KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE YEAR ENDED DECEMBER 31, ~~2022~~2023


				Additional							Total
	Common Stock			Paid-In		Treasury Stock			Accumulated		Stockholders’
	Shares	Amount		Capital		Shares	Amount		Deficit		Equity (Deficit)
Balance - January 1, 2023	113,202,749	$	11,320	$	53,372,673	131,162		(296,222)	$	(42,594,038)	$	10,493,733
Common stock issued for the repayment of prepaid advance liability and related interest accrual pursuant to Investor Notices	4,078,971		408		4,466,219	—		—		—		4,466,627
Common stock issued for the repayment of prepaid advance liability and related interest accrual pursuant to Advance Notices ⁽¹⁾	905,833		90		165,036	—		—		—		165,126
Shares repurchased for payroll taxes and canceled	(175,000)		(17)		(229,232)	—		—		—		(229,249)
Common stock issued pursuant to the equity financing for cash, net of issuance costs ⁽²⁾	13,389,285		1,339		3,062,631	—		—		—		3,063,970
Stock-based compensation:
Restricted stock awards granted	2,218,508		222		(222)	—		—		—		—
Unvested restricted stock awards canceled	(140,000)		(14)		14	—		—		—		—
Common stock issued for services	551,323		55		268,765	—		—		—		268,820
Amortization of restricted common stock	—		—		3,124,174	—		—		—		3,124,174
Amortization of stock options	—		—		157,659	—		—		—		157,659
Net loss	—		—		—	—		—		(23,693,556)		(23,693,556)
Balance - December 31, 2023	134,031,669	$	13,403	$	64,387,717	131,162	$	(296,222)	$	(66,287,594)	$	(2,182,696)

Additional

Total

Common Stock

Paid-In

Treasury Stock

Accumulated

Stockholders'


Shares

Amount

Capital

Shares

Amount

Deficit

Equity
Balance - January 1, 2022

104,792,072

$
10,479

$
39,512,122

—

$
—

$
(23,157,559)

$
16,365,042
Treasury stock held upon the vesting of restricted common stock

—

—

—

194,704

(439,728)

—

(439,728)
Treasury stock issued upon the exercise of options

—

—

(95,124)

(63,542)

143,506

—

48,382
Common stock issued upon the exercise of options

2,500

—

5,075

—

—

—

5,075
Common stock issued upon the exercise of warrants

2,416,668

242

3,020,594

—

—

—

3,020,836
Common stock issued pursuant to the SEPA and Supplemental SEPA agreements:

For cash, net of issuance costs (1)

160,782

16

249,002

—

—

—

249,018
In satisfaction of notes payable

94,458

9

149,991

—

—

—

150,000
For the repayment of prepaid advance liability

5,375,269

538

6,440,305

—

—

—

6,440,843
Stock-based compensation:

Restricted stock awards

310,000

31

(31)

—

—

—

—
Common stock issued for services

51,000

5

109,845

—

—

—

109,850
Amortization of restricted stock units

—

—

1,945,272

—

—

—

1,945,272
Amortization of stock options

—

—

103,220

—

—

—

103,220
Amortization of market-based award

—

—

1,932,402

—

—

—

1,932,402
Net loss

—

—

—

—

—

(19,436,479)

(19,436,479)
Balance - December 31, 2022

113,202,749

$
11,320

$
53,372,673

131,162

$
(296,222)

$
(42,594,038)

$
10,493,733

⁽¹⁾Represents gross proceeds of ~~$250,000~~$166,337 less ~~$982 for~~$1,211 amortization of deferred financing costs.

⁽²⁾Represents gross proceeds of $3,910,000 less issuance ~~costs.~~costs of $846,030.

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

~~F-6~~F-5

Table of Contents

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEAR ENDED DECEMBER 31, ~~2021~~2022


	Series B Convertible			Series D Convertible						Additional							Total					Additional							Total
	Preferred Stock			Preferred Stock			Common Stock			Paid-In		Treasury Stock			Accumulated		Stockholders'		Common Stock			Paid-In		Treasury Stock			Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Shares	Amount		Capital		Shares	Amount		Deficit		Equity		Shares	Amount		Capital		Shares	Amount		Deficit		Equity
Balance - January 1, 2021	13,972	$	1	—	$	—	89,908,600	$	8,991	$	17,355,968	—	$	—	$	(11,246,408)	$	6,118,552
Common stock issued upon the conversion of Series B Convertible Preferred Stock	(13,972)		(1)	—		—	698,600		70		(69)	—		—		—		—
Issuance of Series D Convertible Preferred Stock, common stock and warrants for cash (1)	—		—	650		—	1,300,000		130		6,134,870	—		—		—		6,135,000
Common stock issued upon the conversion of Series D Convertible Preferred Stock	—		—	(650)		—	3,170,730		317		(317)	—		—		—		—
Balance - January 1, 2022																			104,792,072	$	10,479	$	39,512,122	—	$	—	$	(23,157,559)	$	16,365,042
Treasury stock held upon the vesting of restricted common stock																			—		—		—	194,704		(439,728)		—		(439,728)
Treasury stock issued upon the exercise of options																			—		—		(95,124)	(63,542)		143,506		—		48,382
Common stock issued upon the exercise of options																			2,500		—		5,075	—		—		—		5,075
Common stock issued upon the exercise of warrants	—		—	—		—	6,793,358		679		11,718,525	—		—		—		11,719,204	2,416,668		242		3,020,594	—		—		—		3,020,836
Common stock issued upon the exercise of options	—		—	—		—	184,784		18		121,848	—		—		—		121,866
Common stock issued as partial consideration for intangible asset	—		—	—		—	6,000		1		17,999	—		—		—		18,000
Common stock issued pursuant to the SEPA and Supplemental SEPA agreements:
For cash, net of issuance costs ⁽¹⁾																			160,782		16		249,002	—		—		—		249,018
In satisfaction of notes payable																			94,458		9		149,991	—		—		—		150,000
For the repayment of prepaid advance liability⁽²⁾																			5,375,269		538		6,440,305	—		—		—		6,440,843
Stock-based compensation:
Restricted stock awards																			310,000		31		(31)	—		—		—		—
Common stock issued for services	—		—	—		—	170,000		17		376,892	—		—		—		376,909	51,000		5		109,845	—		—		—		109,850
Restricted common stock issued	—		—	—		—	2,677,744		268		(268)	—		—		—		—
Restricted common stock cancelled	—		—	—		—	(117,744)		(12)		12	—		—		—		—
Amortization of restricted common stock	—		—	—		—	—		—		1,606,578	—		—		—		1,606,578
Amortization of restricted stock units																			—		—		1,945,272	—		—		—		1,945,272
Amortization of stock options	—		—	—		—	—		—		68,239	—		—		—		68,239	—		—		103,220	—		—		—		103,220
Amortization of market-based award	—		—	—		—	—		—		2,111,845	—		—		—		2,111,845	—		—		1,932,402	—		—		—		1,932,402
Net loss	—		—	—		—	—		—		—	—		—		(11,911,151)		(11,911,151)	—		—		—	—		—		(19,436,479)		(19,436,479)
Balance - December 31, 2021	—	$	—	—	$	—	104,792,072	$	10,479	$	39,512,122	—	$	—	$	(23,157,559)	$	16,365,042
Balance - December 31, 2022																			113,202,749	$	11,320	$	53,372,673	131,162	$	(296,222)	$	(42,594,038)	$	10,493,733

⁽¹⁾	Represents ~~$6,500,000~~gross proceeds of ~~relative fair value~~$250,000 less $982 for amortization of ~~preferred stock issued, net~~deferred issuance costs.

⁽²⁾	Represents gross proceeds of ~~cash issuance costs~~$6,693,976 less $253,133 for amortization of ~~$365,000.~~debt discount.

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

~~F-7~~F-6

Table of Contents

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended

December 31,


2022

2021
Cash Flows From Operating Activities:




Net loss

$
(19,436,479)

$
(11,911,151)
Adjustments to reconcile net loss to net cash used in operating activities:


Amortization of debt discount

511,825

128,198
Non-cash lease expense

193,106

149,130
Depreciation and amortization expense

259,399

67,715
Non-cash interest expense

576,932

—
Gain on forgiveness of PPP loan and interest

(158,675)

—
Change in fair value of accrued issuable equity

(147,035)

125,821
Stock-based compensation

4,175,014

4,200,091
Bad debt expense

15,026

—
Loss on extinguishment of note payable

8,508

—
Changes in operating assets and liabilities:


Accounts receivable

(1,420,818)

(80,834)
Inventory

(1,770,724)

(135,859)
Prepaid expenses and other current assets

(1,324,836)

(110,204)
Inventory deposits

(3,072)

(309,688)
Security deposits

(1,500)

(50,213)
Accounts payable

658,715

385,342
Accrued expenses and other current liabilities

824,826

768,215
Lease liability

(205,034)

(144,540)
Deferred revenue

(109,303)

112,303
Total Adjustments

2,082,354

5,105,477
Net Cash Used In Operating Activities

(17,354,125)

(6,805,674)

Cash Flows From Investing Activities:




Deposits for purchase of property and equipment

(1,421,432)

(2,153,950)
Purchases of property and equipment

(2,682,970)

(383,285)
Acquisition of intangible assets

(543,572)

(200,000)
Net Cash Used In Investing Activities

(4,647,974)

(2,737,235)




Cash Flows from Financing Activities:




Proceeds from note payable ⁽¹⁾

4,750,000

—
Net proceeds from the SEPA

250,000

—
Net proceeds from the prepaid advance liability ⁽²⁾

10,573,068

—
Issuance costs on prepaid advance liability

(85,000)

—
Payment of financing costs incurred in connection with the SEPA

(72,800)

—
Notes payable issuance costs

(17,200)

—
Payment of financing costs

—

(365,000)
Repayments of notes payable

(1,000,000)

(2,450,000)
Proceeds from the exercise of options

53,457

121,866
Proceeds from the exercise of warrants

3,020,836

11,719,204
Proceeds from sale of Series D Convertible Preferred Stock, common stock and warrants

—

6,500,000
Net Cash Provided By Financing Activities

17,472,361

15,526,070

Net (Decrease) Increase In Cash

(4,529,738)

5,983,161
Cash - Beginning of Year

14,863,301

8,880,140
Cash - End of Year

$
10,333,563

$
14,863,301


	For the Years Ended
	December 31,
	2023		2022
Cash Flows From Operating Activities:
Net loss	$	(23,693,556)	$	(19,436,479)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount		730,230		511,825
Non-cash lease expense		250,893		193,106
Loss on debt extinguishment		-		8,508
Depreciation and amortization expense		2,214,095		259,399
Gain on forgiveness of PPP loan and interest		—		(158,675)
Change in fair value of accrued issuable equity		(167,040)		(147,035)
Non-cash interest expense		—		576,932
Stock-based compensation		3,502,736		4,175,014
Provision for credit losses		16,978		15,026
Inventory write down		293,941		—
Changes in operating assets and liabilities:
Accounts receivable		623,473		(1,420,818)
Inventory		519,047		(1,770,724)
Inventory deposits		257,760		(3,072)
Prepaid expenses and other current assets		981,647		(1,324,836)
Security deposits		50,213		(1,500)
Accounts payable		754,056		658,715
Accrued expenses and other current liabilities		1,442,690		824,826
Lease liability		(270,571)		(205,034)
Deferred revenue		528,021		(109,303)
Total Adjustments		11,728,169		2,082,354
Net Cash Used In Operating Activities		(11,965,387)		(17,354,125)

Cash Flows From Investing Activities:
Deposits for purchase of property and equipment		(644,963)		(1,421,432)
Purchases of property and equipment		(266,150)		(2,682,970)
Acquisition of intangible assets		(135,000)		(543,572)
Net Cash Used In Investing Activities		(1,046,113)		(4,647,974)

Cash Flows from Financing Activities:
Proceeds from equity financing		3,910,000		—
Issuance costs on equity financing		(453,050)		—
Proceeds from the SEPA		—		250,000
Proceeds from prepaid advance liability		2,000,000		10,573,068
Issuance costs on prepaid advance liability		(30,000)		(85,000)
Repayments of prepaid advance liability		(1,575,000)		—
Proceeds from notes payable ⁽¹⁾		250,000		4,750,000
Issuance costs on notes payable		—		(17,200)
Repayments of note payable		—		(1,000,000)
Payment of financing costs incurred in connection with the SEPA		—		(72,800)
Repurchase of common stock		(229,249)		-
Proceeds from the exercise of stock options		—		53,457
Proceeds from the exercise of warrants		—		3,020,836
Net Cash Provided By Financing Activities		3,872,701		17,472,361

Net Decrease In Cash		(9,138,799)		(4,529,738)
Cash - Beginning of Year		10,333,563		14,863,301
Cash - End of Year	$	1,194,764	$	10,333,563

(1)	~~Note payable face~~Face value of $5,000,000, less $250,000 original issue ~~discount.~~

~~(2)~~

Consists of principal of $15,000,000 on prepaid advance liability, less $3,850,000 and $566,932 withheld to repay note payable and related interest and premiums, respectively, owed to same investor, and, $10,000 withhelddiscount for ~~issuance costs.~~2022.

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

statements.

~~F-8~~F-7

Table of Contents

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS, ~~continued~~CONTINUED


	For the Years Ended				For the Years Ended
	December 31,				December 31,
	2022		2021		2023		2022
Supplemental Disclosures of Cash Flow Information:

Cash paid during the year for:
Cash paid during the period for:
Interest	$	86,062	$	1,635	$	314,731	$	86,062
Taxes	$	—	$	—
Income taxes					$	—	$	—

Non-cash investing and financing activities:
Right of use asset for lease liability	$	—	$	814,817	$	51,154	$	—
Common stock held in treasury upon the vesting of restricted common stock					$	—	$	439,728
Original issue discount on prepaid advance liability					$	105,263	$	789,474
Common stock issued for the repayment of prepaid advance liability and related interest accrual pursuant to Investor Notices					$	4,466,627	$	6,440,843
Common stock issued for the repayment of prepaid advance liability and related interest accrual pursuant to Advance Notices					$	165,126	$	—
Prepaid advance for repayment of note payable					$	—	$	3,850,000
Shares issued in satisfaction of note payable					$	—	$	150,000
Deposits applied to purchases of property and equipment					$	2,827,464	$	60,445
Additions to property and equipment included in accounts payable	$	294,794	$	—	$	489,211	$	294,794
Beneficial conversion feature on Series D convertible preferred stock	$	—	$	2,624,326
Common stock issued upon the conversion of Series D convertible preferred stock	$	—	$	317
Common stock held in treasury upon the vesting of restricted common stock	$	439,728	$	—
Common stock issued upon the conversion of Series B convertible preferred stock	$	—	$	70
Common stock issued in satisfaction of accrued issuable equity	$	—	$	209,200	$	206,047	$	—
Prepaid advance for repayment of note payable	$	3,850,000	$	—
Original issue discount on prepaid advance liability	$	789,474	$	—
Common stock issued in satisfaction of note payable	$	150,000	$	—
Common stock issued in satisfaction of prepaid advance liability and interest	$	6,440,843	$	—
Deposits applied to purchase of property and equipment	$	60,445	$	—
Deferred financing costs charged to additional paid in capital	$	982	$	—
Common shares issued as partial consideration for intangible asset	$	—	$	18,000
Accrual of equity financing issuance costs					$	392,980	$	—
Deferred financing costs charged to additional paid-in capital					$	1,211	$	982

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

~~F-9~~F-8

Table of Contents

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION, NATURE OF OPERATIONS, AND RISKS AND UNCERTANTIES

Organization and Operations

KULR Technology Group, Inc. was incorporated on December 11, 2015 under the laws of the State of Delaware as KT High-Tech Marketing, Inc. Effective August 30, 2018, KT High-Tech Marketing, Inc. changed its name to KULR Technology Group, Inc.

KULR Technology Group, Inc., through its wholly-owned subsidiary, KULR Technology Corporation (collectively referred to as “KULR” or the “Company”), develops and commercializes high-performance thermal management technologies for electronics, batteries, and other components across a range of applications. Currently, the Company is focused on targeting both high performance aerospace and Department of Defense (“DOD”) applications, such as space exploration, satellite communications, and underwater vehicles, and applying them to mass market commercial applications, such as lithium-ion battery energy storage, electric vehicles, 5G communication, cloud computer infrastructure, consumer and industrial devices.

Risks and Uncertainties

~~In March 2020, the World Health Organization declared COVID-19,~~The Company operates in a ~~novel strain coronavirus, a pandemic. Continuing into 2022, the global economy has been,~~dynamic and ~~continues to be, affected by COVID-19. While the Company continues to see signs of economic recovery as certain governments begin to gradually ease restrictions, provide economic stimulus~~highly competitive industry and ~~accelerate vaccine distribution, the rate of recovery on a global basis has been affected by resurgence~~believes that changes in any of the virus or its variants in certain jurisdictions. For example, in response to an outbreak of infection in Shanghai, beginning in March 2022, governmental authorities in China implemented a lockdown order in that city, significantly slowing economic and business activity in that region and adversely affecting our ability to import product material required to fulfill some customer commitments. We continue to monitor the rapidly evolving situation and guidance from international and domestic authorities and may take additional actions based on their recommendations and requirements or as we otherwise see fit to protect the health and safety of our employees, customers, partners and suppliers.

