UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended:
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For the transition period from to
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | ||||
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| 2023 |
| 2022 | ||
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Assets |
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Current Assets: |
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Cash | $ | | $ | | ||
Accounts receivable |
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Inventory |
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Inventory deposits | | | ||||
Prepaid expenses and other current assets |
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Total Current Assets |
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Property and equipment, net |
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Equipment deposits | | | ||||
Security deposits | | | ||||
Intangible assets, net | | | ||||
Right of use asset, net | | | ||||
Deferred financing costs | | | ||||
Total Assets | $ | | $ | | ||
Liabilities and Stockholders' Equity |
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Current Liabilities: |
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Accounts payable | $ | | $ | | ||
Accrued expenses and other current liabilities |
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Accrued issuable equity | | | ||||
Lease liability, current portion | | | ||||
Prepaid advance liability, net of discount, current portion | | | ||||
Deferred revenue | | | ||||
Total Current Liabilities |
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Lease liability, non-current portion | — | | ||||
Prepaid advance liability, net of discount, non-current portion | — | | ||||
Accrued interest, non-current | — | | ||||
Total Liabilities | | | ||||
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Commitments and contingencies (Note 12) |
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Stockholders’ Equity |
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Preferred stock, $ |
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Series A Preferred Stock, | ||||||
Series B Convertible Preferred Stock, |
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Series C Preferred Stock, | ||||||
Series D Preferred Stock, | ||||||
Common stock, $ |
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Additional paid-in capital | | | ||||
Treasury stock, at cost; | ( | ( | ||||
Accumulated deficit |
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Total Stockholders’ Equity |
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Total Liabilities and Stockholders' Equity | $ | | $ | |
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, | |||||||||||
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| 2023 |
| 2022 | ||||
Revenue | $ | | $ | | $ | | $ | | ||||
Cost of revenue |
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Gross Profit |
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Operating Expenses |
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Research and development |
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Selling, general, and administrative |
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Total Operating Expenses |
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Loss From Operations |
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Other (Expense) Income |
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Interest expense |
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Gain on forgiveness of PPP loan and interest | — | | — | | ||||||||
Amortization of debt discount | ( | ( | ( | ( | ||||||||
Loss on debt extinguishment | — | ( | — | ( | ||||||||
Change in fair value of accrued issuable equity | ( | | | | ||||||||
Total Other Expense, net |
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Net Loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net Loss Per Share |
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- Basic and Diluted | $ | ( | $ | ( | $ | ( | $ | ( | ||||
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Weighted Average Number of Common Shares Outstanding |
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- Basic and Diluted |
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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' | |||||||||||||||
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| Capital |
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| Amount |
| Deficit |
| Equity | |||||
Balance - January 1, 2023 |
| | $ | | $ | | | $ | ( | $ | ( | $ | | ||||||
Common stock issued for the repayment of prepaid advance liability and related interest accrual | | | | — | — | — | | ||||||||||||
Shares repurchased for payroll taxes and canceled | ( | ( | ( | — | — | — | ( | ||||||||||||
Stock-based compensation: |
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Restricted stock awards granted | | | ( | — | — | — | — | ||||||||||||
Unvested restricted stock awards canceled | ( | ( | | — | — | — | — | ||||||||||||
Common stock issued for services | | | | — | — | — | | ||||||||||||
Amortization of restricted common stock | — | — | | — | — | — | | ||||||||||||
Amortization of stock options | — | — | | — | — | — | | ||||||||||||
Net loss | — | — | — | — | — | ( |
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Balance - March 31, 2023 | | | | | ( | ( | | ||||||||||||
Common stock issued for the repayment of prepaid advance liability and related interest accrual | | | | — | — | — | | ||||||||||||
Stock-based compensation: | |||||||||||||||||||
Amortization of restricted common stock | — | — | | — | — | — | | ||||||||||||
Amortization of stock options | — | — | | — | — | — | | ||||||||||||
Net loss | — | — | — | — | — | ( | ( | ||||||||||||
Balance - June 30, 2023 | | | | | ( | ( | | ||||||||||||
Common stock issued pursuant to the equity financing: |
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For cash, net of issuance costs (1) | | | | — | — | — | | ||||||||||||
Stock-based compensation: |
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Restricted stock awards granted | | | ( | — | — | — | — | ||||||||||||
Common stock issued for services | | | | — | — | — | | ||||||||||||
Amortization of restricted common stock | — | — | | — | — | — | | ||||||||||||
