KULR Technology Group, Inc.

NOTE 1** – ORGANIZATION, NATURE OF OPERATIONS AND BASIS OF PRESENTATION**

Organization and Operations

KULR Technology Group, Inc., through its wholly-owned subsidiary, KULR Technology Corporation (collectively referred to as “KULR” or the “Company”), delivers cutting-edge energy storage solutions for space, aerospace, defense, telecom, and other critical infrastructure. KULR leverages its in-house battery design expertise, comprehensive cell and battery testing suite, and battery fabrication and production capabilities. The Company offers commercial-off-the-shelf and custom next-generation energy storage systems in rapid timelines.

Reverse Stock Split

On June 23, 2025, the Company effected a reverse stock split wherein each eight shares of common stock outstanding immediately prior to the effective date was combined and converted into one share of common stock (the “Reverse Stock Split”). All share and per share amounts in this Quarterly Report have been adjusted to reflect the effect of the Reverse Stock Split as if the Reverse Stock Split occurred as of the earliest period presented.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of September 30, 2026, and for the three and nine months ended September 30, 2026 and 2025. The results of operations for the three and nine months ended September 30, 2026, are not necessarily indicative of the operating results for the full year ending December 31, 2026, or any other period. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and related disclosures as of December 31, 2025 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on Form 10-K on March 31, 2026. The accompanying condensed consolidated balance sheet as of December 31, 2025, has been derived from the audited financial statements included in the Form 10-K.

Discontinued Operations

In July 2026, the Company made a decision to exit its Bitcoin (“BTC”) mining operations, which previously comprised the Mining of Digital Assets reportable segment. All BTC mining operations ceased effective July 31, 2026. The Company determined that the exit represents a strategic shift that has a major effect on its operations and financial results. Accordingly, the results of the BTC mining operations are presented as discontinued operations in the condensed consolidated statements of operations and cash flows for all periods presented, and prior-period amounts have been recast to conform to the current-period presentation. In addition, all assets and liabilities related to the BTC mining operations have been separately identified on the December 31, 2025 condensed consolidated comparative balance sheet. No assets or liabilities related to the BTC mining operations remained as of September 30, 2026. Following the exit, the Company operates as asingle reportable segment, the Energy Management Platform (“EMP”) segment. Unless otherwise noted, the notes to the condensed consolidated financial statements relate to continuing operations. See Note 3 – Discontinued Operations. The decision to exit BTC mining operations preceded the Company’s decision made in September 2026 to sell all BTC (see Note 4 – Digital Assets).

Liquidity

As of September 30, 2026, the Company had unrestricted cash of approximately $54.5 million. The Company sold all of its BTC during the three months ended September 30, 2026 for net proceeds of approximately $80.1 million, a portion of which was used to repay its outstanding loan balance of $20.0 million, plus interest (see Note 4 – Digital Assets). The Company believes that its cash on hand and other working capital will be sufficient to meet its obligations as they become due over the next twelve months from the date these condensed consolidated financial statements were issued.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Since the date of the Annual Report on Form 10-K for the year ended December 31, 2025, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note.

Use of Estimates

Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant estimates used in these unaudited condensed consolidated financial statements include, but are not limited to, revenue recognition, allowance for credit losses, valuation of inventory, valuation of intangible assets, digital assets, property, plant and equipment, stock-based compensation, deferred revenue and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates.

Restricted Cash

Restricted cash consists of cash held at a financial institution as collateral for a letter of credit of $284,050 issued in connection with the Company’s lease of its Houston, Texas facility (the “Houston Facility Lease”) entered into during the nine months ended September 30, 2026 (see Note 9 – Leases). The collateral requirement decreases by approximately 50% each year during the lease term, therefore a portion of the restricted cash has been classified as current. The following table provides a reconciliation of cash and restricted cash reported within the condensed consolidated balance sheets to the total of such amounts shown in the condensed consolidated statements of cash flows:

Concentrations of Credit Risk

Financial assets that potentially subject the Company to significant concentrations of credit risk consisted primarily of cash, accounts receivable and Auto-Vibe assets. The Company’s concentrations of credit risk also include concentrations from key customers and vendors.

Cash Concentrations

A significant portion of the Company’s cash is held at one major financial institution. The Company has not experienced any losses in such accounts. Cash held in US bank institutions is currently insured by the FDIC up to $250,000 at each institution. There were uninsured cash balances of $54,244,086 and $12,800,188 as of September 30, 2026 and December 31, 2025, respectively.

Customer and Revenue Concentrations

During the three and nine months ended September 30, 2026 and 2025, the Company had certain customers whose revenue individually represented 10% or more of total revenue from continuing operations, or whose accounts receivable balances individually represented 10% or more of total accounts receivable, as follows:

There is no assurance the Company will continue to receive significant revenue from any of these customers. Any reduction or delay in operating activity from any of the Company’s significant customers, or a delay or default in payment by any significant customer, or termination of agreements with significant customers, could materially harm the Company’s business and prospects. As a result of the Company’s significant customer concentrations, its gross profit and results from operations could fluctuate significantly due to changes in political, environmental, or economic conditions, or the loss of, reduction of business from, or less favorable terms with any of the Company’s significant customers.

