UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2017March 31, 2022
OR
¨☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto
Commission File Number:
000-55564001-40454
KT HIGH-TECH MARKETING,KULR TECHNOLOGY GROUP, INC.
(Exact name of registrant as specified in its charter)
| | |
Delaware | 81-1004273 | |
(State or |
| ( |
| |
4863 Shawline Street, San Diego, California92111 | |
(Address of |
|
Registrant’s telephone number, including area code:408-663-5247408-663-5247
(Former name, former address and former fiscal year, if changed since last report)N/A
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered |
Common Stock | KULR | NYSE American LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrantissuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx☒ No¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes¨☒ Nox☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitionthe definitions of “large accelerated filer”,filer,” “accelerated filer”,filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b- 2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ | |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B)13(a) of the SecuritiesExchange Act.¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-212b-2 of the Exchange Act). Yes¨☐ Nox☒
As of NovemberMay 16, 2017,2022, there were 77,440,000107,022,536 shares of Common Stock, $0.0001 par value, issued and outstanding.
KT HIGH-TECH MARKETING,KULR TECHNOLOGY GROUP, INC. &AND SUBSIDIARY
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2017MARCH 31, 2022
TABLE OF CONTENTS
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| Notes to Unaudited Condensed Consolidated Financial Statements | 8 | |
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| Item 3. Quantitative and Qualitative Disclosures About Market | 23 | |
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| Item 2. Unregistered Sales of Equity Securities and Use of | 25 | |
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2
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
KT HIGH-TECH MARKETING, INC. & SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
| September 30, | December 31, | |||||||
| 2017 | 2016 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 1,653,492 | $ | 9,087 | ||||
| Accounts receivable | 26,006 | 6,900 | ||||||
| Note receivable - related party | - | 85,000 | ||||||
| Interest receivable - related party | - | 2,152 | ||||||
| Other current receivable | - | 30,000 | ||||||
| Other current receivable - related parties | - | 2,000 | ||||||
| Inventory | 28,083 | 12,932 | ||||||
| Prepaid expenses | 141,443 | 12,344 | ||||||
| Other current assets | 8,727 | 3,648 | ||||||
| Total Current Assets | 1,857,751 | 164,063 | ||||||
| Property and equipment, net | 33,359 | 462 | ||||||
| Total Assets | $ | 1,891,110 | $ | 164,525 | ||||
| Liabilities and Stockholders' Equity (Deficiency) | ||||||||
| Current Liabilities: | ||||||||
| Accrued expenses and other current liabilities | $ | 299,726 | $ | 72,445 | ||||
| Accrued expenses and other current liabilities - related parties | 507,041 | 359,241 | ||||||
| Total Current Liabilities | 806,767 | 431,686 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' Equity (Deficiency): | ||||||||
| Preferred stock, $0.0001 par value, 20,000,000 shares authorized; Series A Preferred Stock, 1,000,000 shares designated; None issued and outstanding at September 30, 2017 and December 31, 2016 | - | - | ||||||
| Common stock, $0.0001 par value, 100,000,000 shares authorized; 77,440,000 and 50,000,000 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 7,744 | 5,000 | ||||||
| Additional paid-in capital | 4,768,259 | 1,661,649 | ||||||
| Accumulated deficit | (3,691,660 | ) | (1,933,810 | ) | ||||
| Total Stockholders' Equity (Deficiency) | 1,084,343 | (267,161 | ) | |||||
| Total Liabilities and Stockholders' Equity (Deficiency) | $ | 1,891,110 | $ | 164,525 | ||||
| | | | | | |
| | March 31, | | December 31, | ||
|
| 2022 |
| 2021 | ||
| | (unaudited) | | | | |
Assets |
| |
|
| |
|
Current Assets: |
| |
|
| |
|
Cash | | $ | 10,132,676 | | $ | 14,863,301 |
Accounts receivable | |
| 193,092 | |
| 136,326 |
Inventory | |
| 287,328 | |
| 191,311 |
Prepaid expenses and other current assets | |
| 1,918,011 | |
| 570,360 |
Total Current Assets | |
| 12,531,107 | |
| 15,761,298 |
Property and equipment, net | |
| 357,509 | |
| 374,475 |
Vendor deposits | | | 2,381,488 | | | 2,153,950 |
Security deposits | | | 58,941 | | | 58,941 |
Intangible assets, net | | | 213,808 | | | 216,952 |
Right of use asset | | | 470,903 | | | 665,687 |
Total Assets | | $ | 16,013,756 | | $ | 19,231,303 |
| |
| | |
|
|
Liabilities and Stockholders' Equity | |
| | |
|
|
Current Liabilities: | |
| | |
|
|
Accounts payable | | $ | 188,737 | | $ | 454,507 |
Accrued expenses and other current liabilities | |
| 1,800,217 | |
| 1,163,227 |
Accrued issuable equity | | | 182,281 | | | 290,721 |
Lease liability, current portion | | | 209,560 | | | 262,379 |
Loan payable | | | 155,226 | | | 155,226 |
Deferred revenue | | | 20,000 | | | 132,303 |
Total Current Liabilities | |
| 2,556,021 | |
| 2,458,363 |
Lease liability, non-current portion | | | 267,900 | | | 407,898 |
Total Liabilities | | | 2,823,921 | | | 2,866,261 |
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Commitments and contingencies (Note 9) | |
|
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Stockholders' Equity | |
|
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|
Preferred stock, $0.0001 par value, 20,000,000 shares authorized; | |
| | |
| |
Series A Preferred Stock, 1,000,000 shares designated; NaN issued and outstanding at March 31, 2022 and December 31, 2021 | | | 0 | | | 0 |
Series B Convertible Preferred Stock, 31,000 shares designated; none issued and outstanding at March 31, 2022 and December 31, 2021 | |
| 0 | |
| 0 |
Series C Preferred Stock, 400 shares designated; none issued and outstanding at March 31, 2022 and December 31, 2021 | | | 0 | | | 0 |
Series D Preferred Stock, 650 shares designated; none issued and outstanding at March 31, 2022 and December 31, 2021 | | | 0 | | | 0 |
Common stock, $0.0001 par value, 500,000,000 shares authorized; 104,870,715 shares issued and 104,792,072 outstanding at March 31, 2022, respectively, and 104,792,072 shares issued and outstanding at December 31, 2021 | |
| 10,487 | |
| 10,479 |
Additional paid-in capital | |
| 40,913,190 | |
| 39,512,122 |
Treasury stock, at cost; 194,704 and 0 shares held at March 31, 2022 and December 31, 2021 | | | (439,728) | | | 0 |
Accumulated deficit | |
| (27,294,114) | |
| (23,157,559) |
Total Stockholders' Equity | |
| 13,189,835 | |
| 16,365,042 |
Total Liabilities and Stockholders' Equity | | $ | 16,013,756 | | $ | 19,231,303 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Table of ContentsKT HIGH-TECH MARKETING,
KULR TECHNOLOGY GROUP, INC. &AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)(unaudited)
| | | | | | |
| | For the Three Months Ended | ||||
| | March 31, | ||||
|
| 2022 |
| 2021 | ||
Revenue | | $ | 200,499 | | $ | 417,905 |
Cost of revenue | | | 122,918 | | | 275,268 |
Gross Profit | |
| 77,581 | |
| 142,637 |
| |
| | |
| |
Operating Expenses | |
| | |
| |
Research and development | |
| 721,347 | |
| 122,983 |
Selling, general, and administrative | |
| 3,534,923 | |
| 1,492,811 |
Total Operating Expenses | |
| 4,256,270 | |
| 1,615,794 |
Loss From Operations | |
| (4,178,689) | |
| (1,473,157) |
| |
| | |
| |
Other Income (Expense) | |
| | |
| |
Interest expense, net | |
| (906) | |
| (865) |
Amortization of debt discount | | | — | | | (108,124) |
Change in fair value of accrued issuable equity | | | 43,040 | | | (132,577) |
Total Other Income (Expense), net | |
| 42,134 | |
| (241,566) |
| |
| | |
| |
Net Loss | | $ | (4,136,555) | | $ | (1,714,723) |
Net Loss Per Share | |
| | |
| |
- Basic and Diluted | | $ | (0.04) | | $ | (0.02) |
| |
| | |
| |
Weighted Average Number of Common Shares Outstanding | |
| | |
| |
- Basic and Diluted | |
| 102,561,211 | |
| 90,078,940 |
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenue | $ | 15,106 | $ | - | $ | 26,006 | $ | 6,900 | ||||||||
| Cost of revenue | 52,384 | - | 108,579 | 7,749 | ||||||||||||
| Gross Loss | (37,278 | ) | - | (82,573 | ) | (849 | ) | |||||||||
| Operating Expenses: | ||||||||||||||||
| Research and development | 157,876 | 14,090 | 207,504 | 16,173 | ||||||||||||
| Research and development - related parties | 38,767 | 91,643 | 439,824 | 285,701 | ||||||||||||
| General and administrative | 605,273 | 92,358 | 1,019,235 | 298,324 | ||||||||||||
| Total Operating Expenses | 801,916 | 198,091 | 1,666,563 | 600,198 | ||||||||||||
| Loss From Operations | (839,194 | ) | (198,091 | ) | (1,749,136 | ) | (601,047 | ) | ||||||||
| Other Income (Expense): | ||||||||||||||||
| Interest income | 142 | 6 | 142 | 24 | ||||||||||||
| Interest income - related party | - | 750 | 1,337 | 1,402 | ||||||||||||
| Interest expense - related party | - | - | (9,593 | ) | - | |||||||||||
| Total Other (Expense) Income | 142 | 756 | (8,114 | ) | 1,426 | |||||||||||
| Loss Before Income Taxes | (839,052 | ) | (197,335 | ) | (1,757,250 | ) | (599,621 | ) | ||||||||
| Income tax expense | 200 | 200 | 600 | 600 | ||||||||||||
| Net Loss | $ | (839,252 | ) | $ | (197,535 | ) | $ | (1,757,850 | ) | $ | (600,221 | ) | ||||
| Net Loss Per Share | ||||||||||||||||
| - Basic and Diluted | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.03 | ) | $ | (0.01 | ) | ||||
| Weighted Average Number of Common Shares Outstanding | ||||||||||||||||
| - Basic and Diluted | 76,843,759 | 48,279,363 | 59,570,769 | 45,024,559 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Table of ContentsKT HIGH-TECH MARKETING,
KULR TECHNOLOGY GROUP, INC. &AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIENCY) EQUITY
FOR THE NINETHREE MONTHS ENDED SEPTEMBER 30, 2017
(Unaudited)
| Additional | ||||||||||||||||||||
| Common Stock | Paid-In | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| Balance - December 31, 2016 | 50,000,000 | $ | 5,000 | $ | 1,661,649 | $ | (1,933,810 | ) | $ | (267,161 | ) | |||||||||
