Q1 2022 KULR Technology Group Inc Earnings Call

Stuart Smith: --and COO of KULR and that's Keith Cochrane and finally from the company we''ll be joined by Chief Financial Officer, Simon Westbrook. We will also be joined for a Q&A session by Theodore O'Neil at Litchfield Hills Research and John Nobile at [inaudible] before.

Stuart Smith: Before we start the call though, I want to read the safe harbor statements found at the bottom of every company press release and regulatory filing. Statements made on this call do not constitute an offer to sell or a solicitation of offers to buy any securities of any entity. This call may contain certain forward-looking statements based on KULR'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. KULR's actual results may differ materially from those stated or implied in such forward-looking statements due to risks and uncertainties associated with their business, which include risk factors disclosed in the company's Form 10-K filed with the Securities Exchange Commission on March 28, 2022.

Regulatory filing.

Statements made on this call do not constitute an offer to sell or a solicitation of offers offers offers excuse me to buy any securities or any empty entity. This call may contain certain forward looking statements based on coolers 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 cooling as actual results may differ materially from those stated or implied in such forward looking statements due to risks and uncertainties associated with their business.

Which include risk factors disclosed in the company's Form 10-K filed with the Securities Exchange Commission on March 28 2022.

Stuart Smith: Forward-looking statements include statements regarding the company's 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 are provided by management in this call are based on information available at this time and management expects that internal projections and expectations may change over time.

Tensions or strategies regarding the future and came by the identified by forward looking words, such as anticipate believe cooler.

The mate expect intend may should and would or similar words. All forecasts are provided by management. In this call are based on information available at this time and management expects that internal projections and expectations may change over time.

Stuart Smith: In addition, the forecasts are entirely on management's best estimate of their future financial performance given their current contract, current backlog of opportunities, and conversations with new and existing customers about their products and services.

Backlog of opportunities and conversations with new and existing customers about their products and services with no debt.

Stuart Smith: The company assumes no obligation to update the information included in this call whether as a result of new information, future events, or otherwise. With that, I will now turn the call over to Michael Moe. Michael, the call is yours.

Michael Moe: Thank you, Stuart, and thank you everybody for joining us today. This is Michael Moe. As I'm sure you all saw we intentionally issued our earnings press release earlier today in sync with the 8-K filing of our financing event that you can find on the SEC's website.

I'm sure you all saw we intentionally issued our earnings press release earlier today.

In sync with the 8-K filing of our financing event that you can find on the FCC website.

Michael Moe: First quarter was an exciting start of 2022 for KULR on the product and business development fronts. We shipped our sample products of our carbon fiber solution to a meta versus OEM customer as a core component in the sensing electrical nerve signals to control navigation to the virtual environments. This partnership marks KULR's entry into the meta verse markets, where we believe our solution has additional opportunities to support this growing industry.

We shipped our simple products of our carbon fiber solution to a meta versus OEM customer as a core component in the sensing electrical nerve signals to control navigation to the virtual environments.

This partnership marks corners entry into the meta versus markets, where we believe our solution has additional opportunity to support this growing industry.

Michael Moe: We secured a battery safety contract with NASA to screen lithium ion battery cells for future battery pack design for the Artemis program, which is NASA's mission to go to the Moon by 2024 with a woman in a personal color. KULR can process up to 10,000 lithium ion battery cells per week based on instructions from NASA and also the department of defense.

Future battery pack designed for the Artemis program.

Which as NASA mission to go to the Moon by 2024 with a woman in a personal color.

Cooler can process up to 10000 lithium ion battery cells per week based on instruction from NASA and also the department of defense.

