ULBI 10-K & 10-Q changes, risk factors and insider trading
Ultralife Corp. · Nasdaq · Miscellaneous Electrical Machinery, Equipment & Supplies · CIK 875657 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Breaches in security, whether cyber or physical, and related disruptions and/or our inability to prevent or respond to such breaches, have previously, and in the future could diminish our ability to generate revenues or contain costs, compromise our assets, and negatively impact our business in other ways.”
New heading “As a result of litigation or claims, currently known or unknown, we could experience negative optics in the market, disruptive demand on our management and staff’s time, and increased costs.”
New heading “A finding that our proprietary and intellectual property rights are not enforceable or invalid could allow our competitors and others to produce competing products based on our proprietary and intellectual property or limit our ability to manufacture and market our products, without significant, costly alterations.”
Removed heading “Breaches in security, whether cyber or physical, and related disruptions and/or our inability to prevent or respond to such breaches, has previously, and in the future could diminish our ability to generate revenues or contain costs, compromise our assets, and negatively impact our business in other ways.”
Removed heading “A finding that our proprietary and intellectual property rights are not enforceable or invalid could allow our competitors and others to produce competing products based on our proprietary and intellectual property or limit our ability to continue to manufacture and market our products, without significant, costly alterations.”
Largest changes
“We continuously face certain security threats, including threats to our information technology infrastructure, attempts to gain access to our proprietary or classified information, and threats to cyber and physical security. Our information technology networks and related systems are critical to the operation of our business and essential to our ability to successfully perform day-to-day operations. …”see in full comparison
“We continuously face certain security threats, including threats to our information technology infrastructure, attempts to gain access to our proprietary or classified information, and threats to cyber and physical security. Our information technology networks and related systems are critical to the operation of our business and essential to our ability to successfully perform day-to-day operations. …”see in full comparison
“Breaches in security, whether cyber or physical, and related disruptions and/or our inability to prevent or respond to such breaches, has previously, and in the future could diminish our ability to generate revenues or contain costs, compromise our assets, and negatively impact our business in other ways.”see in full comparison
“Breaches in security, whether cyber or physical, and related disruptions and/or our inability to prevent or respond to such breaches, have previously, and in the future could diminish our ability to generate revenues or contain costs, compromise our assets, and negatively impact our business in other ways.”see in full comparison
“As a result of litigation or claims, currently known or unknown, we could experience negative optics in the market, disruptive demand on our management and staff’s time, and increased costs.”see in full comparison
“The coronavirus disease of 2019 (COVID-19) has created significant economic disruption and uncertainty around the world. As we enter the fifth year following the initial outbreak of COVID-19, our workforce, customers and vendors still face the risk of the emergence of new strains, availability of effective treatment, and potential regulatory and macroeconomic effects stemming from such impacts. Except for certain situations in China, lockdowns, shelter-in-place restrictions, and vaccine mandates, prevalent during the initial stages of the pandemic, have now been lifted for most companies. …”see in full comparison
Full comparison: every changed paragraph (55)
Changes in economic conditions, including inflation, government trade policies, tariffs, interest rates, and supply-chain disruptions have affected and may continue to affect our business, revenues and earnings adversely.
The post-COVID supply chain conditions which included long-lead times and irregular availability of highly sought after components combined with rapid cost inflation persisted in 20232024 and 2024,2025, although to a lesser extent. The negative impact of these economic conditionsconditions, further complicated by the advent of tariffs, was partially mitigated by our proactive actions including the following: closer alignment of cost increases with customer price increases, extending the time horizon of our sales & operations planning process (“S&OP”) with both customers and suppliers to provide greater visibility in ordering components while upgrading our internal resources responsible for the process, andimproving improvingour internal expertise to enhance our process for launching new products to reduce the cost and time of transitioning to high-volume manufacturing.manufacturing, and the charging of surcharges to customers to help offset the cost of tariffs on certain components.
While significant price increases, longer lead times and key component shortages have eased, they still sporadically occur and general economic conditions are likely to becomebecame more complex with the advent of tariffs in 2025. Despite our best efforts and focus, we may not be able to fully offset in a timely fashion the unfavorable impact of these economic conditions in a timely fashion, which couldcontinue to have a material adverse effect on our business and financial results going forward.
Our efforts to develop new products or new commercial applications for our products and the subsequent transition to high-volume production could be prolonged, not be profitable, not be accepted by our customers or could otherwise fail to achieve market share.
Our supply of raw materials and components could be disrupted or delayed due to business conditions, new or additional tariffs, global conflicts, weather, anysourcing lingering impact of COVID-19requirements or other factors not under our control, or the cost of those raw materials and components may materially increase.
Certain materials and components used in our products are available only from a single or a limited number of suppliers. Some materials and components have been and may continue to be in short supply resulting in limited availability and/or increased costs including new or additional tariffs. Additionally, we may elect to develop relationships with a single or limited number of suppliers for materials and components that are otherwise generally available. Due to our supplying defense products to the U.S. Government, we could receive a government preference to continue to obtain critical supplies to meet military production needs. However, if the government did not provide us with a government preference in such circumstances or ofif the suppliers are not able to meet the necessary demand for the components, the difficulty in obtaining supplies on a timely basis could have a material adverse effect on our business, financial condition and results of operations. We believe that alternative suppliers are available to supply materials and components that could replace materials and components currently used and that, if necessary, we may be able to redesign our products to make use of such alternatives provided that the costs and timing of our customers recertifying the alternate materials and components where necessary is not deemed prohibitive to our customers or us. Nevertheless, any interruption in the supply from any supplier that serves as a sole source could delay product shipments and have a material adverse effect on our business, financial condition and results of operations. We have experienced interruptions of product deliveries by sole source and other suppliers in the past, and we cannot guarantee that we will not experience a continuation of material interruption of deliveries from sole source or other suppliers in the future. Accordingly, these circumstances plus the potentialcontinued impact of costly tariffs and further requirements emphasizing component sourcing from the U.S. in 20252026 and beyond require us to regularly monitor all aspects of our supply chain and share the updates with our customers, to ensure that any potential supply interruptions and incremental costs are understood with all efforts taken to minimize.
As we look forward to potential rising demand for electrification, our lead times for certain critical components from our suppliers could be extended even further, resulting in shipping delays causing us to miss contractual timelines. Our internal purchasing process is focused on the current economic environment, and lead times in the current environment are considered when placing orders from our vendors,vendors. butHowever, we cannot control the ability of our vendors or potential vendors to meet our delivery dates.
Additionally, we could continue to face prolonged, increasing pricing pressure from our suppliers due to rising costs incurred by these suppliers, including the costs associated with potentialcontinued futureor new tariffs, that could be passed on to us in higher prices for our raw materials.materials and components. In addition, customers requiring products containing components and raw materials sourced from the U.S. may also have an impact on both lead times and costs. These increasedhigher prices could increase our cost of business, lower our margins and could have other materially adverse effects on our business, financial condition and results of operations, particularly, if our pass-through of these price increases is not accepted by our customers or if these higher prices are not offset by our lean manufacturing initiatives take longer than anticipated.initiatives.
Rapid growth of our business could significantly strain management, operations and technical resources. If we are successful in obtaining rapid market growth of our products, we may be required to deliver large volumes of products to customers on a timely basis at a reasonable cost. For example, demand for our new transformational or existing products combined with our ability to penetrate new markets and geographies or secure a major project award, could strain the current capacity of our manufacturing facilities and require a substantial increase in our direct labor workforce in a tight job market, and require additional capital resources, equipment and time to meet the required demand. We cannot assure, however, that our business will grow rapidly or that our efforts to expand manufacturing and quality control activities will be successful or that we will be able to satisfy commercial scalecommercial-scale production requirements on a timely and cost-effective basis. Our backlogresources and high confidence orders of approximately $100 million doesmay not meanbe thatsufficient to support rapid growth and demand for our products inand allsimultaneously cases will be met bysatisfy our resourcesbacklog withoutof delay.approximately $110,000 as of December 31, 2025. Although we have highly experienced technical and engineering employees, we cannot assure you that we will be able to fulfill all of the orders of our customers for our products, without delay.
Breaches in security, whether cyber or physical, and related disruptions and/or our inability to prevent or respond to such breaches, has previously, and in the future could diminish our ability to generate revenues or contain costs, compromise our assets, and negatively impact our business in other ways.
We continuously face certain security threats, including threats to our information technology infrastructure, attempts to gain access to our proprietary or classified information, and threats to cyber and physical security. Our information technology networks and related systems are critical to the operation of our business and essential to our ability to successfully perform day-to-day operations. The risks of a security breach, cyberattack, cyber intrusion, or disruption, particularly through actions taken by computer hackers, foreign governments and cyber terrorists, have increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Although we have acquired and developed systems and processes designed to protect our proprietary or classified information, they may not be sufficient to prevent security breach, cyberattack, cyber intrusion, or disruption, and the failure to prevent these types of events could disrupt our operations, require significant management attention and resources, and could negatively impact our reputation among our customers and the public, which could have a negative impact on our financial condition, operating results and liquidity. In 2017, we formed a cross-functional executive management Security Steering Committee focused on mitigating the risk of security breaches, cyberattacks, cyber intrusions, or disruptions. In 2018, with the assistance of outside security consultants, we completed a comprehensive Systems Security Plan (“SSP”) and a Plan of Action & Milestones (“POAM”) in compliance with the requirements of National Institute of Standards and Technology (“NIST”) Special Publication 800-171, Protecting Controlled Unclassified Information in Nonfederal Information Systems and Organizations. In 2019, the Company made further progress in implementing many of the security measures in our SSP and POAM, including increasing security awareness across our employee base. In 2020 through 2024, we continued to make progress towards achieving full implementation of all NIST 800-171 security standards, as well as the requirements under the Cybersecurity Maturity Model Certification (“CMMC”) framework released by the Department of Defense in 2020. We continue to review all key aspects of cybersecurity utilizing our outside security consultants to ensure a robust plan is in place and provides timely updates to our Board. Despite these measures, we cannot eliminate the risk of such security breaches and the potential adverse impacts these breaches may have on our business and financial results. Accordingly, for several years, including 2024, we maintained our cybersecurity insurance policy to help mitigate the impact of a cybersecurity incident.
As reported on Form 8-K filed on March 2, 2023, during performance of their daily information technology security procedures on January 25, 2023, our Information Technology Team (“IT Team”) discovered an unauthorized entry into our information technology systems for our Newark, New York and Virginia Beach, Virginia locations. The accounts in question were immediately disabled by our IT Team, and the Company’s Security Steering Committee met promptly, taking swift action, including the immediate notification of our cybersecurity insurance carrier. Shortly thereafter, with the assistance of recommendations from our cybersecurity carrier, we engaged external incident response professionals to assist with our assessment, recovery and response. On February 7, 2023, the Company received an electronic communication allegedly from a third-party, known for nefarious ransomware attacks, claiming responsibility for the incident, and discussions with that third party commenced through experienced cybersecurity professionals engaged by the Company.
This incident caused a partial disruption of our business operations at these locations, which resulted in production and shipping downtime of several weeks as well as lost sales orders. With the efforts of internal resources supported by external expertise, the Company restored its information technology systems and production was resumed in both locations. Based on the recovery of our systems, review of the files affected, as well as the Company’s prompt response to and assessment of the incident, no ransom or other amount had been paid to the third party. Nevertheless, the cybersecurity event, the business interruption incurred and the resulting restoration was costly to the Company. Despite a business interruption claim, independently computed by a third-party forensic accountant, filed with our cyber insurance underwriter that has not been satisfied, on February 4, 2025 the Company filed a complaint in the Supreme Court of the State of New York, County of Wayne for the outstanding amount of our claim as computed by our third-party forensic accountant.
We continue to diligently monitor our information systems with outside expertise for any intrusions or other irregularities.
Breaches in security, whether cyber or physical, and related disruptions and/or our inability to prevent or respond to such breaches, have previously, and in the future could diminish our ability to generate revenues or contain costs, compromise our assets, and negatively impact our business in other ways.
We continuously face certain security threats, including threats to our information technology infrastructure, attempts to gain access to our proprietary or classified information, and threats to cyber and physical security. Our information technology networks and related systems are critical to the operation of our business and essential to our ability to successfully perform day-to-day operations. The risks of a security breach, cyberattack, cyber intrusion, or disruption, particularly through actions taken by computer hackers, foreign governments and cyber terrorists, have increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Although we have acquired and developed systems and processes designed to protect our information networks, and proprietary or classified information, they may not be sufficient to prevent security breaches, cyberattacks, cyber intrusions, or disruptions, and the failure to prevent these types of events could disrupt our operations, require significant management attention and resources, and could negatively impact our reputation among our customers and the public, which could have a negative impact on our financial condition, operating results and liquidity. In 2017, we formed a cross-functional executive management Security Steering Committee focused on mitigating the risk of security breaches, cyberattacks, cyber intrusions, or disruptions. In 2018, with the assistance of outside security consultants, we completed a comprehensive Systems Security Plan (“SSP”) and a Plan of Action & Milestones (“POAM”) in compliance with the requirements of National Institute of Standards and Technology (“NIST”) Special Publication 800-171, Protecting Controlled Unclassified Information in Nonfederal Information Systems and Organizations. In 2019, the Company made further progress in implementing many of the security measures in our SSP and POAM, including increasing security awareness across our employee base. In 2020 through 2025, we continued to make progress towards achieving full implementation of all NIST 800-171 security standards, as well as the requirements under the Cybersecurity Maturity Model Certification (“CMMC”) framework released by the Department of Defense in 2020. We continue to review all key aspects of cybersecurity utilizing our outside security consultants to ensure a robust plan is in place and provides timely updates to our Board. Despite these measures, we cannot eliminate the risk of such security breaches and the potential adverse impacts these breaches may have on our business and financial results. Accordingly, for several years, including 2025, we maintained our cybersecurity insurance policy to help mitigate the impact of a cybersecurity incident.