| Stock-based compensation | - | - | 411,181 | - | 411,181 | |||||||||||||||
| Equity of KT High-Tech Marketing, Inc. at | ||||||||||||||||||||
| the time of the reverse recapitalization | 27,440,000 | 2,744 | 2,695,429 | - | 2,698,173 | |||||||||||||||
| Net loss | - | - | - | (1,757,850 | ) | (1,757,850 | ) | |||||||||||||
| Balance - September 30, 2017 | 77,440,000 | $ | 7,744 | $ | 4,768,259 | $ | (3,691,660 | ) | $ | 1,084,343 | ||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
KT HIGH-TECH MARKETING, INC. & SUBSIDIARYMARCH 31, 2022 AND 2021
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited)
(Unaudited)
| | | | | | | | | | | | | | | | | | | |
| | FOR THE THREE MONTHS ENDED MARCH 31, 2022 | |||||||||||||||||
| | | | | | | 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 | | — | | | 0 | | | 0 | | 194,704 | | | (439,728) | | | 0 | | | (439,728) |
Common stock issued upon the exercise of warrants |
| 70,143 | |
| 7 | |
| 87,672 | | — | | | — | |
| 0 | |
| 87,679 |
Common stock issued upon the exercise of options | | 2,500 | | | 0 | | | 5,075 | | — | | | — | | | 0 | | | 5,075 |
Stock-based compensation: | | | | | | | | | | | | | | | | | | | |
Common stock issued for services | | 6,000 | | | 1 | | | 43,159 | | — | | | — | | | 0 | | | 43,160 |
Amortization of restricted common stock | | — | | | 0 | | | 519,231 | | — | | | — | | | 0 | | | 519,231 |
Amortization of stock options | | — | | | 0 | | | 15,883 | | — | | | — | | | 0 | | | 15,883 |
Amortization of market-based awards | | — | | | 0 | | | 730,048 | | — | | | — | | | 0 | | | 730,048 |
Net loss | | — | | | 0 | | | 0 | | — | | | — | | | (4,136,555) | | | (4,136,555) |
Balance - March 31, 2022 |
| 104,870,715 | | $ | 10,487 | | $ | 40,913,190 | | 194,704 | | $ | (439,728) | | $ | (27,294,114) | | $ | 13,189,835 |
| | | | | | | | | | | | | | | | | | | |
| | FOR THE THREE MONTHS ENDED MARCH 31, 2021 | |||||||||||||||||
| | Series B Convertible | | | | | | | Additional | | | | | | Total | ||||
| | Preferred Stock | | Common Stock | | Paid-In | | Accumulated | | Stockholders' | |||||||||
|
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| 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 conversion of Series B Convertible Preferred Stock |
| (13,972) | |
| (1) | | 698,600 | |
| 70 | |
| (69) | |
| — | |
| — |
Stock-based compensation: | | | | | | | | | | | | | | | | | | | |
Common stock issued for services | | — | | | — | | 20,000 | | | 2 | | | 49,798 | | | — | | | 49,800 |
Restricted common stock issued | | — | | | — | | 2,000,000 | | | 200 | | | (200) | | | — | | | — |
Amortization of restricted common stock | | — | | | — | | — | | | — | | | 126,625 | | | — | | | 126,625 |
Amortization of stock options | | — | | | — | | — | | | — | | | 9,112 | | | — | | | 9,112 |
Amortization of market-based awards | | — | | | — | | — | | | — | | | 130,245 | | | — | | | 130,245 |
Net loss | | — | | | — | | — | | | — | | | — | | | (1,714,723) | | | (1,714,723) |
Balance - March 31, 2021 | | — | | $ | — | | 92,627,200 | | $ | 9,263 | | $ | 17,671,479 | | $ | (12,961,131) | | $ | 4,719,611 |
| For the Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2017 | 2016 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | (1,757,850 | ) | $ | (600,221 | ) | ||
| Adjustments to reconcile net loss to net cash | ||||||||
| provided by operating activities: | ||||||||
| Depreciation expense | 3,374 | 500 | ||||||
| Stock-based compensation | 411,181 | 23,636 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (19,106 | ) | (3,600 | ) | ||||
| Other current receivable | 30,000 | - | ||||||
| Other current receivable - related parties | 2,000 | - | ||||||
| Interest receivable - related party | 2,152 | (1,402 | ) | |||||
| Inventory | (15,151 | ) | 7,749 | |||||
| Prepaid expenses | (115,945 | ) | (34,292 | ) | ||||
| Other current assets | 861,377 | - | ||||||
| Accrued expenses and other current liabilities | 189,083 | (70,134 | ) | |||||
| Accrued expenses and other current liabilities - related parties | 145,300 | 124,311 | ||||||
| Total Adjustments | 1,494,265 | 46,768 | ||||||
| Net Cash Used In Operating Activities | (263,585 | ) | (553,453 | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Purchase of note receivable - related party | - | (85,000 | ) | |||||
| Proceeds from collection of note receivable - related party | 85,000 | - | ||||||
| Cash acquired in reverse recapitalization | 1,859,261 | - | ||||||
| Purchases of property and equipment | (36,271 | ) | - | |||||
| Net Cash Provided By (Used In) Investing Activities | 1,907,990 | (85,000 | ) | |||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from issuance of Series A1 convertible preferred stock | - | 550,000 | ||||||
| Net Cash Provided By Financing Activities | - | 550,000 | ||||||
| Net Increase (Decrease) In Cash | 1,644,405 | (88,453 | ) | |||||
| Cash - Beginning | 9,087 | 138,753 | ||||||
| Cash - Ending | $ | 1,653,492 | $ | 50,300 | ||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | - | $ | - | ||||
| Income taxes | $ | 1,600 | $ | - | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| | | | | | |
| | For the Three Months Ended | ||||
| | March 31, | ||||
|
| 2022 |
| 2021 | ||
Cash Flows From Operating Activities: |
| |
|
| |
|
Net loss | | $ | (4,136,555) | | $ | (1,714,723) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | |
| |
Amortization of debt discount | | | 0 | | | 108,124 |
Non-cash lease expense | | | 194,784 | | | 0 |
Depreciation and amortization expense | |
| 41,461 | |
| 4,771 |
Change in fair value of accrued issuable equity | | | (43,040) | | | 132,577 |
Stock-based compensation | |
| 1,242,922 | |
| 387,972 |
Changes in operating assets and liabilities: | |
| | |
| |
Accounts receivable | |
| (56,766) | |
| (289,807) |
Inventory | |
| (96,017) | |
| 1,317 |
Prepaid expenses and other current assets | |
| (1,347,651) | |
| (425,178) |
Accounts payable | |
| (265,770) | |
| 111,838 |
Accrued expenses and other current liabilities | |
| 197,262 | |
| 19,724 |
Lease liability | | | (192,817) | | | 0 |
Deferred revenue | | | (112,303) | | | 0 |
Total Adjustments | |
| (437,935) | |
| 51,338 |
Net Cash Used In Operating Activities | | | (4,574,490) | |
| (1,663,385) |
| | | | | | |
Cash Flows From Investing Activities: | | | | | | |
Vendor deposits for property and equipment | | | (227,538) | | | 0 |
Purchases of property and equipment | | | (21,351) | | | 0 |
Net Cash Used In Investing Activities | | | (248,889) | | | 0 |
| |
| | |
| |
Cash Flows from Financing Activities: | |
| | |
| |
Repayments of notes payable | |
| 0 | |
| (1,050,000) |
Proceeds from the exercise of options | | | 5,075 | | | 0 |
Proceeds from the exercise of warrants | | | 87,679 | | | 0 |
Net Cash Provided By (Used In) Financing Activities | |
| 92,754 | |
| (1,050,000) |
| |
| | |
| |
Net Decrease In Cash | |
| (4,730,625) | |
| (2,713,385) |
Cash - Beginning of Period | |
| 14,863,301 | |
| 8,880,140 |
Cash - End of Period | | $ | 10,132,676 | | $ | 6,166,755 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
KT HIGH-TECH MARKETING,KULR TECHNOLOGY GROUP, INC. &AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
(unaudited)
| | | | | | |
| | For the Three Months Ended | ||||
|
| March 31, | ||||
|
| | 2022 |
| | 2021 |
Supplemental Disclosures of Cash Flow Information: |
| | |
| | |
| | | | | | |
Cash paid during the period for: | | | | | | |
Interest | | $ | 642 | | $ | 367 |
| | | | | | |
Non-cash investing and financing activities: | | | | | | |
Common stock held in treasury upon the vesting of restricted common stock | | $ | (439,728) | | $ | 0 |
Common stock issued upon the conversion of Series B Convertible Preferred Stock | | $ | — | | $ | 70 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTANTIES
(UNAUDITED)
Organization and Operations
KT High-Tech Marketing,KULR Technology Group, Inc. ("KT High-Tech") was incorporated on December 11, 2015. Prior to the reverse recapitalization discussed below, KT High-Tech was an early-stage company planning to market and distribute technology products and components targeting the energy and consumer electronics industries. KT High-Tech intended to market and sell the products to both the end user and supply chain markets and to seek partnerships in developing and distributing such products. After the reverse recapitalization discussed below, KTHT integrated, through its existing business operations with those of itswholly-owned subsidiary, KULR Technology Corporation.
KULR, a wholly-owned subsidiary of KT High-TechCorporation (collectively referred to as “KULR” or the “Company”), was formed in 2013develops and is based in Santa Clara, California. KULR is primarily focused on commercializing itscommercializes high-performance thermal management technologies infor electronics, batteries, and other components across a range of applications. Currently, the Company is focused on targeting both, high value, high-performance consumer electronicperformance aerospace and energy storage applications. KULR owns proprietary carbon fiber based (Carbon Fiber Velvet or “CFV”) thermal management solutions that it believes are more effective at storing, conducting, and dissipating waste heat generated by an electronic system’s internal components (i.e. semiconductor, integrated circuits “chips”) in comparison to traditional materials, such as copper and aluminum. KULR’s technologies can be applied inside a wide arrayDepartment of electronicDefense ("DOD") applications, such as mobile devices, cloud computing, virtual reality platforms, satellites, internet of things, drones,satellite communications, directed energy systems and connected cars. In additionhypersonic vehicles, and applying them to thermal management of electronic systems, KULR has developed a highly effective, passivemass market commercial applications, such as lithium-ion battery energy storage, solution for lithium ion batteries that has been testedelectric vehicles, 5G communication, cloud computer infrastructure, consumer and endorsed by the National Aeronautics and Space Administration (“NASA”).industrial devices.
Reverse Recapitalization
On June 8, 2017, KT High-Tech entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with KULR and 100% of the shareholders of KULR (the “KULR Shareholders”). On June 19, 2017 (the “Closing Date”), the Company closed the transaction contemplated by the Share Exchange Agreement. Pursuant to the Share Exchange Agreement, the KULR Stockholders agreed to transfer an aggregate of 25,000,000 shares of KULR’s common stock to the Company in exchange for the Company’s issuance of an aggregate of 50,000,000 shares of the Company’s common stock to the KULR Stockholders (the “Share Exchange”). KULR became a wholly-owned subsidiary of KT High-Tech and the KULR Stockholders now beneficially own approximately 64.57% of KT High-Tech’s common stock on a fully-diluted basis. Upon the closing of the Share Exchange Agreement, a representative of the KULR Stockholders was appointed to be the Company’s second Board Director.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of September 30, 2017March 31, 2022 and for the three months ended March 31, 2022 and nine months then ended.2021. The results of operations for the three and nine months ended September 30, 2017March 31, 2022 are not necessarily indicative of the operating results for the full year ending December 31, 20172022 or any other period. These unaudited condensed consolidated financial statements should be read in conjunction with KULR’s and KT High-Tech’sthe Company’s audited financial statements and related disclosures as of December 31, 20162021 and for the year then ended, which are included in the Form 8-K/A and Form 10-Kwere filed with the Securities and Exchange Commission (“SEC”) on June 19, 2017Form 10-K on March 28, 2022.
Risks and Uncertainties
In March 30, 2017, respectively.
2020, the World Health Organization declared COVID-19, a novel strain coronavirus, a pandemic. During 2020 and continuing into 2022, the global economy has been, 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 and accelerate vaccine distribution, the rate of recovery on a global basis has been affected by resurgence of the virus or its variants in certain jurisdictions. 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. 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 closingfull extent of the Share Exchange Agreement was accounted for asfuture impact of COVID-19 on the Company’s operations and financial condition is uncertain. Accordingly, COVID-19 could have a reverse recapitalization undermaterial adverse effect on the provisions of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 805-40. The condensed consolidated statementsCompany’s business, results of operations, herein reflectfinancial condition and prospects during 2022 and beyond, including the historical results of KULR priordemand for its products, interruptions to supply chains, ability to maintain regular research and development and manufacturing schedules as well as the completion of the reverse recapitalization since it was determinedcapability to be the accounting acquirer, andmeet customer demands in a timely manner. The financial statements do not include any adjustments that might result from the historical resultsoutcome of operations for KT High-Tech prior to the completion of the reverse recapitalization. The balance sheet as of December 31, 2016 presented herein reflects the assets and liabilities of KULR. KT High-Tech’s assets and liabilities are consolidated with the assets and liabilities of KULR as of the Closing Date. The number of shares issued and outstanding and additional paid-in capital of KT High-Tech have been retroactively adjusted to reflect the equivalent number of shares issued by KT High-Tech in the Share Exchange, while KULR’s accumulated deficit is being carried forward as the Company’s accumulated deficit. All costs attributable to the reverse recapitalization were expensed.this uncertainty.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Since the date of the Annual Report on Form 10-K for the year ended December 31, 2021, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note.
8
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Liquidity
As of March 31, 2022, the Company had cash of $10,132,676 and working capital of $9,975,086. For the three months ended March 31, 2022, the Company incurred a net loss of $4,136,555 and used cash in operations of approximately $4,574,490. During April 2022, the Company received an aggregate of $2,933,157 of gross proceeds upon the exercise of warrants. On May 13, 2022, the Company issued a $5,000,000 promissory note to an investor for gross proceeds of $4,750,000. On the same date, the Company entered into a Standby Equity Purchase Agreement, which gives the Company the right, but not the obligation, to sell up to $50,000,000 of its shares of common stock to the same investor during the commitment period. See Note 10 – Subsequent Events for additional information on the aforementioned transactions. While the Company anticipates it will continue to incur operating losses and use cash in operating activities for the foreseeable future, the Company believes that its current working capital, combined with the cash availability pursuant to the Standby Equity Purchase Agreement, is sufficient in comparison to its anticipated cash usage for a period of at least twelve months after the filing date of these 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 unaudited condensed consolidated financial statements include, but are not limited to, fair value calculations for equity securities, stock-based compensation the collectability of receivables, inventory valuations, the recoverability and useful lives of long-lived assets 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 reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consisted primarily of cash, accounts receivable, revenue and accounts payable.
Cash Concentrations
A significant portion of the Company’s cash is held at one major financial institution. The Company maintains cash with major financial institutions.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 aggregate uninsured cash balances of $1,225,642$9,709,169 and $0 at September 30, 2017$5,659,918 as of March 31, 2022 and December 31, 2016,2021, respectively.
Customer and Revenue Concentrations
DuringThe Company had certain customers whose revenue individually represented 10% or more of the nine months ended September 30, 2016, 100%Company's total revenue, or whose accounts receivable balances individually represented 10% or more of the Company's total accounts receivable, as follows:
| | | | | | | | | |
| | Revenues | | Accounts Receivable |
| ||||
| | For the Three Months Ended | | | | |
| ||
| | March 31, | | As of |
| As of |
| ||
|
| 2022 |
| 2021 |
| March 31, 2022 | | December 31, 2021 |
|
Customer A |
| * | | * | | * | | 34 | % |
Customer B |
| 43 | % | * | | * | | * | |
Customer C |
| 37 | % | 51 | % | 50 | % | 42 | % |
Customer D |
| * | | 14 | % | * | | 21 | % |
Customer E |
| * | | 23 | % | * | | * | |
Total |
| 80 | % | 88 | % | 50 | % | 97 | % |
* | Less than 10% |
9
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
There is no assurance the Company will continue to receive significant revenues from any of these customers. Any reduction or delay in operating activity from any of the Company’s revenues were generatedsignificant 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 Customer A. Duringoperations could fluctuate significantly due to changes in political, environmental, or economic conditions, or the loss of, reduction of business from, or less favorable terms with any of the Company’s significant customers.
Vendor Concentrations
Vendor concentrations are as follows for the three months ended September 30, 2017, 76%March 31, 2022 and 24% of the Company’s revenues were generated from Customer C and Customer A, respectively. During the nine months ended September 30, 2017, 44%, 42% and 14% of the Company’s revenues were generated from Customer C, Customer B and Customer A, respectively. As of September 30, 2017, receivables from Customer C, Customer B and Customer A comprised 44%, 42%, and 14%, respectively, of the Company’s total accounts receivable. As of December 31, 2016, a receivable from Customer A comprised 100% of the Company’s total account receivable.2021, respectively:
| | | | | |
| | For the Three Months Ended | | ||
|
| March 31, | | ||
|
| 2022 |
| 2021 | |
Vendor A |
| 69 | % | * | |
Vendor B |
| * |
| 26 | % |
Vendor C |
| 14 | % | * | |
Vendor D |
| * | | 67 | % |
|
| 83 | % | 93 | % |
* | Less than 10% |
Inventory
Inventory
Inventory is comprised of CFVcarbon fiber velvet ("CFV") thermal managementinterface solutions and heatsinks,internal short circuit batteries, which are available for sale. Inventories are stated at the lower of cost andor net realizable value. Cost is determined by the first-in, first-out method. InventoryThe 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. As of September 30, 2017
Inventory at March 31, 2022 and December 31, 2016, the Company’s inventory2021 was comprised solely of finished goods.
Convertible Instruments
The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with ASC Topic 815. The accounting treatment of 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 in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. Embedded conversion options and any related freestanding instruments are recorded as a discount to the host instrument.following:
| | | | | | |
|
| March 31, |
| December 31, | ||
| | 2022 | | 2021 | ||
Work-in-process | | $ | 84,410 | | $ | 5,500 |
Finished goods | |
| 202,918 | |
| 185,811 |
Total inventory | | $ | 287,328 | | $ | 191,311 |
Fair Value of Financial Instruments
The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. 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 and accrued expenses and other current liabilities approximate fair values due to the short-term nature of these instruments. The carrying amounts of the Company’s short–term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates, are comparable to rates of returns for instruments of similar credit risk.
Revenue Recognition
The Company recognizes revenue whenin 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 realized or realizablepossible more judgment and earned. 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; |
10
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
| ● | 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 considersrecognizes revenue realized or realizable and earned when all ofprimarily from the following criteria are met: (i) persuasive evidencedifferent types of an arrangement exists, (ii)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 at the point in time that the Company satisfies its performance obligation under the contract, which is generally at the time the services are fulfilled and/or accepted by the customer. |
The following table summarizes the services have been rendered toCompany’s revenue recognized in its consolidated statements of operations:
| | | | | | |
| | For the Three Months Ended | ||||
| | March 31, | ||||
|
| 2022 |
| 2021 | ||
Product sales | | $ | 172,599 | | $ | 178,249 |
Contract services | |
| 27,900 | |
| 239,656 |
Total revenue | | $ | 200,499 | | $ | 417,905 |
As of March 31, 2022 and December 31, 2021, respectively, the customer, (iii)Company had $20,000 and $132,303 of deferred revenue, respectively, from contracts with customers. The contract liabilities represent payments received from customers for which the sales price is fixed or determinable, and (iv) collectability is reasonably assured. Sales are recognized upon shipment toCompany had not yet satisfied its performance obligation under the customer, free on board shipping point,contract, or the pointcustomers have not officially accepted the goods or services provided under the contract. During the three months ended March 31, 2022, the Company recognized $112,303 of customer acceptance.
revenues that were included in deferred revenue in a previous period.
During the three months ended September 30, 2017March 31, 2021, there was 0 revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods.
As of March 31, 2022 and 2016,December 31, 2021, the Company recognized $15,106had $101,868 and $0$84,324, respectively, of revenue relateddeferred labor costs, which is included in prepaid expenses and other current assets in the Company’s unaudited condensed consolidated balance sheets. Deferred labor costs represent costs to fulfill the saleCompany’s contract service revenue. The Company will recognize the deferred labor costs as cost of PCM heat sinks and CFV thermal interfaces, respectively. Duringrevenues at the nine months ended September 30, 2017 and 2016,point in time that the Company recognized $26,006 and $6,900 of revenue related tosatisfies its performance obligation under the sale of PCM heat sinks and CFV thermal interfaces, respectively.
Research and Development
Research and development expenses are charged to operations as incurred. During the three months ended September 30, 2017 and 2016, the Company incurred $196,643 and $105,733, respectively, of research and development expenses. During the nine months ended September 30, 2017 and 2016, the Company incurred $647,328 and $301,874, respectively, of research and development expenses.
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. For employees, the fair value of the award is measured on the grant date and for non-employees, the fair value of the awardrespective contract, which is generally re-measured on vesting dates and interim financial reporting dates untilat the service period is complete. The fair value amount is then recognized overtime the period during which services are required to be provided in exchange forfulfilled and/or accepted by the award, usually the vesting period. The fair value of the Company’s restricted equity instruments was estimated by management based on observations of the cash sales prices of both restricted shares and freely tradable shares. Awards granted to directors are treated on the same basis as awards granted to employees. Upon the exercise of an option or warrant, the Company issues new shares of common stock out of its authorized shares.customer.
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. During the three months ended September 30, 2017 and 2016, 596,241 and 1,720,637 weighted average shares of unvested common stock, respectively, were excluded from weighted average common stock outstanding. During the nine months ended September 30, 2017 and 2016, 782,051 and 4,975,441 weighted average shares of unvested common stock, respectively, were excluded from weighted average common stock outstanding. Diluted net loss per common share is computed by dividing net loss by the weighted average number of vestedcommon and dilutive common-equivalent shares outstanding during each period.
11
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The following table presents the computation of basic and diluted net loss per common share:
| | | | | | |
|
| For the Three Months Ended | ||||
| | March 31, | ||||
| | 2022 |
| 2021 | ||
Numerator: |
| |
|
| |
|
Net loss attributable to common stockholders | | $ | (4,136,555) | | $ | (1,714,723) |
| | | | | | |
Denominator: | |
|
| |
|
|
Weighted-average common shares outstanding | |
| 104,843,100 | |
| 90,745,607 |
Less: weighted-average unvested restricted shares | |
| (2,357,889) | |
| (666,667) |
Add: weighted average accrued issuable equity | |
| 76,000 | |
| — |
Denominator for basic and diluted net loss per share | | | 102,561,211 | | | 90,078,940 |
| | | | | | |
Net loss per share: | |
|
| |
|
|
Basic and diluted | | $ | (0.04) | | $ | (0.02) |
The following shares were excluded from the calculation of weighted average dilutive common shares plusbecause their inclusion would have been anti-dilutive:
| | | | |
| | March 31, | ||
|
| 2022 |
| 2021 |
Unvested restricted stock | | 1,925,000 | | 2,000,000 |
Unvested market -based equity awards | | 3,000,000 | | 1,500,000 |
Options |
| 462,716 |
| 470,000 |
Warrants | | 2,524,410 | | 6,787,911 |
Total |
| 7,912,126 |
| 10,757,911 |
Recently Adopted Accounting Pronouncements
In October 2020, the net impactFASB 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 common shares (computed usingvarious provisions in the treasury stock method), if dilutive, resulting fromCodification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology. The guidance is effective for the conversionCompany beginning in the first quarter of preferred stock.
Income Taxes
fiscal year 2022 with early adoption permitted. The Company recognizes deferred tax assetsadopted ASU 2020-10 effective January 1, 2022 and liabilitiesits adoption did not have a material impact on its condensed consolidated financial statements.
In May 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 for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the expected future tax consequences of items that have been includednew standard prospectively to modifications or excluded inexchanges occurring after the financial statements or tax returns. Deferred tax assets and liabilities are determined on the basiseffective date of the difference betweennew standard. Early adoption is permitted, including adoption in an interim period. If an issuer elects to early adopt the tax basisnew standard in an interim period, the guidance should be applied as of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in whichbeginning of the temporary differences are expected to reverse.
fiscal year that includes that interim period. The Company utilizesadopted ASU 2021-04 effective January 1, 2022 and its adoption did not have a recognition threshold and measurement process formaterial impact on its condensed consolidated financial statement recognition and measurementstatements.
12
Table of a tax position taken or expected to be taken in a tax return.Contents
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s financial statements asNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 3 PREPAID EXPENSES AND OTHER CURRENT ASSETS
As of September 30, 2017March 31, 2022 and December 31, 2016. 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 expense2021, prepaid expenses and penalties as general and administrative expenses in the condensed statements of operations.
Liquidity and Management’s Plans
As of September 30, 2017, the Company had a cash balance, working capital and an accumulated deficit of $1,653,492, $1,050,984 and $3,691,660, respectively. During the three and nine months ended September 30, 2017, the Company incurred a net loss of $839,252 and $1,757,850 respectively.
As a result of the closing of the Share Exchange, the Company believes it has sufficient cash to sustain its operations for at least a year from the date of this filing.
On June 13, 2017, the Company collected the $85,000 note receivable from KULR’s Chief Executive Officer (“CEO”) in full as well as outstanding accrued interest in the amount of $3,488.
As of September 30, 2017 and December 31, 2016, prepaid expensesother current assets consisted of the following:
| September 30, 2017 | December 31, 2016 | |||||||
| (unaudited) | ||||||||
| Business development services | $ | 70,000 | $ | - | ||||
| Research and development services | 60,000 | - | ||||||
| Professional fees | 10,000 | - | ||||||
| Salary | - | 7,500 | ||||||
| Conference fees | 1,286 | 4,844 | ||||||
| Other | 157 | - | ||||||
| Total prepaid expenses | $ | 141,443 | $ | 12,344 | ||||
| | | | | | |
|
| March 31, |
| December 31, | ||
|
| 2022 |
| 2021 | ||
Marketing | | $ | 992,631 | | $ | 10,231 |
Inventory deposits | | | 593,686 | | | 309,688 |
Other | | | 121,032 | | | 31,074 |
Deferred labor costs | | | 101,868 | | | 84,324 |
Professional fees | | | 79,379 | | | 65,118 |
Insurance | | | 29,415 | | | 69,925 |
Total prepaid expenses | | $ | 1,918,011 | | $ | 570,360 |
Includes $958,188 of prepaid marketing expenses pursuant to certain sponsorship agreements which will be amortized over the respective service periods of the agreements. See Note 9 – Commitments and Contingencies.
NOTE 4 VENDOR DEPOSITS
The Company entered into agreements with third party contractors for facility improvements, the design and build of a battery packaging and inspection automation system, and automated robotic tending system.
As of March 31, 2022, the Company had outstanding deposits of $2,381,488 in connection with these agreements.
NOTE 5 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
As of September 30, 2017March 31, 2022 and December 31, 2016,2021, accrued expenses and other current liabilities consisted of the following:
| | | | | | |
| | March 31, | | December 31, | ||
|
| 2022 |
| 2021 | ||
Legal and professional fees | | $ | 645,645 | | $ | 418,154 |
Payroll and vacation | | | 783,698 | | | 302,101 |
Research and development | |
| 210,932 | |
| 146,158 |
Other | |
| 63,192 | |
| 84,824 |
Board compensation | | | 32,500 | | | 45,680 |
Accrued cost of sales | | | 64,250 | | | 128,500 |
Marketing and advertising fees | | | 0 | | | 37,810 |
Total accrued expenses and other current liabilities | | $ | 1,800,217 | | $ | 1,163,227 |
| September 30, 2017 | December 31, 2016 | |||||||
| (unaudited) | ||||||||
| Accrued legal and professional fees | $ | 116,667 | $ | 18,000 | ||||
| Accrued payroll and vacation | 88,615 | - | ||||||
| Payroll and income tax payable | 12,742 | 36,422 | ||||||
| Accrued research and development expenses | 32,717 | 6,250 | ||||||
| Credit card payable | 25,101 | 9,521 | ||||||
| Other | 23,884 | 2,252 | ||||||
| Total accrued expenses and other current liabilities | $ | 299,726 | $ | 72,445 | ||||
NOTE 6 ACCRUED ISSUABLE EQUITY
As of September 30, 2017 and December 31, 2016, accrued expenses and other current liabilities – related parties consistedA summary of the following:
| September 30, 2017 | December 31, 2016 | |||||||
| (unaudited) | ||||||||
| Accrued research and development expenses - related parties | $ | 507,041 | $ | 351,540 | ||||
| Due to related party | - | 7,701 | ||||||
| Total accrued expenses and other current liabilities - related parties | $ | 507,041 | $ | 359,241 | ||||
Accrued research and development expenses – related parties consists of (a) a liability of $110,000 and $77,500 as of September 30, 2017 and December 31, 2016, respectively, toaccrued issuable equity activity during the Company’s Chief Technology Officer (“CTO”) in connection with consulting services provided to the Company; and (b) a liability of $397,041 and $274,040 as of September 30, 2017 and December 31, 2016, respectively, to Energy Science Laboratories, Inc. (“ESLI”), a company controlled by the Company’s CTO, in connection with consulting services provided to the Company associated with the development of the Company’s CFV thermal management solutions.
Due to related party consisted of certain amounts owed by KULR to KT High-Tech, which were eliminated in consolidation as a result of the reverse recapitalization.
Reverse Recapitalization
See Note 1 - Business Organization, Nature of Operations and Basis of Presentation - Reverse Recapitalization for details of the Share Exchange.
Common Stock
During the ninethree months ended September 30, 2017, the Company received aggregate considerationMarch 31, 2022 is presented below:
| | | |
| | For the Three Months Ended | |
|
| March 31, 2022 | |
Beginning Balance | | $ | 290,721 |
Additions | | | 26,600 |
Cancelled accrued issuable equity obligations | | | (92,000) |
Mark-to-market | | | (43,040) |
Ending Balance | | $ | 182,281 |
13
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Accrued Issuable Equity for Services
During the three months ended September 30, 2017 and 2016,March 31, 2022, the Company recognizedentered into certain contractual arrangements for 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 $26,600.
During the three months ended March 31, 2022, the Company cancelled certain of its accrued issuable equity obligations of an aggregate of 33,333 of its shares with an aggregate fair value of $92,000 due to a reduction in investor relation services.
During the three months ended March 31, 2022, the Company recorded an aggregate of $43,040 of gains related to the reduction in fair value of accrued issuable equity (see Note 8 – Stockholders’ Equity, Stock-Based Compensation for additional details). The fair value of the accrued but unissued shares as of March 31, 2022 was $182,281.
NOTE 7 LEASES
The Company leases office space in San Diego, California. During the three months ended March 31, 2022 and 2021, operating lease expense was $74,080 and $15,598, respectively. As of March 31, 2022, the Company does not have any financing leases.