Michael Moe: KULR was awarded three additional contracts with DOD prime contractors to implement the carbon fiber capital solution for high power magnetics and other Colbert pulse weaponry initiatives. We appointed Dr. William Walker, formerly [inaudible] Joseph B center's senior leader in thermal analysis as our Director of Engineering. Dr. Walker will be an important part of our engineering team to build our suite of battery thermal management and safety products as well as next generation high performance computing thermal management initiatives. We released a corner tech safe case product for maritime lithium ion battery storage that meets the upcoming United States Coast Guard's new battery safety requirements for the passenger vessel industry and provides additional battery safety options for the cargo, fishing, and cruise verticals.

Other Colbert pulse weaponry initiatives.

We appointed Dr. William Walker, formerly.

That's all Joseph B centers senior leader in thermal analysis is our director of engineering.

Dr. Walker will be an important part of our engineering team to build our suite of battery thermal management and safety products as well as next generation high performance computing thermal management initiatives.

We released a corner tech suitcase product for maritime lithium ion battery storage that meets the upcoming.

United States Coast Guard's, New battery safety requirements.

The passenger vessel industry and provides additional battery safety options for the cargo fishing and cruise verticals.

Michael Moe: We continued our R&D program to use carbon fiber substrate materials inside the battery to make them charge faster and make them contain more energy. The configuration is to work with both existing liquid electrolytes and solid-state electrolytes.

The configuration is to work with both existing liquid electrolyte and solid state electrolyte.

Michael Moe: Our battery cell development has produced our own LLCO state battery electrolyte. It is in prototype stage right now, which we think can be a commercial product for sale in the second half of 2022.

Solid state battery electric.

It is in prototype stage right now, which we think can be a commercial products for sale in the second half of 2022.

Michael Moe: On the supply chain and logistics side, it was a challenging quarter as we encountered supply chain disruptions due to the COVID lockdown in China, like many other companies.

It was a challenging quarter as we encounter supply chain disruption due to the Covid lockdown in China.

Like many other companies.

Michael Moe: We had over $325,000 worth of inventory that we built that could have been recognized as revenue in the first quarter but ended up not being shipped due to the COVID-19 lockdown.

We built that could have been recognized as revenue in the first quarter, but ended up not being shipped due to the COVID-19 lockdown.

Michael Moe: We're pleased to report that these products have been shipped to the customer when the lockdown eased a bit. Much of the COVID-related challenges have meant delays in product shipment, not cancellations. So as the restrictions ease in the coming months, we expect to make up for lost time and revenue as we move through our sizable inventory. We're now taking active steps to reduce our supply chain and logistical risks going forward.

Much of the Covid related challenges and delays in product shipment no cancellations, so as the restrictions ease in the coming months we.

We expect to make up for lost time and revenue as we move through our sizable.

Inventory.

We're now taking active steps to reduce our supply chain and logistical risks going forward.

And logistical risks going forward.

Michael Moe: We announced today that we have secured $55 million in additional capital to drive two key initiatives. First is that we're working on securing battery cell supplies of over 500-megawatt hours in energy capacity from tier-one battery manufacturers. We're securing the inventory in anticipation of fast-growing demand from our key end markets in energy storage in new mobility. 500-megawatt hours is enough to power approximately 40,000 homes using currently available domestic energy storage options.

First is that we're working on securing battery cell supplies of over 500 megawatt hours and energy capacity from tier one battery manufacturers.

Where security inventory.

Anticipation of fast growing demand from our key end markets and energy storage in new mobility.

500 megawatt hours is enough to power approximately 40000 homes using currently available domestic energy storage options.

Michael Moe: By integrating our thermal management and battery safety technologies together with the battery cell supplies, KULR would provide total system solutions to specific high-value energy storage and E mobility applications, with a total topline revenue potential of between $250 million to $350 million.

Energy storage and E mobility applications with a total topline revenue potential of between $250 million to $350 million.

Michael Moe: The second initiative is to control supply chain and manufacturing costs and reduce disruptions risk by bringing much of our supply chain and production capabilities to North America. Given the current global macroeconomic conditions and geopolitical risks, we believe it's essential that we can show up our supply chain and take further control of our operations locally now that we have access to capital to do so. This opportunity will allow us to maintain our margins as the improvements in logistics flexibility and response times were more than enough to offset potential increase in labor costs. By securing the resources and infrastructure we need, we can build confidently and be in a strong position to grow.

