10-Q 1 tmb-20230930x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                   

Commission File Number:

001-40454

KULR TECHNOLOGY GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware

    

81-1004273

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

4863 Shawline Street, San Diego, California

    

92111

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: 408-663-5247

(Former name, former address and former fiscal year, if changed since last report) N/A

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

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock

KULR

NYSE American LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b- 2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer 

Smaller reporting company

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No

As of November 10, 2023, there were 127,884,674 shares outstanding.

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS

    

Page

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

3

Condensed Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022

3

Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022

4

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022

5

Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022

7

Notes to Unaudited Condensed Consolidated Financial Statements

9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

24

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

31

Item 4. Controls and Procedures.

31

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

32

Item 1A. Risk Factors.

32

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities

32

Item 3. Defaults Upon Senior Securities.

32

Item 4. Mine Safety Disclosures

32

Item 5. Other Information.

32

Item 6. Exhibits.

33

SIGNATURES

34

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 

December 31, 

    

2023

    

2022

(unaudited)

Assets

 

  

 

  

Current Assets:

 

  

 

  

Cash

$

1,167,315

$

10,333,563

Accounts receivable

 

1,296,811

 

1,542,118

Inventory

 

1,551,399

 

1,962,035

Inventory deposits

91,033

285,260

Prepaid expenses and other current assets

 

945,303

 

1,613,008

Total Current Assets

 

5,051,861

 

15,735,984

Property and equipment, net

 

4,909,766

 

3,193,041

Equipment deposits

1,615,286

3,514,937

Security deposits

10,228

60,441

Intangible assets, net

754,968

720,768

Right of use asset, net

193,210

328,941

Deferred financing costs

71,818

71,818

Total Assets

$

12,607,137

$

23,625,930

Liabilities and Stockholders' Equity

 

 

  

Current Liabilities:

 

 

  

Accounts payable

$

1,813,191

$

1,408,017

Accrued expenses and other current liabilities

 

3,018,326

 

2,142,277

Accrued issuable equity

98,540

227,956

Lease liability, current portion

172,569

223,645

Prepaid advance liability, net of discount, current portion

5,910,405

5,655,612

Deferred revenue

393,934

23,000

Total Current Liabilities

 

11,406,965

 

9,680,507

Lease liability, non-current portion

97,958

Prepaid advance liability, net of discount, non-current portion

3,196,678

Accrued interest, non-current

157,054

Total Liabilities

11,406,965

13,132,197

 

 

  

Commitments and contingencies (Note 12)

 

  

 

  

 

  

 

  

Stockholders’ Equity

 

  

 

  

Preferred stock, $0.0001 par value, 20,000,000 shares authorized;

 

 

Series A Preferred Stock, 1,000,000 shares designated; none issued and outstanding at September 30, 2023 and December 31, 2022

Series B Convertible Preferred Stock, 31,000 shares designated; none issued and outstanding at September 30, 2023 and December 31, 2022

 

 

Series C Preferred Stock, 400 shares designated; none issued and outstanding at September 30, 2023 and December 31, 2022

Series D Preferred Stock, 650 shares designated; none issued and outstanding at September 30, 2023 and December 31, 2022

Common stock, $0.0001 par value, 500,000,000 shares authorized; 127,697,113 shares issued and 127,565,951 shares outstanding at September 30, 2023; 113,202,749 shares issued and 113,071,587 shares outstanding at December 31, 2022

 

12,770

 

11,320

Additional paid-in capital

62,577,789

53,372,673

Treasury stock, at cost; 131,162 shares held at September 30, 2023 and December 31, 2022

(296,222)

(296,222)

Accumulated deficit

 

(61,094,165)

 

(42,594,038)

Total Stockholders’ Equity

 

1,200,172

 

10,493,733

Total Liabilities and Stockholders' Equity

$

12,607,137

$

23,625,930

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

3

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

For the Three Months Ended

For the Nine Months Ended

September 30, 

September 30, 

    

2023

    

2022

    

2023

    

2022

Revenue

$

3,041,007

$

1,393,185

$

7,496,315

$

2,181,230

Cost of revenue

 

1,703,553

 

932,364

4,513,285

1,478,954

Gross Profit

 

1,337,454

 

460,821

 

2,983,030

 

702,276

 

 

 

 

Operating Expenses

 

 

 

 

Research and development

 

1,640,959

 

1,069,852

 

4,873,841

 

2,790,683

Selling, general, and administrative

 

4,793,523

 

4,349,373

 

15,546,915

 

12,210,458

Total Operating Expenses

 

6,434,482

 

5,419,225

 

20,420,756

 