Maturities of lease liabilities as of March 31, 2022 were as follows:
| | | |
Maturity Date |
|
| |
April 1 through December 31, 2022 | | | 171,202 |
2023 | |
| 234,694 |
2024 | |
| 99,187 |
Total lease payments | |
| 505,083 |
Less: Imputed interest | |
| (27,623) |
Present value of lease liabilities | |
| 477,462 |
Less: current portion | |
| (209,560) |
Lease liabilities, non-current portion | | $ | 267,900 |
Supplemental cash flow information related to the lease was as follows:
| | | |
|
| For the Three Months Ended | |
|
| March 31, 2022 | |
Cash paid for amounts included in the measurement of lease liabilities | | | |
Operating cash flows from operating lease | | $ | 193,717 |
NOTE 8STOCKHOLDERS’ EQUITY
Common Stock
During the three months ended March 31, 2022 and 2021, the Company issued an aggregate of 6,000 and 20,000 shares of immediately vested common stock with a grant date value of $43,160 and $49,800, respectively, for legal and consulting services.
Treasury Stock
The Company's equity-based compensation plan allows for the grant of non-vested stock options, RSUs and RSAs to its employees pursuant to the terms of its equity incentive plan. Under the provision of the plan, unless otherwise elected, participants fulfill their related income tax withholding obligation by having shares withheld at the time of vesting. The shares withheld are then transferred to the Company's treasury stock at cost. During the three months ended March 31, 2022, the Company withheld 194,704 shares valued at $439,728 in connection with the vesting of restricted common stock awards during the period.
14
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Warrants
A summary of warrants activity during the three months ended March 31, 2022 is presented below:
| | | | | | | | | | |
| | | | Weighted | | Weighted | | | | |
| | | | Average | | Average | | | | |
| | Number of | | Exercise | | Remaining | | Intrinsic | ||
|
| Warrants |
| Price |
| Term (Yrs) |
| Value | ||
Outstanding, January 1, 2022 |
| 2,594,553 | | $ | 1.25 |
|
|
| |
|
Issued |
| — | |
| — |
|
|
| |
|
Exercised |
| (70,143) | |
| (1.25) |
|
|
| |
|
Expired |
| — | |
| — |
|
|
| |
|
Forfeited |
| — | |
| — |
|
|
| |
|
Outstanding, March 31, 2022 |
| 2,524,410 | | $ | 1.25 |
| 3.8 | | $ | 2,322,457 |
| | | | | | | | | | |
Exercisable, March 31, 2022 |
| 2,524,410 | | $ | 1.25 |
| 3.8 | | $ | 2,322,457 |
A summary of outstanding and exercisable warrants as of March 31, 2022 is presented below:
| | | | | | | |
Warrants Outstanding | | Warrants Exercisable | |||||
| | | | | Weighted | | |
| | | Outstanding | | Average | | Exercisable |
Exercise | | Number of | | Remaining Life | | Number of | |
Price |
| Warrants |
| In Years |
| Warrants | |
$ | 1.25 |
| 2,524,410 |
| 3.8 |
| 2,524,410 |
| |
| 2,524,410 |
| 3.8 |
| 2,524,410 |
Stock Options
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 assumptions:
| | | | | |
| | For The Three Months Ended | | ||
|
| March 31, |
| ||
|
| 2022 |
| 2021 |
|
Risk free interest rate | | 1.18% -2.28 | % | 0.85 | % |
Expected term (years) | | 3.5 - 3.8 | | 2.5 | |
Expected volatility | | 116.00 | % | 93.00 | % |
Expected dividends | | 0.00 | % | 0.00 | % |
For the three months ended March 31, 2022 and 2021, the weighted average grant date fair value per share of options was $3.23 and $0.36, respectively.
15
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
A summary of options activity (excluding Market-Based Awards) during the three months ended March 31, 2022 is presented below:
| | | | | | | | | | |
|
| |
| Weighted |
| Weighted |
|
| | |
| | | | Average | | Average | | | | |
| | Number of | | Exercise | | Remaining | | Intrinsic | ||
|
| Options |
| Price |
| Term (Yrs) |
| Value | ||
Outstanding, January 1, 2022 |
| 405,216 | | $ | 1.55 |
|
|
| |
|
Granted |
| 60,000 | |
| 2.30 |
|
|
| |
|
Exercised |
| (2,500) | |
| 0.66 |
|
|
| |
|
Expired |
| — | |
| — |
|
|
| |
|
Forfeited |
| — | |
| — |
|
|
| |
|
Outstanding, March 31, 2022 |
| 462,716 | | $ | 1.64 |
| 3.4 | | $ | 287,234 |
| | | | | | | | | | |
Exercisable, March 31, 2022 |
| 225,354 | | $ | 1.07 |
| 2.5 | | $ | 255,819 |
The following table presents information related to stock options (excluding market-based option awards) as of March 31, 2022:
| | | | | | | |
Options Outstanding | | Options Exercisable | |||||
| | | | | Weighted | |
|
| | | Outstanding | | Average | | Exercisable |
Exercise | | Number of | | Remaining Life | | Number of | |
Price |
| Options |
| In Years |
| Options | |
$ | 0.66 |
| 185,486 |
| 1.9 |
| 168,125 |
$ | 1.99 | | 10,000 | | 4.2 | | 3,333 |
$ | 2.03 | | 17,500 | | 4.2 | | 3,750 |
$ | 2.05 | | 10,000 | | 4.4 | | 2,708 |
$ | 2.08 | | 10,000 | | 4.1 | | 3,333 |
$ | 2.13 |
| 20,000 |
| 4.4 |
| 5,000 |
$ | 2.25 | | 10,000 | | — | | — |
$ | 2.27 | | 29,730 | | 4.2 | | 9,105 |
$ | 2.31 | | 50,000 | | — | | — |
$ | 2.43 | | 20,000 | | 4.5 | | 5,000 |
$ | 2.44 | | 100,000 | | 3.9 | | 25,000 |
| |
| 462,716 |
| 2.5 |
| 225,355 |
As of March 31, 2022, there was $233,996 of unrecognized stock-based compensation expense related to the above stock options, which will be recognized over the weighted average remaining vesting period of $187,023 and $8,688, respectively, and during the nine months ended September 30, 2017 and 2016, the Company recognized stock-based compensation expense3.0 years.
16
Table of $411,181 and $23,636 respectively,Contents
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Restricted Common Stock
The following table presents information related to restricted common stock awards which is included within general and administrative expenses on the condensed statements(excluding Market-Based Awards) as of operations. March 31, 2022:
| | | | | |
| | | | Weighted Average | |
| | | | Grant Date | |
| | Shares of Restricted | | Fair Value | |
|
| Common Stock |
| Per Share | |
Non-vested balance, January 1, 2022 |
| 2,590,000 | | $ | 2.52 |
Vested |
| (665,000) | |
| 2.61 |
Non-vested shares, March 31, 2022 |
| 1,925,000 | | $ | 2.49 |
As of September 30, 2017,March 31, 2022, there was $464,846$4,475,834 of unrecognized stock-based compensation expense of which, $341,520 was subjectrelated to re-measurement,restricted stock that will be recognized over the weighted average remaining vesting period of 0.62.9 years.
Market-Based Awards
The following table presents information related to market-based awards outstanding as of March 31, 2022:
| | | | | |
| | Number of | | Grant Date | |
Award |
| Shares |
| Fair Value | |
Restricted stock units |
| 1,500,000 | | $ | 2,911,420 |
Stock options |
| 1,500,000 | | | 2,579,000 |
Total |
| 3,000,000 | | $ | 5,490,420 |
The grant date value for the market-based awards is being amortized over the derived service periods of the awards. As of March 31, 2022, there was $2,648,528 of unrecognized stock-based compensation expense related to market-based awards which will be amortized over the remaining weighted average vesting period of 1.44 years.
As of March 31, 2022, none of the market-based awards have vested.
Stock-Based Compensation
During the three months ended March 31, 2022 and 2021, the Company recognized stock-based compensation expense of $1,242,922 and $387,972, respectively, related to restricted common stock, warrants and stock options, of which $1,234,814 and $380,567, respectively are included within selling, general and administrative expenses, and $8,108 and $7,405, respectively are included within research and development expenses on the unaudited condensed consolidated statements of operations.
The following table presents information related to stock-based compensation for the three months ended March 31, 2022 and 2021:
| | | | | | |
|
| For the Three Months Ended | ||||
|
| March 31, | ||||
|
| 2022 |
| 2021 | ||
Common stock for services | | $ | 43,160 | | $ | 49,800 |
Amortization of restricted common stock | |
| 519,231 | |
| 126,625 |
Amortization of market-based awards | |
| 730,048 | |
| 130,245 |
Stock options | |
| 15,883 | |
| 9,112 |
Accrued issuable equity (common stock) | | | (65,400) | | | 72,190 |
Total | | $ | 1,242,922 | | $ | 387,972 |
17
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 9COMMITMENTS AND CONTINGENCIES
Sponsorship Agreement
On December 16, 2021, the Company entered into a one-year 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. The Company has committed to pay an aggregate of $1,350,000 in sponsorship fees which will be amortized over the performance period. The Company paid sponsorship fees of $900,000 during the three months ended March 31, 2022 and is recorded as prepaid expenses. During the three months ended March 31, 2022, $199,107 of sponsorship fees expense was recognized related to the agreement.
NOTE 10SUBSEQUENT EVENTS
Common Stock
During April 2022, the Company issued an aggregate of 2,346,525 shares of common stock upon the exercise of warrants pursuant to which the Company received an aggregate of $2,933,157 of gross proceeds. In connection with the early exercise of such warrants, the Company issued new warrants to purchase an aggregate of 2,346,525 shares of common stock at an exercise price of $1.00 per share. The new warrants expire on December 31, 2025.
