Ultralife reports $2.37 million net income for Q3 2026

Cover page 3 changes

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For the quarterly period ended June September 30, 2026

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(Name of each exchange on which registered)

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As of August 3, November 2, 2026, the registrant had 16,663,269 16,668,049 shares of common stock outstanding.

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Consolidated Financial Statements (unaudited) 4 changes

Consolidated Balance Sheets as of June September 30, 2026 and December 31, 2025

Consolidated Statements of Income and Comprehensive Income for the Three and Six-Month Nine-Month Periods Ended June September 30, 2026 and June September 30, 2025

Consolidated Statements of Cash Flows for the Six-Month Nine-Month Periods Ended June September 30, 2026 and June September 30, 2025

Consolidated Statements of Changes in Stockholders' Equity for the Three and Six-Month Nine-Month Periods Ended June September 30, 2026 and June September 30, 2025

Financial statements 28 changes

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Trade accounts receivable, net of allowance for expected credit losses of $ 462 466 and $ 457 , respectively

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Common stock – par value $ .10 per share; authorized 40,000,000 shares; issued – 21,099,383 21,100,426 shares at June September 30, 2026 and 21,092,617 shares at December 31, 2025; outstanding – 16,663,269 16,664,312 shares at June September 30, 2026 and 16,656,503 shares at December 31, 2025

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Treasury stock - at cost; 4,436,114 shares at June September 30, 2026 and 4,436,114 shares at December 31, 2025 ( 21,492 ( 21,492

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Six-month Nine-month period ended

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Operating income (loss)

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Other comprehensive income:

Income (loss) before income taxes

Income tax provision (benefit)

Net (loss) income (loss) attributable to non-controlling interest

Net income (loss) attributable to Ultralife Corporation

Other comprehensive (loss) income:

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Comprehensive income (loss) attributable to Ultralife Corporation ( 1,458

Net income (loss) per share attributable to Ultralife common stockholders – basic (.07

Net income (loss) per share attributable to Ultralife common stockholders – diluted (.07

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Six-month Nine-month period ended

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Proceeds from sale of equipment

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Borrowings on credit facilities

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Net cash provided by (used in) financing activities

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Balance – June 30, 2025

Balance – September 30, 2025

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Balance – March 31, 2025

Balance – September 30, 2026

Balance – June 30, 2026 2025

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Balance – March 31, 2026

Balance – September 30, 2025

Balance – June 30, 2025 2026

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Balance – June 30, 2026

Balance – September 30, 2026

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Notes to the financial statements 64 changes

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During the second quarter of 2026, the Company received cash refunds of previously paid IEEPA tariffs following legal developments related to the validity of certain IEEPA tariffs and the implementation of refund procedures by U.S. Customs and Border Protection. The Company accounts for IEEPA tariff refunds as gain contingencies and recognizes such amounts only when the related contingencies have been resolved and the amounts are realized or realizable. Accordingly, during the three- and six-month periods nine-month period ended June September 30, 2026, the Company recognized a net refund of $1,102 $ 1,102 as a reduction of cost of products sold, representing the recovery of tariff costs previously recognized in earnings. The tariff costs related to the refund recognized as a reduction of cost of products sold were not charged to customers and therefore not payable to customers. Additional refunds received related to tariff costs capitalized in inventory on hand at June September 30, 2026 were recorded as a reduction of inventory and will be recognized in cost of products sold as the related inventory is sold in future periods. The refund was received in cash during the second quarter of 2026.

The Company continues to evaluate potential claims for additional IEEPA tariff refunds. Additional recoveries remain subject to governmental review, claim validation, administrative processing and ongoing legal proceedings. Accordingly, as of June September 30, 2026, the Company had not recorded a receivable or recognized any amounts related to potential future IEEPA tariff recoveries as realization of such amounts is not considered sufficiently probable at this time.

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As of June September 30, 2026, the Company had $ 45,125 outstanding principal on the Term Loan, $ 1,750 3,125 of which is included in current portion of long-term debt on the consolidated balance sheets, and no amounts $ 5,875 outstanding on the Revolving Credit Facility. As of June September 30, 2026, unamortized debt issuance costs associated with the Term Loan of $ 521 482 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 $ 360 333 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.

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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 June September 30, 2026.

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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 total leverage ratio in effect from time to time. Our borrowing rate was 6.11 6.37 % as of June September 30, 2026.

The Company must pay a fee of twenty , twenty-five or thirty basis points (depending on the consolidated senior total leverage ratio in effect from time to time) based on the average daily unused availability under the Revolving Credit Facility.

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Future minimum principal repayment obligations on our New Credit Agreement as of June September 30, 2026 are as follows:

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For the three-month period ended June September 30, 2026, there were 295,455 200,539 outstanding stock options and 19,543 19,043 unvested restricted stock awards included in the calculation of diluted weighted average shares outstanding, as such securities were dilutive, resulting in 55,268 33,430 potential common shares included in the calculation of diluted EPS. For the comparable three-month period ended June September 30, 2025, there were 214,971 no outstanding stock options and 35,486 unvested restricted stock awards included in the calculation of diluted weighted average shares outstanding as such securities were dilutive, resulting in 21,856 and no potential common shares included in the calculation of diluted EPS, as no securities were dilutive.

There were 649,990 644,533 outstanding stock options for the three-month period ended June September 30, 2026, and 783,093 384,124 outstanding stock options for the comparable three-month period ended June September 30, 2025, that were not included in the calculation of diluted weighted average shares outstanding as the effect would be anti-dilutive.