As reported on Form 8-K filed on March 2, 2023, during performance of their daily information technology security procedures on January 25, 2023, our Information Technology Team (“IT Team”) discovered an unauthorized entry into our information technology systems for our Newark, New York and Virginia Beach, Virginia locations. The accounts in question were immediately disabled by our IT Team, and the Company’s Security Steering Committee met promptly, taking swift action, including the immediate notification of our cybersecurity insurance carrier. Shortly thereafter, with the assistance of recommendations from our cybersecurity insurance carrier, we engaged external incident response professionals to assist with our assessment, recovery and response. On February 7, 2023, the Company received an electronic communication allegedly from a third-party, known for nefarious ransomware attacks, claiming responsibility for the incident, and discussions with that third party commenced through experienced cybersecurity professionals engaged by the Company.
This incident caused a partial disruption of our business operations at these locations, which resulted in production and shipping downtime of several weeks as well as lost sales orders. With the efforts of internal resources supported by external expertise, the Company restored its information technology systems and production was resumed in both locations. Based on the recovery of our systems, review of the files affected, as well as the Company’s prompt response to and assessment of the incident, no ransom or other amount had been paid to the third party. Nevertheless, the cybersecurity event, the business interruption incurred and the resulting restoration was costly to the Company. Despite a business interruption claim, independently computed by a third-party forensic accountant, filed with our cyber insurance underwriter that has not been satisfied, on February 4, 2025 the Company filed a complaint in the Supreme Court of the State of New York, County of Wayne for the outstanding amount of our claim as computed by our third-party forensic accountant. We remain in the discovery phase of the claim with the expectation of a jury trial in the latter half of 2026. On March 2, 2026, the cyber insurance underwriter against whom we filed a claim, filed a motion for permission to file a counter claim which has not yet been granted by the court. If ultimately granted, we believe that such a counter claim is without merit and will be opposed vigorously.
We continue to diligently monitor our information systems with outside expertise for any attempted intrusions or other irregularities, which we have been successful in repelling in 2025.
The market for our products is characterized by rapidly changing technology and evolving industry standards, often resulting in product obsolescence or short product lifecycles. Although we believe that our products utilize state-of-the-art technology and that the costs associated with change could be prohibitive in terms of costs and time, there can be no assurance that competitors will not develop technologies or products that could render our technologies and products obsolete or less marketable. Many of the companies with which we compete have substantially greater resources than we do, and some have the capacity and volume of business to be able to produce their products more efficiently than we can. In addition, these companies are developing or have developed products using a variety of technologies that are expected to compete with our technologies. Furthermore, we have noted an increase in foreign competition, especially in Asia, over the last several years, which tends to compete on price in the battery industry, yet poor quality and the potential impact of tariffs could mitigate their progress. If these companies are more successful than we are in marketing their products and penetrating end markets, this may reduce our revenues and operating income and could have other material adverse effects on our business, financial condition and results of operations.
Due to the high energy inherent in Lithium batteries, our Lithium batteries can pose certain safety risks, including the risk of fire. We incorporate procedures in research, development, product design, manufacturing processes and the transportation of Lithium batteries that are intended to reduce safety risks, but we cannot assure that accidents will not occur or that our products will not be subject to recall for safety concerns. Although we currently carry insurance policies which cover loss of plant and machinery,equipment, leasehold improvements, inventory and business interruption, any accident, whether at our manufacturing facilities or from the use and transportation of our products, may result in significant production delays or claims for damages resulting from injuries or death. While we maintain what we believe to be sufficient casualty liability coverage to protect against such occurrences, these types of losses could reduce our available cash and our operating and net income and have other material adverse effects on our reputation, business, financial condition and results of operation.
Our future operating results and the price of our common stock may vary significantly from quarter-to-quarter and from year-to-year depending on factors such as the timing and shipment of significant orders, new product introductions, the transition of new products to higher-volume production, major project wins, U.S. and foreign government demand, delays in customer releases of purchase orders, delays in receiving raw materials from vendors and other supply-chain disruptions, the mix of distribution channels through which we sell our products and services andservices, general economic conditions.conditions and incurrence of one-time costs. Due to such variances in operating results, we have sometimes failed to meet, and in the future may not meet, market expectations regarding our future operating results.
In addition to the uncertainties of quarterly and annual operating results, future announcements concerning us or our competitors, including technological innovations or commercial products, litigation or public concerns as to the safety or commercial value of one or more of our products, or the impact of economic or geopolitical factors on any of the markets segments in which we participate in may cause the market price of our common stock to fluctuate substantially, all of which may be unrelated to our operating results.
Upon closing of the acquisition of Electrochem Acquisition on October 31, 2024, the Credit Facilities became effective to fund the acquisition and the related closing costs. As of December 31, 2024,2025, the Company had $55,000$50,250 of outstanding principal on the Term Loan Facility, of which $2,750$4,125 is due to be paid in 20252026 and included in current portion of long-term debt on the balance sheet, and no outstanding balance on the Revolving Credit Facility. The related interest rates on our borrowings are variable as disclosed in Note 3 to our Consolidated Financial Statements contained in Item 8 of this Form 10-K. WhileFrom it is in the best interests of the Companytime to reduce the amount of debt quickly, thosetime, funds inwhich some caseswould have been divertedotherwise used to pay down debt, have been used to purchase raw material and component inventory above historical levels in order to satisfy commitments to our customers in light of our backlog and continued demand for our products as well as strategic capital expenditures to improve our gross margins. Accordingly, any increase in interest rates will adversely impact the Company’s financial results, perhaps materially.
The transportation of Lithium batteries is regulated by the International Civil Aviation Organization (“ICAO”) and corresponding International Air Transport Association (“IATA”) Dangerous Goods Regulations and the International Maritime Dangerous Goods Code (“IMDG”) and in the U.S. by the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (“PHMSA”). These regulations are based on the United Nations Recommendations on the Transport of Dangerous Goods Model Regulations and the United Nations Manual of Tests and Criteria. We currently ship our products pursuant to ICAO, IATA and PHMSA hazardous goods regulations. These regulations require companies to meet certain testing, packaging, labeling and shipping specifications for safety reasons. We have not incurred, and do not expect to incur, any significant costs to comply with these regulations. We believe we materially comply with all current U.S. and international regulations for the shipment of our products, and we intend and expect to comply with any new regulations that are imposed. We have established our own testing facilities to ensure that we materially comply with these regulations. If, however, we are unable to comply with any such new regulations, or if regulations are introduced that limit our ability to transport our products to customers in a cost-effective manner, this could reduce our operating income and margins, and have other material adverse effects on our business, financial condition and results of operations.
Our new products, supporting our commercial diversification strategy will likely result in the introduction of our products in new end markets that we have not participated in before. These new market opportunities may carry certain risks that we may not have experienced in the past or that we may not be fully aware of. While we perform extensive due diligence in the launch of our products in new end markets and attempt to mitigate our risks with our contracts and insurance coverage, we may not be fully aware of the risks that may exist until we gain more experience in these markets.
As a result of litigation or claims, currently known or unknown, we could experience negative optics in the market, disruptive demand on our management and staff’s time, and increased costs.
As a global company operating in diverse markets, Ultralife faces the risks of litigation and claims. While we have mitigated the overall financial risks with a comprehensive global insurance program which is closely monitored and renewed annually, the internal cost of management and staff time could impact our efforts spent on product development and growth opportunities.
The COVID-19potential pandemicof andfuture otherpandemics related illnesses have caused and may continue tocould create significant economic and social disruption and uncertainty around the world, may impact the health of our employees, the employees of our customers, and the employees of our suppliers, causing delays in the manufacture and delivery of our mission critical products to end customers, and may disrupt business with our collaborative business partners and service providers, which may continue to adversely impact our business and operating results.
The coronavirus disease of 2019 (COVID-19) created significant economic disruption and uncertainty around the world. The potential of future pandemics could create similar situations.
The coronavirus disease of 2019 (COVID-19) has created significant economic disruption and uncertainty around the world. As we enter the fifth year following the initial outbreak of COVID-19, our workforce, customers and vendors still face the risk of the emergence of new strains, availability of effective treatment, and potential regulatory and macroeconomic effects stemming from such impacts. Except for certain situations in China, lockdowns, shelter-in-place restrictions, and vaccine mandates, prevalent during the initial stages of the pandemic, have now been lifted for most companies. While we have maintained normal business operations at virtually all our facilities throughout the pandemic, the related supply chain disruptions including increased lead times on key components experienced within our business and by our customers and vendors, continue to impact our work schedules and timing of shipments. The lingering impact of these conditions, potentially exacerbated by the emergence of new strains, on our business and financial results is uncertain and will depend on many evolving factors which we continue to monitor but cannot predict, including the resistance to treatments and current vaccinations, and the duration and scope of any new pandemic variants, the resulting actions taken by governments, businesses and individuals, and the flow-through impact on operations and supply chains.
We typically offer standard warranties against product defects that range from ninety (90) days to three (3) years from the date of purchase. We also offer separately priced extended warranty contracts on certain Communications Systems products. Warranty costs expected to be incurred are estimated based on the Company’s experience and recorded as costs of products sold,sold and have historically been minimal. There is no assurance that future warranty claims will be consistent with our past experience and estimates, and in the event we experience a significant increase in warranty claims, there is no assurance that our reserves will be sufficient to cover such increased warranty claims. Excessive warranty claims could have a material adverse effect on our business, financial condition and results of operations.
The transportation of Lithium batteries is regulated by the International Civil Aviation Organization (“ICAO”) and corresponding International Air Transport Association (“IATA”) Dangerous Goods Regulations and the International Maritime Dangerous Goods Code (“IMDG”) and in the U.S. by the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (“PHMSA”). These regulations are based on the United Nations Recommendations on the Transport of Dangerous Goods Model Regulations and the United Nations Manual of Tests and Criteria. We currently ship our products pursuant to ICAO, IATA and PHMSA hazardous goods regulations. These regulations require companies to meet certain testing, packaging, labeling and shipping specifications for safety reasons. We have not incurred, and do not expect to incur, any significant costs in order to comply with these regulations. We believe we materially comply with all current U.S. and international regulations for the shipment of our products, and we intend and expect to comply with any new regulations that are imposed. We have established our own testing facilities to ensure that we materially comply with these regulations. If, however, we are unable to comply with any such new regulations, or if regulations are introduced that limit our ability to transport our products to customers in a cost-effective manner, this could reduce our operating income and margins, and have other material adverse effects on our business, financial condition and results of operations.
Our new products supporting our commercial diversification strategy will likely result in the introduction of our products in new end markets that we have not participated in before. These new market opportunities may carry certain risks that we may not have experienced in the past or that we may not be fully aware of. While we perform extensive due diligence in the launch of our products in new end markets and attempt to mitigate our risks with our contracts and insurance coverage, we may not be fully aware of the risks that may exist until we gain more experience in these markets.
Negative publicity concerning Lithium-ion batteries may adversely impact the industries or markets in which we operate in.operate.
We are unable to predict the impact, severity or duration of negative publicity related to fire/mishandling of Lithium-ion batteries or the environmental impact of their disposal, and how it may impact the industries or markets we serve. Ongoing negative attention regarding Lithium-ion batteries that are used in certain cellular phones or are integrated into the power systems of new commercial aircraft and electric motor vehicles may have an impact on the entire Lithium-ion battery industry as a whole,industry, regardless of the design or usage of those batteries. The effects of such events could reduce demand for our products and have an adverse effect on our business, financial condition, and results of operations.
We maintain manufacturing operations in North America, the United Kingdom and China, and we export products to various countries. We purchase materials and sell our products in foreign currencies, and therefore currency fluctuations have and may in the future impact our pricing of products sold and materials purchased. Sales to non-U.S. customers make up a significant percentage of our total revenues. For example, the percentage of our business with customers outside of the U.S. was 41% in 2024 and 49% in 2023. A future strengthening of the U.S. dollar relative to our customers’ currencies could make our products relatively more expensive and may adversely affect our sales levels and reduce profitability. In addition, our United Kingdom and China subsidiaries maintain their books in local currency and their translation to U.S. dollars for our consolidated financial statements have and may in the future have an adverse effect on our consolidated financial results due to changes in local currency values relative to the U.S. dollar. With the rapid pace of geopolitical events, it is difficult at this time to assess any future impact of currency fluctuation on the Company’s financial results, despite our proactive efforts to minimize the short-term risks of currency fluctuations. Accordingly, currency fluctuations could have a material adverse effect on our business, financial condition and results of operations by increasing our expenses and reducing our income. Finally, we maintain certain domestic U.S. cash balances denominated in foreign currencies, and the U.S. dollar equivalent of these balances fluctuates with changes in the foreign exchange rates between these currencies and the U.S. dollar.
At December 31, 2024, we had approximately $15,000 of U.S. net operating loss carryforwards and $3,200 of U.S. tax credit carryforwards available to offset future taxable income. We continually assess the carrying value of these assets based on the relevant accounting standards. Based on our latest assessment at December 31, 2024, we believe it is more likely than not that our U.S. deferred tax assets will be fully realized. However, failure to achieve our business targets could result in future charges to our income tax provision if any of the net operating loss or tax credit carryforwards are not utilized. See discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations beginning on page 27.
A finding that our proprietary and intellectual property rights are not enforceable or invalid could allow our competitors and others to produce competing products based on our proprietary and intellectual property or limit our ability to continue to manufacture and market our products, without significant, costly alterations.
We believe our success depends more on the knowledge, ability, experience and technological expertise of our employees than on the legal protection of patents and other proprietary rights. However, we claim proprietary rights in various unpatented technologies, know-how, trade secrets and trademarks relating to our products and manufacturing processes. We cannot guarantee the degree of protection these various rights may or will afford, or that competitors will not independently develop, patent or license technologies that are substantially equivalent or superior to our technologies. We also protect our proprietary rights in our products and operations through contractual obligations, including nondisclosure agreements with certain employees, customers, consultants and strategic partners. There can be no assurance as to the degree of protection these contractual measures may or will afford. We have had patents issued and have patent applications pending in the U.S. and elsewhere. We cannot assure (1) that patents will be issued from any of these pending applications, or that the claims allowed under any issued patents will sufficiently protect our technology, (2) that any patents issued to us will not be challenged, invalidated or circumvented, or (3) as to the degree or adequacy of protection that any patents or patent applications may or will afford. Further, if we are found to be infringing upon third party patents, we cannot assure that we will not be subjected to significant liability for damages or that we will be able to obtain licenses with respect to such patents on acceptable terms, if at all. In this event, the failure to obtain necessary licenses could delay product shipments or the introduction of new products, and costly attempts to design around such patents could foreclose the development, manufacture or sale of products, all of which could materially adversely affect our business and our results of operations.
