KULR TECHNOLOGY GROUP’S FOURTH QUARTER AND FULL-YEAR 2024 EARNINGS CALL

Stuart Smith:

Good afternoon and thank you for joining us for the KULR Technology Group fourth quarter and full year 2024 earnings call. Joining me on the call today will be Michael Mo, the Chief Executive Officer of the company, as well as Shawn Canter, the Chief Financial Officer of the company. I am Stuart Smith and I will be your moderator for the call today. After we receive opening statements from both Michael and Shawn, we will dive into a question and answer portion of the call, which will be the answering of questions submitted by you via email and social media. But before we begin the call, please listen to the following Safe Harbor statement. This call contains certain forward-looking statements based on the company’s current expectations, forecasts and assumptions, that involve risks and uncertainties.

Forward-looking statements made on this call are based on information available to the company as of the date hereof. The company’s actual results may differ materially from those stated or implied in such forward-looking statements, due to risk and uncertainties associated with KULR Technology Group’s business, which include the risk factors disclosed in their Form 10-K filed with the Securities and Exchange Commission on April 12th, 2024. As may be amended or supplemented by other reports, KULR files with the Securities Exchange Commission from time to time.

Forward-looking statements include statements regarding their expectations, beliefs, intentions or strategies regarding the future, and can be identified by forward-looking words such as anticipate, believe, could, estimate, expect, intend, may, should and would, or similar words. All forecasts provided by management on this call are based on information that is available at this time, and management expects that internal projections and expectations may change over time.

In addition, the forecasts are entirely based on management’s best estimate of their future financial performance given their current contracts, current backlog of opportunities, and conversations with new and existing customers about their products and services. KULR Technology Group assumes no obligation to update the information included on this call, whether as a result of new information, future events, or otherwise. With that, I will now turn the call over to Michael Mo, CEO of KULR Technology Group. Michael, the call is yours.

Michael Mo:

Thank you, Stuart. This is Michael Mo. Thanks everyone for joining us today. KULR closed out 2024 with a record quarter in Q4. Revenue increased to $3.37 million, up 44% from Q4 2023, while our operating laws decreased by 29% year-over-year. Gross margin was 64% in Q4 2024, compared to 29% in the same quarter, 2023. Product sale customers increased 35% to 53 in 2024, compared to 39 in 2023. Service revenue customers increased 100% to 34 in 2024, from 17 in 2023. By the end of 2024, KULR had approximately $30 million in cash and $20 million in Bitcoin holdings. As of March 26, 2025, we have over $80 million in cash and Bitcoin holdings and no debt. KULR is in its strongest financial position ever with a rock -solid balance sheet. And 2025 will be a transformational year for us.

Energy consumption and thermal management are the key bottlenecks for artificial intelligence, AI infrastructure, and applications. At KULR, we will leverage our energy management expertise to serve multiple fast-growing markets in space exploration, robotics, physical AI at the edge, and AI infrastructure platforms. We expect to at least double our revenue in 2025, as we grow our energy management business and expand into new applications. To accommodate our growth, we’re expanding our Webster, Texas headquarter. We’ve signed a lease for over 13,000 square feet of additional office space next door to our current facility, making the total size to over 31,000 square feet of manufacturing and office space.

Our headquarter facility has received AS9100 certification, which is a significant milestone reflecting KULR’s dedication to producing the highest quality products within the aerospace and defense industries. AS9100 is the globally recognized quality management standard for organizations that design, develop, and provide aerospace, defense, and aviation products and services. We’re now well positioned as the one -stop shop total solution provider to design, test, manufacture, and certify battery products of the highest quality in the United States. As you all know, we’ve been investing in our KULR ONE battery platform. We’re now reaping the benefits of that investment.

For our KULR ONE space product, we now have multiple customer engagements to design their 20793 compliant batteries. We’re going through 20793 certification process now with NASA for one of our customers. We have KULR ONE space reference platform for 100, 200 and 400 watt-hour batteries. We have our own battery management system, BMS, for both terrestrial and space applications that are radiation tolerant. We’re entering production stage for both our KULR ONE space and Guardian customers in 2025. In addition to KULR ONE space and Guardian products, we’re seeing growing demand for battery pack design and manufacturing services from US companies developing drones and robotics.