Standy Equity Purchase Agreement
On May 13, 2022, KULR Technology Group, Inc. (the “Company”) entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd. (“Yorkville”). Pursuant to the SEPA, the Company shall have the right, but not the obligation, to sell to Yorkville up to $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 earliest of (i) the first day of the month following the 24-month anniversary of the SEPA and (ii) the date on which Yorkville shall have made payment of any advances requested pursuant to the SEPA for shares of the Company’s common stock equal to the commitment amount of $50,000,000. Each sale the Company requests under the SEPA (an “Advance”) may be for a number of shares of common stock with an aggregate value of up to $5,000,000. The shares would be purchased at 98.0% of the Market Price (as defined below) and would be subject to certain limitations, including that Yorkville could 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 (the "Ownership Limitation") or an aggregate of 19.9% of the Company's outstanding common stock as of the date of the SEPA (the "Exchange Cap"). The Exchange Cap will not apply under certain circumstances, including to any sales of common stock under the SEPA that equal or exceed the Minimum Price (as defined in Section 312.03 of the NYSE Listed Company Manual). “Market Price” is defined in the SEPA as the average of the VWAPs (as defined below) during each of the three consecutive trading days commencing on the trading day following the Company’s submission of an Advance notice to Yorkville. “VWAP” is defined in the SEPA to mean, for any trading day, the daily volume weighted average price of the Company’s common stock for such date on the NYSE American as reported by Bloomberg L.P. during regular trading hours.
Note Purchase Agreement
On May 13, 2022, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with Yorkville, pursuant to which the Company issued to the Investor a promissory note with an initial principal amount equal to $5,000,000 (the “Promissory Note”) at a purchase price equal to 95.0% of the principal amount of the Convertible Debentures. The Promissory Note carries an interest rate of 10% per annum.
18
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of the results of operations and financial condition of KT High-Tech Marketing,KULR Technology Group, Inc. ("KT High-Tech"KULR") and including its wholly-owned subsidiary, KULR Technology Corporation (“KULR”KTC”), (collectively referred to as “KULR” or the “Company”) as of September 30, 2017 and for the three and nine months ended September 30, 2017March 31, 2022 and 20162021 should be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those unaudited condensed consolidated financial statements that are included elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis should be read in conjunction with KULR’s and KT High-Tech’s audited financial statements and related disclosures as of December 31, 2016 and for the year then ended, which are included in the Form 8-K and Form 10-K filed with the Securities and Exchange Commission (“SEC”) on June 19, 2017 and March 30, 2017, respectively.Report. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us”, “we”, “our” and similar terms refer to the Company.
Forward-Looking Statements
The information in this report This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. All statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risk, uncertainties and other thanfactors. These statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can beoften identified by the use of words such as “believes,” “estimates,” “could,” “possibly,” “probably,” anticipates,” “projects,” “expects,” “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “should”“continue,” and similar expressions or variations. Actual results could differ materially because of the factors discussed in “Risk Factors” elsewhere in this Quarterly Report, and other variations or similar words. Nofactors that we may not know.
Overview
KULR Technology Group, Inc., through our wholly-owned subsidiary KULR Technology Corporation, develops and commercializes high-performance thermal management technologies for batteries, electronics, and other components across an array of battery-powered applications. For aerospace and Department of Defense (“DOD”) applications, our solutions target high performance applications in direct energy, hypersonic vehicles and satellite communications. For commercial applications, our main focus is a total solution to battery safety and sustainability by which we aim to mitigate the effects of thermal runaway propagation which has been known to cause random fires in lithium-ion (“Li-ion”) batteries. This total battery safety solution can be used for electric vehicles, energy storage, battery recycling transportation, cloud computing and 5G communication devices. Our proprietary core technology is a carbon fiber material that provides what we believe to be superior thermal conductivity and heat dissipation for an ultra-lightweight and pliable material. By leveraging our proprietary cooling solutions that have been developed through longstanding partnerships with advanced technology users like NASA, the Jet Propulsion Lab and others, our products and services make commercial battery powered products safer and electronics systems cooler and lighter.
KULR’s business model continues to evolve from being a component supplier, to providing more design and testing services to our customers. The next step of evolution is to provide total system solutions to address market needs. In order to scale up as a systems provider more quickly and efficiently in (i) the Li-ion battery energy storage and recycling markets, (ii) battery cell design and safety testing, and (iii) advanced thermal management systems, such as hypersonic vehicles, KULR will actively seek partners for joint venture, technology licensing and other strategic partnership models. The goal is to leverage the Company’s thermal design technology expertise to create market leading products, which KULR will take to market directly to capture more value for KULR shareholders.
During Q1’22, we experienced significant impact to our business due to the COVID-19 lockdown in China. We had over $325,000 worth of inventory that we had built that could have been recognized as revenue in the first quarter but ended up not being shipped due to the COVID-19 lockdown. We are happy to report that these products have been shipped to the customer when the lockdown eased a bit. Much of the COVID-related challenges have meant delays in product shipment, not cancellations, so as restrictions ease in the coming months, we expect to make up for lost time and revenue as we move through our sizeable inventory.
As a core part of our growth strategy aimed at providing total system solutions that address market needs, KULR has secured a financing facility allowing us access to $55M in additional capital for procuring battery cell supplies and other key materials, as well as securing supply chain and manufacturing capacities in North America. The Company is working to secure inventory allocations in anticipation of ongoing demand from its key end markets. In total, KULR expects to procure lithium-ion battery cells providing up to 500-megawatt hours (“MWh”) of energy capacity, enough to power approximately 40,000 homes using currently available domestic energy storage options. Within applications for the energy storage and e-mobility markets, the battery cell supplies would equate to our estimation of revenue opportunity of $250-$350 million, although no assurances can be givenmade of our actual acquisition of cells providing such opportunities or that those opportunities will provide such revenues. To further control supply chain and manufacturing costs and risks, the future results anticipatedCompany also intends to use these funds to bring much of its production capabilities to North America.
We have not yet achieved profitability and expect to continue to incur cash outflows from operations. As a result, we will eventually need to generate significant revenues to achieve profitability. Until that time, we shall have to continue to raise cash, as and when required, through equity or debt financings.
19
Recent Developments
COVID-19
In March 2020, the World Health Organization declared COVID-19, a novel strain coronavirus, a pandemic. During 2020 and continuing into 2022, the global economy has been, and continues to be, affected by COVID-19. While the forward-looking statements will be achieved. Forward-looking statements reflect management’s current expectationsCompany continues to see signs of economic recovery as certain governments begin to gradually ease restrictions, provide economic stimulus and are inherently uncertain. Our actual results may differ significantlyaccelerate vaccine distribution, the rate of recovery on a global basis has been affected by resurgence of the virus or its variants in certain jurisdictions. Although recent cases and deaths from management’s expectations.
The following discussionthe COVID-19 pandemic have generally declined in the United States, spread of COVID-19 in China recently resulted in a temporary lockdown covering all of Shanghai, China where our manufacturing partner has its headquarter. During this period, we saw significant inventory buildup in China and analysis should be readwe were unable to recognize over $325,000 in conjunction with our financial statements, included herewith. This discussion shouldrevenue in the quarterly period ended March 31, 2022, which inventory buildup was caused by delays in shipment to customers that could not be construedcompleted during the COVID-19 lockdown in China. We are now taking active steps to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment ofdirect our management.
Overview
KT High-Tech Marketing, Inc. (the "Company") was incorporated on December 11, 2015 under the laws of the State of Delaware, and was formerly known as Grant Hill Acquisition Corporation. In April 2016, the Company implemented a change of control by issuing shares to new shareholders, redeeming shares of existing shareholders, electing new officers and directors and accepting the resignations of its then existing officers and directors. In connection with the change of control, the shareholders of the Company and its board of directors unanimously approved the change of the Company’s name from Grant Hill Acquisition Corporation to KT High-Tech Marketing, Inc. in April 2016.
On June 19, 2017, the Company closed a share exchange agreement (the “Share Exchange Agreement”) with KULR Technology Corporation, a Delaware Corporation (“KULR”), and 100% of the shareholders of KULR (the “KULR Shareholders”). Upon the closing of the Share Exchange Agreement, KULR became a wholly owned subsidiary of the Company. The acquisition of KULR is treated as a reverse acquisition, and the business of KULR was integrated into the Company (the transaction, the “Reverse Acquisition”).
KULR was formed in 2013 and is based in Santa Clara, California. Since its inception, KULR primarily focused on developing and commercializing its thermal management technologies, which it acquired through assignment from and license with KULR’s co-founder Dr. Timothy Knowles, in the high value, high-performance consumer electronic and energy storage applications. Prior to 2013, the Company’s technologies were used in numerous advanced space and industrial applications for NASA, Boeing, and Raytheon. A few notable achievements were the use of KULR’s technologies in: the Mars Lander/Rover (battery heat sink), X-31 Battery Heat Sink, Mercury Messenger (battery heat sink), and X-51 Scramjet (heat exchanger).
Prior to the Reverse Acquisition, the Company was an early-stage company planning to market and distribute technology products and components targeting the energy and consumer electronics industries. The Company intended to market and sell the products to both the end userproduction and supply chain marketsactivities to North America to geographically diversify and to seek partnerships in developing and distributing such products.potentially reduce further COVID-19 impacts.
AfterThe full extent of the Reverse Acquisition, the Company integrated its existing business operations with thosefuture impact of its subsidiary, KULR. KULR owns proprietary carbon fiber based (Carbon Fiber Velvet or “CFV”) thermal management solutions that it believes are more effective at conducting, dissipating and storing heat generated by an electronic system’s internal components (i.e. semiconductor, integrated circuits “chips”) in comparison to traditional materials, such as copper and aluminum. KULR’s technologies can be applied inside a wide array of electronic applications, such as mobile devices, cloud computing, virtual reality platforms, satellites, internet of things, drones, and connected cars.
Thermal Management Solutions
Three key vectors have driven advancements in semiconductors and electronics systems – performance, power, and size. These vectors, however, often counteract one another. As chip performance increases, power consumption increases and more heat is generated as a byproduct. When chip size reduces, there is an increased potential for a hot spotCOVID-19 on the chip, which can degrade system performance. Electronic system components must operate withinCompany’s operations and financial condition is uncertain. Accordingly, COVID-19 could have a specific temperature rangematerial adverse effect on both the highCompany’s business, results of operations, financial condition and low endprospects during 2022 and beyond, including the demand for its products, interruptions to operate properly. KULR resolves many ofsupply chains, ability to maintain regular research and development and manufacturing schedules, as well as the tradeoffs associated with other thermal management materials. KULR’s products improve heat storage and dissipation, rigidity problems and durability. Its products are lightweight and reduce manufacturing complexity associated with traditional thermal management materials.
In additioncapability to thermal management of electronic systems, KULR has developed, in partnership with NASA JSC, a highly effective, lightweight and passive thermal protection technology. Thermal Runaway Shield (TRS) for lithium ion batteries. KULR’s lithium ion battery (Li-B) TRS product prevents a potentially dangerous combustible condition known as thermal runaway from occurring in neighboring Li-B cells by acting as a shield or barrier in between individual Li-B cellsmeet customer demands in a battery pack. Although rare, incidentstimely manner. The financial statements do not include any adjustments that might result from the outcome of thermal runaway occurring spontaneously in Li-B cargo shipments and inside electronics, including smartphones, hover boards and electric vehicles, are a cause of public concern.
