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KULR Technology Group, Inc. - Quarter Report: 2022 June (Form 10-Q)

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: June 30, 2022

OR

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

For the transition period from                     to                   

Commission File Number:

001-40454

KULR TECHNOLOGY GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware

    

81-1004273

(State or Other Jurisdiction of Incorporation or Organization)

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

4863 Shawline Street, San Diego, California

    

92111

(Address of principal executive offices)

(Zip Code)

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

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

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

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock

KULR

NYSE American LLC

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

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

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

Large accelerated filer

Accelerated filer

Non-accelerated filer 

Smaller reporting company

 

Emerging growth company

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

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

As of August 11, 2022, there were 107,252,860 shares outstanding.

Table of Contents

KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022

TABLE OF CONTENTS

    

Page

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

3

Condensed Consolidated Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021

3

Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021

4

Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2022 and 2021

5

Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021

6

Notes to Unaudited Condensed Consolidated Financial Statements

8

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

21

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

27

Item 4. Controls and Procedures.

28

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

29

Item 1A. Risk Factors.

29

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

29

Item 3. Defaults Upon Senior Securities.

29

Item 4. Mine Safety Disclosures

29

Item 5. Other Information.

29

Item 6. Exhibits.

30

SIGNATURES

31

2

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, 

    

2022

    

2021

(unaudited)

Assets

 

  

 

  

Current Assets:

 

  

 

  

Cash

$

12,991,732

$

14,863,301

Accounts receivable

 

564,229

 

136,326

Inventory

 

284,572

 

191,311

Prepaid expenses and other current assets

 

1,786,145

 

570,360

Total Current Assets

 

15,626,678

 

15,761,298

Property and equipment, net

 

409,992

 

374,475

Vendor deposits

2,582,958

2,153,950

Security deposits

58,941

58,941

Intangible assets, net

210,663

216,952

Right of use asset

419,142

665,687

Deferred financing costs

72,800

Total Assets

$

19,381,174

$

19,231,303

 

 

  

Liabilities and Stockholders' Equity

 

 

  

Current Liabilities:

 

 

  

Accounts payable

$

301,480

$

454,507

Accrued expenses and other current liabilities

 

1,571,755

 

1,163,227

Accrued issuable equity

148,801

290,721

Lease liability, current portion

214,166

262,379

Loan payable, current portion

56,744

155,226

Deferred revenue

20,000

132,303

Notes payable, net of debt discount

4,836,019

Total Current Liabilities

 

7,148,965

 

2,458,363

Lease liability, non-current portion

212,852

407,898

Loan payable, non-current portion

98,482

Total Liabilities

7,460,299

2,866,261

 

 

  

Commitments and contingencies (Note 10)

 

  

 

  

 

  

 

  

Stockholders' Equity

 

  

 

  

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

 

 

Series A Preferred Stock, 1,000,000 shares designated; none issued and outstanding at June 30, 2022 and December 31, 2021

Series B Convertible Preferred Stock, 31,000 shares designated; none issued and outstanding at June 30, 2022 and December 31, 2021

 

 

Series C Preferred Stock, 400 shares designated; none issued and outstanding at June 30, 2022 and December 31, 2021

Series D Preferred Stock, 650 shares designated; none issued and outstanding at June 30, 2022 and December 31, 2021

Common stock, $0.0001 par value, 500,000,000 shares authorized; 107,223,240 shares issued and 107,061,536 outstanding at June 30, 2022 respectively, and 104,792,072 shares issued and outstanding at December 31, 2021

 

10,722

 

10,479

Additional paid-in capital

 

44,824,151

 

39,512,122

Treasury stock, at cost; 161,704 and 0 shares held at June 30, 2022 and December 31, 2021

(365,199)

Accumulated deficit

 

(32,548,799)

 

(23,157,559)

Total Stockholders' Equity

 

11,920,875

 

16,365,042

Total Liabilities and Stockholders' Equity

$

19,381,174

$

19,231,303

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

3

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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, 

    

2022

    

2021

    

2022

    

2021

Revenue

$

587,546

$

628,244

$

788,045

$

1,046,149

Cost of revenue

 

423,672

 

439,206

546,590

714,474

Gross Profit

 

163,874

 

189,038

 

241,455

 

331,675

 

 

 

 

Operating Expenses

 

 

 

 

Research and development

 

999,484

 

352,741

 

1,720,831

 

475,724

Selling, general, and administrative

 

4,326,162

 

2,723,303

 

7,861,085

 

4,216,114

Total Operating Expenses

 

5,325,646

 

3,076,044

 

9,581,916

 

4,691,838

Loss From Operations

 

(5,161,772)

 

(2,887,006)

 

(9,340,461)

 

(4,360,163)

 

 

 

 

Other (Expense) Income

 

 

 

 

Interest expense, net

 

(42,374)

 

(766)

 

(43,280)

 

(1,631)

Debt redemption costs

(140,000)

(140,000)

Amortization of debt discount

(103,219)

(20,074)

(103,219)

(128,198)

Change in fair value of accrued issuable equity

52,680

20,703

95,720

(111,874)

Total Other (Expense) Income, net

 

(92,913)

 

(140,137)

 

(50,779)

 

(381,703)

 

 

 

 

Net Loss

(5,254,685)

(3,027,143)

(9,391,240)

(4,741,866)

Deemed dividend to Series D preferred stockholders

(2,624,326)

(2,624,326)

Net Loss Attributable to Common Stockholders

$

(5,254,685)

$

(5,651,469)

$

(9,391,240)

$

(7,366,192)

Net Loss Per Share

 

 

 

 

- Basic and Diluted

$

(0.05)

$

(0.06)

$

(0.09)

$

(0.08)

 

 

 

 

Weighted Average Number of Common Shares Outstanding

 

 

 

 

- Basic and Diluted

 

104,545,799

 

92,513,238

 

103,537,473

 

91,302,814

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

4

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022

Additional

Total

Common Stock

Paid-In

Treasury Stock

Accumulated

Stockholders'

    

Shares

    

Amount

    

Capital

    

Shares

    

Amount

    

Deficit

    

Equity

Balance - January 1, 2022

 

104,792,072

$

10,479

$

39,512,122

$

$

(23,157,559)

$

16,365,042

Treasury stock held upon the vesting of restricted common stock

194,704

(439,728)

(439,728)

Common stock issued upon the exercise of warrants

 

70,143

 

7

 

87,672

 

 

87,679

Common stock issued upon the exercise of options

2,500

5,075

5,075

Stock-based compensation:

Common stock issued for services

6,000

1

43,159

43,160

Amortization of restricted common stock

519,231

519,231

Amortization of stock options

15,883

15,883

Amortization of market-based awards

730,048

730,048

Net loss

(4,136,555)

(4,136,555)

Balance - March 31, 2022

 

104,870,715

10,487

40,913,190

194,704

(439,728)

(27,294,114)

13,189,835

Treasury stock issued upon the exercise of options

(46,305)

(33,000)

74,529

28,224

Common stock issued upon the exercise of warrants

2,346,525

234

2,932,922

2,933,156

Stock-based compensation:

