KULR 10-K & 10-Q changes, risk factors and insider trading
KULR Technology Group, Inc. · NYSE · Electronic Components & Accessories · CIK 1662684 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Failure to effectively expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our solutions.”
New heading “We make significant investments in research and development of new products and services that may not achieve expected returns.”
New heading “Our future growth and success depend on our ability to sell effectively to, and manage relationships with, large enterprise and defense customers.”
New heading “We rely entirely on third-party mining service providers and pool operators, and any failure by those counterparties could prevent us from maintaining our mining operations and receiving our estimated digital asset rewards.”
New heading “Because substantial portions of our lease commitments are paid in advance of the respective term, if our daily fractional share of block rewards falls below expectations or the value of the mining rewards substantially decreases, we may not achieve profitability or could suffer substantial losses.”
New heading “We receive non-cash consideration that is subject to daily fair-value remeasurement, creating significant earnings volatility and potential liquidity mismatches.”
New heading “Bitcoin network difficulty, hashrate growth, and our lack of owned equipment may render the hashrate output of our leased miners uncompetitive.”
Removed heading “The availability of spot bitcoin ETPs may adversely affect the market price of our common stock.”
Removed heading “Our bitcoin treasury strategy subjects us to enhanced regulatory oversight.”
Removed heading “We may be subject to regulatory developments related to crypto assets and crypto asset markets, which could adversely affect our business, financial condition, and results of operations.”
Removed heading “The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of bitcoin and adversely affect our financial condition and results of operations.”
Removed heading “Due to the unregulated nature and lack of transparency surrounding the operations of many bitcoin trading venues, bitcoin trading venues may experience greater fraud, security failures or regulatory or operational problems than trading venues for more established asset classes, which may result in a loss of confidence in bitcoin trading venues and adversely affect the value of our bitcoin”
Largest changes
“In addition, geopolitical changes, such as trade disruptions, including the imposition of tariffs by the U.S. on imports from certain countries and any resulting counter-tariffs, political unrest, warfare and military or armed conflict, including those involving China, Ukraine/Russia and the Middle East and the resulting macro-economic impacts from such geopolitical changes, could directly or indirectly cause or exacerbate supply chain disruptions and may further complicate existing supply chain constraints and demand for our products.”see in full comparison
“The tensions between the U.S. and China, the Russia-Ukraine war and conflicts in the Middle East remain uncertain, and while it is difficult to predict the impact of any of the foregoing, any escalation or additional uncertainty in these situations could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition and results of operations.”see in full comparison
“In addition, there has been increasing focus on the extent to which digital assets can be used to launder the proceeds of illegal activities, fund criminal or terrorist activities, or circumvent sanctions regimes, including those sanctions imposed in response to the ongoing conflict between Russia and Ukraine. …”see in full comparison
“The broader digital assets industry is subject to counterparty risks, which could adversely impact the adoption rate, price, and use of bitcoin. …”see in full comparison
“We maintain domestic cash deposits in Federal Deposit Insurance Corporation, or FDIC, insured banks that exceed the FDIC insurance limits. The failure of a bank, or other adverse conditions in the financial or credit markets impacting financial institutions at which we maintain balances, could adversely impact our operations, liquidity, and financial performance. Bank failures; events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions; or concerns or rumors about such events may lead to liquidity constraints. …”see in full comparison
“In 2019 there were reports claiming that 80-95% of bitcoin trading volume on trading venues was false or non-economic in nature, with specific focus on unregulated exchanges located outside of the United States. The SEC also alleged as part of its June 5, 2023, complaint that Binance Holdings Ltd. committed strategic and targeted “wash trading” through its affiliates to artificially inflate the volume of certain digital assets traded on its exchange. …”see in full comparison
Full comparison: every changed paragraph (118)
KULRWe wasare formedan inearly-stage 2015company and KTC was formed in 2013. The Company, as a whole, haswith limited operating history. We have not yet demonstrated sales of products at a level capable of covering our fixed expenses. Since inception, we have demonstrated limited capability to produce sufficient materials to generate the ongoing revenues necessary to sustain our operations in the long-term.long-term, Nornor have we demonstrated the ability to generate sufficient sales to sustain the business. There can be no assurance that the Companywe will ever produce a profit.
Many of the Company’sour products represent new products that have not yet been fully tested in commercial product settings and for which manufacturing operations have not yet been fully scaled. This means that investors are subject to all the risks incident to the creation and development of multiple new products and their associated manufacturing processes, and each investor should be prepared to withstand a complete loss of their investment.
Because we are subject to these uncertainties, there may be risks that management has failed to anticipateanticipate, and you may have a difficult time evaluating our business and your investment in our Company.us. Our ability to become profitable depends primarily on our ability to successfully commercialize our products in the future. Even if we successfully develop and market our products, we may not generate sufficient or sustainable revenue to achieve or sustain profitability, which could cause us to cease operations.
KULRWe primarily sellssell engineered materials or products made with these materials to other companies for incorporation into their products. Although KULR’s technologies were previously used in numerous advanced space and industrial applications for NASA, there has been no significant incorporation of our materials or products into customer products that are released for commercial sale as of the date of this report. Because there is no demonstrated history of large-scale commercial success for our products, it is possible that such commercial success may never happen and that we will never achieve the level of revenues necessary to sustain our business.
We will need to raise substantial additional capital in the future to fund our operationsoperations, and we may be unable to raise such funds when needed and on acceptable terms, which could have a materially adverse effect on our business.
We anticipate that we will incur operating losses for the foreseeable future. We will need to raise substantial additional capital to fund our operationsoperations, and if we are not successful in securing additional financing on acceptable terms, we may be required to delay significantly, reduce the scope of or eliminate one or more of our research or development programs, downsize our general and administrative infrastructure, or seek alternative measures to avoid insolvency, including arrangements with collaborative partners or others that may require us to relinquish rights to certain of our technologies, product candidates or products.
We could experience significant disruptions in supply from our current or future sources.supply sources which may be exacerbated by macroeconomic trends, including trade policies, political events and other international disputes.
We could experience significant disruptions as a result of global supply chain issues and, in the event of a disruption, we cannot make any assurances that we would be able to locate alternative suppliers of materials of comparable quality at an acceptable price, or alternative purchasers of our products. Identifying suitable suppliers and purchasers is a resource-intensive process that requires us to become satisfied with quality control, responsiveness and service, financial stability and labor and other ethical practices. Any delays, interruption or increased costs in the manufacturing and delivery of our products could adversely affect our ability to meet customer demand and could result in reduced net sales, lower gross margins and operating income. We cannot predict the extent to which supply chain disruptions may affect our customers, suppliers or end markets, or the indirect effects such disruptions may have on our operations and demand for our products.
In addition, geopolitical changes, such as trade disruptions, including the imposition of tariffs by the U.S. on imports from certain countries and any resulting counter-tariffs, political unrest, warfare and military or armed conflict, including those involving China, Ukraine/Russia and the Middle East and the resulting macro-economic impacts from such geopolitical changes, could directly or indirectly cause or exacerbate supply chain disruptions and may further complicate existing supply chain constraints and demand for our products.
Increased tariffs or other trade restrictions involving the United States and key trading partners, including, among others, China, Canada and Mexico, may increase the cost of raw materials and components, disrupt cross-border supply chains and adversely affect our customers’ financial condition and demand for our products. Ongoing trade disputes may continue to escalate which could increase the costs of our products and the components we use to manufacture them.
In addition, any indirect supply chain disruptions due to United States trade policy with China or the ongoing military conflict in Ukraine may further complicate existing supply chain constraints and direct or indirect customers’ demand for our products. Interruption of our supplies and in demand of our products by our purchasers, or the loss of one or more key suppliers or purchasers, could have a negative effect on the Company’s business and operating results. Any delays, interruption or increased costs or manufacture of our products could have an adverse effect on our ability to meet customer demand for our products and result in lower net sales and operating income both in the short and long term, which could in turn negatively impact our business, financial condition and the price of our shares. In addition, we cannot adequately predict the effects of the global supply chain disruptions on our customers or potential customers and the indirect effects such disruptions could have on our operations both in the short and long term, which could in turn negatively impact our business, financial condition and the price of our shares.
An additional negative affect on the supply chain is the “Tariff War”, especially with China, Canada and Mexico. The increased tariffs with these countries could have an adverse effect on our supply chain potentially causing financial difficulty for our direct or indirect customers and reduced demand of our products. A continuation of these conflicts could have adverse changes in international trade policies and relations. Tariffs could increase the cost of our products and the components that go into making them. These increased costs could adversely impact the gross margin that we earn on our products. Tariffs could also make our products more expensive for customers, which could make our products less competitive and reduce consumer demand. Changing our operations in accordance with new or changed trade restrictions can be expensive, time-consuming and disruptive to our operations.
TheAdditionally, the conflict between Russia and Ukraine and the warconflicts betweenin Israelthe andMiddle HamasEast have resulted in worldwide geopolitical and macroeconomic uncertainty, and we cannot predict how the conflicts will evolve or the timing thereof. If these conflicts continue for a significant time or further expand to other countries and depending on the ultimate outcomes of these conflicts, which remain uncertain, they could have additional adverse effects on macroeconomic conditions, including but not limited to, increased costs, constraints on the availability of commodities, supply chain disruptions and decreased business spending. Furthermore, continuation of the conflicts could give rise to: disruptions to our or our business partners’ global technology infrastructure, including through cyber-attack or cyber-intrusion; adverse changes in international trade policies and relations; regulatory enforcement; our ability to implement and execute our business strategy; terrorist activities; our exposure toincreased foreign currency fluctuations; and constraints, volatility, or disruption in the capital markets,markets. The occurrence of any of these events may impact our ability to obtain raw materials to manufacture our products, serve our customers, raise additional capital when needed on acceptable terms, if at all, any of which could have a material adverse effect on our business, results of operations, cash flows and financial condition.
