NOTE 5 – AUTO-VIBE ASSETS

In December 2025, the Company entered into a three-year Master Vehicle Sales Agreement with a licensed Dealership (the “Dealership”) in California to buy and sell automobiles as a research and development activity, for the purpose of determining whether the Company’s technology known as KULR VIBE can be deployed in the automobile market. The Company purchased a range of autos and performed vibration diagnostic testing on a select number of the autos.

During December 2025, the Company allocated $5.0 million toward this project. Since December 2025, the Company purchased and sold automobiles totaling approximately $4.9 million. The sales of autos to the Dealership did not qualify as sales to customers, therefore no revenue has been recorded for the sales of these autos.

As of June 30, 2026, the Auto-Vibe assets consist of a gross past due receivable of $1.0 million, and other gross receivables of approximately $4.0 million that are past due as of the date of this filing. A credit loss reserve of $0.5 million was recorded during the six months ended June 30, 2026 against the gross receivables, resulting in a net receivable balance of approximately $4.5 million as of June 30, 2026. The parties are in the process of negotiating a planned settlement of the remaining amount due. The Company expects that collection of the $4.5 million will likely occur beyond a one-year period and accordingly, such receivable has been reflected as a non-current asset in the June 30, 2026 condensed consolidated balance sheet.

As of June 30, 2026 and December 31, 2025, auto-vibe assets consisted of the following:

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