Dragonfly Energy Holdings Corp.

Previous 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”).

Current wording

Since 2020, we have sold over 360,000 batteries. For the quarters ended September 30, 2025, and September 30, 2024, we sold 10,977 and 10,283 batteries, respectively, and had $16.0 million and $12.7 million in net sales, respectively. For the nine months ended September 30, 2025 and September 30, 2024, we sold 33,956 and 32,907 batteries, respectively, and had $45.6 million and $38.4 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

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.

Current wording

During the third 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

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.

Current wording

As discussed under “—Liquidity and Capital Resources” below 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. 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

In addition to the initial merger consideration in connection with our business combination, up to 4,444,445 additional shares of common stock (“Earnout Shares”) may be issued based on achieving specified milestones in three tranches:

Current wording

In addition to the initial merger consideration in connection with our business combination in October of 2022, up to 4,444,445 additional shares of common stock (“Earnout Shares”) may be issued based on achieving specified milestones in three tranches:

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”), 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 .

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 (as defined below). The ChEF Purchase Agreement terminates in December 2025. In connection with the October 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

On February 26, 2025, we entered into a securities purchase agreement with a single institutional investor, pursuant to which we sold in a registered direct offering (the “Registered Direct Offering”) 180 shares of Series A Preferred Stock, at a price of $10,000 per share, initially convertible into shares of our common stock, at a conversion price of $2.332 per share of common stock. The Series A Preferred Stock is also convertible by the investor at an adjusted conversion price, subject to the applicable floor price, which is based on a discount to the market price of our common stock as set forth in the certificate of designation for the Series A Preferred Stock. The floor price for the Series A Preferred Stock sold in the Registered Direct Offering is $1.00.

Current wording

On February 26, 2025, we entered into a securities purchase agreement with a single institutional investor, pursuant to which we sold in a registered direct offering (the “Registered Direct Offering”) 180 shares of Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), at a price of $10,000 per share, initially convertible into shares of our common stock, at a conversion price of $2.332 per share of common stock. The Series A Preferred Stock was also convertible by the investor at an adjusted conversion price, subject to the applicable floor price.

Previous wording

Concurrently with the sale of the Series A Preferred Stock in the Registered Direct Offering, in a private placement offering pursuant to the Purchase Agreement (the “Private Placement” and, together with the Registered Direct Offering, the “Offerings”), we sold, at the initial closing of the Private Placement (the “Initial Closing”), (i) an additional 170 shares of Series A Preferred Stock at the same offering price as the Series A Preferred Stock offered in the Registered Direct Offering, initially convertible into shares of common stock at a conversion price of $2.332 per share, and (ii) warrants (the “Private Placement Convertible Preferred Warrants”) to purchase up to an aggregate of 4,000 shares of Series A Preferred Stock (the “Private Placement Warrant Shares”), with an exercise price of $10,000 per share of Series A Preferred Stock, and a term as described below. The floor price for the Series A Preferred Stock sold in the Private Placement is $0.424.

Current wording

Concurrently with the sale of the Series A Preferred Stock in the Registered Direct Offering, in a private placement offering pursuant to the Purchase Agreement (the “Private Placement” and, together with the Registered Direct Offering, the “Offerings”), we sold, at the initial closing of the Private Placement (the “Initial Closing” and, together with the Registered Direct Offering, the “Initial Offerings”), (i) an additional 170 shares of Series A Preferred Stock at the same offering price as the Series A Preferred Stock offered in the Registered Direct Offering, initially convertible into shares of common stock at a conversion price of $2.332 per share, and (ii) warrants (the “Private Placement Convertible Preferred Warrants”) to purchase up to an aggregate of 4,000 shares of Series A Preferred Stock (the “Private Placement Warrant Shares”), with an exercise price of $10,000 per share of Series A Preferred Stock, and a term as described below.

