KULR Technology, Inc. (NYSE: KULR) is bucking the bearish trend on Wednesday, moving higher to $1.38 after announcing another revenue-generating deal from its innovative and IP-protected Passive Propagation Resistant (PPR) battery solutions technology. The move higher could trigger the break from consolidation around the $1.24 level in February. Shares touched a high of $1.38 intraday on Wednesday but gave back some of those gains as broader market sentiment again turned bearish red.
Still, better positioned now than at any time in its history from an operations perspective, investors would be better served to focus on the value inherent to a growing KULR portfolio and client base. Those two elements are driving revenues to record levels, and because of their accretive nature, they are streamlining costs, allowing income generated to fall faster to KULR's bottom line.
But it's more than KULR's own headlines exposing the near and long-term value proposition. Global headlines indicating the "Electrification" movement is gaining momentum is a focus as well. Why does that matter to KULR and its investors? Because KULR can be a vital contributor to helping usher in global electrification, a movement intended to replace carbon emission fuels with clean and powerful battery-powered solutions.
While proponents of that movement would implement changes tomorrow if they could, the problem behind the move to battery and renewable energy power is the inherent risks associated with those powerful devices. In fact, pragmatically speaking, making global electrification mainstream without embedding sufficient safety management protocols would be more than foolish; it could have devastating consequences.
However, there is good news. KULR has the technology able to provide comprehensive battery-safety inclusions, including technology mitigating thermal runaway, a process often responsible for battery fires and explosions. But that's just one area of KULR technology showing performance superiority. Other technologies, including PPR battery solutions for a stationary and mobile lithium-ion battery power system manufacturer, are also value drivers. In fact, after extensive design and testing efforts, KULR announced inking a follow-on order for this innovative solution.
In addition to being a follow-on order, the better news is that the $2.68 million deal represents KULR's single largest PPR deployment order in a stationary or mobile energy product to date. And because it was made with a customer preparing to scale towards the complete automation of its battery assembly operations, it could be the second of many to come.
Choosing KULR PPR Technology
That's likely. After all, KULR earned the contract by being the best-in-industry for battery safety solutions. According to KULR, the client relied on its PPR solution in designing, testing, and meeting the stringent UL 9540 (Field-Listed with Energy Storage Systems) and UL 9540A (Cell/Module/Pack-Tested) certification of its stationary lithium-ion battery pack systems, which in turn led to rigorous testing and passing of the safety threshold established by the Canadian Standards Association Group ("CSA"). This independent testing body is a leader in standards development, testing, inspection, and certification.
To date, the client lithium-ion battery systems have been authorized as safe to use in occupied buildings and can be configured to provide from 50 KWh ("Kilowatt-hours") to 5 MWh ("Megawatt-hours") of distributed energy storage at the point-of-use where applications range from medical and research complexes, residential and commercial buildings, to remote data centers and manufacturing facilities. The systems also provide fully renewable mobile energy solutions for construction equipment, waste disposal, last-mile delivery, and other portable industrial markets.
Contributing its part, KULR's PPR design solutions enable energy storage systems to have a longer life cycle and allow completely self-contained safe battery solutions to meet the demands of the heavy construction and manufacturing sector while opening new opportunities for KULR with industrial customers seeking to buy and store electricity during less-expensive off-peak times – offsetting the need for gas-powered generators as backup power. California will require portable gas-powered generators to be zero-emissions by 2028, potentially another boon for KULR.
KULR CEO Michael Mo commented on the follow-on order: "We are pleased to be the exclusive supplier of fail-safe stationary storage battery solutions for this Customer's significant buildout. The reality is that there will be many more projects like this one coming to market soon, especially with the Inflation Reduction Act amplifying demand for safe and clean stationary energy storage. We know solutions that promote battery safety are of great importance for utility and industrial energy storage providers and it's our belief that KULR offers one of the safest and most cost-effective energy storage technologies in the marketplace."
Reason For Optimism
Mr. Mo has reasons to be optimistic about his company's future. The stationary battery storage market is set to surpass $870 billion by 2032, according to a research report by Global Market Insights Inc. published in late 2022.
