DFLIW filing — read by section

UNITED
STATES 

 SECURITIES
AND EXCHANGE COMMISSION 

 Washington,
D.C. 20549 

 FORM
 10-K 

 (Mark
One) 

 ☒ 
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

 For
the fiscal year ended December 31 , 2025 

 OR 

 ☐ 
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

 For
the transition period from _______ to _______ 

 Commission
file number 001-40730 

 DRAGONFLY
ENERGY HOLDINGS CORP. 

 (Exact
name of registrant as specified in its charter) 

 Nevada 
 
 85-1873463 

 (State
 or other jurisdiction 

 of
 incorporation or organization) 
 
 (I.R.S.
 Employer 

 Identification
 No.) 
 
 12915
 Old Virgina Rd. 
 
 Reno ,
 Nevada 
 
 89521 

 (Address
 of Principal Executive Offices) 
 
 (Zip
 Code) 

 (775) 
 622-3448 

 Registrant’s
telephone number, including area code 

 Securities
registered pursuant to Section 12(b) of the Act: 

 Title
 of each class 
 
 Trading
 Symbol(s) 
 
 Name
 of each exchange on which registered 

 Common
 stock, par value $0.0001 per share 
 
 DFLI 
 
 The
 Nasdaq Capital Market 

 Redeemable
 Warrants, exercisable for common stock 
 
 DFLIW 
 
 The
 Nasdaq Capital Market 

 Securities
registered pursuant to Section 12(g) of the Act: None . 

 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ 

 Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ 

 Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ 

 Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
 Yes ☒ No ☐ 

 Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. (Check one): 

 If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

 Emerging
 growth company 
 ☒ 

 Large
 accelerated filer 
 ☐ 
 
 Accelerated
 filer 
 ☐ 

 Non-accelerated
 filer 
 ☒ 
 
 Smaller
 reporting company 
 ☒ 

 Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐ 

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued statements. ☐ 

 Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to Section 240.10D-1(b). ☐ 

 Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ 

 The
aggregate market value of voting stock held by non-affiliates of the Registrant on June 30, 2025, based on the closing price of $1.64
for shares of the registrant’s common stock as reported by the Nasdaq Capital Market, was approximately $ 5.8 million. 

 As
of March 26, 2026, there were 12,148,783 shares of the registrant’s common stock, par value $ 0.0001 per share, issued and outstanding. 

 Documents
incorporated by reference: 

 None . 

 TABLE
 OF CONTENTS 
 
 Page 

 Part I 
 1 

 Item 1. Business 
 1 

 Item 1A. Risk Factors 
 20 

 Item 1B. Unresolved Staff Comments 
 46 

 Item 1C. Cybersecurity 
 46 

 Item 2. Properties 
 47 

 Item 3. Legal Proceedings 
 47 

 Item 4. Mine Safety Disclosures 
 47 

 Part II 
 48 

 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 
 48 

 Item 6. [Reserved] 
 48 

 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 
 48 

 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 
 66 

 Item 8. Financial Statements and Supplementary Data 
 66 

 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
 66 

 Item 9A. Controls and Procedures 
 66 

 Item 9B. Other Information 
 66 

 Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections 
 66 

 Part III 
 67 

 Item 10. Directors, Executive Officers and Corporate Governance 
 67 

 Item 11. Executive Compensation 
 71 

 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 
 75 

 Item 13. Certain Relationships and Related Transactions, and Director Independence 
 78 

 Item 14. Principal Accountant Fees and Services 
 80 

 Part IV 
 81 

 Item 15. Exhibit and Financial Statement Schedules 
 81 

 Item 16. Form 10-K Summary 
 85 

 SIGNATURES 
 86 

 On
December 18, 2025, we effected a 1-for-10 reverse stock split of our outstanding shares of common stock. Unless specifically provided
otherwise herein, all share and per share information in this Annual Report on Form 10-K has been adjusted to reflect the reverse stock
split. 

 i 

 CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS 

 This
Annual Report on Form 10-K contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended (the “ Securities Act ”),
and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements with respect to our
beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance, and involve
known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance
or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking
statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can
identify these forward-looking statements through our use of words such as “may,” “can,” “anticipate,”
“assume,” “should,” “indicate,” “would,” “believe,” “contemplate,”
“expect,” “seek,” “estimate,” “continue,” “plan,” “point to,”
“project,” “predict,” “could,” “intend,” “target,” “potential”
and other similar words and expressions of the future. 

 There
are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking
statement made by us. These factors include, but are not limited to: 

 ● 
 our
 ability to service our outstanding indebtedness and comply with the financial covenants in our loan agreement, the failure of which
 could allow our lenders to accelerate payment under our loan agreement, which would have a material adverse effect on our ability
 to operate and could require us, among other things, to reduce operations, sell off our assets, seek the protection of bankruptcy
 courts or shut down our operations and dissolve; 

 ● 
 the
 potential impact of the conversion and the terms of our outstanding Series B Convertible Stock (the “ Series B Preferred
 Stock ”) on the market price of our common stock and our ability to redeem and make dividend payments with respect to our
 Series B Preferred Stock; 

 ● 
 our
 ability to raise additional capital to fund our operations; 

 ● 
 our
 ability to successfully increase market penetration into target markets; 

 ● 
 our
 ability to maintain the listing of our common stock and public warrants on the Nasdaq Capital Market; 

 ● 
 the
 addressable markets that we intend to target do not grow as expected; 

 ● 
 the
 potential for events or circumstances that result in our failure to timely achieve the anticipated benefits of our customer arrangements; 

 ● 
 our
 ability to generate revenue from future product sales in our existing markets or new markets that we enter, including the trucking
 and industrials markets, and our ability to achieve and maintain profitability; 

 ● 
 the
 loss of any members of our senior management team or other key personnel; 

 ● 
 the
 loss of any relationships with key suppliers, including suppliers in China; 

 ● 
 the
 loss of any relationships with key customers; 

 ● 
 our
 ability to protect our patents and other intellectual property; 

 ● 
 our
 ability to engage target customers and successfully retain these customers for future orders; 

 ● 
 the
 failure to successfully optimize solid-state cells or to produce commercially viable solid-state cells in a timely manner or at all,
 or to scale to mass production; 

 ● 
 the
 failure to produce lithium battery cells in the United States in a timely manner or at all, or to scale to mass production; 

 ● 
 the outcome of pending litigation and potential product liability claims; 

 ● 
 the
 failure to timely achieve the anticipated benefits of our licensing arrangement with Stryten Energy LLC (“ Stryten ”); 

 ● 
 changes
 in applicable laws or regulations, 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; 

 ● 
 the
 possibility that we may be adversely affected by other economic, business and/or competitive factors (including an economic slowdown
 or inflationary pressures); 

 ● 
 our
 ability to sell the desired amounts of shares of common stock at desired prices under our committed equity facility; 

 ● 
 the
 accuracy of our projections and estimates regarding our expenses, capital requirements, cash utilization, and need for additional
 financing; 

 ● 
 developments
 relating to our competitors and our industry; 

 ● 
 the
 reliance on two suppliers for our lithium iron phosphate cells and a single supplier for the manufacture of our battery management
 system; 

 ● 
 our
 current dependence on one manufacturing facility; and 

 ● 
 the
 potential impact of global and macroeconomic conditions, including economic, political and social instability, including the Russia-Ukraine
 conflict, the India-Pakistan conflict, Hamas’ attack on Israel and the Iranian conflict, and their effects on our operations. 

 The
foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or
risk factors that we are faced with that may cause our actual results to differ from those anticipated in such forward-looking statements.
Please see “ Part I-Item 1A-Risk Factors ” for additional risks which could adversely impact our business and financial
performance. 

 All
forward-looking statements are expressly qualified in their entirety by this cautionary notice. You are cautioned not to place undue
reliance on any forward looking statements, which speak only as of the date of this report or the date of the document incorporated by
reference into this report. We have no obligation, and expressly disclaims any obligation, to update, revise or correct any of the forward-looking
statements, whether as a result of new information, future events or otherwise. We have expressed our expectations, beliefs and projections
in good faith and believe they have a reasonable basis. However, we cannot assure you that our expectations, beliefs or projections will
result or be achieved or accomplished. 

 ii 

 Part
I 

 Item
1. Business 

 All
references in this report to “Dragonfly,” the “Company,” “we,” “us,” or “our”
mean Dragonfly Energy Holdings Corp. and its subsidiaries unless stated otherwise or the context otherwise indicates. 

 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. Our goal is to develop technology to deliver
environmentally impactful solutions for energy storage to everyone globally. We believe that the innovative design of our lithium-ion
batteries is ideally suited for the demands of modern customers who rely on consumer electronics, connected devices and smart appliances
that require continuous, reliable electricity, regardless of location. 

 Our
deep cycle lithium iron phosphate (“ LFP ”) batteries provide numerous advantages compared to incumbent products, such
as lead-acid batteries. LFP batteries are non-toxic and environmentally friendly, do not rely on scarce or controversial metals and are
a highly cost-effective storage solution. LFP batteries use lithium iron phosphate (“ LiFePO4 ”) as the cathode material
for lithium-ion cells rather than nickel or cobalt. Although the energy density of LFP batteries is lower, they have a longer cycle life
and experience a slower rate of capacity loss. LFP is also intrinsically safer than sulfide gases due to its thermal and chemical stability,
meaning our LFP batteries are less flammable than alternative products. As we develop our proprietary solid-state cell technology, we
believe our use of LFP will continue to provide significant advantages over the lithium-ion technology in development by most other companies
that still incorporate less stable components in their chemistries (such as sulfide gases, which are chemically unstable and form hydrogen
sulfide when exposed to air). 

 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. 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. 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. 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. 

 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. 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. 

 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. 

 Our
innovative battery products have contributed to the ongoing transition from traditional lead-acid batteries to lithium-based energy storage
solutions. 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. 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. 
 Market
 Diversification: Expanding into adjacent markets, including marine, industrial, and heavy-duty trucking applications, where demand
 for reliable, long-life energy storage continues to grow. 

 3. 
 Distributor
 and Dealer Engagement: Strengthening relationships with distributors and dealers to support broader market access and customer
 reach across both consumer and commercial segments. 

 4. 
 System-Level
 Product Expansion: Expanding our portfolio of integrated power system components, including power conversion, monitoring, and
 control solutions, to deliver complete energy storage systems. 

 5. 
 DTC
 Channel Optimization: Maintaining a targeted DTC presence to support brand visibility, customer education, and aftermarket sales,
 while reducing reliance on this channel as a primary growth driver. 

 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 ”). 

 For
the year ended December 31, 2025, we experienced a return to revenue growth following the market correction that affected our end markets
in 2024. This improvement was driven primarily by increased adoption of our products by OEM customers, supported by modest growth in
underlying RV market activity and expanded integration of our products across additional OEM models and configurations. OEM adoption
continued to shift toward higher-content, non-entry-level platforms, which are more closely aligned with our product offerings. 

 Macroeconomic
factors, including persistent inflation, elevated interest rates, and reduced consumer confidence, continued to impact discretionary
spending and direct-to-consumer demand during 2025. As a result, demand within our DTC channels remained pressured, particularly within
price-sensitive segments. Despite these headwinds, OEM sales represented a growing portion of our revenue mix, reflecting deeper penetration
within existing OEM relationships and continued program expansion. 

 In
addition to RV OEM growth, we continued to expand our presence in industrial applications and the heavy-duty trucking market. Within
these markets, customers progressed from initial evaluations and pilot programs toward broader adoption, contributing to increased system
deployments and revenue diversification. 

 In
2026, we expect continued growth to be driven by expanded adoption within our existing customer base, with a focus on OEM customers,
including increased system content per unit, broader deployment of complementary power system components, and continued penetration of
premium product platforms. We also anticipate further growth in our industrial and heavy-duty trucking markets as customer adoption expands
and additional use cases transition from evaluation to commercial deployment. 

 We
offer a growing portfolio of energy storage products and power system components under the Battle Born brand, with battery product lines
differentiated by form factor, capacity, and application requirements. Our battery systems incorporate advanced features such as advanced
battery management, integrated heating capability for cold-temperature operation, and system-level communication and monitoring enabled
through our Dragonfly IntelLigence technology. 

 In
addition to our battery products, we offer a range of complementary power system components, including charging, power conversion, monitoring,
and control solutions, which enable customers to deploy complete and integrated energy storage systems. These components include both
Battle Born-branded products and select third-party components that meet our performance and quality standards. 

 We
also continue to leverage our expertise in alternator charging and power management as a result of our prior acquisition of the Wakespeed
assets, which enables us to integrate advanced alternator regulation and charging control into the systems we design and support. This
system-level capability allows us to address more complex power requirements across mobile and industrial applications. 

 2 

 Our
battery packs are designed and assembled in-house in the United States. In November 2024, we relocated from our 99,000 square foot facility
in Reno, Nevada to our new 390,240 square foot facility also in Reno, Nevada, which has allowed us to increase our production capacity
and gives us the ability to increase sales to existing customers and penetrate new markets. Our 390,240 square foot facility provides
a streamlined, partially autonomous production process for our current batteries, which comprises module assembly and battery assembly,
with the availability to expand the number of lines to handle increased volumes and the additional battery modules we intend to introduce
in the near future. 

 Through
our Battle Born and Wakespeed brands, we serve several core end markets, including recreational vehicles, marine vessels, and other mobile
and stationary power applications. In addition to these core markets, we are expanding our presence in trucking, including heavy-duty
trucks and work truck applications, as well as industrial markets such as oil and gas and other infrastructure-related uses. 

 Across
these markets, our products are designed to replace traditional lead-acid batteries with lithium-based energy storage solutions that
deliver longer service life, improved safety, and more consistent power performance. Our Battle Born portfolio is engineered to support
reliable, long-duration power in applications requiring dependable operation under demanding conditions. 

 We
execute a multi-channel go-to-market strategy that leverages OEM relationships, industry education, and system-level expertise to support
both consumer and commercial sales. Our OEM presence and longstanding partnerships serve as a foundational channel for product adoption,
while thought leadership and technical education help drive broader market awareness and demand. 

 We
maintain an extensive digital presence focused on education and system design, including technical documentation, instructional content,
and search-optimized resources intended to inform customers and support purchasing decisions across both e-commerce and B2B channels.
These efforts are complemented by targeted digital advertising initiatives designed to reach high-intent customers and support demand
generation in priority markets. 

 We
also work closely with dealer and distributor partners to extend market reach through in-store point-of-sale materials, product training,
and technical support. Our sales organization is relationship-focused, emphasizing long-term customer engagement built around product
quality, system integration expertise, and high levels of technical and post-sale support. 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. These
solutions have been adopted as factory options, demonstrating their value proposition for truck fleets seeking to: 

 ● 
 Reduce
 diesel fuel costs: our technology delivers significant fuel savings, offering a rapid return on investment. 

 ● 
 Comply
 with anti-idling regulations: Lithium-ion batteries enable efficient power management eliminating the need for long haul truck drivers
 to idle, thus aligning with increasingly stringent regulations. 

 ● 
 Enhance
 sustainability efforts: Transitioning to long lasting and greener lithium-ion solutions contributes to improved environmental impact. 

 This
strategic approach has led to expanded adoption of our products by large fleet operators, including Highway Transport, Stevens Transport,
and Werner Enterprises, as these customers have progressed from initial evaluations to broader system deployments. In parallel, we continue
to engage in pilot programs with additional fleets, which remain an important driver of future customer adoption and expansion opportunities.
We also support fleet adoption through industry collaboration and thought leadership, including co-authoring a technical whitepaper with
PACCAR focused on electrification and energy storage applications in heavy-duty trucking. 

 3 

 To
augment our core lithium-ion battery pack business, we rely on our research and development department. The team has successfully developed
innovative manufacturing processes for dry-electrode manufacturing of lithium-ion cells, and continues development efforts relating to
next-generation solid-state technology. Since our inception, we have built a comprehensive patent portfolio around our proprietary dry-electrode
battery manufacturing process, which eliminates the use of harmful solvents and energy-intensive drying ovens compared to traditional
methods. This translates to significant environmental and cost benefits, including reduced energy consumption, smaller space requirements,
and a lower carbon footprint. 

 Moreover,
our solid-state technology in development removes the need for a liquid electrolyte, thereby addressing safety concerns related to flammability.
Our unique competitive edge lies in the combination of solid-state technology with its scalable dry-electrode manufacturing process.
This enables the rapid production of cells having an intercalation anode (like graphite or silicon), unlike many competitors reliant
on less stable lithium metal anodes. We believe this design offers superior cyclability and safety, serving as a key differentiator in
the energy storage market. 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. Since the introduction of the absorbed
glass mat (“ AGM ”) lead-acid battery in the mid-1970s, the technological advancements in lead-acid battery technology
have been limited. LFP batteries have numerous advantages over the incumbent lead-acid batteries used in today’s markets: 

 ● 
 Environmentally
 Friendly, Socially Responsible and Safer. Lead-acid batteries that are not recycled or disposed of properly are extremely
 toxic and can cause areas of poisonous groundwater and lead buildups, impacting both humans and the environment. Research by EcoMENA
 shows that a single lead-acid battery disposed of incorrectly into a municipal solid waste collection system could contaminate 25
 tonnes of municipal solid waste and prevent recovery of organic resources due to high lead levels. Lithium-ion batteries, specifically
 LFP batteries, have no toxic elements, offering a much safer environmental alternative to lead-acid batteries. LFP batteries also
 do not rely on controversial elements such as cobalt as part of their chemistry. Compared to lead-acid batteries, there is no concern
 of “off-gassing,” or the emission of noxious gases, for lithium-ion batteries, and therefore no need to take into consideration
 required ventilation or off-gas related fire risk when installing or recharging our LFP batteries. 

 ● 
 Longer
 Lifespan. Lithium-ion batteries have longer lifecycles compared to lead-acid batteries. LFP batteries are able to cycle (i.e.,
 discharge and charge) 3,000 to 5,000 times before hitting the 80% capacity mark. Comparatively, lead-acid batteries degrade quickly,
 only cycling 300-500 times before hitting 50% of their original capacity. Our third-party validated internal research suggests that
 if a typical AGM lead-acid battery and our LFP battery were cycled once every day, the AGM battery and our LFP battery would have
 a respective lifespan of 1.98 years and 19.18 years before reaching 80% depth of discharge (i.e., 80% of our battery would have been
 discharged relative to the overall capacity of the battery in that lifespan). In many storage applications, lithium-ion batteries
 have a lifespan exceeding the lifetime of the project with very limited maintenance requirements, compared to lead-acid batteries,
 which have a one- to two-year useful life in most applications. 

 ● 
 Power
 and Performance. As new technologies evolve and people consume more electricity, the importance of battery power and performance
 increases. Compared to lead-acid batteries, lithium-ion batteries can discharge power at a higher voltage and more consistently through
 the discharge cycle (i.e., until they are 100% discharged) while utilizing a smaller physical space and weighing less. In addition,
 unlike lead-acid batteries, lithium-ion batteries can be discharged below 50% capacity without causing irreparable harm to the battery.
 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. However, due to new advancements in energy density
 (i.e., the amount of energy stored by mass volume) and charge/discharge rates, lithium-ion batteries now significantly outperform
 traditional lead-acid batteries. LFP batteries currently charge five times faster than their lead-acid counterparts, with even faster
 charging rates expected for the next generation of lithium-ion cells. With the appropriate battery management system, lithium-ion
 batteries can be charged in cold temperatures, something lead-acid batteries are unable to do, resulting in two to three times more
 power delivered. 

 ● 
 Maintenance-Free.
 LFP batteries provide the benefit of being a maintenance-free option compared to lead-acid batteries. Unlike lead-acid batteries
 which have no battery management system to regulate current flow and charging rates, all our LFP battery packs include a proprietary
 battery management system that regulates current and provides temperature, short circuit and cold charging protection. Our LFP batteries
 also do not require cleaning or water, eliminating the need for periodic maintenance found in today’s lead-acid batteries.
 While our LFP batteries are generally designed to replace and physically fit into racks made for existing lead-acid batteries, our
 batteries can be installed in any position and without the need for venting. 

 End
Markets 

 Current
Markets 

 We
operate across multiple end markets that are undergoing a transition from traditional lead-acid batteries to lithium-based energy storage
solutions, driven by increasing power demands, space and weight constraints, and a growing need for reliable, maintenance-free energy
storage. 

 ● 
 Recreational
 Vehicles. The recreational vehicle market continues to be an important driver of
 demand for lithium iron phosphate (LFP) energy storage batteries as RV designs and usage
 patterns evolve. According to data published by the RV Industry Association (“ RVIA ”),
 approximately 342,000 RV units were shipped in the United States during 2025, with towable
 RVs representing the substantial majority of total wholesale shipments. RV ownership and
 usage trends continue to support increased onboard power requirements, as RV interiors become
 more electrically intensive with the addition of appliances, electronics, and connectivity
 features associated with extended-stay and full-time RV use. 

 The
 need for greater onboard power generation and energy storage is contributing to a shift away from incumbent lead-acid batteries toward
 LFP batteries. Traditional lead-acid batteries are heavy, occupy significant space, exhibit inefficient discharge characteristics,
 and require ventilation. LFP batteries address these limitations by enabling faster charging, significantly reduced weight, consistent
 power delivery, and maintenance-free operation. 

 Historically,
 our RV market focus has been concentrated on motorized RVs; however, OEMs have increasingly integrated advanced electrical systems
 and energy storage solutions into towable RVs. 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. According to the 2020 Recreational Boating Statistics and the 2020 National Recreational Boating
 Safety Survey, in 2018 over 84 million Americans participated in some form of boating activity. There were a total of over 11.6 million
 registered boats on the water as of 2023. Similar to the RV market, customers are becoming more technologically advanced and are
 adding more electronics to their vessels, in turn driving demand for larger and more reliable energy storage, such as LFP batteries.
 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. These applications include power systems supporting municipalities, energy and infrastructure
 operators, transportation networks, and communications providers, where dependable power is required to support monitoring equipment,
 communications systems, control and relay equipment, safety and security systems, lighting, and other critical electrical loads.
 Demand in these applications is driven by the need for long service life, low maintenance requirements, and consistent performance
 across a wide range of operating conditions. Lithium iron phosphate (LFP) batteries are well-suited to these use cases due to their
 safety profile, durability, and ability to deliver reliable power in environments where traditional lead-acid batteries are constrained
 by weight, maintenance, or performance limitations. As electrification and remote monitoring continue to expand across industrial
 and commercial infrastructure, these stationary energy storage applications represent an increasingly important component of our
 current end markets. 

 ● 
 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. Even 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. 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. Additionally, the market opportunity
 extends to the electrification of Transport Refrigeration Units (“ TRUs ”) on trailers and smaller class refrigerated
 vehicles, which are crucial for the cold chain logistics sector. This shift towards electrification is driven by the need for more
 sustainable and efficient cooling solutions, reducing the carbon footprint of refrigerated transport. The expansion of global trade
 and the continuous push for lower emissions standards are driving the demand for heavy duty trucks equipped with APUs, as well as
 for the electrification of TRUs, highlighting a considerable market opportunity. 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 . The industrial vehicle market includes work trucks, service
 and utility vehicles, material handling and warehousing equipment, and other specialty fleet
 vehicles that support commercial, municipal, and industrial operations. These vehicles increasingly
 rely on onboard electrical systems to power tools, monitoring and communications equipment,
 safety systems, lighting, and other auxiliary loads. 

 Demand
 in this market is driven by increased automation, electrification of onboard equipment, and the need for reliable power in duty-cycle
 intensive environments. Lithium iron phosphate (LFP) batteries are well-suited for these applications due to their long service life,
 safety profile, and ability to deliver consistent power with minimal maintenance compared to 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. 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. Power outages in the United States cost an estimated $150 billion
 per year, according to the Department of Energy, increasing the demand for uninterrupted power sources. The need for reliable emergency
 and standby power exists in both hazardous and non-hazardous environments and is particularly acute in areas where the existing grid
 service is subject to intermittencies or is otherwise inefficient (including as a result high peak electricity usage, grid and related
 equipment age or severe weather and other environmental factors). 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. 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.
 As software companies, such as Google and Oracle, continue to develop new technologies, such as artificial intelligence, data centers
 where the computer and storage functions are co-located also continue to grow. As the industry seeks to cut operating costs, become
 more efficient and minimize dedicated physical space, we expect there to be a shift towards light, compact lithium-ion batteries
 that can reduce overall costs and provide a reliable power supply without sacrificing performance. Lithium-ion batteries are designed
 to operate in environments with higher ambient temperatures than incumbent energy storage methods (such as lead-acid batteries).
 This ability for lithium-ion batteries to withstand and operate at higher temperatures can also reduce cooling costs. 

 ● 
 On-grid
 Storage. On-grid energy storage is used on a large-scale platform within an electrical power grid in conjunction with variable
 renewable energy sources such as solar and wind projects. These storage units (including large-scale stationary batteries) store
 energy when electricity is plentiful, and discharge energy at peak times when electricity is scarce. Because of the low cost of fossil
 fuels, the adoption of large-scale batteries has been slow. However, according to the U.S. Energy Information Administration 2021
 report on battery storage in the United States, lithium-ion battery installations in large-scale storage grew from less than 50 MWh
 of energy capacity annual additions in 2010 to approximately 400 MWh in 2019. As lithium-ion battery production scales, the related
 cost of storage for all lithium-ion batteries will decline and the cost of renewable energy (including associated storage costs)
 is expected to approach $0.05 per kWh, which is the amount required to be cost competitive with the price of power from the electrical
 grid. 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. 

 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. Each of our innovative batteries features custom designed components to enhance power and
 performance in any application or setting. Our batteries feature LFP chemistry that is environmentally friendly, does not heat up
 or swell when charging or discharging, and generates more power in less physical space than competing lead-acid batteries. Unlike
 our competitors, our internal heating technology keeps our batteries within optimal internal conditions without drawing unnecessary
 energy and sustaining minimal energy drain. To protect our products, our batteries possess a proprietary battery management system
 that shuts off the ability to charge at 24 degrees Fahrenheit. This technology increases performance in cold weather conditions while
 possessing a unique heating solution that does not require an external energy source. 

 ● 
 Extensive,
 Growing Patent Portfolio. We have developed and filed patent applications on commercially relevant aspects of our business
 including chemical compositions systems and production processes. 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. 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. 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 have established a broad and diversified
 customer base that includes OEMs, distributors, upfitters, fleet operators, and end consumers
 across multiple end markets. Our products are deployed in a wide range of applications, including
 recreational vehicles, marine vessels, industrial and commercial power systems, and other
 mobile and stationary energy storage use cases. 

 Brand
 recognition developed through our aftermarket presence has supported increased adoption by OEMs and fleet customers, many of whom
 integrate our products into factory-installed or system-level solutions. We believe this combination of channel diversity, repeat
 customer engagement, and expanding OEM and fleet relationships provides visibility into future growth opportunities as we continue
 to deepen existing partnerships and broaden system-level offerings 
 
 ● 
 High
 Quality Manufacturing Process. Unlike competitors that outsource their manufacturing processes, our batteries are designed,
 assembled and tested in the United States, ensuring that our manufacturing process is thoroughly tested and our batteries are of
 the highest quality as a result of governmental regulations for performance and safety. 

 ● 
 Drop-in
 Replacement. Our battery modules are largely designed to be “drop-in replacements” for traditional lead-acid
 batteries, which means that they are designed to fit standard RV or marine vessel configurations without any adjustments. Our target
 applications are powering devices and appliances in larger vehicles and low speed industrial vehicles. We offer a full line of compatible
 components and accessories to simplify the replacement process and provide consumers with customer service to ensure a seamless transition
 to our significantly safer and environmentally friendly battery. Over their lifetime, our batteries are significantly cheaper from
 both an absolute cost and a cost per energy perspective. These lifetime costs, at current costs and capacity, will naturally drop
 as we continue to take advantage of economies of scale. 

 Our
Growth Strategy 

 We
intend to leverage our competitive strengths, technology leadership and market share position to pursue our growth strategy through the
following: 

 ● 
 Expand
 Product Offerings. In the near term, our strategy is to expand and deepen our product
 offerings by providing customers with integrated power solutions rather than standalone components.
 We continue to broaden our portfolio of LFP batteries across existing voltage platforms and
 capacities while expanding the complementary components that enable complete power systems.
 These components include power management, monitoring, and communication technologies that
 support seamless system integration across a range of applications. 

