Dragonfly Energy Holdings Corp.

Previous wording

Since 2020, we have sold over 340,000 batteries. For the quarters ended March 31, 2025, and March 31, 2024, we sold 10,845 and 11,098 batteries, respectively, and had $13.4 million and $12.5 million in net sales, respectively. We currently offer several lines of batteries across our two brands, each differentiated by size, power and capacity, consisting of seven different models, which come with an option for internal heat for cold temperature operation or an option for wireless communication using our Dragonfly IntelLigence feature. We primarily sell “Battle Born” branded batteries directly to consumers (“DTC”) and “Dragonfly” branded batteries to original equipment manufacturers (“OEMs”).

Current wording

Since 2020, we have sold over 350,000 batteries. For the quarters ended June 30, 2025, and June 30, 2024, we sold 12,134 and 11,526 batteries, respectively, and had $16.2 million and $13.2 million in net sales, respectively. For the six months ended June 30, 2025 and June 30, 2024, we sold 22,979 and 22,624 batteries, respectively, and had $29.6 million and $25.7 million in net sales, respectively. We currently offer several lines of batteries across our two brands, each differentiated by size, power and capacity, consisting of seven different models, which come with an option for internal heat for cold temperature operation or an option for wireless communication using our Dragonfly IntelLigence feature. We primarily sell “Battle Born” branded batteries directly to consumers (“DTC”) and “Dragonfly” branded batteries to original equipment manufacturers (“OEMs”).

Previous wording

Our increase in sales is a reflection of a slight recovery in the RV market and increased market penetration as compared to prior quarter and prior year. Although our existing RV OEM customers have only slightly increased their year-over-year production rates, the incorporation of lithium storage systems has accelerated faster than the increase in RV units shipped. This is in contrast to the de-contenting trend that had occurred over the previous 18 months. DTC sales remained relatively flat, indicating generally constant consumer sentiment in the space.

Current wording

Our increase in sales is a reflection of a slight recovery in the motorized RV market and increased market penetration as compared to prior quarter and prior year. Although our existing RV OEM customers have only slightly increased their year-over-year production rates, the incorporation of lithium storage systems has accelerated faster than the increase in RV units shipped. This is in contrast to the de-contenting trend that had occurred over the previous 18 months. DTC sales remained relatively flat, indicating generally constant consumer sentiment in the space.

Previous wording

During the first quarter of 2025, we continued to implement our corporate optimization initiative, prioritizing product development to drive near term revenue and profit. For instance, this strategic shift is accelerating our development of purpose-built solutions for the trucking and industrial markets, resulting in the recent launch of our Battle Born DualFlow Power Pack, a practical, cost-effective hybrid electrification solution for the trucking industry.

Current wording

During the second quarter of 2025, we continued to implement our corporate optimization initiative, prioritizing product development to drive near term revenue and profit. For instance, this strategic shift is accelerating our development of purpose-built solutions for the trucking and industrial markets, resulting in the recent launch of our Battle Born DualFlow Power Pack, a practical, cost-effective hybrid electrification solution for the trucking industry.

Previous wording

In July 2023, we completed the construction of our proprietary and patented cell manufacturing pilot line. Our patented dry deposition process is chemistry agnostic – meaning it can produce battery cells across a variety of chemistries – and is less capital intensive, uses less energy, and can produce cells in a smaller manufacturing footprint, leading to a lower total cost of manufacturing. In August 2023, we successfully demonstrated the ability to produce anode material at scale using this manufacturing process and did the same with cathode material in October 2023. We have since produced sample cells using PFAS-free binders and automotive-grade electrode loadings and C-rates, and are now working on the design and deployment of scaled-up coating equipment that can be applied to a GWh-scale factory, reflecting the shift in industry priorities from cell performance to cost-effective scalability.

Current wording

In July 2023, we completed the construction of our proprietary and patented cell electrode manufacturing pilot line. Our patented dry deposition process is chemistry agnostic – meaning it can produce battery cells across a variety of chemistries – and is less capital intensive, uses less energy, and can produce cells in a smaller manufacturing footprint, leading to a lower total cost of manufacturing. In August 2023, we successfully demonstrated the ability to produce anode material at scale using this manufacturing process and did the same with cathode material in October 2023. We have since produced sample cells using PFAS-free binders and automotive-grade electrode loadings and C-rates, and are now working on the design and deployment of scaled-up coating equipment that can be applied to a GWh-scale factory, reflecting the shift in industry priorities from cell performance to cost-effective scalability.