Custody of Digital Assets

Prior to their sale, the Company held its digital assets, consisting solely of BTC, in a custodial account at Coinbase, a U.S. based, institutional-grade custodian. During the three and nine months ended September 30, 2026, the Company sold all of its BTC previously held, totaling 1,099.09 BTC, for gross proceeds of $80,220,670, or net proceeds of $80,100,339 after deducting fees and commissions of $120,331 (see Note 4 – Digital Assets). As of September 30, 2026, the Company heldno digital assets and, accordingly, was no longer exposed to custodial risk related to digital assets.

Vendor Concentrations

During the three and nine months ended September 30, 2026 and 2025, the following vendors individually represented 10% or more of total purchases from continuing operations:

*Less than 10%

Accounts Receivable and Allowance for Credit Losses

Accounts receivable are carried at their contractual amounts, less an estimate for credit losses. The Company recognizes an allowance for credit losses on receivables in accordance with Accounting Standards Codification (“ASC”) 326-20, Financial Instruments — Credit Losses. Receivables are stated at amortized cost, net of the allowance for credit losses. The allowance represents the Company’s best estimate of expected lifetime credit losses inherent in the receivable portfolio as of each reporting date. The Company evaluates credit losses using an aging-based method. Receivables are grouped into pools based on shared risk characteristics, including customer type and aging status.

The Company uses its historical loss experience and makes appropriate adjustments for current and forecasted macroeconomic conditions, known customer financial distress, or other specific risk factors. A receivable is written off against the allowance when the Company determines that all reasonable collection efforts have been exhausted. As of September 30, 2026 and December 31, 2025, the allowance for credit losses on customer accounts receivable was $3,063,275 and $1,450,000, respectively. Of the $3,063,275 allowance as of September 30, 2026, $2,345,878 was recorded against current accounts receivable and $717,397 was recorded against noncurrent accounts receivable. See Note 5 – Auto-Vibe Assets for information regarding a separate allowance for credit losses of $500,000 on the Auto-Vibe receivable.

Digital Assets

The Company previously invested in BTC, which is a digital asset. Digital assets are subject to limited regulatory oversight and there is no central marketplace for asset exchange. Supply is determined by a computer code, not by a central bank, and prices have been extremely volatile. Certain digital asset exchanges have been closed due to fraud, failure or security breaches.

Prior to the sale of all of its BTC during the three months ended September 30, 2026, the Company reflected digital assets at fair value on the condensed consolidated balance sheets and the activity from the remeasurement of digital assets at fair value on the condensed consolidated statements of operations and cash flows. During the three and nine months ended September 30, 2026, the Company sold all of its BTC previously held, totaling 1,099.09 BTC, for net proceeds of $80,100,339, resulting in cumulative realized losses of $30,221,546. As of September 30, 2026, the Company heldno digital assets. See Note 4 – Digital Assets for further information.

Digital assets were valued using prices as reported by the Company’s principal market, Coinbase, as of the date and time of determination. Since the digital assets are traded on a 24-hour period, the Company used the price at 4:00pm Eastern Standard Time (“EST”) to value its digital assets.

Asset Acquisition

Under ASC 805 Business Combinations, the acquisition of a business requires application of the acquisition method of accounting which recognizes and measures all identifiable assets acquired and liabilities assumed at their fair values as of the date the Company obtains control. Goodwill arising in a business combination represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired. ASC 805 allows a measurement period, not to exceed one year from the date of acquisition, to make any changes in the estimated fair values of the net assets that were not final at the acquisition date, which would result in an adjustment to goodwill.

Contingent consideration related to a business combination, if any, is classified as either an asset or a liability and remeasured to fair value each reporting period, until the contingency is resolved. Changes in fair value of contingent consideration period-over-period are recognized in earnings. Acquisition-related expenses for a business combination are recognized separately from the business combination and are expensed as incurred.

Acquisitions of assets that do not qualify as a business are accounted for under ASC 805-50 using a cost accumulation model. Costs are allocated to assets acquired based on relative fair values and no goodwill is recognized in an asset acquisition. Direct costs related to the acquisition of assets are capitalized as part of the cost of the acquired assets.

Inventory

The Company capitalizes inventory costs associated with products when future commercialization is considered probable, and a future economic benefit is expected to be realized. These costs consist of finished goods, raw materials, manufacturing-related costs, transportation and freight, and other indirect overhead costs.

Inventory is comprised of carbon fiber velvet thermal interface solutions and internal short circuit batteries, which are available for sale, as well as raw materials related primarily to the manufacture of safe cases, battery assemblies under the Company’s KULR ONE platform, including space, defense and aviation battery assemblies (“KULR ONE products”) and other battery products. Safe cases provide a safe and cost-effective solution to commercially store and transport lithium batteries and mitigate the impacts of cell-to-cell thermal runaway propagation. Inventories are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. The Company periodically reviews for slow-moving, excess or obsolete inventories. Products that are determined to be obsolete, if any, are written down to net realizable value.

