KULR Technology Group (KULR) risk factors, FY2024 10-K

Risks Related to Our Business and Our Industry

1. 01We are a young company with a limited operating history, making it difficult for you to evaluate our business and your investment
2. 02We will need to raise substantial additional capital in the future to fund our operations and we may be unable to raise such funds when needed and on acceptable terms, which could have a materially adverse effect on our business
3. 03We could experience significant disruptions in supply from our current or future sources
4. 04capital markets, any of which could have a material adverse effect on our business, results of operations, cash flows and financial condition
5. 05We have limited experience in higher volume manufacturing that will be required to support profitable operations, and the risks associated with scaling to larger production quantities may be substantial
6. 06We have a long and complex sales cycle and have not demonstrated the ability to operate successfully in this environment
7. 07We are dependent on customers and partners to design and test our solution into new applications which may not be brought to market successfully
8. 08We could be adversely affected by our exposure to customer concentration risk
9. 09We operate in an advanced technology arena where hypothesized properties and benefits of our products may not be achieved in practice, or in which technological change may alter the attractiveness of our products
10. 10has been generated in our own laboratories or in laboratory environments at our customers or third-parties. It is well known that laboratory data is not always representative of commercial applications
11. 11Competitors that are larger and better funded may cause the Company to be unsuccessful in selling its products
12. 12Because of our small size and limited operating history, we are dependent on key employees
13. 13Our success depends in part on our ability to protect our intellectual property rights, and our inability to enforce these rights could have a material adverse effect on our competitive position
14. 14If our technologies conflict with the proprietary rights of others, we may incur substantial costs as a result of litigation or other proceedings and we could face substantial monetary damages and be precluded from commercializing our products, which would materially harm our business and financial condition
15. 15We may not obtain U.S. Government contracts to further develop our technology
16. 16Downturns in general economic conditions could adversely affect our profitability
17. 17An increase in the cost of raw materials or electricity might affect our profits
18. 18Our results of operations could deteriorate if our manufacturing operations were substantially disrupted for an extended period
19. 19We may become subject to liabilities related to risks inherent in working with hazardous materials
20. 20Significant disruptions of information technology systems, breaches of data security and other incidents could materially adversely affect our business, results of operations and financial condition
21. 21During March 2023, Silicon Valley Bank (“SVB”), Signature Bank and Silvergate Capital Corp. were each closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver
22. 22Future adverse regulations could affect the viability of the business
23. 23Our directors and officers may be exposed to liability
24. 24Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses and will divert time and attention away from revenue generating activities
25. 25If we fail to maintain effective internal controls over financial reporting, the price of our common stock may be adversely affected
26. 26We are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act of 2002 and if we fail to comply in a timely manner, our business could be harmed and our stock price could decline

Risks Relating to Our Bitcoin Treasury Strategy and Holdings

1. 27Our bitcoin acquisition strategy may expose us to various risks associated with bitcoin
2. 28Bitcoin and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty
3. 29The availability of spot bitcoin ETPs may adversely affect the market price of our common stock
4. 30Our bitcoin treasury strategy subjects us to enhanced regulatory oversight
5. 31Regulatory change reclassifying bitcoin as a security could lead to our classification as an “investment company” under the Investment Company Act of 1940, as amended, or the 1940 Act, and could adversely affect the market price of bitcoin and the market price of our common stock
6. 32We may be subject to regulatory developments related to crypto assets and crypto asset markets, which could adversely affect our business, financial condition, and results of operations
7. 33The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of bitcoin and adversely affect our financial condition and results of operations
8. 34Our intended bitcoin holdings may be less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents

Risks Relating to Our Common Stock and Preferred Stock

1. 35An active, liquid and orderly market for our common stock may not develop or be sustained, and you may not be able to sell your common stock without adversely affecting the price, or at all depending on volume offered for sale at any time
2. 36We are subject to the continued listing requirements of the NYSE American. If we are unable to comply with such requirements, our common stock would be delisted from the NYSE American, which would limit investors’ ability to effect transactions in our common stock and subject us to additional trading restrictions
3. 37On May 6, 2024, the Company received a letter from the NYSE American indicating that the Company has regained compliance with the NYSE American continued listing standard set forth in Section 1003(f)(v) of the NYSE American Company Guide due to its shares of common stock demonstrating sustained price improvement
4. 38If securities or industry analysts do not publish research or reports about our business, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline
5. 39Shares eligible for future sale may adversely affect the market
6. 40We could issue additional common stock, which might dilute the book value of our common stock
7. 41Our common stock could be further diluted as a result of the issuance of convertible securities, warrants or options
8. 42We may require additional capital to support business growth, and if capital is not available to us or is available only by diluting existing stockholders, our business, operating results and financial condition may suffer
9. 43Global economic uncertainty and financial market volatility caused by political instability, changes in international trade relationships and conflicts, such as the war in Ukraine and the Israel-Hamas war, could make it more difficult for us to access financing and could adversely affect our business and operations
10. 44We do not intend to pay dividends
11. 45Voting power of our shareholders is highly concentrated by insiders
12. 46We have 1,000,000 shares of Series A Voting Preferred Stock with super voting rights
13. 47from his holdings of the Series A Voting Preferred Stock. The Series A Voting Preferred Stock will vote together with the common stock
14. 48Our Chairman and CEO owns our Series A Voting Preferred Stock and will be able to exert significant control over matters subject to shareholder approval
15. 49Our articles of incorporation allow for our board to create a new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our Common Stock
16. 50In addition, our Board of Directors could authorize the issuance of a series of preferred stock that has greater voting power than our Common Stock or that is convertible into our Common Stock, which could decrease the relative voting power of our Common Stock or result in dilution to our existing stockholders