DFLI

Acquisition of Dakota Lithium Assets

• Acquired Dakota Lithium's assets for a total purchase price of $4 million: $1 million in cash and $3 million in Dragonfly common stock (issued at $2 per share, 12-month lockup)
• Dakota Lithium holds an established brand, existing customer base, distributor network, and complementary product portfolio for marine, outdoor recreation, power sports, and golf cart markets, which are adjacent to Dragonfly's core business
• Dakota generated $12 million in 2025 net revenue, down from prior years due to working capital and inventory constraints; Dragonfly expects to restore availability and grow revenue using its existing commercial and operational infrastructure with limited incremental operating expense
• In connection with the acquisition, the company amended its term loan to reduce the minimum cash covenant, allow interest-in-kind payments for the next two quarters, and defer covenant compliance until September 2027, preserving near-term liquidity and financial flexibility
• Dakota is expected to begin contributing meaningful revenue and be accretive to adjusted EBITDA starting in Q4 2026

Leadership and Intellectual Property Updates

• Added two key personnel: Robert Keller as Director of National Fleet Sales (bringing 40 years of fleet industry experience and large customer relationships) and Dr. Lucas Lutz to the board of directors (bringing expertise in battery science and AI-driven battery engineering, with prior experience evaluating Dragonfly's dry electrode technology)
• Received a new Japanese patent allowance for solid state battery technology covering dry powder coating methods for electrochemical cells, expanding global IP protection for the company's unique dry electrode manufacturing process alongside existing US and European patent allowances

Commercial Progress

• Heavy-duty trucking reached a commercial inflection point in Q2 2026, with the first meaningful revenue contribution from the segment after years of pilot and validation work; began shipping to Stevens Transport for the first phase of a planned full fleet rollout covering 2,500 trucks, and has an active initial order with Werner Enterprises, with additional pilots ongoing in summer 2026
• RV market demand remains soft, with industry shipments down 14.2% year-over-year, but Dragonfly has strengthened its position with OEM partners, gaining inclusion in additional vehicle lineups and seeing increased energy storage content per existing model
• Early progress is emerging in industrial applications, including potential programs with large national customers, representing an additional avenue for revenue diversification

Financial and Operational Cost Actions

• Implemented cost reduction actions that reduced total operating expenses to $7.2 million in Q2 2026, down from $7.9 million in the prior year quarter
• Adjusted EBITDA improved $3 million sequentially from Q1 2026 to negative $1.6 million, and improved $0.6 million year-over-year despite lower net sales
• Facility consolidation is ongoing, with principal remaining actions expected to be completed in Q3 2026

• Third quarter 2026 net sales are expected to grow to approximately $13.5 million, driven by heavy-duty trucking growth offset by continued RV market weakness; adjusted EBITDA is expected to be approximately negative $2.4 million, with the sequential decline driven by temporary timing factors (unsubleased vacated facility costs and incremental pre-revenue operating costs to restore Dakota Lithium's operations, not a change in the underlying business trajectory)
• Heavy-duty trucking Q3 2026 revenue is expected to more than double Q2 levels to approximately $1.3 million, with continued sequential growth expected in Q4 2026 and beyond
• The company reaffirms its long-term target of achieving positive adjusted EBITDA at an annualized net sales run rate of approximately $70 million, with the Dakota Lithium acquisition accelerating progress toward this target by adding incremental revenue with limited additional operating expense

For Q2 2026, Dragonfly Energy reported total net sales of $13.2 million. OEM net sales contributed $8.4 million, accounting for 63.6% of total net sales, while DTC net sales contributed $4.5 million, accounting for 34.1% of total net sales. The newly commercialized heavy-duty trucking segment generated $0.5 million in revenue, which accounts for approximately 3.8% of total Q2 net sales. Gross profit for the quarter was $4.3 million, with a gross margin of 33.0% (up 470 basis points year-over-year, including a $1.1 million benefit from tariff refund payments).

• Forward-looking results are subject to general macroeconomic risks, including continued softness in discretionary spending that is expected to keep the RV market weak through the end of 2026 and into 2027, which may offset growth in other segments
• Heavy-duty trucking revenue growth depends on successful progression of pilot programs to full fleet rollouts, which is subject to customer adoption timelines that are difficult to forecast accurately
• Commercial ramp-up of Dakota Lithium's business depends on successful inventory replenishment and customer re-engagement, and the company has not included full revenue projections for the business in current guidance due to uncertainty near-term
• Actual results may differ materially from forward-looking statements due to risks and uncertainties disclosed in the company's SEC filings and press releases

Q: The 70 million annualized net sales run rate target for positive adjusted EBITDA includes Dakota Lithium's revenue, correct? How much incremental quarterly operating expense will Dakota add, and what was its recent revenue trend? / A: Yes, the target does include Dakota's revenue. Dakota's 2025 revenue was $12 million, but it declined and remained flat in early 2026 due to ongoing inventory constraints. Dragonfly's main focus is currently replenishing inventory to restart growth. The acquisition is a complementary sales and product channel that leverages Dragonfly's existing infrastructure, so incremental operating expense will be limited to small increases in payroll and marketing, which should accelerate progress toward the profitability target.

Q: What is the outlook for a rebound in the RV market given current macroeconomic conditions? / A: Industry contacts expect continued softness in the RV market through the end of 2026 and into 2027, driven by weak discretionary spending from higher macroeconomic headwinds. Despite the soft overall market, Dragonfly is seeing positive take rates for its products at the OEM level, with more standardization of its solutions across OEM vehicle lineups.

Q: What is the size of the heavy-duty trucking opportunity and expected growth for 2027? / A: It is difficult to put an exact number on near-term growth because fleet adoption progresses through pilot, expanded pilot, and full rollout phases that have variable timelines. However, the current pipeline includes many of the largest public and private for-hire and private fleets in the industry, so very significant growth in heavy-duty trucking revenue can be expected for 2027.

Q: Are there updates on the emerging industrial segment opportunity, and will Dragonfly pursue additional acquisitions similar to Dakota Lithium? / A: Dragonfly has not dedicated major resources to the industrial segment yet, but it has shown promising green shoots, particularly for battery backup in intelligent transportation systems (such as traffic signals) and cellular/telecom backup for industrial solar applications, which are expected to be profitable niche opportunities. Management says it always keeps an eye out for additional complementary acquisition opportunities similar to the Dakota Lithium deal.