On occasion, the Company pays for inventory prior to receiving the goods. These payments are recorded as inventory deposits until the goods are received and are reflected as a current asset in the condensed consolidated balance sheets. As of September 30, 2026 and December 31, 2025, inventory deposits were $1,134,438 and $839,644, respectively.

Inventory at September 30, 2026 and December 31, 2025 consisted of the following:

Inventory is held primarily at the Company’s facilities in Webster and Houston, Texas, with certain inventory held at international contract manufacturers.

Fair Value Measurements

The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurement” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and establishes required disclosures about fair value measurements.

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

The carrying amounts of the Company’s financial assets and financial liabilities, such as cash, restricted cash, accounts receivable, grant receivable, accounts payable, accrued expenses and other current liabilities approximate fair values due to the short-term nature of these instruments.

The carrying amount of the Company’s digital assets was recorded at fair value in accordance with ASC 820, based on quoted prices on the active exchange that the Company determined was the principal market for such assets (Level 1 inputs). The cost basis of digital assets was determined using the first-in, first-out method of each unit received. Changes in fair value of digital assets are recorded to other income (expense), net in the Company’s condensed consolidated statement of operations.

Revenue Recognition

The Company recognizes revenue in accordance with ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation.

The following five steps are applied to achieve that core principle:

The Company’s sales contracts typically have 30-90 day payment terms. For sales contracts with payment terms of more than one year, the Company determines whether there is a significant financing component, and if so, revenue is recognized at an amount that represents the present value of the payments, and interest income is recognized over the contractual period using the effective interest method, reflected in other income on the condensed consolidated statements of operations.

The Company evaluates its role under ASC 606 to determine whether it acts as a principal or agent where third-party sellers fulfill or ship orders to customers. The Company recognizes revenue on a gross or net basis depending on whether it acts as a principal or an agent in the transaction. The determination is based on an evaluation of whether the Company controls the specified good or service before it is transferred to the customer.

During the three and nine months ended September 30, 2026 and 2025, the Company recognized revenue primarily from the following different types of contracts:

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

Contract Balances

The timing of revenue recognition, billings and cash collections results in accounts receivable, and deferred revenues (contract liabilities) on the condensed consolidated balance sheets. Generally, billing occurs subsequent to revenue recognition. However, we sometimes receive advances or deposits from our customers resulting in contract liabilities (See Deferred Revenue, below). As of September 30, 2026 and December 31, 2025, the Company had customer accounts receivable, net of $6,905,804 and $3,075,328, respectively.

Deferred Revenue

Deferred revenue represents payments received from customers for which the Company had not yet satisfied its performance obligation under the contract, or the customers or grantors have not officially accepted the goods or services provided under the contract. The Company expects to satisfy the remaining performance obligations and recognize the revenue related to its deferred revenue balance within the next twelve months. The Company did not recognize revenue from performance obligations satisfied in prior periods during the three months ended September 30, 2026 or 2025. During the nine months ended September 30, 2026 and 2025, the Company recognized $104,478 and $21,489 of revenue that was deferred at the previous year end, respectively. Deferred revenues were $334,188 and $107,267 as of September 30, 2026 and December 31, 2025, respectively.

As of September 30, 2026 and December 31, 2025, deferred revenue included deferred grant revenue of $268,823 and $0, respectively, related to the Texas Grant. Because government grants are not within the scope of ASC 606 and the grantor is not a customer, this amount is not customer deferred revenue; it represents amounts received under the Texas Grant in advance of recognizing the related grant revenue, which is recognized as qualifying costs are incurred. See “Grant revenue” within Note 2 – Summary of Significant Accounting Policies for further information.

Deferred Labor Costs

As of September 30, 2026 and December 31, 2025, the Company had $366,504 and $216,874, respectively, of deferred labor costs, which is part of prepaid expenses and other current assets in the Company’s condensed consolidated balance sheets. Deferred labor costs represent costs incurred to fulfill the Company’s deferred contract service revenue. The Company will recognize the deferred labor costs as cost of revenue 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.

Research and Development Costs

Research and development costs are expensed as incurred and consist primarily of personnel-related costs, materials and supplies, third-party engineering and development services, and testing and related costs. Research and development expenses were $5,019,496 and $2,323,010 for the three months ended September 30, 2026 and 2025, respectively, and $9,775,655 and $7,209,664 for the nine months ended September 30, 2026 and 2025, respectively.

Advertising and Marketing Costs

Advertising costs are expensed in the period incurred. Advertising costs charged to operations for the three months ended September 30, 2026 and 2025 were $402,735 and $1,040,240, respectively. Advertising costs charged to operations for the nine months ended September 30, 2026 and 2025 were $976,004 and $4,347,071, respectively, and are included in selling, general and administrative expense in the condensed consolidated statements of operations.

