What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-21 compared with 2023-05-15 · 542 added, 357 removed, 584 unchanged (61% of the section changed)

3 unchanged sentences

thousands, except share and per share data)

March 31, 2023

December 31, 2022

March 31, 2023

December 31, 2022

Current Assets

Accounts receivable, net of allowance for doubtful accounts

receivable, net of allowance for credit losses

Prepaid expenses

Prepaid inventory

Prepaid income tax

Other current assets

Total Current Assets

Property and Equipment

Machinery and equipment

Office furniture and equipment

Leasehold improvements

Less accumulated depreciation and amortization

Property and Equipment, Net

Operating lease right of use asset

Prepaid income

current assets

Current Assets

and equipment

Office furniture

and equipment

accumulated depreciation and amortization

and Equipment, Net

lease right of use asset

Current Liabilities

Accounts payable

Accrued payroll and other liabilities

Customer deposits

Uncertain tax position liability

Notes payable, net of deferred financing fees

Notes payable, related party

Operating lease liability, current portion

Total Current Liabilities

Long-Term Liabilities

Accrued payroll

and other liabilities

tax position liability

Notes payable,

current portion, net of deferred financing fees

lease liability, current portion

Current Liabilities

Warrant liabilities

Accrued expenses-long term

Operating lease liability, net of current portion

Total Long-Term Liabilities

Total Liabilities

Commitments and Contingencies (See Note 5)

Common stock, 170,000,000 shares at $ 0.0001 par value, authorized, 45,795,502 and 43,272,728 shares issued and outstanding as of

March 31, 2023 and December 31, 2022, respectively

Preferred stock, 5,000,000 shares at $ 0.0001 par value, authorized, no shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Accrued expenses-long

lease liability, net of current portion

Long-Term Liabilities

and Contingencies (See Note 5)

Common stock, 170,000,000 shares

at $ 0.0001 par value, authorized, 58,504,541 and 43,272,728 shares issued and outstanding as of June 30, 2023 and December 31, 2022,

Preferred stock, 5,000,000

shares at $ 0.0001 par value, authorized, no shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

Additional paid in capital

Retained deficit

Total Liabilities and Shareholders’ Equity

Liabilities and Shareholders’ Equity

accompanying notes are an integral part of these condensed and consolidated financial statements.

1 unchanged sentence

Condensed Interim Consolidated Statements of Operations

the Three Months Ended March 31, 2023 and 2022

thousands, except share and per share data)

Cost of Goods Sold

The Three Months Ended

The Six Months Ended

Cost of Goods

and development

administrative

and marketing

Operating Expenses

Research and development

General and administrative

Selling and marketing

Total Operating Expenses

Loss From Operations

Other Income (Expense)

Interest expense

Change in fair market value of warrant liability

Total Other Income (Expense)

Income (Loss) Before Taxes

Income Tax (Benefit) Expense

Net Income (Loss)

Income (Loss) Per Share- Basic

Income (Loss) Per Share- Diluted

Weighted Average Number of Shares- Basic

Weighted Average Number of Shares- Diluted

From Operations

(Expense) Income

in fair market value of warrant liability

Other (Expense ) Income

Tax (Benefit) Expense

Loss Per Share- Basic

Loss Per Share- Diluted

Weighted Average Number

of Shares- Basic

Weighted Average Number

of Shares- Diluted

accompanying notes are an integral part of these condensed and consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Shareholders’ Equity

the Three Months Ended March 31, 2023 and 2022

THE PERIOD ENDED jUNE 30, 2023 AND 2022

thousands, except share data)

Preferred Stock

Retained Earnings

Balance -January 1, 2022

Retroactive application of recapitalization

-January 1, 2022

application of recapitalization

( 10,000,000 )

2 unchanged sentences

Exercise of stock options

Balance - March 31, 2022

– March 31, 2022

Stock compensation expense

Exercise of stock options

– June 30, 2022

Balance -January 1, 2023

Net income (loss)

Common stock issued in public offering (ATM), net of costs

Common stock issued in public

offering (ATM), net of costs

Exercise of stock options

Exercise of public warrants

Cashless exercise of liability classified warrants

Stock compensation expense

Balance - March 31, 2023

Cashless exercise of liability

classified warrants

compensation expense

– March 31, 2023

Net income (loss)

Common stock issued in public

offering, net of costs

Common stock issued in public

offering (ATM), net of costs

Exercise of stock options

Cashless exercise of liability

classified warrants

Shares issued for vested restricted

compensation expense

- June 30, 2023

accompanying notes are an integral part of these condensed and consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

the Three Months Ended March 31, 2023 and 2022

the SIX Months Ended June 30, 2023 and 2022

Cash flows from Operating Activities

Net Income (Loss)

Adjustments to Reconcile Net Income (Loss) to Net Cash

Used in Operating Activities

Stock based compensation

Amortization of debt discount

Change in fair market value of warrant liability

Deferred tax liability

Non-cash interest expense (paid-in kind)

Provision for doubtful accounts

Depreciation and amortization

Loss on disposal of property and equipment

Adjustments to Reconcile Net

Loss to Net Cash

Used in Operating

of debt discount

fair market value of warrant liability

tax liability

interest expense (Paid-in Kind)

for doubtful accounts

and amortization

Loss on disposal

of property and equipment

Changes in Assets and Liabilities

Accounts receivable

Prepaid expenses

Prepaid inventory

Other current assets

Income taxes payable

Accounts payable and accrued expenses

Customer deposits

Total Adjustments

Net Cash Used in Operating Activities

Other current

payable and accrued expenses

Cash Used in Operating Activities

Cash Flows from Investing Activities

Purchase of property and equipment

Net Cash Used in Investing Activities

of property and equipment

Cash Used in Investing Activities

accompanying notes are an integral part of these condensed and consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows (Continued)

the Three Months Ended March 31, 2023 and 2022

(continued from previous page)

the Six Months Ended June 30, 2023 and 2022

(continued from previous

Cash Flows from Financing Activities

Proceeds from public offering, net

from public offering, net

Payment of offering costs

Proceeds from public offering (ATM), net

Proceeds from note payable, related party

Proceeds from exercise of public warrants

Proceeds from exercise of options

Net Cash Provided by Financing Activities

Net Decrease in Cash and Restricted Cash

Beginning cash and restricted cash

Ending cash and restricted cash

Supplemental Disclosures of Cash Flow Information:

Cash paid for interest

of note payable, related party

from exercise of public warrants

from exercise of options

Cash Provided by Financing Activities

Net Increase (Decrease) in Cash

Beginning cash

Supplemental Disclosures of Cash

Flow Information:

paid for income taxes

paid for interest

Supplemental Non-Cash Items

Receivable of options exercised

Purchases of property and equipment, not yet paid

Cashless exercise of liability classified warrants

of options exercised

of property and equipment, not yet paid

exercise of liability classified warrants

accompanying notes are an integral part of these condensed and consolidated financial statements.