For the six-month nine-month period ended June September 30, 2026, there were 203,705 210,539 outstanding stock options and 19,543 19,043 unvested restricted stock awards included in the calculation of diluted weighted average shares outstanding, resulting in 44,992 42,619 potential common shares included in the calculation of diluted EPS. For the comparable six-month nine-month period ended June September 30, 2025, there were 214,971 304,054 outstanding stock options and 35,486 34,819 unvested restricted stock awards included in the calculation of diluted weighted average shares outstanding, resulting in 37,237 60,915 potential common shares included in the calculation of diluted EPS.

There were 741,740 634,533 and 783,093 683,043 outstanding stock options for the six-month nine-month periods ended June September 30, 2026 and 2025, respectively, not included in the calculation of diluted weighted average shares outstanding as the effect would be anti-dilutive.

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The fair value of financial instruments approximated their carrying values at June September 30, 2026, and December 31, 2025. 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.

The composition of the Company's cash was as follows:

During the third quarter of 2026, the Company's Newark facility experienced a fire, and the Company expects the related losses to be covered by insurance, subject to a $ 250 deductible. As of September 30, 2026, the Company received a $ 1,000 advance payment from its insurance provider to cover costs for restoration efforts related to the fire. Restricted cash is included as a component of the cash balance for purposes of the consolidated statements of cash flows.

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Six-month Nine-month period ended

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The following table summarizes the goodwill activity by segment for the six-month nine-month period ended June September 30, 2026:

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Balance – June 30, 2026

Balance – September 30, 2026

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at September 30, 2026

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The change in the cost of total intangible assets from December 31, 2025, to June September 30, 2026, is the effect of foreign currency translations.

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Six-month Nine-month period ended

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Six-month Nine-month period ended

We have stock options outstanding from various stock-based employee compensation plans for which we record compensation cost relating to share-based payment transactions in our financial statements. As of June September 30, 2026, there was $ 232 154 of total unrecognized compensation cost related to outstanding stock options, which is expected to be recognized over a weighted average period of 0.8 0.7 years.

The following table summarizes stock option activity for the six-month nine-month period ended June September 30, 2026:

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Outstanding at June September 30, 2026

Vested and expected to vest at June September 30, 2026

Exercisable at June September 30, 2026

Cash received from stock option exercises under our stock-based compensation plans for the three-month periods ended June September 30, 2026, and June September 30, 2025, was $ 36 6 and $ 61 37 , respectively. Cash received from stock option exercises under our stock-based compensation plans for the six-month nine-month periods ended June September 30, 2026, and June September 30, 2025, was $ 36 42 and $ 61 98 , respectively.

Restricted stock awards vest in equal annual installments over three ( 3 ) years. Unrecognized compensation cost related to unvested restricted shares at June September 30, 2026, and 2025, respectively, was $ 59 44 and $ 171 126 .

Our effective tax rate for the six-month periods nine-month period ended June September 30, 2026, and 2025 was 11.9 12.6 % and 22.8 16.9 %, respectively. The period-over-period change was primarily attributable to the geographic mix of our operating results and other income recognized on nontaxable refundable tax credits under the 45X Advanced Manufacturing Production Credit.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the United States which includes a broad range of tax provisions affecting businesses. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company has included the estimated impacts of the bill in the consolidated financial statements for the three-month three and six-month nine-month periods ended June September 30, 2026.

As of December 31, 2025, our federal net operating loss ("NOL") carryforwards, state net operating loss carryforwards, and federal general business tax credit carryforwards were $ 8,800 9,400 , $ 5,100 and $ 3,400 , respectively. Our domestic net operating loss carryforwards begin to expire in 2031. Our federal general business tax credit carryforwards begin to expire in 2028. As of June September 30, 2026, management has concluded it is more likely than not that these domestic NOL and credit carryforwards will be fully utilized.

As of June September 30, 2026, for certain past operations in the U.K., we continue to report a valuation allowance for NOL carryforwards of approximately $ 10,000 , nearly all of which can be carried forward indefinitely. Utilization of the net operating losses may be limited due to the change in the past U.K. operation and cannot currently be used to reduce taxable income at our other U.K. subsidiary, Accutronics Ltd. There are no other deferred tax assets related to the past U.K. operations.

As of June September 30, 2026, we have not recognized a valuation allowance against our other foreign deferred tax assets, as realization is considered to be more likely than not.

As of June September 30, 2026, the Company maintains its assertion that all foreign earnings will be indefinitely reinvested in those operations, other than earnings generated in the U.K.

There were no unrecognized tax benefits related to uncertain tax positions at June September 30, 2026, and December 31, 2025.

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 thru 2024 2025 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 thru 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.

The Company has operating leases predominantly for operating facilities. As of June September 30, 2026, the remaining lease terms on our operating leases range from approximately one ( 1 ) year to six ( 6 ) 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.

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Three-month periods ended

Nine-month periods ended

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Six-month Nine-month period ended June 30,

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Future minimum lease payments as of June September 30, 2026, are as follows:

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Six-month period ended June 30,

As of June September 30, 2026, we have made commitments to purchase approximately $ 301 734 of production machinery and equipment.

We estimate future warranty costs to be incurred for product failure rates, material usage and service costs in the development of our warranty obligations. Estimated future costs are based on actual past experience and are generally estimated as a percentage of sales over the warranty period. Changes in our product warranty liability during the first six months of nine-month periods ended September 30, 2026 and 2025 were as follows:

Nine-month period ended September 30,

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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 three-month three and six-month nine-month periods ended June September 30, 2026, revenue recognized on extended warranties was $ 75 74 and $ 149 223 , respectively. For the three and nine-month periods ended September 30, 2025, revenue recognized on extended warranties was $ 74 and $ 223 , respectively.