Stock-Based Compensation

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award since the fair value of the award is more readily determinable than the value of the services. The fair value of the award is measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Upon the exercise of an award, the Company generally issues new shares of common stock out of its authorized shares, but may issue treasury stock when available. Forfeitures are recorded as they occur.

Operating and Finance Leases

The Company determines if an arrangement is a lease or contains a lease at inception. The Company recognizes a liability to make lease payments, the “lease liability”, and an asset representing the right to use the underlying asset during the lease term, the “right-of-use asset”. The lease liability is measured at the present value of the remaining lease payments, discounted at either (1) the rate implicit in the lease, if available, or (2) the Company’s incremental borrowing rate. The right-of-use asset is measured at the amount of the lease liability adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, any unamortized initial direct costs, and any impairment of the right-of-use asset.

Classification criteria in ASC 842 is applied in order to determine whether the lease is a finance lease or an operating lease. Operating lease expense is recorded on a straight-line basis over the life of the lease and is included in research and development and selling, general, and administrative expenses on the accompanying condensed consolidated statements of operations. Finance lease right-of-use assets are depreciated on a straight-line basis over the estimated useful life of the asset; the depreciation expense is included in cost of revenue on the accompanying condensed consolidated statements of operations. Finance lease liabilities are subsequently remeasured by increasing the liability to reflect interest accrued during a period and decreasing the liability to reflect payments made during the period. Interest expense incurred on finance leases is included in interest expense on the condensed consolidated statements of operations.

Net Income (Loss) Per Common Share

Basic net income (loss) per common share is computed by dividing income (loss) from continuing operations, income (loss) from discontinued operations, and net income (loss) by the weighted average number of vested common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing those same amounts by the weighted average number of common and dilutive common-equivalent shares outstanding during the period. Income (loss) from continuing operations is used to determine whether potential common shares are dilutive.

The following table presents the computation of basic and diluted net income (loss) per share for continuing operations, discontinued operations and net income (loss):

The following shares were excluded from the calculation of weighted average dilutive common shares for the three and nine months ended September 30, 2026 and 2025 because their inclusion would have been anti-dilutive:

For purposes of the diluted net income per share calculation for the three months ended September 30, 2026, unvested restricted stock units, unvested restricted stock awards and stock options were considered to be potentially dilutive securities, and those that were dilutive (122,664 incremental shares, determined using the treasury stock method) were included in the calculation of diluted net income per share for the three months ended September 30, 2026.

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 net income (loss) per share.

Subsequent Events

The Company has evaluated subsequent events through the date on which these unaudited condensed consolidated financial statements were issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements, except as disclosed in Note 13 – Subsequent Events.

Segment Reporting

Operating segments are components of an enterprise for which separate financial information is available and regularly reviewed by management in deciding how to allocate resources and evaluate performance. Management has determined that the Company operates as a single operating and reportable segment, the EMP, as discussed more fully in Note 12. Prior to its exit from BTC mining in July 2026, the Company also reported a Mining of Digital Assets segment, the results of which are presented as discontinued operations for all periods presented (see Note 3 – Discontinued Operations). In determining the appropriateness of segment definition, the Company considers the criteria of ASC 280, Segment Reporting.

Recently Issued Accounting Pronouncements

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The guidance removes all references to project stages throughout ASC 350-40 and clarifies the threshold entities apply to begin capitalizing costs. It is intended to modernize the accounting for internal-use software costs to reflect the evolution of software development practices. The amendments are effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of implementing this guidance.

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832) – Accounting for Government Grants Received by Business Entities. This ASU establishes authoritative guidance on the accounting for government grants received by business entities, which previously did not exist. In the absence of specific guidance, many business entities analogized to the guidance in International Accounting Standard (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, or Subtopic 958-605, Not-for-Profit Entities—Revenue Recognition. The ASU defines two types of government grants: (1) a grant related to an asset (for which there are two approaches to record the grant proceeds) and (2) a grant related to income. A grant related to an asset is conditioned on the purchase, construction, or acquisition of an asset (for example, a long-lived asset or inventory). A grant related to income is other than a grant related to an asset (for example, a grant that reimburses a business entity for operating expenses). The ASU defines the criteria that need to be met in order to recognize government grant proceeds and prescribes that a business entity present a grant related to income and a grant related to an asset for which the deferred income approach is elected as part of earnings either (1) separately under a general heading such as other income or (2) deducted from the related expense. The ASU is effective for fiscal years beginning after December 15, 2028, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of implementing this guidance.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the form and content of interim financial statements, adds to Topic 270 a list of required interim disclosures, and establishes a principle requiring disclosure of events since the most recent annual period that have a material effect on the entity. The ASU is effective for the Company for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted, and may be applied prospectively or retrospectively. The ASU affects interim disclosures only, and the Company does not expect its adoption to have a material effect on its condensed consolidated financial statements.

Recently Adopted Accounting Pronouncements

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments provide a practical‐expedient election that permits an entity to assume that current conditions as of the reporting date will not change over the remaining life of certain current accounts receivable and contract assets arising from transactions accounted for under ASC 606, “Revenue from Contracts with Customers.” The guidance is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The Company adopted this standard on January 1, 2026, which did not have a material impact on its condensed consolidated financial statements.

