KULR

Business Context and Reporting Period

KULR Technology Group, Inc. (KULR) filed its Form 10-Q for the quarterly period ended June 30, 2026. The Company operates two primary segments: the Energy Management Platform (EMP), which designs and manufactures advanced battery systems for space, defense, and industrial applications, and the Mining of Digital Assets segment. KULR is classified as a non-accelerated filer and a smaller reporting company.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Decline: Revenue for the three months ended June 30, 2026, decreased 43% to $2.08 million from $3.65 million in the prior year period. This was driven by a 67% drop in product sales due to supply chain disruptions and a 46% decrease in digital asset mining revenue due to fewer active mining agreements and lower BTC prices.
• Significant Net Loss: The net loss for the six months ended June 30, 2026, widened to $50.99 million compared to a loss of $10.66 million in the same period in 2025. The primary driver was a $31.36 million unrealized loss on the change in fair value of digital assets (BTC), reflecting a decline in BTC market price from $87,502 to $58,554.
• Operating Expenses: Total operating expenses for the six months were $19.37 million, a slight decrease from $19.81 million in the prior year. This included a $1.27 million credit loss on accounts receivable and a $0.5 million credit loss on Auto-Vibe assets, which were not present in the prior year.
• Debt Financing: The Company drew down its full $20.0 million credit facility with Coinbase during the period. This loan was subsequently repaid in full after the period end using proceeds from the sale of BTC.

Guidance, Outlook, and Risks

• Bitcoin Strategy Shift: On May 7, 2026, the Board authorized the sale of digital assets to fund operations rather than issuing equity. Subsequent to June 30, 2026, the Company sold 333 BTC for approximately $21.5 million to repay its Coinbase loan.
• Operational Changes: The Company terminated its remaining digital asset mining services agreement effective July 31, 2026, relieving it of $2.1 million in future commitments. The Company no longer operates under any machine lease or mining services agreement.
• Liquidity: Management believes cash on hand ($12.8 million unrestricted) and BTC holdings ($63.9 million) are sufficient to meet obligations for the next 12 months. The At-The-Market (ATM) equity offering program remains paused through September 30, 2026.
• Risks: Key risks include significant customer concentration (Customer B represented 30% of EMP revenue in Q2 2026), volatility in digital asset prices, and supply chain disruptions affecting battery production.
• Accounting Revision: The Company corrected an immaterial error in previously reported grant revenue for Q1 2026, reducing revenue and gross profit by $0.9 million for that quarter.

Investor Verification Checklist

• Verify the valuation and liquidity of the remaining 1,091.69 BTC holdings, noting that 565 BTC were pledged as collateral (released upon loan repayment).
• Assess the impact of the termination of mining operations on future revenue streams and the transition to a pure-play battery technology company.
• Review the status of the $4.5 million Auto-Vibe receivable, which is past due and subject to ongoing settlement negotiations.
• Monitor the supply chain constraints cited as the cause for declining product sales and their effect on the ramp-up of KULR ONE products.
• Confirm the timeline for the resumption of ATM equity offerings if BTC sales prove insufficient to fund long-term growth initiatives.