15 unchanged sentences

a wholly owned subsidiary of New Dragonfly.

New Dragonfly was the legal acquirer of Legacy Dragonfly in the merger, Legacy Dragonfly is deemed to be the accounting acquirer, and

the historical financial statements of Legacy Dragonfly became the basis for the historical financial statements of New Dragonfly upon

the closing of the merger.

New Dragonfly together with its wholly owned subsidiary, Dragonfly Energy Corp., is referred to hereinafter

as the “Company.”

New Dragonfly was the legal acquirer of Legacy Dragonfly in the merger, Legacy Dragonfly was deemed to be the accounting acquirer,

and the historical financial statements of Legacy Dragonfly became the basis for the historical financial statements of New

Dragonfly upon the closing of the merger.

New Dragonfly together with its wholly owned subsidiary, Dragonfly Energy Corp., is

referred to hereinafter as the “Company.”

the historical financial statements of Legacy Dragonfly became the historical financial statements of the Company upon the consummation

21 unchanged sentences

Unaudited interim results are not necessarily indicative of the results for the full fiscal year.

These financial statements should be

read along with the Annual Report filed of the Company for the annual period ended December 31, 2022.

The consolidated balance sheet

as of December 31, 2022 was derived from the audited consolidated financial statements as of and for the year then ended.

These condensed and consolidated financial

statements should be read along with the Annual Report filed of the Company for the annual period ended December 31, 2022.

The consolidated

balance sheet as of December 31, 2022 was derived from the audited consolidated financial statements as of and for the year then ended.

Energy Holdings Corp.

5 unchanged sentences

include any adjustments that might result from the outcome of this uncertainty.

the three months ended March 31, 2023 and 2022, the Company incurred loss from operations and had negative cash flow from operations.

As of March 31, 2023, the Company had $ 15,791 in cash and cash equivalents and working capital of $ 24,533 .

The Company’s ability

to achieve profitability and positive cash flow depends on its ability to increase revenue, contain its expenses and maintain compliance

the six months ended June 30, 2023 and 2022, the Company incurred loss from operations and had negative cash flow from operations.

of June 30, 2023, the Company had $ 32,952 in cash and working capital of $ 30,592 .

The Company’s ability to

achieve profitability and positive cash flow depends on its ability to increase revenue, contain its expenses and maintain compliance

with the financial covenants in its outstanding indebtedness agreements.

5 unchanged sentences

leverage ratio with respect to the minimum cash requirements under the Term Loan during the quarter ended March 31, 2023.

It is probable

that the Company will fail to meet these covenants within the next twelve months.

If the Company is unable to obtain a waiver or if the

Company is unable to comply with such covenants, the lenders have the right to accelerate the maturity of the Term Loan.

These conditions

raise substantial doubt about the Company’s ability to continue as a going concern.

While the Company

was in compliance with its covenants for the quarter ended June 30, 2023, it is probable that the Company will fail to meet these covenants

within the next twelve months.

If the Company is unable to obtain a waiver or if the Company is unable to comply with such covenants,

the lenders have the right to accelerate the maturity of the Term Loan.

These conditions raise substantial doubt about the Company’s

ability to continue as a going concern.

addition, the Company may need to raise additional debt and/or equity financings to fund our operations, strategic plans, and meet its

4 unchanged sentences

it will be able to raise additional equity, contain expenses, or increase revenue, and comply with the financial covenants under the

adopted accounting standards :

June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13,

Financial Instruments – Credit Losses (Topic 326):

Recently adopted accounting standards :

In June 2016, the Financial Accounting Standards Board

(“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic

Measurement of Credit Losses on Financial Instruments.

The FASB subsequently

issued amendments to ASU 2016-13, which have the same effective date and transition date of January 1, 2023.

These standards replace

the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measure at amortized cost

to be presented at the net amount expected to be collected.

The Company determined that this change does not have a material impact to

the financial statements or financial statement disclosures.

The FASB subsequently issued amendments to ASU 2016-13, which have the same

effective date and transition date of January 1, 2023.

These standards replace the existing incurred loss impairment model with an expected

credit loss model and requires a financial asset measure at amortized cost to be presented at the net amount expected to be collected.

The Company determined that this change does not have a material impact to the financial statements or financial statement disclosures.

issued accounting pronouncements :

August 2020, FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts

in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments.

ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible

instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s

The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed

to and settled in an entity’s own equity.

ASU 2020-06 amends the diluted earnings per share guidance, including the requirement

to use the if-converted method for all convertible instruments.

The amendments in this update will be effective for the Company on January

The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations

or cash flows.

were no recently adopted accounting standards that had a material impact on the Company’s financial statements.

There were no recently

issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements.

Energy Holdings Corp.

6 unchanged sentences

The Company has an allowance for doubtful accounts

as of March 31, 2023 and December 31, 2022 of $ 116 and $ 90 , respectively.

as of June 30, 2023 and December 31, 2022 of $ 131 and $ 90 , respectively.

(Note 4), which consist of raw materials and finished goods, are stated at the lower of cost (first in, first out) or net realizable

2 unchanged sentences

Based on historical and

projected sales volumes and anticipated selling prices, we established reserves.

projected sales volumes and anticipated selling prices, we establish reserves.

Inventory that is in excess of current and projected

2 unchanged sentences

are written down to net realizable value.

As of March 31, 2023 and December 31, 2022, no such reserves were necessary.

As of June 30, 2023 and December 31, 2022, no such reserves were necessary.

and Equipment

4 unchanged sentences

lives for owned property, or, for leasehold improvements, over the shorter of the asset’s useful life or term of the lease.

expense for the three months ended March 31, 2023 and 2022 was $ 297 and $ 192 , respectively.

The various classes of property and equipment

and estimated useful lives are as follows:

OF VARIOUS CLASSES OF PROPERTY AND EQUIPMENT

AND ESTIMATED USEFUL LIVES

furniture and equipment

and equipment

expense for the six months ended June 30, 2023 and 2022 was $ 593 and $ 389 , respectively.

Depreciation expense for the three months ended

June 30, 2023 and 2022 was $ 296 and $ 197 , respectively.