Amortization of stock options | — | — | | — | — | — | | ||||||||||||
Net loss | — | — | — | — | — | ( | ( | ||||||||||||
Balance - September 30, 2023 | | $ | | $ | | | $ | ( | $ | ( | $ | |
(1) Equity financing gross proceeds of $
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' | |||||||||||||||
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| Amount |
| Capital |
| Shares |
| Amount |
| Deficit |
| Equity | |||||
Balance - January 1, 2022 |
| | $ | $ | | — | $ | — | $ | ( | $ | | |||||||
Treasury stock held upon the vesting of restricted common stock |
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Common stock issued upon the exercise of warrants | | | — | — | — | | |||||||||||||
Common stock issued upon the exercise of options |
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Stock-based compensation: |
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Common stock issued for services |
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Amortization of restricted common stock | — | — | — | — | — | | |||||||||||||
Amortization of stock options | — | — | — | — | — | | |||||||||||||
Amortization of market-based awards |
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Net loss | — | — | — | — | — | ( | ( | ||||||||||||
Balance - March 31, 2022 | | | | | ( | ( | | ||||||||||||
Treasury stock issued upon the exercise of options | — | — | ( | ( | | — | | ||||||||||||
Common stock issued upon the exercise of warrants | | | | — | — | — | | ||||||||||||
Stock-based compensation: | |||||||||||||||||||
Common stock issued for services | | | | — | — | — | | ||||||||||||
Amortization of restricted common stock | — | — | | — | — | — | | ||||||||||||
Amortization of stock options | — | — | | — | — | — | | ||||||||||||
Amortization of market-based awards | — | — | | — | — | — | | ||||||||||||
Net loss | — | — | — | — | — | ( | ( | ||||||||||||
Balance - June 30, 2022 | | | | | ( | ( | | ||||||||||||
Treasury stock issued upon the exercise of options | — | — | — | ( | | ( | | ||||||||||||
Common stock issued pursuant to the SEPA agreement: |
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For cash, net of issuance costs (1) | | | | — | — | — | | ||||||||||||
In satisfaction of notes payable | | | | — | — | — | | ||||||||||||
For the repayment of prepaid advances | | | | — | — | — | | ||||||||||||
Stock-based compensation: |
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Amortization of restricted common stock | — | — | | — | — | — | | ||||||||||||
Amortization of stock options | — | — | | — | — | — | | ||||||||||||
Amortization of market-based awards | — | — | | — | — | — | | ||||||||||||
Net loss | — | — | — | — | — | ( | ( | ||||||||||||
Balance - September 30, 2022 | | $ | | $ | | | $ | ( | $ | ( | $ | |
(1) Represents gross proceeds of $
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, | ||||||
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| 2022 | ||
Cash Flows From Operating Activities: |
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Net loss |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Amortization of debt discount | | | ||||
Non-cash lease expense | | | ||||
Loss on debt extinguishment | — | | ||||
Depreciation and amortization expense | | | ||||
Gain on forgiveness of PPP loan and interest | — | ( | ||||
Change in fair value of accrued issuable equity |
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Non-cash interest expense | — | | ||||
Stock-based compensation | | | ||||
Changes in operating assets and liabilities: |
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Accounts receivable | | ( | ||||
Inventory | | ( | ||||
Inventory deposits | | ( | ||||
Prepaid expenses and other current assets |
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Security deposits |
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Accounts payable |
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Accrued expenses and other current liabilities | | | ||||
Lease liability |
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Deferred revenue |
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Total Adjustments |
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Net Cash Used In Operating Activities | ( | ( | ||||
Cash Flows From Investing Activities: |
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Deposits for purchase of property and equipment | ( | ( | ||||
Purchases of property and equipment | ( | ( | ||||
Acquisition of intangible assets | ( | — | ||||
Net Cash Used In Investing Activities |
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Cash Flows from Financing Activities: |
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Proceeds from equity financing |
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Issuance costs on equity financing | ( | — | ||||
Proceeds from the SEPA | — | | ||||
Proceeds from prepaid advance liability | | | ||||
Issuance costs on prepaid advance liability | ( | ( | ||||
Repayments of prepaid advance liability |
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Proceeds from notes payable (1) | — | | ||||
Issuance costs on notes payable | — | ( | ||||
Repayments of note payable | — | ( | ||||
Payment of financing costs incurred in connection with the SEPA | — | ( | ||||
Payment of financing costs incurred in connection with notes payable | — | | ||||
Repurchase of common stock | ( | — | ||||
Proceeds from the exercise of options | — | | ||||
Proceeds from the exercise of warrants | — | | ||||
Net Cash Provided By Financing Activities | | | ||||
Net (Decrease) Increase In Cash | ( | | ||||
Cash - Beginning of Period |
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Cash - End of Period | $ | | $ | |
(1) Face value of $
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 | $ | | $ | | ||
Taxes | $ | — | $ | — | ||
Non-cash investing and financing activities: | ||||||
Right of use asset for lease liability | $ | | $ | | ||
Common stock held in treasury upon the vesting of restricted common stock | $ | — | $ | ( | ||
Treasury stock issued upon the exercise of stock options | $ | — | $ | | ||
Original issue discount on prepaid advance liability | $ | | $ | — | ||
Common stock issued in satisfaction of prepaid advance liability and interest | $ | | $ | — | ||
Prepaid advance for repayment of note payable | $ | — | $ | | ||
Shares issued i |