KULR Technology Group, Inc. Leases Disclosure

NOTE 13 – LEASES

Operating Leases

On January 18, 2023, the Company entered into a lease agreement for office space in Webster, Texas. The initial lease term is twelve months and thirteen days. Monthly rental payments under the lease are $5,047, which is comprised of $4,245 of base rent plus $802 of common area maintenance fees. The Company determined that the value of the lease liability and the related right-of-use asset at inception was $51,154, using an estimated incremental borrowing rate of 5%.

On January 31, 2024, the initial lease for Webster, Texas dated January 18, 2023, expired. On January 27, 2024, the Company entered into a new lease agreement for new office space in Webster, Texas. The initial lease term is 63 months. The lease contains an option to renew for an additional 36 months, which is not reasonably certain to be exercised and therefore is not included in the measurement of the operating lease ROU asset and related lease liability. Monthly rental payments under the new lease are $33,818, which is comprised of $22,682 of base rent and $11,136 of common area maintenance fees. No cash payments were due for the first three months of the lease.

The Company determined that the value of the operating lease liability and related right-of-use asset at inception was $1,085,498, using an incremental borrowing rate of 10%. The Company paid a security deposit of $37,930 in connection with the Webster lease agreement which is recorded within the security deposits section of the balance sheet as of December 31, 2025 and December 31, 2024.

On April 15, 2025, the Company amended its original lease dated January 27, 2024 (the First Amendment”), for the property located in Webster, TX, to expand the rentable square footage by approximately 13,535 square feet (the “Expansion Premises) for a total rentable space of 31,095 square feet. The First Amendment is effective May 1, 2025 and expires April 30, 2029. Monthly payments for the Expansion Premises are $17,483. No cash payments are due for the first two months of the lease. The Company determined that the value of the operating lease liability and related right-of-use asset at inception was $691,852, using an incremental borrowing rate of 10%.

The Company also leased office space at 4863 Shawline Street, San Diego, CA, pursuant to an operating lease which originally expired May 31, 2024 (the “San Diego Lease”). On January 25, 2024, the Company entered into an amendment to the lease (the “First Renewal”), whereby the lease was extended for a period of eighteen months commencing June 1, 2024, and terminating November 30, 2025. The Company did not renew this lease upon its expiration. Monthly rental payments under the amendment are $30,511. The Company determined that the value of the modified operating lease liability and related right-of-use asset to be $559,919 using an incremental borrowing rate of 10%. The Company paid a security deposit of $50,213 in connection with the San Diego lease agreement which is recorded within the prepaid expenses and other current assets section of the balance sheet as of December 31, 2025.

During the year ended December 31, 2025 and 2024, operating lease expense was $717,505 and $576,332, respectively.

Finance Lease

On October 1, 2025, the Company entered into a two-year lease agreement (the “Fifth Machine Lease Agreement”) with a digital asset mining services company to operate digital assets mining machines on KULR’s behalf, at a total lease cost of $4,220,000. The lease term began on October 31, 2025. On October 1, 2025, the Company prepaid $1,100,000, representing the approximate fair value of the machines. The lease requires monthly fixed payments of $130,000, which cover the operational costs of using the machines. Upon lease commencement on October 31, 2025, the Company obtained the right to control the use of the identified asset and recorded a ROU asset in the amount of $987,932, with no corresponding lease liability, as the full prepayment had been made prior to commencement related to the Fifth Machine Lease Agreement. During 2025, the Company recorded an impairment charge of $905,630 on its ROU asset related to its digital asset mining operations. The impairment was driven by a significant decline in the market price of BTC, which reduced the expected future cash flows attributable to the asset below its carrying value. Accordingly, the ROU asset was written down to zero. See Note 3 for information regarding this finance lease and other short-term digital asset leases.

The Company recorded depreciation expense in the amount of $82,691 and $1,554 in connection with ROU assets held under the finance leases during the years ended December 31, 2025 and 2024, respectively. The Company recorded interest expense of $138 and $118 during the years ended December 31, 2025 and 2024, in connection with its finance lease liabilities.

Supplemental Information

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Maturities of lease liabilities as of December 31, 2025, were as follows:

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

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