Previous wording

The exercise price under each Private Placement Convertible Preferred Warrant will be $10,000 per share of Series A Preferred Stock. Each Private Placement Convertible Preferred Warrant will be exercisable for 200 shares of Series A Preferred Stock in minimum increments of $500,000. The Private Placement Convertible Preferred Warrants will have a term beginning on the issuance date and ending on or prior to the earlier of (i) the thirty-three (33) month anniversary of the date the shares of common stock issued or issuable upon the conversion of the Series A Preferred Stock issued in the concurrent Private Placement are registered for resale (“Registration Effectiveness”) pursuant to an effective registration statement under the Securities Act of 1933, as amended, (the “Securities Act”) (such date, the “Registration Effectiveness Date”) and (ii) (A) the consummation of a Change of Control (as defined in the certificate of designation) and (B) the consummation of a redemption of the then outstanding Series A Preferred Stock in full. The exercise price and number of shares of Series A Preferred Stock issuable upon exercise are subject to appropriate adjustment in the event of share dividends, share splits, reorganizations or similar events affecting shares of our common stock.

Current wording

The exercise price under each Private Placement Convertible Preferred Warrant was $10,000 per share of Series A Preferred Stock. Each Private Placement Convertible Preferred Warrant was exercisable for 200 shares of Series A Preferred Stock in minimum increments of $500,000. The Private Placement Convertible Preferred Warrants had a term beginning on the issuance date and ending on or prior to the earlier of (i) the thirty-three (33) month anniversary of the date the shares of common stock issued or issuable upon the conversion of the Series A Preferred Stock issued in the concurrent Private Placement were registered for resale (“Registration Effectiveness”) pursuant to an effective registration statement under the Securities Act of 1933, as amended, (the “Securities Act”) (such date, the “Registration Effectiveness Date”) and (ii) (A) the consummation of a Change of Control (as defined in the certificate of designation) and (B) the consummation of a redemption of the then outstanding Series A Preferred Stock in full. The exercise price and number of shares of Series A Preferred Stock issuable upon exercise was subject to appropriate adjustment in the event of share dividends, share splits, reorganizations or similar events affecting shares of our common stock.

Previous wording

In addition, upon receipt of stockholder approval pursuant to the rules of Nasdaq for certain shares of common stock issuable upon conversion of the Series A Preferred Stock and the Registration Effectiveness, the investor will be automatically required to purchase for $4.5 million (the “Second Closing”) an additional 450 shares of Series A Preferred Stock (the “Second Closing Preferred Shares”). The Second Closing Preferred Shares are identical to the Series A Preferred Stock offered in the Registered Direct Offering and sold in the initial closing of the Private Placement, other than the conversion price and the floor price which was determined at the time of the Second Closing based on the Nasdaq minimum price. On April 28, 2025, pursuant to the Purchase Agreement, we sold to the Purchaser, in the Second Closing 450 Preferred Shares at a price of $10,000 per share, initially convertible into shares of common stock at a conversion price of $0.594 per share. The floor price for the Series A Preferred Stock issued in the Second Closing is $0.10902.

Current wording

On April 28, 2025, pursuant to the Purchase Agreement, we sold to the Purchaser, in the second closing of the Private Placement (the “Second Closing”) 450 Preferred Shares at a price of $10,000 per share, initially convertible into shares of common stock at a conversion price of $0.594 per share, subject to adjustment.

Previous wording

The net proceeds to us from the Initial Offerings and the Second Offering, after deducting the placement agent’s fees and expenses and estimated offering expenses, were approximately $3.2 million and $4.2, respectively, excluding the net proceeds, if any, from the exercise of the Private Placement Convertible Preferred Warrants.

Current wording

The net proceeds to us from the Initial Offerings and the Second Offering, after deducting the placement agent’s fees and expenses and estimated offering expenses, were approximately $3.2 million and $4.2 million, respectively, excluding the net proceeds, if any, from the exercise of the Private Placement Convertible Preferred Warrants.

Previous wording

Other income (expense) consists primarily of interest expense, the change in fair value of the warrant liability and amortization of debt issuance costs.