Furthermore, this recent order follows the announcement that KULR commenced Phase 2 development of its PPR battery systems for Lockheed Martin Corporation's Advanced Energy Systems (NYSE: LMT). In addition, KULR updated about its collaborations with entities such as the United States Department of Defense ("DoD"), NASA, and major defense manufacturers, with KULR continuing to leverage its thermal design expertise beyond government contracts. That includes rechanneling its PPR applications from military purposes to the commercial enterprise for uses such as energy storage systems, e-mobility, and cloud computing.
Doing so has opened doors and client relationships with other mega-cap companies, including General Motors (NYSE: GM) and Meta Platforms (NASDAQ: META). Those deals are accruing as the reality of being proactive in integrating battery-safety technology may be a better plan than trying to implement post-production. All told, opportunities in play from a combined battery-safety market opportunity are estimated to reach $2.9 billion by 2030. The excellent news for KULR is that it looks to be ideally positioned to capture a significant share of a combined revenue-generating opportunity. Remember that the 2023 market estimate is about 123% higher than last year.
And the better news for KULR and others in the market is that the trend isn't slowing. More industry and consumer applications are expected to add to the demand, creating a decidedly bullish narrative for KULR and the value proposition in play.
Seizing A Valuation Disconnect
The most significant part of the KULR value proposition isn't necessarily related to revenue growth and its clients. The primary reason is that KULR's battery-safety solutions are more than good; they're validated, resulting in KULR earning an industry-leading position providing battery safety, design, and testing solutions. That validation makes KULR one of few companies successfully designing products to meet the stringent requirements and rigorous testing mandated by the JSC 20793 Revision D safety standard created by NASA crewed space missions. This qualification provides that KULR's products and solutions are approved for use and can be utilized for Artemis missions and future space exploration voyages.
That allowance also strengthens KULR's credibility and validates proof of concept to expedite offering similar battery safety and energy management solutions to customers across various industries needing similar commercial applications. By the way, returns from this technology are near term, with KULR saying they expect to begin accepting client orders this quarter.
That's just one deal where KULR technology is recognized as best-in-class. Another potentially massive deal announced in Q4 detailed KULR entering into an agreement to provide its internal short circuit ("ISC") battery safety and testing device to the largest automotive manufacturer in the United States, General Motors. The technology in focus shows the ability to create thermal runaway in lithium-ion battery trigger cells and, importantly, does not rely on mechanically damaging the battery exterior to activate the short, a meaningful differentiation from other evaluation methodologies that do not trigger an actual internal short.
Difference Is Its Advantage
That difference makes it possible to accurately isolate and fix problems that lead to product malfunctions. Moreover, the innovative testing method allows KULR and its customers to more effectively test the next generation of EV batteries, bringing more reliable and safer battery systems to market faster and more cost-effectively. KULR is optimistic its ambitions will be met with considerable EV sector interest. It should. After all, with the electrification movement gaining momentum and a global automotive company embracing the strategic value of better testing for designing the next wave of EV battery systems, KULR's technology is being validated ahead of potential competitors.
General Motors isn't KULR's only mega-cap client. In addition to those already noted, KULR is scoring deals with other influential global companies, indicating in its SEC filings that its sales and marketing team has expanded its customer engagements through direct sales and its Manufacturer's Representative team, resulting in a currently known client book exceeding 300 customer engagements at the end of Q3 2022. Those include deals with Ball Aerospace, a subsidiary of Ball Corporation (NYSE: BALL), SAFT, a subsidiary of Total Energies SE ( NYSE: TTE), Leidos Holdings (NYSE: LDOS), Viridi, and BOSCH.
What's notable about these relationships is that KULR expects they can build upon themselves. KULR noted in its recent 10Q report that as they expand partner relationships, it can cross-sell and up-sell its total solution packages.
Validated Technology Inspires Interest
Remember, too, that while the EV sector earns headlines from companies like Tesla (NASDAQ: TSLA) and Ford (NYSE: F) selling products into record demand, behind the EV sector, manufacturers of millions, even billions, of other products, from consumer staples to space-age technology, also embrace the clean energy solutions that battery power offers. As noted, expect that trend to continue.
