.

Our Board of Directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our Board of Directors have the authority to issue up to 20,000,000 shares of our preferred stock terms of which may be determined by the Board without further stockholder approval.

We could be adversely affected by our exposure to customer concentration risk. We are subject to customer concentration risk as a result of our reliance on a relatively small number of customers for a significant portion of our revenues. During 2022, we had 3 customers whose purchases accounted for 87% of total revenues.

We could be adversely affected by our exposure to customer concentration risk. We are subject to customer concentration risk as a result of our reliance on a relatively small number of customers for a significant portion of our revenues. During 2023, we had 2 customers whose purchases, in the aggregate, accounted for 61% of total revenue.

Our internal control over financial reporting may still or could in the future have weaknesses and conditions that could require correction or remediation, the disclosure of which and continued existence of which may have an adverse impact on the price of our common stock. We are required to establish and maintain appropriate internal controls over financial reporting.

If we fail to maintain effective internal controls over financial reporting, the price of our common stock may be adversely affected. Our internal control over financial reporting could in the future have weaknesses and conditions that could require correction or remediation, the disclosure of which may have an adverse impact on the price of our common stock.

Failure to establish those controls, or any failure of those controls once established, could adversely affect our public disclosures regarding our business, prospects, financial condition or results of operations.

We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely affect our public disclosures regarding our business, prospects, financial condition or results of operations.

There is no assurance that we will pay any dividends in the future, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend. Voting power of our shareholders is highly concentrated by insiders. Our officers, directors and affiliates currently beneficially own approximately 34.2% of our outstanding Common Stock eligible to vote.

We believe that our current cash balance plus capital available under the Company’s Standby Equity Purchase Agreement (the “SEPA”) will be adequate to fund our operations over the next; however we may require additional funds for our anticipated operations and if we are not successful in securing additional financing, we may be required to delay significantly, reduce the scope of or eliminate one or more of our research or development programs, downsize our general and administrative infrastructure, or seek alternative measures to avoid insolvency, including arrangements with collaborative partners or others that may require us to relinquish rights to certain of our technologies, product candidates or products.

We will need to raise substantial additional capital to fund our operations and if we are not successful in securing additional financing on acceptable terms, we may be required to delay significantly, reduce the scope of or eliminate one or more of our research or development programs, downsize our general and administrative infrastructure, or seek alternative measures to avoid insolvency, including arrangements with collaborative partners or others that may require us to relinquish rights to certain of our technologies, product candidates or products.

We currently maintain a policy for director and officer liability insurance, also known as “D&O Insurance.” However, the maximum coverage under our D&O Insurance policy may not be sufficient to cover all such liability exposure and, as a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers. 16 Table of Contents Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses and will divert time and attention away from revenue generating activities.

This could have an adverse impact on our ability to make and sell products or use such processes and could potentially result in costly litigation in which we might not prevail. 14 Table of Contents We could face intellectual property infringement claims that could result in significant legal costs and damages and impede our ability to produce key products, which could have a material adverse effect on our business, financial condition and results of operations.

We could face intellectual property infringement claims that could result in significant legal costs and damages and impede our ability to produce key products, which could have a material adverse effect on our business, financial condition and results of operations.

In addition, there can be no assurance that we will not be required to incur significant costs to comply with environmental laws and regulations in the future, or that our operations, business or assets will not be materially adversely affected by current or future environmental laws or regulations. 15 Table of Contents Significant disruptions of information technology systems, breaches of data security and other incidents could materially adversely affect our business, results of operations and financial condition.

Even if we successfully develop and market our products, we may not generate sufficient or sustainable revenue to achieve or sustain profitability, which could cause us to cease operations.

Even if we successfully develop and market our products, we may not generate sufficient or sustainable revenue to achieve or sustain profitability, which could cause us to cease operations. KULR primarily sells engineered materials or products made with these materials to other companies for incorporation into their products.

Risks Relating to Our Common Stock An active, liquid and orderly market for our common stock may not develop or be sustained, and you may not be able to sell your common stock without adversely affecting the price, or at all depending on volume offered for sale at any time.

In addition, if there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable terms, or at all. 17 Table of Contents Risks Relating to Our Common Stock An active, liquid and orderly market for our common stock may not develop or be sustained, and you may not be able to sell your common stock without adversely affecting the price, or at all depending on volume offered for sale at any time.

Significant disruptions of information technology systems, breaches of data security and other incidents could materially adversely affect our business, results of operations and financial condition. We maintain information in digital and other forms that is necessary to conduct our business, and we are increasingly dependent on information technology systems and infrastructure to operate our business.

See Item 1C – Cybersecurity for a discussion of our information technology systems. We maintain information in digital and other forms that is necessary to conduct our business, and we are increasingly dependent on information technology systems and infrastructure to operate our business.

William Walker, our Chief Technology Officer, Keith Cochran, our President and Chief Operating Officer, and Michael Carpenter, our Vice President of Engineering. If the services of any of these individuals should become unavailable, the Company’s business operations might be adversely affected.

If the services of any of these individuals should become unavailable, the Company’s business operations might be adversely affected.

Our major cost components include items such as production materials and electricity, which items are normally readily available industrial commodities. During our history as a business, we have not seen any material impact (as defined by GAAP) on our cost structure from fluctuations in raw material or energy costs, but this could change in the future.

During our history as a business, we have not seen any material impact on our cost structure from fluctuations in raw material or energy costs, but this could change in the future. Our results of operations could deteriorate if our manufacturing operations were substantially disrupted for an extended period.

