Note 11 - WARRANTS

Common Stock Warrants classified as Equity

Public Warrants

The Company’s Public Warrants are classified as equity and as of September 30, 2026 and December 31, 2025, there were 13,087 Public Warrants issued and outstanding.

During the three and nine months ended September 30, 2026 and 2025, no public warrants were exercised.

DRAGONFLY ENERGY HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

Note 11 - WARRANTS (CONTINUED)

The following table presents a roll-forward of the Company’s equity warrants from January 1, 2026 to September 30, 2026:

 SCHEDULE OF ROLL-FORWARD OF EQUITY WARRANTS

During the three and nine months ended September 30, 2026, the Company received proceeds of $0 and $1, respectively, from the exercise of equity warrants.

Common Stock Warrants classified as Liability

Private Placement Warrants

There were zero and 2,085 private warrants outstanding as of September 30, 2026 and December 31, 2025, respectively. The Company accounts for the Private Warrants issued in connection with the Initial Public Offering in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the private warrants do not meet the criteria for equity treatment thereunder, each private warrant must be recorded as a liability. This liability is subject to re-measurement at each balance sheet date.

With each such re-measurement, the warrant liabilities will be adjusted to their current fair value, with the change in fair value recognized in the Company’s statement of operations. The Company will reassess the classification at each balance sheet date.

DRAGONFLY ENERGY HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

Note 11 - WARRANTS (CONTINUED)

Common Stock Warrants classified as Liability (Continued)

Private Placement Warrants (Continued)

The Private Placement Warrants are classified as Level 2 within the fair value hierarchy. Although these instruments are not actively traded, they are valued based on observable inputs, including the market price of the Company’s publicly traded warrants. The Company used a Black-Scholes model to estimate the fair value of the Private Placement Warrants, applying a discount to the value of the Public Warrants to account for the difference in remaining life. Because the valuation primarily relies on observable market data with limited adjustments, the Company determined that classification within Level 2 is appropriate.

Term Loan Warrants

In connection with the entry into the Term Loan Agreement on October 7, 2022, and as a required term and condition thereof, the Company issued (i) the penny warrants to the Term Loan Lenders exercisable to purchase an aggregate of 3,601 shares of common stock (the “Original Penny Warrants”) and (ii) warrants to the Term Loan Lenders exercisable to purchase an aggregate of 2,222 shares of common stock at $7,200 per share (the “$10 Warrants” and, together with the Original Penny Warrants, the “Term Loan Warrants”).

On February 26, 2025, the Company entered into the Fifth Amendment to the Term Loan with the Term Loan Lenders in connection with the February 2025 securities purchase agreement. The Fifth Amendment provided for a onetime issuance of penny warrants to the Term Loan Lenders to purchase up to 4,125 shares of the Company’s common stock, at an exercise price of $0.80 per share (the “February 2025 Penny Warrants”). The February 2025 Penny Warrants are immediately exercisable upon issuance and will expire ten years from the date of issuance.

In addition to the Original Penny Warrants, through December 31, 2024, the Company issued an additional 16,829 warrants to the Term Loan Lenders, of which 2,778 were exercised on a cashless basis. These warrants were issued in connection with prior amendments to the Term Loan in exchange for waivers of financial covenant testing and pursuant to anti-dilution provisions.

During the nine months ended September 30, 2026, the Term Loan Lenders exercised, on a cashless basis, all 21,777 remaining warrants held by them, consisting of the Original Penny Warrants, the additional warrants described above and the February 2025 Penny Warrants, and the Company agreed to issue 21,672 shares of common stock in connection with such exercises. As of September 30, 2026, none of these warrants remained outstanding.

DRAGONFLY ENERGY HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

Note 11 - WARRANTS (CONTINUED)

Common Stock Warrants classified as Liability (Continued)

The following table provides the significant inputs to the Black-Scholes method for the fair value of the Investor Warrants issued in the June 2023 Offering:

 SCHEDULE OF SIGNIFICANT INPUTS OF FAIR VALUE OF WARRANTS

The following table presents a roll-forward of the Company’s warrants from January 1, 2026 to September 30, 2026:

 SCHEDULE OF ROLL FORWARD OF LIABILITY CLASSIFIED WARRANTS

 DRAGONFLY ENERGY HOLDINGS CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)