 In
 2024, we began selling batteries equipped with Dragonfly IntelLigence, a proprietary monitoring and communication platform that enables
 system-level visibility, optimization, and data collection across battery banks. Building on this foundation, we are focused on delivering
 a more comprehensive and interoperable power ecosystem that simplifies system design, installation, and operation for OEMs, distributors,
 and end customers. We believe this system-oriented approach enhances customer value, supports repeat adoption across applications,
 and expands our opportunity within our existing customer base. 
 
 8 

 ● 
 Expand
 End Markets. We have identified additional end markets that we believe will increasingly adopt lithium-based energy storage
 solutions, including LFP batteries, as demand for reliable and efficient power grows. These markets include industrial and heavy-duty
 trucking applications, where adoption has progressed from pilot programs to early commercial deployments. While revenue contribution
 remains in the early stages, we have seen initial validation through production orders and expanding customer engagement. We aim
 to build on this momentum by continuing to develop products tailored to these end users. 

 ● 
 Commercialize
 our Dry Electrode Cell Manufacturing Technology. We have developed and continue to advance our proprietary and patented dry
 electrode cell manufacturing technology, which is designed to enable the production of lithium-based battery cells across multiple
 chemistries using a less capital-intensive and more energy-efficient process than conventional wet coating methods. The dry deposition
 process is chemistry agnostic and supports manufacturing in a smaller physical footprint, contributing to lower total production
 costs. An independent third-party assessment found that this dry electrode manufacturing approach has the potential to be more scalable,
 cost-effective, and environmentally sustainable than conventional slurry-based processes. We have demonstrated the ability to manufacture
 both anode and cathode materials using this process and have produced sample cells incorporating PFAS-free binders and automotive-grade
 electrode loadings. Ongoing development efforts are focused on process optimization and equipment scaling to support future commercial
 deployment 

 ● 
 Develop
 and Commercialize Solid-State Technology. We believe solid-state technology presents a significant advantage to all products
 currently on the market, with the potential to be lighter, smaller, safer and cheaper. Once we have optimized the chemistry of our
 LFP solid-state batteries to enhance conductivity and power, we intend to scale up for mass production of separate solid-state batteries
 for various applications and use cases. 

 Our
Products and Technology 

 Chemistry
Comparison 

 Lead-acid
batteries were the first form of rechargeable battery to be developed and modified across different platforms for a variety of uses,
from powering small electronics to use for energy storage in back-up power supplies in cell phone towers. Since the development in the
1970s of AGM lead-acid batteries, a form of sealed lead-acid battery that enables operation in any position, there has been limited innovation
in lead-acid battery technology. The push to develop longer-lasting, lower-cost, more environmentally-friendly and faster-charging batteries
has led to the development of lithium-ion batteries and, within the lithium-ion battery market, different chemistries. 

 There
are several dominant battery chemistries in the lithium-ion market that can be used for different purposes. Two widely adopted chemistries
found in the market today are nickel manganese cobalt (“ NMC ”), and nickel cobalt aluminum (“ NCA ”).
The higher energy density and shorter cycle life found in NMC and NCA batteries are suitable for markets where fast charging and high
energy density are required, such as electric vehicle (“ EV ”) powertrains and consumer electronics. 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. 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. LFP batteries do not contain these elements and materials can be sourced domestically,
and are therefore not subject to these shortages, geopolitical concerns or commodity price fluctuations. In fact, LFP batteries have
no toxic elements, offering a much safer environmental alternative. The temperature threshold for thermal runaway (i.e., lithium-ion
battery overheating that can result in an internal chemical reaction) is higher for LFP batteries as compared to NMC and NCA batteries,
making LFP batteries less flammable and safer. 

 LFP
batteries have a useful life of approximately 10 to 15 years compared to one to two years for lead-acid batteries, and typically charge
up to five times faster. LFP batteries are also not constrained by weight (having the same energy capacity at one-fifth of the weight)
or temperature (having the ability to generate power even in low temperatures and to not swell or heat up when charging or discharging)
and are generally maintenance free. 

 In
the electric vehicle market, the race to provide the highest energy density facilitating frequent, rapid acceleration, greatest range
and fastest charging battery - all while competing on cost - is where many new battery companies are prioritizing
their efforts. Success in the electric vehicle market requires use of chemistries capable of optimization to these requirements. In our
targeted stationary storage markets, the ideal solution requires a safe, long-lasting battery in terms of discharge/charge cycles with
a focus on providing a steady power stream. LFP batteries are better suited for the stationary storage market compared to NMC and NCA
batteries, as LFP batteries are safer and have a significantly longer life cycle making them more cost-effective. The market for utility
grade storage, particularly for clean energy projects, and the related adoption of lithium-ion batteries (including LFP batteries) is
expected to increase as the fully loaded cost of energy (production and storage) approaches cost parity with inexpensive fossil fuel
energy provided through the electric grid. 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. Dry-electrode manufacturing eliminates the use of toxic and expensive solvents and energy-intensive
drying ovens in the cell manufacturing process. This in turn reduces the energy usage, space requirements, carbon footprint, and overall
cost as compared to conventional slurry-based methods. Furthermore, the manufacturing technology is chemistry agnostic - meaning it can
produce battery cells across a variety of different chemistries and application use cases. In 2023, we completed the construction of
our dry-electrode manufacturing pilot line, demonstrated the ability to produce Anode and Cathode electrode tapes at scale using this
manufacturing process. We have developed sample cells for prospective customers across a variety of chemistries and end-markets and are
designing equipment for scaled production of full cells. 

 Solid-State
Cells 

 LFP
batteries are not without their disadvantages. While less flammable than other chemistries, the existence of a flammable liquid electrolyte
still poses safety risks. Like all liquid-based lithium-ion batteries, LFP batteries have a potential to produce solid lithium dendrites,
icicle-like formations which can pierce the physical separators in LFP batteries, which are necessary in LFP batteries to separate the
positively charged liquid electrolyte from the negatively charged liquid electrolyte, and which, over time, will degrade the performance
of LFP batteries and potentially result in fire-related risks. The next phase in the development of lithium-ion batteries is solid-state
cell development, which contains a solid, rather than a liquid, electrolyte, eliminating many of the current disadvantages to LFP batteries
while increasing the safety of the battery cells. We believe that the development of our solid-state technology will provide us with
a unique competitive advantage. 

 Compared
to current lithium-ion technology, where lithium-ions cross a liquid electrolyte barrier between a battery’s anode (negative electrode)
and cathode (positive electrode), solid-state batteries aim to use a solid electrolyte to regulate the lithium-ions. As a battery charges
and discharges, an electrochemical reaction occurs creating a flow of electrical energy between the cathode, electrolyte and anode as
the electrodes lose and reacquire electrons. In addition to the use of non-toxic electrode components, the removal of a liquid electrolyte
will eliminate the risk of fire, making solid-state cells inherently safe. 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. 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. When compared to traditional
lead-acid options, Battle Born Batteries deliver two to three times the power in the same physical space, one-fifth the weight for equal
usable power, and up to five times faster charging. Additionally, these batteries have extended lifespans of 3,000-5,000 cycles, translating
to ten to fifteen years of reliable use under typical conditions. This longevity is backed by our 10-year warranty, showcasing our commitment
to quality. The Battle Born Batteries product line currently features various sizes and configurations including models with proprietary
built-in heating for cold weather charging and Dragonfly IntelLigence®, a communication technology that unlocks real-time monitoring,
instant notifications, various protocol integration and superior battery protection. A focus on safety is central to our products, and
all Battle Born Battery products utilize LiFePO4 chemistry, the safest lithium-ion chemistry available on the market. Additionally, our
battery products undergo rigorous testing under stringent industry standards like UL Standard 2054, IEC 62133, UN 38.3 and IP65 to ensure
safety and reliability. 

 Looking
beyond batteries, we also offer a diverse range of power products. 

 ● 
 Battle
 Born Inverters and Inverter/Chargers. Our inverter and inverter/charger products provide pure sine wave AC power from DC battery
 systems and are designed for use in mobile, off-grid, and industrial applications. These systems support reliable power delivery
 for onboard electronics, appliances, and critical loads, and include features such as integrated transfer switching, configurable
 charging profiles, and compatibility with lithium and lead-acid battery chemistries. These products are designed to integrate with
 our battery systems as part of complete energy storage solutions. 

 ● 
 Wakespeed
 Power Management Solutions. Our Wakespeed product line includes advanced power management and charging solutions designed to optimize
 battery system performance in mobile and industrial applications. The WS500 Advanced Alternator Regulator and WS500 Pro utilize real-time
 current, voltage, and temperature inputs to precisely control alternator output and battery charging. These systems support both
 lithium and lead-acid battery chemistries and are designed to improve charging efficiency, protect system components, and simplify
 installation and operation. In addition, we offer a 48V–12V bi-directional converter, which enables power transfer between
 voltage systems to support integrated, multi-voltage energy storage architectures. 

 ● 
 Battle
 Born All-Electric APU and DualFlow Power Pack. Designed for heavy-duty trucking applications, our lithium-powered auxiliary power
 solutions provide stored energy to support hotel loads, including HVAC systems, appliances, and onboard electronics during driver
 rest periods. These systems are designed to reduce engine idling, lower fuel consumption, and improve driver comfort. Our DualFlow
 Power Pack integrates battery storage with vehicle power systems to enable efficient energy management while maintaining battery
 charge during operation. These solutions are pre-assembled and designed for streamlined integration into commercial vehicle platforms. 

 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. 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. 

 11 

 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. 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. 

 Battery
Communication System 

 We
have developed a complete communication system branded Dragonfly IntelLigence, for which a U.S. non-provisional patent application and
an international PCT patent application have been filed, to be used with Dragonfly Energy OEM systems and Battle Born batteries and bundles.
This communication system will enable end customers to monitor each battery in real time, providing information on energy input and output
and current or voltage imbalances. The communication system will be able to communicate with up to 24 batteries in a bank at one time
and aggregate the data received from these batteries into a central system such as a phone or tablet. We began offering the Dragonfly
IntelLigence product line to OEMs in the third quarter of 2024, and to retail consumers in the fourth quarter of 2024. 

 Alternator
Regulation 

 Charging
batteries in a vehicle, such as a boat or RV, often requires pulling electrical current off of the vehicle’s alternator. Alternator
regulation is important to ensure that the alternator does not get unduly stressed during the current delivery to the batteries, and
that the current delivery remains within the operating limits of the onboard battery bank. The acquisition of the assets of Wakespeed
has allowed us to deliver our own proprietary solution to alternator regulation while also leveraging an established brand name. Wakespeed
is especially popular in the marine industry, and our ability to offer this complete solution sets the stage for further penetration
into marine markets. 

 Product
Pipeline 

 Beyond
our current battery modules, we have several LFP products in development that will enable us to access additional end markets. 

 ● 
 New
 Products. Our current offerings feature battery products that serve the RV, marine vessel and off-grid markets. 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. The smaller stature and drop-in replacement nature of these batteries have
 made these popular within the RV and marine vessel markets. 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. A single 24 voltage battery is more efficient than two 12 voltage batteries
 due to the ability to power directly from the source without sacrificing power through cables and connectors. This attractive power
 source is ideal for off-grid housing, telecommunication, solar, marine and motorized home markets, providing enhanced power to larger
 scale applications. 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. These higher-voltage solutions are well-suited for applications requiring greater power capacity, including
 mobile, off-grid, and industrial use cases. 

 ● 
 System
 Integrator. 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 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. 

 Research
and Development 

 Our
research and development team has built up its efforts to support two main initiatives - (1) scale up of our patented dry electrode process
for cell manufacturing and (2) the advanced manufacturing of solid-state lithium-ion batteries. We believe the dry electrode process
can be leveraged to help us vertically integrate from a pack supplier to a cell supplier - positioning ourselves for long-term competitiveness
in the given geopolitical, economic, and technological landscapes. Our innovations in dry electrode processing result in reduced manufacturing
costs, CO 2 equivalents, and factory footprint while eliminating the need for solvents like N-Methyl-2-pyrrolidone (“ NMP ”).
A third-party assessment conducted by Sphere Energy confirming these benefits has been completed in the first quarter of 2024 relating
to cost effectiveness and sustainability of our dry electrode battery manufacturing process (the “ Sphere Energy Assessment ”). 

 The
Sphere Energy Assessment concluded that our dry electrode battery manufacturing process resulted in a 9% reduced carbon footprint of
cell manufacturing with no toxic NMP solvent required, resulting in a significantly more sustainable process. This sustainability advantage
is further augmented by a 71% reduction in energy usage during electrode manufacturing using our process (spray drying, coating, calendaring)
compared to standard cell manufacturing operations (slurry casting, drying, calendaring). By removing the need for large and expensive
drying ovens, our manufacturing process requires 22% less square footage. The culmination of these advantages results in a 25% reduction
in emissions from energy use, making our manufacturing process more sustainable and much more environmentally friendly as compared to
conventional manufacturing methods. 

 In
addition to the energy savings, the cost assessment found our process to be highly cost-effective with an estimated 5% savings (depending
on cell chemistry) on process-related costs compared to conventional methods. Importantly, these savings were calculated without the
additional cost benefits provided by domestically manufacturing battery cells such as Inflation Reduction Act tax credits (issued by
the IRS), tariffs, and shipping. 

 The
dry electrode battery manufacturing process we employ uses a patented spray coating technology to adhere the anode and cathode electrodes,
eliminating the need for large, energy-intensive equipment such as slurry coaters, conveyor dryers, and NMP processing equipment. This
process is chemistry agnostic, allowing for the various applications, such as electric vehicles, consumer electronics, and energy storage,
which is expected to enable us to expand into new markets and to achieve our goal of domestically producing nonflammable all-solid-state
battery cells. 

 We
have successfully produced anode and cathode electrode reels at scale using the dry electrode process and are now qualifying prototype
cells for the core business and potential partners. When compared to slurry cast electrode tapes, which is the conventional manufacturing
method, electrode tapes produced using the dry electrode process match or surpass mechanical integrity and electrochemical performance.
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. Technical risk is reduced by using off-the-shelf equipment
and both unit operations continue to be optimized in 2025. A new set of spray dryers have arrived at our facility in the second quarter
of 2024, enabling us to produce larger volumes of material for the electrode coating lines. 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. 

 We
have developed our patented to be chemistry agnostic and capable of producing current cell chemistries (graphite, LCO, LFP, LTO, NCA,
NMC, LTO, silicon, etc.) and next generation cell chemistries (sodium-ion, solid-state, ionic liquid electrolytes, etc.). We believe
this flexibility and our robust intellectual property protection internationally positions us well for potential partnerships with cell
manufacturers, EV companies, and other pack suppliers in need of cell capacity. The next stage in technical development is to produce
larger volumes of sample cells for qualification. These production runs will be completed with partners in the United States and at our
own facilities. We have invested significant resources into developing an in-house comprehensive understanding of cell manufacturing
- raw material qualification, quality control such as, cell failure diagnostics, aging, and formation processes. Our research and development
Lab is equipped with over $20 million in research infrastructure to support the development of new cell chemistries, process quality
control, failure diagnostics, and more. This equipment includes quality control instruments (ex. moisture analysis, particle size analysis,
peel testing and titrations) and cutting-edge research instrumentation such as en operando nuclear magnetic resonance (“ NMR ”),
electron microscopes with lithium-tracking capabilities, and en operando x-ray diffraction. 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. 

 14 

 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 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 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. In November 2024, we relocated our
headquarters from our 99,000 square foot facility in Reno, Nevada to our new 390,240 square foot facility also in Reno, Nevada, which
has allowed us to increase our production capacity and gives us the ability to increase sales to existing customers and penetrate new
markets. Our 390,240 square foot facility provides a streamlined, partially autonomous production process for our current batteries,
which comprises module assembly and battery assembly, with the availability to expand the number of lines to handle increased volumes
and the additional battery modules we intend to introduce in the near future. We do not own any real estate property. 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 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. 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. 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. 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. After the assembled batteries are tested and sealed,
they are processed for outbound distribution. 

 15 

 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. 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 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
we look toward the production of our traditional and solid-state cells, we have signed a Commercial Offtake Agreement with a lithium
mining company and a lithium recycling company, both located in Nevada for the supply of lithium. 

 Customers;
RV OEM Strategic Arrangements 

 We
currently serve more than 23,000 customers in North America. Our existing customers consist of leading OEMs (such as Keystone, THOR,
REV Group and Airstream); distributors (who purchase large quantities of batteries from us and sell to consumers); upfitters (who augment
or customize vehicles for specific needs); and retail customers (who purchase from us directly). 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 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. 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. THOR and REV each own a number well-known RV OEM brands and their related
companies. These brands compete on a number of factors such as format (e.g., motorized or towable), price, design, value, quality and
service. On November 19, 2021, we entered into a long-term Manufacturing Supply Agreement with Keystone, a member of the THOR group and
the largest towable RV OEM in North America (the “ Supply Agreement ”). 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. This arrangement
helps facilitate our ongoing efforts to drive adoption of our products (leveraging the trend of LFP batteries increasingly replacing
lead-acid batteries) by, among other things, increasing the number of RV OEMs that “design in” our batteries as original
equipment and entering into arrangements with members of the various OEM dealer networks to stock our batteries for service and for aftermarket
replacement sales. Once the distribution agreement has been negotiated and signed, during a to-be-agreed transition period, we will use
commercially reasonable efforts to cease marketing and selling our products to other RV OEMs and suppliers to RV OEMs in North America.
Although the full distribution agreement with THOR has not been executed and is subject to negotiation in the future, its terms are expected
to include: (i) an initial term of 24 months, which THOR may renew for successive one-year periods; (ii) a requirement that we be the
sole provider of lithium-ion batteries to the US-based THOR family of companies for THOR sales in the United States, subject to agreed
exceptions; (iii) favored pricing for products and negotiated rebates or other incentives; (iv) a requirement that THOR and its North
American OEMs be our exclusive RV OEM customers for our products in North America, subject to agreed exceptions; and (v) agreeable terms
with respect to registered and unregistered intellectual property rights and technology rights (which do not include our existing intellectual
property, including our solid-state battery technologies and related IP rights), including necessary licenses between the parties, third
party licenses, and allocation of ownership of any intellectual property rights and/or technology rights developed as a result of development
efforts jointly undertaken between THOR and us, subject to certain limitations. 

 We
continue to seek to grow our customer base within our existing segments; however, we also believe that our products are well suited to
address the needs in additional segments, including residential, commercial and/or industrial standby power, long-haul trucking, industrial
vehicles (such as forklifts, material handling equipment and compact construction equipment) and specialty vehicles (such as emergency
vehicles, utility vehicles and municipal vehicles) and we will seek to expand our market share in these segments in the future. 

 Sales
and Marketing 

 Our
proven sales and marketing strategy has allowed us to penetrate our current end markets efficiently. We have established a highly efficient
sales and marketing strategy, to penetrate targeted end markets and ensuring prominent visibility for our Battle Born Batteries and Wakespeed
brands. We prioritize educating our customer base about the benefits of LFP batteries as a superior investment compared to traditional
lead-acid options. Informational videos published on our website and social media platforms highlight these advantages, complemented
by written guides that assist customers in configuring, installing, and utilizing battery systems and accessories. This messaging is
further reinforced through our active presence at tradeshows, live webinars, and other in-person training events with dealers and customers,
fostering direct engagement and ensuring comprehensive product understanding. Participation in these events fosters strong relationships
with both OEMs and retail customers, keeping us attuned to evolving preferences. By leveraging this customer feedback, we collaborate
with major OEMs to design solutions tailored to new and existing applications. 

 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
also leverage targeted pay-per-click advertising campaigns across various platforms, including search engines, and social media. 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. 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. 

 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. 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. 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. 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
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. 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. 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. 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. The pending patent applications are down
from prior year since we abandoned 9 that were no longer useful. The patents and patent applications cover the United States, Canada,
Australia, Korea, Japan, India, China, and Europe (with individual patents in Germany, France and the United Kingdom). We periodically
review and update our patent portfolio to protect our products and newly developed technologies. Currently, we have a combination of
issued patents and pending patent applications covering the ornamental design of our GC2 and GC3 batteries, a device and method for monitoring
battery systems, pre-coated solid-state electrolyte and electroactive powders and their methods of manufacture, methods and systems for
the dry spray deposition of materials in an electrochemical cell; a thermal fuse; battery systems implementing a mesh network communication
protocol; a power charging system for use during towing of a vehicle; and a power charging system with temperature based charging control.
These patents are expected to have expired or expire between May 2033 and 2043, absent any patent term adjustments or extensions. 

 We
periodically review our development efforts to assess the existence and patentability of new intellectual property. We pursue the registration
of our domain names and trademarks and service marks in the United States and other jurisdictions. 

 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. 

 Government
Regulation and Compliance 

 We
currently operate from a dedicated leased manufacturing facility located in Reno, Nevada as well as a leased R&D facility in Sparks,
Nevada. We have never owned any facility at which we operated. Operations at our facilities are subject to a variety of environmental,
health and safety regulations, including those governing the generation, handling, storage, use, transportation, and disposal of hazardous
materials. To conduct our operations, we have to obtain environmental, health, and safety permits and registrations and prepare plans.
We are subject to inspections and possible citations by federal, state, and local environmental, health, and safety regulators. In transit,
lithium-ion batteries are subject to rules governing the transportation of “dangerous goods.” We have policies and programs
in place to assure compliance with our obligations, such as policies relating to workplace safety, fire prevention, hazardous material
management and other emergency action plans. 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 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. We have adopted our Code of Ethics to support and
protect our culture, and we strive to create a workplace culture in line with our values: “Tell the Truth,” “Be Fair,”
“Keep Your Promises,” “Respect Individuals,” and “Encourage Intellectual Curiosity.” As part of our
initiative to retain and develop our talent, we focus on these key areas: 

 ● 
 Safety  - Employees
 are regularly educated in safety around their workspaces, and employees participate in volunteer roles on a safety committee, and
 in emergency readiness roles. We have a dedicated safety coordinator who tracks and measures our performance, and helps us benchmark
 our safety programs against our peers. 

 ● 
 Diversity,
 Equity & Inclusion  - Our culture has benefitted from the diversity of our workforce from the very beginning.
 Inclusion and equity are “baked into the bricks” of our values, which our employees demonstrate every day. Our human
 resources department and all our corporate officers and directors have an open door policy, and are able to constructively communicate
 with employees to resolve issues when they arise. 

 ● 
 Collaboration  - As
 we grow, opportunities for cross-functional collaboration are not as organic as they used to be. We have responded to that change
 by staying mindful and acting intentionally to gather cross-functional input on new initiatives and continuous improvement efforts. 

 ● 
 Continuous
 Improvement  - We apply continuous improvement measures to processes as well as people. We encourage professional
 development of our employees, through ongoing learning, credentialing, and collaboration with their industry peers. 

 Attracting
and retaining high quality talent at every level of our business is crucial to our continuing success. We have developed relationships
with the University of Nevada Reno and the Nevada System of Higher Education to further our recruitment reach. We provide competitive
compensation and benefits packages, including performance-based compensation that rewards individual and organizational achievements. 

 Recent
Developments 

 In
March 2026, we implemented a strategic cost realignment designed to reduce operating expenses, better align incentives with shareholders
and sharpen our focus on our commercial channels, including OEM, trucking, and industrial end markets. We expect the initiative to generate
approximately $8.9 million in annualized savings. Key elements of the initiative include: 

 ● 
 Board
 and Executive Leadership Compensation Adjustments : Each member of our executive leadership team and Board of Directors has agreed
 to reduce their cash compensation by approximately 20% for the remainder of fiscal 2026, effective April 1, 2026. In lieu of cash
 compensation, they have received equity-based incentives, aligning incentives with long-term shareholder value. 

 ● 
 Workforce
 and Compensation Adjustments : We have implemented a 20% reduction in total payroll expense through a combination of targeted
 workforce reductions and salary adjustments. Non-executive employees participating in salary reductions have received equity-based
 compensation. 

 ● 
 Reduction
 in Discretionary Spending : We are reducing discretionary spending, including a reduction in DTC-focused marketing expenses, as
 we shifts resources towards growing commercial revenues. 

 ● 
 Facility
 Consolidation : We are consolidating our rental space, which is expected to result in a $4.0 million reduction in expenses. 

 Corporate
Information 

 In
October 2022, we completed the merger in connection with our business combination. On March 31, 2023, we changed our state of incorporation
from the State of Delaware to the State of Nevada (the “ Reincorporation ”) pursuant to a plan of conversion dated March
30, 2023.The mailing address of our principal executive office is 12915 Old Virginia Road, Reno, Nevada 89521, and our telephone number
is (775) 622-3448. 

 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 ”). Shares of common stock underlying outstanding stock options and other equity instruments convertible into common
stock were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with
the terms of the agreements governing such securities in connection with the Reverse Stock Split. No fractional shares were issued in
connection with the Reverse Stock Split. The Company paid cash in lieu of any fractional shares to which a stockholder of record was
otherwise entitled as a result of the Reverse Stock Split. All of our historical share and per share information related to issued and
outstanding common stock and outstanding options and warrants exercisable for common stock included or incorporated by reference in this
prospectus have been adjusted, on a retroactive basis, to reflect the Reverse Stock Split. 

 We
file periodic reports, proxy statements and other information with the SEC. Such reports, proxy statements and other information may
be obtained, free of charge, by visiting the SEC’s website at www.sec.gov that contains all of the reports, proxy and information
statements, and other information that we electronically file or furnish to the SEC. We also maintain a website at www.dragonflyenergy.com
where we make available the proxy statements, press releases, registration statements and reports on Forms 3, 4, 8-K, 10-K and 10-Q that
we (and in the case of Section 16 reports, our insiders) file with the SEC. These forms are made available as soon as reasonably practicable
after such material is electronically filed with or furnished to the SEC. Press releases are also issued via electronic transmission
to provide access to our financial and product news, and we provide notification of and access to voice and internet broadcasts of our
quarterly and annual results. Our website also includes investor presentations and corporate governance materials. 

 19 

 Item
1A. Risk Factors 

 An
investment in our common stock is speculative and illiquid and involves a high degree of risk including the risk of a loss of your entire
investment. 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. 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. 

 Summary
of Risk Factors 

 Risks
Related to Our Existing Lithium-Ion Battery Operations 

 ● 
 Our
 business and future growth depends on the needs and success of our customers. 

 ● 
 We
 operate in a competitive industry. We expect that the level of competition will increase and the nature of our competitors will change
 as we develop new LFP battery products for, and enter into, new markets, and as the competitive landscape evolves. 

 ● 
 We
 may not succeed in our medium- and long-term strategy of entering into new end markets for LFP batteries and our success depends,
 in part, on our ability to successfully develop and manufacture new products for, and acquire customers in, these new markets and
 successfully grow our operations and production capabilities (including, in time, our ability to manufacture solid-state cells in-house). 

 ● 
 We
 currently rely on two suppliers to provide our LFP cells and a single supplier for the manufacture of our battery management system.
 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 our facility becomes inoperable for
 any reason, or our automation and expansion plans do not yield the desired effects, our ability to produce our products could be
 negatively impacted. 

 Risks
Related to Our Solid-State Technology Development 

 ● 
 We
 face significant engineering challenges in our attempts to develop and manufacture solid-state battery cells and these efforts may
 be delayed or fail which could negatively impact our business. 

 ● 
 We
 expect to make significant investments in our continued research and development of solid-state battery technology development, and
 we may be unable to adequately control the costs associated with manufacturing our solid-state battery cells. 

 ● 
 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. 

 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. 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. 

 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. 

 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. 

 Risks
Related to Our Financial Position and Capital Requirements related our ability to continue as a going concern 

 ● 
 We,
 as well as our independent registered public accounting firm, have expressed substantial doubt about our ability to continue as a
 going concern. 

 ● 
 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. 

 ● 
 Our
 ability to service our outstanding indebtedness and comply with the financial covenants in our loan agreement, the failure of which
 could allow our lenders to accelerate payment under our loan agreement, which would have a material adverse effect on our ability
 to operate and could require us, among other things, to reduce operations, sell off our assets, seek the protection of bankruptcy
 courts or shut down our operations and dissolve. 

 ● 
 Restrictions
 imposed by our outstanding indebtedness and any future indebtedness may limit our ability to operate our business and to finance
 our future operations or capital needs or to engage in acquisitions or other business activities necessary to achieve growth. 

 Risks
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. 

 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 performance and growth of these markets is impacted by numerous factors, including
macro-economic conditions, consumer spending, travel restrictions, fuel costs and energy demands (including an increasing trend towards
the use of green energy). Increases or decreases in these variables may significantly impact the demand for our products. If we fail
to accurately predict demand, we may be unable to meet our customers’ needs, resulting in the loss of potential sales, or we may
produce excess products, resulting in increased inventory and overcapacity in our production facilities, increasing our unit production
cost and decreasing our operating margins. 

 An
increasing proportion of our revenue has been and is expected to continue to be derived from sales to RV OEMs. 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. For example,
under our Supply Agreement with Keystone RV Company, or Keystone, the largest manufacturer of towable RVs in North America, Keystone
has agreed to fulfill certain of its LFP battery requirements exclusively through us for at least one year, with automatic annual renewals.
However, although in time we expect Keystone to be significant contributor to our projected growth in RV OEM battery sales, this arrangement
may not deliver the anticipated benefits, as there are no firm purchase commitments, sales will continue to be made on a purchase order
basis, Keystone is permitted to purchase other LFP batteries from third parties and this arrangement may not be renewed. 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. Future RV
OEM sales are subject to a number of risks and uncertainties, including the number of RVs that these OEMs manufacture and sell (which
can be impacted by a variety of events including those disrupting our OEM customers’ operations due to supply chain disruptions
or labor constraints); the degree to which our OEM customers incorporate/design-in our batteries into their RV product lines and renew
our supply agreements; the extent to which RV owners, if applicable, opt to purchase our batteries upon initial purchase of their RV
or in the aftermarket; and our continued ability to successfully develop and introduce reliable and cost-effective batteries meeting
evolving industry standards and customer specifications and preferences. Our failure to adequately address any of these risks may result
in lost sales which could have a material adverse effect on our business, financial condition and results of operations. 

 In
addition, our near-term growth depends, in part, on the continued growth of the end markets in which we currently operate. According
to third-party industry data, the global recreational vehicle market was approximately $62.9 billion in 2024 and is projected to grow
to approximately $168.3 billion by 2033. However, these markets may not grow as expected or at all, and we may be unable to maintain
existing customers and/or attract new customers in these markets. 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. 

 Our
success, and our ability to increase sales and operate profitably, depends on our ability to identify target customers and convert these
customers into meaningful orders, as well as our continued development of existing customer relationships. Although we have developed
a multi-pronged sales and marketing strategy to penetrate our end markets and reach a range of customers, this strategy may not continue
to be effective in reaching or converting target customers into orders, or as we expand into additional markets. Recently, we have also
dedicated more resources to developing relationships with certain key RV OEMs, such as Keystone, which we aim to convert into collaborations
on custom designs and/or long-term contractual arrangements. We may be unable to convert these relationships into meaningful orders or
renew these arrangements going forward, which may require us to expend additional cost and management resources to engage other target
customers. 

 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. 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. We expect that the level of competition will increase and the nature of our competitors will change
as we develop new LFP battery products for, and enter into, new markets, and as the competitive landscape evolves. These competitive
and other factors could result in lost potential sales and lower average selling prices and profitability for our products. 

 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. As we continue to expand into new markets, develop new products and move
towards production of our solid-state cells, we will experience competition with a wider range of companies. These include companies
focused on solid-state cell production, vertically integrated energy companies and other technology-focused energy storage companies.
We believe our main competitive advantage in displacing incumbent lead-acid batteries is that we produce a lighter, safer, higher performing,
cost-effective battery with a longer lifespan. We believe our go-to-market strategy, established brands, proven reliability and relationships
with OEMs and end consumers both (i) enable us to compete effectively against other battery manufacturers and (ii) position us favorably
to expand into new addressable markets. However, OEM sales typically result in lower average selling prices and related margins, which
could result in overall margin erosion, affect our growth or require us to raise our prices. As a result, we may be unable to maintain
this competitive advantage given the rapidly developing nature of the industry in which we operate. 

 Our
current competitors have, and future competitors may have, greater resources than we do. Our competitors may be able to devote greater
resources to the development of their current and future technologies. These competitors may also be able to devote greater resources
to sales and marketing efforts, affording them greater access to customers, and may be able to establish cooperative or strategic relationships
amongst themselves or with third parties that may further enhance their competitive positioning. In addition, foreign producers may be
able to employ labor at significantly lower costs than producers in the United States, expand their export capacity and increase their
marketing presence in our major end markets. We expect actual and potential competitors to continue their efforts to develop alternative
battery technologies and introduce new products with more desirable, attractive features. These new technologies and products may be
introduced sooner than our offerings and could gain greater market acceptance. Although we believe we are a leader in developing solid-state
battery technology (particularly for energy storage applications) new competitors may emerge, alternative approaches to solid-state battery
technology may be developed and competitors may seek to market solid-state battery technologies better suited for other applications
such as EV’s to our target markets. 

 Additional
competitive and other factors may result in lost sales opportunities and declines in average sales prices and overall product profitability.
These include rapidly evolving technologies, industry standards, economic conditions and end-customer preferences. Our failure to adapt
to or address these factors as they arise could have a material adverse effect on our business, financial condition and results of operations. 

 We
may not succeed in our medium- and long-term strategy of entering into new end markets for LFP batteries and our success depends, in
part, on our ability to successfully develop and manufacture new products for, and acquire customers in, these new markets and successfully
grow our operations and production capabilities (including, in time, our ability to manufacture solid-state cells in-house). 

 Our
future success depends, in part, upon our ability to expand into additional end markets identified by us as opportunities for our LFP
batteries. These markets include heavy-duty trucking, industrial solar integration, specialty and work vehicles, material handling, rail,
and emergency and standby power in the medium term, and data centers, telecom and distributed on-grid storage in the longer term. Our
ability to expand into these markets depends on a number of factors, including the continued growth of these markets, having sufficient
capital to expand our product offerings (including in the longer term batteries incorporating, once developed, our solid-state cells)
and manufacturing capacity, developing products adapted to customer needs and preferences in these markets, our successful expansion
of our manufacturing capabilities in order to meet customer demand, our ability to identify and convert potential customers within these
markets and our ability to attract and retain qualified personnel to assist in these efforts. Although we intend to devote resources
and management time to understanding these new markets, we may face difficulties in understanding and accurately predicting the demographics,
preferences and purchasing habits of customers and consumers in these markets. 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. A key component of our growth strategy is the expansion and automation of our manufacturing sales capacity to address
expected growing product demand and to accommodate our production of solid-state cells at scale. We have experienced supply delays in
obtaining the necessary components to implement our automated adhesive application systems, as well as our pilot production line for
our solid-state cells, and we may continue to experience component shortages in the future, which may negatively impact our ability to
achieve these aspects of our growth strategy on time or at all. The costs of our expansion and automation efforts may be greater than
expected, and we may fail to achieve anticipated cost efficiencies, which could have a material adverse effect on our business, financial
condition and results of operations. We must also attract, train and retain a significant number of skilled employees, including engineers,
sales and marketing personnel, customer support personnel and management, and the availability of such personnel may be constrained.
Failure to effectively manage our growth could also lead us to over-invest or under-invest in development and operations; result in weaknesses
in our infrastructure, systems or controls; give rise to operational mistakes, financial losses, loss of productivity or business opportunities;
and result in loss of employees and reduced productivity of remaining employees, any of which could have a material adverse effect on
our business, financial condition and results of operations. 

 We
currently rely on two suppliers to provide our LFP cells and a single supplier for the manufacture of our battery management system.
Any disruption in the operations of these key suppliers could adversely affect our business and results of operations. 

 We
currently rely on two carefully selected cell manufacturers located in China, and a single supplier, also located in China, to manufacture
our proprietary battery management system, and we intend to continue to rely on these suppliers going forward. 

 Our
dependence on a limited number of key third-party suppliers exposes us to challenges and risks in ensuring that we maintain adequate
supplies required to produce our LFP batteries. Although we carefully manage our inventory and lead-times, we may experience a delay
or disruption in our supply chain and/or our current suppliers may not continue to provide us with LFP cells or our battery management
systems in our required quantities or to our required specifications and quality levels or at attractive prices. Our close working relationships
with our China-based LFP cell suppliers to-date, reflected in our ability to increase our purchase order volumes (qualifying us for related
volume-based discounts) and to order and receive delivery of cells in advance of required demand, has helped us moderate or offset increased
supply-related costs associated with inflation, currency fluctuations and tariffs imposed on our battery cell imports by the U.S. government
and avoid potential shipment delays. If we are unable to enter into or maintain commercial agreements with these suppliers on favorable
terms, or if any of these suppliers experience unanticipated delays, disruptions or shutdowns or other difficulties ramping up their
supply of products or materials to meet our requirements, our manufacturing operations and customer deliveries would be seriously impacted,
potentially resulting in liquidated damages and harm to our customer relationships. Although we believe we could locate alternative suppliers
to fulfill our needs, we may be unable to find a sufficient alternative supply in a reasonable time or on commercially reasonable terms. 

 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. 

 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. Lead times for materials and components that our suppliers
order may vary significantly and depend on factors such as the specific supplier, contract terms and demand for each component at a given
time. 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. 

 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. Although we monitor our slow-moving inventory, if customer demand declines significantly, we may have excess
inventory which could result in unprofitable sales or write-offs. Expediting additional material to make up for any shortages within
a short time frame could result in increased costs and a delay in meeting orders, which would result in lower profits and negatively
impact our reputation. In either case, our results of operations would fluctuate from period to period. 

 In
addition, certain of our competitors may have long-standing relationships with suppliers, which may provide them with a competitive pricing
advantage for components and reduce their exposure to volatile raw material costs, including due to inflation. As a result, we may face
market-driven downward pricing pressures in the future, which may run counter to the cost of the components required to produce our products.
During 2022 in particular, we experienced rising materials costs due to inflation, which we partially mitigated through increases in
our product prices, where we thought it to be prudent. Our customers may not view this favorably and expect us to cut our costs further
and/or to lower the price of our products. We may be unable to increase our sales volumes to offset lower prices (if we choose to implement
lower prices), develop new or enhanced products with higher selling prices or margins, or reduce our costs to levels enabling us to remain
competitive. Our failure to accomplish any of the foregoing could have a negative impact on our profitability and our business, financial
condition and results of operations may ultimately be materially adversely affected. 

 We
are currently dependent on one manufacturing facility. If our facility becomes inoperable for any reason, or our automation and expansion
plans do not yield the desired effects, our ability to produce our products could be negatively impacted. 

 All
of our battery assembly currently takes place at our 390,240 square foot headquarters and manufacturing facility located in Reno, Nevada.
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. 

 Our
facilities may be harmed or rendered inoperable by natural or man-made disasters, including earthquakes, flooding, fire and power outages,
utility and transportation infrastructure disruptions, acts of war or terrorism, or by public health crises, which may render it difficult
or impossible for us to manufacture our products for an extended period of time. The inability to produce our products or the backlog
that could develop if our manufacturing facility is inoperable for even a short period of time may result in increased costs, harm to
our reputation, a loss of customers or a material adverse effect on our business, financial condition or results of operations. Although
we maintain property damage and business interruption insurance, this insurance may not be sufficient to cover all of our potential losses
and may not continue to be available to us on acceptable terms, if at all. 

 Over
the next several years we plan to automate additional aspects of existing LFP battery production lines, add additional LFP battery production
lines (as required) and construct and operate a pilot production line for our solid-state cells, all designed to maximize the capacity
of our manufacturing facility. In November 2024, we relocated our headquarters and production lines to a 390,240 square foot facility.
Our plans for automation and expansion may experience delays, incur additional costs or cause disruption to our existing production lines.
For example, we have experienced supply delays in obtaining the necessary components to implement our automated adhesive application
systems, as well as our pilot production line for our solid-state cells, and we may continue to experience component shortages in the
future. The costs to successfully achieve our expansion and automation goals may be greater than we expect, and we may fail to achieve
our anticipated cost efficiencies, which could have a material adverse effect on our business, financial condition and results of operations.
Furthermore, while we are generally responsible for delivering products to the customer, we do not maintain our own fleet of delivery
vehicles and outsource this function to third parties. 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. 

 Our
LFP batteries use lithium iron phosphate (LiFePO4) as the cathode material for lithium-ion cells. LFP is intrinsically safer than other
battery technologies due to its thermal and chemical stability and LFP batteries are less flammable than lead-acid batteries or lithium-ion
batteries using different chemistries. On rare occasions, however, lithium-ion cells can rapidly release the energy they contain by releasing
smoke and flames in a manner that can ignite nearby materials and other lithium-ion cells. This faulty result could subject us to lawsuits,
product recalls, or redesign efforts, all of which would be time consuming and expensive. 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. 

 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. In addition, any accident, whether occurring at our manufacturing facility or from the use of our
batteries, may result in significant production interruption, delays or claims for substantial damages caused by personal injuries or
property damage. 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
currently are and may in the future 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. 

 Product
liability claims, even those without merit or that do not involve our products, could result in adverse publicity or damage to our brand,
decreased partner and end-customer demand, and could have a material adverse effect on our business, financial condition and results
of operations. The occurrence of any defects in our products could make us liable for damages and legal claims. In addition, we could
incur significant costs to correct such issues, potentially including product recalls. We face an inherent risk of exposure to claims
in the event that our products do not perform or are claimed not to have performed as expected. We also face risk of exposure to claims
because our products may be installed on vehicles (including RVs and marine vessels) that may be involved in crashes or may not perform
as expected resulting in death, personal injury or property damage. Liability claims may result in litigation, the occurrence of which
could be costly, lengthy and distracting and could have a material adverse effect on our business, financial condition and results of
operations. 

 In
the future, we may voluntarily or involuntarily initiate a recall if any products prove to be defective or non-compliant with then-applicable
safety standards. Such recalls may involve significant expense and diversion of management attention and other resources, which could
damage our brand image in our target end markets, as well as have a material adverse effect on our business, financial condition and
results of operations. 

 A
successful product liability claim against us could require us to pay a substantial monetary award. 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. 

 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. If we are unable to manage the risks inherent in these complex technologies, or if we are unable
to address or mitigate technical limitations in our systems, our business could be adversely affected. 

 Each
of our batteries include our proprietary battery management system, which relies on software and hardware manufactured by third parties
that is complex and technical. In addition, Dragonfly IntelLigence, our battery communications system which we launched in the first
quarter 2023, utilizes third-party software and hardware to store, retrieve, process and manage data. The software and hardware utilized
in these systems may contain errors, bugs, vulnerabilities or defects, which may be difficult to detect and/or manage. Although we attempt
to remedy any issues that we observe in our products as effectively and rapidly as possible, such efforts may not be timely, may hamper
production, or may not be to the satisfaction of our customers. If we are unable to prevent or effectively remedy errors, bugs, vulnerabilities
or defects in the software and hardware that we use, we may suffer damage to our brand, loss of customers, loss of revenue or liability
for damages, any of which could adversely affect our business, financial condition and results of operations. 

 Risks
Related to Our Solid-State Technology Development 

 We
face significant engineering challenges in our attempts to develop and manufacture solid-state battery cells and these efforts may be
delayed or fail which could reduce consumer spending which could negatively impact our business. 

 Our
solid-state battery development efforts are still ongoing, and we may fail to meet our goal of commercially selling LFP batteries incorporating
our manufactured solid-state cells, or at all. We may encounter delays in the design, manufacture and launch of our solid-state battery
cells, and in increasing production to scale. 

 Development
and engineering challenges could delay or prevent our production of solid-state battery cells. These difficulties may arise in connection
with current and future efforts to optimize the chemistry or physical structure of our solid-state batteries with the goal of enhancing
conductivity and power; maximizing cycling capabilities and power results; reducing costs; and developing related mass production manufacturing
processes. 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. To cost-effectively and rapidly manufacture our solid-state cells at scale for incorporation into our LFP batteries,
we plan to utilize currently available spray powder deposition equipment and other commercially available equipment modified to utilize
our proprietary dry spray deposition and other technologies and processes. We may experience delays or additional costs in adapting our
facility, existing production equipment and LFP battery manufacturing processes (for example, designing a dry room to accommodate our
dry spraying processes) to manufacture solid-state cells. Even if we achieve the development and volume production of our solid-state
battery that we anticipate, if the cost, cycling and power results or other technology or performance characteristics of the solid-state
battery fall short of our targets, our business and results of operations would likely be materially adversely affected. 

 We
expect to make significant investments in our continued research and development of solid-state battery technology development, and we
may be unable to adequately control the costs associated with manufacturing our solid-state battery cells. 

 We
will require significant capital to fund our solid-state cell research and development activities, pilot line construction and expansion
of our manufacturing capabilities to accommodate large-scale production of solid-state cells. We have not yet produced any solid-state
battery cells at volume and our forecasted cost advantage for the production of these cells at scale, compared to conventional lithium-ion
cells, will require us to achieve rates of throughput, use of electricity and consumables, yield, and rate of automation demonstrated
for mature battery, battery material, and ceramic manufacturing processes, that we have not yet achieved. 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. 

 27 

 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 batteries will incorporate components that have not been used individually or in
combination in the same manner as the design of our solid-state cells, and that may result in defects and errors, particularly when produced
at scale. We may be unable to detect and fix any defects in our solid-state battery cells prior to their incorporation into our solid-state
LFP batteries and sale to potential consumers. If our solid-state batteries fail to perform as expected, we could lose customers, or
be forced to delay deliveries, terminate orders or initiate product recalls, each of which could adversely affect our sales and brand
and would have a material adverse effect on our business, financial condition and results of operations. 

 We
expect to rely on machinery used in other large-scale commercial applications, modified to incorporate our proprietary technologies and
processes, in order to mass produce solid-state battery cells, which exposes us to a significant degree of risk and uncertainty in terms
of scaling production, operational performance and costs. 

 We
expect to rely on machinery used in other large-scale commercial applications to mass produce our solid-state battery cells. Doing so
will require us to work closely with the equipment provider to modify this machinery to effectively integrate our proprietary solid-state
technology and processes in order to create the equipment we need for the production of solid-state cells. This integration work will
involve a significant degree of uncertainty and risk and may result in delays in scaling up production of our solid-state cells or result
in additional cost to us. 

 Such
machinery is likely to suffer unexpected malfunctions from time to time and will require repairs and spare parts to resume operations,
which may not be available when needed. Unexpected malfunctions may significantly affect the intended operational efficiency of, and
therefore expected cost-efficiency associated with, our production equipment. In addition, because this machinery has not been used to
manufacture and assemble solid-state battery cells, the operational performance and costs associated with repairing and maintaining this
equipment can be difficult to predict and may be influenced by factors outside of our control, including failures by suppliers to deliver
necessary components of our products in a timely manner and at prices acceptable to us, the risk of environmental hazards and the cost
of any required remediation and damages or defects already present in the machinery. 

 Operational
problems with our manufacturing equipment could result in personal injury to or death of workers, the loss of production equipment or
damage to our manufacturing facility, which could result in monetary losses, delays and unanticipated fluctuations in production. In
addition, we may be subject to administrative fines, increased insurance costs or potential legal liabilities. 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. 

 The
products we sell 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 no 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 to 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. 

 While
we select these third-party vendors carefully, we do not control their actions or the manufacture of their products. 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. In addition, many of our domestic
suppliers purchase a portion of their products from foreign sources. As an importer, our business is subject to the risks generally associated
with doing business internationally, such as domestic and foreign governmental regulations, economic disruptions, global or regional
health epidemics, delays in shipments, transportation capacity and costs, currency exchange rates, and changes in political or economic
conditions in countries from which we purchase products. If any such factors were to render the conduct of business in particular countries
undesirable or impractical or if additional U.S. quotas, duties, tariffs, taxes, or other charges or restrictions were imposed upon the
importation of our products in the future, our financial condition and results of operations could be materially adversely affected. 

 The
political landscape in the U.S. contains uncertainty with respect to tax and trade policies, tariffs and regulations affecting trade
between the U.S. and other countries. We source a portion of our merchandise from manufacturers located outside the U.S., primarily in
Asia. Major developments in tax policy or trade relations, such as the disallowance of tax deductions for imported merchandise or the
imposition of tariffs on imported products, could have a material adverse effect on our business, results of operations, and financial
condition. 

 We
rely on manufacturers located in foreign countries, including China, for merchandise. Additionally, a portion of our domestically purchased
merchandise is manufactured abroad. Our business may be materially adversely affected by risks associated with international trade, including
the impact of current or potential tariffs by the U.S. with respect to certain consumer goods imported from China. 

 Changes
in U.S. trade policy, including recently announced tariffs, could have a material adverse impact on our business, financial condition,
and results of operations. We source a portion of our merchandise from manufacturers located outside the U.S., primarily in Asia, and
many of our domestic vendors have a global supply chain. The U.S. has imposed tariffs on certain products imported into the U.S. from
China and could propose additional tariffs. The imposition of tariffs on imported products could result in reduced sales and profits.
It remains unclear how tax or trade policies, tariffs or trade relations may further evolve under the current U.S. administration, and
how such policies could adversely affect our business, results of operations, effective income tax rate, liquidity, and net income. 

 In
addition, the imposition of tariffs by the U.S. has resulted in the adoption of retaliatory tariffs by China on U.S. exports and could
result in the adoption of tariffs by other countries as well. A resulting trade war could have a significant adverse effect on world
trade and the global economy. 

 We
continue to evaluate the impact of the effective and potential tariffs on our supply chain, costs, sales, and profitability as well as
our strategies to mitigate any negative impact, including negotiating with our vendors, and seeking alternative sourcing options. Given
the uncertainty regarding the scope and duration of the current and potential tariffs, as well as the potential for additional trade
actions by the U.S. or other countries, the impact on our business, results of operations, and financial condition is uncertain but could
be significant. Thus, we can provide no assurance that any strategies we implement to mitigate the impact of such tariffs or other trade
actions will be successful in whole or in part. To the extent that our supply chain, costs, sales, or profitability are negatively affected
by the tariffs or other trade actions, our business, financial condition, and results of operations may be materially adversely affected.
In 2024, we identified an underpayment of tariffs to U.S. Customs and Border Protection (“ CBP ”) in the amount of approximately
$1.58 million in the aggregate, related to the improper classification and valuation of certain of the products used in our batteries.
The underpayment related to years 2021 through 2023. We have reported the underpayment to CBP. 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. 

 Our
operations and performance depend, in part, on global and regional economic and geopolitical conditions, given that we have suppliers
located in China. Changes in U.S.-China trade policies, and a number of other economic and geopolitical factors both in China and abroad
could have a material adverse effect on our business, financial condition, results of operations or prospects. 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. 

 As
a result of these events, our ability to obtain supplies from our China-based suppliers may be limited or adversely affected, and we
may incur operational constraints. 

 A
significant disruption to the timely receipt of inventory could adversely impact sales or increase our transportation costs, which would
decrease our profits. 

 We
rely on our distribution and transportation network, including third-party logistics providers, to provide goods in a timely and cost-effective
manner through deliveries to our distribution facilities from vendors and then from the distribution facilities or direct ship vendors
to our stores or customers by various means of transportation, including shipments by sea, air, rail, and truck. Any disruption, unanticipated
expense, or operational failure related to this process could negatively affect our operations. For example, unexpected delivery delays
(including delays due to weather, fuel shortages, work stoppages, global or regional health epidemics, product shortages from vendors,
or other reasons) or increases in transportation costs (including increased fuel costs or a decrease in transportation capacity for overseas
shipments) could significantly decrease our ability to provide adequate products to meet increased customer demand. In addition, labor
shortages or work stoppages in the transportation industry or long-term disruptions to the national and international transportation
infrastructure that lead to delays or interruptions of deliveries could negatively affect our business. Also, a fire, tornado, or other
disaster at one of our distribution facilities could disrupt our timely receiving, processing, and shipment of merchandise to our stores
which could adversely affect our business. While we believe there are adequate reserve quantities and alternative suppliers available,
shortages or interruptions in the receipt or supply of products caused by unanticipated demand, problems in production or distribution,
financial or other difficulties of supplies, inclement weather or other economic conditions, including the availability of qualified
drivers and distribution center team members, could adversely affect the availability, quality and cost of products, and our operating
results. 

 Risks
Related to Our 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 not be able to prevent unauthorized use of our intellectual property, which could harm our business and competitive position. We
rely upon a combination of the intellectual property protections afforded by patent, copyright, trademark and trade secret laws in the
United States and other jurisdictions to establish, maintain and enforce rights in our proprietary technologies. 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 and joint development agreements with business partners and other third parties. Despite our efforts to protect
our proprietary rights, third parties may attempt to copy or otherwise obtain and use our intellectual property. Monitoring unauthorized
use of our intellectual property is difficult and costly, and the steps we have taken or will take to prevent unauthorized use may not
be sufficient. Any enforcement efforts we undertake, including litigation, could be time-consuming and expensive and could divert management’s
attention, which could harm our business, results of operations and financial condition. 

 In
addition, available intellectual property laws and contractual remedies in some jurisdictions may afford less protection than needed
to safeguard our intellectual property portfolio. Intellectual property laws vary significantly throughout the world. The laws of a number
of foreign countries do not protect intellectual property rights to the same extent as do the laws of the United States. Therefore, our
intellectual property rights may not be as strong, or as easily enforced, outside of the United States, and efforts to protect against
the unauthorized use of our intellectual property rights, technology and other proprietary rights may be more expensive and difficult
to undertake outside of the United States. In addition, while we have filed for and obtained certain intellectual property rights in
commercially relevant jurisdictions, we have not sought protection for our intellectual property rights in every possible jurisdiction.
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. 

 Companies,
organizations or individuals, including our current and future competitors, may hold or obtain intellectual property rights that would
prevent, limit or interfere with our ability to make, have made, use, import, develop, have developed, sell or have sold our products,
which could make it more difficult for us to operate our business. From time to time, we may receive inquiries from holders of intellectual
property rights inquiring whether we are infringing their rights and/or seek court declarations that they do not infringe upon our intellectual
property rights. Entities holding intellectual property rights relating to our technology, including, but not limited to, batteries,
battery materials, encapsulated powders, spray deposition of battery materials, and alternator regulators, may bring suits alleging infringement
of such rights or otherwise asserting their rights and seeking licenses. For example, patents and patent applications owned by third
parties may present freedom to operate (“ FTO ”) questions with regards to the precoated feedstock materials for the
spray deposition process depending on the final material selections that are used, although we own a patent application that pre-dates
their patents and patent applications of interest such that our patent application may act as a basis for an invalidity position. However,
it is possible that a court may not agree that our patent application invalidates the patents and patent applications of interest. Any
such litigation or claims, whether or not valid or successful, could result in substantial costs and diversion of resources and our management’s
attention. In addition, if we are determined to have infringed upon a third party’s intellectual property rights, we may be required
to do one or more of the following: 

 ● 
 cease
 using, making, having made, selling, having sold, developing, having developed or importing products that incorporate the infringed
 intellectual property rights; 

 ● 
 pay
 substantial damages; 

 ● 
 obtain
 a license from the holder of the infringed intellectual property rights, which license may not be available on reasonable terms or
 at all; or 

 ● 
 redesign
 our processes or products, which may result in inferior products or processes. 

 In
the event of a successful claim of infringement against us and our failure or inability to obtain a license to or design around the infringed
intellectual property rights, our business, prospects, operating results and financial condition could be materially adversely affected. 

 Our
current and future patent applications may not result in issued patents or our patent rights may be contested, circumvented, invalidated
or limited in scope, any of which could have a material adverse effect on our ability to prevent others from commercially exploiting
products similar to ours. 

 Our
current and future patent applications may not result in issued patents, which may have a material adverse effect on our ability to prevent
others from commercially exploiting products or technology similar to ours. The outcome of patent applications involves complex legal
and factual questions and the breadth of claims that will be allowed is uncertain. As a result, we cannot be certain that the patent
applications that we file will result in patents being issued, or that our current issued patents, and any patents that may be issued
to us in the future, will afford protection that covers our commercial processes, systems and products or that will afford protection
against competitors with similar products or technology. Numerous prior art patents and pending patent applications owned by others,
as well as prior art non-patent literature, exist in the fields in which we have developed and are developing our technology, which may
preclude our ability to obtain a desired scope of protection in the desired fields. In addition to potential prior art concerns, any
of our existing patents, pending patent applications, or future issued patents or patent applications may also be challenged on the basis
that they are invalid or unenforceable. 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. The rights granted under any issued patents may not provide
us with meaningful protection or competitive advantages, and some foreign countries provide significantly less effective patent enforcement
than the United States. In addition, the claims under our current or future patents may not be broad enough to prevent others from developing
technologies that are similar or that achieve results similar to ours. The intellectual property rights of others could also bar us from
licensing and exploiting our current or future patents. 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. 

 General
Risk Factors 

 The
uncertainty in global and macroeconomic conditions, including economic, political and social instability, including the Russia-Ukraine
conflict, the India-Pakistan conflict, Hamas’ attack on Israel and the Iranian conflict, could reduce consumer spending and disrupt
our supply chain which could negatively affect our results of operations. 

 The
global credit and financial markets have recently experienced extreme volatility and disruptions including severely diminished liquidity
and credit availability, disruptions in access to bank deposits and lending commitments due to bank failures, declines in economic growth,
increases in unemployment rates, supply chain disruptions, heightened interest rates and inflation, stock volatility and uncertainty
about economic stability. 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. 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. For example, in late 2024 and early 2025, the United States, China, and the European
Union each announced either new tariffs, non-tariff barriers, or export controls. Any of these risks, ensuing retaliation, or the further
deterioration of trade relations between countries could have an adverse impact on our financial condition and results of operations.
Additional tariffs or further retaliatory trade measures taken by China or other countries in response could affect the demand for any
of our products, impact the competitive position of our products, prevent us from being able to sell products in certain countries or
otherwise adversely impact our results of operations. Growing tensions, protectionist trade policies, and tariffs may also lead to a
fragmentation of the global economy, a general reduction of international trade in goods and services, and a reduction in the integration
of financial markets, any of which could materially and adversely affect our financial condition, or prospects. There can be no assurance
that further deterioration in credit and financial markets and confidence in economic conditions will not occur. 

 As
a result of sanctions imposed in relation to the Russia-Ukraine conflict, gas prices in the United States have become much more volatile
and, in some cases, risen to historic levels. This rise in price may cause a decrease in RV travel, which could ultimately negatively
impact sales of our batteries for RVs. Further escalation of the Russia-Ukraine conflict and the subsequent response, including further
sanctions or other restrictive actions, by the United States and/or other countries could also adversely impact our supply chain, partners
or customers. The extent and duration of the situation in Ukraine, resulting sanctions and resulting future market disruptions are impossible
to predict but could be significant. Any such disruptions caused by Russian military action or other actions (including cyberattacks
and espionage) or resulting actual and threatened responses to such activity, boycotts or changes in consumer or purchaser preferences,
sanctions, tariffs or cyberattacks, may impact the global economy and adversely affect commodity prices. 

 Our
general business strategy as well as our suppliers’ ability to provide us with raw materials and components, may be adversely affected
by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions, which could directly
affect our ability to attain our operating goals on schedule and on budget, including requiring us to delay or abandon certain development
plans and could have a material adverse effect on our growth strategy, financial performance and stock price. 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. Some of these materials may be sourced from foreign suppliers, and any increase in tariffs or
duties on imported goods could significantly raise the cost of doing business. Additionally, retaliatory tariffs, trade disputes, trade
wars, or changes in international trade agreements may lead to supply chain disruptions, including delays in obtaining critical components
or the need to seek alternative suppliers. If we are unable to mitigate the impact of increased costs or supply chain disruptions, our
financial condition, and ability to develop our product candidates in a timely manner, could be adversely affected. 

 The
cost of our components is a key element in the cost of our products. Increases in the prices of our components, including if our suppliers
choose to pass through their increased costs to us, would result in increased production costs, which may result in a decrease in our
margins and may have a material adverse effect on our business financial condition and results of operations. We have historically offset
cost increases through careful management of our inventory of supplies, ordering six months to a year in advance, and increasing our
purchase order volumes to qualify for volume-based discounts, rather than increase prices to customers. However, we may increase prices
from time to time, which may not be sufficient to offset material price inflation and which may result in loss of customers if they believe
our products are no longer competitively priced. In addition, if we are required to spend a prolonged period of time negotiating price
increases with our suppliers, we may be further delayed in receiving the components necessary to manufacture our products and/or implement
aspects of our growth strategy. 

 Adverse
global conditions, including economic uncertainty, may negatively impact our financial results. 

 Global
conditions, dislocations in the financial markets, any negative financial impacts affecting U.S. as a result of tax reform or changes
to existing trade agreements or tax conventions, may adversely impact our business. 

 In
addition, the global macroeconomic environment has been and may continue to be negatively affected by, among other things, instability
in global economic markets, increased U.S. trade tariffs and trade disputes with other countries, instability in the global credit markets,
supply chain weaknesses, instability in the geopolitical environment and political tensions, and foreign governmental debt concerns.
Such challenges have caused, and may continue to cause, uncertainty and instability in local economies and in global financial markets,
which may adversely affect our business. 

 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. 

 We
are highly dependent on the talent and services of Denis Phares, our Chief Executive Officer and Interim Chief Financial Officer, and
other senior technical and management personnel, including our executive officers, who would be difficult to replace. The loss of Dr.
Phares or other key personnel could disrupt our business and harm our results of operations, and we may not be able to successfully attract
and retain senior leadership necessary to grow our business. 

 Our
future success also depends on our ability to attract and retain other key employees and qualified personnel, and our operations may
be severely disrupted if we lost their services. As we become more well known, there is increased risk that competitors or other companies
will seek to hire our personnel. 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. 

 We
expect to face significant challenges with respect to information security and maintaining the security and integrity of our systems,
as well as with respect to the data stored on or processed by these systems. Advances in technology, and an increase in the level of
sophistication, expertise and resources of hackers, could result in a compromise or breach of our systems or of security measures used
in our business to protect confidential information, personal information, and other data. 

 The
availability and effectiveness of our batteries, and our ability to conduct our business and operations, depend on the continued operation
of information technology and communications systems, some of which we have yet to develop or otherwise obtain the ability to use. Systems
used in our business (including third-party data centers and other information technology systems provided by third parties) are and
will be vulnerable to damage or interruption. Such systems could also be subject to break-ins, sabotage and intentional acts of vandalism,
as well as disruptions and security incidents as a result of non-technical issues, including intentional or inadvertent acts or omissions
by employees, service providers, or others. Some of the systems used in our business will not be fully redundant, and our disaster recovery
planning cannot account for all eventualities. Any data security incidents or other disruptions to any data centers or other systems
used in our business could result in lengthy interruptions in our service. 

 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. 

 We
have experienced significant growth in our business, and our future success depends, in part, on our ability to manage our business as
it continues to expand. We have dedicated resources to expanding our manufacturing capabilities, exploring adjacent addressable markets
and our solid-state cell research and development. If not managed effectively, this growth could result in the over-extension of our
operating infrastructure, management systems and information technology systems. Internal controls and procedures may not be adequate
to support this growth. Failure to adequately manage growth in our business may cause damage to our brand or otherwise have a material
adverse effect on our business, financial condition and results of operations. 

 We
may expand our business through acquisitions in the future, and any future acquisition may not be accretive and may negatively affect
our business. 

 As
part of our growth strategy, we may make future investments in businesses, new technologies, services and other assets that complement
our business. We could fail to realize the anticipated benefits from these activities or experience delays or inefficiencies in realizing
such benefits. Moreover, an acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures,
including disruption to our ongoing operations, management distraction, exposure to additional liabilities and increased expenses, any
of which could adversely impact our business, financial condition and results of operations. Our ability to make these acquisitions and
investments could be restricted by the terms of our current and future indebtedness and to pay for these investments we may use cash
on hand, incur additional debt or issue equity securities, each of which may affect our financial condition or the value of our stock
and could result in dilution to our stockholders. Additional debt would result in increased fixed obligations and could also subject
us to covenants or other restrictions that would impede our ability to manage our operations. 

 Our
operations are subject to a variety of environmental, health and safety rules that can bring scrutiny from regulatory agencies and increase
our costs. 

 Our
operations are subject to environmental, health and safety rules, laws and regulations and we may be subject to additional regulations
as our operations develop and expand. There are significant capital, operating and other costs associated with compliance with these
environmental laws and regulations. While we believe that the policies and programs we have in place are reasonably designed and implemented
to assure compliance with these requirements and to avoid hazardous substance release liability with respect to our manufacturing facility,
we may be faced with new or more stringent compliance obligations that could impose substantial costs. 

 34 

 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. 

 We
are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations
in various jurisdictions in which we conduct or in the future may conduct activities, including the U.S. Foreign Corrupt Practices Act
(“ FCPA ”). The FCPA prohibits us and our officers, directors, employees and business partners acting on our behalf,
including agents, from corruptly offering, promising, authorizing or providing anything of value to a “foreign official”
for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The
FCPA also requires companies to make and keep books, records, and accounts that accurately reflect transactions and dispositions of assets
and to maintain a system of adequate internal accounting controls. A violation of these laws or regulations could adversely affect our
business, results of operations, financial condition and reputation. Our policies and procedures designed to ensure compliance with these
regulations may not be sufficient and our directors, officers, employees, representatives, consultants, agents and business partners
could engage in improper conduct for which we may be held responsible. 

 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. 

 From
time to time, we may be involved in legal proceedings and commercial or contractual disputes, which could have an adverse impact on our
profitability and consolidated financial position. 

 We
may be involved in legal proceedings and commercial or contractual disputes that, from time to time, are significant and which may harm
our reputation. These are typically claims that arise in the normal course of business including, without limitation, commercial or contractual
disputes, including warranty claims and other disputes with customers and suppliers; intellectual property matters; personal injury claims;
environmental issues; tax matters; and employment matters. It is difficult to predict the outcome or ultimate financial exposure, if
any, represented by these matters, and any such exposure may be material. Regardless of outcome, legal proceedings can have an adverse
impact on us because of defense and settlement costs, diversion of management resources and other factors. 

 Environmental,
social and governance matters may cause us to incur additional costs. 

 Some
legislatures, government agencies and listing exchanges have mandated or proposed, and others may in the future further mandate, certain
environmental, social and governance (“ ESG ”) disclosure or performance. For example, the Securities and Exchange Commission
has enacted rules that will mandate certain companies to provide certain climate-related disclosures. In addition, we may face reputational
damage in the event our corporate responsibility initiatives or objectives do not meet the standards or expectations of shareholders,
prospective investors, lawmakers, listing exchanges or other stakeholders. 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
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. 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. In addition, we incur expenses associated with SEC reporting requirements. Furthermore,
if any issues in complying with those requirements are identified (for example, if management or our independent registered public accounting
firm identifies additional material weaknesses in the internal control over financial reporting), we could incur additional costs rectifying
those issues, the existence of those issues could adversely affect our reputation or investor perceptions of it and it may be more expensive
to obtain director and officer liability insurance. Risks associated with our status as a public company may make it more difficult to
attract and retain qualified persons to serve on our board of directors or as executive officers. In addition, as a public company, we
may be subject to stockholder activism, which can lead to substantial costs, distract management and impact the manner in which we operate
our business in ways we cannot currently anticipate. 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. If such claims are successful, our business and results of operations could be materially adversely
affected and even if the claims do not result in litigation or are resolved in our favor, these claims and the time and resources necessary
to resolve them could divert the resources of our management and adversely affect our business and results of operations. 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. 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. 

 Most
of the members of our management team have limited experience managing and operating a publicly traded company, interacting with public
company investors and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully
or efficiently manage our role as a public company subject to significant regulatory oversight and reporting obligations under the federal
securities laws and the continuous scrutiny of securities analysts and investors. 

 These
obligations and constituents require significant attention from our senior management and could divert their attention away from the
day-to-day management of our business, which could adversely affect our business, financial condition, and operating results. 

 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. 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 will need to raise additional funds, including through the issuance
of equity, equity-related or debt securities or by obtaining 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 cannot be certain that additional capital will be available on attractive terms, if at all, when needed,
which could be dilutive to stockholders. If we raise additional funds through the issuance of equity or convertible debt or other equity-linked
securities, our existing stockholders could experience significant dilution. 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. 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. 

 Failure
to service our outstanding debt or comply with the financial covenants in our loan agreement could allow our lenders to accelerate payment
under our loan agreement, which would have a material adverse effect on our results of obligations and financial position and raise substantial
doubt about our ability to continue as a going concern. 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. 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. 

 On
October 20, 2025, we entered into the Sixth Amendment to the Term Loan Agreement, pursuant to which we (i) prepaid $45.0 million of principal
using proceeds from the Second October 2025 Offering (as defined below), (ii) exchanged $25.0 million of principal for Series B Preferred
Stock (convertible at $31.50 per share, with 8% cash and 2% “in kind” dividends), and (iii) had $5.0 million of principal
forgiven by the Term Loan Lenders. Following these transactions, approximately $19.4 million of principal remained outstanding under
the Term Loan, bearing 12% interest payable monthly and maturing in October 2027. We paid $0.9 million in fees (half in cash, half added
to principal) and obtained covenant waivers through December 2026, subject to maintaining $5.0 million of minimum liquidity. 

 The
Sixth Amendment significantly improved our liquidity by reducing total debt from $93.1 million to approximately $19.4 million and deferring
near-term cash interest requirements through the preferred stock exchange and covenant waivers. 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. 

 In
addition, we will need to raise additional debt and/or equity financing to fund our operations and strategic plans and meet our financial
covenants. We have historically been able to raise additional capital through issuance of equity and/or debt financing and we intend
to use the ATM (as defined herein) with Canaccord Genuity, LLC 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. If such financings are not available, or if the terms of such financings are less desirable than we expect, we may be forced
to take actions to reduce our capital or operating expenditures, including by not seeking potential acquisition opportunities, eliminating
redundancies, or reducing or delaying our production facility expansions, which may adversely affect our business, operating results,
financial condition and prospects. Further, any future debt or equity financings may adversely affect us, including the market price
of our common stock and may be dilutive to our current stockholders. Additionally, any convertible or exchangeable securities as well
as preferred stock that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock.
If we are unable to raise additional capital or service our debt, we may be forced to reduce operations, seek the protection of bankruptcy
courts or shut down our operations and dissolve. If we liquidate our assets and the values we receive for our assets in liquidation or
dissolution could be significantly lower than the values reflected in our financial statements. 

 37 

 Restrictions
imposed by our outstanding indebtedness and any future indebtedness may limit our ability to operate our business and to finance our
future operations or capital needs or to engage in acquisitions or other business activities necessary to achieve growth. 

 The
agreements governing our indebtedness restrict us from engaging in specified types of transactions. These restrictive covenants restrict
our ability to, among other things: 

 ● 
 incur
 additional indebtedness; 

 ● 
 create
 or incur encumbrances or liens; 

 ● 
 engage
 in consolidations, amalgamations, mergers, acquisitions, liquidations, dissolutions or dispositions; 

 ● 
 sell,
 transfer or otherwise dispose of assets; and 

 ● 
 pay
 dividends and distributions on, or purchase, redeem, defease, or otherwise acquire or retire for value, our stock. 

 Under
the agreements governing our indebtedness, we are also subject to certain financial covenants, including maintaining minimum levels of
Adjusted EBITDA, minimum liquidity, maximum capital expenditure levels and a minimum fixed charge coverage ratio. We cannot guarantee
that we will be able to maintain compliance with these covenants or, if we fail to do so, that we will be able to obtain waivers from
the applicable lender(s) and/or amend the covenants. Even if we comply with all of the applicable covenants, the restrictions on the
conduct of our business could adversely affect our business by, among other things, limiting our ability to take advantage of financing
opportunities, mergers, acquisitions, investments, and other corporate opportunities that may be beneficial to our business. 

 A
breach of any of the covenants in the agreements governing our existing or future indebtedness could result in an event of default, which,
if not cured or waived, could trigger acceleration of our indebtedness, and may result in the acceleration of or default under any other
debt we may incur in the future to which a cross- acceleration or cross-default provision applies, which could have a material adverse
effect on our business, financial condition and results of operations. In the event of any default under our existing or future credit
facilities, the applicable lenders could elect to terminate borrowing commitments and declare all borrowings and loans outstanding, together
with accrued and unpaid interest and any fees and other obligations, to be immediately due and payable. In addition, our obligations
under our indebtedness are secured by, among other things, a security interest in our intellectual property. During the existence of
an event of default under our credit agreements, the applicable lender could exercise its rights and remedies thereunder, including by
way of initiating foreclosure proceedings against any assets constituting collateral for our obligations under such credit facility. 

 We
have in the past identified material weaknesses in our internal control over financial reporting. These material weaknesses in the future
could adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner 

 Our
management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with the generally accepted accounting principles generally accepted in the United States of America (“ U.S. GAAP ”).
As a public company, we are required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any
changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or
a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. 

 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. Failure to implement and maintain effective internal control over
financial reporting could result in errors in our consolidated financial statements that could result in a restatement of our consolidated
financial statements, and could cause it to fail to meet our reporting obligations, any of which could diminish investor confidence in
us and cause a decline in our equity value. 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.
This assessment will need to include disclosure of any material weaknesses identified by our management in internal control over financial
reporting. If in the future we are no longer classified under the definition of an “emerging growth company,” and/or a “non-accelerated
filer”, our independent registered public accounting firm will also be required, pursuant to Section 404(b) of the Sarbanes-Oxley
Act, to attest to the effectiveness of our internal control over financial reporting in each annual report on Form 10-K to be filed with
the SEC. 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. 

 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. Continued listing of a security on the
Nasdaq Capital Market is conditioned upon compliance with various continued listing standards. In the past, we have received notices
from Nasdaq’s Listing Qualifications Department indicating that we had not complied with certain of the Nasdaq Capital Market’s
continued listing standards, including compliance with the $1.00 minimum bid price for our common stock (the “Minimum Bid Price”)
and market value of listed securities. While we have regained compliance for each instance, there can be no assurance that we will continue to
maintain compliance with the Nasdaq listing requirements, including the Minimum Bid Price, market value of listed securities and stockholder equity standards. 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. Additionally, the market price of our common stock may decline
further and stockholders may lose some or all of their investment. There can be no assurance that we will be able to maintain compliance
with the continued listing standards of the Nasdaq Capital Market. 

 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. The shares being registered for resale into
the public markets represent a significant number of shares in respect to our outstanding common stock. The securityholders selling pursuant
to the registration statements will determine the timing, pricing and rate at which they sell such shares into the public market and
such sales could have a significant negative impact on the trading price of our common stock. As such, while sales by the securityholders
selling pursuant to such registration statements may experience a positive rate of return based on the trading price at the time they
sell their shares, public securityholders may not experience a similar rate of return on the securities they purchased due to differences
in the prices at which such public securityholders purchased their shares and the trading price. Given the substantial number of shares
of common stock being registered for potential resale by the securityholders selling pursuant to such registration statements, the sale
of shares by such securityholders, or the perception in the market that the securityholders of a large number of shares intend to sell
shares, may increase the volatility of the market price of our common stock, and may cause the trading prices of our securities to experience
a decline. 

 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. 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. 

 The
trading market for our common stock will depend, in part, on the research and reports that securities or industry analysts publish about
us. We will not have any control over these analysts. If our financial performance fails to meet analyst estimates or one or more of
the analysts who cover us downgrade our common stock or change their opinion, our stock price would likely decline. If one or more of
these analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which
could cause our stock price or trading volume to decline. 

 If
we do not meet the expectations of investors, stockholders or securities analysts, the market price of our securities may decline. In
addition, fluctuations in the price of our securities could contribute to the loss of all or part of your investment. 

 The
trading price of our common stock may fluctuate substantially and may be lower than its current price. This may be especially true for
companies like ours with a small public float. If an active market for our securities develops and continues, the trading price of our
securities could be volatile and subject to wide fluctuations. The trading price of our common stock depends on many factors, including
those described in this “ Risk Factors ” section, many of which are beyond our control and may not be related to our
operating performance. These fluctuations could cause you to lose all or part of your investment in our common stock. Any of the factors
listed below could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly
below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further
decline. 

 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. The stock
market in general and Nasdaq have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate
to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities,
may not be predictable. A loss of investor confidence in the market for the stocks of other companies which investors perceive to be
similar to us could depress our stock price regardless of our business, prospects, financial conditions or results of operations. Broad
market and industry factors, including the impact of global pandemics, as well as general economic, political and market conditions such
as recessions or interest rate changes, may seriously affect the market price of our common stock, regardless of our actual operating
performance. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and
our ability to obtain additional financing in the future. 

 In
addition, in the past, following periods of volatility in the overall market and the market prices of particular companies’ securities,
securities class action litigations have often been instituted against these companies. Litigation of this type, if instituted against
us, could result in substantial costs and a diversion of our management’s attention and resources. Any adverse determination in
any such litigation or any amounts paid to settle any such actual or threatened litigation could require that we make significant payments. 

 An
active trading market for our securities may not be available on a consistent basis to provide stockholders with adequate liquidity. 

 We
cannot assure you that an active trading market for our common stock will be sustained. Accordingly, we cannot assure you of the liquidity
of any trading market, your ability to sell your shares of our common stock when desired or the prices that you may obtain for your shares. 

 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 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. 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. As of March 26, 2026, there are currently 799,835 share
of common stock issuable upon the conversion of the outstanding Series B Preferred Stock. 

 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. Depending on the nature
and price of any equity issuances by us, the number of shares issuable upon the exercise of such Penny Warrants could be increased and
the exercise price of the Penny Warrants could be adjusted down. 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). 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. 

 The
rights of the holders of shares of our Series B Preferred Stock, while such shares remain outstanding, rank senior to the rights of the
holders of shares of our common stock as to dividends, distributions and payments upon the liquidation, dissolution and winding up of
the Company. Upon liquidation, dissolution or winding up of our affairs, the holders of shares of our Series B Preferred Stock are entitled
to receive a liquidation preference of one thousand dollars ($1,000), plus (2) the aggregate amount of all PIK Dividends (as defined
below) paid since the date of issuance of the Series B Preferred Stock (the “ Initial Issuance Date ”), plus (3) the
aggregate amount of all Cash Dividends and PIK Dividends that have accrued and remain unpaid since the Initial Issuance Date (the “B”).
In addition, 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 (the “ Cash Dividends ”) and (i) 20% “in kind” and
added the Liquidation Preference of such holder’s Series B Preferred Stock (“ PIK Dividends ”). 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 of the Powers, Preferences and Relative, Participating, Optional and Other Restrictions of Series B
Convertible Preferred Stock of the Company (the “ Certificate of Designation ”). 

 These
dividend payment obligations could impact our liquidity and reduce the amount of cash available to us for our working capital needs,
capital expenditures, funding growth opportunities, acquisitions, and other general corporate purposes. 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. 

 Our
operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating
results to fall below expectations or any guidance we may provide. 

 Our
quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results.
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.
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. If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may
provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of
our common stock could decline substantially. Such a stock price decline could occur even when it has met any previously publicly stated
revenue or earnings guidance it may provide. 

 Changes
in laws, regulations or rules, or a failure to comply with any laws, regulations or rules, may adversely affect our business, investments
and results of operations. 

 We
are subject to laws, regulations and rules enacted by national, regional and local governments and Nasdaq. In particular, we are required
to comply with certain SEC, Nasdaq and other legal or regulatory requirements. Compliance with, and monitoring of, applicable laws, regulations
and rules may be difficult, time consuming and costly. Those laws, regulations or rules and their interpretation and application may
also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations.
In addition, a failure to comply with applicable laws, regulations or rules, as interpreted and applied, could have a material adverse
effect on our business and results of operations. 

 Our
Articles of Incorporation designates specific courts as the exclusive forum for substantially all stockholder litigation matters, which
could limit the ability of our stockholders to obtain a favorable forum for disputes with us or our directors, officers or employees. 

 Our
Articles of Incorporation provide that, unless we consent in writing to the selection of an alternative forum, to the fullest extent
permitted by applicable law the Second Judicial District Court of Washoe County, Nevada is the sole and exclusive forum for any or all
actions, suits or proceedings, whether civil, administrative or investigative or that asserts any claim or counterclaim: (a) brought
in our name or right or on our behalf; (b) asserting a claim for breach of any fiduciary duty owed by any of our directors, officers,
employees or agents to us or our stockholders; (c) arising or asserting a claim arising pursuant to any provision of the Nevada Revised
Statutes (the “ NRS ”) Chapters 78 or 92A or any provision of our Articles of Incorporation or our Bylaws; (d) to interpret,
apply, enforce or determine the validity of our Articles of Incorporation or our Bylaws; or (e) asserting a claim governed by the internal
affairs doctrine. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it
finds favorable for disputes with us or our directors, officers, or other employees, which may discourage such lawsuits against us and
our directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in our Articles
of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action
in other jurisdictions, which could adversely affect our business, financial condition and results of operations. 

 Our
Articles of Incorporation also provides that, unless we consent in writing to the selection of an alternative forum, the federal district
courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under
the Securities Act. This provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable
for disputes with us and our directors, officers or other employees and may have the effect of discouraging lawsuits against our directors,
officers and other employees. 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. 

 Our
Articles of Incorporation could discourage another company from acquiring us and may prevent attempts by our stockholders to replace
or remove our management. 

 Provisions
in our Articles of Incorporation and our Bylaws may discourage, delay, or prevent, a merger, acquisition or other change in control that
stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares.
These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby
depressing the market price of our common stock. In addition, these provisions may frustrate or prevent any attempts by our stockholders
to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors.
As our board of directors is responsible for appointing the members of our management team, these provisions could in turn affect any
attempt by our stockholders to replace current members of our management team. 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. 

 We
are an emerging growth company and any decision to comply only with certain reduced reporting and disclosure requirements applicable
to emerging growth companies could make our common stock less attractive to investors. 

 We
are an “emerging growth company,” as defined in the JOBS Act. 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. 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. 

 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. 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. If some investors find our common stock less attractive because we rely on any of these exemptions, there may be a
less active trading market for our common stock and the market price of our common stock may be more volatile and may decline. 

 If
we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce
timely and accurate financial statements or comply with applicable regulations could be impaired, which may adversely affect investor
confidence in us and, as a result, the market price 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. We are continuing to develop
and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in
the reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules
and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our management,
including our principal executive and financial officers. 

 We
must continue to improve our internal control over financial reporting. We will be required to make a formal assessment of the effectiveness
of our internal control over financial reporting and once we cease to be an emerging growth company, we will be required to include an
attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve
compliance with these requirements within the prescribed time period, we will be engaging in a process to document and evaluate our internal
control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal
resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of our internal
control over financial reporting, validate through testing that controls are functioning as documented and implement a continuous reporting
and improvement process for internal control over financial reporting. There is a risk that we will not be able to conclude, within the
prescribed time period or at all, that our internal control over financial reporting is effective as required by Section 404 of the Sarbanes-Oxley
Act. Moreover, our testing, or the subsequent testing by our independent registered public accounting firm, may reveal additional deficiencies
in our internal control over financial reporting that are deemed to be material weaknesses. 

 Any
failure to implement and maintain effective disclosure controls and procedures and internal control over financial reporting, including
the identification of one or more material weaknesses, could cause investors to lose confidence in the accuracy and completeness of our
financial statements and reports, which would likely adversely affect the market price of our common stock. In addition, we could be
subject to sanctions or investigations by Nasdaq, the SEC and other regulatory authorities. 

 Unanticipated
changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect
our financial condition and results of operations. 

 We
will be subject to income taxes in the United States, and our tax liabilities will be subject to the allocation of expenses in differing
jurisdictions. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: 

 ● 
 changes
 in the valuation of our deferred tax assets and liabilities; 

 ● 
 expected
 timing and amount of the release of any tax valuation allowances; 

 ● 
 tax
 effects of stock-based compensation; 

 ● 
 costs
 related to intercompany restructurings; 

 ● 
 changes
 in tax laws, regulations or interpretations thereof; or 

 ● 
 lower
 than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings
 in jurisdictions where we have higher statutory tax rates. 

 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. 

 Item
1C. Cybersecurity 

 Cybersecurity
Risk Management 

 We,
like other companies in our industry, face several cybersecurity risks in connection with our business. Our business strategy, results
of operations, and financial condition have not, to date, been affected by risks from cybersecurity threats. 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.
To effectively prevent, detect, and respond to cybersecurity threats, we maintain a cyber risk management program, which is comprised
of a wide array of policies, standards, architecture, and processes. The cyber risk management program falls under the responsibility
of our Chief Executive Officer, who in turn, manages our outsourced experts in information technology (“ IT ”) and 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. 

 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. Our cybersecurity risk management program
incorporates several components, including information security program assessments, continuous monitoring of critical risks from cybersecurity
threats using automated tools, restoration testing, periodic threat testing, and documented standards, policies, and procedures. 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. 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. 

 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. 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. It 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 . The Chief Executive Officer provides updates to the Board on our cybersecurity risk management program,
including any critical cybersecurity risks, ongoing cybersecurity initiatives and strategies, and applicable regulatory requirements
and industry standards on a regular basis. 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 

 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. 

 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. 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. 

 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. 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. 

 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 ”). 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 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. 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. 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. 

 Our
podcast studio was a 1,772 square foot facility located in Sparks, Nevada. The lease for this space expired on September 20, 2024. 

 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.
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. 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. 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
4. Mine Safety Disclosures 

 Not
applicable. 

 47 

 Part
II 

 Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 

 Market
Information 

 Our
common stock is currently listed on the Nasdaq Capital Market under the symbol “DFLI” and our Public Warrants are currently
listed on the Nasdaq Capital Market under the symbol “DFLIW”. 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. 

 Dividend
Policy 

 We
currently intend to retain all available funds and any future earnings to fund the growth and development of our business. We have never
declared or paid any cash dividends on our common stock. We do not intend to pay cash dividends to our common stockholders in the foreseeable
future. Investors should not purchase our common stock with the expectation of receiving cash dividends. 

 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. 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. 

 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] 

 Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 

 All
statements other than statements of historical fact included in this section regarding our financial position, business strategy and
the plans and objectives of management for future operations, are forward- looking statements. When used in this section, words such
as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions,
as they relate to our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management,
as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those
contemplated by the forward- looking statements as a result of certain factors detailed herein. All subsequent written or oral forward-looking
statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph. 

 Some
of the information contained in this discussion and analysis or set forth elsewhere, including information with respect to our plans
and strategy for our business include forward-looking statements that involve risks, uncertainties and assumptions. You should read the
sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of
important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis. 

 On
December 18, 2025, we effected a reverse stock split for our issued and outstanding Common Stock at a ratio of 1-for-10. All of our historical
share and per share information related to issued and outstanding Common Stock and outstanding options and warrants exercisable for Common
Stock included in this prospectus have been adjusted, on a retroactive basis, to reflect the reverse stock splits. 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. 

 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. We currently offer several lines of batteries across our two brands,
each differentiated by size, power and capacity, consisting of seven different models, which come with an option for internal heat for
cold temperature operation or an option for wireless communication using our Dragonfly IntelLigence feature. As a result of changes to
our marketing focus and corporate objectives, we our focusing our selling efforts of “Battle Born” branded batteries primarily
to OEMs as well as DTC customers. 

 Our
increase in sales is a reflection of a slight recovery in the motorized RV market and increased market penetration as compared to the
prior year. Although our existing RV OEM customers have only slightly increased their year-over-year production rates, the incorporation
of lithium storage systems has accelerated faster than the increase in RV units shipped. This is in contrast to the de-contenting trend
that had occurred over the previous 18 months. DTC sales remained relatively flat, indicating generally constant consumer sentiment in
the space. During the second half of 2025, we continued to implement our corporate optimization initiative, prioritizing product development
to drive near term revenue and profit. For instance, this strategic shift is accelerating our development of purpose-built solutions
for the trucking and industrial markets, resulting in the recent launch of our Battle Born DualFlow Power Pack, a practical, cost-effective
hybrid electrification solution for the trucking industry. 

 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. These include chargers, inverters, monitors,
controllers and other system accessories from brands such as Victron Energy, Progressive Dynamics, Magnum Energy and Sterling Power.
Pursuant to the Asset Purchase Agreement dated April 22, 2022 by and among us and Thomason Jones and the other parties thereto, we also
acquired the assets, including Wakespeed of Thomason Jones, allowing us to include our own alternator regulator in systems that we sell. 

 In
addition to our conventional LFP batteries, we have been developing proprietary dry electrode cell manufacturing processes and solid-state
cell technology. We believe that our solid-state technology design allows for a much safer, more efficient battery cell that we believe
will be a key differentiator in the energy storage market. 

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

 As
of December 31, 2025, we had cash totaling $18.3 million. 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. As discussed under “ -Liquidity and Capital Resources ”
below we expect that we will need to raise additional funds, including through the issuance of equity, equity-related or debt securities
or by obtaining additional credit from financial institutions to fund, together with our principal sources of liquidity, ongoing costs.
If such financings are not available, or if the terms of such financings are less desirable than we expect, we may be forced to take
actions to reduce our capital or operating expenditures, including not seeking potential acquisition opportunities, eliminating redundancies,
or reducing or delaying our production facility expansions, reduce operations, sell off our assets, seek the protection of bankruptcy
courts or shut down our operations and dissolve. 

 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. Pursuant to the License
Agreement, Battle Born LLC granted Stryten an exclusive, worldwide license to use certain trademarks relating to Legacy Dragonfly’s
lithium-ion battery brand, Battle Born Batteries® (the “Licensed Trademarks”) for business-to-business sales of batteries
to customers within the following markets: (i) automative, (ii) marine, (iii) powersports, (iv) lawn and garden, (v) golf cart, and (vi)
military and defense (such industries, the “Stryten Market”). In exchange for the licensing rights, Stryten agreed to pay
Battle Born LLC an initial licensing fee of five million dollars ($5,000,000) (the “Initial Licensing Fee”), which was paid
on August 29, 2024. 

 The
License Agreement provides for mid-single digit royalty payments based on net sales using the Licensed Trademarks, with a tiered structure
reaching up to twenty-five million dollars ($25,000,000), at which point Stryten will be required to pay a nominal annual license fee.
Additional fees will apply for battery design and contract manufacturing services outside of the License Agreement. The License Agreement
is perpetual in term, unless terminated by: (i) Battle Born LLC if Stryten fails to pay the royalty payments required by the License
Agreement and such royalty payments remain unpaid thirty (30) days after notice of such overdue payments (provided that Battle Born LLC
uses reasonable efforts to discuss such overdue payments with Stryten), or (ii) either party (x) if the other party materially breaches
the License Agreement and fails to cure such material breach within thirty (30) days of notice of such breach, (y) upon the occurrence
of certain bankruptcy-related events, or (z) under certain circumstances, if the aggregate royalty payments received by Battle Born LLC
under the License Agreement are less than fifteen million dollars ($15,000,000) after five (5) years. 

 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. 
 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. 
 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. 
 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. 

 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. 

 ChEF
Equity Facility 

 We
and Chardan Capital Markets LLC, a New York limited liability company (“CCM LLC”) entered into a purchase agreement (as amended,
the “ ChEF Purchase Agreement ”) and a Registration Rights Agreement in connection with our merger in October 2022 (the
“ Business Combination ”). Pursuant to the Original Purchase Agreement, we 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).
The ChEF Purchase Agreement terminated in December 2025. 

 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. 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. 

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

 On
April 28, 2025, pursuant to the Purchase Agreement, we sold to the Purchaser, in the second closing of the Private Placement (the “Second
Closing”) 45 Preferred Shares at a price of $100,000 per share, initially convertible into shares of common stock at a conversion
price of $5.95 per share, subject to adjustment. 

 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 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. Under the Fifth Amendment, the Term Loan Lenders agreed
to, among other matters (i) receive no principal or interest payments under the Term Loan Agreement through March 31, 2026, and (ii)
remove certain financial covenant tests under the Term Loan, provided that we maintain cash and cash equivalents equal to at least $2.5
million through such date. 

 On
June 23, 2025, we and the holder of Private Placement Convertible Preferred Warrants agreed to cancel such holder’s Private Placement
Convertible Preferred Warrants to purchase up to an aggregate of 400 shares of Series A Preferred Stock, with an exercise price of $100,000
per share of Series A Preferred Stock. As a result, the Private Placement Convertible Preferred Warrants are no longer outstanding. 

 On
July 20, 2025, we entered into a Settlement and Release Agreement (the “ Release Agreement ”) with the holder of the
outstanding shares of Series A Preferred Stock. Pursuant to the terms of the Release Agreement, we issued and delivered 210,000 shares
of common stock to the holder and the holder surrendered to the Company all of the outstanding shares of Series A Preferred Stock. In
addition, under the Release Agreement, upon the issuance of the shares of common stock, our obligations under the Purchase Agreement,
the Certificate of Designation governing the Series A Preferred Stock and the other agreements entered into in connection with the offering
of the Series A Preferred Stock were satisfied in full and the Purchase Agreement and the other agreements were deemed terminated and
any remaining shares of Series A Preferred Stock that were outstanding or deemed to be outstanding were deemed cancelled and no longer
outstanding. We have no further obligation to issue any shares of common stock or Series A Preferred Stock to the holder under the Purchase
Agreement or otherwise. Under the Release Agreement, each party also provided a full release to the other party. 

 51 

 July
2025 Offering 

 On
July 30, 2025, we entered into an underwriting agreement with Canaccord Genuity LLC (“ Canaccord ”), as representative
of the several underwriters named in the certain underwriting agreement, relating to an underwritten public offering (the “ July
2025 Public Offering ”) of 2,198,000 shares of common stock, at a price to the public of $2.50 per share. On July 31, 2025,
we completed the July 2025 Public Offering raising gross proceeds of approximately $5.5 million and net proceeds of $4.7 million after
deducting underwriting discounts and commissions and other estimated offering expenses payable by us. 

 October
2025 Offerings 

 On
October 6, 2025, we entered into an underwriting agreement with Canaccord, as representative of the several underwriters (the “ First
Offering Underwriters ”) named in the underwriting agreement dated October 6, 2025, relating to an underwritten public offering
(the “ First October 2025 Offering ”) of 2,000,000 shares of common stock at a price to the public of $12.50 per share,
which includes the First Offering Underwriters’ option to purchase an additional 300,000 shares of common stock, at a public offering
price of $12.50 per share. On October 8, 2025, we completed the First October 2025 Offering, including the full exercise of the additional
300,000 shares of common stock, raising gross proceeds of approximately $28.8 million and net proceeds of $26.9 million after deducting
underwriting discounts and commissions and other estimated offering expenses payable by us. On October 8, 2025 upon a request from our
Term Loan Lenders under the term loan agreement, we repaid $4.0 million of principal to satisfy a portion of its outstanding principal
under the Term Loan Agreement. 

 On
October 16, 2025, we entered into an additional underwriting agreement with Canaccord, as representative of the several underwriters
(the “ Second Offering Underwriters ”) named in the underwriting agreement, dated October 17, 2025 (the “ Second
Offering Underwriting Agreement ”), relating to an underwritten public offering (the “ Second October 2025 Offering ”)
of 3,600,000 shares of common stock at a price to the public of $13.50 per share, and (ii) prefunded warrants (the “ October
2025 Pre-Funded Warrants ”) to purchase up to 500,000 shares of common stock (the “ Pre-Funded Warrant Shares ”)
at a price to the public of $13.50 per October 2025 Pre-Funded Warrant, which represents the per share public offering price for the
Shares (as defined below) less the $0.001 per share exercise price for each such Pre-Funded Warrant. 

 Sixth
Amendment to Term Loan, Series B Preferred Stock Issuance and 2025 Debt Restructuring 

 On
October 20, 2025, we entered into the Sixth Amendment to the Term Loan Agreement with the Term Loan Lenders to, among other matters,
(i) adjust the fixed interest rate of the remaining outstanding principal amount under the Term Loan Agreement to a fixed interest rate
of 12% per annum, payable monthly commencing December 31, 2025 that will mature in October 2027, and (ii) waive any applicable financial
covenants (except for a financial covenant requiring us to maintain cash and cash equivalents equal to or greater than $5.0 million)
through December 31, 2026. In connection with the Sixth Amendment, (i) we made a prepayment of $45.0 million of outstanding indebtedness
under the Term Loan Agreement from the net proceeds from the Second October 2025 Offering (the “ Loan Prepayment ”),
(ii) the Term Loan Lenders forgave the repayment of $5.0 million of the outstanding principal under the Term Loan Agreement, (iii) we
paid a fee to the Term Loan Lenders equal to approximately $450,000 in cash and $450,000 added to principal outstanding amount of the
loan under the Term Loan Agreement; and (iv) we issued 25,000 shares of Series B Preferred Stock in exchange for $25.0 million outstanding
principal amount of the Term Loan. The remaining outstanding principal amount under the Term Loan Agreement of approximately $19.0 million,
after the repayment and forgiveness disclosed above, will have a fixed interest rate of 12% per annum, payable monthly commencing December
31, 2025 and will mature in October 2027. In addition, certain covenants under the Term Loan Agreement have been waived through December
31, 2026, and we have agreed to a minimum liquidity covenant of $5.0 million calculated on a monthly basis. 

 On
November 4, 2025, we filed a Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Restrictions
of Series B Convertible Preferred Stock (the “Series B Certificate of Designation”) with the Secretary of State of the State
of Nevada to establish the rights, privileges, preferences, and restrictions of the Series B Preferred Stock. As set forth in the Certificate
of Designation, we designated 25,000 shares of preferred stock as Series B Preferred Stock with a stated value of $1,000 per share. The
Series B Preferred Stock is convertible into shares of common stock at the option of the Term Lenders at a conversion price of $31.50
per share, or an aggregate of 793,651 shares of common stock. 

 52 

 On
November 4, 2025, we entered into the Exchange Agreement with the Term Loan Lenders pursuant to we issued 25,000 shares of newly created
Series B Preferred Stock in exchange for $25.0 million outstanding principal amount of the Term Loan. The Series B Preferred Stock (i)
is convertible into shares of common stock at the option of the Term Loan Lenders at a conversion price of $31.50 per share, or an aggregate
of 793,651 shares of common stock, (ii) has a dividend of 8% per annum payable quarterly in cash and (iii) has a dividend of 2% per annum
payable quarterly in kind (“ PIK Dividends ”), which includes the aggregate amount of all paid PIK Dividends and any
accrued and unpaid PIK Dividends on the applicable dividend date. In addition, we have a right to redeem any outstanding shares of the
Series B Preferred Stock at our option at the greater of (i) the stated value plus any outstanding dividends and (ii) the as-converted
value of the shares of common stock underlying the Series B Preferred Stock (the “Optional Redemption Price”). The Term Loan
Lenders have also agreed not to convert any shares of the Series B Preferred Stock for a period of six months following the issuance
of the Series B Preferred Stock. In connection with any future equity offerings, we will be required to use 50% of the net proceeds from
such offering to redeem outstanding shares of the Series B Preferred Stock at the Optional Redemption Price. In the event we have not
redeemed the outstanding shares of Series B Preferred Stock by October 7, 2027 or upon the occurrence of a Non-Payment Event (as defined
in the Series B Certificate of Designation), the holders will have the right to require us to redeem the Series B Preferred Stock at
the Optional Redemption Price. 

 Equity
Distribution Agreement 

 In
January 2026, we entered into an Equity Distribution Agreement with Canaccord Genuity LLC (“ Canaccord ”) under which
we may offer and sell, from time to time, shares of our common stock through an at-the-market equity offering program (the “ ATM ”)
for up to $50.0 million in gross proceeds. 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. We generate sales through (1) direct-to-customer
and (2) through OEMs, particularly in the RV market. 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. 

 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. 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. Therefore, future RV OEM sales will be
subject to risks and uncertainties, including the number of RVs these OEMs manufacture and sell, which in turn may be driven by the expectations
these OEMs have around end market consumer demand. 

 Demand
from end market consumers is impacted by a number of factors, including travel restrictions, fuel costs and energy demands (including
an increasing trend towards the use of green energy), as well as overall macro-economic conditions and inflation. Sales of our batteries
have benefited from the increased adoption of the RV lifestyle, the demand for and inclusion of additional appliances and electronics
in RVs, and the accelerating trend of solar power adoption among RV customers. However, macro-economic conditions and increased competition
from imported battery packs have led to a decrease in direct to consumer sales. We have focused on product diversification, including
the introduction of batteries equipped with our Dragonfly IntelLigence technology and the expansion of complementary system components
that support integrated power solutions across our end markets. We expect that direct to consumer sales will remain relatively flat through
2026. However, we expect growth among our existing RV OEM customers to be driven by expanded adoption of our products across additional
models and configurations, as well as increased system content per unit, rather than solely by changes in overall RV shipment volumes.
In addition, we anticipate increased revenue from continued expansion within existing customer relationships across other end markets,
including industrial and commercial energy storage applications and the heavy-duty trucking market, where fleet customers have begun
to adopt our systems and expand deployments following initial pilot programs 

 53 

 Supply 

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

 As
a result of our battery chemistry and active steps we have taken to manage our inventory levels, we have not been subject to the shortages
or price impacts that have been present for manufacturers of nickel manganese cobalt and nickel cobalt aluminum batteries. As we look
toward the production of our solid-state cells, we have signed a Commercial Offtake Agreement with a lithium mining company located in
Nevada for the supply of lithium, which we expect will enable us to further manage our cost of goods over time. 

 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. In any particular period, changes in the mix and volume of particular products sold and the prices of those products
relative to other products will impact our average selling price and our cost of goods sold. Despite our work to moderate increased supply-related
costs, the price of our products may also increase as a result of increases in the cost of components due to inflation, currency fluctuations
and tariffs. OEM sales typically result in lower average selling prices and related margins, which could result in margin erosion, negatively
impact our growth or require us to raise our prices. However, this reduction is typically offset by the benefits of increased sales volumes.
Sales of third-party sourced accessories typically have lower related margin. We expect accessory sales to increase as we further develop
full-system design expertise and product offerings and consumers increasingly demand more sophisticated systems, rather than simple drop-in
replacements. In addition to the impacts attributable to the general sales mix across our products and accessories, our results of operations
are impacted by the relative margins of products sold. As we continue to introduce new products at varying price points, our overall
gross margin may vary from period to period as a result of changes in product and customer mix. 

 Production
Capacity 

 All
of our battery assembly currently takes place at our 390,240 square foot headquarters and manufacturing facility located in Reno, Nevada.
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. Our existing facility has the capacity to add up to four additional LFP battery production lines
and construct and operate a pilot production line for our solid-state cells, all designed to maximize the capacity of our manufacturing
facility. 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. We have also focused on optimizing our
manufacturing efficiency and throughput, enabling us to increase our production capacity without the need for increased headcount. 

 54 

 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. As we continue to expand into new markets, develop new products and move
towards production of our own conventional LFP cells and, in the longer term, solid state cells, we will experience competition with
a wider range of companies. These competitors may have greater resources than we do and may be able to devote greater resources to the
development of their current and future technologies. Our competitors may be able to source materials and components at lower costs,
which may require us to evaluate measures to reduce our own costs, lower the price of our products or increase sales volumes in order
to maintain our expected levels of profitability. 

 Research
and Development 

 Our
research and development is currently primarily focused on the scaling our proprietary dry electrode process for domestic production
of full LFP cells. Although we have reallocated resources from the advanced manufacturing of solid-state lithium-ion batteries in order
to focus on conventional cells, we expect to return to the solid-state chemistry as capital becomes more available for these longer term
projects. 

 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. 

 Cost
of Goods Sold 

 Cost
of goods sold includes the cost of cells and other components of our LFP batteries, labor and overhead, logistics and freight costs,
and depreciation of manufacturing equipment. 

 Gross
Profit 

 Gross
profit, calculated as net sales less cost of goods sold, may vary between periods and is primarily affected by various factors including
average selling prices, product costs, product mix and customer mix. 

 Operating
Expenses 

 Research
and development 

 Research
and development costs include personnel-related expenses for scientists, experienced engineers and technicians as well as the material
and supplies to support the development of new products and our solid-state technology. 

 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. 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. 

 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. This data should be read together
with our financial statements and related notes included elsewhere in this Annual Report, and is qualified in its entirety by reference
to such financial statements and related notes. 

 Years 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 increase was primarily due to higher OEM battery and accessory sales of new models to existing customers
and licensing revenue which is part of the Stryten Licensing Agreement entered into the second half of 2024. 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 expect our sales to increase in the next 12 months as our customers expand the number of models they include our battery
systems in for the new model year and our entrance into new markets, trucking and industrials, with new product offerings. 

 56 

 Cost
of Goods Sold 

 Cost
of goods sold increased by $4.0 million, or 10.2%, to $43.0 million for the year ended December 31, 2025, as compared to $39.0 million
for the year ended December 31, 2024. This increase was to higher unit volume of batteries and accessories. Overhead increased due to
allocation of expense related to the new building and lease. We expect our cost of goods sold to increase over the next 12 months in
conjunction with the anticipated increase in revenue and higher tariffs but will be slightly offset with some automation initiatives
in the second quarter of 2026. 

 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.
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. The decrease was primarily a result of lower employee related expenses in the amount of
$1.5 million due to reduced headcount along with lower rent, travel and supplies. We expect Research and Development expenses to be relatively
stable over the next year. 

 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. This increase was primarily due to $3.2 million in expenses for the debt restructure
and preferred stock financing along with $1.6 million in higher personnel costs related to increase in engineering and product development
staffing. Additionally, we saw an increase in the allocation of building and depreciation expense of $1.7 million on our properties and
impairment of three leases and related leasehold improvements of $2.9 million. These increases were partially offset by a reduction in
legal, investor relations, insurance, board, audit and accounting support fees of $1.8 million. 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. 

 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.
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. Other expense in 2025 is comprised primarily of debt extinguishment expense of $31.8 million related to our
debt restructure and $20.3 million in interest expense related to our debt securities. The $31.8 million loss on debt extinguishment
is comprised of a (i) pro rata debt discount of $26.2 million, (ii) Series B Preferred shares issued in settlement of $25.0 million
of principal, with a fair value of $21.7 million netting a $3.3 gain, and a pro rata debt discount reduction of $13.0 million,
resulting in a net loss of $9.7 million, (iii) amendment fees of $0.9 million, (iv) offset by a gain on the debt principal forgiven
of $5.0 million. These increases are partially offset by a change in fair market value of warrant liability in the amount of $5.1
million. 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. The income tax benefit reflects our expected
use of losses in the period against future tax obligations. Management evaluated the positive and negative evidence bearing upon the
realizability of its deferred tax assets and determined that it is more likely than not that we will not recognize the benefits of the
deferred tax assets primarily due to us entering into a 3-year cumulative loss position. 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. 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.
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. 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. 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. 

 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. 

 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. Changes in estimates used in these and other items could have a material impact
on our financial statements. 

 We
believe that the following accounting estimates are the most critical to the judgments and assumptions used in the preparation of our
financial statements because they involve significant estimation uncertainty and have had, or are reasonably likely to have, a material
impact on our financial condition and results of operations. 

 Inventory
Valuation 

 We
maintain reserves for excess and obsolete inventory and for inventory that is carried at amounts in excess of its estimated realizable
value. These reserves are inherently judgmental and involve significant estimates regarding expected future demand, product life cycles,
pricing, and the recoverability of costs through future sales. In estimating these reserves, we consider factors such as recent sales
experience, forecasted demand, the aging of inventories and specific identification of items that may be obsolete or slow-moving. 

 Changes
in these assumptions, including adverse changes in customer demand, technological developments, or pricing pressures, could result in
materially different reserve levels and related cost of goods sold in future periods. For example, a decrease in expected demand or sales
prices, or an increase in the aging of inventory, could require us to increase our reserves, which would negatively affect our gross
margin. Conversely, if actual demand is higher than currently estimated, our reserves could prove to be overstated, resulting in lower
cost of goods sold in future periods. 

 Warrants 

 We
issue warrants to purchase our common stock in connection with certain financing and other transactions. We apply the relevant guidance
in ASC 480 and ASC 815 in determining whether warrants should be classified as liabilities or equity. Warrants that are classified as
liabilities are initially recorded at fair value and remeasured at fair value at each reporting date, with changes in fair value recognized
in earnings. 

 The
fair value of liability-classified warrants involves significant judgment, as it is based on valuation models that incorporate various
inputs, including our common stock price, expected stock price volatility, expected term, risk-free interest rates and, as applicable,
other market-based or contractual features. These inputs are subject to estimation uncertainty and can change over time in response to
our operating performance, changes in our capital structure, market conditions or other factors. 

 Because
changes in these inputs directly affect the fair value of the warrants, they can result in material volatility in our reported earnings
from period to period. For example, an increase in the price or volatility of our common stock generally increases the fair value of
liability-classified warrants and may result in a loss recognized in our statement of operations, whereas decreases in stock price or
volatility may result in a gain. 

 58 

 Income
Taxes 

 We
account for income taxes using the asset and liability 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 and for operating loss and
tax credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered or settled. 

 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. We also establish a valuation allowance to reduce deferred
tax assets to an amount that is more likely than not to be realized. 

 The
assessment of the realizability of deferred tax assets and the recognition and measurement of uncertain tax positions involve significant
judgment and estimation, including projections of future taxable income, the timing and character of that income, the reversal of existing
temporary differences, the outcome of tax examinations and the interpretation of tax laws and regulations in multiple jurisdictions.
Our projections of future taxable income are inherently uncertain and subject to change due to changes in our business, our industry,
and the overall economic environment. 

 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. For example, evidence of sustained profitability in one or more jurisdictions could result in a reduction of the
valuation allowance and a related decrease in income tax expense, whereas evidence of sustained losses or unfavorable changes in tax
law could result in an increase in the valuation allowance and higher income tax expense. 

 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. Our incremental borrowing rate is derived from market data, including current borrowing rates available
to us for similar terms and collateral, as well as broader market interest rate information. We also make judgments regarding the lease
term, including renewal and termination options, when it is reasonably certain that such options will be exercised. 

 These
estimates are subjective and can significantly affect the measurement of our right-of-use assets, lease liabilities and related lease
cost recognized in the statement of operations. Changes in our assessment of the incremental borrowing rate, or our expectations about
exercising renewal or termination options, could result in material changes to the recorded lease liabilities and right-of-use assets
and affect the pattern of lease expense recognition over time. 

 License
Arrangement 

 We
have entered into license arrangements under which we receive upfront compensation. 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. 

 The
determination of the appropriate recognition pattern involves significant judgment, including our assessment of the nature and timing
of performance obligations, the expected duration and level of customer engagement, and the likelihood of renewal or modification of
the arrangement. These factors are inherently uncertain and may change over time as we gain more experience with the arrangements or
as customer behavior evolves. 

 If
our expectations regarding the timing or amount of the benefits to be provided under these arrangements change, or if we modify or renew
the arrangements on terms different from those originally anticipated, we may be required to adjust the recognition pattern, which could
result in a material increase or decrease in revenue in one or more reporting periods. 

 Tariffs 

 We
import certain components used in the manufacturing of our products and are responsible for calculating and paying applicable tariffs
and customs duties. Determining the appropriate tariffs involves judgment, including the interpretation and application of customs classifications,
trade agreements and dutiable values. 

 Changes
in customs regulations, interpretations by authorities, trade policies, or our sourcing and supply chain strategies could affect the
applicable tariff rates or classifications and result in additional assessments, refunds or penalties. To the extent that we are required
to pay higher tariffs or duties than currently estimated, or if we are unable to effectively mitigate increases through pricing or supply
chain actions, our cost of goods sold and gross margin could be materially affected. 

 59 

 Non-GAAP
Financial Measures 

 This
Annual Report includes a non-GAAP measure that we use to supplement our results presented in accordance with U.S. GAAP. EBITDA is defined
as earnings before interest and other income (expenses), income taxes, and depreciation and amortization. Adjusted EBITDA is calculated
as EBITDA adjusted for stock-based compensation, change in fair market value of warrant liabilities, non-recurring costs associated with
strategic financing, reverse stock split, litigation and loss on settlement. 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. 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. 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. 

 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. 

 (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. 

 (6) 
 Debt
 Restructure expenses including legal and professional services. 

 (7) 
 Termination
 fee related to the ChEF Equity Facility. 

 (8) 
 Preferred
Stock Financing is comprised of the expense relating to the Offerings. 

 (9) 
 In
2025, impairment of ROU assets and leasehold improvements from our previous main office, as well as Fernley location and prior storage
warehouse. In 2024, impairment of asset previously classified as held for sale. 

 (10) 
 Revision
 to estimate of prior year tariff underpayment. 

 (11) 
 Series
 B Preferred Stock Dividend. 

 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. As of December 31, 2025, we had cash
totaling $18.3 million. We believe that our cash at December 31, 2025 will fund our operations through the end of 2026. 

 In
the year ended December 31, 2025, we raised an aggregate of $90.9 million in net proceeds in connection with our various financings and capital
raises throughout the year, as described per raise in the “ Overview” section above. 

 In
connection with increased sales year over year, we increased our purchase activities in 2025. As a result, our inventory balance at December
31, 2025 increased by $2.5 million to $24.2 million, compared to $21.7 million at December 31, 2024. 

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

 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. 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. 

 As
described in “ -Liquidity and Capital Resources” above, under the Sixth Amendment, we (i) prepaid $45.0 million of
principal using proceeds from the Second October 2025 Offering, (ii) exchanged $25.0 million of principal for redeemable Series B
Preferred Stock (convertible at $31.50 per share, with 8% cash and 2% “in kind” dividends), which is redeemable in
October 2027 unless otherwise converted by the holder, and (iii) had $5.0 million of principal forgiven by the Term Loan Lenders.
Following these transactions, approximately $19.4 million of principal remained outstanding under the Term Loan, bearing 12%
interest payable monthly and maturing in October 2027. We paid $0.9 million in fees (half in cash, half added to principal) and
obtained covenant waivers through December 2026, subject to maintaining $5.0 million of minimum liquidity. 

 The
Sixth Amendment significantly improved our liquidity by reducing total debt from $93.1 million to approximately $19.4 million and deferring
near-term cash interest requirements through the preferred stock exchange and covenant waivers. 

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

 The
Term Loan is secured by substantially all assets of the Company, Battle Born LLC and Legacy Dragonfly, and we pledged our equity interests
in Battle Born LLC and Legacy Dragonfly as additional collateral. In connection with the Business Combination, the Term Loan Lenders
also received Penny Warrants and $10 Warrants. 

 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. In connection with the July 2025 Offering, we agreed
not to sell shares of our common stock for a period of 90 days following the closing of the offering, subject to certain exceptions 

 In
2024, we identified an underpayment of tariffs to U.S. Customs and Border Protection (“CBP”) in the amount of approximately
$1.66 million in the aggregate, related to the improper classification and valuation of certain of the products used in our batteries.
We have reported the underpayment to CBP. In June 2025, after a comprehensive review of this tariff calculation, an additional $0.29
million was discovered and also reported to CBP and a payment plan of $0.05 million per week was put into place and as of December 31,
2025, the remaining balance due is $0.6 million. 

 62 

 Going
Concern 

 For
the year ended December 31, 2025, we incurred losses and had a negative cash flow from operations. As of December 31, 2025, we had approximately
$18.3 million in cash and cash equivalents and a working capital of $ 30.4 million. 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. 

 Under
the Term Loan Agreement, we are obligated to comply with certain financial covenants, which include maintaining a maximum senior leverage
ratio, minimum liquidity, a springing fixed charge coverage ratio, and maximum capital expenditures. On March 31, 2024, April 29, 2024,
May, 30, 2024, June 28, 2024, July 31, 2024, August 31, 2024, September 30, 2024, October 31, 2024, November 30, 2024 and December 31,
2024, we obtained waivers from the Term Loan administrative agent and lenders of its failures to satisfy the liquidity requirement under
the Term Loan for the quarters ended March 31, 2024, June 30, 2024, September 30, 2024, and December 31, 2024 and the fiscal months ended
April 30, 2024, May 31, 2024, July 31, 2024, August 31, 2024, October 31, 2024, and November 30, 2024, as applicable. In connection with
the License Agreement, on July 29, 2024, us, Legacy Dragonfly and Battle Born LLC entered into the Second Amendment. Pursuant to the
Second Amendment, the Term Loan Lenders (i) consented to the transactions contemplated by the License Agreement and the Trademark Transfer
Agreement and (ii) agreed to waive the mandatory prepayment under the Loan Agreement that would have been due to the Lenders under the
Term Loan upon Battle Born LLC’s receipt of the Initial Licensing Fee. In connection with the Second Amendment, Battle Born LLC
entered into the Joinder. 

 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. For Payment Dates
occurring on or after January 1, 2025 (including interest accruing from October 1, 2024, through December 31, 2024), all interest shall
be paid in cash at a rate equal to Adjusted Term SOFR plus the Applicable Margin. 

 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. 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 ”). The Purchase Agreement
called for us to authorize a new series of convertible preferred stock of the Company designated as the Series A Convertible Preferred
Stock, par value $0.0001 per share (the “Series A Preferred Stock”), which shall be convertible into shares of the Company’s
common stock, and sell to each Buyer an aggregate number of shares of Series A Preferred Stock and 20 warrants, to each buyer, that are
convertible to common stock. During the year ended December 31, 2025, we received proceeds of $8,000 less $670 in costs for net proceeds
of $7,330 due to the conversion of for the conversion of 800 shares of Series A Preferred Stock for 3,231,462 shares of common stock
which we have been using for working capital and general corporate purposes. As of December 31, 2025, all Series A Convertible Preferred
Stock has been converted into common stock. 

 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. 

 In
addition, investors received warrants to purchase up to 4,000 shares of Series A Preferred Stock at $10,000 per share, potentially providing
up to $40 million in future capital, however, these warrants were cancelled on June 23, 2025. 

 63 

 On
July 30, 2025, we received proceeds of $5,495 less $811 in costs, which we have been using for working capital and other general corporate
purposes, including the repayment of indebtedness in the ordinary course. Investors received an aggregate of 2,198,000 shares of common
stock. 

 On
October 6, 2025, we received proceeds of $26,925, net of costs, in connection with the issuance of 2,300,000 shares of common stock and
option to purchase 300,000 shares of common stock. On October 17, 2025, we received additional proceeds of $51,928, net of costs, from
the issuance of 3,600,000 shares of common stock and 500,000 pre-funded warrants to purchase shares of common stock. We used the aggregate
net proceeds for working capital and other general corporate purposes, including the repayment of indebtedness in the ordinary course
of business. Additionally, on October 20, 2025, the Term Loan was restructured and we entered into the Sixth Amendment (the “Sixth
Amendment”) with the Term Loan lenders, which included new interest payment terms, $45,000 prepayment in October, and $5,000 debt
cancellation. Lastly, as part of the restructuring, on November 4, 2025, we and the lenders entered into an exchange agreement (the “Exchange
Agreement”) pursuant to which we issued 25,000 shares of Series B Preferred Stock in exchange for $25,000 outstanding principal
amount of the Term Loan. Please see Notes 6 & 10 in our accompanying condensed consolidated financial statements for more
information regarding the offerings, term loan amendment, and exchange agreement that occurred in October and November 2025. 

 Subsequent
to year end, on January 30, 2026, weentered into an Equity Distribution Agreement with Canaccord Genuity LLC, as lead agent and representative
of the other sales agents, establishing an at-the-market equity offering program under which we may, at our discretion, offer and sell
from time to time up to $50 million of its common stock. While we are not obligated to issue any shares under the agreement and retain
full control over the timing, amount, pricing, and terms of any sales effected through the lead agent, this agreement provides us with
a flexible, readily accessible source of capital to support its liquidity needs, subject to customary closing conditions, a 3% sales
commission and reimbursement of specified expenses payable to the agents, and standard indemnification and contribution provisions. 

 As
presented above, strategic initiatives were executed in 2025 and early 2026 in order to alleviate the substantial doubt regarding our ability to continue as a going concern. These initiatives include multiple capital raises totaling a net cash increase
of $90.0 million and Term Loan restructuring to reduce principal and interest owed, including a significant principal paydown, partial debt
cancellation, and partial principal conversion into preferred shares, along with the at-the-market equity offering program entered into
January 2026. With these strong initiatives, along with continued revenue generation anticipated in the next twelve months and our
ability to maintain covenant compliance with a monthly liquidity minimum of $5,000, management has concluded that the substantial doubt
regarding our ability to continue as a going concern has been mitigated. 

 In
addition, we may need to raise additional debt and/or equity financing to fund our operations, strategic plans, meet our financial covenants
under the Term Loan and our redemption obligations under the Series B Preferred Stock and repay our outstanding indebtedness under the Term Loan.
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. 

 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. 

 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. 

 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. 

 Financing
Activities 

 Net
cash provided by financing activities was $41.3 million for the year ended December 31, 2025, primarily as a result of net proceeds of
$26.9 million from the First October 2025 Offering, $51.9 million from the Second Offering Underwriting Agreement, $7.3 million as part
of the Purchase Agreement entered into in February 2025 and $4.7 million as part of the public offering in July 2025 partially offset
by $49.1 million partial repayment of the Term Loan. 

 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. 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. 

 Additionally,
we are required to pay to the holders of the Series B Preferred Stock 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. 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. Additionally, in connection with any future equity offerings,
we are required to use 50% of the net proceeds from such offering to redeem outstanding shares of the Series B Preferred Stock at the
Optional Redemption Price. In the event we have not redeemed the outstanding shares of Series B Preferred Stock by October 7, 2027 or
upon the occurrence of a Non-Payment Event (as defined in the Certificate of Designation), the holders will have the right to require
us to redeem the Series B Preferred Stock at the Optional Redemption Price. 

 JOBS
Act Accounting Election 

 As
an emerging growth company under the JOBS Act, we are eligible to take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies. We have elected not to opt out of such extended
transition period. Accordingly, when an accounting standard is issued or revised and it has different application dates for public or
private companies, we, as an emerging growth company, will adopt the new or revised accounting standard at the time private companies
adopt the new or revised accounting standard, unless early adoption is permitted by the accounting standard, and we elect early adoption.
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. 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. 

 Item
9A. Controls and Procedures 

 Evaluation
of Disclosure Controls and Procedures 

 We
maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under
the Exchange Act, and the rules and regulations thereunder, is recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal
executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing
and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply
its judgment in evaluating the cost-benefit relationship of possible controls and procedures. 

 As
required by Rule 13a-15(b) under the Exchange Act, our management, under the supervision and with the participation of our principal
executive officer and principal financial officer, has evaluated the effectiveness of the design and implementation of our disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2025. Based
on that evaluation, management concluded that as of December 31, 2025, the Company did maintain effective disclosure controls and procedures. 

 Management’s
Annual Report on Internal Control Over Financial Reporting 

 Our
management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined
in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed under the supervision
of our principal executive officer and principal financial officer to provide reasonable assurance regarding the reliability of financial
reporting and preparation of our financial statements for external purposes in accordance with generally accepted accounting principles. 

 Due
to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and, even when determined
to be effective, can only provide reasonable, not absolute, assurance with respect to financial statement preparation and presentation.
Projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate as a result
of changes in conditions or deterioration in the degree of compliance. 

 Under
the supervision and with the participation of our management, including our Chief Executive Officer, who is also acting as our Interim
Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the
framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“ COSO ”)
issued in May 2013 and related COSO guidance. Based on our evaluation under this framework, management concluded that, as of December
31, 2025, our internal control over financial reporting was considered effective. 

 This
Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm on our internal control over
financial reporting due to an exemption established by the JOBS Act for “emerging growth companies.” In addition, we are
currently a non-accelerated filer and are therefore not required to provide an attestation report on our internal control over financial
reporting until such time as we are an accelerated filer or large accelerated filer. 

 Changes
in Internal Control over Financial Reporting 

 No
changes in our internal control over financial reporting (as defined by Rules 13a015(f) and 15d-15(f) under the Exchange Act) occurred
during the fiscal quarter ended December 31, 2025, that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting. 

 Item
9B. Other Information 

 (a)
None. 

 (b)
During the fiscal quarter ended December 31, 2025, none of our directors or “officers” (as defined in Rule 16a-1(f) under
the Exchange Act) adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,”
as each term is defined in Item 408(c) of Regulation S-K. 

 Item
9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections 

 Not
applicable. 

 66 

 PART
III 

 Item
10. Directors, Executive Officers, and Corporate Governance 

 The
following table provides information regarding our executive officers and members of our Board of Directors (the “ Board ”)
with their respective ages as of March 26, 2026: 

 Name 
 
 Age 
 
 Position(s)
 Held With Dragonfly 

 Denis
 Phares 
 
 53 
 
 President,
 Chief Executive Officer, Interim Chief Financial Officer and Chairman of the Board 

 Wade
 Seaburg 
 
 46 
 
 Chief
 Commercial Officer 

 Tyler
 Bourns 
 
 37 
 
 Chief
 Marketing Officer 

 Vickram
 Singh 
 
 32 
 
 Chief
 Operating Officer 

 Luisa
 Ingargiola 
 
 58 
 
 Lead
 Independent Director 

 Brian
 Nelson 
 
 55 
 
 Director 

 Perry
 Boyle 
 
 62 
 
 Director 

 Executive
Officers 

 Dr.
Denis Phares has served as our Chief Executive Officer and Chairman of our Board since October 2022. Since April 2024, Dr. Phares
has served as our Interim Chief Financial Officer. Dr. Phares is the co-founder of Dragonfly Energy Corp., a Nevada corporation (“ Legacy
Dragonfly ”) and has served as Legacy Dragonfly’s Chief Executive Officer and Chairman of the board of directors since
2012. From 2005 until 2012, Dr. Phares served as a faculty member of the Aerospace & Mechanical Engineering Department at the University
of Southern California, where he worked extensively on renewable energy technologies and received tenure in 2010. Dr. Phares holds an
M.B.A. from the University of Nevada - Reno, an M.S. and a Ph.D. in Environmental Engineering Science from the California
Institute of Technology and a B.S. in Physics from Villanova University. Dr. Phares is qualified to serve on our Board based on his substantial
business, leadership, and management experience as the Chief Executive Officer and Chairman of our Board. 

 Wade
Seaburg has served as our Chief Commercial Officer since February 2025. Prio to that, Mr. Seaburg served as our Chief Revenue Officer
from November 2022. Prior to the Business Combination contemplated by that certain Agreement and Plan of Merger, dated May 15, 2022,
as amended on July 12, 2022, by and among Chardan NexTech Acquisition 2 Corporation (“ CNTQ ”) Merger Sub and Legacy
Dragonfly, Mr. Seaburg served as an outside contractor for Legacy Dragonfly from December 2018 through May 2021 and as the Director of
Outside Sales and Business Development of Legacy Dragonfly from June 2021 through October 2022. Previously, Mr. Seaburg served as a senior
account representative within the Distribution Manufactured Structures Division at WESCO International, Inc. (“ WESCO ”)
(NYSE: WCC) from February 2004 to April 2016. After Mr. Seaburg’s time with WESCO, he served as the founder and president of Structure
Sales, a company focused on representing industry-leading suppliers to OEMs in the RV and Marine markets, from May 2016 to May 2021.
Mr. Seaburg graduated from Purdue University in May 2002 with a B.A. in Industrial Engineering. After graduating from Purdue, Mr. Seaburg
completed the Eaton Corporation’s (NYSE: ETN) distinguished Technical Sales Training Program. 

 Tyler
Bourns has served as our Chief Marketing Officer since November 2022. Prior to the Business Combination, Mr. Bourns served as the
Senior Vice President of Marketing of Legacy Dragonfly from December 2021 through October 2022. Previously, Mr. Bourns is the owner and
serves as the present of Bourns Productions Inc., a video production and marketing company focused on content creation, messaging and
strategy for various brands across multiple industries, for twelve years. At Bourns Productions Inc., he oversaw the day-to-day business
of the company, worked closely with clients and provided hands-on service in the creation of video, photography and graphic content,
including for Legacy Dragonfly for the marketing of our Battle Born Batteries brand. In 2018, he was awarded the AAF Reno Ad Person of
the Year. A three-time Emmy Award Winner, he has produced and filmed thought-leading content for companies such as Panasonic, GE Energy
and Terrasmart. Mr. Bourns has also served on the Board of Directors for the Cordillera International Film Festival since its inception
in 2018. 

 67 

 Dr.
Vickram Singh has served as our Chief Operating Officer since February 2025. Prior to the Business Combination, Dr. Singh served
as Director of Research and Development. In that capacity, he has been instrumental in overseeing the development of next-generation
lithium-ion batteries and manufacturing processes and optimizing all-solid-state battery chemistries for deep-cycle applications. After
the Business Combination, Dr. Singh transitioned to overseeing all technical efforts at Dragonfly Energy Corporation - R&D, automation
engineering, and pack development. Before joining Dragonfly Energy Corporation, Dr. Vick Singh was a Postdoctoral Research Fellow at
the Lawrence Livermore National Laboratory’s Center for Global Security Research. His research focused on international energy
development and its impact on foreign policy. Dr. Singh also served as a Nuclear Regulatory Commission Fellow during his Ph.D. studies
at the University of Nevada, Reno, and holds a BS in Chemical Engineering from the University of Tennessee, Knoxville. 

 Non-Employee
Directors 

 Luisa
Ingargiola has served as a member of our Board since October 2022. Prior to the Business Combination, Ms. Ingargiola served on the
board of directors of Legacy Dragonfly from August 2021 to October 2022. Since February 2017, Ms. Ingargiola has served as Chief Financial
Officer of Avalon GloboCare Corp. (NASDAQ: ALBT), a publicly listed bio-tech health care company. Prior to joining Avalon GloboCare Corp.,
Ms. Ingargiola served as the Chief Financial Officer and Co-Founder of MagneGas Corporation from 2007 to 2018. Ms. Ingargiola has also
served as a director and Audit Committee Chair for various over-the-counter and Nasdaq companies. Ms. Ingargiola has served as a member
of the board of directors and as Audit Committee Chair for Progress Acquisition Corporation from November 2020 to February 2023, as a
member of the board of directors and as Audit Committee Chair for AgEagle Aerial Systems Inc. (NYSE American: UAVS) from May 2018 to
November 2022, as the audit committee chair of Siyata Mobile (NASDAQ: SYTA) from December 2020 to December 2021, as a member of the board
of directors, the Compensation Committee Chair and as audit committee chair for Electrameccanica Vehicles Corp. (Nasdaq: SOLO) since
March 2018, as a member of the board and Audit Committee Chair for BioCorRx Inc. (OTC: BICX) since April 2018, and as a member of the
board and Audit Committee Chair of Vision Marine Technologies, Inc. (NASDAQ: VMAR) since December 2020. Ms. Ingargiola holds a M.B.A.
in Health from the University of South Florida and a B.S. in Finance from Boston University. Ms. Ingargiola is qualified to serve on
our Board based on her previous roles serving as Chief Financial Officer for multiple companies and extensive experience serving on multiple
boards of directors for Nasdaq companies. 

 Brian
Nelson has served as a member of our Board since October 2022. Prior to the Business Combination, Mr. Nelson served on the board
of directors of Legacy Dragonfly from April 2022 to October 2022. Mr. Nelson has served as the Chief Executive Officer of Precision Surfacing
Solutions Group (formerly known as the Lapmaster Group) since 2003 and as the President since 2002. Mr. Nelson was hired in the sales
department of Lapmaster in 1996 and he purchased the company in 2003. In 1996, Mr. Nelson served as a Sales Engineer for TII Technical
Education Systems, and from 1993 to 1995, he served as a Staff Engineer for Rust Environment & Infrastructure. Mr. Nelson holds an
M.B.A. in Entrepreneurship from the DePaul University Charles H. Kellstadt School of Business and a B.S. in Civil & Environmental
Engineering from Marquette University. He is a member of the Association of Manufacturing Technology and Young President’s Organization.
Mr. Nelson is qualified to serve on our Board based on his years of business experience as President and Chief Executive Officer of Precision
Surfacing Solutions Group and Lapmaster. 

 Perry
Boyle has served as a member of our Board since October 2022. Prior to the Business Combination, he served on the board of directors
of CNTQ from August 2021 to October 2022. Mr. Boyle is the CEO of MITS Capital, a defense technology investment group he founded in New
York and Kyiv in 2024. He is also the non-executive chairman of MITS Industries A/S, a Danish defense technology company. From 2009 to
the end of 2025, Mr. Boyle served as Chair of BOMA.ngo, the largest African provider of poverty graduation programs. Mr. Boyle was with
Point72 and its affiliates and predecessors from 2004 through March 2020. For most of that time, he managed the firm’s global long/short
equity investing business. He helped lead Point72’s launch as a registered investment advisor, raising over $6 billion in external
capital. Mr. Boyle was a founding partner of Thomas Weisel Partners from 1999 until 2004, and a managing director at Alex Brown &
Sons from 1992 to 1999. He began his career as an investment banker with Salomon Brothers Inc. Mr. Boyle received a B.A.
in Economics from Stanford University, an M.B.A. from Dartmouth College, and an M.A. from the Fletcher School of Law and Diplomacy at
Tufts University. He has a PGCert in Security Studies from King’s College London. He participated in Stanford’s Directors
College and executive education in board governance at Wharton. He is a Chartered Financial Analyst. Mr. Boyle is qualified to serve
on our Board based on his financial industry leadership, governance expertise, and international capital markets experience. 

 68 

 Board
Composition 

 Our
Board currently consists of three classes of a total of four directors. Our directors each serve staggered three-year terms with one
class being elected at each year’s annual meeting of stockholders, as follows: 

 ● 
 Class
 A, which consists of Perry Boyle, whose term will expire at the 2026 annual meeting of stockholders; 

 ● 
 Class
 B, which consists of Brian Nelson, whose term will expire at the 2027 annual meeting of stockholders; and 

 ● 
 Class
 C, which consists of Denis Phares and Luisa Ingargiola, whose terms will expire at the 2028 annual meeting of stockholders. 

 We
have no formal policy regarding board diversity. Our priority in selecting our board members is the identification of members who will
further the interests of our stockholders through their established record of professional accomplishment, the ability to contribute
positively to the collaborative culture among board members, knowledge of our business and understanding of the competitive landscape. 

 The
Board oversees our business and monitors the performance of our management. In accordance with our corporate governance procedures, the
Board does not involve itself in our day-to-day operations. Our executive officers and management oversee our day-to-day operations.
Our directors fulfill their duties and responsibilities by attending meetings of the Board, which are usually held on at least a quarterly
basis. Our directors also discuss business and other matters with other key executives and our principal external advisers (legal counsel,
auditors, financial advisors and other consultants). 

 Board
Committees 

 Our
Board has three standing committees - an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance
Committee. Copies of the charters for each committee are posted under the “Investors” tab on our website, which is located
at https://dragonflyenergy.com / . 

 Audit
Committee 

 The
Board has formed an Audit Committee, which currently consists of Luisa Ingargiola, Brian Nelson and Perry Boyle. Each member of the Audit
Committee is “independent” as that term is defined under the applicable rules of the SEC and Nasdaq. The Board has determined
that each Audit Committee member has sufficient knowledge in financial and auditing matters to serve on the Audit Committee. In addition,
our Board has determined that Ms. Ingargiola qualifies as an audit committee financial expert within the meaning of SEC regulations and
the Nasdaq Marketplace Rules. 

 Luisa
Ingargiola serves as the chair of the Audit Committee. The Audit Committee oversees and monitors our financial reporting process and
internal control system, reviews and evaluates the audit performed by our registered independent public accountants and reports to our
Board any substantive issues found during the audit. The Audit Committee will be directly responsible for the appointment, compensation
and oversight of the work of our registered independent public accountants. The Audit Committee reviews and approves all transactions
with affiliated parties. The Board has adopted a written charter for the Audit Committee. 

 Compensation
Committee 

 The
Board has formed a Compensation Committee which consists of Luisa Ingargiola, Brian Nelson and Perry Boyle, all of whom are independent
(as that term is defined under the Nasdaq Marketplace Rules). Brian Nelson serves as the chair of the Compensation Committee. The Compensation
Committee assists the Board in fulfilling its oversight responsibilities relating to (i) corporate governance practices and policies
and (ii) compensation matters, including our directors and senior management’s compensation and the administration of our compensation
plans. Our Board determined that each of the members of the compensation committee are a non-employee director, as defined in Rule 16b-3
promulgated under the Exchange Act and satisfies the independence requirements of Nasdaq. 

 69 

 Nominating
and Corporate Governance Committee 

 The
Board has formed a Nominating and Corporate Governance Committee, which currently consists of Luisa Ingargiola, Brian Nelson and Perry
Boyle, all of whom are independent (as that term is defined under the Nasdaq Marketplace Rules). Brian Nelson serves as the chair of
the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee assesses potential candidates to
fill perceived needs on the Board for required, skills, expertise, independence and other factors. 

 Nomination
of Directors 

 The
Nominating and Corporate Governance Committee of the Board assesses potential candidates to fill perceived needs on the Board of Directors
for required skills, expertise, independence and other factors. A director candidate recommended by our stockholders will be considered
in the same manner as a nominee recommended by a Board member, management or other sources. Stockholders wishing to recommend a candidate
for nomination should contact our Secretary in writing at the Secretary of Dragonfly at 12915 Old Virginia Road, Reno, Nevada 89521.
Our Nominating and Corporate Governance Committee has discretion to decide which individuals to recommend for nomination as directors. 

 Board
Leadership Structure and Role in Risk Oversight 

 Periodically,
our Board will assess the roles of Chairman and Chief Executive Officer, and the Board leadership structure to ensure the interests of
Dragonfly and our stockholders are best served. Our Board believes the current combination of the two roles is satisfactory at present.
Dr. Phares, as our President, Chief Executive Officer and Chairman, has extensive knowledge of all aspects of Dragonfly and our business.
Our Board has appointed Ms. Ingargiola as Lead Independent Director. We have no policy requiring the combination or separation of leadership
roles and our governing documents do not mandate a particular structure. This has allowed, and will continue to allow, our Board the
flexibility to establish the most appropriate structure for us at any given time. 

 Our
Board is primarily responsible for overseeing our risk management processes. The Board receives and reviews periodic reports from management,
auditors, legal counsel, and others, as considered appropriate regarding our assessment of risks. The Board focuses on the most significant
risks we face and our general risk management strategy, and also ensures that risks undertaken by us are consistent with the Board’s
risk strategy. While the Board oversees our risk management, management is responsible for day-to-day risk management processes. We believe
this division of responsibilities is the most effective approach for addressing the risks we face and that our Board leadership structure
supports this approach. 

 Family
Relationships 

 There
are no family relationships among any of our directors or executive officers. 

 Code
of Ethics 

 We
have adopted a Code of Business Conduct and Ethics that applies to all of our executive officers, financial and accounting officers,
our directors, our financial managers and all of our employees. The Board is committed to a high standard of corporate governance practices
and, through its oversight role, encourages and promotes a culture of ethical business conduct. A copy of our Code of Business Conduct
and Ethics is posted under the “Investors” tab on our website, which is located at https://dragonflyenergy.com/. 

 Insider
trading arrangements and policies. 

 We
have adopted an insider trading policy that governs the purchase, sale, and/or other transactions of our securities by our directors,
officers and employees. A copy of our insider trading policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K for the fiscal
year ended December 31, 2025. In addition, with regard to us trading in our own securities, it is our policy to comply with the federal
securities laws and the applicable exchange listing requirements in all respects. 

 70 

 Item
11. Executive Compensation 

 Our
Board has formed a Compensation Committee. The Compensation Committee is responsible for reviewing and approving management compensation,
including salaries, bonuses, and equity compensation. We seek to provide competitive compensation arrangements that attract and retain
key talent necessary to achieve our business objectives. 

 Summary
Compensation Table 

 The
following table presents information regarding the total compensation awarded to, earned by, or paid to each person serving as our Chief
Executive Officer during the fiscal year ended December 31, 2025, the two most highly-compensated executive officers (other than the
Chief Executive Officer) who were serving as executive officers as of December 31, 2025, and up to two additional individuals for whom
disclosure would have been provided but for the fact that such individuals were not serving as an executive officer as of December 31,
2025 for services rendered in all capacities to us for the fiscal year ended December 31, 2025. These individuals are our named executive
officers (“ NEOs ”) for fiscal year 2025. 

 Non-Equity 
 Non-Qualified 
 
 Incentive 
 Deferred 
 
 Stock 
 Option 
 Plan 
 Compensation 
 All Other 
 
 Name and 
 
 Salary (1) 
 Bonus (2) 
 Awards 
 Awards 
 Compensation 
 Earnings 
 Compensation 
 Total 

 Principal Position 
 Year 
 ($) 
 ($) 
 ($) 
 ($) 
 ($) 
 ($) 
 ($) 
 ($) 

 Dr. Denis Phares 
 2025 
 622,000 
 - 
 - 
 - 
 - 
 - 
 - 
 622,000 

 Chief Executive Officer, Interim Chief Financial Officer, President 
 2024 
 622,000 
 - 
 - 
 - 
 - 
 - 
 - 
 622,000 

 Wade Seaburg 
 2025 
 340,000 
 - 
 - 
 - 
 - 
 - 
 - 
 340,000 

 Chief Commercial Officer 
 2024 
 340,000 
 - 
 - 
 - 
 - 
 - 
 - 
 340,000 

 Dr. Vickram Singh 
 2025 
 351,188 
 5,000 
 - 
 - 
 - 
 - 
 - 
 356,188 

 Chief Operating 
 Officer 
 
 2024 
 225,000 
 - 
 - 
 - 
 - 
 - 
 - 
 225,000 

 (1) 
 Subsequent to fiscal year ended December 31, 2025, each of Dr. Phares, Mr. Seaburg and Dr. Singh agreed to reduce their salary by approximately
20% for the remainder of fiscal 2026, effective April 1, 2026. As a result of these reductions, the salaries for the NEOS for the remainder
of fiscal 2026 shall be: (i) $497,600 for Dr. Phares; (ii) $221,000 for Mr. Seaburg, and (iii) $280,000 for Dr. Singh. 

 (2) 
 The
 amounts reported in this column represent discretionary bonuses awarded to each executive for performance during the fiscal year
 ended December 31, 2025. 

 In
2022, the Compensation Committee engaged Compensia, Inc. as our independent compensation consultant. Compensia, Inc. viewed both executive
and director compensation and did not provide us any other services. Compensia, Inc. reported directly to the Compensation Committee
and provided guidance on trends in executive and non-employee director compensation, the development of specific executive compensation
programs, the composition of our compensation peer group and other matters as directed by the Compensation Committee. Dragonfly Energy
Holdings Corp. did not engage an independent compensation consultant for years ended December 31, 2024 or December 31, 2025. 

 71 

 Named
Executive Officer Employment Agreements 

 We
have entered into employment agreements with Dr. Phares, dated as of October 11, 2022, Mr. Seaburg, dated as of November 7, 2022, and
Dr. Singh, dated as of February 1, 2025. 

 Each
agreement provides for a three-year initial employment term, with automatic three-year renewal terms thereafter, subject to 90 days’
notice of non-renewal by either party. Each agreement also provides for the executive to receive an annual base salary (Dr. Phares - $622,000;
Mr. Seaburg - $340,000; Dr. Singh - $350,000) and to be eligible for an annual bonus of up to a specified
percentage of the executive’s base salary (Dr. Phares - 100%; Mr. Seaburg - 92%; Dr. Singh - 65%). The executive
is generally eligible for an annual bonus only if he remains employed with us through the date the bonus is paid (or if the executive’s
employment terminates due to his death or disability during the year). The executive is also eligible to receive a long-term incentive
award each fiscal year with a grant-date value not less than a dollar amount specified in the agreement (Dr. Phares - $1,532,000;
Mr. Seaburg - $490,000; Dr. Singh - $550,000), with the terms and conditions of each such award to be determined
by the Compensation Committee. Each agreement also includes non-competition and non-solicitation covenants that apply for 12 months following
the executive’s termination of employment, and certain confidentiality and other covenants. 

 If
the executive’s employment is terminated by us without “cause” or by the executive for “good reason” (as
such terms are defined in the employment agreement) and other than a termination in connection with a change in control as described
below, the executive would be entitled to receive (i) cash severance equal to 1.5 times the executive’s annual base salary (in
the case of Dr. Phares) or 1.0 times the executive’s annual base salary (in the case of Mr. Seaburg and Dr. Singh), payable in
installments over two years following the termination date, (ii) reimbursement of monthly COBRA premiums for the executive and his dependents
for up to 18 months (in the case of Dr. Phares) or 12 months (in the case of Mr. Seaburg, and Dr. Singh), and (iii) vesting in full of
any time-based equity awards granted by us to the executive (with any performance-based awards to remain eligible to vest following termination
if the applicable performance conditions are satisfied). In such circumstances, Dr. Phares would also be entitled to receive payment
of 1.5 times the annual bonus he would have received for the fiscal year in which his termination occurs, pro-rated to reflect the portion
of the fiscal year he was employed prior to his termination. 

 If,
during the period commencing three months before a change in control and ending 12 months after a change in control, the executive’s
employment is terminated by us without cause (or as a result of us not renewing the term of the agreement) or by the executive for good
reason, the executive would be entitled to receive the severance benefits described in the preceding paragraph (except that the cash
severance would be 1.5 times the executive’s base salary for Mr. Seaburg and Dr. Singh, the severance in each case would be payable
in a lump sum rather than installments, and the pro-rated bonus provision for Dr. Phares described above would not apply). In addition,
the executive’s outstanding stock options granted by us would fully vest and be exercisable for the remainder of the term of the
option. In the event any of the executive’s benefits under the agreement would be subject to an excise tax as a “parachute
payment” under U.S. tax laws, the executive would be entitled to an additional payment equal to the sum of the excise tax and any
additional amount necessary to put the executive in the same after-tax position as if no excise tax has been imposed. 

 In
each case, the executive’s right to receive the severance benefits described above is subject to him providing a release of claims
to us and his continued compliance with the restrictive covenants in favor of us in the agreement. 

 Effective
April 12, 2024, we entered into amendments to the employment agreements with Dr. Phares and Mr. Seaburg to amend the terms of their annual
equity compensation (the “ Amended Employee Agreements ”). The Amended Employee Agreements allow us to issue a combination
of cash and equity awards on an annual basis up to a specified amount ($1,532,000 for Dr. Phares and $490,000 for Mr. Seaburg), subject
to approval and such other terms and conditions imposed by the compensation committee of the board of directors. 

 On
March 15, 2026, Dr. Phares, Mr. Seaburg and Dr. Singh, each agreed to reduce their salary by approximately 20% for the remainder of fiscal
2026, effective April 1, 2026. As a result of these reductions, the salaries for the following executive officers for fiscal 2026 shall
be: (i) $497,600 for Dr. Phares; (ii) $221,000 for Mr. Seaburg, and (iii) $280,000 for Dr. Singh. 

 72 

 Outstanding
Equity Awards at Fiscal Year-End 

 The
following table provides information regarding outstanding options to acquire our common stock held by each of the NEOs as of December
31, 2025, including the vesting dates for the portions of these awards that had not vested as of that date. The NEOs did not hold any
other outstanding equity awards as of that date. 

 Option Awards 

 Equity 
 
 Incentive 
 
 Plan Awards: 
 
 Number of 
 Number of 
 Number of 
 
 Securities 
 Securities 
 Securities 
 
 Underlying 
 Underlying 
 Underlying 
 
 Unexercised 
 Unexercised 
 Unexercised 
 Option 
 Option 

 Options (#) 
 Options (#) 
 Unearned 
 Exercise 
 Expiration 

 Name 
 Exercisable 
 Unexercisable 
 Options (#) 
 Price ($) 
 Date 

 Dr. Denis Phares 
 — 
 — 
 4,203 (1) 
 — 
 04/12/2034 

 Wade Seaburg 
 — 
 — 
 1,344 (1) 
 — 
 04/12/2034 

 82 
 — 
 — 
 53.16 
 06/09/2030 

 71 
 — 
 — 
 53.26 
 10/19/2030 

 985 
 — 
 — 
 260.28 
 08/04/2031 

 353 
 — 
 — 
 260.38 
 12/06/2031 

 50 
 — 
 — 
 263.23 
 12/06/2031 

 Dr. Vickram Singh 
 132 
 — 
 — 
 53.10 
 06/09/2030 

 57 
 — 
 — 
 53.15 
 10/19/2030 

 525 
 — 
 — 
 260.30 
 12/06/2031 

 — 
 — 
 222 (2) 
 — 
 08/19/2034 

 (1) 
 Restricted
 stock units vest annually as to 1/3rd on April 12, 2025, with the remaining shares vesting in equal annual installments over a period
 of 2 years. 

 (2) 
 Restricted
 stock units vest annually as to 1/3rd on August 9, 2025, with the remaining shares vesting in equal annual installments over a period
 of 2 years. 

 Equity
Grants 

 For
services performed during the year ended December 31, 2023, on April 12, 2024, Dr. Phares was granted 6,304 restricted stock units (“ RSUs ”)
and Mr. Seaburg was granted 2,016 RSUs. Each of the RSUs granted will vest in three equal annual installments, with the first vesting
date on the one (1) year anniversary of the date of issuance and the following two vesting dates on each subsequent anniversary of the
date of issuance, subject to each employees’ continued employment as of each vesting date. In addition to the RSU awards, our Board
also approved the following cash awards to the above referenced employees: (i) $510,666.67 to Dr. Phares; and (ii) $163,333.33 to Mr.
Seaburg. Each of the approved cash awards will not be paid out to the employees until we have achieved a minimum cash balance of $30,000,000,
and are subject to each employee’s continued employment on the date of payment. 

 For
services performed during the year ended December 31, 2022, on February 10, 2023, Dr. Phares was granted 2,269 RSUs and Mr. Seaburg was
granted 726 RSUs. Each grant vested in full on the date of grant. 

 Prior
to his appointment as Chief Operating Officer, Dr. Singh was granted 1,111 RSUs, in which 1,111 vested on February 5, 2024 and 333 RSU’s,
in which 111 vested on August 19, 2025, and the remaining shares vest in two equal installments on the first and second anniversaries
of the first vesting date. 

 Subsequent
to December 31, 2025, Dr. Phares, Mr. Seaburg and Dr. Singh were each granted option awards under the 2022 Plan (as defined below) as
follows: (i) Dr. Phares received options to purchase 38,269 shares of common stock, (ii) Mr. Seaburg received options to purchase 36,607
shares of common stock, and (iii) Dr. Singh received options to purchase 21,534 shares of common stock, in each case at an exercise price
of $2.99 per share. The options vest in three equal annual installments, with one-third of the options vesting on April 1, 2026, one-third
vesting on April 1, 2027, and the remaining one-third vesting on April 1, 2028, in each case subject to such NEO’s continued service
through the applicable vesting date and the terms of the 2022 Plan. 

 73 

 Policies
and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information 

 We
do not have any formal policy that requires us to grant, or avoid granting, stock options at particular times. We have in the past typically
granted RSUs to our officers and directors and do not typically grant stock options but may do so in the future. The timing of any stock
option grants in connection with new hires, promotions, or other non-routine grants is tied to the event giving rise to the award (such
as an employee’s commencement of employment or promotion effective date). As a result, in all cases, the timing of grants of stock
options occurs independent of the release of any material nonpublic information, and we do not time the disclosure of material nonpublic
information for the purpose of affecting the value of executive compensation. 

 No
stock options were issued to executive officers in 2025 during any period beginning four business days before the filing of a periodic
report or current report disclosing material non-public information and ending one business day after the filing or furnishing of such
report with the SEC. 

 Director
Compensation 

 We
have adopted a policy that provides for cash and equity compensation for members of our Board of directors who are not employed by us
or any of our subsidiaries (our “ Non-Employee Directors ”). The policy provides that each Non-Employee Director is
entitled to receive the following cash compensation for board service, as applicable: 

 ● 
 $58,800
 annual retainer for service as a Board member; 

 ● 
 $20,000
 additional annual retainer for service as Lead Independent Director; and 

 ● 
 $20,000
 additional annual retainer for service as Chair of the Audit Committee, $15,000 additional annual retainer for service as Chair of
 the Compensation Committee, and $10,000 additional annual retainer for service as Chair of the Nominating and Corporate Governance
 Committee. 

 Under
the policy, directors are not paid fees for service as members on any of our standing committees, apart from the Chair fees discussed
above. Further, directors must attend at least 75% of all meetings of the Board and all meetings of each committee on which the director
sits to be eligible to receive any of the retainers specified above. These annual retainers are paid on a quarterly basis and pro-rated
if the director commences service in the applicable position after the start of a fiscal quarter. 

 Our
Compensation Committee also has discretion under the director compensation policy to grant Non-Employee Directors equity-based awards
under our Dragonfly Energy Holdings 2022 Equity Incentive Plan (“ 2022 Plan ”) (or any successor equity compensation
plan approved by our stockholders). It is currently expected that Non-Employee Directors will receive an award of options, RSUs and/or
cash with a value of $300,000 upon their initial appointment to the Board and an award of options, RSUs and/or cash with a value of $100,000
on an annual basis thereafter. For each award, the Compensation Committee will determine at the time of grant the methodology for converting
the foregoing dollar amounts to shares and the vesting schedule. The Compensation Committee may approve other grants of equity-based
awards to Non-Employee Directors from time to time, on such terms as the Compensation Committee may determine and subject to the applicable
provisions of our equity compensation plan then in effect. 

 Under
the policy, Non-Employee Directors are entitled to reimbursement from us for their reasonable travel (including airfare and ground transportation),
lodging and meal expenses incident to meetings of the Board or committees thereof or in connection with other Board-related business. 

 Our
Board may change the terms of our director compensation policy from time to time. 

 Effective
on October 7, 2022, we granted each of our Non-Employee Directors then serving of the Board (i.e. Perry Boyle, Luisa Ingargiola, and
Brian Nelson) an award of 333 RSUs under the 2022 Plan that are eligible to vest on the first anniversary of the grant date, subject
to the director’s continued service on the Board through the vesting date. 

 On
April 12, 2024, we granted each of our Non-Employee Directors then serving on the Board (i.e. Perry Boyle, Luisa Ingargiola, and Brian
Nelson) an award of 2,469 RSUs units under the 2022 Plan that are eligible to vest in three equal annual installments, beginning on the
first anniversary of the grant date, subject to the director’s continued service on the Board through each vesting date. 

 74 

 Effective
on April 1, 2026, each Non-Employee Director agreed to reduce their cash compensation by approximately 20% for the remainder of fiscal
2026. In lieu of such cash compensation, the Non-Employee Directors were granted 13,364 RSUs in the aggregate under the Plan (Mr. Boyle
– 4,204 RSUs, Ms. Edmonds – 4,956, and Mr. Nelson – 4,204). The RSUs vest in three equal annual installments, with
one-third of the options vesting on April 1, 2026, one-third vesting on April 1, 2027, and the remaining one-third vesting on April 1,
2028, in each case subject to the directors continued service on the Board through the applicable vesting date. 

 Director
Compensation Table - Fiscal 2025 

 The
following table sets forth certain information concerning compensation awarded to, earned by, or paid to our Non-Employee Directors for
services on our board during the year ended December 31, 2025. Dr. Phares did not receive any additional compensation for his service
on the Board during the year ended December 31, 2025. 

 Name 
 Fees Earned or Paid in Cash ($) 
 Stock Awards ($)(1) 
 Option Awards ($)(2) 
 All Other Compensation ($) 
 Total ($) 

 Jonathan Bellows 
 — 
 — 
 — 
 — 
 — 

 Perry Boyle 
 79,750 
 — 
 — 
 — 
 79,750 

 Karina Montilla Edmonds, Ph.D. 
 — 
 — 
 — 
 — 
 — 

 Luisa Ingargiola 
 98,800 
 — 
 — 
 — 
 98,800 

 Brian Nelson 
 60,350 
 — 
 — 
 — 
 60,350 

 Rick Parod 
 14,700 
 — 
 — 
 — 
 14,700 

 (1) 
 The
 amount reported in this column reflects the grant date fair value of the stock option and/or RSUs granted to the Non-Employee
 Directors for services performed during the year ended December 31, 2024 under the 2022 Plan as described above and is accounted for
 in accordance with FASB ASC Topic 718. Please see the section titled “ Stock-Based Compensation ” in our Notes to
 Consolidated Financial Statements included in our Annual Report. As of March 26, 2026, Luisa Ingargiola held 6,602 unvested RSUs and
 Brian Nelson and Perry Boyle held 5,850 unvested RSUs. 

 (2) 
 As
 of December 31, 2025, the following options remained outstanding: (i) Luisa Ingargiola held options exercisable for 1,083 shares
 of common stock; and (ii) Brian Nelson held options exercisable for 788 shares of common stock. 

 Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 

 The
following table sets forth certain information as of March 26, 2026, with respect to the beneficial ownership of common stock by the
following: 

 ● 
 Each
 other person, or group of affiliated persons, known by us to beneficially own more than 5% of any class of our outstanding shares
 of common stock; 

 ● 
 each
 of our named executive officers; 

 ● 
 each
 of our current directors; and 

 ● 
 all
 of our executive officers and directors as a group. 

 Information
relating to beneficial ownership of the voting securities by our principal stockholders and management is based upon each person’s
information using “beneficial ownership” concepts under the SEC rules. Under these rules, a person is deemed to be a beneficial
owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security,
or investment power, which includes the power to vote or direct the voting of the security. For purposes of computing the number and
percentage of shares beneficially owned by a security holder, any shares which such person has the right to acquire within 60 days of
March 26, 2026 (“ Presently Exercisable Securities ”), are deemed to be outstanding, but those shares are not deemed
to be outstanding for the purpose of computing the percentage ownership of any other security holder. 

 75 

 The
table reflects 12,148,783 shares common stock outstanding as of March 26, 2026 plus any shares issuable upon exercise of Presently Exercisable
Securities held by such person or entity. 

 Under
the SEC rules, more than one person may be deemed to be a beneficial owner of the same securities and a person may be deemed to be a
beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, ownership
consists of sole ownership, voting and investment rights, and the address for each stockholder listed is c/o 12915 Old Virginia Rd, Reno,
Nevada 89521. 

 Name and Address of Beneficial Owner 
 Amount and
 Nature of
 Beneficial
 Ownership 
 Percent
 of Class 

 5% Holders: 
 
 Alyeska Investment Group, L.P. 
 1,195,792 
 9.84 % 

 Named Executive Officers and Directors: 
 
 Dr. Denis Phares (2)(3)(4) 
 194,463 
 1.60 % 

 Wade Seaburg (5) 
 16,280 
 * 

 Dr. Vickram Singh (6) 
 9,336 
 * 

 Luisa Ingargiola (7) 
 4,713 
 * 

 Brian Nelson (8) 
 4,167 
 * 

 Perry Boyle (9) 
 3,623 
 * 

 All Executive Officers and Directors as a group (7 persons): 
 240,831 
 1.98 % 

 *
Less than one percent. 

 (1) 
 Based
on the Schedule 13D filed by Alyeska Investments Group, L.P. (“ Alyeska ”) on February 17, 2026. The business address
of Alyeska is 77 West Wacker Drive, 7th Floor, Chicago, IL 60601. 

 (2) 
 Excludes
2,500,000 shares of common stock not yet payable as the earnout contingencies have not yet been met and will not be met within 60 days
of March 26, 2026. 

 (3) 
 Includes
13,532 shares held on behalf of the Phares 2021 GRAT dated July 9, 2021, of which Dr. Phares is the trustee. 

 (4) 
 Includes
12,756 shares of common stock issuable upon exercise of outstanding stock options and 2,102 of restricted stock units exercisable within
60 days of March 26, 2026. 

 (5) 
 Includes
13,733 shares of common stock issuable upon exercise of outstanding stock options and 672 of restricted stock units exercisable within
60 days of March 26, 2026. 

 (6) 
 Includes
7,178 of restricted stock units exercisable within 60 days of March 26, 2026. 

 (7) 
 Includes
1,083 shares of common stock issuable upon exercise of outstanding stock options and 2,475 of restricted stock units exercisable within
60 days of March 26, 2026. 

 (8) 
 Includes
788 shares of common stock issuable upon exercise of outstanding stock options and 2,224 of restricted stock units exercisable within
60 days of March 26, 2026. 

 (9) 
 Includes
2,224 shares of common stock issuable upon exercise of restricted stock units exercisable within 60 days of March 26, 2026. 

 76 

 Securities
Authorized for Issuance Under Equity Compensation Plans 

 In
connection with our Business Combination, our Board and stockholders adopted the 2022 Plan, which provides for the grant of incentive
stock options and non-qualified stock options to purchase shares of our common stock and other types of awards, as well as the Dragonfly
Energy Holdings Corp. Employee Stock Purchase Plan (the “ ESPP ”). 

 The
general purpose of the 2022 Plan is to provide a means whereby eligible employees, officers, non-employee directors and other individual
service providers develop a sense of proprietorship and personal involvement in our development and financial success, and to encourage
them to devote their best efforts to our business, thereby advancing our interests and the interests of our stockholders. By means of
the 2021 Plan, we seek to retain the services of such eligible persons and to provide incentives for such persons to exert maximum efforts
for our success and the success of our subsidiaries. 

 The
general purpose of the ESPP is to provide an additional means to attract, motivate, retain and reward employees and other eligible persons
by allowing them to purchase additional shares of our common stock. The ESPP is designed to allow our eligible employees and the eligible
employees of our participating subsidiaries to purchase shares of our common stock, at semi-annual intervals, with their accumulated
payroll deductions. 

 Also,
in connection with the Business Combination, our Board and stockholders approved the adoption of the Dragonfly Energy Corp. 2019 Stock
Incentive Plan (the “ 2019 Plan ”) and the Dragonfly Energy Corp. 2021 Stock Incentive Plan (the “ 2021 Plan ”)
in connection with the consummation of the Business Combination. 

 The
following table summarizes the number of shares of our common stock authorized for issuance under our equity compensation plans as of
December 31, 2025. 

 Number of securities to be issued upon exercise of outstanding options, warrants and rights 
 Weighted-average exercise price of outstanding options, warrants and rights 
 Number of securities remaining available for future issuances under equity compensation plans under equity compensation (excluding) securities reflected in column (a) 

 Plan Category 
 (a) 
 (b) 
 (c)(2) 

 Equity compensation plans approved by security holders (1) 
 41,926 
 $ 122,87 
 1,005,470 

 Equity compensation plans not approved by security holders 
 — 
 — 
 — 

 Total 
 41,926 
 $ 122,87 
 1,005,470 

 (1)
The amounts shown in this row include securities under the 2022 Plan, 2021 Plan and 2019 Plan. 

 (2)
In accordance with the “evergreen” provision in the 2022 Plan, an additional 483,149 shares were automatically made available
for issuance on the first trading day of 2026, which represents an amount equal 4% of the number of shares outstanding on December 31,
2025. In accordance with the “evergreen” provision in the ESPP, an additional 120,787 shares were automatically made available
for issuance on the first trading day of 2026, which represents an amount equal to 1% of the number of shares of common stock issued
and outstanding on December 31, 2025. The shares made available pursuant to the “evergreen” provisions are excluded from
this calculation. 

 77 

 Item
13. Certain Relationships and Related Transactions, and Director Independence 

 Related
Party Transactions 

 Other
than compensation arrangements for our Named Executive Officers and directors, which are described in the section entitled “ Executive
Compensation ,” we have had the following transactions or series of similar transactions, since January 1, 2024, to which we
were a party or will be a party, in which: 

 ● 
 the
 amounts involved exceeded or will exceed $120,000; and 

 ● 
 any
 of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of the
 foregoing persons, had or will have a direct or indirect material interest. 

 Agreements
with Directors and Officers 

 Promissory
Notes with Brian Nelson 

 On
January 30, 2024, we issued an unsecured convertible promissory note (the “ January Note ”) in the principal amount
of $1.0 million (the “ January Principal Amount ”) to Brian Nelson, one of our directors, in a private placement in
exchange for cash in an equal amount. The January Note became due and payable in full on February 2, 2024. We were also obligated to
pay $50,000 (the “ January Loan Fee ”) to Mr. Nelson on February 2, 2024. We paid the January Principal Amount and the
January Loan Fee in full on February 2, 2024. 

 On
February 27, 2024 we issued a convertible promissory (the “ February Note ”) in the amount of $1.7 million (the “ February
Principal Amount ”) to Mr. Nelson, in a private placement in exchange for cash in an equal amount. The February Note became
due and payable in full on March 1, 2024. We were also obligated to pay a $85,000 loan fee (the “ February Loan Fee ”)
to Mr. Nelson on March 1, 2024. We paid the February Principal Amount and the February Loan Fee on March 1, 2024. 

 Related
Person Transactions Policy 

 Our
Board adopted a written Related Person Transactions Policy on October 7, 2022 (the “ Policy ”) that sets forth our policies
and procedures regarding the identification, review, consideration and oversight of “related person transactions.” For purposes
of the Policy only, a “related person transaction” is a transaction, arrangement or relationship (or any series of similar
transactions, arrangements or relationships) in which (i) we (including any of our subsidiaries, if any) was, is or will be a participant,
(ii) the aggregate amount involved exceeds or may be expected to exceed $120,000, and (iii) a related person has or will have a direct
or indirect material interest. 

 Subject
to certain limitations, transactions involving compensation for services provided to us as an employee or director will not be considered
related person transactions under the Policy. A related person is any executive officer, director, nominee to become a director or a
holder of more than 5% of any class of our voting securities (including the common stock), including any of their immediate family members
and affiliates, including entities owned or controlled by such persons. A related person is also someone who has a position or relationship
with any firm, corporation or other entity that engages in the transaction if (i) such person is employed or is a general partner or
principal or in a similar position with significant decision making influence, or (ii) the direct or indirect ownership by such person
and all other foregoing persons, in the aggregate, is 10% or greater in another person which is party to the transaction. 

 78 

 Under
the Policy, any related person, or any director, officer or employee of ours who knows of the transaction, must report the information
regarding the proposed related person transaction to our Chief Financial Officer and chairperson of the Audit Committee for review. To
identify related person transactions in advance, we will rely on information supplied by our executive officers, directors and certain
significant stockholders. In considering related person transactions, our audit committee will take into account the relevant available
facts and circumstances, which may include, but are not limited to: 

 ● 
 the
 nature of the related person’s interest in the transaction; 

 ● 
 the
 impact on a director’s independence in the event the related person is a director, immediate family member of a director or
 an entity with which a director is affiliated; 

 ● 
 the
 terms of the transaction; 

 ● 
 the
 availability of other sources for comparable services or products; and 

 ● 
 the
 terms available to or from, as the case may be, unrelated third parties. 

 All
related party transactions may be consummated or continued only if approved or ratified by our Audit Committee. No director or member
of our audit committee may participate in the review, approval or ratification of a transaction with respect to which he or she is a
related party, except that such member may be counted for purposes of a quorum and shall provide such information with respect to the
transaction as may be reasonably requested by other members of our Audit Committee. 

 All
of the transactions entered into since the adoption of the Policy have been approved or ratified by our Audit Committee. 

 Director
Independence 

 Our
common stock is listed on Nasdaq. Under the rules of Nasdaq, a director will only qualify as an “independent director” if,
in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise
of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule
10A-3 of the Exchange Act, a member of an audit committee of a listed company may not, other than in his or her capacity as a member
of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory,
or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company
or any of its subsidiaries. 

 Our
Board of Directors has determined that Perry Boyle, Brian Nelson, and Luisa Ingargiola are an “independent directors” as
such term is defined under the applicable rules of Nasdaq. 

 We
have established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Our Board of Directors
has determined that Ms. Ingargiola is an “audit committee financial expert,” as defined under the applicable rules of the
SEC, and that all members of the Audit Committee are “independent” within the meaning of the applicable Nasdaq rule and the
independence standards of Rule 10A-3 of the Exchange Act. Each of the members of the Audit Committee meets the requirements for financial
literacy under the applicable rules and regulations of the SEC and Nasdaq. 

 79 

 Item
14. Principal Accounting Fees and Services 

 Audit
Fees 

 On
March 31, 2025, CBIZ CPAs P.C. (“ CBIZ ”) was appointed as our independent registered public accounting firm. Marcum
LLP (“ Marcum ”), which was acquired by CBIZ, served as our independent registered public accounting firm from November
15, 2023 until March 31, 2025. The following table summarizes the aggregate fees billed, or reasonably expected to be billed, to us by
CBIZ and Marcum for professional services rendered during the twelve months ended December 31, 2025, and 2024: 

 Fee Category 
 Twelve months ended 
 December 31, 2025 
 
 Twelve months ended 
 December 31, 2024 
 
 Audit fees (1) 
 $ 723,282 
 $ 605,440 

 Audit-related fees (2) 
 — 
 - 

 Tax fees (3) 
 — 
 - 

 All other fees (4) 
 — 
 - 

 Total Fees (5) 
 $ 723,282 
 $ 605,440 

 (1) 
 Audit
 fees consist of fees incurred for professional services rendered for the audit of financial statements, for reviews of our interim
 consolidated financial statements included in our quarterly reports on Form 10-Q, and for services that are normally provided in
 connection with statutory or regulatory filings or engagements. 

 (2) 
 Audit-related
 fees consist of fees billed for professional services that are reasonably related to the performance of the audit or review of our
 financial statements but are not reported under “Audit fees.” 

 (3) 
 Tax
 fees consist of fees billed for professional services relating to tax compliance, tax planning, and tax advice. 

 (4) 
 All
 other fees consist of fees billed for services not associated with audit or tax. 

 (5) 
 For
 the year ended December 31, 2025, the above audit fees were all billed by CBIZ CPAs P.C. For the year ended December 31, 2024, the
 above audit fees were all billed by Marcum LLP. 

 Pre-Approval
Practices and Procedures 

 Our
Audit Committee has established a policy governing our use of the services of our independent registered public accounting firm. The
purpose of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities as it relates to our financial
accounting, reporting and controls. The Audit Committee’s principal functions are to assist the Board of Directors in its oversight
of: 

 ● 
 the
 integrity of our accounting and financial reporting processes and the audits of our financial statements by our independent auditors
 (the “ Independent Auditors ”); 

 ● 
 the
 periodic reviews of the adequacy of the accounting and financial reporting processes and systems of internal control that are conducted
 by the Independent Auditors and our senior management; 

 ● 
 the
 independence and performance of the Independent Auditors; and 

 ● 
 our
 compliance with legal and regulatory requirements. 

 In
accordance with applicable laws, rules and regulations, our Audit Committee charter and pre-approval policies established by the Audit
Committee require that the Audit Committee review in advance and pre-approve all audit and permitted non-audit fees for services provided
to us by our independent registered public accounting firm. The services performed by, and the fees to be paid to, the Independent Auditors
were preapproved by the Audit Committee. 

 80 

 Part
IV 

 Item
15. Exhibit and Financial Statement Schedules 

 (a)
The following documents are filed as part of this report: 

 1. 
 Financial
 Statements 

 The
list of consolidated financial statements set forth in the accompanying Index to the Consolidated Financial Statements at page F-1 of
this Annual Report on Form 10-K is incorporated herein by reference. Such consolidated financial statements are filed as part of this
Annual Report on Form 10-K. 

 2. 
 Financial
 Statement Schedules 

 All
schedules have been omitted because the required information is either not required, not applicable or because the information required
is included in the consolidated financial statements or notes thereto. 

 3. 
 Exhibits 

 Incorporated
 By Reference 

 Exhibit
 No . 
 
 Description 
 
 Form 
 
 Exhibit 
 
 Filing 

 Date 
 
 2.1# 
 
 Agreement and Plan of Merger, dated as of May 15, 2022, by and among Dragonfly Energy Holdings Corp. (f/k/a Chardan NexTech Acquisition 2 Corp.), Bronco Merger Sub, Inc. and Dragonfly Energy Corp. (included as Annex A to the proxy statement/prospectus). 
 
 S-4 
 
 2.1 
 
 07/22/2022 

 2.2 
 
 Amendment to Agreement and Plan of Merger, dated as of July 12, 2022, by and among Dragonfly Energy Holdings Corp. (f/k/a Chardan NexTech Acquisition 2 Corp.), Bronco Merger Sub, Inc. and Dragonfly Energy Corp. 
 
 S-4 
 
 2.1(a) 
 
 07/22/2022 

 2.3 
 
 Plan of Conversion. 
 
 8-K 
 
 2.1 
 
 03/31/2023 

 3.1 
 
 Articles of Incorporation of Dragonfly Energy Holdings Corp. 
 
 8-K 
 
 3.1 
 
 03/31/2023 

 3.2 
 
 Certificate of Amendment to the Articles of Incorporation of Dragonfly Energy Holdings Corp., dated November 29, 2023. 
 
 8-K 
 
 3.1 
 
 11/29/2023 

 3.3 
 
 Certificate of Amendment to the Articles of Incorporation of Dragonfly Energy Holdings Corp., as filed with the Secretary of State of the State of Nevada, dated November 19, 2024. 
 
 8-K 
 
 3.1 
 
 11/22/2024 

 3.4 
 
 Certificate of Amendment to the Articles of Incorporation of Dragonfly Energy Holdings Corp., dated April 25, 2025. 
 
 8-K 
 
 3.1 
 
 04/28/2025 

 3.5 
 
 Certificate of Amendment to the Articles of Incorporation of Dragonfly Energy Holdings Corp., as filed with the Secretary of State of the State of Nevada, dated December 15, 2025. 
 
 8-K 
 
 3.1 
 
 12/18/2025 

 3.5 
 
 Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Restrictions of Series A Convertible Preferred Stock of Dragonfly Energy Holdings Corp. 
 
 8-K 
 
 3.1 
 
 02/27/2025 

 3.6 
 
 Certificate of Designation of the Powers, Preferences and Relative, Participating, Optional and Other Restrictions of Series B Convertible Preferred Stock. 
 
 8-K 
 
 3.1 
 
 11/04/2025 

 3.7 
 
 Bylaws of Dragonfly Energy Holdings Corp. 
 
 8-K 
 
 3.2 
 
 03/31/2023 

 4.1 
 
 Specimen Common Stock Certificate of Dragonfly Energy Holdings Corp. 
 
 8-K 
 
 4.1 
 
 10/11/2022 

 4.2 
 
 Form of $10 Warrant of Dragonfly Energy Holdings Corp. 
 
 8-K 
 
 4.2 
 
 10/11/2022 

 4.3 
 
 Form of Penny Warrant of Dragonfly Energy Holdings Corp. 
 
 8-K 
 
 4.3 
 
 10/11/2022 

 4.4 
 
 Warrant Agreement, dated as of October 19, 2022, between Dragonfly Energy Holdings Corp. and American Stock Transfer & Trust Company, LLC. 
 
 S-1 
 
 4.4 
 
 10/21/2022 

 4.5 
 
 Specimen Warrant Certificate of Dragonfly Energy Holdings Corp. 
 
 10-K 
 
 4.5 
 
 04/17/2023 

 4.6 
 
 Promissory Note of the Company, dated March 5, 2023. 
 
 8-K 
 
 4.1 
 
 03/09/2023 

 4.7 
 
 Form of June 2023 Warrant. 
 
 8-K 
 
 4.1 
 
 06/21/2023 

 4.8 
 
 Form of Underwriters’ Warrant. 
 
 S-1/A 
 
 4.8 
 
 06/14/2023 

 4.9 
 
 Form of December 2023 Lender Penny Warrant. 
 
 8-K 
 
 4.1 
 
 12/29/2023 

 4.10 
 
 Form of January Note. 
 
 8-K 
 
 4.1 
 
 03/04/2024 

 4.11 
 
 Form of February Note. 
 
 8-K 
 
 4.1 
 
 03/04/2024 

 4.12 
 
 Form of May 2024 Penny Warrant. 
 
 10-Q 
 
 4.3 
 
 05/14/2024 

 4.13 
 
 Form of June 2024 Penny Warrant. 
 
 8-K 
 
 4.1 
 
 07/01/2024 

 4.14 
 
 Form of September 2024 Penny Warrant. 
 
 8-K 
 
 4.1 
 
 10/07/2024 

 4.15 
 
 Form of December 2024 Penny Warrant. 
 
 8-K 
 
 4.1 
 
 01/03/2025 

 4.16 
 
 Form of Private Placement Warrant. 
 
 8-K 
 
 4.1 
 
 02/27/2025 

 4.17 
 
 Form of February 2025 Penny Warrant. 
 
 8-K 
 
 4.2 
 
 02/27/2025 

 4.18 
 
 Form of October 2025 Pre-Funded Warrant. 
 
 8-K/A 
 
 4.1 
 
 10/16/2025 

 4.19* 
 
 Description of Securities. 
 
 81 

 10.1 
 
 Sponsor Support Agreement, dated as of May 15, 2022, by and among Chardan NexTech Investments 2 LLC, Dragonfly Energy Corp. and Chardan NexTech Investments 2 LLC (included as Annex E to the proxy statement/prospectus). 
 
 S-4 
 
 10.4 
 
 07/22/2022 

 10.2 
 
 Commitment Letter, dated as of May 15, 2022, by and among Dragonfly Energy Holdings Corp. (f/k/a Chardan NexTech Acquisition 2 Corp.), Dragonfly Energy Corp., CCM Investments 5 LLC and EICF Agent LLC (included as Annex J to the proxy statement/prospectus). 
 
 S-4 
 
 10.5 
 
 07/22/2022 

 10.3 
 
 Equity Facility Letter Agreement, dated as of May 15, 2022, by and among Dragonfly Energy Corp., Dragonfly Energy Holdings Corp. (f/k/a Chardan NexTech Acquisition 2 Corp.) and CCM Investments 5 LLC (included as Annex K to the proxy statement/prospectus). 
 
 S-4 
 
 10.6 
 
 07/22/2022 

 10.4 
 
 Subscription Agreement, dated as of May 15, 2022, between Dragonfly Energy Holdings Corp. (f/k/a Chardan NexTech Acquisition 2 Corp.) and Chardan NexTech Investments 2 LLC (included as Annex F to the proxy statement/prospectus). 
 
 S-4 
 
 10.7 
 
 07/22/2022 

 10.5++ 
 
 Dragonfly Energy Holdings Corp. 2022 Equity Incentive Plan. 
 
 8-K 
 
 10.5 
 
 10/11/2022 

 10.6++ 
 
 Dragonfly Energy Holdings Corp. Employee Stock Purchase Plan. 
 
 8-K 
 
 10.6 
 
 10/11/2022 

 10.7 
 
 Multi-tenant Industrial Triple Net Lease, dated as of March 1, 2021, between Dragonfly Energy Corp. and Icon Reno Property Owner Pool 3 Nevada, LLC. 
 
 S-4 
 
 10.11 
 
 07/22/2022 

 10.8 
 
 Lease, dated as of February 8, 2022, between Dragonfly Energy Corp. and Prologis, L.P. 
 
 S-4 
 
 10.12 
 
 07/22/2022 

 10.9# 
 
 Purchase Agreement, dated as of October 7, 2022, between Dragonfly Energy Holdings Corp. and Chardan Capital Markets LLC. 
 
 8-K 
 
 10.10 
 
 10/11/2022 

 10.10 
 
 Registration Rights Agreement, dated as of October 7, 2022, between Dragonfly Energy Holdings Corp. and Chardan Capital Markets LLC. 
 
 8-K 
 
 10.11 
 
 10/11/2022 

 10.11 
 
 Term Loan Agreement, dated as of October 7, 2022, by and among the Dragonfly Energy Holdings Corp., Dragonfly Energy Corp., the lenders from time to time party thereto and Alter Domus (US) LLC. 
 
 8-K 
 
 10.12 
 
 10/11/2022 

 10.12 
 
 Pledge Agreement, dated as of October 7, 2022, by and among Dragonfly Energy Holdings Corp. and Alter Domus (US) LLC. 
 
 8-K 
 
 10.13 
 
 10/11/2022 

 10.13++ 
 
 Employment Agreement, dated as of January 1, 2022, by and between Dragonfly Energy Corp. and Denis Phares. 
 
 8-K 
 
 10.14 
 
 10/11/2022 

 10.14++ 
 
 Amendment to Employment Agreement, dated as of May 15, 2022, by and between Dragonfly Energy Corp. and Denis Phares. 
 
 8-K 
 
 10.15 
 
 10/11/2022 

 10.15++ 
 
 Dragonfly Energy Corp. 2019 Stock Incentive Plan. 
 
 8-K 
 
 10.19 
 
 10/11/2022 

 10.16++ 
 
 Dragonfly Energy Corp. 2021 Stock Incentive Plan. 
 
 8-K 
 
 10.20 
 
 10/11/2022 

 10.17 
 
 Amended and Restated Registration Rights Agreement, dated as of October 7, 2022, by and among Dragonfly Energy Holdings Corp. and each of the stockholders thereto. 
 
 8-K 
 
 10.21 
 
 10/11/2022 

 10.18++ 
 
 Revised Director Compensation Policy. 
 
 10-K 
 
 10.19 
 
 03/31/2025 

 10.19++ 
 
 Employment Agreement, dated as of October 11, 2022, by and between Dragonfly Energy Holdings Corp. and Denis Phares. 
 
 S-1 
 
 10.23 
 
 11/4/2022 

 10.20 
 
 Asset Purchase Agreement, dated April 22, 2022, by and among Dragonfly Energy Corp., Thomason Jones Company, LLC, William Thomason and Richard Jones. 
 
 10-K 
 
 10.28 
 
 04/17/2023 

 10.21 
 
 Manufacturing Supply Agreement, dated November 19, 2021, by and between Dragonfly Energy Holdings Corp. and Keystone RV Company. 
 
 10-K 
 
 10.29 
 
 04/17/2023 

 82 

 10.22 
 
 Asset Purchase Agreement, dated January 1, 2022, by and between Dragonfly Energy Holdings Corp. and Bourns Productions, Inc. 
 
 10-K 
 
 10.30 
 
 04/17/2023 

 10.23 
 
 Assignment and Assumption Agreement, dated January 1, 2022, by and between Dragonfly Energy Corp. and Bourns Productions, Inc. 
 
 10-K 
 
 10.31 
 
 04/17/2023 

 10.24 
 
 Assignment and Assumption of Lease Agreement, dated January 1, 2022, by and among Dragonfly Energy Corp., Bourns Productions, Inc. and Los Angeles & Steel Co. 
 
 10-K 
 
 10.32 
 
 04/17/2023 

 10.25 
 
 Research and Development Lab Lease, dated April 25, 2019, by and between Dragonfly Energy Corp. and BRE RS Greg Park Owner LLC. 
 
 10-K 
 
 10.33 
 
 04/17/2023 

 10.26 
 
 Amendment No. 1 to Research and Lab Lease, dated March 12, 2020, by and between Dragonfly Energy Corp. and DRE RS Greg Park Owner LLC. 
 
 10-K 
 
 10.34 
 
 04/17/2023 

 10.27 
 
 Amendment No. 2 to Research and Lab Lease, dated July 27, 2020, by and between Dragonfly Energy Corp. and DRE RS Greg Park Owner LLC. 
 
 10-K 
 
 10.35 
 
 04/17/2023 

 10.28 
 
 Amendment No. 3 to Research and Lab Lease, dated August 26, 2020, by and between Dragonfly Energy Corp. and DRE RS Greg Park Owner LLC. 
 
 10-K 
 
 10.36 
 
 04/17/2023 

 10.29 
 
 Amendment No. 4 to Research and Lab Lease, dated December 16, 2020, by and between Dragonfly Energy Corp. and BRS RS Greg Park Owner LLC. 
 
 10-K 
 
 10.37 
 
 04/17/2023 

 10.30 
 
 Amendment No. 5 to Research and Lab Lease, dated January 28, 2022, by and between Dragonfly Energy Corp. and BRS RS Greg Park Owner LLC. 
 
 10-K 
 
 10.38 
 
 04/17/2023 

 10.31 
 
 Limited Waiver, dated as of March 29, 2023, to the Term Loan, Guarantee and Security Agreement, dated as of October 7, 2022, by and among Dragonfly Energy Holdings Corp., Dragonfly Energy Corp., the lenders from time to time party thereto and Alter Domus (US) LLC. 
 
 8-K 
 
 10.1 
 
 03/29/2023 

 10.32 
 
 Limited Waiver, dated as of December 29, 2023, to the Term Loan, Guarantee and Security Agreement, dated as of October 7, 2022, by and among Dragonfly Energy Holdings Corp., Dragonfly Energy Corp., the lenders from time to time party thereto and Alter Domus (US) LLC. 
 
 8-K 
 
 10.1 
 
 12/29/2023 

 10.33++ 
 
 Employment Agreement, dated as of November 7, 2022, by and between Dragonfly Energy Holdings Corp. and Wade Seaburg. 
 
 10-K 
 
 10.42 
 
 04/16/2024 

 10.34++ 
 
 Employment Agreement, dated as of November 7, 2022, by and between Dragonfly Energy Holdings Corp. and Tyler Bourns. 
 
 10-K 
 
 10.43 
 
 04/16/2024 

 10.35 
 
 Fernley Lease, dated April 12, 2024, by and between Dragonfly Energy Corp., Cottonmill Properties, LLC, and Marlene Thier. 
 
 10-K 
 
 10.44 
 
 04/16/2024 

 10.36++ 
 
 Amendment No. 1 to Employment Agreement, effective as of April 12, 2024, by and between Dragonfly Energy Holdings Corp. and Denis Phares. 
 
 10-K 
 
 10.45 
 
 04/16/2024 

 83 

 10.37++ 
 
 Amendment No. 1 to Employment Agreement, effective as of April 12, 2024, by and between Dragonfly Energy Holdings Corp. and Wade Seaburg. 
 
 10-K 
 
 10.46 
 
 04/16/2024 

 10.38++ 
 
 Amendment No. 1 to Employment Agreement, effective as of April 12, 2024, by and between Dragonfly Energy Holdings Corp. and Tyler Bourns. 
 
 10-K 
 
 10.47 
 
 04/16/2024 

 10.39 
 
 Limited Waiver, dated as of May 13, 2024, to the Term Loan, Guarantee and Security Agreement, dated as of October 7, 2022, by and among Dragonfly Energy Holdings Corp., Dragonfly Energy Corp., the lenders from time to time party thereto and Alter Domus (US) LLC. 
 
 10-Q 
 
 10.1 
 
 05/14/2024 

 10.40 
 
 Amended and Restated ChEF Purchase Agreement, by and between Chardan Capital Markets LLC and Dragonfly Energy Holdings Corp., dated May 20, 2024. 
 
 8-K 
 
 10.1 
 
 05/20/2024 

 10.41 
 
 Limited Waiver and First Amendment to Term Loan, Guarantee and Security Agreement, dated as of June 28, 2024, by and among Dragonfly Energy Holdings Corp., Dragonfly Energy Corp., the lenders from time to time party thereto and Alter Domus (US) LLC. 
 
 8-K 
 
 10.1 
 
 07/01/2024 

 10.42# 
 
 Trademark License Agreement, by and among Dragonfly Energy Corp., Battle Born Battery Products, LLC, and Stryten Energy LLC, dated as of July 29, 2024. 
 
 8-K/A 
 
 10.1 
 
 08/01/2024 

 10.43# 
 
 Trademark Transfer and License-Back Agreement, by and between Dragonfly Energy Corp. and Battle Born Battery Products, LLC, dated as of July 29, 2024. 
 
 8-K/A 
 
 10.2 
 
 08/01/2024 

 10.44# 
 
 Limited Waiver, Consent and Second Amendment to Term Loan, Guarantee and Security Agreement, dated as of July 29, 2024, by and among Dragonfly Energy Corp., Dragonfly Energy Holdings Corp., Battle Born Battery Products, LLC, the lenders from time-to-time party thereto and Alter Domus (US) LLC. 
 
 8-K/A 
 
 10.3 
 
 08/01/2024 

 10.45 
 
 Joinder Agreement, by Battle Born Battery Products, LLC and acknowledged by Dragonfly Energy Corp., and Dragonfly Energy Holdings Corp., dated as of July 29, 2024. 
 
 8-K/A 
 
 10.4 
 
 08/01/2024 

 10.46 
 
 Limited Waiver and Third Amendment to Term Loan, Guarantee and Security Agreement, dated as of September 30, 2024, by and among Dragonfly Energy Holdings Corp., Dragonfly Energy Corp., the lenders from time to time party thereto and Alter Domus (US) LLC. 
 
 8-K 
 
 10.1 
 
 10/07/2024 

 10.47 
 
 Limited Waiver and Fourth Amendment to Term Loan, Guarantee and Security Agreement, dated as of December 31, 2024, by and among Dragonfly Energy Holdings Corp., Dragonfly Energy Corp., Battle Born Battery Products, LLC, the lenders from time to time party thereto and Alter Domus (US) LLC. 
 
 8-K 
 
 10.1 
 
 01/03/2025 

 10.48++ 
 
 Employment Agreement by and between Vickram Singh and Dragonfly Energy Holdings Corp, dated February 1, 2025. 
 
 8-K 
 
 10.1 
 
 02/05/2025 

 10.49# 
 
 Form of Securities Purchase Agreement, dated February 26, 2025, by and between Dragonfly Energy Holdings Corp. and the investor listed on the Schedule of Buyers thereto. 
 
 8-K 
 
 10.1 
 
 02/27/2025 

 10.50 
 
 Form of Registration Rights Agreement, dated February 26, 2025, by and between Dragonfly Energy Holdings Corp. and the investor listed on the Schedule of Buyers thereto. 
 
 8-K 
 
 10.2 
 
 02/27/2025 

 84 

 10.51# 
 
 Fifth Amendment to Term Loan, Guarantee and Security Agreement, dated as of February 26, 2025, by and among Dragonfly Energy Holdings Corp., Dragonfly Energy Corp., Battle Born Battery Products, LLC, the lenders from time to time party thereto and Alter Domus (US) LLC. 
 
 8-K 
 
 10.4 
 
 02/27/2025 

 10.52 
 
 Form of Settlement and Mutual Release Agreement, dated July 20, 2025, by and between the Company and the investor party thereto. 
 
 8-K 
 
 10.1 
 
 07/21/2025 

 10.53++ 
 
 Amendment to the Dragonfly Energy Holdings Corp.’s 2022 Equity Incentive Plan. 
 
 8-K 
 
 10.1 
 
 10/15/2025 

 10.54 
 
 Sixth Amendment to Term Loan, Guarantee and Security Agreement, dated as of October 20, 2025, by and among the Company, Dragonfly Energy Corp., Battle Born Battery Products, LLC, the lenders from time to time party thereto and Alter Domus (US) LLC. 
 
 8-K 
 
 10.1 
 
 10/20/2025 

 10.55 
 
 Exchange Agreement, dated November 4, 2025, by and among Dragonfly Energy Holdings Corp. and the lenders party thereto. 
 
 8-K 
 
 10.1 
 
 11/05/2025 

 10.56 
 
 Equity Distribution Agreement, dated January 30, 2026, by and between Dragonfly Energy Holdings Corp. and Canaccord Genuity, LLC. 
 
 8-K 
 
 1.1 
 
 01/30/2026 

 16.1 
 
 Letter dated March 24, 2025 from Marcum LLP to the Securities and Exchange Commission. 
 
 8-K 
 
 16.1 
 
 03/24/2025 

 19.1 
 
 Insider Trading Policy. 
 
 10-K 
 
 19.1 
 
 03/31/2025 

 21.1 
 
 List of Subsidiaries. 
 
 10-K 
 
 21.1 
 
 03/31/2025 

 23.1* 
 
 Consent of CBIZ CPAs P.C. 
 
 23.2* 
 
 Consent of Marcum LLP 
 
 31.1* 
 
 Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended. 
 
 31.2* 
 
 Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended. 
 
 32.1** 
 
 Certification of Chief Executive Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350. 
 
 97.1 
 
 Dragonfly Energy Holdings Corp. Compensation Recovery Policy. 
 
 10-K 
 
 97.1 
 
 04/16/2024 

 101.INS* 
 
 Inline
 XBRL Instance Document. 
 
 101.SCH* 
 
 Inline
 XBRL Taxonomy Extension Schema Document. 
 
 101.CAL* 
 
 Inline
 XBRL Taxonomy Extension Calculation Linkbase Document. 
 
 101.DEF* 
 
 Inline
 XBRL Taxonomy Extension Definition Linkbase Document. 
 
 101.LAB* 
 
 Inline
 XBRL Taxonomy Extension Label Linkbase Document. 
 
 101.PRE* 
 
 Inline
 XBRL Taxonomy Extension Presentation Linkbase Document. 
 
 104* 
 
 Cover
 Page Interactive Data File (embedded within the Inline XBRL document). 
 
 *
Filed herewith. 

 **
Furnished herewith. 

 #
Portions of schedules and exhibits to the agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted
schedule and/or exhibit will be furnished to the Securities and Exchange Commission upon request. 

 ++
Indicates a management contract or compensatory plan. 

 Item
16. Form 10-K Summary 

 None. 

 85 

 SIGNATURES 

 Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly caused this Annual Report to be signed on its behalf by the
undersigned, thereunto duly authorized, in Reno, Nevada, on the 30th day of March, 2026. 

 DRAGONFLY
 ENERGY HOLDINGS CORP. 
 
 By: 
 /s/
 Denis Phares 
 
 Denis
 Phares 
 
 Chief
 Executive Officer, Interim Chief Financial Officer and President 
 
 (Principal
 Executive Officer and Principal Financial and Accounting Officer) 
 
 Pursuant
to the requirements of the Securities Act of 1933, this Annual Report has been signed by the following persons in the capacities and
on the dates indicated: 

 86 

 Dragonfly
Energy Holdings Corp. 

 Signature 
 
 Title 
 
 Date 

 /s/
 Denis Phares 
 
 Chief
 Executive Officer, Interim Chief Financial Officer, President and Chairman 
 
 March
 30, 2026 

 Denis
 Phares 
 
 (Principal
 Executive Officer and Principal Financial and Accounting Officer) 
 
 /s/
 Perry Boyle 
 
 Director 
 
 March
 30, 2026 

 Perry
 Boyle 
 
 /s/
 Luisa Ingargiola 
 
 Director 
 
 March
 30, 2026 

 Luisa
 Ingargiola 
 
 /s/
 Brian Nelson 
 
 Director 
 
 March
 30, 2026 

 Brian
 Nelson 
 
 87 

 Item
8. Financial Statements and Supplemental Data 

 DRAGONFLY
ENERGY HOLDINGS CORP. 

 INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS 

 Report of Independent Registered Public Accounting Firm (PCAOB ID# 199 ) 
 F-2 

 Report of Independent Registered Public Accounting Firm (PCAOB ID# 688 ) 
 F-3 

 Consolidated Balance Sheets as of December 31, 2025 and 2024 
 F-4 

 Consolidated Statements of Operations for the years ended December 31, 2025 and 2024 
 F-5 

 Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2025 and 2024 
 F-6 

 Statements of Cash Flows for the years ended December 31, 2025 and 2024 
 F-7 

 Notes to Consolidated Financial Statements 
 F-9 

 F- 1 

 Dragonfly
Energy Holdings Corp. 

 Report
of Independent Registered Public Accounting Firm 

 To
the Stockholders and Board of Directors of 

 Dragonfly
Energy Holdings Corp. 

 Opinion
on the Financial Statements 

 We
have audited the accompanying consolidated balance sheet of Dragonfly Energy Holdings Corp. (the “Company”) as of December
31, 2025, the related consolidated statements of operations, stockholders’ equity and cash flows for the year ended December 31,
2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audit,
the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and
the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally
accepted in the United States of America. 

 Basis
for Opinion 

 These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 

 We
conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 

 Our
audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the o
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
Dragonfly Energy Holdings Corp. 10-K
