KULR Technology Group, Inc.

All right, thank you for joining us today for the Cooler Technology Group first quarter 2024 earnings call. I will be joined on the call today by the CEO of Cooler Technology Group, Michael Moe, and the chief financial officer for the company, Sean Cantor. But before we begin the call, please listen closely to the following statements. This call does not constitute an offer to sell or a solicitation of offers to buy any securities of any entity. 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 risks and uncertainties associated with their business. which include risk factors disclosed in Cooler Technology Group's Form 10-K filed with the Securities Exchange Commission on April 12, 2024, as may be amended or supplanted by other reports the company files with the Securities Exchange Commission from time to time. Forward-looking statements include statements regarding their expectations, beliefs, intentions or strategy 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 on this call are based on information available at this time and management expects that internal projection and expectations may change over time. In addition, the forecasts are entirely on management's best estimate of Cooler Technology Group's future financial performance given their current contracts. current backlog of opportunities, and conversations with new and existing customers about their products and services. Cooler Technology Group assumes no obligation to update the information included on this call, whether as a result of new information, future events, or otherwise. I will now turn the call over to the Chief Executive Officer of Cooler Technology Group, Michael Moe. Michael, the call is yours.

Thank you, Stuart. This is Michael Mo. Thanks to everybody for joining us today. I'd like to go over some of the financial and operational highlights with you today. I will discuss how we achieved over 760% year-over-year growth in our quarter one design solution business, which is our engineering services business in Q1 of 2024 compared to Q1 of 2023, and how this tremendous growth in service business drives the growth in our overall product sales business especially in the quarter one space and the quarter one guardian product lines. While we're experiencing this big growth, we have reduced our cash use and operating and investment activities by 23% and total operating expenses by 25% year over year for the first quarter in 2024 compared to 2023. I will also give an update on our new quarter Texas facility and how we're strategically positioning it to be the center of excellence for battery design and testing and also foster innovations together with our customers. Market is changing very quickly. Our customers are very demanding. They want the best and they wanted it yesterday. With the ever-changing regulations around safety of lithium-ion battery usage, customers demand fast turnaround time, in addition to the requirements on quality, performance, and customization to fit perfectly to their applications. At Cooler, we're winning customer engagements by offering a one-stop shop solution to all their battery needs. We start with a holistic design methodology to come up with a modular design that is easy to customize for our customers' needs. Our dedicated and experienced engineering team is very focused on safety, And we can turn around very quickly with our in-house testing, machine shop, tooling, and manufacturing capabilities. This has enabled us to achieve over 760% year-over-year growth in our CoolerOne Design Solutions business. Furthermore, Through our Cooler One design solutions process, we're collecting valuable data through the sales screening, to testing, to design, and ultimately accelerating the customer certification process with treasure trove of data. This data is becoming the glue and the fuel to our business. Let's use FTRC testing as an example on how it's driving new and recurring revenues. We recently announced that we have successfully completed large format FTRC test for 200 amp hour high energy battery cells for automotive OEM customer. It's the first in the industry and the only one because Cooler has an exclusive license with NASA on this technology. We're able to provide our customers with battery cell data that are not available anywhere else. And this data is critically foundational to build truly safe battery packs for certification, which makes our service very sticky with our customers. Automotive customers, like customers in electric aviation, energy storage, and industrial markets are constantly evaluating new generation of battery cells with calorimetry data. Therefore, our unique and exclusive position in the battery cell testing market is bringing us new and recurring businesses in the global cell testing market, estimated to reach over $7 billion by 2030. To drive our ecosystem further, we're working with battery cell companies to test and quantify their new battery cells with data. Like our partnership with Ambrius, which we announced recently for their silicon anode cylindrical cells. We see tremendous demand for FTRC testing business because it's providing our customers