As of June September 30, 2026, there was deferred revenue on extended warranty contracts of $ 706 632 , comprised of $ 298 278 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 $ 408 354 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.

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As of June September 30, 2026, and December 31, 2025, 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.

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Three-month period ended June September 30, 2026:

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Three-month period ended June September 30, 2025:

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Income tax provision

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Net income loss attributable to Ultralife Corporation

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Six-month Nine-month period ended June September 30, 2026:

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Six-month Nine-month period ended June September 30, 2025:

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Three-month period ended June September 30, 2026:

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Three-month period ended June September 30, 2026:

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Six-month Nine-month period ended June September 30, 2026:

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Six-month Nine-month period ended June September 30, 2025:

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As previously announced, on October 27, 2026, Ultralife entered into an Agreement and Plan of Merger with EnerSys (NYSE: ENS) under which upon closing EnerSys will acquire Ultralife in an all-cash transaction valued at approximately $ 320 million, including the assumption of debt. Under the terms of the merger agreement, EnerSys, through a subsidiary, has commenced a tender offer to acquire all of the outstanding shares of Ultralife common stock at a price of $ 16.00 per share in cash at closing. The transaction is subject to customary closing conditions, including the tender of at least a majority of the outstanding shares of Ultralife's common stock and receipt of applicable regulatory approvals, and is expected to close in the first quarter of calendar year 2027. Upon completion of the transaction, Ultralife Corporation's common stock will no longer be listed on any public market.

Forward-looking statements 102 changes

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As part of our strategic evolution, in October 2025, Ultralife decided to undergo a comprehensive rebranding initiative that consolidates all sub-brands under a singular, unified master brand – Ultralife. This move reflects our commitment to clarity, consistency and amplified brand equity across all markets. By streamlining our global identity, we aim to strengthen customer recognition, enhance operational efficiency and better align to our customers' needs with a singular, powerful brand narrative. To this end, the Accutronics, Southwest Electronic Energy, Excell Battery, McDowell Research and AMTI brands will no longer be emphasized. The Electrochem brand will remain, but as a product brand on select primary cells. We believe this transformation will position Ultralife for ongoing growth and stronger market impact as we continue to lead in mission critical battery and RF power solutions. This rebranding initiative had a non-cash impact of $12,181 to reduce reduction in the value of our tradename and trademark intangible assets recorded during our 2025 fourth quarter.

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Consolidated revenues of $47,943 for the three-month period ended June 30, 2026, decreased by $618 or 1.3%, from $48,561 for the three-month period ended June 30, 2025, reflecting a 4.7% decline in commercial sales partially offset by a 5.0% increase in government/defense sales.

Gross profit was $13,866, or 28.9% of revenue, for the three-month period ended June 30, 2026, compared to $11,601, or 23.9% of revenue, for the same quarter a year ago. The 500-basis point increase primarily resulted from favorable sales product mix and the net refund of IEEPA tariffs which had been recognized as net costs in previous periods.

Operating income for the three-month period ended June 30, 2026, was $3,437, or 7.2% of revenues, compared to $2,256, or 4.6% of revenues, for the year-earlier period. The increase in operating income primarily resulted from the favorable product mix for our Battery & Energy Products and Communications Systems segments and the net refund of IEEPA tariffs previously paid and recognized as costs in prior periods, partially offset by an increase in one-time, non-recurring costs.

We remain intently focused on converting our long-term new product development efforts into revenue, maintaining a strong focus on operational efficiency initiatives to improve our gross margins and advancing vertical integration in the oil & gas segment. We believe these improvements, along with execution and replenishment of our backlog, position Ultralife to deliver sustainable profitable growth generating incremental cash flow for 2026 to further reduce debt, support strategic capital expenditures, continue our investment in new product development and maximize the value of our global brand.

Consolidated revenues of $48,271 for the three-month period ended September 30, 2026, increased by $4,900 or 11.3%, over $43,371 for the three-month period ended September 30, 2025, reflecting an increase in government/defense sales of 42.5%, partially offset by a decrease in commercial sales of 5.8%.

Gross profit was $13,293, or 27.5% of revenue, for the three-month period ending September 30, 2026, compared to $9,619, or 22.2% of revenue, for the same quarter a year ago. The 530-basis point increase primarily resulted from progress in improving manufacturing efficiencies and vertical integration of our thionyl-chloride cells as well as favorable product mix.

Operating expenses were $10,429 $10,107 for the three-month period ending June September 30, 2026, compared to $9,345 $10,570 for the three-month period ended June September 30, 2025. reflecting The $463 or 4.4% reduction reflects a decrease in one-time, non-recurring costs primarily related to the closing of our Calgary facility and certain consulting costs to help expedite our gross margin improvement in the year-earlier period, partially offset by an increase in new product development costs related to continued investment in our product offering. and certain one-time, non-recurring costs which amounted to $884 for the current period which represents a $558 increase over the non-recurring costs incurred in the prior year. Operating expenses for the 2026 three-month period were 21.8% 20.9% of revenue compared to 19.2% 24.4% of revenue for the year-earlier three-month period.

Operating income (loss) for the three-month period ended September 30, 2026, was $3,186, or 6.6% of revenues, compared to ($951), or (2.2%) of revenues, for the year-earlier period. The $4,137 improvement resulted from the sales growth of 11.3%, gross margin improvement of 530 basis points and leveraged spending by 350 basis points.