NOTE 3 – DISCONTINUED OPERATIONS

In July 2026, the Company made a decision to exit its BTC mining operations and all such operations ceased by July 31, 2026. The Company’s BTC mining lease with Pow.re expired by its terms on July 30, 2026 and was not renewed. Pursuant to an agreement dated August 4, 2026, the Company terminated its BTC mining lease with Soluna effective July 31, 2026, prior to its scheduled expiration in October 2027. In connection with the early termination, the Company paid atermination fee of $150,000. The Company determined that the exit from BTC mining represents a strategic shift that has a major effect on its operations and financial results in accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations. This determination is primarily based on the following: (i) BTC mining was previously presented as a separate reportable segment, Mining of Digital Assets, and represented approximately 43% of total revenue for the year ended December 31, 2025 and 11% of total revenue for the nine months ended September 30, 2026; and (ii) digital asset mining is no longer part of the Company’s strategy, which previously included mining as a means of diversifying its revenue streams; the Company is now focused on building and scaling its core battery technology business through investment in the KULR ONE battery infrastructure platform. Accordingly, the results of the BTC mining operations are presented as discontinued operations in the condensed consolidated statements of operations and cash flows for all periods presented, and prior-period amounts have been recast to conform to the current-period presentation. Assets and liabilities related to the discontinued operations have been presented separately on the condensed consolidated balance sheet as of December 31, 2025. The Company hadno assets or liabilities related to the discontinued operations as of September 30, 2026. Unless otherwise noted, all notes to the condensed consolidated financial statements (other than this Note 3) relate to continuing operations.

The Company’s digital assets held as part of the Company’s treasury strategy are not part of the discontinued operations. Changes in the fair value of digital assets are presented in continuing operations.

The following table presents the carrying amounts of the major classes of assets and liabilities of the discontinued operations as of September 30, 2026 and December 31, 2025:

The following table presents the results of discontinued operations for the three and nine months ended September 30, 2026 and 2025:

Revenue from discontinued operations consists of BTC earned from mining activities. During the three months ended September 30, 2026 and 2025,3.12 and 35.73 BTC were earned from mining operations, at an average value of approximately $64,003 and $114,357 per BTC, respectively. Downtime credits received from hosting providers were recorded as a reduction of cost of revenue. During the three months ended September 30, 2026 and 2025, the Company received BTC with an aggregate fair value of $321,089 and $310,634, respectively, from the lessors as compensation for machine downtime, which was recorded as a reduction of cost of revenue.

During the nine months ended September 30, 2026 and 2025,20.35 and 49.95 BTC were earned from mining operations, at an average value of approximately $72,137 and $109,195 per BTC, respectively. During the nine months ended September 30, 2026 and 2025, the Company received BTC with an aggregate fair value of $339,790 and $631,160, respectively, from the lessors as compensation for machine downtime, which was recorded as a reduction of cost of revenue.

Selling, general, and administrative expense consists of mining-related consulting fees and, for the three and nine months ended September 30, 2026, the $150,000 Soluna termination fee. No income tax expense or benefit was recognized on the income (loss) from discontinued operations due to the Company’s full valuation allowance against its deferred tax assets.

Cash flows of discontinued operations are presented separately in the condensed consolidated statements of cash flows. The following table presents significant non-cash operating items and cash flows of discontinued operations for the nine months ended September 30, 2026 and 2025:

The following policies relate to the mining of digital assets operations, which have been presented as discontinued operations as reflected in the tables above.

Mining of Digital Assets

Prior to the termination of its digital asset mining arrangements during the three months ended September 30, 2026, the Company leased digital asset mining equipment, which provided hash rates to a mining pool operator. The Company derived revenue from its digital asset mining activities by providing hash rates as part of transaction verification services within the digital currency networks of cryptocurrencies, such as BTC, referred to as “mining of digital assets.” In consideration for these services, the Company received digital rewards which were recorded as revenue, based on the daily quantity of BTC earned, valued at the average daily price quoted on the Company’s principal market. Digital rewards were settled daily and were received at Coinbase on a one-day delay and receivable amounts were immaterial. Lease and non-lease costs associated with the digital asset mining operations were recorded as cost of revenue. If the leased machines failed to meet the minimum downtime guarantee over the contracted term, the Company received a credit (in the form of BTC) issued in accordance with the agreements. These credits were recorded as a reduction of cost of revenue. All downtime credits owed to the Company were received by September 30, 2026.

NOTE 4 – DIGITAL ASSETS

In December 2024, the Company adopted a treasury strategy which included acquiring and holding BTC using cash that exceeded working capital requirements. As of September 30, 2026, the Company had discontinued its digital asset treasury strategy, and accordingly, sold all BTC holdings by September 30, 2026. The Company does not intend to acquire or hold BTC or other digital assets as treasury reserve assets in the future.