Recent Developmentsthis uncertainty.
Financing Activities
On June 6, 2017, the Company filedMay 13, 2022, we entered into a Certificate of Designation of Series A Voting Preferred StockStandby Equity Purchase Agreement (the “SEPA”) with the Secretary of State of the State of Delaware (the “Certificate of Designation”YA II PN, Ltd. (“Yorkville”). Pursuant to the Certificate of Designation,SEPA, the Company designated 1,000,000 shares of preferred “A” stock, $0.0001 par value per share (individually or collectively the “Preferred A Stock”). The Preferred A Stock are not convertible into any series or class of stock of the Company. In addition, holders of the Preferred A Stock are not entitled to receive dividends, nor do they have rights to distribution from the assets of the Company in the event of any liquidation, dissolution, or winding up of the Company. Each record holder of Preferred A Stockshall have the right, but not the obligation, to votesell to Yorkville up to $50,000,000 of its shares of common stock any time during the commitment period commencing on May 13, 2022 and terminating on the earliest of (i) the first day of the month following the 24-month anniversary of the SEPA and (ii) the date on which Yorkville shall have made payment of any matter with holdersadvances requested pursuant to the SEPA for shares of the Company’s common stock and other securities entitledequal to vote, if any, voting together as one (1) class.the commitment amount of $50,000,000. Each record holder of Preferred A Stock has thatsale the Company requests (an “Advance”) may be for a number of votes equal to one-hundred (100) votes per share of Preferred A Stock held by such holder. The record holders of the Preferred A Stock are entitled to the same notice of any regular or special meeting of the shareholders as may or shall be given to holdersshares of common stock entitledwith an aggregate value of up to vote$5,000,000. The shares would be purchased at such meetings.
As discussed above,98.0% of the Market Price (as defined in the SEPA) and would be subject to certain limitations. The Company agreed to file a prospectus supplement dated May 13, 2022 to the Company’s prospectus filed as part of the Registration Statement on Form S-3 that was declared effective on June 19, 2017,July 13, 2021. Concurrently with the SEPA, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with Yorkville, pursuant to which the Share Exchange Agreement, KULR becameCompany issued to the Investor a wholly-owned subsidiarypromissory note with an initial principal amount equal to $5,000,000 (the “Promissory Note”) for which the Company received gross proceeds of $4,750,000. The Promissory Note carries an interest rate of 10% per annum and is payable in five monthly installments beginning on June 13, 2022.
The foregoing is a summary description of certain terms of the Company. Accordingly,SEPA, Note Purchase Agreement and Promissory Note. For a full description of all terms, please refer to the Company, through its subsidiary, KULR, will primarily focus its operations on KULR’s thermal management business.
Upon closingcopies of the Share ExchangeSEPA, the Note Purchase Agreement and the Promissory Note that are filed as Exhibit 10.1, Exhibit 10.2 and Exhibit 10.3 to the Company’s Current Report on June 19, 2017, the following persons constituted the executive officersForm 8-K filed on May 16, 2022 and directorsis incorporated herein by reference.
20
* newly appointed as of June 19, 2017
Results of Operations
Three Months Ended March 31, 2022 Compared With Three Months Ended March 31, 2021
The closingRevenue
Our revenues consisted of the Share Exchange Agreement was accounted for as a reverse recapitalization under the provisions of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 805-40. The condensed consolidated statements of operations herein reflect the historical results of KULR prior to the completion of the reverse recapitalization since it was determined to be the accounting acquirer, and do not include the historical results of operations for KT High-Tech prior to the completion of the reverse recapitalization.following types:
| | | | | | |
| | For the Three Months Ended | ||||
| | March 31, | ||||
|
| 2022 |
| 2021 | ||
Product sales | | $ | 172,599 | | $ | 178,249 |
Contract services | |
| 27,900 | |
| 239,656 |
Total revenue | | $ | 200,499 | | $ | 417,905 |
Revenues
Revenues consisted of sales of our CFV thermal management solution and PCM heat sinks.
For the three months ended September 30, 2017March 31, 2022 and 2016,2021, we generated $15,106$200,499 and $0$417,905 of revenues from 11 and 10 customers, respectively, an increaserepresenting a decrease of $15,106.
For$217,406, or 52%. Revenue from product sales during the ninethree months ended September 30, 2017 and 2016, weMarch 31, 2022 decreased by $5,650 or 3% compared to the three months ended March 31, 2021. The Company generated $26,006 and $6,900$172,599 of revenues an increasein connection with 11 product sales completed during the first quarter of $19,106,2022 for the sales of our component product, carbon fiber velvet (“CFV”) thermal management solution, internal short circuit (“ISC”) battery cells and devices, patented TRS technology, and thermal fiber thermal interface (“FTI”) materials. Due to mandated COVID-19 lockdowns in China, we were unable to ship certain finished goods which significantly affected product revenues recognized during the three months ended March 31, 2022. We expect the lockdown protocols to be lifted and our products to ship during the three months ended June 30, 2022, at which time we will recognize revenue of $325,000 related to affected sales. As a result of the restrictions and loss of flexibility we experienced during this period we are looking at bringing a portion of our manufacturing process back home to our US facility. We anticipate that the improvements in logistic flexibility and response times will more than offset increases in assembly labor cost, if any, and enable us to better support our US customers while maintaining our gross margins.
Revenue from contract services during the three months ended March 31, 2022 decreased by approximately $211,756 or 277%.88% compared to the three months ended March 31, 2021. Three large DOD contracts received during the first quarter of 2021 generated $233,656 of revenues. Our service revenues, which include certain research and development contracts and onsite engineering services, have not been hampered by restrictions arising from working under COVID-19 shelter-in-place regulations.
Our customers and prospective customers are large organizations with multiple levels of management, controls/procedures, and contract evaluation/authorization. Furthermore, our solutions are new and do not necessarily fit into pre-existing patterns of purchase commitment. Accordingly, the business activity cycle between expression of initial customer interest to shipping, acceptance and billing can be lengthy, unpredictable, and lumpy, which can influence the timing, consistency and reporting of sales growth.
Cost of Revenues
Cost of revenues consistsconsisted of research and developmentthe cost of our products as well as labor expenses directly related to product sales or research contract services.
Generally, we earn greater margins on revenue from products as well ascompared to revenue from services, so product mix plays an important part in our reported average margins for any period. Also, we are introducing new products at an early stage in our development cycle and the cost of our CFV thermal management solutionmargins earned can vary significantly between periods, customers and PCM heat sinks.
products due to the learning process, customer negotiating strengths, and product mix.
For the three months ended September 30, 2017March 31, 2022 and 2016,2021, cost of revenues were $52,384was $122,918 and $0,$275,268, respectively, an increaserepresenting a decrease of $52,384.$152,350, or 55%. The decrease was primarily due to decreased costs as a result of decreased revenues. The gross margin percentage was 39% and 34% for the three months ended March 31, 2022 and 2021, respectively. The increase was due toresearch and development expenses that werein margins realized during the three months ended March 31, 2022 is primarily attributable to a sales agreement.
Fortwo service contracts that resulted in low gross margins of 15% and 13% during the nine months ended September 30, 2017first and 2016, costsecond quarters of revenues were $108,579 and $7,749, respectively, an increase2021, respectively.
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Research and Development
Research and development (“R&D”) includes expenses incurred in connection with the research and developmentR&D of our CFV thermal management solution.solution, high-areal-capacity battery electrodes, 3D engineering for a rechargeable battery and non-cash stock-based compensation expenses. Research and development expenses are expensedcharged to operations as they are incurred.
For the three months ended September 30, 2017, researchMarch 31, 2022 and development2021, R&D expenses increased to $157,876 from $14,090 in the comparable 2016 period,were $721,347 and $122,983, respectively, representing an increase of $143,786,$598,364 or 1,020%487%. The increase isduring 2022 was comprised primarily attributableof $273,051 related to a research consulting agreement which commenced in September 2016 as well as new consulting agreements and service contracts which commenced in the third quarter of 2017.
For the nine months ended September 30, 2017, research and development expenses increased to $207,504 from $16,173 in the comparable 2016 period, an increase of $191,331, or 1,183%. The increase is primarily attributablein employee headcount spent on R&D and three new projects for automation, battery and drone design initiated in 2021, $168,443 related to a research consulting agreement which commenced in September 2016 as well as new consulting agreementssoftware engineering services, $147,995 related to product development for high-areal capacity battery electrodes and service contracts which commenced in the third quarter of 2017.
3D-engineering for solid state rechargeable batteries, $30,000 related to cell check design services, and $23,151 related to drone engineering services.
We expect that our research and developmentR&D expenses will to continue increase in the future.as we expand our future operations.
Selling, General and Administrative
ResearchSelling, general and Development – Related Parties
Researchadministrative expenses consisted primarily of stock-based compensation, payroll taxes and development – related parties includesother benefits, consulting fees, registration fees, office expenses, associated with the development of our CFV thermal management solutions provided by Energy Science Laboratories, Inc. (“ESLI”), a researchrent expense, directors and development company owned by our Chief Technology Officer (“CTO”)”, as well as services provided from our CTO. Researchofficers insurance, travel and development – related parties expenses are expensed as they are incurred.
entertainment, marketing and advertising, and filing fees.
For the three months ended September 30, 2017, researchMarch 31, 2022 and development – related parties decreased by$52,876,2021, selling, general and administrative expenses were $3,534,923 and $1,492,811, respectively, an increase of $2,042,112, or 58%, to $38,767 from $91,643 in the comparable 2016 period. The decrease is due to a decrease in the amount of work provided by ESLI during the 2017 period as we brought more of our research and development in-house.
For the nine months ended September 30, 2017, research and development – related parties increased by$154,123, or 54%, to $439,824 from $285,701 in the comparable 2016 period.137%. The increase is primarily due to an increaseincreases of approximately $854,243 for stock-based compensation issued to employees and consultants, $530,314 in the amountlabor costs as a result of work provided by ESLI25 new hires during the 2017 period.last twelve months, $185,557 for consulting contractor services, $114,603 for NYSE registration fees, $110,888 for office expenses and supplies, $58,483 for rent expense due to the execution of a new operating lease agreement during the period, $28,654 for directors and officers insurance, $24,262 for travel and entertainment due to the lifting of COVID-19 dining and travel restrictions, $20,399 for expanded marketing and advertising expenses, and $14,049 for filing fees.