Current wording

Other expense consists primarily of interest expense, the change in fair value of the warrant liability and amortization of debt issuance costs.

Previous 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.

Current wording

Net sales increased by $3.2 million, or 25.5%, to $16.0 million for the three months ended September 30, 2025, as compared to $12.7 million for the three months ended September 30, 2024. This increase was primarily due to higher OEM battery and accessory sales of new models to existing customers. We expect our sales to increase in the coming quarters as our customers expand the number of models that include our battery systems in the new model year and our entrance into new markets, trucking and industrials, with new product offerings.

Previous wording

Cost of goods sold increased by $1.6 million, or 16.0%, to $11.6 million for the three months ended June 30, 2025, as compared to $10.0 million for the three 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 along with increased product costs related to higher tariffs over the next 12 months.

Current wording

Cost of goods sold increased by $1.4 million, or 14.0%, to $11.2 million for the three months ended September 30, 2025, as compared to $9.9 million for the three months ended September 30, 2024. This increase was primarily due to product and labor costs due to higher unit volume of OEM accessories. Overhead also increased due to allocation of expense related for the new lease. We expect our Cost of Goods Sold to increase in conjunction with the anticipated increase in revenue over the next 12 months.

Previous 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.

Current wording

Gross profit increased by $1.9 million, or 65.0%, to $4.7 million for the three months ended September 30, 2025, as compared to $2.9 million for the three months ended September 30, 2024. The increase in gross profit was primarily due to a higher unit volume of OEM accessory sales. Gross Profit percentage increased by 7.1% to 29.7% for the three months ended September 30, 2025, as compared to 22.6% for the three months ended September 30, 2024. This is primarily due to sales of higher margin accessory units and assemblies.

Previous 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.

Current wording

Research and development expenses decreased by $1.0 million, or 64.1%, to $0.6 million for the three months ended September 30, 2025, as compared to $1.6 million for the three months ended September 30, 2024. The decrease was primarily a result of lower wage expense in the amount of $0.7 million due to change in bonus accrual and reduced headcount. Overhead expense allocation is lower by $0.2 million and reduced spend of $0.1 million on patents and materials and supplies. 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

General and administrative expenses decreased by $1.1 million, or 19.0%, to $4.6 million for the three months ended June 30, 2025, as compared to $5.7 million for the three months ended June 30, 2024. This decrease was primarily due to a decrease in legal and professional services of $1.5 million. Offsetting these lower costs is an increase wage expense due to increased headcount associated with the focus on product development and an increase in depreciation related to tenant improvements on the new facility. We expect General and Administrative Expenses, as a percentage of revenue, to be relatively stable over the next 12 months.

Current wording

General and administrative expenses increased by $0.9 million, or 21.5%, to $5.3 million for the three months ended September 30, 2025, as compared to $4.4 million for the three months ended September 30, 2024. This increase was primarily due to an increase wage expense of $0.3 million due to increased headcount associated with the focus on product development, an increase in lease and depreciation expense and the impairment of one lease and related leasehold improvements in the amount of $0.6 million. We expect General and Administrative Expenses, as a percentage of revenue, to be relatively stable over the next 12 months.

Previous 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.

Current wording

Sales and marketing expenses decreased by $0.3 million, or 9.4%, to $2.6 million for the three months ended September 30, 2025, as compared to $2.9 million for the three months ended September 30, 2024. This decrease was primarily due to lower employee-related costs. We expect our Selling and Marketing Expenses to be relatively stable over the next 12 months.

Previous 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.

Current wording

Other expense totaled $7.3 million for the three months ended September 30, 2025 as compared to total other expense of $0.8 million for the three months ended September 30, 2024. Other expense of $7.3 million in three months ended September 30, 2025 was comprised primarily of interest expense of $6.4 million related to our debt securities and a negative change in fair market value of warrant liability in the amount of $0.9 million. The $0.8 million of other expense in three months ended September 30, 2024 was comprised primarily of interest expense of $5.6 million related to our debt securities offset by a positive change in fair market value of warrant liability in the amount of $4.9 million.