Any increase in the prices of our raw materials or energy might affect the overall cost of our products. If we are not able to raise our prices to pass on increased costs to our customers, we would be unable to maintain our existing profit margins.

If we are not able to raise our prices to pass on increased costs to our customers, we would be unable to maintain our existing profit margins. Our major cost components include items such as production materials and electricity, which items are normally readily available industrial commodities.

Such concentrated control of the Company may adversely affect the value of our Common Stock. If you acquire our Common Stock, you may have no effective voice in our management. Sales by our insiders or affiliates, along with any other market transactions, could affect the value of our Common Stock.

Our officers, directors and affiliates currently beneficially own approximately 13.7% of our outstanding Common Stock eligible to vote and 39.2% of the voting power of our voting stock. Such concentrated control of the Company may adversely affect the value of our Common Stock. If you acquire our Common Stock, you may have no effective voice in our management.

Because of our small size and limited operating history, we are dependent on key employees. The Company’s operations and development are dependent upon the experience and knowledge of Michael Mo, our Chief Executive Officer, Simon Westbrook our Chief Financial Officer, Dr.

The Company’s operations and development are dependent upon the experience and knowledge of Michael Mo, our Chief Executive Officer, Shawn Canter, our Chief Financial Officer, Dr. William Walker, our Chief Technology Officer, Keith Cochran, our President and Chief Operating Officer, Ted Krupp, our Vice President of Sales, and Michael Carpenter, our Vice President of Engineering.

Removed

We have no sustainable base of products approved for commercial use by our customers, have never generated significant product revenues and may never achieve sufficient revenues for profitable operations, which could cause us to cease operations. KULR primarily sells bulk materials or products made with these materials to other companies for incorporation into their products.

Added

The conflict between Russia and Ukraine and the war between Israel and Hamas have resulted in worldwide geopolitical and macroeconomic uncertainty, and we cannot predict how the conflicts will evolve or the timing thereof.

Removed

Our results of operations could deteriorate if our manufacturing operations were substantially disrupted for an extended period.

Added

If these conflicts continue for a significant time or further expand to other countries and depending on the ultimate outcomes of these conflicts, which remain uncertain, they could have additional adverse effects on macroeconomic conditions, including but not limited to, increased costs, constraints on the availability of commodities, supply chain disruptions and decreased business spending.

Removed

In December 2021, we were the subject of a phishing scheme involving a fraudulent email and wire instructions, resulting in the loss of approximately $138,000 in corporate funds. We took immediate action to contain and eradicate the security breach, including the implementation of control enhancements to prevent a similar situation from occurring again.

Added

Furthermore, continuation of the conflicts could give rise to disruptions to our or our business partners’ global technology infrastructure, including through cyber-attack or cyber-intrusion; adverse changes in international trade policies and relations; regulatory enforcement; our ability to implement and execute our business strategy; terrorist activities; our exposure to foreign currency fluctuations; and constraints, volatility, or disruption in the capital markets, any of which could have a material adverse effect on our business, results of operations, cash flows and financial condition.

Removed

We believe this was an isolated event and do not believe our technology systems have been compromised.

Added

In the event that we cannot compete successfully, the Company may be forced to cease operations. 13 Table of Contents Because of our small size and limited operating history, we are dependent on key employees.

Removed

While we have not experienced any material losses relating to cyber-attacks or other information security breaches such as the one that occurred in December 2021, there can be no assurance (i) that we will ever recover the funds lost, or (ii) that we will not suffer additional losses in the future.

Added

This could have an adverse impact on our ability to make and sell products or use such processes and could potentially result in costly litigation in which we might not prevail.

Removed

Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses and will divert time and attention away from revenue generating activities.

Added

Recently, cost inflation stemming from the COVID-19 pandemic, the Ukraine/Russia crisis, the Israel/Hamas crisis, and other macroeconomic factors has caused prices to increase across various sectors of the economy. Any increase in the prices of our raw materials or energy might affect the overall cost of our products.

Removed

If we fail to maintain effective internal controls over financial reporting, the price of our common stock may be adversely affected. Our management identified weaknesses in our internal controls, as described in Item 9A here within.

Added

We may be unable to continue as a going concern. Management has concluded, and the report of our independent registered public accounting firm includes an explanatory paragraph stating, that there is substantial doubt about our ability to continue as a going concern for a period ending 12 months after the date of this filing.

Removed

The outbreak of Coronavirus has led to restrictions on travel and public meetings and has disrupted markets and shipping schedules. The COVID-19 virus pandemic has created global restrictions on travel and meetings, temporary and permanent closures of businesses and business activities, unemployment, loss of customers and suppliers, and reluctance of business management to make critical commitments and, instead, conserve cash.

Added

The reaction of investors to the inclusion of a going concern statement by management and our auditors and our potential inability to continue as a going concern may materially adversely affect the price of our common shares and our ability to raise new capital or enter into partnerships to raise additional capital.

Removed

For example, we have experienced delays in customer acceptance of delivered products and shipment delays from our suppliers or customers’ suppliers, which delays have disrupted ours and our customers’ product development and testing processes.

Added

If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our financial statements, and it is likely that investors will lose all or part of their investment.

Removed

At this stage, the outlook has improved as federal, state and local economies have reopened and returned to pre-pandemic levels, there is no assurance the future impact of COVID-19 will not have a material adverse effect on our operations, financial condition and prospects during 2023 and beyond.

Added

Further, the perception that we may be unable to continue as a going concern may impede our ability to pursue strategic opportunities or operate our business due to concerns regarding our ability to fulfill our contractual obligations.