The tensions between the U.S. and China, the Russia-Ukraine war and conflicts in the Middle East remain uncertain, and while it is difficult to predict the impact of any of the foregoing, any escalation or additional uncertainty in these situations could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition and results of operations.
We have limited experience in higher volume manufacturing that will be required to support profitable operations, and the risks and costs associated with scaling to larger production quantities may be substantial.
We have limited experience manufacturing our products. We have established small-scale commercial or pilot-scale production facilities for our carbon-based thermal management products, but these facilities do not have the existing production capacity to produce sufficient quantities of materials for us to reach sustainable sales levels. At present, we rely on outsourced partners to produce high volume products. In order to develop internal capacity to produce much higher volumes, it will be necessary to produce multiples of existing processes or engineer new production processes in some cases. We have begun building up the scale of our automated battery cell facilities in our leased facility in San Diego but there is no guarantee that we will be able to economically scale-up our production processes to the levels required. If we are unable to scale-up our production processes and facilities to support sustainable sales levels, the Company may be forced to curtail or cease operations.
TheOur Companysolutions targetsare its thermal management solutiontargeted for new applications and devices that require high performance and unique features offered by itsour products.products, and potential customers may not be aware of our unique offerings. Developing new applications and devices involves a lengthy and complex process, and they may not be commercialized on a timely basis, or at all. The Company’s success is directly related to the successmarketability and adoption of these new products.
Furthermore, because the Company’s solutions are relatively new to mass market consumer electronics, the design and testing time is longer than traditional solutions. Moreover, in transitioning to new technologies and products, we may not achieve design wins, our customers may delay transitiontransitioning to these new technologies, our competitors may transition more quickly than we do, or we may experience product delays, cost overruns or performance issues that could harm our operating results and financial condition.
We could be adversely affected by our exposure to customer concentration risk.risk and reduced manufacturing capacity.
We are subject to customer concentration risk as a result of our reliance on a relatively small number of customers for a significant portion of our revenues. During 2024,2025, we had 2 customers whose purchases, in the aggregate, accounted for 25%28% of total revenue.revenue pursuant to our Energy Management Platform segment, and 1 customer whose purchases accounted for 100% of total revenue pursuant to our Mining of Digital Assets segment. Due to the nature of our business and the relatively large size of many of the applications our customers are developing, we anticipate that we will be dependent on a relatively small number of customers for the majority of our revenues for the next several years. ItEven if we expand our customer base, it is possible that orders from only one or two customers could place orders sufficient to utilizeexhaust most or all of our existing manufacturing capacity. Accordingly, if one or more of these customers were to stop ordering our products or if we are unable to meet the manufacturing capacity demanded by new customers, there would be a risk of significant loss of future revenues, which could in turn have a material adverse effect on our business and on your investment.
In this case, there would be a risk of significant loss of future revenues if one or more of these customers were to stop ordering our materials, which could in turn have a material adverse effect on our business and on your investment.
Because there is no sustained history of successful use of our products in commercial applications, there is no assurance that broad successful commercial applications may be technically feasible. Some of the scientific and engineering data related to our products has been generated in our own laboratories or in laboratory environments at our customers or third-parties. It is well known that laboratoryLaboratory data is not always representative of commercial applications.
Likewise, we operate in a market that is subject to rapid technological change. Part of our business strategy is to monitor such change and take steps to remain technologically current, but there is no assurance that such strategy will be successful. If thewe Company isare not able to adapt to new advances in materials sciences, or if unforeseen technologies or materials emerge that are not compatible with our products and services or that could replace our products and services, our revenues and business prospects would likely be adversely affected. Such an occurrence may have severe consequences, including the potential for our investors to lose all of their investment.
The Company operates in ahighly marketcompetitive that is expected to have significant competition in the future.markets. Global research relating to thermal management solutions is being conducted by substantially larger companies who have greater financial, personnel, technical, and marketing resources.resources than the Company. There can be no assurance that the Company’s strategy of offering better thermal management solutions based on the Company’s proprietary carbon fiber-based products will be able to compete with other companies, many of whom will have significantly greater resources, on a continuing basis. In the event that we cannot compete successfully, the Company may be forced to cease operations.
Failure to effectively expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our solutions.
Our ability to grow our customer base, achieve broader market acceptance, grow revenue, and achieve and sustain profitability will depend, to a significant extent, on our ability to effectively expand our sales and marketing operations and activities and educate potential customers about our solutions. Substantial amounts of time and energy are dedicated to our sale and marketing efforts, and our operating results will suffer if our sales and marketing efforts do not contribute significantly to increasing revenue.
We make significant investments in research and development of new products and services that may not achieve expected returns.
We have made and will continue to make significant investments in research, development, and marketing for existing products, services, and technologies, as well as new technology or new applications of existing technology. Investments in new technology are speculative. Commercial success depends on many factors, including but not limited to, innovativeness, engineering support, and effective distribution and marketing. There is no assurance that we will be rewarded from our investments in developing new services and products. If our customers do not perceive our latest offerings as providing significant new functionality or other value, they may reduce their purchases of services or products, thus unfavorably affecting revenue and profits. We may not achieve significant revenue from new products and services, or new applications of existing products and services, for several years, if at all. New products and services may not be profitable, and even if they are profitable, operating margins for some new products, services and businesses may not be as high as the margins we have experienced historically. Furthermore, developing new technologies is complex and unpredictable, which can require long development and testing periods. Significant delays in new releases or significant problems in creating new products or offering new services could adversely affect our revenue and profits.
The Company’s operations and development are dependent upon the experience and knowledge of Michael Mo, our Chief Executive Officer, Shawn Canter, our Chief Financial Officer, Dr. William Walker, our Chief Technology Officer, Ted Krupp, our Vice President of Sales, and Michael Carpenter, our Vice President of Engineering.Officer. If the services of any of these individuals should become unavailable, the Company’s business operations might be adversely affected. If several of these individuals became unavailable at the same time, the ability of the Company to continue normal business operations might be adversely affected to the extent that revenue or profits could be diminished, and you could lose all or a significant amount of your investment.
Our future growth and success depend on our ability to sell effectively to, and manage relationships with, large enterprise and defense customers.
Our potential customers are manufacturers of products that tend to be large enterprises and organizations, including defense customers. Therefore, our future success will depend on our ability to effectively sell our products to such large customers. Sales to these customers involve risks that may not be present (or that are present to a lesser extent) with sales to smaller customers. These risks include, but are not limited to, increased purchasing power and leverage held by large customers in negotiating contractual arrangements with us and longer sales cycles and the associated risk that substantial time and resources may be spent on a potential customer that elects not to purchase our products or solutions.
Large organizations often undertake a significant evaluation process that results in a lengthy sales cycle. In addition, product purchases by large organizations are frequently subject to budget constraints, multiple approvals and unanticipated administrative, processing and other delays. Finally, large organizations typically have longer implementation cycles, require greater product functionality and scalability, require a broader range of services, demand that vendors take on a larger share of risks, require acceptance provisions that can lead to a delay in revenue recognition and expect greater payment flexibility. All of these factors can add further risk to business conducted with these potential customers.
Recently, cost inflation stemming from thegeopolitical COVID-19factors, pandemic,global the Ukraine/Russia crisis, the Israel/Hamas crisis,crises and other macroeconomic factors has caused prices to increase across various sectors of the economy. Any increase in the prices of our raw materials or energy might affect the overall cost of our products. If we are not able to raise our prices to pass on increased costs to our customers, we would be unable to maintain our existing profit margins. Our major cost components include items such as production materials and electricity, which items are normallytypically readily available industrial commodities. During our history as a business, we have not seen any material impact on our cost structure from fluctuations in raw material or energy costs, but this could change in the future.
Our development and manufacturing processes involve the controlled use of hazardous materials, such as acetone.acetone and other flammable chemicals, as well as lithium-ion batteries and components. We are subject to federal, provincial and local lawslaws, including EPA, OSHA and EPAother regulations governing the use, manufacture, storage, handling and disposal of such materials and certain waste products. Although we believe that our safety procedures for handling and disposing of such materials comply with the standards prescribed by such laws and regulations, the risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of such an accident, we could be held liable for any damages that result and any such liability could exceed our resources. We are not specifically insured with respect to this liability. Although we believe that we are in compliance in all material respects with applicable environmental laws and regulations and currently do not expect to make material capital expenditures for environmental control facilities in the near-term, if we fail to comply with these regulations substantial fines could be imposed on us and we could be required to suspend production, alter manufacturing processes or cease operations. In addition, there can be no assurance that we will not be required to incur significant costs to comply with environmental laws and regulations in the future, or that our operations, business or assets will not be materially adversely affected by current or future environmental laws or regulations.
See Item 1C – Cybersecurity for a discussion of our information technology systems. We maintain information in digital and other forms that is necessary to conduct our business, and we are increasingly dependent on information technology systems and infrastructure to operate our business. In the ordinary course of our business, we collect, store and transmit large amounts of confidential information, including intellectual property, proprietary business information and personal information. It is critical that we do so in a secure manner to maintain the privacy, security, confidentiality, and integrity of such confidential information. Our internal information technology systems and infrastructure, and those of any future collaborators and our contractors, consultants, vendors and other third parties on which we rely, are vulnerable to damage or unauthorized access or use resulting from computer viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, cyber-attacks or cyber-intrusions over the Internet, denial or degradation of service attacks, ransomware, hacking, phishing schemes intended to cause an unauthorized transfer of funds and other social engineering attacks, attachments to emails, persons inside our organization or persons with access to systems inside our organization.
