Mr. Spencer Huh reports

NEO BATTERY DEMONSTRATES STEP-CHANGE PERFORMANCE IN DRONE BATTERIES WITH OVER 50 per cent CAPACITY IMPROVEMENT VERSUS COMMERCIAL BATTERIES

Neo Battery Materials Ltd. has reached a significant technological milestone: the successful development and manufacturing of its first high performance battery cells designed for drone applications (the NBM drone cell), delivering over 50-per-cent-more capacity and 40-per-cent-greater energy density compared with current commercial drone battery cells.

• Achieves over 50-per-cent capacity and 40-per-cent energy density improvement versus widely deployed commercial drone batteries at identical cell size and dimensions;
• Demonstrates competitive performance and quality against incumbent mass-manufactured Chinese drone batteries, addressing critical supply chain concentration and security concerns;
• Preparing for live surveillance drone field test in early February for performance evaluation of extended flight duration;
• Positions Neo as differentiated non-Chinese battery supplier for drone, UAS and mission-critical electronics markets.

The newly developed NBM drone cell, intended for reconnaissance and surveillance applications, achieves an average discharge capacity of 34.2 amp-hours (Ah) and energy density of approximately 300 watt-hours per kilogram (Wh/kg), compared with 22.0 Ah and 214 Wh/kg in widely deployed commercial drone cells manufactured in China. This performance improvement was achieved without altering the physical size or dimensions of the cell, addressing a fundamental constraint in drone and unmanned aerial system (UAS) platforms where battery dimensions are fixed by airframe and design. These advancements are expected to translate into tangible benefits for end customers, including prolonged flight time, widened mission operability and expanded payload capacity.

"This achievement represents both a technological and strategic milestone that demonstrates Neo's capability to compete directly with incumbent Chinese drone battery cells in both performance and quality," expressed Spencer Huh, president and chief executive officer of Neo. "We will leverage our engineering expertise and execution capabilities to actively penetrate the Western and North American markets where customized, non-Chinese battery cell supply is practically non-existent for drones, UAS and electronics."

Strategic benchmarking and targeted drone battery development

The development program was initiated following a comprehensive teardown evaluation of Chinese-manufactured drone battery cells currently integrated in operational surveillance systems. These cells represent the prevailing industry benchmark, given China's dominant market share in global drone battery cell supply. This benchmarking process enabled Neo to assess cell architecture, materials selection and performance characteristics, forming the technical foundation for a targeted redesign.

Using insights from analysis, Neo engineered a new cell architecture optimized for higher energy density while maintaining compatibility with existing drone and UAS platforms. A total of 48 prototype cells were manufactured and evaluated to validate performance consistency and repeatability across the sample set. Internal testing demonstrated that the NBM drone cells consistently exceeded the capacity and energy density of Chinese-sourced benchmark cells, supporting the effectiveness of the underlying design and manufacturing quality.

Neo advanced the program from initial analysis through prototype manufacturing and testing within a compressed two-month development timeline. Following successful cell-level validation, Neo has proceeded to battery pack assembly in collaboration with a pack manufacturing partner in South Korea. The company plans to conduct a live field test in early February, installing finished NBM drone cell packs into a commercial surveillance drone platform to evaluate performance under real-world operating conditions.

Seok Joung Youn, head of facility operations and manufacturing of Neo, commented: "Chinese-sourced battery cells currently represent nearly all global supply for drone and UAS platforms. Our demonstrated ability to materially improve performance at fixed battery sizes provides a compelling opportunity for customers seeking supply diversification, extended operational range, enhanced mission flexibility and increased payload capacity without requiring system-level redesigns. Neo's battery customization and optimization capabilities can be applied across a range of drone platforms and any battery-powered electronics systems."

This performance milestone builds on Neo's recent progress with OEM (original equipment manufacturer) purchase orders, commercial-scale manufacturing for OEM pilot products and official vendor onboarding activities. The company views the drone and UAS segment as an early commercial entry point and strategic target market where performance, customization, and supply security are decisive purchasing criteria.

About Neo Battery Materials Ltd.

Neo Battery Materials is a Canadian battery technology company focused on developing and producing silicon-enhanced lithium-ion batteries in drones, unmanned aerial vehicles (UAV), robotics, unmanned systems, electronics, electric vehicles and energy storage systems for AI data centres. With a patent-protected, low-cost manufacturing process, Neo Battery enables longer-running and ultrafast charging batteries, and provides end-to-end battery solutions from materials selection, cell architecture and process optimization. The company aims to be a globally leading producer of high performance lithium-ion battery components and materials, building a secure, robust battery supply chain in North America.

We seek Safe Harbor.