Added

On December 20, 2023, we received a letter (the “Letter”) from the staff of NYSE American stating that the Company’s stockholders’ equity as reported in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 was not in compliance with the NYSE American’s continued listing standards under Section 1003(a)(iii) of the NYSE American Company Guide (the “Company Guide”).

Added

The Company submitted a plan to the NYSE American on January 19, 2024 advising of actions it has taken or will take to regain compliance with the continued listing standards by June 20, 2025. On March 5, 2024, we received a notification from the NYSE American that the Company’s plan to regain compliance was accepted.

Added

The NYSE American has granted the Company a plan period through June 20, 2025 to regain compliance with Section 1003(a)(iii). If the Company is not in compliance with the continued listing standards by that date or if the Company does not make progress consistent with the plan during the plan period, the NYSE American may commence delisting procedures.

Added

On February 12, 2024, we received a letter from the staff of NYSE American LLC (the “Exchange”) stating that the Company’s securities’ performance of trading price is below compliance criteria pursuant to Section 1003(f)(v) of the NYSE American Company Guide, which the Exchange determined to be a 30-trading day average of less than $0.20 per share.

Added

The Company’s continued listing is predicated on it demonstrating sustained price improvement within a reasonable period of time, which the Exchange has determined to be no later than August 12, 2024, or otherwise effecting a reverse stock split of its common stock.

Added

Our Common Stock will continue to be listed on the NYSE American while we attempt to regain compliance with the listing standard noted, subject to our compliance with other continued listing requirements.

Added

Our Common Stock will continue to trade under the symbol “KULR,” but will have an added designation of “.BC” to indicate that we are not in compliance with the NYSE American’s listing standards.

Added

The NYSE American notification does not affect our business operations or our SEC reporting requirements and does not conflict with or cause an event of default under any of our material agreements.

Added

We may require additional capital to support business growth, and if capital is not available to us or is available only by diluting existing stockholders, our business, operating results and financial condition may suffer.

Added

We may require additional capital to continue to develop and grow our business and operations, including responding to business opportunities, challenges or unforeseen circumstances, and we cannot be certain that additional financing will be available, which could limit our ability to grow and jeopardize our ability to continue our business operations.

Added

We fund our capital needs from available working capital; however, the timing of available working capital and capital funding needs may not always coincide, and the levels of working capital may not fully cover capital funding requirements. From time to time, we may need to supplement our working capital from operations with proceeds from financing activities.

Added

For instance, on May 13, 2022, we entered into a standby equity purchase agreement (the “SEPA”) with YA II PN, LTD., a Cayman Islands exempt limited partnership (“Yorkville”), whereby we have the right, but not the obligation, to sell to Yorkville up to an aggregate of $50,000,000 of our shares of common stock, par value $0.0001 per 19 Table of Contents share, at our request, subject to terms and conditions specified in the SEPA.

Added

We may continue to opportunistically seek access to additional funds by utilizing the SEPA. There can be no assurance that we will be able to obtain any additional financing on terms that are acceptable to us, or at all.

Added

If we raise additional funds through issuances of equity, our existing stockholders could experience significant dilution, and any new securities we issue could have rights, preferences and privileges superior to those of holders of our shares of common stock.

Added

Additionally, any debt financing secured by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities.

Added

Further, a severe or prolonged economic downturn could result in a variety of risks to our business, including weakened demand for our products or services and our inability to raise additional capital when needed on acceptable terms, if at all.

Added

Failure to secure any necessary financing in a timely manner and on favorable terms could impair our ability to achieve our growth strategy, could harm our financial performance and stock price and could require us to delay or abandon our business plans.

Added

We cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.

Added

Sales by our insiders or affiliates, along with any other market transactions, could affect the value of our Common Stock. Our Chairman and CEO owns our Series A Voting Preferred Stock and will be able to exert significant control over matters subject to shareholder approval.

Added

Michael Mo, our Chairman and CEO, currently beneficially owns common stock and Series A Voting Preferred Stock that provide him with 38.36% of the voting power of our voting stock. Therefore, even after further offerings, he will have the ability to substantially influence us through this ownership position.

Added

For example, he may be able to significantly influence elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction.

Added

His interests may not always coincide with our corporate interests or the interests of other shareholders, and he may act in a manner with which you may not agree or that may not be in the best interests of our other shareholders.

Added

On January 26, 2024, our Board of Directors 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.

Added

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.

Added

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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+2 added−3 removed3 unchanged

2022 filing

2023 filing

Biggest changeMARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Common Equity and Related Stockholder Matters On June 7, 2021, our common stock ceased trading on the OTCQB and commenced trading on the NYSE American LLC Exchange under the symbol “KULR.” 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”).

Biggest changeMARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Common Equity and Related Stockholder Matters Our common stock trades on the NYSE American LLC Exchange under the symbol “KULR.” 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”).

Common Shareholders On March 28, 2023, we had approximately 151 record and street shareholders. Dividends The Company has not paid any dividends to date. The Company intends to employ all available funds for the growth and development of its business, and accordingly, does not intend to declare or pay any dividends in the foreseeable future.

Common Shareholders On April 9, 2024, we had approximately 116 record and street shareholders. Dividends The Company has not paid any dividends to date. The Company intends to employ all available funds for the growth and development of its business, and accordingly, does not intend to declare or pay any dividends in the foreseeable future.