with critical data that they cannot get anywhere else. We're building a couple of new testing lines in our new Texas facility, which will be fully operational in Q3 of this year. And we're expecting our testing service alone to be over $1 million a quarter revenue for us by the end of this year. We're also developing AI-based data collection and report generation tools to streamline the testing and the data analysis operations. That will further drive our battery design and product sales business. In Q1, we saw the number of product sales customers grew from 13 in 2023 to 25 in 2024. We had one large customer in Q1 of 23 that did not place order with us in Q1 of 24. Due to the sticky nature of our products that are certified into that customer's products, management expects that customer to continue purchasing from Cooler in this year and beyond. Excluding that one large customer, our product sales revenue grew over 400% in Q1 of 24 year over year. We expect our Cooler One space battery to be a key driver for our growth going forward. The space economy is going to be over $1.8 trillion by 2035, according to McKinsey. This is driven by the commoditization of commercialized space industry. The space battery market is estimated to grow to $6.35 billion by 2030. And we expect our Corolla One space platform to play an important role in this market. Some of the key players that drive this tremendous growth in the space economy include rapidly growing private companies such as SpaceX and Blue Origin, Continued growth of traditional development from contractors like Boeing and Northern Grumman, and also new up-and-coming companies like Voyager Space, Axiom, Vast, and many of these are already Kona customers. What all these companies look for in their energy storage system is high-performance, space-qualified, and competitively priced battery solutions with the highest level of safety that meets NASA safety standards. especially the NASA JSC 20793 specification that's mandated to be part of a crew space mission. That's exactly what Cooler One Space Architecture offers, a pre-qualified design architecture that can be customized, be space flight ready, and certified for NASA JSC 20793 specifications in record time. We're offering a solution that can dramatically improve time to market and offer cost savings to our customers. Another successful example of providing fast time to market engineering service and paved the way for high potential future product sales is our QuotaOne Guardian platform. We started this platform with our contract with Army DefCom for the next generation aviation battery in Q2 of 2023. The contract has since been expanded to over $1.8 million. and we're scheduled to deliver our prototype batteries to them in August of this year. Data has shown that a new battery will be a game changer for Army in terms of safety and energy capacity. Now we're expanding our Core L1 Guardian product portfolio to standard size 2590 battery, swappable UPS battery, and additional custom batteries for DoD customers based on the same scalable architecture. What sets Quota One platform apart from the competition is data, safety, and speed. Our customers demand that their batteries to have the superior thermal performance and safety with the highest energy power. The Quota One dot detector is flexible. It can be quickly customized to meet regulatory requirements across a wide spectrum of applications. Our end-to-end one-stop shop solution is what the customers are looking for. Our SafeKeys product is another example of a data-driven solution winning the marketplace. We have performed exhaustive thermal runaway tests on batteries of all sizes and chemistry in our SafeX product line. The comprehensive test results are presented to U.S. Department of Transportation and also logistic partners like UPS to receive special permits to ship batteries for recycling and other applications. We've also presented these tests and data to fire departments across the country including San Diego and New York. They're very excited about our safe case and how it can help them fight battery fires. We continue to grow our safe case customer base across multiple industries and markets. Customers are excited about the safe case because real-life test data has shown that it has the highest energy capacity to handle in the industry. Expanded technology is the most effective to mitigate battery thermal runaway. It's been used on international space stations since 2019, and it's reusable, which makes it much more sustainable and cost-effective solution compared to our competition. The Cooler Online Marketplace represents a pivotal expansion in Cooler's sales strategy by offering direct order facility that complements our traditional distribution channels. This direct-to-business and consumer channel is going to help us scale up our product sales more quickly. Currently, the marketplace offers our safe case and safe sleep products. We've already received orders from fire department and department energy branches throughout the website. We plan to expand our online offerings to include internal short circuit devices, trigger cells, rat tolerant BMS, quarter