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KULR Technology (KULR) - 2023 Q4 - Annual Report
KULRKULR Technology (KULR)2024-04-12 20:36
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Market Growth and Projections - Global energy storage systems market projected to grow from 210billionin2021to210 billion in 2021 to 435 billion by 2030[13] - Global lithium-ion battery recycling industry expected to grow from 4.6billionin2021to4.6 billion in 2021 to 22.8 billion by 2030[13] - Private space exploration market sector expected to reach 1,110.8billionby2030[13]−Globalvibrationmotormarketestimatedat1,110.8 billion by 2030[13] - Global vibration motor market estimated at 6.5 billion in 2023, forecasted to reach 24.1billionby2032withaCAGRof14.124.1 billion by 2032 with a CAGR of 14.1%[23] - KULR's battery recycling and management market projected to reach over 21 billion by 2025[26] - KULR's thermal management systems market estimated at 24billionby2025[13]−KULR′saircraftmaintenancemarketsizeexpectedtogrowfrom24 billion by 2025[13] - KULR's aircraft maintenance market size expected to grow from 82.7 billion in 2023 to 127.2billionby2032[13]TechnologicalAdvancementsandInnovations−KULRVIBEtechnologydemonstrateda23127.2 billion by 2032[13] Technological Advancements and Innovations - KULR VIBE technology demonstrated a 23% increase in battery life and a 45% lift increase in mission-critical drone tests[22] - KULR has an exclusive manufacturing and distribution agreement with NREL for the patented ISC device, which enables predictable Li-ion battery cell failures for safer research and development[70] - The CRUX Cathode, composed of carbon fiber velvet, generates powerful electron pulses for applications like microwaves, x-rays, and laser radiation, with customizable physical configurations[71] - KULR's PPR design offers lightweight and flexible solutions for high-energy battery cells, providing a competitive edge in thermal runaway mitigation[72] - KULR's FTI thermal interface material provides high bulk thermal conductivity and low contact pressure requirements, offering a competitive advantage over silicone-based solutions[73] - The ISC device triggers true internal shorts in battery cells, enabling accurate problem identification and competitive testing advantages over traditional methods[74] - Company developed Lithium-Ion Battery Thermal Runaway Shield (TRS) in partnership with NASA JSC, preventing thermal runaway propagation in Li-ion batteries[62] - Company installed a fully automated battery cell testing platform in January 2024, capable of handling 500K cells annually, meeting NASA and DOD specifications[63] Financial Performance and Capital Raising - Company reported record annual revenues of 9.8 million for 2023, a 145% increase compared to 4.0millionin2022[42]−Companycompletedtwopublicofferingsin2023:8,214,285sharesat4.0 million in 2022[42] - Company completed two public offerings in 2023: 8,214,285 shares at 0.35 per share (gross proceeds 2.875M)and5,175,000sharesat2.875M) and 5,175,000 shares at 0.20 per share (gross proceeds 1.035M)[44]−CompanyrepaidallremainingprincipalandinterestonprepaidadvanceliabilityafterDecember31,2023[43]−Companyenteredintotwomerchantcashadvanceagreementsin2024,receiving1.035M)[44] - Company repaid all remaining principal and interest on prepaid advance liability after December 31, 2023[43] - Company entered into two merchant cash advance agreements in 2024, receiving 504,900 and 502,200withrepaymentobligationstotaling502,200 with repayment obligations totaling 804,600 each[55][56] - Revenue for the year ended December 31, 2023 increased by 146% to 9,830,166comparedto9,830,166 compared to 3,994,634 in 2022, driven by growth in both product sales and contract services[194] - Product sales revenue increased by 161% to 6,903,988in2023from6,903,988 in 2023 from 2,643,325 in 2022, with the number of customers growing from 33 to 39[195] - Contract services revenue increased by 117% to 1,167,391in2023from1,167,391 in 2023 from 1,351,309 in 2022, with the number of customers growing from 14 to 17[197] - Cash balance decreased to 1,194,764asofDecember31,2023from1,194,764 as of December 31, 2023 from 10,333,563 as of December 31, 