The following table sets forth, as of December 31, 2022, our securities authorized for issuance under any equity compensation plans approved by our stockholders: Number of securities Number of securities remaining available for to be issued upon Weighted-average future issuance under equity exercise of exercise compensation plans outstanding price of (excluding securities options, outstanding options, reflected in warrants and rights warrants and rights column (a)) Plan Category (a) (b) (c) Equity compensation plans approved by security holders 640,216 $ 1.72 10,174,005 Equity compensation plans not approved by security holders — — — Total 640,216 $ 1.72 10,174,005 Stock Transfer Agent Our stock transfer agent of our Common Stock is VStock Transfer LLC, located at 18 Lafayette Pl, Woodmere, NY 11598.

The following table sets forth, as of December 31, 2023, our securities authorized for issuance under any equity compensation plans approved by our stockholders: Number of securities Number of securities remaining available for to be issued upon Weighted-average future issuance under equity exercise of exercise compensation plans outstanding price of (excluding securities options, outstanding options, reflected in warrants and rights warrants and rights column (a)) Plan Category (a) (b) (c) Equity compensation plans approved by security holders 3,722,716 $ 1.26 7,406,405 Equity compensation plans not approved by security holders — — — Total 3,722,716 $ 1.26 7,406,405 Stock Transfer Agent Our stock transfer agent of our Common Stock is VStock Transfer LLC, located at 18 Lafayette Pl, Woodmere, NY 11598.

Removed

Recent Sales of Unregistered Securities Pursuant to an Asset Purchase Agreement the Company executed with Vibetech and Norman Serrano on October 6, 2022, the Company will issue shares of common stock of the Company to Vibetech, valued at $1,500,000 as of October 6, 2022.

Added

Recent Sales of Unregistered Securities There were no sales of unregistered securities during the fiscal year ended December 31, 2023 other than those transactions previously reported to the SEC on our quarterly reports on Form 10-Q and current reports on Form 8-K.

Removed

The Company will issue the shares to Vibetech in four equal installments on each anniversary from October 6, 2022, including on the following dates: (i) October 6, 2023, (ii) October 6, 2024, (iii) October 6, 2025, and (iv) October 6, 2026.

Added

Issuer Purchases of Equity Securities The Company did not repurchase any of its equity securities during the fourth quarter ended December 31, 2023.

Removed

All of the previously described issuances of securities were made pursuant to the exemption from registration at Section 4(a)(2) and/or Rule 506 of Regulation D under the Securities Act for either transactions not involving a public offering or for transactions with an “accredited investor” as defined under the Securities Act. 21 Table of Contents Issuer Purchases of Equity Securities The Company did not repurchase any of its equity securities during the fourth quarter ended December 31, 2022.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

27 edited+40 added−43 removed14 unchanged

2022 filing

2023 filing

Biggest changeThe increase is primarily attributable to the increase in interest expense recorded in connection with notes payable and the Prepaid Advance of $932,538, an increase in the related amortization of debt discount of $383,627, and the loss on debt extinguishment of $8,508, partially offset by a $272,856 increase in the change in fair value of accrued issuable equity, $158,675 gain on forgiveness of PPP loan and interest, and a decrease of debt redemption costs of $140,000.

Biggest changeThe increase is primarily attributable to an increase in the amortization of debt discount 27 Table of Contents of $218,405 associated with the prepaid advance liability, and a $158,675 decline in PPP loan forgiveness, partially offset by a $217,454 decrease in a cash repayment premium recorded in satisfaction of a note payable in September 2022.

We expect that our R&D expenses will increase as we expand our future operations. Selling, General and Administrative Selling, general and administrative expenses consisted primarily of stock-based compensation, marketing and advertising, salaries, payroll taxes and other benefits, accounting and tax, consulting fees, travel and entertainment, rent expense, office expenses, and legal and professional fees.

We expect that our R&D expenses will increase as we expand our future operations. Selling, General and Administrative Selling, general and administrative expenses consisted primarily of stock-based compensation, marketing and advertising, salaries, payroll taxes and other benefits, Board compensation, accounting and tax, consulting fees, travel and entertainment, rent expense, office expenses, and legal and professional fees.

Research and Development Research and development (“R&D”) includes expenses incurred in connection with the R&D of our CFV thermal management solution, high-areal-capacity battery electrodes, 3D engineering for a rechargeable battery and non-cash stock-based compensation expenses. Research and development expenses are charged to operations as incurred.

Research and Development Research and development (“R&D”) includes expenses incurred in connection with the R&D of our CFV thermal management solution, high-areal-capacity battery electrodes, and 3D engineering for a rechargeable battery, including non-cash stock-based compensation expenses. Research and development expenses are charged to operations as incurred.

These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Actual results could differ materially because of the factors discussed in “Risk Factors” elsewhere in this Annual Report, and other factors that we may not know.

These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Actual results could differ materially because of the factors discussed in Item 1A “Risk Factors” in this Annual Report, and other factors that we may not know.

(“KULR”) and its wholly-owned subsidiary, KULR Technology Corporation (“KTC”) (collectively referred to as “KULR” or the “Company”) as of and for the years ended December 31, 2022 and 2021 should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements that are included elsewhere in this Annual Report.

(“KULR”) and its wholly-owned subsidiary, KULR Technology Corporation (“KTC”) (collectively referred to as “KULR” or the “Company”) as of and for the years ended December 31, 2023 and 2022 should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements that are included in Item 8 in this Annual Report.

For the years ended December 31, 2022 and 2021, cash used in investing activities was $4,647,974 and $2,737,235, respectively. Cash used in investing activities during the year ended December 31, 2022 was related to deposits paid for equipment of $1,421,432, purchases of property and equipment of $2,682,970, and the purchase of intangible assets for $543,572.

Cash used in investing activities during the year ended December 31, 2022 was related to purchases of property and equipment of $2,682,970, deposits paid for purchases of property and equipment of $1,421,432 and acquisition of intangible assets of $543,572. For the years ended December 31, 2023 and 2022, cash provided by financing activities was $3,872,702 and $17,472,361, respectively.