Previous wording

As of March 31, 2025, we had cash totaling $2.8 million. Our net loss for the quarter ended March 31, 2025 was $6.8 million and our net loss for the quarter ended March 31, 2024 was $10.4 million. In addition, in February 2025, we completed the initial offering of shares of our Series A Preferred Stock which provided us with additional net proceeds of $3.2 million. Subsequent to the quarter ended March 31, 2025, we completed the second closing of shares of our Series A Preferred Stock which provided us with additional net proceeds of $4.2 million. As discussed under “—Liquidity and Capital Resources” below we expect that we will need to raise additional funds, including through the use of the ChEF Equity Facility (as defined below) and the issuance of equity, equity-related or debt securities or by obtaining additional credit from financial institutions to fund, together with our principal sources of liquidity, ongoing costs. If such financings are not available, or if the terms of such financings are less desirable than we expect, we may be forced to take actions to reduce our capital or operating expenditures, including not seeking potential acquisition opportunities, eliminating redundancies, or reducing or delaying our production facility expansions, reduce operations, sell off our assets, seek the protection of bankruptcy courts or shut down our operations and dissolve.

Current wording

As of June 30, 2025, we had cash totaling $2.7 million. Our net loss for the quarter ended June 30, 2025 was $7.0 million and our net loss for the quarter ended June 30, 2024 was $13.6 million. In addition, in April 2025, we completed the second closing of shares of our Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”) which provided us with additional net proceeds of $4.2 million. On July 30, 2025, we entered into an underwriting agreement with Canaccord Genuity LLC, as underwriter, relating to an underwritten public offering (the “2025 Public Offering”) of 21,980,000 shares of common stock, at a price to the public of $0.25 per share. On July 31, 2025, we completed the 2025 Public Offering raising gross proceed of approximately $5.5 million and net proceeds of $5.035 million after deducting underwriting discounts and commissions and other estimated offering expenses payable by us. As discussed under “—Liquidity and Capital Resources” below we expect that we will need to raise additional funds, including through the use of the ChEF Equity Facility (as defined below) and the issuance of equity, equity-related or debt securities or by obtaining additional credit from financial institutions to fund, together with our principal sources of liquidity, ongoing costs. If such financings are not available, or if the terms of such financings are less desirable than we expect, we may be forced to take actions to reduce our capital or operating expenditures, including not seeking potential acquisition opportunities, eliminating redundancies, or reducing or delaying our production facility expansions, reduce operations, sell off our assets, seek the protection of bankruptcy courts or shut down our operations and dissolve.

Previous wording

We and Chardan Capital Markets LLC, a New York limited liability company (“CCM LLC”) entered into a purchase agreement (as amended, the “ChEF Purchase Agreement”) and a Registration Rights Agreement in connection with our merger in October 2022 (the “Business Combination”). Pursuant to the Original Purchase Agreement, we have the right to sell to CCM LLC an amount of shares of common stock, up to a maximum aggregate purchase price of $150 million, pursuant to the terms of the ChEF Purchase Agreement (the “ChEF Equity Facility”). We intend to opportunistically use the ChEF Equity Facility to help maintain minimum cash balances required by the Term Loan Lenders (as defined below) as we continue to execute on growing the business through product releases, customer/market expansion, and R&D milestones, subject to certain restrictions set forth in the Term Loan Agreement and the terms of the Series A Preferred Stock. We expect to use the ChEF Equity Facility as a source of funds over the next twelve months and our available share balance increases, allowing for more consistent purchases under the ChEF Equity Facility. Use of the ChEF Equity Facility may adversely affect us, including the market price of our common stock and future issuances may be dilutive to existing stockholders.

Current wording

We and Chardan Capital Markets LLC, a New York limited liability company (“CCM LLC”) entered into a purchase agreement (as amended, the “ChEF Purchase Agreement”) and a Registration Rights Agreement in connection with our merger in October 2022 (the “Business Combination”). Pursuant to the Original Purchase Agreement, we have the right to sell to CCM LLC an amount of shares of common stock, up to a maximum aggregate purchase price of $150 million, pursuant to the terms of the ChEF Purchase Agreement (the “ChEF Equity Facility”), subject to certain restrictions set forth in the Term Loan Agreement. The ChEF Purchase Agreement terminates in December 2025. In connection with the 2025 Public Offering, we agreed not to sell shares of our common stock for a period of 90 days following the closing of the offering, subject to certain exceptions .