Defense tech and warehouse automation are two areas of particular interest. The new generation of defense tech companies are focused on innovating rapidly and delivering cost-effective systems to the battlefield. Bomb calls and performance are more important than ever, and KULR is focused on delivering cost-effective solutions for these companies by leveraging our supply chain and advanced technology portfolio across multiple projects. Robots for warehouse operations is another rapidly growing area, and these solutions are all battery operated.

Safety is paramount in these applications, and KULR is able to offer companies in this space a range of solutions to improve safety profile and performance for the battery packs. Nvidia CEO Jensen Huang has highlighted the emergence of physical AI, AI systems capable of understanding interacting with the physical world as a significant rapidly growing market opportunity. He has referred to the sector as a multi-trillion dollar opportunity, particularly emphasizing the potential in robotics in autonomous machines. At KULR, our exposure to this market began through our battery customer interactions, but we quickly realized that this is a massive market opportunity that we must participate in with more than just batteries. We’ll announce our strategic partnership to enter the robotics and physical AI market in the next few weeks.

We announced on Tuesday that we now have 668 Bitcoins, which is more than two thirds way towards our near term goal of 1,000 Bitcoins. I get asked a lot about how we stomach the volatility in Bitcoin. Michael Saylor said it best. “Volatility is vitality.” In this age of AI, where things are transforming at a crazy rate overnight, someone may call it the deep seek moment, we better get used to volatility. I believe that to survive and to thrive in this new era of AI, KULR needs to build a culture that embraces volatility so it can reduce the risk of our own deep seek moments. Bitcoin’s treasury strategy serve two objectives for us. One, we believe that Bitcoin is a long-term store value that beats inflation and gains in value.

Number two, it’s a training ground for building dynamic corporate culture and execution cadence that positions KULR to succeed in the new AI era. We’re doubling down our commitment to BTC with BTC mining. We’re actively exploring partnerships opportunities. As we roll out our AI products and energy management technology applied to AI data centers, we expect to apply them to BTC mining as well to reduce energy costs. Cathie Wood has predicted Bitcoin to reach $1.5 million by 2030. Michael Saylor is projecting Bitcoin to reach $20 trillion in market capitalization within the next four to eight years from the $2 trillion market cap right now. I hope they’re both right.

Speaking of Cathie Wood, I’d like to wrap up my portion of the presentation with her big ideas for 2025, AI, robotics, energy storage, and blockchain Bitcoin. These ideas are not isolated. Their convergence accelerates innovation, leading to potential growth or exponential growth to profound social impact that are fundamentally and structurally changing our financial systems. At KULR, although we’re a small company with limited

Michael Mo:

… resources, but we view this convergence as a generational opportunity for us to participate in because we are all at the very early stage of AI and we have not even yet started the physical AI and the robotics age yet. There will be many DeepSeek moments to come and we want to be ready to take advantage of those moments. We’ll focus on applications where we can add our expertise and the existing business is disrupted by AI and we can pivot to these businesses that could be creative to KULR quickly. To give some context around our thinking and strategy, I’d like to share with you a couple of data points.

In a recent interview at the Tokyo University in Japan, Sam Altman, CEO of OpenAI predicted that OpenAI’s software programming AI agent would be the top one program in the world by the end of 2025. SoftBank CEO Masa Son expects AI intelligence to advance 1000 times every technology cycle, which lasts about two to three years. At that rate, we can expect AI intelligence to be 1 million times more intelligent than what they are today by the end of this decade. As these predictions become realities over the coming months and years, every company in the world will become an AI and software company. KULR needs to get there as fast as possible. Now, before I hand the call over to Shawn, I’d like to encourage you to check out our new website at www.kulr.ai. It’s a fresh new look to showcase all of our products and services. Thank you very much. Next, Shawn will discuss financial details.

Shawn Canter:

Thank you, Mike. Let’s cover some key highlights now for both the fourth quarter and the full year 2024. Topics worth noting include revenue, a record revenue quarter, and record revenue year for KULR. Gross margin. Gross margin was up a hundred percent. Fourth quarter 2024 over fourth quarter 2023. Operating expenses were down. We continued the trend of expanding our paying customer base and reduced our customer concentration. KULR’s balance sheet is strong. We have a meaningful net cash position with no material debt obligations. Our cash and Bitcoin holdings are worth over $80 million as of the close on March 25th. We established our Bitcoin treasury position in 2024 and now own 667 Bitcoin. Let’s start with our income statement.