Other (Expense) Income For the years ended December 31, 2022 and 2021, other expenses, net, were $1,150,497 and $397,736, respectively, representing an increase of $752,761 or 189%.

Other (Expense) Income For the years ended December 31, 2023 and 2022, other expenses, net, were $1,281,610 and $1,150,497, respectively, representing an increase of $131,113 or 11%.

Also, we are introducing new products at an early stage in our development cycle and the margins earned can vary significantly between periods, customers and products due to the learning process, customer negotiating strengths, and product mix. The Company expects that margins will normalize as it prepares for the anticipated volume production of its product mix.

Because we are introducing new products at an early stage in our development cycle and the margins earned can vary significantly between periods, customers, products and services due to the learning process, customer negotiating strengths, and product mix.

Our cash used in operations for the year ended December 31, 2021 was primarily attributable to our net loss of $11,911,151, adjusted for non-cash expenses in the aggregate amount of $4,670,955, as well as $434,522 of net cash generated from changes in the levels of operating assets and liabilities.

Our cash used in operations for the year ended December 31, 2023 was primarily attributable to our net loss of $23,693,556, adjusted for non-cash expenses in the aggregate amount of $6,841,828, as well as $4,886,340 of net cash generated by changes in the levels of operating assets and liabilities.

Recently Issued Accounting Pronouncements See Note 2 – Summary of Significant Accounting Policies of our consolidated financial statements included within this Annual Report for a summary of recently issued and adopted accounting pronouncements.

There are items within our financial statements that require estimation but are not deemed critical, as defined above. Recently Issued Accounting Pronouncements See Note 2 – Summary of Significant Accounting Policies of our consolidated financial statements included within Item 8 of this Annual Report for a summary of recently issued and adopted accounting pronouncements.

GAAP”), which contemplate our continuation as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not necessarily purport to represent realizable or settlement values.

The carrying amounts of assets and liabilities presented in the consolidated financial statements do not necessarily purport to represent realizable or settlement values.

The accounting policies that reflect our more significant estimates and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described below. The following is not intended to be a comprehensive list of all of our accounting policies or estimates.

To the extent that there are material differences between these estimates and actual results, our financial results will be affected. The accounting policies that reflect our more significant estimates and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described below.

Product sales during these periods include sales of our component product, carbon fiber velvet (“CFV”) thermal management solution, internal short circuit (“ISC”) battery cells and devices, patented TRS technology, and thermal fiber thermal interface (“FTI”) materials. 26 Table of Contents Revenue from contract services during the year ended December 31, 2023 increased by $1,574,869 or 117% compared to the year ended December 31, 2022.

As of March 24, 2023, our cash balance was approximately $7.3 million. Our consolidated financial statements included elsewhere in this Annual Report on Form 10-K have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.

Our consolidated financial statements included elsewhere in this Annual Report on Form 10-K have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplate our continuation as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business.

Consolidated Results of Operations Year Ended December 31, 2022 Compared With Year Ended December 31, 2021 Revenue Our revenues consisted of the following types: For the Years Ended December 31, 2022 2021 Product sales $ 2,643,325 $ 1,495,328 Contract services 1,351,309 917,540 Total revenue $ 3,994,634 $ 2,412,868 For the years ended December 31, 2022 and 2021, we generated $3,994,634 and $2,412,868 of revenues from 36 and 20 customers, respectively, representing an increase of $1,581,766, or 66%.

Consolidated Results of Operations Year Ended December 31, 2023 Compared With Year Ended December 31, 2022 Revenue Our revenues consisted of the following types: For the Years Ended December 31, 2023 2022 Revenues Recognized at a Point in Time: Product sales $ 6,903,988 $ 2,643,325 Contract services 1,167,391 1,351,309 Total 8,071,379 3,994,634 Revenues Recognized Over Time: Contract services 1,758,787 — Total Revenues $ 9,830,166 $ 3,994,634 For the years ended December 31, 2023 and 2022, we generated $9,830,166 and $3,994,634 of revenue from 53 and 36 customers, respectively, representing an increase of $5,835,532, or 146%.

Accordingly, the business activity cycle between expression of initial customer interest to shipping, acceptance and billing can be lengthy, unpredictable, and lumpy, which can influence the timing, consistency and reporting of sales growth. Cost of Revenues Cost of revenues consisted of the cost of our products as well as labor expenses directly related to product sales or research contract services.

Furthermore, our solutions are new and do not necessarily fit into pre-existing patterns of purchase commitments. Accordingly, the business activity cycle between expression of initial customer interest to shipping, acceptance and billing can be lengthy, unpredictable, and lumpy, which can influence the timing, consistency and reporting of sales growth.

For the years ended December 31, 2022 and 2021, selling, general and administrative expenses were $16,672,526 and $11,162,062, respectively, an increase of $5,510,464 or 49%.

For the years ended December 31, 2023 and 2022, selling, general and administrative expenses were $19,882,402 and $16,453,776, respectively, an increase of $3,428,626, or 21%.

Revenue from product sales during the year ended December 31, 2022 increased by $1,147,997 or 77% compared to the year ended December 31, 2021.

Revenue from product sales during the year ended December 31, 2023 increased by $4,260,663 or 161% compared to the year ended December 31, 2022, reflecting the growth in the number of customers of 39 in 2023 from 33 in 2022.

Cash used in investing activities during the year ended December 31, 2021 was related to deposits paid for equipment of $2,153,950, purchases of property and equipment of $383,285, and the purchase of an intangible asset for $200,000. For the years ended December 31, 2022 and 2021, cash provided by financing activities was $17,472,361 and $15,526,070, respectively.

For the years ended December 31, 2023 and 2022, cash used in investing activities was $1,046,113 and $4,647,974, respectively. Cash used in investing activities during the year ended December 31, 2023 was related to deposits paid for purchases of property and equipment of $644,963, purchases of property and equipment of $266,150, and an acquisition of intangible assets of $135,000.

Generally, we earn greater margins on revenue from products as compared to revenue from services, so product mix plays an important part in our reported average margins for any period.

Cost of Revenue Cost of revenue consisted of the cost of our products as well as labor and production overhead expenses directly related to product sales or research contract services. Product mix plays an important part in our reported average margins for any period.

The above conditions are indicators that substantial doubt about our ability to continue as 25 Table of Contents a going concern could exist as we have a history of recurring net losses, recurring use of cash in operations and declining working capital.

We have a history of recurring net losses, recurring use of cash in operations and declining working capital.

These accounting principles require us to make estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expense during the periods presented.

Critical Accounting Estimates We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods.

For the years ended December 31, 2022 and 2021, cost of revenues was $1,630,527 and $1,102,038, respectively, representing an increase of $528,489, or 48%. The increase was primarily due to increased costs as a result of increased revenues. The gross margin percentage was 59% and 54% for the years ended December 31, 2022 and 2021, respectively.

For the years ended December 31, 2023 and 2022, cost of revenues was $6,164,310 and $1,630,527, respectively, representing an increase of $4,533,783, or 278%. The increase was primarily due to the increased number of customers and revenue during 2023, and the resultant cost increases from additional headcount and materials, and depreciation of automation equipment placed in service during 2023.

These amounts were partially offset by repayments of notes payable of $2,450,000, and payment of financing costs of $365,000. As of December 31, 2022, future cash requirements for our current liabilities include $3,550,294 for accounts payable and accrued expenses and $223,645 for future payments under operating leases.

As of December 31, 2023, future cash requirements for our current liabilities include $6,232,888 for accounts payable and accrued expenses, $1,609,200 for merchant cash advances, $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.

Until that time, we shall have to continue to raise cash, as and when required, through equity or debt financings. Recent Developments COVID-19 In March 2020, the World Health Organization declared COVID-19, a novel strain coronavirus, a pandemic. During 2020 and continuing into 2023, the global economy has been, and continues to be, affected by COVID-19.

Until that time, we shall have to continue to raise cash, as and when required, through equity or debt financings. Recent Developments Annual Revenues The Company reported record annual revenues of $9.8 million for 2023, as compared to its previous revenues of $4.0 million for 2022.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty. War in Ukraine The short and long-term worldwide implications of Russia’s invasion of Ukraine are difficult to predict at this time.

The resolution was approved by shareholders holding in aggregate of 55.72% of outstanding shares as of February 9, 2024. Risks Associated with Ongoing Conflicts The short and long-term worldwide implications of Russia’s invasion of Ukraine are difficult to predict at this time.

If the price of materials used in the manufacturing of our product candidates increase, that would adversely affect our business and the results of our operations. New Officer Hires On November 1, 2022, Dr. William Walker was appointed as the new Chief Technology Officer. Appointment of Lead Director On November 1, 2022, our existing independent director, Dr.

If the price of materials used in the manufacturing of our product candidates increase, that would adversely affect our business and the results of our operations. Additionally, we do not have operations or material net sales in Israel or Gaza and we currently do not expect the recent hostilities in that region to have a material impact on our business.

Removed

While the Company continues to see signs of economic recovery as certain governments begin to gradually ease restrictions, provide economic stimulus and accelerate vaccine distribution, the rate of recovery on a global basis has been affected by resurgence of the virus or its variants in certain jurisdictions.

Added

Liability Repayment Subsequent to December 31, 2023, the Company repaid in full all remaining principal and interest owed in connection with the prepaid advance liability.

Removed

The Company continues to monitor the impact of COVID-19 on its business and operational assumptions and estimates and has determined there were no material adverse impacts on the Company’s results of operations and financial position at December 31, 2022. 22 Table of Contents The full extent of the future impact of COVID-19 on the Company’s operations and financial condition is uncertain.

Added

Removed

Accordingly, COVID-19 could have a material adverse effect on the Company’s business, results of operations, financial condition and prospects during 2023 and beyond, including the demand for its products, interruptions to supply chains, ability to maintain regular research and development and manufacturing schedules as well as the capability to meet customer demands in a timely manner.

Added

On December 22, 2023, the Company completed a public offering of 5,175,000 shares of common stock, priced at $0.20 per share, with gross proceeds of $1,035,000 less issuance costs of $257,800, for net proceeds of $777,200. 24 Table of Contents Issuance of Non-Convertible Series A Voting Preferred Stock On January 26, 2024, the Board of Directors (“Board”) of the Company, following extensive strategic evaluation, including consultation with advisors, 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, subject to certain limitations as set forth below.

Removed

Joanna Massey, was designated Lead Director of our Board. Exercise of Warrants During March 2022, the Company issued an aggregate of 70,143 shares of common stock upon the exercise of warrants pursuant to which the Company received an aggregate of $87,679 of gross proceeds.

Added

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.

Removed

During April 2022, the Company issued an aggregate of 2,346,525 shares of common stock upon the exercise of warrants pursuant to which the Company received an aggregate of $2,933,156 of gross proceeds.

Added

The issuance is 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.

