10q10k10q10k.net

What changed in Dragonfly Energy Holdings Corp.'s 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Dragonfly Energy Holdings Corp.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+455 added−493 removedSource: 10-K (2026-03-30) vs 10-K (2025-03-31)

Top changes in Dragonfly Energy Holdings Corp.'s 2025 10-K

455 paragraphs added · 493 removed · 259 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

69 edited+63 added−71 removed126 unchanged
Biggest changeWith more than 300,000 Class 8 units sold in 2022, the market demonstrates a robust demand for vehicles that are integral to the backbone of global commerce and infrastructure projects. As the demand for more efficient, sustainable, and reliable transportation solutions grows, the use of Auxiliary Power Units (“ APUs ”) in heavy duty trucks is becoming increasingly significant.
Biggest changeEven in the midst of a historic freight recession, more than 200,000 Class 8 units sold in 2025. A surge in Class 8 units at the end of 2025 indicates a recovery in the market for vehicles that are integral to the backbone of global commerce and infrastructure projects.
Through the expansion of our 12 voltage battery product offerings, we will be able to penetrate further into additional applications including towable RVs, truck campers and trolling motors for small boats. ● We also offer 24 voltage batteries, which currently deliver 50 amp hours, and plan to further expand our 24 voltage battery offerings to provide additional drop-in replacements for AGM batteries.
Through the expansion of our 12 voltage battery product offerings, we will be able to penetrate further into additional applications including towable RVs, truck campers and trolling motors for small boats. 12 ● We also offer 24 voltage batteries, which currently deliver 50 amp hours, and plan to further expand our 24 voltage battery offerings to provide additional drop-in replacements for AGM batteries.
The move to a non-liquid electrolyte also means that solid-state batteries will be, on average, smaller and lighter than existing lithium-ion batteries. The process for manufacturing our solid-state cells is described below under “— Research and Development ”. Our Products We provide various industries with clean, reliable, and efficient power solutions through our comprehensive product portfolio.
The move to a non-liquid electrolyte also means that solid-state batteries will be, on average, smaller and lighter than existing lithium-ion batteries. The process for manufacturing our solid-state cells is described below under “- Research and Development ”. 10 Our Products We provide various industries with clean, reliable, and efficient power solutions through our comprehensive product portfolio.
Although manufacturing operations were previously capacity constrained the expansion into our new manufacturing facility will allow us to add production capacity and increase product offerings and scale based on demand. 9 ● The majority of our current batteries are 12 volt batteries, which provide 100 amp hours of energy and are an affordable solution to customers utilizing smaller or lower power applications.
Although manufacturing operations were previously capacity constrained the expansion into our new manufacturing facility will allow us to add production capacity and increase product offerings and scale based on demand. ● The majority of our current batteries are 12 volt batteries, which provide 100 amp hours of energy and are an affordable solution to customers utilizing smaller or lower power applications.
We work directly with OEMs to ensure compatibility with existing designs and also collaborate on custom designs for new applications. 12 The RV market is characterized by low barriers to entry. In North America, there are two large publicly traded RV companies, THOR Industries and REV Group, in addition to a number of independent RV OEMs.
We work directly with OEMs to ensure compatibility with existing designs and also collaborate on custom designs for new applications. The RV market is characterized by low barriers to entry. In North America, there are two large publicly traded RV companies, THOR Industries and REV Group, in addition to a number of independent RV OEMs.
We intend to integrate our conventional and solid-state cells produced using our dry-electrode process into the existing Dragonfly Energy and Battle Born Batteries product portfolios. 11 Headquarters, Manufacturing, and Production On February 8, 2022, we entered into a 124-month lease for an additional 390,240 square foot warehouse.
We intend to integrate our conventional and solid-state cells produced using our dry-electrode process into the existing Dragonfly Energy and Battle Born Batteries product portfolios. Headquarters, Manufacturing, and Production On February 8, 2022, we entered into a 124-month lease for an additional 390,240 square foot warehouse.
Lithium-ion batteries also provide the same energy capacity with one-fifth the weight of a standard lead-acid battery. Lithium-ion batteries are also significantly more reliable and efficient, especially in cold temperatures, allowing for year-round all-climate usage. ● Charging. Lead-acid batteries were the first rechargeable batteries on the market.
Lithium-ion batteries also provide the same energy capacity with one-fifth the weight of a standard lead-acid battery. Lithium-ion batteries are also significantly more reliable and efficient, especially in cold temperatures, allowing for year-round all-climate usage. 4 ● Charging. Lead-acid batteries were the first rechargeable batteries on the market.
Reflecting the strength of our DTC brand, we signed a brand licensing contract in July of 2024 with Stryten Energy for the Battle Born brand to be deployed in B2B sales within Stryten’s target market. The contract is expected to bring $30 million of licensing revenues within a seven year period.
Reflecting the strength of our Battle Born brand, we signed a brand licensing contract in July of 2024 with Stryten Energy for the Battle Born brand to be deployed in B2B sales within Stryten’s target market. The contract is expected to bring $30 million of licensing revenues within a seven year period.
Furthermore, internal production of both conventional and solid-state cells streamlines our supply chain and enables vertical integration, ultimately driving down production costs. 2 Industry Background For decades, lead-acid batteries have been the dominant player in power and energy markets worldwide.
Furthermore, internal production of both conventional and solid-state cells streamlines our supply chain and enables vertical integration, ultimately driving down production costs. Industry Background For decades, lead-acid batteries have been the dominant player in power and energy markets worldwide.
Compared to NMC and NCA batteries, LFP batteries are at or much closer to grid parity. 7 Dry Electrode Cell Manufacturing Technology Since our inception, we have been developing proprietary dry-electrode manufacturing processes for which we have issued patents and pending patent applications, where appropriate.
Compared to NMC and NCA batteries, LFP batteries are at or much closer to grid parity. Dry Electrode Cell Manufacturing Technology Since our inception, we have been developing proprietary dry-electrode manufacturing processes for which we have issued patents and pending patent applications, where appropriate.
We believe our battery management system is industry-leading for a number of reasons: ● it enables batteries to draw power under 135 degrees Fahrenheit, and is designed to cut off charging at 24 degrees Fahrenheit to protect cells; ● it actively monitors the rate of change of currents to detect and prevent short circuiting, and also protects against potential ground faults; ● it allows for up to an average of 300 amps continuously, 500 amp surges for 30 seconds, and momentary, half second maximum capacity surges; ● it enables batteries to recharge even if completely drained; ● it utilizes larger resistors to ensure balanced loads to improve performance and extend useful life; and ● it facilitates scalability by enabling batteries to be combined in parallel and in series.
We believe our battery management system is industry-leading as it: ● enables batteries to draw power under 135 degrees Fahrenheit, and is designed to cut off charging at 24 degrees Fahrenheit to protect cells; ● actively monitors the rate of change of currents to detect and prevent short circuiting, and also protects against potential ground faults; ● allows for up to an average of 300 amps continuously, 500 amp surges for 30 seconds, and momentary, half second maximum capacity surges; ● enables batteries to recharge even if completely drained; ● utilizes larger resistors to ensure balanced loads to improve performance and extend useful life; and ● facilitates scalability by enabling batteries to be combined in parallel and in series.
We train our employees and conduct audits of our operations to assess our fulfillment of these policies. 14 We are also subject to laws imposing liability for the cleanup of releases of hazardous substances. Under the law, we can be liable even if we did not cause a release on real property that we lease.
We train our employees and conduct audits of our operations to assess our fulfillment of these policies. 18 We are also subject to laws imposing liability for the cleanup of releases of hazardous substances. Under the law, we can be liable even if we did not cause a release on real property that we lease.
We are considering joint development agreements, licensing agreements, and offtake agreements as instruments of partnership with interested parties. 10 In comparison with traditional manufacturing methods, our patented process leverages two off-the-shelf technologies to deliver the stated cell manufacturing benefits – spray drying and electrostatic powder coating.
We are considering joint development agreements, licensing agreements, and offtake agreements as instruments of partnership with interested parties. 13 In comparison with traditional manufacturing methods, our patented process leverages two off-the-shelf technologies to deliver the stated cell manufacturing benefits - spray drying and electrostatic powder coating.
These products and solutions are sold to both OEMs and retail customers. Our lead product line is Battle Born Batteries product line, respected for its exceptional performance and durability.
These products and solutions are sold to both OEMs and aftermarket customers. Our lead product line is Battle Born Batteries product line, respected for its exceptional performance and durability.
However, we have delayed the deployment of these spray dryers until at least the third quarter of 2025 as we focus on designing larger-scale electrode coating equipment.
However, we have delayed the deployment of these spray dryers until at least the third quarter of 2027 as we focus on designing larger-scale electrode coating equipment.
LFP batteries are able to offset grid-related intermittencies and inefficiencies and assist in providing grid stabilization. Importantly, LFP batteries achieve these benefits in a clean, reliable and safe manner by supplanting or reducing the use of fossil fuel backup generators. ● Telecom.
LFP batteries are able to offset grid-related intermittencies and inefficiencies and assist in providing grid stabilization. Importantly, LFP batteries achieve these benefits in a clean, reliable and safe manner by supplanting or reducing the use of fossil fuel backup generators. ● Data Centers.
This trend emphasizes the potential for advanced battery technologies not only as an environmental solution but also as a competitive advantage in the heavy-duty truck and refrigerated transport markets, offering a substantial retrofitting and market penetration opportunity for battery manufacturers and suppliers with the requisite expertise and product offerings. ● Industrial / Material Handlings / Work Truck.
This trend emphasizes the potential for advanced battery technologies not only as an environmental solution but also as a competitive advantage in the heavy-duty truck and refrigerated transport markets, offering a substantial retrofitting and market penetration opportunity for battery manufacturers and suppliers with the requisite expertise and product offerings. ● Industrial Vehicles and Work Trucks .
To date, we have owned 44 issued patents, with an additional 39 patent applications pending, in the United States, Canada, Australia, Korea, Japan, India, China, and Europe (with individual patents in Germany, France and the United Kingdom). ● Proven Go-To-Market Strategy.
To date, we have owned 50 issued patents, with an additional 38 patent applications pending, in the United States, Canada, Australia, Korea, Japan, India, China, and Europe (with individual patents in Germany, France and the United Kingdom). 7 ● Proven Go-To-Market Strategy.
Overview We are a manufacturer of non-toxic deep cycle lithium-ion batteries that caters to customers in the consumer industry (including the recreational vehicle (“ RV ”), marine vessel, solar and off-grid residence industries), and trucking, industrial and energy storage markets, with proprietary, patented and disruptive battery cell manufacturing and non-flammable solid-state cell technology currently under development.
Overview We are a manufacturer of non-toxic deep cycle lithium-ion batteries that caters to customers in the consumer industry (including the recreational vehicle (“ RV ”), marine vessel, industrial, and trucking markets), with proprietary, patented and disruptive battery cell manufacturing and non-flammable solid-state cell technology currently under development.
In addition, we seek to protect our intellectual property rights through non-disclosure and invention assignment agreements with our employees and consultants and through non-disclosure agreements with business partners and other third parties. As of December 31, 2024, we owned 44 issued patents and 39 filed and pending patent applications.
In addition, we seek to protect our intellectual property rights through non-disclosure and invention assignment agreements with our employees and consultants and through non-disclosure agreements with business partners and other third parties. As of December 31, 2025, we owned 50 issued patents and 38 filed and pending patent applications.
Our website also includes investor presentations and corporate governance materials. 15
Our website also includes investor presentations and corporate governance materials. 19
We also have a diverse customer base, with our top 10 customers accounting for 47.4% of our revenue for the year ended December 31, 2024, in which only one customer accounted for more than 10% of our revenue. Our customers primarily utilize our products for RVs, marine vessels and off-grid residences.
We also have a diverse customer base, with our top 10 customers accounting for 57.5% of our revenue for the year ended December 31, 2025, in which only two customers accounted for more than 10% of our revenue. Our customers primarily utilize our products for RVs, marine vessels and off-grid residences.
For the years ended December 31, 2024 and 2023, OEM sales represented 54.5% and 42.7% of our total revenues, respectively. We have deep, long-standing relationships with many of our customers.
For the years ended December 31, 2025 and 2024, OEM sales represented 63.0% and 54.5% of our total revenues, respectively. We have deep, long-standing relationships with many of our customers.
We believe we have taken commercially reasonable steps to avoid such liability with respect to our current leased facilities. Employees and Human Capital Resources As of December 31, 2024, we had 144 employees: 139 full-time, 2 part-time and 3 interns.
We believe we have taken commercially reasonable steps to avoid such liability with respect to our current leased facilities. Employees and Human Capital Resources As of December 31, 2025, we had 141 employees: 137 full-time, 1 part-time and 3 interns.
Battery Management System Our proprietary battery management system is developed and tested in-house. It offers a complete solution for monitoring and controlling our complex battery systems and is designed to protect battery cells from damage in various scenarios.
It offers a complete solution for monitoring and controlling our complex battery systems and is designed to protect battery cells from damage in various scenarios.
We rely upon a combination of patent, trademark and trade secret laws in the United States and other jurisdictions, as well as license agreements and other contractual protections, to establish, maintain and enforce rights in our proprietary technologies.
We have received patents and filed patent applications in the United States and other jurisdictions to provide protection for our technology. We rely upon a combination of patent, trademark and trade secret laws in the United States and other jurisdictions, as well as license agreements and other contractual protections, to establish, maintain and enforce rights in our proprietary technologies.
Founded as an aftermarket-focused company, we initially targeted direct-to-consumer (DTC) sales within the recreational vehicle (RV) market. Since our inception in 2020, we have successfully sold over 330,000 batteries. For the fiscal years ended December 31, 2024, and December 31, 2023, we sold 42,447 and 64,906 batteries, respectively, generating revenues of $50.6 million and $64.5 million for each year.
Founded as an aftermarket-focused company, we initially targeted direct-to-consumer (“ DTC ”) sales within the recreational vehicle (“ RV ”) market. Since 2020, we have successfully sold over 370,000 batteries. For the fiscal years ended December 31, 2025, and December 31, 2024, we sold 43,129 and 42,447 batteries, respectively, generating revenues of $58.6 million and $50.6 million for each year.
Drawing upon our success in collaborating with RV and marine OEMs, we have begun expanding into the heavy-duty trucking market. We are leveraging our expertise in designing and supporting lithium-ion storage systems to tailor solutions meeting specific requirements for fleets.
We believe this approach results in more durable customer relationships and supports repeat adoption across applications and platforms. Drawing upon our success in collaborating with RV and marine OEMs, we have begun expanding into the heavy-duty trucking market. We are leveraging our expertise in designing and supporting lithium-ion storage systems to tailor solutions meeting specific requirements for fleets.
Additionally, we signed a contract manufacturing agreement that allows for us to assemble battery packs to be sold by Stryten under the Battle Born label. Both licensing and contract manufacturing revenues from these contracts are expected to come in throughout 2025, and we believe will represent a significant portion of our total revenues beginning in 2026.
Additionally, we signed a contract manufacturing agreement that allows for us to assemble battery packs to be sold by Stryten under the Battle Born label. Both licensing and contract manufacturing revenues from these contracts began in 2025 and are expected to continue into 2026.
On November 22, 2024, we effected a reverse stock split of our issued and outstanding common stock at a ratio of 1-for-9 (the “ Reverse Stock Split ”).
On December 18, 2025, we effected a reverse stock split of our issued and outstanding common stock at a ratio of 1-for-10 (the “ Reverse Stock Split ”).
We also leverage targeted pay-per-click advertising campaigns across various platforms, including search engines, social media, and connected TV. This data driven approach ensures efficient conversion of high-intent customers at the bottom of the purchase funnel, maximizing return on investment and driving targeted brand awareness among potential buyers. Direct relationships with retail customers remain a core value.
This data driven approach ensures efficient conversion of high-intent customers at the bottom of the purchase funnel, maximizing return on investment and driving targeted brand awareness among potential buyers. Direct relationships with retail customers remain a core value.
We believe our ability to cost-effectively develop and manufacture LFP solid-state batteries will position renewable energy projects deploying these batteries to reach “grid parity” sooner. 5 Our Competitive Strengths We believe that we possess the largest share in the markets we operate in due to our following business strengths, which distinguish us in this competitive landscape and position us to capitalize on the anticipated continued growth in the energy storage market: ● Premier Lithium-Ion Battery Technology.
Our Competitive Strengths We believe that we possess the largest share in the markets we operate in due to our following business strengths, which distinguish us in this competitive landscape and position us to capitalize on the anticipated continued growth in the energy storage market: ● Premier Lithium-Ion Battery Technology.
In July 2022, we strengthened our ties with the THOR group of RV OEMs when (i) THOR Industries made a $15,000,000 strategic investment in us and (ii) we agreed to enter into a future, mutually agreed distribution arrangement and joint IP development arrangement.
Under the Supply Agreement, we will be the exclusive supplier to Keystone for certain of its future LFP battery requirements, solidifying our long standing relationship with Keystone. 16 In July 2022, we strengthened our ties with the THOR group of RV OEMs when (i) THOR Industries made a $15,000,000 strategic investment in us and (ii) we agreed to enter into a future, mutually agreed distribution arrangement and joint IP development arrangement.
Module assembly is a significantly automated process, implementing custom-designed equipment and systems to suit our production needs. This includes cycling of individual cells to detect faulty components and to enable sorting by capacity. Our custom-designed automated welders spot weld individual cells that are assembled into specified module jigs based on the desired amp hour.
This includes cycling of individual cells to detect faulty components and to enable sorting by capacity. Our custom-designed automated welders spot weld individual cells that are assembled into specified module jigs based on the desired amp hour. Completed modules are then fully discharged, recharged fully, and sorted by capacity.
Our manufacturing process is divided into two aspects – (1) module assembly and (2) battery assembly. We use a combination of trained employees and automated processes to increase production capacity and lower costs while maintaining the same level of quality our customers expect from our products.
We use a combination of trained employees and automated processes to increase production capacity and lower costs while maintaining the same level of quality our customers expect from our products. Module assembly is a significantly automated process, implementing custom-designed equipment and systems to suit our production needs.
Our user-friendly website facilitates direct purchases of Battle Born Batteries and Wakespeed products, along with well-known third-party components, allowing customers to explore and acquire complete system solutions in one convenient location.
Our user-friendly website facilitates direct purchases of Battle Born Batteries and Wakespeed products, along with well-known third-party components, allowing customers to explore and acquire complete system solutions in one convenient location. Furthermore, a dedicated team of in-house experts provides comprehensive sales, technical, and service support to ensure our valued customers receive exceptional care and expertise.
Constant technological advancements and larger amounts of data generated and stored by companies for increasingly longer periods of time are driving growth in the importance, and the amount, of physical space dedicated to data centers.
Data centers have seen strong growth in recent years, with over 5,000 data centers in the United States as of September 2023 according to Statista. Constant technological advancements and larger amounts of data generated and stored by companies for increasingly longer periods of time are driving growth in the importance, and the amount, of physical space dedicated to data centers.
Our cells are sourced from two different, carefully selected cell manufacturers in China who are able to meet our demanding quality standards. As a result of our long-standing relationships with these suppliers, we are able to source LFP cells on favorable terms and within reasonable lead-times.