Given the current global macroeconomic conditions and geopolitical risks, we believe its essential that we can show up our supply chain and take further control of our operations locally now.

Now we have access to capital to do so.

This opportunity will allow us to maintain our margins as improvements in logistics.

And logistics flexibility and response times were more than offset potential increase in labor costs.

By securing the resources and infrastructure, we need we can bill confidently and being a strong position to grow.

Michael Moe: Next, Keith Cochran, our president, and COO will present operational updates. Keith, please.

Please.

Terry Keith Cochran: Thanks, Michael. During Q1 2022, KULR was able to produce our backlog per plan and our operations team did an outstanding job. Unfortunately, as you mentioned, the COVID lockdown that occurred in Shanghai, China at the end of March left our production on the dock with no option to ship. Therefore, we did not achieve our revenue goals that the team had worked so hard to produce.

During Q1, 'twenty two cooler was able to produce our backlog per plan and our operations team did an outstanding job.

Unfortunately, as you mentioned the Covid lockdown that occurred in Shanghai, China at the end of March left our production on the dock with no option to ship.

Therefore, we did not achieve our revenue goals that the team that worked so hard to produce.

Terry Keith Cochran: We have since been able to negotiate with the Chinese officials for the release of the shipments and that revenue will be realized in Q2 2022. We have now taken action to create a buffer stock of materials, which we are in negotiations to have our customers take immediately as a hedge against future potential lockdowns.

We have now taken action to create a buffer stock the materials, which we are in negotiations to help our customers take immediately as a hedge against future potential lockdowns.

Terry Keith Cochran: Based on a thorough review of our geopolitical environment and increased logistics cost, we have opted to onshore production to North America in most cases. Per our review of related cost, this move will primarily be neutral to margins for KULR considering the impacts from rising logistics cost coming from Asia. With the shipment production location, KULR will also gain the additional benefits of reduced lead times for our customers and more predictable revenue delivery.

Per our reviews the landed cost this move will primarily be neutral to margins for cooler considering the impacts from rising logistics cost coming from Asia.

With the shipment production location.

KULR will also gain the additional benefits of reduced lead times for our customers and more predictable revenue delivery.

And more predictable revenue delivery.

Terry Keith Cochran: Our engineering team has made significant progress to complete the development of KULR's automated battery cell testing solution and will remain on track per our previous comments to have the lines completely quantified in Q3 and begin full capacity testing by Q4.

On track per our previous comments they have the lines completely quantified in Q3 and begin full capacity testing by Q4.

Terry Keith Cochran: The automation has been very complex, taking over a year of development, but allows for us to operate this capability in the USA at an acceptable cost level. This platform is completely modular and we will be expanding it as our customer demand increases.

Platform is completely modular.

We will be expanding it.

Customer demand increases.

Terry Keith Cochran: I'm excited to say KULR's sell check baseline platform is now complete and we are actively seeking new customer engagements. As this platform is designed to be customized by the end customer to work in their specific battery packs and their use cases, we expect initial revenues to be generated by non-recurring engineering charges, followed by a long-term subscription model, or licensing and agreement.

We expect initial revenues to be generated by nonrecurring engineering charges.

I would buy a long term subscription model our licensing agreement.

Terry Keith Cochran: This platform, which was very software intensive has been deliberate and developed using our engineering team in the US and our partners in India. The automated battery cell testing solution as well as sell check platform, represent a significant effort for KULR to deliver mass market application starting in Q4.

And our partners in India.

The automated battery cell testing solution as well as sell check platform represent a significant effort for cooler to deliver mass market application starting with Q4.