Other expense for the second third quarter of 2026 was $451 $441 compared to $1,143 $800 for the year-earlier quarter. The decrease for the 2026 period primarily reflects lower interest expense for the financing of our Electrochem acquisition with the continued paydown of the related term loan, and the current period estimated portion of a refundable tax credit for certain qualifying battery cells and packs we manufacture under the 45X Advanced Manufacturing Production Tax Credit, established by the Inflation Reduction Act and running through 2032. and more favorable foreign currency rates in the current period.

Net income (loss) attributable to Ultralife Corporation was $2,543, $2,368, or $0.15 $0.14 per share – basic and diluted, for the three-month period ended June September 30, 2026, compared to $879, ($1,220), or $0.05 ($0.07) per share – basic and diluted, for the three-month period ended June September 30, 2025.

Adjusted EBITDA, defined as net income attributable to Ultralife Corporation before net interest expense, provision (benefit) for income taxes, depreciation and amortization, and stock-based compensation expense, plus/minus expenses/income that we do not consider reflective of our ongoing operations, amounted to $6,148, $5,636, or 12.8% 11.7% of revenues, for the second third quarter of 2026, compared to $4,113, $2,048, or 8.5% 4.7% of revenues, for the second third quarter of 2025. See the section "Adjusted EBITDA" on page 26 29 for a reconciliation of adjusted EBITDA to net income attributable to Ultralife Corporation.

On October 27, 2026, Ultralife announced that it has agreed to be acquired by EnerSys (NYSE: ENS) in an all-cash transaction valued at approximately $320 million, including the assumption of net debt. The transaction is expected to close in the first quarter of 2027.

Proposed Acquisition of the Company

On October 27, 2026, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with EnerSys ("Parent") and EnerSys Merger Sub ("Merger Sub"), a wholly owned subsidiary of Parent. Pursuant to the Merger Agreement, Merger Sub agreed to commence a tender offer (the "Offer") to acquire all of the outstanding shares of the Company's common stock, par value $.10 per share (the "Shares"), for $16.00 per Share in cash, without interest and subject to any applicable withholding taxes (the "Offer Price"). Following the successful completion of the Offer, Merger Sub will merge with and into the Company (the "Merger"), with the Company continuing as the surviving corporation and a wholly owned subsidiary of Parent. The Merger is expected to be effected pursuant to Section 251(h) of the Delaware General Corporation Law (the "DGCL"), without a vote of the Company's stockholders, subject to the satisfaction or waiver of the applicable conditions set forth in the Merger Agreement.

The Offer Price represents a premium of approximately 166% over the closing price of the Shares of $6.01 on October 26, 2026, the last full trading day prior to the announcement of the Merger Agreement. The transaction is subject to the satisfaction or waiver of the conditions specified in the Merger Agreement, including the Minimum Condition, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and satisfaction of the applicable condition under the United Kingdom National Security and Investment Act 2021 (the "NSIA").

The Company's Board of Directors unanimously determined that the Merger Agreement, the Offer, the Merger and the other transactions contemplated thereby were advisable and fair to, and in the best interests of, the Company and its stockholders, approved the Merger Agreement and the transactions contemplated thereby, and recommended that the Company's stockholders accept the Offer and tender their Shares to Merger Sub.

Concurrently with the execution of the Merger Agreement, certain stockholders of the Company, including Bradford T. Whitmore, the Chair of the Company's Board of Directors, and certain entities and trusts affiliated with him (collectively, the "Supporting Stockholders"), entered into a Tender and Support Agreement with Parent and Merger Sub (the "Support Agreement"). As of the date of the Merger Agreement, the Supporting Stockholders collectively beneficially owned 6,708,835 Shares, representing approximately 40.3% of the outstanding Shares. Pursuant to the Support Agreement, the Supporting Stockholders agreed, subject to specified exceptions and conditions, to tender and not withdraw their Shares in the Offer and to comply with certain voting, transfer and other restrictions. The Shares subject to the Support Agreement do not, without the tender of additional Shares by other stockholders, satisfy the Minimum Condition.

As of the date of this Quarterly Report on Form 10-Q, the Offer and the Merger have not been consummated. The Company cannot assure that the conditions to the Offer and the Merger will be satisfied or waived or that the transactions will be completed within the anticipated timeframe or at all. The transaction remains subject to the terms and conditions of the Merger Agreement, including applicable regulatory requirements.

Expected Effects of the Transaction on the Company

Upon consummation of the Offer and the Merger, the Company will become a wholly owned subsidiary of Parent, and the holders of Shares immediately prior to the Effective Time will generally be entitled to receive $16.00 in cash for each Share held, other than Shares subject to specified exceptions under the Merger Agreement. Shares not tendered in the Offer will generally be converted into the right to receive the same cash consideration upon consummation of the Merger, subject to the terms of the Merger Agreement.

Following the Effective Time, the Company's Shares are expected to be delisted from the Nasdaq Stock Market and deregistered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as practicable and, in any event, within 10 days after the Closing Date. Accordingly, upon completion of the transaction, the Company's Shares will no longer be publicly traded, and the Company will no longer have the same access to the public equity markets as an independent, publicly traded company.

The transaction is expected to result in a change in the Company's ownership and governance structure. The extent to which the transaction will affect the Company's operations, business strategy, capital allocation, financing arrangements and future financial performance will depend on Parent's plans following the Closing Date. The Company cannot predict the extent or timing of any such changes at this time.

