UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended:
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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, | December 31, | ||||
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| 2024 |
| 2023 | ||
| (unaudited) | |||||
Assets |
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Current Assets: |
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Cash | $ | | $ | | ||
Accounts receivable |
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Inventory |
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Inventory deposits | | | ||||
Prepaid expenses and other current assets |
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Total Current Assets |
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Property and equipment, net |
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Equipment deposits | | | ||||
Security deposits | | | ||||
Intangible assets, net | | | ||||
Right-of-use asset, net | | | ||||
Deferred financing costs, net | | | ||||
Total Assets | $ | | $ | | ||
Liabilities and Stockholders’ Equity (Deficit) |
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Current Liabilities: |
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Accounts payable | $ | | $ | | ||
Accrued expenses and other current liabilities |
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Accrued issuable equity | | | ||||
Lease liabilities, current portion | | | ||||
Notes payable, net of discount, current portion | | — | ||||
Deferred revenue | | | ||||
Total Current Liabilities |
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Notes payable, non-current portion | | | ||||
Lease liabilities, non-current portion | | — | ||||
Prepaid advance liability, net of discount, non-current portion | — | | ||||
Accrued interest, non-current portion | — | | ||||
Total Liabilities | | | ||||
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Commitments and contingencies (Note 16) |
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Stockholders’ Equity (Deficit) |
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Preferred stock, $ |
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Series A Preferred Stock, | | |||||
Series B Convertible Preferred Stock, |
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Series C Preferred Stock, | ||||||
Series D Preferred Stock, | ||||||
Common stock, $ |
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Additional paid-in capital | | | ||||
Treasury stock, at cost; | ( | ( | ||||
Accumulated deficit |
| ( |
| ( | ||
Total Stockholders’ Equity (Deficit) |
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Total Liabilities and Stockholders’ Equity (Deficit) | $ | | $ | | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the Three Months Ended | ||||||
March 31, | ||||||
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| 2024 |
| 2023 | ||
Revenue | $ | | $ | | ||
Cost of revenue |
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Gross Profit |
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Operating Expenses |
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Research and development |
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Selling, general, and administrative |
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Total Operating Expenses |
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Loss From Operations |
| ( |
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Other (Expense) Income |
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Interest expense |
| ( |
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Amortization of debt discount | ( | ( | ||||
Loss on debt extinguishment | ( | — | ||||
Change in fair value of accrued issuable equity | ( | | ||||
Total Other Expense, net |
| ( |
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Net Loss | $ | ( | $ | ( | ||
Net Loss Per Share |
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- Basic and Diluted | $ | ( | $ | ( | ||
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Weighted Average Number of Common Shares Outstanding |
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- Basic and Diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 2024 | ||||||||||||||||||||||||
Series A | Additional | Total | ||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-In | Treasury Stock | Accumulated | Stockholders’ | |||||||||||||||||||
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| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Shares |
| Amount |
| Deficit |
| Equity (Deficit) | ||||||
Balance - January 1, 2024 | — | $ | — |
| | $ | | $ | | | $ | ( | $ | ( | $ | ( | ||||||||
Preferred stock issued for no consideration | | | — | — | ( | — | — | — | — | |||||||||||||||
Common stock issued for the repayment of prepaid advance liability and related interest accrual pursuant to Advance Notices (1) | — | — | | | | — | — | — | | |||||||||||||||
Common stock issued for cash pursuant to Advance Notices (2) | — | — | | | | — | — | — | | |||||||||||||||
Stock-based compensation: | ||||||||||||||||||||||||
Restricted stock awards exchanged for restricted stock units | — | — | ( | ( | | — | — | — | — | |||||||||||||||
Restricted stock units vested | — | — | | | ( | — | — | — | — | |||||||||||||||
Common stock issued for services | — | — | | | | — | — | — | | |||||||||||||||
Amortization of restricted common stock | — | — | — | — | | — | — | — | | |||||||||||||||
Amortization of stock options | — | — | — | — | | — | — | — | | |||||||||||||||
Net loss | — | — | — | — | — | — | — | ( |
| ( | ||||||||||||||
Balance - March 31, 2024 | | $ | | | $ | | $ | | | $ | ( | $ | ( | $ | | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 2023 | |||||||||||||||||||
Additional | Total | ||||||||||||||||||
Common Stock | Paid-In | Treasury Stock | Accumulated | Stockholders’ | |||||||||||||||
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| Shares |
| Amount |
| Capital |
| Shares |
| Amount |
| Deficit |
| Equity | |||||
Balance - January 1, 2023 |
| | $ | $ | | | $ | ( | $ | ( | $ | | |||||||
Common stock issued for the repayment of prepaid advance liability and related interest accrual pursuant to Investor Notices |
| |
| | | — | — |
| — |
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Shares repurchased for payroll taxes and canceled | ( | ( | ( | — | — | — | ( | ||||||||||||
Stock-based compensation: |
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Restricted stock awards granted | | | ( | — | — | — | — | ||||||||||||
Unvested restricted stock awards canceled |
| ( |
| ( | — | — |
| — |
| — | |||||||||
Common stock issued for services | | | — | — | — | | |||||||||||||
Amortization of restricted common stock | — | — | — | — | — | | |||||||||||||
Amortization of stock options |
| — | — | — | — |
| — |
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Net loss | — | — | — | — | — | ( | ( | ||||||||||||
Balance - March 31, 2023 | | $ | | $ | | | $ | ( | $ | ( | $ | | |||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the Three Months Ended | ||||||
March 31, | ||||||
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| 2024 |
| 2023 | ||
Cash Flows From Operating Activities: |
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Net loss |
| $ | ( | $ | ( | |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Amortization of debt discount | | | ||||
Non-cash lease expense | | | ||||
Loss on debt extinguishment | | — | ||||
Depreciation and amortization expense | | | ||||
Change in fair value of accrued issuable equity |
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Stock-based compensation | | | ||||
Changes in operating assets and liabilities: |
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Accounts receivable | ( | ( | ||||
Inventory | | | ||||
Inventory deposits | — | | ||||
Prepaid expenses and other current assets |
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Security deposits |
| ( |
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Accounts payable |
| ( |
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Accrued expenses and other current liabilities | ( | | ||||
Lease liability |
| ( |
| ( | ||
Deferred revenue |
| ( |
| ( | ||
Total Adjustments |
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Net Cash Used In Operating Activities | ( | ( | ||||
Cash Flows From Investing Activities: |
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Purchases of property and equipment | ( | ( | ||||
Acquisition of intangible assets | — | ( | ||||
Net Cash Used In Investing Activities |
| ( |
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Cash Flows from Financing Activities: |
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Proceeds from the SEPA | | — | ||||
Proceeds from prepaid advance liability | — | | ||||
Issuance costs on prepaid advance liability | — | ( | ||||
Net proceeds from notes payable (1) | | — | ||||
Issuance costs on notes payable | ( | — | ||||
Repayments of notes payable | ( | — | ||||
Net Cash Provided By Financing Activities | | | ||||
Net Decrease In Cash | ( | ( | ||||
Cash - Beginning of Period |
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Cash - End of Period | $ | | $ | | ||
(1) Face value of $
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
(unaudited)
For the Three Months Ended | ||||||
| March 31, | |||||
| 2024 |
| 2023 | |||
Supplemental Disclosures of Cash Flow Information: | ||||||
Cash paid during the period for: | ||||||
Interest | $ | | $ | — | ||
Taxes | $ | — | $ | — | ||
Non-cash investing and financing activities: | ||||||
Right-of-use asset for lease liability | $ | | $ | | ||
Shares repurchased for payroll taxes (not paid as of period-end) and canceled | $ | — | $ | | ||
Restricted stock awards converted to restricted stock units | $ | | $ | — | ||
Restricted stock units vested | $ | | $ | — | ||
Original issue discount on indebtedness | $ | | $ | | ||
Common stock issued pursuant to Investor Notices in satisfaction of prepaid advance liability and interest | $ | — | $ | | ||
Common stock issued pursuant to Advance Notices in satisfaction of prepaid advance liability and interest | $ | | $ | — | ||
Deposits applied to purchases of property and equipment | $ | — | $ | | ||
Additions to property and equipment included in accounts payable | $ | | $ | | ||
Additions to property and equipment included in accrued purchases | $ | | $ | — | ||
Deferred financing costs charged to additional paid-in capital | $ | | $ | — | ||
Accrued underwriting fees for notes payable | $ | | $ | — | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
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”), develops and commercializes high-performance thermal management technologies for electronics, batteries, and other components across a range of applications. Currently, the Company is focused on targeting both high performance aerospace and Department of Defense (“DOD”) applications, such as space exploration, satellite communications, and underwater vehicles, and applying them to mass market commercial applications, such as lithium-ion battery energy storage, electric vehicles, fifth generation (“5G”) communication, cloud computer infrastructure, consumer and industrial devices.