Terry Keith Cochran: We have additional platforms in development, which we will be making announcements for in the coming quarter. All of the platforms we currently have in development are intended for large-scale markets. It is important for cool to have a global strategy for development and manufactured products.

All of the platforms. We currently have in development are intended for large scale markets.

It is important for cool to have a global strategy for development and manufactured products.

Terry Keith Cochran: Accordingly, management has spent a significant amount of resources the last two quarters to develop additional partners to multi-source our needs in diverse geographies. Our new suppliers have now begun deliveries and we are pleased with the flexibility, pricing, and quality of their services. We believe this diversity will help increase our ability to rapidly react to customer demand and market uncertainty.

We believe this diversity will help increase our ability to rapidly react to customer demand and market uncertainty.

Terry Keith Cochran: Next KULR's CFO, Simon Westbrook will present financial updates. Simon?

Simon P. Westbrook: Thanks, Terry. This is Simon Westbrook and I'm going to talk about our financial results for the quarter just ended on March 31st compared to the same quarter last year.

Simon P. Westbrook: For revenue, results for the current quarter were impacted by ongoing COVID-19 related logistics and supply chain issues that restricted our ability to ship to meet some customer orders. As a result, sales reduced by 52% from 418,000 in 2021 to 200,000 this year.

<unk> reduced by 52%.

419000 in 2021 to 200000 this year.

Simon P. Westbrook: For selling, general, and admin expenses they increased to $3.5 million in the first quarter of this year from $1.5 million in the corresponding quarter last year. The increase of 136% was due to additional marketing and advertising expenses, consulting fees, and non-cash stock compensation paid to employees and consultants, and the expansion in keeping up of our new office facilities.

Increased to $3 5 million in the first quarter of this year from $1 5 million in the corresponding quarter last year.

The increase of 136% was due to additional marketing and advertising expenses consulting fees and noncash stock compensation paid to employees and consultants.

And the expansion in keeping out of how you office facilities.

Simon P. Westbrook: Our R&D expenses increased 486% from 123,000 in the first quarter of 2021 to 721,000 in the first quarter of 2022. It reflects a combination of headcount and new and automated test and production equipment, first implemented in the last quarter of last year.

It reflects a combination of head count and new and automated test and production equipment. So it was implemented in the last quarter of last year.

Simon P. Westbrook: Operating results the loss from operations increased 141% from $1.5 million for the first quarter of 2021 to $4.1 million for the first quarter of this year. The increase in the operating loss included $0.9 million increase in non-cash stock-based compensation expenses and increases in payroll, advertising, and marketing expenses as well as professional fees and research and development projects.

For one 5 million so the first quarter of 2021.

$4 1 million for the first quarter of this year.

The increase in the operating loss included.

$9 million increase in non cash stock based compensation expense. And increases in payroll.

And increases in payroll.

Advertising and marketing expenses as well as professional fees and research and development projects.

Simon P. Westbrook: Our net loss increased by 141% from $1.7 million in the first quarter of 2021 to $4.2 million in the first quarter of this year. Our net loss per share for the first quarter of 2022 was four cents compared to two cents for the comparable period last year.

In the first quarter of 2021 to $4 2 million.

In the first quarter this year.

And net loss per share for the first quarter of 2022 was full sense.

<unk> so.

So the comparable period last year.

Simon P. Westbrook: Looking at our cash position, at March 31, 2021, the company reported cash balances of $10.1 million compared to $6.2 million at March 31st this year. Since the quarter end, we have raised over $7 million from the issuance of warrants and promissory notes and have established a $15 million dollar standby equity purchase agreement. This funding leaves us well-positioned to expand operations for new business and consolidate our manufacturing operations in the United States to ensure greater control over logistics in the face of continuing worldwide uncertainties. Now back to Stuart.

Since the quarter end, we have raised over $7 million from the issuance of warrants and promissory notes.

Stablish, a 15 million dollar standby equity purchase agreements.

This funding leaves us well positioned to expand operations.