Removed

The increase in revenue from product sales for the year ended December 31, 2022 is primarily due to two contracts for custom TRS kits and heatsink technology which generated approximately $1,270,000 and $322,000 respectively, partially offset by a decrease attributable to contracts which generated approximately $485,000 for battery cells for the year ended December 31, 2021.

Added

This conditional arrangement is designed to ensure that the voting power conferred by the Non-convertible Series A Voting Preferred Stock remains tied to the active leadership of the Company. This underscores the Board’s commitment to maintaining alignment with the long-term interests of the Company and its stockholders.

Removed

Revenue from contract services during the year ended December 31, 2022 increased by $433,769 or 47% compared to the year ended December 31, 2021.

Added

The Independent Members of the Board have determined that the issuance represents a pivotal strategic move to reinforce and enhance 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.

Removed

The increase in revenue for the year ended December 31, 2022 is primarily due to three large contracts which generated approximately $1,272,000, partially offset by a decrease attributable to contracts which generated approximately $862,600 23 Table of Contents for the year ended December 31, 2021.

Added

Appointment of Officers and Management 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.

Removed

Our service revenues, which include certain research and development contracts and onsite engineering services, have not been hampered by restrictions arising from working under COVID-19 shelter-in-place regulations. Our customers and prospective customers are large organizations with multiple levels of management, controls/procedures, and contract evaluation/authorization. Furthermore, our solutions are new and do not necessarily fit into pre-existing patterns of purchase commitments.

Added

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 will be amortized ratably over the vesting period.

Removed

For the years ended December 31, 2022 and 2021, R&D expenses were $3,977,563 and $1,662,183, respectively, representing an increase of $2,315,380 or 139%. The increase is primarily comprised of $1,337,351 related to planned increases in headcount in order to build future capacity, and $978,029 related to new R&D initiatives designed to build future revenue growth.

Added

In addition, the Company committed to a one-year guaranteed commission of $200,000, payable in four quarterly installments as well as a severance package of $250,000 and one-year of family health insurance if the VP of Sales is terminated without cause (as defined) within one year of hire.

Removed

This increase is primarily due to an increase in employee related costs to build future capacity for planned revenue growth of $2,484,407, marketing and advertising expenses of $1,500,371, travel expenses primarily related to customer and vendor relations of $484,214, NetSuite implementation costs of $390,000, and $315,773 of SEC filing fees and professional services.

Added

Appointment of Chief Financial Officer On March 31, 2023, the Company appointed a Chief Financial Officer (the “CFO”) and issued the CFO 1,500,000 shares of restricted stock. The restricted common stock had an aggregate grant date fair value of $1,380,000, and vests in five equal annual installments beginning March 31, 2024 based solely on continued service.

Removed

Liquidity and Capital Resources As of December 31, 2022 and 2021, we had cash balances of $10,333,563 and $14,863,301, respectively, and working capital of $6,055,477 and $13,302,935, respectively. 24 Table of Contents On May 13, 2022, we issued a $5,000,000 Promissory Note to Yorkville for gross proceeds of $4,750,000.

Added

Management Equity Incentive Grants On July 12, 2023, the Board unanimously approved an equity grant to the Chief Technology Officer, of 350,000 shares of restricted common stock. The restricted common stock had a grant date fair value of $266,000 and vests in four equal annual installments beginning on July 12, 2024.

Removed

On the same date, we entered into a SEPA which gives us the right, but not the obligation, to sell up to $50,000,000 of shares of our common stock to Yorkville during the 24 months following the effective date of the SEPA.

Added

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.

Removed

Further, on September 23, 2022, we entered into the Supplemental SEPA, which allows us to request advances, (each, a “Prepaid Advance”), still up to an aggregate of $50,000,000, from Yorkville.

Added

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.

Removed

Pursuant to the terms of the Supplemental SEPA, Yorkville has the right to receive shares, 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 in order to pay down the Prepaid Advance.

Added

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.

Removed

The aggregate common shares issued under the SEPA and the Supplemental SEPA cannot exceed $50,000,000. We may not request that the investor purchase shares pursuant to the SEPA at any time that there is an outstanding balance owed under a Prepaid Advance.

Added

Recent Shareholder Vote by Majority Written Consent On February 9, 2024, the shareholders of the Company, acted by way of majority written consent (in lieu of a special meeting of stockholders) to approve resolutions authorizing the Company’s Board of Directors to take the following actions: (1) to issue shares of Common Stock to current or future engagements with commercial or strategic parties, which may result in issuances of over 20% of 25 Table of Contents the issued and outstanding shares of Common Stock; (2) to amend the Company’s Bylaws to decrease the number of shares of Common Stock needed to establish a quorum for meetings of stock holders to thirty-three-and-one-third percent (33 1/3 %) of the outstanding voting securities of the Company; (3) to amend the Certificate of Incorporation of the Company to effect a reverse split within a ratio range between 1-for-2 and 1-for-80; (4) to issue shares of common stock, in connection with an existing financing facility, which may result in the potential issuance of over 20% of the issued and outstanding shares.

Removed

On September 23, 2022, the Company received proceeds from a Prepaid Advance in the amount of $15,000,000 (“the Initial Prepaid Advance”), of which, $3,850,000 and $566,932 was withheld to repay the Promissory Note and related interest and premiums owed to Yorkville.

Added

We cannot predict how the events described above will evolve.

Removed

During September through December 2022, the Company issued 5,375,269 shares of common stock, at purchase prices per share ranging from $0.99 to $1.84 pursuant to Investor Notices, in satisfaction of the Initial Prepaid Advance liability in the amount of $6,000,000. As of March 28, 2023, the remaining balance on the initial Prepaid Advance is $5,750,000.