~~The full extent of the future impact of COVID-19 on the Company’s operations and financial condition is uncertain. Accordingly, COVID-19~~following areas could have a material adverse effect on the Company’s ~~business,~~future financial position, results of operations, ~~financial condition and prospects during 2023 and beyond, including the demand for its products, interruptions to supply chains,~~or cash flows: ability to ~~maintain regular research~~obtain future financing; advances and trends in new technologies and industry standards; regulatory approval and market acceptance of the Company’s products; development of sales channels; certain strategic relationships; litigation or claims against the Company based on intellectual property, patent, product, regulatory, or other factors; and ~~manufacturing schedules as well as~~ the ~~capability~~Company’s ability to ~~meet customer demands in a timely manner. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.~~attract and retain employees necessary to support its growth.

The short and long-term worldwide implications of Russia’s invasion of Ukraine are difficult to predict at this time. The imposition of sanctions on Russia by the United States or other countries and possible counter sanctions by Russia, and the resulting economic impacts on oil prices and other materials and goods, could affect the price of materials used in the manufacture of our product candidates. 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.

On March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership. A statement by the Department of the Treasury, the Federal Reserve and the FDIC stated that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts. The standard deposit insurance amount is up to $250,000 per depositor, per insured bank, for each account ownership category. Although we do not have any funds deposited with the aforementioned banks that failed, we regularly maintain cash balances with other financial institutions in excess of the FDIC insurance limit. 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.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The consolidated financial statements of the Company include the accounts of KULR Technology Group, Inc. and its wholly-owned subsidiary, KULR Technology Corporation. All significant intercompany transactions have been eliminated in the consolidation. The

~~F-10~~

~~Table of Contents~~

~~KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

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

Going Concern and Management’s Liquidity Plans

As of December 31, 2023, the Company had cash of $1,194,764 and working capital deficit of $2,994,753. During the year ended December 31, ~~2022,~~2023, the Company incurred a net loss in the amount of ~~$19,436,479~~$23,693,556 and used cash in operations of $17,354,125. As of December 31, 2022, the Company had cash of $10,333,563 and working capital of $6,055,477. During the year ended December 31, 2022, the Company generated net cash from financing activities of $17,472,361, mainly from proceeds received from Prepaid Advances, the issuance of a note payable, shares of common stock, and from the exercise of options and warrants to purchase common stock.$11,965,387.

The Company’s primary source of liquidity has historically been cash generated from equity and debt ~~offerings.~~offerings along with cash flows from revenue. Under ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet future financial obligations as they become due within one year after the date that ~~the~~these financial statements are issued. The ~~above conditions are indicators~~accompanying consolidated financial statements have been prepared on the basis that ~~substantial doubt about the Company’s ability to~~we will continue as a going concern, ~~could exist as~~which contemplates realization of assets and the ~~Company has~~satisfaction of liabilities in the normal course of business. However, since the Company’s inception we have had a history of recurring net losses from operations, recurring use of cash in ~~operations~~operating activities and ~~declining~~ working ~~capital. Despite these conditions,~~capital deficits.

Future cash requirements for our current liabilities include $6,232,888 for accounts payable and accrued expenses, $1,609,200 for merchant cash advances (see Note 18 – Subsequent Events – Merchant Cash Advance Agreement), $1,323,963 for capital expenditures and $102,186 for future payments under operating leases. Future cash requirements for long-term liabilities include $250,000 for promissory notes. See Note 14 – Notes Payable for additional information. The non-current Prepaid Advance Liability balance (see Note 11 – Prepaid Advance Liability) of $5,892,056 was paid in full subsequent to December 31, 2023 from proceeds raised from the Company has a successful track record of raising capital as needed and continues to have a positive, ongoing relationship with a financial institution that has provided access to capital and will continue to support KULR.Company’s subsequent equity issuances.

On May 13, 2022, the Company entered into a Standby Equity Purchase Agreement (the “SEPA”), which gives the Company the right, but not the obligation, to sell up to $50,000,000 of its shares of common stock to YA II PN, Ltd. (“Yorkville”) during the commitment period. Further, on September 23, 2022, the Company entered into the Supplemental SEPA, pursuant to which the Company may request advances (“Prepaid Advances”) up to an aggregate of $50,000,000 from Yorkville. Yorkville has the right to receive shares, and may select the timing and delivery of such shares, in an amount up to the balance of the Prepaid Advance in order to pay down the Prepaid Advance liability. During the year ended December ~~31, 2022,~~20, 2023, the Company received ~~aggregate gross proceeds~~a notice of ~~$4,750,000~~noncompliance from a Promissory Note payable and received gross proceeds of $400,000 and $15,000,000 under the SEPA and the Supplemental SEPA, respectively (of which $150,000 and $3,850,000, respectively, was used to repay the Promissory Note; see Note 12 – Notes Payable). The CompanyNYSE Regulation (“NYSE”) stating it is not ~~permitted to initiate additional sales of its common stock under~~in compliance with Section 1003(a)(iii) in the ~~SEPA until the Prepaid Advance liability ($8,852,290 at December 31, 2022) is settled. Subsequent to December 31, 2022,~~NYSE American Company Guide (the “Company Guide”) since the Company ~~issued 3,153,036 shares~~reported stockholders’ equity of ~~common stock,~~$1,200,172 at ~~purchase price per share ranging~~September 30, 2023, and losses from ~~$0.90 to $1.20,~~continuing operations and/or net losses in ~~satisfaction of the Prepaid Advance Liability in the amount of $3,579,932. See Note 10 – Prepaid Advance Liability and Note 15 – Stockholders’ Equity for additional information.~~

While no assurance can be provided that the Company will be successful in raising additional capital from Yorkville, as they are not obligated to advance funds to the Company so long as there is an outstanding Prepaid Advance, Yorkville has represented that inits five most scenarios, with mutual consent, they will continue to provide financial support as evidenced by the funds provided during March 2023. On March 10, 2023, the Company and Yorkville closed on a second Prepaid Advance in the amount of $2,000,000. Upon satisfaction of the Prepaid Advance liability, the Company will utilize its ability to draw down on the remaining $33,000,000 available under the SEPA.

Based on the above, the Company believes it has sufficient liquidity and access to future capital to continue as a going concern for a period of at least twelve months from the date the financial statements have been issued and that its above plans alleviate any potential substantial doubt about the entity’s ability to continue as a going concern. As of March 24, 2023, the Company’s cash balance was approximately $7.3 million.recent

~~F-11~~F-9

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

fiscal years. On February 12, 2024, the Company received a second notice letter from NYSE stating it is not in compliance with Section 1003 (f)(v) of the Company guide since the Company’s securities were trading at an average of less than $0.20 per share for 30 days.

The factors above raise substantial doubt about the Company’s ability to meet its obligations as they become due within the twelve months from the date these condensed consolidated financial statements are issued.

Management’s plans to mitigate the factors which raise substantial doubt include (i) revenue growth, (ii) reducing operating expenses through careful cost management, (iii) raising additional funds through future financings, and (iv) negotiating an extension and/or conversion to equity of the Company’s prepaid advance liability (see Note 11 – Prepaid Advance Liability).

The Company’s ability to continue as a going concern is dependent upon its ability to successfully execute the aforementioned initiatives.

Subsequent to December 31, 2023, the Company issued 40,276,430 shares of common stock, at purchase prices per share ranging from $0.13 to $0.41, pursuant to Advance Notices submitted by the Company to Yorkville for aggregate proceeds of $8,326,457. Of the gross proceeds, $2,610,650 was retained by the Company to help fund operations. The remaining proceeds were applied against the remaining principal and accrued interest owed in connection with the Prepaid Advance Liability. See Note 11 – Prepaid Advance Liability and Note 15 – Stockholders’ (Deficit) Equity for additional information.

During the first quarter of 2024, the Company entered into two agreements whereby the Company received $1,007,100 of cash (net of underwriting fees of $72,900) with the obligation to repay a total of $1,609,200 over a total of thirty-two weekly payments. See Note 18 – Subsequent Events – Merchant Cash Advance Agreement for additional details.

On January 9, 2024, the Company announced that it had completed a reduction of its total workforce of approximately 15% in an effort to allocate its resources to key business priorities to focus on improving the profitability of commercial customer engagements.

On April 2, 2024, the Company received cash proceeds of $440,000 related to a Promissory Note comprised of an initial principal amount of $500,000 and discount of $60,000. The Promissory Note carries an annual interest rate of 0% and increases to 15% in the event of default, and shall be repaid in cash representing all outstanding principal and accrued and unpaid interest due on October 2, 2024, as defined by the terms of the agreement. See Note 18 – Subsequent Events – Promissory Notes for additional information.

On April 9, 2024, the Company received cash proceeds of $200,000 related to a Promissory Note which matures on the first anniversary of its issuance and carries an annual interest rate of 16%. In the event the promissory note is prepaid within 9 months of its issuance, the holder is entitled to the repayment of principal and cash payment of interest equal to 12% of the prepayment amount. See Note 18 – Subsequent Events – Promissory Notes for additional information.

As of the date of the issuance of these consolidated financial statements, the Company has no additional commitments to obtain additional funding through future debt or equity financings, or that the Company will be able to obtain additional funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations. The aforementioned factors indicate that management’s plans do not alleviate the substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements.

The consolidated financial statements do not include any adjustments relating to the recoverability of assets and the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern.

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Use of Estimates

Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant estimates used in these financial statements include, but are not limited to, fair value calculations for intangible assets, equity securities, stock-based compensation and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates.

~~See Note 2 – Summary of Significant Accounting Policies, Stock-Based Compensation for additional discussion of the use of estimates in estimating the fair value of the Company’s common stock.~~

~~Treasury Stock~~

The Company records repurchases of its own common stock at cost. Repurchased common stock is presented as a reduction of equity in the consolidated balance sheets. Subsequent reissuances of treasury stock are accounted for on a weighted average cost basis. Gains resulting from differences between the cost of treasury stock and the re-issuance proceeds are credited to additional paid in capital. Losses resulting from differences between the cost of treasury stock and the re-issuance proceeds are debited to additional paid-in capital.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consisted primarily of cash and accounts receivable. The Company’s concentrations of credit risk also ~~includes~~include concentrations from key customers and vendors.

Cash Concentrations

A significant portion of the Company’s cash is held at one major financial institution. The Company has not experienced any losses in such accounts. Cash held in US bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. There were uninsured balances of ~~$9,833,541~~$694,763 and ~~$14,363,301~~$9,833,541 as of December 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

Customer and Revenue Concentrations

The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows:


	Revenues				Account Receivables				Revenue				Accounts Receivable
	For the Years Ended								For the Years Ended				As of		As of
	December 31,				As of December 31,				December 31,				December 31,		December 31,
	2022		2021		2022		2021		2023		2022		2023		2022
Customer A	13	%	29	%	34	%	*		51	%	32	%	*		61	%
Customer B	*		*		*		34	%	9	%	*		*		*
Customer C	42	%	25	%	*		*		*		*		14	%	*
Customer D	*		30	%	*		42	%	*		13	%	52	%	34	%
Customer E	*		*		*		21	%	*		*		20	%	*
Customer F	32	%	*		61	%	*		*		42	%	*		*
Total	87	%	84	%	95	%	97	%	60	%	87	%	86	%	95	%

*Less than 10%

There is no assurance the Company will continue to receive significant ~~revenues~~revenue from any of these customers. Any reduction or delay in operating activity from any of the Company’s significant customers, or a delay or default in payment by any significant customer, or termination of agreements with significant customers, could materially harm the Company’s business and prospects. As a result of the Company’s significant customer concentrations, its gross profit and results from operations could fluctuate significantly due to changes in political, environmental, or economic conditions, or the loss of, reduction of business from, or less favorable terms with any of the Company’s significant customers.

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Vendor Concentrations

~~Vendor concentrations are~~The Company had vendors whose purchases of inventory individually represented 10% or more of the Company’s total purchases of inventory, as ~~follows for the years ended December 31, 2022 and 2021:~~follows:


	For the Years Ended				For the Years Ended
	December 31,				December 31,
	2022		2021		2023		2022
Vendor A	*		*		23	%	*
Vendor B	*		14	%	15	%	*
	0	%	14	%	38	%	0	%

*	Less than 10%

Accounts Receivable

Accounts receivable are carried at their contractual amounts, less an estimate for ~~uncollectible amounts.~~credit losses. As of December 31, ~~2022~~2023 and ~~2021,~~2022, no allowances for ~~uncollectible amounts~~credit losses were determined to be necessary. Management estimates the allowance for ~~bad debts~~credit losses based on existing economic conditions, the financial conditions of the customers, and the amount and age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for bad debts only after all collection attempts have been exhausted.

Inventory

The Company capitalizes inventory costs associated with products when future commercialization is considered probable, and a future economic benefit is expected to be realized. These costs consist of finished goods, raw materials, manufacturing – related costs, transportation and freight, and other indirect overhead costs.

Inventory is comprised of carbon fiber velvet (“CFV”) thermal interface solutions and internal short circuit batteries, which are available for sale, as well as raw materials and work in process related primarily to the manufacture of safe cases. Safe cases provide a safe and cost-effective solution to commercially store and transport lithium batteries and mitigate the impacts of cell-to-cell thermal runway propagation. Inventories are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. The cost of inventory that is sold to third parties is included within cost of sales and the cost of inventory that is given as samples is included within operating expenses. The Company periodically reviews for slow-moving, excess or obsolete inventories. Products that are determined to be obsolete, if any, are written down to net realizable value. During the year ended December 31, 2023, certain inventory was written down to its net realizable value by taking a charge to cost of revenue of $293,941. On occasion, the Company pays for inventory prior to receiving the goods. These payments are recorded as inventory deposits until the goods are received and these costs are included in the current asset section of the consolidated balance sheet. As of December 31, ~~2022~~2023 and ~~2021,~~2022, inventory deposits were ~~$285,260~~$27,500 and ~~$309,688,~~$285,260, respectively. Finished goods inventory is held on-site at the San Diego, California ~~location. Raw~~and Webster, Texas locations. Certain raw materials are held off-site with certain ~~suppliers.~~contract manufacturers.

Inventory at December 31, ~~2022~~2023 and ~~2021~~2022 consisted of the following:


	December 31,		December 31,		December 31,		December 31,
	2022		2021		2023		2022
Raw materials	$	1,075,310	$	—	$	322,111	$	1,075,310
Work-in-process		2,977		—		—		2,977
Finished goods		883,748		191,311		826,936		883,748
Total inventory	$	1,962,035	$	191,311	$	1,149,047	$	1,962,035

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation, which is recorded commencing at the in-service date using the straight-line method at rates sufficient to charge the cost of depreciable assets to operations over their estimated useful lives, which range from 3 to 7 years (see Note 56 – Property and Equipment for additional details). Leasehold improvements are amortized over the shorter of (a) the useful life of the asset; or (b) the remaining lease term. Maintenance and repairs are charged to operations as incurred.

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company capitalizes ~~cost~~costs attributable to the betterment of property and equipment when such betterment extends the useful life of the assets. Vendor deposits toward the purchase of property and equipment are reflected as equipment deposits on the accompanying balance sheets.

~~F-13~~

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~~KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

The Company reviews property and equipment assets for ~~the~~ impairment ~~of long-lived assets annually~~on an annual basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying value. As of December 31, 2023 and December 2022, the Company determined there was no impairment of property and equipment.

Intangibles

Intangible assets are stated at ~~fair value~~cost as of the date acquired, less accumulated amortization. Amortization is calculated based on the estimated useful lives of the assets, using the straight-line method or another method that more fairly represents the utilization of the assets, as follows:


		Estimated Useful Life
Patent		17.3 years
Intellectual property		5.0 years
Technology license		10.0 years

The Company periodically evaluates the remaining useful lives of our intangible assets to determine whether events or circumstances warrant a revision to the remaining periods of amortization. In the event that the estimate of an intangible asset’s remaining useful life has changed, the remaining carrying amount of the intangible asset is amortized prospectively over that revised remaining useful life. If it is determined that an intangible asset has an indefinite useful life, that intangible asset would be subject to impairment testing annually or whenever events or circumstances indicate that its carrying value may not, based on future undiscounted cash flows or market factors, be recoverable. An impairment loss, the recorded amount of which would be based on the fair value of the intangible asset at the measurement date, would be recorded in the period in which the impairment determination was made. As of December 31, 2023 and December 31, 2022, the Company determined there was no impairment of intangible assets.