Previous 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).

Current wording

We experienced a net loss of $11.1 million for the three months ended September 30, 2025, as compared to net loss of $6.8 million for the three months ended September 30, 2024. As described above, this result was driven by higher sales of higher margin accessory units, lower operating expenses, and an increase in other expense (due to higher interest expense and the change in fair market value of our warrants).

Previous wording

The following table sets forth our results of operations for the six months ended June 30, 2025, and the six months ended June 30, 2024. This data should be read together with our financial statements and related notes included elsewhere in this Quarterly Report, and is qualified in its entirety by reference to such financial statements and related notes.

Current wording

The following table sets forth our results of operations for the nine months ended September 30, 2025, and the nine months ended September 30, 2024. This data should be read together with our financial statements and related notes included elsewhere in this Quarterly Report, and is qualified in its entirety by reference to such financial statements and related notes.

Previous wording

Net sales increased by 3.0 million, or 23.0%, to $16.2 million for the three months ended June 30, 2025, as compared to $13.2 million for the three 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. 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.

Current wording

Net sales increased by $7.1 million, or 18.6%, to $45.6 million for the nine months ended September 30, 2025, as compared to $38.4 million for the nine months ended September 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. We expect our sales to increase in the next 12 months 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 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.

Current wording

Cost of goods sold increased by $3.0 million, or 10.1%, to $32.3 million for the nine months ended September 30, 2025, as compared to $29.3 million for the nine months ended September 30, 2024. This increase was primarily due to product and labor costs related to higher unit volume of accessory units. Overhead increased due to allocation of expense related to the new lease. 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

Research and development expenses decreased by $1.2 million or 40.9%, to $1.7 million for the six months ended June 30, 2025, as compared to $2.9 million for the six months ended June 30, 2024. The decrease was primarily a result of lower wage expense in the amount of $0.9 million due to change in bonus accrual and reduced headcount along with lower rent, travel and supplies. 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 $2.2 million, or 49.3%, to $2.3 million for the nine months ended September 30, 2025, as compared to $4.5 million for the nine months ended September 30, 2024. The decrease was primarily a result of lower employee related expense in the amount of $1.6 million due to change in bonus accrual and reduced headcount along with lower rent, travel and supplies. 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

General and administrative expenses decreased by $0.5 million, or 4.4%, to $11.0 million for the six months ended June 30, 2025, as compared to $10.5 million for the six months ended June 30, 2024. This decrease was primarily due to a decrease in legal and professional services of $0.7 million and lower employee related costs in the amount of $0.2 million partially offset by higher rent in the amount of $0.5 million. We expect General and Administrative Expenses, as a percentage of revenue, to be relatively stable over the next 12 months.

Current wording

General and administrative expenses increased by $1.4 million, or 9.4%, to $16.3 million for the nine months ended September 30, 2025, as compared to $14.9 million for the nine months ended September 30, 2024. This increase was primarily due the allocation of lease and depreciation expense of $1.7 million on our properties and impairment of one lease and related leasehold improvements of $0.6 million partially offset by a decrease in legal and professional services of $0.8 million. We expect General and Administrative Expenses, as a percentage of revenue, to be relatively stable over the next 12 months.

Previous wording

Sales and marketing expenses decreased by $0.3 million, or 6.7%, to $5.1 million for the six months ended June 30, 2025, as compared to $5.4 million for the six months ended June 30, 2024. This decrease was primarily due to lower employee related costs in the amount of $0.6 million primarily related to a change in bonus accrual and lower headcount. Partially offsetting this decrease is higher shipping costs in the amount of $0.1 million related to an increase in units sold along with higher spend on advertising. We expected Selling and Marketing Expenses, as a percentage of revenue, to be relatively stable over the next 12 months.

