Dragonfly Energy Enters into $30M Licensing Agreement for Battle Born Batteries Brand with Stryten Energy, a Leading North American Battery Manufacturer

Rhea-AI Summary

Dragonfly Energy (Nasdaq: DFLI) has entered into a $30 million licensing agreement with Stryten Energy for its Battle Born Batteries® brand. The deal grants Stryten exclusive rights to market and distribute Battle Born Batteries in new B2B markets, including military, automotive, marine, power sports, lawn and garden, and golf cart applications.

The agreement includes an initial $5 million licensing fee and potential mid-single digit royalty payments up to an additional $25 million. Dragonfly Energy will continue its operations in existing markets such as RV, off-grid properties, and stationary storage. The partnership aims to expand brand awareness and market reach while offering Stryten's customers reliable lithium-based power solutions.

Positive

• Potential $30 million revenue from licensing agreement
• Expansion into new B2B markets through Stryten Energy's distribution network
• Immediate $5 million upfront payment
• Potential for additional revenue from battery design and contract manufacturing services
• Increased brand awareness and market reach for Battle Born Batteries

Negative

• Potential competition in new markets may impact existing business
• Dependence on Stryten Energy's performance for royalty payments
• Possible brand dilution if quality control is not maintained in new markets

Insights

Financial Analyst

The $30 million licensing agreement between Dragonfly Energy and Stryten Energy represents a significant business development for Dragonfly. This deal structure, with an upfront payment of $5 million and potential for up to $25 million in royalties, provides Dragonfly with immediate capital infusion and a steady revenue stream. The mid-single digit royalty rate suggests a healthy margin on sales, which could translate to substantial earnings as Stryten expands into new markets.

Importantly, this agreement allows Dragonfly to monetize its brand in new B2B sectors without cannibalizing its existing markets. The partnership with Stryten, a major player in energy storage solutions, opens doors to military, automotive and other lucrative sectors. This diversification could significantly reduce Dragonfly's market risk and potentially smooth out revenue fluctuations.

From a financial perspective, the contract manufacturing arrangement until Stryten establishes its own production capabilities could provide an additional revenue boost for Dragonfly in the short to medium term. However, investors should monitor the transition of manufacturing to Stryten, as it may impact Dragonfly's future revenues.

Overall, this deal appears to be a strategic move that could accelerate Dragonfly's growth and market penetration without significant capital expenditure, potentially improving its financial position and shareholder value.

Market Research Analyst

This licensing agreement signifies a major shift in Dragonfly Energy's market strategy. By partnering with Stryten Energy, Dragonfly is effectively expanding its reach into new B2B markets including military, automotive, marine, power sports, lawn & garden and golf carts. This diversification could substantially increase the total addressable market for Battle Born Batteries.

Stryten Energy's extensive distributor and customer network, including automotive aftermarket retailers and battery distributors, provides a robust channel for market penetration. This could lead to increased brand visibility and consumer accessibility for Battle Born Batteries, potentially accelerating market share growth.

The focus on developing new battery models tailored to Stryten's target markets suggests a product diversification strategy that could enhance the brand's appeal across various industries. This adaptability could be important in capturing market share in competitive sectors like automotive and marine applications.

However, it's important to note that success in these new markets isn't guaranteed. Factors such as competition, regulatory requirements and market-specific demands will play important roles. Investors should closely monitor Stryten's performance in introducing Battle Born Batteries to these new sectors, as it will be a key indicator of the agreement's long-term value.

Tech Expert

This licensing agreement represents a significant technological opportunity for both Dragonfly Energy and Stryten Energy. The collaboration allows for the expansion of lithium-ion battery technology into new applications, potentially accelerating the adoption of this more efficient and environmentally friendly energy storage solution in various industries.

The partnership's focus on developing new battery models for Stryten's target markets is particularly intriguing. This could lead to innovative designs tailored for specific applications like military or automotive use, potentially pushing the boundaries of lithium-ion battery technology. The combination of Dragonfly's expertise in lithium-ion batteries and Stryten's experience in diverse energy storage solutions could result in breakthrough products that address unique market needs.

From a manufacturing perspective, the initial arrangement for Dragonfly to contract manufacture the batteries ensures quality control and consistency. However, the planned transition to Stryten's own domestic manufacturing will be a critical phase to watch. It will require careful technology transfer and quality assurance processes to maintain the Battle Born Batteries' reputation for reliability.

The commitment to ongoing technical support from Dragonfly is important for maintaining product quality and customer satisfaction as the brand expands into new markets. This continued involvement could also facilitate further technological advancements and refinements based on real-world application feedback from diverse sectors.