As a result of our long-standing relationships with these suppliers, we are able to source LFP cells on favorable terms and within reasonable lead-times.
This is comparable to companies such as Tesla, BYD Limited and Li-Cycle. Our solid-state technology will also enable us to further penetrate the energy storage market, and we expect to compete with technology-focused energy storage companies such as EOS Energy, ESS and STEM.
Our solid-state technology will also enable us to further penetrate the energy storage market, and we expect to compete with technology-focused energy storage companies such as EOS Energy, ESS and STEM. Intellectual Property The success of our business and our technology leadership is supported by our proprietary battery technology.
Our valued RV OEM partners currently include industry leaders such as Airstream, Tiffin Motorhomes, Forest River, nuCamp RV, Triple E RV, REV Group, Keystone, and THOR Industries (“ THOR ”). Notably, THOR has made a strategic investment in our business, which we believe underscores our strong industry relationships.
Our valued RV OEM partners currently include industry leaders such as Airstream, Tiffin Motorhomes, Forest River, Triple E RV, REV Group, Keystone RV Company (“ Keystone ”), Ember, nuCamp RV, ATC, and THOR Industries (“ THOR ”).
Extensive informational videos and exceptional customer service provide sales, technical and hands-on service support to facilitate consumer transition from traditional lead-acid or incumbent lithium-ion batteries to our products. ● Established Customer Base with Brand Recognition.
Our established DTC platform supports brand awareness, customer education, and aftermarket demand. Extensive informational content and customer support resources provide technical guidance and facilitate customer transition from traditional lead-acid or incumbent lithium-ion batteries to our products. ● Established Customer Base with Brand Recognition.
We currently have two production lines with another line currently in construction. We continue to have the capability to expand our production volumes and line quantities to support increased volumes of new products we intend to introduce soon.
We currently have four production lines. We continue to have the capability to expand our production volumes and line quantities to support increased volumes of new products we intend to introduce soon. Our manufacturing process is divided into two aspects - (1) module assembly and (2) battery assembly.
We are currently implementing an automated process for the gluing and sealing process, which would incorporate a two-robot system for gluing and epoxying, as well as a glue pallet system to move finished batteries. After the assembled batteries are tested and sealed, they are processed for outbound distribution.
We aim to automate the battery management system testing and installation process, which we expect could increase production capacity fourfold. We are currently implementing an automated process for the gluing and sealing process, which would incorporate a two-robot system for gluing and epoxying, as well as a glue pallet system to move finished batteries.
Our batteries are lighter and longer-lasting compared to traditional lead-acid batteries, and easy to install as direct replacements for lead-acid batteries. Proprietary technologies, including advanced battery management systems, integrated heat capabilities, and intelligent battery communication, ensure reliable, high-performance energy storage as compared to traditional lead-acid batteries and other lithium-ion products.
Proprietary technologies, including advanced battery management systems, integrated heat capabilities, and intelligent battery communication, ensure reliable, high-performance energy storage as compared to traditional lead-acid batteries and other lithium-ion products. 17 With regard to solid-state technology, we have two main competitors, QuantumScape and Solid Power.
For nearly all of our components, other than our battery management system, we ensure that we have alternative suppliers available. Our battery management system is sourced from a single supplier based in China who we have a nearly 10-year relationship with and who manufactures this component exclusively for us based on our proprietary design.
Our battery management system is sourced from a single supplier based in China who we have a nearly 10-year relationship with and who manufactures this component exclusively for us based on our proprietary design. Our cells are sourced from two different, carefully selected cell manufacturers in China who are able to meet our demanding quality standards.
Supplier Relationships We have a well-established, global supply chain that underlies the sourcing of the components for our products, although we source domestically wherever possible. We aim to maintain approximately six months’ worth of all components, other than cells, which we pre-order in advance for the year to ensure adequate supply.
We aim to maintain approximately six months’ worth of all components, other than cells, which we pre-order in advance for the year to ensure adequate supply. For nearly all of our components, other than our battery management system, we ensure that we have alternative suppliers available.
APUs provide an alternative energy source for powering onboard systems and maintaining cabin comfort during rest periods, without the need for the main engine to run—thereby reducing fuel consumption and emissions.
As the demand for more efficient, sustainable, and reliable transportation solutions grows, the use of Auxiliary Power Units (“ APUs ”) in heavy duty trucks is becoming increasingly significant. APUs provide an alternative energy source for powering onboard systems and maintaining cabin comfort during rest periods, without the need for the main engine to run-thereby reducing fuel consumption and emissions.
Our solid-state technology continues to progress as we qualify new chemistries and refine the dry electrode process for solid-state applications. Currently, we are cycling solid-state coin cells, although we have delayed the production of prototype pouch cells until at least the beginning of 2026. These cell chemistries are nonflammable, solid-state, and an LFP/graphite cell chemistry.
Currently, we are cycling solid-state coin cells, although we have delayed the production of prototype pouch cells until at least the beginning of 2027. These cell chemistries are nonflammable, solid-state, and an LFP/graphite cell chemistry. We believe these cells will be a pivotal technology in grid storage applications once fully deployed.
We have successfully established a DTC platform and have developed strong working relationships with major OEMs and fleets in the RV, marine and heavy trucking markets. We custom design and engineer storage systems for new and existing applications.
We have developed strong working relationships with major OEMs and fleets across the RV, marine, and heavy-duty trucking markets, which represent the primary focus of our commercial strategy. We custom design and engineer storage systems for new and existing applications and continue to expand relationships with leading OEMs, fleets, and distributors.
We compete with traditional lead-acid manufacturers and distributers, such as East Penn, Trojan, and Interstate and companies importing and white-labeling low-cost lithium products. This influx of inexpensive overseas batteries has intensified price competition. We believe our products stand out through American design and assembly, premium components, superior customer service, and full system design capabilities.
This influx of inexpensive overseas batteries has intensified price competition. We believe our products stand out through American design and assembly, premium components, superior customer service, and full system design capabilities. Our batteries are lighter and longer-lasting compared to traditional lead-acid batteries, and easy to install as direct replacements for lead-acid batteries.
This infrastructure has allowed us to optimize the dry-electrode process, allowing our team to match or surpass traditional electrode tape performance and mechanical integrity. Because our process is dry and the active material is coated directly onto the current collector, interfacial and composite resistivity of the electrode tapes often surpass the quality of slurry cast equivalents.
This infrastructure has allowed us to optimize the dry-electrode process, allowing our team to match or surpass traditional electrode tape performance and mechanical integrity.
Completed modules are then fully discharged, recharged fully, and sorted by capacity. Battery assembly is performed largely by hand by our trained employees, although we continue to look for innovative ways to integrate automation into this process.
Battery assembly is performed largely by hand by our trained employees, although we continue to look for innovative ways to integrate automation into this process. Our proprietary battery management system is thoroughly tested for quality cutoffs, then mounted onto individual modules, before the modules are bolted into its casing.
Tightening marina regulations are also driving the need for electric docking motors on more vessels and increasing the focus on safety, which LFP batteries are well-suited to address. ● Off-Grid Residences.
Tightening marina regulations are also driving the need for electric docking motors on more vessels and increasing the focus on safety, which LFP batteries are well-suited to address. 5 ● Industrial. We serve a growing range of industrial and commercial applications that require reliable, stationary energy storage in both grid-connected and remote environments.
We have an in-house expert customer service team that assists customers in fully integrating their applications to our technologies for a seamless transition to lithium-based energy storage systems. Through our evolving technology and the customized architecture and application of our products, we are able to offer customers a seamless transition to creating a centralized coordinated system.
Through our evolving technology and the customized architecture and application of our products, we are able to offer customers a seamless transition to creating a centralized coordinated system.
LFP batteries are best suited for energy storage markets where long life and affordability are paramount, such as RV, marine vessel, off-grid storage, onboard tools, material handling, utility-grade storage, telecom, rail and data center markets.
LFP batteries are best suited for energy storage markets where long life and affordability are paramount, such as RV, marine vessel, off-grid storage, onboard tools, material handling, utility-grade storage, telecom, rail and data center markets. 9 NMC batteries are highly dependent on two metals that present significant constraints - nickel, which is facing an industry-wide shortage, and cobalt, a large percentage of which comes from conflict-ridden countries.
Additionally, as a distributor of leading brands like Victron, Schneider, and REDARC, we act as a one-stop shop for full system integration, catering to both OEMs and retail customers. Our complete offering allows customers to benefit from clean and sustainable power, extended lifespans, reduced costs, increased efficiency, and seamless integration - all backed by expert service and support.
Additionally, as a distributor of leading brands like Victron, Rich Solar, and REDARC, we act as a one-stop shop for full system integration, catering to both OEMs and retail customers.
With regard to solid-state technology, we have two main competitors, QuantumScape and Solid Power. While both of these competitors are focused on the development of solid-state technology for use in the propulsion of electric vehicles, we are focused on power storage applications, which has different requirements.
While both of these competitors are focused on the development of solid-state technology for use in the propulsion of electric vehicles, we are focused on power storage applications, which has different requirements. We believe that our proprietary processes, systems and materials provide us with a significant competitive advantage in developing a fully solid-state, non-toxic and highly cost-effective energy solution.
As these medium- and long-term markets mature, we intend to deploy our solid-state technology, once developed, while concurrently continuing to further displace the incumbent lead-acid technology. ● Heavy Duty Truck. The heavy-duty truck market encompasses a broad range of vehicles designed for extensive commercial and industrial use, such as long-haul transport, construction, and logistics.
As these medium- and long-term markets mature, we intend to deploy our solid-state technology, once developed, while concurrently continuing to further displace the incumbent lead-acid technology. ● Emergency and Standby Power. Demand for reliable emergency and standby power sources is expected to continue to drive demand for effective power storage for residential, commercial and industrial uses.
We believe that our proprietary processes, systems and materials provide us with a significant competitive advantage in developing a fully solid-state, non-toxic and highly cost-effective energy solution. As our solid-state technology comes to fruition and we begin to commercialize this product, we intend to become a vertically integrated battery company, internalizing all aspects of the manufacturing and assembly process.
As our solid-state technology comes to fruition and we begin to commercialize this product, we intend to become a vertically integrated battery company, internalizing all aspects of the manufacturing and assembly process. This is comparable to companies such as Tesla, BYD Limited and Li-Cycle.
According to the RVIA’s 2024 RV Market Report, approximately 89% of wholesale RV units shipping in 2025 are projected to be towable units, representing a significant growth opportunity for LFP batteries. 3 ● Marine Vessels. As boating becomes more popular in North America, the need for a reliable, non-flammable energy storage system is becoming increasingly apparent.
The continued dominance of towable RV shipments, combined with increasing electrification across RV platforms, represents a growing opportunity for LFP battery adoption. ● Marine Vessels. As boating becomes more popular in North America, the need for a reliable, non-flammable energy storage system is becoming increasingly apparent.
Furthermore, a dedicated team of in-house experts provides comprehensive sales, technical, and service support to ensure our valued customers receive exceptional care and expertise. 13 Competition The energy storage market is highly competitive, with traditional lead-acid batteries still dominating. However, lithium-ion adoption continues to grow as customers seek better performance and longer lifespans.
Competition The energy storage market is highly competitive, with traditional lead-acid batteries still dominating. However, lithium-ion adoption continues to grow as customers seek better performance and longer lifespans. We compete with traditional lead-acid manufacturers and distributers, such as East Penn, Trojan, and Interstate and companies importing and white-labeling low-cost lithium products.
As this shift towards clean energy becomes more prominent and cost-effective, the LFP battery market will be able to penetrate the largely untapped off-grid markets. Addressable Adjacent Markets Our addressable markets are areas with significant growth potential that we will be positioned to penetrate as customers turn towards LFP and other lithium-ion batteries as replacements for traditional lead-acid batteries.
As fleet operators seek to improve reliability, reduce maintenance requirements, and support expanded electrical functionality, adoption of LFP-based energy storage solutions across industrial vehicles and work truck platforms continues to expand. 6 Addressable Adjacent Markets Our addressable markets are areas with significant growth potential that we will be positioned to penetrate as customers turn towards LFP and other lithium-ion batteries as replacements for traditional lead-acid batteries.
A natural evolution of our business is to offer customers a system integration solution providing more efficient power solutions at a cost-effective price point. We currently offer components and accessories necessary to build out complete lithium power systems, including solar panels, chargers and inverters, system monitoring, Wakespeed’s alternator regulators, accessories, and more.
We currently offer components and accessories necessary to build out complete lithium power systems, including solar panels, chargers and inverters, system monitoring, Wakespeed’s alternator regulators, accessories, and more. We have an in-house expert customer service team that assists customers in fully integrating their applications to our technologies for a seamless transition to lithium-based energy storage systems.
Additionally, we foster relationships with key industry publications, securing valuable editorial coverage that showcases our innovative power solutions and how they are used. We believe these strategic collaborations position our brands as industry leaders within our markets and to the general public as a whole, further strengthening brand awareness and consumer confidence.
We believe these strategic collaborations position our brands as industry leaders within our markets and to the general public as a whole, further strengthening brand awareness and consumer confidence. We also leverage targeted pay-per-click advertising campaigns across various platforms, including search engines, and social media.
According to an article by McKinsey & Company titled “ Lithium and Cobalt: A tale of two commodities ”, global forecasts for cobalt show supply shortages arising as early as 2022, slowing down NMC battery growth. Both of these elements are also subject to commodity price fluctuations, making NMC and NCA batteries less cost-effective than LFP batteries.
As a result, a growing number of companies are expected to transition to LFP batteries. Both of these elements are also subject to commodity price fluctuations, making NMC and NCA batteries less cost-effective than LFP batteries.
We currently source the LFP cells incorporated into our batteries from a limited number of carefully selected suppliers that can meet our demanding quality standards and with whom we have developed long-term relationships.
We source LFP cells from a limited number of carefully selected suppliers that meet our quality and performance requirements, and we design, assemble, and test the majority of our battery products in the United States, supported by long-term supplier relationships that promote consistent supply and product reliability.
Dragonfly owns 16 trademark registrations to cover our house marks in the United States and we have 7 registered trademark relating to our design logos and slogans in the United States and we have 22 registered trademarks internationally with 10 other international trademark applications pending.
In an effort to protect our brand, as of December 31, 2025, we owned 41 trademarks globally. Dragonfly owns 18 trademark registrations to cover our house marks in the United States, including 8 registered trademarks for our design marks in the United States and we have 23 registered trademarks internationally.
We have a dual-brand strategy for battery products, Dragonfly Energy (“ Dragonfly Energy ”) and Battle Born Batteries (“ Battle Born ”). Battle Born branded products are primarily sold direct-to-consumers (“ DTC ”), while the Dragonfly Energy brand is primarily sold to original equipment manufacturers (“ OEMs ”).
Recently, we have moved away from our dual-brand strategy for battery products, Dragonfly Energy (“ Dragonfly Energy ”) and Battle Born® Batteries (“ Battle Born ”). Moving forward, Battle Born is the brand under which we sell our energy storage products and related power system components.
A vast majority of telecommunication cell sites utilize 24 voltage batteries, greatly expanding our addressable market. ● We intend to offer 48 voltage batteries at 100 amp hours that utilize the Dragonfly IntelLigence system to maintain balance and full visibility into the status of all cells. The 48 voltage batteries provide further efficiency gains with higher voltage.
A vast majority of telecommunication cell sites utilize 24 voltage batteries, greatly expanding our addressable market. ● We intend to expand our portfolio of 48 volt battery systems designed to improve efficiency and support larger-scale energy storage applications. These systems are expected to incorporate our Dragonfly IntelLigence platform to enable system monitoring, control, and performance optimization.
Removed
However, with the growing popularity and brand recognition of Battle Born, these batteries have become increasingly popular with our OEM customers.
Added
Battle Born products are sold across multiple channels, including original equipment manufacturers (“ OEM ”), distributor, dealer, fleet, and direct-to-consumer relationships, depending on the application and customer requirements. As adoption of lithium-based energy storage has expanded, Battle Born products have been increasingly integrated into factory-installed and system-level applications across a range of end markets.
Removed
Based on the extensive research and optimization undertaken by our team, we have developed a line of products with features including a proprietary battery management system and an internal battery heating feature for cold temperatures, and we have recently launched our unique battery communication system.
Added
Our product portfolio includes LFP battery packs, integrated battery management systems, integrated heating capability for cold-temperature operation, and system-level communication and monitoring enabled through our Dragonfly IntelLigence® technology.
Removed
Our innovative battery products have disrupted the traditional lead-acid battery markets. The strong DTC demand, combined with our efforts to educate and market to original equipment manufacturers (OEMs), has facilitated significant penetration into the OEM sector. Historically, we have driven total sales growth through several strategies: 1.
Added
Our innovative battery products have contributed to the ongoing transition from traditional lead-acid batteries to lithium-based energy storage solutions.
Removed
Expansion of DTC Sales : Increasing direct sales of batteries for RV applications. 2. Market Diversification : Entering the marine vessel and off-grid storage markets with related DTC offerings. 3. OEM Partnerships : Supplying batteries to RV OEMs. 4. Distributor Engagement : Enhancing sales through increased distribution channels. 5. Accessory Sales : Reselling accessories for our battery systems.
Added
Historically, demand from our DTC channel, combined with our efforts to educate and engage original equipment manufacturers (“OEMs”), supported our initial market penetration and brand development. 1 As our business has evolved, our growth strategy has increasingly shifted toward OEM, fleet, and industrial channels, where we can deliver integrated energy storage solutions at scale.
Removed
For the year ended December 31, 2024, we experienced a period of sustained market correction characterized by ongoing inflation and historically high interest rates, which posed challenges to our DTC markets. While there were small increases in retail registrations and wholesale shipments within the RV industry, much of this growth was concentrated in the price-sensitive entry-level segment.
Added
While DTC continues to support brand awareness and aftermarket demand, it is no longer the primary driver of our growth strategy. Historically and currently, we have driven total sales growth through the following strategies: 1. Expansion of OEM and Fleet Partnerships: Increasing adoption of our battery systems in factory-installed and commercial applications across RV, trucking, and industrial markets. 2.
Removed
These entry-level RVs typically do not incorporate our battery products, resulting in a decline in our overall sales due to the limited growth in segments aligned with our offerings. However, we did observe increased OEM adoption of our products outside the entry-level segment, marked by the acquisition of new customers and enhanced market share within existing customer product lines.

… 123 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

86 edited+22 added−51 removed256 unchanged
Biggest changeRisks Related to Ownership of Our Common Stock ● If we are unable to correct any deficiencies or meet the Nasdaq Stock Market continued listing standards, including the market value of listed securities, our common stock and Public Warrants may be delisted from the Nasdaq Stock Market; ● The impact of the conversion and the terms of our outstanding Series A Preferred Stock on the market price of common stock; ● Future issuances of debt securities and equity securities may adversely affect us and may be dilutive to existing stockholders. ● We may issue additional shares of our common stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of your shares.
Biggest changeRisks Related to Ownership of Our Common Stock ● If we do not continue to meet the Nasdaq Stock Market continued listing standards our common stock and Public Warrants may be delisted from the Nasdaq Stock Market; ● Future issuances of debt securities and equity securities may adversely affect us and may be dilutive to existing stockholders. ● We may issue additional shares of our common stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of your shares. 21 Risks Related to Our Existing Lithium-Ion Battery Operations Our business and future growth depends on the needs and success of our OEM’s and similar customers.
These provisions provide, among other things, that: ● our board of directors will be divided into three classes, with each class serving staggered three-year terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; ● our board of directors has the exclusive right to expand the size of its board of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; ● our stockholders may not act by written consent, which forces stockholder action to be taken at an annual or special meeting of stockholders; ● a special meeting of stockholders may be called only by a majority of our board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; ● our Articles of Incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; ● our board of directors may alter certain provisions of our Bylaws without obtaining stockholder approval; ● the approval of the holders of at least sixty-six and two-thirds percent (66 2⁄3%) of our common shares entitled to vote at an election of our board of directors is required to adopt, amend, alter or repeal our Bylaws or amend, alter, change or repeal or adopt any provision of our Articles of Incorporation inconsistent with the provisions of our Articles of Incorporation regarding the election and removal of directors; ● stockholders must provide advance notice and additional disclosures to nominate individuals for election to our board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain voting control of our common stock; and ● our board of directors is authorized to issue shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer.
These provisions provide, among other things, that: ● our board of directors will be divided into three classes, with each class serving staggered three-year terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; 43 ● our board of directors has the exclusive right to expand the size of its board of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; ● our stockholders may not act by written consent, which forces stockholder action to be taken at an annual or special meeting of stockholders; ● a special meeting of stockholders may be called only by a majority of our board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; ● our Articles of Incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; ● our board of directors may alter certain provisions of our Bylaws without obtaining stockholder approval; ● the approval of the holders of at least sixty-six and two-thirds percent (66 2⁄3%) of our common shares entitled to vote at an election of our board of directors is required to adopt, amend, alter or repeal our Bylaws or amend, alter, change or repeal or adopt any provision of our Articles of Incorporation inconsistent with the provisions of our Articles of Incorporation regarding the election and removal of directors; ● stockholders must provide advance notice and additional disclosures to nominate individuals for election to our board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain voting control of our common stock; and ● our board of directors is authorized to issue shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer.
Any shortages in trucking capacity, any increase in the cost thereof or any other disruption to the highway systems could limit our ability to deliver our products in a timely manner or at all. Lithium-ion battery cells have been observed to catch fire or release smoke and flame, which may have a negative impact on our reputation and business.
Any shortages in trucking capacity, any increase in the cost thereof or any other disruption to the highway systems could limit our ability to deliver our products in a timely manner or at all. 25 Lithium-ion battery cells have been observed to catch fire or release smoke and flame, which may have a negative impact on our reputation and business.
Furthermore, in order to attract and convert customers we must continue to develop batteries that address our current and future customers’ needs. Our failure to achieve any of the foregoing could have a material adverse effect on our business, financial condition and results of operations. We operate in a competitive industry.
Furthermore, in order to attract and convert customers we must continue to develop batteries that address our current and future customers’ needs. Our failure to achieve any of the foregoing could have a material adverse effect on our business, financial condition and results of operations. 22 We operate in a competitive industry.
Our failure to maintain or expand our share of these growing markets could have a material adverse effect on our business, financial condition and results of operations. We may not be able to engage target customers successfully and convert these customers into meaningful orders in the future.
Our failure to maintain or expand our share of these markets could have a material adverse effect on our business, financial condition and results of operations. We may not be able to engage target customers successfully and convert these customers into meaningful orders in the future.
Any of these operational problems could have a material adverse effect on our business, financial condition and results of operations. 22 Risks Related to Supply Chain and Third-Party Vendors We face risks associated with vendors from whom our products are sourced.
Any of these operational problems could have a material adverse effect on our business, financial condition and results of operations. Risks Related to Supply Chain and Third-Party Vendors We face risks associated with vendors from whom our products are sourced.
Such conditions may continue or worsen in the future. The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict including Russia’s invasion of Ukraine and the conflict between Hamas and Israel, terrorism or other geopolitical events.
Such conditions may continue or worsen in the future. The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict including Russia’s invasion of Ukraine, the conflict between Hamas and Israel and the Iranian conflict, terrorism or other geopolitical events.
If we are unable to overcome developmental and engineering challenges, our solid-state battery efforts could fail. 21 We currently purchase the battery cells incorporated into our LFP batteries and have limited experience in manufacturing battery cells at a commercial scale.
If we are unable to overcome developmental and engineering challenges, our solid-state battery efforts could fail. We currently purchase the battery cells incorporated into our LFP batteries and have limited experience in manufacturing battery cells at a commercial scale.
Failure to adequately protect our intellectual property rights could result in competitors using our intellectual property to make, have made, use, import, develop, have developed, sell or have sold their own products, potentially resulting in the loss of some of our competitive advantage and a decrease in our revenue, which would adversely affect our business, prospects, financial condition and operating results. 24 We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause us to incur substantial costs.
Failure to adequately protect our intellectual property rights could result in competitors using our intellectual property to make, have made, use, import, develop, have developed, sell or have sold their own products, potentially resulting in the loss of some of our competitive advantage and a decrease in our revenue, which would adversely affect our business, prospects, financial condition and operating results. 30 We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause us to incur substantial costs.
Advocacy efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs. 28 Our management team has limited experience managing a public company.
Advocacy efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs. Our management team has limited experience managing a public company.
Factors affecting the trading price of our securities may include: ● actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to ours; ● changes in the market’s expectations about our operating results; ● the public’s reaction to our press releases, other public announcements and filings with the SEC; ● speculation in the press or investment community; ● actual or anticipated developments in our business, competitors’ businesses or the competitive landscape generally; ● innovations or new products developed by us or our competitors; ● manufacturing, supply or distribution delays or shortages; ● any changes to our relationship with any manufacturers, suppliers, licensors, future collaborators, or other strategic partners; ● the operating results failing to meet the expectation of securities analysts or investors in a particular period; ● changes in financial estimates and recommendations by securities analysts concerning us or the market in general; ● operating and stock price performance of other companies that investors deem comparable to ours; ● changes in laws and regulations affecting our business; ● commencement of, or involvement in, litigation involving us; ● changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; ● the volume of our common stock available for public sale; ● any major change in our board of directors or management; ● sales of substantial amounts of our common stock by our directors, officers or significant stockholders or the perception that such sales could occur; and ● general economic and political conditions such as recessions, interest rates, “trade wars,” pandemics (such as COVID-19) and acts of war or terrorism (including the Russia-Ukraine conflict and Hamas’ attack on Israel). 32 Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance.
Factors affecting the trading price of our securities may include: ● actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to ours; ● changes in the market’s expectations about our operating results; ● the public’s reaction to our press releases, other public announcements and filings with the SEC; ● speculation in the press or investment community; ● actual or anticipated developments in our business, competitors’ businesses or the competitive landscape generally; ● innovations or new products developed by us or our competitors; ● manufacturing, supply or distribution delays or shortages; ● any changes to our relationship with any manufacturers, suppliers, licensors, future collaborators, or other strategic partners; ● the operating results failing to meet the expectation of securities analysts or investors in a particular period; ● changes in financial estimates and recommendations by securities analysts concerning us or the market in general; ● operating and stock price performance of other companies that investors deem comparable to ours; ● changes in laws and regulations affecting our business; ● commencement of, or involvement in, litigation involving us; ● changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; ● the volume of our common stock available for public sale; ● any major change in our board of directors or management; ● sales of substantial amounts of our common stock by our directors, officers or significant stockholders or the perception that such sales could occur; and ● general economic and political conditions such as recessions, interest rates, “trade wars,” pandemics (such as COVID-19) and acts of war or terrorism (including the Russia-Ukraine conflict, the India-Pakistan conflict, Hamas’ attack on Israel and the Iranian conflict). 40 Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance.
Such factors may include: ● instability in political or economic conditions, such as inflation, recession, foreign currency exchange restrictions and devaluations, restrictive governmental controls on the movement and repatriation of earnings and capital, and actual or anticipated military or political conflicts, particularly in emerging markets; ● expanded jurisdiction of the Committee for Foreign Investment in the U.S.; and ● intergovernmental conflicts or actions, such as the armed conflicts between Russia and Ukraine and in the Middle East, trade wars, retaliatory tariffs, and acts of terrorism or war.
Such factors may include: ● instability in political or economic conditions, such as inflation, recession, foreign currency exchange restrictions and devaluations, restrictive governmental controls on the movement and repatriation of earnings and capital, and actual or anticipated military or political conflicts, particularly in emerging markets; ● expanded jurisdiction of the Committee for Foreign Investment in the U.S.; and ● intergovernmental conflicts or actions, such as the armed conflicts between Russia and Ukraine, in Iran and elsewhere in the Middle East, trade wars, retaliatory tariffs, and acts of terrorism or war.
If we fail to execute on our growth strategies in accordance with our expectations, our sales growth would be limited to the growth of existing products and existing end markets, and this could have a material adverse effect on our business, financial condition and results of operations. 18 Further, if we are unable to manage the growth of our operations effectively to match the growth in sales, we may incur unexpected expenses and be unable to meet our customers’ requirements, which could materially adversely affect our business, financial condition and results of operations.
If we fail to execute on our growth strategies in accordance with our expectations, our sales growth would be limited to the growth of existing products and existing end markets, and this could have a material adverse effect on our business, financial condition and results of operations. 23 Further, if we are unable to manage the growth of our operations effectively to match the growth in sales, we may incur unexpected expenses and be unable to meet our customers’ requirements, which could materially adversely affect our business, financial condition and results of operations.
Sanctions imposed by the U.S. and other countries in response to such conflicts, including sanctions imposed in connection with the war in Ukraine and the conflict between Hamas and Israel, the effect of tariffs and/or any resulting trade wars, increasing interest rates, or other factors may also adversely impact the financial markets and the global economy and any economic countermeasures by affected countries and others could exacerbate market and economic instability.
Sanctions imposed by the U.S. and other countries in response to such conflicts, including sanctions imposed in connection with the war in Ukraine, the India-Pakistan conflict, and the conflict between Hamas and Israel, the effect of tariffs and/or any resulting trade wars, increasing interest rates, or other factors may also adversely impact the financial markets and the global economy and any economic countermeasures by affected countries and others could exacerbate market and economic instability.
The failure to attract, integrate, train, motivate, and retain these personnel could impact our ability to successfully grow our operations and execute our strategy. 26 Our website, systems, and the data we maintain may be subject to intentional disruption, security incidents, or alleged violations of laws, regulations, or other obligations relating to data handling that could result in liability and adversely impact our reputation and future sales.
The failure to attract, integrate, train, motivate, and retain these personnel could impact our ability to successfully grow our operations and execute our strategy. 33 Our website, systems, and the data we maintain may be subject to intentional disruption, security incidents, or alleged violations of laws, regulations, or other obligations relating to data handling that could result in liability and adversely impact our reputation and future sales.
In the event CBP determines that we owe additional amounts or any penalties or determines in the future that we have not paid the correct duties, our results of operations could be materially impacted. 23 Changes in geopolitical conditions, U.S.-China trade relations and other factors beyond our control may adversely impact our business and operating results.
In the event CBP determines that we owe additional amounts or any penalties or determines in the future that we have not paid the correct duties, our results of operations could be materially impacted. 29 Changes in geopolitical conditions, U.S.-China trade relations and other factors beyond our control may adversely impact our business and operating results.
Under the terms of the Penny Warrants, no adjustment will be made in connection with any sale of shares of up to $150.0 million in gross proceeds under the Purchase Agreement (or any replacement thereof) if the sales price is higher than $45.00 (appropriately adjusted for stock splits, combinations and the like).
Under the terms of the Penny Warrants, no adjustment will be made in connection with any sale of shares of up to $150.0 million in gross proceeds under the Purchase Agreement (or any replacement thereof) if the sales price is higher than $450.00 (appropriately adjusted for stock splits, combinations and the like).
In addition, the Penny Warrants have price-based anti-dilution protection against subsequent equity sales or distributions at below $90.00 per share of common stock, subject to exclusions including for issuances upon conversion exercise or exchange of securities outstanding as of October 7, 2022, the closing date of the Business Combination, issuances pursuant to agreements in effect as of the closing date of the Business Combination, issuances pursuant to employee benefit plans and similar arrangements, issuances in joint ventures, strategic arrangements or other non-financing type transactions and issuances pursuant to any public equity offerings.
In addition, the Penny Warrants have price-based anti-dilution protection against certain subsequent equity sales or distributions at below $900.00 per share of common stock, subject to exclusions including for issuances upon conversion exercise or exchange of securities outstanding as of October 7, 2022, the closing date of the Business Combination, issuances pursuant to agreements in effect as of the closing date of the Business Combination, issuances pursuant to employee benefit plans and similar arrangements, issuances in joint ventures, strategic arrangements or other non-financing type transactions and issuances pursuant to any public equity offerings.
Risks Related to Supply chain and Third-Party Vendors ● We rely on components and other inputs that are sourced from a variety of domestic and international vendors. ● We rely on long-term relationships with our suppliers but have not significant long-term contracts with such suppliers. ● Our future success will depend in large measure upon our ability to maintain our existing supplier relationships and/or develop new ones. ● This reliance exposes us to the risk of inadequate and untimely supplies of various products due to political, economic, social, health, or environmental conditions, transportation delays, or changes in laws and regulations affecting distribution. ● Our vendors may be forced to reduce their production, shut down their operations or file for bankruptcy protection, which could make it difficult for us to serve the market needs and could have a material adverse effect on our business.
Risks Related to Supply chain and Third-Party Vendors ● We rely on components and other inputs that are sourced from a variety of domestic and international vendors. ● We rely on long-term relationships with our suppliers but have not significant long-term contracts with such suppliers. ● Our future success will depend in large measure upon our ability to maintain our existing supplier relationships and/or develop new ones. ● This reliance exposes us to the risk of inadequate and untimely supplies of various products due to political, economic, social, health, or environmental conditions, transportation delays, or changes in laws and regulations affecting distribution. ● Our vendors may be forced to reduce their production, shut down their operations or file for bankruptcy protection, which could make it difficult for us to serve the market needs and could have a material adverse effect on our business. 20 Risks Related to Intellectual Property ● We rely heavily upon our intellectual property portfolio.
