KULR Technology Group (NYSE: KULR) swings to $51M loss on Bitcoin volatility
KULR Technology Group, Inc. reported significantly weaker results for the three and six months ended June 30, 2026, driven largely by volatility in its Bitcoin holdings and continued investment in growth. For the six-month period, revenue was $6,026,607, roughly flat versus 2025, but cost of revenue and operating expenses kept the core business unprofitable, producing a loss from operations of $19,489,755.
The company’s largest impact came from digital assets: a $31,359,380 negative change in fair value of Bitcoin swung other income deeply negative, contributing to a net loss of $50,990,660 for the first half of 2026, versus a $10,664,509 loss a year earlier. As of June 30, 2026, KULR held 1,091.69 BTC with a fair value of $63,922,870 (cost basis $109,801,107), of which $33,083,010 was pledged as collateral against a $20,000,000 loan payable. Management states that cash of $13,067,983, Bitcoin holdings and working capital are expected to cover obligations for at least twelve months, and notes that the Coinbase loan was repaid after quarter-end using BTC sale proceeds.
Positive
- None.
Negative
- Net loss rose to $50,990,660 for the first half of 2026, compared with a $10,664,509 loss in the prior-year period, reflecting both operating losses and digital asset fair value declines.
- Negative operating cash flow of $17,690,781 for the first half of 2026 indicates substantial cash usage to fund operations and working capital.
- Bitcoin fair value loss of $31,359,380 in the first half of 2026 highlights significant earnings volatility tied to digital asset price movements.
- Allowance for credit losses increased to $2,722,889 on accounts receivable, including a separate $500,000 reserve on Auto-Vibe receivables, signaling elevated collection risk.
Filing Explained
A $900,000 first-quarter revenue correction and a $4.5 million long-dated receivable add accounting and liquidity changes beyond reported results.
The June 30, 2026 Form 10-Q is an unaudited quarterly report: it shows a
The filing also says all BTC was reclassified as current assets because the board approved making it available to fund operations; at June 30, total BTC fair value was
For the March 31 quarter, the company revised revenue and gross profit down by
A separate liquidity-related item is the
Key Figures
Key Terms
Mining of digital assets financial
Fair value financial
Allowance for credit losses financial
Right-of-use asset financial
Segment reporting financial
Reverse stock split financial
Earnings Snapshot
FAQ
How did KULR (KULR) perform financially in the quarter ended June 30, 2026?
What were KULR (KULR) revenues for the first half of 2026?
How large are KULR’s (KULR) Bitcoin holdings and related losses?
What is KULR’s (KULR) liquidity position as of June 30, 2026?
How much debt does KULR (KULR) have tied to its digital assets?
What is the impact of KULR’s (KULR) Auto-Vibe receivables on its risk profile?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended:
OR
For the transition period from to
Commission File Number:
KULR TECHNOLOGY GROUP, INC.
(Exact name of registrant as specified in its charter)
| ||
(State or Other Jurisdiction of Incorporation or Organization) | | (I.R.S. Employer Identification No.) |
| ||
(Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including area code:
(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 |
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.
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).
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 | ☐ |
☒ | 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
As of August 11, 2026, there were
Table of Contents
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2026
TABLE OF CONTENTS
| | Page | |
PART I – FINANCIAL INFORMATION | | ||
| | | |
| Item 1. Financial Statements. | 3 | |
| | | |
| Condensed Consolidated Balance Sheets as of June 30, 2026 (unaudited) and December 31, 2025 | 3 | |
| | | |
| Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2026 and 2025 | 4 | |
| | | |
| Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2026 | | 5 |
| | | |
| Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2025 | | 6 |
| | | |
| Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 | 7 | |
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| Notes to Unaudited Condensed Consolidated Financial Statements | 9 | |
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| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 30 | |
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| Item 3. Quantitative and Qualitative Disclosures About Market Risk. | 39 | |
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| Item 4. Controls and Procedures. | 39 | |
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PART II – OTHER INFORMATION | | ||
| | | |
| Item 1. Legal Proceedings. | 40 | |
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| Item 1A. Risk Factors. | 40 | |
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| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. | 40 | |
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| Item 3. Defaults Upon Senior Securities. | 40 | |
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| Item 4. Mine Safety Disclosures. | 40 | |
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| Item 5. Other Information. | 40 | |
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| Item 6. Exhibits. | 41 | |
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| SIGNATURES | 42 | |
Table of Contents
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
| | | | | | |
| | June 30, | | December 31, | ||
| | 2026 | | 2025 | ||
| | (unaudited) | | | | |
Assets |
| | |
| | |
Current Assets: |
| | |
| | |
Cash | | $ | | | $ | |
Restricted cash | | | | | | — |
Accounts receivable, net of allowance for credit losses of $ | |
| | |
| |
Grant receivable | | | | | | |
Inventory | |
| | |
| |
Inventory deposits | | | | | | |
Digital assets | | | | | | — |
Digital assets, pledged as collateral | | | | | | — |
Auto-Vibe assets | | | — | | | |
Prepaid expenses and other current assets | |
| | |
| |
Total Current Assets | |
| | |
| |
Digital assets, non-current | | | — | | | |
Restricted cash, non-current | | | | | | — |
Accounts receivable, non-current, net of allowance for credit losses of $ | | | | | | |
Auto-Vibe assets, non-current, net of allowance for credit losses of $ | | | | | | — |
Property and equipment, net | |
| | |
| |
Equipment deposits | | | | | | |
Security deposits | | | | | | |
Intangible assets, net | | | | | | |
Operating lease right-of-use assets | | | | | | |
Deferred financing costs | | | | | | |
Other non-current assets | | | — | | | |
Total Assets | | $ | | | $ | |
| | | | | | |
Liabilities and Stockholders’ Equity | |
| | |
| |
Current Liabilities: | |
| | |
| |
Accounts payable | | $ | | | $ | |
Accrued expenses and other current liabilities | |
| | |
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Loan payable | |
| | | | — |
Operating lease liabilities, current portion | | | | | | |
Deferred revenue | | | | | | |
Total Current Liabilities | |
| | |
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Operating lease liabilities, non-current portion | | | | | | |
Total Liabilities | | | | | | |
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Commitments and contingencies (Note 11) | |
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Stockholders’ Equity | |
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Preferred stock, $ | |
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Series A Voting Preferred Stock, | | | | | | |
Series B Convertible Preferred Stock, | |
| — | |
| — |
Series C Convertible Preferred Stock, | | | — | | | — |
Series D Convertible Preferred Stock, | | | — | | | — |
Common stock, $ | |
| | |
| |
Additional paid-in capital | | | | | | |
Treasury stock, at cost; | | | ( | | | ( |
Accumulated deficit | |
| ( | |
| ( |
Total Stockholders’ Equity | |
| | |
| |
Total Liabilities and Stockholders’ Equity | | $ | | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Table of Contents
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| | | | | | | | | | | | |
| | For the Three Months Ended | | For the Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Revenue | | $ | | | $ | | | $ | | | $ | |
Cost of revenue | |
| | |
| | | | | | | |
Gross Profit (Loss) | |
| ( | |
| | |
| ( | |
| |
Operating Expenses | |
| | |
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Research and development | |
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Selling, general, and administrative | |
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Credit losses on accounts receivable | |
| | |
| — | |
| | |
| — |
Credit losses on R&D activity | | | — | | | — | | | | | | — |
Impairment expense | | | — | | | | | | — | | | |
Total Operating Expenses | |
| | |
| | |
| | |
| |
Loss From Operations | |
| ( | |
| ( | | | ( | |
| ( |
| |
| | |
| | |
| | |
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Other Income (Expense) | |
| | |
| | |
| | |
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Change in fair value of digital assets | | | ( | | | | |
| ( | |
| |
Interest income | | | | | | | | | | | | |
Miscellaneous income | | | | | | — | | | | | | — |
Interest expense | | | ( | | | ( | | | ( | | | ( |
Change in fair value of accrued issuable equity | | | — | | | | | | — | | | |
Amortization of debt discount | | | — | | | — | | | — | | | ( |
Gain on debt extinguishment, net | | | — | | | — | | | — | | | |
Total Other Income (Expense) | | | ( | | | | | | ( | |
| |
Net Income (Loss) | | $ | ( | | $ | | | $ | ( | | $ | ( |
| | | | | | | | | | | | |
Net Income (Loss) Per Share | |
| | |
| | |
| | |
| |
Basic | | $ | ( | | $ | | | $ | ( | | $ | ( |
Diluted | | $ | ( | | $ | | | $ | ( | | $ | ( |
| |
| | |
| | |
| | |
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Weighted Average Number of Common Shares Outstanding | |
| | |
| | |
| | |
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Basic | |
| | |
| | |
| | |
| |
Diluted | | | | | | | | | | | | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Table of Contents
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 | ||||||||||||||||||||||
| | Series A | | | | | | | Additional | | | | | | | | | | Total | |||||
| | Preferred Stock | | Common Stock | | Paid-In | | Treasury Stock | | Accumulated | | Stockholders’ | ||||||||||||
| | Shares | | Amount | | Shares | | Amount | | Capital | | Shares | | Amount | | Deficit | | Equity | ||||||
Balance - January 1, 2026 |
| | | $ | | | | | $ | | | $ | | | | | $ | ( | | $ | ( | | $ | |
