KULR Technology Group, Inc. Revenue Disclosure
Revenue Recognition
The Company recognizes revenue in accordance with ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation.
The following five steps are applied to achieve that core principle:
| ● | Step 1: Identify the contract with the customer; |
| ● | Step 2: Identify the performance obligations in the contract; |
| ● | Step 3: Determine the transaction price; |
| ● | Step 4: Allocate the transaction price to the performance obligations in the contract; and |
| ● | Step 5: Recognize revenue when the company satisfies a performance obligation. |
The Company’s sales contracts typically have 30-60 day payment terms. For sales contracts with payment terms of more than one year, the Company determines whether there is a significant financing component, and if so, revenue is recognized at an amount that represents the present value of the payments, and interest income is recognized over the contractual period using the effective interest method, reflected in other income on the consolidated statements of operations.
Principal versus Agent Considerations
The Company evaluates its role under ASC 606 to determine whether it acts as a principal or agent where third-party sellers fulfill or ship orders to customers. The Company recognizes revenue on a gross or net basis depending on whether it acts as a principal or an agent in the transaction. The determination is based on an evaluation of whether the Company controls the specified good or service before it is transferred to the customer.
During the years ended December 31, 2025 and 2024, the Company recognized revenue primarily from the following different types of contracts:
| ● | Product sales – Revenue is recognized at the point in time the customer obtains control of the goods and the Company satisfies its performance obligation, which is generally at the time it ships the product to the customer. For certain product sales contracts, |
| the Company acts as an agent and revenue in connection with these contracts is presented net of the related costs. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service before transfer to the customer. When the Company concludes that it controls the good or service before transfer to the customer, the Company is considered a principal in the transaction and records revenue on a gross basis. When the Company concludes that it does not control the good or service before transfer to the customer but arranges for another entity to provide the good or service, the Company acts as an agent and records revenue on a net basis in the amount it earns for its agent service. |
| ● | Contract services – Revenue is recognized pursuant to the terms of each individual contract when the Company satisfies the respective performance obligations, which could be recognized at a point in time or over the term of the contract. Contract services revenue that is recognized over time may be recognized using the input method, based on labor hours expended, or using the output method based on milestones achieved, depending on the contract. |
| ● | Mining of digital assets – The Company has entered into lease agreements with a digital assets mining services company to operate digital asset mining machines on behalf of the Company and provide mining pool operating and hosting services. Pursuant to these agreements, the Company provides computing power to the mining pool operator. The Company is entitled to digital asset rewards once it begins to perform hash calculations for the pool operator in accordance with the operator’s specifications. The Company’s fractional share is based on the total blocks expected to be generated on the BTC network for the daily 24-hour period. Digital asset rewards are considered non-cash consideration. |
| ● | IP license – Revenue is recognized pursuant to the type of intellectual property (“IP”) being licensed for each individual contract when the Company satisfies the respective performance obligations, which could be recognized at a point in time or over the term of the contract. IP license revenue for the right to access IP is recognized over time and the right to use IP is recognized at a point in time. |
| a) | License fees – revenue from the right to use IP is recognized immediately at the point in time that the control of the license is transferred to the customer. |
| b) | Minimum royalty fees related to a license to use IP – revenue is recognized at the point in time that control of the license is transferred to the customer. |
| c) | Sales based royalty fees above the minimum – are recognized when the sale occurs. |
| ● | Grant revenue - The Company has determined that government grant revenue does not fall under the FASB ASC 606. Under the grant contract with the Texas Space Commission (“Texas Grant”), the Texas Space Commission receives no direct benefit from the product development, and therefore does not meet the definition of a customer pursuant to ASC 606. As there was no authoritative guidance under U.S. GAAP on accounting for grants to for-profit business entities when the Company entered into the Texas Grant, the Company has applied the guidance in ASC 958 Not-for-Profit Entities by analogy. Further, the Texas Grant is considered a conditional contribution because the Texas Grant can only be used to reimburse allowable expenses. The grant is for the research and development of cold-temperature lithium-ion battery solutions for the next generation of Lunar and Martian missions which is part of the Company’s ongoing major or central activities. As such, reimbursement proceeds from the Texas Grant are recorded as revenue, which is generally recognized when qualifying costs are incurred and conditions |
