ULTRALIFE CORP 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and schedules listed in Item 15(a)(1) are included in this Report beginning on page 44. Page Reports of Independent Registered Public Accounting Firms 39 Consolidated Financial Statements: Consolidated Balance Sheets as of December 31, 2025, and 2024 44 Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income for the years ended December 31, 2025, and 2024 45 Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2025, and 2024 46 Consolidated Statements of Cash Flows for the years ended December 31, 2025, and 2024 47 Notes to Consolidated Financial Statements 48 38 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Ultralife Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Ultralife Corporation and its subsidiaries (the “Company”) as of December 31, 2025, the related consolidated statements of (loss) income and comprehensive (loss) income, changes in stockholders' equity and cash flows for the year ended December 31, 2025, and the related notes to the consolidated financial statements (collectively, the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Our report dated March 23, 2026, expressed an opinion that the Company had not maintained effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Other Matter The financial statements of the Company as of and for the year ended December 31, 2024, were audited by Freed Maxick P.C., who joined WithumSmith+Brown, PC on August 1, 2025 and expressed an unmodified opinion on those statements dated April 1, 2025. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 39 Estimate for excess, obsolete, and slow-moving inventory reserve As discussed in Notes 1 and 4 to the financial statements, inventories are stated at the lower of cost or net realizable value with cost determined under the first-in, first-out method. The Company records provisions for excess, obsolete, and slow-moving inventory based on changes in customer demand, technology developments or other economic factors. The excess, obsolete, and slow-moving inventory reserve serves to reduce the Company’s inventory balance through a charge to cost of products sold. The Company’s reserve for excess, obsolete, and slow-moving inventory related to the Newark, New York and Virginia Beach, Virginia facilities is based upon assumptions related to expectations of future demand, product lifecycles, product support, technical obsolescence, regulatory requirements, and economic and market conditions. If the actual realization of excess, obsolete, and slow-moving inventory does not meet the Company’s assumptions future inventory adjustments would result in a decrease in gross margin. Due to the magnitude of the inventory and the subjectivity involved in estimating the reserve, we identified the evaluation of the reserve as a critical audit matter, which required a high degree of auditor judgment. Addressing the matter involved performing subjective procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. The primary procedures we performed include: performing retrospective review of prior-year estimates to identify potential bias of management judgements, obtaining an understanding of the process and assumptions used by management to develop the reserve for excess, obsolete, and slow-moving inventory, obtaining an understanding of controls related to the reserve for excess, obsolete, and slow-moving inventory, perform brainstorming meeting among the engagement team to determine where the estimate may be susceptible to material misstatement, test management’s calculation of the reserve for excess, obsolete, and slow-moving inventory, including testing the completeness and accuracy of source information used, mathematical accuracy of management’s calculations, evaluate reasonableness and consistency of methodology and assumptions. Goodwill Impairment Analysis As discussed in Notes 1 and 4 to the financial statements, the Company performs its goodwill impairment test on an annual basis as of October 1st or whenever events and changes in circumstances indicate that the carrying value of a reporting unit might exceed its fair value. For each reporting unit the Company performed a quantitative test, which compares the fair value of the reporting unit to the carrying value of the respective reporting unit. The Company has identified two goodwill reporting units. Management determines fair value of the respective reporting units using a discounted cash flow model. Significant estimates and judgements used in this model include internal operating and cash flow forecasts, excess working capital requirements, and inputs to the weighted-average cost of capital used to discount future cash flows. Future revenue and operating cash flow forecasts, the development of the weighted average cost of capital used to discount the future cash flows, and excess working capital requirements are subject to judgement based on sources utilized and the assessment of risks related to the cash flows. Due to the subjectivity involved with the assumptions used to determine the fair value of the reporting units, we identified the goodwill impairment test as a critical audit matter, which required a high degree of auditor judgement. Addressing the matter involved performing subjective procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. The primary procedures we performed include: performing retrospective review of prior-year estimates to identify potential bias of management judgements, obtaining an understanding of the process and assumptions used by management to develop the impairment analysis, obtaining and understanding of controls related to the impairment analysis, performing brainstorming meeting among the engagement team to determine where the estimate may be susceptible to material misstatement, testing management’s impairment analysis, including test the completeness and accuracy of source information used, mathematical accuracy of management’s calculations, evaluate reasonableness and consistency of methodology and assumptions, engaging internal valuation specialist to evaluate assumptions included in the impairment analysis. /s/ WithumSmith+Brown, PC We have served as the Company's auditor since 2016. Rochester, New York March 23, 2026 PCAOB ID Number 100 40 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Ultralife Corporation Opinion on the Internal Control Over Financial Reporting We have audited Ultralife Corporation's (the “Company”) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, because of the effect of the material weaknesses described below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2025, the related consolidated statements of (loss) income and comprehensive (loss) income, changes in stockholders' equity and cash flows for the year ended December 31, 2025, and the related notes to the consolidated financial statements (collectively, the “financial statements”) and our report dated March 23, 2026 expressed an unqualified opinion. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. A material weakness has been identified and included in management’s assessment because remediation efforts initiated during the year ended December 31, 2025 relating to the material weakness identified during the year ended December 31, 2024 attributable to the need for additional personnel to provide a full complement of accounting and reporting expertise has not been in place for a sufficient period of time to allow management to conclude that the related controls are operating effectively. In addition, information technology general controls (ITGC) were not operating effectively to ensure that (i) access to applications and data, including the ability to make changes, was appropriately restricted to authorized personnel, and (ii) the activities of individuals with such access were adequately monitored. As a result, business process controls (automated and manual) that are dependent on the affected ITGCs were also deemed ineffective because they could have been adversely impacted. The material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2025 financial statements, and this report does not affect our report dated March 23, 2026 on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ WithumSmith+Brown, PC We have served as the Company’s auditor since 2016 Rochester, New York March 23, 2026 PCAOB ID Number 100 41 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Ultralife Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Ultralife Corporation and its subsidiaries (the “Company”) as of December 31, 2024, the related consolidated statements of income and comprehensive income, changes in stockholders' equity and cash flows for the year ended December 31, 2024, and the related notes to the consolidated financial statements (collectively, the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Estimate for excess, obsolete, and slow-moving inventory reserve As discussed in Notes 1 and 4 to the financial statements, inventories are stated at the lower of cost or net realizable value with cost determined under the first-in, first-out method. The Company records provisions for excess, obsolete, and slow-moving inventory based on changes in customer demand, technology developments or other economic factors. The excess, obsolete, and slow-moving inventory reserve serves to reduce the Company’s inventory balance through a charge to cost of products sold. The Company’s reserve for excess, obsolete, and slow-moving inventory is based upon assumptions related to expectations of future demand, product lifecycles, product support, technical obsolescence, regulatory requirements, and economic and market conditions. If the actual realization of excess, obsolete, and slow-moving inventory does not meet the Company’s assumptions future inventory adjustments would result in a decrease in gross margin. Due to the magnitude of the inventory and the subjectivity involved in estimating the reserve, we identified the evaluation of the reserve as a critical audit matter, which required a high degree of auditor judgment. Addressing the matter involved performing subjective procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. The primary procedures we performed include: performing retrospective review of prior-year estimates to identify potential bias of management judgements, obtaining an understanding of the process and assumptions used by management to develop the reserve for excess, obsolete, and slow-moving inventory, obtaining an understanding of controls related to the reserve for excess, obsolete, and slow-moving inventory, perform brainstorming meeting among the engagement team to determine where the estimate may be susceptible to material misstatement, test management’s calculation of the reserve for excess, obsolete, and slow-moving inventory, including testing the completeness and accuracy of source information used, mathematical accuracy of management’s calculations, evaluate reasonableness and consistency of methodology and assumptions. 