What changed in this filing

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Item 1A. Risk Factors

2026-03-23 compared with 2025-04-01 · 119 added, 109 removed, 199 unchanged (53% of the section changed)

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Company Risk Factors

Changes in economic conditions, including inflation, tariffs, interest rates, and supply-chain disruptions have affected and may continue to affect our business, revenues and earnings adversely.

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 2024 and 2025, although to a lesser extent.

The negative impact of these economic conditions 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, and improving our process for launching new products to reduce the cost and time of transitioning to high-volume manufacturing.

While price increases, longer lead times and key component shortages have eased, they still sporadically occur and general economic conditions are likely to become 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 which could have a material adverse effect on our business and financial results going forward.

The negative impact of these economic conditions, 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, improving our internal expertise to enhance our process for launching new products to reduce the cost and time of transitioning to high-volume 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 became more complex with the advent of tariffs in 2025.

Despite our best efforts and focus, we may not be able to fully offset the unfavorable impact of these economic conditions in a timely fashion, which continue to have a material adverse effect on our business and financial results going forward.

A significant portion of our revenue is derived from certain key customers.

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or foreign military expenditures could result in a reduction in the military demand for our products, which could have a material adverse effect on our business, financial condition and results of operations.

Our efforts to develop new products or new commercial applications for our products could be prolonged, not be profitable, not be accepted by our customers or could otherwise fail to achieve market share.

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.

Although we develop certain products for new commercial applications, we cannot be sure that these new products will be accepted due to the highly competitive nature of our industries.

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Increased competition, failure to gain customer acceptance of our products, the introduction of competitive technologies or failure of our customers to purchase our products in their markets all may have an adverse effect on our business and reduce our revenues and operating income.

Our supply of raw materials and components could be disrupted or delayed due to business conditions, new or additional tariffs, global conflicts, weather, any lingering impact of COVID-19 or other factors not under our control, or the cost of those raw materials and components may materially increase.

Our supply of raw materials and components could be disrupted or delayed due to business conditions, new or additional tariffs, global conflicts, weather, sourcing requirements 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.

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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 of 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.

However, if the government did not provide us with a government preference in such circumstances or if 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.

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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 potential impact of costly tariffs in 2025 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 are understood with all efforts taken to minimize.

Accordingly, these circumstances plus the continued impact of costly tariffs and further requirements emphasizing component sourcing from the U.S.

in 2026 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, but 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 potential future tariffs, that could be passed on to us in higher prices for our raw materials.

These increased prices could increase our cost of business, lower our margins and 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 our lean manufacturing initiatives take longer than anticipated.

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.

However, 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 continued or new tariffs, that could be passed on to us in higher prices for our raw 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 higher prices 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.

Our growth and expansion strategy could strain or overwhelm our resources.

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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.

For example, demand for our new 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-scale production requirements on a timely and cost-effective basis.

Our backlog and high confidence orders of approximately $100 million does not mean that rapid growth and demand for our products in all cases will be met by our resources without delay.

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.

Our resources may not be sufficient to support rapid growth and demand for our products and simultaneously satisfy our backlog of 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 the orders of our customers for our products, without delay.

The failure to manage growth and expansion effectively could have a material adverse effect on our business, financial condition, and results of operations.

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.

Our ability to recruit and retain experienced, competent management is critical to the success of the business, and the loss of top management and key personnel could significantly harm our business, and the ability to implement our succession plan.

The continued service of our officers and executive team is key to the successful implementation of our business model and growth strategy designed to deliver sustainable, consistent profitability.

A top management priority has been the development and implementation of a formal written succession plan to mitigate the risks associated with the loss of senior executives.

This formal succession plan is updated annually and presented to our Board of Directors.

There is no guarantee that we will be successful in our efforts to effectively implement our succession plan.

Because of the specialized, technical nature of our business, we are highly dependent on certain members of our management, sales, engineering and technical staff.

The loss of one or more of these employees could have a material adverse effect on our business, financial condition and results of operations.

Our ability to effectively pursue our business strategy will depend upon, among other factors, the successful retention of our key personnel, recruitment of additional highly skilled and experienced managerial, sales, engineering and technical personnel, and the integration of such personnel obtained through business acquisitions.

We cannot be sure that we will be able to retain or recruit this type of personnel at reasonable costs, or at all.

An inability to hire sufficient numbers of people or to find people with the desired skills could result in greater demands being placed on limited management resources which could delay or impede the execution of our business plans and have other material adverse effects on our business, financial condition and results of operations.

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.

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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.

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.

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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.

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.

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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.

The continued service of our officers and executive team is key to the successful implementation of our business model and growth strategy designed to deliver sustainable, consistent profitability.