The various classes of property and equipment and estimated useful lives are

OF VARIOUS CLASSES OF PROPERTY AND EQUIPMENT AND ESTIMATED USEFUL LIVES

Office furniture and

Machinery and equipment

Leasehold improvements

Term of Lease

46 unchanged sentences

The Company recognizes these contract liabilities as sales after the revenue criteria are met.

As of March 31, 2023 and December

As of June 30, 2023 and December

31, 2022, the contract liability related to the Company’s customer deposits approximated $ 152 and $ 238 , respectively.

recognized $ 211 of contract liability pertaining to the year ended December 31, 2022 as of March 31, 2023.

The entire contract liability

balance of $ 434 as of January 1, 2022 was recognized as revenue during the three months ended March 31, 2022.

recognized $ 221 of the contract liability pertaining to the year ended December 31, 2022 during the six months ended June 30, 2023.

entire contract liability balance of $ 434 as of January 1, 2022 was recognized as revenue during the six months ended June 30, 2022.

Disaggregation

1 unchanged sentence

OF DISAGGREGATED REVENUES BY DISTRIBUTION CHANNEL

For the Three Months Ended

Original equipment manufacture

The Three Months Ended June 30,

The Six Months Ended June 30,

equipment manufacture

and handling fees paid by customers are recorded within net sales, with the related expenses recorded in cost of sales.

1 unchanged sentence

Shipping and handling costs associated

with outbound freight totaled $ 1,007 and $ 1,228 for the three months ended March 31, 2023 and 2022, respectively.

with outbound freight totaled $ 1,958 and $ 2,534 for the six months ended June 30, 2023 and 2022, respectively.

Shipping and handling

costs associated with outbound freight totaled $ 951 and $ 1,306 for the three months ended June 30, 2023 and 2022, respectively.

Company offers assurance type warranties from 5 to 10 years on its products.

9 unchanged sentences

The Company has assessed the costs of fulfilling its existing

assurance type warranties and has determined that the estimated outstanding warranty obligation on March 31, 2023 and December 31, 2022

assurance type warranties and has determined that the estimated outstanding warranty obligation on June 30, 2023 and December 31, 2022

to be $ 329 and $ 328 , respectively.

4 unchanged sentences

Concentrations

from one customer comprised approximately 50 % of accounts receivable as of March 31, 2023.

Receivables from three customers comprised

approximately 18 %, 10 % and 10 %, respectively, of accounts receivable as of December 31, 2022.

There are no other significant accounts

receivable concentration.

from one customer comprised approximately 26 % of revenue for the three months ended March 31, 2023.

There were no significant revenue

concentrations for the three months ended March 31, 2022.

to one vendor comprised approximately 67 % of accounts payables as of March 31, 2023.

Payables to one vendor comprised approximately 61 %

of accounts payables as of December 31, 2022.

the three months ended March 31, 2023, two vendors accounted for approximately 38 % and 10 %, respectively, of the Company’s total

For the three months ended March 31, 2022, one vendor accounted for approximately 34 % of the Company’s total purchases.

from two customers comprised approximately 22 % and 20 %, respectively, of accounts receivable as of June 30, 2023.

Receivables from three

customers comprised approximately 18 %, 10 % and 10 %, respectively, of accounts receivable as of December 31, 2022.

There are no other

significant accounts receivable concentration.

from one customer comprised approximately 26 % of revenue for the six months ended June 30, 2023.

One customer accounted for approximately

11 % of the Company’s total revenue for the six months ended June 30, 2022.

Sales from one customer comprised approximately 27 %

of revenue for the three months ended June 30, 2023.

One customer accounted for approximately 15 % of the Company’s total revenue

for the three months ended June 30, 2022.

to two vendors comprised approximately 56 % and 10 %, respectively, of accounts payables as of June 30, 2023.

Payables to one vendor comprised

approximately 61 % of accounts payables as of December 31, 2022.

the six months ended June 30, 2023, one vendor accounted for approximately 22 % of the Company’s total purchases.

For the six months

ended June 30, 2022, one vendor accounted for approximately 26 % of the Company’s total purchases.

For the three months ended June

30, 2023, one vendor accounted for approximately 10 % of the Company’s total purchases.

For the three months ended June 30, 2022,

two vendors accounted for approximately 17 % and 15 %, respectively, of the Company’s total purchases.

Company expenses advertising costs as they are incurred and are included in selling and marketing expenses..

Advertising expenses amounted

to $ 587 and $ 781 for the three months ended March 31, 2023, and 2022, respectively.

to $ 1,270 and $ 1,262 for the six months ended June 30, 2023 and 2022, respectively.

Advertising expenses amounted to $ 683 and $ 481 for

the three months ended June 30, 2023 and 2022, respectively.

Company accounts for stock-based compensation arrangements with employees and non-employee consultants using a fair value method which

6 unchanged sentences

Restricted stock unit awards are valued based on the closing trading value of the Company’s

common stock on the date of grant and then amortized on a straight-line basis over the requisite service period of the award.

measures equity-based compensation awards granted to non-employees at fair value as the awards vest and recognizes the resulting value

as compensation expense at each financial reporting period.

common stock, par value $ 0.0001 , per share (the “Common Stock”) on the date of grant and then amortized on a straight-line

basis over the requisite service period of the award.

The Company measures equity-based compensation awards granted to non-employees

at fair value as the awards vest and recognizes the resulting value as compensation expense at each financial reporting period.

the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, expected dividend

24 unchanged sentences

that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position.

has a liability of $ 128 and $ 128 as of March 31, 2023, and December 31, 2022, respectively, of uncertain tax positions.

The Company’s

accounting policy is to include penalties and interest related to income taxes if any, in selling, general and administrative expenses.

has a liability of $ 128 as

of June 30, 2023, and December 31, 2022 of uncertain tax positions.

The Company’s accounting policy is to include

penalties and interest related to income taxes if any, in selling, general and administrative expenses.

segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation

13 unchanged sentences

in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes between the following:

1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

2 inputs are inputs other than quoted prices included within Level 1 that are observable for a similar asset or liability, either

directly or indirectly.

3 inputs are unobservable inputs that reflect the Company’s own assumptions about the inputs that market participants would

use in pricing the asset or liability.

Level 1 inputs are quoted

prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are inputs

other than quoted prices included within Level 1 that are observable for a similar asset or liability, either directly or indirectly.

