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What changed in ULTRALIFE CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ULTRALIFE CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+245 added−238 removedSource: 10-K (2025-04-01) vs 10-K (2024-03-21)

Top changes in ULTRALIFE CORP's 2024 10-K

245 paragraphs added · 238 removed · 203 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

58 edited+13 added−10 removed124 unchanged
Biggest changeWe continually evaluate our requirements for additional capital equipment and direct labor resources, to help ensure that our planned increases will be adequate to meet foreseeable customer demand. Certain materials used in our products, other than rechargeable battery cells, are available only from a single source or a limited number of sources.
Biggest changeWe have acquired new machinery and equipment in areas where production bottlenecks have occurred in the past and we believe that we have sufficient capacity in most areas. We continually evaluate our requirements for additional capital equipment and direct labor resources, to help ensure that our planned increases will be adequate to meet foreseeable customer demand.
We continue to expand our marketing activities as part of our strategic plan, a comprehensive forward-looking document which sets forth our strategic growth plans, tactical actions and financial projections over a rolling three-year period, to increase sales of our battery and energy products for commercial, standby, defense and communications applications, as well as hand-held devices, wearable devices and other electronic portable equipment.
We continue to expand our marketing activities as part of our strategic plan, a comprehensive forward-looking document which sets forth our strategic growth plans, tactical actions and financial projections over a rolling three-year period, to increase sales of our battery and energy products for commercial, standby, defense and communications applications, as well as hand-held devices, wearable devices and other portable electronic equipment.
In general, we do not believe our sales are seasonal, although we may sometimes experience seasonality for some of our military products based on the timing of government fiscal budget expenditures. A significant portion of our business comes from sales of products and services to U.S. and foreign governments through various contracts.
In general, we do not believe our sales are seasonal, although we may sometimes experience seasonality for some of our military products based on the timing of government fiscal budget expenditures. 7 A significant portion of our business comes from sales of products and services to U.S. and foreign governments through various contracts.
Non-Rechargeable Batteries We believe that the chemistry of Lithium batteries provides significant advantages over currently available non-rechargeable battery technologies, which include lighter weight, longer operating time, longer shelf life, and a wider operating temperature range. Our non-rechargeable batteries also have relatively flat voltage profiles, which provide more stable power.
Non-Rechargeable Batteries We believe that the chemistry of Lithium batteries provides significant advantages over other currently available non-rechargeable battery technologies, which include lighter weight, longer operating time, longer shelf life, and a wider operating temperature range. Our non-rechargeable batteries also have relatively flat voltage profiles, which provide more stable power.
As such, we report segment performance at the gross profit level and operating expenses as Corporate charges. (See Note 9 in the notes to consolidated financial statements contained in Item 8 of this Form 10-K.) Our website address is www.ultralifecorporation.com.
As such, we report segment performance at the gross profit level and operating expenses as Corporate charges. (See Note 10 in the notes to consolidated financial statements contained in Item 8 of this Form 10-K.) Our website address is www.ultralifecorporation.com.
We enjoy strong name recognition in our markets under our Ultralife®, Ultralife HiRate®, Ultralife Thin Cell®, Ultralife Batteries Inc.®, Lithium Power®, McDowell Research®, AMTI TM , ABLE TM , ACCUTRONICS™, ACCUPRO™, ENTELLION™, SWE Southwest Electronic Energy Group™, SWE SEASAFE™, Excell Battery Group™ and Criterion Gauge™ brands, among others.
We enjoy strong name recognition in our markets under our Ultralife ® , Ultralife HiRate ® , Ultralife Thin Cell ® , Ultralife Batteries Inc. ® , Lithium Power ® , McDowell Research ® , AMTI™, ABLE™, ACCUTRONICS™, ACCUPRO™, ENTELLION™, SWE Southwest Electronic Energy Group™, SWE SEASAFE™, Excell Battery Group™ and Criterion Gauge™ brands, among others.
Lithium-ion Cells and Batteries. We market a variety of Lithium-ion cells and rechargeable batteries comprised of cells manufactured by qualified cell manufacturers. These products are used in a wide variety of applications including communications, medical and other portable electronic devices. Battery Charging Systems and Accessories.
Lithium-ion Cells and Batteries. We market a variety of Lithium-ion cells and rechargeable batteries comprised of cells manufactured by qualified cell manufacturers. These products are used in a wide variety of applications including communications, medical and other portable electronic devices. 6 Battery Charging Systems and Accessories.
We respond to Requests for Proposals (“RFPs”) to design products for OEMs, and believe that our design capabilities, product characteristics and solution integration will encourage OEMs to incorporate our batteries into their product offerings, resulting in revenue growth opportunities for us.
We respond to Requests for Proposals to design products for OEMs, and believe that our design capabilities, product characteristics and solution integration will encourage OEMs to incorporate our batteries into their product offerings, resulting in revenue growth opportunities for us.
We believe our current 9-volt Lithium battery manufacturing capacity is adequate to meet forecasted customer demand over the next three years. Cylindrical Batteries.
We believe our current 9-volt Lithium battery manufacturing capacity is adequate to meet forecasted customer demand over the next three years. 5 Cylindrical Batteries.
Our annual report on Form SD was filed by the statutory due date of May 31, 2023 for the 2022 calendar year and we continue to utilize appropriate measures with our suppliers to better ascertain the origin of the conflict minerals in our products. 13 Competition Competition in both the battery and communications systems markets is, and is expected to remain, intense.
Our annual report on Form SD was filed by the statutory due date of May 31, 2024 for the 2023 calendar year and we continue to utilize appropriate measures with our suppliers to better ascertain the origin of the conflict minerals in our products. 13 Competition Competition in both the battery and communications systems markets is, and is expected to remain, intense.
Our Newark, New York facility has the capacity to produce significant volumes of batteries and energy products. This operation generally manufacturers non-rechargeable battery cells, non-rechargeable and rechargeable battery packs, and chargers and is limited only by physical space and is not constrained by manufacturing equipment capacity which can accommodate significant additional volumes of product.
Our Newark, New York facility has the capacity to produce significant volumes of batteries and energy products. This operation generally manufactures non-rechargeable battery cells, non-rechargeable and rechargeable battery packs, and chargers and is limited only by physical space and is not constrained by manufacturing equipment capacity which can accommodate significant additional volumes of product.
Research and Development We devote significant resources to research and development activities to improve the technological capabilities of our products and to design new products for customers’ applications. We conduct our research and development in Newark, New York; Virginia Beach, Virginia; Tallahassee, Florida; Missouri City, Texas; Newcastle-under-Lyme, United Kingdom; and Shenzhen, China.
Research and Development We devote significant resources to research and development activities to improve the technological capabilities of our products and to design new products for customers’ applications. We conduct our research and development in Newark, New York; Virginia Beach, Virginia; Tallahassee, Florida; Missouri City, Texas; Raynham, Massachusetts; Newcastle-under-Lyme, United Kingdom; and Shenzhen, China.
Although we have experienced interruptions of product deliveries by sole source and other suppliers in 2023 resulting in the delay of some shipments to future periods, we cannot assure that these interruptions and delays will not have an adverse effect on us in the future.
Although we have experienced interruptions of product deliveries by sole source and other suppliers in 2024 resulting in the delay of some shipments to future periods, we cannot assure that these interruptions and delays will not have an adverse effect on us in the future.
For information relating to total assets by segment, revenues for the last two years by segment, and contribution by segment for the last two years, see Note 9 in the notes to consolidated financial statements. 3 History Ultralife was formed as a Delaware corporation in December 1990.
For information relating to total assets by segment, revenues for the last two years by segment, and contribution by segment for the last two years, see Note 10 in the notes to consolidated financial statements. 3 History Ultralife was formed as a Delaware corporation in December 1990.
See Management’s Discussion and Analysis of Financial Condition and Results of Operations and the 2023 Consolidated Financial Statements and Notes thereto contained in this Form 10-K Annual Report for additional information on the expenses referred to above.
See Management’s Discussion and Analysis of Financial Condition and Results of Operations and the 2024 Consolidated Financial Statements and Notes thereto contained in this Form 10-K Annual Report for additional information on the expenses referred to above.
(“ABLE”), an established manufacturer of Lithium batteries located in Shenzhen, China, which broadened our product offering, including a wide range of Lithium Thionyl Chloride and Lithium Manganese batteries, and provided additional exposure to new consumer markets. In July 2006, we finalized the acquisition of substantially all the assets of McDowell Research, Ltd. (“McDowell”), a manufacturer of military communications accessories.
(“ABLE”), an established manufacturer of Lithium batteries located in Shenzhen, China, which broadened our product offering, including a wide range of Lithium Thionyl Chloride and Lithium Manganese batteries, and provided additional exposure to new consumer markets. In July 2006, we acquired substantially all the assets of McDowell Research, Ltd. (“McDowell”), a manufacturer of military communications accessories.
Among the defense uses are manpack radios, night vision goggles, chemical agent monitors and thermal imaging equipment. Medical applications include Automated External Defibrillators (AEDs), infusion pumps, wearable patient monitoring and telemetry systems. Search and rescue applications include Emergency Locator Transmitters (ELTs) for aircraft and Emergency Position Indicating Radio Beacons (EPIRBs) for ships.
Among the defense uses are manpack radios, night vision goggles, chemical agent monitors and thermal imaging equipment. Medical applications include Automated External Defibrillators, infusion pumps, wearable patient monitoring and telemetry systems. Search and rescue applications include Emergency Locator Transmitters for aircraft and Emergency Position Indicating Radio Beacons for ships.
These current initiatives include the following: completing the development and testing of new battery and power solutions in our facilities in Newark, New York, Houston and Missouri City, Texas, Canada and Newcastle-under-Lyme, UK; our Thionyl Chloride battery project in China and new product initiatives for our Communications Systems business.
These current initiatives include the following: completing the development and testing of new battery and power solutions in our facilities in Newark, New York, Missouri City, Texas, Raynham, Massachusetts, Canada and Newcastle-under-Lyme, UK; our Thionyl Chloride battery project in China and new product initiatives for our Communications Systems business.
We expect that research and development expenditures in the future, including 2024, could increase by 10% or more over 2023 levels, based on current initiatives.
We expect that research and development expenditures in the future, including 2025, could increase by 10% or more over 2024 levels, based on current initiatives.
Oil and gas applications include battery packs for downhole and directional drilling applications such as Measurement While Drilling (MWD) and Logging While Drilling (LWD) and pipeline inspection and monitoring. 5 Thin Cell Batteries. We manufacture a range of thin Lithium Manganese Dioxide batteries under the Ultralife Thin Cell® brand.
Oil and gas applications include battery packs for downhole and directional drilling applications such as Measurement While Drilling and Logging While Drilling and pipeline inspection and monitoring. Thin Cell Batteries. We manufacture a range of thin Lithium Manganese Dioxide batteries under the Ultralife Thin Cell ® brand.
We market a wide range of cylindrical non-rechargeable Lithium cells and batteries in various sizes under both the Ultralife HiRate and ABLE brands.
We market a wide range of cylindrical non-rechargeable Lithium cells and batteries in various sizes under both the Ultralife HiRate and Electrochem brands.
The India JV assembles Ultralife power solution products and manages local sales and marketing activities, serving commercial, government and defense customers throughout India. We have invested cash into the India JV, as consideration for our 51% ownership stake in the India JV. In March 2009, we acquired the tactical communications products business of Science Applications International Corporation.
The India JV assembles Ultralife power solution products and manages local sales and marketing activities, serving commercial, government and defense customers throughout India. We used cash as consideration for our 51% ownership stake in the India JV. In March 2009, we acquired the tactical communications products business of Science Applications International Corporation.
We hold thirty-four patents issued in the U.S., six patents issued in the European Union member states, five patents issued in the European Union, five patents issued in the United Kingdom, five patents issued in Japan, four patents issued in India, four patents issued in South Korea, three patents issued in Canada, three patents issued in China, three patents issued in Taiwan, two patents issued in Norway, one patent issued in Australia, one patent issued in Hong Kong, one patent issued in Iceland, one patent issued in Mexico and one patent issued by the World Intellectual Property Organization.
We hold fifty-two patents issued in the U.S., six patents issued in the European Union member states, seven patents issued in the European Union, eight patents issued in the United Kingdom, five patents issued in Japan, four patents issued in India, four patents issued in South Korea, four patents issued in Canada, three patents issued in China, three patents issued in Taiwan, two patents issued in Norway, one patent issued in Australia, one patent issued in Hong Kong, one patent issued in Iceland, one patent issued in Mexico and one patent issued by the World Intellectual Property Organization.
Our manufacturing facility in Virginia Beach, Virginia is ISO 9001 certified. 9 We expect our future raw material purchases to fluctuate based on global demand for our products, our knowledge regarding the timing of customer orders, the related need to build inventory in anticipation of orders and actual shipment dates.
Our manufacturing facility in Raynham, Massachusetts is ISO 9001 certified. 9 We expect our future raw material purchases to fluctuate based on global demand for our products, our knowledge regarding the timing of customer orders, the related need to build inventory in anticipation of orders and actual shipment dates.
The year-over-year 17% decrease is due to the fulfillment of certain large purchase orders in 2023 that contained longer lead time components to meet the commitment dates. Management continuously monitors inventory levels in an effort to optimize such levels.
The year-over-year 4% decrease is due to the fulfillment of certain large purchase orders in 2024 that contained longer lead time components to meet the commitment dates. Management continuously monitors inventory levels in an effort to optimize such levels.
Our trademarks include the following: Ultralife®, Ultralife Thin Cell®, Ultralife HiRate®, Ultralife & design®, LithiumPower®, LithiumPower & Design®, Smart Circuit®, Smart Circuit & design®, WE. ARE.
Our trademarks include the following: Ultralife®, Ultralife Thin Cell®, Ultralife HiRate®, Ultralife & design®, LithiumPower®, LithiumPower & Design®, SMART CIRCUIT®, SMARTCIRCUIT®, SMART CIRCUIT & design®, SODIUMPOWER®, SODIUMPOWER (design)®, WE. ARE.
This operation generally assembles products and is limited only by physical space and is not constrained by manufacturing equipment capacity. 10 The total carrying value of our Communications Systems inventory, including raw materials, work in process and finished goods, amounted to $6,994 and $8,421 as of December 31, 2023 and 2022, respectively.
This operation generally assembles products and is limited only by physical space and is not constrained by manufacturing equipment capacity. The total carrying value of our Communications Systems inventory, including raw materials, work in process and finished goods, amounted to $6,749 and $6,994 as of December 31, 2024 and 2023, respectively.
The total carrying value of our Battery & Energy Products inventory, including raw materials, work in process and finished goods, amounted to $35,221 and $32,771 as of December 31, 2023 and 2022, respectively.
The total carrying value of our Battery & Energy Products inventory, including raw materials, work in process and finished goods, amounted to $44,614 and $35,221 as of December 31, 2024 and 2023, respectively.
We sell our products and services directly to commercial customers, including OEMs, as well as government and defense agencies in the U.S. and abroad and have contractual arrangements with sales agents who market our products on a commission basis in defined territories.
Sales and Marketing We employ a staff of sales and marketing personnel in North America, Europe and Asia. We sell our products and services directly to commercial customers, including OEMs, as well as government and defense agencies in the U.S. and abroad and have contractual arrangements with sales agents who market our products on a commission basis in defined territories.
During 2023 and 2022, we expended $8,587 and $7,874, respectively, on research and development, including $1,056 and $793, respectively, on customer sponsored research and development activities, which are included in cost of products sold. The year-over-year increase in customer sponsored research and development is due to the timing of key projects, including the development of customer-driven new products.
During 2024 and 2023, we spent $9,549 and $8,587, respectively, on research and development, including $1,281 and $1,056, respectively, on customer sponsored research and development activities, which are included in cost of products sold. The year-over-year increase in customer sponsored research and development is due to the timing of key projects, including the development of customer-driven new products.
The 49% decrease in our Communications Systems backlog at December 31, 2023 is primarily a result of fulfillment in 2023 of purchase orders received in 2022 to supply a global defense prime with our Vehicle Amplifier-Adaptors for the U.S.
The 34% decrease in our Communications Systems backlog and high confidence orders at December 31, 2024 is primarily a result of fulfillment in 2024 of purchase orders received in prior years to supply a global defense prime with our Vehicle Amplifier-Adaptors for the U.S.
Although we believe that alternative sources are available to supply materials and components that could replace materials or components we use, any interruption in our supply from any supplier that serves currently as our sole source or any significant increase in lead times to provide components could delay product shipments and adversely affect our financial performance and relationships with our customers.
Although we believe that alternative sources are available to supply materials and components that could replace materials or components we use, any interruption in our supply from any supplier that serves currently as our sole source or any significant increase in lead times to provide components could delay product shipments and adversely affect our financial performance and relationships with our customers. 10 Our Virginia Beach, Virginia facility has sufficient capacity to produce communications products and systems to meet current demand.
The principal competing non-rechargeable battery technologies are Carbon Zinc, Alkaline and Lithium. We manufacture a range of non-rechargeable battery products based on Lithium Manganese Dioxide, Lithium Manganese Dioxide Carbon Monofluoride hybrid, and Lithium Thionyl Chloride technologies.
Products, Services and Technology Battery & Energy Products A non-rechargeable battery is used until discharged and then replaced. The principal competing non-rechargeable battery technologies are Carbon Zinc, Alkaline and Lithium. We manufacture a range of non-rechargeable battery products based on Lithium Manganese Dioxide, Lithium Manganese Dioxide Carbon Monofluoride hybrid, and Lithium Thionyl Chloride technologies.
Our communications products include the following product configurations: RF Amplifiers. These amplifiers are used to extend the range of manpack and handheld tactical transceivers, and our RF amplifiers include both mounted and dismounted versions and many related accessories and kits which can be used on mobile or fixed site applications. Integrated Systems.
These amplifiers are used to extend the range of manpack and handheld tactical transceivers, and our RF amplifiers include both mounted and dismounted versions and many related accessories and kits which can be used on mobile or fixed site applications. Integrated Systems. Our integrated systems include vehicle mounted systems; SATCOM systems; rugged, deployable case systems; and multiband transceiver kits.
We have one major customer, a large global defense primary contractor, which comprised 15% of our total revenues in 2023, and 17% of our total revenues in 2022. There were no other customers that comprised greater than 10% of our total revenues during these years. In 2023, sales to U.S. and foreign customers were approximately $81,396 and $77,248, respectively.
We have one major customer, a large global defense primary contractor, which comprised 23% of our total revenues in 2024, and 15% of our total revenues in 2023. There were no other customers that comprised greater than 10% of our total revenues during these years. In 2024, sales to U.S. and foreign customers were $97,040 and $67,416, respectively.
Army’s Leader Radio program and to supply an international defense contractor with our amplifiers and radio vehicle mounts for an ongoing allied country government/defense modernization program. The 2023 year-end Communications Systems backlog is related to orders that are expected to ship throughout 2024.
Army’s Leader Radio program and to supply an international defense contractor with our amplifiers and radio vehicle mounts for an ongoing allied country government/defense modernization program as well as the timing of future orders with these customers in 2025. The 2024 year-end Communications Systems backlog and high confidence orders are related to orders that are expected to ship throughout 2025.
We sell our products directly to commercial businesses in the U.S. At December 31, 2023 and 2022, our backlog related to Communications Systems orders was approximately $11,500 and $22,400, respectively.
We sell our products directly to commercial businesses in the U.S. At December 31, 2024 and 2023, our backlog and high confidence orders related to Communications Systems orders were approximately $7,600 and $11,500, respectively.
In 2022, sales to U.S. and foreign customers were approximately $67,914 and $63,926, respectively. 7 Battery & Energy Products We target sales of our non-rechargeable products to manufacturers of security and safety equipment, medical devices, search and rescue equipment, specialty instruments, oil and gas downhole drilling and pipe inspection equipment, point of sale equipment and metering applications, as well as users of military equipment.
Battery & Energy Products We target sales of our non-rechargeable products to manufacturers of security and safety equipment, medical devices, search and rescue equipment, specialty instruments, oil and gas downhole drilling and pipe inspection equipment, point of sale equipment and metering applications, as well as users of military equipment.
The year-over-year 7% increase primarily reflects an increase in materials, including rechargeable cells, required to fulfill the backlog for our batteries primarily used in the medical devices, government and defense, and oil and gas sectors. Management continuously monitors inventory levels in an effort to optimize such levels.
The year-over-year 27% increase primarily reflects our acquisition of Electrochem on October 31, 2024 and an increase in materials, including rechargeable cells, required to fulfill the backlog for our batteries primarily used in the government and defense and medical device sectors. Management continuously monitors inventory levels in an effort to optimize such levels.
Employees As of December 31, 2023, we employed a total of 536 permanent and temporary employees: 412 in production, 75 in sales and administration, and 49 in research and development. None of our employees are represented by a labor union.
Employees As of December 31, 2024, we employed a total of 671 permanent and temporary employees: 524 in production, 89 in sales and administration, and 58 in research and development. None of our employees are represented by a labor union.
Our manufacturing facility in Shenzhen, China is ISO 9001, ISO 14001 and ISO 13485 certified. Our manufacturing facility in Missouri City, Texas is ISO 9001 and ISO 13485 certified. Our manufacturing facilities in the United Kingdom are ISO 9001 and ISO 13485 certified.
Our manufacturing facilities in the United Kingdom are ISO 9001 and ISO 13485 certified. Our manufacturing facility in Virginia Beach, Virginia is ISO 9001 certified.
Commercial products offered to date under the Ultralife brand integrate information technology equipment and power conversion capability into rugged cases, supporting use in various industries. We market these products to automotive, cellular carriers and manufacturing industries. Revenues for this segment for the year ended December 31, 2023 were $28,691 and segment contribution (gross profit) was $8,425.
Commercial products offered to date under the Ultralife brand integrate information technology equipment and power conversion capability into rugged cases, supporting use in various industries. We market these products to automotive, cellular carriers and manufacturing industries.
Additionally, we may elect to develop relationships with a single or limited number of sources for materials that are otherwise generally available.
Certain materials used in our products, other than rechargeable battery cells, are available only from a single source or a limited number of sources. Additionally, we may elect to develop relationships with a single or limited number of sources for materials that are otherwise generally available.
In 2023 and 2022, we spent $199 and $264, respectively, on environmental compliance, including costs to properly dispose of potentially hazardous waste. Since non-rechargeable and rechargeable Lithium battery chemistries react adversely with water and water vapor, certain of our manufacturing processes must be performed in a controlled environment with low relative humidity.
Since non-rechargeable and rechargeable Lithium battery chemistries react adversely with water and water vapor, certain of our manufacturing processes must be performed in a controlled environment with low relative humidity.
Furthermore, we utilize Excell experienced technical resources in our global new product initiatives and add a complementary line of highly engineered products, both existing and in development, that are costly for our customers to substitute with products of a competitor. 4 Products, Services and Technology Battery & Energy Products ’ A non-rechargeable battery is used until discharged and then replaced.
Furthermore, we utilize Excell experienced technical resources in our global new product initiatives and add a complementary line of highly engineered products, both existing and in development, that are costly for our customers to substitute with products of a competitor. 4 On October 31, 2024, we acquired Electrochem Solutions, Inc, a Massachusetts corporation (“Electrochem”).
Our Lithium Thionyl Chloride batteries, sold under our ABLE and Ultralife brands as well as a private label brand, are used in a variety of applications including utility meters, wireless security devices, electronic meters, automotive electronics and geothermal devices. We believe that the chemistry of Lithium batteries provides significant advantages over other currently available non-rechargeable battery technologies.
Our Lithium Thionyl Chloride batteries, sold under our Electrochem and Ultralife brands as well as a private label brand, are used in a variety of applications including utility meters, wireless security devices, electronic meters, automotive electronics, and downhole drilling, geothermal and pipeline inspection devices .
Revenues for this segment for the year ended December 31, 2023 were $129,953 and segment contribution (gross profit) was $30,775. Communications Systems Under our McDowell Research and AMTI brands, we design and manufacture a line of communications systems and accessories to support military communications requirements and under our Ultralife brand we provide system integration products and services.
Communications Systems Under our McDowell Research and AMTI brands, we design and manufacture a line of communications systems and accessories to support military communications requirements and under our Ultralife brand we provide system integration products and services.
We package all systems to meet specific customer needs in rugged enclosures to allow their use in extreme environments and under our Ultralife Corporation brand provide system integration products and services for commercial requirements. 6 We offer a wide range of military communications systems and accessories designed to enhance and extend the operation of communications equipment such as vehicle-mounted, manpack and handheld transceivers.
We package all systems to meet specific customer needs in rugged enclosures to allow their use in extreme environments and under our Ultralife Corporation brand provide system integration products and services for commercial requirements.
These advantages include higher energy density, lighter weight, longer operating time, longer shelf life and a wider operating temperature range. Our non-rechargeable batteries also have relatively flat voltage profiles, which provide stable power. Conventional non-rechargeable batteries, such as alkaline batteries, have sloping voltage profiles that result in decreasing power output during discharge.
We believe that the chemistry of Lithium batteries provides significant advantages over other currently available non-rechargeable battery technologies. These advantages include higher energy density, lighter weight, longer operating time, longer shelf life and a wider operating temperature range. Our non-rechargeable batteries also have relatively flat voltage profiles, which provide stable power.
Manufacturing and Raw Materials We manufacture our products from raw materials and component parts that we purchase. Our manufacturing facility in Newark, New York is ISO 9001 and ISO 13485 certified. Our Canadian manufacturing facilities in Calgary, Vancouver and Mississauga are ISO 9001 certified and ISO 13485 certified.
Our manufacturing facility in Newark, New York is ISO 9001 and ISO 13485 certified. Our Canadian manufacturing facilities in Calgary, Vancouver and Mississauga are ISO 9001 certified and ISO 13485 certified. Our manufacturing facility in Shenzhen, China is ISO 9001, ISO 14001 and ISO 13485 certified. Our manufacturing facility in Missouri City, Texas is ISO 9001 and ISO 13485 certified.
A key part of this expansion includes increasing our design and assembly capabilities as well as building our international network of distributors and value-added distributors. At December 31, 2023 and 2022, our backlog related to Battery & Energy Products was approximately $92,000 and $88,600, respectively.
A key part of this expansion includes increasing our design and assembly capabilities as well as building our international network of distributors and value-added distributors.
POWER®, AMTI®, ABLE™, ACCUTRONICS™, ACCUPRO™, ENTELLION™, McDowell Research®, SWE Southwest Electronic Energy Group®, SWE DRILL-DATA®, SWE DRILL-DATA OBSERVER®, SWE SEASAFE®, SWE SEASAFE (& DESIGN)®, SWE SEASAFE + DIRECT®, SWE SOUTHWEST ELECTRONIC ENERGY GROUP ADVANCED BATTERY SOLUTIONS & DESIGN®, Excell Battery Group™ and Criterion Gauge™.
POWER®, AMTI®, ABLE™, ACCUTRONICS™, ACCUPRO™, ENTELLION™, McDowell Research®, SWE DRILL-DATA®, SWE SEASAFE (& DESIGN)®, SWE SEASAFE DIRECT®, SWE SOUTHWEST ELECTRONIC ENERGY CORP®, SWE Southwest Electronic Energy Group®, Excell Battery Group™ and Criterion Gauge™, POW-R BMS®, POW-R-BMS®, POW-R TOTE®. Manufacturing and Raw Materials We manufacture our products from raw materials and component parts that we purchase.
Our power systems include AC/DC power supplies with battery backup for tactical manpack radios and power adaptors and chargers. We can provide power supplies for virtually all tactical communications devices. Our commercial products integrate information technology capability into rugged cases, supporting use of high computing capability in various configurations. We market these products to automotive, cellular carriers and manufacturing industries.
Our commercial products integrate information technology capability into rugged cases, supporting use of high computing capability in various configurations. We market these products to automotive, cellular carriers and manufacturing industries. Communications and Electronics. Our communications and electronics services include the design, integration, and deployment of portable, mobile and fixed-site communications systems.
A prolonged delay in the resolution of a protest, or a reversal of an award resulting from such a protest, could have a material adverse effect on our business, financial condition and results of operations. We market our products to defense organizations in the U.S. and other countries. In September 2019, we were awarded an indefinite-delivery/indefinite-quantity contract from the U.S.
A prolonged delay in the resolution of a protest, or a reversal of an award resulting from such a protest, could have a material adverse effect on our business, financial condition and results of operations. We target sales of our Lithium-ion rechargeable batteries and charging systems to OEM customers, as well as distributors and resellers focused on our target markets.
The 2023 year-end Battery & Energy Products backlog is primarily related to orders that are expected to ship throughout 2024 and does not include future shipments under the indefinite-delivery/indefinite-quantity awards with the U.S. Department of Defense.
The 2024 year-end Battery & Energy Products backlog and high confidence orders are primarily related to orders that are expected to ship throughout 2025.
Capacity, however, is affected by demand for particular products, and product mix changes can produce bottlenecks in an individual operation, constraining overall capacity. We have acquired new machinery and equipment in areas where production bottlenecks have occurred in the past and we believe that we have sufficient capacity in most areas.
Battery & Energy Products Our Newark, New York and Shenzhen, China facilities have the capacity to produce cylindrical cells, 9-volt Lithium batteries, 3-volt battery and thin cells. Capacity, however, is affected by demand for particular products, and product mix changes can produce bottlenecks in an individual operation, constraining overall capacity.
Our integrated systems include vehicle mounted systems; SATCOM systems; rugged, deployable case systems; and multiband transceiver kits. These systems provide enhanced capabilities which enable communications operators to provide links to support Command, Control, Communications, Computers, Cyber and Intelligence, Surveillance and Reconnaissance (C5ISR). Power Systems.
These systems provide enhanced capabilities which enable communications operators to provide links to support Command, Control, Communications, Computers, Cyber and Intelligence, Surveillance and Reconnaissance. Power Systems. Our power systems include AC/DC power supplies with battery backup for tactical manpack radios and power adaptors and chargers. We can provide power supplies for virtually all tactical communications devices.
The 4% year-over-year increase in our Battery & Energy Products backlog at December 31, 2023 primarily resulted from the demand for our medical, government and defense, and oil and gas batteries.
Backlog and high confidence orders for Battery & Energy Products were approximately $95,000 and $92,000 as of December 31, 2024 and 2023, respectively, reflecting continued high demand for our medical, government and defense, and oil and gas batteries.
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Corporate We report revenues and cost of sales for the above operating segments. The balance of income and expense, including but not limited to research and development expenses, and selling, general and administrative expenses, are reported as Corporate operating expenses.
Added
Conventional non-rechargeable batteries, such as alkaline batteries, have sloping voltage profiles that result in decreasing power output during discharge.
Removed
Corporate had no revenues for the year ended December 31, 2023 and our Corporate operating expenses for the year ended December 31, 2023 were $29,725.
Added
Revenues for this segment for the year ended December 31, 2024 were $144,081 and segment contribution was $18,997, as compared to revenues of $129,953 and segment contribution of $14,276 for the year ended December 31, 2023.
Removed
Communications and Electronics. Our communications and electronics services include the design, integration, and deployment of portable, mobile and fixed-site communications systems. Sales and Marketing We employ a staff of sales and marketing personnel in North America, Europe and Asia.
Added
Revenues for this segment for the year ended December 31, 2024 were $20,375 and segment contribution was $1,191, as compared to revenues of $28,691 and segment contribution of $3,958 for the year ended December 31, 2023. Corporate We report revenues, cost of sales and direct operating expenses for the above operating segments.
Removed
Government’s Defense Logistics Agency for up to five years, with the potential to generate revenue of $14,422, to provide our BA-5368 batteries. In May 2021 we were awarded an indefinite-delivery/indefinite-quantity contract from the U.S.
Added
The direct operating expenses include research & development, selling and general administration expenses that are determined, controlled and monitored by the operating segments.
Removed
Army for purchases of Conformal Wearable Batteries (“CWB”) not to exceed $168,000 during the three-year base award period with the potential for up to an additional $350,000 should the six one-year options be exercised.
Added
The balance of operating expenses, comprised of unallocated general administration and merger & acquisition expenses for corporate functions including board of directors, executive officers, accounting and finance, treasury management, shareholder communications, human resources, legal and compliance and information technology, are reported as Corporate operating expenses. Corporate had no revenues for the years ended December 31, 2024 and 2023.
Removed
Our development work on the CWB continues, and we have successfully completed UN/DOT shipment testing in 2023, a major milestone which allows us to now ship batteries to customers for initial testing and functional feedback. We are working on completing validation testing to enter U.S. Government First Article Testing, which is currently scheduled to start later in 2024.
Added
Corporate operating expenses, including costs incurred in connection with business acquisitions, were $10,223 and $8,759 for the years ended December 31, 2024 and 2023, respectively.
Removed
In December 2021, we were awarded an indefinite-delivery/indefinite-quantity contract not to exceed $9,900 for the U.S. Government’s Defense Logistics Agency for our Lithium Manganese Dioxide, non-rechargeable BA-5390 batteries. The award consists of a three-year base contract with two one-year option periods.
Added
Based in Raynham, MA with over forty years of battery technology experience in critical applications where the cost of failure is high, Electrochem designs and manufactures primary lithium metal and ultracapacitor cells and battery packs serving energy, military and various environmental, industrial and utility end markets.
Removed
We target sales of our Lithium-ion rechargeable batteries and charging systems to OEM customers, as well as distributors and resellers focused on our target markets.
Added
Acquiring Electrochem advances our strategy of more fully realizing the operating leverage of our business model through scale and creates opportunities for gross margin expansion through the realization of manufacturing cost efficiencies, U.S.-based vertical integration, supply chain and lean initiatives.
Removed
The prices and availability of some raw materials were impacted by COVID-19/supply chain disruptions in 2023 and may continue to be affected in 2024. Battery & Energy Products Our Newark, New York and Shenzhen, China facilities have the capacity to produce cylindrical cells, 9-volt Lithium batteries, 3-volt battery and thin cells.
Added
Electrochem primarily services a blue-chip customer base with little or no overlap with Ultralife’s customers, has long-tenured technical resources which we plan to utilize in progressing our global new product initiatives, and has a complimentary portfolio of highly engineered thionyl, sulfuryl and bromine chloride cells and packs which can be commercially cost prohibitive to substitute or replace.
Removed
Our Virginia Beach, Virginia facility has the sufficient capacity to produce communications products and systems to meet current demand.
Added
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. Furthermore, with Electrochem we believe we are increasing our value to our customers and significantly strengthening our competitive position in our end markets.
Added
We offer a wide range of military communications systems and accessories designed to enhance and extend the operation of communications equipment such as vehicle-mounted, manpack and handheld transceivers. Our communications products include the following product configurations: RF Amplifiers.
Added
In 2023, sales to U.S. and foreign customers were $81,396 and $77,248, respectively.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

68 edited+7 added−9 removed93 unchanged
Biggest changeIn the years ended December 31, 2023 and 2022, $57,802 or 36% and $38,795 or 29%, respectively, of our revenues were comprised of sales made directly or indirectly to U.S. and foreign militaries. While significant gains have been made in commercial markets with our business, we are still highly dependent on sales to U.S. Government customers.
Biggest changeWhile significant gains have been made in commercial markets with our business, we are still highly dependent on sales to U.S. Government customers. The amounts and percentages of our net revenue that were derived from sales to U.S.
However, if the government did not provide us with a government preference in such circumstances or if the suppliers are not able to meet the necessary demand for the components, the difficulty in obtaining supplies on a timely basis could have a material adverse effect on our business, financial condition and results of operations.
However, if the government did not provide us with a government preference in such circumstances or of the suppliers are not able to meet the necessary demand for the components, the difficulty in obtaining supplies on a timely basis could have a material adverse effect on our business, financial condition and results of operations.
In 2019, the Company made further progress in implementing many of the security measures in our SSP and POAM, including increasing the security awareness across our employee base.
In 2019, the Company made further progress in implementing many of the security measures in our SSP and POAM, including increasing security awareness across our employee base.
The accounts in question were immediately disabled by our IT Team, and the Company’s Security Steering Committee met promptly, taking swift action, including the immediate notification of our cybersecurity insurance carrier. Shortly thereafter, with assistance of recommendations from our cybersecurity carrier, we engaged external incident response professionals to assist with our assessment, recovery and response.
The accounts in question were immediately disabled by our IT Team, and the Company’s Security Steering Committee met promptly, taking swift action, including the immediate notification of our cybersecurity insurance carrier. Shortly thereafter, with the assistance of recommendations from our cybersecurity carrier, we engaged external incident response professionals to assist with our assessment, recovery and response.
We cannot guarantee the degree of protection these various claims may or will afford, or that competitors will not independently develop, patent or license technologies that are substantially equivalent or superior to our technologies. We also protect our proprietary rights in our products and operations through contractual obligations, including nondisclosure agreements with certain employees, customers, consultants and strategic partners.
We cannot guarantee the degree of protection these various rights may or will afford, or that competitors will not independently develop, patent or license technologies that are substantially equivalent or superior to our technologies. We also protect our proprietary rights in our products and operations through contractual obligations, including nondisclosure agreements with certain employees, customers, consultants and strategic partners.
The volatility in this industry, whether driven by geopolitical developments; international tensions; supply and demand economics; the introduction of new global, national, and industry-specific regulations; U.S. administration policies; and technology, appears to be a trend. A significant downturn in the price of oil may result in a decrease in downhole drilling and adversely impact our financial results.
The volatility in this industry, whether driven by geopolitical developments; international tensions; supply and demand economics; the introduction of new global, national, and industry-specific regulations; U.S. administration policies; and technology, appears to be a cyclical trend. A significant downturn in the price of oil may result in a decrease in downhole drilling and adversely impact our financial results.
For example, demand for our new or existing products combined with our ability to penetrate new markets and geographies or secure a major project award, could strain the current capacity of our manufacturing facilities and require a substantial increase in our direct labor workforce in a tight job market, and require additional capital resources, equipment and time to meet the required demand.
For example, demand for our new transformational or existing products combined with our ability to penetrate new markets and geographies or secure a major project award, could strain the current capacity of our manufacturing facilities and require a substantial increase in our direct labor workforce in a tight job market, and require additional capital resources, equipment and time to meet the required demand.
In these scenarios we are also typically required to successfully meet contractual specifications and to pass various qualification-testing for the products under contract. Our inability to pass these tests in a timely fashion, or to meet delivery schedules for orders released under contract, could have a material adverse effect on our business, financial condition and results of operations.
In these scenarios we are also typically required to successfully meet contractual specifications and to pass various qualification tests for the products under contract. Our inability to pass these tests in a timely fashion, or to meet delivery schedules for orders released under contract, could have a material adverse effect on our business, financial condition and results of operations.
Although we currently carry insurance policies which cover loss of plant and machinery, leasehold improvements, inventory and business interruption, any accident, whether at the manufacturing facilities or from the use and transportation of the products, may result in significant production delays or claims for damages resulting from injuries or death.
Although we currently carry insurance policies which cover loss of plant and machinery, leasehold improvements, inventory and business interruption, any accident, whether at our manufacturing facilities or from the use and transportation of our products, may result in significant production delays or claims for damages resulting from injuries or death.
A prolonged delay in the resolution of a protest, or a reversal of an award resulting from such a protest could have material adverse effects on our business, financial condition and results of operations. We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act ( “ FCPA ” ), the U.K.
A prolonged delay in the resolution of a protest, or a reversal of an award resulting from such a protest could have material adverse effects on our business, financial condition and results of operations. Our business and results of operations could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act ( “ FCPA ” ), the U.K.
We face certain security threats, including threats to our information technology infrastructure, attempts to gain access to our proprietary or classified information, and threats to cyber and physical security. Our information technology networks and related systems are critical to the operation of our business and essential to our ability to successfully perform day-to-day operations.
We continuously face certain security threats, including threats to our information technology infrastructure, attempts to gain access to our proprietary or classified information, and threats to cyber and physical security. Our information technology networks and related systems are critical to the operation of our business and essential to our ability to successfully perform day-to-day operations.
Any such disruptions could depress our earnings and have other material adverse effects on our business, financial condition and results of operations. Fluctuations in the demand, supply and price of oil and gas and the resulting volatility in the level of downhole drilling could have a material adverse effect on our business, financial condition and results of operations.
Any such disruptions could depress our earnings and have other material adverse effects on our business, financial condition and results of operations. 17 Fluctuations in the demand, supply and price of oil and gas and the resulting volatility in the level of downhole drilling could have a material adverse effect on our business, financial condition and results of operations.
Such circumstances, if they occur, could have a material adverse impact on our results of operations. We may incur significant costs because of known and unknown environmental matters. National, state and local laws impose various environmental controls on the manufacture, transportation, storage, use and disposal of batteries and of certain chemicals used in the manufacture of batteries.
Such circumstances, if they occur, could have a material adverse impact on our results of operations. We may incur significant costs because of known and unknown environmental factors. National, state and local laws impose various environmental controls on the manufacture, transportation, storage, use and disposal of batteries and of certain chemicals used in the manufacture of batteries.
This formal succession plan is updated annually and presented to our Board of Directors. There is no guarantee that we will be successful in our efforts to effectively implement our succession plan. Because of the specialized, technical nature of our business, we are highly dependent on certain members of our management, sales, engineering and technical staffs.
This formal succession plan is updated annually and presented to our Board of Directors. There is no guarantee that we will be successful in our efforts to effectively implement our succession plan. Because of the specialized, technical nature of our business, we are highly dependent on certain members of our management, sales, engineering and technical staff.
We incorporate procedures in research, development, product design, manufacturing processes and the transportation of Lithium batteries that are intended to minimize safety risks, but we cannot assure that accidents will not occur or that our products will not be subject to recall for safety concerns.
We incorporate procedures in research, development, product design, manufacturing processes and the transportation of Lithium batteries that are intended to reduce safety risks, but we cannot assure that accidents will not occur or that our products will not be subject to recall for safety concerns.
In 2020 through 2023, we continued to make progress towards achieving full implementation of all NIST 800-171 security standards, as well as the requirements under the Cybersecurity Maturity Model Certification (“CMMC”) framework released by the Department of Defense in 2020.
In 2020 through 2024, we continued to make progress towards achieving full implementation of all NIST 800-171 security standards, as well as the requirements under the Cybersecurity Maturity Model Certification (“CMMC”) framework released by the Department of Defense in 2020.
Negative publicity concerning Lithium-ion batteries may negatively impact the industries or markets we operate in. We are unable to predict the impact, severity or duration of negative publicity related to fire/mishandling of Lithium-ion batteries or the environmental impact of their disposal, and how it may impact the industries or markets we serve.
Negative publicity concerning Lithium-ion batteries may adversely impact the industries or markets we operate in. We are unable to predict the impact, severity or duration of negative publicity related to fire/mishandling of Lithium-ion batteries or the environmental impact of their disposal, and how it may impact the industries or markets we serve.
Every effort is made to adjust future prices accordingly, but our ability to adjust prices is generally based on market conditions and we may not be able to adjust prices in various circumstances. This could have an adverse impact in the form of reduced revenues or lower margins.
Every effort is made to adjust future prices accordingly, but our ability to adjust prices is generally based on market conditions that may change quickly and we may not be able to adjust prices in various circumstances. This could have an adverse impact in the form of reduced revenues or lower margins.
Although we develop certain products for new commercial applications, we cannot assure that these new products will be accepted due to the highly competitive nature of our industries. There are many new product and technology entrants into the markets we sell our products to.
Although we develop certain products for new commercial applications, we cannot be sure that these new products will be accepted due to the highly competitive nature of our industries. There are many new products and technology entrants into the markets we sell our products to.
Accordingly, these circumstances require us to regularly monitor all aspects of our supply chain and share the updates with our customers, to ensure that any potential supply interruptions are understood with all efforts taken to minimize. 15 As we look forward to potential rising demand for electrification, our lead times for certain critical components from our suppliers could be extended even further, resulting in shipping delays causing us to miss contractual timelines.
Accordingly, these circumstances plus the potential impact of costly tariffs in 2025 and beyond require us to regularly monitor all aspects of our supply chain and share the updates with our customers, to ensure that any potential supply interruptions are understood with all efforts taken to minimize. 15 As we look forward to potential rising demand for electrification, our lead times for certain critical components from our suppliers could be extended even further, resulting in shipping delays causing us to miss contractual timelines.
For example, the percentage of our business with customers outside of the U.S. was 49% in 2023 and 48% in 2022. A future strengthening of the U.S. dollar relative to our customers’ currencies could make our products relatively more expensive and may adversely affect our sales levels and reduce profitability.
For example, the percentage of our business with customers outside of the U.S. was 41% in 2024 and 49% in 2023. A future strengthening of the U.S. dollar relative to our customers’ currencies could make our products relatively more expensive and may adversely affect our sales levels and reduce profitability.
We continue to monitor our information systems for any intrusions or other irregularities. Our ability to recruit and retain experienced, competent management is critical to the success of the business, and the loss of top management and key personnel could significantly harm our business, and ability to implement our succession plan.
We continue to diligently monitor our information systems with outside expertise for any intrusions or other irregularities. Our ability to recruit and retain experienced, competent management is critical to the success of the business, and the loss of top management and key personnel could significantly harm our business, and the ability to implement our succession plan.
We cannot assure that we will be able to retain or recruit this type of personnel at reasonable costs, or at all.
We cannot be sure that we will be able to retain or recruit this type of personnel at reasonable costs, or at all.
We have one customer, L3Harris Technologies, a large global defense primary contractor, which comprised 15% of our total revenues in 2023 and 17% of our total revenues in 2022. There were no other customers that comprised greater than 10% of our total revenues during these years.
We have one customer, L3Harris Technologies, a large global defense primary contractor, which comprised 23% of our total revenues in 2024 and 15% of our total revenues in 2023. There were no other customers that comprised greater than 10% of our total revenues during these years.
Government on 9-volt batteries that we manufacture in China as well as any retaliating trade policies or restrictions, and an outbreak of a contagious disease variant, related to COVID-19 or not, which may cause us or our suppliers and/or customers to temporarily suspend operations in the affected city or region.
Government on products that we manufacture or purchase in China as well as any retaliating trade policies or restrictions, and an outbreak of a contagious disease variant, related to COVID-19 or not, which may cause us or our suppliers and/or customers to temporarily suspend operations in the affected city or region.
Accordingly, any increase in interest rates will adversely impact the Company’s reported financial results, perhaps materially. 19 Our customers may not meet the volume expectations in our supply agreements. We sell most of our products and services through supply agreements and contracts.
Accordingly, any increase in interest rates will adversely impact the Company’s financial results, perhaps materially. Our customers ’ purchases may not meet the volume expectations in our supply agreements. We sell most of our products and services through supply agreements and contracts.
Such demands may limit the number of suppliers that can provide products in sufficient quantities to meet customer demand or at competitive prices. Any of these consequences may increase our costs of operations, increase or margins and harm our business. 24
Such demands may limit the number of suppliers that can provide products in sufficient quantities to meet customer demand or at competitive prices. Any of these consequences may increase our costs of operations, increase or margins and adversely effect our business.
While these conditions persisted in 2023, although to a lesser extent, the negative impact was partially mitigated by our proactive actions including the following: closer alignment of cost increases with customer price increases, extending the time horizon of our sales & operations planning process (“S&OP”) with both customers and suppliers to provide greater visibility in ordering components while upgrading our internal resources responsible for the process, and improving our process for launching new products to reduce the cost and time of transitioning to high-volume manufacturing.
The negative impact of these economic conditions was partially mitigated by our proactive actions including the following: closer alignment of cost increases with customer price increases, extending the time horizon of our sales & operations planning process (“S&OP”) with both customers and suppliers to provide greater visibility in ordering components while upgrading our internal resources responsible for the process, and improving our process for launching new products to reduce the cost and time of transitioning to high-volume manufacturing.
Certain materials and components used in our products are available only from a single or a limited number of suppliers. Some materials and components have been and may continue to be in short supply resulting in limited availability and/or increased costs.
Certain materials and components used in our products are available only from a single or a limited number of suppliers. Some materials and components have been and may continue to be in short supply resulting in limited availability and/or increased costs including new or additional tariffs.
A finding that our proprietary and intellectual property rights are not enforceable or invalid could allow our competitors and others to produce competing products based on our proprietary and intellectual property or limit our ability to continue to manufacture and market our products.
A finding that our proprietary and intellectual property rights are not enforceable or invalid could allow our competitors and others to produce competing products based on our proprietary and intellectual property or limit our ability to continue to manufacture and market our products, without significant, costly alterations.
The novel coronavirus disease of 2019 (COVID-19) has created significant economic disruption and uncertainty around the world. As we enter the fourth year of the pandemic, our workforce, customers and vendors still face the risk of the emergence of new strains, availability of effective treatment, and potential regulatory and macroeconomic effects stemming from such impacts.
The coronavirus disease of 2019 (COVID-19) has created significant economic disruption and uncertainty around the world. As we enter the fifth year following the initial outbreak of COVID-19, our workforce, customers and vendors still face the risk of the emergence of new strains, availability of effective treatment, and potential regulatory and macroeconomic effects stemming from such impacts.
Fluctuations in the demand, supply and pricing encountered in the oil and gas industry, have placed financial strain on the producers and the companies that provide oilfield services and equipment to those producers.
Fluctuations in the demand, supply and pricing encountered in the oil and gas industry, may place financial strain on the producers and the companies that provide oilfield services and equipment to those producers.
Our supply of raw materials and components could be disrupted or delayed due to business conditions, global conflicts, weather, the continuing impact of COVID-19 or other factors not under our control, or the cost of those raw materials and components may materially increase.
Our supply of raw materials and components could be disrupted or delayed due to business conditions, new or additional tariffs, global conflicts, weather, any lingering impact of COVID-19 or other factors not under our control, or the cost of those raw materials and components may materially increase.
Additionally, we could continue to face prolonged, increasing pricing pressure from our suppliers due to rising costs incurred by these suppliers that could be passed on to us in higher prices for our raw materials.
Additionally, we could continue to face prolonged, increasing pricing pressure from our suppliers due to rising costs incurred by these suppliers, including the costs associated with potential future tariffs, that could be passed on to us in higher prices for our raw materials.
As of December 31, 2023, the Company had $6,167 outstanding principal on the Term Loan Facility, of which $2,000 is due to be paid in 2024 and included in current portion of long-term debt on the balance sheet, and $19,580 outstanding on the Revolving Credit Facility.
As of December 31, 2024, the Company had $55,000 of outstanding principal on the Term Loan Facility, of which $2,750 is due to be paid in 2025 and included in current portion of long-term debt on the balance sheet, and no outstanding balance on the Revolving Credit Facility.
In this event, the failure to obtain necessary licenses could delay product shipments or the introduction of new products, and costly attempts to design around such patents could foreclose the development, manufacture or sale of products, all of which could materially adversely affect our business and our results of operations. 21 We are subject to the contract rules and procedures of the U.S. and foreign governments.
In this event, the failure to obtain necessary licenses could delay product shipments or the introduction of new products, and costly attempts to design around such patents could foreclose the development, manufacture or sale of products, all of which could materially adversely affect our business and our results of operations.
Future determinations that the estimated fair value of our goodwill and/or indefinite-lived intangible assets is less than their respective carrying values may result in significant (non-cash) impairment charges which could have a material adverse impact on our future results of operations.
Future determinations that the estimated fair value of our goodwill and/or indefinite-lived intangible assets is less than their respective carrying values may result in significant (non-cash) impairment charges which could have a material adverse impact on our future results of operations. 21 We are subject to the contract rules and procedures of the U.S. and foreign governments.
The lingering impact of these conditions, potentially exacerbated by the emergence of new strains, on our business and financial results is uncertain and will depend on many evolving factors which we continue to monitor but cannot predict, including the resistance to treatments and current vaccinations, and the duration and scope of any new pandemic variants, the resulting actions taken by governments, businesses and individuals, and the flow-through impact on operations and supply chains.
The lingering impact of these conditions, potentially exacerbated by the emergence of new strains, on our business and financial results is uncertain and will depend on many evolving factors which we continue to monitor but cannot predict, including the resistance to treatments and current vaccinations, and the duration and scope of any new pandemic variants, the resulting actions taken by governments, businesses and individuals, and the flow-through impact on operations and supply chains. 19 We may incur significant costs or liabilities to satisfy obligations under the terms of the warranties we supply and the contractual terms under which we sell our products and services.
While we maintain what we believe to be sufficient casualty liability coverage to protect against such occurrences, these types of losses could reduce our available cash and our operating and net income and have other material adverse effects on our reputation, business, financial condition and results of operation.
While we maintain what we believe to be sufficient casualty liability coverage to protect against such occurrences, these types of losses could reduce our available cash and our operating and net income and have other material adverse effects on our reputation, business, financial condition and results of operation. 18 Our quarterly and annual results and the price of our common stock have and could in the future continue to fluctuate significantly.
While we consider our relationship with this major customer to be good, the reduction, delay or cancellation of orders from this customer or any delays in payments beyond their payment terms, for any reason, would reduce our revenues and operating income and could materially and adversely affect our business, operating results and financial condition in other ways.
While we consider our relationship with this major customer to be good, the reduction, delay or cancellation of orders from this customer or any delays in payments beyond their payment terms, for any reason, would reduce our revenues and operating income and could materially and adversely affect our business, operating results and financial condition in other ways. 14 Reductions or delays in U.S. and foreign military spending could have a material adverse effect on our business, financial condition and results of operations.
The failure to manage growth and expansion effectively could have a material adverse effect on our business, financial condition, and results of operations. 17 The COVID-19 pandemic and other related illnesses have caused and may continue to create significant economic and social disruption and uncertainty around the world, may impact the health of our employees, the employees of our customers, and the employees of our suppliers, causing delays in the manufacture and delivery of our mission critical products to end customers, and may disrupt business with our collaborative business partners and service providers, which may continue to adversely impact our business and operating results.
The COVID-19 pandemic and other related illnesses have caused and may continue to create significant economic and social disruption and uncertainty around the world, may impact the health of our employees, the employees of our customers, and the employees of our suppliers, causing delays in the manufacture and delivery of our mission critical products to end customers, and may disrupt business with our collaborative business partners and service providers, which may continue to adversely impact our business and operating results.
Government or any prime defense contractor could significantly reduce our revenues. Our competitors continuously engage in efforts to expand their business relationships with the U.S. Government and will continue these efforts in the future, and the U.S. Government may choose to use other contractors or suppliers. Budget and appropriations decisions made by the U.S.
We and our competitors continuously engage in efforts to expand business relationships with the U.S. Government and will continue these efforts in the future, and the U.S. Government may choose to use other contractors or suppliers that compete with us. Budget and appropriations decisions made by the U.S.
As reported on Form 8-K filed on March 2, 2023, during performance of their daily information technology security procedures on January 25, 2023, our Information Technology Team (“IT Team”) discovered an unauthorized entry into our information technology systems for our Newark, New York and Virginia Beach, Virginia locations.
Accordingly, for several years, including 2024, we maintained our cybersecurity insurance policy to help mitigate the impact of a cybersecurity incident. 16 As reported on Form 8-K filed on March 2, 2023, during performance of their daily information technology security procedures on January 25, 2023, our Information Technology Team (“IT Team”) discovered an unauthorized entry into our information technology systems for our Newark, New York and Virginia Beach, Virginia locations.
Any inability to comply with changes to the regulations for the shipment of our products could limit our ability to transport our products to customers in a cost-effective manner and reduce our operating income and margins.
Excessive warranty claims could have a material adverse effect on our business, financial condition and results of operations. Any inability to comply with changes to the regulations for the shipment of our products could limit our ability to transport our products to customers in a cost-effective manner and reduce our operating income and margins.
There is no assurance that future warranty claims will be consistent with our estimates, and in the event we experience a significant increase in warranty claims, there is no assurance that our reserves will be sufficient to cover such increased warranty claims. Excessive warranty claims could have a material adverse effect on our business, financial condition and results of operations.
There is no assurance that future warranty claims will be consistent with our past experience and estimates, and in the event we experience a significant increase in warranty claims, there is no assurance that our reserves will be sufficient to cover such increased warranty claims.
Furthermore, we have noted an increase in foreign competition, especially in Asia, over the last several years which tends to compete on price in the battery industry.
Furthermore, we have noted an increase in foreign competition, especially in Asia, over the last several years, which tends to compete on price in the battery industry, yet poor quality and the potential impact of tariffs could mitigate their progress.
While our backlog remained at over $100 million for the last five quarters, this does not mean that rapid growth and demand for our products in all cases will be met by our resources without delay.
Our backlog and high confidence orders of approximately $100 million does not mean that rapid growth and demand for our products in all cases will be met by our resources without delay.
On February 7, 2023, the Company received an electronic communication allegedly from a third-party, known for nefarious ransomware attacks, claiming responsibility for the incident, and discussions with that third party commenced through experienced cybersecurity professionals engaged by the Company. 16 This incident caused a partial disruption of our business operations at these locations, which resulted in production and shipping downtime of several weeks.
On February 7, 2023, the Company received an electronic communication allegedly from a third-party, known for nefarious ransomware attacks, claiming responsibility for the incident, and discussions with that third party commenced through experienced cybersecurity professionals engaged by the Company.
The related interest rates on our borrowings are variable as disclosed in Note 2 to our consolidated financial statements.
The related interest rates on our borrowings are variable as disclosed in Note 3 to our Consolidated Financial Statements contained in Item 8 of this Form 10-K.
While it is in the best interests of the Company to reduce the amount of debt quickly, those funds in some cases have been diverted to purchase raw material and component inventory above historical levels in order satisfy commitments to our customers in light of the continuing increase in our backlog and lingering long lead times and other supply chain disruptions.
While it is in the best interests of the Company to reduce the amount of debt quickly, those funds in some cases have been diverted to purchase raw material and component inventory above historical levels in order to satisfy commitments to our customers in light of our backlog and continued demand for our products as well as strategic capital expenditures to improve our gross margins.
Finally, we maintain certain domestic U.S. cash balances denominated in foreign currencies, and the U.S. dollar equivalent of these balances fluctuates with changes in the foreign exchange rates between these currencies and the U.S. dollar. Any impairment of goodwill and/or other indefinite-lived intangible assets could adversely impact our results of operations.
Finally, we maintain certain domestic U.S. cash balances denominated in foreign currencies, and the U.S. dollar equivalent of these balances fluctuates with changes in the foreign exchange rates between these currencies and the U.S. dollar.
The amounts and percentages of our net revenue that were derived from sales to U.S. Government customers, including the Department of Defense, whether directly or through prime contractors, was approximately $43,476 or 27% in 2023 and $33,064 or 25% in 2022. Therefore, any significant disruption to or deterioration of our relationship with the U.S.
Government customers, including the Department of Defense, whether directly or through prime contractors, was approximately $54,077 or 33% in 2024 and $43,476 or 27% in 2023. Therefore, any significant disruption to or deterioration of our relationship with the U.S. Government or any prime defense contractor could significantly reduce our revenues.
Failure to comply with environmental requirements could also result in enforcement actions that materially limit or otherwise affect the operations of the facilities involved. Under certain environmental laws, a current or previous owner or operator of an environmentally contaminated site may be held liable for the entire cost of investigation, removal or remediation of hazardous materials at such property.
Under certain environmental laws, a current or previous owner or operator of an environmentally contaminated site may be held liable for the entire cost of investigation, removal or remediation of hazardous materials at such property.
Our goodwill and other indefinite-lived intangible assets are subject to impairment testing on an annual basis. Additionally, goodwill and other indefinite-lived intangible assets are assessed for impairment whenever events and circumstances indicate that impairment may exist. Any excess carrying value of goodwill and/or other intangible assets resulting from an impairment assessment must be written off in the period of determination.
Any impairment of goodwill and/or other indefinite-lived intangible assets could adversely impact our results of operations. Our goodwill and other indefinite-lived intangible assets are subject to impairment testing on an annual basis. Additionally, goodwill and other indefinite-lived intangible assets are assessed for impairment whenever events and circumstances indicate that impairment may exist.
The Company’s Amended Credit Agreement, among other things, provides for a 5-year, $10,000 senior secured term loan (the “Term Loan Facility”) and extends the term of the $30,000 senior secured revolving credit facility (the “Revolving Credit Facility”, and together with the Term Loan Facility, the “Amended Credit Facilities”) through May 30, 2025.
Rising interest rates will increase the cost of our borrowing and will affect our earnings adversely. The Company’s Credit Agreement, among other things, provides for a 5-year, $55,000 senior secured term loan (the “Term Loan Facility”) and a $30,000 senior secured revolving credit facility (the “Revolving Credit Facility”, and together with the Term Loan Facility, the “Credit Facilities”).
Although we have highly experienced technical and engineering employees, we cannot assure you that we will be able to fulfil the orders of our customers for our products, without delay.
Although we have highly experienced technical and engineering employees, we cannot assure you that we will be able to fulfill all of the orders of our customers for our products, without delay. The failure to manage growth and expansion effectively could have a material adverse effect on our business, financial condition, and results of operations.
We also offer separately priced extended warranty contracts on certain Communications Systems products. Warranty costs expected to be incurred are estimated based on the Company’s experience and recorded as costs of products sold.
Warranty costs expected to be incurred are estimated based on the Company’s experience and recorded as costs of products sold, and have historically been minimal.
See discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations beginning on page 28. We are subject to foreign currency fluctuations. We maintain manufacturing operations in North America, the United Kingdom and China, and we export products to various countries.
The effects of such events could reduce demand for our products and have an adverse effect on our business, financial condition, and results of operations. 20 We are subject to foreign currency fluctuations. We maintain manufacturing operations in North America, the United Kingdom and China, and we export products to various countries.
Despite our proactive actions to improve gross margins and to secure alternate vendors to minimize the disruptions experienced in the past, we may not be able to fully offset in a timely fashion the unfavorable impact these disruptions may continue to cause on our business and financial results going forward. 14 A significant portion of our revenues is derived from certain key customers.
Despite our best efforts and focus, we may not be able to fully offset in a timely fashion the unfavorable impact of these economic conditions which could have a material adverse effect on our business and financial results going forward. A significant portion of our revenue is derived from certain key customers.
The market for our products is characterized by rapidly changing technology and evolving industry standards, often resulting in product obsolescence or short product lifecycles. Although we believe that our products utilize state-of-the-art technology, there can be no assurance that competitors will not develop technologies or products that would render our technologies and products obsolete or less marketable.
Although we believe that our products utilize state-of-the-art technology and that the costs associated with change could be prohibitive in terms of costs and time, there can be no assurance that competitors will not develop technologies or products that could render our technologies and products obsolete or less marketable.
With the efforts of internal resources supported by external expertise, the Company restored its information technology systems and production was resumed in both locations. Based on the recovery of our systems, review of the files affected, as well as the Company’s prompt response to and assessment of the incident, no ransom or other amount has been paid to the third-party.
Based on the recovery of our systems, review of the files affected, as well as the Company’s prompt response to and assessment of the incident, no ransom or other amount had been paid to the third party. Nevertheless, the cybersecurity event, the business interruption incurred and the resulting restoration was costly to the Company.
Company Risk Factors Changes in economic conditions, including inflation, interest rates, and supply-chain disruptions have affected and may continue to affect our business, revenues and earnings adversely.
Company Risk Factors Changes in economic conditions, including inflation, tariffs, interest rates, and supply-chain disruptions have affected and may continue to affect our business, revenues and earnings adversely. The post-COVID supply chain conditions which included long-lead times and irregular availability of highly sought after components combined with rapid cost inflation persisted in 2023 and 2024, although to a lesser extent.
If these companies successfully market their products in a manner that renders our technologies obsolete, this may reduce our revenues and operating income and could have other material adverse effects on our business, financial condition and results of operations. 18 Our quarterly and annual results and the price of our common stock have and could in the future continue to fluctuate significantly.
If these companies are more successful than we are in marketing their products and penetrating end markets, this may reduce our revenues and operating income and could have other material adverse effects on our business, financial condition and results of operations.
The effects of such events could have an adverse effect on our business, financial condition, and results of operations. 20 Our ability to use our net operating loss and tax credit carryforwards in the future may be limited, which could increase our tax liabilities and reduce our cash flow and net income.
Our ability to use our net operating loss and tax credit carryforwards in the future may be limited, which could increase our tax liabilities and reduce our cash flow and net income. At December 31, 2024, we had approximately $15,000 of U.S. net operating loss carryforwards and $3,200 of U.S. tax credit carryforwards available to offset future taxable income.
We may incur significant costs or liabilities to satisfy obligations under the terms of the warranties we supply and the contractual terms under which we sell our products and services. We typically offer standard warranties against product defects that range from ninety (90) days to three (3) years from the date of purchase.
We typically offer standard warranties against product defects that range from ninety (90) days to three (3) years from the date of purchase. We also offer separately priced extended warranty contracts on certain Communications Systems products.
Based on our latest assessment at December 31, 2023, we believe it is more likely than not that our U.S. deferred tax assets will be fully realized. However, failure to achieve our business targets could result in future charges to our income tax provision if any of the net operating loss or tax credit carryforwards are not utilized.
We continually assess the carrying value of these assets based on the relevant accounting standards. Based on our latest assessment at December 31, 2024, we believe it is more likely than not that our U.S. deferred tax assets will be fully realized.
While price increases, longer lead times and key component shortages are easing, they still exist.
While price increases, longer lead times and key component shortages have eased, they still sporadically occur and general economic conditions are likely to become more complex with the advent of tariffs in 2025.
Reductions or delays in U.S. and foreign military spending could have a material adverse effect on our business, financial condition and results of operations. A significant portion of our revenues is derived from contracts with U.S. and foreign militaries or OEMs that supply U.S. and foreign militaries.
A significant portion of our revenues is derived from contracts with U.S. and foreign militaries or OEMs that supply U.S. and foreign militaries. In the years ended December 31, 2024 and 2023, $62,374 or 38% and $57,802 or 36%, respectively, of our revenues were comprised of sales made directly or indirectly to U.S. and foreign militaries.
Removed
The disruptions resulting from supply chain and logistics complications hit a crescendo in 2022 in large part because of a sharp uptick for our more-advanced rechargeable battery packs which increased our need for highly sought-after components, including various electronic components, PC boards, chip sets and certain metals to name a few.
Added
This incident caused a partial disruption of our business operations at these locations, which resulted in production and shipping downtime of several weeks as well as lost sales orders. With the efforts of internal resources supported by external expertise, the Company restored its information technology systems and production was resumed in both locations.
Removed
The underlying factors pressuring our gross margins in this timeframe included rapid cost inflation on raw materials and key components not entirely aligned with the timing of customer price increases; incremental fees to source and expedite critical components in a timely manner, necessitating the one-time use of brokers at a much higher cost and with more complex logistics, and further complicating the timely matching of higher costs with customer price increases; and irregular component availability and lead time extensions causing continuous production-line start-ups, shut-downs and changeovers resulting in labor inefficiencies, higher scrap and decreased absorption of overhead.
Added
Despite a business interruption claim, independently computed by a third-party forensic accountant, filed with our cyber insurance underwriter that has not been satisfied, on February 4, 2025 the Company filed a complaint in the Supreme Court of the State of New York, County of Wayne for the outstanding amount of our claim as computed by our third-party forensic accountant.
Removed
Past supply chain disruptions and increased component lead times resulting from COVID-19 and its after-effects were exacerbated by the increased demand for Lithium-based cells from the electric vehicle manufacturers.
Added
The market for our products is characterized by rapidly changing technology and evolving industry standards, often resulting in product obsolescence or short product lifecycles.
Removed
While the latter has resulted in increased supply of such cells, meeting such electric vehicle demand could possibly result in delays or even the discontinuation of the cells required for our products.
Added
Upon closing of the Electrochem Acquisition on October 31, 2024, the Credit Facilities became effective to fund the acquisition and the related closing costs.
Removed
Accordingly, for several years, including 2023, we maintained our cybersecurity insurance policy to help mitigate the impact of a cybersecurity incident.
Added
However, failure to achieve our business targets could result in future charges to our income tax provision if any of the net operating loss or tax credit carryforwards are not utilized. See discussion in Management’s Discussion and Analysis of Financial Condition and Results of Operations beginning on page 27.
Removed
Nevertheless, the cybersecurity event and the resulting restoration was costly to the Company, and a business interruption claim was filed with our cyber insurance underwriter. The claim remains in review and is not included in our 2023 financial results. The Company’s deductible for its cyber insurance is $100 which was recognized in our 2023 results.
Added
Any excess carrying value of goodwill and/or other intangible assets resulting from an impairment assessment must be written off in the period of determination.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeManagement is responsible for hiring appropriate personnel, integrating cybersecurity considerations into the Company’s overall risk management strategy, and for communicating key priorities to employees, as well as for approving budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports.
Biggest changeManagement is responsible for hiring appropriate personnel, integrating cybersecurity considerations into the Company’s overall risk management strategy, and for communicating key priorities to employees, as well as for approving budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports. 24 Notwithstanding the focus and emphasis on cybersecurity, the Company has experienced and will continue to experience cybersecurity incidents, and there can be no guarantee that future incidents will not have a material adverse effect on its business.
Depending on the nature of the services provided, the sensitivity and/or quantity of information processed, the vendor management process may include reviewing cybersecurity practices of these providers, contractually imposing obligations on the provider, inspecting independently audited reports, and/or conducting its own security assessments of their services. The Company’s Board of Directors has ultimate oversight of the Company’s cybersecurity risk.
Depending on the nature of the services provided and the sensitivity and/or quantity of information processed, the vendor management process may include reviewing cybersecurity practices of these providers, contractually imposing obligations on the provider, inspecting independently audited reports, and/or conducting its own security assessments of their services. The Company’s Board of Directors has ultimate oversight of the Company’s cybersecurity risk.
The Company engages leading cybersecurity firms to assist with its security engineering and operations; provide independent evaluations of its security posture through regular assessments; and to audit and provide advice on how to make its security processes and controls more effective. Furthermore, the Company utilizes third-party service providers to perform a variety of functions to assist in operating the business.
The Company engages leading cybersecurity firms to assist with its security engineering and operations; provide independent evaluations of its security posture through regular assessments; and to audit and provide advice on how to make its security processes and controls more effective. The Company utilizes third-party service providers to perform a variety of functions to assist in operating its business.
The mission of our Security Steering Committee is to focus on defining and deploying its information security strategy, sustaining a robust employee cyber awareness and training program, executing security engineering, providing continuous monitoring of its operations, responding and coordinating the response and investigation of cyber threats, building and testing its disaster recovery plans in support of its businesses’ continuity plan requirements, and developing its cyber and information security policies.
The mission of our Security Steering Committee is to focus on defining and deploying its information security strategy, sustaining a robust employee cybersecurity awareness and training program, executing security engineering, providing continuous monitoring of the Company's information security strategy, responding and coordinating the response and investigation of cyber threats, building and testing its disaster recovery plans in support of its businesses’ continuity plan requirements, and developing its cyber and information security policies.
The Company's cybersecurity strategy is based on recognized best practices, standards, and frameworks for cybersecurity and information technology, including the Center for Information Security ("CIS") Controls and National Institute of Standards and Technology ("NIST"). The strategy focuses on implementing technologies, controls, and processes to constantly monitor, identify, assess, and manage cybersecurity risks.
The Company's cybersecurity strategy is based on recognized best practices, standards, and frameworks for cybersecurity and information technology, including the Center for Information Security (“CIS”) Controls and National Institute of Standards and Technology (“NIST”). The strategy focuses on implementing technologies, controls, and processes to constantly monitor, identify, assess, and manage cybersecurity risks.
ITEM 1C. CYBERSECURITY Securing the Company's IT systems is integral and foundational to its everyday operations. The Company’s Security Steering Committee is comprised of cross-functional executive management team members that collectively possess an extensive level of security and technology operations expertise.
ITEM 1C. CYBERSECURITY Securing the Company's IT systems is integral and foundational to its everyday operations. The Company’s Security Steering Committee is comprised of cross-functional executive management team members that collectively possess a high level of cybersecurity and technology operations expertise.
See "Risk Factors - Breaches in security, whether cyber or physical, and related disruptions and/or our inability to prevent or respond to such breaches, could diminish our ability to generate revenues or contain costs, compromise our assets, and negatively impact our business in other ways" for more information on the Company's cybersecurity risks. 25
See Risk Factor “ Breaches in security, whether cyber or physical, and related disruptions and/or our inability to prevent or respond to such breaches, has previously, and in the future could diminish our ability to generate revenues or contain costs, compromise our assets, and negatively impact our business in other ways " for more information on the Company's cybersecurity risks.
Removed
Notwithstanding the focus and emphasis on cybersecurity, the Company has experienced and will continue to experience cybersecurity incidents, and there can be no guarantee that future incidents will not have a material adverse effect on its business.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe own one building in Missouri City, Texas comprising 69,000 square feet, which houses our SWE and Excell USA operations, and lease approximately 97,000 square feet in two buildings on one campus in Shenzhen, China, including a dormitory facility, approximately 25,000 square feet in six buildings in a contiguous area in Newcastle-under-Lyme, United Kingdom, and approximately 24,000 square feet in three facilities for our Excell Canada operations located in Calgary, Mississauga and Vancouver, Canada, all which serve operations in the Battery & Energy Products operating segment.
Biggest changeWe own one building in Missouri City, Texas comprising 69,000 square feet, which houses our SWE and Excell USA operations and one building in Raynham, Massachusetts comprising 82,000 square feet, which houses our Electrochem operations, and lease approximately 97,000 square feet in two buildings on one campus in Shenzhen, China, including a dormitory facility, approximately 25,000 square feet in six buildings in a contiguous area in Newcastle-under-Lyme, United Kingdom, and approximately 24,000 square feet in three facilities for our Excell Canada operations located in Calgary, Mississauga and Vancouver, Canada, all which serve operations in the Battery & Energy Products operating segment.
ITEM 2. PROPERTIES As of December 31, 2023, we own two buildings in Newark, New York comprising approximately 250,000 square feet, which serve operations primarily in the Battery & Energy Products operating segment. Our corporate headquarters are located in our Newark, New York facility.
ITEM 2. PROPERTIES As of December 31, 2024, we own two buildings in Newark, New York comprising approximately 250,000 square feet, which serve operations primarily in the Battery & Energy Products operating segment. Our corporate headquarters are located in our Newark, New York facility.
Our research and development efforts for Battery & Energy Products are conducted at our Newark, New York; Missouri City, Texas; Newcastle-under-Lyme, United Kingdom; Shenzhen, China; and our Canada facilities, while our research and development efforts for our Communications Systems products are conducted in our leased facilities in Tallahassee, Florida and in Virginia Beach, Virginia.
Our research and development efforts for Battery & Energy Products are conducted at our Newark, New York; Missouri City, Texas; Raynham, Massachusetts; Newcastle-under-Lyme, United Kingdom; Shenzhen, China; and our Canada facilities, while our research and development efforts for our Communications Systems products are conducted in our leased facilities in Tallahassee, Florida and in Virginia Beach, Virginia.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities by the Issuer There were no purchases of our common stock by the Company during the years ended December 31, 2023 and December 31, 2022. Dividends We have never declared or paid any cash dividends on our capital stock. Pursuant to our current credit facility, we are precluded from paying any dividends.
Biggest changePurchases of Equity Securities by the Issuer There were no purchases of our common stock by the Company during the years ended December 31, 2024 and December 31, 2023. Dividends We have never declared or paid any cash dividends on our capital stock. Pursuant to our current credit facility, we are precluded from paying any dividends.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Ultralife’s common stock is listed on the NASDAQ Global Market under the symbol “ULBI.” Holders As of March 1, 2024, there were approximately 4,300 registered holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Ultralife’s common stock is listed on the NASDAQ Global Market under the symbol “ULBI.” Holders As of March 1, 2025, there were approximately 5,700 registered holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAs we look ahead, we believe our backlog, durable customer relationships, diversified end markets, new product initiatives, and ongoing actions to improve our gross margins and further strengthen our balance sheet position us to deliver high-quality, sustainable profitable growth. 30 Results of Operations Year ended December 31, 2023 compared with the year ended December 31, 2022: Year ended December 31, Increase/ 2023 2022 (decrease) Revenues: Battery & Energy Products $ 129,953 $ 119,995 $ 9,958 Communications Systems 28,691 11,845 16,846 Total 158,644 131,840 26,804 Cost of products sold: Battery & Energy Products 99,178 93,841 5,337 Communications Systems 20,266 8,599 11,667 Total 119,444 102,440 17,004 Gross profit: Battery & Energy Products 30,775 26,154 4,621 Communications Systems 8,425 3,246 5,179 Total 39,200 29,400 9,800 Operating expenses 29,725 29,271 454 Operating income 9,475 129 9,346 Other expense, net 358 575 (217 ) Income (loss) before income taxes 9,117 (446 ) 9,563 Income tax provision (benefit) 1,951 (326 ) 2,277 Net income (loss) 7,166 (120 ) 7,286 Net loss attributable to non-controlling interest (31 ) (1 ) (30 ) Net income (loss) attributable to Ultralife Corporation $ 7,197 $ (119 ) $ 7,316 Net income (loss) attributable to Ultralife common shares – basic $ 0.44 $ (0.01 ) $ 0.45 Net income (loss) attributable to Ultralife common shares – diluted $ 0.44 $ (0.01 ) $ 0.45 Weighted average shares outstanding – basic 16,213,746 16,125,239 88,507 Weighted average shares outstanding – diluted 16,226,407 16,125,239 101,168 Revenues.
Biggest changeAs a result, we believe that we will be able to deliver profitable growth and incremental cash flow to reduce debt and support strategic capital expenditures. 29 Results of Operations Year ended December 31, 2024 compared with the year ended December 31, 2023: Year Ended December 31, Increase/ 2024 2023 (Decrease) Revenues: Battery & Energy Products $ 144,081 $ 129,953 $ 14,128 Communications Systems 20,375 28,691 (8,316 ) Total 164,456 158,644 5,812 Cost of products sold: Battery & Energy Products 107,764 99,178 8,586 Communications Systems 14,378 20,266 (5,888 ) Total 122,142 119,444 2,698 Gross profit: Battery & Energy Products 36,317 30,775 5,542 Communications Systems 5,997 8,425 (2,428 ) Total 42,314 39,200 3,114 Operating expenses 32,349 29,725 2,624 Operating income 9,965 9,475 490 Other expenses, net 1,664 358 1,306 Income before income taxes 8,301 9,117 (816 ) Income tax provision 1,892 1,951 (59 ) Net income 6,409 7,166 (757 ) Net income (loss) attributable to non-controlling interest 97 (31 ) 128 Net income attributable to Ultralife Corporation $ 6,312 $ 7,197 $ (885 ) Net income attributable to Ultralife common shares – basic $ 0.38 $ 0.44 $ (0.06 ) Net income attributable to Ultralife common shares – diluted $ 0.38 $ 0.44 $ (0.06 ) Weighted average shares outstanding – basic 16,554,935 16,213,746 341,189 Weighted average shares outstanding – diluted 16,767,132 16,226,407 540,725 Revenues.
The results of operations of acquired businesses are included in the consolidated statements of income and comprehensive income beginning on the respective acquisition date. 39 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.
The results of operations of acquired businesses are included in the consolidated statements of income and comprehensive income beginning on the respective acquisition date. 38 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.
Revenue not yet recognized on extended warranty contracts is recorded as deferred revenue on the consolidated balance sheet. For customer contracts with an original expected duration of less than one year, we apply 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.
Revenue not yet recognized on extended warranty contracts is recorded as deferred revenue on the consolidated balance sheets. For customer contracts with an original expected duration of less than one year, we apply 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.
As of December 31, 2023, we 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.
As of December 31, 2024, we 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.
There is a possibility that our goodwill and other intangible assets could be impaired in the future should there be a significant change in the significant estimates and assumptions used in our impairment assessment. 38 Impairment of Long-Lived Assets: We assess our long-lived assets for impairment whenever events or circumstances indicate their carrying amounts may not be recoverable.
There is a possibility that our goodwill and other intangible assets could be impaired in the future should there be a significant change in the significant estimates and assumptions used in our impairment assessment. 37 Impairment of Long-Lived Assets: We assess our long-lived assets for impairment whenever events or circumstances indicate their carrying amounts may not be recoverable.
Off-Balance Sheet Arrangements We have no off-balance sheet arrangements. 37 Critical Accounting Policies and Estimates The above discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, included in Item 8 of this Form 10-K, which have been prepared in accordance with GAAP.
Off-Balance Sheet Arrangements We have no off-balance sheet arrangements. 36 Critical Accounting Policies and Estimates The above discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, included in Item 8 of this Form 10-K, which have been prepared in accordance with GAAP.
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. We conducted our annual impairment test for goodwill and other indefinite-lived intangible assets as of October 1, 2023.
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. We conducted our annual impairment test for goodwill and other indefinite-lived intangible assets as of October 1, 2024.
Other companies may calculate adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. 34 We compensate for these limitations by relying primarily on our GAAP results and using adjusted EBITDA only on a supplemental basis.
Other companies may calculate adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. 33 We compensate for these limitations by relying primarily on our GAAP results and using adjusted EBITDA only on a supplemental basis.
As of December 31, 2023, we had made commitments to purchase approximately $890 of production machinery and equipment. We typically offer standard warranties against product defects that range from ninety (90) days to three (3) years from the date of purchase. We also offer separately priced extended warranty contracts on certain Communications Systems products.
As of December 31, 2024, we had made commitments to purchase approximately $752 of production machinery and equipment. We typically offer standard warranties against product defects that range from ninety (90) days to three (3) years from the date of purchase. We also offer separately priced extended warranty contracts on certain Communications Systems products.
Adjusted EPS for 2023 excludes the provision for deferred income taxes of $1,301 which represents non-cash charges primarily for U.S. income taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future.
Adjusted EPS for 2024 excludes the provision for deferred income taxes of $1,232 which represents non-cash charges primarily for U.S. income taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future.
Adjusted EPS for 2023 excludes the provision for deferred income taxes of $1,301 which represents non-cash charges primarily for U.S. income taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future.
Adjusted EPS for 2024 excludes the provision for deferred income taxes of $1,232 which represents non-cash charges primarily for U.S. income taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future.
As of December 31, 2023, for certain past operations in the U.K., we continue to report a valuation allowance for net operating loss carryforwards of approximately $9,800, nearly all of which can be carried forward indefinitely.
As of December 31, 2024, for certain past operations in the U.K., we continue to report a valuation allowance for net operating loss carryforwards of approximately $9,600, nearly all of which can be carried forward indefinitely.
The 240-basis point improvement in gross margin is due primarily to better alignment of the timing of our customer price increases with the impact of cost inflation on raw materials and key components; extending the time horizon of our sales & operations planning process (“S&OP”) with both customers and suppliers while upgrading our internal resources responsible for the process to reduce the negative impact of production line start-ups, shutdowns and changeovers due to irregular component availability and lead time extensions; concerted efforts to level-load production resulting in improved labor utilization efficiency and higher cost absorption; and improving our process for launching new products to reduce the cost and time of transitioning to high-volume manufacturing.
The 100-basis point improvement in gross margin is due primarily to better alignment of the timing of our customer price increases with the impact of cost inflation on raw materials and key components; extending the time horizon of our sales & operations planning process (“S&OP”) with both customers and suppliers while upgrading our internal resources responsible for the process to reduce the negative impact of production line start-ups, shutdowns and changeovers due to irregular component availability and lead time extensions; and concerted efforts to level-load production resulting in improved labor utilization efficiency and higher cost absorption.
The 240-basis point improvement was due primarily to the following: better alignment of the timing of our customer price increases with the impact of cost inflation on raw materials and key components; extending the time horizon of our sales & operations planning process (“S&OP”) with both customers and suppliers while upgrading our internal resources responsible for the process to reduce the negative impact of production line start-ups, shutdowns and changeovers due to irregular component availability and lead time extensions; concerted efforts to level-load production resulting in improved labor utilization efficiency and higher cost absorption; and improving our process for launching new products to reduce the cost and time of transitioning to high-volume manufacturing.
The 100-basis point improvement was due primarily to the following: better alignment of the timing of our customer price increases with the impact of cost inflation on raw materials and key components; extending the time horizon of our sales & operations planning process (“S&OP”) with both customers and suppliers while upgrading our internal resources responsible for the process to reduce the negative impact of production line start-ups, shutdowns and changeovers due to irregular component availability and lead time extensions; and concerted efforts to level-load production resulting in improved labor utilization efficiency and higher cost absorption.
As of December 31, 2023, we have not recognized a valuation allowance against our other foreign deferred tax assets, including net operating loss carryforwards of $1,300 which expire 2028 thru 2033, as we believe that it is more likely than not that they will be fully realized.
As of December 31, 2024, we have not recognized a valuation allowance against our other foreign deferred tax assets, including net operating loss carryforwards of $1,000 which expire 2029 thru 2033, as we believe that it is more likely than not that they will be fully realized.
Adjusted EBITDA, defined as net income (loss) attributable to Ultralife Corporation before net interest expense, provision (benefit) for income taxes, depreciation and amortization, plus/minus income/expense that we do not consider reflective of our continuing operations, amounted to $15,703 for the year ended December 31, 2023, compared to $6,575 for the prior year.
Adjusted EBITDA, defined as net income attributable to Ultralife Corporation before net interest expense, provision (benefit) for income taxes, depreciation and amortization, plus/minus income/expense that we do not consider reflective of our continuing operations, amounted to $16,480 for the year ended December 31, 2024, compared to $15,703 for the prior year.
The income tax provision for 2023 is comprised of a $650 current provision for taxes expected to be paid on income primarily in foreign jurisdictions, representing a cash-based effective tax rate of 7.1%, and a $1,301 deferred tax provision which primarily represents non-cash charges for U.S. taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future.
The income tax provision for 2024 is comprised of a $660 current provision for taxes expected to be paid on income primarily in foreign jurisdictions, representing a cash-based effective tax rate of 8.0%, and a $1,232 deferred tax provision which primarily represents non-cash charges for U.S. taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future.
The income tax provision for 2023 is comprised of a $650 current provision for taxes expected to be paid on income primarily in foreign jurisdictions, representing a cash-based effective tax rate of 7.1%, and a $1,301 deferred tax provision which primarily represents non-cash charges for U.S. taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future.
The income tax provision for 2024 is comprised of a $660 current provision for taxes expected to be paid on income primarily in foreign jurisdictions, representing a cash-based effective tax rate of 8.0%, and a $1,232 deferred tax provision which primarily represents non-cash charges for U.S. taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future.
Battery & Energy Products’ gross margin increased for the year ended December 31, 2023 by 190 basis points from the prior year to 23.7% primarily due to improved price realization as well as our concerted effort to level-load production more evenly resulting in labor utilization efficiencies and higher cost absorption.
Battery & Energy Products’ gross margin increased for the year ended December 31, 2024 by 150 basis points from the prior year to 25.2% primarily due to improved price realization as well as our concerted effort to level-load production more evenly resulting in labor utilization efficiencies and higher cost absorption.
Overall, operating expenses as a percentage of revenues was 18.7% for the year ended December 31, 2023 compared to 22.2% for the comparable 2022 period.
Overall, operating expenses as a percentage of revenues was 19.7% for the year ended December 31, 2024 compared to 18.7% for the comparable 2023 period.
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.
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.
Adjusted EPS for 2022 excludes the benefit for deferred income taxes of $962 which represents a non-cash benefit primarily for U.S. net operating losses and temporary tax differences which are expected to offset future U.S. taxable income. See section “Adjusted EPS” on page 36 for a reconciliation of adjusted EPS to EPS.
Adjusted EPS for 2023 excludes the provision for deferred income taxes of $1,301 which represents non-cash charges primarily for U.S. net operating losses and temporary tax differences which are expected to offset future U.S. taxable income. See section “Adjusted EPS” on page 35 for a reconciliation of adjusted EPS to EPS.
Adjusted EPS for 2022 excludes the benefit for deferred income taxes of $962 which represents a non-cash benefit primarily for U.S. net operating losses and temporary tax differences which are expected to offset future U.S. taxable income. See section “Adjusted EPS” on page 36 for a reconciliation of adjusted EPS to EPS.
Adjusted EPS for 2023 excludes the provision for deferred income taxes of $1,301 which represents non-cash charges primarily for U.S. net operating losses and temporary tax differences which are expected to offset future U.S. taxable income. See section “Adjusted EPS” on page 35 for a reconciliation of adjusted EPS to EPS.
Commitments As of December 31, 2023, the Company had $6,167 outstanding principal on the Term Loan Facility, of which $2,000 is due to be paid in 2024, and $19,580 outstanding principal on the Revolving Credit Facility. The Company is in full compliance with its debt covenants under the Credit Facilities.
Commitments As of December 31, 2024, the Company had $55,000 outstanding principal on the Term Loan, of which $2,750 is due to be paid in 2025, and no amounts outstanding on the Revolving Credit Facility. The Company is in full compliance with its debt covenants under the Credit Facilities.
Weighted average common shares outstanding used to compute diluted earnings per share increased from 16,125,239 for the 2022 period to 16,226,407 for the 2023 period, primarily due to the issuance of common stock upon the exercise of stock options and the vesting of restricted stock in 2023. 33 Adjusted EBITDA In evaluating our business, we consider and use adjusted EBITDA, a non-GAAP financial measure, as a supplemental measure of our operating performance.
Weighted average common shares outstanding used to compute diluted earnings per share increased from 16,226,407 for the 2023 period to 16,767,132 for the 2024 period, due to the issuance of common stock upon the exercise of stock options in 2024 and a higher average stock price for 2024 as compared to 2023. 32 Adjusted EBITDA In evaluating our business, we consider and use adjusted EBITDA, a non-GAAP financial measure, as a supplemental measure of our operating performance.
Other expenses for the 2023 period includes an Employee Retention Credit (“ERC”) of $1,544 under Section 2301 of the Coronavirus Aid, Relief and Economic Security Act which was filed with the Internal Revenue Service during the second quarter of 2023. Interest and financing expense increased $1,065, or 112.0%, from $951 for 2022 to $2,016 for the comparable period in 2023.
Other expenses for the 2023 period included an Employee Retention Credit (“ERC”) of $1,544 under Section 2301 of the Coronavirus Aid, Relief and Economic Security Act which was filed with the Internal Revenue Service during the second quarter of 2023. Interest and financing expense decreased $76 or 3.8% from $2,016 for 2023 to $1,940 for the comparable period in 2024.
Our assessment also considered our ability to fully utilize before expiration our domestic net operating loss carryforwards, which expire 2031 thru 2035, and our general business tax credit carryforwards, which expire 2028 thru 2043. As of December 31, 2023, our domestic net operating loss carryforwards and general business tax credits were approximately $27,200 and $2,900, respectively.
Our assessment also considered our ability to fully utilize before expiration our domestic net operating loss carryforwards, which expire 2031 thru 2035, and our general business tax credit carryforwards, which expire 2028 thru 2044. As of December 31, 2024, our domestic net operating loss carryforwards and general business tax credits were $15,000 and $3,200, respectively.
Adjusted EPS was $0.52 per share on a diluted basis for 2023, compared to a $0.07 loss per share for 2022.
Adjusted EPS was $0.45 per share on a diluted basis for 2024, compared to $0.52 per share for 2023.
Government and defense sales of this business increased $2,161 or 8.0% from 2022 and now comprise 22.4% of total segment sales versus 22.5% last year. The increase primarily reflects higher U.S. demand resulting in year-over-growth of 9.3%. This was partially offset by a 2.3% decrease in sales to allied countries.
Government and defense sales of this business increased $12,888 or 44.3% from 2023 and now comprise 29.1% of total segment sales versus 22.4% last year. The increase primarily reflects higher U.S. demand resulting in year-over-growth of 49.9%. This was partially offset by a 6.1% decrease in sales to allied countries.
During the year ended December 31, 2023, cash generated from operations was $1,929, as compared to $1,263 used in operations for the year ended December 31, 2022.
During the year ended December 31, 2024, cash generated from operations was $16,636, as compared to $1,929 for the year ended December 31, 2023.
Amortization expense associated with intangible assets related to our acquisitions decreased to $889 for the year-ended December 31, 2023 ($792 in selling, general and administrative expenses and $97 in research and development costs) from $1,282 for the year ended December 31, 2022 ($1,185 in selling, general and administrative expenses and $97 in research and development costs) as a result of the amortization periods of certain intangible assets associated with our acquisition of Excell in December 2021.
Amortization expense associated with intangible assets related to our acquisitions increased to $1,032 for the year ended December 31, 2024 ($929 in selling, general and administrative expenses and $103 in research and development costs) from $889 for the year ended December 31, 2023 ($792 in selling, general and administrative expenses and $97 in research and development costs) as a result of the amortization periods of intangible assets associated with our acquisition of Electrochem on October 31, 2024.
We continue to have significant U.S. net operating loss carryforwards available to utilize as an offset to taxable income. As of December 31, 2023, none of our U.S. net operating loss carryforwards have expired. See Note 6 to the consolidated financial statements included in Item 8 of this Form 10-K for additional information.
As of December 31, 2024, none of our U.S. net operating loss carryforwards have expired. See Note 7 to the consolidated financial statements included in Item 8 of this Form 10-K for additional information.
Cash used in investing activities for the year ended December 31, 2023 was $2,552 for capital expenditures, reflecting investments in equipment for new products transitioning to high-volume manufacturing, as compared to $1,679 capital spending for the year ended December 31, 2022.
Cash used in investing activities for the year ended December 31, 2024 was $49,954, comprised of $48,022 for the acquisition of Electrochem and $1,932 for capital expenditures, reflecting investments in equipment for new products transitioning to high-volume manufacturing, as compared to $2,552 capital spending for the year ended December 31, 2023.
Communications Systems revenues increased $16,846 or 142.2% for the year ended December 31, 2023 as compared to the prior year. The increase is primarily attributable to fulfilling long-lead time orders of vehicle-amplifier adaptors to a global defense contractor for the U.S.
Communications Systems revenues decreased $8,316 or 29.0% for the year ended December 31, 2024 as compared to the prior year. The decrease is primarily attributable to fulfilling long-lead time orders of vehicle-amplifier adaptors to a global defense contractor for the U.S.
Army and of integrated systems of amplifiers and radio vehicle mounts to a major international defense contractor under an ongoing allied country government/defense modernization program. Our order backlog at December 31, 2023 was $103,535, a decrease of $7,459 or 6.7% from the backlog at December 31, 2022 which was $110,994.
Army and of integrated systems of amplifiers and radio vehicle mounts to a major international defense contractor under an ongoing allied country government/defense modernization program in 2023. Our order backlog and high confidence orders at December 31, 2024 were $102,156, a decrease of $1,379 or 1.3% from the backlog and high confidence orders at December 31, 2023 which were $103,535.
Year ended December 31, 2023 2022 Net income (loss) attributable to Ultralife Corporation $ 7,197 $ (119 ) Adjustments: Interest expense, net 2,016 951 Income tax provision (benefit) 1,951 (326 ) Depreciation expense 3,022 3,177 Amortization of intangible assets 889 1,282 Stock-based compensation expense 528 776 Cyber insurance policy deductible 100 - Non-cash purchase accounting adjustments - 55 Severance to former President & CEO - 779 Adjusted EBIDTA $ 15,703 $ 6,575 35 Adjusted Earnings Per Share In evaluating our business, we consider and use adjusted earnings per share (“EPS”), a non-GAAP financial measure, as a supplemental measure of our business performance.
Year ended December 31, 2024 2023 Net income attributable to Ultralife Corporation $ 6,312 $ 7,197 Adjustments: Interest expense, net 1,940 2,016 Income tax provision 1,892 1,951 Depreciation expense 3,125 3,022 Amortization of intangible assets 1,032 889 Stock-based compensation expense 698 528 Cyber insurance policy deductible - 100 Acquisition and other non-recurring costs 1,361 - Non-cash purchase accounting adjustments 120 - Adjusted EBITDA $ 16,480 $ 15,703 34 Adjusted Earnings Per Share In evaluating our business, we consider and use adjusted earnings per share (“EPS”), a non-GAAP financial measure, as a supplemental measure of our business performance.
For our Battery & Energy Products segment, the cost of products sold increased $5,337 or 5.7%, from the year ended December 31, 2022. Battery & Energy Products’ gross profit for 2023 was $30,775 or 23.7% of revenues, an increase of $4,621 or 17.7% from gross profit of $26,154, or 21.8% of revenues, for 2022.
For our Battery & Energy Products segment, the cost of products sold increased $8,586 or 8.7%, from the year ended December 31, 2023. Battery & Energy Products’ gross profit for 2024 was $36,317 or 25.2% of revenues, an increase of $5,542 or 18.0% from gross profit of $30,775, or 23.7% of revenues, for 2023.
Adjusted EPS is calculated as follows for the periods presented: Three-month period ended December 31, 2023 December 31, 2022 Amount Per basic share Per diluted share Amount Per basic share Per diluted share Net income (loss) attributable to Ultralife Corporation $ 2,873 $ .18 $ .17 $ (224 ) $ (.01 ) $ (.01 ) Deferred tax provision (benefit) 56 - .01 (279 ) (.02 ) (.02 ) Adjusted net income (loss) $ 2,929 $ .18 $ .18 $ (503 ) $ (.03 ) $ (.03 ) Weighted average shares outstanding 16,338 16,479 16,135 16,135 Year ended December 31, 2023 December 31, 2022 Amount Per basic share Per diluted share Amount Per basic share Per diluted share Net income (loss) attributable to Ultralife Corporation $ 7,197 $ .44 $ .44 $ (119 ) $ (.01 ) $ (.01 ) Deferred tax provision (benefit) 1,301 .08 .08 (962 ) (.06 ) (.06 ) Adjusted net income (loss) $ 8,498 $ .52 $ .52 $ (1,081 ) $ (.07 ) $ (.07 ) Weighted average shares outstanding 16,214 16,226 16,125 16,125 36 Liquidity and Capital Resources Cash Flows and General Business Matters As of December 31, 2023, cash totaled $10,278 (including restricted cash of $82), an increase of $4,565 from the $5,713 as of December 31, 2022, primarily attributable to our profitable operations in 2023.
Adjusted EPS is calculated as follows for the periods presented: Three-month period ended December 31, 2024 December 31, 2023 Amount Per basic share Per diluted share Amount Per basic share Per diluted share Net income attributable to Ultralife Corporation $ 194 $ .01 $ .01 $ 2,873 $ .18 $ .17 Deferred tax (benefit) provision (63 ) - - 56 - .01 Adjusted net income $ 131 $ .01 $ .01 $ 2,929 $ .18 $ .18 Weighted average shares outstanding 16,629 16,762 16,338 16,479 Year ended December 31, 2024 December 31, 2023 Amount Per basic share Per diluted share Amount Per basic share Per diluted share Net income attributable to Ultralife Corporation $ 6,312 $ .38 $ .38 $ 7,197 $ .44 $ .44 Deferred tax provision 1,232 .08 .07 1,301 .08 .08 Adjusted net income $ 7,544 $ .46 $ .45 $ 8,498 $ .52 $ .52 Weighted average shares outstanding 16,555 16,767 16,214 16,226 35 Liquidity and Capital Resources Cash Flows and General Business Matters As of December 31, 2024, cash totaled $6,854, a decrease of $3,424 from the $10,278 as of December 31, 2023, primarily attributable to our profitable operations in 2023.
Army. We expect additional orders for Leader Radio and Vehicle Amplifier-Adaptors in 2024. The 2023 year-end backlog is related to orders that are expected to ship throughout 2024. Cost of Products Sold and Gross Profit. Cost of products sold for the year ended December 31, 2023 increased $17,004 or 16.6% from the year ended December 31, 2022.
We have received or expect additional orders for Leader Radio and Vehicle Amplifier-Adaptors in 2025. The 2024 year-end backlog and high confidence orders are related to orders that are expected to ship throughout 2025. Cost of Products Sold and Gross Profit.
The increase in government and defense sales reflects growth in Battery & Energy Products sales of $2,161 or 8.0% representing higher demand from prime defense contractors and growth in Communications Systems of $16,846 or 142.2% primarily attributable to fulfilling long-lead time orders of vehicle-amplifier adaptors to a global defense contractor for the U.S.
The increase in government and defense sales reflects growth in Battery & Energy Products sales of $12,888 or 44.3% from $29,111 in 2023 to $41,999 in 2024 representing higher demand from prime defense contractors, partially offset by a decline in Communications Systems sales of $8,316 or 29.0% from $28,691 in 2023 to $20,375 in 2024, primarily attributable to fulfilling long-lead time orders of vehicle-amplifier adaptors to a global defense contractor for the U.S.
Excluding the ERC gain in the 2023 period, miscellaneous income amounted to $114 for the 2023 period compared to $376 for the 2022 period, primarily attributable to foreign exchange gains and loss due to fluctuations in foreign currency exchange rates. 32 Income Tax (Benefit) Provision.
Excluding interest expense and the ERC gain in the 2023 period, miscellaneous income amounted to $276 for the 2024 period compared to $114 for the 2023 period, primarily attributable to foreign exchange gains and loss due to fluctuations in foreign currency exchange rates. 31 Income tax provision was $1,892 for the year ended December 31, 2024, compared to $1,951 for the year ended December 31, 2023.
Total revenues for the year ended December 31, 2023 amounted to $158,644, an increase of $26,804, or 20.3% from the $131,840 reported for the year ended December 31, 2022. Battery & Energy Products revenues increased $9,958, or 8.3%, for the year ended December 31, 2023 as compared to the prior year.
Total revenues for the year ended December 31, 2024 amounted to $164,456, an increase of $5,812, or 3.7% from the $158,644 reported for the year ended December 31, 2023. Battery & Energy Products revenues increased $14,128, or 10.9%, for the year ended December 31, 2024 as compared to the prior year.
Excluding the ERC gain in the 2023 period, miscellaneous income amounted to $114 for the 2023 period compared to $376 for the 2022 period, primarily attributable to foreign exchange gains and loss due to fluctuations in foreign currency exchange rates.
Excluding interest expense and the ERC gain in the 2023 period, miscellaneous income amounted to $276 for the 2024 period compared to $114 for the 2023 period, primarily attributable to foreign exchange gains and loss due to fluctuations in foreign currency exchange rates. 28 Income tax provision was $1,892 for the year ended December 31, 2024, compared to $1,951 for the year ended December 31, 2023.
Operating expenses increased by $454 or 1.6% to $29,725 during the year ended December 31, 2023, compared to $29,271 during the year ended December 31, 2022.
Operating expenses increased by $2,624 or 8.8% to $32,349 during the year ended December 31, 2024, compared to $29,725 during the year ended December 31, 2023.
For our Communications Systems segment, the cost of products sold increased by $11,667 or 135.7% from the year ended December 31, 2022.
For our Communications Systems segment, the cost of products sold decreased by $5,888 or 29.1% from the year ended December 31, 2023.
Other expenses for 2023 includes an ERC of $1,544 under Section 2301 of the Coronavirus Aid, Relief and Economic Security Act which was filed with the Internal Revenue Service during the second quarter of 2023. Interest and financing expense increased $1,065, or 112.0%, from $951 for 2022 to $2,016 for the comparable period in 2023.
Other expense totaled $1,664 for the year ended December 31, 2024 compared to $358 for the year ended December 31, 2023. Other expenses for 2023 includes an ERC of $1,544 under Section 2301 of the Coronavirus Aid, Relief and Economic Security Act which was filed with the Internal Revenue Service during the second quarter of 2023.
Consolidated cost of products sold as a percentage of total revenue decreased from 77.7% for the year ended December 31, 2022 to 75.3% for the year ended December 31, 2023. Correspondingly, consolidated gross margin was 24.7% for the year ended December 31, 2023, compared with 22.3% for the year ended December 31, 2022.
Cost of products sold for the year ended December 31, 2024 increased $2,698 or 2.3% from the year ended December 31, 2023. Consolidated cost of products sold as a percentage of total revenue decreased from 75.3% for the year ended December 31, 2023 to 74.3% for the year ended December 31, 2024.
Industrial and other commercial sales of $23,335 decreased $4,062 or 14.8% primarily due to timing of demand for 9-Volt and our new Thionyl Chloride and thin cell battery cells which are expected to rebound in future periods.
Presidential election, and an $823 or 3.5% decline in industrial and other commercial sales from $23,335 in 2023 to $22,512 in 2024 due primarily to timing of demand for and market testing of our new Thionyl Chloride and thin cell battery cells which are expected to increase in future periods.
Furthermore, we utilize Excell experienced technical resources in our global new product initiatives and add a complementary line of highly engineered products, both existing and in development, that are costly for our customers to substitute with products of a competitor. 28 Currently, we do not experience significant seasonal sales trends in either of our operating segments, although sales to the U.S.
Furthermore, we utilize Excell experienced technical resources in our global new product initiatives and add a complementary line of highly engineered products, both existing and in development, that are costly for our customers to substitute with products of a competitor. 27 On October 31, 2024, we acquired Electrochem Solutions, Inc, a Massachusetts corporation (“Electrochem”).
Communications Systems’ gross profit for the year ended December 31, 2023 was $8,425 or 29.4% of revenues, an increase of $5,179 or 159.6% from gross profit of $3,246 or 27.4% of revenues for the year ended December 31, 2022.
Communications Systems’ gross profit for the year ended December 31, 2024 was $5,997 or 29.4% of revenues, a decrease of $2,428 or 28.8% from gross profit of $8,425 or 29.4% of revenues for the year ended December 31, 2023. Operating Expenses.
See the section “Adjusted EBITDA” beginning on page 34 for a reconciliation of adjusted EBITDA to net income attributable to Ultralife. The Company’s liquidity remains solid, with cash on hand of $10,278, working capital of $66,473 and a current ratio (current assets divided by current liabilities) of 3.8.
The Company’s liquidity remains solid, with cash on hand of $6,854, working capital of $67,869 and a current ratio (current assets divided by current liabilities) of 3.3 as of December 31, 2024, as compared to cash on hand of $10,278, working capital of $66,473 and a current ratio of 3.8 as of December 31, 2023.
For the 2023 period, cash provided by our operations was comprised of net income of $7,166 plus non-cash items totaling $5,804 for depreciation, amortization, stock-based compensation, and deferred taxes, partially offset by $11,041 attributable to increased working capital.
For the 2024 period, cash provided by our operations was comprised of net income of $6,409 plus non-cash items totaling $6,340 for depreciation, amortization, stock-based compensation, and deferred taxes, and other non-cash operating expenses, plus $3,887 attributable to a reduction in working capital, driven primarily by the timing of collections and payments.
This 2023 performance reflected a $7,797 or 8.4% increase in sales to our commercial customers and a $19,007 or 49.0% increase in sales to government and defense customers.
Our consolidated 2024 performance reflected a $1,240 or 1.2% increase in sales to our commercial customers and a $4,573 or 7.9% increase in sales to government and defense customers.
Operating expenses as a percentage of revenue was 18.7% for 2023 compared to 22.2% for 2022, a 350-basis point improvement reflecting the sales leverage of our business model. Other expenses totaled $358 for the year-ended December 31, 2023 compared to $575 for the year ended December 31, 2022.
Operating expenses as a percentage of revenue was 19.7% for 2024 compared to 18.7% for 2023, a 100-basis point increase due primarily to the one-time acquisition costs. Other expenses totaled $1,664 for the year ended December 31, 2024 compared to $358 for the year ended December 31, 2023.
Net income attributable to Ultralife Corporation common stockholders per diluted share was $0.44 for 2023 and a net loss of $0.01 for 2022. Adjusted EPS was $0.52 per share on a diluted basis for 2023, compared to a $0.07 loss per share for 2022.
Adjusted EPS was $0.45 per share on a diluted basis for 2024, compared to $0.52 per share for 2023.
For the comparable 2022 period, the income tax benefit was comprised of a $636 current tax provision and a $962 deferred tax benefit primarily for U.S. pre-tax losses and temporary tax differences expected to offset future U.S. taxable income. 29 Net income attributable to Ultralife Corporation was $7,197, or $0.44 per share – basic and diluted on a GAAP basis for the year ended December 31, 2023, compared to a net loss of $119, or $0.01 per share – basic and diluted for the year ended December 31, 2022.
Net income attributable to Ultralife Corporation was $6,312, or $0.38 per share – basic and diluted on a GAAP basis for the year ended December 31, 2024, compared to $7,197, or $0.44 per share – basic and diluted for the year ended December 31, 2023.
Army and of integrated systems of amplifiers and radio vehicle mounts to a major international defense contractor under an ongoing allied country government/defense modernization program. Demand for our products remains strong with our 2023 year-end backlog of $103,535. Gross margin increased to 24.7% for the year ended December 31, 2023 from 22.3% for the year ended December 31, 2022.
Army and of integrated systems of amplifiers and radio vehicle mounts to a major international defense contractor in 2023. Demand for our products remains strong with our 2024 year-end backlog and high confidence orders of $102,156 representing 62.1% of 2024 revenues.
Consolidated revenues increased by $26,804 or 20.3% to $158,644 for the year ended December 31, 2023 compared to $131,840 for the year ended December 31, 2022. During 2023, we experienced revenue growth of 8.3% for our Battery & Energy Products business and 142.2% for our Communications Systems business.
Consolidated revenues for 2024 excluding Electrochem were $158,394, representing a decrease of $250 or 0.2% when compared to the prior year. During 2024, we experienced organic revenue growth, excluding Electrochem, of 6.2% for our Battery & Energy Products business and a revenue decline of 29.0% for our Communications Systems business.
Research and development costs were $7,531 in 2023, an increase of $450 or 6.4%, from $7,081 reported in 2022. This increase is largely attributable to investments in new product development. Selling, general, and administrative expenses increased $4 to $22,194 for the year ended December 31, 2023 from $22,190 for the year ended December 31, 2022.
Research and development costs were $8,268 in 2024, an increase of $737 or 9.8%, from $7,531 reported in 2023. This increase is attributable to additional investments in new product development and our acquisition of Electrochem which contributed $227 of the increase.
Commercial revenues of this business increased $7,797 or 8.4% from 2022 and now comprise 77.6% of total segment sales versus 77.5% last year.
Commercial revenues of this business increased $1,240 or 1.2% from 2023 and now comprise 70.9% of total segment sales versus 77.6% last year. The increase in our commercial business was due to the acquisition of Electrochem on October 31, 2024 which contributed $6,062 to commercial sales for this segment.
For the comparable 2022 period, the income tax benefit was comprised of a $636 current tax provision and a $962 deferred tax benefit primarily for U.S. net operating losses and temporary tax differences expected to offset future U.S. taxable income. Net income attributable to Ultralife Corporation was $7,197 for 2023, as compared to a net loss of $119 for 2022.
For the comparable 2023 period, the income tax provision was comprised of a $650 current tax provision and a $1,301 deferred tax provision which primarily represents non-cash charges for U.S. taxes that we expect will be fully offset by net operating loss carryforwards and other tax credits for the foreseeable future.
Army’s Leader radio program, a September 2022 contract valued at approximately $7,500 to supply its integrated system of A-320 amplifiers and A-320HVA radio vehicle mounts to a major international defense contractor for an ongoing government/defense modernization program, and an October 2022 purchase order for $5,500 to supply its vehicle communications systems to a global prime defense contractor for the U.S.
The year-over-year decrease is primarily attributable to fulfilling long-lead time orders of vehicle-amplifier adaptors to a global defense contractor for the U.S. Army and of integrated systems of amplifiers and radio vehicle mounts to a major international defense contractor under an ongoing allied country government/defense modernization program in 2023.
The increase in operating expense is primarily attributable to increased new product development investments, the recording of the $100 deductible on our cybersecurity insurance policy for expenses associated with the January 2023 cyberattack and higher variable compensation, including officer and executive team bonuses and salesforce commissions, and insurance costs. Both periods reflected our continued tight control over discretionary spending.
The increase is primarily attributable to one-time costs of $1,294 directly related to the acquisition of Electrochem, and increased investments in new product development and the strengthening of sales and marketing leadership team to expedite organic growth and further leverage our global brand and resources. Both periods reflected continued tight control over discretionary spending.
The increase is primarily due to the financing of our acquisition of Excell in December 2021, working capital funding resulting from our January 2023 cyberattack and rising interest rates.
The decrease is primarily due to the paydown of the financing of our acquisition of Excell in December 2021, partially offset by the financing of our acquisition of Electrochem on October 31, 2024.
The increase is primarily attributable to increased new product development investments, the recording of the $100 deductible on our cybersecurity insurance policy for expenses incurred associated with the January 2023 cyberattack and higher variable compensation, including Officer and Executive Team bonuses and salesforce commissions, and insurance costs. Both periods reflected continued tight control over discretionary spending.
The increase is primarily attributable to one-time costs of $1,294 directly related to the acquisition of Electrochem, and increased investments in new product development and the strengthening of our sales and marketing leadership team to expedite organic growth and further leverage our global brand and resources. Both periods reflected continued tight control over discretionary spending.
Removed
Department of Defense and other international defense organizations can be sporadic based on the needs of those particular customers and allocated funding levels. The COVID-19 pandemic has created significant economic disruption and uncertainty around the world. The Company continues to closely monitor the developments surrounding COVID-19 and its related strains and take actions to mitigate the business risks involved.
Added
Based in Raynham, MA 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.
Removed
We remain focused on ensuring the health and safety of our employees by implementing the material protocols established by public health officials. We continue to strive to ensure an uninterrupted flow of our mission critical products serving medical device, first responder, public safety, energy and national security customers.
Added
Acquiring Electrochem advances our strategy of more fully realizing the operating leverage of our business model through scale and creates opportunities for gross margin expansion through the realization of manufacturing cost efficiencies, U.S.-based vertical integration, supply chain and lean initiatives.
Removed
The increase in our commercial business was due to medical sales of $36,945 which increased $9,624 or 35.2% due primarily to higher demand from a large global medical device OEM and the successful launch of our X-5 medical cart battery system.
Added
Electrochem primarily services a blue-chip customer base with little or no overlap with Ultralife’s customers, has long-tenured technical resources which we plan to utilize in progressing our global new product initiatives, and has 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.
Removed
Income tax provision was $1,951 for the year ended December 31, 2023, compared to an income tax benefit of $326 for the year ended December 31, 2022. Our effective tax rate decreased to 21.4% for the 2023 period as compared to 73.1% for the 2022 period, primarily attributable to the year over year increase in income before income taxes.
Added
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. Furthermore, with Electrochem we are increasing our value to our customers and significantly strengthening our competitive position in our end markets.
Removed
To protect our ability to service our substantial backlog while considering the longer lead times and unreliable delivery dates for critical components, during 2023 we increased inventory by $1,023 or 2.5%. As of December 31, 2022, the Company had cash on hand of $5,713, working capital of $50,075 and a current ratio of 2.7.
Added
Currently, we do not experience significant seasonal sales trends in either of our operating segments, although sales to the U.S. Department of Defense and other international defense organizations can be sporadic based on the needs of those particular customers and allocated funding levels.
Removed
The increase in our commercial business was due to medical sales of $36,945 which increased $9,624 or 35.2% due primarily to the high demand for our batteries used in ventilators, respirators, infusion pumps and other medical devices and the successful launch of our X-5 medical cart battery system, and oil and gas sales of $40,562 which increased $2,235 or 5.8% due to continuing high demand for our down-hole drilling batteries.
Added
Consolidated revenues increased by $5,812 or 3.7% to $164,456 for the year ended December 31, 2024 compared to $158,644 for the year ended December 31, 2023. Revenues for 2024 include $6,062 for Electrochem which was acquired on October 31, 2024.
Removed
For our Battery & Energy Products business, the backlog increased $3,365 or 3.8% to $91,997 from $88,632. The year-over-year increase is primarily driven by higher demand across the major markets that we serve including government and defense, medical, oil and gas and industrial.
Added
The increase in our commercial business was due to Electrochem sales of $6,062, partially offset by a $1,559 or 4.2% decline in medical sales from $36,946 in 2023 to $35,387 in 2024, primarily reflecting the timing of sales to a large global medical device OEM and a $2,441 or 6.0% decline in oil & gas market sales from $40,562 in 2023 to $38,121 in 2024, excluding Electrochem, due primarily to market uncertainty leading up to the November 2024 U.S.
Removed
The 2023 year-end backlog is primarily related to orders expected to ship in the next year and does not include future shipments under any of the indefinite delivery/indefinite quantity U.S. Department of Defense awards. 31 For our Communications Systems business, the backlog decreased $10,824 or 48.4% to $11,538 from $22,362.

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Other ULBI 10-K year-over-year comparisons