For new business and consolidate manufacturing operations in the United States to ensure greater control over logistics in the face of continuing worldwide uncertainties.

Now back to Scott.

Stuart Smith: Alright, thank you for that Simon. So now I'd like to welcome to the call Theodore O'neil from Litchfield Hills Research. He's got our first set of questions for management. Theo, the call is yours, go ahead.

Theodore O'neil: Thanks very much. I was wondering-- so I have two questions. The first is, can you give us a little more color on your lithium ion cell testing for NASA? I'm pretty sure Tesla or its battery subcontractor test their own cells. It's my assumption that GM also has its own test protocol or its supplier LG. And I'd like to know if there's an opportunity for standardization in cell tests who would drive the standardization and do you think there will ever be a third-party test market or will it remain like it is now the wild wild West?

I was wondering if you have two questions first is can you give us a little more color on your lithium ion cell testing.

For NASA.

Pretty sure Tesla or its battery subcontractor test their own cells. It's my assumption that Gee am also has its own test protocol or a supplier LG and I'd like to know if there's an opportunity for standardization and sell test who would drive the standardization and will there ever be a you think you'll ever be a third party test market.

Remain like it is now the wild wild West.

Terry Keith Cochran: Okay, I'll go ahead and take that. This is Keith Cochran. Thanks for your question Theodore, appreciate that.

I'll go ahead and take that Keith Cochran.

Thanks for your question Theodore appreciate that.

Terry Keith Cochran: Yeah, so as I previously stated, it took us a little over a year to develop significant automation to support the NASA for quarter 037, which is very intensive, very comprehensive, does complete battery life characterization. The test platform we developed for them is probably far and way above what Tesla and GM are doing today. These batteries are designed to go into space and [inaudible] missions. So, with that said, that's on track, it's looking great and we're excited to put that into full production heading into Q4.

Significant automation to support the NASA for quarter or <unk> 37.

<unk> is very intensive very comprehensive.

That's complete.

Remarks characterization.

You know the test platform, we'd give outlook for them is probably.

BARDA BARDA way way above what Tesla and GM are doing today.

These batteries are designed to go into space.

Can't tell missions so.

With that said. That's on track, it's looking great and we're excited. To put that into full production heading into Q4.

That's on track, it's looking great and we're excited.

To put that into full production heading into Q4.

Terry Keith Cochran: You asked a little bit about standardization and cell tests. I would be surprised if we see California and New York probably lead the charge from a state-level considering there have been some battery fires that caused significant damage and may tend to lead on a regulatory capacity and then potentially maybe that rolls up into the federal.

I think.

I wouldn't be surprised at all if we see California, and New York, probably lead the charge from a state level considering there have been some battery fires caused.

Cause significant damage may tend to lead on a regulatory capacity and then potentially maybe that rolls up into the federal.

Terry Keith Cochran: As far as standardization the applications for battery cells are really diverse. I think what we've done at KULR is we've made our system pretty modular so we can serve a broad range of different markets. For example, we could probably do I don't know exactly, haven't seen TESLA's entire specification, but based on what I know of it, I'm pretty sure we would be able to support them. We'd certainly love to support their space X program, which would have requirements I guess, very similar to what NASA has. But I don't see an immediate regulatory body stepping up on this but I think it will happen over time.

Really diverse I think what we've done at cooler as we've made our system.

Modular so we can sort of broader.

Broad range of different.

Markets. For example, we could probably do I don't know exactly haven't seen peso entire specification, but based on what I know of it.

I'm pretty sure we would be able to support them, we'd certainly love to support their space X program, which would have requirements I guess, you know very similar too.

To what Natalie.

But.

I don't see an immediate a regulatory body stepping up on this but I think it will happen over time.

Stuart Smith: Okay, great. Theodore, I think you had another follow-up question. 