Treatment of Company Equity Awards

Under the Merger Agreement, each outstanding stock option to purchase Shares (a "Company Stock Option") with an exercise price below the Offer Price will automatically vest in full immediately prior to the Effective Time and be canceled in exchange for a cash payment equal to the excess of the Offer Price over the applicable exercise price, multiplied by the number of Shares subject to the option, subject to applicable withholding taxes. Such payments will be made reasonably promptly following the Effective Time and, in any event, no later than thirty (30) business days after the Effective Time.

Each outstanding Company Stock Option with an exercise price equal to or greater than the Offer Price will be canceled for no consideration, whether vested or unvested. Based on the Company's records, no outstanding Company Stock Option has an exercise price equal to or greater than $16.00 per Share.

Each outstanding share of restricted stock, whether vested or unvested, will automatically vest in full immediately prior to the Effective Time and be canceled in exchange for a cash payment equal to the Offer Price, subject to applicable withholding taxes. Such payments will be made at or reasonably promptly following the Effective Time and, in any event, no later than thirty (30) business days after the Effective Time.

Parent will not assume any Company equity award or substitute any similar award representing Parent equity. Each of the Company's equity compensation plans will terminate effective no later than immediately prior to the Effective Time.

The Company expects to recognize incremental stock based compensation expense in connection with the acceleration and settlement of outstanding equity awards, subject to the final determination of the applicable accounting treatment and the timing of the consummation of the transaction. The amount and timing of any such expense will depend on the outstanding awards at the Effective Time, the applicable exercise prices, the remaining unrecognized compensation cost and the accounting requirements applicable to the transaction.

Employee Benefits and Executive Compensation

Under the Merger Agreement, Parent has agreed, subject to the terms of the Merger Agreement and any applicable written agreements, to maintain during the period beginning on the Closing Date and ending on the first anniversary of the Closing Date (or, if earlier, the applicable employee's termination of employment) base salaries or hourly wages and employee benefits for employees of the Company and its subsidiaries who are employed at the Effective Time that are, in the aggregate, substantially comparable to those provided immediately prior to the Effective Time. These commitments exclude certain benefits and compensation arrangements, including equity-based compensation, transaction-related bonuses, nonqualified deferred compensation, severance, defined benefit pension and retiree medical benefits.

Parent has also agreed to recognize prior service with the Company for specified eligibility, vesting, vacation and severance purposes, subject to customary exceptions, and to honor certain existing change-in-control, retention, transaction bonus and other transaction-related payment obligations to the extent triggered and payable following the Effective Time. In addition, subject to the terms of the Merger Agreement, Covered Employees whose employment is involuntarily terminated without cause during the applicable continuation period will be entitled to severance payments and benefits on terms no less favorable than those under the Company's existing severance policies immediately prior to the Effective Time.

The Merger Agreement also provides for the indemnification of current and former directors and officers of the Company and its subsidiaries for specified matters arising from events occurring at or prior to the Effective Time, the continuation of certain indemnification and exculpation provisions in the organizational documents of the surviving corporation and its subsidiaries, and the maintenance of directors' and officers' liability insurance coverage for a period of six years following the Closing Date, subject to specified limitations.

Transaction Expenses

In connection with the proposed transaction, the Company expects to incur transaction-related expenses, including legal, financial advisory, accounting and other professional fees. The amount and timing of these expenses will depend on the progress and ultimate consummation of the transaction and the services provided by the Company's advisors.

The recognition of transaction-related expenses will depend on the nature of the services received and the applicable accounting requirements. The Company will continue to evaluate the appropriate classification and timing of such expenses as additional information becomes available.

Liquidity and Capital Resources

The Company is evaluating the potential effects of the proposed transaction on its liquidity and capital resources. The transaction consideration payable to the Company's stockholders will be funded in accordance with the terms of the Merger Agreement and the arrangements made by Parent and Merger Sub. The Merger Agreement does not contain a financing condition to the Offer.

The Company's obligations in connection with the transaction include certain transaction-related expenses and, in specified circumstances, a termination fee. Under the Merger Agreement, the Company may be required to pay Parent a termination fee of $10.3 million in certain circumstances, including in connection with a qualifying alternative acquisition proposal and the termination of the Merger Agreement under specified conditions. In addition, Parent may be required to pay the Company a reverse termination fee of $10.3 million in specified antitrust-related circumstances.

The payment of either termination fee is contingent upon the occurrence of the applicable circumstances described in the Merger Agreement. As of the filing of this Form 10Q, no termination fee was payable.

The Company's liquidity and capital resources prior to the consummation of the transaction will continue to be affected by its operating results, working capital requirements, capital expenditures, debt obligations and other ordinary-course business activities, as well as transaction-related expenses. The Merger Agreement also contains customary interim operating covenants that restrict the Company's ability to take certain actions before the Effective Time without Parent's consent, subject to specified exceptions. These restrictions may limit the Company's flexibility to pursue certain business opportunities, make investments or undertake certain financing or other corporate actions before the transaction is completed.

The Company will continue to monitor its liquidity and capital requirements throughout the pendency of the transaction. The Company cannot assure that the transaction will be consummated or that the transaction will be completed within the anticipated timeframe.

Regulatory Approvals and Conditions to Closing

The Offer and the Merger are subject to certain regulatory approvals and other closing conditions. Under the HSR Act, the Offer may not be consummated until the expiration or early termination of the applicable waiting period following the filing of the required notification and report forms with the Antitrust Division of the U.S. Department of Justice and the Federal Trade Commission. The Merger Agreement requires the Company and Parent to make the required HSR Act filings within ten (10) business days after the date of the Merger Agreement and to use reasonable best efforts to obtain required regulatory approvals and clearances, subject to the limitations set forth in the Merger Agreement.