Level 3 inputs are unobservable

inputs that reflect the Company’s own assumptions about the inputs that market participants would use in pricing the asset

or liability.

assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

9 unchanged sentences

3 - Fair Value Measurements (Continued)

following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis

as of March 31, 2023:

SCHEDULE OF FAIR VALUE, ASSETS AND LIABILITIES

As of March 31, 2023

Warrant liability- Term Loan

Warrant liability- Private placement warrants

Total liabilities

following table presents assets and liabilities that were measured at fair value in the Condensed Consolidated Balance Sheets on a

recurring basis as of June 30, 2023:

OF FAIR VALUE, ASSETS AND LIABILITIES

of June 30, 2023

Warrant liability-

Warrant liability- June public

liability- Private placement warrants

following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis

as of December 31, 2022:

Carrying Amount

As of December 31, 2022

Warrant liability- Term Loan

Warrant liability- Private placement warrants

Total liabilities

carrying amounts of accounts receivable and accounts payable are considered level 1 and approximate fair value as of March 31, 2023 and

of December 31, 2022

Warrant liability-

liability- Private placement warrants

carrying amounts of accounts receivable and accounts payable are considered level 1 and approximate fair value as of June 30, 2023 and

December 31, 2022 because of the relatively short maturity of these instruments.

carrying value of the term loan as of March 31, 2023 and December 31, 2022 approximates fair value as the interest rate does not

differ significantly from the current market rates available to the Company for similar debt and is considered level 2.

carrying value of the term loan as of June 30, 2023 and December 31, 2022 approximates fair value as the interest rate does not differ

significantly from the current market rates available to the Company for similar debt and is considered level 2.

Energy Holdings Corp.

3 unchanged sentences

consists of the following:

March 31, 2023

December 31, 2022

Finished goods

Total inventory

5 - COMMITMENTS AND CONTINGENCIES

15 unchanged sentences

is expected to be within 2 years from the effective date.

As of March 31, 2023, the lease has not commenced as the Company does not have

As of June 30, 2023, the lease has not commenced as the Company does not have

control over the asset.

1 unchanged sentence

SCHEDULE OF TABLE REPRESENTING THE BREAKOUT OF THE OPERATING LEASES

March 31, 2023

Operating lease right-of-use assets

lease right-of-use assets

Short-term operating lease liabilities

Long-term operating lease liabilities

Total operating lease liabilities

operating lease liabilities

Weighted average remaining lease term

7 unchanged sentences

Leases (Continued)

March 31, 2023, the future minimum lease payments under these operating leases are as follows:

June 30, 2023, the future minimum lease payments under these operating leases are as follows:

SCHEDULE OF THE FUTURE MINIMUM LEASE PAYMENTS UNDER THE OPERATING LEASES

Fiscal Years Ending

December 31, 2024

1 unchanged sentence

December 31, 2026

Total lease payments

Less imputed interest

Total operating lease liabilities

lease payments

operating lease liabilities

(1) Represents

scheduled payments for the remaining nine-month period ending December 31, 2023.

scheduled payments for the remaining six-month period ending December 31, 2023

OF LEASE COST

The Three Months Ended

The Six Months Ended

Classification

March 31, 2023

March 31, 2022

Operating lease cost

4 unchanged sentences

General and administration

Operating lease cost

Selling and marketing

Total lease cost

and marketing

former holders of shares of Legacy Dragonfly common stock (including shares received as a result of the conversion of Legacy Dragonfly

26 unchanged sentences

A loss on extinguishment of $ 4,824 was recognized upon settlement.

During the three months ended

March 31, 2022, a total of $ 619 of interest expense was incurred under the debt.

During the six months ended

June 30, 2022, a total of $ 1,254 of interest expense was incurred under the debt.

Amortization of the debt issuance costs amounted to

$ 613 during the three months ended March 31, 2022.

$ 1,197 during the six months ended June 30, 2022.

During the three months ended June 30, 2022, a total of $ 635 of interest expense was

incurred under the debt.

Amortization of the debt issuance costs amounted to $ 584 during the three months ended June 30, 2022.

Energy Holdings Corp.

41 unchanged sentences

Loan Agreement (Continued)

the three months ended March 31, 2023, a total of $ 3,496 of interest expense was incurred under the debt.

Amortization of the debt issuance

costs amounted to $ 219 during the three months ended March 31, 2023.

The carrying balance of $ 20,699 on March 31, 2023 consisted of $ 75,000

in principal, plus $ 2,430 PIK interest, less $ 56,731 in unamortized debt discount related to the debt issuance costs.

the three and six months ended June 30, 2023, a total of $ 3,651 and $ 7,147 , respectively, of interest expense was incurred under the

Amortization of the debt issuance costs amounted to $ 401 and $ 620 , respectively, during the three and six months ended June 30,

carrying balance of $ 22,372 on June 30, 2023 consisted of $ 75,000 in principal, plus $ 3,702 Paid-in-Kind (PIK) interest, less $ 56,330 in unamortized

debt discount related to the debt issuance costs.

Senior Leverage Ratio

5 unchanged sentences

to exceed the ratio set forth opposite such period in the table below:

OF LEVERAGE RATION

Test Period Ending

Leverage Ratio

December 31, 2022 - March 31, 2023

June 30, 2023 - September 30, 2023

December 31, 2023 - March 31, 2024

June 30, 2024 - September 30, 2024

December 31, 2024 - March 31, 2025

June 30, 2025 and thereafter

OF LEVERAGE RATIO

Period Ending

31, 2022 - March 31, 2023

30, 2023 - September 30, 2023

31, 2023 - March 31, 2024

30, 2024 - September 30, 2024

31, 2024 - March 31, 2025

30, 2025 and thereafter

Company shall not permit their Liquidity (determined on a consolidated basis) to be less than $10,000 as of the last day of each fiscal

8 unchanged sentences

the level of capital expenditures is limited .

March 29, 2023, the Company obtained a waiver from Alter Domus (US) LLC, as administrative agent for the lenders (the “Administrative

Agent”) and the Term Loan Lenders of its failures to satisfy the fixed charge coverage ratio and maximum senior leverage ratio

with respect to the minimum cash requirements under the Term Loan during the quarter ended March 31, 2023.

As a result of the uncertainty

of maintaining compliance with financial covenants the Company has continued to classify the entire term loan balance within current

liabilities on the balance sheet.

Company was in compliance with its covenants as of June 30, 2023 and December 31, 2022.

During the three months ended March 31, 2023,

the Company determined it would fail to satisfy the fixed charge coverage ratio and maximum senior leverage ratio for the quarter.

March 29, 2023, the Company obtained a waiver from the Administrative Agent and the Term Loan Lenders of its failures to satisfy the

fixed charge coverage ratio and maximum senior leverage ratio with respect to the minimum cash requirements under the Term Loan during

the quarter ended March 31, 2023.