Common stock issued for services

6,000

1

10,260

10,261

Amortization of restricted common stock

422,128

422,128

Amortization of stock options

26,535

26,535

Amortization of market-based awards

565,421

565,421

Net loss

(5,254,685)

(5,254,685)

Balance - June 30, 2022

 

107,223,240

$

10,722

$

44,824,151

161,704

$

(365,199)

$

(32,548,799)

$

11,920,875

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021

Series B Convertible

Series D Convertible

Additional

Total

Preferred Stock

Preferred Stock

Common Stock

Paid-In

Accumulated

Stockholders'

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Deficit

    

Equity

Balance - January 1, 2021

 

13,972

$

1

$

89,908,600

$

8,991

$

17,355,968

$

(11,246,408)

$

6,118,552

Common stock issued upon conversion of Series B Convertible Preferred Stock

 

(13,972)

 

(1)

698,600

 

70

 

(69)

 

 

Stock-based compensation:

Common stock issued for services

 

 

20,000

 

2

 

49,798

 

 

49,800

Restricted common stock issued

2,000,000

200

(200)

Amortization of restricted common stock

 

 

 

 

126,625

 

 

126,625

Amortization of stock options

9,112

9,112

Amortization of market-based awards

130,245

130,245

Net loss

 

 

(1,714,723)

 

(1,714,723)

Balance - March 31, 2021

92,627,200

9,263

17,671,479

(12,961,131)

4,719,611

Issuance of Series D Convertible Preferred Stock, Common Stock, and warrants for cash (1)

650

1,300,000

130

6,134,870

6,135,000

Common stock issued upon the conversion of Series D Convertible Preferred Stock

(650)

3,170,730

317

(317)

Common stock issued upon the exercise of warrants

3,000,000

300

3,712,200

3,712,500

Stock-based compensation:

Common stock issued for services

55,000

6

109,994

110,000

Restricted common stock issued

415,000

42

(42)

Amortization of restricted common stock

433,689

433,689

Amortization of stock options

15,779

15,779

Amortization of market-based awards

489,774

489,774

Net loss

(3,027,143)

(3,027,143)

Balance - June 30, 2021

$

$

100,567,930

$

10,058

$

28,567,426

$

(15,988,274)

$

12,589,210

(1) Represents relative fair value of preferred stock issued, net of cash issuance costs of $365,000.

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 CASH FLOWS

(unaudited)

For the Six Months Ended

June 30, 

    

2022

    

2021

Cash Flows From Operating Activities:

 

  

 

  

Net loss

$

(9,391,240)

$

(4,741,866)

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

 

 

Amortization of debt discount

103,219

128,198

Non-cash lease expense

102,905

Depreciation and amortization expense

 

88,548

 

9,908

Change in fair value of accrued issuable equity

(95,720)

111,874

Stock-based compensation

 

2,286,467

 

1,473,863

Changes in operating assets and liabilities:

 

 

Accounts receivable

 

(427,903)

 

(559,292)

Inventory

 

(93,261)

 

(127,006)

Prepaid expenses and other current assets

 

(1,187,561)

 

(338,070)

Security deposits

(50,213)

Right of use asset

21,048

Accounts payable

 

(153,028)

 

53,140

Accrued expenses and other current liabilities

 

(31,199)

 

(51,986)

Lease liability

(99,619)

(20,392)

Deferred revenue

(112,303)

9,229

Total Adjustments

 

380,545

 

660,301

Net Cash Used In Operating Activities

(9,010,695)

 

(4,081,565)

Cash Flows From Investing Activities:

Vendor deposits for property and equipment

(429,008)

Purchases of property and equipment

(117,776)

(36,492)

Net Cash Used In Investing Activities

(546,784)

(36,492)

Cash Flows from Financing Activities:

 

 

Repayments of notes payable

 

 

(2,450,000)

Proceeds from notes payable (1)

4,750,000

Payment of issuance costs

(17,200)

Payment of financing costs incurred in connection with the SEPA

(72,800)

Proceeds from the sale of Series D convertible preferred stock, common stock and warrants

6,500,000

Proceeds from the exercise of options

5,075

3,712,500

Proceeds from the exercise of warrants

3,020,835

Payment of financing costs

(365,000)

Net Cash Provided By Financing Activities

 

7,685,910

 

7,397,500

Net (Decrease) Increase In Cash

 

(1,871,569)

 

3,279,443

Cash - Beginning of Period

 

14,863,301

 

8,880,140

Cash - End of Period

$

12,991,732

$

12,159,583

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

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

6

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued

(unaudited)

For the Six Months Ended

 

June 30, 

    

2022

    

2021

Supplemental Disclosures of Cash Flow Information:

    

    

Cash paid during the period for:

Interest

$

43,553

$

735

Non-cash investing and financing activities:

Right of use asset for lease liability

$

143,640

$

814,817

Beneficial conversion feature on Series D convertible preferred stock

$

$

2,624,326

Common stock issued upon the conversion of Series D convertible preferred stock

$

$

317

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

$

(439,728)

$

Common stock issued upon the conversion of Series B Convertible Preferred Stock

$

$

70

Treasury stock issued upon the exercise of stock options

$

74,529

$

Receivable recorded for pending cash deposit of stock option exercise proceeds

$

28,224

$

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

7

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1    ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTANTIES

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 satellite communications, directed energy systems and hypersonic vehicles, and applying them to mass market commercial applications, such as lithium-ion battery energy storage, electric vehicles, 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 June 30, 2022 and for the three and six months ended June 30, 2022 and 2021. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the operating results for the full year ending December 31, 2022 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, 2021 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on Form 10-K on March 28, 2022.

Risks and Uncertainties

In March 2020, the World Health Organization declared COVID-19, a novel strain coronavirus, a pandemic. During 2020 and continuing into 2022, the global economy has been, and continues to be, affected by COVID-19. While the Company continues to see signs of economic recovery as certain governments begin to gradually ease restrictions, provide economic stimulus and accelerate vaccine distribution, the rate of recovery on a global basis has been affected by resurgence of the virus or its variants in certain jurisdictions. For example, in response to an outbreak of infection in Shanghai, beginning in March 2022, governmental authorities in China implemented a lockdown order in that city, significantly slowing economic and business activity in that region. We continue to monitor the rapidly evolving situation and guidance from international and domestic authorities and may take additional actions based on their recommendations and requirements or as we otherwise see fit to protect the health and safety of our employees, customers, partners and suppliers.

The full extent of the future impact of COVID-19 on the Company’s operations and financial condition is uncertain. Accordingly, COVID-19 could have a material adverse effect on the Company’s business, results of operations, financial condition and prospects during 2022 and beyond, including the demand for its products, interruptions to supply chains, ability to maintain regular research and development and manufacturing schedules as well as the capability to meet customer demands in a timely manner. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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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, 2021, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note.

Liquidity

During April 2022, the Company received an aggregate of $2,933,156 of gross proceeds upon the exercise of warrants. On May 13, 2022, the Company issued a $5,000,000 promissory note to an investor for gross proceeds of $4,750,000.  On the same date, the Company entered into a Standby Equity Purchase Agreement, which gives the Company the right, but not the obligation, to sell up to $50,000,000 of its shares of common stock to the same investor during the commitment period. See Note 9 – Stockholders’ Equity for additional information on the aforementioned transactions.