Fair Value of Financial Instruments

The Company measures the fair value of financial assets and liabilities based on the guidance of Accounting Standards Codification (“ASC”) 820, “Fair Value ~~Measurements and Disclosures”~~Measurement” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

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

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

~~Preferred~~Treasury Stock

The Company ~~applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement~~records repurchases of its ~~preferred stock. The Company’s preferred shares~~own common stock at cost. Repurchased common stock is presented as a reduction of equity in the consolidated balance sheets. Subsequent reissuances of treasury stock are ~~classified as stockholders’ equity because they~~accounted for on a weighted average cost basis. Gains resulting from differences between the cost of treasury stock and the re-issuance proceeds are ~~not subject~~credited to ~~mandatory redemption, which would result in liability classified instruments measured at fair value,~~additional paid-in capital. Losses resulting from differences between the cost of treasury stock and ~~because they~~the re-issuance proceeds are ~~not conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject~~debited to ~~redemption upon the occurrence of uncertain events not solely within the Company’s control) which would result in temporary equity classified instruments.~~additional paid-in capital.

~~F-14~~F-13

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Convertible Instruments

The Company evaluates ~~its~~embedded conversion features within convertible ~~instruments~~debt to determine ~~if those contracts or~~whether the embedded ~~components of those contracts qualify as derivative financial instruments to~~conversion feature(s) should be ~~separately~~bifurcated from the host instrument and accounted for ~~in accordance with Topic 815 of the FASB ASC. The accounting treatment of~~as a derivative ~~financial instruments requires that the Company record embedded conversion options and any related freestanding instruments at their fair values as of the inception date of the agreement and~~ at fair value ~~as of each subsequent balance sheet date. Any change~~with changes in fair value recorded in earnings. If an embedded derivative is ~~recorded~~bifurcated from share-settled convertible debt, the Company records the debt component at cost less a debt discount equal to the bifurcated derivative’s fair value. If the conversion feature is not required to be accounted for separately as ~~non-operating, non-cash income or expense~~an embedded derivative, the convertible debt instrument is accounted for ~~each reporting period at each balance sheet date.~~wholly as debt. The Company ~~reassesses~~amortizes the ~~classification of its derivative instruments at each balance sheet date. If~~debt discount over the ~~classification changes as a result of events during the period, the contract is reclassified as~~life of the ~~date of~~debt instrument as additional non-cash interest expense utilizing the ~~event that caused the reclassification. Embedded conversion options~~effective interest method. Debt issuance and ~~any related freestanding instruments~~offering costs are recorded as adebt discount, toreducing the ~~host instrument.~~

~~If the instrument is determined not to be a derivative liability, the Company then evaluates for the existence of a beneficial conversion feature by comparing the market price~~carrying value of the ~~Company’s common stock~~debt instrument, and are amortized as interest expense over the term of the ~~commitment date to~~convertible debt instrument using the effective ~~conversion price of the instrument.~~interest method.

Accrued Issuable Equity

The Company records accrued issuable equity when it is contractually obligated to issue shares and there has been a delay in the issuance of such shares. Accrued issuable equity is recorded and carried at fair value with changes in its fair value recognized in the Company’s consolidated statements of operations. Once the underlying shares of common stock are issued, the accrued issuable equity is reclassified to equity as of the share issuance date at the then current fair ~~market~~ value of the common stock.

Deferred Financing Costs

~~Deferred financing costs, which primarily consist of direct,~~Direct, incremental ~~professional~~ fees incurred in connection with a debt or equity financing, are capitalized as deferred financing costs (a non-current asset) on the balance sheet. Once the financing closes, the Company reclassifies such costs as either discounts to notes payable or as a reduction of proceeds received from equity transactions so that such costs are recorded as a reduction of additional paid-in capital. If the completion of a contemplated financing was deemed to be no longer probable, the related deferred ~~offering~~financing costs would be charged to general and administrative expense in the consolidated financial statements.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation.

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

●

Step 1: Identify the contract with the customer;

●

Step 2: Identify the performance obligations in the contract;

●

Step 3: Determine the transaction price;

●

Step 4: Allocate the transaction price to the performance obligations in the contract; and

●

Step 5: Recognize revenue when the company satisfies a performance obligation.

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

●

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

●

Contract services – Revenue is recognized pursuant to the terms of each individual contract when the Company satisfies the respective performance obligations, which could be recognized at ~~the~~a point in time ~~that~~or over the ~~Company satisfies its performance obligation under~~term of the ~~contract, which is generally at the time the services are fulfilled and/or accepted by the customer.~~

contract.

~~F-15~~F-14

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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


	For the Years Ended				For the Years Ended
	December 31,				December 31,
	2022		2021		2023		2022
Revenues Recognized at a Point in Time:
Product sales	$	2,643,325	$	1,495,328	$	6,903,988	$	2,643,325
Contract services		1,351,309		917,540		1,167,391		1,351,309
Total revenue	$	3,994,634	$	2,412,868
Total						8,071,379		3,994,634
Revenues Recognized Over Time:
Contract services						1,758,787		—
Total Revenues					$	9,830,166	$	3,994,634

Deferred Revenue

As of December 31, ~~2022~~2023 and ~~2021,~~2022, the Company had ~~$23,000~~$551,021 and ~~$132,303~~$23,000 of deferred revenue, respectively, from contracts with customers. The contract liabilities included in deferred revenue represent payments received from customers for which the Company had not yet satisfied its performance obligation under the contract, or the customers have not officially accepted the goods or services provided under the contract. The Company expects to satisfy the remaining performance obligations and recognize the revenue related to its deferred revenue balance within the next twelve months. During the year ended December 31, 2023, $3,000 was recognized for performance obligations satisfied in previous periods. During the year ended December 31, 2022, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods.

Deferred Labor Costs

As of December 31, ~~2022~~2023 and ~~2021,~~2022, the Company had ~~$34,402~~$41,625 and ~~$84,324,~~$34,402, respectively, of deferred labor costs, which is included in prepaid expenses and other current assets in the Company’s consolidated balance sheets. Deferred labor costs represent costs incurred to fulfill the Company’s deferred contract service revenue. The Company will recognize the deferred labor costs as cost of ~~revenues~~revenue at the point in time that the Company satisfies its performance obligation under the respective contract, which is generally at the time the services are fulfilled and/or accepted by the customer.

Shipping and Handling Costs

~~Amounts~~Shipping and handling fees billed to a customer in a sales transaction related toare recorded as revenue. The Company has adopted a policy of accounting for shipping and handling ~~are recorded~~activities as ~~revenue.~~a fulfillment cost rather than a performance obligation. Costs incurred for shipping and handling are included as cost of ~~revenues~~revenue on the accompanying consolidated statements of operations.

Research and Development

Research and development include compensation and other expenses incurred in connection with the research and development of our CFV thermal management solution, high-areal-capacity battery electrodes, 3D engineering for a rechargeable battery, ~~and~~including non-cash stock-based compensation expenses. Research and development expenses are ~~charged to operations~~recognized as incurred.

Advertising Costs

Advertising costs are expensed in the period incurred. Advertising costs charged to operations for the years ended December 31, 2023 and 2022 were $1,801,144 and ~~2021 were~~ $874,398, ~~and $145,025,~~ respectively, and are included in selling, general and administrative expenses in the consolidated statements of operations.

Stock-Based Compensation

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award since the fair value of the award is more readily determinable than the value of the services. The fair value of the award is measured on

F-15

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Upon the exercise of an award, the Company generally issues new shares of common stock out of its authorized shares, but may issue treasury stock when available.

Net Loss Per Common Share

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

~~F-16~~

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~~KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

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


	For the Twelve Months Ended				For the Years Ended
	December 31,				December 31,
	2022		2021		2023		2022
Numerator:
Net loss	$	(19,436,479)	$	(11,911,151)
Deemed dividend to Series D preferred stockholders		—		(2,624,326)
Net loss attributable to common stockholders	$	(19,436,479)	$	(14,535,477)	$	(23,693,556)	$	(19,436,479)

Denominator (weighted average quantities):
Common shares issued		107,683,574		97,708,080		120,756,776		107,683,574
Less: Treasury shares purchased		(125,015)		—		(131,162)		(125,015)
Less: Unvested restricted shares		(2,005,109)		(2,037,897)		(3,079,374)		(2,005,109)
Add: Accrued issuable equity		102,323		79,437		274,500		102,323
Denominator for basic and diluted net loss per share		105,655,773		95,749,620		117,820,740		105,655,773

Basic and diluted net loss per common share	$	(0.18)	$	(0.15)	$	(0.20)	$	(0.18)

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

December 31,

2022

2021
Unvested restricted stock

5,042,500

2,590,000
Unvested market -based equity awards

—

3,000,000
Options

640,216

405,216
Warrants

2,524,410

2,594,553
Total

8,207,126

8,589,769

~~The table above does not include shares to be issued in satisfaction of the remaining prepaid advance liability (see Note 10 – Prepaid Advance Liability).~~

December 31,

2023

2022
Prepaid advance ⁽¹⁾

28,015,465

6,867,791
Unvested restricted stock awards

3,381,008

5,042,500
Restricted stock units

2,250,000

—
Options

722,716

640,216
Warrants

2,524,410

2,524,410
Total

36,893,599

15,074,917

⁽¹⁾

Shares to be issued if the Company defaults on any of its cash payment obligations. The shares are estimated using the effective floor price at the end of each period (see Note 11 – Prepaid Advance Liability).

Operating Leases

The Company leases properties under operating leases. For leases in effect upon adoption of Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” at January 1, 2020 and for any leases commencing thereafter, the Company recognizes a liability to make lease payments, the “lease liability”, and an asset representing the right to use the underlying asset during the lease term, the “right-of-use asset”. The lease liability is measured at the present value of the remaining lease payments, discounted at the Company’s incremental borrowing rate. The right-of-use asset is measured at the amount of the lease liability adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, any unamortized initial direct costs, and any impairment of the right-of-use-asset. Operating lease expense consists of a single lease cost calculated so that the remaining cost of the lease is allocated over the remaining lease term on a straight-line basis, variable lease payments not included in the lease liability, and any impairment of the right-of-use asset.

F-16

Table of Contents

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income Taxes

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in the financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse.

The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

~~F-17~~

~~Table of Contents~~

~~KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s financial statements as of December 31, ~~2022~~2023 and ~~2021.~~2022. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date.

The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as selling, general and administrative expenses in the consolidated statements of operations.

Reclassifications

Certain prior period balances have been reclassified in order to conform to the current period presentation. These reclassifications have no effect on previously reported results of operations or loss per share.

Subsequent Events

The Company has evaluated subsequent events through the date on which the consolidated financial statements were issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements, except as ~~disclosed.~~disclosed in Note 18 – Subsequent Events.

Recently Issued Accounting Pronouncements

In ~~June 2016,~~November 2023, the Financial Accounting Standards Board (the “FASB”) FASB issued ASU ~~No. 2016-13 “Financial Instruments - Credit Losses~~2023-07, “Segment Reporting (Topic ~~326)~~280): Improvements to Reportable Segment Disclosures.” These amendments require a public entity to disclose significant segment expenses and ~~also issued subsequent amendments~~other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Public entities with a single reporting segment are required to provide both the ~~initial guidance under ASU 2018-19, ASU 2019-04, ASU 2019-05~~new disclosures and ~~ASU 2020-02 (collectively Topic 326). Topic 326 requires the measurement and recognition~~all of ~~expected credit losses for financial assets held at amortized cost. This replaces~~ the existing ~~incurred loss model with an expected loss model~~disclosures required under ASC 280. The guidance is effective for fiscal years beginning after December 15, 2023, and ~~requires the use of forward-looking information to calculate credit loss estimates. The Company will be required to adopt the provisions of this ASU on January 1, 2023,~~interim periods within fiscal years beginning after December 15, 2024, with early adoption ~~permitted for certain amendments. Topic 326 must be adopted by applying a cumulative effect adjustment to retained earnings. The~~permitted. Since this new ASU addresses only disclosures, the Company does not expect the adoption of this ~~standard~~ASU to have aany material ~~effect~~effects on its ~~consolidated~~ financial ~~statements.~~condition, results of operations or cash flows. The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023-07.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in ASU 2023 – 09 are effective for the Company on December 15, 2024, with early adoption permitted. Since this new ASU addresses only disclosures, the Company does not expect the adoption to have any material effects on its financial condition, results of operation or cash flows. The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023–09.

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an ~~Entity’s~~Entity; Own ~~Equity.~~ Equity (“ASU ~~2020-06 simplifies~~2020-06”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the ~~accounting~~usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for ~~certain financial instruments with characteristics of liabilities~~convertible debt that require the convertible debt to be separated into a debt and equity ~~including~~component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will instead account for the convertible ~~instruments and contracts in an entity’s own equity. ASU 2020-06~~debt wholly as debt. The new guidance also requires ~~entities to provide expanded disclosures about~~use of the ~~terms and features~~“if-converted” method when calculating the dilutive impact of convertible ~~instruments and amends certain guidance in ASC 260, Earnings per Share, relating to the computation of~~debt on earnings per share, for convertible instruments and contracts in an entity’s own equity. The guidance becomes effective for the Company on January 1, 2024, with early adoption permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.

~~Recently Adopted Accounting Pronouncements~~

~~In December 2019, the Financial Accounting Standards Board (the “FASB”) issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,”~~ which is ~~intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to~~consistent with the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The Company adopted ASU 2019-12 effective January 1, 2021 and its adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In October 2020, the FASB issued ASU 2020-10 “Codification Improvements”, which improves consistency by amending the Codification to include all disclosure guidance in the appropriate disclosure sections and clarifies application of various provisions in the Codification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology. The guidance is effective for the Company beginning in the first quarter of fiscal year 2022 with early adoption permitted. The Company adopted ASU 2020-10 effective January 1, 2022 and its adoption did not have a material impact on its condensed consolidated financial statements.

On May 3, 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective

~~F-18~~F-17

Table of Contents

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company’s current accounting treatment under the current guidance. The guidance is effective for the Company in financial statements issued for fiscal years beginning after December 15, ~~2021, including~~2023, and interim periods within those fiscal ~~years. Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. Early~~years, with early adoption is permitted, ~~including adoption in an interim period. If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of~~but only at the beginning of the fiscal ~~year~~year. Management does not expect the adoption of this pronouncement will have a material effect on the Company’s financial statements.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This update requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that ~~includes that~~affect the collectability of the reported amount. Since June 2016, the FASB issued clarifying updates to the new standard including changing the effective date for smaller reporting companies. The guidance is effective for the Company for fiscal years beginning after December 15, 2022, and interim ~~period.~~periods within those fiscal years, with early adoption permitted. The Company adopted this ASU ~~2021-04 effective~~on January 1, ~~2022~~2023, using the modified retrospective approach and ~~its adoption~~it did not have a material impact on its ~~condensed~~ consolidated financial statements.

NOTE 3 – ASSET ~~PURCHASE~~ACQUISITION

On October 6, 2022 (the “Asset Purchase Date”), KULR Technology Group, Inc. (the “Company”) entered into an agreement (the “Asset Purchase Agreement”) with a seller (the “Seller”), pursuant to which the Company purchased all of the assets, including intellectual property, of the Seller (the “Acquired Assets”) for consideration of $3,500,000 (the “Total Consideration”), of which, $2,000,000 (the “Cash Consideration”) will be paid in cash, and the Company will issue shares of common stock with an aggregate fair value of $1,500,000, valued as of the Asset Purchase Date (the “Equity Consideration”).

The Asset Purchase Agreement includes customary representations, warranties and covenants of the Company and the Seller. The Purchase Agreement also contains post-closing indemnification provisions pursuant to which the parties have agreed to indemnify each other against losses resulting from certain events, including breaches of representations and warranties, covenants and certain other matters.

The Company paid ~~$1,000,000 of~~ the Cash Consideration of $1,000,000 on October 6, ~~2022. The remaining Cash Consideration will be paid in two equal installments of~~2022, $500,000 on ~~each of~~ April 5, 2023 and $500,000 on October 5, ~~2023~~.2023. In addition to total consideration, the seller has been employed by the Company ~~and will receive~~with an annual salary of $216,000. If the Seller terminates his employment with the Company less than four years after the Asset Purchase Date for reasons other than severe health problems or other extenuating circumstances that would render the Seller unable to perform his employment obligations, the Seller is required to pay back to the Company a pro rata portion of the Cash Consideration (the “Clawback”), based upon the length of the Seller’s employment as percentage of the four year employment requirement. A partial year is considered a full year for purposes of calculating the Clawback amount.

The Company will issue the Equity Consideration in four equal installments of 279,852 common shares, valued as of the Asset Purchase Date at $1.34 per share, on the following dates: (i) October 5, 2023, (ii) October 5, 2024, (iii) October 5, 2025, and (iv) October 5, 2026, provided that the Seller has not terminated his employment with the Company as of the date of payment.

All of the Equity Consideration is contingent upon the continued employment of the Seller; further, 75% of the Cash Consideration is subject to Clawback, based on the term of the Seller’s employment by the Company. As such, an aggregate of $3,000,000 of the Total Consideration is accounted for as compensation, which will be recognized on a pro rata basis over the employment term requirement. During the years ended December 31, 2023 and 2022, the Company recognized compensation expense of $500,000 and $125,000, respectively, which are included within the research and development expenses in the consolidated statements of operations. The remaining $500,000 of Total Consideration iswas accounted for as consideration for the Acquired Assets.