A top management priority has been the development and implementation of a formal written succession plan to mitigate the risks associated with the loss of senior executives.

This formal succession plan is updated annually and presented to our Board of Directors.

There is no guarantee that we will be successful in our efforts to effectively implement our succession plan.

Because of the specialized, technical nature of our business, we are highly dependent on certain members of our management, sales, engineering and technical staff.

The loss of one or more of these employees could have a material adverse effect on our business, financial condition and results of operations.

We cannot be sure that we will be able to retain or recruit this type of personnel at reasonable costs, or at all.

Our operations in China are subject to unique risks and uncertainties, including political changes, tariffs and trade restrictions.

Our operating facility in China presents unique risks including, but not limited to, changes in local regulatory requirements, changes in labor laws, local wage laws, environmental regulations, taxes and operating licenses, compliance with U.S.

regulatory requirements, including the Foreign Corrupt Practices Act, uncertainties as to the application and interpretation of local laws and enforcement of contract and intellectual property rights, currency restrictions, currency exchange controls, fluctuations in the value of currency to the U.S.

dollar and currency revaluations, eminent domain claims, civil unrest, power outages, water shortages, labor shortages, labor disputes, increase in labor costs, rapid changes in government, economic and political policies, political or civil unrest, war, acts of terrorism, or the threat of boycotts, other civil disturbances, the impact of the imposition of tariffs by the U.S.

Government on products that we manufacture or purchase in China as well as any retaliating trade policies or restrictions, and an outbreak of a contagious disease variant, related to COVID-19 or not, which may cause us or our suppliers and/or customers to temporarily suspend operations in the affected city or region.

Any such disruptions could depress our earnings and have other material adverse effects on our business, financial condition and results of operations.

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.

Fluctuations in the demand, supply and price of oil and gas and the resulting volatility in the level of downhole drilling could have a material adverse effect on our business, financial condition and results of operations.

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A significant downturn in the price of oil may result in a decrease in downhole drilling and adversely impact our financial results.

Our operations in China are subject to unique risks and uncertainties, including political changes, tariffs and trade restrictions.

Any such disruptions could depress our earnings and have other material adverse effects on our business, financial condition and results of operations.

A decline in demand for products using our batteries or communications systems could reduce demand for our products and/or our products could become obsolete resulting in lower revenues and profitability.

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We are subject to many risks beyond our control that influence the success or failure of a particular product or service offered by a customer, including:

competition faced by the customer in its particular industry,

competition faced by the customer in its industry,

market acceptance of the customer’s product or service,

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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.

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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, 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.

Although we currently carry insurance policies which cover loss of plant and 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.

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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 and general economic conditions.

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 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.

Rising interest rates will increase the cost of our borrowing and will affect our earnings adversely.

The Company’s Credit Agreement, among other things, provides for a 5-year, $55,000 senior secured term loan (the “Term Loan Facility”) and a $30,000 senior secured revolving credit facility (the “Revolving Credit Facility”, and together with the Term Loan Facility, the “Credit Facilities”).

Upon closing of the 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, the Company had $55,000 of outstanding principal on the Term Loan Facility, of which $2,750 is due to be paid in 2025 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.

While it is in the best interests of the Company to reduce the amount of debt quickly, those funds in some cases have been diverted 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.

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 may cause the market price of our common stock to fluctuate substantially, all of which may be unrelated to our operating results.

Our customers ’ purchases may not meet the volume expectations in our supply agreements.

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This could have an adverse impact in the form of reduced revenues or lower margins.

The COVID-19 pandemic and other related illnesses have caused and may continue to 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) 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 may incur significant costs or liabilities to satisfy obligations under the terms of the warranties we supply and the contractual terms under which we sell our products and services.

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, 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.

Rising interest rates will increase the cost of our borrowing and will affect our earnings adversely.

Upon closing of the acquisition of Electrochem on October 31, 2024, the Credit Facilities became effective to fund the acquisition and the related closing costs.

As of December 31, 2025, the Company had $50,250 of outstanding principal on the Term Loan Facility, of which $4,125 is due to be paid in 2026 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.

From time to time, funds which would have been otherwise used to pay down debt, have been used to purchase raw material and component inventory 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.

Any inability to comply with changes to the regulations for the shipment of our products could limit our ability to transport our products to customers in a cost-effective manner and reduce our operating income and margins.

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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 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.

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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 we operate in.

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 potential of future pandemics could 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.

We may incur significant costs or liabilities to satisfy obligations under the terms of the warranties we supply and the contractual terms under which we sell our products and services.

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 and have historically been minimal.

