ulbi20220630_10q.htm
0000875657 false --12-31 2022 Q2 2 10 1 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2002 2005 2006 2007 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2002 2005 2006 2007 2011 2012 2013 2014 2015 0 0 0 30.5 3 283 84 0 100 714 320 0.09 0.02 0.05 0.03 0.09 0.02 0.05 0.03 0.10 0.10 0 0 0.10 0.10 00008756572022-01-012022-06-30 00008756572022-07-25 xbrli:shares thunderdome:item xbrli:pure 0000875657us-gaap:NonUsMember2021-01-012021-06-30 0000875657country:US2021-01-012021-06-30 iso4217:USD 00008756572021-01-012021-06-30 0000875657ulbi:CommunicationsSystemsSegmentMemberus-gaap:NonUsMember2021-01-012021-06-30 0000875657ulbi:CommunicationsSystemsSegmentMembercountry:US2021-01-012021-06-30 0000875657ulbi:CommunicationsSystemsSegmentMember2021-01-012021-06-30 0000875657ulbi:BatteryEnergyProductsSegmentMemberus-gaap:NonUsMember2021-01-012021-06-30 0000875657ulbi:BatteryEnergyProductsSegmentMembercountry:US2021-01-012021-06-30 0000875657ulbi:BatteryEnergyProductsSegmentMember2021-01-012021-06-30 0000875657us-gaap:NonUsMember2022-01-012022-06-30 0000875657country:US2022-01-012022-06-30 0000875657ulbi:CommunicationsSystemsSegmentMemberus-gaap:NonUsMember2022-01-012022-06-30 0000875657ulbi:CommunicationsSystemsSegmentMembercountry:US2022-01-012022-06-30 0000875657ulbi:CommunicationsSystemsSegmentMember2022-01-012022-06-30 0000875657ulbi:BatteryEnergyProductsSegmentMemberus-gaap:NonUsMember2022-01-012022-06-30 0000875657ulbi:BatteryEnergyProductsSegmentMembercountry:US2022-01-012022-06-30 0000875657ulbi:BatteryEnergyProductsSegmentMember2022-01-012022-06-30 0000875657us-gaap:NonUsMember2021-04-012021-06-30 0000875657country:US2021-04-012021-06-30 00008756572021-04-012021-06-30 0000875657ulbi:CommunicationsSystemsSegmentMemberus-gaap:NonUsMember2021-04-012021-06-30 0000875657ulbi:CommunicationsSystemsSegmentMembercountry:US2021-04-012021-06-30 0000875657ulbi:CommunicationsSystemsSegmentMember2021-04-012021-06-30 0000875657ulbi:BatteryEnergyProductsSegmentMemberus-gaap:NonUsMember2021-04-012021-06-30 0000875657ulbi:BatteryEnergyProductsSegmentMembercountry:US2021-04-012021-06-30 0000875657ulbi:BatteryEnergyProductsSegmentMember2021-04-012021-06-30 0000875657us-gaap:NonUsMember2022-04-012022-06-30 0000875657country:US2022-04-012022-06-30 00008756572022-04-012022-06-30 0000875657ulbi:CommunicationsSystemsSegmentMemberus-gaap:NonUsMember2022-04-012022-06-30 0000875657ulbi:CommunicationsSystemsSegmentMembercountry:US2022-04-012022-06-30 0000875657ulbi:CommunicationsSystemsSegmentMember2022-04-012022-06-30 0000875657ulbi:BatteryEnergyProductsSegmentMemberus-gaap:NonUsMember2022-04-012022-06-30 0000875657ulbi:BatteryEnergyProductsSegmentMembercountry:US2022-04-012022-06-30 0000875657ulbi:BatteryEnergyProductsSegmentMember2022-04-012022-06-30 0000875657ulbi:GovernmentDefenseMember2021-01-012021-06-30 0000875657ulbi:CommercialMember2021-01-012021-06-30 0000875657ulbi:GovernmentDefenseMemberulbi:CommunicationsSystemsSegmentMember2021-01-012021-06-30 0000875657ulbi:CommercialMemberulbi:CommunicationsSystemsSegmentMember2021-01-012021-06-30 0000875657ulbi:GovernmentDefenseMemberulbi:BatteryEnergyProductsSegmentMember2021-01-012021-06-30 0000875657ulbi:CommercialMemberulbi:BatteryEnergyProductsSegmentMember2021-01-012021-06-30 0000875657ulbi:GovernmentDefenseMember2022-01-012022-06-30 0000875657ulbi:CommercialMember2022-01-012022-06-30 0000875657ulbi:GovernmentDefenseMemberulbi:CommunicationsSystemsSegmentMember2022-01-012022-06-30 0000875657ulbi:CommercialMemberulbi:CommunicationsSystemsSegmentMember2022-01-012022-06-30 0000875657ulbi:GovernmentDefenseMemberulbi:BatteryEnergyProductsSegmentMember2022-01-012022-06-30 0000875657ulbi:CommercialMemberulbi:BatteryEnergyProductsSegmentMember2022-01-012022-06-30 0000875657ulbi:GovernmentDefenseMember2021-04-012021-06-30 0000875657ulbi:CommercialMember2021-04-012021-06-30 0000875657ulbi:GovernmentDefenseMemberulbi:CommunicationsSystemsSegmentMember2021-04-012021-06-30 0000875657ulbi:CommercialMemberulbi:CommunicationsSystemsSegmentMember2021-04-012021-06-30 0000875657ulbi:GovernmentDefenseMemberulbi:BatteryEnergyProductsSegmentMember2021-04-012021-06-30 0000875657ulbi:CommercialMemberulbi:BatteryEnergyProductsSegmentMember2021-04-012021-06-30 0000875657ulbi:GovernmentDefenseMember2022-04-012022-06-30 0000875657ulbi:CommercialMember2022-04-012022-06-30 0000875657ulbi:GovernmentDefenseMemberulbi:CommunicationsSystemsSegmentMember2022-04-012022-06-30 0000875657ulbi:CommercialMemberulbi:CommunicationsSystemsSegmentMember2022-04-012022-06-30 0000875657ulbi:GovernmentDefenseMemberulbi:BatteryEnergyProductsSegmentMember2022-04-012022-06-30 0000875657ulbi:CommercialMemberulbi:BatteryEnergyProductsSegmentMember2022-04-012022-06-30 0000875657us-gaap:CorporateMember2021-01-012021-06-30 0000875657us-gaap:CorporateMember2022-01-012022-06-30 0000875657us-gaap:CorporateMember2021-04-012021-06-30 0000875657us-gaap:CorporateMember2022-04-012022-06-30 00008756572021-06-30 00008756572022-06-30 00008756572020-12-31 00008756572021-12-31 0000875657ulbi:CapitalAdditionPurchaseCommitmentsMember2022-01-012022-06-30 0000875657ulbi:AccruedExpensesAndOtherCurrentLiabilitesAndOtherNoncurrentLiabilitiesMember2022-06-30 utr:Y 0000875657ulbi:AccruedExpensesAndOtherCurrentLiabilitesAndOtherNoncurrentLiabilitiesMember2021-12-31 0000875657us-gaap:OtherNoncurrentLiabilitiesMember2021-12-31 0000875657us-gaap:OtherNoncurrentLiabilitiesMember2022-06-30 0000875657ulbi:AccruedExpensesAndOtherCurrentLiabilitiesMember2021-12-31 0000875657ulbi:AccruedExpensesAndOtherCurrentLiabilitiesMember2022-06-30 0000875657us-gaap:OtherNoncurrentAssetsMember2021-12-31 0000875657us-gaap:OtherNoncurrentAssetsMember2022-06-30 0000875657srt:MaximumMember2022-06-30 0000875657srt:MinimumMember2022-06-30 0000875657us-gaap:ForeignCountryMember2022-01-012022-06-30 0000875657us-gaap:StateAndLocalJurisdictionMember2022-01-012022-06-30 0000875657us-gaap:DomesticCountryMemberus-gaap:InternalRevenueServiceIRSMember2022-01-012022-06-30 0000875657us-gaap:ForeignCountryMember2022-06-30 0000875657us-gaap:ForeignCountryMemberus-gaap:HerMajestysRevenueAndCustomsHMRCMember2022-06-30 0000875657us-gaap:DomesticCountryMemberus-gaap:InternalRevenueServiceIRSMember2021-12-31 0000875657us-gaap:RestrictedStockMember2022-01-012022-06-30 0000875657us-gaap:RestrictedStockMember2022-06-30 0000875657us-gaap:RestrictedStockMemberulbi:The2014LongtermIncentivePlan2014Member2022-01-012022-06-30 iso4217:USDxbrli:shares 00008756572022-01-012022-03-31 00008756572022-03-31 0000875657us-gaap:EmployeeStockOptionMember2022-01-012022-06-30 0000875657us-gaap:EmployeeStockOptionMember2022-06-30 00008756572021-01-012021-03-31 0000875657us-gaap:RestrictedStockMember2021-01-012021-06-30 0000875657us-gaap:RestrictedStockMember2021-01-012021-03-31 0000875657us-gaap:RestrictedStockMember2022-01-012022-03-31 0000875657us-gaap:EmployeeStockOptionMember2021-01-012021-06-30 0000875657us-gaap:EmployeeStockOptionMember2021-01-012021-03-31 0000875657us-gaap:EmployeeStockOptionMember2022-01-012022-03-31 0000875657us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-01-012021-06-30 0000875657us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-01-012022-06-30 0000875657us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-04-012021-06-30 0000875657us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-04-012022-06-30 0000875657us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-06-30 0000875657us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-06-30 0000875657us-gaap:ResearchAndDevelopmentExpenseMember2021-04-012021-06-30 0000875657us-gaap:ResearchAndDevelopmentExpenseMember2022-04-012022-06-30 0000875657us-gaap:OtherIntangibleAssetsMember2021-12-31 0000875657us-gaap:TrademarksMember2021-12-31 0000875657us-gaap:TradeNamesMember2021-12-31 0000875657us-gaap:PatentedTechnologyMember2021-12-31 0000875657us-gaap:CustomerRelationshipsMember2021-12-31 0000875657us-gaap:OtherIntangibleAssetsMember2022-06-30 0000875657us-gaap:TrademarksMember2022-06-30 0000875657us-gaap:TradeNamesMember2022-06-30 0000875657us-gaap:PatentedTechnologyMember2022-06-30 0000875657us-gaap:CustomerRelationshipsMember2022-06-30 0000875657ulbi:CommunicationsSystemsSegmentMember2022-06-30 0000875657ulbi:BatteryEnergyProductsSegmentMember2022-06-30 0000875657ulbi:CommunicationsSystemsSegmentMember2021-12-31 0000875657ulbi:BatteryEnergyProductsSegmentMember2021-12-31 0000875657us-gaap:ConstructionInProgressMember2021-12-31 0000875657us-gaap:ConstructionInProgressMember2022-06-30 0000875657us-gaap:ComputerEquipmentMember2021-12-31 0000875657us-gaap:ComputerEquipmentMember2022-06-30 0000875657us-gaap:FurnitureAndFixturesMember2021-12-31 0000875657us-gaap:FurnitureAndFixturesMember2022-06-30 0000875657us-gaap:MachineryAndEquipmentMember2021-12-31 0000875657us-gaap:MachineryAndEquipmentMember2022-06-30 0000875657us-gaap:BuildingAndBuildingImprovementsMember2021-12-31 0000875657us-gaap:BuildingAndBuildingImprovementsMember2022-06-30 0000875657us-gaap:LandMember2021-12-31 0000875657us-gaap:LandMember2022-06-30 0000875657country:NL2021-12-31 0000875657country:NL2022-06-30 0000875657us-gaap:EmployeeStockOptionMember2021-01-012021-06-30 0000875657us-gaap:EmployeeStockOptionMember2021-04-122021-06-30 0000875657us-gaap:EmployeeStockOptionMember2022-01-012022-06-30 0000875657us-gaap:EmployeeStockOptionMember2022-04-012022-06-30 00008756572021-04-122021-06-30 0000875657us-gaap:RevolvingCreditFacilityMemberulbi:AmendedCreditAgreementMembersrt:MaximumMember2021-12-132021-12-13 0000875657us-gaap:RevolvingCreditFacilityMemberulbi:AmendedCreditAgreementMembersrt:MinimumMember2021-12-132021-12-13 0000875657us-gaap:RevolvingCreditFacilityMemberulbi:AmendedCreditAgreementMembersrt:MaximumMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-12-132021-12-13 0000875657us-gaap:RevolvingCreditFacilityMemberulbi:AmendedCreditAgreementMembersrt:MinimumMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-12-132021-12-13 0000875657us-gaap:RevolvingCreditFacilityMemberulbi:AmendedCreditAgreementMembersrt:MaximumMemberus-gaap:BaseRateMember2021-12-132021-12-13 0000875657us-gaap:RevolvingCreditFacilityMemberulbi:AmendedCreditAgreementMembersrt:MinimumMemberus-gaap:BaseRateMember2021-12-132021-12-13 0000875657us-gaap:RevolvingCreditFacilityMemberulbi:AmendedCreditAgreementMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-12-132021-12-13 0000875657us-gaap:RevolvingCreditFacilityMemberulbi:AmendedCreditAgreementMemberus-gaap:FederalFundsEffectiveSwapRateMember2021-12-132021-12-13 0000875657us-gaap:RevolvingCreditFacilityMemberulbi:AmendedCreditAgreementMembersrt:ScenarioForecastMember2023-06-30 0000875657us-gaap:RevolvingCreditFacilityMemberulbi:AmendedCreditAgreementMembersrt:ScenarioForecastMember2023-03-31 0000875657us-gaap:RevolvingCreditFacilityMemberulbi:AmendedCreditAgreementMembersrt:ScenarioForecastMember2022-12-31 0000875657ulbi:AmendedCreditAgreementMember2022-06-30 0000875657us-gaap:RevolvingCreditFacilityMemberulbi:AmendedCreditAgreementMember2022-06-30 0000875657ulbi:LongtermDebtCurrentMaturitiesMemberulbi:TermLoanFacilityMemberulbi:AmendedCreditAgreementMember2022-06-30 0000875657us-gaap:RevolvingCreditFacilityMemberulbi:AmendedCreditAgreementMemberulbi:KeybankMember2021-12-13 0000875657ulbi:TermLoanFacilityMemberulbi:AmendedCreditAgreementMemberulbi:KeybankMember2021-12-13 0000875657ulbi:TermLoanFacilityMemberulbi:AmendedCreditAgreementMemberulbi:KeybankMember2021-12-132021-12-13 0000875657ulbi:UehcMember2022-01-012022-06-30 0000875657ulbi:UehcMember2022-04-012022-06-30 0000875657ulbi:UehcMember2022-06-30 0000875657ulbi:UehcMemberus-gaap:TechnologyBasedIntangibleAssetsMember2022-06-30 0000875657ulbi:UehcMemberus-gaap:TechnologyBasedIntangibleAssetsMember2022-01-012022-06-30 0000875657ulbi:UehcMemberulbi:BacklogMember2022-06-30 0000875657ulbi:UehcMemberulbi:BacklogMember2022-01-012022-06-30 0000875657ulbi:UehcMemberus-gaap:CustomerContractsMember2022-06-30 0000875657ulbi:UehcMemberus-gaap:CustomerContractsMember2022-01-012022-06-30 0000875657ulbi:UehcMemberus-gaap:TradeNamesMember2022-06-30 0000875657ulbi:UehcMemberus-gaap:CustomerRelationshipsMember2022-06-30 0000875657ulbi:UehcMemberus-gaap:CustomerRelationshipsMember2022-01-012022-06-30 0000875657ulbi:UehcMember2021-12-132021-12-13 0000875657us-gaap:NoncontrollingInterestMember2022-06-30 0000875657us-gaap:TreasuryStockMember2022-06-30 0000875657us-gaap:RetainedEarningsMember2022-06-30 0000875657us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-30 0000875657us-gaap:AdditionalPaidInCapitalMember2022-06-30 0000875657us-gaap:CommonStockMember2022-06-30 0000875657us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-30 0000875657us-gaap:TreasuryStockMember2022-04-012022-06-30 0000875657us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-30 0000875657us-gaap:CommonStockMember2022-04-012022-06-30 0000875657us-gaap:NoncontrollingInterestMember2022-04-012022-06-30 0000875657us-gaap:RetainedEarningsMember2022-04-012022-06-30 0000875657us-gaap:NoncontrollingInterestMember2022-03-31 0000875657us-gaap:TreasuryStockMember2022-03-31 0000875657us-gaap:RetainedEarningsMember2022-03-31 0000875657us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-31 0000875657us-gaap:AdditionalPaidInCapitalMember2022-03-31 0000875657us-gaap:CommonStockMember2022-03-31 0000875657us-gaap:NoncontrollingInterestMember2021-06-30 0000875657us-gaap:TreasuryStockMember2021-06-30 0000875657us-gaap:RetainedEarningsMember2021-06-30 0000875657us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-30 0000875657us-gaap:AdditionalPaidInCapitalMember2021-06-30 0000875657us-gaap:CommonStockMember2021-06-30 0000875657us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-30 0000875657us-gaap:TreasuryStockMember2021-04-012021-06-30 0000875657us-gaap:CommonStockMember2021-04-012021-06-30 0000875657us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-30 0000875657us-gaap:NoncontrollingInterestMember2021-04-012021-06-30 0000875657us-gaap:RetainedEarningsMember2021-04-012021-06-30 00008756572021-03-31 0000875657us-gaap:NoncontrollingInterestMember2021-03-31 0000875657us-gaap:TreasuryStockMember2021-03-31 0000875657us-gaap:RetainedEarningsMember2021-03-31 0000875657us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-31 0000875657us-gaap:AdditionalPaidInCapitalMember2021-03-31 0000875657us-gaap:CommonStockMember2021-03-31 0000875657us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-06-30 0000875657us-gaap:TreasuryStockMember2022-01-012022-06-30 0000875657us-gaap:AdditionalPaidInCapitalMember2022-01-012022-06-30 0000875657us-gaap:CommonStockMember2022-01-012022-06-30 0000875657us-gaap:NoncontrollingInterestMember2022-01-012022-06-30 0000875657us-gaap:RetainedEarningsMember2022-01-012022-06-30 0000875657us-gaap:NoncontrollingInterestMember2021-12-31 0000875657us-gaap:TreasuryStockMember2021-12-31 0000875657us-gaap:RetainedEarningsMember2021-12-31 0000875657us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-31 0000875657us-gaap:AdditionalPaidInCapitalMember2021-12-31 0000875657us-gaap:CommonStockMember2021-12-31 0000875657us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-06-30 0000875657us-gaap:TreasuryStockMember2021-01-012021-06-30 0000875657us-gaap:AdditionalPaidInCapitalMember2021-01-012021-06-30 0000875657us-gaap:CommonStockMember2021-01-012021-06-30 0000875657us-gaap:NoncontrollingInterestMember2021-01-012021-06-30 0000875657us-gaap:RetainedEarningsMember2021-01-012021-06-30 0000875657us-gaap:NoncontrollingInterestMember2020-12-31 0000875657us-gaap:TreasuryStockMember2020-12-31 0000875657us-gaap:RetainedEarningsMember2020-12-31 0000875657us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-31 0000875657us-gaap:AdditionalPaidInCapitalMember2020-12-31 0000875657us-gaap:CommonStockMember2020-12-31
 

 



 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)                                    

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2022

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____________ to ____________

 

Commission file number: 0-20852

ULTRALIFE CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware

(State or other jurisdiction of incorporation of organization)

 

2000 Technology Parkway Newark, New York 14513

(Address of principal executive offices) (Zip Code)

16-1387013

(I.R.S. Employer Identification No.)

 

(315) 332-7100 

(Registrant’s telephone number, including area code:)

 

None

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Common Stock, $0.10 par value per share

ULBI

NASDAQ

(Title of each class)

(Trading Symbol)

(Name of each exchange on which registered)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data file required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐

Accelerated filer

   

Non-accelerated filer ☐

Smaller reporting company

   
 

Emerging Growth Company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No☒

 

As of July 25, 2022, the registrant had 16,132,868 shares of common stock outstanding.

 



 

 

 

 

ULTRALIFE CORPORATION AND SUBSIDIARIES

 

INDEX

 

   

Page

PART I.

FINANCIAL INFORMATION

 
     

Item 1.

Consolidated Financial Statements (unaudited):

 
     
 

Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021

1

     
 

Consolidated Statements of Income and Comprehensive (Loss) Income for the Three and Six-Month Periods Ended June 30, 2022 and June 30, 2021

2

     
 

Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 30, 2022 and June 30, 2021

3

     
 

Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six-Month Periods Ended June 30, 2022 and June 30, 2021

4

     
 

Notes to Consolidated Financial Statements

5

     

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

     

Item 4.

Controls and Procedures

28

     

PART II.

OTHER INFORMATION

 
     

Item 6.

Exhibits

29

     
 

Signatures

30

 

 

 

 

PART I.     FINANCIAL INFORMATION

 

Item 1.    CONSOLIDATED FINANCIAL STATEMENTS

 

ULTRALIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands except share amounts)

(Unaudited)

 

   

June 30,

2022

   

December 31,

2021

 
ASSETS  

Current assets:

               

Cash

  $ 5,114     $ 8,413  

Trade accounts receivable, net of allowance for doubtful accounts of $316 and $346, respectively

    22,349       20,232  

Inventories, net

    39,201       33,189  

Prepaid expenses and other current assets

    5,161       4,690  

Total current assets

    71,825       66,524  

Property, plant and equipment, net

    22,338       23,205  

Goodwill

    37,502       38,068  

Other intangible assets, net

    16,566       17,390  

Deferred income taxes, net

    11,731       11,472  

Other noncurrent assets

    2,261       2,879  

Total assets

  $ 162,223     $ 159,538  
                 

LIABILITIES AND STOCKHOLDERS EQUITY

 

Current liabilities:

               

Accounts payable

  $ 13,441     $ 9,823  

Current portion of long-term debt

    2,000       2,000  

Accrued compensation and related benefits

    1,924       1,842  

Accrued expenses and other current liabilities

    4,811       5,259  

Total current liabilities

    22,176       18,924  

Long-term debt

    19,566       18,857  

Deferred income taxes

    2,086       2,254  

Other noncurrent liabilities

    1,328       1,760  

Total liabilities

    45,156       41,795  
                 

Commitments and contingencies (Note 9)

               
                 

Stockholders’ equity:

               

Preferred stock – par value $.10 per share; authorized 1,000,000 shares; none issued

    -       -  

Common stock – par value $.10 per share; authorized 40,000,000 shares; issued – 20,567,460 shares at June 30, 2022 and 20,522,427 shares at December 31, 2021; outstanding – 16,132,868 shares at June 30, 2022 and 16,089,832 shares at December 31, 2021

    2,057       2,052  

Capital in excess of par value

    186,999       186,518  

Accumulated deficit

    (47,488 )     (47,832 )

Accumulated other comprehensive loss

    (3,151 )     (1,653 )

Treasury stock - at cost; 4,434,592 shares at June 30, 2022 and 4,432,595 shares at December 31, 2021

    (21,480 )     (21,469 )

Total Ultralife Corporation equity

    116,937       117,616  

Non-controlling interest

    130       127  

Total stockholders’ equity

    117,067       117,743  
                 

Total liabilities and stockholders’ equity

  $ 162,223     $ 159,538  
 

The accompanying notes are an integral part of these consolidated financial statements.

 

1

 

 

ULTRALIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE (LOSS) INCOME

(In thousands except per share amounts)

(Unaudited)

 

   

Three-month period ended

   

Six-month period ended

 
   

June 30,

2022

   

June 30,

2021

   

June 30,

2022

   

June 30,

2021

 
                                 

Revenues

  $ 32,126     $ 26,770     $ 62,499     $ 52,743  

Cost of products sold

    24,480       19,503       47,895       38,498  

Gross profit

    7,646       7,267       14,604       14,245  
                                 
Operating expenses:                                

Research and development

    1,672       1,853       3,529       3,500  

Selling, general and administrative

    5,181       4,323       10,577       8,702  

Total operating expenses

    6,853       6,176       14,106       12,202  
                                 

Operating income

    793       1,091       498       2,043  
                                 
Other expense (income):                                

Interest and financing expense

    177       55       311       111  

Miscellaneous

    (62 )     (34 )     (79 )     (34 )

Total other expense

    115       21       232       77  
                                 

Income before income tax provision

    678       1,070       266       1,966  

Income tax provision (benefit)

    170       248       (81 )     465  
                                 

Net income

    508       822       347       1,501  
                                 

Net (loss) income attributable to non-controlling interest

    (4 )     11       3       19  
                                 

Net income attributable to Ultralife Corporation

    512       811       344       1,482  
                                 
Other comprehensive (loss) income:                                

Foreign currency translation adjustments

    (1,262 )     93       (1,498 )     196  
                                 

Comprehensive (loss) income attributable to Ultralife Corporation

  $ (750 )   $ 904     $ (1,154 )   $ 1,678  
                                 

Net income per share attributable to Ultralife common stockholders basic

  $ .03     $ .05     $ . 02     $ .09  
                                 

Net income per share attributable to Ultralife common stockholders diluted

  $ .03     $ .05     $ . 02     $ .09  
                                 

Weighted average shares outstanding basic

    16,129       16,019       16,116       15,997  

Potential common shares

    20       241       25       197  

Weighted average shares outstanding - diluted

    16,149       16,260       16,141       16,194  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

2

 

 

 

ULTRALIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)

 

   

Six-month period ended

 
   

June 30,

2022

   

June 30,

2021

 
OPERATING ACTIVITIES:                

Net income

  $ 347     $ 1,501  
Adjustments to reconcile net income to net cash (used in) provided by operating activities:                

Depreciation

    1,635       1,460  

Amortization of intangible assets

    651       310  

Amortization of financing fees

    17       52  

Stock-based compensation

    373       370  

Deferred income taxes

    (375 )     345  
Changes in operating assets and liabilities:                

Accounts receivable

    (2,385 )     2,390  

Inventories

    (6,606 )     864  

Prepaid expenses and other assets

    104       2,536  

Accounts payable and other liabilities

    2,839       (2,873 )

Net cash (used in) provided by operating activities

    (3,400 )     6,955  
                 
INVESTING ACTIVITIES:                

Purchases of property, plant and equipment

    (585 )     (1,225 )

Net cash used in investing activities

    (585 )     (1,225 )
                 
FINANCING ACTIVITIES:                

Borrowings on revolving credit facility

    1,550       -  

Payments on term loan facility

    (833 )     (789 )

Proceeds from exercise of stock options

    113       314  
Payment of debt issuance costs     (25 )     -  

Tax withholdings on stock-based awards

    (11 )     (67 )

Net cash provided by (used in) financing activities

    794       (542 )
                 

Effect of exchange rate changes on cash

    (108 )     (13 )
                 

(DECREASE) INCREASE IN CASH

    (3,299 )     5,175  
                 

Cash, Beginning of period

    8,413       10,653  

Cash, End of period

  $ 5,114     $ 15,828  

  

The accompanying notes are an integral part of these consolidated financial statements.

 

3

 

 

ULTRALIFE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

(In thousands except share amounts)

(Unaudited)

 

                   

Capital

   

Accumulated

                                 
   

Common Stock

   

in Excess

   

Other

                   

Non-

         
    Number of             of Par     Comprehensive     Accumulated     Treasury     Controlling          
    Shares     Amount     Value     Income (Loss)     Deficit     Stock     Interest     Total  
                                                                 

Balance December 31, 2020

    20,373,519     $ 2,037     $ 185,464     $ (1,782 )   $ (47,598 )   $ (21,321 )   $ 123     $ 116,923  

Net income

                                    1,482               19       1,501  

Stock option exercises

    88,656       9       305                       (52 )             262  

Stock-based compensation – stock options

                    337                                       337  

Stock-based compensation – restricted stock

                    33                                       33  

Vesting of restricted stock

    12,501       1       (1 )                     (15 )             (15 )

Foreign currency translation adjustments

                            196                               196  

Balance June 30, 2021

    20,474,676     $ 2,047     $ 186,138     $ (1,586 )   $ (46,116 )   $ (21,388 )   $ 142     $ 119,237  
                                                                 

Balance December 31, 2021

    20,522,427     $ 2,052     $ 186,518     $ (1,653 )   $ (47,832 )   $ (21,469 )   $ 127     $ 117,743  

Net income

                                    344               3       347  

Stock option exercises

    38,369       4       109                       (7 )             106  

Stock-based compensation – stock options

                    362                                       362  

Stock-based compensation – restricted stock

                    11                                       11  

Vesting of restricted stock

    6,664       1       (1 )                     (4 )             (4 )

Foreign currency translation adjustments

                            (1,498 )                             (1,498 )

Balance June 30, 2022

    20,567,460     $ 2,057     $ 186,999     $ (3,151 )   $ (47,488 )   $ (21,480 )   $ 130     $ 117,067  
                                                                 

Balance March 31, 2021

    20,416,511     $ 2,042     $ 185,674     $ (1,679 )   $ (46,927 )   $ (21,380 )   $ 131     $ 117,861  

Net income

                                    811               11       822  

Stock option exercises

    51,497       5       278                                       283  

Stock-based compensation – stock options

                    174                                       174  

Stock-based compensation – restricted stock

                    12                                       12  

Vesting of restricted stock

    6,668                                       (8 )             (8 )

Foreign currency translation adjustments

                            93                               93  

Balance June 30, 2021

    20,474,676     $ 2,047     $ 186,138     $ (1,586 )   $ (46,116 )   $ (21,388 )   $ 142     $ 119,237  
                                                                 

Balance March 31, 2022

    20,560,796     $ 2,056     $ 186,816     $ (1,889 )   $ (48,000 )   $ (21,476 )   $ 134     $ 117,641  

Net income

                                    512               (4 )     508  

Stock option exercises

    -       -       -                       -               -  

Stock-based compensation – stock options

                    181                                       181  

Stock-based compensation – restricted stock

                    3                                       3  

Vesting of restricted stock

    6,664       1       (1 )                     (4 )             (4 )

Foreign currency translation adjustments

                            (1,262 )                             (1,262 )

Balance June 30, 2022

    20,567,460     $ 2,057     $ 186,999     $ (3,151 )   $ (47,488 )   $ (21,480 )   $ 130     $ 117,067  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

4

 

 

ULTRALIFE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands except share and per share amounts)

(Unaudited)

 

 

1.

BASIS OF PRESENTATION

 

The accompanying unaudited consolidated financial statements of Ultralife Corporation and its subsidiaries (the “Company” or “Ultralife”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Rule 8-03 of Regulation S-X. Accordingly, they do not include all the information and notes for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair presentation of the consolidated financial statements have been included. Results for interim periods should not be considered indicative of results to be expected for a full year. Reference should be made to the consolidated financial statements and related notes thereto contained in our Form 10-K for the year ended December 31, 2021.

 

The December 31, 2021 consolidated balance sheet information referenced herein was derived from audited financial statements but does not include all disclosures required by GAAP.

 

Certain items previously reported in specific financial statement captions have been reclassified to conform to the current presentation.

 

Recent Accounting Guidance Not Yet Adopted

 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments”, which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company is currently assessing the impact that adopting this new accounting standard will have on our consolidated financial statements.

 

 

 

2.

ACQUISITION

 

On December 13, 2021, the Company acquired all the outstanding shares of Excell (as defined below) for an aggregate net purchase price of $23,519 in cash.

 

On December 13, 2021, 1336889 B.C. Unlimited Liability Company, a British Columbia unlimited liability company and wholly-owned subsidiary of Ultralife Canada Holding Corp., a Delaware corporation (“UCHC”) and wholly-owned subsidiary of Ultralife Excell Holding Corp., a Delaware corporation (“UEHC”) and wholly-owned subsidiary of Ultralife Corporation, completed the acquisition of all issued and outstanding shares of Excell Battery Canada Inc., a British Columbia corporation (“Excell Canada”) (the “Excell Canada Acquisition”), and, concurrently, 1336902 B.C. Unlimited Liability Company, a British Columbia unlimited liability company and wholly-owned subsidiary of UCHC, completed the acquisition of all issued and outstanding shares of 656700 B.C. LTD, a British Columbia corporation and sole owner of all issued and outstanding shares of Excell Battery Corporation USA, a Texas corporation (“Excell USA”, and together with Excell Canada, “Excell Battery Group” or “Excell”) (the “Excell USA Acquisition”, and together with the Excell Canada Acquisition, the “Excell Acquisition”).

 

Based in Canada with U.S. operations, Excell is a leading independent designer and manufacturer of high-performance smart battery systems, battery packs and monitoring systems to customer specifications. Excell serves a variety of industrial markets including downhole drilling, OEM industrial and medical devices, automated meter reading, ruggedized computers, and mining, marine and other mission critical applications which demand uncompromised safety, service, reliability and quality.

 

5

 

The Excell Canada Acquisition was completed pursuant to a Share Purchase Agreement dated December 13, 2021 (the “Excell Canada Acquisition Agreement”) by and among 1336889 B.C. Unlimited Liability Company, Mark Kroeker, Randolph Peters, Brian Larsen, M. & W. Holdings Ltd., Karen Kroeker, Heather Peterson, Michael Kroeker, Nicholas Kroeker, Brentley Peters, Craig Peters, Kurtis Peters, Heather Larsen, Ian Kane, Carol Peters, and 0835205 B.C. LTD (the “Excell Canada Sellers”), Mark Kroeker in his capacity as the Excell Canada Sellers’ Representative, and Excell Canada. The Excell USA Acquisition was completed pursuant to a Share Purchase Agreement dated December 13, 2021 (the “Excell USA Acquisition Agreement”, and together with the Excell Canada Acquisition Agreement, the “Excell Acquisition Agreements”) by and among 1336902 B.C. Unlimited Liability Company, M. & W. Holdings Ltd., Ian Kane, Sanford Capital Ltd., Arcee Enterprises Inc., and 0835205 B.C. Ltd. (the “Excell USA Sellers”, and together with the Excell Canada Sellers, the “Sellers”), Mark Kroeker in his capacity as the Excell USA Sellers’ Representative, and 656700 B.C. LTD. The Excell Acquisition Agreements contain customary terms and conditions including representations, warranties and indemnification provisions. A portion of the consideration paid to the Sellers is being held in escrow for indemnification purposes for a period of twelve months from the closing date.

 

The Excell Acquisition was funded by the Company through a combination of cash on hand and borrowings under the Amended Credit Facilities (Note 3).

 

The Excell Acquisition was accounted for in accordance with the accounting treatment of a business combination pursuant to FASB ASC Topic 805, Business Combinations (“ASC 805”). Accordingly, the purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values on the acquisition date. The excess of the purchase price over the estimated fair value of the separately identifiable assets acquired and liabilities assumed was allocated to goodwill. Management is responsible for determining the acquisition date fair value of the assets acquired and liabilities assumed, which requires the use of various assumptions and judgments that are inherently subjective. The purchase price allocation presented below reflects all known information about the fair value of the assets acquired and liabilities assumed as of the acquisition date. The purchase price allocation is subject to change should additional information existing as of the acquisition date about the fair value of the assets acquired and liabilities assumed becomes known. The final purchase price allocation may reflect material changes in the valuation of assets acquired and liabilities assumed, including but not limited to intangible assets, fixed assets, deferred taxes, and residual goodwill.

 

Cash

  $ 736  

Accounts receivable

    3,570  

Inventories

    3,622  

Prepaid expenses and other current assets

    785  

Property, plant and equipment

    429  

Goodwill

    10,989  

Other intangible assets

    8,870  

Other noncurrent assets

    991  

Accounts payable

    (1,450 )

Accrued compensation and related benefits

    (540 )

Accrued expenses and other current liabilities

    (720 )

Deferred tax liability, net

    (2,223 )

Other noncurrent liabilities

    (803 )

Net assets acquired

  $ 24,256  

 

The purchase price allocation was adjusted during the six-month period ended June 30, 2022 to reflect a change in the estimated fair value of certain other intangible assets acquired. The measurement period adjustment resulted in a $40 increase in other intangible assets acquired, a $10 increase in deferred tax liabilities and a $30 decrease to goodwill. The adjusted purchase price allocation is reflected in the consolidated balance sheet as of June 30, 2022.

 

The goodwill included in the Company’s purchase price allocation presented above represents the value of Excell’s assembled and trained workforce, the incremental value that Excell engineering and technology will bring to the Company and the revenue growth which is expected to occur over time which is attributable to increased market penetration from future new products and customers. The goodwill acquired in connection with the acquisition is not deductible for income tax purposes.

 

Other intangible assets were valued using the income approach which requires a forecast of all expected future cash flows and the use of certain assumptions and estimates. The following table summarizes the estimated fair value and annual amortization for each of the identifiable intangible assets acquired.

 

6

 

 

                   

Annual Amortization

 
   

Estimated

Fair Value

   

Amortization Period (Years)

   

Year 1

   

Year 2

   

Year 3

   

Year 4

   

Year 5

 

Customer relationships

  $ 4,100       15     $ 273     $ 273     $ 273     $ 273     $ 273  

Trade name

    3,150     Indefinite       -       -       -       -       -  

Customer contracts

    1,140       15       76       76       76       76       76  

Backlog

    360       1       360       -       -       -       -  

Technology

    120       7       17       17       17       17       17  

Total

  $ 8,870             $ 726     $ 366     $ 366     $ 366     $ 366  

 

We acquired right-of-use assets and assumed lease liabilities of $960 for Excell’s operating facilities. Right-of-use assets are classified as other noncurrent assets, and current and long-term lease liabilities are classified as accrued expenses and other current liabilities and other noncurrent liabilities, respectively, on the Company’s consolidated balance sheet.

 

The operating results and cash flows of Excell are reflected in the Company’s consolidated financial statements from the date of acquisition. Excell is included in the Battery & Energy Products segment.

 

For the three months ended June 30, 2022, Excell contributed revenue of $6,591 and net income of $320, inclusive of amortization expense of $182 on acquired identifiable intangible assets. For the six months ended June 30, 2022, Excell contributed revenue of $13,027 and net income of $714, inclusive of amortization expense of $364 on acquired identifiable intangible assets and $55 in cost of products sold attributable to the fair market value step-up of acquired inventory sold during the period.

 

 

 

3.

DEBT

 

On December 13, 2021, Ultralife, Southwest Electronic Energy Corporation, a Texas corporation (“SWE”), CLB, INC., a Texas corporation and wholly owned subsidiary of SWE (“CLB”), UEHC, UCHC and Excell USA, as borrowers, entered into the Second Amendment Agreement with KeyBank National Association (“KeyBank” or the “Bank”), as lender and administrative agent, to amend the Credit and Security Agreement dated May 31, 2017 as amended by the First Amendment Agreement by and among Ultralife, SWE, CLB and KeyBank dated May 1, 2019 (the “Credit Agreement”, and together with the Second Amendment Agreement, the “Amended Credit Agreement”).

 

The 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. Up to six months prior to May 30, 2025, the Revolving Credit Facility may be increased to $50,000 with the Bank’s concurrence.

 

As of June 30, 2022, the Company had $9,167 outstanding principal on the Term Loan Facility, $2,000 of which is included in current portion of long-term debt on the consolidated balance sheet, and $12,530 outstanding on the Revolving Credit Facility. As of June 30, 2022, total unamortized debt issuance costs of $131, including placement, renewal and legal fees associated with the Amended Credit Agreement, are classified as a reduction of long-term debt on the balance sheet. Debt issuance costs are amortized to interest expense over the term of the Amended Credit Facilities.

 

The remaining availability under the Revolving Credit Facility is subject to certain borrowing base limits based on trade receivables and inventories.

 

The Company is required to repay the borrowings under the Term Loan Facility in equal consecutive monthly payments commencing on February 1, 2022, in arrears, together with applicable interest. All unpaid principal and accrued and unpaid interest with respect to the Term Loan Facility is due and payable in full on January 1, 2027. All unpaid principal and accrued and unpaid interest with respect to the Revolving Credit Facility is due and payable in full on May 30, 2025. The Company may voluntarily prepay principal amounts outstanding at any time subject to certain restrictions.

 

7

 

In addition to the customary affirmative and negative covenants, the Company must maintain a consolidated senior leverage ratio, as defined in the Amended Credit Agreement, of equal to or less than 3.5 to 1.0 for the fiscal quarters ending December 31, 2022 and March 31, 2023, and equal to or less than 3.0 to 1.0 for the fiscal quarters ending June 30, 2023 and thereafter.

 

Borrowings under the Amended Credit Facilities are secured by substantially all the assets of the Company and its subsidiaries.

 

Interest will accrue on outstanding indebtedness under the Amended Credit Facilities at the Base Rate or the Overnight LIBOR Rate, as selected by the Company, plus the applicable margin. The Base Rate is the higher of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus 50 basis points, and (c) the Overnight LIBOR Rate plus one hundred basis points. The applicable margin ranges from zero to negative 50 basis points for the Base Rate and from 185 to 215 basis points for the Overnight LIBOR Rate and are determined based on the Company’s senior leverage ratio. The Second Amendment Agreement includes standard market provisions permitting the Bank to transition from LIBOR to a SOFR based rate, in its discretion

 

The Company must pay a fee of 0.15% to 0.25% based on the average daily unused availability under the Revolving Credit Facility.

 

Payments must be made by the Company to the extent borrowings exceed the maximum amount then permitted to be drawn on the Amended Credit Facilities and from the proceeds of certain transactions. Upon the occurrence of an event of default, the outstanding obligations may be accelerated, and the Bank will have other customary remedies including resort to the security interest the Company provided to the Bank.

 

 

 

4.

EARNINGS PER SHARE

 

Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) attributable to Ultralife by the weighted average shares outstanding during the period. Diluted EPS includes the dilutive effect of securities, if any, and is calculated using the treasury stock method. For the three-month period ended June 30, 2022, 135,163 stock options and 5,000 restricted stock awards were included in the calculation of diluted EPS as such securities are dilutive. Inclusion of these securities resulted in 20,352 additional shares in the calculation of fully diluted earnings per share. For the comparable three-month period ended June 30, 2021, 906,404 stock options and 14,164 restricted stock awards were included in the calculation of diluted EPS resulting in 240,259 additional shares in the calculation of fully diluted earnings per share. For the six-month periods ended June 30, 2022 and June 30, 2021, 135,163 and 659,488 stock options and 5,000 and 14,164 restricted stock awards, respectively, were included in the calculation of diluted EPS as such securities are dilutive. Inclusion of these securities resulted in 24,751 and 197,848 additional shares, respectively, in the calculation of fully diluted EPS. There were 1,073,077 and 414,916 outstanding stock options for the three and six-month periods ended June 30, 2022 and June 30, 2021, respectively, which were not included in EPS as the effect would be anti-dilutive.

 

 

 

5.

SUPPLEMENTAL BALANCE SHEET INFORMATION

 

Fair Value Measurements and Disclosures

 

The fair value of financial instruments approximated their carrying values at June 30, 2022 and December 31, 2021. The fair value of cash, accounts receivable, accounts payable, accrued liabilities, and the current portion of long-term debt approximates carrying value due to the short-term nature of these instruments.

 

Cash

 

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

 

   

June 30,

   

December 31,

 
   

2022

   

2021

 

Cash

  $ 5,037     $ 8,329  

Restricted cash

    77       84  

Total

  $ 5,114     $ 8,413  

 

8

 

As of June 30, 2022 and December 31, 2021, restricted cash included $77 and $84, respectively, of euro-denominated deposits withheld by the Dutch tax authorities and third-party VAT representatives in connection with a previously utilized logistics arrangement in the Netherlands. Restricted cash is included as a component of the cash balance for purposes of the consolidated statements of cash flows.

 

Inventories, Net

 

Inventories are stated at the lower of cost or net realizable value, net of obsolescence reserves, with cost determined under the first-in, first-out (FIFO) method. The composition of inventories, net was:

 

   

June 30,

   

December 31,

 
   

2022

   

2021

 

Raw materials

  $ 26,209     $ 21,660  

Work in process

    3,526       4,227  

Finished goods

    9,466       7,302  

Total

  $ 39,201     $ 33,189  

 

Property, Plant and Equipment, Net

 

Major classes of property, plant and equipment consisted of the following:

 

   

June 30,

   

December 31,

 
   

2022

   

2021

 

Land

  $ 1,273     $ 1,273  

Buildings and leasehold improvements

    15,522       15,442  

Machinery and equipment

    63,930       63,780  

Furniture and fixtures

    2,756       2,588  

Computer hardware and software

    7,583       7,579  

Construction in process

    824       761  
      91,888       91,423  

Less: Accumulated depreciation

    (69,550 )     (68,218 )

Property, plant and equipment, net

  $ 22,338     $ 23,205  

 

Depreciation expense for property, plant and equipment was as follows:

 

   

Three-month period ended

   

Six-month period ended

 
   

June 30,

   

June 30,

   

June 30,

   

June 30,

 
   

2022

   

2021

   

2022

   

2021

 

Depreciation expense

  $ 819     $ 730     $ 1,635     $ 1,460  

 

9

 

 

Goodwill

 

The following table summarizes the goodwill activity by segment for the six-month period ended June 30, 2022.

 

   

Battery &

Energy

   

Communications

         
   

Products

   

Systems

   

Total

 

Balance – December 31, 2021

  $ 26,575     $ 11,493     $ 38,068  

Measurement period adjustment (1)

    (30 )     -       (30 )

Effect of foreign currency translation

    (536 )     -       (536 )

Balance – June 30, 2022

  $ 26,009     $ 11,493     $ 37,502  

 

 

(1)

Change for measurement period adjustment related to Excell Acquisition (Note 2).

 

Other Intangible Assets, Net

 

The composition of other intangible assets was:

 

   

at June 30, 2022

 
           

Accumulated

         
   

Cost

   

Amortization

   

Net

 

Customer relationships

  $ 12,978     $ 5,689     $ 7,289  

Patents and technology

    5,560       5,117       443  

Trade names

    4,631       468       4,163  

Trademarks

    3,407       -       3,407  

Other

    1,500       236       1,264  

Total other intangible assets

  $ 28,076     $ 11,510     $ 16,566  

 

   

at December 31, 2021

 
           

Accumulated

         
   

Cost

   

Amortization

   

Net

 

Customer relationships

  $ 13,214     $ 5,484     $ 7,730  

Patents and technology

    5,667       5,126       541  

Trade names

    4,670       436       4,234  

Trademarks

    3,413       -       3,413  

Other

    1,490       18       1,472  

Total other intangible assets

  $ 28,454     $ 11,064     $ 17,390  

 

The change in the cost of total intangible assets from December 31, 2021 to June 30, 2022 is a result of measurement period adjustments for the Excell Acquisition (Note 2) and the effect of foreign currency translations.

 

Amortization expense for other intangible assets was as follows:

 

   

Three-month period ended

   

Six-month period ended

 
   

June 30,

   

June 30,

   

June 30,

   

June 30,

 
   

2022

   

2021

   

2022

   

2021

 

Amortization included in:

                               

Research and development

  $ 25     $ 33     $ 51     $ 66  

Selling, general and administrative

    298       123       600       244  

Total amortization expense

  $ 323     $ 156       651     $ 310  

 

10

 

 

 

6.

STOCK-BASED COMPENSATION

 

We recorded non-cash stock compensation expense in each period as follows:

 

   

Three-month period ended

   

Six-month period ended

 
   

June 30,

   

June 30,

   

June 30,

   

June 30,

 
   

2022

   

2021

   

2022

   

2021

 

Stock options

  $ 181     $ 174     $ 362     $ 337  

Restricted stock grants

    3       12       11       33  

Total

  $ 184     $ 186     $ 373     $ 370  

 

We have stock options outstanding from various stock-based employee compensation plans for which we record compensation cost relating to share-based payment transactions in our financial statements. As of June 30, 2022, there was $516 of total unrecognized compensation cost related to outstanding stock options, which is expected to be recognized over a weighted average period of 1.0 years.

 

The following table summarizes stock option activity for the six-month period ended June 30, 2022:

 

   

Number of

Shares

   

Weighted

Average

Exercise

Price

   

Weighted

Average

Remaining Contractual

Term (years)

   

Aggregate

Intrinsic

Value

 

Outstanding at January 1, 2022

    1,306,824     $ 6.87                  

Granted

    5,000       4.68                  

Exercised

    (58,750 )     3.81                  

Forfeited or expired

    (44,834 )     6.76                  

Outstanding at June 30, 2022

    1,208,240     $ 7.01       4.07     $ 33  

Vested and expected to vest at June 30, 2022

    1,103,948     $ 7.01       3.93     $ 33  

Exercisable at June 30, 2022

    717,956     $ 7.06       2.93     $ 33  

 

Cash received from stock option exercises under our stock-based compensation plans for the three-month periods ended June 30, 2022 and June 30, 2021 was $0 and $283, respectively.

 

Outstanding restricted shares vest in equal annual installments over three (3) years. There were 5,000 unvested restricted shares outstanding as of June 30, 2022. Unrecognized compensation cost related to these restricted shares was $6 at June 30, 2022, which is expected to be recognized over a weighted average period of 1.3 years.

 

11

 

 

 

7.

INCOME TAXES

 

Our effective tax rate for the six-month periods ended June 30, 2022 and June 30, 2021 was (30.5%) and 23.7%, respectively. The period-over-period change was primarily attributable to the geographic mix of our operating results and the larger impact of permanent and discrete adjustments on a smaller amount of pretax income.

 

As of December 31, 2021, we have domestic net operating loss (“NOL”) carryforwards of $44,716, which expire 2022 thru 2037, and domestic tax credits of $2,239, which expire 2028 thru 2039, available to reduce future taxable income. As of June 30, 2022, management has concluded it is more likely than not that these domestic NOL and credit carryforwards will be fully utilized.

 

As of June 30, 2022, for certain past operations in the U.K., we continue to report a valuation allowance for NOL carryforwards of approximately $11,000, nearly all of which can be carried forward indefinitely. Utilization of the net operating losses may be limited due to the change in the past U.K. operation and cannot currently be used to reduce taxable income at our other U.K. subsidiary, Accutronics Ltd. There are no other deferred tax assets related to the past U.K. operations.

 

As of June 30, 2022, we have not recognized a valuation allowance against our other foreign deferred tax assets, as realization is considered to be more likely than not.

 

As of June 30, 2022, the Company maintains its assertion that all foreign earnings will be indefinitely reinvested in those operations, other than earnings generated in the U.K.

 

There were no unrecognized tax benefits related to uncertain tax positions at June 30, 2022 and December 31, 2021.

 

As a result of our operations, we file income tax returns in various jurisdictions including U.S. federal, U.S. state and foreign jurisdictions. We are routinely subject to examination by taxing authorities in these various jurisdictions. In August 2020, the Internal Revenue Service (“IRS”) completed its examination of the Company’s federal tax returns for 2016-2018 with no material adjustments identified. Our U.S. tax matters for 2019-2021 remain subject to IRS examination. Our U.S. tax matters for 2002, 2005-2007 and 2011-2015 also remain subject to IRS examination due to the remaining availability of NOL carryforwards generated in those years. Our U.S. tax matters for 2002, 2005-2007 and 2011-2021 remain subject to examination by various state and local tax jurisdictions. Our tax matters for the years 2011 through 2021 remain subject to examination by the respective foreign tax jurisdiction authorities.

 

 

 

8.

OPERATING LEASES

 

The Company has operating leases predominantly for operating facilities. As of June 30, 2022, the remaining lease terms on our operating leases range from approximately one (1) year to ten (10) years. Lease terms include renewal options reasonably certain of exercise. There is no transfer of title or option to purchase the leased assets upon expiration. There are no residual value guarantees or material restrictive covenants.

 

The components of lease expense for the current and prior-year comparative periods were as follows:

 

   

Three months ended

   

Six months ended

 
   

June 30,

2022

   

June 30,

2021

   

June 30,

2022

   

June 30,

2021

 

Operating lease cost

  $ 226     $ 189     $ 458     $ 376  

Variable lease cost

    23       13       47       32  

Total lease cost

  $ 249     $ 202     $ 505     $ 408  

 

12

 

 

Supplemental cash flow information related to leases was as follows:

 

   

Six-month period ended June 30,

 
   

2022

   

2021

 

Cash paid for amounts included in the measurement of lease liabilities:

               

Operating cash flows from operating leases

  $ 449     $ 365  

 

Supplemental consolidated balance sheet information related to leases was as follows:

 

 

Balance sheet classification

 

June 30,

2022

   

December 31,

2021

 

Assets:

                 

Operating lease right-of-use asset

Other noncurrent assets

  $ 2,131     $ 2,581  
                   

Liabilities:

                 

Current operating lease liability

Accrued expenses and other current liabilities

  $ 859     $ 867  

Operating lease liability, net of current portion

Other noncurrent liabilities

    1,312       1,743  

Total operating lease liability

  $ 2,171     $ 2,610  
                   

Weighted-average remaining lease term (years)

    4.3       4.5  
                   

Weighted-average discount rate

    4.5 %     4.5 %

 

Future minimum lease payments as of June 30, 2022 are as follows:

 

Maturity of operating lease liabilities

       

2022

  $ 440  

2023

    871  

2024

    449  

2025

    136  
2026     137  
2027     137  
Thereafter     281  

Total lease payments

    2,451  

Less: Imputed interest

    (280 )

Present value of remaining lease payments

  $ 2,171  

 

13

 

 

 

9.

COMMITMENTS AND CONTINGENCIES

 

Purchase Commitments

 

As of June 30, 2022, we have made commitments to purchase approximately $697 of production machinery and equipment.

 

Product Warranties

 

We estimate future warranty costs to be incurred for product failure rates, material usage and service costs in the development of our warranty obligations. Estimated future costs are based on actual past experience and are generally estimated as a percentage of sales over the warranty period. Changes in our product warranty liability during the first six months of 2022 and 2021 were as follows:

 

   

Six-month period ended June 30,

 
   

2022

   

2021

 

Accrued warranty obligations – beginning

  $ 133     $ 149  

Accruals for warranties issued

    25       121  

Settlements made

    (26 )     (108 )

Accrued warranty obligations – ending

  $ 132     $ 162  

 

Contingencies and Legal Matters

 

We are subject to legal proceedings and claims that arise from time to time in the normal course of business. We believe that the final disposition of any such matters will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, recognizing that legal matters are subject to inherent uncertainties, there exists the possibility that ultimate resolution of these matters could have a material adverse impact on the Company’s financial position, results of operations or cash flows. We are not aware of any such situations at this time.

 

 

 

10.

REVENUE RECOGNITION

 

Revenues are generated from the sale of products. Performance obligations are met and revenue is recognized upon transfer of control to the customer, which is generally upon shipment. When contract terms require transfer of control upon delivery at a customer’s location, revenue is recognized on the date of delivery. For products shipped under vendor managed inventory arrangements, revenue is recognized and billed when the product is consumed by the customer, at which point control has transferred and there are no further obligations by the Company. Revenue is measured as the amount of consideration we expect to receive in exchange for shipped product. Sales, value-added and other taxes billed and collected from customers are excluded from revenue. Customers, including distributors, do not have a general right of return.

 

Revenues recognized from prior period performance obligations for the six-month periods ended June 30, 2022 and 2021 were not material.

 

Deferred revenue, unbilled revenue and deferred contract costs recorded on our consolidated balance sheets as of June 30, 2022 and December 31, 2021 were not material. As of June 30, 2022 and December 31, 2021, the Company had no unsatisfied performance obligations for contracts with an original expected duration of greater than one (1) year. Pursuant to Topic 606, we have applied the practical expedient with respect to disclosure of the deferral and future expected timing of revenue recognition for transaction price allocated to remaining performance obligations.

 

14

 

 

 

11.

BUSINESS SEGMENT INFORMATION

 

We report our results in two (2) operating segments: Battery & Energy Products and Communications Systems. The Battery & Energy Products segment includes: Lithium 9-volt, cylindrical and various other non-rechargeable batteries, in addition to rechargeable batteries, uninterruptable power supplies, charging systems and accessories. The Communications Systems segment includes: RF amplifiers, power supplies, cable and connector assemblies, amplified speakers, equipment mounts, case equipment, man-portable systems, integrated communication systems for fixed or vehicle applications and communications and electronics systems design. We believe that reporting performance at the gross profit level is the best indicator of segment performance.

 

Three-month period ended June 30, 2022:

 

   

Battery &

Energy

Products

   

Communications

Systems

   

Corporate

   

Total

 

Revenues

  $ 30,140     $ 1,986     $ -     $ 32,126  

Segment contribution

    7,151       495       (6,853 )     793  

Other expense

                    (115 )     (115 )

Income tax provision

                    (170 )     (170 )

Non-controlling interest

                    4       4  

Net income attributable to Ultralife

                          $ 512  

 

15

 

 

Three-month period ended June 30, 2021:

 

   

Battery &

Energy

Products

   

Communications

Systems

   

Corporate

   

Total

 

Revenues

  $ 22,875     $ 3,895     $ -     $ 26,770  

Segment contribution

    6,016       1,251       (6,176 )     1,091  

Other expense

                    (21 )     (21 )

Income tax provision

                    (248 )     (248 )

Non-controlling interest

                    (11 )     (11 )

Net income attributable to Ultralife

                          $ 811  

 

Six-month period ended June 30, 2022:

 

   

Battery &

Energy

Products

   

Communications Systems

   

Corporate

   

Total

 

Revenues

  $ 59,290     $ 3,209     $ -     $ 62,499  

Segment contribution

    13,872       732       (14,106 )     498  

Other expense

                    (232 )     (232 )

Income tax benefit

                    81       81  

Non-controlling interest

                    (3 )     (3 )

Net income attributable to Ultralife

                          $ 344  

 

Six-month period ended June 30, 2021:

 

   

Battery &

Energy

Products

   

Communications Systems

   

Corporate

   

Total

 

Revenues

  $ 44,986     $ 7,757     $ -     $ 52,743  

Segment contribution

    11,452       2,793       (12,202 )     2,043  

Other expense

                    (77 )     (77 )

Income tax provision

                    (465 )     (465 )

Non-controlling interest

                    (19 )     (19 )

Net income attributable to Ultralife

                          $ 1,482  

 

16

 

 

The following tables disaggregate our business segment revenues by major source and geography.

 

Commercial and Government/Defense Revenue Information:

 

Three-month period ended June 30, 2022:

 

   

Total

Revenue

   

Commercial

   

Government/

Defense

 

Battery & Energy Products

  $ 30,140     $ 24,682     $ 5,458  

Communications Systems

    1,986       -       1,986  

Total

  $ 32,126     $ 24,682     $ 7,444  
              77 %     23 %

 

Three-month period ended June 30, 2021:

 

   

Total

Revenue

   

Commercial

   

Government/

Defense

 

Battery & Energy Products

  $ 22,875     $ 16,011     $ 6,864  

Communications Systems

    3,895       -       3,895  

Total

  $ 26,770     $ 16,011     $ 10,759  
              60 %     40 %

 

Six-month period ended June 30, 2022:

 

   

Total

Revenue

   

Commercial

   

Government/

Defense

 

Battery & Energy Products

  $ 59,290     $ 47,276     $ 12,014  

Communications Systems

    3,209       -       3,209  

Total

  $ 62,499     $ 47,276     $ 15,223  
              76 %     24 %

 

Six-month period ended June 30, 2021:

 

   

Total

Revenue

   

Commercial

   

Government/

Defense

 

Battery & Energy Products

  $ 44,986     $ 30,356     $ 14,630  

Communications Systems

    7,757       -       7,757  

Total

  $ 52,743     $ 30,356     $ 22,387  
              58 %     42 %

 

17

 

 

U.S. and Non-U.S. Revenue Information1:

 

Three-month period ended June 30, 2022:

 

   

Total

Revenue

   

United

States

   

Non-United

States

 

Battery & Energy Products

  $ 30,140     $ 13,330     $ 16,810  

Communications Systems

    1,986       1,910       76  

Total

  $ 32,126     $ 15,240     $ 16,886  
              47 %     53 %

 

Three-month period ended June 30, 2021:

 

   

Total

Revenue

   

United

States

   

Non-United

States

 

Battery & Energy Products

  $ 22,875     $ 11,813     $ 11,062  

Communications Systems

    3,895       1,953       1,942  

Total

  $ 26,770     $ 13,766     $ 13,004  
              51 %     49 %

 

Six-month period ended June 30, 2022:

 

   

Total

Revenue

   

United

States

   

Non-United

States

 

Battery & Energy Products

  $ 59,290     $ 27,870     $ 31,420  

Communications Systems

    3,209       3,062       147  

Total

  $ 62,499     $ 30,932     $ 31,567  
              49 %     51 %

 

Six-month period ended June 30, 2021:

 

   

Total

Revenue

   

United

States

   

Non-United

States

 

Battery & Energy Products

  $ 44,986     $ 24,403     $ 20,583  

Communications Systems

    7,757       3,421       4,336  

Total

  $ 52,743     $ 27,824     $ 24,919  
              53 %     47 %

 

1 Sales classified to U.S. include shipments to U.S.-based prime contractors which in some cases may serve non-U.S. projects.

 

18

 

 

 

Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward-Looking Statements

 

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. This report contains certain forward-looking statements and information that are based on the beliefs of management as well as assumptions made by and information currently available to management. The statements contained in this report relating to matters that are not historical facts are forward-looking statements that involve risks and uncertainties, including, but not limited to, the continued impact of COVID-19 and the related supply chain disruptions on our business, operating results and financial condition; our reliance on certain key customers; reduced U.S. and foreign military spending including the uncertainty associated with government budget approvals; our efforts to develop new commercial applications for our products; fluctuations in the price of oil and the resulting impact on the demand for downhole drilling; the unique risks associated with our China operations; potential disruptions in our supply of raw materials and components; our ability to retain top management and key personnel; possible breaches in information systems security and other disruptions in our information technology systems; our resources being overwhelmed by our growth; possible future declines in demand for the products that use our batteries or communications systems; potential costs attributable to the warranties we supply with our products and services; safety risks, including the risk of fire; variability in our quarterly and annual results and the price of our common stock; our entrance into new end-markets which could lead to additional financial exposure; our inability to comply with changes to the regulations for the shipment of our products; our customers’ demand falling short of volume expectations in our supply agreements; our exposure to foreign currency fluctuations; negative publicity concerning Lithium-ion batteries; possible impairments of our goodwill and other intangible assets; our ability to utilize our net operating loss carryforwards; the risk that we are unable to protect our proprietary and intellectual property; rules and procedures regarding contracting with the U.S. and foreign governments; exposure to possible violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act or other anti-corruption laws; known and unknown environmental matters; possible audits of our contracts by the U.S. and foreign governments and their respective defense agencies; our ability to comply with government regulations regarding the use of “conflict minerals”; technological innovations in the non-rechargeable and rechargeable battery industries; and other risks and uncertainties, certain of which are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ materially from those forward-looking statements described herein. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “seek,” “project,” “intend,” “plan,” “may,” “will,” “should,” or words of similar import are intended to identify forward-looking statements. For further discussion of certain of the matters described above and other risks and uncertainties, see Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.

 

Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity and the development of the industries in which we operate may differ materially from those made in or suggested by the forward-looking statements contained herein. In addition, even if our results of operations, financial condition and liquidity and the development of the industries in which we operate are consistent with the forward-looking statements contained in this quarterly report, those results or developments may not be indicative of results or developments in subsequent periods. Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

 

Undue reliance should not be placed on our forward-looking statements. Except as required by law, we disclaim any obligation to update any risk factors or to publicly announce the results of any revisions to any of the forward-looking statements contained in this Form 10-Q or our Annual Report on Form 10-K for the year ended December 31, 2021 to reflect new information or risks, future events or other developments.

 

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the consolidated financial statements and notes thereto in Part I, Item 1 of this Form 10-Q, and the consolidated financial statements and notes thereto and risk factors in our Annual Report on Form 10-K for the year ended December 31, 2021.

 

The financial information in this MD&A is presented in thousands of dollars, except for share and per share amounts, unless otherwise specified.

 

19

 

General

 

We offer products and services ranging from power solutions to communications and electronics systems to customers across the globe in the government, defense and commercial sectors. With an emphasis on strong engineering and a collaborative approach to problem solving, we design and manufacture power and communications systems including: rechargeable and non-rechargeable batteries, charging systems, communications and electronics systems and accessories, and custom engineered systems related to those product lines. We continually evaluate ways to grow, including the design, development and sale of new products, expansion of our sales force to penetrate new markets and territories, as well as seeking opportunities to expand through acquisitions.

 

We sell our products worldwide through a variety of trade channels, including original equipment manufacturers (“OEMs”), industrial and defense supply distributors, and directly to U.S. and foreign defense departments. We enjoy strong name recognition in our markets under our Ultralife® Batteries, Lithium Power®, McDowell Research®, AMTITM, ABLETM, ACCUTRONICS™, ACCUPRO™, ENTELLION™, SWE Southwest Electronic Energy Group™, SWE DRILL-DATA™, SWE SEASAFE™, Excell Battery Group and Criterion Gauge brands.  We have sales, operations and product development facilities in North America, Europe and Asia.

 

We report our results in two operating segments: Battery & Energy Products and Communications Systems.  The Battery & Energy Products segment includes:  Lithium 9-volt, cylindrical, thin cell and other non-rechargeable batteries, in addition to rechargeable batteries, uninterruptable power supplies, charging systems and accessories. The Communications Systems segment includes:  RF amplifiers, power supplies, cable and connector assemblies, amplified speakers, equipment mounts, case equipment, man-portable systems, integrated communication systems for fixed or vehicle applications and communications and electronics systems design. We believe that reporting performance at the gross profit level is the best indicator of segment performance.  As such, we report segment performance at the gross profit level and operating expenses as Corporate charges.  See Note 11 to the consolidated financial statements of this Form 10-Q for further information.

 

Our website address is www.ultralifecorporation.com. We make available free of charge via a hyperlink on our website (see Investor Relations link on the website) our annual reports on Form 10-K, proxy statements, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports and statements as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (“SEC”). We will provide copies of these reports upon written request to the attention of Philip A. Fain, CFO, Treasurer and Secretary, Ultralife Corporation, 2000 Technology Parkway, Newark, New York, 14513. Our filings with the SEC are also available through the SEC website at www.sec.gov or at the SEC Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 or by calling 1-800-SEC-0330.

 

COVID-19

 

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 take actions to mitigate the business risks involved.  During this challenging time, we remain focused on ensuring the health and safety of our employees by implementing the protocols established by public health officials and on meeting the demand of our customers.  While we have maintained normal business operations at all our facilities with the exception of the well-publicized shutdowns in China which impacted our Shenzhen facility in the first quarter of 2022, the COVID-19 related supply chain disruptions including increased lead times on key components experienced within our business and by our customers, impacted our work schedules and timing of shipments.  The continuing impact of these conditions on our business is uncertain and will depend on many evolving factors which we continue to monitor but cannot predict, including the duration and scope of the pandemic and its variants, the resulting actions taken by governments, businesses and individuals, and the flow-through impact on operations and supply chains.  Potential effects of COVID-19 that may continue to adversely impact our future business include limited availability and/or increased cost of raw materials and components used in our products, reduced demand and/or pricing for our products, inability of our customers to pay for our products or remain solvent, and reduced availability of our workforce. Prolonged adverse effects of COVID-19 on our business could result in the impairment of long-lived assets including goodwill and other intangible assets.  Further, we cannot predict all possible adverse effects the COVID-19 pandemic may cause. Consequently, there may be adverse effects in addition to those described above. We will continue to closely monitor the developments surrounding COVID-19 and take actions when possible to mitigate the business risks involved and the potential effects of COVID-19 on our business.

 

20

 

 

Overview

 

Consolidated revenues of $32,126 for the three-month period ended June 30, 2022, increased by $5,356 or 20.0%, over $26,770 for the three-month period ended June 30, 2021, reflecting the revenues of Excell Battery Group (“Excell”) acquired on December 13, 2021, and increased sales in our medical, industrial, and oil & gas battery markets, partially offset by lower revenues for government/defense which continued to be impacted by supply chain challenges.  Excluding Excell, commercial revenues of $18,090 for the quarter-ended June 30, 2022 increased $2,079 or 13.0% over the year-earlier period, and government/defense revenues of $7,444 decreased $3,315 or 30.8% from the 2021 period.