2022, with working capital deficit of (2,994,753)comparedto(2,994,753) compared to 6,055,477 in 2022[211] - The company entered into two merchant cash advance agreements in 2024, receiving a total of 1,007,100incashandagreeingtorepayatotalof1,007,100 in cash and agreeing to repay a total of 1,609,200[185][186] Operational and Infrastructure Developments - KULR Texas facility expanded from 4,800 ft² to 17,560 ft² to support customer base and engineering team growth[34] - KULR's IT infrastructure improved with a NIST score increase of over 140 points[36] - As of December 31, 2023, KULR had 57 full-time employees and 3 contractors, following a 15% workforce reduction to focus on profitability[76] - Company expanded direct sales and marketing teams, including hiring a VP of Sales with expertise in Aerospace and Defense sectors[59] - Company appointed a Vice President of Sales in January 2023, issuing 298,507 shares of restricted common stock with a grant date fair value of 400,000[182]−CompanyappointedaChiefFinancialOfficerinMarch2023,issuing1,500,000sharesofrestrictedstockwithanaggregategrantdatefairvalueof400,000[182] - Company appointed a Chief Financial Officer in March 2023, issuing 1,500,000 shares of restricted stock with an aggregate grant date fair value of 1,380,000[183] Intellectual Property and Patents - Company holds six granted patents, an exclusive license to four third-party patents, and has ten pending patent applications as of December 31, 2023[61] - KULR holds six U.S. patents, six pending patent applications, and exclusive licenses for four patents, with expiration dates ranging from 2024 to 2035[78] - The company faces risks related to intellectual property protection, including potential unauthorized use by third parties, which could harm its competitive position and market share[100][101] - Pending patent and trademark applications may not be approved, and existing patents may not provide a competitive advantage, potentially leading to increased competition[101][102] - The company relies on trade secrets and proprietary manufacturing expertise, but these could be independently developed or breached, jeopardizing critical intellectual property[103][104] - Intellectual property infringement claims could result in significant legal costs, damages, and potential restrictions on product commercialization[105][106][107] Risks and Challenges - Company received NYSE noncompliance notice due to stockholders' equity of 1.2MasofSeptember30,2023,andsubmittedacomplianceplanwithadeadlineofJune20,2025[45][46][47]−Substantialdoubtaboutthecompany′sabilitytocontinueasagoingconcernforthenext12months,potentiallyleadingtoliquidationandinvestorlosses[125]−NYSEAmericannotifiedthecompanyofnon−compliancewithlistingstandardsduetostockholders′equitybelow1.2M as of September 30, 2023, and submitted a compliance plan with a deadline of June 20, 2025[45][46][47] - Substantial doubt about the company's ability to continue as a going concern for the next 12 months, potentially leading to liquidation and investor losses[125] - NYSE American notified the company of non-compliance with listing standards due to stockholders' equity below 6 million, with a compliance plan accepted until June 20, 2025[128] - NYSE American issued a warning regarding the company's stock trading price below 0.20pershare,requiringsustainedpriceimprovementorareversestocksplitbyAugust12,2024[129]−Thecompany′scommonstockwillcontinuetotradeonNYSEAmericanwitha".BC"designationindicatingnon−compliancewithlistingstandards[130]−PotentialdelistingfromNYSEAmericancouldresultinlimitedmarketliquidity,reducedanalystcoverage,anddifficultyinraisingfuturecapital[131]−Thecompanymayrequireadditionalcapitaltosupportbusinessgrowth,withpotentialdilutionofexistingstockholdersifequityisissued[138]−Thecompany′soperationsarehighlydependentonkeyexecutives,andthelossofseveralkeyindividualssimultaneouslycouldsignificantlyimpactrevenueandprofits[99]−Economicdownturnscouldreducedemandforthecompany′sproducts,lowerprices,andnegativelyimpactprofitability[111][112]−Risingrawmaterialandenergycosts,drivenbyglobalmacroeconomicfactors,couldpressureprofitmarginsifthecompanycannotpassthesecoststocustomers[113]−Manufacturingdisruptionsduetoextremeweather