I've been getting very sporadic results with this...
Sometimes, it works, and upgrades the item, but most times, it just says something like 'no upgrade slotted', but it deletes the upgrade icon from the inventory and takes the 700 dilithium... The other day, it did it when I tried to use the Ultra Rare upgrade token from Echoes of Light...
I find that I can get one upgrade per log on. Subsequent attempts just don't work, but if I close the game and re-load it, it seems to work again... Is it just me, ir is this hapoening to other folk too?
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It takes many upgrades to move up to the next level once you pass mk vi or so. You should expect to use many many upgrades and dilithium, while potentially getting to the next mk level but not getting a quality upgrade. Quality upgrades are not guaranteed until mk xiv, and even then the guarantee takes a lot of upgrades to achieve.
Then apply your upgrade and watch the 700 number change, even though "nothing happens."
It's just like you leveling up your character in STO and most other games. You do 4 quests, "nothing happens" (+100 XP, + 150 XP, +200 XP, +150 XP). Then you do one more quest and you level up. The first 4 quests were not defective
EDIT: That's from using Superior Upgrade Kits BTW. Also, I find the experimental kits are not really worth it unless you already have a bunch of Salvaged Tech laying around.