By Lisa Thompson

NYSE:KULR

READ THE FULL KULR RESEARCH REPORT

KULR’s Bitcoin Treasury Strategy Masks Strong Company Fundamentals

KULR (NYSE:KULR) has become a hybrid company since it implemented a Bitcoin treasury strategy starting in December. Driven by management’s faith in the potential appreciation of Bitcoin, the company sold equity to buy Bitcoin, causing its stock to surge and then settle back down in recent months. Despite being down 64% year to date, the stock is still up 79% compared to last year. The company has taken advantage of the stock surge to shore up its balance sheet and eliminate debt. As of March 26^th, the company had over $80 million in cash and Bitcoin combined, which we believe could support its negative cash flow until profitability is achieved. With $20 million in operating expenses and 50% gross margins, the company would be profitable at $40 million in revenues, which could happen in 2026. Of course, the gross margin will be determined by the product mix between sales of products, services, and licensing. Licensing is a new revenue stream that started in Q3 and continued in Q4 but will vary from quarter to quarter.

The company’s main drivers—acceleration of the space battery market, improved batteries for military use, drones and robotics, and KULR vibration technology are all in strong positions to increase revenues.

KULR Shows Strong Growth in Q4 Aided by License Deals

Revenues for the quarter ending December 31st were $3.4 million versus $3.0 million, showing an increase of 44%. The breakdown was $1.7 million in IP licensing versus none last year, $1.3 million in contract services, down 5%, and $1.1 million in product sales, down 24% from last year. The licensing revenue was from a new agreement for a carbon fiber cathode technology for laser-based fusion reactors and SMR nuclear reactors in Japan. This was described as a multi-million-dollar 10-year license. While the $1.8 million fee will be paid over the next five years, the company recognized the revenue upfront at a discount value. It appears as unbilled accounts receivable on the balance sheet.

The gross margin for Q4 2024 was 63.6%, up from 29.9% in Q4 2023, as the $1.7 million license fee had no cost of goods. Gross margin dollars increased by 214%. Total operating expenses for Q4 2024 were flat with last year at $5.7 million.

The operating loss for the quarter was $3.5 million versus a loss of $5.1 million last year. Most of the other income was comprised of the loss from the marking to market of Bitcoin holdings of $710,000. The pre-tax loss was $4.6 million versus $5.2 million last year. Taxes were zero for both periods. This resulted in a loss per share of $0.02 versus a loss of $0.04 last year. Average shares outstanding were approximately 231 million versus 126 million in 2023, up 83%.

Taking out a small amount of stock-based compensation and the loss on Bitcoin of $710,000 marked to market, the non-GAAP net loss was $3.0 million versus $4.4 million or $ 0.01 versus $0.04 per share.

Balance Sheet

As of December 31st, KULR had $29.8 million in cash, $20.3 million in Bitcoin, $29.5 million in working capital, and $528,000 in debt. It had a negative free cash flow of $2.7 million (not including changes in working capital or the purchase of Bitcoin) for the quarter.

From January 1, 2025, through March 27, 2025, KULR issued 19,387,610 shares of common stock for gross proceeds of $51,122,190 under the ATM. As of March 26^th, it had over $80,000,000 in cash and Bitcoin and 284,389,637 primary shares outstanding. At the end of December, there were also 75,000 unvested restricted stock awards, 5,742,611 unvested restricted stock units, 327,500 options, and 711,219 warrants, all totaling 6,856,330.

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