The Company’s digital assets were comprised solely of BTC. In accordance with ASC Topic 820, Fair Value Measurement, the Company measured the fair value of its BTC based on the quoted price at 4:00pm EST on the measurement date for a single BTC on an active trading platform, Coinbase. Management determined that Coinbase, an active exchange market, represented the Company’s principal market for BTC and at 4:00pm EST, the price was considered both readily available and representative of fair value (Level 1 inputs). As of September 30, 2026, the Company heldno BTC, having sold all of its digital assets during the quarter. As of December 31, 2025, the Company held 1,074.21 BTC at Coinbase with a cost basis of $108,514,113, and a fair value of $93,995,256. The Company’s digital assets were held as part of the Company’s treasury strategy, as described above, and are not included in discontinued operations. Accordingly, changes in the fair value of digital assets are presented within continuing operations. See Note 3 – Discontinued Operations.

The following table presents the rollforward of activity related to the Company’s digital assets for the nine months ended September 30, 2026:

See Note 3 – Discontinued Operations for further information regarding the digital assets mined and received as downtime credits during the nine months ended September 30, 2026 as reflected in the table above.

Purchases of Digital Assets

During the three and nine months ended September 30, 2026, the Company didnot purchase BTC. During the three months ended September 30, 2025, the Company purchased 90.00 BTC at an average cost of $108,889 per BTC, inclusive of fees and expenses, for an aggregate cost of $9,799,993. During the nine months ended September 30, 2025, the Company purchased 783.81 BTC at an average cost of $101,683 per BTC, inclusive of fees and expenses, for an aggregate cost of $79,700,002.

Sales of Digital Assets

During the three and nine months ended September 30, 2026, the Company sold 1,099.09 BTC for gross proceeds of $80,220,670, or on a net basis $80,100,339 after deducting fees and commissions of $120,331. The BTC sold had an original cost basis of $110,321,885, determined on a first-in, first-out basis, resulting in cumulative realized losses of $30,221,546 from dispositions occurring during the period. Cumulative realized losses represent the difference between the net proceeds received and the original cost basis of the BTC disposed of. The BTC sold was remeasured to fair value through the date of sale, and the resulting change in fair value is included in change in fair value of digital assets within other income (expense) in the condensed consolidated statements of operations. The fees and commissions of $120,331 were recorded as digital asset fees and commissions within other income (expense) in the accompanying condensed consolidated statements of operations. As described above, the Company’s treasury strategy no longer contemplates acquiring or holding digital assets.

Loan Agreement

During the nine months ended September 30, 2026, the Company borrowed a total of $20.0 million pursuant to the Coinbase Master Loan Agreement, which loan bore interest at 7% per annum. Using a portion of the net proceeds from the sale of BTC during the three months ended September 30, 2026, the Company repaid the outstanding principal of $20.0 million and interest balance under the Coinbase Master Loan Agreement. In accordance with the terms of the Coinbase Master Loan Agreement, the repayment resulted in the automatic release of 565 BTC that the Company had held as collateral for the loan. As of September 30, 2026, the loan has been fully repaid, and the Company hasno borrowing availability under the facility following the sale of all of its BTC.

NOTE 5 – AUTO-VIBE ASSETS

In December 2025, the Company entered into athree-year Master Vehicle Sales Agreement with a licensed Dealership (the “Dealership”) in California to buy and sell automobiles as a research and development activity, for the purpose of determining whether the Company’s technology known as KULR VIBE could be deployed in the automobile market. The Company purchased a range of autos and performed vibration diagnostic testing on a select number of the autos.

During December 2025, the Company allocated $5.0 million toward this project. Since December 2025, the Company purchased and sold automobiles totaling approximately $5.0 million. The sales of autos to the Dealership did not qualify as sales to customers, thereforeno revenue was recorded for the sales of these autos. During the first quarter of 2026, KULR directed the Dealership to halt further automobile purchases in connection with the Company’s cancellation of this research and development activity.

A credit loss reserve of $0.5 million was recorded during the nine months ended September 30, 2026 against the gross receivables due from the Dealership based on a term sheet that was signed by both parties regarding a proposed settlement, resulting in a net receivable balance of approximately $4.5 million as of September 30, 2026. While the terms within the term sheet did not progress, the parties, through legal counsel, are still in the process of negotiating a planned settlement of the remaining amount due and, simultaneously, the Company continues to consider all options for recovery. The Company expects that collection of the $4.5 million will likely occur beyond a one-year period and accordingly, such receivable has been reflected as a non-current asset in the September 30, 2026 condensed consolidated balance sheet.

As of September 30, 2026 and December 31, 2025, Auto-Vibe assets consisted of the following:

NOTE 6 – CABAN ASSET ACQUISITION

On December 24, 2025 (the “Acquisition Date”), the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Caban Systems, Inc. (“Caban”), a Miami-based renewable energy services and technology company, pursuant to which the Company acquired certain equipment and software used for the development, manufacture, and supply of Underwriters Laboratories (“UL”)-certified battery packs in exchange for a purchase price of $2,515,987 (the “Acquisition”). The Company paid cash of $1,921,127 on the Acquisition Date, with the remainder of $594,860 (“Holdback Amount”) to be paid in cash during 2026 based on timing of completion of delivery and installation of the equipment at the Company’s facility. During the nine months ended September 30, 2026, the Company paid the Holdback Amount in full.

