NEO Battery Materials Ltd., a low-cost, silicon-enhanced battery materials and components developer that enables longer-running, rapid-charging lithium-ion batteries, is pleased to receive a ₩3,000,000,000 KRW ($3,000,000 CAD) purchase order and execute a Joint Product Development Agreement (JPDA) with a South Korea-based drone and unmanned combat aerial vehicle (UCAV) manufacturer (the Customer). Under a project named “Project David”, NEO will provide end-to-end battery solutions for the Customer’s multi-drone platform to strategically parallel the performance of gasoline-powered medium-altitude long-endurance (MALE) UCAVs.

The scope of Project David encompasses the design, prototype development, and commercial integration of distinct high-performance, lightweight lithium-ion battery products to enhance the Customer’s drone platforms across three form factors: swarm UCAV, medium vertical take-off and landing (VTOL), and balloon systems. For Project David prototypes, the Company will provide silicon-enhanced batteries that enhance flight time by 25% to more than 50% compared to current lithium-polymer batteries, and increase the energy density to 333 watt-hours per kilogram (Wh/kg) from 200 to 250 Wh/kg, effectively decreasing system weight for improved payload flexibility.

Additionally, both parties will be committed to iterative optimization via extensive field testing, with an emphasis on delivering maximum power efficiency and cost-effectiveness. The JPDA is structured in development phases to prepare for commercial deployment in defense, industrial, and surveillance operations. NEO aims to support the Customer in competing with high-cost, fuel-based MALE UCAVs, such as Baykar’s Bayraktar TB2.

For total battery design and architecture solutions, prototype batteries developed under JPDA, and commercially-validated products, the Customer has committed to an initial purchase order of ₩3,000,000,000 KRW ($3,000,000 CAD) over 24 months, subject to performance achievements, prototype and commercial integration validation, certification outcomes, and production capacity and readiness.

Operational Battery Components Manufacturing Facility Update

Following the Letter of Intent (LOI) with a South Korean battery company to lease an operational, revenue-generating battery components manufacturing facility on September 22, 2025, the Company expects to finalize and close the definitive lease agreement (the Definitive Agreement) by the end of the week of November 10th. NEO has conducted due diligence on the operational status of the production equipment and machinery, facility safety and structural conditions, environmental assessments, and legal/regulatory compliance.

Upon completion of the Definitive Agreement, NEO will have immediate access to and rights over all equipment and facilities. The Company will promptly restart production of battery electrodes to service existing major automotive manufacturers and downstream clients. NEO will further supply silicon-enhanced batteries from this manufacturing facility and the adjacent 3.2-acre expansion site for its new drone, robotics, and electronics pipeline and partnerships.