The transaction is also subject to the applicable condition under the NSIA. The parties have agreed to use reasonable best efforts to obtain the required clearance, subject to the limitations set forth in the Merger Agreement. There can be no assurance that the required regulatory clearances will be obtained on a timely basis or at all, or that any required clearance will not be subject to conditions that are unacceptable to Parent.

Although Parent and Merger Sub are required to use reasonable best efforts to obtain required regulatory approvals, they are not required under the Merger Agreement to agree to divestitures, licenses, hold-separate arrangements, behavioral remedies or other specified remedies or restrictions in order to obtain such approvals. Accordingly, the timing and outcome of the regulatory review remain uncertain.

The completion of the Offer and the Merger is also subject to the satisfaction or waiver of the other conditions set forth in the Merger Agreement, including the Minimum Condition and the absence of certain legal restraints. Failure to satisfy or waive the applicable conditions could delay or prevent the consummation of the transaction.

Risks and Uncertainties Associated with the Proposed Transaction

The proposed transaction presents certain risks and uncertainties that could affect the Company's business, operating results and financial condition during the period before completion and, if the transaction is not consummated, thereafter. These risks include, among others, the following:

• Completion risk. There can be no assurance that the Offer and the Merger will be completed, that the conditions to completion will be satisfied or waived, or that the transaction will be completed within the anticipated timeframe. If the transaction is not consummated, the Company may incur substantial transaction expenses without realizing the anticipated benefits of the transaction.

• Regulatory risk. The Offer and the Merger are subject to regulatory requirements, including the HSR Act and the NSIA. Delays in obtaining the required clearances, the imposition of unacceptable conditions or the failure to obtain the required clearances could delay or prevent completion of the transaction.

• Business disruption. The pendency of the transaction may divert management's attention from the Company's day-to-day operations and create uncertainty among employees, customers, suppliers and other business partners. These factors could adversely affect the Company's operating performance and business relationships.

• Operating restrictions. The interim operating covenants in the Merger Agreement restrict the Company's ability to take certain actions without Parent's consent. These restrictions may limit the Company's flexibility to respond to changing business conditions or pursue certain opportunities before the transaction is completed.

• Transaction costs. The Company expects to incur additional legal, financial advisory and other professional fees in connection with the transaction. If the transaction is delayed or not consummated, certain of these expenses may not be recoverable.

• Termination risk. The Merger Agreement may be terminated under specified circumstances. Depending on the circumstances, termination may require the Company or Parent to pay a termination fee or reverse termination fee, respectively, and could adversely affect the Company's financial condition and stock price.

• Uncertainty regarding future operations. The Company's future operating strategy, capital allocation and business plans following completion of the transaction will be determined in light of Parent's plans and the circumstances existing at that time. The Company cannot predict the full extent of the changes that may result from the transaction.

If the transaction is consummated, the Company's stockholders will receive the applicable cash consideration and will no longer participate in the future earnings, growth or other benefits of owning equity in the Company. If the transaction is not consummated, the Company will continue to operate as an independent company, subject to the risks associated with its business, financial condition and operating environment, as well as the potential effects of the failed transaction.

The Company will continue to evaluate the transaction and its potential effects on the Company's financial position, results of operations and liquidity as the transaction progresses. Additional information regarding the Merger Agreement, the Offer, the Merger and the associated risks is included in the Company's filings with the Securities and Exchange Commission, including the Company's Schedule 14D-9 and Current Reports on Form 8-K, as applicable.

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Revenues. Consolidated revenues for the three-month period ending June 30, 2026, were $47,943, a decrease of $618, or 1.3%, from $48,561 for the three-month period ended June 30, 2025. Overall, commercial sales decreased 4.7% and government/defense sales increased 5.0%.

Battery & Energy Products revenues decreased $1,678, or 3.7%, from $45,867 for the three-month period ended June 30, 2025, to $44,189 for the three-month period ended June 30, 2026. The revenue decline was primarily attributable to a 4.7% decrease in commercial sales due to an 8.7% decrease in oil & gas and industrial sales, offsetting a 7.2% increase in medical battery sales, and a 1.4% decline in government/defense sales due to the shipment of a very large order for an allied country last year.

Cost of Products Sold / Gross Profit. Cost of products sold totaled $34,077 for the quarter ended June 30, 2026, a decrease of $2,883, or 7.8%, from the $36,960 reported for the same three-month period a year ago. Consolidated cost of products sold as a percentage of total revenue decreased from 76.1% for the three-month period ended June 30, 2025, to 71.1% for the three-month period ended June 30, 2026. Correspondingly, consolidated gross margin increased from 23.9% for the three-month period ended June 30, 2025, to 28.9% for the three-month period ended June 30, 2026, primarily reflecting favorable sales product mix for both our Battery & Energy Products and Communications Systems segments and the net refund of IEEPA tariffs which had been recognized as net costs in previous periods. The net IEEPA refund in the second quarter of 2026 was $1,102, accounting for 230 basis point of gross margin for that period.

Operating Expenses. Operating expenses for the three-month period ended June 30, 2026, were $10,429, an increase of $1,084 or 11.6% from the $9,345 for the three-month period ended June 30, 2025. The increase is primarily attributable to a 39.1% increase in new product development costs related to continued investment in our product offerings and the completion of certain one-time, non-recurring expenses of $884 primarily related to litigation expenses incurred for our cyber-insurance claim and certain consulting costs to help expedite gross margin improvement at our two largest manufacturing facilities. Non-recurring costs reported for the 2025 second quarter were $326 primarily representing litigation expenses for our cyber insurance claim and acquisition transition costs. Both periods reflected continued tight control over discretionary spending.