one battery packs, and also rapid engineering design services in the near future. Quora has spent the last few years creating a portfolio of services and solutions that allow the company to support every aspect of battery lifecycle. We have now consolidated the infrastructure to execute our Quora One Design Solutions services under one roof, all in-house in our new Center of Excellence of Battery Design and Testing in Webster, Texas. This facility is approximately 2.1 miles from NASA Johnson Space Center, and it's next to companies like Exium Space, Leidos, Blue Origin, among many others. It's an ideal location to provide rapid turnaround, real-time VIP-style battery design testing to production services to the surrounding ecosystem of aerospace companies. We signed the lease in April of this, sorry, in February of this year, And we are in the midst of finishing up the facility improvements, moving in, and also execute our daily operation at the same time. So a big shout out to my Texas team. Our success story with the NASA RFI program is a perfect example to highlight how Quilter Texas facility is providing rapid turnaround solution to our customers. Within six hours of engagement, the Quilter team was able to provide NASA's R5 team with a solution which successfully pass your testing requirements and get the CubeSat battery space ready. With the CoolerOne design solution infrastructure in place, we can provide in-house and custom battery design, testing services, analysis and modeling services, abuse testing, style level categorization and cycling, fabrication, and also production services, all in one shop, all under one roof. In addition to customer support, Cooler Texas is our R&D center to advance our next generation modular Cooler One architecture. It's also our customer innovation center where customers will come in and develop exciting new products next to our engineers under one roof. So I'm super excited about this new facility and how you would drive the future of Cooler and frankly, our industry together with our customers. Next, Sean Cantor will provide financial highlights. Sean.

Thanks, Mike. Cooler's financial position is the strongest it's been in over a year. Today, Cooler has over $3 million in the bank, and the prepaid advance note has been fully repaid. You can see the financial results from our first quarter 2024 in our Form 10-Q, which is now online. I'll touch on a few highlights. Total revenue in the first quarter of 2024 was $1.8 million. Product revenue was approximately $615,000, down from about $1.6 million. As Mike mentioned, this decrease was substantially due to delayed orders from a customer who placed a large order in the first quarter of 2023 and didn't order in the first quarter of 2024. Further emphasizing Mike's earlier point, due to the sticky nature of our products as certified into our customers' products, management expects this customer to continue purchasing from Cooler this year and going forward. Due to the nature of our customer base and the end markets we serve, quarter over quarter comparisons may not always capture the larger trend in the business. As Cooler grows and continues to expand its customer base, any one customer's purchase order timing is likely to have less of an effect on interim, annual, and longer trends. Additionally, Some unanticipated delays at government agencies in issuing particular licenses for our safe case products impacted revenue in the first quarter. These licenses have been issued to Cooler, and Cooler's sales team is now in market with these products. Cooler services revenue was up 769% in the first quarter over the same quarter last year. As we have previously discussed, service revenue may be seen as a predictor of future product revenue. Gross margin for the first quarter was 29 percent versus 37 percent in the same period last year. The decrease primarily stemmed from expenses related to a major project without corresponding revenue in the same period. While the first quarter gross margin related to this particular project was a drag on the overall gross margin for the quarter, the overall gross margin for this project is estimated to be approximately 50%. Overall, management anticipates gross margins returning to historical trends in the upper 30s to low 40s. Switching to customers, the total number of revenue-generating customers in the first quarter of 2024 numbered 34 versus only 15 in the first quarter of 2023, a 127% increase. Q1 2024 versus Q1 2023, revenue generating customers from products grew 92% and from services 180%. Touching on expenses. Operating expenses went down in the first quarter compared to the same quarter last year by about 25%. In the first quarter of 2024, Cooler not only reduced its operating expenses, the company continued to reduce its cash consumption. Net cash used in operating activities decreased 18% in the first quarter of 2024 over the same period last year, and net cash used in operating plus investing activities decreased 23% first quarter 2024 over the same quarter in 2023. And finally, earnings per share improved by 33% in the first quarter 2024 compared to Q1 last year. Back to you, Stuart.