In connection with the Purchase Agreement, the Company entered into a Transition Services Agreement (the “TSA”) with Caban, whereby both parties agreed to work together for approximately ninety days after the equipment was installed at the Company’s facility, to ensure a smooth transition of the manufacturing of the battery packs from Caban to KULR. In consideration for the transition services, the Company agreed to pay Caban service fees not to exceed $500,000 in the aggregate unless otherwise agreed in writing. During the three and nine months ended September 30, 2026, the Company incurred expenses in connection with the TSA and facility costs of $291,626 and $391,626, respectively, which are presented within cost of revenue in the condensed consolidated statements of operations.

NOTE 7 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of September 30, 2026 and December 31, 2025, prepaid expenses and other current assets consisted of the following:

NOTE 8 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

As of September 30, 2026 and December 31, 2025, accrued expenses and other current liabilities consisted of the following:

NOTE 9 – LEASES

Operating Leases

On May 12, 2026, the Company entered into a lease agreement for a new facility consisting of approximately 24,700 rentable square feet located in Houston, Texas. The initial lease term is 36 months, with monthly base rental payments ranging from $23,671 to $25,357, plus common area maintenance costs. The Houston Facility Lease contains anoption to renew for an additional 60 months at the then-fair market rental rate but shall be no less than the annual base rent amount during the third year of the initial term, exercisable no more than nine months and no less than six months prior to the expiration of the initial term. Management assessed the renewal option as reasonably certain to be exercised, and accordingly the renewal period was included in the measurement of the initial operating lease liability and related right-of-use asset, resulting in a lease term of 96 months. The value of the operating lease liability and related right-of-use asset at inception was $1,536,777, measured using an incremental borrowing rate of 8.75%. The present value of the lease liability reflected a reduction of a $197,600 tenant improvement allowance that was received from the landlord during the three months ended September 30, 2026 after the Company completed certain tenant improvements.

In connection with the Houston Facility Lease, the Company paid a cash security deposit of $67,550, which is included in security deposits on the condensed consolidated balance sheets, and was required to secure a letter of credit of $284,050 within sixty days of the lease effective date. The letter of credit must be maintained in successive twelve-month terms throughout the lease term and, provided no event of default has occurred, is reduced to $142,025 at the beginning of the second year of the lease term and to $71,013 at the beginning of the third year. Upon delivery of the letter of credit, the landlord will refund the cash security deposit. Cash collateralizing the letter of credit is classified as restricted cash; see Note 2.

During the three and nine months ended September 30, 2026, operating lease expense was $189,583 and $476,827, respectively. During the three and nine months ended September 30, 2025, operating lease expense was $204,070 and $541,245, respectively.

Maturities of operating lease liabilities as of September 30, 2026, were as follows:

Supplemental cash flow information related to the leases is as follows:

NOTE 10** –**STOCKHOLDERS’ EQUITY

Common Stock

During the nine months ended September 30, 2026, the Company issued 364,989 shares of common stock upon the vesting of restricted stock units previously granted, of which 125,696 shares were withheld to cover payroll tax obligations.

Stock-Based Compensation

The following table presents information related to stock-based compensation for the three and nine months ended September 30, 2026 and 2025:

During the three and nine months ended September 30, 2026, the Company recognized stock-based compensation expense of $1,203,085 and $3,570,608, respectively, of which $957,514 and $2,926,566 respectively, are included within selling, general and administrative expenses, and $245,571 and $644,042, respectively, are included within research and development expenses in the condensed consolidated statements of operations.

During the three and nine months ended September 30, 2025, the Company recognized stock-based compensation expense of $1,288,074 and $4,510,241, respectively, of which $1,140,466 and $3,536,611, respectively, are included within selling, general and administrative expenses, and $147,608 and $973,630, respectively, are included within research and development expenses in the condensed consolidated statements of operations.

Stock Options

A summary of stock options activity during the nine months ended September 30, 2026, is presented below:

The following table presents information related to stock options as of September 30, 2026:

As of September 30, 2026, there was $36,709 of unrecognized stock-based compensation expense related to the above stock options, which will be recognized over the weighted average remaining vesting period of 2.35 years.

Restricted Stock Awards

The following table presents information related to restricted stock awards (“RSAs”) activity during the nine months ended September 30, 2026:

As of September 30, 2026, there was $4,487 of unrecognized stock-based compensation expense related to restricted stock awards that will be recognized over the weighted average remaining vesting period of 0.09 years.

Restricted Stock Units

The following table presents information related to restricted stock units (“RSUs”) activity during the nine months ended September 30, 2026:

To date, RSUs have been granted to non-employee directors, employees and consultants in accordance with the Company’s 2018 and 2025 Equity Incentive Plans. Pursuant to the terms of the restricted stock unit agreements, the vested but undelivered units are to be settled on January 1, 2027.