See Item 1C – Cybersecurity for a discussion of our information technology systems.
We maintain domestic cash deposits in Federal Deposit Insurance Corporation, or FDIC, insured banks that exceed the FDIC insurance limits. The failure of a bank, or other adverse conditions in the financial or credit markets impacting financial institutions at which we maintain balances, could adversely impact our operations, liquidity, and financial performance. Bank failures; events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions; or concerns or rumors about such events may lead to liquidity constraints. For example, in March 2023, Silicon Valley Bank failed and was taken into receivership by the FDIC. We cannot guarantee that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or applicable foreign government, or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks or government institutions or by acquisition in the event of a failure or liquidity crisis.
During March 2023, Silicon Valley Bank (“SVB”), Signature Bank and Silvergate Capital Corp. were each closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver.
A statement by the Department of the Treasury, the Federal Reserve and the FDIC stated that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts. The standard deposit insurance amount is up to $250,000 per depositor, per insured bank, for each account ownership category. Although we do not have any funds deposited with the aforementioned banks that failed, we regularly maintain cash balances with other financial institutions in excess of the FDIC insurance limit. A failure of a depository institution to return deposits could impact access to our invested cash or cash equivalents and could adversely impact our operating liquidity and financial performance.
As a small generator of hazardous substances, we are subject to local governmental regulations relating to the storage, discharge, handling, emission, generation, manufacture and disposal of toxic or other hazardous substances, such as acetone that is used in very small quantities to manufacture our products. We are currently in compliance with these regulations. However, there can be no assurance that future regulations might not change or raise the compliance standards, ofwith which the Company may becomeno inlonger violatecomply or for which we may incur substantial costs to comply.
In most cases, asAs far as we are aware, there are no current regulations elsewhere in the world that prevent or prohibit the sale of the Company’s products. However, there is no assurance that any regulations will not be enacted in the future to require the Company’s products or production materials to be subject to test for toxicity or other health effects before they can be sold or used in the production process,process. ifIf such regulations are enacted in the future, thethey Company’smay businessresult could be adversely affected because of the requirement forin expensive and time-consuming tests or other actions to ensure regulatory compliance.compliance, which could adversely affect the Company’s business. There can be no assurance that future regulations might not severely limit or even prevent the sale of the Company’s products in major markets, in which casecould severely limit the Company’s financial prospects mightand be severely limited, causingcause investors to lose some or all of their investment.
We currently maintain a policy for director and officer liability insurance, also known as “D&O Insurance.” However, the maximum coverage under our D&O Insurance policy may not be sufficient to cover all such liability exposure and, as a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers.officers or, in the event of liabilities beyond our maximum coverage, we may become subject to liability under our D&O indemnification obligations.
Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 20022002, the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010, and related SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the public markets and public reporting. Our management team has invested and will need to continue to invest significant management time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased selling, general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities, which could have an adverse effect on our business.
Our bitcoinBTC acquisition strategyand holdings strategies may expose us to various risks associated with bitcoinBTC
Our bitcoinBTC acquisition strategyand holdings strategies may expose us to various risks associated with bitcoin,BTC, including the following:
BTC is a highly volatile asset. BTC is a highly volatile asset and has experienced, and may continue to experience, significant price volatility, including sharp declines over short periods. While BTC prices are determined primarily using data from various exchanges, over-the-counter markets and derivative platforms, they have historically been volatile and are impacted by a variety of factors, such as market sentiment, adoption trends, regulatory developments, macroeconomic conditions and speculation. Currently, we do not use a formula or specific methodology to determine whether or when we will sell BTC and decisions to hold or sell BTC are made by management based on market conditions and liquidity needs. Such decisions, however well-informed, may result in untimely sales and even losses, adversely affecting an investment in us.
Bitcoin is a highly volatile asset. Bitcoin is a highly volatile asset that has traded below $38,000 per bitcoin and above $106,000 per bitcoin on Coinbase during 2024. The trading price of bitcoin was significantly lower during prior periods, and such decline may occur again in the future.
While Bitcoin prices are determined primarily using data from various exchanges, over-the-counter markets and derivative platforms, they have historically been volatile and are impacted by a variety of factors. Such factors include, but are not limited to, the worldwide growth in the adoption and use of Bitcoins, the maintenance and development of the software protocol of the Bitcoin network, changes in consumer demographics and public tastes, fraudulent or illegitimate actors, real or perceived scarcity, and political, economic, regulatory or other conditions. Furthermore, pricing may be the result of, and may continue to result in, speculation regarding future appreciation in the value of Bitcoin, or our share price, making prices more volatile.
Currently, we do not use a formula or specific methodology to determine whether or when we will sell Bitcoin that we hold, or the number of Bitcoins we will sell. Rather, decisions to hold or sell Bitcoins are currently determined by management by analyzing forecasts and monitoring the market in real time. Such decisions, however well-informed, may result in untimely sales and even losses, adversely affecting an investment in us. At this time, we do not anticipate engaging in any hedging activities related to our holding of Bitcoin as this would expose us to substantial decreases in the price of Bitcoin.
BitcoinBTC does not pay interest or dividends. BitcoinBTC does not pay interest or other returnsreturns, and we can only generate cash from our bitcoinBTC holdings if we sell our bitcoinBTC or implement strategies to create income streams or otherwise generate cash by using our bitcoinBTC holdings. Even if we pursue any such strategies, we may be unable to create income streams or otherwise generate cash from our bitcoinBTC holdings, and any such strategies may subject us to additional risks.
We purchase bitcoinBTC using primarily proceeds from equity financings. Our ability to achieveexecute on the objectivesacquisition portion of our bitcoinBTC strategy depends in significant part on our ability to obtain equity financing. If we are unable to obtain equity financing on favorable terms or at all, we may not be able to successfully execute on our bitcoinBTC strategy.
Our bitcoin acquisition strategy has not been tested. This bitcoin acquisition strategy has not been tested. Although we believe bitcoin, due to its limited supply, has the potential to serve as a hedge against inflation in the long term, the short-term price of bitcoin declined in recent periods during which the inflation rate increased. Some investors and other market participants may disagree with our bitcoin acquisition strategy or actions we undertake to implement it. If bitcoin prices were to decrease or our bitcoin acquisition strategy otherwise proves unsuccessful, our financial condition, results of operations, and the market price of our common stock would be materially adversely impacted.
The broader digital assets industry is subject to counterparty risks, which could adversely impact the adoption rate, price, and use of bitcoin. A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry, including the filings for bankruptcy protection by Three Arrows Capital, Celsius Network, Voyager Digital, FTX Trading and Genesis Global Capital, the closure or liquidation of certain financial institutions that provided lending and other services to the digital assets industry, including Signature Bank and Silvergate Bank, SEC enforcement actions against Coinbase, Inc. and Binance Holdings Ltd., the placement of Prime Trust, LLC into receivership following a cease-and-desist order issued by Nevada’s Department of Business and Industry, and the filing and subsequent settlement of a civil fraud lawsuit by the New York Attorney General against Genesis Global Capital, its parent company Digital Currency Group, Inc., and former partner Gemini Trust Company, have highlighted the counterparty risks applicable to owning and transacting in digital assets. Any similar bankruptcies, closures, liquidations and other events may not result in any loss or misappropriation of our bitcoin holdings, or adversely impact our access to our bitcoin holdings. Or, any such bankruptcies, closures, liquidations, regulatory enforcement actions or other events involving participants in the digital assets industry may negatively impact the adoption rate, price, and use of bitcoin, limit the availability to us of financing collateralized by bitcoin, or create or expose additional counterparty risks.
Changes in the trading price of bitcoinBTC or changes in the manner in which we own BTC could have significant accounting impacts, including increasing the volatility of our results. The Company has adopted ASU 2023-08, which requires us to measure our bitcoinBTC holdings at fair value in our statement of financial position, and to recognize gains and losses from changes in the fair value of our bitcoinBTC in net income each reporting period. ASU 2023-08 also requires us to provide certain interim and annual disclosures with respect to our bitcoinBTC holdings. Volatility in the price of bitcoinBTC could have a material impact on the carrying value of our digital assets on our balance sheet, increase the volatility of our financial results, and it could also have adverse tax consequences, which in turn could have a material adverse effect on our financial results and the market price of our common stock.
ChangesAdditionally, in our ownership of bitcoin could have accounting, regulatory and other impacts. Whilewhile we currently intend to own bitcoinBTC directly, we may investigate other potential approaches to owning bitcoin,BTC, including indirect ownership (for example, through ownership interests in a fund that owns bitcoinBTC). If we were to own all or a portion of our bitcoinBTC in a different manner, the accounting treatment for our bitcoin,BTC, our ability to use our bitcoinBTC as collateral for additional borrowings, and the regulatory requirements to which we are subject, may correspondingly change. For example, the volatile nature of bitcoin may force us to liquidate our holdings to use it as collateral, which could be negatively effected by any disruptions in the crypto market, and if liquidated, the value of the collateral would not reflect potential gains in market value of bitcoin, all of which could negatively affect our business and implementation of our bitcoin strategy.
BitcoinBTC and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty.
BitcoinBTC and other digital assets are relatively novel and are subject to significant uncertainty, which could adversely impact their price. The application of state and federal securities laws and other laws and regulations to digital assets is unclear in certain respects, and it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of bitcoin.BTC.