In the fourth quarter KULR set a new revenue record. Revenue was approximately $3.4 million and this is about 44% higher than the same period last year, and 6% higher than the third quarter 2024, which was then itself another revenue record quarter. In 2024, KULR delivered $10.7 million of revenue. Another revenue record for KULR. This was up 9% from 2023, which was itself also a revenue record year. In 2024, product revenue was approximately $3.6 million down 47% year over year, and service revenue was approximately 4.4 million in 2024, up 51% from the same period last year. In 2024, KULR signed its first two revenue generating license agreements and recorded 2.7 million in revenue. We are excited about this business model and hope to be able to announce similar type deals in the coming quarters.

Gross margin for the fourth quarter was 64% versus 29% in the same period last year. For the full year 2024 gross margin was 51% versus 37% in 2023, a 37% increase year over year. 2024 versus 2023, full year R&D expenses were down 34% and SG&A was down 16%. 2024 earnings per share improved 55% over 2023. Now let’s spend a moment on customers. In 2024, KULR had 71 paying customers up from 53 in 2023. Paying product customers were up 36% from 39 in 2023 to 53 in 2024. Service customers were up a hundred percent to 34 in 2024. In addition to expanding our customer base, we are reducing our paying customer concentration. Now, a few points on our balance sheet. Compared to the end of 2023, our balance sheet has improved materially. At the end of 2024, our cash on hand was $30 million. Our current accounts receivable was 2.6 million and we held 20 million in Bitcoin.

Total assets were $63 million at 12/31/2024 versus 11 million at the end of 2023, up 479%, and we had no material financial debts. Total liabilities were down 58% to $5.5 million. Before moving on, as a reminder, we currently hold about 667 Bitcoin. KULR has decided to early adopt the new FASB rule for marking to market our Bitcoin holdings. So you’ll see on our 2024 income statement a line item called, quote, “Change in fair value of digital assets,” unquote. At the end of 2024, this line item was a $719,000 charge. This is a non-cash item. It just reflects the change in value from the purchase date to the mark date, in this case, 12/31/2024. It does not reflect that we sold any Bitcoin. Going forward, our Bitcoin holdings will be marked on a monthly basis. Back to you Stuart.

Stuart Smith:

Thank you, Shawn. Well, let’s jump right into the questions now, and this first question is for you, Michael. Here it goes. I saw the news on Thursday, March 12th about the deal with a space agency to provide M35A batteries. How prevalent do you think space travel becomes over the next 10 years? Will there be applications on Earth as well?

Michael Mo:

Yeah, thanks, Stuart. Yeah, space travel will definitely become more affordable and prevalent over the next 10 years, but we believe that the bigger market opportunity is privatized space exploration. With new satellites, equipment into space, that they’re all going to require batteries to power them, and also as the volume go up, the cost will go down. As that happens, we expect some of these more higher-end technology to be available for applications on earth.

Stuart Smith:

All right, excellent. Next question is for you, Shawn. Here it is. Are there plans to diversify crypto or buy more?

Shawn Canter:

Thanks, Stuart. Sure. As we’ve indicated before several times from a crypto point of view, we are focused on our BTC or Bitcoin treasury program.

Stuart Smith:

Okay, thank you for that. Okay, here’s the next question and it’s for you again, Michael. There is a rumor circulating on Twitter aka X. That KULR is providing materials to Rocket Lab Archimedes engine, specifically a carbon composite material to be used in a rocket called Neutron. One, can KULR please confirm or deny that they are providing any materials to Rocket Lab? Two, if they are providing any materials to Rocket Lab, can KULR confirm or deny if the materials provided would be sufficient for the two companies to announce a partnership? And three, if the partnership will be announced, can KULR please give details of any further opportunities that may arise from working together with Rocket Lab and how much money KULR expects to realize from the partnership and how often they would be providing materials. I’m pretty sure he slipped about seven questions in there, Michael. I’ll leave it to you.

