v3.26.1
COMMITMENTS AND CONTINGENCIES
 6 Months Ended
Jun. 30, 2026
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

Note 5 - COMMITMENTS AND CONTINGENCIES

 

Litigation

 

From time to time the Company may be named in claims arising in the ordinary course of business. Currently, no legal proceedings, governmental actions, administrative actions, investigations or claims are pending against the Company or involve the Company that, in the opinion of the Company’s management, could reasonably be expected to have a material adverse effect on the Company’s business and financial condition.

 

Operating Leases

 

The Company has leases related to the main office, warehouse space, research and development lab, engineering office, and sales office, all located in Reno, Nevada. The leases require annual escalating monthly payments ranging from $111 to $309.

 

On May 8, 2025, the Company entered into a sixth lease amendment with its landlord to extend the lease term for an additional sixty-four (64) month period for the research and development lab and engineering office in Reno, Nevada. 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 following table presents the breakout of the operating leases as of:

 

   June 30,
2026		   December 31,
2025		 
Operating lease right-of-use assets  $14,654   $15,240 
Short-term operating lease liabilities   2,360    2,533 
Long-term operating lease liabilities   19,411    20,470 
Total operating lease liabilities  $21,771   $23,003 
Weighted average remaining lease term   7.51 years    7.88 years 
Weighted average discount rate   8.01%   7.99%

 

Assumptions used in determining our incremental borrowing rate include our implied credit rating and an estimate of secured borrowing rates based on comparable market data.

 

 

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

 

Note 5 - Commitments and Contingencies (continued)

 

At June 30, 2026, the future minimum lease payments under these operating leases are as follows:

 

Fiscal Years Ending    
December 31, 2026(1)  $2,149 
December 31, 2027   3,746 
December 31, 2028   3,860 
December 31, 2029   3,614 
December 31, 2030   3,446 
Thereafter   12,600 
Total lease payments   29,415 
Less imputed interest   7,644 
Total operating lease liabilities  $21,771 

 

(1)Represents scheduled payments for the remaining six-month period ending December 31, 2026.
      For The Three Months Ended
June 30,		   For The Six Months Ended
June 30,		 
Lease cost  Classification  2026   2025   2026   2025 
Operating lease cost  Cost of goods sold  $102   $610   $554   $1,237 
Operating lease cost  Research and development   44    37    87    77 
Operating lease cost  General and administration   560    724    793    1,541 
Operating lease cost  Selling and marketing   13    13    27    26 
Total lease cost     $719   $1,384   $1,461   $2,881 

 

All lease costs included in the schedule above are fixed.

 

 

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

 

Note 5 - Commitments and Contingencies (continued)

 

Financing Leases

 

The Company entered into finance lease agreements for equipment to support the Company’s operations. Payments under the finance lease agreements are fixed for a term of 3-5 years. The leased assets are recognized in property plant & equipment.

 

The following table presents the breakout of the financing leases as of:

 

   June 30,
2026		   December 31,
2025		 
Finance lease right-of-use assets  $67   $85 
Short-term finance lease liabilities   21    35 
Long-term finance lease liabilities   18    28 
Total finance lease liabilities  $39   $63 
Weighted average remaining lease term   2.17 years    2.15 years 
Weighted average discount rate   5.2%   5.2%

 

Assumptions used in determining our incremental borrowing rate include our implied credit rating and an estimate of secured borrowing rates based on comparable market data.

 

At June 30, 2026, the future minimum lease payments under these financing leases are as follows:

 

Fiscal Years Ending    
December 31, 2026(1)  $11 
December 31, 2027   18 
December 31, 2028   9 
December 31, 2029   3 
Total lease payments   41 
Less imputed interest   2 
Total financing lease liabilities  $39 

 

(1)Represents scheduled payments for the remaining six-month period ending December 31, 2026.

 

Other Contingencies

 

In March 2025, the Company agreed to pay LithiumHub a total of $2,500, of which approximately $562 is payable in 2025 and approximately $1,938 is payable in 2026, in exchange for a non-exclusive license in LithiumHub Technologies, LLC’s patent rights related to the Patents-in-Suit. In accordance with the Settlement Agreement, the Company and LithiumHub terminated the ongoing patent litigation between them. The Settlement Agreement includes no admission of infringement by the Company. On October 22, 2025, the Company paid the settlement amount in full.

 

 

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

 

Note 5 - Commitments and Contingencies (continued)

 

Other Contingencies (Continued)

 

On February 20, 2026, the United States Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). In March 2026, the U.S. Court of International Trade issued an additional ruling stating that importers that have paid tariffs under IEEPA are due refunds. The Company began to receive tariff refunds in the second quarter of fiscal 2026, and as of June 30, 2026, has received refunds of $810, inclusive of an immaterial amount of interest. As of June 30, 2026, the Company recognized an additional $332 as a receivable included in other current assets, which was received subsequent to June 30, 2026. For the six months ended June 30, 2026, $1,092 of the tariff refund related to product sales was recognized as a reduction in cost of sales. The Company continues to monitor developments and assess the potential impact on its consolidated financial statements and results of operations.