In fact, geopolitical and local legislative pressures support the proposition that the pace at which battery power gets integrated into current infrastructures will accelerate. That makes sense. The powerful and densely packed batteries used are inherently dangerous, especially with advanced lithium-ion technology contributing to making densely packed and enormously powerful energy drivers in a more compact housing. The result can be explosions, fires, and even potential meltdowns of energy-providing infrastructures.
But here's the deal. Many of these potential catastrophes can be avoided. And as KULR continues to strengthen an already impressive IP portfolio, they also enhance its stature as the go-to company to deliver best-in-class battery safety solutions to a potential trillion-dollar market opportunity. Accumulating IP is happening regularly.
Most recently, the United States Patent and Trademark Office awarded a patent on the technology behind KULR's SafeCase products – a U.S. Department of Transportation ("DoT") permitted lithium-ion battery cell and pack storage and transportation system. The SafeCase products are designed to mitigate thermal runaway propagation and its catastrophic effects for lithium-ion battery packs of up to 2.5 kWh (kilowatt-hours) per case by utilizing KULR's patented Thermal Runaway Shield ("TRS") technology.
That technology gave KULR immediate and open access to commercial partners and customers by securing United Parcel Service (NYSE: UPS) shipping certification, allowing for the shipment of batteries utilizing the KULR SafeCase products through UPS' vast shipping network.
Notably, it's the fourth patent issued to KULR based on its TRS design architecture, which, as a result, helped KULR secure a trio of DoT-granted special permits enabling it to strategically pursue regulatory markets ranging from shipping prototype batteries to end-of-life battery management, as well as those used by NASA to transport and store batteries aboard the International Space Station.
KULR VIBE Is A Value Driver
More opportunity has been put into play after KULR unveiled a vibration reduction solution. And like its other technology, it keeps getting better. Acquired in 2022, the KULR VIBE is updated to include a scalable, centralized artificial intelligence ("AI") server platform. Powered by NVIDIA (NASDAQ: NVDA) accelerators, the enhanced KULR VIBE system will deliver faster processing speeds and data capture for remote access. Of particular interest and request from KULR's enterprise customers, the cornerstone of this expansion will bring enhanced security to protect customer data, mission-critical projects, and intellectual against potential cyber security risks.
Specifically, the KULR VIBE suite of products and services provides vibration analysis and mitigation solutions to commercial clients, a sector served for over two decades. Getting better with age, advances in measurement and computing have allowed the KULR VIBE technologies to offer transformative, scalable solutions across aviation, transportation, renewable energy (wind), manufacturing, industrial, performance racing, and autonomous aerial (drone) applications. That's not all.
KULR notes that the new KULR VIBE AI platform allows for advanced, trajectory-altering maintenance capable of optimizing craft performance and systems to prioritize safety, lower maintenance costs, and increase the lifespan of sensitive and expensive equipment in the field, resulting in more extended commercial use. From a demand perspective, by providing enhanced security and faster remote diagnoses for managing the vibration and balancing needs of high-performance machines and systems, KULR is tapping into markets potentially worth billions from clients that are looking to be more competitive in the market by ensuring their systems are operating as safely as possible.
Taking Advantage Of A Valuation Disconnect
Perhaps the most interesting part of the KULR proposition is that by successfully seizing a single market opportunity, they can score millions in new revenues. Some of those opportunities extend well beyond those totals. But thinking about KULR as a single-dimensional company would ignore the combination of prospects already in play, where a sum of its portfolio and IP parts supports a valuation significantly higher than its current levels. Factor this too. KULR isn't short on optimism; guidance has been decidedly bullish and supported by record-setting quarterly and consecutive operating performance.
The news on Tuesday supports the premise that the best days for KULR are ahead. That's considering record-setting revenues, increasing client count, strengthening its IP, and scoring follow-on deals with some of the world's most influential companies. That's not all. With a dominant market position, a strong balance sheet, and its continuing to strike deals with global and diverse industry players, KULR is right to be bullish on its future. Taking it a step further, investors should be confident as well.
Yes, stocks trade in cycles, and right now, investors across the board are taking on less risk than typical. Still, bear markets don't last, and when the bulls return, it's often the best-of-breed companies that run first and fastest. KULR makes that list. They are, after all, doing the right things with compelling technology at the right time. That, too, supports the bullish proposition.
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