Current wording

Sales and marketing expenses decreased by $0.6 million, or 7.7%, to $7.7 million for the nine months ended September 30, 2025, as compared to $8.3 million for the nine months ended September 30, 2024. This decrease was primarily due to lower employee related costs in the amount of $0.9 million primarily related to a change in bonus accrual and lower headcount. Partially offsetting this decrease is higher shipping costs in the amount of $0.3 million related to an increase in units sold. We expected Selling and Marketing Expenses, as a percentage of revenue, to be relatively stable over the next 12 months.

Previous wording

Other expense totaled $4.6 million for the six months ended June 30, 2025 as compared to total other expense of $11.4 million for the six months ended June 30, 2024. Other expense for the six months ended June 30, 2025 is comprised of $10.1 million in interest expense related to our debt securities partially offset by a change in fair market value of our warrants in the amount of $5.5 million. Other expense for the six months ended June 30, 2024 is comprised of a negative change in fair market value of our warrants in the amount of $1.7 million and $9.6 million in interest expense related to our debt securities.

Current wording

Other expense totaled $11.9 million for the nine months ended September 30, 2025 as compared to total other expense of $12.2 million for the nine months ended September 30, 2024. Other expense for the nine months ended September 30, 2025 is comprised of $16.5 million in interest expense related to our debt securities partially offset by a positive change in fair market value of our warrants in the amount of $4.6 million. Other expense for the nine months ended September 30, 2024 is comprised of $15.3 million in interest expense related to our debt securities partially offset by a positive change in fair market value of our warrants in the amount of $3.1 million.

Previous wording

There was no tax expense recorded for the six months ended June 30, 2025 or the six 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 six months ended June 30, 2025 or the six months ended June 30, 2024.

Current wording

There was no tax expense recorded for the nine months ended September 30, 2025 or the nine months ended September 30, 2024. Based on available evidence as of September 30, 2025 and September 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 nine months ended September 30, 2025 or the nine months ended September 30, 2024.

Previous wording

We generated a net loss of $13.8 million for the six months ended June 30, 2025, as compared to net loss of $24.0 million for the six months ended June 30, 2024. As described above, this result was driven by higher sales, consumption of lower-priced inventory, lower operating expenses, and an increase in other expense , due to the change in fair market value of our warrants.

Current wording

We generated a net loss of $24.9 million for the nine months ended September 30, 2025, as compared to net loss of $30.8 million for the nine months ended September 30, 2024. As described above, this result was driven by higher sales of higher margin accessory sales and lower operating expenses.

Previous 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.

Current wording

The table below presents our adjusted EBITDA, reconciled to net (loss) income for the three and nine months ended September 30, 2025, and September 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 June 30, 2025, we had cash totaling $2.7 million.

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 September 30, 2025, we had cash totaling $3.8 million.

Previous wording

On November 24, 2021, we issued $45 million of fixed rate senior notes, secured by among other things, a security interest in our intellectual property. As part of the Business Combination, we entered into a senior secured term loan facility in an aggregate principal amount of $75 million (the “Term Loan”) pursuant to the Term Loan, Guarantee and Security Agreement (the “Original Term Loan Agreement”) by and among, us, Legacy Dragonfly, Alter Domus (US) LLC, as the Agent to the lenders time-to-time party thereto (such lenders, the “Term Loan Lenders”), the proceeds of which were used to repay the $45 million fixed rate senior notes, and ChEF Equity Facility. On June 28, 2024, we entered into the First Amendment with the Term Loan Lenders. The First Amendment provided for a one-time issuance of the June 2024 Penny Warrants to purchase up to 233,334 shares of common stock and certain amendments to the Term Loan. On July 29, 2024, we entered into the Second Amendment with the Term Loan Lenders in connection with the License Agreement. On September 30, 2024, we entered into the Third Amendment with the Term Loan Lenders, which provided for the issuance of the September 2024 Penny Warrants to purchase up to 333,334 shares of common stock and certain amendments to the Term Loan Agreement. On December 31, 2024, we entered into the Fourth Amendment with the Term Loan Lenders, which provided for the issuance of the December 2024 Penny Warrants to purchase up to 350,000 shares of common stock and certain amendments to the Term Loan Agreement. On February 26, 2025, we entered into the Fifth Amendment with the Term Loan Lenders, which provided for the issuance of the February 2025 Penny Warrants to purchase up to 330,000 shares of common stock and certain amendments to the Term Loan Agreement.