42 Goodwill Impairment Analysis As discussed in Notes 1 and 4 to the financial statements, the Company performs its goodwill impairment test on an annual basis as of October 1st or whenever events and changes in circumstances indicate that the carrying value of a reporting unit might exceed its fair value. For each reporting unit the Company performed a quantitative test, which compares the fair value of the reporting unit to the carrying value of the respective reporting unit. The Company has identified two goodwill reporting units. Management determines fair value of the respective reporting units using a discounted cash flow model. Significant estimates and judgements used in this model include internal operating and cash flow forecasts, excess working capital requirements, and inputs to the weighted-average cost of capital used to discount future cash flows. Future revenue and operating cash flow forecasts, the development of the weighted average cost of capital used to discount the future cash flows, and excess working capital requirements are subject to judgement based on sources utilized and the assessment of risks related to the cash flows. Due to the subjectivity involved with the assumptions used to determine the fair value of the reporting units, we identified the goodwill impairment test as a critical audit matter, which required a high degree of auditor judgement. Addressing the matter involved performing subjective procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. The primary procedures we performed include: performing retrospective review of prior-year estimates to identify potential bias of management judgements, obtaining an understanding of the process and assumptions used by management to develop the impairment analysis, obtaining and understanding of controls related to the impairment analysis, performing brainstorming meeting among the engagement team to determine where the estimate may be susceptible to material misstatement, testing management’s impairment analysis, including test the completeness and accuracy of source information used, mathematical accuracy of management’s calculations, evaluate reasonableness and consistency of methodology and assumptions, engaging internal valuation specialist to evaluate assumptions included in the impairment analysis. Electrochem Business Combination and Purchase Price Allocation As discussed in Notes 1 and 2 to the financial statements, effective October 31, 2024, the Company acquired all the outstanding shares of Electrochem Solutions, Inc. (Electrochem). The total net purchase price paid for the shares of Electrochem was approximately $48.0 million. The Company applied the acquisition method of accounting for the acquisition. Under this method, identifiable assets acquired, and liabilities assumed are measured at their acquisition-date fair value. The Company used a valuation hierarchy and utilized an independent third-party valuation specialist to determine the fair values used in this allocation. Intangible assets and goodwill represented an allocation of purchase price of the acquired business in the amount of approximately $10.5 million and $7.6 million, respectively. The Company’s determination of the fair value used for the allocation of the purchase price is based upon assumptions of the future performance of Electrochem and includes work performed by a third-party valuation specialist. Due to the subjectivity involved in estimating the fair values and ultimate allocation of purchase price, we identified the fair value estimates for purchase price allocation of goodwill and intangible assets as a critical audit matter, which required a higher degree of auditor judgement as well as the use of professionals with specialized skill and knowledge. Addressing the matter involved performing subjective procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. The primary procedures we performed include: obtaining an understanding of the process and assumptions used by management to develop the estimate of the purchase price allocation, obtaining an understanding of the controls relating to the purchase price allocation, engaging an internal valuation specialist to review/test certain assumptions and approaches used, testing management’s allocation, including test the completeness and accuracy of source information used, mathematical accuracy of management’s calculations, evaluate reasonableness and consistency of methodology and assumptions. /s/ Freed Maxick P.C. (f/k/a Freed Maxick CPAs, P.C.) We have served as the Company's auditor since 2016. Rochester, New York April 1, 2025 43 ULTRALIFE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) December 31, 2025 2024 ASSETS Current Assets: Cash $ 9,345 $ 6,854 Trade accounts receivable, net of allowance for expected credit losses of $ 457 and $ 384 , respectively 33,948 29,370 Inventories, net 54,008 51,363 Prepaid expenses and other current assets 8,500 9,573 Total current assets 105,801 97,160 Property, plant and equipment, net 40,397 40,485 Goodwill 45,376 45,006 Other intangible assets, net 10,933 24,557 Deferred income taxes, net 10,494 8,413 Other noncurrent assets 3,911 4,830 Total assets $ 216,912 $ 220,451 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 17,423 $ 14,160 Current portion of long-term debt 4,125 2,750 Accrued compensation and related benefits 2,754 2,911 Accrued expenses and other current liabilities 13,031 9,470 Total current liabilities 37,333 29,291 Long-term debt, net 45,526 51,502 Deferred income taxes 1,000 1,443 Other noncurrent liabilities 2,919 4,028 Total liabilities 86,778 86,264 Commitments and contingencies (Note 5) Stockholders' Equity: Preferred stock – par value $ .10 per share; authorized 1,000,000 shares; none issued - - Common stock – par value $ .10 per share; authorized 40,000,000 shares; issued – 21,092,617 shares and 21,069,079 shares, respectively; outstanding – 16,656,503 shares and 16,632,965 shares, respectively 2,109 2,107 Capital in excess of par value 192,859 191,828 Accumulated deficit ( 40,340 ) ( 34,442 ) Accumulated other comprehensive loss ( 3,141 ) ( 4,006 ) Treasury stock - at cost; 4,436,114 shares and 4,436,114 shares, respectively ( 21,492 ) ( 21,492 ) Total Ultralife Corporation equity 129,995 133,995 Non-controlling interest 139 192 Total stockholders’ equity 130,134 134,187 Total liabilities and stockholders' equity $ 216,912 $ 220,451 The accompanying notes are an integral part of these consolidated financial statements. 44 ULTRALIFE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME (Dollars in Thousands, Except Per Share Amounts) Year ended December 31, 2025 2024 Revenues $ 191,159 $ 164,456 Cost of products sold 145,138 122,142 Gross profit 46,021 42,314 Operating expenses: Research and development 10,398 8,268 Selling, general and administrative 29,344 24,081 Intangible asset impairment 12,181 - Total operating expenses 51,923 32,349 Operating (loss) income ( 5,902 ) 9,965 Other expense (income): Interest and financing expense 3,953 1,940 Miscellaneous income ( 1,457 ) ( 276 ) Total other expense, net 2,496 1,664 (Loss) income before income taxes ( 8,398 ) 8,301 Income tax (benefit) provision ( 2,447 ) 1,892 Net (loss) income ( 5,951 ) 6,409 Net (loss) income attributable to non-controlling interest ( 53 ) 97 (Loss) income attributable to Ultralife Corporation ( 5,898 ) 6,312 Other comprehensive income (loss): Foreign currency translation adjustments 865 ( 346 ) Comprehensive (loss) income attributable to Ultralife Corporation $ ( 5,033 ) $ 5,966 Net (loss) income per share attributable to Ultralife Corporation common stockholders – Basic $ (. 35 ) $ . 38 Net (loss) income per share attributable to Ultralife Corporation common stockholders – Diluted $ (. 35 ) $ . 38 Weighted average shares outstanding – Basic 16,642 16,555 Weighted average shares outstanding – Diluted 16,642 16,767 The accompanying notes are an integral part of these consolidated financial statements. 