Previous wording

Subsequent to March 31, 2025, in connection with our efforts to reduce expenses, our Board of Directors approved reducing the size of the Board, and in connection therewith, on May 6, 2025 and May 7, 2025, respectively, each of Dr. Karina Montilla Edmonds and Mr. Jonathan Bellows resigned as a member of the Board, effective immediately. As a result of the resignations, the Board was reduced to five directors.

Current wording

In connection with our efforts to reduce expenses, our Board of Directors approved reducing the size of the Board to five members, and in connection therewith, on May 6, 2025 and May 7, 2025 respectively, Dr. Karina Montilla Edmonds and Mr. Jonathan Bellows resigned as members of the Board, effective immediately. Subsequently, on May 30, 2025, Rick Parod resigned as a member of the Board, effective immediately. As a result of the resignations, the Board currently has four directors.

Previous wording

Demand from end market consumers is impacted by a number of factors, including travel restrictions, fuel costs and energy demands (including an increasing trend towards the use of green energy), as well as overall macro-economic conditions and inflation. Sales of our batteries have benefited from the increased adoption of the RV lifestyle, the demand for and inclusion of additional appliances and electronics in RVs, and the accelerating trend of solar power adoption among RV customers. However, macro-economic conditions and increased competition from imported battery packs have led to a decrease in direct to consumer sales. We have addressed this decrease through product diversification by the release of our Dragonfly IntelLigence feature, as well as more targeted marketing efforts to increase the efficiency of our marketing spend. We expect that direct to consumer sales will remain relatively flat through 2025. However, we expect growth among our existing RV OEM customers due to an overall increase in RV shipments as the industry slowly recovers from the market correction, as well as our customers expanding the number of models that will include our battery systems in the new model year. Moreover, we expect increased revenue through our market diversification efforts – especially in our industrials market, including industrial solar and oil and gas, as well as the trucking market, in which we have been piloting our systems with fleets for the last two years.

Current wording

Demand from end market consumers is impacted by a number of factors, including travel restrictions, fuel costs and energy demands (including an increasing trend towards the use of green energy), as well as overall macro-economic conditions and inflation. Sales of our batteries have benefited from the increased adoption of the RV lifestyle, the demand for and inclusion of additional appliances and electronics in RVs, and the accelerating trend of solar power adoption among RV customers. However, macro-economic conditions and increased competition from imported battery packs have led to a decrease in direct to consumer sales. We have addressed this decrease through product diversification by the release of our Dragonfly IntelLigence feature, as well as more targeted marketing efforts to increase the efficiency of our marketing spend. We expect that direct to consumer sales will remain relatively flat through 2025. However, we expect growth among our existing RV OEM customers due to an overall increase in RV shipments as our customers expanding the number of models that will include our battery systems in the new model year. Moreover, we expect increased revenue through our market diversification efforts – especially in our industrials market, including industrial solar and oil and gas, as well as the trucking market, in which we have been piloting our systems with fleets for the last two years.

Previous wording

We currently rely on two carefully selected cell manufacturers located in China, and a single supplier, also located in China, to manufacture our proprietary battery management system, and we intend to continue to rely on these suppliers going forward. Our close working relationships with our China-based LFP cell suppliers, reflected in our ability to increase our purchase order volumes (qualifying us for related volume-based discounts) and order and receive delivery of cells in anticipation of required demand, has helped us moderate increased supply-related costs associated with inflation, currency fluctuations and U.S. government tariffs imposed on our imported battery cells and to avoid potential shipment delays. To mitigate against potential adverse production events, we opted to build our inventory of key components, such as battery cells. However, as many of the supply chain challenges and delays that were prevalent over the last several years have eased, we are actively working down our inventory to more appropriate safety stock levels.

Current wording

We currently rely on two carefully selected cell manufacturers located in China, and a single supplier, also located in China, to manufacture our proprietary battery management system. Our close working relationships with our China-based LFP cell suppliers, reflected in our ability to increase our purchase order volumes (qualifying us for related volume-based discounts) and order and receive delivery of cells in anticipation of required demand, has helped us moderate increased supply-related costs associated with inflation, currency fluctuations and U.S. government tariffs imposed on our imported battery cells and to avoid potential shipment delays. To mitigate against potential adverse production events, we opted to build our inventory of key components, such as battery cells. However, as many of the supply chain challenges and delays that were prevalent over the last several years have eased, we are actively working down our inventory to more appropriate safety stock levels.