Our goodwill and other indefinite-lived intangible assets are subject to impairment testing on an annual basis. Additionally, goodwill and other indefinite-lived intangible assets are assessed for impairment whenever events and circumstances indicate that impairment may exist. Any excess carrying value of goodwill and/or other intangible assets resulting from an impairment assessment must be written off in the period of determination. In addition, from time to time, we may acquire a business which will require us to record goodwill and/or other indefinite-lived intangible assets based on the allocation of the total consideration transferred to consummate the acquisition to the identified tangible and intangible assets acquired and liabilities assumed based on their respective estimated fair values. We may subsequently experience unforeseen circumstances related to past or future acquisitions which may adversely impact the forecasted cash flows or other assumptions used to value these assets. Future determinations that the estimated fair value of our goodwill and/or indefinite-lived intangible assets is less than their respective carrying values may result in significant (non-cash) impairment charges which could have a material adverse impact on our future results of operations.
We maintain manufacturing operations in North America, the United Kingdom and China, and we export products to various countries. We purchase materials and sell our products in foreign currencies, and therefore currency fluctuations have impacted and may in the future impact our pricing of products sold and materials purchased. Sales to non-U.S. customers make up a significant percentage of our total revenues. For example, the percentage of our business with customers outside of the U.S. was 28% in 2025 and 41% in 2024. A future strengthening of the U.S. dollar relative to our customers’ currencies could make our products relatively more expensive and may adversely affect our sales levels and reduce profitability. In addition, our United Kingdom and China subsidiaries maintain their books in local currency and their translation to U.S. dollars for our consolidated financial statements have and may in the future have an adverse effect on our consolidated financial results due to changes in local currency values relative to the U.S. dollar. With the rapid pace of geopolitical events, it is difficult to assess any future impact of currency fluctuation on the Company’s financial results, despite our proactive efforts to minimize the short-term risks of currency fluctuations. Accordingly, currency fluctuations could have a material adverse effect on our business, financial condition and results of operations by increasing our expenses and reducing our income. Finally, we maintain certain domestic U.S. cash balances denominated in foreign currencies, and the U.S. dollar equivalent of these balances fluctuates with changes in the foreign exchange rates between these currencies and the U.S. dollar.
At December 31, 2025, we had approximately $8,800 of federal net operating loss carryforwards, $5,100 of state net operating loss carryforwards and $3,400 of federal general business tax credit carryforwards available to offset future taxable income. We continually assess the carrying value of these assets based on the relevant accounting standards. Based on our latest assessment at December 31, 2025, we believe it is more likely than not that our U.S. deferred tax assets will be fully realized. However, failure to achieve our business targets could result in future charges to our income tax provision if any of the net operating loss or tax credit carryforwards are not utilized. See discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations beginning on page 26.
A finding that our proprietary and intellectual property rights are not enforceable or invalid could allow our competitors and others to produce competing products based on our proprietary and intellectual property or limit our ability to manufacture and market our products, without significant, costly alterations.
We believe our success depends more on the knowledge, ability, experience and technological expertise of our employees than on the legal protection of patents and other proprietary rights. However, we claim proprietary rights in various unpatented technologies, know-how, trade secrets and trademarks relating to our products and manufacturing processes. We cannot guarantee the degree of protection these various rights will afford, or that competitors will not independently develop, patent or license technologies that are substantially equivalent or superior to our technologies. We also protect our proprietary rights in our products and operations through contractual obligations, including nondisclosure agreements with certain employees, customers, consultants and strategic partners. There can be no assurance as to the degree of protection these contractual measures will afford. We have had patents issued and have patent applications pending in the U.S. and elsewhere. We cannot assure (1) that patents will be issued from any of these pending applications, or that the claims allowed under any issued patents will sufficiently protect our technology, (2) that any patents issued to us will not be challenged, invalidated or circumvented, or (3) as to the degree or adequacy of protection that any patents will afford. Further, if we are found to be infringing upon third party patents, we cannot assure that we will not be subjected to significant liability for damages or that we will be able to obtain licenses with respect to such patents on acceptable terms, if at all. In this event, the failure to obtain necessary licenses could delay product shipments or the introduction of new products, and costly attempts to design around such patents could foreclose the development, manufacture or sale of products, all of which could materially adversely affect our business and our results of operations.
As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act"), the SEC has promulgated disclosure requirements regarding the use of certain minerals, which are mined from the Democratic Republic of Congo and adjoining countries, known as conflict minerals. We are required to perform due diligence inquiries of our supply chain and publicly disclose whether we manufacture (as defined in the Dodd Frank Act) any products that contain conflict minerals and could incur significant costs related to implementing a process that will meet the mandates of the Act. Additionally, customers typically rely on us to provide critical data regarding the parts they purchase, including conflict mineral information. Our material sourcing is broad-based and multi-tiered, and we may not be able to easily verify the origins for conflict minerals used in the products we sell. We have many suppliers, and each provides conflict mineral information in a different manner, if at all. Accordingly, because our supply chain is complex, we may face reputational challenges if we are unable to sufficiently verify the origins of conflict minerals used in our products. Additionally, customers may demand that the products they purchase be free of conflict minerals. Such demands may limit the number of suppliers that can provide products in sufficient quantities to meet customer demand or at competitive prices. Any of these consequences may increase our costs of operations, decrease our margins and adversely affect our business.
Our goodwill and other indefinite-lived intangible assets are subject to impairment testing on an annual basis. Additionally, goodwill and other indefinite-lived intangible assets are assessed for impairment whenever events and circumstances indicate that impairment may exist. Any excess carrying value of goodwill and/or other intangible assets resulting from an impairment assessment must be written off in the period of determination. For example, in October 2025 Ultralife decided to undergo a comprehensive rebranding initiative that consolidates all sub-brands under a singular, unified master brand – Ultralife. To this end, the Accutronics, Southwest Electronic Energy, Excell Battery, McDowell Research and AMTI brands will no longer be emphasized. The Electrochem brand will remain, but as a product brand on select primary cells. This transformation positions Ultralife for stronger market impact as we continue to lead in mission critical battery and RF power solutions. This rebranding initiative had a non-cash impact of $12,181 to reduce the value of our tradename and trademark intangible assets recorded during our 2025 fourth quarter.
In addition, from time to time, we may acquire a business which will require us to record goodwill and/or other indefinite-lived intangible assets based on the allocation of the total consideration transferred to consummate the acquisition to the identified tangible and intangible assets acquired and liabilities assumed based on their respective estimated fair values. We may subsequently experience unforeseen circumstances related to past or future acquisitions which may adversely impact the forecasted cash flows or other assumptions used to value these assets. Future determinations that the estimated fair value of our goodwill and/or indefinite-lived intangible assets is less than their respective carrying values may result in significant (non-cash) impairment charges which could have a material adverse impact on our future results of operations.
The EU RoHS Directive places restrictions on the use of certain hazardous substances in electrical and electronic equipment. All applicable products sold in the European Union market after July 1, 2006, must comply with EU RoHS Directive. While this directive does not apply to batteries and does not currently affect our defense products, should any changes occur in the directive that would affect our products, we intend and expect to comply with any such new regulations that may be imposed. Our commercial chargers comply with this directive. Additional European Union directives, entitled the Waste Electrical and Electronic Equipment (“WEEE”) Directive and the Directive "on batteries and accumulators and waste batteries and accumulators", impose regulations affecting our non-defense products. These directives require producers or importers of particular classes of electrical goods to be financially responsible for specified collection, recycling, treatment and disposal of past and future covered products. These directives assign levels of responsibility to companies doing business in European Union markets based on their relative market share. These directives call on each European Union member state to enact enabling legislation to implement the directive. As additional European Union member states pass enabling legislation, our compliance system should be sufficient to meet such requirements. Our current estimated costs associated with our compliance with these directives based on our current market share are not significant. However, we continue to evaluate the impact of these directives as European Union member states implement guidance, and actual costs could differ from our current estimates.
The EU Battery Directive is intended to cover all types of batteries regardless of their shape, volume, weight, material composition or use. It is aimed at reducing mercury, cadmium, lead and other metals in the environment by minimizing the use of these substances in batteries and by treating and re-using old batteries. This directive applies to all types of batteries except those used to protect European member states’ security, for military purposes, or sent into space. To achieve these objectives, the EU Battery Directive prohibits the marketing of some batteries containing hazardous substances. It establishes processes aimed at high levels of collection and recycling of batteries with quantified collection and recycling targets. The directive sets out minimum rules for producer responsibility and provisions regarding labeling of batteries and their removability from equipment. Product markings are required for batteries and accumulators to provide information on capacity and to facilitate reuse and safe disposal. We currently ship our products pursuant to the requirements of the directive. Our current estimated costs associated with our compliance with these directives based on our current market share are not significant. However, we continue to evaluate the impact of these directives as European Union member states implement guidance, and actual costs could differ from our current estimates.
Several domestic and international communities have passed laws prohibiting the landfill disposal of batteries and requiring companies to make provisions for product recycling. Of note are the EU Batteries Directive and the New York State Rechargeable Battery Recycling Law. We are committed to responsible product stewardship and ongoing compliance with these and future statutes and regulations. The compliance costs associated with current recycling statutes and regulations are not expected to be significant at this time. However, we continue to evaluate the impact of these regulations, and actual costs could differ from our current estimates and additional laws could be enacted by these and other states which entail greater costs of compliance.
The EU RoHS Directive places restrictions on the use of certain hazardous substances in electrical and electronic equipment. All applicable products sold in the European Union market after July 1, 2006 must comply with EU RoHS Directive. While this directive does not apply to batteries and does not currently affect our defense products, should any changes occur in the directive that would affect our products, we intend and expect to comply with any new regulations that are imposed. Our commercial chargers comply with this directive. Additional European Union directives, entitled the Waste Electrical and Electronic Equipment (“WEEE”) Directive and the Directive "on batteries and accumulators and waste batteries and accumulators", impose regulations affecting our non-defense products. These directives require producers or importers of particular classes of electrical goods to be financially responsible for specified collection, recycling, treatment and disposal of past and future covered products. These directives assign levels of responsibility to companies doing business in European Union markets based on their relative market share. These directives call on each European Union member state to enact enabling legislation to implement the directive. As additional European Union member states pass enabling legislation our compliance system should be sufficient to meet such requirements. Our current estimated costs associated with our compliance with these directives based on our current market share are not significant. However, we continue to evaluate the impact of these directives as European Union member states implement guidance, and actual costs could differ from our current estimates.
The EU Battery Directive is intended to cover all types of batteries regardless of their shape, volume, weight, material composition or use. It is aimed at reducing mercury, cadmium, lead and other metals in the environment by minimizing the use of these substances in batteries and by treating and re-using old batteries. This directive applies to all types of batteries except those used to protect European member states’ security, for military purposes, or sent into space. To achieve these objectives, the EU Battery Directive prohibits the marketing of some batteries containing hazardous substances. It establishes processes aimed at high levels of collection and recycling of batteries with quantified collection and recycling targets. The directive sets out minimum rules for producer responsibility and provisions with regard to labeling of batteries and their removability from equipment. Product markings are required for batteries and accumulators to provide information on capacity and to facilitate reuse and safe disposal. We currently ship our products pursuant to the requirements of the directive. Our current estimated costs associated with our compliance with these directives based on our current market share are not significant. However, we continue to evaluate the impact of these directives as European Union member states implement guidance, and actual costs could differ from our current estimates.
A number of domestic and international communities are prohibiting the landfill disposal of batteries and requiring companies to make provisions for product recycling. Of particular note are the EU Batteries Directive and the New York State Rechargeable Battery Recycling Law. We are committed to responsible product stewardship and ongoing compliance with these and future statutes and regulations. The compliance costs associated with current recycling statutes and regulations are not expected to be significant at this time. However, we continue to evaluate the impact of these regulations, and actual costs could differ from our current estimates and additional laws could be enacted by these and other states which entail greater costs of compliance.
As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Act"), the SEC has promulgated disclosure requirements regarding the use of certain minerals, which are mined from the Democratic Republic of Congo and adjoining countries, known as conflict minerals. We are required to perform due diligence inquiries of our supply chain and publicly disclose whether we manufacture (as defined in the Act) any products that contain conflict minerals and could incur significant costs related to implementing a process that will meet the mandates of the Act. Additionally, customers typically rely on us to provide critical data regarding the parts they purchase, including conflict mineral information. Our material sourcing is broad-based and multi-tiered, and we may not be able to easily verify the origins for conflict minerals used in the products we sell. We have many suppliers, and each provides conflict mineral information in a different manner, if at all. Accordingly, because our supply chain is complex, we may face reputational challenges if we are unable to sufficiently verify the origins of conflict minerals used in our products. Additionally, customers may demand that the products they purchase be free of conflict minerals. Such demands may limit the number of suppliers that can provide products in sufficient quantities to meet customer demand or at competitive prices. Any of these consequences may increase our costs of operations, increase or margins and adversely effect our business.
Management's Discussion & Analysis (MD&A)
New heading “Results of Operations — Consolidated”
New heading “Year ended December 31, 2025, compared with the year ended December 31, 2024:”
New heading “Material Cash Requirements”
Removed heading “Results of Operations”
Removed heading “Year ended December 31, 2024 compared with the year ended December 31, 2023:”
Largest changes
“Other Expense. Other expenses totaled $2,496 for the year ended December 31, 2025, compared to $1,664 for the year ended December 31, 2024. Interest and financing expense increased $2,013, or 103.8%, from $1,940 for 2024 to $3,953 for the comparable period in 2025 resulting from the financing of the Electrochem acquisition on October 31, 2024. …”see in full comparison
“Other expenses totaled $2,496 for the year ended December 31, 2025, compared to $1,664 for the year ended December 31, 2024. Interest and financing expense increased $2,013, or 103.8%, from $1,940 for 2024 to $3,953 for the comparable period in 2025 resulting from the financing of the Electrochem acquisition on October 31, 2024. …”see in full comparison
Overall, operating expenses as a percentage of revenues wassee in full comparison19.7%27.2% for the year ended December 31,20242025, compared to18.7%19.7% for the comparable20232024 period.AmortizationIn addition to the 2025 $12,181 intangible asset impairment charge related to our rebranding initiative, amortization expense associated with intangible assets related to our acquisitions increased to $1,518 for the year ended December 31, 2025 ($1,395 in selling, general and administrative expenses and $123 in research and development costs) from $1,032 for the year ended December 31, 2024 ($929 in selling, general and administrative expenses and $103in research and development costs) from $889 for the year ended December 31, 2023 ($792 in selling, general and administrative expenses and $97in research and development costs) as a result of the amortization periods of intangible assets associated with our acquisition of Electrochem on October 31, 2024. Research and development costs were$8,268$10,398 in2024,2025, an increase of$737$2,130 or9.8%,25.8%, from$7,531$8,268 reported in2023.2024. This increase is attributable toadditional investments in new product development andour acquisition of Electrochem which contributed$227$1,122 of theincrease.increase and additional investments in new product development. Selling, general, and administrative expenses increased$1,887$5,263 or8.5%21.9% to$24,081$29,344 for the year-ended December 31,20242025, from$22,194$24,081 for the year ended December 31,2023.2024. The increase resulted fromone-timethe full year inclusion of Electrochem which contributed $2,486, the increase in certain one-time, non-recurring expenses of $1,580 which include costsofto$1,294closedirectlyour Calgary facility, costs related totheour acquisition of Electrochem and$469thecontributedrelatedbytransitionElectrochem.to Ultralife systems and litigation expenses for our cyber insurance claim, and the strengthening of our sales and marketing leadership team to expedite organic growth and further leverage our global brand and resources. We continued tight control over discretionary spending across the Company.
“Over the next 24 months, we expect estimated material cash requirements for debt service (interest and scheduled principal) of approximately $16,000 based on the requirements of our Credit and Security Agreement with interest rates at present levels and capital expenditures of approximately $8,000 - $9,000 based on completion of current projects, planned projects and historical trends. …”see in full comparison
“We monitor liquidity through cash balances, cash generated from operations, and availability under our revolving credit facility; we were in compliance with our debt covenants as of year‑end.”see in full comparison
Cost of Products Sold and Gross Profit. Cost of products sold for the year ended December 31,see in full comparison20242025, increased$2,698$22,996 or2.3%18.8% from the year ended December 31,2023.2024. Consolidated cost of products sold as a percentage of total revenuedecreasedincreased from75.3% for the year ended December 31, 2023 to74.3% for the year ended December 31,2024.2024, to 75.9% for the year ended December 31, 2025. Correspondingly, consolidated gross margin was 24.1% for the year ended December 31, 2025, compared with 25.7% for the year ended December 31,2024, compared with 24.7% for the year ended December 31, 2023.2024. The100-basis160-basis pointimprovementdeclinein gross margin iswas due primarily tobettersalesalignmentproduct mix reflecting lower oil & gas cell pack, medical and Communications Systems sales, scrap on the transition ofthenewtimingproducts to higher production levels, quality issues on some incoming components impacting manufacturing operations, and lower factory throughput at some of ourcustomer price increases with the impact of cost inflation on raw materials and key components; extending the time horizon of our sales & operations planning process (“S&OP”) with both customers and suppliers while upgrading our internal resources responsible for the process to reduce the negative impact of production line start-ups, shutdowns and changeovers due to irregular component availability and lead time extensions; and concerted efforts to level-load production resulting in improved labor utilization efficiency and higher cost absorption.operations.
Full comparison: every changed paragraph (72)
The following discussion and analysis should be read in conjunction with theour accompanyingConsolidated consolidatedFinancial financial statementsStatements and notesthe related Notes thereto appearing in Item 8 of this Form 10-K.
The financial information in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is presented in thousands of dollars, except for share and per share amounts. AllThis figuresMD&A presentedincludes belowforward-looking representstatements that involve risks and uncertainties; actual results frommay continuingdiffer operations,materially. unlessSee otherwise“Forward-Looking specified.Statements” and Item 1A – Risk Factors.
All figures presented below represent results from continuing operations, unless otherwise specified.
We report our results in two operating segments: Battery & Energy Products and Communications Systems. The Battery & Energy Products segment includes Lithium 9-volt, cylindrical, thin cell and other non-rechargeable batteries, in addition to rechargeable batteries, uninterruptable power supplies, charging systems and accessories. The Communications Systems segment includes RF amplifiers, power supplies, cable and connector assemblies, amplified speakers, equipment mounts, case equipment, man-portable systems, integrated communication systems for fixed or vehicle applications and communications and electronics systems design. We believe that reporting performance at the segment contribution level, as defined by gross profit levelless direct selling, general and administrative (“SG&A”) and research and development expenses, is the best indicator of segment performance. This metric is used as a consistent benchmark for comparison across reporting periods. Corporate general and administrative (“G&A”) expenses, including costs associated with our acquisitions, include corporate functions including board of directors, executive officers, accounting & finance, human resources, legal, information technology and their related functional expenses. These costs are not directly allocable to the operating segments. As such, we report segment performance at the gross profitcontribution level and operatingCorporate G&A expenses as Corporate charges.
On May 1, 2019, we acquired Southwest Electronic Energy Corporation, a Texas corporation (“SWE”), and a leading designer and manufacturer of high-performance smart battery systems and battery packs to customer specifications using Lithium cells. SWE serves a variety of industrial markets, including oil and gas, remote monitoring, process control and marine, which demand uncompromised safety, service, reliability and quality. We acquired SWE as a bolt-on acquisition which has supported our strategy of commercial revenue diversification by providing entry to the oil and gas exploration and production, and subsea electrification markets, which were previously unserved by us. Another key benefit has been obtaining a highly valuable technical team of battery pack and charger system engineers and technicians which has added to our new product development-baseddevelopment based revenue growth initiatives in our commercial end-markets particularly asset tracking, smart metering and other industrial applications.
On December 13, 2021, we acquired Excell Battery Canada Inc., a British Columbia corporation (“Excell Canada”) and 656700 B.C. Ltd., a British Columbia corporation (“656700”) and its wholly owned subsidiary, Excell Battery Corporation USA, a Texas corporation (“Excell USA” together with Excell Canada and 656700, collectively, “Excell”), which operate under the name Excell Battery Group. Based in Canada with U.S. operations, the Excell Battery Group is a leading independent designer and manufacturer of high-performance smart battery systems, battery packs and monitoring systems to customer specifications. Excell serves a variety of industrial markets including downhole drilling, OEM industrial and medical devices, automated meter reading, and mining, marine and other mission critical applications which demand uncompromised safety, service, reliability and quality. We acquired Excell as an important component of our strategy to diversify commercial revenue and expand the end markets we serve. Acquiring Excell has allowed us to further scale our Battery & Energy Products business and drive the operating leverage of our business model, expand into OEM device verticals that we dodid not presentlypreviously serve, enhance our contributed value to both our customers and realize cost synergies. Furthermore, we utilize ExcellExcell’s experienced technical resources in our global new product initiatives and add a complementary line of highly engineered products, both existing and in development, that are costly for our customers to substitute with products of a competitor.
On October 31, 2024, we acquired Electrochem Solutions, Inc, a Massachusetts corporation (“Electrochem”). Based in Raynham, MAMassachusetts with over forty years of battery technology experience in critical applications, Electrochem designs and manufactures primary lithiumLithium metal and ultracapacitor cells and battery packs serving energy, military and various environmental, industrial and utility end markets on a global basis. Acquiring Electrochem advances our strategy of more fully realizing the operating leverage of our business model through scale and creates opportunities for gross margin expansion through the realization of manufacturing cost efficiencies, U.S.-based vertical integration, supply chain and lean initiatives. Electrochem primarily services a blue-chip customer base withwhich has little or no overlap with Ultralife’s other customers, has long-tenured technical resources which we planare to utilizeutilizing in progressingadvancing our global new product initiatives, and has a complimentary portfolio of highly engineered thionyl,Thionyl, sulfurylSulfuryl and bromineBromine chlorideChloride cells and packs which can be commercially cost prohibitive to substitute or switch out. We viewbelieve this acquisition ashas an avenue to createcreated highly attractive opportunities to drive revenue growth through heightened cross-selling platformsactivities and extendextends our reach into underserved adjacent markets that demand uncompromised safety, service, reliability and quality. Furthermore, with Electrochem we are increasing our value to our customers and significantly strengthening our competitive position in our end markets.
Consolidated revenues increased by $5,812$26,703 or 3.7%16.2% to $191,159 for the year ended December 31, 2025, compared to $164,456 for the year ended December 31, 2024 compared to $158,644 for the year ended December 31, 2023.2024. Revenues for 2024 include $6,062 for Electrochem which was acquired on October 31, 2024. Consolidated revenues for 2025 and 2024 excluding Electrochem were $158,560 and $158,394, representing a decrease of $250 or 0.2% when compared to the prior year.respectively. During 2024,2025, we experienced organic revenue growth, excluding Electrochem, of 6.2%5.4% for our Battery & Energy Products business and a revenue decline of 29.0%35.6% for our Communications Systems business. Our consolidated 20242025 performance reflected a $1,240$23,213 or 1.2%22.7% increase in sales to our commercial customers and a $4,573$3,490 or 7.9%5.6% increase in sales to government and defense customers. TheExcluding increaseElectrochem, our commercial sales declined $3,324 from $96,020 in 2024 to $92,696 in 2025 resulting from declines of $4,755 or 12.5% in our commercialoil & gas business wasdue dueprimarily to Electrochemthe saleswavering oil indices reflective of $6,062,economic partiallyand offsetgeo-political byconditions aand $1,559$3,040 or 4.2% decline8.6% in medical sales from $36,946 in 2023 to $35,387 in 2024, primarily reflecting the timing of sales to a large global medical device OEMOEM’s. These declines were partially offset by industrial and aother $2,441commercial sales which increased $4,471 or 6.0% decline in oil & gas market sales from $40,562 in 2023 to $38,121 in 2024, excluding Electrochem, due primarily to market uncertainty leading up to the November 2024 U.S. Presidential election.19.9%. The increase in government and defense sales reflects growth in Battery & Energy Products sales of $12,888$10,748 or 44.3%25.6% from $29,111 in 2023 to $41,999 in 2024 to $52,747 in 2025 representing higher demand from prime defense contractors, partially offset by a decline in Communications Systems sales of $8,316$7,258 or 29.0%35.6% from $28,691 in 2023 to $20,375 in 2024,2024 to $13,117 in 2025, primarily attributable to fulfillingdelays long-leadin timethe timing of purchase orders including the impact of vehicle-amplifier adaptors to a global defense contractor for the U.S. ArmyGovernment and of integrated systems of amplifiers and radio vehicle mounts to a major international defense contractor in 2023.shutdown. Demand for our products remains strong with our 20242025 year-end backlog andof high$110,223 confidencerepresenting orders57.7% of $102,1562025 representingrevenues, 62.1%a 22.1% increase over the backlog exiting the third quarter of 2025 of $90,273 and a 7.9% increase over the backlog exiting 2024 revenues.of $102,156.
Gross margin decreased to 24.1% for the year ended December 31, 2025, from 25.7% for the year ended December 31, 2024. The 160-basis point decline was due primarily to sales product mix reflecting lower oil & gas cell pack, medical and Communications Systems sales, scrap on the transition of new products to higher production levels, quality issues on some incoming components impacting manufacturing operations, and lower factory throughput at some of our operations.
Operating expenses increased by $19,574 or 60.5% to $51,923 during the year ended December 31, 2025, compared to $32,349 during the year ended December 31, 2024. The increase is primarily attributable to the Company’s October 2025 decision to undergo a comprehensive rebranding initiative that consolidates all sub-brands under a singular, unified master brand – Ultralife. This move reflects our commitment to clarity, consistency and amplified brand equity across all markets. By streamlining our global identity, we aim to strengthen customer recognition, enhance operational efficiency and better align to our customers’ needs with a singular, powerful brand narrative. To this end, the Accutronics, Southwest Electronic Energy, Excell Battery, McDowell Research and AMTI brands will no longer be promoted. The Electrochem brand will remain, but as a product brand on select primary cells. This transformation positions Ultralife for ongoing growth and stronger market impact as we continue to lead in mission critical battery and RF power solutions. This rebranding initiative had a non-cash impact of $12,181 to reduce the value of our tradename and trademark intangible assets recorded during our 2025 fourth quarter. The increase also reflects the inclusion of Electrochem’s operating expenses for the full year compared to only two months in 2024 resulting in an increase of $3,713 and one-time costs relating to the acquisition and transition of Electrochem to Ultralife’s systems, the closure of two of our Canada-based operations, legal costs relating to our cyber insurance claim and certain consulting costs resulting in an increase of $1,580. Excluding the impairment charge from 2025 and the one-time costs from both periods, operating expenses were $36,951 or 19.3% of sales for 2025 compared to $31,077 or 18.9% for 2024, with the increase reflecting the full year impact of Electrochem and investments in new product development and sales and marketing to expedite organic growth. Both periods reflected continued tight control over discretionary spending.
Other expenses totaled $2,496 for the year ended December 31, 2025, compared to $1,664 for the year ended December 31, 2024. Interest and financing expense increased $2,013, or 103.8%, from $1,940 for 2024 to $3,953 for the comparable period in 2025 resulting from the financing of the Electrochem acquisition on October 31, 2024. Miscellaneous income amounted to $1,457 for 2025 compared to $276 for 2024, primarily attributable to our expected $1,410 tax refund resulting from the 45X Advanced Manufacturing Production Tax Credit, established by the Inflation Reduction Act and running through 2032, for certain qualifying battery cells and packs we manufacture. Miscellaneous income in 2024 resulted from a payment of $235 from our insurance carrier pertaining to a ransomware cyberattack experienced by the Company in the first quarter of 2023. Both periods also reflect foreign exchange gains and losses due to fluctuations in foreign currency exchange rates.
Income tax (benefit) provision was ($2,447) for the year ended December 31, 2025, compared to $1,892 for the year ended December 31, 2024. Our effective tax rate increased to 29.1% for the 2025 period as compared to 22.8% for the 2024 period, primarily attributable to the geographic mix in earnings and the nontaxable refundable 45X Advanced Manufacturing Production Credit.
