KULR Technology Group, Inc. Income Taxes Disclosure
NOTE 15 – INCOME TAXES
The following table summarizes income before income taxes:
For the Years Ended, | ||||||
| 12/31/2025 | | 12/31/2024 | |||
Domestic | $ | (61,899,782) | $ | (17,523,629) | ||
Foreign |
| — |
| — | ||
Total | $ | (61,899,782) | $ | (17,523,629) | ||
The Company’s income tax expense (benefit) is as follows:
For the Years Ended, | ||||||
| | 12/31/2025 | | 12/31/2024 | ||
U.S. federal |
| $ | — |
| $ | — |
State | — | — | ||||
Foreign |
| — |
| — | ||
Current income tax expense (benefit) | — | — | ||||
U.S. federal |
| (12,746,999) |
| (2,542,839) | ||
State |
| (1,642,546) |
| (200,562) | ||
Foreign |
| — |
| — | ||
Deferred income tax expense (benefit) |
| (14,389,545) |
| (2,743,401) | ||
Change in valuation allowance | 14,389,545 | (2,743,401) | ||||
Total income tax expense (benefit) | $ | — | $ | — | ||
The Company’s effective tax rate for the periods ended December 31, 2025 and 2024 were 0.0%. For the period ended December 31, 2025 and December 31, 2024, the primary driver of the variance from the statutory rate was valuation allowance activity.
The following is a reconciliation from the Company’s statuary rate to the effective tax rate reported in the financial statements:
For the Years Ended, | |||||||||||
12/31/2025 | | 12/31/2024 | | ||||||||
| | Amount | | Percent | Amount | | Percent | ||||
Income tax expense (benefit) at federal statutory rate |
| $ | (13,041,538) | 21.0 | % | $ | (3,676,946) |
| 21.0 | % | |
State and local income taxes, net of federal benefit of state |
| — | 0.0 | % | — |
| 0.0 | % | |||
Foreign jurisdictions |
| — | 0.0 | % | — |
| 0.0 | % | |||
Federal law changes |
| — | 0.0 | % | — |
| 0.0 | % | |||
Tax credits (federal) |
| — | 0.0 | % | — |
| 0.0 | % | |||
Federal R&D tax credit | — | 0.0 | % | — | 0.0 | % | |||||
Other federal tax credits (Orphan Drug) |
| — | 0.0 | % | — |
| 0.0 | % | |||
Valuation allowance (federal) |
| 12,749,892 | (20.5) | % | 2,539,107 |
| (14.5) | % | |||
Non-deductible or non-taxable items |
| — | 0.0 | % | — |
| 0.0 | % | |||
Section 162(m) limitation | 176,494 | (0.3) | % | 303,460 | (1.7) | % | |||||
Share based compensation | 157,680 | (0.3) | % | 782,949 | (4.5) | % | |||||
Other | (42,529) | 0.1 | % | 51,429 | (0.3) | % | |||||
Unrecognized tax benefits | — | 0.0 | % | — | 0.0 | % | |||||
Other adjustments | — | 0.0 | % | — | 0.0 | % | |||||
$ | — | 0.0 | % | $ | — | (0.0) | % | ||||
For the periods ended December 31, 2025 and 2024, the Company’s state tax expense was $0.00.
The tax effect of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases that give rise to deferred tax assets and liabilities are as follows:
For the Years Ended, | ||||||
| | 12/31/2025 | | 12/31/2024 | ||
Accrued expenses |
| $ | 43,454 |
| $ | 16,113 |
Property & equipment | 306,052 | 268,474 | ||||
Intangible assets |
| 110,285 |
| 42,312 | ||
Credit carry-forward | 222,645 | 222,645 | ||||
Net operating losses carryforward |
| 25,955,934 |
| 15,514,550 | ||
Section 174 costs | 1,861,126 | 2,587,355 | ||||
Stock based compensation | 909,402 | 461,408 | ||||
Lease liability (ASC 842) | 345,299 | 313,458 | ||||
Unrealized gains/losses | 3,468,214 | 171,710 | ||||
Capital loss carryforward | 794,275 | — | ||||
Gross deferred tax assets | $ | 34,016,686 | $ | 19,598,025 | ||
Valuation allowance | (33,696,912) | (19,307,367) | ||||
Net deferred tax assets | 319,774 | 290,658 | ||||
Deferred tax liabilities | ||||||
Lease liability (ASC 842) | (319,774) | (290,658) | ||||
Total deferred tax liabilities | (319,774) | (290,658) | ||||
Total deferred tax assets (liabilities) | $ | — | $ | — | ||
For the period ended December 31, 2025, the Company has federal and state post-apportioned net operating loss carryforwards of $105.3 million and $51.2 million, respectively. Of the federal amount, $3.3 million have a limited carryforward period and will begin to expire in 2033; the remaining $102.0 million will have an indefinite carryforward period. Of the state post-apportioned amount, $40.3 million have a limited carryforward period and will begin to expire in 2033; the remaining $10.9 million will have an indefinite carryforward period.
For the period ended December 31, 2025, the Company has federal and state tax credit carryforwards of $0.1 million and $0.1 million, respectively. The full federal amount of $0.1 million has a limited carryforward period and will begin to expire in 2033. The full state amount of $0.1 million has an indefinite carryforward period.
For the period ended December 31, 2025, the Company has federal capital loss carryforward of $3.3 million that will begin to expire in 2030.
In accordance with Section 382 and Section 383, utilization of the NOL and tax credit carryforwards may subject to limitations based on prior or future ownership changes.
Additionally, after weighing all available and positive and negative evidence for the period ended December 31, 2025, the Company determined a full valuation allowance was necessary, consistent with prior year.
No income tax was paid during the years ended December 31, 2025 and 2024.
Tax Law Change
On July 4, 2025, the President signed into law significant federal tax legislation, H.R.1 (the “Tax Reform Act of 2025”). The legislation includes numerous changes to U.S. corporate income tax law, including but not limited to: permanent 100% bonus depreciation for qualified property, immediate expensing of domestic research and experimental expenditures, modifications to the limitation on business interest expense, increased Section 179 expensing limits, changes to the international tax regime, and expanded limitations on the deductibility of executive compensation under IRC Section 162(m). Most provisions are effective for tax years beginning after December 31, 2024, with certain transition rules and exceptions.
The Company evaluated the impact of the Tax Reform Act of 2025 on its consolidated financial statements and determined the total impact on the tax expense to be immaterial.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 31, 2026 | Showing above |
| 2024 | Mar 31, 2025 | |
| 2023 | Apr 12, 2024 | |
| 2022 | Mar 28, 2023 | |
| 2021 | Mar 28, 2022 | |
| 2020 | Mar 19, 2021 | |
| 2019 | May 14, 2020 | |
| 2018 | Mar 29, 2019 | |
| 2017 | Apr 17, 2018 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.