Previous wording

Gross profit increased by $0.8 million, or 28.7%, to $3.9 million for the quarter ended March 31, 2025, as compared to $3.1 million for the quarter ended March 31, 2024. The increase in gross profit was primarily due to an increase in sales and lower material costs.

Current wording

Gross profit increased by $1.4 million, or 45.4%, to $4.6 million for the three months ended June 30, 2025, as compared to $3.2 million for the three months ended June 30, 2024. The increase in gross profit was primarily due to a higher unit volume of sales partially offset by consumption of lower-priced inventory.

Previous wording

Research and development expenses decreased by $0.3 million, or 25.0%, to $1.0 million for the quarter ended March 31, 2025, as compared to $1.3 million for the quarter ended March 31, 2024. The decrease was primarily due to lower wage expense in the amount of $0.3 million due to reduced headcount. We expect Research and Development expenses to be lower than last year as we change our focus from Solid State to Product Development.

Current wording

Research and development expenses decreased by $0.8 million, or 54.7%, to $0.7 million for the three months ended June 30, 2025, as compared to $1.5 million for the three months ended June 30, 2024. The decrease was primarily a result of lower wage expense in the amount of $0.6 million due to change in bonus accrual and reduced headcount. We expect Research and Development expenses to be lower than last year as we change our focus from Solid State to Product Development.

Previous wording

Sales and marketing expenses decreased by $0.3 million, or 9.4%, to $2.5 million for the quarter ended March 31, 2025, as compared to $2.7 million for the quarter ended March 31, 2024. This decrease was primarily due to lower employee-related costs in the amount of $0.3 million related to lower headcount and partially offset by slightly higher shipping costs related to higher sales. We expect our Selling and Marketing Expenses to be relatively stable over the next 12 months.

Current wording

Sales and marketing expenses decreased by $0.1 million, or 4.0%, to $2.6 million for the three months ended June 30, 2025, as compared to $2.7 million for the three months ended June 30, 2024. This decrease was primarily due to lower employee-related costs in the amount of $0.3 million partially offset by higher shipping costs in the amount of $0.2 million related to an increase in sales volume. We expect our Selling and Marketing Expenses to be relatively stable over the next 12 months.

Previous wording

Other expense totaled $0.9 million for the quarter ended March 31, 2025 as compared to other expense of $4.5 million for the quarter ended March 31, 2024. Other expense of $0.9 million in quarter ended March 31, 2025 was comprised primarily of interest expense of $4.7 million related to our debt securities offset by a change in fair market value of warrant liability in the amount of $3.8 million. The $4.5 million of other expense in quarter ended March 31, 2024 is comprised primarily of interest expense of $4.8 million related to our debt securities offset by a change in fair market value of warrant liability in the amount of $0.2 million.

Current wording

Other expense totaled $3.8 million for the three months ended June 30, 2025 as compared to total other expense of $6.9 million for the three months ended June 30, 2024. Other expense of $3.8 million in three months ended June 30, 2025 was comprised primarily of interest expense of $5.4 million related to our debt securities partially offset by a change in fair market value of warrant liability in the amount of $1.7 million. The $6.9 million of other expense in three months ended June 30, 2024 was comprised primarily of interest expense of $4.9 million related to our debt securities and a negative change in fair market value of warrant liability in the amount of $2.0 million.

Previous wording

There was no tax expense recorded for the three months ended March 31, 2025 or March 31, 2024. Based on available evidence as of March 31, 2025 and March 31, 2024, management believes it is more likely than not that some or all the deferred tax assets will not be realized. Accordingly, we established a 100% valuation allowance. As a result of the full valuation allowance, we did not record a tax benefit during the quarter ended March 31, 2025 or 2024.

Current wording

There was no tax expense recorded for the three months ended June 30, 2025 or the three months ended June 30, 2024. Based on available evidence as of June 30, 2025 and June 30, 2024, management believes it is more likely than not that some or all the deferred tax assets will not be realized. Accordingly, we established a 100% valuation allowance. As a result of the full valuation allowance, we did not record a tax benefit during the three months ended June 30, 2025 or the three months ended June 30, 2024.

Previous wording

We experienced a net loss of $6.8 million for the quarter ended March 31, 2025, as compared to net loss of $10.4 million for the quarter ended March 31, 2024. As described above, this result was driven by higher sales, lower cost of goods sold, and higher operating expenses.

Current wording

We experienced a net loss of $7.0 million for the three months ended June 30, 2025, as compared to net loss of $13.6 million for the three months ended June 30, 2024. As described above, this result was driven by higher sales, consumption of lower-priced inventory, lower operating expenses, and a decrease in other income (due to the change in fair market value of our warrants).

Previous wording

Net sales increased by $0.9 million, or 6.8%, to $13.4 million for the quarter ended March 31, 2025, as compared to $12.5 million for the quarter ended March 31, 2024. This increase was primarily due to higher OEM battery and accessory sales of new models to existing customers and licensing revenue which is part of the Stryten agreement entered into the second half of 2024. The decrease in DTC sales were lower due to ongoing macroeconomic pressures. We expect our sales to increase as the cyclical recovery of the RV market gains momentum in the coming quarters and our entrance into new markets, trucking and industrials, with new product offerings.

Current wording

Net sales increased by $3.9 million, or 15.1%, to $29.6 million for the six months ended June 30, 2025, as compared to $25.7 million for the six months ended June 30, 2024. This increase was primarily due to higher OEM battery and accessory sales of new models to existing customers and licensing revenue which is part of the Stryten agreement entered into the second half of 2024. The decrease in DTC sales was due to ongoing macroeconomic pressures. We expect our sales to increase in the coming quarters as our customers expand the number of models they include our battery systems in for the new model year and our entrance into new markets, trucking and industrials, with new product offerings.

Previous wording

Cost of revenue decreased by less than $0.1 million, or 0.3%, to $9.4 million for the quarter ended March 31, 2025, as compared to $9.5 million for the quarter ended March 31, 2024. This decrease was primarily due to lower material costs associated with consuming lower-priced inventory. We expect our Cost of Goods Sold to increase in conjunction with the anticipated increase in revenue over the next 12 months.

Current wording

Cost of goods sold increased by $1.6 million, or 8.1%, to $21.1 million for the six months ended June 30, 2025, as compared to $19.5 million for the six months ended June 30, 2024. This increase was primarily due to higher unit volume partially offset by lower material costs associated with consuming lower-priced inventory resulting in a $1.6 million increase in product cost. We expect our Cost of Goods Sold to increase in conjunction with the anticipated increase in revenue and higher tariffs over the next 12 months.

Previous wording

Acquired right-of-use assets and assumed lease liabilities are measured based on the remaining lease payments over the remaining portion of the lease term. As our leases do not provide an implicit rate, our incremental borrowing rate is used as a discount rate in determining the present value of lease payments. Our incremental borrowing rate was determined by comparing current low- and high-end mortgage loan rates and calculating an average. For our new warehouse lease with a lease commencement date of March 25, 2024, to be conservative in our estimate, we chose to use the high-end average as our incremental borrowing rate.

Current wording

Acquired right-of-use assets and assumed lease liabilities are measured based on the remaining lease payments over the remaining portion of the lease term. As our leases do not provide an implicit rate, our incremental borrowing rate is used as a discount rate in determining the present value of lease payments. Our incremental borrowing rate was determined by comparing current low- and high-end mortgage loan rates and calculating an average. To be conservative in our estimate, we chose to use the high-end average as our incremental borrowing rate for all lease arrangements.

Previous wording

The table below presents our adjusted EBITDA, reconciled to net loss for the three months ended March 31, 2025, and March 31, 2024.

Current wording

The table below presents our adjusted EBITDA, reconciled to net (loss) income for the three and six months ended June 30, 2025, and June 30, 2024.

Previous wording

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, contractual obligations and other commitments. We assess liquidity in terms of our cash flows from operations and their sufficiency to fund our operating and investing activities. As of March 31, 2025, we had cash totaling $2.8 million. In February 2025, we raised $3.5 million with net proceeds of $3.2 million in connection with the sale of the shares of our Series A Preferred Stock in February 2025, and received an additional $4.5 million with net proceeds of $4.2 million in connection with the second closing of shares of our Series A Preferred Stock in April 2025. We believe that our cash balance as of March 31, 2025 and the net proceeds from the second closing will fund our operations into the first quarter of 2026.

Current wording

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, contractual obligations and other commitments. We assess liquidity in terms of our cash flows from operations and their sufficiency to fund our operating and investing activities. As of June 30, 2025, we had cash totaling $2.7 million.