Theodore O'neil: I do have a follow-up question. You sort of answered part of this in the prepared remarks. Of the finished good products that didn't ship out of China in the first quarter, you said they were in Shanghai where they were delayed, was it just shipping or was there some kind of manufacturing aspect that was delaying it and where were these products going?

The finished good products that didnt ship out of China in the first quarter.

You said they were and they were in Shanghai.

When they were they were delayed.

Is it just shipping or was there some kind of manufacturing aspect. It was delaying it and where are these products going.

Terry Keith Cochran: Yeah, no manufacturing issues whatsoever. In fact, the finished goods were ready to ship approximately two weeks prior to the end of the quarter, and our customer was not ready to release that shipment until they had completed their UL-9540 certification. Unfortunately, that took them into the last week and by time they released us we were already experiencing the lockdown in Shanghai. So no, production went great, no issues there whatsoever and the product was shipping from Shanghai over to Wuxi. Wuxi was still open, infortunately, Shanghai wasn't.

It is goods we're ready.

Our ready to ship approximately two weeks prior to the end of the quarter.

And our customer.

It was not ready to release that shipment until they had completed their you all 90 540 certifications.

Unfortunately that took them into the last week of my time, they released us.

Are already experiencing the lockdown in Shanghai So.

No production went great no issues, there whatsoever and the product is shipping from Shanghai opened at Wuxi.

I would assume it's still open Unfortunately, Shanghai wasn't.

John Nobeil: Alright, well then our next set of questions is going to come from John Nobeil at [inaudible] Brothers. John, the call is now yours. Go ahead and it looks like you have a question for Keith as well.

John The call is now yours to go ahead and it looks like you have a question for Keith as well.

John Nobeil: Yes, several questions. I was hoping that you could provide an update on the Volta order for 2022 and the potential growth for shipments in the coming years. I know that Volta has publicly stated that it plans to bring between 750-1000 battery storage units using KULR's technology. They plan to bring this to market in 2022, and they plan to increase that up to 50,000 units in 2023.

Several questions I was hoping.

You could provide an update on the volt the order for 2022.

Potential growth for shipments in the coming years.

I'll, let Volta has publicly stated that it plans to bring between 752, a thousand battery storage units using our coolers technology.

They plan to bring this to market in 2022, and they plan to increase that.

Up to 50000 units in 2023.

Terry Keith Cochran: Yeah, well a couple of things on Volta, for one they are a tremendous partner. We are very lucky to have them as a customer. I mentioned earlier, we've just completed as a team our UL-9540 certification. That's a real big deal for energy storage-type products, so we're super excited about that.

Yeah, well a couple of things on Volta for warm there are tremendous partner, we are very lucky to have them as a customer.

Mentioned earlier, we've just completed as a team you all $95 40 certification.

That's a big that's a real big deal for energy storage type products. So we're super excited by that.

Terry Keith Cochran: With regards to their forecast, I would be comfortable to talk about what they publicly stated, and that's what I would actually ask you to rely upon in their public statements, and not something that would be coming from KULR.

Wouldn't be comfortable to talk about you know what they publicly stated. And that's what I would actually ask you to rely upon in their public statements. And that would be coming from cooler.

And that's what I would actually ask you to rely upon in their public statements. And that would be coming from cooler.

And that would be coming from cooler.

John Nobeil: Okay, but as far as you see right now, there's nothing to say that this may not come to fruition. I think the original order was actually for 2022, so that looks like it's basically a good-to-go order at this point?

As far as you see right now.

Theres nothing too.

To say that.

It just may not come to fruition I think the original order was actually for 2022, so that looks like it's basically a good to go order at this point.

Terry Keith Cochran: What I can tell you is we are shipping product and it's been completely certified by UL. And we're looking for a nice event in June that they'll be hosting with the Governor of New York I believe. So as of right now, we have every reason in the world that believe what they publicly stated.

And we're looking for.

For a nicer than in June that there'll be hosting with the Governor of New York I believe.