The income tax benefit for 2025 is comprised of a $94 current provision for taxes expected to be paid on income primarily for U.S. states and foreign jurisdictions and a ($2,541) deferred tax benefit primarily comprised of a ($2,743) deferred tax (benefit) related to the impairment of certain intangible assets in connection with the launch of our global rebranding initiative. For the comparable 2024 period, the income tax provision was comprised of a $660 current tax provision and a $1,232 deferred tax provision.
Gross margin increased to 25.7% for the year ended December 31, 2024 from 24.7% for the year ended December 31, 2023. The 100-basis point improvement was due primarily to the following: better alignment of the timing of our customer price increases with the impact of cost inflation on raw materials and key components; extending the time horizon of our sales & operations planning process (“S&OP”) with both customers and suppliers while upgrading our internal resources responsible for the process to reduce the negative impact of production line start-ups, shutdowns and changeovers due to irregular component availability and lead time extensions; and concerted efforts to level-load production resulting in improved labor utilization efficiency and higher cost absorption.
Operating expenses increased by $2,624 or 8.8% to $32,349 during the year ended December 31, 2024, compared to $29,725 during the year ended December 31, 2023. The increase is primarily attributable to one-time costs of $1,294 directly related to the acquisition of Electrochem, and increased investments in new product development and the strengthening of sales and marketing leadership team to expedite organic growth and further leverage our global brand and resources. Both periods reflected continued tight control over discretionary spending. Operating expenses as a percentage of revenue was 19.7% for 2024 compared to 18.7% for 2023, a 100-basis point increase due primarily to the one-time acquisition costs.
Other expenses totaled $1,664 for the year ended December 31, 2024 compared to $358 for the year ended December 31, 2023. Other expenses for the 2023 period included an Employee Retention Credit (“ERC”) of $1,544 under Section 2301 of the Coronavirus Aid, Relief and Economic Security Act which was filed with the Internal Revenue Service during the second quarter of 2023. Interest and financing expense decreased $76 or 3.8% from $2,016 for 2023 to $1,940 for the comparable period in 2024. The decrease is primarily due to the paydown of the financing of our acquisition of Excell in December 2021, partially offset by the financing of our acquisition of Electrochem on October 31, 2024. Excluding interest expense and the ERC gain in the 2023 period, miscellaneous income amounted to $276 for the 2024 period compared to $114 for the 2023 period, primarily attributable to foreign exchange gains and loss due to fluctuations in foreign currency exchange rates.
Income tax provision was $1,892 for the year ended December 31, 2024, compared to $1,951 for the year ended December 31, 2023. Our effective tax rate increased to 22.8% for the 2024 period as compared to 21.4% for the 2023 period, primarily attributable to the geographic mix in earnings and certain non-recurring transaction costs associated with the 2024 acquisition of Electrochem that were not deductible for income tax purposes. The income tax provision for 2024 is comprised of a $660 current provision for taxes expected to be paid on income primarily in foreign jurisdictions, representing a cash-based effective tax rate of 8.0%, and a $1,232 deferred tax provision which primarily represents non-cash charges for U.S. taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future. For the comparable 2023 period, the income tax provision was comprised of a $650 current tax provision and a $1,301 deferred tax provision which primarily represents non-cash charges for U.S. taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future.
Net income attributable to Ultralife Corporation was $6,312, or $0.38 per share – basic and diluted on a GAAP basis for the year ended December 31, 2024, compared to $7,197, or $0.44 per share – basic and diluted for the year ended December 31, 2023. Adjusted EPS was $0.45 per share on a diluted basis for 2024, compared to $0.52 per share for 2023. Adjusted EPS for 2024 excludes the provision for deferred income taxes of $1,232 which represents non-cash charges primarily for U.S. income taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future. Adjusted EPS for 2023 excludes the provision for deferred income taxes of $1,301 which represents non-cash charges primarily for U.S. net operating losses and temporary tax differences which are expected to offset future U.S. taxable income. See section “Adjusted EPS” on page 35 for a reconciliation of adjusted EPS to EPS.
Adjusted EBITDA, defined as net income attributable to Ultralife Corporation before net interest expense, provision (benefit) for income taxes, depreciation and amortization, plus/minus income/expense that we do not consider reflective of our continuing operations, amounted to $16,480 for the year ended December 31, 2024, compared to $15,703 for the prior year. See the section “Adjusted EBITDA” beginning on page 33 for a reconciliation of adjusted EBITDA to net income attributable to Ultralife.
The Company’s liquidity remains solid, with cash on hand of $6,854, working capital of $67,869 and a current ratio (current assets divided by current liabilities) of 3.3 as of December 31, 2024, as compared to cash on hand of $10,278, working capital of $66,473 and a current ratio of 3.8 as of December 31, 2023.
We entered 2025 with a healthy backlog representing a broadened opportunity set in high-growth end markets that position us to more fully realize the operating leverage of our business model through scale; a plan to complete the integration of Electrochem and realize manufacturing cost efficiencies and U.S.-based vertical integration savings; a schedule of new products to launch; and a strengthened sales and marketing leadership team to expedite organic growth and further leverage our global brand and resources. As a result, we believe that we will be able to deliver profitable growth and incremental cash flow to reduce debt and support strategic capital expenditures.
Results of Operations
Year ended December 31, 2024 compared with the year ended December 31, 2023:
Revenues.Net Total(loss) revenuesincome attributable to Ultralife Corporation was ($5,898), or ($0.35) per share – basic and diluted on a GAAP basis for the year ended December 31, 20242025, amountedcompared to $164,456, an increase of $5,812,$6,312, or 3.7%$0.38 fromper theshare $158,644– reportedbasic and diluted for the year ended December 31, 2023.2024.
Adjusted EBITDA, defined as net income attributable to Ultralife Corporation before net interest expense, provision (benefit) for income taxes, depreciation and amortization, plus/minus income/expense that we do not consider reflective of our continuing operations, amounted to $17,284 for the year ended December 31, 2025, compared to $16,480 for the prior year. See the section “Adjusted EBITDA” beginning on page 32 for a reconciliation of adjusted EBITDA to net income attributable to Ultralife.
The Company’s liquidity remains solid, with cash on hand of $9,345, working capital of $68,468 and a current ratio (current assets divided by current liabilities) of 2.8 as of December 31, 2025, as compared to cash on hand of $6,854, working capital of $67,869 and a current ratio of 3.3 as of December 31, 2024.
During the fourth quarter of 2025, we took a number of decisive actions to remove structural and manufacturing inefficiencies from our global operations as we advance several new products into qualification and production and capitalize on an expanding pipeline of opportunities consisting primarily of large, multi-year programs. These actions include the realignment of our four thionyl chloride/oil & gas operations into one business within our Battery & Energy Products segment focused on industrial, specialty and telemetry solutions in order to optimize synergies, deepen customer engagement and expand value propositions; the design of a master brand strategy uniting all acquired sub-brands under the Ultralife brand and aligning sales of the total Ultralife portfolio; and the completion of steps to strengthen the operational leadership at our two largest manufacturing facilities. While we were intensely focused on addressing operational improvements, strong order flow increased backlog to $110 million at the end of 2025, representing a 22% increase over the third quarter. As a result, we have greater confidence in our ability to deliver sustainable profitable growth and incremental cash flow in 2026 enabling us to reduce debt, support strategic capital expenditures, continue our investment in new product development and maximize the value of our global brand.
Results of Operations — Consolidated
Year ended December 31, 2025, compared with the year ended December 31, 2024:
Revenues. Total revenues for the year ended December 31, 2025, amounted to $191,159, an increase of $26,703, or 16.2% from the $164,456 reported for the year ended December 31, 2024. Overall, commercial sales of $125,295 increased $23,213 or 22.7% and government/defense sales of $65,864 increased $3,490 or 5.6%. Excluding Electrochem sales from both periods, sales increased $167 or 0.1% with Battery & Energy Products sales increasing $7,424 or 5.4% and Communications Systems sales declining $7,258 or 35.6%.
Battery & Energy Products revenues of $178,042 increased $33,961, or 23.6%, for the year ended December 31, 2025, over $144,081 for the prior year. Electrochem comprised $26,537 of this increase and core organic growth of $7,424 or 5.4% comprising the remainder. Commercial revenues of this business increased $23,213 or 22.7% from 2024 and now comprise 70.4% of total segment sales versus 70.9% last year. Excluding Electrochem, the $3,324 decrease in commercial sales resulted from a $4,755 or 12.5% reduction in oil & gas sales due primarily to wavering oil indices reflective of economic and geo-political conditions and a $3,040 or 8.6% decline in medical sales due to timing of purchases from large global medical devices OEM’s, partially offset by a $4,471 or 19.9% increase in industrial and all other commercial sales. Government/Defense revenues increased $10,748 or 25.6% from 2024 and now comprise 29.6% of total segment sales versus 29.1% for 2024. The higher government/defense revenues reflects strong demand from the U.S. and allied countries which increased 20.9% and 92.9%, respectively, over 2024.
Variance drivers included commercial end market timing (oil & gas and medical), changes in government/defense shipments, lower oil & gas pack/medical sales volumes, and incoming materials quality impacts at certain sites.
Battery & Energy Products revenues increased $14,128, or 10.9%, for the year ended December 31, 2024 as compared to the prior year. Commercial revenues of this business increased $1,240 or 1.2% from 2023 and now comprise 70.9% of total segment sales versus 77.6% last year. The increase in our commercial business was due to the acquisition of Electrochem on October 31, 2024 which contributed $6,062 to commercial sales for this segment. This increase was partially offset by a $1,559 or 4.2% decline in medical sales from $36,946 in 2023 to $35,387 in 2024, primarily reflecting the timing of sales to a large global medical device OEM, a $2,441 or 6.0% decline in oil & gas market sales from $40,562 in 2023 to $38,121 in 2024 excluding Electrochem due primarily to market uncertainty leading up to the November 2024 U.S. Presidential election, and an $823 or 3.5% decline in industrial and other commercial sales from $23,335 in 2023 to $22,512 in 2024 due primarily to timing of demand for and market testing of our new Thionyl Chloride and thin cell battery cells which are expected to increase in future periods. Government and defense sales of this business increased $12,888 or 44.3% from 2023 and now comprise 29.1% of total segment sales versus 22.4% last year. The increase primarily reflects higher U.S. demand resulting in year-over-growth of 49.9%. This was partially offset by a 6.1% decrease in sales to allied countries.
Communications Systems revenues of $13,117 decreased $8,316$7,258 or 29.0%35.6% for the year ended December 31, 20242025, as compared to $20,375 for the prior year. The decrease is primarily attributable to fulfillingdelays long-leadin timethe timing of purchase orders including the impact of vehicle-amplifier adaptors to a global defense contractor for the U.S. ArmyGovernment and of integrated systems of amplifiers and radio vehicle mounts to a major international defense contractor under an ongoing allied country government/defense modernization program in 2023.shutdown.
Our order backlog and high confidence orders at December 31, 20242025, werewas $102,156,$110,223, aan decreaseincrease of $1,379$8,067 or 1.3%7.9% from the backlog and high confidence orders at December 31, 20232024, which werewas $103,535.$102,156. For our Battery & Energy Products business, the backlog andincreased high$7,400 confidenceor orders7.8% to $101,984, the highest level in the Company’s history for this segment, from $94,584. For our Communications Systems business, the backlog increased $2,587$667 or 2.8%8.8% to $94,584$8,239 from $91,997.$7,572. The 20242025 year-end backlog and high confidence orders are primarily related to orders expected to ship in 2025.2026.
For our Communications Systems business, the backlog and high confidence orders decreased $3,966 or 34.4% to $7,572 from $11,538. The year-over-year decrease is primarily attributable to fulfilling long-lead time orders of vehicle-amplifier adaptors to a global defense contractor for the U.S. Army and of integrated systems of amplifiers and radio vehicle mounts to a major international defense contractor under an ongoing allied country government/defense modernization program in 2023. We have received or expect additional orders for Leader Radio and Vehicle Amplifier-Adaptors in 2025. The 2024 year-end backlog and high confidence orders are related to orders that are expected to ship throughout 2025.
Cost of Products Sold and Gross Profit. Cost of products sold for the year ended December 31, 20242025, increased $2,698$22,996 or 2.3%18.8% from the year ended December 31, 2023.2024. Consolidated cost of products sold as a percentage of total revenue decreasedincreased from 75.3% for the year ended December 31, 2023 to 74.3% for the year ended December 31, 2024.2024, to 75.9% for the year ended December 31, 2025. Correspondingly, consolidated gross margin was 24.1% for the year ended December 31, 2025, compared with 25.7% for the year ended December 31, 2024, compared with 24.7% for the year ended December 31, 2023.2024. The 100-basis160-basis point improvementdecline in gross margin iswas due primarily to bettersales alignmentproduct mix reflecting lower oil & gas cell pack, medical and Communications Systems sales, scrap on the transition of thenew timingproducts to higher production levels, quality issues on some incoming components impacting manufacturing operations, and lower factory throughput at some of our customer price increases with the impact of cost inflation on raw materials and key components; extending the time horizon of our sales & operations planning process (“S&OP”) with both customers and suppliers while upgrading our internal resources responsible for the process to reduce the negative impact of production line start-ups, shutdowns and changeovers due to irregular component availability and lead time extensions; and concerted efforts to level-load production resulting in improved labor utilization efficiency and higher cost absorption.operations.
For our Battery & Energy Products segment, the cost of products sold increased $8,586$27,638 or 8.7%,25.6%, from the year ended December 31, 2023.2024. Battery & Energy Products’ gross profit for 20242025 was $36,317$42,640 or 25.2%23.9% of revenues, an increase of $5,542$6,323 or 18.0%17.4% from gross profit of $30,775,$36,317 or 23.7%25.2% of revenues,revenues for 2023.2024. Battery & Energy Products’ gross margin increaseddecreased for the year ended December 31, 2024 by 150130 basis points from the prior year to 25.2% primarily due to improvedproduct pricemix realizationreflecting assales welldeclines asin ourhigher concertedmargin effortoil & gas pack and medical battery sales, manufacturing inefficiencies caused by quality issues associated with some incoming raw materials, and scrap on the transition of some products to level-loadhigher production more evenly resulting in labor utilization efficiencies and higher cost absorption.levels.