As a result of the uncertainty of maintaining compliance with financial covenants the Company has continued

to classify the entire term loan balance within current liabilities on the balance sheet..

Energy Holdings Corp.

2 unchanged sentences

6 - Debt (continued)

Debt Maturities

March 31, 2023, the future debt maturities, based on contractual principal payments are as follows:

SCHEDULE OF FUTURE DEBT MATURITIES

Future Debt Maturities

June 30, 2023, the future debt maturities are as follows:

OF FUTURE DEBT MATURITIES

For Year Ended December 31,

1 unchanged sentence

Unamortized debt issuance costs, noncurrent

Total carrying amount

carrying amount

Current portion of debt

Total long-term debt

long-term debt

(1) Represents

scheduled payments for the remaining nine-month period ending December 31, 2023

scheduled payments for the remaining six-month period ending December 31, 2023

7 - ASSET PURCHASE AGREEMENT

23 unchanged sentences

As a result, the Company recorded an accrual related

to the Earn Out in the amount of $ 1,147 and $ 782 as of March 31, 2023 and December 31, 2022.

to the Earn Out in the amount of $ 1,909 and $ 782 as of June 30, 2023 and December 31, 2022, respectively.

Energy Holdings Corp.

10 unchanged sentences

The COO shall have 12 months from the termination date to exercise outstanding options.

February 2023, the Company entered into an agreement with its former COO in which the ownership of a Company van was transferred to

the former COO in connection with his severance.

The Company accounted for the cost of the van as an employee bonus, resulting in $116 of general

and administrative expense for the current period.

February 2023, the Company entered into an agreement with its former COO in which the COO waived their rights to a transaction bonus

resulting from the merger transaction (Note 1) in lieu of a Company van.

The Company accounted for the cost of the van as an

employee bonus, resulting in $116 of general and administrative expense for the current period.

March 5, 2023, the Company entered into a convertible promissory note (the “Note”) with a board member in the amount of $ 1,000 ,

4 unchanged sentences

Amount and the Loan Fee on April 1, 2023 and April 4, 2023, respectively.

April 26, 2023, the Company entered into a separation and release of claims agreement with its Chief Legal Officer

As consideration for the CLO’s execution of the agreement, the Company agreed to pay the employee

payments equivalent to $ 720

for wages and benefits divided into 24 monthly payments commencing on June 1, 2023, and all outstanding equity-based compensation

awards to become fully vested and exercisable resulting in an expense of $ 76 .

The CLO shall have 3 months from the termination date to exercise outstanding options.

The three-month period ended on July 26, 2023 in which the options were not exercised

and the options were forfeited as a result.

Stock Warrants classified as Equity

16 unchanged sentences

from the Units, the close price of the Public Warrant price was used as the fair value of the Warrants as of each relevant date.

the quarter ended March 31, 2023, the Company received proceeds from public warrant exercises of $ 747 in exchange for 64,971 common shares.

the six months ended June 30, 2023, the Company received proceeds from public warrant exercises of $ 747 in exchange for 64,971 common

The Company did not receive any proceeds from public warrants during the three months ended June 30, 2023.

2023 Offering

connection with the entry into the underwriting agreement as further described in Note 10 of the financial statements, (the “June

2023 Offering”) the Company issued (i) underwriters warrants to purchase up to an aggregate of 570,250

shares of Common Stock (the “Underwriters’

Warrants”) which are exercisable upon issuance and will expire on June 20, 2028.

The initial exercise price of the Underwriters’

Warrants is $ 2.50

per share, which equals 125 %

of the per share public offering price in the June 2023 Offering and (ii) warrants to purchase up to 10,000,000

shares of Common Stock to the investors in the

offering together with shares of Common Stock (the “Investor Warrants”), at the combined public offering price of $ 2.00

per share of Common Stock and accompanying Warrant,

less underwriting discounts and commissions .

The Company also granted the underwriters a 45-day over-allotment option to purchase up

to an additional 1,500,000

shares of Common Stock and/or Investor Warrants

to purchase up to 1,500,000

shares of Common Stock at the public offering

price per security, less underwriting discounts and commissions.

The underwriters exercised its over-allotment option to purchase an

additional 1,405,000

shares of Common Stock and Investor Warrants

to purchase up to 1,405,000

shares of Common Stock.

The Company accounts

for the Investor Warrants issued in connection with the Offering in accordance with the guidance contained in ASC 815-40.

Such guidance

provides that because the Investor Warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as

This liability is subject to re-measurement at each balance sheet date.

With each such re-measurement, the warrant liabilities

will be adjusted to its current fair value, with the change in fair value recognized in the Company’s statement of operations.

The Company will reassess the classification at each balance sheet date.

It was determined that the Underwriters’ Warrants were

not precluded from equity treatment and have been accounted for as such.

OF UNDERWRITER WARRANTS

Common Stock Warrants

Warrants Outstanding, January 1, 2023

Warrants issued

Warrants Outstanding, June 30, 2023

There were no underwriter warrants issued,

exercised and outstanding from the period January 1, 2022 through June 30, 2022.

Energy Holdings Corp.

8 unchanged sentences

(i) will be exercisable either for cash or on a cashless basis

at the holders option and (ii) will not be redeemable by the Company, in either case as long as the Private Warrants are held by the

initial purchasers or any of their permitted transferees (as prescribed in the Subscription Agreement).

The Private Warrants may not

be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction

at the holders’ option and (ii) will not be redeemable by the Company, in either case as long as the Private Warrants are held

by the initial purchasers or any of their permitted transferees (as prescribed in the Subscription Agreement).

The Private Warrants may

not be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction

that would result in the effective economic disposition of, the Private Warrants (or any securities underlying the Private Warrants)

2 unchanged sentences

restriction for the remainder of the time period.

During the three months ended March 31, 2023, private placement warrant holders exercised

During the six months ended June 30, 2023, private placement warrant holders exercised

3,126,472 warrants on a cashless basis, with the Company agreeing to issue 1,100,000 shares of common stock in connection with such exercise.

There were 1,501,386 and 4,627,858 private warrants issued and outstanding as of March 31, 2023 and December 31, 2022, respectively.

The Company accounts for the Private Warrants issued in connection with the Initial Public Offering in accordance with the guidance contained

There were 1,501,386 and 4,627,858 private warrants issued and outstanding as of June 30, 2023 and December 31, 2022, respectively.

Company accounts for the Private Warrants issued in connection with the Initial Public Offering in accordance with the guidance contained

in ASC 815-40.

13 unchanged sentences

connection with the entry into the Term Loan Agreement, and as a required term and condition thereof, the Company issued (i) the penny

warrants to the Term Loan Lenders exercisable to purchase an aggregate of 2,593,056 shares (the “Penny Warrants”) and (ii)

the $10 warrants to issue warrants to the Term Loan Lenders exercisable to purchase an aggregate of 1,600,000 shares of common stock

at $ 10 per share (the “$10 Warrants” and, together with the Penny Warrants, the “Term Loan Warrants”).

Warrants were exercised on a cashless basis on October 10, 2022, with the Company issuing 457,142 shares of Common Stock in connection

warrants to the Term Loan Lenders exercisable to purchase an aggregate of 2,593,056

shares (the “Penny Warrants”)

and (ii) the $10 warrants to issue warrants to the Term Loan Lenders exercisable to purchase an aggregate of 1,600,000

shares of common stock at $ 10

per share (the “$10 Warrants”

and, together with the Penny Warrants, the “Term Loan Warrants”).

The $10 Warrants were exercised on a cashless basis on

October 10, 2022, with the Company issuing 457,142

shares of Common Stock in connection

with such exercise.

During the three months ended March 31, 2023, penny warrant holders exercised 1,250,000 warrants on a cashless basis,

with the Company agreeing to issue 1,248,294 shares of common stock in connection with such exercise.

The Company concluded the warrants

are not considered indexed to the Company’s stock and to be accounted for as liabilities under ASC 815.

As such, the estimated

fair value is recognized as a liability each reporting period, with changes in the fair value recognized within income each period.

During the three months ended June 30, 2023, penny warrant holders exercised 750,000

warrants on a cashless basis, with

the Company agreeing to issue 748,029

shares of common stock in connection

with such exercise.

The Company concluded the warrants are not considered indexed to the Company’s stock and to be accounted for

as liabilities under ASC 815.

As such, the estimated fair value is recognized as a liability each reporting period, with changes in the

fair value recognized within income each period.

Energy Holdings Corp.

5 unchanged sentences

FAIR VALUE WARRANTS

March 31, 2023

June 30, 2023

December 31, 2022

2 unchanged sentences

Dividend yield

Term (in years)

Risk-free rate

following table presents a roll-forward of the Company’s warrants from January 1, 2023 to March 31, 2023:

following table provides the significant inputs to the Black-Scholes method for the fair value of the June Offering Warrants:

June 30, 2023

June 20, 2023

(Initial Measurement)

Common stock price

Exercise price

Dividend yield

Term (in years)

Risk-free rate

following table presents a roll-forward of the Company’s warrants from January 1, 2023 to June 30, 2023:

OF ROLL FORWARD IN WARRANTS

Warrants Outstanding, January 1, 2023

Exercise of warrants

Stock Warrants

Outstanding, January 1, 2023

( 3,126,472 )

Warrants Outstanding, March 31, 2023

were no private warrants issued, exercised and outstanding from the period January 1, 2022 through March 31, 2022.

Warrants Outstanding, January 1, 2023

Exercise of warrants

Warrants Outstanding, March 31, 2023

were no public warrants issued, exercised and outstanding from the period January 1, 2022 through March 31, 2022.

Outstanding, June 30, 2023

were no private warrants issued, exercised and outstanding from the period January 1, 2022 through June 30, 2022.

Stock Warrants

Outstanding, January 1, 2023

Outstanding, June 30, 2023

were no public warrants issued, exercised and outstanding from the period January 1, 2022 through June 30, 2022.

Loan Warrants:

Warrants Outstanding, January 1, 2023

Exercise of warrants

Stock Warrants

Outstanding, January 1, 2023

( 2,000,000 )

Warrants Outstanding, March 31, 2023

were no term loan warrants issued, exercised and outstanding from the period January 1, 2022 through March 31, 2022.

Outstanding, June 30, 2023

were no term loan warrants issued, exercised and outstanding from the period January 1, 2022 through June 30, 2022.

Common Stock Warrants

Warrants Outstanding, January 1, 2023

Warrants issued

Warrants Outstanding, June 30, 2023

were no investor warrants issued, exercised and outstanding from the period January 1, 2022 through June 30, 2022.

following table presents a roll forward of the aggregate fair values of the Company’s warrant liabilities for which fair value

1 unchanged sentence

The only class of warrants that were determined to be Level 3 are the term loan warrants.

Warrant Liability

Balances, January

Issuance of warrants

Exercise of warrants

Change in fair value of warrants

Balances, March 31, 2023

in fair value of warrants

June 30, 2023

Energy Holdings Corp.

5 unchanged sentences

if and when declared by the Board of Directors subject to the rights of the preferred stockholders.

the three months ended March 31, 2023 and 2022, the Company had reserved shares of common stock for issuance as follows:

As of June 30, 2023 and December

31, 2022, there were 58,504,541 and 43,272,728 shares issued and outstanding.

No dividends on common stock had been declared by the Company.

the six months ended June 30, 2023 and 2022, the Company had reserved shares of common stock for issuance as follows:

SUMMARY OF RESERVED SHARES OF COMMON STOCK FOR ISSUANCE

March 31, 2023

March 31, 2022

Options issued and outstanding

Options issued and

Common stock outstanding

1 unchanged sentence

Earnout shares

Shares available for future issuance

available for future issuance

Equity Facility

6 unchanged sentences

Under the terms of the Purchase Agreement, the Company issued 98,500 shares pursuant to the Purchase Agreement with CCM LLC for aggregate

net proceeds to the Company of $ 597 from the period January 1, 2023 through March 31, 2023.

11 - STOCK-BASED COMPENSATION

compensation expense for options and RSUs totaling $ 4,487 and $ 288 was recognized in the Company’s consolidated statements of operations

for the three months ended March 31, 2023 and 2022, respectively.

Of the $ 4,487 of share-based compensation incurred during the three

months ended March 31, 2023, $ 36 is allocated to cost of goods sold, $ 29 to research and development, $ 856 to selling and marketing,

and $ 3,566 to general and administrative expenses.

Of the $ 288 of share-based compensation incurred during the three months ended March

31, 2022, $ 97 is allocated to cost of goods sold, $ 37 to research and development, $ 60 to selling and marketing, and $ 94 to general and

administrative expenses.

net proceeds to the Company of $ 671 from the period January 1, 2023 through June 30, 2023.

