8-K: Dragonfly Energy Resolves Preferred Stock Obligations, Issues 2.1 Million Common Shares

Dragonfly Energy Holdings Corp. has entered into a Settlement and Mutual Release Agreement to exchange all outstanding Series A Convertible Preferred Stock for 2,100,000 shares of common stock, eliminating future obligations and enhancing financial flexibility.

Summary

• Dragonfly Energy Holdings Corp. (DFLI) entered into a Settlement and Mutual Release Agreement on July 20, 2025, with the holder of its Series A Convertible Preferred Stock.
• Under the agreement, Dragonfly Energy will issue 2,100,000 shares of its common stock to the investor.
• In exchange, the investor will surrender all outstanding shares of Series A Preferred Stock.
• This transaction fully satisfies and terminates the company's obligations under the original Securities Purchase Agreement, the Certificate of Designation governing the Series A Preferred Stock, and other related agreements.
• All remaining outstanding Series A Preferred Stock will be cancelled, and the company will have no further obligation to issue common or Series A Preferred Stock under these agreements.
• Both parties have provided a full release of claims to each other related to the aforementioned agreements.
• The common shares are being issued without registration, relying on the exemption provided by Section 3(a)(9) of the Securities Act of 1933.

Sentiment

Score: 8

Explanation: The agreement resolves outstanding preferred stock obligations, eliminating potential future dilution and dividend burdens, which is a significant positive for the company's capital structure and financial flexibility.

Positives

• Eliminates all outstanding shares of Series A Convertible Preferred Stock and associated common stock issuance obligations.
• Removes risks related to the number of conversion shares and dividend obligations associated with the Series A Preferred Stock.
• Improves the company's capital structure and enhances financial flexibility.
• Removes potential future dilution concerns stemming from the Series A Preferred Stock.
• Positions the company to better focus resources on driving growth and achieving profitability.

Risks

• The company's ability to achieve improved recovery in its core markets, including the RV market.
• The company's ability to successfully increase market penetration into target markets.
• The company's ability to penetrate the heavy-duty trucking and other new markets.
• The company's ability to retain members of its senior management team and other key personnel.
• The company's ability to maintain relationships with key suppliers, including those in China.
• The company's ability to maintain relationships with key customers.
• The company's ability to access capital as and when needed under its $150 million ChEF Equity Facility.
• The company's ability to protect its patents and other intellectual property.
• The company's ability to successfully utilize its patented dry electrode battery manufacturing process and optimize solid state cells, as well as to produce commercially viable solid state cells in a timely manner or at all, and to scale to mass production.
• The company's ability to timely achieve the anticipated benefits of its licensing arrangement with Stryten Energy LLC.
• The company's ability to achieve the anticipated benefits of its customer arrangements with THOR Industries and THOR Industries affiliated brands.
• The company's ability to maintain the listing of its common stock and public warrants on the Nasdaq Capital Market.
• Impacts from the Russian/Ukrainian conflict.
• The company's ability to generate revenue from future product sales and its ability to achieve and maintain profitability.
• The company's ability to compete with other manufacturers in the industry and its ability to engage target customers and successfully convert these customers into meaningful orders in the future.

Future Outlook

The company anticipates improved recovery in its core markets, including the RV market, and aims to successfully increase market penetration into target markets like heavy-duty trucking. It plans to focus resources on driving growth and achieving profitability, leveraging its patented dry electrode battery manufacturing process and developing commercially viable solid-state cells. The company also expects to achieve anticipated benefits from its licensing arrangement with Stryten Energy LLC and customer arrangements with THOR Industries.

Management Comments

• "By eliminating the risks related to the number of conversion shares and dividend obligations associated with the Series A Preferred Stock, we believe we have successfully improved our capital structure and have enhanced our financial flexibility, while removing potential future dilution concerns."
• "We believe this strategic move will position us to better focus our resources on driving growth and achieving profitability."

Industry Context

Dragonfly Energy operates in the energy storage and battery technology sector, specializing in lithium battery cell manufacturing, battery pack assembly, and full system integration. The company's focus includes the RV market, heavy-duty trucking, and the development of proprietary, nonflammable, all-solid-state battery cells, positioning it at the forefront of domestic lithium battery cell production. This transaction enhances its financial position to pursue growth in these areas.

Stakeholder Impact

• Shareholders: The transaction eliminates potential future dilution from the Series A Preferred Stock, but results in the issuance of 2,100,000 new common shares, which will cause immediate dilution to existing common shareholders. However, it removes an overhang from the preferred stock structure.
• Creditors: Improved capital structure and financial flexibility may enhance the company's creditworthiness.

Next Steps

• Continue to focus resources on driving growth and achieving profitability.
• Pursue increased market penetration into target markets, including heavy-duty trucking.
• Advance the development and commercialization of proprietary, nonflammable, all-solid-state battery cells.

Key Dates

Recommendation

Keywords

Dragonfly Energy, DFLI, Series A Preferred Stock, Common Stock, Settlement Agreement, Capital Structure, Financial Flexibility, Dilution, SEC Filing, 8-K, Convertible Preferred Stock, Stock Exchange, Battery Technology, Energy Storage