Michael Mo:

Thanks, Stuart. Yeah, I’m glad that this investor really did a lot of homework on both KULR and Rocket Lab sounds like. But I really can’t comment on any rumors that we have not officially announced, that we have any relationship with, so I’m just going to leave it to that.

Stuart Smith:

Understood. So the next question, Shawn, is for you, why is such a large portion of cash being invested into Bitcoin and could this money be better allocated to focus on the growth of the KULR brand at this clearly pivotal time for the company? Also, I would like to know what the company plans to do with their Bitcoin reserve if the company comes on financial hardship. More than that, would they rather dilute investors or sell a portion of the Bitcoin holdings?

Shawn Canter:

Thanks, Stuart. Good topic. Our treasury strategy is to maintain liquidity and significant cash reserves in addition to building our BTC treasury position, as I’ve said before. Given the economic context in today’s world and the fundamentals of Bitcoin, and what I mean by that is sort of the growing demand across several dimensions, individuals, institutions,

Shawn Canter:

… state organizations, government bodies, and the fixed supply of Bitcoin, that there’ll only be 21 million ever created. We consider BTC a good store of value over time, and therefore, a positive for KULR shareholders.

We consider our liquidity and our cash on hand to fund operations as we go through our internal decision-making processes. All of our decisions get analyzed through a lens of what we think is in the overall best interest of the KULR shareholder base, and decisions around cash management and our BTC treasury program are no different than that. So our strategy is to be a long-term holder of BTC, Bitcoin, and we do not see a scenario today that would cause us to change that strategy.

Stuart Smith:

Okay. Shawn, let’s stay on this topic, and let’s stay with you. Here’s the question. Why invest in Bitcoin and not invest in your company? I would imagine you need to improve product and facilities to create revenue.

Shawn Canter:

Sure. Excellent question. We don’t see that we have to make a decision between the two though, that we’d have to make a choice between the two today. We’re investing in our company, and we consider our BTC treasury program a very valuable asset to KULR and its shareholders. We’re also investing in our people, our facilities, and our product development.

Stuart Smith:

Excellent. All right. Next question. This is for you, Michael. During the last earnings call, you were asked if KULR could deliver/produce if any large battery contract was awarded. You said yes, and that KULR had a partner that was also ready to go if that big volume contract came along.

What do you consider to be a, quote-unquote, big contract? What is the name of the company/partner you mentioned you would be ready to help take on the production of a big contract?

Michael Mo:

Yeah. I mean, we do have a number of customers with contracts over $1 million, and we do have customers ready on production. As I talked earlier, we have expanded our facility in Webster, Texas, to over 31,000 square feet, and so now, we are actually ready to take on some of these bigger contracts, and I think that in our new facility, we can manufacture thousands of batteries per year without blinking an eye, so yeah. We’re ready for these big contracts.

Stuart Smith:

All right. Well, during the last two earnings calls, you’ve mentioned that revenues were down in part because KULR’s biggest customer had not resigned a contract/agreement. However, you said they were expected to do so in 2024. Did that transpire?

Michael Mo:

Yeah. In 2024, that particular customer did not order any products, but we were still able to make up the difference with new customers and finish the year on a record quarter. So as you’ve seen in the general battery market in the United States, it’s been a very challenging time for a lot of people, a lot of our customers.

So we won’t make any prediction right now on when and how much this customer will order for 2025, but without any forecast from this one particular customer, we still expect our revenue to at least double in 2025.

Stuart Smith:

Okay. Here’s another question on a different topic, though. This is for you, Michael. Has KULR considered pursuing a service contract providing a service technician on every US military air base, with helicopters to utilize KULR Xero Vibe?

Michael Mo:

Yeah. That’s a great idea, but it’s really up to the US military to grant such contracts. So, so far, we haven’t received any indication of such contract or arrangement is welcomed by the US military at this moment.

Stuart Smith:

Okay. So Michael, next question. Are there any data centers that have a KULR product at this time?

Michael Mo:

Yep. So our Japanese-licensed customer is testing the KULR Xero Vibe product. I believe some of their engagement is for data center customers.

Stuart Smith:

Okay. Michael, this is about the sales team. How big is KULR’s sales team, and do you contract third-party sales agents as well?

Michael Mo:

Yes. We are growing our sales team, sales and marketing team, together. Yes, we do have third-party sales agents for our SafeCASE and other products.