Shares withheld for employee payroll tax obligations | | — | | | — | | ( | | | ( | | | ( | | — | | | — | | | — | | | ( |
Stock-based compensation: |
| | | | | | | |
| | | | | | | | | | |
| | |
| |
Common stock issued upon vesting of restricted stock units | | — | | | — | | | | | | | | ( | | — | | | — | | | — | | | — |
Amortization of restricted common stock | | — | | | — | | — | | | — | | | | | — | | | — | | | — | | | |
Amortization of stock options |
| — | | | — | | — | | | — | | | | | — | | | — | |
| — | |
| |
Net loss | | — | | | — | | — | | | — | | | — | | — | | | — | | | ( | | | ( |
Balance - March 31, 2026 | | | | $ | | | | | $ | | | $ | | | | | $ | ( | | $ | ( | | $ | |
Shares withheld for employee payroll tax obligations |
| — | | | — | | ( | |
| ( | | | ( | | — | | | — | |
| — | |
| ( |
Stock-based compensation: | | | | | | | | | | | | | | | | | | | | | | | | |
Common stock issued upon vesting of restricted stock units | | — | | | — | | | | | | | | ( | | — | | | — | | | — | | | — |
Amortization of restricted common stock |
| — | | | — | | — | | | — | | | | | — | | | — | | | — | | | |
Amortization of stock options | | — | | | — | | — | | | — | | | | | — | | | — | |
| — | |
| |
Net loss | | — | | | — | | — | | | — | | | — | | — | | | — | | | ( | | | ( |
Balance - June 30, 2026 | | | | $ | | | | | $ | | | $ | | | | | $ | ( | | $ | ( | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
| | | | | | | | | | | | | | | | | | | | | | | | |
| | FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 | ||||||||||||||||||||||
| | Series A | | | | | | | Additional | | | | | | | | | | Total | |||||
| | Preferred Stock | | Common Stock | | Paid-In | | Treasury Stock | | Accumulated | | Stockholders’ | ||||||||||||
| | Shares | | Amount | | Shares | | Amount | | Capital | | Shares | | Amount | | Deficit | | Equity | ||||||
Balance - January 1, 2025 | | | | $ | |
| | | $ | | | $ | | | | | $ | ( | | $ | ( | | $ | |
Preferred stock issued for no consideration | | | | | | | — | | | — | | | ( | | — | | | — | | | — | | | — |
Shares returned to treasury for employee payroll tax obligations | | — | | | — | | — | | | — | | | — | | | | | ( | | | — | | | ( |
Common stock issued upon the exercise of options | | — | | | — | | | | | — | | | | | — | | | — | | | — | | | |
Common stock issued for at the market offering(1) | | — | | | — | | | | | | | | | | — | | | — | | | — | | | |
Shares withheld for employee payroll tax obligations | | — | | | — | | ( | | | ( | | | ( | | — | | | — | | | — | | | ( |
Stock-based compensation: | | | | | | | | | | | | | | | | | | | | | | | | |
Common stock issued for services | | — | | | — | | | | | | | | | | — | | | — | | | — | | | |
Common stock issued upon vesting of restricted stock units | | — | | | — | | | | | | | | ( | | — | | | — | | | — | | | — |
Amortization of restricted common stock | | — | | | — | | — | | | — | | | | | — | | | — | | | — | | | |
Amortization of stock options | | — | | | — | | — | | | — | | | | | — | | | — | | | — | | | |
Net loss | | — | | | — | | — | | | — | | | — | | — | | | — | | | ( | | | ( |
Balance - March 31, 2025 | | | | | | | | | | | | | | | | | | ( | | | ( | | | |
Common stock issued upon the exercise of options | | — | | | — | | | | | — | | | | | — | | | — | | | — | | | |
Common stock issued for at the market offering(2) | | — | | | — | | | | | | | | | | — | | | — | | | — | | | |
Shares returned to treasury for employee payroll tax obligations | | — | | | — | | — | | | — | | | — | | | | | ( | | | — | | | ( |
Shares withheld for employee payroll tax obligations | | — | | | — | | ( | | | ( | | | ( | | — | | | — | | | — | | | ( |
Stock-based compensation: | | | | | | | | | | | | | | | | | | | | | | | | |
Common stock issued for services | | — | | | — | | | | | — | | | | | — | | | — | | | — | | | |
Common stock issued upon vesting of restricted stock units | | — | | | — | | | | | | | | ( | | — | | | — | | | — | | | — |
Amortization of restricted common stock | | — | | | — | | — | | | — | | | | | — | | | — | | | — | | | |
Amortization of stock options | | — | | | — | | — | | | — | | | | | — | | | — | | | — | | | |
Effect of reverse stock split | | — | | | — | | | | | — | | | — | | — | | | — | | | — | | | — |
Net income | | — | | | — | | — | | | — | | | — | | — | | | — | | | | | | |
Balance - June 30, 2025 | | | | $ | | | | | $ | | | $ | | | | | $ | ( | | $ | ( | | $ | |
| (1) |
| (2) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Table of Contents
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| | | | | | |
| | For the Six Months Ended | ||||
| | June 30, | ||||
| | 2026 | | 2025 | ||
Cash Flows From Operating Activities: | | | |
| | |
Net loss | | $ | ( | | $ | ( |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | |
| |
Credit losses on accounts receivable | | | | | | — |
Credit losses on R&D activity | | | | | | — |
Amortization of debt discount | | | — | | | |
Non-cash operating lease expense | | | | | | |
Gain on debt extinguishment | | | — | | | ( |
Depreciation and amortization expense | | | | | | |
Stock-based compensation | | | | | | |
Write down of equipment deposits | | | — | | | |
Change in fair value of accrued issuable equity | | | — | | | ( |
Change in fair value of digital assets | | | | | | ( |
Digital assets received as downtime credits | | | ( | | | ( |
Mining of digital assets | | | ( | | | ( |
Subtotal | |
| | |
| ( |
Changes in operating assets and liabilities: | |
| | |
| |
Accounts receivable | | | | | | ( |
Auto-Vibe assets | | | | | | — |
Inventory | | | ( | | | ( |
Inventory deposits | | | | | | ( |
Prepaid expenses and other current assets | |
| ( | |
| ( |
Security deposit | |
| ( | |
| — |
Accounts payable | |
| ( | |
| ( |
Accrued expenses and other current liabilities | | | | | | |
Operating lease liabilities | |
| ( | |
| ( |
Deferred revenue | |
| | |
| ( |
Subtotal | |
| ( | |
| ( |
Net Cash Used In Operating Activities | | | ( | | | ( |
Cash Flows From Investing Activities: | | | | | | |
Equity investments | | | — | | | ( |
Equipment deposits | | | ( | | | ( |
Payment of holdback amount related to Caban asset acquisition | | | ( | | | — |
Purchases of property and equipment | | | ( | | | ( |
Purchases of digital assets | | | — | | | ( |
Net Cash Used In Investing Activities | |
| ( | |
| ( |
Cash Flows from Financing Activities: | | | | | | |
Proceeds from loan payable | | | | | | — |
Proceeds from ATM equity financing | | | — | | | |
Issuance costs on ATM equity financing (1) | | | — | | | ( |
Proceeds from exercise of stock options | | | — | | | |
Payments for deferred financing costs | | | — | | | ( |
Repayments of notes payable | | | — | | | ( |
Repayment of finance lease liability | | | — | | | ( |
Payment of employee tax withholdings from shares withheld | | | ( | | | ( |
Net Cash Provided By Financing Activities | | | | | | |
Net Decrease In Cash | | | ( | | | ( |
Cash and Restricted Cash - Beginning of Period | |
| | |
| |
Cash and Restricted Cash - End of Period | | $ | | | $ | |
| (1) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
Table of Contents
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
(unaudited)
| | | | | | |
| | For the Six Months Ended | ||||
|
| June 30, | ||||
| | 2026 | | 2025 | ||
Supplemental Disclosures of Cash Flow Information: | | | | | | |
| | | | | | |
Cash paid during the period for: | | | | | | |
Interest | | $ | | | $ | |
Taxes | | $ | — | | $ | — |
| | | | | | |
Non-cash investing and financing activities: | | | | | | |
Digital assets, pledged as collateral | | $ | | | $ | — |
Deposits applied to purchases of property and equipment | | $ | | | $ | — |
Right-of-use asset for operating lease liability | | $ | | | $ | |
Accounts payable and accrued expenses for property and equipment purchases | | $ | | | $ | |
Deferred financing costs charged to additional paid-in capital | | $ | — | | $ | |
Common stock issued in satisfaction of accrued issuable equity | | $ | — | | $ | |
Shares returned to treasury for employee payroll tax obligations | | $ | — | | $ | |
Preferred shares issued for no consideration | | $ | — | | $ | |
Common shares issued for restricted stock units vested | | $ | | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
Table of Contents
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 – ORGANIZATION, NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Organization and Operations
KULR Technology Group, Inc., through its wholly-owned subsidiary, KULR Technology Corporation (collectively referred to as “KULR” or the “Company”), delivers cutting-edge energy storage solutions for space, aerospace, defense, telecom, and other critical infrastructure. KULR leverages its in-house battery design expertise, comprehensive cell and battery testing suite, and battery fabrication and production capabilities. The Company offers commercial-off-the-shelf and custom next-generation energy storage systems in rapid timelines.
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 (the “Reverse Stock Split”). All share and per share amounts in this Quarterly Report have been adjusted to reflect the effect of the Reverse Stock Split as if the Reverse Stock Split occurred as of the earliest period presented.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of June 30, 2026, and for the three and six months ended June 30, 2026 and 2025. The results of operations for the three and six months ended June 30, 2026, are not necessarily indicative of the operating results for the full year ending December 31, 2026, or any other period. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related disclosures as of December 31, 2025 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on Form 10-K on March 31, 2026. The accompanying condensed consolidated balance sheet as of December 31, 2025, has been derived from the audited financial statements included in the Form 10-K.
Immaterial Revision of Previously Reported Financial Information
See Note 3 – Immaterial Revision of Previously Reported Financial Information.
Liquidity
As of June 30, 2026, the Company had unrestricted cash of approximately $
9
Table of Contents
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Since the date of the Annual Report on Form 10-K for the year ended December 31, 2025, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note.
Use of Estimates
Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant estimates used in these unaudited condensed consolidated financial statements include, but are not limited to, allowance for credit losses, valuation of inventory, valuation of intangible assets, digital assets, property, plant and equipment, stock-based compensation, deferred revenue and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates.
