On August 13, KULR Technology Group (NYSEAMERICAN:KULR) held its second-quarter earnings call, and CEO Michael Mo did not sugarcoat it. Revenue fell 43% year over year to $2.1 million, and the company posted a gross loss for the period. Yet the same call detailed a $20 million debt payoff, a full exit from Bitcoin mining, and a fresh $5 million defense drone order tied to a $1.1 billion Pentagon program shifting from policy talk to purchase orders.
Pentagon Orders Start Rolling In
The US Department of Defense’s $1.1 billion Drone Dominance program has moved from planning to purchase orders, with roughly 30,000 units currently being delivered and another 60,000 expected in September, on the way to hundreds of thousands of units by 2027. Management pointed to the fiscal 2027 budget request, which includes more than $70 billion for drones and counter-drone systems, the largest such allocation in US history. Mo argued that domestic drone makers are being pushed to drop foreign parts, including batteries, calling it a market where “the American drone market is converting from policy to purchase orders.”
KULR is chasing that wave with concrete wins. In the second quarter, the company landed initial defense drone battery orders worth more than $5 million from a US drone maker participating in the Drone Dominance initiative. Management also expects to begin shipping NDAA-compliant chargers to US customers by the end of 2026, rounding out a power stack that spans battery packs, thermal management, and charging electronics.
The balance sheet got simpler too. After the quarter closed, KULR sold 333 Bitcoin to fully repay its $20 million credit facility, exited its Bitcoin mining operations entirely, and eliminated $2.1 million in remaining mining-related expense commitments for a $150,000 termination fee. The company issued zero shares through its at-the-market facility during the first half of 2026, and management said the business is starting the back half of the year with roughly $60 million on the balance sheet and no debt.
A Rough Quarter By Every Metric
The headline numbers were hard to spin. Revenue dropped 43% year over year to $2.1 million, and gross margin swung to negative 31% from positive 20% a year earlier, as supply chain bottlenecks and production delays pushed shipments out of the quarter. Net loss came in at $21.97 million, or $0.47 per share, with $10.6 million of that tied to a non-cash mark-to-market loss on the company’s Bitcoin holdings. Across the first half, digital asset losses totaled $31.4 million, a reminder that the treasury strategy management is now unwinding created real volatility in reported results even as the battery business itself held roughly steady.
Management was candid about the internal strain behind the numbers. Mo said KULR is carrying more customer programs than its current resources can execute with the speed customers demand, and that board and management changes during the quarter consumed bandwidth and slowed decision-making. Operating loss widened 19% to $11.2 million, and R&D spending rose 23% to $2.98 million even as revenue fell, a combination that only pays off if the second-half ramp management is promising actually shows up.
The company is also making a sizable bet on the back half. Raw materials inventory has grown roughly fivefold since the end of 2025, and KULR’s new Texas manufacturing facility was not yet contributing in the second quarter, with production lines expected online in the third quarter, leaving the company exposed if orders arrive later than planned.
Hedge Funds Circle Despite Heavy Shorting
Hedge fund ownership climbed to 12 funds in the most recent quarter from 4 in the prior quarter, pointing to institutional investors building positions even after a rough print. Short interest sits at 14.83% of the float, a level that signals a substantial bear camp betting against the stock. That combination shows a market genuinely split on whether the drone story outruns the execution risk.
Where The Story Goes From Here
KULR’s second quarter was messy, with a 43% revenue decline, a gross loss, and tens of millions in Bitcoin-related paper losses. But the underlying pitch has not changed: American drone makers need domestic batteries, and a $1.1 billion Pentagon program is starting to write purchase orders instead of policy papers. For the bulls, the open question is timing: whether the Texas facility, the inventory buildup, and the NDAA charger rollout translate into the pack volume management expects in the second half.
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