Current wording

On November 24, 2021, we issued $45.0 million of fixed rate senior notes, secured by among other things, a security interest in our intellectual property. As part of the Business Combination, we entered into a senior secured term loan facility in an aggregate principal amount of $75 million (the “Term Loan”) pursuant to the Term Loan, Guarantee and Security Agreement (the “Original Term Loan Agreement” and, as amended, the “Term Loan Agreement”) by and among, us, Legacy Dragonfly, Alter Domus (US) LLC, as the Agent to the lenders time-to-time party thereto (such lenders, the “Term Loan Lenders”), the proceeds of which were used to repay the $45 million fixed rate senior notes, and ChEF Equity Facility.

Previous wording

The Term Loan proceeds were used to: (i) support the Business Combination, (ii) prepay the fixed rate senior notes at closing of the Business Combination, (iii) pay fees and expenses in connection with the foregoing, (iv) to provide additional growth capital and (v) for other general/corporate purposes. The Term Loan will mature on October 7, 2027, or the Maturity Date, and will be subject to quarterly amortization of 5% per annum beginning 24 months after issuance. The definitive documents for the Term Loan incorporate certain mandatory prepayment events and certain affirmative and negative covenants and exceptions hereto. The financial covenants for the Term Loan include a maximum senior leverage ratio covenant, a minimum liquidity covenant, a springing fixed charge coverage ratio covenant, and a maximum capital expenditures covenant. On March 29, 2023, September 29, 2023, December 29, 2023, May 13, 2024, June 28, 2024, September 30, 2024 and December 31, 2024, we obtained waivers from Alter Domus (US) LLC, as the administrative agent for the lenders (the “Administrative Agent”) and EICF Agent LLC and certain third-party financing source of our failure to satisfy the Tests under the Term Loan during the quarters ended March 31, 2023, September 30, 2023, December 31, 2023, March 31, 2024, June 30, 2024, September 30, 2024, and December 31, 2024. On March 31, 2024, April 29, 2024, May 30, 2024, June 28, 2024, July 31, 2024, August 30, 2024, September 30, 2024, October 31, 2024, November 30, 2024, December 31, 2024 and January 31, 2025, we received additional waivers from the Administrative Agent and the Term Loan Lenders in regard to our compliance with the liquidity requirement under the Term Loan as of the last day of the fiscal quarters ended March 31, 2024, June 30, 2024, September 30, 2024 and December 31, 2024, and as of the last fiscal day for the months ended April 30, 2024, May 31, 2024, July 31, 2024, August 31, 2024, October 31, 2024 and November 30, 2024. However, it is probable that we will fail to meet these covenants within the next twelve months. In accordance with U.S. GAAP, we reclassified our notes payable from a long-term liability to a current liability. The Term Loan accrues interest as follows: (i) until April 1, 2024, at a per annum rate equal to adjusted secured overnight financing rate (“SOFR”) plus 7% payable in cash plus an amount ranging from 4.5% to 6.5%, depending on our senior leverage ratio; (ii) effective April 1, 2024 and thereafter, interest payable to certain lenders subject to regulations of the U.S. Small Business Administration (“SBA”) with outstanding principal on that date of $30,846 will be limited to 14.0% per annum (except for default interest permitted under SBA regulations, as applicable); and (iii) the other outstanding principal will accrue interest from April 1, 2024 thereafter until October 1, 2024, at a per annum rate equal to adjusted SOFR plus 7% payable in cash plus an amount ranging from 4.5…

Excerpt shortened here; the source contains the full paragraph.