15,001,141

Loss From Operations

 

(5,097,028)

 

(4,958,404)

 

(17,437,726)

 

(14,298,865)

 

 

 

 

Other (Expense) Income

 

 

 

 

Interest expense

 

(187,574)

 

(633,342)

 

(544,615)

 

(676,622)

Gain on forgiveness of PPP loan and interest

158,675

158,675

Amortization of debt discount

(234,899)

(172,407)

(695,773)

(275,626)

Loss on debt extinguishment

(8,508)

(8,508)

Change in fair value of accrued issuable equity

(42,773)

27,401

177,987

123,121

Total Other Expense, net

 

(465,246)

 

(628,181)

 

(1,062,401)

 

(678,960)

Net Loss

$

(5,562,274)

$

(5,586,585)

$

(18,500,127)

$

(14,977,825)

Net Loss Per Share

 

 

 

 

- Basic and Diluted

$

(0.05)

$

(0.05)

$

(0.16)

$

(0.14)

 

 

 

 

Weighted Average Number of Common Shares Outstanding

 

 

 

 

- Basic and Diluted

 

117,144,452

 

105,572,820

 

115,149,761

 

104,223,378

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

4

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

(unaudited)

Additional

Total

Common Stock

Paid-In

Treasury Stock

Accumulated

Stockholders'

    

Shares

    

Amount

    

Capital

    

Shares

    

Amount

    

Deficit

    

Equity

Balance - January 1, 2023

 

113,202,749

$

11,320

$

53,372,673

131,162

$

(296,222)

$

(42,594,038)

$

10,493,733

Common stock issued for the repayment of prepaid advance liability and related interest accrual

3,153,036

315

3,750,653

3,750,968

Shares repurchased for payroll taxes and canceled

(175,000)

(17)

(229,232)

(229,249)

Stock-based compensation:

Restricted stock awards granted

1,848,508

185

(185)

Unvested restricted stock awards canceled

(75,000)

(8)

8

Common stock issued for services

5,500

1

6,819

6,820

Amortization of restricted common stock

765,100

765,100

Amortization of stock options

40,605

40,605

Net loss

(6,602,861)

(6,602,861)

Balance - March 31, 2023

117,959,793

11,796

57,706,441

131,162

(296,222)

(49,196,899)

8,225,116

Common stock issued for the repayment of prepaid advance liability and related interest accrual

925,935

93

715,565

715,658

Stock-based compensation:

Amortization of restricted common stock

823,540

823,540

Amortization of stock options

44,311

44,311

Net loss

(6,334,992)

(6,334,992)

Balance - June 30, 2023

118,885,728

11,889

59,289,857

131,162

(296,222)

(55,531,891)

3,473,633

Common stock issued pursuant to the equity financing:

For cash, net of issuance costs (1)

8,214,285

821

2,285,949

2,286,770

Stock-based compensation:

Restricted stock awards granted

370,000

37

(37)

Common stock issued for services

227,100

23

137,637

137,660

Amortization of restricted common stock

808,316

808,316

Amortization of stock options

56,067

56,067

Net loss

(5,562,274)

(5,562,274)

Balance - September 30, 2023

127,697,113

$

12,770

$

62,577,789

131,162

$

(296,222)

$

(61,094,165)

$

1,200,172

(1) Equity financing gross proceeds of $2,875,000 less issuance costs of $588,230.

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

5

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

(unaudited)

Additional

Total

Common Stock

Paid-In

Treasury Stock

Accumulated

Stockholders'

    

Shares

    

Amount

   

Capital

    

Shares

    

Amount

    

Deficit

    

Equity

Balance - January 1, 2022

 

104,792,072

$

10,479

$

39,512,122

$

$

(23,157,559)

$

16,365,042

Treasury stock held upon the vesting of restricted common stock

 

 

194,704

(439,728)

 

 

(439,728)

Common stock issued upon the exercise of warrants

70,143

7

87,672

87,679

Common stock issued upon the exercise of options

 

2,500

 

5,075

 

 

5,075

Stock-based compensation:

Common stock issued for services

 

6,000

 

1

43,159

 

 

43,160

Amortization of restricted common stock

519,231

519,231

Amortization of stock options

15,883

15,883

Amortization of market-based awards

 

730,048

 

 

730,048

Net loss

(4,136,555)

(4,136,555)

Balance - March 31, 2022

104,870,715

10,487

40,913,190

194,704

(439,728)

(27,294,114)

13,189,835

Treasury stock issued upon the exercise of options

(46,305)

(33,000)

74,529

28,224

Common stock issued upon the exercise of warrants

2,346,525

234

2,932,922

2,933,156

Stock-based compensation:

Common stock issued for services

6,000

1

10,260

10,261

Amortization of restricted common stock

422,128

422,128

Amortization of stock options

26,535

26,535

Amortization of market-based awards

565,421

565,421

Net loss

(5,254,685)

(5,254,685)

Balance - June 30, 2022

107,223,240

10,722

44,824,151

161,704

(365,199)

(32,548,799)

11,920,875

Treasury stock issued upon the exercise of options

(30,542)

68,977

(48,819)

20,158

Common stock issued pursuant to the SEPA agreement:

For cash, net of issuance costs (1)

160,782

16

247,855

247,871

In satisfaction of notes payable

94,458

9

149,991

150,000

For the repayment of prepaid advances

221,605

22

274,635

274,658

Stock-based compensation:

Amortization of restricted common stock

403,812

403,812

Amortization of stock options

23,959

23,959

Amortization of market-based awards

477,700

477,700

Net loss

(5,586,585)

(5,586,585)

Balance - September 30, 2022

107,700,085

$

10,770

$

46,402,103

131,162

$

(296,222)

$

(38,184,203)

$

7,932,448

(1) Represents gross proceeds of $250,000 less $2,129 for amortization of issuance costs.

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

6

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

For the Nine Months Ended

September 30, 

    

2023

    

2022

Cash Flows From Operating Activities:

  

 

  

Net loss

$

(18,500,127)

$

(14,977,825)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Amortization of debt discount

695,773

275,626

Non-cash lease expense

186,885

143,861

Loss on debt extinguishment

8,508

Depreciation and amortization expense

1,532,796

140,829

Gain on forgiveness of PPP loan and interest

(158,675)

Change in fair value of accrued issuable equity

 

(177,987)

 

(123,121)

Non-cash interest expense

576,932

Stock-based compensation

2,730,989

3,208,778

Changes in operating assets and liabilities:

 

 

Accounts receivable

245,307

(1,208,646)

Inventory

410,636

(150,863)

Inventory deposits

194,227

(721,462)

Prepaid expenses and other current assets

 

667,705

 

(741,937)

Security deposits

 

50,213

 

Accounts payable

 

(103,457)

 

377,987

Accrued expenses and other current liabilities

1,003,244

248,301

Lease liability

 

(200,188)

 

(151,997)

Deferred revenue

 

370,934

 

(112,303)

Total Adjustments

 

7,607,077

 

1,611,818

Net Cash Used In Operating Activities

(10,893,050)

(13,366,007)

Cash Flows From Investing Activities:

Deposits for purchase of property and equipment

(621,107)

(2,198,626)

Purchases of property and equipment

(237,592)

(573,942)

Acquisition of intangible assets

(135,000)

Net Cash Used In Investing Activities

 

(993,699)

 

(2,772,568)

Cash Flows from Financing Activities:

Proceeds from equity financing

 

2,875,000

 

Issuance costs on equity financing

(320,250)

Proceeds from the SEPA

247,871

Proceeds from prepaid advance liability

2,000,000

10,573,068

Issuance costs on prepaid advance liability

(30,000)

(85,000)

Repayments of prepaid advance liability

 

(1,575,000)

 

Proceeds from notes payable (1)

4,750,000

Issuance costs on notes payable

(17,200)

Repayments of note payable

(1,000,000)

Payment of financing costs incurred in connection with the SEPA

(72,800)

Payment of financing costs incurred in connection with notes payable

2,129

Repurchase of common stock

(229,249)

Proceeds from the exercise of options

25,233

Proceeds from the exercise of warrants

3,020,836

Net Cash Provided By Financing Activities

2,720,501

17,444,137

Net (Decrease) Increase In Cash

(9,166,248)

1,305,562

Cash - Beginning of Period

 

10,333,563

 

14,863,301

Cash - End of Period

$

1,167,315

$

16,168,863

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

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

7

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued

(unaudited)

For the Nine Months Ended

 

September 30, 

    

2023

    

2022

Supplemental Disclosures of Cash Flow Information:

Cash paid during the period for:

Interest

$

264,731

$

676,281

Taxes

$

$

Non-cash investing and financing activities:

Right of use asset for lease liability

$

51,154

$

143,640

Common stock held in treasury upon the vesting of restricted common stock

$

$

(439,728)

Treasury stock issued upon the exercise of stock options

$

$

143,506

Original issue discount on prepaid advance liability

$

105,263

$

Common stock issued in satisfaction of prepaid advance liability and interest

$

4,466,626

$

Prepaid advance for repayment of note payable

$

$

3,850,000

Shares issued i