Previous wording

We expect that we will need to raise additional funds, including through the use of the ChEF Equity Facility and the issuance of equity, equity-related or debt securities or by obtaining additional credit from financial institutions to fund, together with our principal sources of liquidity, ongoing costs, such as research and development relating to our solid-state batteries, expansion of our facilities, and new strategic investments. If such financings are not available, or if the terms of such financings are less desirable than we expect, we may be forced to take actions to reduce our capital or operating expenditures, including by not seeking potential acquisition opportunities, eliminating redundancies, or reducing or delaying our production facility expansions, reduce operations, sell off our assets, seek the protection of bankruptcy courts or shut down our operations and dissolve. Further, any future debt or equity financings may be dilutive to our current stockholders.

Current wording

We expect that we will need to raise additional funds, including through the issuance of equity, equity-related or debt securities or by obtaining additional credit from financial institutions to fund, together with our principal sources of liquidity, ongoing costs, such as research and development relating to our solid-state batteries, expansion of our facilities, and new strategic investments. If such financings are not available, or if the terms of such financings are less desirable than we expect, we may be forced to take actions to reduce our capital or operating expenditures, including by not seeking potential acquisition opportunities, eliminating redundancies, or reducing or delaying our production facility expansions, reduce operations, sell off our assets, seek the protection of bankruptcy courts or shut down our operations and dissolve. Further, any future debt or equity financings may be dilutive to our current stockholders.

Previous wording

We may elect to prepay all or any portion of the amounts owed prior to the Maturity Date, provided that we provide notice to the Administrative Agent and the amount is accompanied by the applicable prepayment premium, if any. Prepayments of the Term Loan are required to be accompanied by a premium of 5% of the principal amount so prepaid if made prior to the October 7, 2023, 3% if made on and after October 7, 2023 but prior to October 7, 2024, 1% if made after October 7, 2024 but prior to October 7, 2025, and 0% if made on or after October 7, 2025. If the Term Loan is accelerated following the occurrence of an event of default, Legacy Dragonfly is required to immediately pay to lenders the sum of all obligations for principal, accrued interest, and the applicable prepayment premium.

Current wording

We may elect to prepay all or any portion of the amounts owed prior to the Maturity Date, provided that we provide notice to the Administrative Agent and the amount is accompanied by the applicable prepayment premium, if any. Prepayments of the Term Loan are required to be accompanied by a premium of 5% of the principal amount so prepaid if made prior to October 7, 2023, 3% if made on and after October 7, 2023 but prior to October 7, 2024, 1% if made after October 7, 2024 but prior to October 7, 2025, and 0% if made on or after October 7, 2025. If the Term Loan is accelerated following the occurrence of an event of default, Legacy Dragonfly is required to immediately pay to lenders the sum of all obligations for principal, accrued interest, and the applicable prepayment premium.

Previous wording

Pursuant to the ChEF Purchase Agreement, on the terms of and subject to the satisfaction of the conditions in the ChEF Purchase Agreement, including the filing and effectiveness of a registration statement registering the resale by CCM LLC of the shares of common stock issued to it under the ChEF Purchase Agreement, and certain restrictions set forth in the Term Loan Agreement and the terms of the Series A Preferred Stock, we will have the right from time to time at our option to direct CCM LLC to purchase up to a specified maximum amount of shares of common stock, up to a maximum aggregate purchase price of $150 million over the term of the ChEF Equity Facility. In connection with the ChEF Equity Facility, we filed a registration statement registering the resale of up to 2,390,226 shares that may be resold into the public markets by CCM LLC, which represented approximately 33% of the shares of our common stock outstanding as of December 31, 2023. During the year ended December 31, 2023, we issued and sold approximately 65,389 shares of our common stock under this facility, resulting in net cash proceeds of $1,278,566. During the year ended December 31, 2024, we issued 350,423 shares pursuant to the ChEF Purchase Agreement with CCM LLC for aggregate proceeds to us of $2,043,885. During the quarter ended March 31, 2025, we issued 23,160 shares pursuant to the ChEF Purchase Agreement for aggregate proceeds to us of $62,846. Subsequent to the quarter ended March 31, 2025, we have not issued any shares pursuant to the ChEF Purchase Agreement.This impact may be heightened by the fact that sales to CCM LLC will generally be at prices below the current trading price of our common stock. If the trading price of our common stock does not recover or experiences a further decline, sales of shares of common stock to CCM LLC pursuant to the ChEF Purchase Agreement may be a less attractive source of capital and/or may not allow us to raise capital at rates that would be possible if the trading price of our common stock were higher.

