Mr. Spencer Huh reports

NEO BATTERY ACQUIRES EXPANSION SITE TO SCALE KOREA-MADE DRONE & ROBOTICS BATTERY CELL MANUFACTURING

Neo Battery Materials Ltd. has closed the 3.2-acre expansion site for commercial-scale drone and robotics battery cell manufacturing and the scale-up of silicon anode production (the expansion facility) previously announced (see news release dated on Oct. 9, 2025).

• Acquired 3.2-acre expansion site for commercial-scale battery cell manufacturing for drones, robotics and physical artificial intelligence;
• Strategically initiate with pouch-cell installations to service drone manufacturers and government/military seeking non-Chinese battery sourcing;
• Planned production capacity of 500 MWh (megawatt-hours) to supply 66,000 small ISR drones or 315,000 loitering munitions annually;
• Aim to exclusively source battery inputs outside of PRC and FEOC for NDAA-compliance and defense procurement eligibility.

Neo's expansion facility will house commercial-scale cell assembly equipment required to mass-produce high performance, customized battery solutions for drones and robotics. The company will strategically initiate by installing pouch-cell capacities to fulfill the demand for pouch-cells from drone manufacturers and governments seeking non-Chinese supply chains. Subsequently, the originally planned cylindrical and prismatic-cell manufacturing lines will be established based on downstream needs and internal operating priorities. Subject to process optimization, project financing and demand forecasts, the targeted annual capacity is approximately 500 megawatt-hours (MWh), equating to supplying 66,000 small ISR drone packs or 315,000 loitering munition5 packs, based on internal operating assumptions.

"With developing geopolitical conflict and security concerns, Western and Western-allied governments and militaries have explicitly and implicitly ordered the phase-out or banning of Chinese-sourced batteries in defense procurement," commented Spencer Huh, president and chief executive officer of Neo. "Consequently, a global battery supply deficit is projected due to the heavy concentration of Chinese manufacturing and weak Western supply chains. Neo's expansion facility will accommodate the commercial volume interest for Korean-sourced battery cells from downstream manufacturers in the United States, Taiwan, Ukraine, Israel, South Korea and Japan."

To comply with updated defence procurement regulations, prominently Section 842 of the United States fiscal year 2026 National Defense Authorization Act, Neo aims to exclusively source raw materials and components outside of the People's Republic of China (PRC) and other foreign entities of concern (FEOC) as defined under 10 U.S. Code 48727. The expansion facility is expected to be complete by Q4 2026, with timelines dependent on equipment lead times, utility/infrastructure construction, permitting approvals, strategic partnerships and other relevant timing factors. Until commissioning is complete, Neo will produce and supply initial pouch-cell orders at its operational battery components factory in Gimje, South Korea.

Neo concurrently plans to scale up its proprietary silicon anode materials technology, NBMSiDE, to 20 tons per year. The company will integrate its silicon products into various drone battery applications based on performance needs. NBMSiDE-P200 anodes will be purposed for loitering munitions due to their ultrahigh capacity (approximately 2,600 mAh/g or seven times that of traditional graphite anodes) and short cycle life, and P300N anodes will be deployed in payload and ISR drones that require high capacity and extended duration.

Mr. Huh added: "To increase market presence and visibility, Neo will heavily target the distribution of its high performance batteries into South Korea's Ministry of National Defense, starting with training programs to full-scale commercial deployment. Korean military integration and performance validation will serve as a credible, robust use case for the United States, extended Asia-Pacific governments and NATO countries. We hope to deliver and execute phase-by-phase growth and expansion of the company's Korea-made batteries."

Drone and UAS 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 (unmanned aerial vehicle) usage scales, battery technology must evolve to meet rigorous performance requirements. Concurrently, advances in faster-charging architecture and complex BMS 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, 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.