Agreement to allow for expansion of Battle Born Batteries® products into new markets

• Dragonfly Energy signs a $30 million agreement to license its popular lithium-ion battery brand, Battle Born Batteries^®, to Stryten Energy for distribution globally
• Stryten Energy will have exclusive rights to market and distribute Battle Born Batteries for military, automotive, marine, power sports, lawn and garden and golf cart applications. All B2B end markets Dragonfly Energy doesn’t currently have a presence in.
• This partnership will encompass a mix of existing Battle Born Batteries products, with a strong focus on the development of new battery models specifically tailored to Stryten Energy's target markets.
• Dragonfly Energy will receive an initial licensing fee of $5 million and have the right to mid-single digit royalty payments for up to an additional $25 million.

RENO, Nev., July 30, 2024 (GLOBE NEWSWIRE) -- Dragonfly Energy Holdings Corp. ("Dragonfly Energy" or the "Company") (Nasdaq: DFLI), an industry leader in energy storage and manufacturer of lithium-ion batteries, today announced a strategic partnership with Stryten Energy, a leading North American battery manufacturer, for the licensing of the Dragonfly Energy’s Battle Born Batteries^® brand of lithium-ion batteries. The agreement, with a potential value of up to $30 million, grants Stryten Energy a license to market and distribute Dragonfly Energy's Battle Born Batteries globally. Stryten Energy plans to leverage its vast distributor and customer network to introduce Battle Born Batteries branded products to new business-to-business (B2B) markets, including military, automotive, marine, power sports, lawn & garden and golf carts.

"At Dragonfly Energy, we're incredibly proud to see the Battle Born Batteries brand take this leap forward into new end markets," said Dr. Denis Phares, chief executive officer of Dragonfly Energy. "The love and trust our customers have placed in our products has been humbling, and the potential to see our lithium batteries on shelves at major retailers, alongside other leading brands’ components, not only is a testament to their enduring quality but makes them more accessible to consumers nationwide. We believe that Stryten Energy's extensive reach and shared commitment to innovation will make this agreement the beginning of a truly mutually beneficial relationship, and we're confident it will unlock increased growth for both companies."

The partnership between Dragonfly Energy and Stryten Energy will focus on battery design, contract manufacturing and licensing of Battle Born Batteries products for new B2B end markets where the Company does not currently have a presence in. Dragonfly Energy will continue its independent operations in existing markets such as recreational vehicles (RV), off-grid properties, heavy-duty trucking, stationary storage, and oil and gas. The potential value of the licensing agreement is $30 million, comprised of an upfront payment of $5 million to Dragonfly Energy and subsequent mid-single digit royalty payments based on Stryten Energy’s product volume using the licensed branding, with a tiered structure reaching up to an additional $25 million, at which point Stryten Energy will be required to pay a nominal annual license fee. Additional fees will apply for battery design and contract manufacturing services outside of the licensing agreement and are expected to provide additional revenue to the Company.

Stryten Energy is a leading U.S.-based manufacturer of energy storage solutions, providing advanced lead, lithium and vanadium batteries to customers across the transportation, industrial, military and government sectors. With a workforce of over 2,500 employees and ten manufacturing plants, Stryten Energy is a respected supplier in the energy storage market. Through a nationwide customer base of automotive aftermarket retailers and battery distributors, this exclusive business-to-business licensing deal is poised to expand brand awareness and market reach of Battle Born Batteries while offering Stryten Energy’s customers reliable, trusted and powerful lithium-based power solutions.

"At Stryten Energy, we're focused on providing premium energy storage solutions to our customers," said Mike Judd, chief executive officer of Stryten Energy. "This partnership with Dragonfly Energy will allow us to expand our transportation product portfolio and provide our customers access to the well-known Battle Born Batteries brand of quality lithium batteries. We're excited about the market potential this collaboration holds and look forward to continuing to explore future opportunities as we grow our relationship with Dragonfly Energy."

To ensure the same high level of quality customers expect from the Battle Born Batteries brand, Dragonfly Energy will initially contract manufacture all batteries distributed by Stryten Energy at the Company’s facility in Northern Nevada until Stryten Energy establishes its own domestic manufacturing footprint. This partnership will encompass a mix of existing Battle Born Batteries products, with a strong focus on the development of new battery models specifically tailored to Stryten Energy's target markets. This approach will allow Stryten to leverage the proven performance of Battle Born Batteries while offering unique solutions to its diverse customer base. Dragonfly Energy remains committed to providing exceptional technical support for all Battle Born Batteries products and will continue to grow their support team along with increasing demand.

"The impact of this partnership with Stryten Energy for the wider proliferation of the Battle Born Batteries brand cannot be understated," said Tyler Bourns, chief marketing officer at Dragonfly Energy. "We believe this agreement not only allows us to expand the brand into a wider range of previously untapped markets, but also leverages Stryten Energy's vast retail and distribution customer network to significantly increase our brand awareness. We believe this is a major step forward in our mission to make Battle Born Batteries a household name across North America."

For more information about Dragonfly Energy, visit DragonflyEnergy.com. To learn more about Stryten Energy, visit Stryten.com.

About Dragonfly Energy
Dragonfly Energy Holdings Corp. (Nasdaq: DFLI) is a comprehensive lithium battery technology company, specializing in cell manufacturing, battery pack assembly, and full system integration. Through its renowned Battle Born Batteries^® brand, Dragonfly Energy has established itself as a frontrunner in the lithium battery industry, with hundreds of thousands of reliable battery packs deployed in the field through top-tier OEMs and a diverse retail customer base. At the forefront of domestic lithium battery cell production, Dragonfly Energy's patented dry electrode manufacturing process can deliver chemistry-agnostic power solutions for a broad spectrum of applications, including energy storage systems, electric vehicles, and consumer electronics. The Company's overarching mission is the future deployment of its proprietary, nonflammable, all-solid-state battery cells.

To learn more about Dragonfly Energy and its commitment to clean energy advancements, visit www.dragonflyenergy.com/investors.

About Stryten Energy
Stryten Energy helps solve the world’s most pressing energy challenges with a broad range of energy storage solutions across the Essential Power, Motive Power, Transportation, Military and Government sectors. Headquartered in Alpharetta, Georgia, we partner with some of the world’s most recognized companies to meet the growing demand for reliable and sustainable energy storage capacity. Stryten powers everything from submarines to subcompacts, microgrids, warehouses, distribution centers, cars, trains and trucks. Our stored energy technologies include advanced lead, lithium and vanadium redox flow batteries, intelligent chargers and energy performance management software that keep people on the move and supply chains running. An industry leader backed by more than a century of expertise, Stryten has The Energy to Challenge the status quo and deliver top-performing energy solutions for today and tomorrow. Learn more at stryten.com.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical statements of fact and statements regarding the Company's intent, belief, or expectations, including, but not limited to, statements regarding its partnership with Stryten Energy and the potential value of the license agreement, the Company's future results of operations and financial position, planned products and services, business strategy and plans, market size and growth opportunities, competitive position and technological and market trends. Some of these forward-looking statements can be identified by the use of forward-looking words, including "may," "should," "expect," "intend," "will," "estimate," "anticipate," "believe," "predict," "plan," "targets," "projects," "could," "would," "continue," "forecast" or the negatives of these terms or variations of them or similar expressions.

These forward-looking statements are subject to risks, uncertainties, and other factors (some of which are beyond the Company's control) which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Such factors include those set forth in the sections entitled "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, and in the Company's subsequent filings with the SEC available at www.sec.gov. If any of these risks materialize or any of the Company's assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that the Company presently does not know or that it currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. All forward-looking statements contained in this press release speak only as of the date they were made. Except to the extent required by law, the Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.

Investor Relations
Caldwell Bailey
ICR, Inc.
DragonflyIR@icrinc.com

Media Relations
Amy Demuth, RAD Strategies Inc.
dragonfly@radstrategiesinc.com

Media Resources
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Source: Dragonfly Energy Holdings Corp.

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/03fbe138-674c-4a2d-af89-baef2a9780f3

FAQ

What is the value of the licensing agreement between Dragonfly Energy and Stryten Energy?

The licensing agreement between Dragonfly Energy (DFLI) and Stryten Energy has a potential value of up to $30 million, including an initial $5 million licensing fee and subsequent royalty payments.

Which new markets will Battle Born Batteries expand into through this agreement?

Through this agreement, Battle Born Batteries will expand into new B2B markets including military, automotive, marine, power sports, lawn and garden, and golf cart applications.

How will Dragonfly Energy (DFLI) benefit from this licensing agreement?

Dragonfly Energy (DFLI) will benefit from an initial $5 million licensing fee, potential royalty payments up to $25 million, increased brand awareness, and possible additional revenue from battery design and contract manufacturing services.

Will Dragonfly Energy (DFLI) continue to operate in its existing markets after this agreement?

Yes, Dragonfly Energy (DFLI) will continue its independent operations in existing markets such as recreational vehicles, off-grid properties, heavy-duty trucking, stationary storage, and oil and gas.