Restricted Cash
Restricted cash consists of cash held at a financial institution as collateral for a letter of credit of $
| | | | | | |
| | June 30, | | December 31, | ||
| | 2026 | | 2025 | ||
Cash | | $ | | | $ | |
Restricted cash, current | |
| | |
| — |
Restricted cash, non-current | |
| | |
| — |
Total cash and restricted cash | | $ | | | $ | |
Concentrations of Credit Risk
Financial assets that potentially subject the Company to significant concentrations of credit risk consisted primarily of cash, accounts receivable and BTC held at Coinbase. The Company’s concentrations of credit risk also include concentrations from key customers and vendors.
Cash Concentrations
A significant portion of the Company’s cash is held at one major financial institution. The Company has not experienced any losses in such accounts. Cash held in US bank institutions is currently insured by the FDIC up to $250,000 at each institution. There were uninsured cash balances of $
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Customer and Revenue Concentrations
During the three and six months ended June 30, 2026, the Company operated
| | | | | | | | | | | | | |
| | Energy Management Platform | | ||||||||||
| | Revenue | | Accounts Receivable |
| ||||||||
| | For the Three Months Ended | | For the Six Months Ended | | As of | | As of |
| ||||
| | June 30, | | June 30, | | June 30, | | December 31, |
| ||||
| | 2026 | | 2025 | | 2026 | | 2025 | | 2026 | | 2025 |
|
Customer A |
| * | | * | | | % | * | | * | | * | |
Customer B |
| | % | * | | | % | * | | | % | * | |
Customer C |
| | % | * | | | % | * | | | % | * | |
Customer D | | | % | * | | * | | * | | | % | * | |
Customer E | | * | | | % | * | | | % | * | | | % |
Customer F | | * | | * | | * | | * | | | % | | % |
Customer G | | * | | | % | * | | | % | * | | | % |
Customer H |
| * | | * | | * | | * | | | % | * | |
Customer I | | * | | | % | * | | | % | * | | * | |
Customer J | | * | | * | | * | | | % | * | | * | |
Customer K | | * | | * | | * | | | % | * | | * | |
Total |
| | % | | % | | % | | % | | % | | % |
| | | | | | | | | | | | | |
| | Mining of Digital Assets | | ||||||||||
| | Revenue | | Accounts Receivable | | ||||||||
| | For the Three Months Ended | | For the Six Months Ended | | As of | | As of | | ||||
| | June 30, | | June 30, | | June 30, | | December 31, | | ||||
| | 2026 | | 2025 | | 2026 | | 2025 | | 2026 | | 2025 | |
Customer L |
| | % | | % | | % | | % | N/A | | N/A | |
Total |
| | % | | % | | % | | % | N/A |
| N/A | |
* | Less than 10% |
There is no assurance the Company will continue to receive significant revenue from any of these customers. Any reduction or delay in operating activity from any of the Company’s significant customers, or a delay or default in payment by any significant customer, or termination of agreements with significant customers, could materially harm the Company’s business and prospects. As a result of the Company’s significant customer concentrations, its gross profit (loss) and results from operations could fluctuate significantly due to changes in political, environmental, or economic conditions, or the loss of, reduction of business from, or less favorable terms with any of the Company’s significant customers.
Custody of Digital Assets
The Company currently holds and intends to continue to hold all of its digital assets in a custodial account at a U.S. based, institutional-grade custodian (who may hold the Company’s digital assets in the United States or other territories) that has demonstrated records of regulatory compliance and information security, including digital assets pledged as collateral under the Company’s loan agreement with Coinbase (see Note 4 – Digital Assets). The custodian may also serve as a liquidity provider.
If the Company’s custodially-held digital assets were considered to be the property of the custodian’s estate in the event that the custodian were to enter bankruptcy, receivership or similar insolvency proceedings, the Company could be treated as a general unsecured creditor of the custodian, inhibiting the Company’s ability to exercise ownership rights with respect to such digital assets and this may ultimately result in the loss of the value related to some or all of such digital assets.
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Additionally, the digital assets the Company holds with our custodian and transacts with our trade execution partners do not enjoy the same protections as are available to cash or securities deposited with or transacted by institutions subject to regulation by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation.
Vendor Concentrations
During the three and six months ended June 30, 2026, the Company operated
| | | | | | | | | |
| | Energy Management Platform | | ||||||
| | For the Three Months Ended |
| For the Six Months Ended | | ||||
| | June 30, |
| June 30, | | ||||
| | 2026 | | 2025 | | 2026 | | 2025 | |
Vendor A |
| | % | * | | | % | * | |
Vendor B |
| * | | * | | | % | * | |
Vendor C | | | % | | % | | % | | % |
|
| | % | | % | | % | | % |
| | | | | | | | | |
| | Mining of Digital Assets |
| ||||||
| | For the Three Months Ended | | For the Six Months Ended |
| ||||
| | June 30, | | June 30, |
| ||||
| | 2026 | | 2025 | | 2026 | | 2025 |
|
Vendor A | | | % | * | | | % | * | |
Vendor B |
| | % | * |
| | % | * | |
Vendor C |
| * |
| | % | * |
| | % |
|
| | % | | % | | % | | % |
*Less than 10%
Accounts Receivable and Allowance for Credit Losses
Accounts receivable are carried at their contractual amounts, less an estimate for credit losses. The Company recognizes an allowance for credit losses on receivables in accordance with Accounting Standards Codification (“ASC”) 326-20, Financial Instruments — Credit Losses. Receivables are stated at amortized cost, net of the allowance for credit losses. The allowance represents the Company’s best estimate of expected lifetime credit losses inherent in the receivable portfolio as of each reporting date. The Company evaluates credit losses using an aging-based method. Receivables are grouped into pools based on shared risk characteristics, including customer type and aging status.
The Company uses its historical loss experience and makes appropriate adjustments for current and forecasted macroeconomic conditions, known customer financial distress, or other specific risk factors. A receivable is written off against the allowance when the Company determines that all reasonable collection efforts have been exhausted. As of June 30, 2026 and December 31, 2025, the allowance for credit losses on customer accounts receivable was $
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Digital Assets
The Company has invested in BTC, which is a digital asset. Digital assets are subject to limited regulatory oversight and there is no central marketplace for asset exchange. Supply is determined by a computer code, not by a central bank, and prices have been extremely volatile. Certain digital asset exchanges have been closed due to fraud, failure or security breaches. Any of the Company’s digital assets that reside on an exchange that shuts down may be lost. Several factors may affect the price of digital assets, including, but not limited to: supply and demand, investors’ expectations with respect to the rate of inflation, interest rates, currency exchange rates or future regulatory measures (if any) that restrict the trading of digital assets, and the use of digital assets as a form of payment. There is no assurance that digital assets will maintain their long-term value in terms of purchasing power in the future, or that acceptance of digital asset payments by mainstream retail merchants and commercial businesses will continue to grow.
The Company reflects digital assets at fair value on the condensed consolidated balance sheets and the activity from the remeasurement of digital assets at fair value on the condensed consolidated statements of operations and cash flows, and includes disclosures in Note 4 - Digital Assets.
Digital assets are generally valued using prices as reported by the Company’s principal market, Coinbase, as of the date and time of determination. Since the digital assets are traded on a 24-hour period, the Company uses the price at 4:00pm Eastern Standard Time (“EST”) to value its digital assets.
Mining of Digital Assets
The Company leases digital asset mining equipment, which provides hash rates to a mining pool operator. The Company derives a portion of its revenue from its digital asset mining activities by providing hash rates as part of transaction verification services within the digital currency networks of cryptocurrencies, such as BTC, referred to herein as “mining of digital assets.” In consideration for these services, the Company receives digital rewards which are recorded as revenue, based on the daily quantity of BTC earned, valued at the average daily price quoted on the Company’s principal market. Digital rewards are settled daily and are received at Coinbase on a one-day delay and receivable amounts are immaterial. The Company’s digital assets are recorded on the condensed consolidated balance sheets at their fair value. Unrealized gains or losses on the remeasurement of digital assets are recorded in the condensed consolidated statements of operations. Lease and non-lease costs associated with the digital asset mining operation are recorded as cost of revenue. If the leased machines fail to meet the minimum downtime guarantee over the contracted term, the Company will receive a credit (in the form of BTC) issued in accordance with the agreements. These credits are recorded as a reduction to lease costs. The Company has leased
Asset Acquisition
Under ASC 805 Business Combinations, the acquisition of a business requires application of the acquisition method of accounting which recognizes and measures all identifiable assets acquired and liabilities assumed at their fair values as of the date the Company obtains control. Goodwill arising in a business combination represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired. ASC 805 allows a measurement period, not to exceed one year from the date of acquisition, to make any changes in the estimated fair values of the net assets that were not final at the acquisition date, which would result in an adjustment to goodwill.
Contingent consideration related to a business combination, if any, is classified as either an asset or a liability and remeasured to fair value each reporting period, until the contingency is resolved. Changes in fair value of contingent consideration period-over-period are recognized in earnings. Acquisition-related expenses for a business combination are recognized separately from the business combination and are expensed as incurred.
Acquisitions of assets that do not qualify as a business are accounted for under ASC 805-50 using a cost accumulation model. Costs are allocated to assets acquired based on relative fair values and no goodwill is recognized in an asset acquisition. Direct costs related to the acquisition of assets are capitalized as part of the cost of the acquired assets.
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Inventory
The Company capitalizes inventory costs associated with products when future commercialization is considered probable, and a future economic benefit is expected to be realized. These costs consist of finished goods, raw materials, manufacturing-related costs, transportation and freight, and other indirect overhead costs.
Inventory is comprised of carbon fiber velvet thermal interface solutions and internal short circuit batteries, which are available for sale, as well as raw materials related primarily to the manufacture of safe cases, KULR ONE battery systems, and other battery products. Safe cases provide a safe and cost-effective solution to commercially store and transport lithium batteries and mitigate the impacts of cell-to-cell thermal runway propagation. Inventories are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. The Company periodically reviews for slow-moving, excess or obsolete inventories. Products that are determined to be obsolete, if any, are written down to net realizable value.
On occasion, the Company pays for inventory prior to receiving the goods. These payments are recorded as inventory deposits until the goods are received and are reflected as a current asset in the condensed consolidated balance sheets. As of June 30, 2026 and December 31, 2025, inventory deposits were $
Inventory at June 30, 2026 and December 31, 2025 consisted of the following:
| | | | | | |
| | June 30, | | December 31, | ||
| | 2026 | | 2025 | ||
Raw materials | | $ | | | $ | |
Finished goods | |
| | |
| |
Total inventory | | $ | | | $ | |
Finished goods inventory is held on-site at the Webster, Texas location. Certain raw materials are held off-site with certain contract manufacturers.
Fair Value Measurements
The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurement” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and establishes required disclosures about fair value measurements.
ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 — quoted prices in active markets for identical assets or liabilities
Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)
The carrying amounts of the Company’s financial assets and financial liabilities, such as cash, restricted cash, accounts receivable, grant receivable, accounts payable, accrued expenses and other current liabilities and loan payable approximate fair values due to the short-term nature of these instruments.
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The carrying amount of the Company’s digital assets is recorded at fair value in accordance with ASC 820, based on quoted prices on the active exchange(s) that the Company has determined is the principal market for such assets (Level 1 inputs). The cost basis of digital assets is determined using the first-in, first-out method of each unit received. Realized and unrealized gains and losses are recorded to other income (expense), net in the Company’s condensed consolidated statement of operations.
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation.
The following five steps are applied to achieve that core principle:
| ● | Step 1: Identify the contract with the customer; |
| ● | Step 2: Identify the performance obligations in the contract; |
| ● | Step 3: Determine the transaction price; |
| ● | Step 4: Allocate the transaction price to the performance obligations in the contract; and |
| ● | Step 5: Recognize revenue when the company satisfies a performance obligation. |
The Company’s sales contracts typically have 30-60 day payment terms. For sales contracts with payment terms of more than one year, the Company determines whether there is a significant financing component, and if so, revenue is recognized at an amount that represents the present value of the payments, and interest income is recognized over the contractual period using the effective interest method, reflected in other income on the condensed consolidated statements of operations.
The Company evaluates its role under ASC 606 to determine whether it acts as a principal or agent where third-party sellers fulfill or ship orders to customers. The Company recognizes revenue on a gross or net basis depending on whether it acts as a principal or an agent in the transaction. The determination is based on an evaluation of whether the Company controls the specified good or service before it is transferred to the customer.
During the three and six months ended June 30, 2026 and 2025, the Company recognized revenue primarily from the following different types of contracts:
| ● | Product sales – Revenue is recognized at the point in time the customer obtains control of the goods and the Company satisfies its performance obligation, which is generally at the time it ships the product to the customer. For certain product sales contracts, the Company acts as an agent and revenue in connection with these contracts is presented net of the related costs. |
| ● | Contract services – Revenue is recognized pursuant to the terms of each individual contract when the Company satisfies the respective performance obligations, which could be recognized at a point in time or over the term of the contract. Contract services revenue that is recognized over time, may be recognized using the input method, based on labor hours expended, or using the output method based on milestones achieved, depending on the contract. |
| ● | Mining of digital assets – The Company has entered into multiple lease agreements with digital asset mining services companies to operate digital asset mining machines on behalf of the Company and provide mining pool operating and hosting services. Pursuant to these agreements, the Company provides computing power to the mining pool operator. The Company is entitled to digital asset awards once it begins to perform hash calculations for the pool operator in accordance with the operator’s specifications. The Company’s fractional share is based on the total blocks expected to be generated on the Bitcoin network for the daily 24-hour period. Revenue from digital assets is considered non-cash consideration. |
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
| ● | Grant revenue - The Company has determined that government grant revenue does not fall under the Financial Accounting Standards Board (“FASB”) ASC 606. Under the grant contract with the Texas Space Commission (“Texas Grant”) entered into during September 2025, the Texas Space Commission receives no direct benefit from the product development and therefore does not meet the definition of a customer pursuant to ASC 606. As there was no authoritative guidance under U.S. GAAP on accounting for grants to for-profit business entities when the Company entered into the Texas Grant, the Company has applied the guidance in ASC 958 Not-for-Profit Entities by analogy. Further, the Texas Grant is considered a conditional contribution because the Texas Grant can only be used to reimburse allowable expenses. The grant is for the research and development of cold-temperature lithium-ion battery solutions for the next generation of Lunar and Martian missions which is part of the Company’s ongoing major or central activities. As such, the grant is considered revenue, which is only recognized when qualifying costs are incurred and it is reasonably assured that the conditions for reimbursement will be met. Grant 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 for further information. |
The following table summarizes the Company’s revenue recognized in its condensed consolidated statements of operations:
| | | | | | | | | | | | |
| | For the Three Months Ended | | For the Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Revenue Recognized at a Point in Time: | | | | | | | | | | | | |
Product sales | | $ | | | $ | | $ | | | $ | | |
Contract services | | | | | | | | | | | | |
Grant revenue | | | | | | — | | | | | | — |
Total | | | | | | | | | | | | |
Revenue Recognized Over Time: | | | | | | | | | | | | |
Mining of digital assets | | | | | | | | | | | | |
Contract services | |
| | |
| — | |
| | |
| |
Total Revenue | | $ | | | $ | | | $ | | | $ | |
Contract Balances
The timing of revenue recognition, billings and cash collections results in accounts receivable, and deferred revenues (contract liabilities) on the condensed consolidated balance sheets. Generally, billing occurs subsequent to revenue recognition. However, we sometimes receive advances or deposits from our customers resulting in contract liabilities (See Deferred Revenue, below). As of June 30, 2026 and December 31, 2025, the Company had customer accounts receivable, net of $
Deferred Revenue
Deferred revenue represents payments received from customers for which the Company had not yet satisfied its performance obligation under the contract, or the customers or grantors have not officially accepted the goods or services provided under the contract. The Company expects to satisfy the remaining performance obligations and recognize the revenue related to its deferred revenue balance within the next twelve months. The Company did not recognize revenue from performance obligations satisfied in prior periods during the three months ended June 30, 2026 or 2025. During the six months ended June 30, 2026 and 2025, the Company recognized $
As of June 30, 2026 and December 31, 2025, deferred revenue included deferred grant revenue of $
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Deferred Labor Costs
As of June 30, 2026 and December 31, 2025, the Company had $
Research and Development Costs
Research and development costs are expensed as incurred and consist primarily of personnel-related costs, materials and supplies, third-party engineering and development services, and testing and related costs. Research and development expenses were $
Advertising and Marketing Costs
Advertising costs are expensed in the period incurred. Advertising costs charged to operations for the three months ended June 30, 2026 and 2025 were $
Stock-Based Compensation
The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award since the fair value of the award is more readily determinable than the value of the services. The fair value of the award is measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Upon the exercise of an award, the Company generally issues new shares of common stock out of its authorized shares, but may issue treasury stock when available.
Operating and Finance Leases
The Company determines if an arrangement is a lease or contains a lease at inception. The Company recognizes a liability to make lease payments, the “lease liability”, and an asset representing the right to use the underlying asset during the lease term, the “right-of-use asset”. The lease liability is measured at the present value of the remaining lease payments, discounted at either (1) the rate implicit in the lease, if available, or (2) the Company’s incremental borrowing rate. The right-of-use asset is measured at the amount of the lease liability adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, any unamortized initial direct costs, and any impairment of the right-of-use asset.
Classification criteria in ASC 842 is applied in order to determine whether the lease is a finance lease or an operating lease. Operating lease expense is recorded on a straight-line basis over the life of the lease and is included in research and development and selling, general, and administrative expenses on the accompanying condensed consolidated statements of operations. Finance lease right-of-use assets are depreciated on a straight-line basis over the estimated useful life of the asset; the depreciation expense is included in cost of revenue on the accompanying condensed consolidated statements of operations. Finance lease liabilities are subsequently remeasured by increasing the liability to reflect interest accrued during a period and decreasing the liability to reflect payments made during the period. Interest expense incurred on finance leases is included in interest expense on the condensed consolidated statements of operations.
Net Income (Loss) Per Common Share
Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common and dilutive common-equivalent shares outstanding during each period.
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The following table presents the computation of basic and diluted net loss per common share:
| | | | | | | | | | | | |
| | For the Three Months Ended | | For the Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Numerator: |
| | | | | |
| | | | | |
Net Income (Loss) | | $ | ( | | $ | | | $ | ( | | $ | ( |
| | | | | | | | | | | | |
Denominator (weighted average quantities): | |
| | |
| | |
| | |
| |
Common shares issued | |
| | |
| | |
| | |
| |
Less: Treasury shares purchased | |
| ( | |
| ( | | | ( | |
| ( |
Less: Unvested restricted stock awards | | | ( | | | ( | | | ( | | | ( |
Add: Accrued issuable equity | | | — | | | | | | — | | | |
Add: Vested unissued restricted stock units | | | | | | | | | | | | |
Denominator for basic net income (loss) per share | |
| | |
| | |
| | | | |
Denominator for diluted net income (loss) per share | | | | | | | | | | | | |
| | | | | | | | | | | | |
Net Income (Loss) Per Share | | | | | | | | | | | | |
Basic | | $ | ( | | $ | | | $ | ( | | $ | ( |
Diluted | | $ | ( | | $ | | | $ | ( | | $ | ( |
The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive as a result of the net loss for these periods:
| | | | |
| | For the Three and Six | | For the Six |
| | Months Ended | | Months Ended |
| | June 30, 2026 | | June 30, 2025 |
Unvested restricted stock awards | | | | |
Unvested restricted stock units | | | | |
Options |
| | | |
Warrants | | — | | |
Total |
| | | |
For the purposes of the three-month diluted net income per share calculation for the three months ended June 30, 2025, common stock warrants, unvested restricted stock units and stock options were considered to be potentially dilutive securities and were included in the calculation of diluted net income per share for the three months ended June 30, 2025.
Reclassifications
Certain prior period balances have been reclassified in order to conform to the current period presentation. These reclassifications have no effect on previously reported results of operations or loss per share.
Subsequent Events
The Company has evaluated subsequent events through the date on which these unaudited condensed consolidated financial statements were issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements, except as disclosed in Note 13 – Subsequent Events.
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Segment Reporting
Operating segments are components of an enterprise for which separate financial information is available and regularly reviewed by management in deciding how to allocate resources and evaluate performance. Management has determined that the Company has
Recently Issued Accounting Pronouncements
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The guidance removes all references to project stages throughout ASC 350-40 and clarifies the threshold entities apply to begin capitalizing costs. It is intended to modernize the accounting for internal-use software costs to reflect the evolution of software development practices. The amendments are effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of implementing this guidance.
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832) – Accounting for Government Grants Received by Business Entities. This ASU establishes authoritative guidance on the accounting for government grants received by business entities, which previously did not exist. In the absence of specific guidance, many business entities analogized to the guidance in International Accounting Standard (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, or Subtopic 958-605, Not-for-Profit Entities—Revenue Recognition. The ASU defines two types of government grants: (1) a grant related to an asset (for which there are two approaches to record the grant proceeds) and (2) a grant related to income. A grant related to an asset is conditioned on the purchase, construction, or acquisition of an asset (for example, a long-lived asset or inventory). A grant related to income is other than a grant related to an asset (for example, a grant that reimburses a business entity for operating expenses). The ASU defines the criteria that need to be met in order to recognize government grant proceeds and prescribes that a business entity present a grant related to income and a grant related to an asset for which the deferred income approach is elected as part of earnings either (1) separately under a general heading such as other income or (2) deducted from the related expense. The ASU is effective for fiscal years beginning after December 15, 2028, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of implementing this guidance.
Recently Adopted Accounting Pronouncements
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments provide a practical‐expedient election that permits an entity to assume that current conditions as of the reporting date will not change over the remaining life of certain current accounts receivable and contract assets arising from transactions accounted for under ASC 606, “Revenue from Contracts with Customers.” The guidance is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The Company adopted this standard on January 1, 2026, which did not have a material impact on its condensed consolidated financial statements.
NOTE 3 – IMMATERIAL REVISION OF PREVIOUSLY REPORTED FINANCIAL INFORMATION
During June 2026, the Company identified a misstatement in grant revenue related to its Texas Space Commission grant (the “Texas Grant”) for the three months ended March 31, 2026 as reported in the Company’s Form 10-Q as of and for the three months ended March 31, 2026 filed on May 14, 2026. The misstatement, which was caused by a clerical error, resulted in an overstatement of grant revenue and gross profit of $
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
To correct the misstatement, the Company revised its previously reported March 31, 2026 amounts, and such revised amounts and disclosures are reflected in the accompanying condensed consolidated financial statements for the six months ended June 30, 2026. See the table below for the details of the revision:
| | | | | | | | | |
| | For The Three Months Ended March 31, 2026 | |||||||
| | As Originally Reported | | Adjustment | | As Revised | |||
Condensed Consolidated Statements of Operations: |
| | |
| | |
| | |
Revenue | | $ | | | $ | ( | | $ | |
Gross profit | | $ | | | $ | ( | | $ | |
Net loss | | $ | ( | | $ | ( | | $ | ( |
Net loss per share, basic and diluted | | $ | ( | | $ | ( | | $ | ( |
| | | | | | | | | |
| | As of March 31, 2026 | |||||||
Condensed Consolidated Balance Sheets: | | | | | | | | | |
Grant receivable | | $ | | | $ | ( | | $ | |
Total current assets | | $ | | | $ | ( | | $ | |
Total assets | | $ | | | $ | ( | | $ | |
Total stockholders’ equity | | $ | | | $ | ( | | $ | |
NOTE 4 – DIGITAL ASSETS
The Company’s digital assets are comprised solely of BTC. In accordance with ASC Topic 820, Fair Value Measurement, the Company measures the fair value of its BTC based on the quoted price at 4:00pm EST on the measurement date for a single BTC on an active trading platform, Coinbase. Management has determined that Coinbase, an active exchange market, represents the Company’s principal market for BTC and at 4:00pm EST, the price is both readily available and representative of fair value (Level 1 inputs). As of June 30, 2026, the Company held
The following table presents the roll forward of activity related to the Company’s digital assets for the six months ended June 30, 2026:
| | | |
| | Digital Assets and | |
| | Digital Assets Pledged | |
| | As Collateral | |
Beginning balance at January 1, 2026 | | $ | |
Additions - purchased | |
| — |
Additions - mined | | | |
Received as downtime credits | |
| |
Change in fair value | |
| ( |
Balance, June 30, 2026 | | $ | |
| | | |
Less: Digital assets, pledged as collateral | | | ( |
Digital assets, net | | $ | |
During the three months ended June 30, 2026, the Company did
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
During the six months ended June 30, 2026, the Company did
During the three months ended June 30, 2026, the Board of Directors approved management’s decision that the Company’s BTC holdings would be available to fund operations, and accordingly, all digital assets were reclassified into current assets as of June 30, 2026.
Loan Agreement
On March 27, 2026, the Company borrowed $
On May 13, 2026, the Company borrowed an additional $
As of June 30, 2026, the full $
NOTE 5 – AUTO-VIBE ASSETS
In December 2025, the Company entered into a
During December 2025, the Company allocated $
As of June 30, 2026, the Auto-Vibe assets consist of a gross past due receivable of $
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
As of June 30, 2026 and December 31, 2025, auto-vibe assets consisted of the following:
| | | | | | |
| | Auto-Vibe Assets | ||||
| | June 30, | | December 31, | ||
| | 2026 | | 2025 | ||
Receivables – gross | | $ | | | $ | |
Credit loss reserve on Auto-Vibe receivables | |
| ( | |
| — |
Receivables – net | | | | | | |
Vehicles owned | | | — | | | |
Deposits in segregated account | |
| | |
| |
Total Auto-Vibe assets | | $ | | | $ | |
NOTE 6 – CABAN ASSET ACQUISITION
On December 24, 2025 (the “Acquisition Date”), the Company 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 the Company 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 $
In connection with the Purchase Agreement, the Company 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 the Company’s facility, to ensure a smooth transition of the manufacturing of the Battery Packs from Caban to KULR. In consideration for the transition services, the Company agreed to pay Caban service fees not to exceed $
NOTE 7 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
As of June 30, 2026 and December 31, 2025, prepaid expenses and other current assets consisted of the following:
| | | | | | |
| | June 30, | | December 31, | ||
| | 2026 | | 2025 | ||
Deferred grant expenses | | $ | | | $ | |
Prepaid research and development expenses | | | | | | — |
Insurance | | | | | | |
Deferred labor costs | | | | | | |
Bitcoin mining leases | | | | | | |
Dues and subscriptions | | | | | | |
Professional fees | | | | | | |
Rent | | | — | | | |
Security deposit | | | — | | | |
Other | | | | | | |
Total prepaid expenses and other current assets | | $ | | | $ | |
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 8 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
As of June 30, 2026 and December 31, 2025, accrued expenses and other current liabilities consisted of the following:
| | | | | | |
| | June 30, | | December 31, | ||
| | 2026 | | 2025 | ||
Professional fees | | $ | | | $ | |
Inventory purchases | | | | | | |
Payroll and vacation | | | | | | |
Research and development | | | | | | |
Interest payable | | | | | | — |
Royalties | | | | | | |
Franchise tax payable | | | | | | |
Sales tax payable | | | | | | |
Purchase consideration payable | | | — | | | |
Bitcoin mining costs | | | — | | | |
Sales and marketing | |
| — | | | |
Equipment purchases | | | — | | | |
Other | | | | | | |
Total accrued expenses and other current liabilities | | $ | | | $ | |
NOTE 9 – LEASES
Operating Leases
On May 12, 2026, the Company entered into a lease agreement for a new facility consisting of approximately
In connection with the Houston Facility Lease, the Company paid a cash security deposit of $
During the three and six months ended June 30, 2026, operating lease expense was $
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Maturities of operating lease liabilities as of June 30, 2026, were as follows:
| | | |
Year | | Operating Lease | |
7/1/26 to 12/31/26 | | $ | |
2027 | | | |
2028 | | | |
2029 | |
| |
2030 | | | |
2031 | | | |
Thereafter | | | |
Total future minimum lease payments | |
| |
Less: amount representing imputed interest | | | ( |
Present value of lease liabilities | | | |
Less: current portion | | | ( |
Lease liabilities, non current portion | | $ | |
Supplemental cash flow information related to the leases is as follows:
| | | | | | | |
| | For the Six Months Ended |
| ||||
|
| June 30, | | ||||
| | 2026 | | 2025 | | ||
Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | |
Operating cash flows from operating lease | | $ | | | $ | | |
Repayment of finance lease liability | | $ | — | | $ | | |
Right-of-use assets obtained in exchange for lease obligations | | | | | | | |
Operating leases | | $ | | | $ | | |
Financing leases | | $ | — | | | N/A | |
Weighted Average Remaining Lease Term (Years) | | | | | | | |
Operating leases | | | years | | years | ||
Financing leases | | | years | | years | ||
Weighted Average Discount Rate | | | | | | | |
Operating leases | | | | % | | | % |
Financing leases | | | N/A | | | | % |
NOTE 10 – STOCKHOLDERS’ EQUITY
Common Stock
During the six months ended June 30, 2026, the Company issued
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Stock-Based Compensation
The following table presents information related to stock-based compensation for the three and six months ended June 30, 2026 and 2025:
| | | | | | | | | | | | |
| | For The Three Months Ended | | For The Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Shares issued for legal services | | $ | — | | $ | | | $ | — | | $ | |
Accrued issuable equity (common stock) | |
| — | |
| | |
| — | |
| |
Amortization of stock options | |
| | | | | |
| | |
| |
Amortization of restricted stock awards and units | |
| | |
| | | | | |
| |
Total | | $ | | | $ | | | $ | | | $ | |
During the three and six months ended June 30, 2026, the Company recognized stock-based compensation expense of $
During the three and six months ended June 30, 2025, the Company recognized stock-based compensation expense of $
Stock Options
A summary of stock options activity during the six months ended June 30, 2026, is presented below:
| | | | | | | | | | |
| | | | Weighted | | Weighted | | | | |
| | | | Average | | Average | | | | |
| | Number of | | Exercise | | Remaining | | Intrinsic | ||
| | Options | | Price | | Term (Yrs) | | Value | ||
Outstanding, January 1, 2026 |
| | | $ | |
| |
| | |
Granted |
| — | |
| — |
| |
| | |
Forfeited |
| ( | |
| |
| |
| | |
Exercised | | — | | | — | | | | | |
Outstanding, June 30, 2026 |
| | | $ | |
| | $ | | |
| | | | | | | | | | |
Exercisable, June 30, 2026 |
| | | $ | |
| | $ | | |
The following table presents information related to stock options as of June 30, 2026:
| | | | | | |
Options Outstanding | | Options Exercisable | ||||
| | | | Weighted | | |
Range of | | Outstanding | | Average | | Exercisable |
Exercise | | Number of | | Remaining Term | | Number of |
Prices | | Options | | In Years | | Options |
$ |
| | | | | |
$ |
| | | | | |
$ |
| | | | | |
$ |
| | | | | |
|
| | | | | |
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
There were
| | | | | | | | | |
| | For The Three Months Ended | | For The Six Months Ended | | ||||
| | June 30, |
| June 30, | | ||||
| | 2026 | | 2025 |
| 2026 | | 2025 | |
Risk free interest rate |
| N/A | | N/A | | N/A | | | % |
Expected term (years) |
| N/A | | N/A | | N/A | | | |
Expected volatility |
| N/A | | N/A | | N/A | | | % |
Expected dividends |
| N/A | | N/A | | N/A | | | % |
Option forfeitures are accounted for at the time of occurrence. The expected term used is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of employee option grants. The Company utilizes an expected volatility figure based on the historical volatility of its common stock over a period of time equivalent to the expected term of the instrument being valued. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.
As of June 30, 2026, there was $
Restricted Stock Awards
The following table presents information related to restricted stock awards (“RSAs”) activity during the six months ended June 30, 2026:
| | | | | |
| | | | Weighted Average | |
| | Shares of Restricted | | Grant Date | |
| | Common Stock | | Fair Value | |
Non-vested RSAs, January 1, 2026 |
| | | $ | |
Granted |
| — | |
| — |
Vested |
| ( | |
| |
Forfeited |
| — | |
| — |
Non-vested RSAs, June 30, 2026 |
| | | $ | |
As of June 30, 2026, there was $
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Restricted Stock Units
The following table presents information related to restricted stock units (“RSUs”) activity during the six months ended June 30, 2026:
| | | | | |
| | | | Weighted Average | |
| | Shares of Restricted | | Grant Date | |
| | Common Stock | | Fair Value | |
Non-vested RSUs, January 1, 2026 |
| | | $ | |
Granted |
| | | | |
Vested |
| ( | | | |
Forfeited | | ( | | | |
Non-vested RSUs, June 30, 2026 | | | | $ | |
| | | | | |
Vested RSUs undelivered June 30, 2026 | | | | $ | |
To date, RSUs have only been granted to employees and consultants in accordance with the Company’s 2018 and 2025 Equity Incentive Plans. Pursuant to the terms of the restricted stock unit agreements, the vested but undelivered units are to be settled on January 1, 2027.
As of June 30, 2026, there was $
NOTE 11 – COMMITMENTS AND CONTINGENCIES
Legal Matters
The Company may be involved in litigation and arbitrations from time to time in the ordinary course of business. As of June 30, 2026, the Company was not involved in any ongoing litigation. The Company records legal costs associated with loss contingencies as incurred. Settlements are accrued when, and if, they become probable and estimable.
Digital Asset Mining Leases
On October 1, 2025, the Company entered into a
NOTE 12 – SEGMENT REPORTING
The Company operates as
The Company does not have intra-entity sales or transfers.
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The CODM does not consider gains and losses associated with digital assets when reviewing the results of operations, or allocating resources to the Company’s operating segments. Gains and losses associated with the Company’s digital assets are presented separately from segment operating results. The Company has designated a Corporate & Other category, which is not considered an operating segment, which includes the changes in fair value of the Company’s digital asset holdings.
The following table presents the breakout of the operations of the Energy Management Platform and Mining of Digital Assets segments for the three and six months ended June 30, 2026 and 2025:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | ||||||||||||||||||||||
| | June 30, 2026 | | June 30, 2025 | ||||||||||||||||||||
| | Energy | | | | | | | | | | | Energy | | | | | | | | | | ||
| | Management | | Mining of | | Corporate & | | | | | Management | | Mining of | | Corporate & | | | | ||||||
| | Platform | | Digital Assets | | Other | | Total | | Platform | | Digital Assets | | Other | | Total | ||||||||
Revenue | | $ | | | $ | | | $ | — | | $ | | | $ | | | $ | | | $ | — | | $ | |
Cost of revenue | |
| | |
| | |
| — | |
| | |
| | | | | | | — | | | |
Gross Profit (Loss) | |
| ( | |
| ( | |
| — | |
| ( | |
| | | | | | | — | | | |
Operating Expenses | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Research and development | |
| | |
| — | |
| — | |
| | |
| | | | — | | | — | | | |
Selling, general, and administrative(1) | |
| | |
| | |
| — | |
| | |
| | | | — | | | — | | | |
Total Operating Expenses | |
| | |
| | |
| — | |
| | |
| | | | — | | | — | | | |
Segment Net Loss | |
| ( | |
| ( | |
| — | |
| ( | |
| ( | | | | | | — | | | ( |
Other (Expense) Income | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Other segment (expense) income(2) | |
| ( | |
| — | |
| — | |
| ( | |
| | | | — | | | — | | | |
Change in fair value of digital assets | |
| — | |
| — | |
| ( | |
| ( | |
| — | | | — | | | | | | |
Total Other (Expense) Income, net | |
| ( | |
| — | |
| ( | |
| ( | |
| | | | — | | | | | | |
Net Income (Loss) | | $ | ( | | $ | ( | | $ | ( | | $ | ( | | $ | ( | | $ | | | $ | | | $ | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Six Months Ended | ||||||||||||||||||||||
| | June 30, 2026 | | June 30, 2025 | ||||||||||||||||||||
| | Energy |
| | |
| | |
| | |
| Energy |
| | |
| | | | | | ||
|
| Management |
| Mining of |
| Corporate & | | | |
| Management |
| Mining of |
| Corporate & | | | | ||||||
| | Platform | | Digital Assets | | Other | | Total | | Platform | | Digital Assets | | Other | | Total | ||||||||
Revenue | | $ | | | $ | | | $ | — | | $ | | | $ | | | $ | | | $ | — | | $ | |
Cost of revenue | |
| | |
| | |
| — | |
| | |
| | | | | | | — | | | |
Gross Profit (Loss) | | | | |
| ( | |
| — | |
| ( | |
| | | | ( | | | — | | | |
Operating Expenses | | | | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Research and development | |
| | |
| — | |
| — | |
| | |
| | | | — | | | — | | | |
Selling, general, and administrative(1) | |
| | |
| | |
| — | |
| | |
| | | | — | | | — | | | |
Total Operating Expenses | |
| | |
| | |
| — | |
| | |
| | | | — | | | — | | | |
Segment Net Loss | |
| ( | |
| ( | |
| — | |
| ( | |
| ( | | | ( | | | — | | | ( |
Other (Expense) Income | | | | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Other segment (expense) income(2) | |
| ( | |
| — | |
| — | |
| ( | |
| | | | — | | | — | | | |
Change in fair value of digital assets | | | — | | | — | | | ( | | | ( | | | — | | | — | | | | | | |
Total Other (Expense) Income, net | |
| ( | |
| — | |
| ( | |
| ( | |
| | |
| — | |
| | |
| |
Net Loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( | | $ | ( | | $ | ( | | $ | | | $ | ( |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | As of | ||||||||||||||||||||||
| | June 30, 2026 | | December 31, 2025 | ||||||||||||||||||||
| | Energy | | | | | | | | | | | Energy | | | | | | | | | | ||
| | Management | | Mining of | | Corporate & | | | | | | Management | | Mining of | | Corporate & | | | | |||||
| | Platform | | Digital Assets | | Other | | Total | | Platform | | Digital Assets | | Other | | Total | ||||||||
Segment Assets | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and Restricted Cash | | $ | | | $ | — | | $ | — | | $ | | | $ | | | $ | — |
| $ | — | | $ | |
Digital assets | |
| — | |
| — | |
| | |
| | |
| — | |
| — |
| | | |
| |
All other assets | |
| | |
| — | |
| — | |
| | |
| | |
| — |
| | — | |
| |
Total Assets | | $ | | | $ | — | | $ | | | $ | | | $ | | | $ | — | | $ | | | $ | |
(1) | Selling, general, and administrative included credit losses on Auto-Vibe assets and accounts receivable for 2026 and impairment of equipment deposits for 2025. |
(2) |
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 13 – SUBSEQUENT EVENTS
The Company has evaluated events that have occurred after the balance sheet date and through the date the condensed consolidated financial statements were issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements, except as disclosed below.
Repayment of Coinbase Loan and Sales of Bitcoin
Subsequent to June 30, 2026, the Company repaid the outstanding principal and interest balance under its $
Digital Asset Mining Services Agreement Termination
Effective July 31, 2026, the Company terminated its remaining digital asset mining services agreement (originally expiring October 2027), relieving the Company of a future commitment of $
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Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 June 30, 2026 and for the three and six months ended June 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.
Overview
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.
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.
Recent Developments
Credit Agreement
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.
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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:
| 1. | Scale its flagship KULR ONE Space (K1S) architecture providing scalable, standardized battery solutions that meet rigorous human spaceflight safety standards. |
| 2. | Ramp production of its KULR ONE Air products for military and commercial drone applications. |
| 3. | Advance the development of its KULR ONE MAX battery backup solutions for AI data center and telecommunications applications. |
Bitcoin Strategy
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.
At the Market Offering
The Company has an 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 transactions through June 30, 2026. During the three and six months ended June 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 transactions through September 30, 2026.
Results of Operations
Three and Six Months Ended June 30, 2026, Compared With Three and Six Months Ended June 30, 2025
Revenue
| | | | | | | | | | | | |
| | For the Three Months Ended | | |
| |||||||
| | June 30, | | Variances |
| |||||||
| | 2026 | | 2025 | | $ | | % |
| |||
Product sales | | $ | 650,163 | | $ | 1,978,066 | | $ | (1,327,903) | | (67) | % |
Contract services | |
| 355,080 | |
| 555,836 | |
| (200,756) | | (36) | % |
Grant revenue | | | 468,952 | | | — | | | 468,952 | | N/A | |
Digital asset mining | | | 605,982 | | | 1,118,569 | | | (512,587) | | (46) | % |
Total Revenue | | $ | 2,080,177 | | $ | 3,652,471 | | $ | (1,572,294) | | (43) | % |
| | | | | | | | | | | | |
| | For the Six Months Ended | | |
| |||||||
| | June 30, | | Variances |
| |||||||
| | 2026 | | 2025 | | $ | | % |
| |||
Product sales | | $ | 2,783,401 | | $ | 3,138,625 | | $ | (355,224) | | (11) | % |
Contract services | |
| 1,037,725 | |
| 1,594,129 | |
| (556,404) | | (35) | % |
Grant revenue | | | 937,188 | | | — | | | 937,188 | | N/A | |
Digital asset mining | | | 1,268,293 | | | 1,368,323 | | | (100,030) | | (7) | % |
Total Revenue | | $ | 6,026,607 | | $ | 6,101,077 | | $ | (74,470) | | (1) | % |
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For the three months ended June 30, 2026 and 2025, we generated $2.1 million and $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.
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, acceptance, 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.
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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, Gross Profit and Gross Profit Margin
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.
| | | | | | | | | | | | |
| | For the Three Months Ended | | | | | |
| ||||
| | June 30, 2026 | | Gross Profit (Loss) |
| |||||||
| | Revenue | | COGS | | $ | | % |
| |||
Gross Margins | | | | | | | | | | | |
|
Product sales | | $ | 650,163 | | $ | 974,664 | | $ | (324,501) | | (50) | % |
Contract services | |
| 355,080 | |
| 689,099 | |
| (334,019) | | (94) | % |
Grant revenue | |
| 468,952 | |
| — | |
| 468,952 | | 100 | % |
Mining of digital assets | |
| 605,982 | |
| 1,055,347 | |
| (449,365) | | (74) | % |
Total | | $ | 2,080,177 | | $ | 2,719,110 | | $ | (638,933) | | (31) | % |
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| | | | | | | | | | | | |
| | For the Three Months Ended | | | | | |
| ||||
| | June 30, 2025 | | Gross Profit (Loss) |
| |||||||
| | Revenue | | COGS | | $ | | % |
| |||
Gross Margins | | | | | | | | | | | |
|
Product sales | | $ | 1,978,066 | | $ | 1,013,386 | | $ | 964,680 | | 49 | % |
Contract services | |
| 555,836 | |
| 822,637 | |
| (266,801) | | (48) | % |
Mining of digital assets | |
| 1,118,569 | |
| 1,102,738 | |
| 15,831 | | 1 | % |
Total | | $ | 3,652,471 | | $ | 2,938,761 | | $ | 713,710 | | 20 | % |
| | | | | | | | | | | | |
| | For the Six Months Ended | | | | | |
| ||||
| | June 30, 2026 | | Gross Profit (Loss) |
| |||||||
| | Revenue | | COGS | | $ | | % |
| |||
Gross Margins | | | | | | | | | | | |
|
Product sales | | $ | 2,783,401 | | $ | 2,647,679 | | $ | 135,722 | | 5 | % |
Contract services | |
| 1,037,725 | |
| 1,403,319 | |
| (365,594) | | (35) | % |
Grant revenue | |
| 937,188 | |
| — | |
| 937,188 | | 100 | % |
Mining of digital assets | |
| 1,268,293 | |
| 2,097,250 | |
| (828,957) | | (65) | % |
Total | | $ | 6,026,607 | | $ | 6,148,248 | | $ | (121,641) | | (2) | % |
| | | | | | | | | | | | |
| | For the Six Months Ended | | | | | |
| ||||
| | June 30, 2025 | | Gross Profit (Loss) |
| |||||||
| | Revenue | | COGS | | $ | | % |
| |||
Gross Margins | | | | | | | | | | | |
|
Product sales | | $ | 3,138,625 | | $ | 1,286,836 | | $ | 1,851,789 | | 59 | % |
Contract services | |
| 1,594,129 | |
| 2,451,448 | |
| (857,319) | | (54) | % |
Mining of digital assets | |
| 1,368,323 | |
| 1,442,738 | |
| (74,415) | | (5) | % |
Total | | $ | 6,101,077 | | $ | 5,181,022 | | $ | 920,055 | | 15 | % |
Revenue mix plays an important part in our reported average margins for any period. Because we are introducing new revenue streams at an early stage in our development cycle, the margins earned can vary significantly between periods, customers, products and services due to the learning process, customer negotiating strengths, and product mix.
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.
For 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 period, and by lower product sales in the second quarter of 2026 from supply chain disruptions related to battery cell supply and power electronics without a proportionate decline in 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
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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
For the three 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.
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 $0.5 million and $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
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, 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.
| | | | | | | | | | | | |
| | For the Three Months Ended | | | | | |
| ||||
| | June 30, | | Variances |
| |||||||
| | 2026 | | 2025 | | $ | | % |
| |||
Operating Expenses |
| | |
| | | |
| | | | |
Research and development | | $ | 2,985,659 | | $ | 2,436,754 | | $ | 548,905 | | 23 | % |
| | | | | | | | | | | | |
| | For the Six Months Ended | | | | | |
| ||||
| | June 30, | | Variances |
| |||||||
| | 2026 | | 2025 | | $ | | % |
| |||
Operating Expenses |
| | |
| | | |
| | | | |
Research and development | | $ | 4,756,159 | | $ | 4,886,654 | | $ | (130,495) | | (3) | % |
We expect that our R&D expenses will increase as we expand our future operations.
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, partially offset by R&D expenses incurred related to the Texas Space Commission grant in the 2026 periods.
Selling, General, and Administrative
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
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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.
| | | | | | | | | | | | |
| | For the Three Months Ended | | | | | |
| ||||
| | June 30, | | Variances |
| |||||||
| | 2026 | | 2025 | | $ | | % |
| |||
Operating Expenses |
| | |
| | | |
| | | | |
Selling, general, and administrative | | $ | 6,307,097 | | $ | 6,941,599 | | $ | (634,502) | | (9) | % |
| | | | | | | | | | | | |
| | For the Six Months Ended | | | | | |
| ||||
| | June 30, | | Variances |
| |||||||
| | 2026 | | 2025 | | $ | | % |
| |||
Operating Expenses |
| | |
| | | |
| | | | |
Selling, general, and administrative | | $ | 12,839,066 | | $ | 13,573,072 | | $ | (734,006) | | (5) | % |
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 June 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.
Impairment Expense
There were no impairment expenses for the three and six months ended June 30, 2026. For the three and six months ended June 30, 2025, impairment expenses were $786,397 and $1,355,174, respectively, due to the write-off of equipment deposits.
Credit Losses
During the six months ended June 30, 2026, the Company recorded a credit loss of $500,000 on Auto-Vibe assets. There was no comparable charge in the prior year period.
For the three and six months ended June 30, 2026, credit losses on accounts receivable were approximately $1.3 million, which related to a single customer and was determined based on a specific assessment of that customer’s ability to pay. There were no credit losses on accounts receivable for the three and six months ended June 30, 2025.
Other Income (Expense)
The following table presents the dollar and percentage variances in other income (expense) for the periods presented.
| | | | | | | | | | | | |
| | For the Three Months Ended | | | | | |
| ||||
| | June 30, | | Variances |
| |||||||
| | 2026 | | 2025 | | $ | | % |
| |||
Other Income (Expense) |
| | |
| | | |
| | | | |
Change in fair value of digital assets |
| $ | (10,591,667) |
| $ | 17,367,660 | | $ | (27,959,327) | | (161) | % |
Interest income |
| | 47,476 |
| | 168,975 | |
| (121,499) | | (72) | % |
Miscellaneous income |
| | 7,000 |
| | — | |
| 7,000 | | N/A | |
Interest expense | | | (229,047) | | | (2,124) | | | (226,923) | | 10,684 | % |
Change in fair value of accrued issuable equity |
| | — |
| | 58,678 | |
| (58,678) | | (100) | % |
Total Other Income (Expense), net | | $ | (10,766,238) | | $ | 17,593,189 | | $ | (28,359,427) | | (161) | % |
| | | | | | | | | | | | |
| | For the Six Months Ended | | | | | |
| ||||
| | June 30, | | Variances |
| |||||||
| | 2026 | | 2025 | | $ | | % |
| |||
Other Income (Expense) |
| | |
| | | |
| | | | |
Change in fair value of digital assets |
| $ | (31,359,380) |
| $ | 7,619,060 | | $ | (38,978,440) | | (512) | % |
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Interest income |
| | 85,963 |
| | 337,399 | |
| (251,436) | | (75) | % |
Miscellaneous income |
| | 7,000 |
| | — | |
| 7,000 | | N/A | |
Interest expense |
| | (234,488) |
| | (12,521) | |
| (221,967) | | 1,773 | % |
Change in fair value of accrued issuable equity | | | — | | | 319,276 | | | (319,276) | | (100) | % |
Amortization of debt discount | | | — | | | (82,878) | | | 82,878 | | (100) | % |
Gain on debt extinguishment, net |
| | — |
| | 50,000 | |
| (50,000) | | (100) | % |
Total Other Income (Expense), net | | $ | (31,500,905) | | $ | 8,230,336 | | $ | (39,731,241) | | (483) | % |
The three month change is primarily attributable to the $28.0 million unfavorable change in the fair value of BTC holdings, reflecting the change in market price of BTC, from $68,228 on April 1, 2026, to $58,554 on June 30, 2026, compared to the change from $82,560 on April 1, 2025, to $107,176 on June 30, 2025.
The six month change is primarily attributable to the $39.0 million unfavorable change in the fair value of BTC holdings, reflecting the change in market price of BTC, from $87,502 on January 1, 2026, to $58,554 on June 30, 2026, compared to the change from $93,384 on January 1, 2025, to $107,176 on June 30, 2025.
Our Bitcoin Acquisition Strategy
In December 2024, we adopted BTC as our primary treasury reserve asset on an ongoing basis, subject to market conditions and our anticipated cash needs. Our strategy included acquiring and holding BTC using cash that exceeds our working capital requirements, and from time to time, subject to market conditions, issuing equity or debt securities or engaging in other capital raising transactions with the objective of using the proceeds to purchase BTC. However, for the foreseeable future, we do not expect to allocate surplus cash to BTC as we prioritize scaling our operating business, including KULR ONE and related products and services. We have not set any specific target for the amount of BTC we seek to hold, and we will continue to monitor market conditions in determining whether to engage in additional BTC transactions. This overall strategy also contemplates that we could periodically leverage or sell BTC for general corporate purposes or in connection with strategies that generate tax benefits in accordance with applicable law, enter into additional capital raising transactions, including those that could be collateralized by our BTC holdings, and consider pursuing strategies to create income streams or otherwise generate funds using our BTC holdings. Through June 30, 2026, KULR had not sold any BTC from its treasury holdings.
On May 7, 2026, our Board of Directors authorized management to sell digital assets as deemed necessary to fund operations and key business priorities in lieu of issuing equity. Accordingly, rather than issue equity under the ATM at current levels, we intend to sell BTC to fund our planned operations and growth initiatives, including scaling our KULR ONE Space architecture, ramping production of our KULR ONE Air products, and advancing development of our KULR ONE MAX battery backup solutions. Subsequent to June 30, 2026, we repaid the remaining outstanding principal and interest balance under our $20.0 million loan agreement with Coinbase, which resulted in the automatic release of the 565 BTC held in the collateral account. To fund the repayment, we sold an aggregate of approximately 333 BTC for total proceeds of approximately $21.5 million, at an average price of approximately $64,467 per BTC, of which we used proceeds of approximately $20.0 million to fund the principal repayment. See Note 13 – Subsequent Events for further information regarding sales of BTC subsequent to June 30, 2026.
As of June 30, 2026, we had contractual commitments 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, which was not renewed, with a digital asset mining services company, with total committed payments of $2.6 million, of which all were made as of June 30, 2026. In addition, on October 1, 2025, we entered into a two-year mining services agreement with a digital asset mining services company, that included certain non-lease operating expense commitments and the remaining commitments as of June 30, 2026 for future operating expenses associated with this lease totaled $2.1 million (see Note 13 – Subsequent Events, related to the termination of this agreement in July 2026).
For the three and six months ended June 30, 2026, the Company earned 8.44 and 17.23 BTC from mining operations. As of June 30, 2026, we held 1,091.69 BTC with a fair value of $63.9 million, of which 565 BTC with a fair value of $33.1 million were pledged as collateral under the Company’s loan agreement with Coinbase and are presented as digital assets, pledged as collateral, on the condensed consolidated balance sheets.
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The following table presents BTC activity during the six months ended June 30, 2026:
| | | | | | | | |
| | | | | | | Weighted | |
| | | | | | | Average | |
| | Digital Assets(1) | | Bitcoin Held | | Per Bitcoin | ||
Fair value as of December 31, 2025 | | $ | 93,995,256 |
| 1,074.21 | | $ | 87,502 |
Digital assets purchased | |
| — |
| — | | | — |
Digital assets mined | |
| 1,268,293 |
| 17.23 | |
| 73,594 |
Received as downtime credits | | | 18,701 | | 0.25 | | | 75,641 |
Change in fair value of digital assets | |
| (31,359,380) |
| | | | |
Fair value as of June 30, 2026 | | $ | 63,922,870 |
| 1,091.69 | | $ | 58,554 |
| | | | | | | | |
Less: Digital assets, pledged as collateral | | | (33,083,010) | | | | | |
Digital assets, net | | $ | 30,839,860 | | | | | |
| (1) | The source of capital used to purchase Bitcoin was primarily proceeds from ATM offerings. |
Liquidity and Capital Resources
As of August 11, 2026 and June 30, 2026, we had unrestricted cash balances of $8.7 million and $12.8 million, respectively. As of June 30, 2026, we had working capital of $59.6 million. As of June 30, 2026, we also had BTC holdings of $63.9 million.
For the six months ended June 30, 2026 and 2025, net cash used in operating activities was $17.7 million and $21.5 million, respectively. Our net cash used in operations for the six months ended June 30, 2026, was primarily attributable to our net loss of $51.0 million, adjusted for non-cash expenses in the aggregate amount of $35.0 million, plus $1.7 million of net cash used to fund changes in the levels of operating assets and liabilities. Our net cash used in operations for the six months ended June 30, 2025, was primarily attributable to our net loss of $10.7 million, adjusted for non-cash gains in the aggregate amount of $4.2 million, plus $6.6 million of net cash used to fund changes in the levels of operating assets and liabilities.
For the six months ended June 30, 2026 and 2025, net cash used in investing activities was $2.1 million and $73.6 million, respectively. Net cash used in investing activities during the six months ended June 30, 2026, was primarily related to purchases of property and equipment of $1.5 million and the payment of a holdback amount related to an asset acquisition of $0.6 million. Net cash used in investing activities during the six months ended June 30, 2025, was primarily related to purchases of digital assets of $69.9 million, equity investments of $3.3 million, and purchases of property and equipment of $0.3 million.
For the six months ended June 30, 2026 and 2025, net cash provided by financing activities was $19.6 million and $85.8 million, respectively. Net cash provided by financing activities during the six months ended June 30, 2026, was primarily due to proceeds from our loan payable of $20.0 million, partially offset by payment of employee tax withholding on stock-based compensation of $0.4 million. Net cash provided by financing activities during the six months ended June 30, 2025, was primarily due to proceeds from ATM equity financing of $89.5 million, partially offset by issuance costs on ATM equity financing of $2.2 million, repayments of notes payable of $0.6 million, payments for deferred financing costs of $0.6 million, and payment of employee tax withholding on stock-based compensation of $0.3 million.
Future cash requirements for our June 30, 2026 current liabilities include approximately $4.4 million for accounts payable and accrued expenses, $20.0 million to repay our loan payable, of which the outstanding balance was repaid subsequent to June 30, 2026, and $0.3 million for future payments under our operating leases to be made within the next year. Future cash requirements for our long-term liabilities include $2.4 million for future payments under operating leases. In July 2026, we terminated our digital asset mining services agreement and we were relieved of future commitments of $2.1 million in exchange for an early termination fee of $0.15 million.
Our primary source of liquidity has historically been cash generated from equity and debt offerings. Under ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern, we have the responsibility to evaluate whether conditions and/or events raise substantial doubt about our ability to meet future financial obligations as they become due within one year after the date that the financial statements are issued. We have a history of recurring net losses and recurring use of cash in operations.
On December 22, 2025, the Company decided to pause its ATM transactions, and subsequently extended that pause through September 30, 2026. During the six months ended June 30, 2026, the Company fully drew down its Master Loan Agreement with Coinbase Credit,
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Inc., resulting in $20.0 million outstanding as of June 30, 2026, which was repaid in full subsequent to June 30, 2026, and accordingly, the full $20.0 million loan facility remains available as of the date of this filing. As of June 30, 2026, we believe that our cash on hand, BTC holdings and working capital balances will be sufficient to meet our obligations as they become due over the next twelve months from the date these condensed consolidated financial statements were issued.
Our ATM transactions remain paused as of the date of this filing.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on financial conditions, changes in financial conditions, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Critical Accounting Estimates
We prepare our condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial results will be affected. The accounting policies that reflect our more significant estimates and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described below. We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our condensed consolidated financial statements that require estimation but are not deemed critical, as defined above. There have been no material changes to our critical accounting estimates from those described in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 31, 2026.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company, as defined by Rule 229.10(f)(1) and are not required to provide the information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our management, with the participation of our principal executive officer and principal financial officer, concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting that occurred during the second quarter of 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations of the Effectiveness of Controls
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. A control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. 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.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Arrangement
During the three months ended June 30, 2026, no director or officer of the Company
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ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibit | | Description |
| | |
31.1 |
| Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* |
|
|
|
31.2 |
| Certification of the Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* |
|
|
|
32.1 |
| Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** |
|
|
|
101.INS |
| Inline XBRL Instance* |
|
|
|
101.SCH |
| Inline XBRL Taxonomy Extension Schema* |
|
|
|
101.CAL |
| Inline XBRL Taxonomy Extension Calculation* |
|
|
|
101.DEF |
| Inline XBRL Taxonomy Extension Definition* |
|
|
|
101.LAB |
| Inline XBRL Taxonomy Extension Labels* |
|
|
|
101.PRE |
| Inline XBRL Taxonomy Extension Presentation* |
| | |
104 | | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101)* |
* | Filed herewith. |
** | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this quarterly report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: August 13, 2026 | By: | /s/ Michael Mo |
|
| Michael Mo |
|
| Chief Executive Officer |
|
| (Principal Executive Officer) |
Dated: August 13, 2026 | By: | /s/ Michael Kimel |
|
| Michael Kimel |
|
| Chief Financial Officer |
|
| (Principal Financial and Accounting Officer) |
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