Current wording

Pursuant to the ChEF Purchase Agreement, on the terms of and subject to the satisfaction of the conditions in the ChEF Purchase Agreement, including the filing and effectiveness of a registration statement registering the resale by CCM LLC of the shares of common stock issued to it under the ChEF Purchase Agreement, and certain restrictions set forth in the Term Loan Agreement, we will have the right from time to time at our option to direct CCM LLC to purchase up to a specified maximum amount of shares of common stock, up to a maximum aggregate purchase price of $150 million over the term of the ChEF Equity Facility. In connection with the ChEF Equity Facility, we filed a registration statement registering the resale of up to 2,390,226 shares that may be resold into the public markets by CCM LLC, which represented approximately 33% of the shares of our common stock outstanding as of December 31, 2023. During the year ended December 31, 2023, we issued and sold approximately 65,389 shares of our common stock under this facility, resulting in net cash proceeds of $1,278,566. During the year ended December 31, 2024, we issued 350,423 shares pursuant to the ChEF Purchase Agreement with CCM LLC for aggregate proceeds to us of $2,043,885. During the six months ended June 30, 2025, we issued 23,160 shares pursuant to the ChEF Purchase Agreement for aggregate proceeds to us of $62,846. Subsequent to the quarter ended June 30, 2025, we have not issued any shares pursuant to the ChEF Purchase Agreement. This impact may be heightened by the fact that sales to CCM LLC will generally be at prices below the current trading price of our common stock. If the trading price of our common stock does not recover or experiences a further decline, sales of shares of common stock to CCM LLC pursuant to the ChEF Purchase Agreement may be a less attractive source of capital and/or may not allow us to raise capital at rates that would be possible if the trading price of our common stock were higher. The ChEF Purchase Agreement terminates in December 2025. In connection with the 2025 Public Offering, we agreed not to sell shares of our common stock for a period of 90 days following the closing of the offering, subject to certain exceptions

Previous wording

In 2024, we identified an underpayment of tariffs to U.S. Customs and Border Protection (“CBP”) in the amount of approximately $1.66 million in the aggregate, related to the improper classification and valuation of certain of the products used in our batteries. We have reported the underpayment to CBP.

Current wording

In 2024, we identified an underpayment of tariffs to U.S. Customs and Border Protection (“CBP”) in the amount of approximately $1.66 million in the aggregate, related to the improper classification and valuation of certain of the products used in our batteries. We have reported the underpayment to CBP. In June 2025, after a comprehensive review of this tariff calculation, an additional $0.29 million was discovered and also reported to CBP and a payment plan of $0.05 million per week was put into place.

Previous wording

For the quarter ended March 31, 2025, we generated a net loss of $6.8 million and had a negative cash flow from operations. As of March 31, 2025, we had approximately $2.8 million in cash and cash equivalents and working capital of $9.1 million.

Current wording

For the quarter ended June 30, 2025, we generated a net loss of $7.0 million and had a negative cash flow from operations. As of June 30, 2025, we had approximately $2.7 million in cash and cash equivalents and working capital of $8.4 million.

Previous wording

As presented above, strategic initiatives were executed in order to alleviate the substantial doubt, such as our ability to raise funds through the Purchase Agreement, the maturity extension of the Term Loan (which reclassifies the loan as long-term on the financial statements for the year ending December 31, 2024), and the absence of any covenants, other than a $2,500 minimum cash requirement, for at least one year from the financial statement issuance date. However, the initiatives were not enough support to completely alleviate our going concern. Due to no other concessions being made by the lenders in terms of future debt and interest due, except for extending payments into 2026 and the maturity date by one year, and lack of substantial proof of revenue projections for new markets, management concluded that there is significant doubt about our ability to continue as a going concern.

Current wording

As presented above, strategic initiatives were executed in order to alleviate the substantial doubt, such as our ability to raise funds, the maturity extension of the Term Loan (which reclassified the loan as long-term on the financial statements for the year ending December 31, 2024), and the absence of any covenants, other than a $2,500 minimum cash requirement, for at least one year from the financial statement issuance date. However, the initiatives were not enough support to completely alleviate our going concern. Due to no other concessions being made by the lenders in terms of future debt and interest due, except for extending payments into 2026 and the maturity date by one year, and lack of substantial proof of revenue projections for new markets, management concluded that there is significant doubt about our ability to continue as a going concern.

Previous wording

In addition, we may need to raise additional debt and/or equity financing to fund our operations and strategic plans and meet our financial covenants. We have historically been able to raise additional capital through issuance of equity and/or debt financing and we intend to use the ChEF Equity Facility and raise additional capital as needed, subject to certain restrictions set forth in the Term Loan Agreement and the terms of the Series A Preferred Stock. However, we cannot guarantee that we will be able to raise additional equity, contain expenses, or increase revenue. If such financings are not available, or if the terms of such financings are less desirable than we expect, we may be forced to take actions to reduce our capital or operating expenditures, including by not seeking potential acquisition opportunities, eliminating redundancies, or reducing or delaying our production facility expansions, reduce operations, sell off our assets, seek the protection of bankruptcy courts or shut down our operations and dissolve, which may adversely affect our business, operating results, financial condition and prospects. Further, future debt or equity financings may be dilutive to our current stockholders.

Current wording

In addition, we may need to raise additional debt and/or equity financing to fund our operations and strategic plans and meet our financial covenants. We have historically been able to raise additional capital through issuance of equity and/or debt financing and we intend to raise additional capital as needed, subject to certain restrictions set forth in the Term Loan Agreement. However, we cannot guarantee that we will be able to raise additional equity, contain expenses, or increase revenue. If such financings are not available, or if the terms of such financings are less desirable than we expect, we may be forced to take actions to reduce our capital or operating expenditures, including by not seeking potential acquisition opportunities, eliminating redundancies, or reducing or delaying our production facility expansions, reduce operations, sell off our assets, seek the protection of bankruptcy courts or shut down our operations and dissolve, which may adversely affect our business, operating results, financial condition and prospects. Further, future debt or equity financings may be dilutive to our current stockholders.

Previous wording

Cash Flows for the Three months ended March 31, 2025, and March 31, 2024

Current wording

Cash Flows for the Six months ended June 30, 2025, and June 30, 2024

Previous wording

Net cash used in operating activities was $4.5 million for the three months ended March 31, 2025, primarily due to a net loss of $6.8 million partially offset by $2.7 million increase in accounts payable.

Current wording

Net cash used in operating activities was $7.9 million for the six months ended June 30, 2025, primarily due to a net loss of $13.8 million partially offset by $7.3 million of payment in-kind interest accrued on the Term Loan.

Previous wording

Net cash used in operating activities was $3.4 million for the three months ended March 31, 2024, primarily due to a net loss of $10.4 million partially offset by $1.3 million of payment in-kind interest accrued on the Term Loan and $5.2 million decrease in inventory as a result of management’s decision to lower overall stocking levels to adjust for more modest demand.

Current wording

Net cash used in operating activities was $7.4 million for six months ended June 30, 2024, primarily due to a net loss of $24.0 million partially offset by $4.6 million of payment in-kind interest accrued on the Term Loan and $10.1 million decrease in inventory as a result of management’s decision to lower overall stocking levels to adjust for more modest demand.

Previous wording

Net cash used in investing activities was $0.8 million for the three months ended March 31, 2025, as compared to net cash used in investing activities of $0.8 million for the three months ended March 31, 2024. The cash used for the three months ended March 31, 2025 was primarily for payments of building improvements for the new warehouse. The cash used for the three months ended March 31, 2024 was primarily related to capital equipment expenses to support our core battery business and ongoing efforts to develop solid-state battery technology and manufacturing process.

Current wording

Net cash used in investing activities was $1.6 million for the six months ended June 30, 2025, as compared to net cash used in investing activities of $1.3 million for the six months ended June 30, 2024. The increase in cash used in investing activities was primarily due to an increase in capital expenses to support our core battery business.

Previous wording

Net cash provided by financing activities was $3.3 million for the three months ended March 31, 2025, primarily related to net proceeds of $3.2 million from the Offerings on February 26, 2025, as compared to zero net cash provided in financing activities, proceeds of $2.7 million note payable was subsequently repaid within the three months ended March 31, 2024.

Current wording

Net cash provided by financing activities was $7.4 million for the six months ended June 30, 2025, primarily related to net proceeds of $7.3 million as part of the Purchase Agreement entered into in February 2025. This is compared to $0.7 million net cash provided in financing activities primarily from proceeds of issuing and selling shares under ChEF Equity Facility for the six months ended June 2024.

Previous wording

Our estimated future obligations consist of short-term and long-term operating lease liabilities. As of March 31, 2025, we had $3.0 million in short-term operating lease and financing liabilities and $21.9 million in long-term operating and financing lease liabilities.

Current wording

Our estimated future obligations consist of short-term and long-term operating lease liabilities. As of June 30, 2025, we had $3.0 million in short-term operating lease and financing liabilities and $21.8 million in long-term operating and financing lease liabilities.