The additional reporting and other obligations imposed by these rules and regulations will increase legal and financial compliance costs and the costs of related legal, accounting and administrative activities. These increased costs will require us to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic objectives.
The additional reporting and other obligations imposed by these rules and regulations increase our legal and financial compliance costs and the costs of related legal, accounting and administrative activities. These increased costs require us to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic objectives.
As a result of disclosure of information in this Annual Report and in filings required of a public company, our business and financial condition will become more visible, which may result in threatened or actual litigation, including by competitors and other third parties.
As a result of disclosure of information in this Annual Report and in filings required of a public company, our business and financial condition is more visible, which may result in threatened or actual litigation, including by competitors and other third parties.
Due to these reasons, this could require us, to among other things, reduce operations, sell off our assets, seek the protection of bankruptcy courts or shut down our operations and dissolve. For the year ended December 31, 2024, we incurred losses and had a negative cash flow from operations.
This could require us, to among other things, reduce operations, sell off our assets, seek the protection of bankruptcy courts or shut down our operations and dissolve. For the year ended December 31, 2025, we incurred losses and had a negative cash flow from operations.
We will continue to face increased legal, accounting, administrative and other costs and expenses as a public company that we did not incur as a private company and these expenses may increase even more after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, the PCAOB and the securities exchanges and the listing standards of Nasdaq, impose additional reporting and other obligations on public companies.
We face significant legal, accounting, administrative and other costs and expenses as a public company, and these expenses may increase even more after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, the PCAOB and the securities exchanges and the listing standards of Nasdaq, impose additional reporting and other obligations on public companies.
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 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. 31 Risks Related to Ownership of Our Common Stock If securities or industry analysts do not publish research or reports about us, or publish negative reports, our stock price and trading volume could decline.
If the trading price of our common stock does not recover or experiences a further decline, sales of shares of common stock pursuant to the ATM 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. 39 Risks Related to Ownership of Our Common Stock If securities or industry analysts do not publish research or reports about us, or publish negative reports, our stock price and trading volume could decline.
For as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including: ● not being required to have an independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act; ● reduced disclosure obligations regarding executive compensation in our periodic reports and annual report on Form 10-K; and ● exemptions from the requirements of holding non-binding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved.
For as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including: ● not being required to have an independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act; ● reduced disclosure obligations regarding executive compensation in our periodic reports and annual report on Form 10-K; and ● exemptions from the requirements of holding non-binding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved. 44 As a result, the stockholders may not have access to certain information that they may deem important.
Risks Related to Our Financial Position and Capital Requirements Our business is capital intensive, and we may not be able to raise additional capital on attractive terms, if at all. Any further indebtedness we incur may limit our operational flexibility in the future. As of December 31, 2024, we had cash totaling $4.8 million.
Risks Related to Our Financial Position and Capital Requirements Our business is capital intensive, and we may not be able to raise additional capital on attractive terms, if at all. Any further indebtedness we incur may limit our operational flexibility in the future. As of December 31, 2025, we had cash totaling $18.3 million.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: ● our ability to engage target customers and successfully convert these customers into meaningful orders in the future; ● our reliance on two suppliers for LFP cells and a single supplier for the manufacture of our battery management system; ● the size and growth of the potential markets for our batteries and its ability to serve those markets; 33 ● challenges in our attempts to develop and produce solid state battery cells; ● the level of demand for any products, which may vary significantly; ● future accounting pronouncements or changes in our accounting policies; ● macroeconomic conditions, both nationally and locally; and ● any other change in the competitive landscape of our industry, including consolidation among our competitors or partners.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: ● our ability to engage target customers and successfully convert these customers into meaningful orders in the future; ● our reliance on two suppliers for LFP cells and a single supplier for the manufacture of our battery management system; ● the size and growth of the potential markets for our batteries and its ability to serve those markets; ● challenges in our attempts to develop and produce solid state battery cells; ● the level of demand for any products, which may vary significantly; ● future accounting pronouncements or changes in our accounting policies; ● macroeconomic conditions, both nationally and locally; and ● any other change in the competitive landscape of our industry, including consolidation among our competitors or partners. 42 The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results.
A delisting could substantially decrease trading in our common stock, adversely affect the market liquidity of our common stock as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws, adversely affect our ability to obtain financing on acceptable terms, if at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities.
A delisting could substantially decrease trading in our common stock, adversely affect the market liquidity of our common stock as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal pre-emption of state securities laws, result in a default under the terms of our outstanding indebtedness, adversely affect its ability to obtain financing on acceptable terms, if at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities.
Risks Related to Intellectual Property ● We rely heavily upon our intellectual property portfolio. If we are unable to protect our intellectual property rights, our business and competitive position would be harmed. ● We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause us to incur substantial costs.
If we are unable to protect our intellectual property rights, our business and competitive position would be harmed. ● We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause us to incur substantial costs.
Any equity securities issued may provide for rights, preferences, or privileges senior to those of common stockholders. If we raise funds by issuing debt securities, these debt securities would have rights, preferences, and privileges senior to those of common stockholders. We intend to use the ChEF Equity Facility and Term Loan to provide additional capital to us.
Any equity securities issued may provide for rights, preferences, or privileges senior to those of common stockholders. If we raise funds by issuing debt securities, these debt securities would have rights, preferences, and privileges senior to those of common stockholders. We intend to use the Term Loan and our at-the-market (ATM) facility with Canaccord to provide additional capital to us.
Risks Related to Being a Public Company We will continue to incur significant increased expenses and administrative burdens as a public company, which could have an adverse effect on our business, financial condition and operating results.
Risks Related to Being a Public Company ● We will continue to incur significant increased expenses and administrative burdens as a public company, which could have an adverse effect on our business, financial condition and operating results. ● Our management team has limited experience managing a public company.
The exercise of outstanding warrants to acquire our common stock would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
The exercise of outstanding warrants or conversion of the Series B Preferred Stock to acquire our common stock would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
The exercise of outstanding warrants to acquire our common stock will increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
The exercise of outstanding warrants or conversion of the Series B Preferred Stock to acquire our common stock will increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
Further, our dependence on these third-party suppliers entails additional risks, including: ● inability, failure or unwillingness of third-party suppliers to comply with regulatory requirements; ● breach of supply agreements by the third-party suppliers; ● misappropriation or disclosure of our proprietary information, including our trade secrets and know-how; ● relationships that third-party suppliers may have with others, which may include our competitors, and failure of third-party suppliers to adequately fulfill contractual duties, resulting in the need to enter into alternative arrangements, which may not be available, desirable or cost-effective; and ● termination or nonrenewal of agreements by third-party suppliers at times that are costly or inconvenient for us.
Further, our dependence on these third-party suppliers entails additional risks, including: ● inability, failure or unwillingness of third-party suppliers to comply with regulatory requirements; ● breach of supply agreements by the third-party suppliers; ● misappropriation or disclosure of our proprietary information, including our trade secrets and know-how; ● relationships that third-party suppliers may have with others, which may include our competitors, and failure of third-party suppliers to adequately fulfill contractual duties, resulting in the need to enter into alternative arrangements, which may not be available, desirable or cost-effective; and ● termination or nonrenewal of agreements by third-party suppliers at times that are costly or inconvenient for us. 24 We may not be able to accurately estimate future demand for our LFP batteries, and our failure to accurately predict our production requirements could result in additional costs or delays.
Any problems caused by these third parties, or issues associated with their products or workforce, including customer or governmental complaints, breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, and cyber-attacks or security breaches at a vendor could subject us to litigation and adversely affect our ability to deliver products and services to its customers and have a material adverse effect on our results of operations and financial condition.
Any problems caused by these third parties, or issues associated with their products or workforce, including customer or governmental complaints, breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, and cyber-attacks or security breaches at a vendor could subject us to litigation and adversely affect our ability to deliver products and services to its customers and have a material adverse effect on our results of operations and financial condition. 28 We rely on foreign manufacturers for various products that are incorporated into the products we sell.
The Sponsor has agreed that the Private Warrants may not be exercised to the extent the Sponsor and any affiliate of the Sponsor is deemed to beneficially own, or it would cause the Sponsor and such affiliates to be deemed to beneficially own, more than 7.5% of our common stock.
The Sponsor has agreed that the Private Warrants may not be exercised to the extent the Sponsor and any affiliate of the Sponsor is deemed to beneficially own, or it would cause the Sponsor and such affiliates to be deemed to beneficially own, more than 7.5% of our common stock. 41 The rights of holders of our Series B Preferred Stock rank senior to the rights of the holders of our common stock.
As a public company, we will be required to comply with the requirements of the Sarbanes-Oxley Act, including, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. See “ We have identified material weaknesses in our internal control over financial reporting.
As a public company, we will be required to comply with the requirements of the Sarbanes-Oxley Act, including, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
In addition, we may be subject to audits of our income, sales and other transaction taxes by taxing authorities. Outcomes from these audits could have an adverse effect on our financial condition and results of operations.
In addition, we may be subject to audits of our income, sales and other transaction taxes by taxing authorities. Outcomes from these audits could have an adverse effect on our financial condition and results of operations. 45 Item 1B. Unresolved Staff Comments Not applicable.
The incurrence of additional debt could adversely impact our business, including limiting our operational flexibility by: ● making it difficult for us to pay other obligations; ● increasing our cost of borrowing from other sources; ● making it difficult to obtain favorable terms for any necessary future financing for working capital, capital expenditures, investments, acquisitions, debt service requirements, or other purposes; ● restricting us from making acquisitions or causing us to make divestitures or similar transactions; ● requiring us to dedicate a substantial portion of our cash flow from operations to service and repay our indebtedness, reducing the amount of cash flow available for other purposes; ● placing us at a competitive disadvantage compared to our less leveraged competitors; and ● limiting our flexibility in planning for and reacting to changes in our business.
However, market conditions and certain restrictions contained in the agreements governing the Term Loan and ATM facility may limit our ability to access equity and debt under such agreements. 36 The incurrence of additional debt could adversely impact our business, including limiting our operational flexibility by: ● making it difficult for us to pay other obligations; ● increasing our cost of borrowing from other sources; ● making it difficult to obtain favorable terms for any necessary future financing for working capital, capital expenditures, investments, acquisitions, debt service requirements, or other purposes; ● restricting us from making acquisitions or causing us to make divestitures or similar transactions; ● requiring us to dedicate a substantial portion of our cash flow from operations to service and repay our indebtedness, reducing the amount of cash flow available for other purposes; ● placing us at a competitive disadvantage compared to our less leveraged competitors; and ● limiting our flexibility in planning for and reacting to changes in our business.
General Risk Factors ● The uncertainty in global and macroeconomic conditions, including economic, political and socials instability, could reduce consumer spending and disrupt our supply chain which could negatively affect our results of operations. ● The loss of one or more members of our senior management team, other key personnel or our failure to attract additional qualified personnel may adversely affect our business and our ability to achieve our anticipated level of growth. ● If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of customer service, or adequately address competitive challenges. ● Changes in applicable laws or regulations could impact our operations, including changes in the rates of tariffs or any adjustments to the amounts payable by us to customs as a result of improperly identifying the applicable tariff rate payable on our products. 16 Risks Related to Being a Public Company ● We will continue to incur significant increased expenses and administrative burdens as a public company, which could have an adverse effect on our business, financial condition and operating results. ● Our management team has limited experience managing a public company.
General Risk Factors ● The uncertainty in global and macroeconomic conditions, including economic, political and socials instability, could reduce consumer spending and disrupt our supply chain which could negatively affect our results of operations. ● The loss of one or more members of our senior management team, other key personnel or our failure to attract additional qualified personnel may adversely affect our business and our ability to achieve our anticipated level of growth. ● If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of customer service, or adequately address competitive challenges. ● Changes in applicable laws or regulations could impact our operations, including changes in the rates of tariffs or any adjustments to the amounts payable by us to customs as a result of improperly identifying the applicable tariff rate payable on our products.
Any disruption in the operations of these key suppliers could adversely affect our business and results of operations. ● We are currently, and likely will continue to be, dependent on a single manufacturing facility until the construction of our new facility is completed, if at all.
Any disruption in the operations of these key suppliers could adversely affect our business and results of operations. ● We are currently, and likely will continue to be, dependent on a single manufacturing facility.
If one or several production lines were to become inoperable for any period of time, we would face delays in meeting orders, which could prevent us from meeting demand or require us to incur unplanned costs, including capital expenditures.
We currently operate three LFP battery production lines, which has been sufficient to meet customer demand. If one or several production lines were to become inoperable for any period of time, we would face delays in meeting orders, which could prevent us from meeting demand or require us to incur unplanned costs, including capital expenditures.
Compliance with public company requirements will increase costs and make certain activities more time-consuming. A number of those requirements will require us to carry out activities we have not done previously. For example, we will create new board committees, enter into new insurance policies and adopt new internal controls and disclosure controls and procedures.
Compliance with public company requirements is costly and make certain activities more time-consuming. A number of those requirements require us to carry out activities we have not done previously. For example, we have created new board committees, entered into new insurance policies and adopted new internal controls and disclosure controls and procedures.
Our status as an emerging growth company will end as soon as any of the following takes place: ● the last day of the fiscal year in which we have at least $1.235 billion in annual revenue; ● the date we qualify as a “large accelerated filer,” with at least $700.0 million of equity securities held by non-affiliates; ● the date on which we have issued, in any three-year period, more than $1.0 billion in non-convertible debt securities; or ● the last day of the fiscal year ending after the fifth anniversary of our IPO. 35 Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies.
Our status as an emerging growth company will end as soon as any of the following takes place: ● the last day of the fiscal year in which we have at least $1.235 billion in annual revenue; ● the date we qualify as a “large accelerated filer,” with at least $700.0 million of equity securities held by non-affiliates; ● the date on which we have issued, in any three-year period, more than $1.0 billion in non-convertible debt securities; or ● the last day of the fiscal year ending after the fifth anniversary of our IPO.
Our ability to achieve profitability and positive cash flow depends on our ability to increase revenue, contain our expenses and maintain compliance with the financial covenants in our outstanding indebtedness agreements.
However, our ability to achieve profitability and positive cash flow continues to depend on our ability to increase revenue, contain our expenses and maintain compliance with the financial covenants in our outstanding indebtedness agreements once the convent waivers expire.
Further, negative public perceptions regarding the suitability or safety of lithium-ion cells or any future incident involving lithium-ion cells, such as a vehicle or other fire, even if such incident does not involve our products, could seriously harm our business and reputation. 20 To facilitate an uninterrupted supply of battery cells, we store a significant number of lithium-ion cells at our facility.
Further, negative public perceptions regarding the suitability or safety of lithium-ion cells or any future incident involving lithium-ion cells, such as a vehicle or other fire, even if such incident does not involve our products, could seriously harm our business and reputation.
If we do not regain compliance and continue to meet the continued listing requirements, our securities may be delisted, which could affect the market price and liquidity for our common stock and reduce our ability to raise additional capital.
If we do not continue to meet the continued listing requirements for The Nasdaq Capital Market, our common stock may be delisted, which could affect the market price and liquidity for our common stock and reduce our ability to raise additional capital. Our common stock and Public Warrants are currently listed for trading on The Nasdaq Capital Market.
The agreements governing our Series A Preferred Stock restrict us from engaging in specified types of transactions.
The agreements governing our indebtedness restrict us from engaging in specified types of transactions.
Our net loss for the year ended December 31, 2024 was $40.6 million and our net loss for the year ended December 31, 2023 was $13.8 million.
Our net loss for the year ended December 31, 2025 was $69.9 million and our net loss for the year ended December 31, 2024 was $40.6 million.
We are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and non-compliance with such laws can subject us to administrative, civil and criminal fines and penalties, collateral consequences, remedial measures and legal expenses, all of which could adversely affect our business, results of operations, financial condition and reputation.
Non-compliance with anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could subject us to whistleblower complaints, adverse media coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences, remedial measures and legal expenses, all of which could materially and adversely affect our reputation, business, financial condition and results of operations.
If our solid-state batteries fail to perform as expected, our ability to further develop, market and sell our solid-state batteries could be harmed. Our solid-state battery cells may contain defects in design and manufacture that may cause them to not perform as expected or that may require repairs, recalls and design changes.
Our solid-state battery cells may contain defects in design and manufacture that may cause them to not perform as expected or that may require repairs, recalls and design changes.
If any of the following risks actually materialize, our business, financial condition and/or operations could suffer. In such event, the value of our common stock could decline, and you could lose all or a substantial portion of the money that you pay for our common stock.
In such event, the value of our common stock could decline, and you could lose all or a substantial portion of the money that you pay for our common stock.
You should carefully consider the risks and uncertainties described below and the other information contained in this report and our other reports filed with the Securities and Exchange Commission (the “SEC”). The risks set forth below are not the only ones facing us. Additional risks and uncertainties may exist that could also adversely affect our business, operations and financial condition.
You should carefully consider the risks and uncertainties described below and the other information contained in this report and our other reports filed with the Securities and Exchange Commission (the “ SEC ”). The risks set forth below are not the only ones facing us.
Furthermore, stockholders may be subject to increased costs to bring these claims, and the exclusive forum provision could have the effect of discouraging claims or limiting investors’ ability to bring claims in a judicial forum that they find favorable. 34 Our Articles of Incorporation could discourage another company from acquiring us and may prevent attempts by our stockholders to replace or remove our management.
Furthermore, stockholders may be subject to increased costs to bring these claims, and the exclusive forum provision could have the effect of discouraging claims or limiting investors’ ability to bring claims in a judicial forum that they find favorable.
As of December 31, 2024, we had approximately $4.8 million in cash and cash equivalents and working capital of $11.1 million. As of December 31, 2024, we had $86 million outstanding under our Term Loan Agreement.
As of December 31, 2025, we had approximately $18.3 million in cash and cash equivalents and working capital of $30.4 million. As of December 31, 2025, we had $19.3 million in principal outstanding under our Term Loan Agreement.
Risks Related to Our Existing Lithium-Ion Battery Operations Our business and future growth depends on the needs and success of our OEM’s and similar customers. The demand for our products, including sales to OEM s , ultimately depends on consumers in our current end markets (primarily owners of RVs, marine vessels and off-grid residences).
The demand for our products, including sales to OEM s , ultimately depends on consumers in our current end markets (primarily owners of RVs, marine vessels and off-grid residences).
Furthermore, patent applications filed in foreign countries are subject to laws, rules, and procedures that differ from those of the United States, and thus we cannot be certain that foreign patent applications related to issued U.S. patents will be issued.
Furthermore, patent applications filed in foreign countries are subject to laws, rules, and procedures that differ from those of the United States, and thus we cannot be certain that foreign patent applications related to issued U.S. patents will be issued. 31 Even if our current or future patent applications succeed and patents are issued, it is still uncertain whether our current or future patents will be contested, circumvented, invalidated or limited in scope in the future.
While we have implemented enhanced safety procedures related to the handling of the cells, any mishandling, other safety issue or fire related to the cells could disrupt our operations.
To facilitate an uninterrupted supply of battery cells, we store a significant number of lithium-ion cells at our facility. While we have implemented enhanced safety procedures related to the handling of the cells, any mishandling, other safety issue or fire related to the cells could disrupt our operations.
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. However, we cannot guarantee that we will be able to raise additional equity, contain expenses, or increase revenue, and comply with the financial covenants under the Term Loan.
However, we cannot guarantee that we will be able to raise additional equity, contain expenses, or increase revenue, and comply with the financial covenants under the Term Loan.
Such damage or injury could lead to adverse publicity and potentially a product recall, which could have a material adverse effect on our brand, business, financial condition and results of operations. We may be subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.
Such damage or injury could lead to adverse publicity and potentially a product recall, which could have a material adverse effect on our brand, business, financial condition and results of operations.
Further, we have registered 2,390,226 shares of common stock to be issued and sold to CCM LLC in connection with the ChEF Equity Facility. Any sales of such shares into the public market could have a significant negative impact on the trading price of our common stock.
Further, we have registered up to $50.0 million of shares of common stock to be issued and sold from time to time through Canaccord Genuity LLC, acting as sales agent, in connection with the ATM. Any sales of such shares into the public market could have a significant negative impact on the trading price of our common stock.
In addition, expenses associated with SEC reporting requirements will be incurred.
In addition, we incur expenses associated with SEC reporting requirements.
While Keystone has not moved to a different solution or competitor, as a result in this change in strategy there was a material limiting effect on our revenue in 2023 and in 2024. 17 Our sales to any future or current customers may decrease for reasons outside our control, including loss of market share by customers to whom we supply products, reduced or delayed customer requirements, supply and/or manufacturing issues affecting production, reputational harm or continued price reductions.
Our sales to any future or current customers may decrease for reasons outside our control, including loss of market share by customers to whom we supply products, reduced or delayed customer requirements, supply and/or manufacturing issues affecting production, reputational harm or continued price reductions.
As a public company, we are required pursuant to Section 404(a) of the Sarbanes-Oxley Act to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for each annual report on Form 10-K to be filed with the SEC.
Additionally, ineffective internal controls could expose us to an increased risk of financial reporting fraud and the misappropriation of assets, and may further subject us to potential delisting from Nasdaq, or to other regulatory investigations and civil or criminal sanctions. 38 As a public company, we are required pursuant to Section 404(a) of the Sarbanes-Oxley Act to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for each annual report on Form 10-K to be filed with the SEC.
The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. Investors should not rely on its past results as an indication of our future performance.
As a result, comparing our operating results on a period-to-period basis may not be meaningful. Investors should not rely on its past results as an indication of our future performance. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period.
Our obligations to the holders of the Series A Preferred Stock could limit our ability to obtain additional financing or complete certain transactions or increase our borrowing costs, which could have an adverse effect on its financial condition and hinder the accomplishment of our corporate goals.
Our obligations to the holders of the Series B Preferred Stock could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition. The preferential rights could also result in divergent interests between the holders of the Series B Preferred Stock and holders of our common stock.
If we fail to order sufficient quantities of product components in a timely manner, the delivery of our batteries to our customers could be delayed, would harm our business, financial condition and results of operations. 19 To meet our delivery deadlines, we generally make significant decisions on our production level and timing, procurement, facility requirements, personnel needs and other resources requirements based on our estimate of demand, our past dealings with such customers, economic conditions and other relevant factors.
To meet our delivery deadlines, we generally make significant decisions on our production level and timing, procurement, facility requirements, personnel needs and other resources requirements based on our estimate of demand, our past dealings with such customers, economic conditions and other relevant factors.
Failure to comply with ESG-related laws, exchange policies or stakeholder expectations could materially and adversely impact the value of our stock and related cost of capital, and limit our ability to fund future growth, or result in increased investigations and litigation.
Failure to comply with ESG-related laws, exchange policies or stakeholder expectations could materially and adversely impact the value of our stock and related cost of capital, and limit our ability to fund future growth, or result in increased investigations and litigation. 35 Risks Related to Being a Public Company We incur significant increased expenses and administrative burdens as a public company, which could have an adverse effect on our business, financial condition and operating results.
We have implemented additional measures to address the material weakness relating to tariff by designing new controls to capture, record, and pay tariffs related to the imported merchandise . Our efforts to remediate these material weaknesses in internal controls over financial reporting may not be successful, and may not prevent additional material weaknesses from being identified in the future.
Our efforts to remediate these material weaknesses in internal controls over financial reporting may not be successful, and may not prevent additional material weaknesses from being identified in the future.
However, our business and customer product demand is impacted by trends and factors that may be outside our control. Therefore, our ability to predict our manufacturing requirements is subject to inherent uncertainty.
We seek to maintain approximately a six-month supply of LFP cells and other critical components by pre-ordering in advance of expected demand. However, our business and customer product demand is impacted by trends and factors that may be outside our control. Therefore, our ability to predict our manufacturing requirements is subject to inherent uncertainty.
We may not be able to achieve our desired cost benefits and, in turn, we may not be able to provide our solid-state cells at a cost that is attractive to customers. If we are unable to cost-efficiently design, manufacture, market, sell and distribute our solid-state batteries and services, our margins, profitability and prospects would be materially and adversely affected.
We may not be able to achieve our desired cost benefits and, in turn, we may not be able to provide our solid-state cells at a cost that is attractive to customers.
Changes in trade policies, including the imposition of tariffs or other trade restrictions, could materially impact our ability to obtain the raw materials, active pharmaceutical ingredients, and other components necessary for the manufacturing of our product candidates used in our clinical development activities.
In addition, there is a risk that one or more of our current suppliers may not survive an economic downturn, which could directly affect our ability to attain our operating goals on schedule and within budget. 32 Changes in trade policies, including the imposition of tariffs or other trade restrictions, could materially impact our ability to obtain the raw materials, active pharmaceutical ingredients, and other components necessary for the manufacturing of our product candidates used in our clinical development activities.
We rely on foreign manufacturers for various products that are incorporated into the products we sell. In addition, many of our domestic suppliers purchase a portion of their products from foreign sources.
In addition, many of our domestic suppliers purchase a portion of their products from foreign sources.
In addition, our current or future patents may be infringed upon or designed around by others and others may obtain patents that we need to license or design around, either of which would increase costs and may adversely affect our business, prospects, financial condition and operating results. 25 General Risk Factors The uncertainty in global and macroeconomic conditions, including economic, political and social instability, including the Russia-Ukraine conflict and Hamas’ attack on Israel, could reduce consumer spending and disrupt our supply chain which could negatively affect our results of operations.
In addition, our current or future patents may be infringed upon or designed around by others and others may obtain patents that we need to license or design around, either of which would increase costs and may adversely affect our business, prospects, financial condition and operating results.
We have filed registration statements registering the resale of up to approximately 1.7 million shares of common stock underlying outstanding warrants that may be sold and/or issued into the public markets by certain securityholders. The shares being registered for resale into the public markets represent a significant number of shares in respect to our outstanding common stock.
Future resales of our outstanding securities may cause the market price of our securities to drop significantly, even if our business is doing well. We have filed registration statements registering the resale of up to approximately 0.2 million shares of common stock underlying outstanding warrants that may be sold and/or issued into the public markets by certain securityholders.
As of March 27, 2025 , there are currently (i) 1,046,947 shares of common stock issuable upon the exercise of outstanding public warrants at an exercise price of $103.50 per share (the “Public Warrants”); (ii) 166,821 shares of common stock issuable upon the exercise of outstanding private warrants at an exercise price of $103.50 per share (the “Private Warrants”); and (iii) 680,473 shares of common stock issuable upon exercise of outstanding Penny Warrants at an exercise price of $0.01 per share and 1,061,685 shares of common stock issuable upon exercise of outstanding Penny Warrants at an exercise price of $0.09 per share.
As of March 26, 2026, there are currently (i) 104,695 shares of common stock issuable upon the exercise of outstanding public warrants at an exercise price of $180.00 per share (the “Public Warrants”); (ii) 16,083 shares of common stock issuable upon the exercise of outstanding private warrants at an exercise price of $180.00 per share (the “Private Warrants”); (iii) 103,947 shares of common stock issuable upon exercise of outstanding Penny Warrants at an exercise price of $0.01 per share; (iv) 500,000 shares of common stock issuable upon the exercise of outstanding pre-funded warrants at an exercise price of $0.0001 per share.
While Keystone has not moved to a different solution or competitor, as a result in this change in strategy there was a material limiting effect on our revenue in 2023. Increased overall RV OEM sales in the future may not materialize as expected or at all and we may fail to achieve our targeted sales levels.
Increased overall RV OEM sales in the future may not materialize as expected or at all and we may fail to achieve our targeted sales levels.
Failure to comply with the Sarbanes-Oxley Act could potentially subject us to sanctions or investigations by the SEC, Nasdaq, or other regulatory authorities, which would require additional financial and management resources. 30 We are not currently in compliance with the continued listing requirements for The Nasdaq Capital Market.
We will be required to disclose material changes made in our internal control over financial reporting on a quarterly basis. Failure to comply with the Sarbanes-Oxley Act could potentially subject us to sanctions or investigations by the SEC, Nasdaq, or other regulatory authorities, which would require additional financial and management resources.
We may elect to take advantage of this extended transition period and as a result, our financial statements may not be comparable with similarly situated public companies. We cannot predict if investors will find our common stock less attractive if we choose to rely on any of the exemptions afforded emerging growth companies.
We cannot predict if investors will find our common stock less attractive if we choose to rely on any of the exemptions afforded emerging growth companies.
While we maintain product liability insurance, the insurance that we carry may not be sufficient or it may not apply to all situations. Moreover, a product liability claim against us or our competitors could generate substantial negative publicity about our products and business and could have a material adverse effect on our brand, business, financial condition and results of operations.
Moreover, a product liability claim against us or our competitors could generate substantial negative publicity about our products and business and could have a material adverse effect on our brand, business, financial condition and results of operations. 26 We currently rely on software and hardware that is complex and technical, and we expect that our reliance will increase in the future with the introduction of future products.

… 79 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

7 edited+2 added−0 removed4 unchanged
Biggest changeGovernance Our Board of Directors (the “ Board ”) is responsible for the oversight of cybersecurity risk management. The Chief Executive Officer reports to our Board.
Biggest changeIt is important to note that using the NIST CSF as a guide does not imply our cybersecurity program meets any specific technical standards or requirements. Governance Our Board of Directors (the “ Board ”) is responsible for the oversight of cybersecurity risk management . The Chief Executive Officer reports to our Board .
Under the guidance of our Chief Executive Officer, we task reputable third-party IT experts that utilize a wide variety of software to secure the environment. We also utilize a variety of cybersecurity software from reputable vendors in cybersecurity.
Under the guidance of our Chief Executive Officer, we task reputable third-party IT experts that utilize a wide variety of software to secure the environment. We also utilize a variety of cybersecurity software from reputable vendors in the industry.
The Chief Executive Officer also notifies the Board of any cybersecurity incidents (suspected or actual) and provides updates on the incidents as well as cybersecurity risk mitigation activities as appropriate.
The Chief Executive Officer also notifies the Board of any cybersecurity incidents (suspected or actual) and provides updates on the incidents as well as cybersecurity risk mitigation activities as appropriate. 46
We have implemented a cybersecurity risk management program that is designed to identify , assess, and mitigate risks from cybersecurity threats to this data and our systems and ensure the effectiveness of our security controls.
We have implemented a cybersecurity risk management program that is designed to identify , assess, and mitigate risks from cybersecurity threats against our data and systems and ensure the effectiveness of our security controls.
During the reporting period, we have not experienced any material cyber incidents, nor have we experienced a series of immaterial incidents, which would require disclosure. In the ordinary course of our business, we use, store and process data including data of our employees, partners, collaborators, and vendors.
During the reporting period, we have no t experienced any material cyber incidents, nor have we experienced a series of immaterial incidents, which would require disclosure. In the ordinary course of our business, we use, store and process data including data of our employees, partners, collaborators, and vendors.
We deploy a wide range of security tools across the environment, require multifactor authentication across all critical systems, and implement access control policies to further limit protect the data within the systems. We periodically engage third parties to conduct risk assessments, including periodic penetration testing and other system vulnerability analyses.
We deploy a wide range of security tools across the environment, require multifactor authentication across all critical systems, and implement access control policies to further limit protect the data within the systems. We periodically engage third parties to conduct risk assessments and other system vulnerability analyses. As a result of these assessments, we have not identified any material cybersecurity risks.
As a result of these assessments and testing, we have not identified any material cybersecurity risks. We also maintain documentation of our system hardening progress and plans. Additionally, our program requires cybersecurity training, which includes social engineering and phishing training, on a quarterly basis, for all employees.
We also maintain documentation of our system hardening progress and plans. Additionally, our program requires cybersecurity training, which includes social engineering and phishing training, on a quarterly basis, for all employees with access to our internal network.
Added
The underlying processes and controls of our cyber risk management program incorporate recognized best practices and standards for cybersecurity and IT, including the National Institute of Standards and Technology, or NIST, Cybersecurity Framework, or CSF, and processes and controls supporting data protection requirements under applicable law.
Added
The NIST CSF offers a thorough set of guidelines and best practices to help establish a strong cybersecurity posture. Utilizing NIST CSF enables us to systemically identify, assess, and manage cybersecurity risks most relevant and impactful to our business operations.

Item 2. Properties

Properties — owned and leased real estate

6 edited+4 added−0 removed0 unchanged
Biggest changeThe current monthly rent is $44,800. Our Research & Development lab is a 9,600 square foot facility located in Sparks, Nevada. The lease for these premises was entered into on July 27, 2020 and expires on July 31, 2025. The current monthly rent is $9,336. Our podcast studio was a 1,772 square foot facility located in Sparks, Nevada.
Biggest changeAs of December 31, 2025, management has determined to further consolidate our warehousing and operations into our headquarters location, which resulted in the full impairment of the Fernley Lease Agreement. The current monthly rent is $46,144. Our Research & Development lab is a 9,600 square foot facility located in Sparks, Nevada.
We are also currently leasing a 59,500 square foot warehouse facility at 12815 Old Virginia Road in Reno, Nevada. The lease for this space was entered into on December 1, 2021, and expires December 31, 2026; the current monthly rent is $49,732.
We are also currently leasing a 59,500 square foot warehouse facility at 12815 Old Virginia Road in Reno, Nevada. The lease for this space was entered into on December 1, 2021, and expires December 31, 2026; the current monthly rent is $45,244.
We are currently leasing a 99,000 square foot facility at 1190 Trademark Drive #108, Reno, Nevada, which was the prior location of our headquarters until November 2024. The lease for this building was entered into on March 1, 2021 and expires on April 30, 2026. The current monthly rent is $59,750.
We are currently leasing a 99,000 square foot facility at 1190 Trademark Drive #108, Reno, Nevada, which was the prior location of our headquarters until November 2024. The lease for this building was entered into on March 1, 2021 and expires on April 30, 2026.
Item 2. Properties On February 8, 2022, we entered into a 124-month lease for an additional 390,240 square foot warehouse. In November, 2024, we relocated our headquarters to our new 390,240 square foot warehouse at 12915 Old Virginia Road in Reno, Nevada 89521. The current rent, which became payable on March 25, 2024 is $230,000 payable monthly.
Item 2. Properties On February 8, 2022, we entered into a 124-month lease for an additional 390,240 square foot warehouse. In November, 2024, we relocated our headquarters to our new 390,240 square foot warehouse at 12915 Old Virginia Road in Reno, Nevada 89521. The current monthly rent is $237,149 payable monthly.
On April 12, 2024, we entered into the Fernley Lease Agreement, effective April 1, 2024, for the approximately 64,000 square foot Premises located at 2275 East Newlands Road, Fernley, Nevada, to be used for general, warehousing, assembly/light manufacturing, painting of products, storage fulfillment, distribution of our products. The Fernley Lease Agreement expires April 1, 2029.
On April 12, 2024, we entered into a lease agreement, effective April 1, 2024, for the approximately 64,000 square foot premises located at 2275 East Newlands Road, Fernley, Nevada (the “ Fernley Lease Agreement ”).
The lease for this space expired on September 20, 2024.
Our podcast studio was a 1,772 square foot facility located in Sparks, Nevada. The lease for this space expired on September 20, 2024.
Added
As of September 30, 2025, management has determined to further consolidate our warehousing and operations into our headquarters location, which resulted in the full impairment of the Trademark Drive lease agreement. Subsequent to December 31, 2025 the lease termination agreement was executed and no further monthly rents are due.
Added
As of December 31, 2025, management has determined to further consolidate our warehousing and operations into our headquarters location, which resulted in the full impairment of the Old Virginia Road lease agreement.
Added
The lease for these premises was entered into on July 27, 2020 and expires on July 31, 2025. On May 8, 2025, we entered into a sixth lease amendment with our landlord to extend the lease term for an additional sixty-four (64) month period.
Added
Under the terms of the amended lease, the base rent due shall be fully abated for the four (4) month period commencing on August 1, 2025, and ending on November 30, 2025. The lease is set to expire on November 30, 2030. The current monthly rent is $12,480.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

0 edited+4 added−2 removed0 unchanged
Removed
Item 3. Legal Proceedings From time to time, we may become involved in litigation or other legal proceedings. We are not currently a party to any litigation or legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business.
Added
Item 3. Legal Proceedings On February 13, 2026, a putative consumer class action captioned Berdner et al v. Dragonfly Energy Holdings Corp. d/b/a Battle Born , was filed against the Company in the Superior Court of the State of California, County of Sonoma, Case No. 26CV01247, however, the Company has yet to be served with the complaint.
Removed
Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Item 4. Mine Safety Disclosures Not applicable. 38 Part II
Added
The plaintiffs purport to represent four classes of purchasers of certain “Battle Born” branded 100 amp-hour 12V LiFePo4 batteries. They allege that the products share a uniform design defect related to the positive terminal connection that can result in overheating, premature failure, and safety risk.
Added
The complaint asserts violations of various state consumer protection statutes, breach of express and implied warranties (including under California law), and false advertising, and seeks damages, restitution, injunctive relief, punitive damages, and attorneys’ fees. The Company believes that the claims are without merit and intends to vigorously defend this matter.
Added
No trial date has been set as of the date of this report. The Company is unable at this time to reasonably estimate a range of possible loss or determine whether an adverse outcome is probable; accordingly, no liability has been recorded related to this matter as of the date of this report.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+3 added−0 removed2 unchanged
Biggest changeInvestors should not purchase our common stock with the expectation of receiving cash dividends. Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, general business conditions, and other factors that our board of directors may deem relevant. Item 6. [Reserved]
Biggest changeAny future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, general business conditions, and other factors that our board of directors may deem relevant. Item 6. [Reserved]
As of March 27, 2025, the closing price of our common stock and warrants was $1.07 and $0.03, respectively. As of March 27, 2025 , there were 83 holders of record of our common stock and 2 holders of record of our Public Warrants.
As of March 26, 2026, the closing price of our common stock and warrants was $1.94 and $0.05, respectively. As of March 26, 2026, there were 77 holders of record of our common stock and 2 holders of record of our Public Warrants.
Added
Investors should not purchase our common stock with the expectation of receiving cash dividends.
Added
The holders of the Series B Preferred Stock are entitled to receive dividends, which will accrue at 10% per annum, commencing from the Initial Issuance Date, payable (i) 80% in cash and (i) 20% “in kind” and added the Liquidation Preference of such holder’s Series B Preferred Stock.
Added
Such dividends are payable quarterly in arrears on the first trading day of each fiscal quarter commencing on the first trading day of the initial fiscal quarter after the date of issuance. Upon the occurrence of certain events, the dividend rate may automatically increase, as described in the Certificate of Designation.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

89 edited+98 added−110 removed47 unchanged
Biggest changeYears ended December 31, 2024 % Net Sales 2023 % Net Sales (in thousands) Net Sales $ 50,645 100.0 64,392 100.0 Cost of Goods Sold 39,019 77.0 48,946 76.0 Gross profit 11,626 23.0 15,446 24.0 Operating expenses Research and development 5,451 10.8 3,863 6.0 General and administrative 21,909 43.3 26,389 41.0 Sales and marketing 10,025 19.8 12,623 19.6 Total Operating expenses 37,385 73.8 42,875 66.6 Loss From Operations (25,759 ) (50.9 ) (27,429 ) (42.6 ) Other Income (Expense) Other (expense) income (36 ) (0.1 ) 19 0.0 Interest expense, net (21,504 ) (42.5 ) (16,015 ) (24.9 ) Change in fair market value of warrant liability 6,684 13.2 29,582 45.9 Total Other (Expense) Income (14,856 ) (29.3 ) 13,586 21.1 Loss Before Taxes (40,615 ) (80.2 ) (13,843 ) (21.5 ) Income Tax Benefit - (0.0 ) (26 ) 0.0 Net Loss $ (40,615 ) (80.2 ) $ (13,817 ) (21.5 ) Years ended December 31, 2024 2023 (in thousands) DTC 22,616 36,875 % Net Sales 44.7 57.3 OEM 27,612 27,517 % Net Sales 54.5 42.7 Licensing Revenue 417 - % Net Sales 0.8 - Net Sales $ 50,645 $ 64,392 Net Sales Net sales decreased by $13.7 million, or 21.3%, to $50.6 million for the year ended December 31, 2024, as compared to $64.4 million for the year ended December 31, 2023.
Biggest changeYears ended December 31, 2025 % Net Sales 2024 % Net Sales (in thousands) Net Sales $ 58,630 100.0 $ 50,645 100.0 Cost of Goods Sold 42,983 73.3 39,019 77.0 Gross profit 15,647 26.7 11,626 23.0 Operating expenses Research and development 2,981 5.1 5,451 10.8 General and administrative 22,992 39.2 21,909 43.3 Sales and marketing 10,180 17.4 10,025 19.8 Loss on impairment of right-of-use assets 2,667 4.5 - - Total Operating expenses 38,820 66.2 37,385 73.8 Loss From Operations (23,173 ) (39.5 ) (25,759 ) (50.9 ) Other Income (Expense) Other (expense) income 131 0.2 (36 ) (0.1 ) Interest expense, net (20,265 ) (34.6 ) (21,504 ) (42.5 ) Debt Extinguishment (31,843 ) (54.3 ) - - Change in fair market value of warrant liability 5,117 8.7 6,684 13.2 Total Other (Expense) Income (46,860 ) (79.9 ) (14,856 ) (29.3 ) Loss Before Taxes (70,033 ) (119.4 ) (40,615 ) (80.2 ) Income Tax Benefit (94 ) (0.2 ) - - Net Loss $ (69,939 ) (119.3 ) $ (40,615 ) (80.2 ) Less: Preferred Stock Dividends (869 ) (1.5 ) - - Net Loss Attributable to Common Shareholders (70,808 ) (120.8 ) $ (40,615 ) (80.2 ) Years ended December 31, 2025 % Net Sales 2024 % Net Sales (in thousands) DTC $ 20,696 35.3 $ 22,616 44.7 OEM 36,934 63.0 27,612 54.5 Licensing Revenue 1,000 1.7 417 0.8 Net Sales $ 58,630 100.0 $ 50,645 100.0 Net Sales Net sales increased by $8.0 million, or 15.8%, to $58.6 million for the year ended December 31, 2025, as compared to $50.6 million for the year ended December 31, 2024.
This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Item 7A. Quantitative and Qualitative Disclosures about Market Risk Not applicable. Item 8.
This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. 65 Item 7A. Quantitative and Qualitative Disclosures about Market Risk Not applicable. Item 8.
On December 31, 2024, the Company entered into the Fourth Amendment, which: (i) reduced the liquidity requirement under the Term Loan to be $3.5 million as of the last day of the month ended December 31, 2024, and $10.0 million as of the last day of each fiscal month thereafter commencing with the fiscal month ended January 31, 2025 and (ii) on January 1, 2025, interest is payable in-kind, to be capitalized and added to the principal.
On December 31, 2024, we entered into the Fourth Amendment, which: (i) reduced the liquidity requirement under the Term Loan to be $3.5 million as of the last day of the month ended December 31, 2024, and $10.0 million as of the last day of each fiscal month thereafter commencing with the fiscal month ended January 31, 2025 and (ii) on January 1, 2025, interest is payable in-kind, to be capitalized and added to the principal.
Financial Statements and Supplementary Data Our consolidated audited financial statements as of and for the years ended December 31, 2024 and December 31, 2023, together with the report of the independent registered public accounting firm thereon and the notes thereto, are presented beginning at page F-2. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
Financial Statements and Supplementary Data Our consolidated audited financial statements as of and for the years ended December 31, 2025 and December 31, 2024, together with the report of the independent registered public accounting firm thereon and the notes thereto, are presented beginning at page F-2. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
Further, any future debt or equity financings may be dilutive to our current stockholders. Financing Obligations and Requirements 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.
Further, any future debt or equity financings may be dilutive to our current stockholders. 61 Financing Obligations and Requirements 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.
The Term Loan will mature on October 7, 2026, 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 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.
Product and Customer Mix Our product sales consist of sales of seven different models of LFP batteries, along with accessories for battery systems (individually or bundled). These products are sold to different customer types (e.g., consumers, OEMs and distributors) and at different prices and involve varying levels of costs.
Product and Customer Mix Our product sales consist of sales of numerous models of LFP batteries, along with accessories for battery systems (individually or bundled). These products are sold to different customer types (e.g., consumers, OEMs and distributors) and at different prices and involve varying levels of costs.
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.
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.
General and administrative General and administrative costs include personnel-related expenses attributable to our executive, finance, human resources, and information technology organizations, certain facility costs, and fees for professional services. Selling and marketing Selling and marketing costs include outbound freight, personnel-related expenses, as well as trade show, industry event, marketing, customer support, and other indirect costs.
General and administrative General and administrative costs include personnel-related expenses attributable to our executive, finance, human resources, engineering and product development organizations, certain facility and information technology costs, and fees for professional services. Selling and marketing Selling and marketing costs include outbound freight, personnel-related expenses, as well as trade show, industry event, marketing, customer support, and other indirect costs.
Net cash used in operating activities was $17.7 million for the year ended December 31, 2023, primarily due to a net loss during the period and the change in fair market value of the warrant liability, partially offset by a decrease in inventory as a result of management’s decision to lower overall stocking levels to adjust for more modest demand.
Net cash used in operating activities was $7.2 million for the year ended December 31, 2024, primarily due to a net loss during the period and the change in fair market value of the warrant liability, partially offset by a decrease in inventory as a result of management’s decision to lower overall stocking levels to adjust for more modest demand.
Earnout Merger Consideration 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: 1.
Earnout Merger Consideration In addition to the initial merger consideration in connection with our business combination in October of 2022, up to 444,445 additional shares of common stock (“ Earnout Shares ”) may be issued based on achieving specified milestones in three tranches: 1.
These include chargers, inverters, monitors, controllers, solar panels, and other system accessories from brands such as Victron Energy, Progressive Dynamics, Magnum Energy and Sterling Power.
These include chargers, inverters, monitors, controllers and other system accessories from brands such as Victron Energy, Progressive Dynamics, Magnum Energy and Sterling Power.
In addition, the Third Amendment (i) reduced the liquidity requirement under the Term Loan to be $7.0 million as of the last day of the month ended September 30, 2024, and $10.0 million as of the last day of each fiscal month thereafter commencing with the fiscal month ended July 31, 2024 and (ii) on October 1, 2024, interest is payable (a) $1,500,000 in cash pro rata benefit of the Lenders and (b) the remaining interest in-kind, to be capitalized and added to the principal.
On September 30, 2024, we entered into the Third Amendment, which: (i) reduced the liquidity requirement under the Term Loan to be $7.0 million as of the last day of the month ended September 30, 2024, and $10.0 million as of the last day of each fiscal month thereafter commencing with the fiscal month ended July 31, 2024 and (ii) on October 1, 2024, interest is payable (a) $1,500,000 in cash for the pro rata benefit of the Lenders and (b) the remaining interest in-kind, to be capitalized and added to the principal.
First Tranche (1,666,667 shares): Issuable if 2023 total audited revenue is at least $250 million and audited operating income is at least $35 million. This milestone was not achieved for 2023. 2.
First Tranche (166,667 shares): Issuable if 2023 total audited revenue is at least $250 million and audited operating income is at least $35 million. This milestone was not achieved for 2023. 2.
Results of Operations Comparisons for the Years Ended December 31, 2024 and 2023 The following table sets forth our results of operations for the years ended December 31, 2024 and 2023.
Results of Operations Comparisons for the Years Ended December 31, 2025 and 2024 The following table sets forth our results of operations for the years ended December 31, 2025 and 2024.
We expect to continue to make the necessary sales and marketing investments to enable the execution of our strategy, which includes expanding into additional end markets. 45 Total Other Income (Expense) Other income (expense) consists primarily of interest expense, the change in fair value of the warrant liability and amortization of debt issuance costs.
We expect to continue to make the necessary sales and marketing investments to enable the execution of our strategy, which includes expanding into additional end markets. 55 Total Other Expense Other expense consist primarily of debt extinguishment, interest expense, the change in fair value of the warrant liability and amortization of debt issuance costs.
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.
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 $45.0 million fixed rate senior notes, and ChEF Equity Facility.
The net proceeds to us from the Initial Offerings, after deducting the placement agent’s fees and expenses and estimated offering expenses, were approximately $3.2 million, excluding the net proceeds, if any, from the exercise of the Private Placement Warrants.
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.
As a condition precedent to the closing of the Offerings, on February 26, 2025, we entered into the Fifth Amendment (the “Fifth Amendment”) to the Term Loan Agreement with the Term Loan Lenders.
As a condition precedent to the closing of the Initial Offerings, on February 26, 2025, we entered into the Fifth Amendment (the “ Fifth Amendment ”) to the Term Loan Agreement with the Term Loan Lenders.
The Private Placement 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 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.
We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.
We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that involve a significant degree of estimation uncertainty at the time the estimate is made; and (2) changes in the estimate that are reasonably likely to occur from period to period, or the use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.
In connection with the Second Amendment, Battle Born LLC entered into the Joinder. 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 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.
For the year ended December 31, 2024, DTC revenue decreased by $14.3 million as a result of decreased customer demand for our products due to rising interest rates and inflation.
For the year ended December 31, 2025, DTC revenue decreased by $1.9 million as a result of decreased customer demand for our products due to rising interest rates and inflation.
We recognize the financial statement effect of an uncertain income tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. Recognized income tax positions are measured at the largest amount that is greater than 50% likely to be realized.
We recognize the financial statement effect of an uncertain tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. Recognized tax positions are measured at the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.
Second Tranche (1,388,889 shares): Issuable if the volume-weighted average trading price of common stock reaches $202.50 over any 20 trading days within a 30-day period, on or before December 31, 2026. 3.
Second Tranche (138,889 shares): Issuable if the volume-weighted average trading price of common stock reaches $2,025.00 over any 20 trading days within a 30-day period, on or before December 31, 2026. 3.
For Payment Dates occurring on or after April 1, 2025 (including interest accruing from January 1, 2025, through March 31, 2025), all interest shall be paid in cash at a rate equal to Adjusted Term SOFR plus the Applicable Margin.
For Payment Dates occurring on or after April 1, 2025 (including interest accruing from January 1, 2025, through March 31, 2025), all interest shall be paid in cash at a rate equal to Adjusted Term SOFR plus the Applicable Margin. On February 26, 2025, we entered into a Securities Purchase agreement (“ Purchase Agreement ”).
Third Tranche (1,388,889 shares): Issuable if the volume-weighted average trading price of common stock reaches $292.50 over any 20 trading days within a 30-day period, on or before December 31, 2028.
Third Tranche (138,889 shares): Issuable if the volume-weighted average trading price of common stock reaches $2,925.00 over any 20 trading days within a 30-day period, on or before December 31, 2028.
Components of Results of Operations Net Sales Net sales is primarily generated from the sale of our LFP batteries to OEMs and consumers, as well as chargers and other accessories, either individually or bundled.
Components of Results of Operations Net Sales Net sales are primarily generated from the sale of our LFP batteries to OEMs and directly to consumers, as well as chargers and other accessories, either individually or bundled, and recognition of deferred licensing revenue.
Other income in 2023 is comprised of a change in fair market value of warrant liability in the amount of $29.6 million, partially offset by interest expense of $16.0 million related to our debt securities. Income Tax Benefit The income tax benefit for the years ended December 31, 2024 and December 31, 2024 were immaterial.
Other expense in 2024 is comprised primarily of interest expense of $21.5 million related to our debt securities partially offset by a change in fair market value of warrant liability in the amount of $6.7 million. 57 Income Tax Benefit The income tax benefit for the years ended December 31, 2024 and December 31, 2025 were immaterial.
Although our battery systems are built in to each model, our RV OEM sales have been on a purchase order basis, without firm revenue commitments, and we expect that this will likely continue to be the case.
Our RV OEM sales have been on a purchase order basis, without firm revenue commitments, and we expect that this will likely continue to be the case.
In 2024, we identified an underpayment of tariffs to 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.
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.
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. However, we cannot guarantee that we will be able to raise additional equity, contain expenses, or increase revenue.
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. However, we cannot guarantee that we will be able to raise additional equity, contain expenses, or increase revenue, and comply with the financial covenants under the Term Loan.
As a result, a full valuation allowance totaling $19.7 million was recorded as of December 31, 2023 revalued at $29.4 million for the year ended December 31, 2024 Net Loss We experienced a net loss of $40.6 million for the year ended December 31, 2024, as compared to a net loss of $13.8 million for the year ended December 31, 2023.
As a result, a full valuation allowance totaling $29.4 million was recorded as of December 31, 2024 revalued at $37.7 million for the year ended December 31, 2025 Net Loss We generated a net loss of $69.9 million for the year ended December 31, 2025, as compared to a net loss of $40.6 million for the year ended December 31, 2024.
February 2025 Registered Direct Offering and Concurrent Private Placement and Fifth Amendment to Term Loan Agreement 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.
February 2025 Registered Direct Offering and Concurrent Private Placement, Fifth Amendment to Term Loan Agreement and April 2025 Private Placement 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 ”) 18 shares of Series A Convertible Preferred Stock, par value $0.001 per share (the “ Series A Preferred Stock ”), at a price of $100,000 per share, initially convertible into shares of our common stock, at a conversion price of $23.32 per share of common stock.
Since 2020, we have sold over 330,000 batteries. For the years ended December 31, 2024 and 2023, we sold 42,447 and 64,096 batteries, respectively, and had $50.6 million and $64.4 million in net sales, respectively.
Since 2020, we have sold over 370,000 batteries. For the years ended December 31, 2025 and 2024, we sold 43,129 and 42,447 batteries, respectively, and had $58.6 million and $50.6 million in net sales, respectively.
Net cash provided by financing activities was $19.5 million for the year ended December 31, 2023, primarily as a result of $20.7 million proceeds from the June 2023 Offering. Contractual Obligations Our estimated future obligations consist of short-term and long-term operating and financing lease liabilities.
Net cash provided by financing activities was $2.0 million for the year ended December 31, 2024, primarily as a result of proceeds $2.0 million from the utilization of the ChEF Equity Facility. Contractual Obligations Our estimated future obligations consist of short-term and long-term operating and financing lease liabilities.
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. Pursuant to the Private Placement Warrants, we have a call right upon the occurrence of certain events.
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.
See “Corporate Information.” Overview We are a manufacturer of non-toxic deep cycle lithium-ion batteries that are designed to displace lead acid batteries in a number of different storage applications and end markets including RV, marine vessel, and solar and off-grid industries, and trucking, industrial and energy storage with disruptive cell manufacturing and solid-state cell technology currently under development.
See “Corporate Information.” 48 Overview We are a manufacturer of non-toxic deep cycle lithium-ion batteries that caters to customers in the consumer industry (including the RV, marine vessel, solar and off-grid residence industries), and trucking, industrial and energy storage markets, with proprietary, patented and disruptive battery cell manufacturing and non-flammable solid-state cell technology currently under development.
If a change of control occurs during the second or third earnout periods, unachieved milestones will be automatically deemed satisfied if the share price at the time of the transaction meets or exceeds $202.50 for the second period or $292.50 for the third period. 40 ChEF Equity Facility We have the ChEF Equity Facility.
If a change of control occurs during the second or third earnout periods, unachieved milestones will be automatically deemed satisfied if the share price at the time of the transaction meets or exceeds $2,025.00 for the second period or $2,925.00 for the third period.
We currently source the lithium iron phosphate cells incorporated into our batteries from a limited number of carefully selected suppliers that can meet our demanding quality standards and with whom we have developed long-term relationships.
We currently source the LFP cells incorporated into our batteries from a limited number of carefully selected suppliers that can meet our demanding quality standards and with whom we have developed long-term relationships. To supplement our battery offerings, we are also a reseller of accessories for battery systems.
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.
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. 49 License Agreement with Stryten On July 29, 2024, Legacy Dragonfly and Battle Born Battery Products, LLC (“ Battle Born LLC ”), a wholly-owned subsidiary of Legacy Dragonfly, entered into a License Agreement (the “ License Agreement ”) with Stryten.
As of December 31, 2024, we had $3.0 million in short-term operating and financing lease liabilities and $22.7 million in long-term operating, and financing lease liabilities. 53 As disclosed above, we have a Term Loan and as of December 31, 2024, the principal amount outstanding under the Term Loan was $69.9 million.