The U.S. federal government, states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of bitcoinBTC or the ability of individuals or institutions such as us to own or transfer bitcoin.BTC. For example, the U.S. executive branch, the SEC, the European Union’s Markets in Crypto Assets Regulation, among others have been active in recent years, and in the U.K., the Financial Services and Markets Act 2023, or FSMA 2023 became law. It is not possible to predict whether, or when, any of these developments will lead to Congress granting additional authorities to the SEC or other regulators, or whether, or when, any other federal, state or foreign legislative bodies will take any similar actions. It is also not possible to predict the nature of any such additional authorities, how additional legislation or regulatory oversight might impact the ability of digital asset markets to function or the willingness of financial and other institutions to continue to provide services to the digital assets industry, nor how any new regulations or changes to existing regulations might impact the value of digital assets generally and bitcoinBTC specifically. The consequences of increased regulation of digital assets and digital asset activities could adversely affect the market price of bitcoinBTC and in turn adversely affect the market price of our common stock.
Moreover, the risks of engaging in a bitcoinBTC treasury strategy are relatively novel and have created, and could continue to create, complications due to the lack of experience that third parties have with companies engaging in such a strategy, such as increased costs of director and officer liability insurance or the potential inability to obtain such coverage on acceptable terms in the future.
The growth of the digital assets industry in general, and the use and acceptance of bitcoinBTC in particular, may also impact the price of bitcoinBTC and is subject to a high degree of uncertainty. The pace of worldwide growth in the adoption and use of bitcoinBTC may depend, for instance, on public familiarity with digital assets, ease of buying, accessing or gaining exposure to bitcoin,BTC, institutional demand for bitcoinBTC as an investment asset, the participation of traditional financial institutions in the digital assets industry, consumer demand for bitcoinBTC as a means of payment, and the availability and popularity of alternatives to bitcoin.BTC. Even if growth in bitcoinBTC adoption occurs in the near or medium-term, there is no assurance that bitcoinBTC usage will continue to grow over the long-term.
Management's Discussion & Analysis (MD&A)
New heading “Investments, Impairment and Credit Losses”
New heading “Mining of Digital Assets”
New heading “At the Market Offerings”
New heading “License and Opportunities for CF Cathode Design Technology”
New heading “Reverse Stock Split”
New heading “Credit Agreement”
New heading “Credit Losses on Accounts Receivable”
New heading “Impairment of Equipment Deposits, Intangible Assets, ROU Assets and Property and Equipment”
New heading “Impairment of Long-Lived Assets”
New heading “Recoverability Assessment”
New heading “Determination of Fair Value”
New heading “Results for the Period”
Removed heading “Change in Address of Principal Executive Offices”
Removed heading “Issuance of Non-Convertible Series A Voting Preferred Stock”
Largest changes
“Impairment of Equipment Deposits, Intangible Assets, ROU Assets and Property and Equipment”see in full comparison
“Bitcoin accounting guidance has been evolving. According to the American Institute of Certified Public Accountants “Accounting for and auditing of Digital Assets practice aid,” bitcoin would satisfy the definition of an indefinite-lived intangible asset and would be accounted for under ASC 350, Intangibles - Goodwill and Other issued by the Financial Accounting Standards Board, or FASB. Under these guidelines, bitcoin holdings would be accounted for initially at cost and subject to impairment losses if their fair value fell below carrying value. …”see in full comparison
“We review long-lived assets, including property, plant and equipment, ROU lease assets and finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. …”see in full comparison
“Each of these impairments resulted from a triggering event that required us to review the assets for impairment, which resulted in the determination that the de minimis fair value of the assets were not recoverable, and the assets were fully impaired. We recorded an impairment charge of $0.9 million on our finance lease right-of-use (“ROU”) asset related to our digital asset mining operations. The impairment was driven by a significant decline in the market price of bitcoin, which reduced the expected future cash flows attributable to the asset below its carrying value. …”see in full comparison
Full comparison: every changed paragraph (95)
KULR designs and builds advanced battery systems for autonomous platforms, digital infrastructure, e-mobility and Space – sold as a product or delivered as service subscription. The Company addresses two primary constraints in electrification: thermal management and safety. As energy and power density increase across aerospace, autonomous machines, digital infrastructure and industrial applications, managing heat generation, current density, and propagation risk becomes essential to system reliability and survivability.
KULR is establishing a fully integrated battery energy storage system design and production infrastructure in Houston, Texas. KULR brings battery pack design, prototyping, testing, certification, and manufacturing; as well as battery management system software and electronics design capabilities together under one roof. This full-stack approach enables faster development cycles and rapid transition from prototype to cost-effective volume production. The facility is designed to build high-power and high-energy battery packs that require advanced thermal, mechanical, and safety engineering. With domestic supply chain alignment and scalable production capacity, KULR is positioning itself as a leading manufacturer of advanced battery packs for mission-critical and high-performance applications in the United States.
KULR VIBE is a vibration-reduction technology designed to improve performance and reliability in high-speed and rotor-driven systems. Derived from vibration management solutions used in defense helicopters for over 20 years, it addresses excess vibration that reduces efficiency, increases mechanical wear, and shortens vehicle lifespan. KULR VIBE enables motors, rotating assemblies, and sensitive electronics to operate more smoothly and efficiently across a range of applications, including helicopters, drones, performance vehicles, wind turbines, and other electric and autonomous systems.
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.
We have not yet achieved profitability and expect to continue to incur cash outflows from operations, and as a result, we will eventually need to generate significant revenues to achieve profitability. Until that time, we may continue to raise cash, as and when required, through equity or debt financings.
Investments, Impairment and Credit Losses
During the year ended December 31, 2025, the Company made two investments in a private German entity (the “Investee”), including Series A7 Preferred Shares and a convertible loan receivable of $3.3 million and $2.1 million, respectively. In addition, the Company had accounts receivable of $0.8 million due from Investee, who was also a customer. On November 13, 2025, the Investee filed an application with a German insolvency court to open insolvency proceedings. As a result, as of December 31, 2025, the Company has fully impaired or recognized credit losses associated with the Company’s investments and accounts receivable associated with the Investee. During the fourth quarter of 2025, the Company determined that it would not pursue additional sales of exoskeleton products and, accordingly, recorded an inventory reserve of $0.5 million, bringing the net carrying value of its on-hand exoskeleton inventory down to zero.
Bitcoin Treasury Strategy
On December 4, 2024, the Board approved, and the Company publicly announced its decision to include BTC as a primary asset in its treasury program. During the year ended December 31, 2025, the Company purchased 783.81 BTC via trade orders on Coinbase (the “Custodian”), at an average cost of $101,683 per BTC, inclusive of fees and expenses, for an aggregate cost of $79.7 million.
Bitcoin accounting guidance has been evolving. According to the American Institute of Certified Public Accountants “Accounting for and auditing of Digital Assets practice aid,” bitcoin would satisfy the definition of an indefinite-lived intangible asset and would be accounted for under ASC 350, Intangibles - Goodwill and Other issued by the Financial Accounting Standards Board, or FASB. Under these guidelines, bitcoin holdings would be accounted for initially at cost and subject to impairment losses if their fair value fell below carrying value. In December 2023, the FASB issued Accounting Standards Update No. 2023-08, Accounting for and Disclosure of Crypto Assets (ASU 2023-08), which revised bitcoin accounting treatment. Under this new guidance, the valuation of bitcoin is to be measured based on fair value.
Mining of Digital Assets
Beginning in March 2025, the Company expanded its bitcoin treasury strategy to include BTC mining operations. Management determined that participating in mining activities could (i) increase BTC holdings through internally generated production, (ii) provide potential exposure to favorable mining economics, and (iii) enhance long-term treasury value through vertical participation in the bitcoin ecosystem. The Company’s mining activities are conducted pursuant to fixed-term machine lease agreements.
As of March 27, 2026, 81.72 BTC have been mined pursuant to the Machine Lease Agreements, at an average cost of $103,545 per BTC. See the section “Our Bitcoin Acquisition Strategy” below for further information regarding our BTC purchases, including the source of capital used to purchase BTC.
At the Market Offerings
On December 4, 2024, the Board approved, and the Company publicly announced its decision to include Bitcoin (“BTC”) as a primary asset in its treasury program. On December 22, 2024, the Company completed its initial acquisition of BTC through Coinbase (the primary broker) and a total of 217.18 bitcoin was purchased at a weighted average price of approximately $96,696 per bitcoin, or an aggregate cost of $21 million. Subsequent to December 31, 2024, the Company purchased 449.45 Bitcoin via trade orders on Coinbase, at an average cost of $99,008 per Bitcoin for an aggregate $44,499,352. Additionally, on March 7, 2025, the Company entered into a sixty-day Machine Lease Agreement with a bitcoin mining services company to operate 2,500 S-19 bitcoin mining machines on KULR’s behalf, at a total lease cost of $850,000. As of March 27, 2025, 2.48 bitcoin have been mined pursuant to the Machine Lease Agreement, at an average cost of $84,225 per bitcoin.