| for reimbursement have been met. Grant revenue during the year ended December 31, 2025, was $1,886,376 related to the reimbursement of equipment purchases totaling $255,728, R&D expenses totaling $1,474,100 and prepayments of $156,548. |
The following table summarizes the Company’s revenue recognized in its consolidated statements of operations:
For the Years Ended | ||||||
December 31, | ||||||
| | 2025 | | 2024 | ||
Revenue Recognized at a Point in Time: | ||||||
Product sales | $ | 5,052,771 | $ | 3,644,240 | ||
Contract services | 2,028,201 | 3,412,030 | ||||
IP license |
| — |
| 2,687,218 | ||
Grant revenue | 1,886,376 | — | ||||
Total | 8,967,348 | 9,743,488 | ||||
Revenue Recognized Over Time: | ||||||
Mining of digital assets | 7,029,924 | — | ||||
Contract services | 173,132 | 993,993 | ||||
Total Revenue | $ | 16,170,404 | $ | 10,737,481 | ||
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and deferred revenues (contract liabilities) on the Consolidated Balance Sheet. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits from our customers resulting in contract liabilities (See Deferred Revenue, below). As of December 31, 2025 and 2024, the Company had accounts receivable, net of $3,075,328 and $4,091,679, respectively. As of December 31, 2025, the Company had non-trade receivables of $3,723,473. Deferred revenues were $107,267 and $32,768 as of December 31, 2025 and 2024, respectively.
IP License Agreements
On September 29, 2024, the Company entered into a three-year licensing agreement (the “KULR VIBE Agreement”) with a customer located in Japan to use its KULR VIBE software to measure and reduce fan vibration levels. The KULR VIBE Agreement gives the customer the exclusive license to use the software in Japan (for Japanese customers) for the sole purpose of operating the Balancer. The Balancer is a hardware device used to measure vibration levels. Pursuant to this Agreement, the Company received a one-time, non-refundable license fee for the right to use the IP of $500,000 for which revenue was recognized immediately. The customer is required to pay royalty fees to the Company of $0.20 per unit of any rotational system balanced by a Balancer, and 3% of gross sales of all Balancers the customer manufactures and sells to a third party. The customer is required to make quarterly royalty payments to the Company which may vary from period to period, but there is a minimum payment of $50,000 per quarter for three years (or $600,000 over the three-year term of the Agreement). Since the payment of the minimum royalty occurs significantly after performance, a significant financing component was identified. Therefore, in 2024, the Company immediately recognized revenue in an amount equal to the present value ($528,767) of the $600,000 minimum royalty to be received, using the prevailing interest rate in the relevant market (prime rate) of 8.0%. Royalty fees above the minimum amount, if any, will be recognized when the related sales are recognized by the customer. The Company has not recognized any excess royalty fees as revenue during the years ended December 31, 2025 and 2024.
While the KULR Vibe Agreement contains a software maintenance provision, the Company expects the resources that will be dedicated to the software maintenance services to be negligible and determined an amount to be allocated to this software maintenance performance obligation to be de minimis.
On December 29, 2024, the Company entered into a ten-year licensing agreement (the “CF Cathode Agreement”) with a different customer located in Japan, for the use of intellectual property in connection with its CF Cathode Design technology (including the specifications, diagrams, schematics and instructions (together the “KULR CF Intellectual Property”)) for the production of the CF Cathode. The CF Cathode Agreement provides an exclusive license to use the KULR CF Intellectual Property to manufacture and sell CF Cathodes in Japan, and a non-exclusive license to manufacture and sell CF Cathodes in several other countries, including Taiwan, China, India and Korea. The license fee is $1.8 million to be paid over 5 years as follows: $300,000 due on February 15, 2025; $150,000
due on June 15, 2026; $150,000 due on December 15, 2025; and $150,000 on each of June 15 and December 15 in 2026 through 2029 (with the last $150,000 being due on December 15, 2029).
The CF Cathode Agreement contains a significant financing component. Therefore, the Company immediately recognized revenue in an amount equal to the present value ($1,658,451) of the $1,800,000 license fee, using the prevailing interest rate in the relevant market (prime rate) of 7.5%.
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 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.