As of September 30, 2026, there was $9,786,432 of unrecognized stock-based compensation expense related to RSUs that will be recognized over a weighted average remaining vesting period of 2.57 years.

NOTE 11 – COMMITMENTS AND CONTINGENCIES

Legal Matters

The Company may be subject to legal proceedings, claims, inquiries and disputes arising in the ordinary course of business. The Company accrues for a loss contingency when it is probable that a liability has been incurred (or an asset has been impaired) and the amount of loss can be reasonably estimated, and it discloses a contingency when a loss is at least reasonably possible. Legal costs are expensed as incurred.

See Note 5 – Auto-Vibe Assets and Note 13 – Subsequent Events for additional discussion of Auto-Vibe and Section 205 matters.

NOTE 12 – SEGMENT REPORTING

Following its exit from mining of digital assets in July 2026 (see Note 3 – Discontinued Operations), the Company operates as asingle operating and reportable segment, the EMP, which develops and commercializes energy management technologies, batteries and other components across a range of applications. The accounting policies of the EMP segment are the same as those described in Note 2 – Summary of Significant Accounting Policies. The results of the former Mining of Digital Assets segment are presented as discontinued operations (see Note 3 – Discontinued Operations) and are excluded from the segment information below for all periods presented, and prior-period segment information has been recast to conform to the current-period presentation.

The chief operating decision maker (“CODM”), who is the Company’s Chief Executive Officer, uses segment net loss to assess performance, make decisions about the allocation of operating and capital resources, and evaluate pricing strategies. The CODM is not regularly provided disaggregated expense information other than the expense captions included within the condensed consolidated statements of operations. The CODM reviews total assets on a consolidated basis; accordingly, segment assets are equal to total consolidated assets as reported in the condensed consolidated balance sheets.

The Company does not have intra-entity sales or transfers.

The CODM does not consider changes in the fair value of digital assets, impairment of equity investment, or credit loss on loan receivable when reviewing segment results. These items are presented as reconciling items between segment net loss and net income (loss).

The following table presents the operations of the EMP segment and a reconciliation of segment net loss to income (loss) from continuing operations for the three and nine months ended September 30, 2026 and 2025:

NOTE 13** –**SUBSEQUENT EVENTS

The Company has evaluated events that have occurred after the balance sheet date and through the date the condensed consolidated financial statements were issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements, except as disclosed below.

Validation of Corporate Acts Under Section 205 of the Delaware General Corporation Law

On October 23, 2026, the Company filed a verified petition (the “Petition”) in the Court of Chancery of the State of Delaware (the “Court of Chancery”) pursuant to Section 205 of the Delaware General Corporation Law (the “DGCL”) seeking validation of certain corporate acts and of the Company’s outstanding shares of common stock and Series A Voting Preferred Stock (the “Series A Preferred Stock”), including the filing of the certificate of designation of the Series A Preferred Stock (collectively, the “Section 205 Action”).

In connection with a review of its corporate records, the Company identified potential technical defects in the authorization of certain corporate acts taken between 2016 and 2025, consisting of (i) the 2016 certificate of amendment changing the Company’s name, (ii) the 2018 certificate of amendment increasing the Company’s authorized common stock from 100,000,000 to 500,000,000 shares, (iii) the 2017 designation of the Series A Preferred Stock and the issuances of Series A Preferred Stock to the Company’s Chief Executive Officer in January 2024 and January 2025, (iv) the June 2025 certificate of amendment effecting the 1-for-8 reverse split of the Company’s common stock and the reverse split itself and (v) the June 2025 actions of the Company’s board of directors (the “Board”) increasing the size of the Board, electing directors to fill the resulting vacancies, appointing an officer and approving compensation for two independent directors (collectively, the “Corporate Acts”).

The Company believes that the Corporate Acts were approved and effected in the good faith belief that they complied with the DGCL, and the Company, the Board, the Company’s officers and the Company’s stockholders have treated the Corporate Acts as valid. However, the Company determined to file the Petition to seek an order from the Court of Chancery to validate the Corporate Acts and eliminate any uncertainty. In addition to the Petition, the Company filed a motion for expedited proceedings in the Section 205 Action.

No assurance can be given that the Court of Chancery will grant the relief requested in the Petition or that the Section 205 Action will result in a timely resolution of the uncertainty regarding the Company’s Board composition and capitalization, if at all.

Workforce Reduction

In November 2026, as part of its effort to simplify its engineering design process and adopt an AI-first operating model, the Company is conducting a reduction in force of its personnel. The Company expects to generate approximately $4 million in annualized cost savings upon full implementation. The restructuring is expected to be substantially completed by the end of 2026, with the anticipated savings supporting a lower operating expense base entering 2027. The Company expects to incur severance and related costs ranging from $0.35 million to $0.65 million in connection with the reduction, substantially all of which will be recognized in the fourth quarter of 2026. Actual savings, costs and timing may differ from current estimates.