On July 3, 2024, the Company entered into an At the Market Offering agreementAgreement (the “SalesFirst ATM Agreement”) with an agent (the “First ATM Agent”), pursuant to which the Company may, from time to time, sell shares of common stock for aggregate gross proceeds of up to $20,000,000$20 million in “at the market” offerings through or to the First ATM Agent (the “ATM”). Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of the sale, or as otherwise agreed with the First ATM Agent. The First ATM Agent willwas receiveentitled to a commission from the Company of 3% of the gross proceeds of any shares of common stock sold pursuant to the ATM. On December 4, 2024, the Company increased the maximum aggregate offering amount of the shares of the Company’s common stock issuable under the ATM from approximately $20 million to $46 million. On December 26, 2024, the Company increased the maximum aggregate offering amount of the shares of the Company’s common stock issuable under the ATM by an additional $50 million, to $96 million,million. andOn July 3, 2024, the Company entered into an amendment (the “Amendment”) to the SalesFirst ATM Agreement withto reduce the Agent,First entered into on July 3, 2024, to provide that theATM Agent’s compensationcommission payable under the Sales Agreement shall beto 2.5% of gross proceeds of any sales of shares of common stock sold under the Sales Agreement. During the year ended December 31, 2024, the Company issued a total of 74,781,217 shares of common stock pursuant to the ATM for aggregate gross proceeds of $61,912,798. During the period from January 2, 2025, through March 27, 2025, the Company has sold 19,387,610 shares of common stock pursuant to this offering, with gross proceeds of $51,122,190.ATM.
On January 24, 2025, the Company increased the maximum aggregate offering amount of the shares of the Company’s common stock issuable under the First ATM Agreement by an additional $50 million, bringing the total aggregate offering amount to $146 million. On May 30, 2025, the Company completed its initial ATM offering pursuant to the First ATM Agreement, issuing an aggregate of 14,783,401 shares of common stock for gross proceeds of approximately $146 million. Of these shares, 9,347,652 were issued for gross proceeds of $61.9 million in 2024, and 5,435,749 were issued for gross proceeds of $84.1 million in 2025.
On June 9, 2025, the Company entered into a second At the Market Offering Agreement (the “Second ATM Agreement”) with two sales agents (the “Second ATM Agents”), pursuant to which the Company may, from time to time, sell shares of common stock for aggregate gross proceeds of up to $300 million in ATM offerings through or to the Second ATM Agents. On September 30, 2025, the Company reduced the aggregate offering amount to $150 million. Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of the sale, or as otherwise agreed with the Second ATM Agents. The Second ATM Agents will receive a commission from the Company of up to 3.0% of the gross proceeds of any shares of common stock sold pursuant to the Second ATM Agreement. During the year ended December 31, 2025, the Company issued a total of 7,243,562 shares of common stock pursuant to the Second ATM Agreements for aggregate gross proceeds of $39.1 million. As of December 22, 2025, the Company decided to pause its ATM transactions through June 30, 2026.
On September 29, 2024, we entered into a licensing agreement for our proprietary vibration reduction technology named KULR Xero Vibe (“KXV”). The $2.35M agreementdeal includes a $1.1M$1.1 million minimum guaranteed license and royalty fee, a unique opportunity for the licensee to purchase proprietary balancing equipment directly from the Company and additional revenue upside to the Company based on volume and technology upgrades. The licensee,licensee is a leading Japanese corporation,corporation specializing in systems integration and the distribution of advanced semiconductor solutions,solutions. intendsDuring the year ended December 31, 2025, the Company entered into a Master Vehicles Agreement that permits the application of its Zero Vibe technology in automotive platforms. The Company continues to useexplore theadditional KXVlicense technology to balance industrial-scale fan systems used in data center computer cooling, HVAC and other industrial applications.opportunities.
License and Opportunities for CF Cathode Design Technology
On December 29, 2024 the Company entered into a ten-year licensing agreement with a customer located in Japan, for the use of intellectual property in connection with its CF Cathode Design technology (including the specifications, diagrams, schematics and instructions (together the “KULR CF Intellectual Property”) for the production of the CF Cathode (the “License”).Cathode. The Agreementagreement gives the customer the exclusive license to use the KULR CF Intellectual Property to manufacture and sell CF Cathodes in Japan, and a non-exclusive license to manufacture and sell CF Cathodes in several other countries, including Taiwan, China, India and Korea. ThePursuant Companyto this license agreement, the total contract value is exploring$1.8 additionalmillion, licenseof opportunities based on geographic regions in tangential power-consuming applications, wherewhich the Company expectsrecognized substantial$1.7 upsidemillion in revenue potentialfor the year ended December 31, 2024. There was no revenue recognized for the year ended December 31, 2025 under this license agreement. In addition, $0.1 million will be recognized as product sales and royaltyinterest income scalesover alongthe withterm itsof customers’the growth.agreement as a result of a significant financing component.
Reverse Stock Split
On June 20, 2025, the Company filed a Certificate of Amendment to its Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect a 1-for-8 reverse stock split of the shares of the Company’s common Stock, effective on June 23, 2025 (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every eight shares of issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock, without any change in the par value per share. No fractional shares were issued as a result of the Reverse Stock Split, and any fractional shares that would otherwise have resulted from the Reverse Stock Split were rounded up to the next whole number. The number of authorized shares of common stock under the Company’s Certificate of Incorporation, as amended, remained unchanged.
All references to share and per share amounts for all periods presented in the audited consolidated financial statements have been retrospectively restated to reflect the Reverse Stock Split. All rights to receive shares of common stock under outstanding securities, including but not limited to, warrants, options, and restricted stock units (“RSUs”) were adjusted to give effect to the Reverse Stock Split. Furthermore, proportionate adjustments were made to the per share exercise price and the number of shares of common stock that may be purchased upon exercise of outstanding stock options granted by the Company, and the number of shares of common stock reserved for future issuance under the Company’s 2018 Equity Incentive Plan.
Credit Agreement
On July 1, 2025, the Company entered into a Master Loan Agreement (the “Master Loan Agreement”) with Coinbase Credit, Inc., a Delaware corporation, and Coinbase, Inc., a Delaware corporation, acting in its principal capacity and as agent for each of its affiliates (each, a “Coinbase Entity” and together the “Lender”). The Master Loan Agreement governs separate loan transactions (each, a “Loan”) whereby the Lender may, from time to time, lend to the Company (i) specified quantities of digital assets or (ii) cash in U.S. dollars (collectively, “Loaned Assets”). Each Loan will be documented by a written confirmation setting forth the asset type, principal amount, loan fee rate, maturity profile and any other negotiated terms. The Master Loan Agreement provides for a multiple-draw term facility up to $20 million. A Loan shall only be deemed to commence once the Lender transfers the Loaned Assets to the Company, and the Company simultaneously pledges the required collateral.
On July 8, 2025, the Company borrowed $8.0 million in cash (the “Initial Drawdown”) under the Master Loan Agreement. The Initial Drawdown is the first advance against the revolving credit facility established by the Master Loan Agreement. The Initial Drawdown bears an 8% loan fee. The Company’s obligations are secured by a first-priority security interest at a collateral-coverage ratio of about 156.25% of the outstanding principal amount. The Initial Drawdown is subject to the terms and conditions of the Master Loan Agreement. As of December 31, 2025, the balance on the loan was repaid in full.
On March 27, 2026, the Company borrowed $5.0 million in cash (the “March 2026 Drawdown”) under the Master Loan Agreement. The March 2026 Drawdown bears a 7% loan fee. The Company’s obligations under the March 2026 Drawdown are secured under the same terms and collateral-coverage ratio as the Initial Drawdown. The March 2026 Drawdown is subject to terms and conditions of the Master Loan Agreement. After giving effect to the March 2026 Drawdown, $15.0 million of the $20.0 million credit facility remains available.
Change in Address of Principal Executive Offices
In the third quarter of 2024, we moved our principal executive offices to 555 Forge River Road, Suite 100, Webster, Texas 77598.
Issuance of Non-Convertible Series A Voting Preferred Stock
On January 26, 2024, the Board of Directors (“Board”) of the Company, following extensive strategic evaluation, including consultation with advisors, approved, authorized, and ratified the issuance of 730,000 shares of previously designated Non-convertible Series A Voting Preferred Stock to the Chairman and Chief Executive Officer of the Company, Michael Mo, subject to certain limitations as set forth below, for no consideration. The issuance of up to 1,000,000 shares of Non-convertible Series A Voting Preferred Stock was previously approved and authorized by a vote of the majority stockholders of the Company. On January 16, 2025, the Board of Directors approved the issuance of an additional 270,000 shares of Non-convertible Series A Voting Preferred Stock (“Series A Voting Preferred”) to the Chief Executive Officer, bringing his total holdings up to 1,000,000 shares of Series A Voting Preferred Stock.
The issuance is subject to the Board reserving the full and unequivocal right to revoke, rescind, transfer or otherwise cancel the issued Non-convertible Series A Voting Preferred Stock in the event Michael Mo is removed from any position with the Company or resigns from all positions with the Company. This conditional arrangement is designed to ensure that the voting power conferred by the Non-convertible Series A Voting Preferred Stock remains tied to the active leadership of the Company. This underscores the Board’s commitment to maintaining alignment with the long-term interests of the Company and its stockholders.
The Independent Members of the Board have determined that the issuance represents a pivotal strategic move to reinforce and enhance the Company’s flexibility to optimize the Company’s negotiating position in any potential current and/or future engagements with commercial, financial, and/or strategic parties, and to provide defenses against potential hostile third-party actions.
Revenue
For the years ended December 31, 20242025 and 2023,2024, we generated $10,737,481$16.2 million and $9,830,166$10.7 million of revenue from 7160 and 5371 customers, respectively, representing an increase of $907,315, or 9%.respectively.
We had 47 product sales customers in 2025, compared with 53 in 2024. Product sales during these periods include sales of our component product, battery production, internal short circuit battery cells and devices, patented thermal runaway shield technology (“TRS”), phase change material (“PCM”) heatsinks, KULR SafeCases, and exoskeleton devices. Although the number of customers decreased, the increase in product revenue was driven primarily by our new client base generating more significant revenue per contract during the year ended December 31, 2025, as compared to the same period in 2024. Additionally, there was a significant increase in revenue generated from one of the Company’s existing customers.