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 March 31, 2024, and for the three months ended March 31, 2024 and 2023. The results of operations for the three months ended March 31, 2024, are not necessarily indicative of the operating results for the full year ending December 31, 2024 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, 2023 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on Form 10-K on April 12, 2024. The accompanying condensed consolidated balance sheet as of December 31, 2023, has been derived from the audited financial statements included in the Form 10-K.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Since the date of the Annual Report on Form 10-K for the year ended December 31, 2023, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note.
Going Concern and Management’s Liquidity Plans
As of March 31, 2024, the Company had cash of $
The Company’s primary source of liquidity has historically been cash generated from equity and debt offerings along with cash flows from revenue. Under ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet future financial obligations as they become due within one year after the date that these financial statements are issued. The accompanying condensed consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. However, since the Company’s inception we have had a history of recurring net losses from operations, recurring use of cash in operating activities and working capital deficits.
Future cash requirements for our current liabilities include $
On December 20, 2023, the Company received a notice of noncompliance from NYSE Regulation (“NYSE”) stating it is not in compliance with Section 1003(a) (iii) in the NYSE American Company Guide (the “Company Guide”) since the Company reported stockholders’ equity of $
9
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
On March 5, 2024, the Company received a notification from the NYSE that the Company’s plan to regain compliance with Section 1003 (a) (iii) of the Company Guide was accepted and so long as the Company meets its interim objectives, the Company will have until June 20, 2025, to regain compliance with the minimum stockholders’ equity requirement. On May 1, 2024, the Company received a notification from the NYSE stating that the Company had regained compliance with Section 1003 (f) (v) of the Company Guide given the increase in the trading price of the Company’s securities.
The factors above raise substantial doubt about the Company’s ability to meet its obligations as they become due within the twelve months from the date these condensed consolidated financial statements are issued.
Management’s plans to mitigate the factors which raise substantial doubt include (i) revenue growth, (ii) reducing operating expenses through careful cost management, and (iii) raising additional funds through future financings.
The Company’s ability to continue as a going concern is dependent upon its ability to successfully execute the aforementioned initiatives.
On April 2, 2024, the Company received cash proceeds of $
On April 9, 2024, the Company received cash proceeds of $
Subsequent to March 31, 2024, and through May 13, 2024, the Company issued a total of
As of the date of the issuance of these condensed consolidated financial statements, the Company has no additional commitments to obtain additional funding through future debt or equity financings, or assurance the Company will be able to obtain additional funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations. The aforementioned factors indicate that management’s plans do not alleviate the substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements.
These unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability of assets and the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern.
Use of Estimates
Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant estimates used in these unaudited condensed consolidated financial statements include, but are not limited to, fair value calculations for intangible assets, equity securities, stock-based compensation 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.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consisted primarily of cash and accounts receivable. The Company’s concentrations of credit risk also include concentrations from key customers and vendors.
10
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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 Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. There were uninsured balances of $
Customer and Revenue Concentrations
The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows:
Revenue | Accounts Receivable |
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For the Three Months Ended | As of | As of |
| ||||||
March 31, | March 31, |
| December 31, |
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|
| 2024 |
| 2023 |
| 2024 | 2023 |
| |
Customer A |
| | % | * | | % | * | ||
Customer B |
| | % | * | | % | | % | |
Customer C |
| * | | % | * | * | |||
Customer D | * | * | | % | * | ||||
Customer E | * | * | | % | * | ||||
Customer F | * | * | | % | * | ||||
Customer G | * | * | * | | % | ||||
Customer H |
| * | * | * | | % | |||
Total |
| | % | | % | | % | | % |
* | Less than 10% |
There is no assurance the Company will continue to receive significant revenues from any of these customers. Any reduction or delay in operating activity from any of the Company’s 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 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.
Vendor Concentrations
The Company had vendors whose purchases of inventory individually represented 10% or more of the Company’s total purchases of inventory, as follows:
For the Three Months Ended |
| ||||
| March 31, |
| |||
| 2024 |
| 2023 |
| |
Vendor A |
| | % | * | |
Vendor B |
| * | | % | |
| | % | | % | |
* | Less than 10% |
Accounts Receivable
Accounts receivable are carried at their contractual amounts, less an estimate for credit losses. As of March 31, 2024 and December 31, 2023, no allowances for credit losses were determined to be necessary. Management estimates the allowance for credit losses based on
11
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
existing economic conditions, the financial conditions of the customers, and the amount and age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for bad debts only after all collection attempts have been exhausted.
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 (“CFV”) thermal interface solutions and internal short circuit batteries, which are available for sale, as well as raw materials and work in process related primarily to the manufacture of safe cases. 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 cost of inventory that is sold to third parties is included within cost of sales and the cost of inventory that is given as samples is included within operating expenses. The Company periodically reviews for slow-moving, excess or obsolete inventories. Products that are determined to be obsolete, if any, are written down to net realizable value. 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 these costs are included in the current asset section of the consolidated balance sheet. As of March 31, 2024 and December 31, 2023, inventory deposits were $
Inventory at March 31, 2024 and December 31, 2023 was comprised of the following:
| March 31, |
| December 31, | |||
2024 | 2023 | |||||
Raw materials | $ | | $ | | ||
Finished goods |
| |
| | ||
Total inventory | $ | | $ | | ||
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is 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. |
12
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The Company recognizes 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. |
| ● | 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.
The following table summarizes the Company’s revenue recognized by type of contract in its condensed consolidated statements of operations:
For the Three Months Ended | ||||||
March 31, | ||||||
| 2024 |
| 2023 | |||
Revenue Recognized at a Point in Time: | ||||||
Product sales | $ | | $ | | ||
Contract services | | | ||||
Total | | | ||||
Revenue Recognized Over Time: | ||||||
Contract services |
| |
| — | ||
Total Revenue | $ | | $ | | ||
Net Loss Per Common Share
Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. 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.
The following table presents the computation of basic and diluted net loss per common share:
| For the Three Months Ended | |||||
March 31, | ||||||
2024 |
| 2023 | ||||
Numerator: |
|
|
|
| ||
Net loss | $ | ( | $ | ( | ||
|
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Denominator (weighted average quantities): |
|
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Common shares issued |
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| | ||
Less: Treasury shares purchased |
| ( |
| ( | ||
Less: Unvested restricted shares |
| ( |
| ( | ||
Add: Accrued issuable equity | | | ||||
Denominator for basic and diluted net loss per share | ||||||
|
|
|
| |||
Basic and diluted net loss per common share | $ | ( | $ | ( | ||
13
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:
| March 31, | |||
|
| 2024 |
| 2023 |
Unvested restricted stock awards | | | ||
Restricted stock units | | | ||
Options |
| |
| |
Warrants | | | ||
Total |
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| |
Operating Leases
The Company leases properties under operating leases. For leases in effect upon adoption of Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” at January 1, 2020, and for any leases commencing thereafter, 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 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. Operating lease expense consists of a single lease cost calculated so that the remaining cost of the lease is allocated over the remaining lease term on a straight-line basis, variable lease payments not included in the lease liability, and any impairment of the right-of-use asset. The Company elected the accounting policy to include both the lease and non-lease components of the agreements as a single component and account for them as a lease.
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 12 – Subsequent Events.
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (the “FASB”) FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” These amendments require a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Public entities with a single reporting segment are required to provide both the new disclosures and all of the existing disclosures required under ASC 280. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Since this new ASU addresses only disclosures, the Company does not expect the adoption of this ASU to have any material effects on its financial condition, results of operations or cash flows. The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023-07.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to improve the effectiveness of income tax disclosures. The amendments in ASU 2023 – 09 are effective for annual periods beginning after December 15, 2024, with early adoption permitted. Since this new ASU addresses only disclosures, the Company
14
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
does not expect the adoption to have any material effects on its financial condition, results of operation or cash flows. The Company is currently evaluating any new disclosures that may be required upon adoption of ASU 2023–09.
Recently Adopted Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity; Own Equity (“ASU 2020-06”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for the Company in financial statements issued for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year. The Company adopted this ASU on January 1, 2024, and the adoption did not have a material impact on its condensed consolidated financial statements.
NOTE 3 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
As of March 31, 2024 and December 31, 2023, prepaid expenses and other current assets consisted of the following:
| March 31, |
| December 31, | |||
| 2024 |
| 2023 | |||
Compensation costs | | $ | | |||
Deferred expenses | | | ||||
Security deposits | | | ||||
Professional fees | | | ||||
Insurance | | | ||||
Dues and subscriptions | | | ||||
Vendor receivables | | | ||||
Conferences and seminars | | | ||||
Investor relationships | — | | ||||
Other | | | ||||
Total prepaid expenses and other current assets | $ | | $ | | ||
15
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 4 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
As of March 31, 2024 and December 31, 2023, accrued expenses and other current liabilities consisted of the following:
| March 31, | December 31, | ||||
|
| 2024 |
| 2023 | ||
Professional fees | $ | | $ | | ||
Payroll and vacation | | | ||||
Research and development | | | ||||
Refund due to customer |
| — | | |||
Inventory purchases | | | ||||
Legal fees |
| | | |||
Tools and supplies | | | ||||
Board compensation |
| | | |||
Royalties |
| | | |||
Other |
| | | |||
Total accrued expenses and other current liabilities |
| | | |||
Add: Accrued interest, non-current | — | | ||||
Total accrued expenses and other liabilities | $ | | $ | | ||
NOTE 5 – ACCRUED ISSUABLE EQUITY
A summary of the accrued issuable equity activity during the three months ended March 31, 2024 is presented below:
For the Three Months Ended | |||
| March 31, 2024 | ||
Beginning balance at January 1, 2024 | $ | | |
Additions | | ||
Mark-to-market | | ||
Fair value at March 31, 2024 | $ | | |
During the three months ended March 31, 2024, the Company entered into and settled certain contractual arrangements for services in exchange for a fixed number of shares of common stock of the Company. On the respective dates the contracts were entered into, the estimated fair value of the shares to be issued was an aggregate of $
During the three months ended March 31, 2024 and 2023, the Company recorded gains (losses) in the aggregate amount of $(
NOTE 6 – PREPAID ADVANCE LIABILITY
The Company’s prepaid advance liability consists of the following:
| Gross Amount of |
| Less: |
| Prepaid Advance | ||||
Prepaid Advance | Debt | Liability, | |||||||
Liability | Discount | net of discount | |||||||
Balance, January 1, 2024 | $ | | $ | ( | $ | | |||
Repayments pursuant to Advance Notices |
| ( |
| — |
| ( | |||
Amortization of debt discount |
| — |
| |
| | |||
Balance, March 31, 2024 | $ | — | $ | — | $ | — | |||
16
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
On January 9, 2024, the Company entered into a letter agreement with Yorkville to defer the Company’s December 31, 2023 (the “December Payment”) payment of $
During the three months ended March 31, 2024, the Company issued
The remaining
NOTE 7 – LEASES
On January 31, 2024, the initial lease for Webster, Texas dated January 18, 2023, expired. The Company expects to recover the security deposit of $
On January 27, 2024, the Company entered into a lease agreement for new office space in Webster, Texas. The initial lease term is
The Company also leases office space at 4863 Shawline Street, San Diego, CA 92111, pursuant to an operating lease which expires May 31, 2024 (the “San Diego Lease”).
On January 25, 2024, the Company entered into an amendment to the lease dated April 5, 2021, for the facility located at 4863 Shawline Street, San Diego, CA 92111 (the “First Renewal”). Pursuant to the amendment, the lease is extended for a period of
As of March 31, 2024, the Company does not have any financing leases.
During the three months ended March 31, 2024 and 2023, operating lease expense was $
17
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Maturities of lease liabilities as of March 31, 2024, were as follows:
Year |
| ||
4/1/24 to 12/31/24 | $ | | |
2025 | | ||
2026 | | ||
2027 |
| | |
2028 | | ||
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 lease was as follows:
| For the Three Months Ended |
| |||||
| March 31, | ||||||
2024 |
| 2023 | |||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||
Operating cash flows used in operating activities | $ | | $ | | |||
Right-of-use assets obtained in exchange for lease obligations |
|
| |||||
Operating leases | $ | | $ | | |||
NOTE 8 – RELATED PARTY TRANSACTIONS
Effective August 26, 2022, the Company entered into a consulting agreement with the father of the Company’s Chief Technology Officer (the “Related Consultant”). On July 24, 2023, the Related Consultant accepted an employment offer by the Company which became effective on August 7, 2023.
During the three months ended March 31, 2023, expense recognized for services provided by the Related Consultant were $
As of March 31, 2024 and December 31, 2023, the Company did
18
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 9-NOTES PAYABLE
A summary of the notes payable activity during the three months ended March 31, 2024, is presented below:
| Notes |
| Debt |
| |||||
Payable | Discount | Total | |||||||
Outstanding, January 1, 2024 | $ | — | $ | — |
| — | |||
Proceeds from merchant cash advances |
| |
| ( |
| | |||
Issuance costs paid in cash |
| — |
| ( |
| ( | |||
Issuance costs to be paid in equity |
| ( |
| ( | |||||
Underwriting fees paid in cash |
| ( |
| ( | |||||
Repayments in cash |
| ( |
| — |
| ( | |||
Amortization of debt discount |
| — |
| |
| | |||
Notes payable, current-portion |
| |
| ( |
| | |||
Add: Notes payable, non-current portion |
| |
| — |
| | |||
Total Notes payable as of March 31, 2024 | $ | | $ | ( | $ | | |||
On January 22, 2024, the Company entered into a merchant cash advance agreement (the “Cash Advance Agreement”) whereby the Company received $
On February 26, 2024, the Company entered into a merchant cash advance agreement (the “Second Cash Advance Agreement”) with the same lender mentioned above whereby the Company received $
See Note 12 – Subsequent Events – Promissory Notes for information related to notes payable issued subsequent to March 31, 2024, and warrants subsequently issued to satisfy the equity obligation.
NOTE 10 - STOCKHOLDERS’ EQUITY (DEFICIT)
Standby Equity Purchase Agreement (“SEPA”) and Supplemental SEPA
On May 13, 2022, the Company entered into the SEPA with Yorkville. Pursuant to the SEPA, the Company has the right, but not the obligation, to sell to Yorkville up to an aggregate of $
Each sale (an “Advance”) that the Company requests under the SEPA (via an “Advance Notice”) may be for a number of shares of common stock with an aggregate value of up to $
19
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
purchase any shares that would result in it owning more than
During the three months ended March 31, 2024, the Company issued
See Note 6 – Prepaid Advance Liability, for details related to a supplemental agreement to the SEPA.
Common Stock
During the three months ended March 31, 2024, the Company issued an aggregate of
During the three months ended March 31, 2024, the Company issued
See Note 10 - Stockholders’ Equity - Restricted Stock Awards, for details related to restricted equity grants and Note 6 - Prepaid Advance Liability for details related to additional share issuances.
Preferred Stock
On January 26, 2024, the Board of Directors (“Board”), approved, authorized, and ratified the issuance of
Holders of Non-convertible Series A Voting Preferred Stock shall not be entitled to dividends, shall not convert into another series or class of stock of the Company and have no rights to distributions in the event of any liquidation. Each record holder of Non-convertible Series A Voting Preferred Stock shall have that number of votes (identical in every other respect to the voting rights of the holders of Common Stock entitled to vote at any regular or special meeting of the shareholders or by written consent) equal to one-hundred (100) votes per share of Non-convertible Series A Voting Preferred Stock held by such record holder.
Treasury Stock
As of March 31, 2024 and December 31, 2023, the Company has
20
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Warrants
A summary of warrants activity during the three months ended March 31, 2024, is presented below:
|
| Weighted |
| Weighted |
| |||||
Average | Average | |||||||||
Number of | Exercise | Remaining | Intrinsic | |||||||
| Warrants |
| Price |
| Term (Yrs) |
| Value | |||
Outstanding, January 1, 2024 |
| | $ | |
|
|
|
| ||
Issued |
| — |
| — |
|
|
|
| ||
Exercised |
| — |
| — |
|
|
|
| ||
Expired |
| — |
| — |
|
|
|
| ||
Forfeited |
| — |
| — |
|
|
|
| ||
Outstanding, March 31, 2024 |
| | $ | |
| $ | — | |||
| ||||||||||
Exercisable, March 31, 2024 |
| | $ | |
| $ | — | |||
A summary of outstanding and exercisable warrants as of March 31, 2024, is presented below:
Warrants Outstanding | Warrants Exercisable | |||||
Weighted |
| |||||
Outstanding | Average | Exercisable | ||||
Exercise | Number of | Remaining Life | Number of | |||
Price |
| Warrants |
| In Years |
| Warrants |
$ |
| |
|
| | |
$ |
| |
|
| | |
|
| |
|
| | |
Stock Options
A summary of stock options activity during the three months ended March 31, 2024, is presented below:
|
| Weighted |
| Weighted |
|
| ||||
Average | Average | |||||||||
Number of | Exercise | Remaining | Intrinsic | |||||||
Options | Price | Term (Yrs) | Value | |||||||
Outstanding, January 1, 2024 |
| | $ | |
|
|
|
| ||
Granted |
| |
| |
|
|
|
| ||
Forfeited |
| ( |
| |
|
|
|
| ||
Outstanding, March 31, 2024 |
| | $ | |
| $ | | |||
Exercisable, March 31, 2024 |
| | $ | |
| $ | — | |||
21
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The following table presents information related to stock options as of March 31, 2024:
Options Outstanding | Options Exercisable | |||||
Weighted | ||||||
Outstanding | Average | Exercisable | ||||
Exercise | Number of | Remaining Life | Number of | |||
Price |
| Options |
| In Years |
| Options |
$ |
| |
|
| | |
$ |
| |
|
| | |
$ |
| |
|
| | |
$ |
| |
|
| | |
| |
|
| | ||
For the three months ended March 31, 2024 and 2023, the weighted average grant date fair value per share of options was $
The Company has computed the fair value of stock options granted using the Black-Scholes option pricing model. In applying the Black-Scholes option pricing model, the Company used the following range of assumptions:
| For The Three Months Ended |
| |||
March 31, |
| ||||
2024 |
| 2023 |
| ||
Risk free interest rate |
| | % | % | |
Expected term (years) |
|
| |||
Expected volatility |
| | % | | % |
Expected dividends |
| | % | | % |
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 March 31, 2024, there was $
Restricted Stock Awards
The following table presents information related to restricted stock awards activity during the three months ended March 31, 2024:
Shares of | Weighted Average | ||||
Restricted | Grant Date | ||||
| Common Stock |
| Fair Value | ||
Non-vested RSAs, January 1, 2024 |
| | $ | | |
RSAs exchanged for RSUs | ( | | |||
Granted |
| — |
| — | |
Vested |
| ( |
| | |
Forfeited |
| — |
| — | |
Non-vested RSAs, March 31, 2024 |
| | $ | | |
22
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
During the three months ended March 31, 2024, the Company issued
As of March 31, 2024, there was $
Restricted Stock Units
The following table presents information related to restricted stock units (“RSUs”) activity during the three months ended March 31, 2024:
Number of | Weighted Average | ||||
Restricted | Grant Date | ||||
| Common Units |
| Fair Value | ||
Non-vested RSUs, January 1, 2024 |
| | $ | | |
RSAs exchanged for RSUs |
| |
| | |
Granted |
| |
| | |
Vested |
| ( | | ||
Forfeited | — | — | |||
Non-vested RSUs, March 31, 2024 | | $ | | ||
As of March 31, 2024, there was $
Stock-Based Compensation
During the three months ended March 31, 2024 and 2023, the Company recognized stock-based compensation expense of $
The following table presents information related to stock-based compensation for the three months ended March 31, 2024 and 2023:
| For The Three Months Ended | |||||
| March 31, | |||||
| 2024 |
| 2023 | |||
Common stock for services (includes accrued, unissued shares) | $ | | $ | | ||
Amortization of stock options |
| |
| | ||
Amortization of restricted stock awards and units |
| |
| | ||
Total | $ | | $ | | ||
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 March 31, 2024, 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.
23
KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 12 - SUBSEQUENT EVENTS
Promissory Notes
On April 2, 2024, the Company entered into an agreement (the “Promissory Note”), with a lender (the “Lender”), pursuant to which the Lender purchased an unsecured promissory note with an initial principal amount of $
On April 9, 2024, the Company entered into a note purchase agreement pursuant to which the Company issued an unsecured promissory note with an initial principal amount of $
Board of Director Activities and Compensation
On April 15, 2024, the Company announced the appointment of a new independent director, Donna H. Grier, to the Company’s Board of Directors (the “Board”). Ms. Grier will serve as Chair of the Audit Committee, and a member of both the Nominating and Corporate Governance, and Compensation Committees of the Board. Ms. Grier was granted cash compensation of $
Concurrent with the appointment of Ms. Grier, director Mr. Morio Kurosaki retired from the Board, and was issued immediately vested equity compensation of
Standby Equity Purchase Agreement
Subsequent to March 31, 2024, and through May 13, 2024, the Company issued a total of
Warrants
Pursuant to the January 2024 and February 2024 Merchant Cash Advance Agreements (see Note 9 – Notes Payable), on April 9, 2024, the Company issued and delivered a total of
24
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 March 31, 2024 and for the three months ended March 31, 2024 and March 31, 2023 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 April 12, 2024, unless disclosed elsewhere in this Quarterly Report.
Overview
KULR Technology Group, Inc., through our wholly owned subsidiary KULR Technology Corporation, maintains expertise in three key technology domain areas: (1) energy storage systems and recycling, (2) thermal management solutions, and (3) rotary system vibration reduction. Historically, KULR, focused on thermal energy management solutions for space and Department of Defense (DoD) applications, with recent expansion into energy storage and vibration reduction markets as the logical next step. Combined, this energy management platform consists of high-performance thermal management technologies for batteries and electronics, AI-powered battery management and vibration mitigation software solutions, and reusable energy storage modules. Our mission is to advance and apply these technologies to make our world more sustainable by using less energy; using energy more efficiently; making energy consumption safer and cooler; using less materials to achieve these goals; and completing the circular economy through recycling.
Active government initiatives propelled by industry and regulatory tailwinds are increasing demand for energy storage, battery recycling and clean energy, resulting in an expanding total addressable market for KULR’s solutions. According to Precedence Research, global energy storage systems market is to grow from $210B in 2021 to $435B by 2030. Global lithium-ion battery recycling industry is to grow from $4.6B in 2021 to $22.8B by 2030, according to Market and Markets Research. Additionally, the domain driving the growth of KULR’s battery design and production capabilities is the private space exploration market sector, which requires highly custom, safe, and reliable energy storage systems, and is expected to reach $1,110.8B by 2030 according to CoherentMI. The Company’s disruptive technologies strive to fulfill an addressable $24 billion thermal management systems market (estimated based on market data projections published by Converged Markets stating that the thermal management systems market size was projected to grow to $24.8 billion by 2025). E-aviation growth and continued reliance on traditional aviation vehicles drives an aircraft maintenance market size that is expected to reach $127.2B by 2032, an increase from $82.7B in 2023, according to Precedence Research. KULR VIBE, the Company’s rotary system vibration reduction software, positions KULR to access this market area.
As companies and governments around the world pledge to meet net zero emissions over the next few decades, KULR is uniquely positioned to accelerate the adoption of clean energy solutions and sustainable products and facilitate the migration to a global circular economy. The Company’s goal is to provide total battery safety solutions for more efficient battery systems, increased sustainability, and end-of-life battery management, making KULR a key technology solutions provider in the migration to a global circular economy.
KULR ONE and KULR ONE Design Solutions (K1DS)
KULR’s primary technical domain that is shaping the future landscape of the Company is safe, high-performance energy storage solutions. To effectively support and provide energy storage solutions, a holistic approach is necessary. Batteries are an interdisciplinary technology which require:
| (1) | Multi-disciplinary expertise to address related electrical, thermal, mechanical, and electrochemical requirements, |
| (2) | Cell supply access to top-tier OEMs, |
25
| (3) | Cell level testing capabilities to characterize performance, quality, and safety behavior at the cell level, |
| (4) | Expertise in early concept design, modeling, and analysis, |
| (5) | Rapid prototyping and production capabilities, |
| (6) | Pack and system level thermal, mechanical, electrical, and abuse testing capabilities, |
| (7) | Expertise in battery management, controls, and monitoring, |
| (8) | Ability to support beginning of life to end of life requirements for transport and recycling. |
To address the need for a holistic approach, KULR developed a battery product and service portfolio over the course of the last decade that provides products, safety testing services, modeling and analysis services, electrical testing services, transport and recycling packaging and logistics, and battery design solutions. Collectively, this is referred to as KULR ONE Design Solutions (K1-DS), which is actively leveraged by the Company to facilitate engagement with customers no matter the battery life cycle phase they are in.
26
Currently, the primary aspects of K1-DS utilized by industry are product sales of trigger cells and TRS, the safety testing methodologies, and the utilization of the K1-DS platform as a whole to develop customized energy storage solutions.
Internally, KULR has leveraged K1-DS to develop off the shelf KULR ONE architecture which represents a groundbreaking innovation that is driving the world’s transition to a more sustainable electrification economy. These revolutionary designs offer a unique combination of cutting-edge features, including unparalleled safety, exceptional performance, intelligent functionality, modular construction, reliability, and customizability. The KULR ONE battery packs have been engineered to meet the exacting demands of the world’s most demanding applications. As of now, the Company is focused on the KULR ONE Space for space exploration, the KULR ONE Guardian for military applications, and the KULR ONE Max for rack-style grid energy storage systems, also referred to as Battery Energy Storage Systems (BESS). These architectures collectively offer a comprehensive solution that addresses the critical need for safe and reliable energy storage in a wide range of industries, from aerospace and defense to electric vehicles and consumer electronics. One of the key features of the KULR ONE family of battery packs is the modularity and consistency of the architectures. This allows for greater flexibility as customers can easily adjust the size and configuration of the battery pack to suit their specific application requirements while still also benefitting from testing previously conducted by the KULR team for their specific architecture. In addition to offering exceptional performance and reliability, the KULR ONE battery packs are also designed with safety as a top priority. They incorporate state-of-the-art thermal management technology to prevent overheating and ensure safe operation even in the most challenging environments. Overall, the KULR ONE family of battery packs, depicted with the following picture, is at the forefront of the global drive towards sustainable electrification. With its unparalleled combination of safety, performance, intelligence, modularity, reliability, and customizability, KULR ONE is positioned to revolutionize the way we think about energy storage and powering the world’s most demanding applications.
27
KULR VIBE Solution
During 2022, we acquired intellectual property from Vibetech International, LLC (“Vibetech”), which allows KULR to expand itself as a vertically integrated energy management company focused on sustainable energy solutions. For nearly twenty years, the primary application has been aviation. However, advances in measurement and computing technologies have allowed KULR VIBE to provide transformative and scalable solutions across transportation, renewable energy (wind farm), manufacturing, industrial, performance racing and autonomous aerial (drone) applications among others. KULR VIBE addresses one the most challenging issues with advanced machinery today; excessive energy robbing vibrations that are destructive to both the machinery and in many cases the operator. The KULR VIBE suite of technologies utilize proprietary sensor processes with advanced learning algorithms to both achieve precision balancing solutions, and successfully predict component failure based on its comprehensive database of vibration signatures. Its enhanced AI learning algorithms pinpoint areas where excess vibrations cause a loss of energy that can lead to system malfunctions, weakened performance, and maintenance issues.
This innovative technology can be utilized as a standalone solution or be paired with existing track and balance technology to facilitate vibration reduction, achieve increased energy production, and reduce mechanical failures thereby extending platform life. KULR VIBE recently balanced the motors and blades of a mission critical drone to demonstrate the benefits of the technology. The results were a 23% increase in battery life and a lift increase of 45%. Same motors, same blades, KULR VIBE optimized.
The KULR VIBE suite of products and services have provided vibration analysis and mitigation to global companies across multiple industries and sectors. According to Fact.MR, an insights-driven global market intelligence company, the global vibration motor market is forecasted to reach $24.1 billion by 2032.
The Future is Energy + AI
We believe the future of KULR is Energy + AI. We are building our AI infrastructure on industry leading Nvidia and AMD semiconductor platforms, and they are hosted on a hybrid of private cloud and Microsoft Azure. As the world faces shortages of both technical expertise to design batteries and raw materials to build batteries, KULR aims to address this need with KULR ONE AI (K1AI). The Company is collecting large quantities of performance and safety test datasets for the most highly used commercial lithium-ion cells and combining that data with AI techniques to drive battery design and reduce engineering touch time to market. This product is to target the following markets:
| ● | Aerospace and defense systems, such as CubeSat batteries meeting JSC 20793 safety requirements by NASA |
| ● | Power tools and industrial equipment |
| ● | High-performance electric vehicles |
| ● | Electric vertical take-off and landing (“eVOTL”) |
| ● | Electric micro-mobility vehicles |
| ● | Residential and commercial energy storage systems |
Recent Developments
Liability Repayment
During the three months ended March 31, 2024, the Company issued 41,027,591 shares of common stock pursuant to SEPA Advance Notices submitted by the Company to Yorkville for aggregate proceeds of $8,979,058. Of the gross proceeds, $2,910,651 was retained by the Company to fund operations. The remaining proceeds were applied against the principal and interest owed in connection with the Prepaid Advance Liability. The Prepaid Advance Liability and the related accrued interest has been repaid in full during the first quarter of 2024.
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Standby Equity Purchase Agreement (“SEPA”)
Subsequent to March 31, 2024, and through May 13, 2024, the Company issued a total of 9,453,767 shares of common stock pursuant to SEPA Advance Notices submitted by the Company to Yorkville for aggregate proceeds of $4,321,479.
Merchant Cash Advance Agreement
On January 22, 2024, the Company entered into a merchant cash advance agreement (the “Cash Advance Agreement”) with a lender, pursuant to which Cash Advance Agreement the Company agreed to sell, and the lender agreed to purchase, the Company’s right, title and interest in and to $804,600 of the Company’s accounts receivables, for a purchase price of $504,900. The Company received $504,900 of cash (net of underwriting fees of $35,100) and paid finder’s fees in cash of $21,600 and finder’s fees to be issued in equity with an aggregate value of $16,200, with the obligation to repay a total of $804,600 over thirty-two weekly payments of $25,143.75, beginning January 30, 2024. The Cash Advance Agreement is secured by the Company’s accounts receivable and related cash receipts. On February 26, 2024, the parties added an addendum to the agreement for an early payoff discount whereby the Company will owe $756,000 if paid by March 22, 2024, or $783,000 if paid by April 22, 2024. The Company did not take advantage of the early payoff discount and will resume making weekly payments over the original thirty-two week term.
On February 26, 2024, the Company entered into a merchant cash advance agreement (the “Second Cash Advance Agreement”) with the lender mentioned above, pursuant to which Second Cash Advance Agreement the Company agreed to sell, and the lender agreed to purchase, the Company’s right, title and interest in and to $804,600 of the Company’s accounts receivables, for a purchase price of $502,200. The Company received $502,200 of cash (net of underwriting fees of $37,800) and paid finder’s fees in cash of $21,600 and finder’s fees to be issued in equity with an aggregate value of $16,200, with the obligation to repay a total of $804,600 over thirty weekly payments of $26,820, beginning February 29, 2024. The Second Cash Advance Agreement is secured by the Company’s accounts receivable and related cash receipts.
Promissory Notes
On April 2, 2024, the Company entered into an agreement (the “Promissory Note”), with a lender (the “Lender”), pursuant to which the Lender purchased an unsecured promissory note with an initial principal amount of $500,000. The Company received cash proceeds of $440,000, resulting in a discount of $60,000, made up of an original issue discount of $50,000 and debt issuance costs of $10,000. The Promissory Note carries an annual interest rate of 0%, which shall increase to 15% in the event of default, and has a maturity date of October 2, 2024, after which all outstanding principal and accrued interest will become immediately due.
On April 9, 2024, the Company entered into a note purchase agreement pursuant to which the Company issued an unsecured promissory note with an initial principal amount of $200,000 and which matures on the first anniversary of its issuance. The Company received cash proceeds of $200,000. The promissory note carries an annual interest rate of 16%. In the event the promissory note is prepaid within 9 months of its issuance, the holder is entitled to the repayment of principal and cash payment of interest equal to 12% of the prepayment amount.
Issuance of Non-Convertible Series A Voting Preferred Stock
On January 26, 2024, the Board of Directors (“Board”) of the Company, following extensive strategic evaluation, including consultation with advisors, approved, authorized, and ratified the issuance of 730,000 shares of previously designated Non-convertible Series A Voting Preferred Stock to the Chairman and Chief Executive Officer of the Company, Michael Mo, subject to certain limitations as set forth below. The issuance of up to 1,000,000 shares of Non-convertible Series A Voting Preferred Stock was previously approved and authorized by a vote of the majority of the stockholders of the Company.
The issuance is subject to the Board reserving the full and unequivocal right to revoke, rescind, transfer or otherwise cancel the issued Non-convertible Series A Voting Preferred Stock in the event Michael Mo is removed from any position with the Company or resigns from all positions with the Company. This conditional arrangement is designed to ensure that the voting power conferred by the Non-convertible Series A Voting Preferred Stock remains tied to the active leadership of the Company. This underscores the Board’s commitment to maintaining alignment with the long-term interests of the Company and its stockholders.
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The Independent Members of the Board have determined that the issuance represents a pivotal strategic move to reinforce and enhance the Company’s flexibility to optimize the Company’s negotiating position in any potential current and/or future engagements with commercial, financial, and/or strategic parties, and to provide defenses against potential hostile third-party actions.
Recent Shareholder Vote by Majority Written Consent
On February 9, 2024, the shareholders of the Company, acted by way of majority written consent (in lieu of a special meeting of stockholders) to approve resolutions authorizing the Company’s Board of Directors to take the following actions: (1) to issue shares of Common Stock to current or future engagements with commercial or strategic parties, which may result in issuances of over 20% of the issued and outstanding shares of Common Stock; (2) to amend the Company’s Bylaws to decrease the number of shares of Common Stock needed to establish a quorum for meetings of stock holders to thirty-three-and-one-third percent (33 1/3 )% of the outstanding voting securities of the Company; (3) to amend the Certificate of Incorporation of the Company to effect a reverse split within a ratio range between 1-for-2 and 1-for-80, which the Company has not taken the required action to effect this reverse split; (4) to issue shares of common stock, in connection with an existing financing facility, which may result in the potential issuance of over 20% of the issued and outstanding shares. The resolution was approved by shareholders holding approximately in aggregate of 55.72% of ownership percentage of the voting stock as of February 9, 2024.
Risks Associated with Ongoing Conflicts
The short and long-term worldwide implications of Russia’s invasion of Ukraine are difficult to predict at this time. The imposition of sanctions on Russia by the United States or other countries and possible counter sanctions by Russia, and the resulting economic impacts on oil prices and other materials and goods, could affect the price of materials used in the manufacture of our product candidates. If the price of materials used in the manufacturing of our product candidates increase, that would adversely affect our business and the results of our operations.
Additionally, we do not have operations or material net sales in Israel or Gaza and we currently do not expect the recent hostilities in that region to have a material impact on our business.
We cannot predict how the events described above will evolve. If the events continue for a significant period of time or expand to other countries, and depending on the ultimate outcomes of these conflicts, which remain uncertain, they could heighten certain risks disclosed in Item 1A in our Annual Report on Form 10-K which was filed with the SEC on April 12, 2024, including, but not limited to, adverse effects on macroeconomic conditions, including increased inflation, constraints on the availability of commodities, supply chain disruption and decreased business spending; cyber-incidents; disruptions to our or our business partners’ global technology infrastructure, including through cyber-attack or cyber-intrusion; adverse changes in international trade policies and relations; claims, litigation and regulatory enforcement; our ability to implement and execute our business strategy; terrorist activities; our exposure to foreign currency fluctuations; reputational risk; and constraints, volatility, or disruption in the capital markets, any of which could have a material adverse effect on our business, results of operations, cash flows and financial condition.
Compliance with NYSE American Continued Listing Requirements
On December 20, 2023, the Company received a notice of noncompliance (the “Stockholders’ Equity Notice”) from NYSE Regulation (“NYSE”) stating that it is not in compliance with Section 1003(a) (i) in the NYSE American Company Guide (the “Company Guide”) since the Company reported stockholders’ equity of $1,200,172 on September 30, 2023, and losses from continuing operations and/or net losses in its five most recent fiscal years. Section 1003(a) (iii) of the Company Guide requires a listed company to have stockholders’ equity of $6 million or more if the listed company has reported losses from continuing operations and/or net losses in its five most recent fiscal years.
As required by the Stockholders’ Equity Notice, on January 19, 2024, the Company submitted a plan (the “Plan”) to NYSE advising of actions it has taken or will take to regain compliance with the continued listing standards by June 20, 2025. NYSE staff will review the Company periodically for compliance with the initiatives outlined in the Plan. If the Company is not in compliance with the continued listing standards by June 20, 2025, or if the Company does not make progress consistent with the Plan during the Plan period, NYSE staff will initiate delisting proceedings as appropriate.
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On March 5, 2024, the Company received a notification from the NYSE that the Company’s plan to regain compliance with Section 1003 (a) (iii) of the Company Guide was accepted and so long as the Company meets its interim objectives, the Company will have until June 20, 2025, to regain compliance with the minimum stockholders’ equity requirement.
On February 12, 2024, the Company received an additional notice letter from NYSE stating that it is not in compliance with Section 1003(f)(v) of the Company Guide since the Company’s securities were trading at an average of less than $0.20 per share for 30 days. However, on May 1, 2024, the Company received a notification from the NYSE stating that the Company had regained compliance with Section 1003 (f) (v) of the Company Guide given the increase in the trading price of the Company’s securities.
Results of Operations
Three Months Ended March 31, 2024, Compared With Three Months Ended March 31, 2023
Revenue
Our revenues consisted of the following contract types:
| For the Three Months Ended | |||||
| March 31, | |||||
2024 |
| 2023 | ||||
Product sales | $ | 615,093 | $ | 1,629,258 | ||
Contract services |
| 1,134,011 |
| 130,544 | ||
Total Revenue | $ | 1,749,104 | $ | 1,759,802 | ||
For the three months ended March 31, 2024 and 2023, we generated $1,749,104 and $1,759,802 of revenues from 34 and 15 customers, respectively.
Revenue from product sales during the three months ended March 31, 2024, decreased by $1,014,165 or 62% compared to the three months ended March 31, 2023. Product sales include the sales of our component product, internal short circuit (“ISC”) battery cells and devices, and patented TRS technology. We had 25 product sales customers in the first quarter of 2024, compared with 13 in the first quarter of 2023. The decline in product sales can be attributed to several expected first half 2024 orders, which management now expects to receive in the second half of 2024.
Revenue from contract services during the three months ended March 31, 2024, increased by $1,003,467 or 769% compared to the three months ended March 31, 2023. Service revenues include certain research and development contracts and onsite engineering services. We had 14 contract services customers in the first quarter of 2024, compared with 5 in the first quarter of 2023. Four large contracts received during the first quarter of 2024 generated $328,000 of service revenues, while $461,000 of service revenues deferred at December 31, 2023, were recognized in the quarter.
Our customers and prospective customers are large organizations with multiple levels of management, controls/procedures, and contract evaluation/authorization. Furthermore, our solutions are new and do not necessarily fit into pre-existing patterns of purchase commitments. Accordingly, the business activity cycle between expression of initial customer interest to shipping, acceptance and billing can be lengthy, unpredictable, and lumpy, which can influence the timing, consistency and reporting of sales growth.
Cost of Revenue and Gross Profit
Cost of revenue consisted of the cost of our products as well as labor and production overhead expenses directly related to product sales or research contract services.
Product mix plays an important part in our reported average margins for any period. Because we are introducing new products at an early stage in our development cycle and the margins earned can vary significantly between periods, customers, products and services due to the learning process, customer negotiating strengths, and product mix.
For the three months ended March 31, 2024 and 2023, cost of revenues was $1,238,315 and $1,116,414, respectively, representing an increase of $121,901 or 11%. For the three months ended March 31, 2024 and 2023, gross profit was $510,789 and $643,388, respectively, a decline of $132,599 or 21%, which represented gross profit margins of 29% and 37%, respectively. The decrease in the
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current period profit margin was primarily due to (a) approximately $250,000 of labor and materials costs in the current period associated with a specific project which had no corresponding current period revenue; and (b) an approximately $167,000 increase in quarterly depreciation expense for revenue generating equipment that was put in service in the last month of the quarter ended March 31, 2023.
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, including non-cash stock-based compensation expenses. Research and development expenses are charged to operations as incurred.
For the three months ended March 31, 2024 and 2023, R&D expenses were $954,625 and $1,805,015, respectively, representing a decrease of $850,390 or 47%. The decrease was comprised primarily of $429,263 of labor costs allocated to cost of revenue in 1Q24 due to the increase in service revenue, $390,714 related to a planned decrease in R&D consulting services to conserve cash, partially offset by an increase in building related expenses of approximately $50,000 for the facility in Texas.
We expect that our R&D expenses will increase as we expand our future operations and as our cash position improves.
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 compensation, accounting and tax, consulting fees, travel and entertainment, rent expense, office expenses, and legal and professional fees.
For the three months ended March 31, 2024 and 2023, selling, general and administrative expenses were $4,212,898 and $5,099,091, respectively, representing a decrease of $886,193 or 17%. The decrease is primarily due to a planned decrease in outsourced services of $575,158, a decrease in conferences and seminars of $127,835 and a decrease of $95,889 for stock-based compensation.
Other Income (Expense)
For the three months ended March 31, 2024 and 2023, other expense was $352,142 and $342,143, respectively, representing a decrease of $9,999, or 3%. The change is primarily attributable to a decrease of $71,240 for amortization of debt discount in connection with the Prepaid Advance, a decrease of $27,229 for interest recorded in connection with the Prepaid Advance Liability, partially offset by an increase in the change in fair value of accrued issuable equity of $77,110 and an increase of $31,358 due to a 2023 loss on debt extinguishment related to the Prepaid Advance Liability.
Liquidity and Capital Resources
As of March 31, 2024 and December 2023, we had cash balances of $798,843 and $1,194,764, respectively, and a working capital deficit of $3,907,626 and $2,994,753, respectively.
For the three months ended March 31, 2024 and 2023, net cash used in operating activities was $3,907,406 and $4,759,039, respectively. Our net cash used in operations for the three months ended March 31, 2024, was primarily attributable to our net loss of $5,008,876, adjusted for non-cash expenses in the aggregate amount of $1,853,354, plus $751,884 of net cash used to fund changes in the levels of operating assets and liabilities. Our net cash used in operations for the three months ended March 31, 2023, was primarily attributable to our net loss of $6,602,861, adjusted for non-cash expenses in the aggregate amount of $1,414,023, partially offset by $429,799 of net cash generated by changes in the levels of operating assets and liabilities.
For the three months ended March 31, 2024 and 2023, net cash used in investing activities was $13,400 and $358,490, respectively. Net cash used in investing activities during the three months ended March 31, 2024, was related to purchases of property and equipment. Net cash used in investing activities during the three months ended March 31, 2023, was related to purchases of property and equipment, and the acquisition of an intangible asset.
For the three months ended March 31, 2024 and 2023, net cash provided by financing activities was $3,524,885 and $1,970,000, respectively. Net cash provided by financing activities during the three months ended March 31, 2024, was due to proceeds from SEPA Advance Notices totaling $2,910,651, and net proceeds from notes payable totaling $963,900, partially offset by notes payable
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repayments of $349,666. Net cash provided by financing activities during the three months ended March 31, 2023, was due to net proceeds from the prepaid advance liability of $1,970,000.
Future cash requirements for our current liabilities include approximately $5.8 million for accounts payable and accrued expenses, $1,259,534 for notes payable, and $435,707 for operating leases. The Company has also committed to spend $981,371 related to capital expenditures for automation equipment.
Future cash requirements for long-term liabilities as of March 31, 2024, include $250,000 for notes payable, and $1,188,259 for operating leases.
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 (“ASC 205-40”), 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, recurring use of cash in operations and declining working capital.
On December 20, 2023, we received a Stockholders’ Equity Notice stating we are not in compliance with Section 1003(a) (iii) of the Company Guide since we reported stockholders’ equity of $1,200,172 at September 30, 2023, and losses from continuing operations and/or net losses in our five most recent fiscal years. On February 12, 2024, we received a Letter from NYSE stating we are not in compliance with Section 1003(f) (v) of the Company guide since our securities were trading at an average of less than $0.20 per share for 30 days.
On March 5, 2024, the Company received a notification from the NYSE that the Company’s plan to regain compliance with Section 1003 (a) (iii) of the Company Guide was accepted and so long as the Company meets its interim objectives, the Company will have until June 20, 2025, to regain compliance with the minimum stockholders’ equity requirement. On May 1, 2024, the Company received a notification from the NYSE stating that the Company had regained compliance with Section 1003 (f) (v) of the Company Guide given the increase in the trading price of the Company’s securities.
On April 2, 2024, the Company received cash proceeds of $440,000 related to an unsecured Promissory Note comprised of an initial principal amount of $500,000 and discount of $60,000. The Promissory Note carries an annual interest rate of 0% and increases to 15% in the event of default and has a maturity date of October 2, 2024. See Note 14 – Subsequent Events – for additional information.
On April 9, 2024, the Company received cash proceeds of $200,000 related to an unsecured Promissory Note which matures on the first anniversary of its issuance and carries an annual interest rate of 16%. In the event the promissory note is prepaid within 9 months of its issuance, the holder is entitled to the repayment of principal and cash payment of interest equal to 12% of the prepayment amount. See Note 14 – Subsequent Events – for additional information.
Subsequent to March 31, 2024, and through May 13, 2024, the Company issued a total of 9,453,767 shares of common stock pursuant to SEPA Advance Notices submitted by the Company to Yorkville for aggregate proceeds of $4,321,479.
As of the date of the issuance of these consolidated financial statements, the Company has no additional commitments to obtain additional funding through future debt or equity financings, or that the Company will be able to obtain additional funds on commercially acceptable terms, if at all. There is no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations. The aforementioned factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements.
Our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplate our continuation as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values.
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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 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 financial statements that require estimation but are not deemed critical, as defined above.
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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 first quarter of 2024 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 April 12, 2024.
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 March 31, 2024, no director or officer of the Company or a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
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ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibit |
| Description |
31.1 |
| |
|
|
|
31.2 |
| |
|
|
|
32.1 |
| |
|
|
|
101.INS |
| Inline XBRL Instance* |
|
|
|
101.SCH |
| Inline XBRL Taxonomy Extension Schema* |
|
|
|
101.CAL |
| Inline XBRL Taxonomy Extension 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: May 15, 2024 | By: | /s/ Michael Mo |
|
| Michael Mo |
|
| Chief Executive Officer |
|
| (Principal Executive Officer) |
Dated: May 15, 2024 | By: | /s/ Shawn Canter |
|
| Shawn Canter |
|
| Chief Financial Officer |
|
| (Principal Financial and Accounting Officer) |
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