As of June 30, 2022, the Company had cash of $12,991,732 and working capital of $8,477,713. During the six months ended June 30, 2022, the Company incurred a net loss of $9,391,240 and used cash in operations of $9,010,695.

While the Company anticipates it will continue to incur operating losses and use cash in operating activities for the foreseeable future, the Company believes that its current working capital, combined with the cash availability pursuant to the Standby Equity Purchase Agreement, is sufficient in comparison to its anticipated cash usage for a period of at least twelve months after the filing date of these financial statements.

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 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, accounts receivable, revenue and accounts payable.

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 $12,491,732 and $14,363,301 as of June 30, 2022 and December 31, 2021, respectively.

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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:

Revenues

Accounts Receivable

 

For the Three Months Ended

For the Six Months Ended

 

June 30, 

June 30, 

As of

    

As of

 

    

2022

    

2021

    

2022

    

2021

    

June 30, 2022

December 31, 2021

 

Customer A

 

*

69

%

12

%

62

%

*

42

%

Customer B

 

56

%

*

42

%

*

59

%

*

Customer C

 

28

%

*

21

%

*

30

%

34

%

Customer D

 

*

20

%

*

14

%

*

*

Customer E

 

*

*

*

12

%

*

*

Customer F

 

*

*

11

%

*

 

*

*

Customer G

*

*

*

*

*

21

%

Total

 

84

%  

89

%  

86

%  

88

%  

89

%  

97

%

*

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

Vendor concentrations are as follows for the three and six months ended June 30, 2022 and 2021, respectively:

For the Three Months Ended

 

For the Six Months Ended

    

June 30, 

 

June 30, 

    

2022

    

2021

 

2022

    

2021

Vendor A

 

65

%

*

51

%

*

Vendor B

 

*

85

%

*

 

43

%

Vendor C

 

*

*

*

48

%

Vendor D

 

*

*

17

%

*

 

65

%  

85

%

68

%  

91

%

*

Less than 10%

Inventory

Inventory is comprised of carbon fiber velvet (“CFV”) thermal interface solutions and internal short circuit batteries, which are available for sale. 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.

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Inventory at June 30, 2022 and December 31, 2021 was comprised of the following:

    

June 30, 

    

December 31, 

2022

2021

Work-in-process

$

91,188

$

5,500

Finished goods

 

193,384

 

185,811

Total inventory

$

284,572

$

191,311

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.

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 at the point in time that the Company satisfies its performance obligation under the contract, which is generally at the time the services are fulfilled and/or accepted by the customer.

The following table summarizes the Company’s revenue recognized in its consolidated statements of operations:

For the Three Months Ended

For the Six Months Ended

June 30, 

June 30, 

    

2022

    

2021

    

2022

    

2021

Product sales

$

557,664

$

577,360

$

730,263

$

755,609

Contract services

 

29,882

 

50,884

 

57,782

 

290,540

Total revenue

$

587,546

$

628,244

$

788,045

$

1,046,149

As of June 30, 2022 and December 31, 2021, respectively, the Company had $20,000 and $132,303 of deferred revenue, respectively, from contracts with customers. The contract liabilities represent payments received from customers for which the Company had not yet satisfied its performance obligation under the contract, or the customers have not officially accepted the goods or services provided under the contract. During the three and six months ended June 30, 2022, the Company recognized $0 and $112,303, respectively, that was included in deferred revenue in a previous period. During the three and six months ended June 30, 2021, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods.

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

As of June 30, 2022 and December 31, 2021, the Company had $29,887 and $84,324, respectively, of deferred labor costs, which is included in prepaid expenses and other current assets in the Company’s unaudited condensed consolidated balance sheets. Deferred labor costs represent costs to fulfill the Company’s contract service revenue. The Company will recognize the deferred labor costs as cost of revenues at the point in time that the Company satisfies its performance obligation under the respective contract, which is generally at the time the services are fulfilled and/or accepted by the customer.

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

    

For the Six Months Ended

June 30, 

June 30, 

2022

    

2021

2022

    

2021

Numerator:

 

  

    

  

 

  

    

  

Net loss attributable to common stockholders

$

(5,254,685)

$

(5,651,469)

$

(9,391,240)

$

(7,366,192)

Denominator:

 

  

 

  

 

  

 

  

Weighted-average common shares outstanding

 

106,348,239

 

94,513,238

 

105,578,313

 

92,639,830

Less: weighted-average unvested restricted shares

 

(2,019,011)

 

(2,000,000)

 

(2,187,514)

 

(1,337,017)

Add: weighted average accrued issuable equity

 

216,571

 

 

146,674

 

Denominator for basic and diluted net loss per share

104,545,799

92,513,238

103,537,473

91,302,814

Net loss per share:

 

  

 

  

 

  

 

  

Basic and diluted

$

(0.05)

$

(0.06)

$

(0.09)

$

(0.08)

The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive:

June 30, 

    

2022

    

2021

Unvested restricted stock

1,957,500

2,475,000

Unvested market -based equity awards

3,000,000

3,000,000

Options

 

482,216

 

540,000

Warrants

2,524,410

6,387,911

Total

 

7,964,126

 

12,402,911

Recently Adopted Accounting Pronouncements

In October 2020, the FASB issued ASU 2020-10 “Codification Improvements”, which improves consistency by amending the Codification to include all disclosure guidance in the appropriate disclosure sections and clarifies application of various provisions in the Codification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology. The guidance is effective for the Company beginning in the first quarter of fiscal year 2022 with early adoption permitted. The Company adopted ASU 2020-10 effective January 1, 2022 and its adoption did not have a material impact on its condensed consolidated financial statements.

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. Early adoption is permitted, including adoption in an interim period. If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The Company adopted ASU 2021-04 effective January 1, 2022 and its adoption did not have a material impact on its condensed consolidated financial statements.

NOTE 3    PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of June 30, 2022 and December 31, 2021, prepaid expenses and other current assets consisted of the following:

    

June 30, 

    

December 31, 

    

2022

    

2021

Marketing

$

726,422

$

10,231

Inventory deposits

691,006

309,688

Professional fees

164,558

65,118

Subscriptions

71,774

Insurance

40,733

69,925

Other

33,541

31,074

Deferred labor costs

29,887

84,324

Receivable for option exercise

28,224

Total prepaid expenses

$

1,786,145

$

570,360

Prepaid marketing costs consist of two sponsorship agreements with a marketing partner whereby the Company is required to make upfront payments. These agreements expire in September 2022 and December 2022. As of June 30, 2022, total prepayments made towards such contracts were $2,000,000, of which $722,321 remains unamortized and is included in prepaid marketing costs. See Note 10 – Commitments and Contingencies for additional information.

NOTE 4    VENDOR DEPOSITS

The Company entered into agreements with third party contractors for facility improvements, the design and build of a battery packaging and inspection automation system, and automated robotic tending system.

As of June 30, 2022, the Company had outstanding deposits of $2,582,958 in connection with these agreements.