As of December 31, 2025, we had $2.6 million in short-term operating and financing lease liabilities and $20.5 million in long-term operating and financing lease liabilities. As disclosed above, we have a Term Loan and as of December 31, 2025, the principal amount outstanding under the Term Loan was $19.3 million.
On November 22, 2024, we effected a reverse stock split for our issued and outstanding Common Stock at a ratio of 1-for-9.
On December 18, 2025, we effected a reverse stock split for our issued and outstanding Common Stock at a ratio of 1-for-10.
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 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 Series A Preferred Stock was also convertible by the investor at an adjusted conversion price, subject to the applicable floor price. 50 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 17 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 $23.32 per share, and (ii) warrants (the “ Private Placement Convertible Preferred Warrants ”) to purchase up to an aggregate of 400 shares of Series A Preferred Stock (the “ Private Placement Warrant Shares ”), with an exercise price of $100,000 per share of Series A Preferred Stock, and a term as described below.
In addition, in February 2025, we completed an offering of shares of our Series A Preferred Stock which provided us with an additional net proceeds of $3.2 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 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.
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.
Investing Activities Net cash used in investing activities was $2.7 million for the year ended December 31, 2024, as compared to $6.9 million for the year ended December 31, 2023. The cash used in investing activities was primarily driven by capital expenditures in leasehold improvements for our new lease and to support our core battery business.
Investing Activities Net cash used in investing activities was $2.0 million for the year ended December 31, 2025, as compared to $2.7 million for the year ended December 31, 2024. The cash used in investing activities was primarily due to capital expenses to support our core battery business.
An increasing proportion of our sales has been and is expected to continue to be derived from sales to RV and other OEMs, driven by continued efforts to develop larger and more complete storage systems.
An increasing proportion of our sales has been and is expected to continue to be derived from sales to RV OEMs, driven by continued efforts to develop and expand sales to RV OEMs with whom we have longstanding relationships.
Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our board of directors. In addition, there are other items within our financial statements that require estimation but are not deemed critical as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements.
Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our board of directors. In addition to the estimates described below, there are other items within our financial statements that require estimation, but that we do not consider critical under the definition above.
The floor price for the Series A Preferred Stock sold in the Private Placement is $0.424. 42 The exercise price under each Private Placement Warrant will be $10,000 per share of Series A Preferred Stock. Each Private Placement Warrant will be exercisable for 200 shares of Series A Preferred Stock in minimum increments of $500,000.
The exercise price under each Private Placement Convertible Preferred Warrant was $100,000 per share of Series A Preferred Stock. Each Private Placement Convertible Preferred Warrant was exercisable for 20 shares of Series A Preferred Stock in minimum increments of $500,000.
The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities in our financial statements.
The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. We base our estimates on historical experience, known trends and events, and other factors we believe to be reasonable under the circumstances.
Adjusted EBITDA is calculated as EBITDA adjusted for stock-based compensation, ERP implementation, non-recurring debt transaction and business combination expenses. Adjusted EBITDA is a performance measure that we believe is useful to investors and analysts because it illustrates the underlying financial and business trends relating to our core, recurring results of operations and enhances comparability between periods.
Adjusted EBITDA is a performance measure that we believe is useful to investors and analysts because it illustrates the underlying financial and business trends relating to our core, recurring results of operations and enhances comparability between periods. Adjusted EBITDA is not a recognized measure under U.S. GAAP and is not intended to be a substitute for any U.S.
As described above, this result was driven by increased other expenses, lower sales due to reduced demand in the RV market, partially offset by lower cost of goods sold and lower operating expenses. 47 Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States.
As described above, this result was mainly due to debt extinguishment, partially offset by higher sales of higher margin accessory sales. Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States.
Investors should exercise caution in comparing our non-GAAP measure to any similarly titled measure used by other companies. This non-GAAP measure excludes certain items required by U.S. GAAP and should not be considered as an alternative to information reported in accordance with U.S. GAAP.
GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry. Investors should exercise caution in comparing our non-GAAP measure to any similarly titled measure used by other companies. This non-GAAP measure excludes certain items required by U.S.
During the year ended December 31, 2024, we sold 350,423 shares pursuant to the Purchase Agreement with CCM LLC for aggregate proceeds to us of $2,043,885.
During the year ended December 31, 2025, we issued 2,316 shares pursuant to the ChEF Purchase Agreement with CCM LLC for aggregate proceeds to us of $0.06 million. The ChEF Purchase Agreement terminated in December 2025.
Key Factors Affecting Our Operating Results Our financial position and results of operations depend to a significant extent on the following factors: End Market Consumers The demand for our products ultimately depends on demand from consumers in our current end markets. We generate sales through (1) direct-to-customer and (2) through OEMs, particularly in the RV market.
Subsequent to December 31, 2025, we did not sell any shares of our common stock pursuant to the ATM. Key Factors Affecting Our Operating Results Our financial position and results of operations depend to a significant extent on the following factors: End Market Consumers The demand for our products ultimately depends on demand from consumers in our current end markets.
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.
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.
Research and Development Expenses Research and development expenses increased by $1.6 million, or 41.1%, to $5.5 million for the year ended December 31, 2024, as compared to $3.9 million for the year ended December 31, 2023.
General and Administrative Expenses General and administrative expenses increased by $3.8 million, or 17.1%, to $25.7 million for the year ended December 31, 2025, as compared to $21.9 million for the year ended December 31, 2024.
Although our automation efforts are expected to reduce our costs of goods, we may not fully recognize the anticipated savings when planned and could experience additional costs or disruptions to our production activities. 44 Competition We compete with traditional lead-acid battery manufacturers and lithium-ion battery manufacturers, who primarily either import their products or components or manufacture products under a private label.
Although our automation efforts are expected to reduce our costs of goods, we may not fully recognize the anticipated savings when planned and could experience additional costs or disruptions to our production activities.
On February 2025, subsequent to the current year ended December 31, 2024, in connection with the Securities Purchase Agreement, the Company entered into the Fifth Amendment, which: (i) extended the maturity date by one year to October 2027, (ii) deferred all principal and interest payments to April 2026 and (iii) removed any applicable financial covenants (except for a financial covenant requiring the Company to maintain cash and cash equivalents equal to or greater than $2,500 on a monthly basis) for the next 1.5 years.
In addition to the Purchase Agreement, the Term Loan was amended on February 26, 2025 to (i) extend the maturity date by one (1) year to October 2027, (ii) defer all principal and interest payments to April 2026 and (iii) remove any applicable financial covenants (except for a financial covenant requiring us to maintain cash and cash equivalents equal to or greater than $2,500) through June 30, 2026.
Years ended December 31, 2024 2023 (in thousands) Net (loss) $ (40,615 ) $ (13,817 ) Interest Expense 21,504 16,015 Taxes - (26 ) Depreciation 1,372 1,237 EBITDA (17,739 ) 3,409 Adjusted for: Stock-Based Compensation (1) 1,020 6,710 June 2023 Offering Costs (2) - 904 Loss on Disposal of Assets 69 712 Separation Agreement (3) - 720 Change in fair market value of warrant liability (4) (6,684 ) (29,582 ) Non-Recurring/One-Time Expenses: Tariff Investigation(5) 463 Patent Litigation(6) 624 Reverse Stock Split (7) 90 Stryten Licensing Agreement(8) 284 Loss on Settlement(9) 2,500 - Loss on Impairment of Assets(10) 873 - Adjusted EBITDA $ (18,500 ) $ (17,127 ) (1) Stock-Based Compensation is comprised of costs associated with option and RSU grants made to our employees, consultants and board members.
Years ended December 31, 2025 2024 (in thousands) Net loss Attributable to Common Shareholders $ (70,808 ) $ (40,615 ) Interest Expense 20,265 21,504 Taxes (94 ) - Depreciation 2,236 1,372 EBITDA (48,401 ) (17,739 ) Adjusted for: Stock-Based Compensation (1) 714 1,020 Loss on Disposal of Assets 126 69 Change in fair market value of warrant liability (2) (5,117 ) (6,684 ) Non-Recurring/One-Time Expenses: Tariff Investigation 463 Patent Litigation and loss on settlement (3) 862 3,124 Reverse Stock Split (4) 76 90 Stryten Licensing Agreement 284 Debt Extinguishment (5) 31,843 Debt Restructure Expenses (6) 2,291 ChEF Equity Facility termination fee (7) 891 - Preferred Stock Financing Expenses (8) 686 Loss on Impairment of Assets (9) 3,043 873 Prior year tariff estimate adjustment (10) 287 Severance 35 Preferred Stock Dividend (11) 869 Adjusted EBITDA $ (11,795 ) $ (18,500 ) (1) Stock-Based Compensation is comprised of costs associated with option and RSU grants made to our employees, consultants and Board members. 60 (2) Change in fair market value of warrant liabilities represents the change in fair value from the date the warrants were issued through December 31, 2025.
Leases 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.
Leases We recognize right-of-use assets and lease liabilities for our operating leases based on the present value of lease payments over the expected lease term. Because our leases generally do not provide an implicit rate, we estimate an incremental borrowing rate to determine the present value of lease payments.
We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
These estimates form the basis for judgments about the carrying values of assets and liabilities that are not readily apparent from other sources, and actual results may differ from these estimates under different assumptions or conditions. On a recurring basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience.
While the lease for the 99,000 facility is continuing, no manufacturing is taking place in this location. We currently operate three LFP battery production lines. Consistent with our operating history, we plan to continue to automate additional aspects of our battery production lines.
We currently operate four LFP battery production lines. Consistent with our operating history, we plan to continue to automate additional aspects of our battery production lines.
Selling and Marketing Expenses Sales and marketing expenses decreased by $2.6 million, or 20.6%, to $10.0 million for the year ended December 31, 2024, as compared to $12.6 million for the year ended December 31, 2023. This decrease was primarily due to a $2.3 million reduction in employee related costs and lower stock-based compensation.
Selling and Marketing Expenses Sales and marketing expenses increased by $0.2 million, or 1.5%, to $10.2 million for the year ended December 31, 2025, as compared to $10.0 million for the year ended December 31, 2024. This increase was primarily due to higher shipping costs due to higher unit sales volume.
In the event that actual results differ from these estimates or we adjust our estimates in the future, we may need to adjust our valuation allowance, which could materially impact our financial position and results of operations.
If actual results differ from our estimates, or if we adjust our estimates in future periods, we may need to increase or decrease our valuation allowance or adjust our uncertain tax positions, which could have a material impact on our effective tax rate, income tax expense and results of operations.
The table below presents our adjusted EBITDA, reconciled to net (loss) income for the years ended December 31, 2024 and 2023.
GAAP and should not be considered as an alternative to information reported in accordance with U.S. GAAP. The table below presents our adjusted EBITDA, reconciled to net loss for the years ended December 31, 2025 and 2024.
Cash Flows for the Years ended December 31, 2024 and 2023 Years ended December 31, 2024 2023 Net Cash provided by/(used in): (in thousands) Operating Activities $ (7,182 ) $ (17,706 ) Investing activities $ (2,729 ) $ (6,885 ) Financing activities $ 2,047 $ 19,523 Operating Activities Net cash used in operating activities was $7.2 million for the year ended December 31, 2024, primarily due to a net loss during the period and the change in fair market value of the warrant liability, partially offset by a decrease in inventory as a result of management’s decision to lower overall stocking levels to adjust for more modest demand.
Cash Flows for the Years ended December 31, 2025 and 2024 Years ended December 31, 2025 2024 Net Cash provided by/(used in): (in thousands) Operating Activities $ (25,968 ) $ (7,190 ) Investing activities $ (1,949 ) $ (2,676 ) Financing activities $ 41,338 $ 2,002 64 Operating Activities Net cash used in operating activities was $26.0 million for the year ended December 31, 2025, primarily due to a net loss of during the period and the change in fair market value of the warrant liability, partially offset by a loss on extinguishment of debt and a payment in-kind interest accrued on the Term Loan.
(6) Patent Investigation are legal fees and expenses related to the Internation Trade Commission ‘ITC’ Lithium Hub patent infringement case. (7) Reverse Stock Split are transfer agent and legal expenses and fees related to the reverse stock split with the SEC.
(3) Litigation Fees and Loss on Settlement includes legal fees and expenses and settlement related to the International Trade Commission ‘ITC’ LithiumHub patent infringement case and others. (4) Reverse Stock Split are transfer agent and legal expenses and fees related to the reverse stock split with the SEC. (5) Debt discount expensed as part of the restructuring.
Other expense in 2024 is comprised primarily of interest expense of $21.5 million related to our debt securities partially offset by a change in fair market value of warrant liability in the amount of $6.7 million.
These increases are partially offset by a change in fair market value of warrant liability in the amount of $5.1 million.
As of December 31, 2024, we had cash totaling $4.8 million. Our net loss for the years ended December 31, 2024 and December 31, 2023, were $40.6 million and $13.8 million, respectively.
Our net loss for the years ended December 31, 2025 and December 31, 2024, were $69.9 million and $40.6 million, respectively. In the year ended December 31, 2025, we raised an aggregate of $90.9 million in net proceeds in connection with our various financings, as described below.
Total Other Income (Expense) Other expense totaled $14.9 million for the year ended December 31, 2024 as compared to total other income of $13.6 million for the year ended December 31, 2023.
We expect our Selling and Marketing Expenses to decrease as a result of cost reduction measures beginning in the second quarter of 2026. Total Other Income (Expense) Other expense totaled $46.9 million for the year ended December 31, 2025 as compared to total other expense of $14.9 million for the year ended December 31, 2024.
Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities using enacted rates. The effect of a change in tax rates on deferred taxes is recognized in income in the period that includes the enactment date.
Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities and for operating loss and tax credit carryforwards.
The decrease in expense was offset by an impairment loss accrued for assets held for sale at year end of $0.9 million and a loss on patent litigation settlement accrued of $2.5 million. We expect General and Administrative Expenses, as a percentage of revenue, to increase as we increase the staffing in our Engineering department over the next 12 months.
Prior year included non-recurring costs for patent litigation and settlement costs of $3.1 million and asset impairment of $0.9 million. We expect General and Administrative Expenses, as a percentage of revenue, to decrease over the next 12 months as a result of cost reduction measures beginning in the second quarter of 2026.
A valuation allowance is recorded to reduce deferred income tax assets to an amount, which in the opinion of management is more likely than not to be realized. Management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, and any valuation allowance recorded against our deferred tax assets.
We also establish a valuation allowance to reduce deferred tax assets to an amount that is more likely than not to be realized.
(8) Stryten Licensing Agreement is comprised of Legal expenses and fees related to the Licensing agreement with Stryten Energy, LLC (9) Loss on settlement from patent licensing litigation (10) Loss on impairment of assets from subsequent sale at a price lower than its carrying value 49 Liquidity and Capital Resources 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.
Liquidity and Capital Resources 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.
Pursuant to the Purchase Agreement, on the terms of and subject to the satisfaction of the conditions in the 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 Purchase 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.
Pursuant to the Original Purchase Agreement, we had 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).
We expect the materials and labor portion of our Cost of goods sold to increase in conjunction with the anticipated increase in revenue over the next 12 months. 46 Gross Profit Gross profit decreased by $3.8 million, or 24.7%, to $11.6 million for the year ended December 31, 2024, as compared to $15.4 million for the year ended December 31, 2023.
Gross Profit Gross profit increased by $4.0 million, or 34.6%, to $15.7 million for the year ended December 31, 2025, as compared to $11.6 million for the year ended December 31, 2024. The increase in gross profit was primarily due to a higher unit volume of battery and accessory sales.
Our actual results may differ from these estimates under different assumptions or conditions. On a recurring basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, and experience. The effects of material revisions in an estimate, if any, will be reflected in the consolidated financial statements prospectively from the date of the change in the estimate.
The effects of material revisions in an estimate, if any, are reflected in the consolidated financial statements prospectively from the date of the change in the estimate.
License Arrangement We have entered into license arrangements that involve receiving upfront compensation, which is recognized as revenue over a five-year period. Management estimates the appropriate recognition pattern based on the expected delivery of related services and the period over which the economic benefits will be realized.
We recognize this compensation as revenue over a five-year period, which we believe reflects the pattern in which control of the licensed rights and related services is transferred and the period over which we expect to realize the economic benefits of the arrangement.
We expect Research and Development expenses to reduce as we change our focus from Solid State to Product Development. General and Administrative Expenses General and administrative expenses decreased by $4.5 million, or 17.0%, to $21.9 million for the year ended December 31, 2024, as compared to $26.4 million for the year ended December 31, 2023.
Gross Profit percentage increased by 3.7% to 26.7% primarily due to sales of higher margin accessory units and assemblies. Research and Development Expenses Research and development expenses decreased by $2.5 million, or 45.3%, to $3.0 million for the year ended December 31, 2025, as compared to $5.5 million for the year ended December 31, 2024.

… 217 more changes not shown on this page.

Other DFLIW 10-K year-over-year comparisons