Revenues. Consolidated revenues for the six-month period ended June 30, 2026, were $95,388, a decrease of $3,919 or 3.9%, from $99,307 for the six-month period ended June 30, 2025. Overall, commercial sales decreased $3,259 or 5.1% and government/defense sales decreased $660 or 1.8%.

For our Battery & Energy Products segment, gross profit for the 2026 period was $21,861, a decrease of $414 or 1.9% from gross profit of $22,275 for the 2025 period. Battery & Energy Products' gross margin of 24.7% increased by 50-basis points from the 24.2% gross margin for the year-earlier period, primarily due to sales mix and the net refund of IEEPA tariffs.

Three-Month Periods Ended June September 30, 2026, and June September 30, 2025

Revenues. Consolidated revenues for the three-month period ending September 30, 2026 were $48,271, an increase of $4,900, or 11.3%, over $43,371 for the three-month period ended September 30, 2025. Overall, government/defense sales increased 42.5% and commercial sales decreased 5.8%.

Battery & Energy Products revenues increased $5,142, or 12.9%, from $39,946 for the three-month period ended September 30, 2025 to $45,088 for the three-month period ended September 30, 2026. The year-over-year increase reflects 56.7% growth in government/defense sales due primarily to a large order for conformal wearable batteries, partially offset by 5.8% decrease in commercial sales primarily resulting from softness in the global oil & gas market resulting in a 10.1% decline for that market.

Communications Systems sales increased $1,060, decreased $242, or 39.3%, 7.1%, from $2,694 $3,425 for the three-month period ended June September 30, 2025 to $3,754 $3,183 for the three-month period ended June September 30, 2026 due primarily to the timing of orders.

Our total backlog, which consists of unfilled orders or contracts for shipments in future periods, exiting the second third quarter of 2026 was $117.5 $136.0 million, the highest level in the Company's history, compared to $115.1 $117.5 million exiting the first second quarter of 2026 and $84.5 $90.3 million exiting the second third quarter of 2025.

Cost of Products Sold / Gross Profit. Cost of products sold totaled $34,978 for the quarter ended September 30, 2026, an increase of $1,226, or 3.6%, from the $33,752 reported for the same three-month period a year ago. Consolidated cost of products sold as a percentage of total revenue decreased from 77.8% for the three-month period ended September 30, 2025 to 72.5% for the three-month period ended September 30, 2026. Correspondingly, consolidated gross margin increased from 22.2% for the three-month period ended September 30, 2025, to 27.5% for the three-month period ended September 30, 2026, primarily reflecting improved manufacturing efficiencies, increased vertical integration of thionyl chloride cells for our oil & gas business and favorable sales product mix.

For our Battery & Energy Products segment, gross profit for the third quarter of 2026 was $12,016, an increase of $3,196 or 36.2% from gross profit of $8,820 for the third quarter of 2025. Battery & Energy Products' gross margin of 26.7% increased by 460-basis points from the 22.1% gross margin for the year-earlier period, primarily due to sales mix reflecting the 56.7% increase in government/defense sales driven by shipments of conformal wearable batteries and, an almost ten-fold increase in the vertical integration of thionyl chloride cells for our oil & gas business.

For our Communications Systems segment, gross profit for the second third quarter of 2026 was $1,363 $1,277 or 36.3% 40.1% of revenues, compared to gross profit of $766 $799 or 28.4% 23.3% of revenues for the second third quarter of 2025. The 790-basis 1,680-basis point increase in gross margin was primarily due to resulted from favorable sales mix and lower warranty costs.

Operating Expenses. Operating expenses for the three-month period ended September 30, 2026 were $10,107, a decrease of $463 or 4.4% from the $10,570 for the three-month period ended September 30, 2025. The decrease is primarily attributable to lower one-time, non-recurring costs related to the closing of our Calgary facility and certain consulting costs to help expedite our gross margin improvement in the year-earlier period.

Overall, operating expenses were 21.8% 20.9% of revenue for the quarter ending June September 30, 2026 compared to 19.2% 24.4% of revenue for the quarter ended June September 30, 2025. Amortization expense associated with intangible assets related to our acquisitions was $268 $267 for the second third quarter of 2026 ($263 ($262 in selling, general and administrative expenses and $5 in research and development costs), compared with $410 $411 for the second third quarter of 2025 ($378 ($380 in selling, general, and administrative expenses and $32 $31 in research and development costs). The year-over-year decline in amortization expenses resulted from our decision in the 2025 fourth quarter to undergo a comprehensive rebranding initiative that consolidates all sub-brands under a singular, unified master brand – Ultralife, and the ensuing write-down of tradenames and trademarks associated with our sub-brands during that period. Research and development costs were $3,225 $3,189 for the three-month period ended June September 30, 2026, an increase of $907 $334 or 39.1%, 11.7%, from $2,318 $2,855 for the three-month period ended June September 30, 2025. The increase is attributable to an increase in higher new product development costs related to continued investment in our product offering as we aggressively pursue both government/defense and commercial opportunities. Excluding one-time non-recurring costs, selling, general, and administrative expenses were $7,204 $6,390 for the three-month period ended June September 30, 2026, an increase a decrease of $177 $240 or 2.5% 3.6% from $7,027 $6,630 for the second third quarter of 2025. The period-over-period increase decrease was primarily attributable to the inclusion of certain one-time, non-recurring expenses of $884 primarily related to litigation expenses incurred for our cyber-insurance claim and the completion of consulting costs to help expedite gross margin improvement at our two largest manufacturing facilities. lower discretionary spending.