Revenue from product sales during the year ended December 31, 2024 decreased by $3,259,748 or 47% compared to the year ended December 31, 2023. We had 53 product sales customers in 2024, compared with 39 in 2023. The decline in product revenue can be attributed to several expected 2024 orders, which management now expects to receive in a later period. We can provide no assurance as to when we will receive the expected orders. Product sales during these periods include sales of our component product, carbon fiber velvet (“CFV”) thermal management solution, internal short circuit (“ISC”) battery cells and devices, patented TRS technology, and thermal fiber thermal interface (“FTI”) materials.
RevenueWe fromhad 34 contract services duringcustomers thein year ended December 31, 2024 increased by $1,479,845 or 51%2025, compared towith the34 yearin ended December 31, 2023.2024. The increasedecrease in revenue for the year ended December 31, 2024 is primarily due to growtha large contract earned during 2024 which generated $0.7 million of service revenues, along with a significant reduction in customerstwo toother 34contracts in 20242025. fromService 17 in 2023. This workrevenue includes unique engineering design and testing projects customized for specific customers.
Revenue from IP licensing during the year ended December 31, 2024, was $2,687,218.$2.6 million. License revenue consists of contracts with customers for the rights to use our patented KULR VIBE technology and CF Cathode Design technology. This includesLicense revenue fromconsists of certain guaranteed minimum royalty fees of $600,000. Minimum royalty fees consist of guaranteed amounts due to the Company for contracts with customers for the rights to use its patented KULR VIBE technology.amounts. These contracts were executed during the year ended December 31, 2024. There was no license revenue recognized priorduring tothe thisyear period.ended December 31, 2025.
Our customers and prospective customers are large organizations with multiple levels of management, controls/procedures, and contract evaluation/authorization. Furthermore, our solutions are new and do not necessarily fit into pre-existing patterns of purchase commitments. 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.
Revenue from mining of digital assets mined during the year ended December 31, 2025 was $7.0 million. The initial mining contract was entered into on March 7, 2025 and mining activities increased through December 31, 2025, with additional leases being executed during the period. Two new mining contracts were entered into during the second quarter of 2025, followed by a fourth and fifth mining contract in the third and fourth quarters of 2025, respectively. For the year ended December 31, 2025, we earned 65.79 BTC from mining operations. There was no mining of digital assets revenue recognized prior to March 7, 2025.
Grant revenue during the year ended December 31, 2025 was $1.9 million related to the reimbursement of equipment purchases totaling $0.3 million, R&D expenses totaling $1.4 million and prepayments of $0.2 million. Grant revenue consists of an award from the Texas Space Commission to perform research and development of cold-temperature lithium-ion battery solutions for the next generation of Lunar and Martian missions which is part of our ongoing major or central activities. The contract award was executed on September 23, 2025. Revenue is earned on the award once specific grant conditions have been met, which is generally when the costs relevant to the condition have been incurred by the Company. There was no grant revenue recognized prior to this period.
Cost of revenue consists of the cost of our products as well as labor expenses directly related to product sales or contract services. The following table presents the dollar and percentage variances in cost of revenue for the periods presented.
Product mix plays an important part in our reported average margins for any period. Because we are introducing new products at an early stage in our development cycle andcycle, the margins earned can vary significantly between periods, customers, products and services due to the learning process, customer negotiating strengths, and product mix.
Gross profit margin on product sales declined sharply year-over-year. The decline was driven primarily by a write-off of approximately $0.7 million of inventory following the customer’s cessation of business operations, against which minimal revenue was generated. The inventory write-off, combined with low revenue from the related product line, resulted in significant margin reduction during the period.
Gross profit margin on contract services deteriorated from a positive margin in 2024 to a negative margin in 2025. The decline reflects increased labor hours incurred on service contracts relative to revenue recognized during the period. Margins were further pressured by approximately $0.7 million of depreciation expense on a revenue-generating machine that was placed into storage following the expiration of the Shawline lease in November 2025, resulting in limited revenue being generated against an otherwise fixed cost base.
Mining of digital assets is a new segment in 2025 with no comparable prior year period. Gross margins were negative during the period, reflecting the early-stage nature of the operations where hosting, energy, and lease costs exceeded mining revenue during the initial ramp-up period. Margins were further pressured by the decline in BTC prices experienced from March 2025 through December 2025, which reduced the value of BTC mined relative to the fixed costs of leasing the machines, compressing margins throughout the majority of the year.
Grant revenue, which represents a reimbursement of costs, reflected a full gross margin contribution. The related costs include $1.5 million classified within research and development expenses, and $0.4 million which were capitalized as fixed assets or prepaid expenses.
IP licensing generated a full margin contribution in 2024 as it carried no associated cost of revenue. No IP licensing revenue was recognized in 2025, and its absence was a significant driver of the overall decline in gross profit year-over-year.
For the years ended December 31, 2024 and 2023, cost of revenues was $5,254,283 and $6,164,310, respectively, representing a decrease of $910,027, or 15%. During the years ended December 31, 2024 and 2023, gross profit was $5,483,198 and $3,665,856, respectively, an increase of $1,817,342 or 50%. Our gross profit margins were 51% and 37%, during the years ended December 31, 2024 and 2023, respectively. The increase in the current period profit margin resulted primarily from our licensing agreements that generated $2,687,218 of revenue in 2024, which had no corresponding cost of revenue.
Research and development (“R&D”) includes expenses incurred in connection with the R&D of our CFV thermal management solution, high-areal-capacity battery electrodes, and 3D engineering for a rechargeable battery. Research and developmentR&D expenses are charged to operations as incurred. The following table presents the dollar and percentage variances in R&D expenses for the periods presented.
The increase was primarily attributable to planned increases in R&D services and personnel during 2025, including approximately $4.5 million of higher costs associated with third-party engineering and development services related to balancing fans to optimize vibration signature and acoustic studies, the purchase of testing equipment, and investments to support manufacturing expansion. Stock-based compensation increased by approximately $1.2 million as a result of new equity awards granted during the year. In addition, employee benefits related to health insurance increased by approximately $0.2 million, driven by expanded coverage and overall market pricing increases.
For the years ended December 31, 2024 and 2023, R&D expenses were $4,738,305 and $7,135,452, respectively, representing a decrease of $2,397,147 or 34%. The decrease was comprised primarily of $2,193,643 of engineering labor and other costs charged that were reduced or redeployed to revenue-generating activities and were charged to costs of revenue, $784,827 related to a planned decrease in R&D consulting services, partially offset by an increase in building related expenses of $335,142 for the new, larger facility in Texas, and an increase in stock-based compensation of $98,525.
Selling, general and administrative expenses consisted primarily of stock-based compensation, marketing and advertising, salaries, payroll taxes and other benefits, Board member compensation, accounting and tax, consulting fees, travel and entertainment, rent expense, office expenses, and legal and professional fees. The following table presents the dollar and percentage variances in selling, general and administrative expenses for the periods presented.
The increase was primarily attributable to higher operating costs associated with the Company’s expanded activities during 2025. Accounting, legal, consulting, and other professional fees increased by approximately $4.3 million, primarily related to strategic investment and business and corporate development related activities. Marketing expense increased by approximately $2.0 million, reflecting increased corporate and product awareness activity, advertising and promotional efforts. Travel expense increased by approximately $0.5 million, primarily related to increased marketing, business development and operational activities. Insurance expense increased by approximately $0.7 million, driven by expanded coverage and overall market pricing increases. SG&A expenses also increased primarily due to higher stock-based compensation expense of approximately $3.0 million related to additional equity awards granted during 2025, as well as approximately $0.7 million of increased personnel costs driven by higher headcount and employee bonuses.
Credit Losses on Accounts Receivable
For the year ended December 31, 2025, credit losses on accounts receivable were approximately $2.2 million, comprised of a $0.8 million direct write-off of accounts receivable associated with the Investee, as a result of their financial condition, and a $1.4 million allowance for credit losses determined using an aging-based method that groups accounts receivable into pools based on shared risk characteristics. There were no credit losses for the year ended December 31, 2024.
Impairment of Equipment Deposits, Intangible Assets, ROU Assets and Property and Equipment
What changed in the latest 10-Q
Risk Factors
There have been no material changes to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K which was filed with the SEC on March 31, 2026.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Strategic Initiatives”
New heading “Product Revenue”
New heading “Service Revenue”
New heading “Mining of Digital Assets Revenue”
New heading “Product Revenue Margins”
New heading “Service Revenue Margins”
New heading “Mining of Digital Asset Revenue Margins”
New heading “Grant Revenue Margins”
New heading “Impairment Expense”
Removed heading “Caban Asset Acquisition”
Removed heading “Departure and Appointment of Directors”
Removed heading “Reverse Stock Split”
Removed heading “Other Income (Expense)”
Largest changes
“For the three months ended June 30, 2026, the gross profit margin on product sales decreased compared to the prior year period, driven primarily by lower product sales from supply chain disruptions related to battery cell supply and power electronics in the second quarter of 2026, while expenses associated with direct labor, outsourced labor and other production costs did not decline proportionately.”see in full comparison
Full comparison: every changed paragraph (79)
The following discussion and analysis of the results of operations and financial condition of KULR Technology Group, Inc. (“KULR”) and its wholly-owned subsidiary, KULR Technology Corporation (“KTC”) (collectively referred to as “KULR” or the “Company”) as of MarchJune 31,30, 2026 and for the three and six months ended MarchJune 31,30, 2026 and 2025 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. 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. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risk, uncertainties and other factors. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Actual results could differ materially because of the factors discussed in “Risk Factors” elsewhere in this Quarterly Report, and other factors that we may not know. There have been no material changes to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K which was filed with the SEC on March 31, 2026, unless disclosed elsewhere in this Quarterly Report.
In June 2026, the Company communicated its strategy to position itself as an energy-systems platform for “physical AI,” prioritizing product revenue growth, gross margin improvement, and cost discipline across its target markets, which include space and defense, the low-altitude drone economy, AI data center backup power, Energy-as-a-Service for critical infrastructure, and robotics.
Caban Asset Acquisition
On December 24, 2025 (the “Acquisition Date”), we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Caban Systems, Inc. (“Caban”), a Miami-based renewable energy services and technology company, pursuant to which we acquired certain equipment and software used for the development, manufacture, and supply of Underwriters Laboratories (“UL”)-certified battery packs in exchange for a purchase price of $2,515,987 (the “Acquisition”). We paid cash of $1,921,127 on the Acquisition Date, with the remainder of $594,860 (“Holdback Amount”) to be paid in cash during 2026 based on timing of completion of delivery and installation of the equipment at our facility. If we suffer any damages related to the Acquisition for which we are indemnified and that are not cured by Caban, the Holdback Amount may be setoff against payments for such damages that would otherwise be paid by Caban. As of March 31, 2026, the remaining balance of the Holdback Amount was $348,601.
In connection with the Purchase Agreement, we entered into a Transition Services Agreement (the “TSA”) with Caban, whereby both parties agreed to work together for approximately ninety days after the equipment is installed at our facility, to ensure a smooth transition of the manufacturing of the Battery Packs from Caban to KULR. In consideration for the transition services, we will pay Caban service fees not to exceed $500,000 in the aggregate unless otherwise agreed in writing. During the three months ended March 31, 2026, we incurred expenses in connection with the TSA of approximately $100,000.
Subsequent to June 30, 2026, the Company repaid the outstanding principal balance of $20.0 million under its credit facility with Coinbase. In accordance with the terms of the Master Loan Agreement, dated as of July 1, 2025, the repayment resulted in the automatic release of 565 BTC from the collateral account. The Company sold an aggregate of 333 BTC for total proceeds of approximately $21.5 million at an average price of approximately $64,467 per BTC, of which approximately $20.0 million (approximately 310 BTC) was used to fund the repayment.
Strategic Initiatives
KULR expects its existing liquidity, together with disciplined balance-sheet management, will support its planned operations and growth initiatives for the near term, which include:
In July 2025, we secured a $20 million credit facility (which has no fixed termination date) with Coinbase, our digital assets custodian (the “Custodian”). Pursuant to the terms of the agreement, either party may terminate a loan on a termination date established by notice given to the other party prior to the close of business on any day that is a calendar day. On July 8, 2025, we borrowed $8 million (“Initial Drawdown”) which was repaid on October 15, 2025. On March 27, 2026, we borrowed $5 million (the “Second Drawdown”) against the facility. The Second Drawdown bears a 7% loan fee, and we segregated 125 Bitcoin (“BTC”) as collateral against this loan. The Second Drawdown is subject to the terms and conditions of the Master Loan Agreement. As of March 31, 2026, the full $5 million of principal was outstanding and we incurred interest in the amount of $4,795 pursuant to the Second Drawdown.
On May 13, 2026, we borrowed an additional $15 million (the “Third Drawdown”) against the $20 million credit facility with Coinbase. The Third Drawdown bears a 7% loan fee rate per annum, paid monthly, with no scheduled maturity date. We segregated 300 BTC as collateral against this loan. The Third Drawdown is subject to the terms and conditions of the Master Loan Agreement.
On May 7, 2026, the Company’s Board of Directors authorized management to sell digital assets as deemed necessary to fund key business priorities in lieu of issuing equity. During the period from July 9, 2026 through August 11, 2026, 333 BTC have been sold for net proceeds of $21.5 million.
See the section “Our Bitcoin Acquisition Strategy” below for further information regarding our Bitcoin purchases, including the sources of capital used to purchase Bitcoin.
As of March 31, 2026, we had two machine lease agreements (“Machine Lease Agreements”) with digital asset mining services providers related to the operation of digital asset mining machines. On July 30, 2025, we entered into a one-year mining services agreement and on October 1, 2025, we entered into a two-year mining services agreement with a digital asset mining services company. During the three months ended March 31, 2026, the Company did not purchase BTC and 8.80 BTC were earned from mining operations at an average value of $75,263 per BTC. See the section “Our Bitcoin Acquisition Strategy” below for further information regarding our Bitcoin purchases, including the source of capital used to purchase Bitcoin.
Departure and Appointment of Directors
On April 28, 2026, the holder of a majority of the outstanding voting stock of the Company, acting by written consent in lieu of a stockholder meeting, removed Dr. Joanna Massey, Donna Grier, Aron Schwartz, and Shawn Canter from the Company’s Board of Directors and appointed Mr. Ben Frank, a Director of Workforce AI Solution Engineering at Microsoft Corporation, and Dr. Mike Kimel, a specialist in pricing and profit optimization, as directors, effective immediately. Each newly appointed director will serve until the Company’s next annual meeting of stockholders or until his successor has been duly elected and qualified. As a result of these actions, the Company’s Board of Directors was reduced to three members, a majority of whom are independent. These changes were undertaken as part of the Company’s ongoing efforts to reduce selling, general and administrative expenses and improve operating efficiency in 2026.
Facility Lease
On May 12, 2026, we executed a 3-year lease agreement for a new facility located in Houston, Texas. The facility is approximately 24,700 rentable square feet and monthly rent is $30 thousand, which consists of base rent plus common area maintenance costs. We will pay a security deposit of $70 thousand and secure a letter of credit in the amount of $0.3 million within sixty days of the effective date of the agreement.
AsThe ofCompany Decemberhas 22,an 2025,at-the-market offering program (“ATM”) pursuant to an ATM arrangement with Cantor Fitzgerald and Craig-Hallum, under which the Company previously announced it had decided to pause its ATM transactions through June 30, 2026. During the three and six months ended MarchJune 31,30, 2026, the Company did not issue any shares of common stock pursuant to the ATM. On June 26, 2026, the Company announced that it had extended the pause of ATM Agreement.transactions through September 30, 2026.
Reverse Stock Split
On June 23, 2025, the Company effected a reverse stock split wherein each 8 shares of common stock outstanding immediately prior to the effective date was combined and converted into one share of common stock. All share and per share amounts have been adjusted to reflect the Reverse Stock Split.
Three and Six Months Ended MarchJune 31,30, 2026, Compared With Three and Six Months Ended MarchJune 31,30, 2025
For the three months ended MarchJune 31,30, 2026 and 2025, we generated $4.8$2.1 million and $2.4$3.7 million, respectively, of revenues from 26 and 30 customers in each period. For the six months ended June 30, 2026 and 2025, we generated $6.0 million and $6.1 million, respectively, of revenues from 39 and 43 customers in each period.
We had 19 product sales customers in the first quarter of 2026, compared with 16 in the first quarter of 2025. Product sales during these periods include sales of our component product, fiber thermal interface solutions (“FTI”), battery production, internal short circuit battery cells and devices, patented thermal runaway shield technology (“TRS”), phase change material (“PCM”) heatsinks, and KULR SafeCases. The increase in product revenue is primarily due to large sales of FTI and KULR One products to three new customers with whom we did not have contracts during the three months ended March 31, 2025.
We had 12 contract services customers in each of the first quarters of 2026 and 2025. Although the number of customers was unchanged, the decrease in revenue was primarily driven by two large long term contracts that were completed during the three months ended March 31, 2025. Contract services revenue includes unique engineering design and testing projects customized for specific customers.
Grant revenue during the three months ended March 31, 2026 was $1.4 million related to the reimbursement of R&D expenses. Grant revenue consists of an award from the Texas Space Commission to perform research and development of cold-temperature lithium-ion battery solutions for the next generation of Lunar and Martian missions which is part of our ongoing major or central activities. The contract award was executed on September 23, 2025. Revenue is earned on the award once specific grant conditions have been met, which is generally when the costs relevant to the condition have been incurred by the Company. There was no grant revenue recognized for the three months ended March 31, 2025.
Revenue from mining of digital assets during the three months ended March 31, 2026 was $0.7 million. The Company continued its mining operations pursuant to existing Machine Lease Agreements entered into during 2025. For the three months ended March 31, 2026, the Company earned 8.80 BTC from mining operations. For the three months ended March 31, 2025, the Company earned 2.97 BTC from mining operations pursuant to the initial Machine Lease Agreement entered into on March 7, 2025.
Our customers and prospective customers for product and service revenue are large organizations with multiple levels of management, controls/procedures, and contract evaluation/authorization. Furthermore, our solutions are new and do not necessarily fit into pre-existing patterns of purchase commitments. Accordingly, the business activity cycle between expression of initial customer interest to shipping, acceptanceacceptance, performance of services, and billing can be lengthy, unpredictable, and lumpy, which can influence the timing, consistency and reporting of sales growth.
Product Revenue
Product sales consist of battery systems delivered through our KULR ONE platform — including space, defense and aviation battery assemblies (“KULR ONE products”), battery management system hardware and lithium iron phosphate (“LFP”) battery packs — together with internal short circuit (“ISC”) cells and devices and battery storage and transport products (“Safe Cases”).
