KULR Technology Group (NYSE American: KULR) announced it secured a prototype development agreement with a U.S.-based defense drone manufacturer to design and develop lithium-ion battery packs for unmanned aerial vehicles and handheld controllers.

Under the agreement, KULR will handle system-level design, battery architecture development, prototype fabrication, functional and safety testing, certification support, and production-readiness activities for the customer's UAV and ground control station platforms, according to a press release statement.

The Houston-based company will serve as the qualified battery source for the customer's platform, establishing a foundation for potential long-term revenue as the platform reaches deployment. Defense and aerospace battery programs typically progress through multi-quarter design, qualification, and production-readiness cycles before generating volume production revenue.

"This agreement puts KULR engineering directly inside a U.S. drone manufacturer's UAV and ground control programs, with full responsibility for design, certification, and production readiness," said Michael Mo, Chief Executive Officer of KULR Technology Group.

The contract comes as the Pentagon pursues its $1.1 billion Drone Dominance program, which aims to field 300,000 low-cost attack drones by the end of 2027. In April, the Pentagon requested $75 billion for drones and counter-drone systems as part of the Trump Administration's proposed $1.5 trillion defense budget.

Recent Wall Street Journal reporting indicated the Trump administration is pursuing funding arrangements with drone manufacturers, potentially including equity stakes, to accelerate domestic production and reduce costs.

The global drone battery market is projected to grow at a compound annual growth rate of 17.65% from 2026 through 2035, reaching approximately $45.64 billion by 2035, driven by increasing demand for unmanned aerial systems across defense, commercial, industrial, and logistics applications.