For our Communications Systems segment, the cost of products sold decreased by $5,888$4,642 or 29.1%32.3% from the year ended December 31, 2023.2024. Communications Systems’ gross profit for the year ended December 31, 20242025, was $5,997$3,381 or 29.4%25.8% of revenues, a decrease of $2,428$2,616 or 28.8%43.6% from gross profit of $8,425$5,997 or 29.4% of revenues for the year ended December 31, 2023.2024. The 360 basis point reduction from the prior year primarily results from lower factory throughput and sales mix.
Operating Expenses. Total operating expenses for the year ended December 31, 2025, increased $19,574 or 60.5% from the year ended December 31, 2024. The increase is primarily attributable to the Company’s October 2025 decision to undergo a comprehensive rebranding initiative that consolidates all sub-brands under a singular, unified master brand – Ultralife, which resulted in a non-cash write-off of $12,181 to eliminate the value of tradenames and trademark intangible assets that will no longer be emphasized going forward as a result of the rebranding. The increase also reflects the inclusion of Electrochem’s operating expenses for the full year compared to only two months in 2024 resulting in an increase of $3,713 and one-time costs relating to the acquisition and transition of Electrochem to Ultralife’s systems, the closure of two of our Canada-based operations, legal costs relating to our cyber insurance claim and certain consulting costs resulting in an increase of $1,580. Excluding the impairment charge from 2025 and the one-time costs from both periods, operating expenses were $36,951 or 19.3% of sales for 2025 compared to $31,077 or 18.9% for 2024, with the increase reflecting the full year impact of Electrochem and investments in new product development and sales and marketing to expedite organic growth. Both periods reflected continued tight control over discretionary spending.
Operating Expenses. Total operating expenses for the year ended December 31, 2024 increased $2,624 or 8.8% from the year ended December 31, 2023. The increase is primarily attributable to one-time costs of $1,294 directly related to the acquisition of Electrochem, and increased investments in new product development and the strengthening of our sales and marketing leadership team to expedite organic growth and further leverage our global brand and resources. Both periods reflected continued tight control over discretionary spending.
Overall, operating expenses as a percentage of revenues was 19.7%27.2% for the year ended December 31, 20242025, compared to 18.7%19.7% for the comparable 20232024 period. AmortizationIn addition to the 2025 $12,181 intangible asset impairment charge related to our rebranding initiative, amortization expense associated with intangible assets related to our acquisitions increased to $1,518 for the year ended December 31, 2025 ($1,395 in selling, general and administrative expenses and $123 in research and development costs) from $1,032 for the year ended December 31, 2024 ($929 in selling, general and administrative expenses and $103 in research and development costs) from $889 for the year ended December 31, 2023 ($792 in selling, general and administrative expenses and $97 in research and development costs) as a result of the amortization periods of intangible assets associated with our acquisition of Electrochem on October 31, 2024. Research and development costs were $8,268$10,398 in 2024,2025, an increase of $737$2,130 or 9.8%,25.8%, from $7,531$8,268 reported in 2023.2024. This increase is attributable to additional investments in new product development and our acquisition of Electrochem which contributed $227$1,122 of the increase.increase and additional investments in new product development. Selling, general, and administrative expenses increased $1,887$5,263 or 8.5%21.9% to $24,081$29,344 for the year-ended December 31, 20242025, from $22,194$24,081 for the year ended December 31, 2023.2024. The increase resulted from one-timethe full year inclusion of Electrochem which contributed $2,486, the increase in certain one-time, non-recurring expenses of $1,580 which include costs ofto $1,294close directlyour Calgary facility, costs related to theour acquisition of Electrochem and $469the contributedrelated bytransition Electrochem.to Ultralife systems and litigation expenses for our cyber insurance claim, and the strengthening of our sales and marketing leadership team to expedite organic growth and further leverage our global brand and resources. We continued tight control over discretionary spending across the Company.
Other Expense. Other expenses totaled $2,496 for the year ended December 31, 2025, compared to $1,664 for the year ended December 31, 2024. Interest and financing expense increased $2,013, or 103.8%, from $1,940 for 2024 to $3,953 for the comparable period in 2025 resulting from the financing of the Electrochem acquisition on October 31, 2024. Miscellaneous income amounted to $1,457 for 2025 compared to $276 for 2024, primarily attributable to our expected $1,410 tax refund resulting from the 45X Advanced Manufacturing Production Tax Credit, established by the Inflation Reduction Act and running through 2032, for certain qualifying battery cells and packs we manufacture. Miscellaneous income in 2024 resulted from a payment of $235 from our insurance carrier pertaining to a ransomware cyberattack experienced by the Company in the first quarter of 2023. Both periods also reflect foreign exchange gains and losses due to fluctuations in foreign currency exchange rates.
Other Expense. Other expense totaled $1,664 for the year ended December 31, 2024 compared to $358 for the year ended December 31, 2023. Other expenses for 2023 includes an ERC of $1,544 under Section 2301 of the Coronavirus Aid, Relief and Economic Security Act which was filed with the Internal Revenue Service during the second quarter of 2023. Interest and financing expense decreased $76 or 3.8% from $2,016 for 2023 to $1,940 for the comparable period in 2024. The decrease is primarily due to the paydown of the financing of our acquisition of Excell in December 2021, partially offset by the financing of our acquisition of Electrochem on October 31, 2024. Excluding interest expense and the ERC gain in the 2023 period, miscellaneous income amounted to $276 for the 2024 period compared to $114 for the 2023 period, primarily attributable to foreign exchange gains and loss due to fluctuations in foreign currency exchange rates.
Income tax (benefit) provision was ($2,447) for the year ended December 31, 2025, compared to $1,892 for the year ended December 31, 2024, compared to $1,951 for the year ended December 31, 2023.2024. Our effective tax rate increased to 22.8%29.1% for the 20242025 period as compared to 21.4%22.8% for the 20232024 period, primarily attributable to the geographic mix in earnings and certain non-recurring transaction costs associated with the 2024nontaxable acquisitionrefundable of45X ElectrochemAdvanced thatManufacturing wereProduction not deductible for income tax purposes.Credit. The income tax provisionbenefit for 20242025 is comprised of a $660$94 current provision for taxes expected to be paid on income primarily infor U.S. states and foreign jurisdictions, representing a cash-based effective tax rate of 8.0%,jurisdictions and a $1,232($2,541) deferred tax provision which(benefit) primarily representscomprised non-cashof chargesa for($2,743) U.S. taxes that we expect will be fully offset by net operating loss carryforwards and otherdeferred tax credits(benefit) forrelated to the foreseeableimpairment future.of certain intangible assets in connection with the launch of our global rebranding initiative. For the comparable 20232024 period, the income tax provision was comprised of a $650$660 current tax provision and a $1,301$1,232 deferred tax provision which primarily represents non-cash charges for U.S. taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future.provision.
Net (loss) income attributable to Ultralife Corporation was ($5,898), or ($0.35) per share – basic and diluted on a GAAP basis for the year ended December 31, 2025, compared to $6,312, or $0.38 per share – basic and diluted for the year ended December 31, 2024.
Net income attributable to Ultralife Corporation was $6,312, or $0.38 per share – basic and diluted on a GAAP basis for the year ended December 31, 2024, compared to $7,197, or $0.44 per share – basic and diluted for the year ended December 31, 2023. Adjusted EPS was $0.45 per share on a diluted basis for 2024, compared to $0.52 per share for 2023. Adjusted EPS for 2024 excludes the provision for deferred income taxes of $1,232 which represents non-cash charges primarily for U.S. income taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future. Adjusted EPS for 2023 excludes the provision for deferred income taxes of $1,301 which represents non-cash charges primarily for U.S. net operating losses and temporary tax differences which are expected to offset future U.S. taxable income. See section “Adjusted EPS” on page 35 for a reconciliation of adjusted EPS to EPS.
Weighted average common shares outstanding used to compute diluted earnings per share increaseddecreased from 16,226,407 for the 2023 period to 16,767,132 for the 2024 period to 16,642,218 for the 2025 period, primarily due to the issuanceloss for the 2025 period which resulted in there being no dilutive effect of commonour stockoutstanding uponequity awards for the exercise2025 of stock options in 2024 and a higher average stock price for 2024 as compared to 2023.period.
Non-GAAP Financial Measures
We use certain non‑GAAP measures, including Adjusted EBITDA, to evaluate operating performance and to facilitate period‑to‑period comparisons. GAAP results are presented first and with equal or greater prominence than non‑GAAP measures. We provide clear quantitative reconciliations to the most directly comparable GAAP measures and explain why we believe the measures are useful and how management uses them. We avoid adjustments that could be viewed as excluding normal, recurring cash operating expenses. See the accompanying reconciliations below for additional detail.
In evaluating our business, we consider and use adjusted EBITDA, a non-GAAP financial measure, as a supplemental measure of our operating performance. We define adjusted EBITDA as net income (loss) income attributable to Ultralife before net interest expense, provision (benefit) for income taxes, depreciation and amortization, and stock-based compensation expense, plus/minus expense/income that we do not consider reflective of our ongoing continuing operations. We also use adjusted EBITDA as a supplemental measure to review and assess our operating performance and to enhance comparability between periods. We also believe the use of adjusted EBITDA facilitates investors’ understanding of operating performance from period to period by backing out potential differences caused by variations in such items as capital structures (affecting relative interest expense and stock-based compensation expense), the amortization of intangible assets acquired through our business acquisitions (affecting relative amortization expense and provision (benefit) provision for income taxes), the age and book value of facilities and equipment (affecting relative depreciation expense) and one-time charges/benefits relating to income taxes. We also present adjusted EBITDA from operations because we believe it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance. We reconcile adjusted EBITDA to net income (loss) income attributable to Ultralife, the most comparable financial measure under GAAP.
We use adjusted EBITDA in our decision-making processes relating to the operation of our business together with GAAP financial measures such as operating (loss) income. We believe that adjusted EBITDA permits a comparative assessment of our operating performance, relative to our performance based on our GAAP results, while isolating the effects of depreciation and amortization, which may vary from period to period without any correlation to underlying operating performance, and of stock-based compensation, which is a non-cash expense that varies widely among companies. We believe that by presenting adjusted EBITDA, we assist investors in gaining a better understanding of our business on a going forward basis. We provide information relating to our adjusted EBITDA so that securities analysts, investors and other interested parties have the same data that we employ in assessing our overall operations. We believe that trends in our adjusted EBITDA are a valuable indicator of our operating performance on a consolidated basis and of our ability to produce operating cash flows to fund working capital needs, to service debt obligations and to fund capital expenditures.
We compensate for these limitations by relying primarily on our GAAP results and using adjusted EBITDA only on a supplemental basis. Neither current nor potential investors in our securities should rely on adjusted EBITDA as a substitute for any GAAP measures and we encourage investors to review the following reconciliation of adjusted EBITDA to net income (loss) attributable to Ultralife.Ultralife Corporation.
Adjusted Earnings Per Share
In evaluating our business, we consider and use adjusted earnings per share (“EPS”), a non-GAAP financial measure, as a supplemental measure of our business performance. We define adjusted EPS as net income (loss) attributable to Ultralife Corporation excluding the provision (benefit) for deferred income taxes divided by our weighted average shares outstanding on both a basic and diluted basis. We believe that this information is useful in providing period-to-period comparisons of our results by reflecting the portion of our tax provision that will be predominantly offset by our U.S. net operating loss carryforwards and other tax credits for the foreseeable future. We reconcile adjusted EPS to EPS, the most comparable financial measure under GAAP. Neither current nor potential investors in our securities should rely on adjusted EPS as a substitute for any GAAP measures and we encourage investors to review the following reconciliation of adjusted EPS to EPS and net income attributable to Ultralife Corporation.
Adjusted EPS is calculated as follows for the periods presented:
Overview
We monitor liquidity through cash balances, cash generated from operations, and availability under our revolving credit facility; we were in compliance with our debt covenants as of year‑end.
As of December 31, 2025, cash totaled $9,345, an increase of $2,491 from $6,854 as of December 31, 2024, primarily attributable to EBITDA generated in 2025 and the timing of remittances from customers and payments to vendors.
As of December 31, 2024, cash totaled $6,854, a decrease of $3,424 from the $10,278 as of December 31, 2023, primarily attributable to our profitable operations in 2023.
What changed in the latest 10-Q
Risk Factors
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Management's Discussion & Analysis (MD&A)
New heading “Six-Month Periods Ended June 30, 2026, and June 30, 2025”
Largest changes
“Overall, operating expenses as a percentage of revenues were 21.8% for the six-month period ended June 30, 2026, compared to 18.8% for the six-month period ended June 30, 2025. Amortization expense associated with intangible assets related to our acquisitions was $535 for the first six months of 2026 ($525 in selling, general and administrative expenses and $10 in research and development costs), compared with $815 for the first six months of 2025 ($754 in selling, general, and administrative expenses and $61 in research and development costs). …”see in full comparison
Cost of Products Sold / Gross Profit. Cost of products sold totaledsee in full comparison$37,335$34,077 for the quarter endedMarchJune31,30, 2026, a decrease of$666,$2,883, or1.8%,7.8%, from the$38,001$36,960 reported for the same three-month period a year ago.CostConsolidated cost of products sold as a percentage of total revenueincreaseddecreased from74.9%76.1% for the three-month period endedMarchJune31,30, 2025, to78.7%71.1% for the three-month period endedMarchJune31,30, 2026. Correspondingly, consolidated gross margindecreasedincreased from25.1%23.9% for the three-month period endedMarchJune31,30, 2025, to21.3%28.9% for the three-month period endedMarchJune31,30, 2026, primarily reflecting favorable sales product miximpactingfortariffs,bothhigherourutilityBattery & Energy Products and Communications Systems segments and the net refund of IEEPA tariffs which had been recognized as net costsandincertainpreviousone-timeperiods.eventsTheimpactingnetproductionIEEPAdaysrefundandinoperatingtheefficiencies.second quarter of 2026 was $1,102, accounting for 230 basis point of gross margin for that period.
“Operating Expenses. Operating expenses for the six-month period ended June 30, 2026, were $20,754, an increase of $2,063 or 11.0% from the $18,691 for the six-month period ended June 30, 2025. …”see in full comparison
“Cost of Products Sold / Gross Profit. Cost of products sold totaled $71,412 for the six-month period ended June 30, 2026, a decrease of $3,549, or 4.7%, from the $74,961 reported for the same six-month period a year ago. Consolidated cost of products sold as a percentage of total revenue decreased from 75.5% for the six-month period ended June 30, 2025, to 74.9% for the six-month period ended June 30, 2026. …”see in full comparison
Overall, operating expenses were 21.8% of revenue for the quarter endingsee in full comparisonMarchJune31,30, 2026, compared to18.4%19.2% of revenue for the quarter endedMarchJune31,30, 2025. Amortization expense associated with intangible assets related to our acquisitions was$267$268 for thefirstsecond quarter of 2026 ($262$263 in selling, general and administrative expenses and $5 in research and development costs), compared with$405$410 for thefirstsecond quarter of 2025 ($376$378 in selling, general, and administrative expenses and$29$32 in research and development costs). The year-over-year decline in amortization expenses resulted from our decision in the 2025 fourth quarter to undergo a comprehensive rebranding initiative that consolidates all sub-brands under a singular, unified master brand – Ultralife, and the ensuing write-down of tradenames and trademarks associated withoutour sub-brands during that period. Research and development costs were$2,961$3,225 for the three-month period endedMarchJune31,30, 2026, an increase of$557$907 or23.2%,39.1%, from$2,404$2,318 for the three-month period endedMarchJune31,30, 2025. The increase is attributable to an increase in new product development costs related to continued investment in our product offering as we aggressively pursue both government/defense and commercial opportunities. Selling, general, and administrative expenses were$7,364$7,204 for the three-month period endedMarchJune31,30, 2026, an increase of$422$177 or6.1%2.5% from$6,942$7,027 for thefirstsecond quarter of 2025. The period-over-period increase was primarily attributable to the inclusion of certain one-time, non-recurring expenses of$847$884 primarily related to litigation expenses incurred for our cyber-insurance claim and the completion of consulting costs to help expedite gross margin improvement at our two largest manufacturingfacilities and litigation expenses incurred for our cyber-insurance claim.facilities.
Full comparison: every changed paragraph (46)
We sell our products worldwide through a variety of trade channels, including original equipment manufacturers (“OEMs”), industrial and defense supply distributors, and directly to U.S. and foreign defense departments. Historically, we utilized the following brands, tradenames and trademarks (“sub-brands”) to promote our products in the markets we serve: Ultralife®, Ultralife Thin Cell®, Ultralife HiRate®, Ultralife & design®, LithiumPower®, LithiumPower & Design®, SMART CIRCUIT®, SMARTCIRCUIT®, SMART CIRCUIT & design®, SODIUMPOWER®, SODIUMPOWER (design)®, WE. ARE. POWER®, AMTI®, ABLE™, ACCUTRONICS™, ACCUPRO™, ENTELLION™, McDowell Research®, SWE DRILL-DATA®, SWE SEASAFE (& DESIGN)®, SWE SEASAFE DIRECT®, SWE SOUTHWEST ELECTRONIC ENERGY CORP®, SWE Southwest Electronic Energy Group®, Excell Battery Group™ and Criterion Gauge™, POW-R BMS®, POW-R-BMS®, POW-R TOTE® and Electrochem®. As explained below, our rebranding initiative will eliminate or de-emphasize our reference to the sub-brands going forward. We have sales, operations and product development facilities in North America, Europe and Asia.
As part of our strategic evolution, in October 2025, Ultralife decided to undergo a comprehensive rebranding initiative that consolidates all sub-brands under a singular, unified master brand – Ultralife. This move reflects our commitment to clarity, consistency and amplified brand equity across all markets. By streamlining our global identity, we aim to strengthen customer recognition, enhance operational efficiency and better align to our customers’ needs with a singular, powerful brand narrative. To this end, the Accutronics, Southwest Electronic Energy, Excell Battery, McDowell Research and AMTI brands will no longer be emphasized. The Electrochem brand will remain, but as a product brand on select primary cells. ThisWe believe this transformation positionswill position Ultralife for ongoing growth and stronger market impact as we continue to lead in mission critical battery and RF power solutions. This rebranding initiative had a non-cash impact of $12,181 to reduce the value of our tradename and trademark intangible assets recorded during our 2025 fourth quarter.
Consolidated revenues of $47,445$47,943 for the three-month period ended MarchJune 31,30, 2026, decreased by $3,301$618 or 6.5%,1.3%, overfrom $50,746$48,561 for the three-month period ended MarchJune 31,30, 2025, reflecting a 5.5%4.7% decline in commercial sales andpartially anoffset 8.2%by declinea 5.0% increase in government/defense sales.
Gross profit was $10,110$13,866, or 21.3%28.9% of revenue, for the three-month period ended MarchJune 31,30, 2026, compared to $12,745,$11,601, or 25.1%23.9% of revenue, for the same quarter a year ago. The 380-basis500-basis point declineincrease primarily resulted from favorable sales product mix impactingand tariffs,the highernet utilityrefund of IEEPA tariffs which had been recognized as net costs andin certainprevious one-time events impacting production delays and operating efficiencies.periods.
Operating expenses were $10,325$10,429 for the three-month period ending MarchJune 31,30, 2026, compared to $9,346$9,345 for the three-month period ended MarchJune 31,30, 2025, reflecting an increase in new product development costs related to continued investment in our product offering and certain one-time, non-recurring costs.costs which amounted to $884 for the current period which represents a $558 increase over the non-recurring costs incurred in the prior year. Operating expenses for the 2026 period were 21.8% of revenue compared to 18.4%19.2% of revenue for the year-earlier period.
Operating (loss) income for the three-month period ended MarchJune 31,30, 2026, was ($215),$3,437, or (0.5)%7.2% of revenues, compared to $3,399,$2,256, or 6.7%4.6% of revenues, for the year-earlier period. The decreaseincrease in operating income primarily resulted from the declinesfavorable inproduct revenuemix for our Battery & Energy Products and grossCommunications marginSystems segments and the increasenet refund of IEEPA tariffs previously paid and recognized as costs in operatingprior expenses,periods, includingpartially $847offset by an increase in one-time, non-recurring costs.
Other expense for the second quarter of 2026 was $451 compared to $1,143 for the year-earlier quarter. The decrease for the 2026 period primarily reflects lower interest expense for the financing of our Electrochem acquisition with the continued paydown of the related term loan, the current period estimated portion of a refundable tax credit for certain qualifying battery cells and packs we manufacture under the 45X Advanced Manufacturing Production Tax Credit, established by the Inflation Reduction Act and running through 2032, and more favorable foreign currency rates in the current period.
Net (loss) income attributable to Ultralife Corporation was ($451),$2,543, or ($0.03)$0.15 per share – basic and diluted, for the three-month period ended MarchJune 31,30, 2026, compared to $1,865,$879, or $0.11$0.05 per share – basic and diluted, for the three-month period ended MarchJune 31,30, 2025.
Adjusted EBITDA, defined as net (loss) income attributable to Ultralife Corporation before net interest expense, provision (benefit) provision for income taxes, depreciation and amortization, and stock-based compensation expense, plus/minus expenses/income that we do not consider reflective of our ongoing operations, amounted to $3,209,$6,148, or 6.8%12.8% of revenues, for the firstsecond quarter of 2026, compared to $5,448,$4,113, or 10.7%8.5% of revenues, for the firstsecond quarter of 2025. See the section “Adjusted EBITDA” on page 2026 for a reconciliation of adjusted EBITDA to net income attributable to Ultralife Corporation.
We remain intently focused on improving manufacturing efficiencies atconverting our Newark, NY facility, particularly as we ramp up production oflong-term new products,product development efforts into revenue, maintaining a strong focus on operational efficiency initiatives to improve our gross margins and advancing vertical integration in order to increase the gross margin of Batteryoil & Energygas Products,segment. andWe onbelieve driving Communications Systems orders. Thesethese improvements, along with execution and replenishment of our backlog, position Ultralife to restoredeliver profitabilitysustainable andprofitable generategrowth generating incremental cash flow for 2026 to further reduce debt, support strategic capital expenditures, continue our investment in new product development and maximize the value of our global brand.
Three-Month Periods Ended MarchJune 31,30, 2026, and MarchJune 31,30, 2025
Revenues. Consolidated revenues for the three-month period ending MarchJune 31,30, 2026, were $47,445,$47,943, a decrease of $3,301,$618, or 6.5%,1.3%, from $50,746$48,561 for the three-month period ended MarchJune 31,30, 2025. Overall, commercial sales decreased 5.5%4.7% and government/defense sales decreasedincreased 8.2%.5.0%.
Battery & Energy Products revenues decreased $2,166,$1,678, or 4.7%,3.7%, from $46,321$45,867 for the three-month period ended MarchJune 31,30, 2025, to $44,155$44,189 for the three-month period ended MarchJune 31,30, 2026. The revenue decline was primarily attributable to a 5.5%4.7% decrease in commercial sales due to aan 22.1% decrease in industrial and other commercial sales and a 5.9%8.7% decrease in oil & gas,gas and industrial sales, offsetting a 5.9%7.2% increase in medical battery sales.sales, Theand overalla 1.4% decline in commercialgovernment/defense sales was in large part a result of lost production days due to the failure of the substation providing power to our Newark, NY facility and winter blizzards and a prolonged shutdown to conduct a comprehensive physical inventory at our Raynham, MA facility. Government/Defense sales declined 2.7% due to the shipment of a very large charger order for an allied country inlast the 2025 period.year.
Communications Systems sales decreasedincreased $1,135,$1,060, or 25.7%,39.3%, from $4,425$2,694 for the three-month period ended MarchJune 31,30, 2025, to $3,290$3,754 for the three-month period ended MarchJune 31,30, 2026.2026, The decrease wasdue primarily attributable to shipments in the prior year to a major international defense contractor and the timing of expected orders in the current period.orders.
Our total backlog, which consists of unfilled orders or contracts for shipments in future periods, exiting the second quarter of 2026 was $117.5 million, the highest level in the Company’s history, compared to $115.1 million exiting the first quarter of 2026 and $84.5 million exiting the second quarter of 2025.
Cost of Products Sold / Gross Profit. Cost of products sold totaled $37,335$34,077 for the quarter ended MarchJune 31,30, 2026, a decrease of $666,$2,883, or 1.8%,7.8%, from the $38,001$36,960 reported for the same three-month period a year ago. CostConsolidated cost of products sold as a percentage of total revenue increaseddecreased from 74.9%76.1% for the three-month period ended MarchJune 31,30, 2025, to 78.7%71.1% for the three-month period ended MarchJune 31,30, 2026. Correspondingly, consolidated gross margin decreasedincreased from 25.1%23.9% for the three-month period ended MarchJune 31,30, 2025, to 21.3%28.9% for the three-month period ended MarchJune 31,30, 2026, primarily reflecting favorable sales product mix impactingfor tariffs,both higherour utilityBattery & Energy Products and Communications Systems segments and the net refund of IEEPA tariffs which had been recognized as net costs andin certainprevious one-timeperiods. eventsThe impactingnet productionIEEPA daysrefund andin operatingthe efficiencies.second quarter of 2026 was $1,102, accounting for 230 basis point of gross margin for that period.
For our Battery & Energy Products segment, gross profit for the firstsecond quarter of 2026 was $9,358,$12,503, aan decreaseincrease of $2,082$1,668 or 18.2%15.4% from gross profit of $11,440$10,835 for the firstsecond quarter of 2025. Battery & Energy Products’ gross margin of 21.2%28.3% decreasedincreased by 350-basis470-basis points from the 24.7%23.6% gross margin for the year-earlier period, primarily due to sales product mix impacting tariffs, higher utility costs and certainthe one-timenet eventsrefund impactingof productionIEEPA daystariffs. andThe operatingnet efficiencies.refund accounted for 250 basis points of the year-over-year increase in gross margin.
For our Communications Systems segment, gross profit for the firstsecond quarter of 2026 was $752$1,363 or 22.9%36.3% of revenues, compared to gross profit of $1,305$766 or 29.5%28.4% of revenues for the firstsecond quarter of 2025. The 660-basis790-basis point decreaseincrease in gross margin was primarily due to unfavorablefavorable sales mix and the 25.7% revenue decline reducing factory volume.mix.
Operating Expenses. Operating expenses for the three-month period ended MarchJune 31,30, 2026, were $10,325,$10,429, an increase of $979$1,084 or 10.5%11.6% from the $9,346$9,345 for the three-month period ended MarchJune 31,30, 2025. The increase is primarily attributable to a 23.2%39.1% increase in new product development costs related to continued investment in our product offerings and the completion of certain one-time, non-recurring expenses of $847$884 primarily related to litigation expenses incurred for our cyber-insurance claim and certain consulting costs to help expedite gross margin improvement at our two largest manufacturing facilitiesfacilities. andNon-recurring costs reported for the 2025 second quarter were $326 primarily representing litigation expenses incurred for our cyber-insurancecyber claim.insurance claim and acquisition transition costs. Both periods reflected continued tight control over discretionary spending.
Overall, operating expenses were 21.8% of revenue for the quarter ending MarchJune 31,30, 2026, compared to 18.4%19.2% of revenue for the quarter ended MarchJune 31,30, 2025. Amortization expense associated with intangible assets related to our acquisitions was $267$268 for the firstsecond quarter of 2026 ($262$263 in selling, general and administrative expenses and $5 in research and development costs), compared with $405$410 for the firstsecond quarter of 2025 ($376$378 in selling, general, and administrative expenses and $29$32 in research and development costs). The year-over-year decline in amortization expenses resulted from our decision in the 2025 fourth quarter to undergo a comprehensive rebranding initiative that consolidates all sub-brands under a singular, unified master brand – Ultralife, and the ensuing write-down of tradenames and trademarks associated with outour sub-brands during that period. Research and development costs were $2,961$3,225 for the three-month period ended MarchJune 31,30, 2026, an increase of $557$907 or 23.2%,39.1%, from $2,404$2,318 for the three-month period ended MarchJune 31,30, 2025. The increase is attributable to an increase in new product development costs related to continued investment in our product offering as we aggressively pursue both government/defense and commercial opportunities. Selling, general, and administrative expenses were $7,364$7,204 for the three-month period ended MarchJune 31,30, 2026, an increase of $422$177 or 6.1%2.5% from $6,942$7,027 for the firstsecond quarter of 2025. The period-over-period increase was primarily attributable to the inclusion of certain one-time, non-recurring expenses of $847$884 primarily related to litigation expenses incurred for our cyber-insurance claim and the completion of consulting costs to help expedite gross margin improvement at our two largest manufacturing facilities and litigation expenses incurred for our cyber-insurance claim.facilities.
Other Expense. Other expense totaled $448$451 for the three-month period ended MarchJune 31,30, 2026, compared to $953$1,143 for the three-month period ended MarchJune 31,30, 2025. Interest and financing expense decreased $164,$153, or 15.9%,15.4%, from $1,032$992 for the firstsecond quarter of 2025 to $868$839 for the comparable period in 2026 resulting from the continued paydown of the term loan financing of the Electrochem acquisition on October 31, 2024. Miscellaneous (income) expense amounted to $420($388) for the firstsecond quarter of 2026 compared to $79$151 for the firstsecond quarter of 2025, primarily attributable to refundable tax credits for certain qualifying battery cells and packs we manufacture under the 45X Advanced Manufacturing Production Credit, established by the Inflation Reduction Act which runs through 2032. The year-earlier period reflects interest income recognized on the Employee Retention Credit under the Coronavirus Aid, Relief and Economic Security Act filed on June 22nd, 2023, and approved for payment by the Internal Revenue Service on March 31, 2025. In addition, both periods reflect foreign exchange gains and losses due to fluctuations in foreign currency exchange rates.
Income Taxes. For the three-month period ended MarchJune 31,30, 2026, Ultralife recognized an income tax (benefit) provision of ($192),$468, comprised of a current (benefit)tax provision of $136 expected to be paid on income primarily in foreign jurisdictions and a deferred tax (benefit) of $(328). This compares to a provision of $567 comprised of a current provision of $223$47 and a deferred tax provision of $344$421 which primarily represents non-cash charges for U.S. taxes which we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future. This compares to a tax provision of $243 comprised of a current tax benefit of $22 and a deferred tax provision of $265 for the three-month period ended MarchJune 31,30, 2025. Our effective tax rate was 29.0%15.7% for the firstsecond quarter of 2026 as compared to 23.2%21.8% for the firstsecond quarter of 2025, primarily attributable to the geographic mix of our operating results and other income recognized on the nontaxable refundable tax credits under the 45X Advanced Manufacturing Production Credit. See Note 6 to the consolidated financial statements in Item 1 of Part I of this Form 10-Q for additional information regarding our income taxes.
Net (Loss) Income Attributable to Ultralife Corporation. Net (loss) income attributable to Ultralife Corporation was ($451),$2,543, or ($0.03)$0.15 per share – basic and diluted, for the three-month period ended MarchJune 31,30, 2026, compared to $1,865,$879, or $0.11$0.05 per share – basic and diluted, for the three-month period ended MarchJune 31,30, 2025. Weighted average shares outstanding used to compute diluted earnings per share decreased from 16,679,758 for the first quarter of 2025 to 16,656,503 for the first quarter of 2026.
Weighted average shares outstanding used to compute diluted earnings per share increased from 16,656,408 for the second quarter of 2025 to 16,714,196 for the second quarter of 2026. The increase is attributable to stock option exercises since the second quarter. Dilutive shares of 55,268 were added to basic weighted average shares for the 2026 period compared to 21,856 for the 2025 period.
Six-Month Periods Ended June 30, 2026, and June 30, 2025
Revenues. Consolidated revenues for the six-month period ended June 30, 2026, were $95,388, a decrease of $3,919 or 3.9%, from $99,307 for the six-month period ended June 30, 2025. Overall, commercial sales decreased $3,259 or 5.1% and government/defense sales decreased $660 or 1.8%.
Battery & Energy Products revenues decreased $3,844, or 4.2%, from $92,188 for the six-month period ended June 30, 2025, to $88,344 for the six-month period ended June 30, 2026. The decrease is primarily attributable to a $3,259 or 5.1% decline in commercial sales and a $585 or a 2.0% decline in government/defense sales. The decrease in commercial sales was driven by a $2,265 or 12.7% decline in industrial sales and a $2,049 or 6.9% decline in oil & gas sales, partially offset by a $1,055 or 6.5% increase in medical battery sales. The overall decline in commercial sales was in large part a result of lost production days due to the failure of the substation providing power to our Newark, NY facility and winter blizzards and a prolonged shutdown to conduct a comprehensive physical inventory at our Raynham, MA facility during the first quarter of 2026. The government/defense sales decline was due to the shipment of a very large charger order for an allied country in the 2025 period.
Communications Systems revenues decreased $75 or 1.1%, from $7,119 for the six-month period ended June 30, 2025, to $7,044 for the six-month period ended June 30, 2026. The decrease was primarily attributable to shipments in the prior year to a major international defense contractor and the timing of expected orders in the current period.
Cost of Products Sold / Gross Profit. Cost of products sold totaled $71,412 for the six-month period ended June 30, 2026, a decrease of $3,549, or 4.7%, from the $74,961 reported for the same six-month period a year ago. Consolidated cost of products sold as a percentage of total revenue decreased from 75.5% for the six-month period ended June 30, 2025, to 74.9% for the six-month period ended June 30, 2026. Correspondingly, consolidated gross margin increased from 24.5% for the six-month period ended June 30, 2025, to 25.1% for the six-month period ended June 30, 2026, reflecting the net refund of IEEPA tariffs of $1,102 in the second quarter which had been recognized as net costs in previous periods.
For our Battery & Energy Products segment, gross profit for the 2026 period was $21,861, a decrease of $414 or 1.9% from gross profit of $22,275 for the 2025 period. Battery & Energy Products’ gross margin of 24.7% increased by 50-basis points from the 24.2% gross margin for the year-earlier period, primarily due to sales mix and the net refund of IEEPA tariffs.
For our Communications Systems segment, gross profit for the 2026 period was $2,115 or 30.0% of revenues, compared to gross profit of $2,071 or 29.1% of revenues for the 2025 period. The 90-basis point increase in gross margin was primarily due to favorable sales mix.
Operating Expenses. Operating expenses for the six-month period ended June 30, 2026, were $20,754, an increase of $2,063 or 11.0% from the $18,691 for the six-month period ended June 30, 2025. The increase is primarily attributable to a 31.0% increase in new product development costs related to continued investment in our product offerings and the completion of certain one-time, non-recurring expenses of $1,731, compared to $518 for the year-earlier quarter, primarily related to litigation expenses incurred for our cyber-insurance claim and certain consulting costs to help expedite gross margin improvement at our two largest manufacturing facilities. Both periods reflected continued tight control over discretionary spending.
Overall, operating expenses as a percentage of revenues were 21.8% for the six-month period ended June 30, 2026, compared to 18.8% for the six-month period ended June 30, 2025. Amortization expense associated with intangible assets related to our acquisitions was $535 for the first six months of 2026 ($525 in selling, general and administrative expenses and $10 in research and development costs), compared with $815 for the first six months of 2025 ($754 in selling, general, and administrative expenses and $61 in research and development costs). The year-over-year decline in amortization expenses resulted from our decision in the 2025 fourth quarter to undergo a comprehensive rebranding initiative that consolidates all sub-brands under a singular, unified master brand – Ultralife, and the ensuing write-down of tradenames and trademarks associated with out sub-brands during that period. Research and development costs were $6,186 for the six-month period ended June 30, 2026, an increase of $1,464 or 31.0 %, from $4,722 for the six months ended June 30, 2025. Selling, general, and administrative expenses increased $599, or 4.3%, from $13,969 for the first six months of 2025 to $14,568 for the first six months of 2026. The period-over-period increase was primarily attributable to the inclusion of certain one-time, non-recurring expenses primarily related to litigation expenses incurred for our cyber-insurance claim and the completion of consulting costs to help expedite gross margin improvement at our two largest manufacturing facilities.
Other Expense. Other expense totaled $899 for the six-month period ended June 30, 2026, compared to $2,096 for the six-month period ended June 30, 2025. Interest and financing expense decreased $317, or 15.7%, from $2,024 for the first half of 2025 to $1,707 for the comparable period in 2026 resulting from the continued paydown of the term loan financing of the Electrochem acquisition on October 31, 2024. Miscellaneous (income) expense amounted to ($808) for the first half of 2026 compared to $72 for the first half of 2025, primarily attributable to refundable tax credits for certain qualifying battery cells and packs we manufacture under the 45X Advanced Manufacturing Production Credit, established by the Inflation Reduction Act which runs through 2032. In addition, both periods reflect foreign exchange gains and losses due to fluctuations in foreign currency exchange rates.
Income Taxes. The income tax provision for the 2026 six-month period was $276 compared to $810 for the 2025 six-month period. Our effective tax rate decreased to 11.9% from 22.8% for the 2025 period, primarily attributable to the geographic mix of our operating results and other income recognized on the nontaxable refundable tax credits under the 45X Advanced Manufacturing Production Credit. The income tax provision for the first six months of 2026 is comprised of a $183 current tax provision for taxes expected to be paid on income primarily in foreign jurisdictions and a $93 deferred tax provision which primarily represents non-cash charges for U.S. income taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future. For the comparable 2025 period, the income tax provision was comprised of a $201 current provision for taxes expected to be paid on income primarily in foreign jurisdictions and a $609 deferred tax provision which primarily represents non-cash charges for U.S. taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future. See Note 6 to the consolidated financial statements in Item 1 of Part I of this Form 10-Q for additional information regarding our income taxes.
Net Income Attributable to Ultralife. Net income attributable to Ultralife was $2,092, or $0.13 per share – basic and diluted for the six-month period ended June 30, 2026, compared to $2,744, or $0.17 per share – basic and diluted, for the six-month period ended June 30, 2025.
Weighted average shares outstanding used to compute diluted earnings per share increased from 16,671,000 for the first six months of 2025 to 16,702,714 for the first six months of 2026. The increase is attributable to stock option exercises since the second quarter of 2025, a slight increase in the average stock price used to compute diluted shares from $6.36 for the six-month period ended June 30, 2025, to $6.43 for the six-month period ended June 30, 2026. Accordingly diluted shares of 44,992 were added to basic weighted average shares in 2026 compared to 37,237 in 2025.
In evaluating our business, we consider and use adjusted EBITDA, a non-GAAP financial measure, as a supplemental measure of our operating performance. We define adjusted EBITDA as net income (loss) income attributable to Ultralife Corporation before interest expense, provision for income taxes, depreciation and amortization, and stock-based compensation expense, plus/minus expense/income that we do not consider reflective of our ongoing continuing operations. We also use adjusted EBITDA as a supplemental measure to review and assess our operating performance and to enhance comparability between periods. We believe the use of adjusted EBITDA facilitates investors’ understanding of operating performance from period to period by backing out potential differences caused by variations in such items as capital structures (affecting relative interest expense and stock-based compensation expense), the amortization of intangible assets acquired through our business acquisitions (affecting relative amortization expense and provision (benefit) for income taxes), the age and book value of facilities and equipment (affecting relative depreciation expense) and one-time charges/benefits relating to income taxes. Adjusted EBITDA should not be considered in isolation, as a substitute for, or superior to net income, operating income, cash flows from operating activities or any other measure of financial performance prepared in accordance with GAAP. We also present adjusted EBITDA from operations because we believe it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance. We reconcile adjusted EBITDA to net income (loss) income attributable to Ultralife Corporation, the most comparable financial measure under GAAP.
We compensate for these limitations by relying primarily on our GAAP results and using adjusted EBITDA only on a supplemental basis. Neither current nor potential investors in our securities should rely on adjusted EBITDA as a substitute for any GAAP measures and we encourage investors to review the following reconciliation of adjusted EBITDA to net lossincome attributable to Ultralife Corporation.
As of MarchJune 31,30, 2026, cash totaled $8,890,$6,663, as compared to $9,345 at December 31, 2025. The decrease in cash was largely reflectsattributable decreasedto revenuepayments bytotaling $5,125 against the outstanding principal on our operationsTerm Loan during the period,first ashalf wellof as a reduction in our outstanding debt.2026.
For the three-monthsix-month period ended MarchJune 31,30, 2026, cash generated from operations was $2,256,$3,444, as compared to $3,368$9,303 generated for the three-monthsix-month period ended MarchJune 31,30, 2025. For the 2026 period, cash generated from operations was comprised of net lossincome of $471$2,047 plus non-cash items totaling $1,058$2,959 for depreciation, amortization, stock-based compensation, and deferred taxes, asoffset wellby asdecrease $1,669of $1,562 attributable to working capital.
Cash used in investing activities for the threesix months ended MarchJune 31,30, 2026, was $770$1,223 for capital expenditures, primarily reflecting investments in equipment for new products transitioning to higher-volume manufacturing.
Cash used in financing activities for the threesix months ended MarchJune 31,30, 2026, was $2,063,$5,089, representing a $2,063$5,125 reduction in our outstanding debt.debt partially offset by $36 of cash generated from employee stock option exercise proceeds during the period.
As of MarchJune 31,30, 2026, the Company had $48,188$45,125 outstanding on the Term Loan and no amounts outstanding on the Revolving Credit Facility. The Company was in full compliance with its debt covenants under the Revolving Credit Facility and Term Loan as of MarchJune 31,30, 2026.
As of MarchJune 31,30, 2026, we have made commitments to purchase approximately $545$301 of production machinery and equipment.
During the first threesix months of 2026, there were no significant changes in the manner in which our significant accounting policies were applied or in which related assumptions and estimates were developed.
ULBI insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 2 Form 4 filings (2 insiders, 4 trade dates, 110,878 shares, about $727.9K) and open-market sales in 0 filings. Net open-market shares: 110,878 (purchases minus sales); net value about $727.9K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-05-26 | Whitmore Bradford T |
Open-market purchase | 67,302 | $6.81 | $458.3K |
| 2026-05-22 | Whitmore Bradford T |
Open-market purchase | 8,700 | $6.33 | $55.1K |
| 2026-05-21 | Whitmore Bradford T |
Open-market purchase | 32,876 | $6.13 | $201.5K |
| 2026-05-18 | Manna Michael Edward |
Open-market purchase | 2,000 | $6.47 | $12.9K |
Well-known investors holding ULBI (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 171,790 | $1.1M | 0.0% | Reduced 13% |
| Two Sigma Investments | 2026-06-30 | 51,106 | $323.0K | 0.0% | Reduced 18% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 25,283 | $159.8K | 0.0% | Reduced 39% |