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 5    ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

As of June 30, 2022 and December 31, 2021, accrued expenses and other current liabilities consisted of the following:

June 30, 

December 31, 

    

2022

    

2021

Legal and professional fees

 $

862,047

 $

418,154

Payroll and vacation

397,809

302,101

Research and development

 

194,444

 

146,158

Board compensation

56,541

45,680

Other

 

38,160

 

84,824

Marketing and advertising fees

20,563

37,810

Accrued cost of sales

2,191

128,500

Total accrued expenses and other current liabilities

$

1,571,755

$

1,163,227

NOTE 6    ACCRUED ISSUABLE EQUITY

A summary of the accrued issuable equity activity during the six months ended June 30, 2022 is presented below:

For the Six Months Ended

    

June 30, 2022

Beginning Balance

$

290,721

Additions

45,800

Cancelled accrued issuable equity obligations

(92,000)

Mark-to market

(95,720)

Ending Balance

$

148,801

Accrued Issuable Equity for Services

During the six months ended June 30, 2022, the Company entered into 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 $45,800.

During the six months ended June 30, 2022, the Company cancelled certain of its accrued issuable equity obligations of an aggregate of 33,333 of its shares, respectively, with an aggregate fair value of $92,000, respectively, due to a reduction in investor relation services.

During the six months ended June 30, 2022, the Company recorded an aggregate of $95,720 of gains related to the reduction in fair value of accrued issuable equity (see Note 9 – Stockholders’ Equity, Stock-Based Compensation for additional details). The fair value of the accrued but unissued shares as of June 30, 2022 was $148,801.

NOTE 7    LEASES

The Company leases office space in San Diego, California.  During the three and six months ended June 30, 2022, operating lease expense was $57,849 and $131,930, respectively. During the three and six months ended June 30, 2021, operating lease expense was $39,805 and $55,207, respectively. As of June 30, 2022, the Company did not have any financing leases.

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Maturities of lease liabilities as of June 30, 2022 were as follows:

Maturity Date

    

    

July 1 through December 31, 2022

$

114,999

2023

 

234,694

2024

 

99,187

Total lease payments

 

448,880

Less: Imputed interest

 

(21,862)

Present value of lease liabilities

 

427,018

Less: current portion

 

(214,166)

Lease liabilities, non-current portion

$

212,852

Supplemental cash flow information related to the lease was as follows:

    

For the Six Months Ended

 

June 30, 2022

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from operating lease

$

99,619

NOTE 8    NOTES AND LOANS PAYABLE

Note Purchase Agreement

On May 13, 2022, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with YAII PN, Ltd., a Cayman Island exempt limited partnership (the “Investor”), pursuant to which the Investor purchased a full recourse promissory note with an initial principal amount equal to $5,000,000 (the “Promissory Note”) for cash proceeds of $4,750,000. The Promissory Note included an original issue discount of $250,000, a structuring fee of $10,000, and legal fees of $7,200, which represents the difference between the principal and proceeds received. The original issue discount, along with structuring fees were recorded as a debt discount which is being amortized over the term of the Note using the effective interest rate method. The Promissory Note carries an interest rate of 10% per annum. The Company is required to repay the principal and interest in monthly installments by the maturity date of November 13, 2022.

A summary of notes payable activity during the six months ended June 30, 2022 is presented below:

    

Notes

    

Debt

    

    

Payable

Discount

Total

Balance, January 1, 2022

$

$

$

Proceeds from promissory note

 

5,000,000

 

 

5,000,000

Debt discount

 

 

(267,200)

 

(267,200)

Amortization of debt discount

 

 

103,219

 

103,219

Outstanding, June 30, 2022

$

5,000,000

$

(163,981)

$

4,836,019

Paycheck Protection Program Loan

On April 27, 2020, the Company received approximately $155,000 of cash proceeds pursuant to an unsecured loan provided in connection with the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security Act and applicable regulations (“CARES Act”).

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of 2020, the Company is eligible to apply for and receive forgiveness for all or a portion of their respective PPP Loans. Such forgiveness will be determined, subject to limitations, based on the use of the loan proceeds for certain permissible purposes as set forth in the PPP, including, but not limited to, payroll costs (as defined under the PPP) and mortgage interest, rent or utility costs (collectively, “Qualifying Expenses”) incurred during the 24 weeks subsequent to funding, and on the maintenance of employee and compensation levels, as defined, following the funding of the PPP Loan.

The initial term of the loan was two years and has been extended to five years with a maturity date of April 27, 2025.  The Company has applied for forgiveness of the PPP loan, which was approved by the Small Business Administration and the PPP loan was fully forgiven effective July 18, 2022. During the three and six months ended June 30, 2022, the Company recognized interest expense of $387 and $651, respectively, related to the PPP loan. As of June 30, 2022 and December 31, 2021, the Company’s accrued expense related to the loan was $2,352 and $1,701, respectively.

NOTE 9    STOCKHOLDERS’ EQUITY

Standby Equity Purchase Agreement

On May 13, 2022, KULR Technology Group, Inc. (the “Company”) entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd. (“Yorkville”). Pursuant to the SEPA, the Company shall have the right, but not the obligation, to sell to Yorkville up to $50,000,000 of its shares of common stock, par value $0.0001 per share, at the Company’s request any time during the commitment period commencing on May 13, 2022 and terminating on the earliest of (i) the first day of the month following the 24-month anniversary of the SEPA and (ii) the date on which Yorkville shall have made payment of any advances requested pursuant to the SEPA for shares of the Company’s common stock equal to the commitment amount of $50,000,000. Each sale the Company requests under the SEPA (an “Advance”) may be for a number of shares of common stock with an aggregate value of up to $5,000,000. The shares would be purchased at 98.0% of the Market Price (as defined below) and would be subject to certain limitations, including that Yorkville could not purchase any shares that would result in it owning more than 4.99% of the Company’s outstanding common stock at the time of an Advance (the “Ownership Limitation”) or a cumulative aggregate of 19.9% of the Company’s outstanding common stock as of the date of the SEPA (the “Exchange Cap”). The Exchange Cap will not apply under certain circumstances, including to any sales of common stock under the SEPA that equal or exceed the Minimum Price (as defined in Section 312.03 of the NYSE Listed Company Manual). “Market Price” is defined in the SEPA as the average of the VWAPs (as defined below) during each of the three consecutive trading days commencing on the trading day following the Company’s submission of an Advance notice to Yorkville. “VWAP” is defined in the SEPA to mean, for any trading day, the daily volume weighted average price of the Company’s common stock for such date on the NYSE American as reported by Bloomberg L.P. during regular trading hours. There were no issuances pursuant to the SEPA during the three and six months ended June 30, 2022.

Common Stock

During March 2022, the Company issued an aggregate of 70,143 shares of common stock upon the exercise of warrants pursuant to which the Company received an aggregate of $87,679 of gross proceeds.