Excessive warranty claims could have a material adverse effect on our business, financial condition and results of operations.

Negative publicity concerning Lithium-ion batteries may adversely impact the industries or markets in which we 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 Lithium-ion battery industry as a whole, regardless of the design or usage of those batteries.

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, 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 are subject to the contract rules and procedures of the U.S.

and foreign governments.

These rules and procedures create significant risks and uncertainties for us that are not usually present in contracts with private parties.

We continue to develop battery products and communications systems to meet the needs of the U.S.

and foreign governments.

We compete in solicitations for awards of contracts from these governments.

The receipt of an award, however, does not always result in the immediate release of an order and does not guarantee in any way any given volume of orders.

Any delay of solicitations or anticipated purchase orders by, or future failure of, the U.S.

or foreign governments to purchase products manufactured by us could have a material adverse effect on our business, financial condition and results of operations.

In these scenarios we are also typically required to successfully meet contractual specifications and to pass various qualification tests for the products under contract.

Our inability to pass these tests in a timely fashion, or to meet delivery schedules for orders released under contract, could have a material adverse effect on our business, financial condition and results of operations.

Additionally, when a U.S.

government contract is awarded, there is a government procedure that permits unsuccessful companies to formally protest such award if they believe they were unjustly treated in the evaluation process.

As a result of these protests, the government is precluded from proceeding under these contracts until the protests are resolved.

A prolonged delay in the resolution of a protest, or a reversal of an award resulting from such a protest could have material adverse effects on our business, financial condition and results of operations.

We are subject to foreign currency fluctuations.

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.

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.

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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.

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.

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.

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Our ability to use our net operating loss and tax credit carryforwards in the future may be limited, which could increase our tax liabilities and reduce our cash flow and net income.

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.

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.

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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 continue to manufacture and market our products, without significant, costly alterations.

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 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 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 may or will afford.

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 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.

Compliance with government regulations regarding the use of " conflict minerals " may result in increased costs and risks to the Company.

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.

Any impairment of goodwill and/or other indefinite-lived intangible assets could adversely impact our results of operations.

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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.

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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 are subject to the contract rules and procedures of the U.S.

and foreign governments.

These rules and procedures create significant risks and uncertainties for us that are not usually present in contracts with private parties.

We continue to develop battery products and communications systems to meet the needs of the U.S.

and foreign governments.

We compete in solicitations for awards of contracts from these governments.

The receipt of an award, however, does not always result in the immediate release of an order and does not guarantee in any way any given volume of orders.

Any delay of solicitations or anticipated purchase orders by, or future failure of, the U.S.

or foreign governments to purchase products manufactured by us could have a material adverse effect on our business, financial condition and results of operations.

In these scenarios we are also typically required to successfully meet contractual specifications and to pass various qualification tests for the products under contract.

Additionally, when a U.S.

As a result of these protests, the government is precluded from proceeding under these contracts until the protests are resolved.

Our business and results of operations could be adversely affected by violations of the U.S.

Foreign Corrupt Practices Act ( “ FCPA ” ), the U.K.

Bribery Act or other anti-corruption laws.

The FCPA, U.K.

Bribery Act and other anti-corruption laws generally prohibit companies and their intermediaries from making improper payments (to foreign officials and otherwise) and require companies to keep accurate books and records and maintain appropriate internal controls.

Our training program and policies mandate compliance with such laws.

We operate in some parts of the world that have experienced governmental corruption to some degree, and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices.

If we are found to be liable for violations of anti-corruption laws (either due to our own acts or our inadvertence, or due to the acts or inadvertence of others, including employees of our third-party partners or agents), we could suffer from civil and criminal penalties or other sanctions, incur significant internal investigation costs and suffer reputational harm.

Such circumstances, if they occur, could have a material adverse impact on our results of operations.

We may incur significant costs because of known and unknown environmental factors.

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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.

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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.

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.

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However, we continue to evaluate the impact of this regulation, 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.

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.

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Failure to comply with the procurement laws or regulations can result in civil, criminal or administrative proceedings involving fines, penalties, suspension of payments, or suspension or disbarment from government contracting or subcontracting for a period of time, which could have a material adverse effect on the Company.

Compliance with government regulations regarding the use of " conflict minerals " may result in increased costs and risks to the Company.

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.

Our business and results of operations could be adversely affected by violations of the U.S.

Foreign Corrupt Practices Act ( “ FCPA ” ), the U.K.

Bribery Act or other anti-corruption laws.

The FCPA, U.K.

Our training program and policies mandate compliance with such laws.

Such circumstances, if they occur, could have a material adverse impact on our results of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors