PART I – FINANCIAL INFORMATION Financial Statements Presents unaudited condensed consolidated financial statements, noting significant customer concentration and substantial doubt about going concern due to recurring losses Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Items | Sep 30, 2019 ($) | Dec 31, 2018 ($) | | :--- | :--- | :--- | | Assets | | | | Cash | $76,061 | $229,896 | | Total Current Assets | $588,145 | $406,316 | | Total Assets | $623,492 | $451,107 | | Liabilities & Stockholders' Deficiency | | | | Total Current Liabilities | $899,221 | $576,244 | | Total Stockholders' Deficiency | ($275,729) | ($125,137) | | Total Liabilities and Stockholders' Deficiency | $623,492 | $451,107 | Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended Sep 30, 2019 ($) | Three Months Ended Sep 30, 2018 ($) | Nine Months Ended Sep 30, 2019 ($) | Nine Months Ended Sep 30, 2018 ($) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $526,722 | $482,798 | $777,984 | $881,929 | | Gross Profit | $417,671 | $407,414 | $578,866 | $623,128 | | Loss From Operations | ($267,281) | ($215,157) | ($1,453,578) | ($1,685,391) | | Net Loss | ($267,534) | ($191,251) | ($1,454,643) | ($1,661,718) | | Net Loss Per Share | ($0.00) | ($0.00) | ($0.02) | ($0.02) | Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity | For the Nine Months Ended Sep 30, 2019 ($) | For the Nine Months Ended Sep 30, 2018 ($) | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | ($1,206,135) | ($1,064,935) | | Net Cash Used In Investing Activities | $0 | ($15,476) | | Net Cash Provided By Financing Activities | $1,052,300 | $359,000 | | Net Decrease In Cash | ($153,835) | ($721,411) | | Cash - End of Period | $76,061 | $174,350 | - The company has not achieved profitability and expects continued cash outflows, raising substantial doubt about its ability to continue as a going concern as operations are funded month-to-month via private placements with no firm future financing commitments2728 - The company has significant customer concentration, with three customers (A, B, C) accounting for 71% of total revenues for the nine months ended September 30, 2019, and Customer A alone representing 90% of accounts receivable as of that date33 Management's Discussion and Analysis of Financial Condition and Results of Operations Discusses thermal management technology development, Q3 2019 revenue growth, and ongoing concerns about profitability and liquidity Overview KULR develops high-performance thermal management technologies for E-Mobility, AI, and 5G, addressing heat challenges in electronics - The company's core technology is a carbon fiber material offering superior thermal conductivity and heat dissipation, developed through partnerships with NASA and the Jet Propulsion Lab60 - KULR's growth strategy focuses on E-Mobility applications, encompassing internal growth and synergistic acquisitions, despite two recent acquisition terminations6456 - The company has not yet achieved profitability and anticipates increased expenses, indicating substantial doubt about its ability to continue as a going concern65 Results of Operations Q3 2019 revenue increased 9% year-over-year, while nine-month revenue decreased 12%, with gross margin shifts and rising SG&A expenses Revenue Comparison | Period | 2019 ($) | 2018 ($) | Change ($) | % Change | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended Sep 30 | $526,722 | $482,798 | $43,924 | 9% | | Nine Months Ended Sep 30 | $777,984 | $881,929 | ($103,946) | -12% | - The number of customers increased from 6 to 11 for the three-month period and from 11 to 21 for the nine-month period, comparing 2018 to 20197577 Cost of Revenues and Gross Margin | Period | 2019 ($) | 2018 ($) | Change ($) | % Change | | :--- | :--- | :--- | :--- | :--- | | Cost of Revenues (3 Months) | $109,051 | $75,384 | $33,667 | 45% | | Gross Margin % (3 Months) | 79% | 84% | -5 p.p. | - | | Cost of Revenues (9 Months) | $199,118 | $258,801 | ($59,683) | -23% | | Gross Margin % (9 Months) | 74% | 71% | +3 p.p. | - | - Selling, general and administrative expenses increased by 19% in Q3 2019, primarily due to a $76,000 increase in professional fees and a $9,000 increase in non-cash stock-based compensation88 Liquidity and Capital Resources Critical liquidity position with $1.2 million cash used in operations, relying on month-to-month private placements, raising going concern doubts - Cash used in operating activities totaled $1,206,135 for the nine months ended September 30, 2019, compared to $1,064,953 for the same period in 201890 - Financing activities provided $1,052,300 in cash during the first nine months of 2019, primarily from the sale of common stock ($898,300) and Series C Convertible Preferred Stock and warrants ($169,000)93 - The company funds operations month-to-month with no firm commitments for new financing, potentially requiring significant curtailment or discontinuation of operations if funds are not secured95 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, KULR is not required to provide market risk disclosures - The Company is a smaller reporting company and is not required to provide the information for this Item99 Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes to internal controls during Q3 2019 - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period100 - No material changes in internal control over financial reporting occurred during the third quarter of 2019101 PART II - OTHER INFORMATION Legal Proceedings The company reported no legal proceedings during the period - No legal proceedings were reported103 Risk Factors No material changes to previously disclosed risk factors in the Annual Report on Form 10-K - No material changes to the risk factors discussed in the Annual Report on Form 10-K filed on March 29, 2019 have occurred104 Unregistered Sales of Equity Securities and Use of Proceeds Issued unregistered common stock for consulting services and Series B Preferred Stock conversion, exempt from registration - Issued 45,966 shares of restricted common stock for consulting services, exempt from registration under Section 4(a)(2) of the Securities Act105 - Issued 818,550 shares of restricted common stock upon the conversion of 16,371 shares of Series B Convertible Preferred Stock, exempt from registration under Section 3(a)(9) of the Securities Act106 Defaults Upon Senior Securities The company reported no defaults upon senior securities - No defaults upon senior securities were reported107 Mine Safety Disclosures This item is not applicable to the company - This item is not applicable108 Other Information The company reported no other information for this item - No other information was reported for this item109 Exhibits Lists exhibits filed, including Series C Preferred Stock designation, acquisition termination agreement, and SOX certifications - Key exhibits filed include the Certificate of Designation of Series C Convertible Preferred Stock and the Rescission and Termination Agreement dated July 5, 2019110 Signatures
KULR Technology (KULR) - 2019 Q3 - Quarterly Report