During April 2022, the Company issued an aggregate of 2,346,525 shares of common stock upon the exercise of warrants pursuant to which the Company received an aggregate of $2,933,156 of gross proceeds. In connection with an inducement offer from the Company, the Company issued new warrants to purchase an aggregate of 2,346,525 shares of common stock at an exercise price of $1.00 per share (the “New Warrants”). The New Warrants expire on December 31, 2025. The value of the New Warrants provided to the exercising warrant holders was deemed to be an offering cost associated with an equity financing to raise capital, pursuant to ASU 2021-04.  Because the New Warrants were determined to be classified as equity, the credit to additional paid-in capital associated with the issuance of the New Warrants is offset by the debit to additional paid-in capital related to the offering cost. The warrants had a grant date value of $3,657,763, calculated using the Black Scholes pricing model with the following assumptions used: risk free rate – 2.88%, expected term – 3.69, expected volatility – 100%, expected dividends – 0%.

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

During the three and six months ended June 30, 2022, the Company issued an aggregate of 6,000 and 12,000 shares of immediately vested common stock with a grant date value of $10,261 and $53,421, respectively, for legal services.

During the six months ended June 30, 2022, the Company issued an aggregate of 35,500 shares of common stock upon the exercise of stock options, of which 33,000 shares were issued from treasury stock.

Treasury Stock

The 2018 KULR Technology Group Equity Incentive Plan (the “Plan”) allows for the grant of non-vested stock options, RSUs and RSAs to the Company’s employees pursuant to the terms of the Plan. Under the provision of the Plan, unless otherwise elected, participants fulfill their related income tax withholding obligation by having shares withheld at the time of vesting. The shares withheld are then transferred to the Company’s treasury stock at cost. During the six months ended June 30, 2022, the Company withheld 194,704 shares valued at $439,728 in connection with the vesting of restricted common stock awards during the period. Pursuant to the exercise of options, the Company transferred 33,000 shares that were held in treasury for an aggregate of $28,224 gross proceeds. As of June 30, 2022, the Company has 161,704 shares of held in treasury valued at $365,199.

Warrants

A summary of warrants activity during the six months ended June 30, 2022 is presented below:

Weighted

Weighted

Average

Average

Number of

Exercise

Remaining

Intrinsic

    

Warrants

    

Price

    

Term (Yrs)

    

Value

Outstanding, January 1, 2022

 

2,594,553

$

1.25

 

  

 

  

Issued

 

2,346,525

 

1.00

 

  

 

  

Exercised

 

(2,416,668)

 

(1.25)

 

  

 

  

Expired

 

 

 

  

 

  

Forfeited

 

 

 

  

 

  

Outstanding, June 30, 2022

 

2,524,410

$

1.02

 

3.5

$

1,343,954

Exercisable, June 30, 2022

 

2,524,410

$

1.25

 

3.5

$

1,343,954

See the Common Stock discussion above for additional information.

A summary of outstanding and exercisable warrants as of June 30, 2022 is presented below:

Warrants Outstanding

Warrants Exercisable

Weighted

Outstanding

Average

Exercisable

Exercise

Number of

Remaining Life

Number of

Price

    

Warrants

    

In Years

    

Warrants

$

1.25

 

177,885

 

3.5

 

177,885

$

1.00

 

2,346,525

 

3.5

 

2,346,525

 

2,524,410

 

3.5

 

2,524,410

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Stock Options

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 assumptions:

For The Six Months Ended

    

June 30, 

 

    

2022

    

2021

 

Risk free interest rate

1.18% -2.94

%

1.58

%

Expected term (years)

3.5 - 3.9

2.5 - 3.5

Expected volatility

116

%

93% - 109

%

Expected dividends

0

%

0

%

For the six months ended June 30, 2022 and 2021, the weighted average grant date fair value per share of options was $1.47 and $0.66, respectively.

A summary of options activity (excluding Market-Based Awards) during the six months ended June 30, 2022 is presented below:

    

    

Weighted

    

Weighted

    

    

Average

Average

Number of

Exercise

Remaining

Intrinsic

    

Options

    

Price

    

Term (Yrs)

    

Value

Outstanding, January 1, 2022

 

405,216

$

2.29

 

  

 

  

Granted

 

130,000

 

2.03

 

  

 

  

Exercised

 

(35,500)

 

0.76

 

  

 

  

Expired

 

 

 

  

 

  

Forfeited

 

(17,500)

 

2.03

 

  

 

  

Outstanding, June 30, 2022

 

482,216

$

1.65

 

3.5

$

167,783

Exercisable, June 30, 2022

 

207,355

$

1.19

 

2.4

$

125,267

The following table presents information related to stock options (excluding market-based option awards) as of June 30, 2022:

Options Outstanding

Options Exercisable

Weighted

 

Outstanding

Average

Exercisable

Exercise

Number of

Remaining Life

Number of

Price

    

Options

    

In Years

    

Options

$

0.66

 

152,486

 

1.7

 

140,750

$

1.28

10,000

$

1.55

20,000

$

1.99

10,000

3.9

3,958

$

2.05

50,000

4.1

3,333

$

2.08

 

10,000

 

3.9

 

3,958

$

2.13

20,000

4.2

6,250

$

2.25

10,000

4.6

625

$

2.27

29,730

4.0

10,980

$

2.31

50,000

$

2.43

20,000

4.2

6,250

$

2.44

 

100,000

 

3.7

 

31,250

482,216

2.4

207,355

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

As of June 30, 2022, there was $292,920 of unrecognized stock-based compensation expense related to the above stock options, which will be recognized over the weighted average remaining vesting period of 3.2 years.

Restricted Common Stock

The following table presents information related to restricted common stock (excluding Market-Based Awards) as of June 30, 2022:

Weighted Average

Grant Date

Shares of Restricted

Fair Value

    

Common Stock

    

Per Share

Non-vested balance, January 1, 2022

 

2,590,000

$

2.52

Granted

 

150,000

 

2.08

Vested

 

(782,500)

 

2.48

Non-vested shares, June 30, 2022

 

1,957,500

$

2.50

As of June 30, 2022, there was $4,365,706 of unrecognized stock-based compensation expense related to restricted stock that will be recognized over the weighted average remaining vesting period of 2.7 years.

Market-Based Awards

The following table presents information related to market-based awards outstanding as of June 30, 2022:

Number of

Grant Date

Award

    

Shares

    

Fair Value

Restricted stock units

 

1,500,000

$

2,911,420

Stock options

 

1,500,000

2,579,000

Total

 

3,000,000

$

5,490,420

The grant date value for the market-based awards is being amortized over the derived service periods of the awards. As of June 30, 2022, there was $2,083,108 of unrecognized stock-based compensation expense related to market-based awards which will be amortized over the remaining weighted average vesting period of 1.4 years.

As of June 30, 2022, none of the market-based awards have vested.

Stock-Based Compensation

During the three and six months ended June 30, 2022, the Company recognized stock-based compensation expense of $1,043,545 and $2,286,467, respectively, related to restricted common stock, warrants and stock options, of which $1,033,851 and $2,268,665, respectively are included within selling, general and administrative expenses, and $9,694 and $17,802, respectively are included within research and development expenses in the unaudited condensed consolidated statements of operations. During the three and six months ended June 30, 2021, the Company recognized stock-based compensation expense of $1,085,891 and $1,473,863, respectively, related to restricted common stock, warrants and stock options, of which $1,078,106 and $1,458,673, respectively are included within selling, general and administrative expenses, and $7,785 and $15,190, respectively are included within research and development expenses on the unaudited condensed consolidated statements of operations.