So as of right now we have every reason in the world that believe what they publicly stated.

John Nobeil: Okay, and it looks like you're branching into new applications for your technology with the recent entry into a bio-sensing for the meta verse. So how long has this been under development and are there any other new applications that you might be looking at? I was hoping you may be able to disclose them on this call.

Terry Keith Cochran: Yes, I'm gonna go ahead and push that one to Michael. Michael?

Michael.

Michael Moe: Yes, thanks, Keith. Hey John, great to hear from you. So for this application it's because of the electrical sensitivity and the thermal conductivity characteristic of our carbon fiber substrate material, and that was a really good fit for this application. We expect our material to be actually kind of a foundational platform for many other new applications. The electric pulse sensing one, it was actually first tested by Yale University researchers in the medical side over 10 years ago to pick up the signals from the brain. And then we've done quite a bit of work on that now just really happy to see new applications with similar characteristics and obviously a much larger market opportunity in the meta verse space.

Great to hear from you.

So.

So for this application is because of the electrical sensitivity.

Thermal conductivity characteristic.

All of our carbon fiber substrate material.

And that was really good fit for this application.

We expect our mature to be actually kind of a foundational platform for many other new applications.

The luxury post sensing one.

It was actually first testify Youll University researchers in the medical side over 10 years ago to pick up the signals from the brain.

And then we've done quite a bit of work on that now just really happy to see new applications with similar characteristics and obviously a much larger market opportunity in the <unk> space.

Michael Moe: In addition to that, something that we're really excited about is really using this material as a substrate inside a battery for higher energy density and faster charging capabilities, especially now, we're able to produce our own solid-state electrolyte. We've just opened up a lot more opportunities to innovate and produce safer batteries, so that's something we're super excited about.

That's something that we're really excited about is is really using this material is a substrate inside a battery.

Higher energy density and faster charging capabilities, especially.

Especially now we're able to produce our own solid state electrolyte.

We've just opened up.

A lot more opportunities to innovate and produce safer batteries. So that's something we're super excited about.

John Nobeil: Okay. Are you licensing this technology? I mean, I just want to get an idea of the ownership of this electric pulse sensing technology.

This tech now is this a license are you licensing this technology I mean, I just wanted to get an idea of.

The ownership of this electric pulse sensing technology.

Michael Moe: No, we're not licensing this. It's a finished product that we sell to the customer. We're incorporating this physical piece into a wearable, out there, VR, AR glasses.

Sell to the customer we're doing corporate this physical piece into a wearable.

Oh, there you know.

We are our glasses.

John Nobeil: Oh, okay. And another question, your battery safety contract with NASA for the Artemis program now, I believe it was scheduled to launch in May which we're currently in. So I was hoping that you could provide a status on this program. And if you have any information on how long that you believe this program will actually run.

And.

Another question your battery safety contract with NASA for the order MS program now I believe it was scheduled to launch in May which were currently and so I was hoping that you could provide a status on this program.

And if you have any information on how long that you believe this program will actually run.

Michael Moe: Yeah, so the May launch into the Artemis, I just want to be clear, though we were not part of that particular program. The overall Artemis program is to go back to the Moon by 2024. So we're just getting started scratching the surface on the battery testing on the screening side right now. That's where the automation program that Keith talked about will kick in later this year and that will pick up the scale and perform a lot more versatile tasks based on the NASA working structure, so we're just getting started on that program.

So the may launch into the Artemis.

Just I just want to be clear, though we were not part of that particular program the.

The overall arc and this program is to go back to the Moon by 2024. So we're just getting started scratching the surface on the battery testing in a screening side right now.

It's weird to automation program that Keith talked about will kick in later this year and that will pick up the scale and performed a lot more burst upheld tasks.

The Nassau working structure so.

We're just getting started on that program.

John Nobeil: Okay, just one final question and to the $55 million that you just recently entered into that agreement to secure inventory in anticipation of demand from key end markets, your words were key end markets. So I was hoping you could tell us where you believe most of this demand will come from and how much inventory you believe that you would need to procure to be able to satisfy--I know it was in the press release stated in your prepared comments-- about $250 million to $350 million in revenue. So I wanted to get an idea of how much you might need to tap into your financing to be able to get that type of inventory for this kind of market.

One final question.

And to the $55 million that you just.

Recently entered into that agreement to secure inventory in anticipation of demand from.

Key end markets. Your words were key end markets. So I was hoping you could.

Tell us where you believe most of this demand will come from.

And how much inventory you believe that you would need to procure to be able to satisfy.

I know it was in the press release stated it in your prepared comments about $250 million to $350 million in revenue. So I wanted to get an idea of how much.

I need to tap into your financing to be able to.

Get that type of inventory for this kind of market.

Michael Moe: Yeah, good question, John. So we expect most of the demand will come from energy storage and E mobility products where safety, reliability, and high performance is very important for their products. So in these markets, we will apply our entire technology portfolio to the product starting from the screening of the cells to get the most reliable battery cells and design them into a 40 PPR battery pack and test them to meet all the necessary regulatory requirements on safety, reliability, and so forth, and they go through certification, such as [inaudible] certification and so forth and then we will apply our sell check solution to manage entire lifecycle, the active management of the battery pack. So this kind of solution approach for about 500-megawatt hours of energy, which it's roughly about 40 million cells presents that entirety of this $300 million worth of revenue of potential for us.

So we expect most of the demand will come from energy storage and E mobility products.

Where safety reliability and hi, Praful. This is very important for their products. So in these markets, who we will apply our entire technology portfolio.

Two the product starting from the screening of yourselves to get the most reliable battery cells and design them into a 40 P. P. R.

Battery pack and test them to meet all the necessary regulatory requirements on safety reliability and so forth.

And they go through certification.

Such as email certification and if so and so forth and then we will apply our sell check solution to manage entire lifecycle. The active management of the battery pack. So this kind of solution approach for about 500 megawatt hours of energy, which is it's roughly about 40 million cells.

<unk> that entirety of this $300 million worth of revenue upon the potential for us.

Michael Moe: In terms of your question about how much of the $55 million capital we would have to achieve that, I think that's still to be negotiated with the vendor at this moment, the supplier, and then we want to be as capital efficient as possible, but it's certainly nice to have that available so to build the confidence in both our vendors, our customers, and in ourselves when we execute these strategies.

Capital, we would have to achieve that.

That's I think that's still to be negotiated with the vendor at this moment.

Fire and then we what we want to be as capital efficient as possible, but it's certainly nice to have gotten available so to build the confidence in both our vendors.

All of our customers and are in ourselves.

When we execute these strategies.

John Nobeil: Okay, well, thank you for that, that's all I have. Thank you.

Stuart Smith: Well, thank you, John, and thank you, Michael. I'd like to thank everyone, including our guests today, Jon Nobeil from [inaudible] Brothers, Theodore O'neil from Litchfield Hills Research, and of course, the management team, Michael Moe, Keith Cochrane, and Simon Westbrook, I know they extend their deepest gratitude for all those joining us on the call today and all of their shareholders.

I'd like to thank everyone, including our guests today, Jon Noble from Tag looks brothers Theodore O'neill from Litchfield Hills Research and of course, the management team, Michael Moe, Keith Cochrane and Simon Westbrook I know they extend their deepest gratitude for all those joining us on the call today and all of their shareholders.

Stuart Smith: Be sure to visit the company's website kulrtechnology.com. If you click on the investors' tab, you'll see presentations, you'll find all of these calls archived as well as some of the other things like the 10th annual Gateway conference in Zynga and all kinds of wonderful information on the company. So on behalf of management, this is Stuart Smith saying thanks so much for tuning in today.

Thanks, so much for tuning in today.