We had 16 product sales customers during the three months ended June 30, 2026, compared with 25 during the three months ended June 30, 2025. Product sales for the period were driven principally by two large orders, each of which was to a new customer and consisted of a new battery product configuration — custom lithium-ion battery assemblies and LFP battery packs. The decrease in product sales compared to the prior year period was primarily due to supply chain disruptions related to battery cell supply and power electronics during the period, which delayed the sale, production and delivery of certain battery products.
We had 29 product sales customers during the six months ended June 30, 2026, compared with 32 during the six months ended June 30, 2025. Product sales for the 2026 six-month period were driven principally by our largest order of the period, an FTI program delivered to a new defense customer during the first quarter of 2026, together with custom lithium-ion battery assemblies and LFP battery packs sold to two additional new customers. The decrease in product sales compared to the prior year period was primarily due to supply chain disruptions related to battery cell supply and power electronics during the period, which delayed the sale, production and delivery of certain battery products.
Service Revenue
Contract services consists of battery engineering and design services, including non-recurring engineering (“NRE”); cell screening and characterization; pack-level qualification and abuse testing, including calorimetry and propagation resistance testing; and KULR VIBE vibration services.
We had 10 contract services customers during the three months ended June 30, 2026, compared with 12 during the three months ended June 30, 2025. Contract services revenue for the 2026 period was driven principally by engineering services performed for our two largest services customers for the period, together with qualification and abuse testing services performed for several other customers. The decrease in contract services revenue was primarily attributable to the substantial completion of engineering services contracts that were in progress during the three months ended June 30, 2025, including a government-funded engineering program and two other significant engineering services contracts that did not recur in the 2026 period, partially offset by testing services performed for new customers during the 2026 period.
We had 17 contract services customers during the six months ended June 30, 2026, compared with 23 during the six months ended June 30, 2025. Contract services revenue for the 2026 six-month period was driven principally by NRE performed for our largest services customer and vibration testing and qualification services performed for our second largest services customer, together with engineering services performed for several other customers. The decrease in contract services revenue was primarily attributable to the substantial completion of engineering services contracts that were in progress during the six months ended June 30, 2025, including a large government-funded engineering program and three other significant engineering services contracts that did not recur at a comparable scale in the 2026 period. The decrease was partially offset by an increased volume of qualification and abuse testing services performed for new customers.
Grant Revenue
Grant revenue during the three and six months ended June 30, 2026 was $0.5 million and $0.9 million related to the reimbursement of R&D expenses. Grant revenue consists of an award from the Texas Space Commission to perform research and development of cold-temperature lithium-ion battery solutions for the next generation of Lunar and Martian missions which is part of our ongoing major or central activities. The contract award was executed on September 23, 2025. Revenue is earned on the award once specific grant conditions have been met, which is generally when the costs relevant to the condition have been incurred by the Company. There was no grant revenue recognized for the three and six months ended June 30, 2025.
Revenue for the six months ended June 30, 2026 reflects the correction of an immaterial error in previously reported grant revenue for the three months ended March 31, 2026. See Note 3 – Immaterial Revision of Previously Reported Financial Information, to the condensed consolidated financial statements for further information.
Mining of Digital Assets Revenue
For the three months ended June 30, 2026, the decrease in revenue from mining of digital assets was primarily due to fewer BTC earned, as the Company operated under two machine lease agreements during the three months ended June 30, 2026, compared to three agreements in effect during the three months ended June 30, 2025. The decrease was further driven by a lower average fair value of BTC on the dates earned in 2026.
For the six months ended June 30, 2026, the decrease in revenue from mining of digital assets was primarily due to fewer BTC earned, as the Company operated under two machine lease agreements during the six months ended June 30, 2026, compared to three agreements in effect during the six months ended June 30, 2025. The decrease was further driven by a lower average fair value of BTC on the dates earned in 2026.
The two machine lease agreements in effect during the six months ended June 30, 2026 have both since concluded. The first agreement became effective July 30, 2025 and expired by its terms on July 30, 2026, and the Company did not renew or extend it. The second agreement was originally scheduled to continue through October 31, 2027; however, in July 2026, the Company and the mining services provider under that agreement agreed to terminate it prior to its stated term, and the Company has no further obligations thereunder. As a result, the Company no longer operates under any machine lease or mining services agreement. See Note 13 – Subsequent Events for further information.
Cost of revenue consists of the cost of our products as well as labor expenses directly related to product sales or contract services, and lease and non-lease costs incurred pursuant to Machine Lease Agreements in connection with mining digital assets. The following tables present the gross profit (loss) and gross profit (loss) margin by revenue type for the periods presented.
Product Revenue Margins
For the three months ended June 30, 2026, the gross profit margin on product sales decreased compared to the prior year period, driven primarily by lower product sales from supply chain disruptions related to battery cell supply and power electronics in the second quarter of 2026, while expenses associated with direct labor, outsourced labor and other production costs did not decline proportionately.
GrossFor the six months ended June 30, 2026, the gross profit margin on product sales decreased compared to the prior year period, driven primarily by reduced margins recognized on various product lines during the periodperiod, asand by lower product sales in the second quarter of 2026 from supply chain disruptions related to battery cell supply and power electronics without a resultproportionate ofdecline productin mix.associated expenses.
Service Revenue Margins
For the three months ended June 30, 2026, the gross loss on contract services increased slightly from the prior year period in dollar terms, and the gross profit margin percentage on contract services declined, driven primarily by lower contract services revenue recognized relative to depreciation and project labor costs during the period, including excess labor and material costs on a customer engineering program that generated a gross loss during the period. Substantially all other contract services projects generated positive gross margins during the period. In the prior year period, gross losses on contract services were concentrated in two other customer engineering programs.
For the six months ended June 30, 2026, the gross loss on contract services decreased compared to the prior year period in dollar terms, driven primarily by the completion of two projects that had been impacted by excess labor hours and generated negative margins during the first quarter of 2026, partially offset by excess labor and material costs on a customer engineering program during the second quarter of 2026. The gross profit margin percentage on contract services improved compared to the prior year period, as contract services cost of revenue decreased at a faster rate than contract service revenue compared to the prior period.
Mining of Digital Asset Revenue Margins
Gross profit margin on contract services improved slightly in the first quarter of 2026, driven primarily by the completion of two projects that had been impacted by excess labor hours and created negative margins in the first quarter of 2025.
MiningFor the three months ended June 30, 2026, the gross profit margin on mining of digital asset marginsassets decreased duringcompared to the period.prior Theyear decreaseperiod, wasdriven primarily driven by the decline in BTC prices, which were down significantly in March 2026prices relative to Marchthe 2025,prior reducingyear period, which reduced the value of BTC mined relative to the fixed costs associated with machine lease obligations.
For the six months ended June 30, 2026, the gross profit margin on mining of digital assets decreased compared to the prior year period, driven primarily by the decline in BTC prices relative to the prior year period, which reduced the value of BTC mined relative to the fixed costs associated with machine lease obligations. Additionally, the 2026 period includes a full six months of lease and hosting costs, while the 2025 period includes four months due to mining operations beginning in March 2025.
Grant Revenue Margins
Grant revenue, which represents a reimbursement of costs, reflected a full gross margin contribution. The related costs include $1.4$0.5 million primarilyand $0.9 million, respectively, for the three and six months ended June 30, 2026 and are classified within research and development expenses.
Research and development (“R&D”) includes expenses incurred in connection with the R&D of our CFV thermal management solution, high-areal-capacity battery electrodes, and 3D engineering for a rechargeable battery.battery, as well as costs incurred under the Texas Space Commission award, which are reimbursed through grant revenue. R&D expenses are charged to operations as incurred. The following table presents the dollar and percentage variances in R&D expenses for the periods presented.
The increase in research and development expenses for the three months ended June 30, 2026 was primarily attributable to costs incurred under the Texas Space Commission grant, which are reimbursed through grant revenue.
The decrease in research and development expenses for the six months ended June 30, 2026 was primarily attributable to progress made on several key initiatives in the prior year, including third-party engineering and development services, testing equipment purchases, and investments to support manufacturing expansion, which resulted in lower activity levels and associated costs during the current period.period, partially offset by R&D expenses incurred related to the Texas Space Commission grant in the 2026 periods.
Selling, GeneralGeneral, and Administrative
The decrease in selling, general and administrative expenses for the three and six months ended June 30, 2026 was primarily attributable to the conclusion of strategic investment and corporate development activities that drove costs higher during 2025, including a minority investment in an external company that did not recur during the three and six months ended MarchJune 31,30, 2026. Accounting, legal, consulting, and other professional fees decreased as these activities wound down. Marketing, travel, insurance, and personnel-related expenses similarly reflect lower activity levels in the current period compared to the elevated investment and expansion efforts undertaken throughout 2025.
KULR insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-10 | Frank Benjamin Andrew |
Grant/award | 20,000 | — | — |
| 2026-09-10 | Perez Steven John |
Grant/award | 20,000 | — | — |
| 2026-09-10 | Kimel Michael Philip |
Grant/award | 200,000 | — | — |
| 2026-08-04 | Walker William Quinn |
Shares withheld for tax | 2,663 | $3.22 | $8.6K |
| 2026-06-11 | Yamamoto Jay Koichi |
Shares withheld for tax | 9,507 | $3.82 | $36.3K |
| 2026-04-15 | Canter Shawn |
Shares withheld for tax | 19,369 | $2.17 | $42.0K |
Well-known investors holding KULR (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Millennium Management (Israel Englander) | 2026-06-30 | 222,665 | $848.4K | 0.0% | New position |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 187,180 | $713.2K | 0.0% | Added 126% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 118,979 | $453.3K | 0.0% | New position |
| Two Sigma Investments | 2026-06-30 | 12,710 | $48.4K | 0.0% | New position |