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KULR TECHNOLOGY GROUP, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following table presents information related to stock-based compensation for the three months ended June 30, 2022 and 2021:

    

For The Three Months Ended

For The Six Months Ended

    

June 30, 

June 30,

    

2022

    

2021

    

2022

    

2021

Common stock for services

$

10,261

$

110,000

$

53,421

$

159,800

Amortization of restricted common stock

 

422,128

 

433,689

 

941,359

 

560,314

Amortization of market-based awards

 

565,421

 

489,774

 

1,295,469

 

620,019

Stock options

 

26,535

 

15,779

 

42,418

 

24,891

Accrued issuable equity (common stock)

19,200

36,649

(46,200)

108,839

Total

$

1,043,545

$

1,085,891

$

2,286,467

$

1,473,863

NOTE 10    COMMITMENTS AND CONTINGENCIES

Sponsorship Agreement

On June 15, 2022, the Company amended the Second Sponsorship Agreement (see Note 3 - Prepaid Expenses and Other Current Assets) to extend the term through December 31, 2023. The agreement provides the Company with the right to publicize and highlight the sponsorship and display its name and logo during certain events and use digital marketing and social media platforms throughout the 2023 calendar year. The Company has committed to pay an aggregate of $1,450,000 in sponsorship fees in three installments, which are due July 2022, January 2023, and April 2023. On July 8, 2022, the Company paid $500,000 which will be recorded as a prepaid expense and amortized over the performance period of January 1, 2023 to December 31, 2023 using the straight-line method. The total remaining commitment amount to be paid for sponsorship agreements is $950,000.

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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 and for the three and six months ended June 30, 2022 and 2021 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.

Overview

KULR Technology Group, Inc., through our wholly-owned subsidiary KULR Technology Corporation, develops and commercializes high-performance thermal management technologies for batteries, electronics, and other components across an array of battery-powered applications. For aerospace and Department of Defense (“DOD”) applications, our solutions target high performance applications in direct energy, hypersonic vehicles and satellite communications. For commercial applications, our main focus is a total solution to battery safety and sustainability by which we aim to mitigate the effects of thermal runaway propagation which has been known to cause random fires in lithium-ion (“Li-ion”) batteries. This total battery safety solution can be used for electric vehicles, energy storage, battery recycling transportation, cloud computing and 5G communication devices. Our proprietary core technology is a carbon fiber material that provides what we believe to be superior thermal conductivity and heat dissipation for an ultra-lightweight and pliable material. By leveraging our proprietary cooling solutions that have been developed through longstanding partnerships with advanced technology users like NASA, the Jet Propulsion Lab and others, our products and services make commercial battery powered products safer and electronics systems cooler and lighter.

KULR’s business model continues to evolve from being a component supplier, to providing more design and testing services to our customers. The next step of evolution is to provide total system solutions to address market needs. In order to scale up as a systems provider more quickly and efficiently in the Li-ion battery energy storage and recycling markets, KULR will actively seek partners for joint venture, technology licensing and other strategic partnership models. The goal is to leverage the Company’s thermal design technology expertise to create market leading products, which KULR will take to market directly to capture more value for KULR shareholders.

In June, KULR achieved significant milestone in executing this strategy by securing an initial order for over 75 megawatt hours (“MWh”) of Li-ion battery cell capacity from Taiwan’s E-One Moli Energy Corporation (“Molicel”) to design and build battery applications with the highest safety ratings. As part of the strategic relationship, KULR would purchase over 700MWh of battery energy capacity to further accelerate its production and supply chain localization initiatives within North America. Securing this Molicel battery cell supply accelerates our ability to provide total solutions to high value customer applications with revenue potential that could exceed $350 million.

Through the partnership with Molicel, KULR will apply a holistic and comprehensive solution to battery safety and thermal energy management with a suite of technologies including its: Passive Propagation Resistant (“PPR”) design and testing, Internal Short Circuit (“ISC”) trigger cells, Fractional Thermal Runaway Calorimeter (“FTRC”) testing and AI-powered CellCheck battery management system, to target the following markets:

Aerospace and defense systems, such as CubeSat batteries meeting JSC 20793 safety requirements and the strategic battery reserve program initiated by NASA
Energy storage systems
High-performance electric vehicles and electric vertical take-off and landing (“eVOTL”)
Premium industrial and consumer electronics

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Recent Developments

Sales and Marketing

The KULR Sales and Marketing group further expanded with the onboarding of a Director of Product Marketing, Internal Sales Manager, and Technical Sales Lead. These individuals bring over 60+ years of experience to the KULR team and will bring more focus on sales related to energy storage and recycling. Additionally, KULR has added an additional Manufacturer’s Representative team to support East Coast sales. With the increase in product platforms and expanded sales and marketing capabilities, KULR now has in excess of 300 customers in our active sales funnel.

The Sales team were successful in landing four major commercial accounts for our SafeCase products with deployment trials underway. Additionally, with support of our major recycling partner, KULR were able to obtain UPS permits allowing for shipment of batteries utilizing the KULR SafeCase products. This is a major milestone for the expansion of SafeCase utilization.

Additionally, KULR received a follow-on order for the space-developed phase change material (“PCM”) heat sink technology from leading aerospace and defense company Lockheed Martin Corporation.

Operations and HR

The KULR organization took a tremendous leap forward in completing ISO 9001 certification for our San Diego headquarter facility during the quarter. This is an exceptional accomplishment for the team and demonstrates KULR’s dedication is pursuit of manufacturing excellence and operational controls.

Our fully automated battery testing capability has begun installation with initial processing capabilities of approximately 500,000 18650/21700 cells annually in support of NASA WI-37. System installation will complete in Q3’22 with full capacity processing initiating in Q4’22. This capability will be used to support NASA and DOD battery cell deployments as well as for internal demands related to KULR qualified cells deployments.

KULR hired an additional 10 permanent employees during the second quarter and maintains an outsource strategy for software development and volume TRS manufacturing. We have 42 full-time and two part-time employees as of June 30, 2022.

COVID-19

In March 2020, the World Health Organization declared COVID-19, a novel strain coronavirus, a pandemic. During 2020 and continuing into 2022, the global economy has been, and continues to be, affected by COVID-19. While the Company continues to see signs of economic recovery as certain governments begin to gradually ease restrictions, provide economic stimulus and accelerate vaccine distribution, the rate of recovery on a global basis has been affected by resurgence of the virus or its variants in certain jurisdictions. Although recent cases and deaths from the COVID-19 pandemic have generally declined in the United States, spread of COVID-19 in China recently resulted in a temporary lockdown covering all of Shanghai, China where our manufacturing partner has its headquarter. During the first quarter of 2022, we experienced significant impact to our business due to the COVID-19 lockdown in China. As of March 2022, inventory in excess of $325,000 could not be shipped due to the COVID-19 lockdown in Shanghai. The product was shipped, and revenue was recognized during the second quarter. COVID-related challenges have resulted in delays in product shipment, not cancellations. As restrictions ease in the coming months, we expect to make up for lost time and revenue as we move through our sizeable inventory. We are currently taking active steps to direct our production and supply chain activities to North America to geographically diversify and potentially reduce further COVID-19 impacts.

The full extent of the future impact of COVID-19 on the Company’s operations and financial condition is uncertain. Accordingly, COVID-19 could have a material adverse effect on the Company’s business, results of operations, financial condition and prospects during 2022 and beyond, including the demand for its products, interruptions to supply chains, ability to maintain regular research and development and manufacturing schedules, as well as the capability to meet customer demands in a timely manner. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Financing Activities

On May 13, 2022, we entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd. (“Yorkville”). Pursuant to the SEPA, the Company shall have the right, but not the obligation, to sell to Yorkville up to $50,000,000 of its shares of common stock any time during the commitment period commencing on May 13, 2022 and terminating on the earliest of (i) the first day of the month following the 24-month anniversary of the SEPA and (ii) the date on which Yorkville shall have made payment of any advances requested pursuant to the SEPA for shares of the Company’s common stock equal to the commitment amount of $50,000,000. Each sale the Company requests (an “Advance”) may be for a number of shares of common stock with an aggregate value of up to $5,000,000. The shares would be purchased at 98.0% of the Market Price (as defined in the SEPA) and would be subject to certain limitations. The Company agreed to file a prospectus supplement dated May 13, 2022 to the Company’s prospectus filed as part of the Registration Statement on Form S-3 that was declared effective on July 13, 2021. Concurrently with the SEPA, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with Yorkville, pursuant to which the Company issued to the Investor a promissory note with an initial principal amount equal to $5,000,000 (the “Promissory Note”) for which the Company received gross proceeds of $4,750,000. The Promissory Note carries an interest rate of 10% per annum and is payable in five monthly installments beginning on June 13, 2022.

The foregoing Is a summary description of certain terms of the SEPA, Note Purchase Agreement and Promissory Note. For a full description of all terms, please refer to the copies of the SEPA, the Note Purchase Agreement and the Promissory Note that are filed as Exhibit 10.1, Exhibit 10.2 and Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on May 16, 2022.

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Results of Operations

Three and Six Months Ended June 30, 2022 Compared With Three and Six Months Ended June 30, 2021

Revenue

Our revenues consisted of the following types:

    

For the Three Months Ended

    

For the Six Months Ended

    

June 30, 

June 30, 

2022

    

2021

    

2022

    

2021

Product sales

$

557,664

$

577,360

$

730,263

$

755,609

Contract services

 

29,882

 

50,884

 

57,782

 

290,540

Total revenue

$

587,546

$

628,244

$

788,045

$

1,046,149

For the three months ended June 30, 2022 and 2021, we generated $587,546 and $628,244 of revenues from 12 and 6 customers, respectively, representing a decrease of $40,698, or 6%. For the six months ended June 30, 2022 and 2021, we generated $788,045 and $1,046,149 of revenues, respectively, representing a decrease of $258,104, or 25%, resulting from three contracts received during the first quarter of 2021.

Revenue from product sales during the three months ended June 30, 2022 decreased by $19,696 or 3% compared to the three months ended June 30, 2021. Revenue from product sales during the six months ended June 30, 2022 decreased by $25,346 or 3% compared to the six months ended June 30, 2021. Product sales during these periods include sales of our component product, carbon fiber velvet (“CFV”) thermal management solution, internal short circuit (“ISC”) battery cells and devices, patented TRS technology, and thermal fiber thermal interface (“FTI”) materials.

Revenue from contract services during the three months ended June 30, 2022 decreased by approximately $21,002 or 41% compared to the three months ended June 30, 2021. Revenue from contract services during the six months ended June 30, 2022 decreased by approximately $232,758 or 80% compared to the six months ended June 30, 2021. The decrease in revenue for the six months ended June 30, 2022 is primarily attributable to three large DOD contracts received during the first quarter of 2021 generated $233,656 of revenues during the six months ended June 30, 2021. Our service revenues, which include certain research and development contracts and onsite engineering services, have not been hampered by restrictions arising from working under COVID-19 shelter-in-place regulations.

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 commitment. 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 Revenues

Cost of revenues consisted of the cost of our products as well as labor expenses directly related to product sales or research contract services.

Generally, we earn greater margins on revenue from products as compared to revenue from services, so product mix plays an important part in our reported average margins for any period. Also, we are introducing new products at an early stage in our development cycle and the margins earned can vary significantly between periods, customers and products due to the learning process, customer negotiating strengths, and product mix.

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For the three months ended June 30, 2022 and 2021, cost of revenues was $423,672 and $439,206, respectively, representing an increase of $15,534, or 4%. The increase was primarily due to increased labor costs to produce finished goods, costs to procure component material for a new product line, and shipping costs from our foreign manufacturer. The gross margin percentage was 28% and 30% for the three months ended June 30, 2022 and 2021, respectively. The decrease in margins realized during the three months ended June 30, 2022 is primarily attributable to an increase in headcount for production, new costs related to material for our new Safe Case product, and shipping costs from our foreign manufacturers.

For the six months ended June 30, 2022 and 2021, cost of revenues was $546,590 and $714,474, respectively, representing a decrease of $167,884, or 23%. The decrease was primarily due to decreased costs as a result of decreased revenues. The gross margin percentage was 31% and 32% for the six months ended June 30, 2022 and 2021, respectively. The decrease in margins realized during the six months ended June 30, 2022 is primarily attributable to an increase in headcount for production, new costs for material for our new Safe Case product, and shipping costs from our foreign manufacturers.

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, 3D engineering for a rechargeable battery and non-cash stock-based compensation expenses. Research and development expenses are charged to operations as incurred.

For the three months ended June 30, 2022 and 2021, R&D expenses were $999,484 and $352,741, respectively, representing an increase of $646,743 or 183%. The increase during 2022 was comprised primarily of $350,617 related to an increase in employee headcount spent on R&D and three new projects for automation, battery and drone design initiated in 2021, $148,513 related to cell check design services, $74,024 related to product development for high-areal capacity battery electrodes and 3D-engineering for solid state rechargeable batteries, $37,000 related to software design services and $17,950 related to drone engineering services.

For the six months ended June 30, 2022 and 2021, R&D expenses were $1,720,831 and $475,724, respectively, representing an increase of $1,245,107 or 262%. The increase is primarily comprised of $625,577 related to the increase in employee headcount spent on battery and drone design, $316,956 related to research in cell check technology, $222,020 related to research in solid state batteries and 3D engineering services, and $67,000 related to cell check design services.

We expect that our R&D expenses will increase as we expand our future operations.

Selling, General and Administrative

Selling, general and administrative expenses consisted primarily of stock-based compensation, payroll taxes and other benefits, consulting fees, registration fees, office expenses, rent expense, directors and officers insurance, travel and entertainment, marketing and advertising, and filing fees.

For the three months ended June 30, 2022 and 2021, selling, general and administrative expenses were $4,326,162 and $2,723,303, respectively, an increase of $1,602,859, or 59%. The increase is primarily due to increases of approximately $530,484 in labor costs as a result of 25 new hires during the last twelve months, $515,984 for expanded marketing and advertising expenses, $130,389 for legal and professional services, $123,518 for office related expenses and supplies resulting from the increase in headcount, $94,904 for travel and entertainment expenses due to the lifting of COVID-19 restrictions, $37,913 for membership dues and subscriptions, $37,120 for depreciation expense primarily due to facility improvements and computer equipment for the increase in headcount, and $26,825 for directors and officers insurance.