Current wording

The Term Loan proceeds were used to: (i) support the Business Combination, (ii) prepay the fixed rate senior notes at closing of the Business Combination, (iii) pay fees and expenses in connection with the foregoing, (iv) to provide additional growth capital and (v) for other general/corporate purposes. The Term Loan will mature on October 7, 2027, or the Maturity Date, and will be subject to quarterly amortization of 5% per annum beginning 24 months after issuance. The definitive documents for the Term Loan incorporate certain mandatory prepayment events and certain affirmative and negative covenants and exceptions hereto. The financial covenants for the Term Loan include a maximum senior leverage ratio covenant, a minimum liquidity covenant, a springing fixed charge coverage ratio covenant, and a maximum capital expenditures covenant. In accordance with U.S. GAAP, we reclassified our notes payable from a long-term liability to a current liability. The Term Loan accrues interest as follows: (i) until April 1, 2024, at a per annum rate equal to adjusted secured overnight financing rate (“SOFR”) plus 7% payable in cash plus an amount ranging from 4.5% to 6.5%, depending on our senior leverage ratio; (ii) effective April 1, 2024 and thereafter, interest payable to certain lenders subject to regulations of the U.S. Small Business Administration (“SBA”) with outstanding principal on that date of $30,846 will be limited to 14.0% per annum (except for default interest permitted under SBA regulations, as applicable); and (iii) the other outstanding principal will accrue interest from April 1, 2024 thereafter until October 1, 2024, at a per annum rate equal to adjusted SOFR plus 7% payable in cash plus an amount ranging from 4.5% to 6.5%, depending on the senior leverage ratio of the consolidated company, and at all times thereafter, at a per annum rate equal to adjusted SOFR plus a margin ranging from 11.5% to 13.5%, depending on our senior leverage ratio.

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, 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

Current wording

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 nine months ended September 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 September 30, 2025, we have not issued any shares pursuant to the ChEF Purchase Agreement. The ChEF Purchase Agreement terminates in December 2025. In connection with the July 2025 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

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.

Current wording

For the quarter ended September 30, 2025, we generated a net loss of $11.1 million and had a negative cash flow from operations. As of September 30, 2025, we had approximately $3.8 million in cash and cash equivalents and working capital of $8.8 million.

Previous wording

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

Current wording

Cash Flows for the Nine months ended September 30, 2025, and September 30, 2024

Previous 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.

Current wording

Net cash used in operating activities was $11.2 million for the nine months ended September 30, 2025, primarily due to a net loss of $24.9 million partially offset by $11.2 million of payment in-kind interest accrued on the Term Loan.

Previous 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.

Current wording

Net cash used in operating activities was $4.7 million for nine months ended September 30, 2024, primarily due to a net loss of $30.8 million partially offset by $4.8 million in deferred revenue related to the License Agreement, $6.6 million of payment in-kind interest accrued on the Term Loan and $14.8 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 $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.

Current wording

Net cash used in investing activities was $1.8 million for the nine months ended September 30, 2025, as compared to net cash used in investing activities of $1.7 million for the nine months ended September 30, 2024. The cash used in investing activities was primarily due to capital expenses to support our core battery business.

Previous 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.

Current wording

Net cash provided by financing activities was $12.0 million for the nine months ended September 30, 2025, primarily related to net proceeds of $7.3 million as part of the Purchase Agreement entered into in February 2025 and $4.7 million as part of the public offering in July 2025. This is compared to $1.7 million net cash provided in financing activities primarily from proceeds of issuing and selling shares under ChEF Equity Facility for the nine months ended June 30, 2024.

Previous 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.

Current wording

Our estimated future obligations consist of short-term and long-term operating lease liabilities. As of September 30, 2025, we had $2.9 million in short-term operating lease and financing liabilities and $21.1 million in long-term operating and financing lease liabilities.