,industrialaccidents,orregulatorychangescouldmateriallyaffectthecompany′soperations[114]−Cybersecurityrisks,includingdatabreachesandITsystemvulnerabilities,coulddisruptoperationsandharmthecompany′sreputationandfinancialcondition[116][117]−Compliancewithevolvingcorporategovernanceandpublicdisclosureregulations,suchasSarbanes−Oxley,mayincreasecostsanddivertmanagementattentionfromrevenue−generatingactivities[122][124]−Thecompanyfacesrisksfromglobalconflicts,includingpotentialsupplychaindisruptions,increasedmaterialcosts,andadversemacroeconomicconditions[190][192]CorporateGovernanceandShareholderInformation−Thecompany′sChairmanandCEOholds38.360.20 per share, requiring sustained price improvement or a reverse stock split by August 12, 2024[129] - The company's common stock will continue to trade on NYSE American with a ".BC" designation indicating non-compliance with listing standards[130] - Potential delisting from NYSE American could result in limited market liquidity, reduced analyst coverage, and difficulty in raising future capital[131] - The company may require additional capital to support business growth, with potential dilution of existing stockholders if equity is issued[138] - The company's operations are highly dependent on key executives, and the loss of several key individuals simultaneously could significantly impact revenue and profits[99] - Economic downturns could reduce demand for the company's products, lower prices, and negatively impact profitability[111][112] - Rising raw material and energy costs, driven by global macroeconomic factors, could pressure profit margins if the company cannot pass these costs to customers[113] - Manufacturing disruptions due to extreme weather, industrial accidents, or regulatory changes could materially affect the company's operations[114] - Cybersecurity risks, including data breaches and IT system vulnerabilities, could disrupt operations and harm the company's reputation and financial condition[116][117] - Compliance with evolving corporate governance and public disclosure regulations, such as Sarbanes-Oxley, may increase costs and divert management attention from revenue-generating activities[122][124] - The company faces risks from global conflicts, including potential supply chain disruptions, increased material costs, and adverse macroeconomic conditions[190][192] Corporate Governance and Shareholder Information - The company's Chairman and CEO holds 38.36% of the voting power, allowing significant influence over corporate decisions[145] - The company's Board of Directors can issue up to 20 million shares of preferred stock without shareholder approval, potentially diluting common stock voting power[146] - The company issued 730,000 shares of Non-convertible Series A Voting Preferred Stock to the Chairman and CEO, Michael Mo, with conditions tied to his continued leadership[179][180] - Shareholders approved resolutions allowing the issuance of over 20% of common stock and a potential reverse stock split with a ratio range between 1-for-2 and 1-for-80[189] - The company's common stock trades on the NYSE American LLC Exchange under the symbol "KULR"[164] - The company has approximately 116 record and street shareholders as of April 9, 2024[167] - The company has not paid any dividends and intends to reinvest all available funds for business growth and development[168] Financial Metrics and Expenses - Gross margin percentage decreased to 37% in 2023 from 59% in 2022, primarily due to increased costs from additional headcount, materials, and depreciation of automation equipment[201] - R&D expenses increased by 48% to 6,195,400 in 2023 from 4,196,313in2022,drivenbyplannedincreasesinheadcountandnewfacilityexpenses[204]−Selling,generalandadministrativeexpensesincreasedby214,196,313 in 2022, driven by planned increases in headcount and new facility expenses[204] - Selling, general and administrative expenses increased by 21% to 19,882,402 in 2023 from $16,453,776 in 2022, primarily due to labor costs and facility expansion[207] Cybersecurity and Risk Management - The company maintains a cyber risk management program integrated with its enterprise risk management system, based on the NIST Cybersecurity Framework[156]