45 ULTRALIFE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Dollars in Thousands) Common stock Number of shares Amount Capital in excess of par value Accumulated other comprehensive income (loss) Accumulated deficit Treasury stock Non-controlling interest Total Balance – December 31, 2023 20,783,607 $ 2,078 $ 189,160 $ ( 3,660 ) $ ( 40,754 ) $ ( 21,492 ) $ 95 $ 125,427 Net income 6,312 97 6,409 Stock option exercises 285,472 29 1,970 1,999 Stock-based compensation -stock options 640 640 Stock-based compensation -restricted stock 58 58 Foreign currency translation adjustments ( 346 ) ( 346 ) Balance – December 31, 2024 21,069,079 2,107 191,828 ( 4,006 ) ( 34,442 ) ( 21,492 ) 192 134,187 Net loss ( 5,898 ) ( 53 ) ( 5,951 ) Stock option exercises 15,982 2 96 - 98 Stock-based compensation -stock options 770 770 Stock-based compensation -restricted stock 7,556 165 165 Foreign currency translation adjustments 865 865 Balance – December 31, 2025 21,092,617 $ 2,109 $ 192,859 $ ( 3,141 ) $ ( 40,340 ) $ ( 21,492 ) $ 139 $ 130,134 The accompanying notes are an integral part of these consolidated financial statements. 46 ULTRALIFE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) Year ended December 31, 2025 2024 OPERATING ACTIVITIES: Net (loss) income $ ( 5,951 ) $ 6,409 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation 3,981 3,125 Amortization of intangible assets 1,518 1,032 Intangible asset impairment 12,181 - Amortization of financing fees 265 91 Debt modification expense - 162 Stock-based compensation 935 698 Deferred income tax expense ( 2,541 ) 1,232 Changes in operating assets and liabilities: Accounts receivable ( 4,354 ) 7,599 Inventories ( 2,345 ) ( 109 ) Prepaid expenses and other assets 1,687 ( 3,754 ) Income taxes receivable and payable ( 170 ) ( 64 ) Accounts payable and other liabilities 5,784 215 Net cash provided by operating activities 10,990 16,636 INVESTING ACTIVITIES: Purchase of Electrochem - ( 48,022 ) Purchases of property, plant and equipment ( 3,872 ) ( 1,932 ) Net cash used in investing activities ( 3,872 ) ( 49,954 ) FINANCING ACTIVITIES: Borrowings on credit facility - 55,000 Payment of credit facilities ( 4,750 ) ( 25,747 ) Payment of debt issuance costs ( 24 ) ( 1,392 ) Proceeds from exercise of stock options 98 1,999 Net cash (used in) provided by financing activities ( 4,676 ) 29,860 Effect of exchange rate changes on cash 49 34 INCREASE (DECREASE) IN CASH 2,491 ( 3,424 ) Cash - Beginning of year 6,854 10,278 Cash - End of year $ 9,345 $ 6,854 Supplemental cash flow information: Construction in process in accounts payable $ 424 $ 248 Income taxes paid $ 147 $ 722 Interest paid $ 3,689 $ 1,855 The accompanying notes are an integral part of these consolidated financial statements. 47 ULTRALIFE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in Thousands, Except Per Share Amounts) Note 1 - Summary of Operations and Significant Accounting Policies a. Description of Business As used in this annual report, unless otherwise indicated, the terms the “Company”, “we”, “our” and “us” refer to Ultralife Corporation (“Ultralife”) and its wholly owned subsidiaries ABLE New Energy Co., Limited and its wholly owned subsidiary ABLE New Energy Co., Ltd (collectively “ABLE”); Ultralife UK LTD and its wholly owned subsidiary Accutronics Ltd (collectively “Accutronics”); Ultralife Batteries (UK) Ltd.; Southwest Electronic Energy Corporation and its wholly owned subsidiary, CLB, Inc. (collectively “SWE”); Ultralife Excell Holding Corp. (“UEHC”) and its wholly owned subsidiary Excell Battery Corporation USA (collectively “Excell Battery USA”); Ultralife Canada Holding Corp (wholly owned by UEHC, “UCHC”) and its wholly owned subsidiary Excell Battery Canada ULC (“Excell Battery Canada”); Electrochem Solutions, Inc. (“Electrochem”); and its majority-owned joint venture Ultralife Batteries India Private Limited (“Ultralife India”). We offer products and services ranging from power solutions to communications and electronics systems. Through our engineering and collaborative approach to problem solving, we serve government, defense and commercial customers across the globe. We design, manufacture, install and maintain power and communications systems including rechargeable and non-rechargeable batteries, charging systems, communications and electronics systems and accessories, and custom engineered systems. 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 international defense departments. b. Principles of Consolidation The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of Ultralife Corporation and its wholly owned subsidiaries ABLE, Accutronics, Ultralife Batteries (UK) Ltd., SWE, Excell, Electrochem, and its majority-owned joint venture Ultralife India. Intercompany accounts and transactions have been eliminated in consolidation. c. Management's Use of Judgment and Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at year end and the reported amounts of revenues and expenses during the reporting period. Key areas affected by estimates include: (a) carrying value of goodwill and intangible assets; (b) reserves for excess and obsolete inventory, deferred tax assets, warranties, and bad debts; (c) valuation of assets acquired and liabilities assumed in business combinations; (d) various expense accruals; and (e) stock-based compensation. Our actual results could differ from these estimates. d. Reclassifications Certain items previously reported in specific financial statement captions are reclassified to conform to the current presentation. There were no material reclassifications for the years ended December 31, 2025, and 2024. e . Cash Our cash balances may at times exceed federally insured limits. We have not experienced any losses in these accounts and believe we are not exposed to any significant risk with respect to cash. f. Accounts Receivable and Allowance for Expected Credit Losses We extend credit to our customers in the normal course of business. We perform ongoing credit evaluations and generally do not require collateral. Payment terms are generally thirty (30) to sixty (60) days. Trade accounts receivable are recorded at their invoiced amounts, net of allowance for expected credit losses. We evaluate the adequacy of our allowance for expected credit losses quarterly. Accounts outstanding for longer than contractual payment terms are considered past due and are reviewed for collectability. We maintain reserves for potential credit losses based upon our historical experience, aging profile and general market conditions. Receivable balances are written off when collection is deemed unlikely. 48 g. Inventories Inventories are stated at the lower of cost or net realizable value with cost determined under the first‑in, first‑out (FIFO) method. We record provisions for excess, obsolete or slow-moving inventory based on changes in customer demand, technology developments or other economic factors. h. Property, Plant and Equipment Property, plant and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives. Estimated useful lives are as follows (in years): Buildings 10 – 40 Machinery and Equipment 5 – 10 Furniture and Fixtures 3 – 10 Computer Hardware and Software 2 – 5 Leasehold Improvements Lesser of useful life or lease term Betterments, renewals and extraordinary repairs that extend the life of the assets are capitalized. Other repairs and maintenance costs are expensed when incurred. When disposed, the cost and accumulated depreciation applicable to assets retired are removed from the accounts and the gain or loss on disposition is recognized in operating income. i. Long-Lived Assets, Goodwill and Intangibles We assess our long-lived assets for impairment whenever events or circumstances indicate that their carrying amounts may not be recoverable. For property, plant and equipment and amortizable intangible assets, this is accomplished by comparing the expected undiscounted future cash flows of the assets with the respective carrying amount as of the date of assessment. If the expected undiscounted future cash flows exceed the respective carrying amount as of the date of assessment, no impairment is recognized. Should aggregate undiscounted future cash flows be less than the carrying value, a write-down would be required, measured as the difference between the carrying value and the fair value of the asset. Fair value is estimated as the present value of expected discounted future cash flows. The discount rate used in our evaluation is an industry-based weighted average cost of capital. Under the acquisition method of accounting, the purchase price paid, or the total consideration transferred, to consummate the acquisition is allocated to the identified tangible and intangible assets acquired and liabilities assumed based on their respective estimated fair values as of the acquisition date with the residual amount recorded to goodwill. We do not amortize goodwill and intangible assets with indefinite lives, but instead evaluate these assets for impairment at least annually, or whenever events or circumstances indicate that impairment may exist. We amortize intangible assets that have definite lives so that the economic benefits of the intangible assets are being recognized over their estimated useful life. The annual impairment test for goodwill consists of a comparison of the estimated fair value for each reporting unit to which goodwill is assigned to the carrying value of the respective reporting unit. The annual impairment test for other indefinite-lived intangible assets consists of a comparison of the estimated fair value of each asset to the carrying value of the respective asset. If the estimated fair value of a reporting unit or other indefinite-lived intangible asset exceeds its respective carrying value, the goodwill or indefinite-lived intangible asset is considered not impaired. If carrying value of a reporting unit or indefinite-lived intangible asset exceeds its estimated fair value, the excess carrying value of the respective goodwill or indefinite-lived intangible asset is recognized as an impairment loss. j. Translation of Foreign Currency The financial statements of our foreign subsidiaries are translated from the functional currency into U.S. dollar equivalents, with translation adjustments recorded as the sole component of accumulated other comprehensive income (loss). Exchange gains and losses related to foreign currency transactions and balances denominated in currencies other than the functional currency are recognized in net income (loss). 49 k . Revenue Recognition Revenues are generated from the sale of products. Performance obligations are met and revenue is recognized upon transfer of control to the customer, which is generally upon shipment. When contract terms require transfer of control upon delivery at a customer’s location, revenue is recognized on the date of delivery. For products shipped under vendor managed inventory arrangements, revenue is recognized and billed when the product is consumed by the customer, at which point control has transferred and there are no further obligations by the Company. Revenue is measured as the amount of consideration we expect to receive in exchange for shipped product. Sales, value-added and other taxes billed and collected from customers are excluded from revenue. Customers, including distributors, do not have a general right of return. Separately priced extended warranty contracts are offered on certain Communications Systems products for a duration of up to eight ( 8 ) years. Extended warranties are treated as separate performance obligations and recognized to revenue evenly over the term of the respective contract. Revenue not yet recognized on extended warranty contracts is recorded as deferred revenue on the consolidated balance sheets. For the years ended December 31, 2025, and 2024, revenue recognized on extended warranties was $ 298 and $ 298 , respectively. As of December 31, 2025, there was deferred revenue on extended warranty contracts of $ 855 , comprised of $ 298 expected to be recognized as revenue within one ( 1 ) year and classified as accrued expenses and other current liabilities on our consolidated balance sheets, and $ 557 expected to be recognized as revenue over the remaining duration of the respective contracts and classified as other noncurrent liabilities on our consolidated balance sheets. As of December 31, 2025, and 2024, the Company had no other unsatisfied performance obligations for contracts with an original expected duration of greater than one year. Pursuant to Topic 606, we have applied the practical expedient with respect to disclosure of the deferral and future expected timing of revenue recognition for transaction price allocated to remaining performance obligations. l. Warranty Reserves 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 products. Warranty costs expected to be incurred are estimated based on the Company’s experience and recorded as costs of products sold. Standard warranty costs are recognized upon product sale. Extended warranty costs are recognized over the term of the contract. Provision for warranty costs is recorded in accrued expenses and other current liabilities and other noncurrent liabilities on our consolidated balance sheets based on the duration of the warranty. m. Shipping and Handling Costs Costs incurred by us related to shipping and handling are included in cost of products sold. Amounts charged to customers pertaining to these costs are reflected as revenue. n. Sales Commissions Sales commissions are expensed as incurred for contracts with an expected duration of one year or less. There were no sales commissions capitalized as of December 31, 2025, and 2024. o. Research and Development Research and development expenditures are charged to operations as incurred. The majority of research and development expenses pertain to salaries and benefits, developmental supplies, depreciation and other contracted services. For the years ended December 31, 2025, and 2024, we expended $ 12,079 and $ 9,549 , respectively, on research and development, including costs of $ 1,681 and $ 1,281 , respectively, on customer sponsored research and development activities, which are included in cost of products sold. p. Environmental Costs Environmental expenditures that relate to current operations are expensed. Remediation costs that relate to an existing condition caused by past operations are accrued when it is probable that these costs will be incurred and can be reasonably estimated. 50 q. Income Taxes We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Pursuant to ASC 740, a valuation allowance is recognized when the realizability of deferred tax assets is not more likely than not, based all available evidence, both positive and negative, weighted based on objective verifiability. r. Concentration Related to Customers and Suppliers One of our customers, a large global defense primary contractor, comprised 27 % and 23 % of our total consolidated revenues for 2025 and 2024, respectively. Revenues for this customer represented 29 % and 24 % of our total Battery & Energy Products segment revenues for 2025 and 2024, respectively. There were no other customers that comprised greater than 10% of our total consolidated revenues during these years. s. Fair Value Measurements and Disclosures Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or that we corroborate with observable market data for substantially the full term of the related assets or liabilities. Level 3: Unobservable inputs supported by little or no market activity that are significant to the fair value of the assets or liabilities. The fair value of financial instruments approximated their carrying values at December 31, 2025, and 2024. The fair value of cash, accounts receivable, accounts payable, accrued liabilities, and the current portion of long-term debt approximates carrying value due to the short-term nature of these instruments. The carrying value of long-term debt approximates fair value, as the variable interest rates approximate current market rates. t. Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net income (loss) attributable to Ultralife Corporation by the weighted average shares of common stock outstanding for the period. Diluted EPS reflects the assumed exercise and conversion of dilutive outstanding stock options and unvested restricted stock, if any, applying the treasury stock method. For the year ended December 31, 2025, there were no outstanding equity awards included in the calculation of diluted weighted average shares outstanding and no potential common shares included in the calculation of diluted EPS, as no securities were dilutive. There were 967,351 outstanding stock options and 40,343 unvested restricted stock awards not included in the calculation of EPS for the year ended December 31, 2025, as the effect would be antidilutive. For the comparable year ended December 31, 2024, there were 770,376 outstanding stock options and 38,386 unvested restricted stock awards included in the calculation of diluted weighted average shares outstanding, as such securities were dilutive, resulting in 212,197 potential common shares included in the calculation of diluted EPS. There were 336,060 outstanding stock options for the year ended December 31, 2024, not included in EPS as the effect would be antidilutive. 51 u. Stock-Based Compensation We have various stock-based employee compensation plans that are described more fully in Note 6. The compensation cost relating to share-based payment transactions is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the equity award). v. Segment Reporting We have two operating segments – Battery & Energy Products and Communications Systems. The basis for determining our operating segments is the manner in which financial information is used in monitoring our operations. Management operates and organizes itself according to business units that comprise unique products and services across geographic locations. w. Business Combinations We allocate the purchase price of acquired businesses to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values on the acquisition date. Any excess of the purchase price over the net fair value of the separately identifiable assets acquired and liabilities assumed is allocated to goodwill. Management determines the fair values of identifiable intangible assets acquired based on historical data, estimated discounted future cash flows, expected royalty rates for trademarks and trade names, as well as certain other information. The valuation of assets acquired and liabilities assumed requires a number of judgments and is subject to change as additional information about the fair value of assets and liabilities becomes available. Additional information, which existed as of the acquisition date but unknown to us at that time, may become known during the remainder of the measurement period. This measurement period may not exceed twelve months from the acquisition date. We will recognize any adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustments are determined. Additionally, in the same period in which adjustments are recognized, we will record the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of any change to the provisional amounts, calculated as if the accounting adjustment had been completed at the acquisition date. Acquisition costs are expensed as incurred. The results of operations and cash flows of acquired businesses are included in our consolidated financial statements from the date of acquisition. x. Leases At contract inception, the Company determines whether the arrangement is or contains a lease and determines the lease classification. The lease term is determined based on the non-cancellable term of the lease adjusted to the extent optional renewal terms and termination rights are reasonably certain. Lease expense for operating leases is recognized evenly over the lease term. Variable lease payments are recognized as period costs. The present value of remaining lease payments is recognized as a liability on the balance sheet with a corresponding right-of-use asset adjusted for prepaid or accrued lease payments. The Company uses its incremental borrowing rate for the discount rate, unless the interest rate implicit in the lease contract is readily determinable. The Company has adopted the practical expedients to not separate non-lease components from lease components and to not present short-term leases on the balance sheet. See Note 8 for further disclosure regarding lease accounting. y. Recent Accounting Pronouncements Recently Adopted Accounting Guidance In November 2023, the FASB issued ASU 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” to expand the disclosure requirements for reportable segments. The standard expands reportable segment disclosure requirements for public business entities primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment operating profit (loss). This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of this new accounting standard did not have an impact on the Company's results of operations, financial position or cash flows. In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for the Company’s annual reporting period beginning January 1, 2025, with early adoption permitted and the Company adopted it as required on January 1, 2025. The adoption of this new accounting standard did not have an impact on the Company's results of operations, financial position or cash flows. 52 Recent Accounting Guidance Not Yet Adopted In November 2024, the FASB issued ASU 2024-03 “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” which requires public entities to disclose specified information about certain costs and expenses. ASU 2024-03 is effective for the Company’s annual reporting period beginning January 1, 2027, and interim reporting periods beginning January 1, 2028, with early adoption permitted. The Company is currently evaluating the impact that ASU 2024-03 will have on its consolidated financial statements. Note 2 – Acquisition On October 31, 2024, the Company completed the acquisition of all issued and outstanding shares of Electrochem Solutions, Inc., a Massachusetts corporation (“Electrochem”), pursuant to a stock purchase agreement (the “Agreement”) with Greatbatch Ltd., a New York corporation (the “Seller”), dated September 27, 2024 (the “Acquisition”). The Agreement established a purchase price of $ 50,000 for the Acquisition subject to customary working capital adjustments. The Company completed the Acquisition for $ 48,022 in cash, inclusive of working capital adjustments of $ 1,978 . Based in Raynham, Massachusetts and with over forty years of battery technology experience in critical applications, Electrochem designs and manufactures primary lithium 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 manufacturing cost efficiencies. Electrochem brought a blue-chip customer base with little or no overlap with Ultralife’s then existing customers, long-tenured technical resources which we plan to utilize in progressing our global new product initiatives, and a complimentary portfolio of highly engineered Thionyl, Sulfuryl and Bromine Chloride cells and packs which can be commercially cost prohibitive to substitute or switch out. We view this acquisition as an avenue to create highly attractive opportunities to drive revenue growth through heightened cross-selling platforms and extend our reach into underserved adjacent markets that demand uncompromised safety, service, reliability and quality. In addition, the combination of Electrochem and Ultralife creates achievable opportunities for gross margin expansion through the realization of vertical integration, supply chain synergies and lean initiatives. With Electrochem we are increasing our value to our customers and significantly strengthening our competitive position in our end markets. The Company funded the purchase price for the Acquisition through the New Credit Agreement (refer to Note 3). The Acquisition was accounted for in accordance with the accounting treatment of a business combination pursuant to FASB ASC Topic 805, “Business Combinations” (“ASC 805”). Accordingly, the purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values on the acquisition date. The excess of the purchase price over the estimated fair value of the separately identifiable assets acquired and liabilities assumed was allocated to goodwill. Management is responsible for determining the acquisition date fair value of the assets acquired and liabilities assumed, which requires the use of various assumptions and judgments that are inherently subjective. The purchase price allocation presented below reflects all known information about the fair value of the assets acquired and liabilities assumed as of the acquisition date. Accounts receivable $ 5,270 Inventories 9,172 Prepaid expenses and other current assets 251 Property, plant and equipment 20,735 Goodwill 7,558 Other intangible assets 10,500 Other noncurrent assets 237 Accounts payable ( 2,231 ) Accrued compensation and related benefits ( 1,561 ) Accrued expenses and other current liabilities ( 904 ) Deferred tax liability, net ( 748 ) Other noncurrent liabilities ( 257 ) Net assets acquired $ 48,022 53 The goodwill included in the Company’s purchase price allocation presented above represents the value of Electrochem’s assembled and trained workforce, the incremental value that Electrochem engineering and technology will bring to the Company and the revenue growth which is expected to occur over time which is attributable to increased market penetration from future new products and customers. The goodwill acquired in connection with the acquisition is not deductible for income tax purposes. Other intangible assets were valued using the income approach which requires a forecast of all expected future cash flows and the use of certain assumptions and estimates. The following table summarizes the estimated fair value and annual amortization for each of the identifiable intangible assets acquired. Annual Amortization Estimated Fair Value Amortization Period (Years) Year 1 Year 2 Year 3 Year 4 Year 5 Trade name $ 5,300 15 $ 353 $ 353 $ 353 $ 353 $ 353 Customer relationships 5,100 15 340 340 340 340 340 Patents and technology 100 5 20 20 20 20 20 Total $ 10,500 $ 713 $ 713 $ 713 $ 713 $ 713 We acquired right-of-use assets and assumed operating lease liabilities of $ 230 . Right-of-use assets are classified as other noncurrent assets, and current and long-term lease liabilities are classified as accrued expenses and other current liabilities and other noncurrent liabilities, respectively, on the Company’s consolidated balance sheets. The operating results and cash flows of Electrochem are reflected in the Company’s consolidated financial statements from the date of acquisition. Electrochem is included in the Battery & Energy Products segment. For the year ended December 31, 2025, Electrochem contributed revenue of $ 32,599 and pre-tax income of $ 997 , inclusive of a $ 120 increase in cost of products sold for the fair value step-up of acquired finished goods inventory sold during the period, and amortization expense of $ 625 on acquired identifiable intangible assets. During the year ended December 31, 2025, the Company incurred transaction costs and other non-recurring expenses of $ 973 directly attributable to the acquisition, including one-time accounting, legal and due diligence services. These costs are included in selling, general and administrative expense on the consolidated statement of (loss) income and comprehensive (loss) income for the year ended December 31, 2025. For the year ended December 31, 2024, Electrochem contributed revenue of $ 6,062 and pre-tax income of $ 932 , inclusive of a $ 120 increase in cost of products sold for the fair value step-up of acquired finished goods inventory sold during the period, and amortization expense of $ 119 on acquired identifiable intangible assets. During the year ended December 31, 2024, the Company incurred transaction costs and other non-recurring expenses of $ 1,294 directly attributable to the acquisition, including one-time accounting, legal and due diligence services. These costs are included in selling, general and administrative expense on the consolidated statement of (loss) income and comprehensive (loss) income for the year ended December 31, 2024. 54 Note 3 – Debt On October 31, 2024, Ultralife, SWE, CLB, Excell USA, and Electrochem, as borrowers, and certain other subsidiaries of the Company, entered into a new Credit and Security Agreement with KeyBank National Association (“KeyBank” or the “Bank”), as lender and administrative agent (the “New Credit Agreement”). The proceeds of the loans under the New Credit Agreement were used, in part, to repay outstanding indebtedness under the Company’s Amended Credit Agreement. The New Credit Agreement, among other things, provides in its term loan provisions for a 5 -year, $ 55 million senior secured term loan (the “Term Loan” or “Term Loan Facility”). The Term Loan is subject to repayment in quarterly installments commencing March 31, 2025, in amounts as set forth in the New Credit Agreement. Interest is payable on the unpaid principal outstanding under the Term Loan. All amounts of unpaid principal and accrued and unpaid interest remaining due under the Term Loan are scheduled to be paid in full October 31, 2029. Upon closing of the Acquisition on October 31, 2024, the Company borrowed the full amount of the Term Loan Facility. As of December 31, 2025, the Company had $ 50,250 outstanding principal on the Term Loan, $ 4,125 of which is included in current portion of long-term debt on the consolidated balance sheets, and no amounts outstanding on the Revolving Credit Facility. As of December 31, 2025, unamortized debt issuance costs associated with the Term Loan of $ 599 are classified on the consolidated balance sheets as a reduction of long-term debt, and unamortized debt issuance costs associated with the Revolving Credit Facility of $ 414 are classified on the consolidated balance sheets as other noncurrent assets. Debt issuance costs include lender fees and certain costs paid to third parties, including legal and accountant fees, and are amortized to interest expense over the term of the New Credit Agreement. The New Credit Agreement also provides under its revolving credit provisions for revolving loans, letters of credit, and swing loans (“Revolving Credit Facility”). Upon the effectiveness of the New Credit Agreement, any amounts outstanding under letters of credit issued pursuant to the Amended Credit Agreement became issued under the New Credit Agreement. The availability under the Revolving Credit Facility is subject to certain borrowing base limits based on trade receivables and inventories. All unpaid principal and accrued and unpaid interest with respect to the Revolving Credit Facility is due and payable in full on October 31, 2029. The Company may voluntarily prepay principal amounts outstanding under the New Credit Agreement at any time subject to certain advance notifications and other restrictions. In addition to the customary affirmative and negative covenants, the Company must maintain a consolidated fixed charge coverage ratio, as defined in the New Credit Agreement, of equal to or greater than 1.15 to 1.00 for the fiscal quarter ending March 31, 2025, and for each fiscal quarter thereafter, as calculated for the four (4) consecutive fiscal quarters ending on such date, and a consolidated senior leverage ratio, as defined in the New Credit Agreement, not to exceed (i) 3.50 to 1.00 for the fiscal quarters ending March 31, 2025 through December 31, 2025, (ii) 3.25 to 1.00 for the fiscal quarters ending March 31, 2026 through December 31, 2026, (iii) 3.00 to 1.00 for the fiscal quarter ending March 31, 2027 and on the last day of each fiscal quarter thereafter, for the remaining term of the New Credit Agreement. The Company was in full compliance with its covenants under the New Credit Agreement as of December 31, 2025. Borrowings under the New Credit Agreement are secured by substantially all the assets of the Company and certain of its present and future subsidiaries who are or become parties to, or guarantors under the new Credit Agreement. Interest will accrue on outstanding indebtedness under the Term Loan Facility and Revolving Credit Facilities at a variable rate of interest based on designated interest rate benchmarks plus a varying margin determined by reference to the consolidated senior leverage ratio in effect from time to time. Our borrowing rate was 6.16 % as of December 31, 2025. The Company must pay a fee of twenty, twenty-five or thirty basis points (depending on the consolidated senior leverage ratio in effect from time to time) based on the average daily unused availability under the Revolving Credit Facility. The Company must make payments to the extent borrowings exceed the maximum amount then permitted to be borrowed and from the proceeds of certain transactions. Upon the occurrence of an event of default, the outstanding obligations may be accelerated, and the Bank will have other customary remedies including resort to the security interest the Company provided to the Bank. Future minimum principal repayment obligations on our Amended Credit Facilities as of December 31, 2025, are as follows: 2026 $ 4,125 2027 5,500 2028 5,500 2029 35,125 Total $ 50,250 55 Note 4 - Supplemental Balance Sheet Information a. Cash and Restricted Cash The composition of the Company’s cash was as follows. December 31, 2025 2024 Cash $ 9,345 $ 6,854 b. Inventory, Net Inventories are stated at the lower of cost or net realizable value with cost determined under the first-in, first-out (FIFO) method. The composition of inventories, net was: December 31, 2025 2024 Raw materials $ 42,150 $ 36,035 Work in process 4,045 4,501 Finished products 7,813 10,827 Total $ 54,008 $ 51,363 c. Property, Plant and Equipment Major classes of property, plant and equipment consisted of the following: December 31, 2025 2024 Land $ 4,693 $ 4,693 Buildings and leasehold improvements 30,179 30,109 Machinery and equipment 63,556 60,986 Furniture and fixtures 3,195 3,067 Computer hardware and software 8,164 7,990 Construction in progress 3,129 2,077 112,916 108,922 Less: Accumulated depreciation ( 72,519 ) ( 68,437 ) Total $ 40,397 $ 40,485 Depreciation expense was $ 3,981 and $ 3,125 for the years ended December 31, 2025, and 2024, respectively. d. Goodwill and Other Intangible Assets The Company conducted its annual impairment test for goodwill and other indefinite-lived intangible assets as of October 1, 2025. We identified two (2) goodwill reporting units and five (5) indefinite-lived intangible assets for trademarks and trade names. We performed a quantitative impairment assessment of each goodwill reporting unit and indefinite-lived intangible asset. Based on the results of our quantitative impairment assessment, and consideration of qualitative factors, as of our test date and December 31, 2025, no impairments were identified with respect to goodwill, and it was concluded that our trademarks and trade names were fully impaired as a result of the Company’s global rebranding initiative to consolidate all sub-brands under a singular, unified master brand – Ultralife, which launched during the fourth quarter of 2025. 56 The following table summarizes the goodwill activity by segment for the years ended December 31, 2025, and 2024: Battery & Energy Products Communications Systems Total Balance – January 1, 2025 $ 33,513 $ 11,493 $ 45,006 Effect of foreign currency translation 370 - 370 Balance – December 31, 2025 $ 33,883 $ 11,493 $ 45,376 The composition of intangible assets was: December 31, 2025 Cost Accumulated amortization Net Customer relationships $ 18,333 $ 8,360 $ 9,973 Patents and technology 5,762 5,635 127 Other 1,500 667 833 Trade names - - - Trademarks - - - Total other intangible assets $ 25,595 $ 14,662 $ 10,933 December 31, 2024 Cost Accumulated amortization Net Customer relationships $ 18,154 $ 7,296 $ 10,858 Patents and technology 5,690 5,428 262 Other 1,500 591 909 Trade names 9,942 813 9,129 Trademarks 3,399 - 3,399 Total other intangible assets $ 38,685 $ 14,128 $ 24,557 The change in the cost value of other intangible assets is primarily the result of the impairment of our trademarks and trade names during the year ended December 31, 2025 as a result of the Company’s rebranding initiative, as well as the effect of foreign currency translations. Amortization of other intangible assets was included in the following financial statement captions: Year ended December 31, 2025 2024 Selling, general and administrative expense $ 1,395 $ 929 Research and development expense 123 103 Total $ 1,518 $ 1,032 Future amortization expense of amortizable intangible assets will be approximately $ 1,066 , $ 1,066 , $ 1,066 , $ 1,046 and $ 1,029 for the five fiscal years ending December 31, 2026, through 2030, respectively. 57 Note 5 - Commitments and Contingencies a. Legal Matters We are subject to legal proceedings and claims that arise from time to time in the ordinary course of business. We believe that the final disposition of any such matters of which we are currently aware will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, recognizing that legal matters are subject to inherent uncertainties, there exists the possibility that ultimate resolution of current or future legal matters could have a material adverse impact on the Company’s financial position, results of operations or cash flows. We are not aware of any such situations at this time. b. Indemnity Our organizational documents provide that our directors or officers will be reimbursed for all expenses, to the fullest extent permitted by law arising out of their performance. c. Purchase Commitments As of December 31, 2025, we have made commitments to purchase approximately $ 321 of production machinery and equipment. d. China Our operating facility in China presents 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 application and interpretation of local laws and enforcement of contract and intellectual property rights, currency restrictions, currency exchange controls, fluctuations of currency, 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, acts of terrorism, or the threat of boycotts, other civil disturbances and the possible impact of the imposition of tariffs by the U.S. Government on 9-volt batteries that we manufacture in China as well as any retaliating trade policies or restrictions. Any such disruptions could depress our earnings and have other material adverse effects on our business, financial condition and results of operations. e. Product Warranties 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 products. Warranty costs expected to be incurred are estimated based on the Company’s experience and recorded as costs of products sold. Standard warranty costs are recognized upon product sale. Extended warranty costs are recognized over the term of the contract. The following table summarizes the warranty activity for the years ended December 31, 2025, and 2024: 2025 2024 Accrued warranty obligations – beginning $ 887 $ 547 Accruals for warranties issued 656 1,149 Settlements made ( 417 ) ( 809 ) Accrued warranty obligations - ending $ 1,126 $ 887 Note 6 – Stock-Based Compensation We recorded non-cash stock compensation expense in each period as follows: Year ended December 31, 2025 2024 Stock options $ 770 $ 640 Restricted stock 165 58 Total $ 935 $ 698 58 We have various stock-based employee compensation plans, for which compensation cost is recognized in the financial statements. The cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award). Our stockholders have approved various equity-based plans that permit the grant of stock options, restricted stock and other equity-based awards. In addition, our stockholders have approved the grant of stock options outside of these plans. On July 16, 2024, our stockholders approved the 2024 Long-Term Incentive Plan (“2024 LTIP”) as the successor plan to the 2014 Long-Term Incentive Plan (“2014 LTIP”) that expired on June 2, 2024. Under the 2024 LTIP, a total of 2,000,000 shares of common stock were made available for grant of awards. Of the total number of shares of common stock available for awards under the 2024 LTIP, no more than 800,000 shares of common stock may be used for awards other than stock options and stock appreciation rights. Grants under the 2024 LTIP may be awarded through July 15, 2034. Stock options granted under the 2024 LTIP and 2014 LTIP are either Incentive Stock Options (“ISOs”) or Non-Qualified Stock Options (“NQSOs”). Key employees are eligible to receive ISOs and NQSOs; however, directors and consultants are eligible to receive only NQSOs. Stock options vest in equal installments on the first, second and third anniversaries of the grant date and expire on the seventh anniversary of the grant date. As of December 31, 2025, there were 242,780 stock options outstanding under the 2024 LTIP and 724,571 stock options outstanding under the 2014 LTIP. As of December 31, 2025, there was $ 384 of total unrecognized compensation costs related to outstanding stock options, which we expect to recognize over a weighted average period of 1.3 years. We use the Black-Scholes option-pricing model to estimate fair value of stock options. There were no stock options awarded for the year ended December 31, 2025. The following weighted average assumptions were used to value options granted during the year ended December 31, 2024: Year ended December 31, 2025 2024 Risk-free interest rate - 4.3 % Volatility factor - 58 % Weighted average expected life (years) - 4.7 Forfeiture rate - 10.0 % Dividends - 0.0 % We calculate expected volatility for stock options by taking an average of historical volatility over the expected term. The computation of expected term was determined based on historical experience of similar awards and consideration of the contractual terms of the stock-based awards and vesting schedules. The interest rate for periods within the contractual life of the award is based on the U.S. Treasury yield in effect at the time of grant. Forfeiture rates are calculated by dividing unvested shares forfeited by beginning shares outstanding. The pre-vesting forfeiture rate is calculated yearly and is determined based on historical experience. The following tables summarize data for the stock options issued by us: Year ended December 31, 2025 Number of shares Weighted average exercise price per share Weighted average remaining contractual term Aggregate intrinsic value Shares under option – January 1 1,106,436 $ 7.15 Options granted - - Options exercised ( 15,982 ) 6.10 Options forfeited or expired ( 123,103 ) 8.87 Shares under option – December 31 967,351 $ 6.95 3.80 $ 83 Vested and expected to vest - December 31 911,744 $ 6.92 3.69 $ 81 Options exercisable – December 31 737,972 $ 6.78 3.23 $ 76 59 Year ended December 31, 2024 Number of shares Weighted average exercise price per share Weighted average remaining contractual term Aggregate intrinsic value Shares under option – January 1 1,250,595 $ 7.10 Options granted 261,520 7.85 Options exercised ( 298,293 ) 7.08 Options forfeited or expired ( 107,386 ) 8.41 Shares under option – December 31 1,106,436 $ 7.15 4.53 $ 741 Vested and expected to vest - December 31 1,003,942 $ 7.17 4.36 $ 674 Options exercisable – December 31 625,826 $ 7.18 3.18 $ 477 The following table represents additional information about stock options outstanding at December 31, 2025: Option outstanding Options exercisable Range of exercise prices Number of outstanding options Weighted-average remaining contractual life Weighted- average exercise price Number of options exercisable Weighted- average exercise price $ 4.07 - $ 6.51 301,804 2.94 $ 5.69 297,638 $ 5.72 $ 6.84 - $ 6.97 291,853 4.16 6.88 228,453 6.89 $ 7.86 - $ 7.86 242,780 5.95 7.86 80,967 7.86 $ 8.25 - $ 8.50 130,914 1.01 8.34 130,914 8.34 $ 4.07 - $ 8.50 967,351 3.80 $ 6.95 737,972 $ 6.78 The weighted average fair value of options granted during the year ended December 31, 2024, was $ 4.08 . There were no stock options awarded during the year ended December 31, 2025. The total intrinsic value of options (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) exercised during the years ended December 31, 2025, and 2024 was $ 24 and $ 1,007 , respectively. Cash received from stock option exercises under our stock-based compensation plans for the years ended December 31, 2025, and 2024 was $ 98 and $ 1,999 , respectively. Restricted stock awards vest in equal annual installments over three years. The Company granted restricted stock awards of 18,200 shares and 35,700 shares for the years ended December 31, 2025, and 2024, respectively. The average grant date fair value of restricted stock awards was $ 5.40 and $ 8.71 for the years ended December 31, 2025, and 2024, respectively. As of December 31, 2025, there was $ 180 of total unrecognized compensation costs related to outstanding restricted shares. There were 1,709,020 shares of common stock available for future issuance under equity compensation plans as of December 31, 2025. 60 Note 7 - Income Taxes For the years ended December 31, 2025, and 2024, we recognized an income tax (benefit) provision of ($ 2,447 ) and $ 1,892 , respectively. Year ended December 31, 2025 2024 Current: Federal $ 12 $ - State 48 50 Foreign 34 610 94 660 Deferred: Federal ( 1,802 ) 1,313 State ( 248 ) 58 Foreign ( 491 ) ( 139 ) ( 2,541 ) 1,232 Total income tax (benefit) provision $ ( 2,447 ) $ 1,892 Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows: December 31, 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 4,809 $ 5,817 Research and development 5,448 4,894 Tax credit carryforwards 3,448 3,180 Inventory reserves 2,991 2,859 Intangible assets 610 1,678 Lease Liability 728 905 Accrued expenses and other 1,318 1,542 Total deferred tax assets 19,352 20,875 Valuation allowance for deferred tax assets ( 2,530 ) ( 2,404 ) Net deferred tax assets 16,822 18,471 Deferred tax liabilities: Intangible assets ( 5,619 ) ( 9,480 ) Property, plant and equipment ( 980 ) ( 1,113 ) Right of use asset ( 729 ) ( 908 ) Total deferred tax liabilities ( 7,328 ) ( 11,501 ) Net deferred tax assets $ 9,494 $ 6,970 Net deferred tax assets (liabilities) are comprised of the following balance sheet amounts: December 31, 2025 2024 Deferred tax assets, net $ 10,494 $ 8,413 Deferred tax liabilities ( 1,000 ) ( 1,443 ) $ 9,494 $ 6,970 For financial reporting purposes, net (loss) income from continuing operations before income taxes is as follows: Year ended December 31, 2025 2024 United States $ ( 5,863 ) $ 7,044 Foreign ( 2,535 ) 1,257 $ ( 8,398 ) $ 8,301 61 The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to income from continuing operations before income taxes as follows under the guidance in ASU 2023-09 the Company adopted on a prospective basis: Year ended December 31, 2025 Federal statutory income tax rate $ ( 1,763 ) 21.0 % State and local income taxes, net of federal income tax effect (a) ( 204 ) 2.4 Nontaxable or nondeductible items: Equity compensation 136 ( 1.6 ) Nontaxable refund credit ( 296 ) 3.5 Other 14 ( 0.2 ) Other reconciling items ( 127 ) 1.5 Tax credits: R&D ( 267 ) 3.2 Cross-border tax laws: ( 20 ) 0.2 Foreign tax effects: China R&D deduction ( 103 ) 1.2 Other ( 8 ) 0.1 Hong Kong Tax rate differential 131 ( 1.5 ) Canada Tax rate differential 164 ( 2.0 ) Provincial taxes ( 303 ) 3.6 Change in functional currency 170 ( 2.0 ) Other 20 ( 0.2 ) Other foreign jurisdictions 9 ( 0.1 ) Effective income tax rate $ ( 2,447 ) 29.1 % a. State taxes and state tax adjustments in Florida and Virginia made up the majority (greater than 50%) of the tax effect in this category. The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to income from continuing operations before income taxes as follows under the prior guidance: Year ended December 31, 2024 Statutory income tax rate 21.0 % Increase (decrease) in tax provision resulting from: Equity compensation 0.5 Global intangible low-taxed income 0.7 China R&D deduction ( 1.1 ) Income tax credits ( 3.6 ) Tax rate changes ( 0.1 ) Foreign exchange loss 0.8 Foreign tax rates 2.3 States taxes 1.1 Transaction costs 0.7 Other 0.5 Effective income tax rate 22.8 % 62 Upon adoption of ASU 2023-09, as described in Note 1, cash paid for income taxes, net of refunds was as follows: Year ended December 31, 2025 Federal $ 34 State 49 Foreign: Canada 126 China - United Kingdom ( 91 ) India 29 Total foreign 64 Total income taxes paid, net of refunds $ 147 As of December 31, 2025, it was concluded that it is more likely than not that our U.S. deferred tax assets will be fully realized based on management’s assessment. In evaluating the realizability of our U.S. deferred tax assets, management considered all available evidence, both positive and negative, weighted based on objective verifiability. Our assessment also considered our ability to fully utilize before expiration our domestic net operating loss carryforwards, which begin to expire in 2031, and our federal general business tax credit carryforwards, which begin to expire in 2028. As of December 31, 2025, our federal net operating loss carryforwards, state net operating loss carryforwards, and federal general business tax credit carryforwards were $ 8,800 , $ 5,100 and $ 3,400 , respectively. As of December 31, 2025, for certain past operations in the U.K., we continue to report a valuation allowance for net operating loss carryforwards of approximately $ 10,100 , nearly all of which can be carried forward indefinitely. Management has concluded that utilization of the U.K. net operating losses may be limited due to the change in the past U.K. operation, and that they cannot currently be used to reduce taxable income of our other U.K. subsidiary, Accutronics Ltd. There are no other deferred tax assets related to the past U.K. operations. As of December 31, 2025, we have not recognized a valuation allowance against our other foreign deferred tax assets, including net operating loss carryforwards of $ 1,300 which expire in 2029 through 2035, as we believe that it is more likely than not that they will be fully realized. There were no unrecognized tax benefits related to uncertain tax positions at December 31, 2025, and 2024. As of December 31, 2025, the Company maintains its assertion that all foreign earnings will be indefinitely reinvested in those operations, other than earnings generated in the U.K. As a result of our operations, we file income tax returns in various jurisdictions including U.S. federal, U.S. state and foreign jurisdictions. We are routinely subject to examination by taxing authorities in these various jurisdictions. Our U.S. tax matters for 2022 through 2024 remain subject to IRS examination. Our U.S. tax matters for 2005-2007, 2009, and 2011-2015 also remain subject to IRS examination due to the remaining availability of net operating loss carryforwards generated in those years. Our U.S. tax matters for 2015 through 2024 remain subject to examination by various state and local tax jurisdictions. Our tax matters for the years 2015 through 2024 remain subject to examination by the respective foreign tax jurisdiction authorities. 63 Note 8 – Operating Leases The Company has operating leases predominantly for operating facilities. As of December 31, 2025, the remaining lease terms on our operating leases range from approximately one ( 1 ) year to seven ( 7 ) years. Lease terms include renewal options reasonably certain of exercise. There is no transfer of title or option to purchase the leased assets upon expiration. There are no residual value guarantees or material restrictive covenants. The components of lease expense for the current and prior-year comparative periods were as follows: Year ended December 31, 2025 2024 Operating lease cost $ 1,166 $ 1,101 Variable lease cost 93 100 Total lease cost $ 1,259 $ 1,201 Supplemental cash flow information related to leases was as follows: Year ended December 31, 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 1,151 $ 1,108 Right-of-use assets obtained in exchange for lease liabilities: $ 57 $ 1,706 Supplemental balance sheet information related to leases was as follows: December 31, Balance Sheet Classification 2025 2024 Assets: Operating lease right-of-use asset Other noncurrent assets $ 3,344 $ 4,153 Liabilities: Current operating lease liability Accrued expenses and other current liabilities $ 976 $ 1,138 Operating lease liability, net of current portion Other noncurrent liabilities 2,357 2,998 Total operating lease liability $ 3,333 $ 4,136 Weighted-average remaining lease term (years) 4.1 4.5 Weighted-average discount rate 7.1 % 6.7 % Future minimum lease payments as of December 31, 2025, are as follows: Maturity of Operating Lease Liabilities 2026 $ 1,013 2027 944 2028 933 2029 580 2030 156 Thereafter 196 Total lease payments $ 3,822 Less: Imputed interest ( 489 ) Present value of remaining lease payments $ 3,333 64 Note 9 - 401(k) Retirement Benefit Plan We maintain a defined contribution 401(k) plan covering substantially all employees. Employees can contribute a portion of their salary or wages as prescribed under Section 401(k) of the Internal Revenue Code and, subject to certain limitations, we may, at the discretion of our Board of Directors, authorize an employer contribution based on a portion of the employees' contributions. For the years ended December 31, 2025, and 2024, the Company matched 100 % on the first 3 % and 50 % on the next 2 % contributed by the employee, or a maximum of 4 % of the employee’s income. For 2025 and 2024, we contributed $ 1,203 and $ 771 , respectively, to the 401(k) plan. Note 10 - Business Segment Information Operating segments represent a component of the Company that engages in business activities from which it may recognize revenues and incur expenses whose operating results are regularly reviewed by the public entity’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Once operating segments are identified, the Company determined which of those operating segments are required to be presented as reportable segments based on the quantitative thresholds. We structure our operations primarily around the products we sell and report our financial results in following two operating segments: Battery & Energy Products and Communications Systems. The Battery & Energy Products segment includes Lithium 9-volt, cylindrical and various 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. Our Chief Operating Decision Maker (“CODM”) is Mike Manna, President & Chief Executive Officer. Both of our business segments are regularly reviewed by the CODM through weekly revenue, gross margin and consolidated financial forecast updates, bi-weekly business and financial reviews to assess business performance, top priorities, utilization of resources and to regularly communicate with segment management, who are part of the CODM’s executive leadership team, and monthly meetings with the executive leadership team. In his role as CODM, Mr. Manna is deeply involved in business operations through daily updates by the segment management and ongoing financial, revenue and operations discussions. The primary financial measures used by the CODM to monitor and evaluate the performance of the operating segments is segment contribution, as defined by gross profit less direct research and development (“R&D”) and direct selling, general and administrative (“SG&A”) expenses. This metric is used as a consistent benchmark for comparison across reporting periods. The significant segment expenses regularly reviewed by the CODM and included in segment contribution are cost of products sold and direct R&D and SG&A expenses. There are no other segment items included in segment contribution beyond the significant expenses disclosed. 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 business segments. 2025: Battery & Energy Products Communications Systems Corporate Total Revenue $ 178,042 $ 13,117 $ - $ 191,159 Cost of products sold ( 135,402 ) ( 9,736 ) - ( 145,138 ) Gross profit 42,640 3,381 - 46,021 Direct R&D and SG&A expenses ( 22,417 ) ( 4,671 ) - ( 27,088 ) Segment contribution 20,223 ( 1,290 ) - 18,933 Corporate G&A expenses - - ( 24,835 ) ( 24,835 ) Operating loss ( 5,902 ) Other expense, net ( 2,496 ) ( 2,496 ) Income tax provision 2,447 2,447 Non-controlling interest 53 53 Net loss attributable to Ultralife $ ( 5,898 ) Total assets $ 165,592 $ 27,201 $ 24,119 $ 216,912 Capital expenditures $ 3,872 $ - $ - $ 3,872 Goodwill $ 33,883 $ 11,493 $ - $ 45,376 Depreciation and amortization of intangible assets $ 5,115 $ 231 $ 153 $ 5,499 Stock-based compensation $ 602 $ 97 $ 236 $ 935 65 2024: Battery & Energy Products Communications Systems Corporate Total Revenue $ 144,081 $ 20,375 $ - $ 164,456 Cost of products sold ( 107,764 ) ( 14,378 ) - ( 122,142 ) Gross profit 36,317 5,997 - 42,314 Direct R&D and SG&A expenses ( 17,320 ) ( 4,806 ) - ( 22,126 ) Segment contribution 18,997 1,191 - 20,188 Corporate G&A expenses - - ( 10,223 ) ( 10,223 ) Operating profit 9,965 Other expense, net ( 1,664 ) ( 1,664 ) Income tax provision ( 1,892 ) ( 1,892 ) Non-controlling interest ( 97 ) ( 97 ) Net income attributable to Ultralife $ 6,312 Total assets $ 173,954 $ 26,876 $ 19,621 $ 220,451 Capital expenditures $ 1,261 $ 513 $ 158 $ 1,932 Goodwill $ 33,513 $ 11,493 $ - $ 45,006 Depreciation and amortization of intangible assets $ 3,676 $ 237 $ 244 $ 4,157 Stock-based compensation $ 383 $ 96 $ 219 $ 698 Long-lived assets (comprised of property, plant and equipment; goodwill; and other intangible assets) held outside the U.S., principally in Canada, United Kingdom and China, were $ 19,777 and $ 22,306 , net of accumulated depreciation and amortization, as of December 31, 2025, and 2024, respectively. The following tables disaggregate our business segment revenues by major source and geography. Commercial and Government/Defense Revenue Information: Year ended December 31, 2025: Total Revenue Commercial Government/ Defense Battery & Energy Products $ 178,042 $ 125,295 $ 52,747 Communications Systems 13,117 - 13,117 Total $ 191,159 $ 125,295 $ 65,864 66 % 34 % Year ended December 31, 2024: Total Revenue Commercial Government/ Defense Battery & Energy Products $ 144,081 $ 102,082 $ 41,999 Communications Systems 20,375 - 20,375 Total $ 164,456 $ 102,082 $ 62,374 62 % 38 % 66 U.S. and Non-U.S. Revenue Information 1 : Year ended December 31, 2025: Total Revenue United States Non-United States Battery & Energy Products $ 178,042 $ 125,903 $ 52,139 Communications Systems 13,117 11,174 1,943 Total $ 191,159 $ 137,077 $ 54,082 72 % 28 % Year ended December 31, 2024: Total Revenue United States Non-United States Battery & Energy Products $ 144,081 $ 82,227 $ 61,854 Communications Systems 20,375 14,813 5,562 Total $ 164,456 $ 97,040 $ 67,416 59 % 41 % 1 Sales classified to U.S. include shipments to U.S.-based prime contractors which in some cases may serve non-U.S. projects. 67 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.