Mr. Spencer Huh reports

NEO BATTERY ENTERS SUPPLY INTENT LETTER TO DELIVER HIGH-PERFORMANCE BATTERIES TO KOREAN DRONE MANUFACTURER FOR ROK ARMY PROGRAM

Neo Battery Materials Ltd. has entered into a non-binding supply intent letter to supply high-performance drone batteries to a drone manufacturing company based in South Korea for an undisclosed Republic of Korea (ROK) Army program.

Under the terms of the agreement, Neo commits to supply 7,584 drone battery packs, comprising 45,504 battery cells, to facilitate the production of the counterparty's drone platforms designated for the ROK Army program. The supply period is scheduled to commence in July, 2026, and continue through October, 2026, with an expected contract value range of at least 1.5 billion Korean won ($1.37-million) based on current raw materials, labour and margin estimates. In accordance with ROK Army and ministerial-level procurement requirements to diversify away from foreign-dependent supply chains, Neo is uniquely positioned to ensure a low-to-no composition of Chinese-sourced components for full compliance with protocols.

"This strategic agreement reinforces Neo's growing presence within the defence drone market and the high-performance qualities of our battery cell technology," stated Spencer Huh, president and chief executive officer of Neo. "By maintaining rigorous component quality and providing active technical support, we are ensuring our partners' production timelines and program requirements are met. This partnership further solidifies our footprint in the defence and commercial UAV [unmanned aerial vehicle] supply chain and advances our commitment to establishing Neo as a reliable, non-Chinese alternative for specialized drone applications."

While this agreement establishes the operational framework and confirms the scale of the intended delivery, specific unit pricing and detailed payment terms are expected to be settled through a formal product supply agreement with the counterparty as the ROK Army program scope is finalized. The company cautions that this supply intent letter is non-binding and the final supply arrangement is subject to the execution of the definitive agreement. As such, there can be no assurance that the projected volumes and contract value will be fulfilled or that a formal contract will be executed on the terms currently contemplated.

Drone and UAS (unmanned aircraft system) applications represent a key catalyst segment within the global lithium-ion battery market, which was estimated at approximately $9.1-billion (U.S.) in 2025 and is projected to exceed $29-billion (U.S.) by 2032. As defence, industrial and consumer UAV usage scales, battery technology must evolve to meet rigorous performance requirements. Concurrently, advances in faster-charging architecture and complex BMS (battery management system) are broadening the drone/UAS market, enabling longer, safer operations and more efficient energy utilization. As a result, the synergy between drone platform advancement and battery innovation will be a major driver of sustained growth across both markets.

About Neo Battery Materials Ltd.

Neo Battery Materials is a Canadian-South Korean battery technology company focused on developing and producing silicon-enhanced lithium-ion batteries in drones, robotics, physical AI (artificial intelligence), electric vehicles and energy storage systems. With a patent-protected, low-cost silicon manufacturing process, Neo Battery enables longer-running and ultrafast-charging properties 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 batteries and materials, building a secure, robust battery supply chain for Western manufacturers.

We seek Safe Harbor.