Management determined that the remaining $500,000 of consideration attributable to fair value of the Acquired Assets was concentrated into a single identifiable asset, namely, intellectual property. As a result, this transaction was accounted for as an asset acquisition.

The Company incurred legal costs in connection with the execution of the Asset Purchase Agreement, in the aggregate amount of $43,572. The total cost of the intellectual property acquired of $543,572 is included in intangible assets on the accompanying consolidated balance sheet and is being amortized over its estimated useful life of 5 years (see Note 67 – Intangible Assets for additional details).

~~F-19~~F-18

Table of Contents

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On May 4, 2023, the Company entered into an agreement (the “Asset Purchase Agreement”) with a seller (the “Seller”), pursuant to which the Company purchased all of the assets, primarily intellectual property, of the Seller (the “Acquired Assets”) for consideration of $75,000 (the “Total Consideration”), which was paid in cash on May 11, 2023. In addition, the Seller has been employed by the Company. The total cost of the intellectual property acquired of $75,000 is included in intangible assets on the accompanying consolidated balance sheet and is being amortized over its estimated useful life of 5 years.

The Asset Purchase Agreement includes customary representations, warranties and covenants of the Company and the Seller. The Asset Purchase Agreement also contains post-closing indemnification provisions pursuant to which the parties have agreed to indemnify each other against losses resulting from certain events, including breaches of representations and warranties, covenants and certain other matters.

The Company determined that the transaction should be accounted for as an asset acquisition because substantially all of the fair value of the Acquired Assets is concentrated in a single asset. The total cost of the intellectual property acquired of $75,000 is included in intangible assets on the accompanying consolidated balance sheet and is being amortized over its estimated useful life of 5 years (see Note 7 – Intangible Assets for additional details).

NOTE 4 – INVENTORY DEPOSITS

Inventory deposits consist of amounts paid in advance to vendors to secure future deliveries of specific finished goods and raw materials which will be received and sold in future periods.

As of December 31, 2023 and December 31,2022, the Company had outstanding inventory deposits of $27,500 and $285,260, respectively.

NOTE 45 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of December 31, ~~2022~~2023 and ~~2021,~~2022, prepaid expenses and other current assets consisted of the following:


	As of December 31,				As of December 31,
	2022		2021		2023		2022
Vendor receivables	$	368,069	$	—
Deferred labor costs		34,402		84,324
Compensation costs					$	375,000	$	375,000
Deferred expenses						59,089		34,402
Security deposits						55,308		—
Dues and subscriptions						50,689		75,889
Insurance		12,776		69,925		32,606		12,776
Professional fees		25,787		65,118		24,125		25,787
Conferences and seminars						19,338		—
Vendor receivables						1,995		368,069
Marketing and sponsorships						1,512		574,636
Research and development						—		62,329
Other		84,120		31,074		11,699		84,120
Research and development		62,329		—
Dues and subscriptions		75,889		—
Compensation costs		375,000		—
Marketing and sponsorships		574,636		10,231
Total prepaid expenses	$	1,613,008	$	260,672
Total prepaid expenses and other current assets					$	631,361	$	1,613,008

Prepaid marketing and sponsorship costs as of December 31, 2022, primarily consist of two sponsorship agreements with a marketing partner whereby the Company is required to make upfront payments which were amortized over the respective service periods of the agreements. As of December 31, 2023, the sponsorship costs were fully amortized.

F-19

Table of Contents

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 56 -– PROPERTY AND EQUIPMENT

As of December 31, ~~2022~~2023 and ~~2021,~~2022, property and equipment consisted of the following:


	December 31,					December 31,
	2022		2021		Estimated Useful Life	2023		2022		Estimated Useful Life
Construction in progress ~~(1)~~	$	1,428,217	$	—		$	408,076	$	1,428,217
Machinery & equipment		1,374,293		72,392	5 - 7 years		3,864,009		1,374,293	5 – 7 years
Leasehold improvements		345,709		339,422	Lesser of the useful life of the asset or remaining life of the lease		2,043,672		345,709	Lesser of the useful life of the asset or remaining life of the lease
Computer equipment		152,699		47,503	3 years		212,616		152,699	3 years
Software		127,193		18,714	3 years		314,932		127,193	3 years
Research and development equipment		100,939		12,810	3 years		167,517		100,939	3 years
Research and development laboratory							101,053		—	10 years
Furniture and fixtures		6,968		6,968	5 years		6,968		6,968	5 years
		3,536,018		497,809			7,118,843		3,536,018
Less: accumulated depreciation		(342,977)		(123,334)
Less: accumulated deprecation							(2,420,699)		(342,977)
Property and equipment, net	$	3,193,041	$	374,475		$	4,698,144	$	3,193,041

~~(1)~~

~~Consists primarily of $1,198,733 for the construction of an automation facility and $184,484 for the construction of the mezzanine.~~

Depreciation expense amounted to ~~$219,643~~$2,077,722 and ~~$66,667, respectively,~~$219,643 for the years ended December 31, ~~2022~~2023 and ~~2021,~~2022, respectively, which is included in cost of revenue, selling, general and administrative and research and development expenses in the consolidated statements of operations.

NOTE ~~6 -~~7 – INTANGIBLE ASSETS

The Company’s intangible assets consist of the following:


	December 31,				December 31,
	2022		2021		2023		2022
Patent	$	218,000	$	218,000	$	218,000	$	218,000
Intellectual property		543,572		—		618,572		543,572
Technology license						60,000		—
		761,572		218,000		896,572		761,572
Less: accumulated amortization		(40,804)		(1,048)		(177,177)		(40,804)
Intangible assets, net	$	720,768	$	216,952	$	719,395	$	720,768

On October 5, 2022, the Company acquired intellectual property with an aggregate cost of $543,572 (see Note 3 – Asset Acquisition). This long-lived intangible asset has a useful life of 5 years and is being amortized on a straight-line basis and tested for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

In February 2023, the Company entered into an agreement and paid $60,000 for exclusive use of a technology license. This long-lived asset has a useful life of ten years and is being amortized on a straight-line basis and tested for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

On May 4, 2023, the Company acquired intellectual property with an aggregate cost of $75,000 (see Note 3 – Asset Purchase). This long-lived intangible asset has a useful life of 5 years and is being amortized on a straight-line basis and tested for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

During the years ended December 31, 2023 and 2022, the Company recognized amortization expense related to intangible assets of $136,373 and $39,756, respectively.

F-20

Table of Contents

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In December 2021, the Company acquired a patent for consideration of $218,000. This long-lived intangible asset has a useful life of approximately 17.3 years and is being amortized on a straight-line basis and tested for impairment on an annual basis.

On October 5, 2022 the Company acquired intellectual property with an aggregate cost of $543,572 (see Note 3 - Asset Purchase). This long-lived intangible asset has a useful life of 5 years and is being amortized on a straight-line basis and tested for impairment on an annual basis.

During the years ended December 31, 2022 and 2021, the Company recognized amortization expense related to intangible assets of $39,756 and $1,048, respectively. As of December 31, 2022, the Company had no impairments of its intangible assets.

The weighted average remaining amortization period of the Company’s intangible assets is ~~8.0~~7.3 years. Future amortization of intangible ~~asset~~assets is as follows:


For the Years Ended December 31, 2022
2023	$	121,293
For the Years Ending December 31,
2024		121,293	$	142,293
2025		121,293		142,293
2026		121,293		142,293
2027		94,114		115,113
2028				23,579
Thereafter		141,482		153,824
	$	720,768	$	719,395

NOTE ~~7 -~~8 – EQUIPMENT DEPOSITS

The Company entered into agreements with third party contractors for the design and ~~build~~construction of a battery packaging and inspection automation system, and automated robotic tending system. As of December 31, ~~2022~~2023 and ~~2021,~~2022, the Company had outstanding deposits of ~~$3,514,937~~$1,332,436 and ~~$2,153,950,~~$3,514,937, respectively, in connection with these agreements.

NOTE ~~8 -~~9 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

As of December 31, ~~2022~~2023 and ~~2021,~~2022, accrued expenses and other current liabilities consisted of the following:


	As of December 31,				December 31,		December 31,
	2022		2021		2023		2022
Professional fees	$	1,180,000	$	418,154	$	1,875,000	$	1,180,000
Payroll and vacation		464,453		302,101		504,748		464,453
Research and development		196,409		146,158		441,192		196,409
Refund due to customer						171,960		—
Inventory						145,949		58,804
Legal fees						117,640		2,000
Tools and supplies						28,663		—
Board compensation						23,750		122,500
Royalties						17,505		3,861
Marketing and advertising fees						—		3,999
Subscriptions		65,000		—		—		65,000
Inventory		58,804		—
Accrued cost of sales		—		128,500
Board compensation		122,500		45,680
Marketing and advertising fees		3,999		37,810
Legal fees		2,000		—
Other		49,112		84,824		136,937		45,251
Total accrued expenses and other current liabilities		2,142,277		1,163,227		3,463,344		2,142,277
Add: Accrued interest, non-current		157,054		—		5,899		157,054
Total accrued expenses and other current liabilities	$	2,299,331	$	1,163,227
Total					$	3,469,243	$	2,299,331

~~F-21~~

~~Table of Contents~~

~~KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

NOTE ~~9 -~~10 – ACCRUED ISSUABLE EQUITY

A summary of the accrued issuable equity activity during the ~~year~~years ended December 31, 2023 and 2022, is presented below:


	As of December 31,				For the Years Ended
	2022		2021		As of December 31,
Beginning balance	$	290,721	$	128,380
Grant date value of share obligations		176,270		245,720
					2023		2022
Fair value at January 1					$	227,956	$	290,721
Additions						158,133		176,270
Cancellation of accrued issuable equity		(92,000)		—		—		(92,000)
Mark-to-market						(167,040)		(147,035)
Shares issued in satisfaction of accrued issuable equity		—		(209,200)		(206,047)		—
Mark-to-market		(147,035)		125,821
Ending balance	$	227,956	$	290,721
Fair value at December 31					$	13,002	$	227,956

F-21

Table of Contents

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the years ended December 31, ~~2022~~2023 and ~~2021,~~2022, the Company entered into certain contractual arrangements for consulting services in exchange for a fixed number of shares of common stock of the Company. On the respective dates the contracts were entered into, the estimated fair value of the shares to be issued was an aggregate of $158,133 and $176,270, ~~and $245,720, respectively.~~

~~On October 5, 2022,~~respectively, based on the ~~Company entered into an Asset Purchase Agreement (See Note 3, Asset Purchase), pursuant to which the Company agreed to issue 279,851 shares of common stock on each~~quoted market prices of the four anniversaries following the Asset Purchase Date, provided that the Seller has not terminated his employment with the Company as of the date of payment. Since all of the Equity Consideration is contingent upon the employment of the Seller, the grant date value of the accrued issuable shares will be accounted for as compensation expense, and will be recognized on a pro rata basis over the four-year employment requirement. As of December 31, 2022, the Company has accrued for the issuance of 69,963 shares of common stock, with an aggregate grant date value of $93,750.

During the year ended December 31, 2021, the Company settled certain of its accrued issuable equity obligations through the issuance of an aggregate of 100,000 of its shares with an aggregate fair value of $209,200, remeasured as of the date of settlement.shares.

During the year ended December 31, 2022, the Company cancelled certain of its accrued issuable equity obligations of an aggregate of 33,333 of its shares ~~respectively,~~ with an aggregate fair value of $92,000, ~~respectively,~~ due to a reduction in investor relation services.

During the year ended December 31, 2023, the Company settled certain of its accrued issuable equity obligations through the issuance of an aggregate of 409,723 of its shares with an aggregate fair value of $206,047, remeasured as of the date of settlement based on the quoted market prices of the shares.

During the years ended December 31, ~~2022~~2023 and ~~2021,~~2022, the Company recorded gains (losses) in the aggregate amount of ~~$147,035~~$167,040 and ~~($125,821),~~$147,035, respectively, related to the ~~change~~changes in fair value of accrued issuable equity (see Note 1316 – Stockholders’ (Deficit) Equity, Stock-Based Compensation for additional details). The fair value of the accrued but unissued shares as of December 31, ~~2022 and 2021~~2023 was ~~$227,956 and $290,721, respectively.~~$13,002, based on Level 1 inputs, which consist of quoted prices for the Company’s common stock in active markets.

NOTE 1011 – PREPAID ADVANCE LIABILITY

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

Original Issue


Prepaid Advance

Discount

Debt Discount

Net
Current portion

$
5,750,000

$
302,579

$
(396,967)

$
5,655,612
Non-current portion

3,250,000

171,052

(224,374)

3,196,678
Total prepaid advance liability

$
9,000,000

$
473,631

$
(621,341)

$
8,852,290

Gross Amount of

Less:

Prepaid Advance

Prepaid Advance

Debt

Liability,


Liability

Discount

net of discount

Balance, January 1, 2022

$
—

$
—

$
—

Proceeds from prepaid advance

15,000,000

15,000,000

Original issue discount on prepaid advance

789,474

(789,474)

—

Legal fees

—

(85,000)

(85,000)

Repayments in cash

—

—

—

Repayments pursuant to Investor Notices

(6,315,843)

—

(6,315,843)

Amortization of debt discount

—

253,133

253,133

Balance, December 31, 2022

9,473,631

(621,341)

8,852,290
⁽¹⁾
Proceeds from prepaid advance

2,000,000

—

2,000,000

Original issue discount on prepaid advance

105,263

(105,263)

—

Legal fees

—

(30,000)

(30,000)

Repayments in cash

(1,575,000)

—

(1,575,000)

Repayments pursuant to Advance Notices

(52,806)

—

(52,806)

Repayments pursuant to Investor Notices

(4,032,658)

—

(4,032,658)

Amortization of debt discount

—

730,230

730,230

Balance, December 31, 2023

$
5,918,430

$
(26,374)

$
5,892,056
⁽²⁾

⁽¹⁾	The current portion of this liability was $5,655,612 as of December 31, 2022.

⁽²⁾	The current portion of this liability was $0 as of December 31, 2023.

On September 23, 2022, the Company entered into a Supplemental Agreement (the “Supplemental Agreement”) to its Standby Equity Purchase Agreement (the “SEPA”) with ~~Yorkville.~~YA II PN, Ltd. (“Yorkville”). Under the Supplemental Agreement, the Company may from time-to-time request advances of up to $15,000,000 (each, a “Prepaid Advance”) from Yorkville with a limitation on the aggregate amount of such advances of $50,000,000. At any time that there is a balance outstanding under a Prepaid Advance, the Company is not permitted to deliver Advance Notices (as defined in Note ~~11,~~16, Stockholders’ (Deficit) Equity) under the ~~SEPA.~~SEPA, without prior consent from Yorkville.

Each Prepaid Advance matures 12 months after the date of the closing of such advance (the “Prepaid Advance Date”), and accrues interest at 10% per annum, subject to an increase to 15% per annum upon events of default as defined. Any Prepaid Advance balance that remains outstanding at maturity must be repaid in cash.

~~F-22~~

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~~KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Pursuant to the terms of the Supplemental Agreement, Yorkville has the right to receive shares to pay down Prepaid Advances, and may select the timing and delivery of such shares (via an “Investor Notice”), in an amount up to the balance of the Prepaid Advance at a price equal to the lower of (a) 135% of the volume weighted average price (“VWAP”) of the Company’s common stock on the day

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

immediately prior the closing of the Prepaid Advance, or (b) 95% of the lowest VWAP during the three days immediately prior to the Investor Notice.

~~The Company may prepay amounts owed for a~~Each Prepaid Advance ~~in cash, provided that the Company gives Yorkville 10 days’ notice~~accrues interest at 10% per annum, subject to an increase to 15% per annum upon events of ~~its intent to repay in cash (the “Prepayment Notice”)~~default as defined and ~~provided that the daily VWAP of the Company’s common stock on~~matures 12 months after the date of ~~Prepayment Notice is not less than $0.75. The prepayment amount will be delivered on~~ the ~~11th trading day after the Prepayment Notice,~~closing of such advance. Any advance balance that ~~Yorkville has 10 days to deliver an Investor Notice with respect to the~~remains outstanding ~~Prepaid Advance. The prepayment amount will be equal to the amount of Prepaid Advance to~~at maturity must be repaid ~~plus all accrued and unpaid interest owed on the Prepaid Advance, as well as a payment premium equal to 5% of the principal amount being repaid.~~

~~Upon the occurrence of certain triggering events, as defined, the Company may be required to make monthly repayments of amounts outstanding under a Prepaid Advance, with each monthly repayment to be~~ in an amount equal to the sum of (x) $3.0 million, (y) 5% (the “Payment Premium”) in respect of such amount, and (z) all outstanding accrued and unpaid interest in respect of such Prepaid Advance as of each payment date.cash.

On September 23, 2022, the Company recorded an initial Prepaid Advance liability in the amount of $15,789,474, which consisted of $15,000,000 of gross cash proceeds (the “Initial Advance”), plus an original issue discount of $789,474. Of the $15,000,000 Initial Advance amount, $3,850,000 was used to repay amounts due under a Note Purchase Agreement with Yorkville. The Company incurred $85,000 of legal and professional fees in connection with its entry into the Supplemental Agreement. The original issue discount and legal and professional fees incurred were recorded as a debt discount, which ~~will be~~is being amortized ratably over the term of the Initial Advance.

~~As of December 31, 2022,~~On March 10, 2023, the Company ~~has issued 5,375,269 shares of common stock as partial repayment of the Initial~~and Yorkville agreed and closed on a second Prepaid Advance ~~principal~~(the “Second Advance”). The Company recorded additional prepaid advance liability in the amount of ~~$6,000,000 and premium and~~$2,105,263, which consisted of $2,000,000 cash proceeds received, plus an original issue discount of $105,263. Interest accrues on the outstanding balance of each Prepaid Advance at an annual rate of 10%, subject to an increase to 15% upon events of default, as defined.

On September 18, 2023, the Company repaid an aggregate amount of $1,839,731, consisting of a principal amount of $1,500,000, accrued interest in the amount of ~~$315,843~~$264,731 and ~~$125,000, respectively. The balance~~a payment premium in the amount of Prepaid Advance Liability as of December 31, 2022 is $8,852,290, which consists of the remaining Initial Advance balance of $9,000,000, plus $473,631 original issue discount on the remaining Initial Advance balance, net of unamortized debt discount of $621,341.$75,000.

During the year ended December 31, ~~2022,~~2023, the Company issued 4,078,971 shares of common stock, at purchase prices per share ranging from $0.57 to $1.20, pursuant to Investor Notices submitted by Yorkville for aggregate proceeds of $4,466,627. The proceeds were applied against the principal and interest due for the Prepaid Advance Liability in the aggregate amounts of $4,032,657 and $433,970, respectively.

During the year ended December 31, 2023, the Company recorded interest expense in the amount of ~~$282,054~~$728,318 and recorded amortization of debt discount in the amount of ~~$253,133~~$730,230 in connection with the Prepaid Advance liability.

~~Subsequent to~~On August 16, 2023, as amended on August 23, 2023, August 30, 2023, November 6, 2023 and December ~~31, 2022,~~19, 2023, the Company ~~issued 3,153,036 shares~~and Yorkville entered into letter agreements (the “Letter Agreement”), intended to supplement and modify the Supplemental Agreement to extend the repayment date of ~~common stock in satisfaction of~~ the ~~Initial Advance liability in the amount of $3,250,000 and interest accrued through March 2023 in the amount of $329,932 (see Note 17, Subsequent Events). As a result, $3,196,678 of~~ Prepaid Advance Liability ~~at December 31, 2022 (consisting~~balance as follows: (i) an initial payment of ~~$3,250,000 of Initial Advance balance,~~$1,000,000 plus ~~$171,052 original issue discount, less $224,374 of unamortized debt discount)~~accrued interest as well as ~~$157,054~~a 5% cash payment premium on or before December 31, 2023 or the date of the closing of any financing conducted by the Company (the “December Payment”); (ii) $2,000,000 on or before February 29, 2024 plus accrued interest ~~payable~~ as ~~of December 31, 2022, are classified~~well as a ~~non-current liability on~~5% cash payment premium (the “February Payment”); (iii) the ~~accompanying consolidated balance sheet.~~

~~NOTE 11 – LEASES~~

The Company leases office space in San Diego, California. The lease, as amended, provided for monthly rental payments of $5,127, and the lease term expired on June 30, 2021. Subsequent to the expirationremaining principal amount of the ~~lease term,~~Prepaid Advance Liability of $2,597,194 plus accrued interest as well as a 5% cash payment premium on or before April 30, 2024 (the “April Payment”).

On January 9, 2024, the Company entered into a ~~verbal~~letter agreement with Yorkville to defer the ~~landlord to continue occupying the space on~~Company’s December 31, 2023 (the “December Payment”) payment of $2,000,000 plus accrued interest and a ~~month-to-month basis~~5% cash payment premium until February 29, 2024. On February 13, 2024, the Company ~~eventually moved out~~and Yorkville entered into another agreement to extend all payment due dates and defer all payment obligations to December 31, 2024. See Note 18 – Subsequent Events – Prepaid Advance Liability for additional details.

As of March 27, 2024, all remaining principal and accrued interest balances related to the Prepaid Advance Liability were repaid in ~~October 2021.~~full through the issuance of common stock (see Note 18 – Subsequent Events – Prepaid Advance Liability). Consequently, the outstanding balance as of December 31, 2023 is classified as non-current.

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 – LEASES

On January 18, 2023, the Company entered into a new lease agreement for office space in Webster, Texas. The ~~Company evaluated this operating~~initial lease term is twelve months and thirteen days. Monthly rental payments under the new lease are $5,047, which is comprised of $4,245 of base rent plus $802 of common area maintenance fees. The Company determined that the ~~short-term exemption available under ASC 842 applied since~~value of the lease ~~term is less than 12 months~~liability and the ~~lease does not include a purchase option whose exercise is reasonably certain. Since the short-term exemption applies, lease payments are recognized as~~related right-of-use asset at inception was $51,154, using an ~~expense and no right~~estimated incremental borrowing rate of ~~use asset or lease liability was recorded~~5% (see Note 18 – Subsequent Events – Leases for information related to ~~this lease.~~the new lease entered into subsequent to December 31, 2023).

On April 5, 2021, the Company entered into a new lease agreement for office space in San Diego, California, effective June 1, 2021. The initial lease term is three years and there is an option to renew for an additional five years. Management does not expect to exercise its option to renew. Monthly rental payments under the new lease begin at $23,787, which is comprised of $18,518 of base rent plus

~~F-23~~

~~Table of Contents~~

~~KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~$5,268~~ $5,268 of common area maintenance fees, with annual escalation of 3.5%~~. The Company paid a security deposit of $50,213 in connection with~~ (see Note 18 – Subsequent Events – Leases for information related to the ~~new~~ lease ~~agreement.~~extension entered into subsequent to December 31, 2023).

The Company determined that the value of the lease liability and the related right-of-use asset at inception was $814,817, using an estimated incremental borrowing rate of 5% based on information available at the commencement date of the lease.

During the years ended December 31, ~~2022~~2023 and ~~2021,~~2022, operating lease expense was ~~$231,116~~$265,457 and ~~$223,548~~$231,116 respectively. As of December 31, ~~2022,~~2023, the Company ~~does~~did not have any financing leases.

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


	Amount
Total future minimum lease payments	$	103,432
Less: amount representing imputed interest		(1,246)
Present value of lease liabilities	$	102,186

The Company paid a security deposit of $50,213 in connection with the San Diego lease ~~liabilities~~agreement which is recorded within the prepaid expenses and other current assets section of the balance sheet as of December 31, ~~2022 were as follows:~~

Maturity Year

Amount
2023

234,694
2024

99,187
Total lease payments

333,881
Less: Imputed interest

(12,278)
Present value of lease liabilities

321,603
Less: current portion

(223,645)
Lease liabilities, non-current portion

$
97,958

2023.

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


	For the Years Ended				For the Years Ended
	December 31,				December 31,
	2022		2021		2023			2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating lease	$	205,034	$	144,540
Right-of-use asset obtained in exchange for lease obligations
Operating lease	$	—	$	814,817
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating activities					$	270,570		$	205,034
Right-of-use assets obtained in exchange for lease obligations
Operating leases					$	51,154		$	—

Weighted Average Remaining Lease Term (Years)
Operating leases						0.4 years			1.4 years
Weighted Average Discount Rate
Operating leases						5.0	%		—

NOTE 1213 – ~~NOTES PAYABLE~~RELATED PARTY TRANSACTIONS

During the year ended December 31, 2021, the Company repaid principal on notes payable (the 2021 Notes Payable) to Yorkville in the aggregate amount of $2,450,000, such that the balance on the notes payable was $0 at December 31, 2021. The Company paid debt redemption costs in the aggregate amount of $140,000, which were recognized as expense during the year ended December 31, 2021 (see Note 15 – Stockholders’ Equity for additional details).

~~The Company recorded amortization expense related to the debt discount on the 2021 Notes Payable of $128,198 during the year ended December 31, 2021.~~

~~On May 13,~~Effective August 26, 2022, the Company entered into ~~a note purchase~~an eight-month consulting agreement with Yorkville, pursuant to which Yorkville purchased a full recourse promissory note with an initial principal amount equal to $5,000,000 (the “Promissory Note”) for net cash proceeds of $4,750,000. The Promissory Note included an original issue discount of $250,000, which represents the ~~difference between the principal amount~~father of the Promissory Notes and the proceeds received. The Company also incurred a structuring fee of $10,000, and legal fees of $7,200 in connection with the Promissory Note. The original issue discount, along with structuring fees were recorded as a debt discount to be amortized over the term of the Note using the effective interest rate method. The Promissory Note carriesCompany’s Chief Technology Officer (the “Related Consultant”), which shall automatically renew for an interest rate of 10% per annum. As of December 31, 2022, the Company had fully repaid the principal and interest due in the amounts of $5,000,000 and $165,493, respectively, of which $3,850,000 and $0, respectively, were paid from the proceeds of the Initial Advance (see Note 10 - Prepaid Advance Liability).

additional four months unless otherwise terminated. During the ~~year~~years ended December 31, 2023 and 2022, expense recognized for services provided by the Related Consultant were $32,055 and $16,290, respectively, and is included within selling, general and administrative expenses in the consolidated statements of operations. On July 24, 2023, the Related Consultant accepted an employment offer by the Company, ~~recorded (i) interest expense related to the Promissory Note in the amount $650,493,~~ which included $165,493 of stated interest, a 10% payment premium in the amount of $385,000 and a late payment premium in the amount of $100,000, (ii) amortization of debt discount in the amount of $258,692, and (iii) a gainbecame effective on ~~the extinguishment of debt in the amount of $8,508, which represented the unamortized portion of debt discount on the date that the debt was extinguished.~~August 7, 2023.

F-24

Table of Contents

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~The following table summarizes activity related to the Promissory Note during the year ended~~As of December 31, ~~2022.~~

Notes

Debt



Payable

Discount

Total
Balance, January 1, 2022

$
—

$
—

—
Proceeds from promissory note

5,000,000

(250,000)

4,750,000
Debt discount

—

(17,200)

(17,200)
Repayments in cash

(4,850,000)

—

(4,850,000)
Repayments in shares of common stock

(150,000)

—

(150,000)
Amortization of debt discount

—

258,692

258,692
Loss on debt extinguishment

—

8,508

8,508
Outstanding, December 31, 2022

$
—

$
—

$
—

2023 and December 31, 2022, the Company did not have material accounts payable outstanding with related parties.

NOTE 1314 – ~~LOAN~~NOTES PAYABLE

On ~~April 27, 2020,~~November 29, 2023, the Company ~~received $155,226 of cash proceeds~~entered into an agreement (the “Promissory Note 1”) with an individual investor (the “Investor 1”), pursuant to which the Investor purchased a five-year Promissory Note with a principal amount of $150,000. The Promissory Note carries an ~~unsecured loan (the “PPP” Loan) provided in connection~~interest rate of 15% per annum, with the ~~Paycheck Protection Program (“PPP”~~first interest payment due on the one-year anniversary of the Promissory Note, and then every six months thereafter. The Company is required to repay the principal amount by the maturity date of November 29, 2028. There were no legal fees or issue discount associated with this Promissory Note.

On December 6, 2023, the Company entered into an agreement (the “Promissory Note 2”) ~~under~~with an individual investor (the “Investor 2”), pursuant to which the ~~Coronavirus Aid, Relief, and Economic Security Act and applicable regulations (“CARES Act”). The PPP Loan, along~~Investor purchased a five-year Promissory Note with ~~interest accrued in the~~a principal amount of ~~$3,449 was forgiven on July 18, 2022, and~~$100,000. The Promissory Note carries an interest rate of 15% per annum, with the ~~Company recorded a gain~~first interest payment due on the ~~forgiveness~~one-year anniversary of the ~~loan in the aggregate amount of $158,675, which is reflected in other income on the accompanying statements of operations.~~

Promissory Note, and then every six months thereafter. The Company ~~recorded interest expense~~is required to repay the principal amount by the maturity date of ~~$825 and $1,701 during the years ended~~December 6, 2028. There were no legal fees or issue discount associated with this Promissory Note.

See Note 18 – Subsequent Events – Promissory Notes for information related to notes payable issued subsequent to December 31, ~~2022 and 2021, respectively.~~2023.

NOTE ~~14 -~~15 – INCOME TAXES

The income tax provision (benefit) for the years ended December 31, ~~2022~~2023 and ~~2021~~2022 consists of the following:


	For the Years Ended				For The Years Ended
	December 31,				December 31,
	2022		2021		2023		2022
Federal:
Federal
Current	$	—	$	—	$	—	$	—
Deferred		(3,967,600)		(2,359,473)		(4,772,247)		(3,967,600)

State and local:
State and Local
Current		—		—		—		—
Deferred		(1,133,600)		(996,095)		(405,473)		(1,133,600)
		(5,101,200)		(3,355,568)		(5,177,720)		(5,101,200)
Change in valuation allowance		5,101,200		3,355,568		5,177,720		5,101,200
Income tax provision	$	—	$	—	$	—	$	—

A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:

For the Years Ended

December 31,


2022

2021

Tax benefit at federal statutory rate

(21.0)
%
(21.0)
%
State income taxes, net of federal benefit

(6.0)
%
(6.0)
%
Permanent differences

(0.1)
%
(1.0)
%
Other and prior year true-ups

0.9
%
0.0
%
Change in valuation allowance

26.2
%
28.0
%
Effective income tax rate

0.0
%
0.0
%

~~F-25~~

~~Table of Contents~~

~~KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~


	For The Years Ended
	December 31,
	2023		2022

Tax benefit at federal statutory rate	(21.0)	%	(21.0)	%
State income taxes, net of federal benefit	(3.5)	%	(6.0)	%
Permanent differences	0.9	%	(0.1)	%
Other and prior year true-ups	2.3	%	0.9	%
Rate and apportionment changes	(0.6)	%	0.0	%
Change in valuation allowance	21.9	%	26.2	%
Effective income tax rate	(0.0)	%	0.0	%

The Company has determined that a valuation allowance for the entire net deferred tax asset is required. A valuation allowance is required if, based on the weight of evidence, it is more likely than not that some or the entire portion of the deferred tax asset will not be realized. After consideration of all the evidence, management has determined that a full valuation allowance is necessary to reduce the deferred tax asset to zero.

F-25

Table of Contents

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The tax effects of temporary differences that give rise to deferred tax assets and liabilities are presented below:


	For the Years Ended				For The Years Ended
	December 31,				December 31,
	2022		2021		2023		2022
Deferred Tax Assets (Liabilities):
Net operating loss carryforwards	$	9,078,972	$	4,978,331	$	12,665,029	$	9,078,972
Research and development credit carryforwards		101,422		270,188		101,422		101,422
Capitalized research and development costs		953,675		—		1,949,748		953,675
Stock-based compensation		1,587,800		981,067		1,687,091		1,587,800
Property and equipment		(382,819)		—		87,018		(382,819)
Debt Discount		(16,384)		—
Intangible assets						24,945		4,320
Debt discount						(1,436)		(16,384)
Accruals and other		63,580		55,460		50,149		59,260
Gross deferred tax assets		11,386,246		6,285,046		16,563,966		11,386,246
Valuation allowance		(11,386,246)		(6,285,046)		(16,563,966)		(11,386,246)
Deferred tax asset, net of valuation allowance	$	—	$	—	$	—	$	—

Changes in valuation allowance	$	5,101,200	$	3,355,568	$	5,177,720	$	5,101,200

At December 31, ~~2022~~2023 and ~~2021,~~2022, the Company had federal net operating loss carry forwards of approximately ~~$33.7~~$49.0 million and ~~$18.6~~$32.3 million, respectively. At December 31, ~~2022,~~2023, approximately ~~$3.4~~$3.3 million of federal net operating losses will expire from 2033 to 2037, and approximately ~~$30.3~~$45.7 million will have no expiration. At December 31, ~~2022~~2023 and ~~2021,~~2022, the Company had state net operating loss carry forwards of approximately ~~$33.6~~$33.3 million and ~~$18.1~~$33.6 million, respectively, which will begin to expire in 2024.

The net operating loss carryovers may be subject to annual limitations under Internal Revenue Code Section 382, and similar state provisions, should there be a greater than 50% ownership change as determined under the applicable income tax regulations. The amount of the limitation would be determined based on the value of the company immediately prior to the ownership change and subsequent ownership changes could further impact the amount of the annual limitation. An ownership change pursuant to Section 382 may have occurred in the past or could happen in the future, such that the NOLs available for utilization could be significantly limited.

~~The Company files federal and state (California) tax returns which are subject to audit for the years ending on or after December 31, 2019.~~ No tax audits were commenced or were in process during the years ended December 31, ~~2022~~2023 and ~~2021.~~2022. No tax related interest or penalties were incurred during the years ended December 31, 2023 and 2022. The Company’s federal and state income tax returns beginning with the year ended December 31, 2020 remain subject to examination.

NOTE ~~15 -~~16 – STOCKHOLDERS’ (DEFICIT) EQUITY

Authorized Capital

The Company is authorized to issue 500,000,000 shares of common stock, par value of $0.0001 per share, and 20,000,000 shares of preferred stock, par value of $0.0001 per share. The holders of the Company’s common stock are entitled to one vote per share. The preferred stock is designated as follows: 1,000,000 shares designated as Series A Preferred Stock, 31,000 shares designated as Series B Convertible Preferred Stock, 400 shares designated as Series C Preferred Stock, and 650 shares designated as Series D Convertible Preferred Stock.

Equity Incentive Plan

On August 15 and November 5, 2018, the Board of Directors and a majority of the Company’s ~~shareholders,~~stockholders, respectively, approved the 2018 Equity Incentive Plan (the “2018 Plan”). Under the 2018 Plan, 15,000,000 shares of common stock of the Company are authorized for issuance. The 2018 Plan provides for the issuance of incentive stock options, non-statutory stock options, rights to purchase common stock, stock appreciation rights, restricted stock and restricted stock units to employees, directors and consultants of the Company and

~~F-26~~

~~Table of Contents~~

~~KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

its affiliates. The 2018 Plan requires the exercise price of stock options to be not less than the fair value of the Company’s common stock on the date of grant. As of December 31, ~~2022,~~2023, there were ~~10,174,005~~7,601,405 shares available for issuance under the 2018 Plan.

F-26

Table of Contents

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Standby Equity Purchase Agreement(“SEPA”) and Supplemental SEPA

On May 13, 2022, the Company entered into the SEPA with Yorkville. Pursuant to the SEPA, the Company has the right, but not the obligation, to sell to Yorkville up to an aggregate of $50,000,000 of its shares of common stock, par value $0.0001 per share, at the Company’s request any time during the commitment period commencing on May 13, 2022 and terminating on the first day of the month following the 24-month anniversary of the SEPA.

Each sale (an “Advance”) that the Company requests under the SEPA (via an “Advance Notice”) may be for a number of shares of common stock with an aggregate value of up to $5,000,000. Shares are sold under the SEPA at 98.0% of the average of the VWAPs during each of the three consecutive trading days commencing on the trading day following the Company’s submission of an Advance Notice to Yorkville. Advances are subject to certain limitations, including that Yorkville will not purchase any shares that would result in it owning more than 4.99% of the Company’s outstanding common stock at the time of an Advance, or more than the amount of shares registered under the registration statement in effect at the time of the Advance. Further, the aggregate amount of shares purchased under the SEPA (as defined) ~~cannot~~could not initially exceed 19.9% of the Company’s outstanding common stock as of the date of the SEPA. See Note 18 – Subsequent Events – Prepaid Advance Liability for additional information regarding the lifting of the 19.9% restriction.

~~Through~~During the year ended December 31, ~~2022,~~2023, the Company issued ~~Advance Notices to for the issuance of 255,240~~905,833 shares of common stock ~~valued at $399,018~~ pursuant to Advance Notices to repay $166,337 of the ~~SEPA,~~Prepaid Advance Liability, of which ~~94,458 shares valued at issuance at $150,000, were issued in satisfaction of Notes Payable~~$113,531 was applied to ~~Yorkville.~~accrued interest, and $52,806 was applied to principal.

~~On September 23, 2022, the Company entered into the Supplemental Agreement~~See Note 11 – Prepaid Advance Liability, for details related to a supplemental agreement to the SEPA and ~~received a Prepaid Advance in the amount of $15,000,000 pursuant to the Supplemental Agreement (see~~ Note 1018 – Subsequent Events – Prepaid Advance ~~Liability). At any time that there is a balance outstanding under a Prepaid~~Liability for information related to subsequent common stock issuances pursuant to Advance ~~the Company is not permitted to deliver Advance Notices under the SEPA.~~Notices.

Series A Preferred Stock

Each record holder of Series A Preferred Stock shall have the right to vote on any matter with holders of the Company’s common stock and other securities entitled to vote, if any, voting together as one class. Each record holder of Series A Preferred Stock is entitled to one-hundred votes per share of Series A Preferred Stock held by such holder.

The Series A Preferred Stock is not convertible into any series or class of stock of the Company. In addition, holders of the Series A Preferred Stock shall not be entitled to receive dividends, nor do they have a right to distribution from the assets of the Company in the event of any liquidation, dissolution, or winding up of the Company.

On November 5, 2018, the Company received a written consent of the majority of the stockholders to issue 1,000,000 shares of the Company’s Series A Preferred Stock to ~~Mr. Mo,~~the Chief Executive Officer of the Company, if necessary, as a measure to protect the Company from an uninvited takeover. As of the date of filing, the shares of Series A Preferred Stock have not been issued. Please see Note 18 – Subsequent Events – Unregistered Sales of Equity Securities for additional information on the issuance of Series A Preferred Stock.

Series B Convertible Preferred Stock

Holders of shares of Series B Convertible Preferred Stock are not entitled to voting rights or dividend rights. The Series B Convertible Preferred Stock does not contain any redemption provisions or other provisions requiring cash settlement within control of the holder. Series B Convertible Preferred Stock is senior in liquidation preference to common stock. Each share of Series B Convertible Preferred Stock, after 181 days after issuance and without the payment of additional consideration, is convertible at the option of the holder into fifty (50) fully paid and non-assessable shares of common stock. ~~It was determined that the embedded conversion option is clearly and closely related to the equity host, therefore it is not bifurcated and not accounted for as a derivative.~~

During the year ended December 31, 2021, the Company issued an aggregate of 698,600 shares of common stock upon the conversion of 13,972 shares of Series B Preferred stock, after which no Series B Convertible Preferred Stock remained outstanding.

There are no Series B Convertible shares outstanding or available to issue at December 31, ~~2022.~~2023.

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~~KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Series C Convertible Preferred Stock

Series C Convertible Preferred Stock is senior in liquidation preference to the Company’s common stock for an amount equal to the stated value per share of $10,000 (“Stated Value”). Holders of shares of Series C Convertible Preferred Stock shall vote on an as-if-converted-to-common-stock basis with the common stockholders. Holders of shares of Series C Convertible Preferred Stock are entitled to receive dividends when, as and if declared by the Board of Directors, at an annual rate of twelve percent (12)% beginning one year after each share’s issuance. The Company may elect to redeem all or part of each share of Series C Convertible Preferred Stock for the Stated Value.

~~There are no Series C Convertible shares outstanding or available to issue at December 31, 2022.~~

~~Series D Convertible Preferred Stock~~

On May 19, 2021, the Company entered into a Securities Purchase Agreement (“SPA”) with an investor, pursuant to which the Company agreed to issue to the investor an aggregate of 650 shares of Series D convertible preferred stock (the “Series D Preferred”) pursuant to a new designation of preferred stock, and one-year warrants to purchase 2,600,000 shares of common stock (the “Warrants”) at a price of $2.50 per share, for aggregate gross proceeds of $6,500,000 (the “Offering”). The Company also agreed to pay the investor a commitment fee of 1,300,000 shares of common stock at the closing of the Offering. The closing of the Offering occurred on May 20, 2021. In connection with the closing of the financing, the Company repaid in full its aggregate remaining notes payable obligation of $1,400,000.

The Series D Preferred have a fixed conversion price of $2.05, are convertible into an aggregate of 3,170,730 shares of common stock and have the right to vote on an as-converted basis. Holders of the Series D Preferred shall be entitled to receive cumulative dividends annually at an annual rate equal to ten percent (10%). Dividends shall be payable in cash or, at the option of the holder of the Series D Preferred, converted into shares of common stock as provided in the certificate of designation for the Series D Preferred. Provided that the shares of common stock issuable upon conversion of the Series D Preferred is registered pursuant to an effective registration statement, the Company shall have the option, but not the obligation, to redeem, in cash, all or part of the Series D Preferred.

The Company determined that the Series D Preferred was permanent equity given that there was no redemption provision at the holder’s option and it was determined that the conversion option was clearly and closely related to the equity host, so it didn’t need to be bifurcated. The Company further determined that the $10,000 cash structuring fee, debt redemption costs of $140,000, and the remaining notes payable obligation of $1,400,000 paid to the investor, would be accounted for as a reduction of the $6,500,000 of gross proceeds. The remaining proceeds of $6,490,000 were allocated on a relative fair value basis to the Series D Preferred ($3,875,675), the commitment shares ($1,339,582) and the Warrant ($1,274,743). The Company used the Black-Scholes option pricing model to determine the fair value of the Warrant using the following assumptions: exercise price of $2.50 per share, market price of $2.05 per share, expected term of 1.0 year, volatility of 142% and a risk-free interest rate of 0.05%. Finally, the Company determined that the Series D Preferred had a beneficial conversion feature equal to $2,624,326 which is a deemed dividend and represents an adjustment to the numerator in the loss per share calculation. The cash issuance costs of $365,000 (inclusive of the $10,000 cash structuring fee) were charged to additional paid-in-capital.

~~On June 17, 2021, all of the outstanding shares of Series D Preferred were converted into 3,170,730 shares of common stock, after which no Series D Convertible Preferred Stock remained outstanding.~~

~~There are no Series D Convertible shares available at December 31, 2022.~~

~~Common Stock~~

During the year ended December 31, 2021, the Company issued an aggregate of 170,000 shares of immediately vested common stock with a grant date value of $376,909 for legal and consulting services and issued 6,000 shares with a grant date value of $18,000 related to the acquisition of an intangible asset during the year ended December 31, 2021.

~~During the year ended December 31, 2021, KULR issued an aggregate of 184,784 shares of common stock upon the exercise of options.~~

~~During the year ended December 31, 2021, KULR issued an aggregate of 6,793,358 shares of our common stock upon the exercise of warrants.~~

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

There are no Series C Convertible shares outstanding or available to issue at December 31, 2023.

Series D Convertible Preferred Stock

Holders of the Series D Preferred shall vote on an as-if-converted basis and are entitled to receive cumulative dividends annually at an annual rate equal to ten percent (10%).

There are no Series D Convertible shares outstanding or available at December 31, 2023.

Common Stock

During the year ended December 31, 2022, the Company issued an aggregate of 51,000 shares of immediately vested common stock with a grant date value of $109,850 for legal and consulting services.

During the year ended December 31, 2022, the Company issued an aggregate of 2,416,668 shares of common stock upon the exercise of warrants pursuant to which the Company received an aggregate of ~~$3,020,835~~$3,020,836 of gross proceeds.

During the year ended December 31, 2023, the Company issued an aggregate of 551,323 shares of common stock valued at $268,820 for legal and consulting services, of which 189,963 shares valued at issuance at $227,956 were accrued at January 1, 2023 for services rendered in prior years.

During the year ended December 31, 2023, the Company issued an aggregate of 13,389,285 shares of common stock in public equity offerings for gross proceeds of $3,910,000 less issuance costs of $846,030.

Treasury Stock

~~Pursuant to the exercise of options, the Company transferred 63,542 shares that were held in treasury for an aggregate of $48,382 gross proceeds.~~ As of December 31, 2023 and 2022, the Company has 131,162 shares held in treasury ~~valued~~recorded at their cost of $296,222. During the year ended December 31, 2022, the company withheld 194,704 shares valued at $439,728 for employee income tax withholding obligations in connection with the vesting of restricted common stock during the period.

Warrants

A summary of warrants activity during the year ended December 31, ~~2022~~2023 is presented below:


		Weighted		Weighted				Weighted		Weighted
		Average		Average				Average		Average
	Number of	Exercise		Remaining	Intrinsic		Number of	Exercise		Remaining	Intrinsic
	Warrants	Price		Term (Yrs)	Value		Warrants	Price		Term (Yrs)	Value
Outstanding, January 1, 2022	2,594,553	$	1.25
Outstanding, January 1, 2023							2,524,410	$	1.02
Issued	2,346,525		1.00				—		—
Exercised	(2,416,668)		(1.25)				—		—
Expired	—		—				—		—
Forfeited	—		—				—		—
Outstanding, December 31, 2022	2,524,410	$	1.02	3.0	$	492,770
Exercisable, December 31, 2022	2,524,410	$	1.02	3.0	$	492,770
Outstanding, December 31, 2023							2,524,410	$	1.02	2.0	$	—
Exercisable, December 31, 2023							2,524,410	$	1.02	2.0	$	—

A summary of outstanding and exercisable warrants as of December 31, ~~2022~~2023 is presented below:


Warrants Outstanding	Warrants Outstanding		Warrants Exercisable		Warrants Outstanding		Warrants Exercisable
			Weighted				Weighted
		Outstanding	Average	Exercisable		Outstanding	Average	Exercisable
	Exercise	Number of	Remaining Life	Number of	Exercise	Number of	Remaining Life	Number of
	Price	Warrants	In Years	Warrants	Price	Warrants	In Years	Warrants
$	1.25	177,885	3.0	177,885	1.25	177,885	2.0	177,885
$	1.00	2,346,525	3.0	2,346,525	1.00	2,346,525	2.0	2,346,525
		2,524,410	3.0	2,524,410		2,524,410	2.0	2,524,410

~~Stock-Based Compensation~~

During the years ended December 31, 2022 and 2021, the Company recognized stock-based compensation expense of $4,175,014 and $4,200,091, respectively, related to restricted common stock, warrants and stock options, of which $4,136,494 and $4,171,241, respectively are included within selling, general and administrative expenses, and $38,520 and $28,850, respectively are included within research and development expenses on the consolidated statements of operations.

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents information related to stock-based compensation for the years ended December 31, ~~2022~~2023 and ~~2021:~~2022:


	For the Years Ended					For The Years Ended
	December 31,					December 31,
	2022			2021		2023		2022
Common stock issued for services	$	109,850		$	167,710
Accrued issuable equity (common stock)		84,270			245,719
Common stock for services (includes accrued, unissued shares)						$	220,903	$	194,120
Amortization of stock options		103,220			68,239		157,659		103,220
Amortization of restricted stock awards and units							3,124,174		1,945,272
Amortization of market-based awards		1,932,402			2,111,845		—		1,932,402
Amortization of restricted stock units		1,945,272	��		1,606,578
Total	$	4,175,014		$	4,200,091	$	3,502,736	$	4,175,014

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

Stock Options

A summary of options activity (excluding market-based option awards) during the year ended December 31, ~~2022~~2023 is presented below:


		Weighted		Weighted				Weighted		Weighted
		Average		Average				Average		Average
	Number of	Exercise		Remaining	Intrinsic		Number of	Exercise		Remaining	Intrinsic
	Options	Price		Term (Yrs)	Value		Options	Price		Term (Yrs)	Value
Outstanding, January 1, 2022	405,216	$	2.29
Outstanding, January 1, 2023							640,216	$	1.72
Granted	330,000		1.71				325,000		0.87
Exercised	(66,042)		0.71
Expired	—		—
Forfeited	(28,958)		1.49				(242,500)		1.97
Outstanding, December 31, 2022	640,216	$	1.72	3.6	$	60,767
Outstanding, December 31, 2023							722,716	$	1.26	2.6	$	—

Exercisable, December 31, 2022	199,174	$	1.43	2.1	$	58,476
Exercisable, December 31, 2023							389,522	$	0.74	1.2	$	—

The following table presents information related to stock options (excluding market-based option awards) as of December 31, ~~2022:~~2023:


Options Outstanding	Options Outstanding		Options Exercisable		Options Outstanding		Options Exercisable
			Weighted				Weighted
		Outstanding	Average	Exercisable
Range of						Outstanding	Average	Exercisable
Exercise		Number of	Remaining Life	Number of		Number of	Remaining Life	Number of
Price		Options	In Years	Options		Options	In Years	Options
$0.66		110,486	1.0	106,320
$1.28 - $1.50		140,000	—	—
$0.62 - $0.99						325,486	0.5	253,542
$1.21 - $1.50						155,000	4.0	46,250
$1.55 - $1.99		90,000	3.4	5,208		82,500	3.3	27,500
$2.05 - $2.44		299,730	3.4	87,646		159,730	2.9	62,230
		640,216	2.1	199,174		722,716	1.2	389,522

For the years ended December 31, ~~2022~~2023 and ~~2021,~~2022, the weighted average grant date fair value per share of options was ~~$1.23~~$0.52 and ~~$0.80,~~$1.23, respectively.

The Company has computed the fair value of stock options granted using the Black-Scholes option pricing model. In applying the Black-Scholes option pricing model, the Company used the following range of assumptions:


	For the Years Ended						For The Year Ended
	December 31,						December 31,
	2022			2021			2023			2022
Risk free interest rate		1.18% - 4.54	%		0.20% - 0.85	%		3.92% - 5.40	%		1.18% - 4.54	%
Expected term (years)		3.5 - 3.9			2.5 - 3.5			0.5 – 3.5			3.5 – 3.9
Expected volatility		104% - 116	%		93% - 109	%		105% - 109	%		104% - 116	%
Expected dividends		0	%		0	%		0	%		0	%

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Option forfeitures are accounted for at the time of occurrence. The expected term used is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of employee option grants. The Company utilizes an expected volatility figure based on the historical volatility of its common stock over a period of time equivalent to the expected term of the instrument being valued. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

As of December 31, 2023, there was $300,321 of unrecognized stock-based compensation expense related to the above stock options, which will be recognized over the weighted average remaining vesting period of 2.5 years.

Restricted Stock Awards

The following table presents information related to restricted stock awards as of December 31, 2023:


		Weighted Average
	Shares of Restricted	Grant Date
	Common Stock	Fair Value
Non-vested RSAs, January 1, 2023	2,042,500	$	2.50
Granted	2,218,508		0.96
Vested	(740,000)		2.41
Forfeited	(140,000)		2.06
Non-vested RSAs, December 31, 2023	3,381,008	$	1.53

On March 31, 2021, the Company granted 2,000,000 restricted shares of common stock to the Company’s President and Chief Operating Officer with a grant date fair value of $5,220,000. The restricted shares vest in four (4) equal annual installments, the first installment of which vested on March 1, 2023. On March 31, 2023, and effective as of March 1, 2023, the Company withheld and cancelled 175,000 shares of its common stock to satisfy an aggregate of $229,249 of payroll tax withholdings and remittance obligations in connection with vesting of 500,000 shares of restricted stock, resulting in a net settlement of 325,000 shares. The withholding and cancellation of the 175,000 shares represented a retirement of shares at a price per share equal to $1.31, the closing price per share of our common stock on the trading day prior to the March 1, 2023, the effective date of the share cancellation.

During the year ended December 31, 2022, the Company issued as incentive shares to its employees, an aggregate of 250,000 shares of restricted common stock, of which, 75,000 shares were cancelled.

On March 31, 2023, the Company granted 1,500,000 restricted shares of common stock with a grant date fair value of $1,380,000 to the Company’s Chief Financial Officer. The restricted shares vest in five (5) equal annual installments.

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

During the year ended December 31, 2023, the Company issued 50,000 shares of restricted common stock for marketing services subject to a 180-day lock-up period.

As of December 31, 2023, there was $3,642,659 of unrecognized stock-based compensation expense related to restricted stock that will be recognized over the weighted average remaining vesting period of 2.75 years.

Restricted Stock Units

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

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Option forfeitures are accounted for at the time of occurrence. The expected term used is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants. The Company does not yet have a trading history to support its historical volatility calculations. Accordingly, the Company is utilizing an expected volatility figure based on a review of the historical volatility of comparable entities over a period of time equivalent to the expected life of the instrument being valued. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

As of December 31, 2022, there was $442,199 of unrecognized stock-based compensation expense related to the above stock options, which will be recognized over the weighted average remaining vesting period of ~~3.1~~ ~~years.~~

~~Market-Based Awards and Exchange for Restricted Stock Units~~


		Weighted Average
	Restricted	Grant Date
	Stock Units	Fair Value
Non-vested RSUs, January 1, 2023	3,000,000	$	2.05
Granted	—		—
Vested	(750,000)		—
Forfeited	—		—
Non-vested RSUs, December 31, 2023	2,250,000	$	2.05

On March 1, 2021, in connection with the appointment of the Company’s Chief Operating Officer (the “COO”), the COO became eligible to receive of up to 1,500,000 shares of the Company’s common stock which would be earned based upon achieving certain market capitalization milestones up to $4 billion (the “Market-based RSU Award”). The grant date fair value of this award of $2,911,420 was determined using a Monte Carlo valuation model for market-based vesting awards, and was amortizable over each of the tranches’ prospective derived service period.

On June 10, 2021, the Chief Executive Officer (the “CEO”) received an option for the purchase of up to 1,500,000 shares of the Company’s common stock at an exercise price of $2.60 per share (the “Market-based Option Award”, and together with the Market-based RSU Award, the “Market-based Awards”), which would be earned based upon achieving certain market capitalization milestones up to $4 billion. The grant date fair value of this award of $2,579,000 was determined using a Monte Carlo valuation model for market-based vesting awards, and was amortizable over each of the tranches’ prospective derived service period.

On November 1, 2022 (the “Modification Date”), the Board approved the termination of the Market-Based Awards and approved the grant of 1,500,000 restricted stock units (the “RSUs”) with a grant date fair value of $3,075,000, to each of the COO and CEO (the “Grantees”). The grant date value was determined using the stock price per share immediately preceding the Board approval of the grant. The RSUs will vest in four equal installments over the course of four years, ~~in accordance with~~ the ~~following schedule:~~


		~~Number of~~
		~~Restricted Stock~~
~~Vesting Date~~		~~Units That Vest~~
~~November 1, 2023~~		~~750,000~~
~~November 1, 2024~~		~~750,000~~
~~November 1, 2025~~		~~750,000~~
~~November 1, 2026~~		~~750,000~~

first of which vested on November 1, 2023.

The exchange of RSUs for the Market-based Awards was accounted for as a modification of stock awards; as such, the amortizable value of the RSUs was determined to be $4,226,175, which represents the unrecognized grant-date fair value of the Market-based awards of $1,446,175, plus $2,780,000 representing the incremental fair value of the RSUs over the fair value of the Market Based Awards at the modification date.

The following assumptions were used in applying the Monte Carlo valuation model to the Company’s market-based awards on each of the measurement dates described above.


	November 1,		March 1,		June 10,		November 1,		March 1,		June 10,
	2022		2021		2021		2022		2021		2021
Risk free interest rate	4.33	%	0.71	%	0.73	%	4.33	%	0.71	%	0.73	%
Expected volatility	100.0	%	98.9	%	98.5	%	100.0	%	98.9	%	98.5	%
Expected dividend yield	0	%	0	%	0	%	0	%	0	%	0	%
Expected term	3.3 years		2.1 years		2.2 years		3.3 years		2.1 years		2.2 years

As of December 31, 2023, there was $2,970,061 of unrecognized stock-based compensation expense related to restricted stock units that will be recognized over the weighted average remaining vesting period of 3.09 years.

Stock-Based Compensation

During the years ended December 31, 2023 and 2022, the Company recognized stock-based compensation expense of $3,502,736 and $4,175,014, respectively, related to restricted stock awards, restricted stock units, warrants and stock options, of which $3,227,782 and $4,136,494, respectively, are included within selling, general and administrative expenses, and $274,954 and $38,520, respectively are included within research and development expenses in the consolidated statements of operations.

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~Restricted Common Stock~~

~~The following table presents information related to restricted stock awards and restricted stock units (excluding Market-Based RSU Awards) as of December 31, 2022:~~

Weighted Average

Shares of Restricted

Grant Date

Common Stock

Fair Value
Non-vested balance, January 1, 2022

2,590,000

$
2.52
Granted

3,310,000

2.05
Vested

(857,500)

2.38
Canceled

—

—
Non-vested shares, December 31, 2022

5,042,500

$
2.23

During the year ended December 31, 2021, KULR issued as incentive shares to its employees, an aggregate of 2,677,744 shares of our restricted common stock, of which, 117,744 shares were subsequently cancelled.

As of December 31, 2022, there was $7,813,665 of unrecognized stock-based compensation expense related to restricted stock that will be recognized over the weighted average remaining vesting period of 3.1 years.

NOTE ~~16 -~~17 – COMMITMENTS AND CONTINGENCIES

Patent License Agreement

~~On March 21, 2018,~~During April 2023, the Company entered into ana licensing agreement ~~with~~whereby the ~~National Renewable Energy Laboratory (“NREL”) granting the~~ Company obtained an exclusive license to commercialize its patented ~~Internal Short Circuit technology.~~Format Fractional Thermal Runaway Calorimeter. The agreement is effective ~~for~~ as long as the licensed patents are enforceable, subject to certain early termination provisions specified in the agreement. In consideration, the Company agreed to pay ~~to NREL~~ the following: (i) a cash payment of ~~$12,000~~$60,000 payable upon the execution of the agreement (which was capitalized as an intangible asset and is being amortized over ~~one year,~~its useful life), and (ii) royalties ~~ranging from 1.5% to 3.75%~~of 5.5% on the net sales price of ~~the licensed~~royalty-based products and services for each accounting period, as defined in the agreement, with minimum annual royalty payments ~~ranging from $0 to $7,500. In addition,~~of $20,000 beginning in the 2024 calendar year.

Appointment of Vice President, Sales

On January 16, 2023, the Company ~~shall use commercially reasonable efforts to bring~~appointed a Vice President of Sales (the “VP of Sales”), and issued the licensed products to market through a commercialization program that requires that certain milestones be met, as specified in the agreement. During the years ended December 31, 2022 and 2021, the Company recorded royalty expenseVP of ~~$6,304 and $2,558, respectively, which were included within cost of revenues.~~

~~Technology Development and Sponsorship Agreement~~

On March 31, 2021, the Company entered into a multi-year technology development and sponsorship agreement, pursuant to which the Company has committed to spend an aggregate of $900,000 in sponsorship fees, payable in three installments, of which $250,000 was paid on April 1, 2021, $300,000 was paid on January 31, 2022, and $350,000 is due during the first quarter of 2023. Payments under this agreement are initially recorded as a prepaid expense and are then amortized over the performance period. During the years ended December 31, 2022 and 2021, $300,000 and $250,000, respectively, of sponsorship fees expense were recognized related to this agreement.

In addition, the Company has committed to paying an aggregate of $750,000 related to technology co-development fees, which is to be paid in three equal installments. As of December 31, 2022, the co-development technologies had not been agreed to and no portion of the technology co-development fees has been paid.

On December 16, 2021, the Company entered into a one-year sponsorship agreement (the “Second Sponsorship Agreement”) which provides the Company with the right to display its name and logo during certain events during the period from January 1, 2022 through December 31, 2022. During the year ended December 31, 2022, the Company recorded $1,350,000 of sponsorship fees expense related to this agreement.

On June 15, 2022, the Company amended the Second Sponsorship Agreement to extend the term through December 31, 2023. The agreement provides the Company with the right to publicize and highlight the sponsorship and display its name and logo during certain events and use digital marketing and social media platforms throughout the 2023 calendar year. The Company has committed to pay an aggregate of $1,450,000 in sponsorship fees in three installments, of which $500,000 was paid in July 2022, $475,000 was paid in

~~F-32~~

~~Table of Contents~~

~~KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

January 2023, and $475,000 is payable in April 2023. As of December 31, 2022, $500,000 is included in prepaid expenses (see Note 4 - Prepaid Expenses and Other Current Assets) and will be amortized over the performance period of January 1, 2023 to December 31, 2023 using the straight-line method.

~~Research and Development Agreements~~

On April 5, 2021, the Company entered into a two-year research and development agreement to develop high-areal-capacity battery electrodes to increase the energy density of batteries. Pursuant to the terms of the agreement, the Company has committed to spend an aggregate amount of $580,375, payable in eight quarterly installments of $72,547. During the years ended December 31, 2022 and 2021, $290,188 and $217,641, respectively, of research and development expense was recognized related to this agreement.

On August 18, 2021, the Company entered into a multi-year research and development agreement for a solid-state rechargeable battery, pursuant to which the Company has committed to spend an aggregate amount of $592,196 in eight quarterly payments of $74,025. During the years ended December 31, 2022 and 2021, $296,100 and $123,375, respectively, of research and development expense was recognized related to this agreement.

~~Consulting Agreement~~

On September 30, 2020, the Company entered into a 2-year consulting agreement with a contractor to provide services as an Advisory Board Member related to government and defense acquisitions in exchange for 60,000Sales 298,507 shares of restricted common stock. ~~Pursuant to the consulting agreement, the shares are subject to the Company’s claw back, based upon the satisfaction of meeting general performance parameters. As of December 31, 2022, the~~The restricted common stock had a grant date fair value of ~~the common stock was recognized as stock-based compensation expense ratably over the vesting period.~~

~~During the years ended December 31, 2022~~$400,000, and ~~2021, $25,545 and $46,455 of expense was recognized as stock-based compensation under this agreement. See Note 15 – Stockholders’ Equity for additional details.~~

~~Election of Directors and Appointment of Certain Officers~~

On November 1, 2022, the Board of the Company appointed a Lead Independent Director (“Lead Director”) and a non-Lead Independent Director (“non-Lead Director”) of the Board, to hold office until the earlier of the expiration of the term of office of the director whom they have replaced, successors are duly elected and qualified, or the earlier of such director’s death, resignation, disqualification, or removal. Furthermore, the Lead Director will receive annual cash compensation equal to $150,000 upon their appointment and the non-Lead Independent Director (“non-Lead Director”) will receive annual cash compensation equal to $95,000. Additionally, all independent Board members will be granted 37,500 shares of common stock of which shares shall vest quarterly in 7,500 share installments with the first installment vesting December 31, 2022.

On March 16, 2022, the Company hired an individual to serve as the Director of Engineering. Effective November 1, 2022, the Company appointed this individual as Chief Technology Officer (the “CTO”) of the Company, upon which the Company issued 100,000 shares of restricted common stock with an aggregate grant date value of $205,000, which shall vestvests in four equal annual installments beginning ~~November 1, 2023.~~January 16, 2024 based solely on continued service. The grant date fair value is being amortized ratably over the vesting period. In addition, the Company committed to a severance package of $250,000 and one-year of family health insurance if the VP of Sales is terminated without cause (as defined) within one year of hire.

NOTE ~~17 -~~18 – SUBSEQUENT EVENTS

Prepaid Advance Liability

Subsequent to December 31, ~~2022,~~2023, the Company issued ~~3,153,036~~40,276,430 shares of common stock, at a purchase ~~prices~~price per share ranging from ~~$0.90~~$0.13 to ~~$1.20,~~$0.41, pursuant to ~~Investor~~SEPA Advance Notices submitted by the Company to Yorkville for aggregate proceeds of ~~$3,579,932.~~$8,326,457. Of the gross proceeds, $2,610,650 was retained by the Company to fund operations. The remaining proceeds were applied against the principal and interest ~~due for Initial~~owed in connection with the Prepaid Advance ~~in the aggregate amounts of $3,250,000 and $329,932, respectively.~~Liability. As of March ~~28, 2023,~~27, 2024, the ~~remaining balance on the Initial~~Prepaid Advance ~~is $5,750,000.~~Liability and related accrued interest has been repaid in full. See Note 1011 – Prepaid Advance Liability for additional information.

On ~~March 10, 2023,~~January 9, 2024, the Company had entered into a letter agreement with Yorkville to defer the Company’s December 31, 2023 (the “December Payment”) payment of $2,000,000 plus accrued interest and a 5% cash payment premium until February 29, 2024. On February 13, 2024, the Company entered into a letter agreement (the “Amendment Agreement”) with Yorkville ~~agreed~~to extend all payment due dates (including the December 2023, February 2024 and ~~closed~~April 2024 payments) and to defer all payment obligations to December 31, 2024.

Under the terms of the Supplemental Agreement, the aggregate number of shares purchased under the SEPA could not initially exceed 19.9% of the Company’s outstanding common stock as of the date of the SEPA. Pursuant to its obligations under the agreement, on February 9, 2024, the Company obtained stockholder approval for the issuance of shares of common stock to Yorkville beyond the Exchange Cap.

Merchant Cash Advance Agreement

On January 22, 2024, the Company entered into a ~~second Prepaid~~merchant cash advance agreement (the “Cash Advance Agreement”) whereby the Company received $504,900 of cash (net of underwriting fees of $35,100), and paid finder’s fees in cash of $21,600 and finder’s fees to be issued in equity with an aggregate value of $16,200,with the obligation to repay a total of $804,600 over thirty-two weekly payments of $25,143.75, beginning January 30, 2024. On February 26, 2024, the parties added an addendum to the agreement for ~~$2,000,000~~an early payoff discount whereby the Company will owe $756,000 if paid by March 22, 2024, or $783,000 if paid by April 22, 2024.

On February 26, 2024, the Company entered into a merchant cash advance agreement (the “Second ~~Advance”~~Cash Advance Agreement”)~~. Interest accrues on~~ with the ~~outstanding balance~~lender mentioned above whereby the Company received $502,200 of ~~each Prepaid Advance at~~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 ~~annual rate~~aggregate value of ~~10%, subject~~$16,200, with the obligation to ~~an increase to 15% upon events~~repay a total of ~~default as defined.~~$804,600 over thirty weekly payments of $26,820, beginning February 29, 2024.

~~F-33~~F-32

Table of Contents

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~Operating Lease~~Unregistered Sales of Equity Securities

On January ~~18, 2023,~~26, 2024, the Board of Directors (“Board”), approved, authorized, and ratified the issuance of 730,000 shares of previously designated Non-convertible Series A Voting Preferred Stock to the Chairman and Chief Executive Officer of the Company, Michael Mo, for no consideration, subject to the Board reserving the full and unequivocal right to revoke, rescind, transfer or otherwise cancel the issued Non-convertible Series A Voting Preferred Stock in the event Michael Mo is removed from any position with the Company or resigns from all positions with the Company.

The issuance of up to 1,000,000 shares of Non-convertible Series A Voting Preferred Stock was previously approved and authorized by a vote of the majority stockholders of the Company and reinforces and enhances the Company’s flexibility to optimize the Company’s negotiating position in any potential current and/or future engagements with commercial, financial, and/or strategic parties, and to provide defenses against potential hostile third-party actions.

Leases

On January 25, 2024, the Company entered into an amendment to the lease dated April 5, 2021 for the facility located at 4863 Shawline Street, San Diego, CA 92111. Pursuant to the amendment, the lease is extended for a period of eighteen months commencing June 1, 2024, and terminating November 30, 2025. Monthly rental payments under the amendment are $29,337.30.

On January 27, 2024, the Company entered into a new lease agreement for office space in Webster, Texas. The initial lease term is ~~twelve months and thirteen days.~~63 months. Monthly rental payments under the new lease are ~~$5,047,~~$30,086, which is comprised of ~~$4,245~~$21,950 of base rent ~~plus $802~~and $11,136 of common area maintenance fees. No cash payments are due for the first three months of the lease.

Promissory Notes

On April 2, 2024, the Company entered into an agreement (the “Promissory Note”), with a lender (the “Lender”), pursuant to which the Lender purchased a promissory note with an initial principal amount of $500,000. The Company ~~determined that the value~~received cash proceeds of ~~the lease liability~~$440,000, resulting in a discount of $60,000, made up of an original issue discount of $50,000 and ~~the related right-of-use asset at inception was $51,154, using~~debt issuance costs of $10,000. The Promissory Note carries an ~~estimated incremental borrowing~~annual interest rate of ~~5%.~~0%, which shall increase to 15% in the event of default, and has a maturity date of October 2, 2024, after which all outstanding principal and accrued interest will become immediately due.

~~Patent License Agreement~~

~~During February 2023,~~On April 9, 2024, the Company entered into a ~~licensing~~note purchase agreement ~~whereby~~pursuant to which the Company ~~obtained~~issued a promissory note with an ~~exclusive license~~initial principal amount of $200,000 and which matures on the first anniversary of its issuance. The Company received cash proceeds of $200,000. The promissory note carries an annual interest rate of 16%. In the event the promissory note is prepaid within 9 months of its issuance, the holder is entitled to ~~commercialize its patented Format Fractional Thermal Runaway Calorimeter. The agreement is effective for as long as~~ the ~~licensed patents are enforceable, subject to certain early termination provisions specified in the agreement. In consideration, the Company agreed to pay the following: (i) a~~repayment of principal and cash payment of ~~$60,000 payable upon~~interest equal to 12% of the ~~execution~~prepayment amount.

Warrants

As part of ~~this agreement, (ii) royalties~~the January 2024 and February 2024 Merchant Cash Advance Agreements (see Merchant Cash Advance Agreement above), on April 9, 2024, the Company issued and delivered a total of ~~5.5% on~~190,177 warrants to the ~~net sales price~~FINRA-registered financial advisor that assisted with arranging the facility. The warrants grant the advisor the right to purchase one share of ~~royalty-based products, and services~~common stock for each ~~accounting period, as defined in the agreement,~~warrant, at prices ranging from $0.14 per share to $0.19 per share, with ~~minimum annual royalty payments~~a final expiration date of $20,000 for each accounting period. In addition, the Company shall establish: (a) that a market for the licensed invention has been created, and to the extent practicable, that a market has been created in the United States; (b) that it is being utilized; (c) that its benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms; and (d) that market demand, at least in the United States, shall be reasonably met.February 26, 2027.

~~F-34~~F-33


Delaware		81-1004273
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)



Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	KULR	NYSE American LLC

Securities registered pursuant to Section 12(g) of the Act:
None


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐


		Page
Part I
Item 1	Business	32
Item 1A	Risk Factors	1211
Item 1B	Unresolved Staff Comments	2021
Item 1C	Cybersecurity	21
Item 2	Properties	2022
Item 3	Legal Proceedings	2022
Item 4	Mine Safety Disclosures	2022
Part II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	2123
Item 6	[Reserved]	2223
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operation	2224
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	2729
Item 8	Financial Statements and Supplementary Data	2729
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	2730
Item 9A	Controls and Procedures	2730
Item 9B	Other Information	2831
Item 9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	2831
Part III
Item 10	Directors, Executive Officers and Corporate Governance	2932
Item 11	Executive Compensation	3336
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	3437
Item 13	Certain Relationships and Related Transactions, and Director Independence	3538
Item 14	Principal ~~Accounting~~Accountant Fees and Services	3639
Part IV
Item 15	Exhibits and Financial Statement Schedules	3740
Item 16	Form 10-K Summary	3943
Signatures		4044


Name	Age	Office
Michael Mo	5253	Chief Executive Officer and Chairman
~~Dr. Timothy Knowles~~Shawn Canter	7653	~~Director, Executive Technical Fellow and Secretary~~
~~Simon Westbrook~~	74	Chief Financial Officer
Dr. William Walker	3334	Chief Technical Officer
Keith Cochran	5758	President and Chief Operating Officer
Michael Carpenter	5960	Vice President of Engineering
Dr. Joanna Massey	5455	Lead Director
Morio Kurosaki	6667	Director


~~Auditor PCAOB ID: 688~~	~~Auditor Name: Marcum LLP~~	~~Auditor Location: Los Angeles, California~~


						Stock		Option		Total								Stock		Option		Total
Name and Principal Position	Year	Salary		Bonus		Awards		Awards		Earned			Year	Salary		Bonus		Awards		Awards		Earned
Michael Mo	2022	$	306,159	$	—	$	1,443,000	$	—	$	1,749,159	(1)	2023	$	333,649	$	—	$	—	$	—	$	333,649
Chief Executive Officer	2021	$	233,661	$	—	$	—	$	2,579,000	$	2,812,661	(2)	2022	$	306,159	$	—	$	1,443,000	$	—	$	1,749,159	(1)
Keith Cochran	2022	$	268,563	$	—	$	1,337,000	$	—	$	1,605,563	(3)
President and Chief Operating Officer	2021	$	206,571	$	—	$	8,131,420	$	—	$	8,337,991	(4)
Shawn Canter													2023	$	188,369	$	—	$	1,380,000	$	—	$	1,568,369	(2)
Chief Financial Officer													2022	$	—	$	—			$	—	$	—
William Walker	2022	$	151,250	$	12,000	$	309,000	$	—	$	472,250	(5)	2023	$	223,703	$	—	$	266,000	$	—	$	489,703	(3)
Chief Technology Officer	2021	$	—	$	—	$	—	$	—	$	—		2022	$	151,250	$	12,000	$	309,000	$	—	$	472,250	(4)


Outstanding Equity Awards	Outstanding Equity Awards				Outstanding Equity Awards
Stock Awards	Stock Awards				Stock Awards
		Number of Shares or Units of	Market Value of Units of			Number of Shares or Units of	Market Value of Units of
		Stock that have not vested	Stock that have not vested			Stock that have not vested	Stock that have not vested
Name		(#)	($)			(#)	($)
Michael Mo (Chief Executive Officer)		1,500,000	$	1,800,000		1,125,000	$	213,750
Keith Cochran (President and Chief Operating Officer)		3,000,000		3,600,000
Shawn Canter (Chief Financial Officer)						1,500,000		285,000
Dr. William Walker (Chief Technology Officer)		150,000		180,000		450,000		85,500


	Amount of
	Beneficial	Percentage
Name of Beneficial Owner	Ownership	Ownership ⁽¹⁾
Michael Mo (2) - CEO and Chairman	20,651,539	18.1	%
Dr. Timothy Knowles (3) - Executive Technical Fellow and Secretary	16,370,360	14.4	%
Simon Westbrook (4) - CFO	120,000	*
Dr. William Walker (5) - CTO	—	*
Keith Cochran (6) – President and COO	773,495	*
Michael Carpenter - VP of Engineering	500,000	*
Morio Kurosaki (7) - Director	542,500	*
Dr. Joanna Massey (8) - Director	52,500	*
All directors and executive officers as a group (8 persons)	39,010,394	34.2	%


	For the Fiscal Year Ended				For the Fiscal Year Ended
	December 31,				December 31,
	2022		2021		2023		2022
Audit Fees	$	208,060	$	155,530	$	339,025	$	208,060
Tax Fees		—		—		—		—
Total	$	208,060	$	155,530	$	339,025	$	208,060


Exhibit No.		Description
2.1		Share Exchange Agreement, dated June 8, 2017 (1)

3.1		Articles of Incorporation of the Company (2)

3.2		Bylaws of the Company (2)

3.3		Certificate of Incorporation of KULR Technology Corporation (3)

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

3.5		By-laws of KULR Technology Corporation (3)

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

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

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

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

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

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

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

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

10.2		Consulting Agreement, dated April 15, 2013 (3)

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

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

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

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

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

10.8		Consulting Agreement, dated March 15, 2018 (7)

10.9		2018 KULR Technology Group Equity Incentive Plan (12)

10.10		Securities Purchase Agreement dated April 2, 2019 (13)

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

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

10.13		Form of Subscription Agreement (16)

10.14		Form of Warrant (16)

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


10.16		Note Purchase Agreement dated February 27, 2020 (17)

10.17		Promissory Note dated February 27, 2020 (17)

10.18		Note Purchase Agreement dated July 20, 2020 (18)

10.19		Promissory Note dated July 20, 2020 (18)

10.20		Form of Securities Purchase Agreement (19)

10.21		Form of Warrant (19)

10.22		Co-Placement Agency Agreement (19)

10.23		Form of Securities Purchase Agreement dated May 19. 2021 (20)

10.24		Form of Warrant (20)

10.25		Standby Equity Purchase Agreement, dated May 13, 2022, by and between KULR Technology Group, Inc. and YA II PN, Ltd. (21)

10.26		Note Purchase Agreement, dated May 13, 2022, by and between KULR Technology Group, Inc. and YA II PN, Ltd. (21)

10.27		Promissory Note, dated May 13, 2022 (21)

10.28		Amendment, dated June 3, 2022, to the Standby Equity Purchase Agreement by and between KULR Technology Group, Inc. and YA II PN, Ltd. (22)

10.29		Supplemental Agreement dated as of September 23, 2022 to the Standby Equity Purchase Agreement dated as of May 16, 2022 between KULR Technology Group, Inc. and YA II PN, LTD. (23)

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

10.31		Underwriting Agreement dated December 20, 2023 by and between KULR Technology Group, Inc. and R.F. Lafferty & Co., Inc. (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on September 13, 2023)

10.32		Letter Agreement dated August 16, 2023, by and among KULR Technology Group, Inc., YA II PN, LTD, and Yorkville Advisors Global, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 16, 2023)

10.33		Amendment Letter Agreement dated August 22, 2023, by and among KULR Technology Group, Inc., YA II PN, LTD, and Yorkville Advisors Global, L.P. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 22, 2023)

10.34		Amendment Letter Agreement dated August 30, 2023, by and among KULR Technology Group, Inc., YA II PN, LTD, and Yorkville Advisors Global, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 30, 2023)

10.35		Amendment Letter Agreement dated December 19, 2023, by and among KULR Technology Group, Inc., YA II PN, LTD, and Yorkville Advisors Global, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 19, 2023)

10.36		Amendment Letter Agreement dated January 9, 2024, by and among KULR Technology Group, Inc., YA II PN, LTD, and Yorkville Advisors Global, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 9, 2024)


10.37		Amendment Letter Agreement dated February 13, 2024, by and among KULR Technology Group, Inc., YA II PN, LTD, and Yorkville Advisors Global, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 13, 2024)

21.1		List of Subsidiaries (3)

~~23.1~~23.1*		Consent of Marcum LLP*

~~31.1~~31.1*		Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

~~31.2~~31.2*		Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

~~32.1~~32.1**		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

97*		Clawback Policy, effective November 29, 2023

101.INS		Inline XBRL Instance*

101.SCH		Inline XBRL Taxonomy Extension Schema*

101.CAL		Inline XBRL Taxonomy Extension Calculation*

101.DEF		Inline XBRL Taxonomy Extension Definition*

101.LAB		Inline XBRL Taxonomy Extension Labels*

101.PRE		Inline XBRL Taxonomy Extension Presentation*


104		Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit)*


~~March 28, 2023~~April 12, 2024	KULR Technology Group, Inc.

	By:	/s/ Michael Mo
		Michael Mo
		Chief Executive Officer and Chairman
		(Principal Executive Officer)

	By:	/s/ ~~Simon Westbrook~~Shawn Canter
		~~Simon Westbrook~~Shawn Canter
		Chief Financial Officer
		(Principal Financial and Accounting Officer)


Signature		Title	Date

By:	/s/ Michael Mo	Chief Executive Officer and Chairman	~~March 28, 2023~~April 12, 2024
	Michael Mo

By:	/s/ ~~Timothy Knowles~~	~~Executive Technical Fellow and Director~~	~~March 28, 2023~~
	~~Timothy Knowles~~

~~By:~~	~~/s/ Simon Westbrook~~Shawn Canter	Chief Financial Officer	~~March 28, 2023~~April 12, 2024
	~~Simon Westbrook~~Shawn Canter

By:	/s/ ~~William Walker~~Joanna Massey	~~Chief Technical Officer~~Lead Director	~~March 28, 2023~~
	~~William Walker~~		April 12, 2024

~~By:~~	~~/s/ Keith Cochran~~
	~~Keith Cochran~~	~~President and Chief Operating Officer~~	~~March 28, 2023~~

~~By:~~	~~/s/~~ Joanna Massey
	~~Joanna Massey~~	~~Lead Director~~	~~March 28, 2023~~

By:	/s/ Morio Kurosaki	Director	~~March 28, 2023~~April 12, 2024
	Morio Kurosaki


Report of Independent Registered Public Accounting Firm (PCAOB ID: 688)	F-2

Consolidated Balance Sheets as of December 31, ~~2022~~2023 and ~~2021~~2022	~~F-4~~F-3

Consolidated Statements of Operations for the Years Ended December 31, ~~2022~~2023 and ~~2021~~2022	~~F-5~~F-4

Consolidated Statement of Changes in Stockholders’ Equity (Deficit) for the Year Ended December 31, ~~2022~~2023	~~F-6~~F-5

Consolidated Statement of Changes in Stockholders’ Equity for the Year Ended December 31, ~~2021~~2022	~~F-7~~F-6

Consolidated Statements of Cash Flows for the Years Ended December 31, ~~2022~~2023 and ~~2021~~2022	~~F-8~~F-7

Notes to Consolidated Financial Statements	~~F-10~~F-9


			Original Issue
	Prepaid Advance		Discount		Debt Discount		Net
Current portion	$	5,750,000	$	302,579	$	(396,967)	$	5,655,612
Non-current portion		3,250,000		171,052		(224,374)		3,196,678
Total prepaid advance liability	$	9,000,000	$	473,631	$	(621,341)	$	8,852,290


	Gross Amount of		Less:		Prepaid Advance
	Prepaid Advance		Debt		Liability,
	Liability		Discount		net of discount
Balance, January 1, 2022	$	—	$	—	$	—
Proceeds from prepaid advance		15,000,000				15,000,000
Original issue discount on prepaid advance		789,474		(789,474)		—
Legal fees		—		(85,000)		(85,000)
Repayments in cash		—		—		—
Repayments pursuant to Investor Notices		(6,315,843)		—		(6,315,843)
Amortization of debt discount		—		253,133		253,133
Balance, December 31, 2022		9,473,631		(621,341)		8,852,290	⁽¹⁾
Proceeds from prepaid advance		2,000,000		—		2,000,000
Original issue discount on prepaid advance		105,263		(105,263)		—
Legal fees		—		(30,000)		(30,000)
Repayments in cash		(1,575,000)		—		(1,575,000)
Repayments pursuant to Advance Notices		(52,806)		—		(52,806)
Repayments pursuant to Investor Notices		(4,032,658)		—		(4,032,658)
Amortization of debt discount		—		730,230		730,230
Balance, December 31, 2023	$	5,918,430	$	(26,374)	$	5,892,056	⁽²⁾


Maturity Year	Amount
2023		234,694
2024		99,187
Total lease payments		333,881
Less: Imputed interest		(12,278)
Present value of lease liabilities		321,603
Less: current portion		(223,645)
Lease liabilities, non-current portion	$	97,958


	Notes		Debt
	Payable		Discount		Total
Balance, January 1, 2022	$	—	$	—		—
Proceeds from promissory note		5,000,000		(250,000)		4,750,000
Debt discount		—		(17,200)		(17,200)
Repayments in cash		(4,850,000)		—		(4,850,000)
Repayments in shares of common stock		(150,000)		—		(150,000)
Amortization of debt discount		—		258,692		258,692
Loss on debt extinguishment		—		8,508		8,508
Outstanding, December 31, 2022	$	—	$	—	$	—