We’ve just added a new VP of business development, Jeong Song. He was at EaglePicher and Enovix, and he’s helping developing new battery customers. Josh Steinmann also just joined us as VP of AI and Robotics. Josh started his career at Qualcomm where he developed the CDMA footprint for Southeast Asian markets, and he has lot of experience in IoT as well as AI software. And our whole team is about 10 people.

Stuart Smith:

Okay. Another question for you then, Michael. What has the partnership or collaboration with the United States Postal Service produced?

Michael Mo:

Yeah. We are working on final approval for a couple of very large-sized SafeCASE configurations. I believe it’s over three kilowatt-hours to have UPS permits. Once that’s granted, then we have the power tools and EV customers ready to ship their recycled batteries on the UPS network.

Stuart Smith:

All right. Very good. Let’s change gears and talk to you again, Shawn, with another question. How much revenue in Q4 came from licensing deals?

Shawn Canter:

Sure. So in the fourth quarter of 2024, KULR generated 1.7 million in revenue from licensing. And while we’re on the topic for the full year 2024, we generated $2.7 million from licensing.

Stuart Smith:

All right. Thank you, Shawn. Michael, here’s another question. What new products or customers is KULR pursuing to utilize its TRS to potentially gain new business?

Michael Mo:

Yeah. Well, TRS will be utilized across all of our products for the KULR ONE battery, for space, for DOD, for the robotics, so it’s across all of our new battery initiatives.

Stuart Smith:

Okay. Another question for you here, Michael. Can you provide an update on KULR’s current and future endeavors with private space stations, particularly with Axiom Station and Starlab? Given your partnerships with Axiom Space and Voyager Space, what growth opportunities do private space stations present for the company?

Michael Mo:

Yeah. We can’t comment on individual customer activities, but we feel very strongly the quarter one space platform is gaining traction with private space companies, especially with the 20793 certification.

And then also, our off-the-shelf products, off-the-shelf, the customizable quarter one space platforms, the 100-watt-hour, 200, the 400-watt-hour configurations, these are very competitive products for satellites and other private space missions.

Stuart Smith:

Okay. Shawn, let’s talk to you. Here’s another question. The January 25th 2024 lease amendment extended the San Diego facility lease at 4863 Shawline Street to November 30th, 2025, known as the first renewal. What are KULR’s plans for its California operations after this date? Does management anticipate extending this lease again?

Shawn Canter:

Thanks, Stuart. Sure. As you know, we have moved our official headquarters to our Webster, Texas, facility. Our California activity continues to be an important part of our company.

Whether we stay in this particular facility in California long-term or identify a different facility for our California-based activities, it’s simply an optimized operating decision that we will make based on the long-term best interests of KULR, its customers, and its shareholders. And once that decision’s made and it’s appropriate to share it, we’ll certainly share that with everyone.

Stuart Smith:

All right. Very good. Michael, a March 2025 announcement stated the KULR ONE space battery incorporating the Molicel M35A cells is set for completion this month, followed by NASA safety board review. Can you share the key progress made in March towards this completion?

Michael Mo:

Yes. We are going through the NASA JSC 20793 certification testing right now. I believe the customer will be ready for NASA mission in 2025.

Stuart Smith:

Okay. Michael, the next question is for you. With Archer Aviation and Vertical Aerospace disclosing their use of the Molicel battery cells, what opportunities exist for KULR to integrate its patented Thermal Runway Shield as a thermal management solution in their aircraft given KULR’s partnership with Molicel to enhance battery safety?

Michael Mo:

Great question. Molicel is very well-respected in the industry, so you see industry leaders like Archer and Vertical use them. We have a very close relationship with Moli. We have done FTRC and IZM testing on the M35A cells, and also their new power cells, such as the

Michael Mo:

… the P50, and they have actually a new version, more powerful cell coming as well. So we’ve gained a lot of knowledge about that, and we’re building our KULR One Air reference platform with the Mali cell for electric aviation and draw markets. So TRS will play an integral role for that and we were looking forward to really leverage that relationship, and grow business for both US and Mali.

Stuart Smith:

Okay. The next question is also for you, Michael. A September, 2024 announcement stated that KULR completed its initial engagement with the US army, under the expanded $2.4 million battery contract, focusing on silicone anode lithium ion battery prototypes with plans for KULR One Guardian battery production in 2025. Can you provide an update on the progress of this project since Q3 2024, including any developments in testing, production timelines, or expanded applications for the army?

Michael Mo:

Sure. We actually receive another development and testing order from the army. We believe we’re doing cell screening testing for them to show the value of cell screening for qualified cells, to find defective cells before they’re built into the battery pack. And so therefore we can build the most reliable battery pack for the army. We will go to pilot production with them in fall of 2025.

Stuart Smith:

Okay. Here’s the next question, Michael. After the Japanese deal regarding cathode applications, what are your involvement in nuclear energy? Is there any upcoming project about that?

Michael Mo:

Yes, the nuclear energy is a long-term investment for our customers. It’s going to take some time. I actually met with Charlie Oppenheimer, the grandson of Mr. Oppenheimer, which the movie was based on. We had dinner together and we talked about his new company, Oppenheimer Energy. I learned a lot about how long it takes and how much money it takes to build a nuclear power plant, and it’s kind of mind-boggling. So we’re just getting started, start engaging with these customers, but it’s going to be a long, long time for some of them to get to fruition.

Stuart Smith:

Understood. Michael, here’s the next question. You announced the first sale of your M35A battery cells. Is there only one customer so far? Did that customer just make a one-time purchase or are there ongoing sales expected?

Michael Mo:

Yes, I think this question is about the M35A golden lot, or what we call the golden lot cell, that has gone through the NASA Work Construction 37. And then we have other customers for those cells as well as we’re using those cells to build KULR One space batteries for customers that need to meet the JSC 20793 certification.

Stuart Smith:

Okay, Michael, what is the current status of your Guardian One contract with the Army?

Michael Mo:

Yep, I think this is probably similar to the previous question. We’re going through more testing, cell screening with the customer right now, and targeting prototype production in fall of 2025.

Stuart Smith:

All right. And another topic here for you, Michael. Has your fan customer started selling fans? How far off might sales be that are larger than the minimum? Are there any other vibe customers since then?

Michael Mo:

Yes. They have not gone into volume production yet. We’re working on faster throughput on the balancing system, to lower the cost. We are also developing acoustic energy elimination technology to combine that with vibration elimination. It actually turns out that acoustic energy is as important to eliminate as vibration energy in server environments. So we’re working with the customer pretty hard on that. And then hopefully later this year we will be announcing those kind of products into the market.

Stuart Smith:

All right, excellent. And thank you for that, Michael. Shawn, as you deplete your cash is this next question, will you sell Bitcoin to support the company’s operations?

Shawn Canter:

Thanks, Stuart. We believe our Bitcoin holdings will account for meaningful shareholder value over the long term. We don’t anticipate using our BTC holdings to meet normal course working capital funding, and think we’ll have available cash on hand to meet those needs.

Stuart Smith:

Shawn, the final question is for you. Here we go. Given the growing interest in cryptocurrency adoption and electrification driven by policies such as the Bitcoin Strategic Reserve announced by President Trump, how does KULR Technology Group plan to leverage its thermal management and battery solutions to support Bitcoin mining and energy storage infrastructure in the United States? And what impact does the company expect this to have on the revenue and margins over the next 12 to 18 months?

Shawn Canter:

Sure, good question. We think the announcement of the strategic Bitcoin Reserve is a strong positive for Bitcoin and therefore for KULR and its shareholders. We’re one of the largest corporate owners of Bitcoin and we are always looking to leverage our knowledge, resources, and asset base to explore potential sources of shareholder value. As you know, we’ve already signed a license for our KULR zero Vibe Cooling solutions, and as we continue to explore these opportunities, we’ll look to execute on those that drive material growth and positive margin contribution.

Stuart Smith:

All right, thank you for that, Shawn. As mentioned, that was our final question, which concludes the question and answer portion of this call. I’d like to thank both of our guests, Shawn Canter, CFO of the company, as well as of course, Michael Mo, the CEO of KULR Technology Group. But most of all, I know Michael and Shawn want to extend their deepest gratitude to all of you shareholders who have tuned in, and those that have submitted their questions. With that, that concludes our call and I’ll turn the call back over to our operator, Thomas.

Operator:

This concludes our call for today. Thank you.