Added

If the events continue for a significant period of time or expand to other countries, and depending on the ultimate outcomes of these conflicts, which remain uncertain, they could heighten certain risks disclosed in Item 1A in this Form 10-K, including, but not limited to, adverse effects on macroeconomic conditions, including increased inflation, constraints on the availability of commodities, supply chain disruption and decreased business spending; cyber-incidents; disruptions to our or our business partners’ global technology infrastructure, including through cyber-attack or cyber-intrusion; adverse changes in international trade policies and relations; claims, litigation and regulatory enforcement; our ability to implement and execute our business strategy; terrorist activities; our exposure to foreign currency fluctuations; reputational risk; and constraints, volatility, or disruption in the capital markets, any of which could have a material adverse effect on our business, results of operations, cash flows and financial condition.

Removed

See Note 10 - Prepaid Advance Liability in the accompanying consolidated financial statements for additional information. For the years ended December 31, 2022 and 2021, cash used in operating activities was $17,354,125 and $6,805,674, respectively.

Added

Executive Officers Effective as of August 4, 2023, Dr. Timothy Knowles resigned from the Board of Directors, as well as any other position that he occupied with the Company.

Removed

Cash provided by financing activities during the year ended December 31, 2022 was due to net proceeds from the Prepaid Advance of $10,573,068, proceeds from a promissory note of $4,750,000, proceeds from the exercise of warrants of $3,020,836, proceeds from the SEPA of $250,000, proceeds from the exercise of options of $53,457.

Added

The increase in revenue for the year ended December 31, 2023 is primarily due to growth in customers of 17 in 2023 from 14 in 2022. This work includes unique engineering design and testing projects customized for specific customers. Our customers and prospective customers are large organizations with multiple levels of management, controls/procedures, and contract evaluation/authorization.

Removed

These amounts were partially offset by repayments of the promissory note of $1,000,000, and payments of issuance costs related to the prepaid advance liability of $85,000, financing costs related to the SEPA for $72,800 and payments of issuance costs in connection with notes payable for $17,200.

Added

Additionally, there was a $0.3 million write down of our inventory to net realizable value. The gross margin percentage was 37% in 2023, compared with 59% in 2022. The margin on product sales was 26% and 44% for the years ended December 31, 2023 and 2022, respectively.

Removed

Cash provided by financing activities during the year ended December 31, 2021 resulted from proceeds from the exercise of warrants in the amount of $11,719,204, proceeds from the sale of Series D Convertible Preferred Stock and warrants of $6,500,000, and proceeds from the exercise of options of $121,866.

Added

The margin on contract services was 63% and 89% for the years ended December 31, 2023 and 2022, respectively. During the year ended December 31, 2023, the Company had depreciation expense for new automation equipment and increased costs related to finished goods manufactured internally. In addition, the Company recorded an inventory write down that represented 2% of the related revenue.

Removed

The Company has also committed to spend $1,000,000 related to the asset purchase agreement, $825,000 related to sponsorship agreements, $889,171 related to capital expenditures for automation and testing equipment, $391,842 for research and development, and $201,867 for construction related to facility enhancements. In addition, the Company committed to pay nonrefundable license fees and a minimum royalty of $67,500.

Added

For the years ended December 31, 2023 and 2022, R&D expenses were $6,195,400 and $4,196,313, respectively, representing an increase of $1,999,087 or 48%.

Removed

Future cash commitments for long term liabilities consists of $97,958 for the long-term lease and a minimum royalty payment of $27,500. As of December 31, 2022, the Company also had $9,000,000 of principal outstanding for a prepaid advance liability pursuant to the Supplemental SEPA.

Added

The increase is primarily comprised of $1,980,948 related to planned increases in headcount in order to build future capacity, amortization of prepaid cash consideration related to the Vibetech asset purchase agreement of $375,000, stock-based compensation for equity awards of $142,684 and rent expense of $79,831 for a new facility for R&D initiatives designed to build future revenue growth, partially offset by a reduction in outsourced R&D costs of $649,492.

Removed

Subsequent to December 31, 2022, the Company issued 2,839,217 shares of common stock in settlement of $3,000,000 of the Prepaid Advance. As of the filing date of this Form 10-K, the principal balance due on the Prepaid Advance is $6,000,000.

Added

The increase is primarily due to increases in labor costs of $1,564,020, depreciation and amortization expense of $1,512,509 due to expansion of our facility and equipment placed in service during 2023, consulting fees to build future revenue growth of $546,880, software license and utility fees of $350,689, and costs to attend conferences and seminars of $119,897, partially offset by a decrease in stock-based compensation of $814,965.

Removed

While the Company expects that the prepaid advance liability will be repaid with the issuance of common stock, any prepaid advance balances outstanding for more than twelve months must be repaid in cash. The Company intends to meet its cash requirements from its current cash balance, proceeds from the SEPA or the Supplemental SEPA, and from future revenues.

Added

Liquidity and Capital Resources As of December 31, 2023 and 2022, we had cash balances of $1,194,764 and $10,333,563, respectively, and working capital (deficit) of $(2,994,753) and $6,055,477, respectively. For the years ended December 31, 2023 and 2022, cash used in operating activities was $11,965,388 and $17,354,125, respectively.

Removed

Despite these conditions, we have a successful track record of raising capital as needed and continue to have a positive, ongoing relationship with a financial institution that has provided access to capital and will continue to support us.

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Top changes in KULR Technology Group, Inc.'s 2023 10-K

Item 1. Business

Item 1A. Risk Factors

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Other KULR 10-K year-over-year comparisons