We expect that our research and development expenses will continue to increase in the future.
General and Administrative
General and administrative expenses consist primarily of salaries, payroll taxes and other benefits, legal and professional fees, stock-based compensation, marketing, travel, rent and office expenses.
Other Income (Expense)
For the three months ended September 30, 2017, generalMarch 31, 2022 and administrative expenses increased by $512,915,2021, other income (expense) was $42,134 and ($241,566), respectively, representing a change of $283,700 or 555%,117%. The change is primarily attributable to $605,273 from $92,358the change in fair value of accrued issuable equity of $175,617 and the decrease in the comparable 2016 period. The increase is primarily dueamortization of debt discount recorded in connection with notes payable issued in 2020 of $108,124.
Liquidity and Capital Resources
As of March 31, 2022 and December 2021, we had cash balances of $10,132,676 and $14,863,301, respectively, and working capital of $9,975,086 and $13,302,935, respectively.
On May 13, 2022, the Company issued a $5,000,000 Promissory Note to an increase in non-cash stock-based compensation expenseinvestor for gross proceeds of approximately $178,000, increased payroll expenses from$4,750,000. On the hiringsame date, the Company entered into the SEPA which gives the Company the right, but not the obligation, to sell up to $50,000,000 of new employees in the third quarterits shares of 2017, increased marketing expenses as well as increased professional fees related to being a public company.
For the nine months ended September 30, 2017, general and administrative expenses increased by $720,911, or242%, to $1,019,235 from $298,324 in the comparable 2016 period. The increase is primarily to an increase in non-cash stock-based compensation expense of approximately $388,000, increased payroll expenses from the hiring of new employees in the third quarter of 2017, increased marketing expenses as well as increased professional fees incurred with regardscommon stock to the Share Exchange and being a public company.
Interest Income – Related Party
Interest income – related party consists of income generated from our loan receivable from our CEO.
same investor during the commitment period. See Financing Activities under Recent Developments above for additional details.
For the three months ended September 30, 2017, interest income – related party decreased by $750 to $0 from $750. The decrease was due to the collection of a note receivable in the second quarter of 2017.
For the nine months ended September 30, 2017, interest income – related party decreased by $65 to $1,337 from $1,402. The decrease was due to the collection of a note receivable in the second quarter of 2017.
Interest Expense – Related Party
Interest expense – related party consists of interest on a KT High-Tech promissory note purchased by KULR in 2017. Since the KT High-TechMarch 31, 2022 and KULR reverse recapitalization, all interest expense related to the promissory note has been eliminated in consolidation.
For the nine months ended September 30, 2017, interest expense – related party was $9,593.
Liquidity and Capital Resources
Operating Activities
For the nine months ended September 30, 2017 and 2016,2021, cash used in operating activities was $263,585$4,574,490 and $553,453,$1,663,385, respectively. Our cash used in operations for the ninethree months ended September 30, 2017March 31, 2022 was primarily attributable to our net loss of $1,757,850,$4,136,555, adjusted for net non-cash expenseexpenses in the aggregate amount of $414,555, partially offset by $1,079,710$1,436,127, as well as $1,874,062 of net cash provided byused to fund changes in the levels of operating assets and liabilities. Our cash used in operations for the ninethree months ended September 30, 2016March 31, 2021 was primarily attributable to our net loss of $600,221,$1,714,723, adjusted for net non-cash expenseexpenses in the aggregate amount of $24,136, partially offset by $22,632$633,444, as well as $582,106 of net cash provided byused to fund changes in the levels of operating assets and liabilities.
For the three months ended March 31, 2022 and 2021, cash used in investing activities was $248,889 and $0, respectively. Cash used in investing activities during the three months ended March 31, 2022 was related to deposits paid for equipment of $227,538 and purchases of property and equipment of $21,351.
Investing Activities22
For the ninethree months ended September 30, 2017March 31, 2022 and 2016,2020, cash provided by (used in) investingfinancing activities was $1,907,990$92,754 and $(85,000)($1,050,000), respectively. Cash provided by investingfinancing activities during the ninethree months ended September 30, 2017 resulted from $1,859,261 of cash acquired in connection with the Share Exchange as well as $85,000 ofMarch 31, 2022 was due to proceeds received from the collectionexercise of warrants of $87,679 and proceeds from the exercise of options of $5,075. Cash used in financing activities during the three months ended March 31, 2021 was due to repayments of notes payable of $1,050,000.
Future cash requirements for our current liabilities include approximately $1,758,786 for accounts payable and accrued expenses (including lease liabilities) and $155,226 related to our PPP loan, for which we have applied for forgiveness. The Company has also committed to spend $970,546 related to capital expenditures for the construction of a new automation facility, $867,224 for automation and testing equipment, $586,286 for research and development, and $450,000 related to a sponsorship agreement. Cash requirements for long term liabilities consist of $267,900 for lease payments, and $148,049 for research and development. The Company intends to meet these cash requirements from its current cash balance, proceeds from the SEPA and from future revenues.
In March 2020, the World Health Organization declared COVID-19, a novel strain coronavirus, a pandemic. During 2020 and continuing into 2022, the global economy has been, 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 and accelerate vaccine distribution, the rate of recovery on a global basis has been affected by resurgence of the virus or its variants in certain jurisdictions. The Company continues to monitor the impact of COVID-19 on its business and operational assumptions; however, given the uncertainty around the extent and timing of the potential future spread or mitigation of the Coronavirus and around the imposition or relaxation of protective measures, we cannot reasonably estimate the impact to our future results of operations, cash flows, or financial condition.
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 note receivable from our CEO, partially offset by $36,271product candidates. If the price of purchases of property and equipment. Our cashmaterials used in investing activities for the nine months ended September 30, 2016 was related tomanufacturing of our product candidates increase, that would adversely affect our business and the purchaseresults of a note receivableour operations.
Our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q have been prepared in conformity with accounting principles generally accepted in the amountUnited States of $85,000 fromAmerica (“U.S. GAAP”), which contemplate our CEO.continuation as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values.
Financing Activities
Net cash provided by financing activities for nine months ended September 30, 2016 was $550,000 which was related to the issuance of an aggregate of 1,833,334 shares of Series A1 convertible preferred stock to investors. There were no cash flows from financing activities for the nine months ended September 30, 2017.
Summary
As of September 30, 2017, we had a cash balance, working capital of and an accumulated deficit of $1,653,492, $1,050,984 and $3,691,660, respectively. During the three and nine months ended September 30, 2017, we incurred a net loss of $839,252 and $1,757,850, respectively.
As a result of the closing of the Share Exchange, we believe we have sufficient cash to sustain our operations for at least a year from the date of this filing.
Critical Accounting Policies
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on financial conditions, changes in financial conditions, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material changes from theto stockholders.
Critical Accounting Estimates
For a description of our critical accounting policies set forthestimates, see Critical Accounting Estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”Item 7 of our CurrentAnnual Report on Form 8-K10-K which was filed with the SEC on June 19, 2017. Please refer to that documentMarch 28, 2022.
Recent Accounting Pronouncements
See Note 2 – Summary of Significant Accounting Policies of our unaudited condensed consolidated financial statements included within this Quarterly Report for disclosures regarding the criticala summary of recently adopted accounting policies related to our business.pronouncements.
Off Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company isWe are a smaller reporting company, as defined by Rule 229.10(f)(1), and isare not required to provide the information required by this Item.
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ITEM 4. CONTROLS AND PROCEDURES
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, has evaluated, under the supervision and with the participation of our principal executive officer and principal financial officers,officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report, pursuant to Rule 13a-15(b)as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”).Act. Based on thatthis evaluation, our management, with the participation of our principal executive officer and principal financial officersofficer, concluded that, as of the end of the period covered by this report, due to the inadequate recordation of certain transactions and communication of those transactions to those integral to our disclosure procedures, our disclosure controls and procedures were not effective in ensuring that information required to be disclosedat the reasonable assurance level.
During the year ended December 31, 2021, our management identified a material weakness in our Exchange Act reportsinternal control over financial reporting whereas we did not design or maintain effective controls to ensure that there is (1) recorded, processed, summarizedan independent review and reportedapproval of electronic payments (wires, EFT’s, ACH’s and credit card payments) as our policy of providing timely support to ensure completeness and accuracy of the payment was not followed which continued to exist as of March 31, 2022. We are currently in the process of implementing a timely manner,detailed plan for remediation of the material weakness, including developing and (2) accumulated and communicatedmaintaining preventative controls around the electronic payment process to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure. ensure proper segregation of duties.
Changes in Internal Control overOver Financial Reporting
There haveExcept as disclosed above, there has been no changeschange in our internal control over financial reporting that occurred during the period covered by this reportfirst quarter of 2022 that havehas materially affected, or areis reasonably likely to materially affect, our internal control over current or future financial reporting.
Inherent Limitations of the Effectiveness of Controls
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. A control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
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PART II.II – OTHER INFORMATION
ItemITEM 1. Legal Proceedings.
LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors discussed in Item 1A. Risk Factors.
Not applicable. See, however, Item 1A ofFactors in our CurrentAnnual Report on Form 8-K,10-K which was filed with the Securities and Exchange CommissionSEC on June 19, 2017.March 28, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During April 2022, the Company issued new warrants to purchase an aggregate of 2,346,525 shares of common stock at an exercise price of $1.00 per share. The new warrants expire on December 31, 2025.
None.
ItemITEM 3. Defaults Upon Senior Securities.
DEFAULTS UPON SENIOR SECURITIES
None.
ItemITEM 4. Mine Safety Disclosures
MINE SAFETY DISCLOSURES
Not Applicable.applicable.
ItemITEM 5. Other Information.
OTHER INFORMATION
None.
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ITEM 6. Exhibits.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibit | Description | |
31.1 | ||
31.2 | ||
32.1 | ||
101.INS | Inline XBRL Instance* | |
101.SCH | ||
Inline XBRL Taxonomy Extension Schema* | ||
101.CAL | Inline XBRL Taxonomy Extension | |
101.DEF | Inline XBRL Taxonomy Extension | |
101.LAB | Inline XBRL Taxonomy Extension | |
101.PRE | Inline XBRL Taxonomy Extension | |
| | |
104 | | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit)* |
*Filed herewithherewith.
**Furnished herewithherewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this quarterly report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: May 16, 2022 | By: | /s/Michael Mo |
Michael Mo | ||
Chief Executive Officer | ||
(Principal Executive Officer) |
Dated: May 16, 2022 | By: | /s/ Simon Westbrook |
Simon Westbrook | ||
Chief Financial Officer | ||
( |
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