2023 Offering

the June 2023 Offering, the Company sold an aggregate of (i) 10,000,000 shares of its Common Stock and, (ii) accompanying Investor Warrants

to purchase up to 10,000,000 shares of Common Stock, at the combined public offering price of $ 2.00 per share and accompanying Investor

Warrant, less underwriting discounts and commissions, and (iii) the Underwriters’ Warrants.

In addition, the Company granted the

underwriters a 45-day over-allotment option to purchase up to an additional 1,500,000 shares of Common Stock and/or Investor Warrants

to purchase up to an aggregate of 1,500,000 shares of Common Stock at the public offering price per security, less underwriting discounts

and commissions.

The Investor Warrants are exercisable for five years from the closing date of the June 2023 Offering, have an exercise price of $ 2.00

per share and are immediately exercisable.

In the event of certain fundamental transactions, holders of the Investor Warrants will have

the right to receive the Black Scholes Value (as defined in the Investor Warrants) of their Investor Warrants calculated pursuant to

the formula set forth in the Investor Warrants, payable either in cash or in the same type or form of consideration that is being offered

and being paid to the holders of Common Stock.

The Underwriters’ Warrants are exercisable upon issuance at an exercise price of

$ 2.50 per share and will expire on June 20, 2028 .

Company granted the underwriters a 45-day over-allotment option to purchase up to an additional 1,500,000 shares of Common Stock and/or

Warrants to purchase up to an aggregate of 1,500,000 shares of Common Stock at the public offering price per security, less underwriting

discounts and commissions, of which the underwriters exercised for 1,405,000 shares of Common Stock and Investor Warrants to purchase

up to 1,405,000 shares of Common Stock and the remaining was not exercised within the 45-day window.

Company received gross proceeds of $ 22,810

and incurred $ 2,074

of offering related costs.

The gross proceeds were first allocated to the liability classified warrants based upon the transaction

date fair value and then to the equity classified warrants with the residual allocated to the common shares.

The offering related

costs were allocated based on the relative fair value of all instruments, of which $ 1,169

was accounted for as a reduction of additional-paid-in-capital and $ 905

was recorded within general and administrative expenses.

The Company accounted for the investor warrants issued in connection with

the Public Offering and the exercise of the underwriters’ over-allotment option in accordance with the guidance contained in

Such guidance provides that the warrants described above are precluded from equity classification.

The fair value of the

warrants were recorded as a liability in the amount of $ 13,762

on issuance and are being fair valued at each reporting period.

Energy Holdings Corp.

1 unchanged sentence

thousands, except share and per share data)

11 - STOCK-BASED COMPENSATION (CONTINUED)

11 - STOCK-BASED COMPENSATION

compensation expense for options and RSUs totaling $ 5,441

was recognized in the Company’s

consolidated statements of operations for the six months ended June 30, 2023 and 2022, respectively.

Share-based compensation expense

for options and RSUs totaling $ 954

was recognized in the Company’s

consolidated statements of operations for the three months ended June 30, 2023 and 2022, respectively.

compensation for the six months ended June 30, 2023 and 2022 was allocated as follows:

OF STOCK BASED COMPENSATION

Cost of goods sold

Research and development

Selling and marketing

General and administrative expense

compensation for the three months ended June 30, 2023 and 2022 was allocated as follows:

Cost of goods sold

Research and development

Selling and marketing

General and administrative expense

summary of the Company’s option activity and related information follows:

3 unchanged sentences

Weighted-Average

Weighted-Average Remaining Contractual Life (in years)

Grant Date Fair Value

Weighted-Average

Remaining Contractual Life

intrinsic value

2 unchanged sentences

Options forfeited

Options exercised

Balances, March 31, 2022

Balances, June 30, 2022

Balances, January 1, 2023

1 unchanged sentence

Options forfeited

Options exercised

Balances, March 31, 2023

At March 31, 2023

June 30, 2023

At June 30, 2023

Vested and Exercisable

Vested and expected to vest

(1) Number of options

and weighted average exercise price has been adjusted to reflect the exchange of Legacy Dragonfly’s stock options for New Dragonfly

stock options at an exchange ratio of approximately 1.182 as a result of the merger.

October 7, 2022, the Company granted 180,000 restricted stock units under the 2022 plan which vest one year from the grant date.

fair value of the restricted stock units on the date of grant was $ 2,520 , which is recognized as compensation expense over the requisite

service period based on the value of the underlying shares on the date of grant.

On February 10, 2023, the Company granted 461,998 restricted

stock units under the 2022 plan which vest immediately.

The fair value of the restricted stock units on the date of grant was $ 3,464

and was recorded as compensation expense.

of options and weighted average exercise price has been adjusted to reflect the exchange of Legacy Dragonfly’s stock options for

New Dragonfly stock options at an exchange ratio of approximately 1.182 as a result of the merger.

See Note 1 for additional information.

October 7, 2022, the Company granted 180,000

restricted stock units under the 2022 plan which vest one year from the grant date.

The fair value of the restricted stock units on

the date of grant was $ 2,520 ,

which is recognized as compensation expense over the requisite service period based on the value of the underlying shares on the

date of grant.

On February 10, 2023, the Company granted 461,998

restricted stock units under the 2022 plan which vested immediately.

The fair value of the restricted stock units on the date of

grant was $ 3,464

and was recorded as compensation expense during the six months ended June 30, 2023.

During the first six months of 2023, the Company

granted an additional 28,000

restricted stock units which have not vested.

The fair value of the 28,000

unvested restricted stock units was $ 105

and an expense of $ 7

was recorded during the six months ended June 30, 2023.

Energy Holdings Corp.

5 unchanged sentences

The following table presents the restricted stock units activity for

the three months ended March 31, 2023:

the six months ended June 30, 2023:

OF RESTRICTED STOCK UNITS ACTIVITY

1 unchanged sentence

Fair Market Value

Unvested shares at January 1, 2023

Unvested shares

at January 1, 2023

Granted and unvested

Unvested shares, March 31, 2023

Vested as of March 31, 2023

of March 31, 2023, there were 4,319,309 shares of unissued authorized and available for future awards under the 2022 Equity Incentive

shares, June 30, 2023

Vested and exercisable as of

June 30, 2023

of June 30, 2023, there were 4,434,916 shares of unissued authorized and available for future awards under the 2022 Equity Incentive

Plan and Employee Stock Purchase Plan.