Other Expense. Other expense totaled $451 $441 for the three-month period ended June September 30, 2026 compared to $1,143 $800 for the three-month period ended June September 30, 2025. Interest and financing expense decreased $153, $71 or 15.4%, 7.2%, from $992 for the second third quarter of 2025 to $839 $921 for the comparable period in 2026, resulting from the continued paydown of the term loan financing of the Electrochem acquisition on October 31, 2024. Miscellaneous (income) expense amounted to ($388) ($480) for the second third quarter of 2026 compared to $151 ($192) for the second third quarter of 2025, primarily attributable to refundable tax credits for certain qualifying battery cells and packs we manufacture under the 45X Advanced Manufacturing Production Credit, established by the Inflation Reduction Act which runs through 2032, In addition, both periods reflect and foreign exchange gains and losses due to fluctuations in foreign currency exchange rates.

Income Taxes. For the three-month period ended June September 30, 2026, Ultralife recognized an income tax provision of $468, $362, comprised of a current tax provision of $47 $67 and a deferred tax provision of $421 $295 which primarily represents non-cash charges for U.S. taxes which we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future. This compares to a tax provision benefit of $243 ($504) comprised of a current tax benefit of $22 ($19) and a deferred tax provision benefit of $265 ($485) for the three-month period ended June September 30, 2025. Our effective tax rate was 15.7% 13.2% for the second third quarter of 2026 as compared to 21.8% 28.8% for the second third quarter of 2025, primarily attributable to the geographic mix of our operating results and other income recognized on the nontaxable refundable tax credits under the 45X Advanced Manufacturing Production Credit, established by the Inflation Reduction Act. See Note 6 to the consolidated financial statements in Item 1 of Part I of this Form 10-Q for additional information regarding our income taxes.

Net Income Attributable to Ultralife Corporation. Net income attributable to Ultralife Corporation was $2,543, $2,368, or $0.15 $0.14 per share – basic and diluted, for the three-month period ended June September 30, 2026, compared to $879, net (loss) of ($1,220), or $0.05 ($0.07) per share – basic and diluted, for the three-month period ended June September 30, 2025.

Weighted average shares outstanding used to compute diluted earnings per share increased from 16,656,408 16,646,336 for the second third quarter of 2025 to 16,714,196 16,697,232 for the second third quarter of 2026. The increase is attributable to stock option exercises since the second third quarter of 2025 as well as the loss incurred in the 2025 period resulting in the use of weighted average basic share outstanding for that period. For the third quarter of 2026, dilutive shares of 55,268 33,430 were added to basic weighted average shares. for the 2026 period compared to 21,856 for the 2025 period.

Six-Month Nine-Month Periods Ended June September 30, 2026, and June September 30, 2025

Revenues. Consolidated revenues for the nine-month period ended September 30, 2026 were $143,659 an increase of $981, or 0.7%, over $142,678 for the nine-month period ended September 30, 2025. Overall, government/defense sales increased $2,454 or 4.6% and commercial sales decreased $1,473 or 1.7%.

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Controls and procedures 3 changes

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Management, under the supervision and with the participation of our President and Chief Executive Officer (principal executive officer) and our Chief Financial Officer and Treasurer (principal financial officer), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this quarterly report. Management has concluded that our disclosure control and procedures were not effective as of June September 30, 2026, because of the existing material weakness in our internal control over financial reporting as described below.

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Management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2025, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control - Integrated Framework (2013). Based on our evaluation, management concluded that there is a material weakness in our internal control over financial reporting. As a result of the material weakness identified, management has concluded that our internal control over financial reporting was not effective as of December 31, 2025. The material weakness was not yet fully remediated as of June September 30, 2026.

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During the first half nine months of 2026 and through the date of this Quarterly Report on Form 10-Q, management continues to develop and is actively implementing corrective actions to remediate the identified ITGC deficiencies. The Company is conducting a comprehensive risk-based evaluation of user access to our key IT applications to ensure that access is appropriately administered. Access will be restricted to the extent possible, and monitoring or other mitigating controls will be implemented to address instances, if any, where system-level segregation may not be feasible. Steps have been taken to restrict certain user access and to evaluate activity logs through the period that such access was deemed to have not been appropriately restricted. Additionally, we are in the process of formalizing our user access reviews and requiring that they are performed on a more frequent and timely basis.

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Exhibits 7 changes

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Agreement and Plan of Merger, dated as of October 27, 2026, by and among EnerSys, EnerSys Mergersub Inc. and Ultralife Corporation

Exhibit 2.1 of the Form 8-K filed on October 28, 2026

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Attached as Exhibit 101 to this report are the following formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June September 30, 2026 and December 31, 2025, (ii) Consolidated Statements of Income and Comprehensive Income for the three and six nine months ended June September 30, 2026 and 2025, (iii) Consolidated Statements of Cash Flows for the six nine months ended June September 30, 2026 and 2025, (iv) Consolidated Statements of Changes in Stockholders' Equity for the three and six nine months ended June September 30, 2026 and 2025, and (v) Notes to Consolidated Financial Statements.

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Date: August 7, 2026

Date: November 5, 2026

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Date: August 7, 2026

Date: November 5, 2026

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