For the six months ended June 30, 2022 and 2021, selling, general and administrative expenses were $7,861,085 and $4,216,114, respectively, an increase of $3,644,971, or 86%. The increase is primarily due to increases of approximately $1,052,004 in labor costs as a result of 25 new hires during the last twelve months, $809,991 for stock-based compensation issued to employees and consultants, $536,383 for expanded marketing and advertising expenses, $319,723 for legal and professional services, $149,000 for NYSE registration fees, $234,406 for office related expenses and supplies, $119,166 for travel and entertainment due to the lifting of COVID-19 restrictions, $76,200 for rent expense due to the execution of a new operating lease agreement during the period, $69,645 for depreciation expense primarily due to facility improvements, and computer equipment for the increase in headcount, and $55,479 for directors and officers insurance.

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Other (Expense) Income

For the three months ended June 30, 2022 and 2021, net other expense was $92,913 and $140,137, respectively, representing a decrease of $47,224 or 34%. The change is primarily attributable to the decrease in debt redemption costs of $140,000, and the change in fair value of accrued issuable equity of $31,977, partially offset by an increase in the amortization of the debt discount and interest expense recorded in connection with notes payable issued in 2022 of $83,145 and $41,608, respectively.

For the six months ended June 30, 2022 and 2021, net other expense was $50,779 and $381,703, respectively, representing a change of $330,924 or 87%. The change is primarily attributable to the change in fair value of accrued issuable equity of $207,594, the decrease in debt redemption costs of $140,000, and a decrease in the amortization of debt discount of $24,979, partially offset by an increase in interest expense of $41,649 recorded in connection with the notes payable issued in 2022.

Liquidity and Capital Resources

As of June 30, 2022 and December 2021, we had cash balances of $12,991,732 and $14,863,301, respectively, and working capital of $8,477,713 and $13,302,935, respectively.

On May 13, 2022, the Company issued a $5,000,000 Promissory Note to an investor for gross proceeds of $4,750,000.  On the same date, the Company entered into the SEPA which gives the Company the right, but not the obligation, to sell up to $50,000,000 of its shares of common stock to the same investor during the commitment period.  See Financing Activities under Recent Developments above for additional details.

For the six months ended June 30, 2022 and 2021, cash used in operating activities was $9,010,695 and $4,081,565, respectively. Our cash used in operations for the six months ended June 30, 2022 was primarily attributable to our net loss of $9,391,240, adjusted for non-cash expenses in the aggregate amount of $2,485,419, as well as $2,104,874 of net cash used to fund changes in the levels of operating assets and liabilities. Our cash used in operations for the six months ended June 30, 2021 was primarily attributable to our net loss of $4,741,866, adjusted for non-cash expenses in the aggregate amount of $1,723,843, and $1,063,542 of net cash used to fund changes in the levels of operating assets and liabilities.

For the six months ended June 30, 2022 and 2021, cash used in investing activities was $546,784 and $36,492, respectively. Cash used in investing activities during the six months ended June 30, 2022 was related to deposits paid for equipment of $429,008 and purchases of property and equipment of $117,776.

For the six months ended June 30, 2022 and 2021, cash provided by financing activities was $7,685,910 and $7,397,500, respectively. Cash provided by financing activities during the six months ended June 30, 2022 was due to proceeds from a promissory note of $4,750,000, proceeds from the exercise of warrants of $3,020,835 and proceeds from the exercise of options of $5,075, partially offset by issuance costs related to the note payable and deferred financing costs related to the SEPA for $17,200 and $72,800, respectively. Cash provided by financing activities during the six months ended June 30, 2021 was due to $6,500,000 of proceeds from the sale of preferred stock and $3,712,500 received in connection with the exercise of warrants, partially offset by the $2,450,000 of principal repayments on notes payable and $365,000 of financing costs paid during the period.

Future cash requirements for our current liabilities include approximately $5,056,744, of principal for the promissory note and loan payable, $2,087,402 for accounts payable and accrued expenses (including lease liabilities). The Company has also committed to spend $1,800,000 related to various sponsorship agreements, $981,648 related to capital expenditures for the construction of a new automation facility, $357,119 for automation and testing equipment, and $610,960 for research and development. Cash requirements for long term liabilities consist of $212,852 for lease payments, $98,482 for loans payable, and $49,350 for research and development. The Company intends to meet these cash requirements from its current cash balance, proceeds from the SEPA and from future revenues.

In March 2020, the World Health Organization declared COVID-19, a novel strain coronavirus, a pandemic. During 2020 and continuing into 2022, the global economy has been, and continues to be, affected by COVID-19. While the Company continues to see signs of economic recovery as certain governments begin to gradually ease restrictions, provide economic stimulus and accelerate vaccine distribution, the rate of recovery on a global basis has been affected by resurgence of the virus or its variants in certain jurisdictions. The Company continues to monitor the impact of COVID-19 on its business and operational assumptions; however, given the uncertainty around the extent and timing of the potential future spread or mitigation of the Coronavirus and around the imposition or relaxation of protective measures, we cannot reasonably estimate the impact to our future results of operations, cash flows, or financial condition.

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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.

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.

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

For a description of our critical accounting estimates, see Critical Accounting Estimates in Item 7 of our Annual Report on Form 10-K which was filed with the SEC on March 28, 2022.

Recent Accounting Pronouncements

See Note 2 – Summary of Significant Accounting Policies of our unaudited condensed consolidated financial statements included within this Quarterly Report for a summary of recently adopted accounting pronouncements.

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.

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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 not effective at the reasonable assurance level.

During the year ended December 31, 2021, our management identified a material weakness in our internal control over financial reporting whereas we did not design or maintain effective controls to ensure that there is an independent review and approval of electronic payments (wires, EFT’s, ACH’s and credit card payments) as our policy of providing timely support to ensure completeness and accuracy of the payment was not followed which continued to exist as of June 30, 2022. We are currently in the process of implementing a detailed plan for remediation of the material weakness, including developing and maintaining preventative controls around the electronic payment process to ensure proper segregation of duties.

Changes in Internal Control Over Financial Reporting

Except as disclosed above, there has been no change in our internal control over financial reporting that occurred during the second quarter of 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over current or future 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 28, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During April 2022, the Company issued new warrants to purchase an aggregate of 2,346,525 shares of common stock at an exercise price of $1.00 per share. The new warrants expire on December 31, 2025.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Exhibit 
No.

   

Description

31.1

 

Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

 

 

 

31.2

 

Certification pursuant to 18 U.S.C. Section 1350 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)*

*Filed herewith. A summary of the accrued issuable equity activity during the six months ended June 30, 202

**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 15, 2022

By:

/s/ Michael Mo

 

 

Michael Mo

 

 

Chief Executive Officer

 

 

(Principal Executive Officer)

Dated: August 15, 2022

By:

/s/ Simon Westbrook

 

 

Simon Westbrook

 

 

Chief Financial Officer

 

 

(Principal Financial and Accounting Officer)

31