12 - EARNINGS (LOSS) PER SHARE

(Loss) per Common Share

following table sets forth the information needed to compute basic and diluted earnings (loss) per share for the three months ended March

31, 2023 and 2022:

SCHEDULE OF INFORMATION NEEDED TO COMPUTE BASIC AND DILUTED EARNINGS PER SHARE

March 31, 2023

March 31, 2022

Basic Earnings (Loss) per common share:

Net Income (Loss) available to common shareholders

Weighted average number of common shares-basic

Earnings (Loss) per share, basic

Diluted Earnings (Loss) per common share:

Net Income (Loss) available to common shareholders

Weighted average number of common shares-basic

Dilutive effect related to stock options and warrants

Weighted average diluted shares outstanding

Earnings (Loss) per share, diluted

following table sets forth the number of potential shares of common stock that have been excluded from diluted net income per share net

income (loss) per share because their effect was anti-dilutive:

12 – SUPPLIER AGREEMENT

May 9, 2023, Ioneer Rhyolite Ridge LLC (“Seller”), an emerging lithium-boron producer, and the Company announced a commercial

offtake agreement partnership whereby the Seller is developing the Rhyolite Ridge Project which, once completed, is expected to produce lithium carbonate, and boric acid (the “Project”).

Beginning on the supply start date which is the

date the Seller notifies the Company that the project is fully completed and commissioned in accordance with the engineering, procurement

and construction contract, and for the duration of the supply period, the Company shall purchase and receive product from Seller, on

the terms and conditions of the agreement.

The agreement calls for a minimum annual purchase requirement.

The agreement becomes effective when the seller has

informed the Company that the seller has made a positive financial investment decision in respect of the project.

13 - LOSS PER SHARE

Company follows the two -class method when computing net loss per share as the Company has issued warrants that meet the definition

of participating securities.

The two -class method determines net loss per share for each class of common and participating securities

according to dividends declared or accumulated and participation rights in undistributed earnings.

The two -class method requires

income available to common stockholders for the period to be allocated between common and participating securities based upon their respective

rights to receive dividends as if all income for the period had been distributed.

net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common

shares outstanding.

In addition, in computing the dilutive effect of convertible securities, the numerator is adjusted to add back any

convertible preferred dividends.

Diluted net loss per common share is computed by dividing net loss attributable to common stockholders

by the weighted average number of common shares that would have been outstanding during the period assuming the issuance of common shares

for all potential dilutive common shares outstanding.

Potential common shares consist of potential future exercises of outstanding stock

options and common stock warrants.

Because the inclusion of potential common shares would be anti-dilutive for all periods presented,

they have been excluded from the calculation.

Company’s common stock warrants contractually entitle the holders of such securities to participate in dividends but do not contractually

require the holders of such securities to participate in losses of the Company.

Accordingly, in periods in which the Company reports

a net loss, such losses are not allocated to such participating securities.

In periods in which the Company reports

a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net

loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued

if their effect is anti-dilutive.

The Company reported a net loss attributable to common stockholders for the three

and six months ended June 30, 2023 and 2022.

The following table sets forth the information needed to compute basic

and diluted loss per share for the three and six months ended June 30, 2023 and 2022:

OF INFORMATION NEEDED TO COMPUTER BASIC AND DILUTED EARNINGS PER SHARE

For The Three Months

Ended June 30,

For The Six Months

Ended June 30,

Net Loss attributable to common stockholders

Weighted average common shares outstanding used to compute net loss per share, basic and diluted

Weighted average common shares outstanding,basic

Net loss per share of common stock, basic and diluted

Net loss per share of common stock, basic

Energy Holdings Corp.

to Unaudited Condensed Consolidated Financial Statements

thousands, except share and per share data)

following table sets forth the number of potential shares of common stock that have been excluded from diluted net loss per share because

their effect was anti-dilutive:

SCHEDULE OF POTENTIAL SHARES OF COMMON STOCK EXCLUDED FROM DILUTED NET (LOSS) INCOME PER SHARE

March 31, 2023

March 31, 2022

Restricted stock units

Weighted average number of common shares-basic

Weighted average number

of common shares-basic

14 – INCOME TAXES

2 unchanged sentences

The Company recorded an income tax expense (benefit)

of $ 0 and ($ 527 ) during the three months ended March 31, 2023 and 2022, respectively.

of $ 0 and ($ 814 ) during the six months ended June 30, 2023 and 2022, respectively.

The effective tax rate differs from the U.S.

7 unchanged sentences

15 – SUBSEQUENT EVENTS

April 1, 2023 the Company paid the $ 1,000 Principal Amount on the Note previously issued to Brian Nelson on March 5, 2023.

Upon execution

of the Note and funding of the Principal Amount, a payment of the $ 100 Loan Fee, was fully earned as of the date of the note and was

due and paid in full in cash on April 4, 2023.

April 26, 2023 (the “Separation Date”), the Company’s Chief Legal Officer’s employment with the Company

ended and her employment agreement was deemed terminated as of that date by the Company without cause for purposes of determining severance thereunder.

Under the terms of her employment agreement, Ms.

Harvey is entitled to receive cash severance equal to $ 334,000 payable in 52 biweekly

installments commencing 30 days from the Separation Date.

Harvey’s outstanding options granted by the Company fully vested,

and are exercisable for three (3) months following the Separation Date.

to the period ending June 30, 2023, and through August 8, 2023, 273,100 investor warrants were exercised for net proceeds of

July 2023, upon a request from the Company’s lenders under the term loan agreement, the Company repaid $ 5,275

of principal to satisfy a portion

of its outstanding principal under the term loan agreement.

July 6, 2023, the Company opened a 12-month time deposit account at Wells Fargo Commercial Banking amounting to $ 315 with fixed interest

rate of 2 %, payable on a monthly basis.

The time deposit account has a current maturity date of July 6, 2024 and is subject to automatic

annual renewal.

In July of 2023, the Company was notified by its largest

RV OEM customer that, due to weaker demand for its products and their subsequent focus on reducing costs, it would no longer install the

Company’s storage solutions as standard equipment, but rather return to offering those solutions as an option to dealers and consumers.

While this customer is not moving to a different solution or competitor, the Company expects this change in strategy to have a material

limiting effect on the Company’s revenue throughout the remainder of 2023.

On August 20, 2023, upon mutual agreement between

the Company and Mr.

Marchetti, Mr.

Marchetti resigned from his position as the Company’s Chief Financial Officer.

will continue in the role of Senior Vice President, Operations.

In connection with Mr.

Marchetti’s resignation, on August 20, 2023,

the Board appointed Denis Phares, the Company’s President, Chief Executive Officer, and Chairman of the Board, to succeed Mr.

as the Company’s interim Chief Financial Officer.

Phares will continue his duties as President, Chief Executive Officer, and

Chairman of the Board.

The Company intends to commence a search for a full time Chief Financial Officer.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements