Dragonfly Energy Holdings (DFLI) risk factors, FY2025 10-K

Risks Related to Our Existing Lithium-Ion Battery Operations

1. 01Our business and future growth depends on the needs and success of our OEM’s and similar customers34% rewritten
2. 02We may not be able to engage target customers successfully and convert these customers into meaningful orders in the future
3. 03We 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
4. 04We 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
5. 05We 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
6. 06Lithium-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
7. 07We 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

Risks Related to Our Solid-State Technology Development

1. 08We 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
2. 09We 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
3. 10If 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

1. 11We face risks associated with vendors from whom our products are sourced
2. 12Changes in geopolitical conditions, U.S.-China trade relations and other factors beyond our control may adversely impact our business and operating results
3. 13A significant disruption to the timely receipt of inventory could adversely impact sales or increase our transportation costs, which would decrease our profits

Risks Related to Our Intellectual Property

1. 14We 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
2. 15We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause us to incur substantial costs
3. 16Our 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 ours71% rewritten
4. 17Global 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
5. 18The 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
6. 19Our 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
7. 20If 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
8. 21We may expand our business through acquisitions in the future, and any future acquisition may not be accretive and may negatively affect our business
9. 22Our operations are subject to a variety of environmental, health and safety rules that can bring scrutiny from regulatory agencies and increase our costs
10. 23From 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
11. 24Environmental, social and governance matters may cause us to incur additional costs

Risks Related to Being a Public Company

1. 25We incur significant increased expenses and administrative burdens as a public company, which could have an adverse effect on our business, financial condition and operating results24% rewritten
2. 26Our management team has limited experience managing a public company

Risks Related to Our Financial Position and Capital Requirements

1. 27Our 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 future73% rewritten
2. 28Restrictions 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 growth36% rewritten
3. 29If 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 capitalNew
4. 30Future resales of our outstanding securities may cause the market price of our securities to drop significantly, even if our business is doing well28% rewritten

Risks Related to Ownership of Our Common Stock

1. 31If securities or industry analysts do not publish research or reports about us, or publish negative reports, our stock price and trading volume could decline
2. 32If 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
3. 33The 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 stockholders39% rewritten
4. 34The rights of holders of our Series B Preferred Stock rank senior to the rights of the holders of our common stockNew
5. 35Our 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
6. 36Changes 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
7. 37Our 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
8. 38Our Articles of Incorporation could discourage another company from acquiring us and may prevent attempts by our stockholders to replace or remove our management
9. 39We 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
10. 40Unanticipated 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 operations25% rewritten