Dragonfly Energy Holdings Corp

may differ due to factors noted in the press release and in periodic SEC filings. Management will reference some non-GAAP financial measures. Reconciliations to the nearest corresponding GAAP measure can be found in today's press release on the company's website. I'll now turn the call over to Dragonfly Energy CEO, Dr. Dennis Farris.

Thank you, and thank you to everyone joining us today. With another quarter of growth under our belts, Dragonfly Energy continues to demonstrate our ability to diversify and progress our business in the face of difficult, though slowly improving market conditions. We have historically leveraged our cutting edge technology development with strong sales and marketing. And this quarter is no exception as we continue to lean into our strengths to weather the realities of how higher interest rates affect consumer discretionary spending and consequently our core markets. We have worked hard to diversify our downstream markets in preparation for more stable growth and a rapid path back to profitability. This has included our entrance into the heavy duty trucking and oil and gas markets. Over the course of the second quarter, we also negotiated and finalized a brand licensing deal for our Battle Born Batteries brand with one of the largest American energy storage companies, Strident Energy. We were thrilled to be able to announce the closing of this deal at the end of July. We are extremely happy with the mutual benefits this collaboration is expected to bring. For Dragonfly Energy, it means broad exposure for our Battle Born Batteries brand through B2B channels and into markets that were previously not even on our product roadmap. Stryton's vast distribution channels allow for mass brand proliferation, with their reach extending to major retailers like Tractor Supply Company, Interstate, AutoZone, and Continental Batteries. These are the types of big box stores where we expect to see Battle Born Batteries products available for consumers to purchase in the future. We believe this exposure should build considerable brand value, including in our core markets. In addition to the increased liquidity through licensing royalties, revenue will also come in the form of contract manufacturing, as Dragonfly Energy will produce and support the Battle Born Batteries that are sold through Strident. This collaboration with Strident Energy exemplifies the strong reputation and value we have built in the Battle Born brand, but it also is a testament to the quality of our technology. In addition to our licensing agreement, both we and Strident anticipate an expanded collaboration whereby we will produce cells for Strident using our dry electric process. We believe this is truly a win-win arrangement and one we anticipate expanding in the future. Moving to our R&D efforts, Apart from continuing to produce battery cell test samples for potential OEM partners, the focus of our research and development program has been the design of a scaled-up dry electrode cell production plant. We have been actively seeking non-diluted ways to fund the first half gigawatt hour of production through downstream partnerships, such as Willing Customers, and upstream component and material suppliers. At the same time, we are in advanced negotiations for our first government funding commitment for the construction of a dry electrode battery manufacturing facility, and we are currently evaluating numerous sites in North America. The desire for affordable domestic cell supply is enormous today. During the scale-up design process, we have identified further cost reductions that we believe will result in even more competitive pricing than what was previously presented in a third-party cost study of our dry electrode process. And since the extension of our dry electrode process to non-flammable all-solid state cells having a composite electrolyte does not require significant modifications from our conventional cell line, we have been continuing work to further optimize the ionic connectivity and voltage stability of the composite electrolyte itself to allow for improved cyclability and expanded operation beyond our core storage applications. I will now turn the call over to our Chief Revenue Officer, Wade Seberg, to discuss our progress within our core markets and our revenue diversification efforts.

Thank you, Dennis, and thank you to everyone joining us today. Our focus today is on building momentum for sustainable and diversified growth. Over the past quarter, Dragonfly Energy has made significant strides in laying the groundwork for long-term, sustainable growth across multiple key markets. We continue to expand our reach and solidify our position in the energy storage industry, even as we face ongoing challenges. We are excited to report progress in our heavy-duty trucking market initiatives. While a full transition to our all-electric auxiliary power unit, or EAPU, has been slower than we anticipated, this can be attributed to the longer-than-normal freight recession and the multiple-season trials some of our larger partners are requesting. These trials are critical to market adoption, as they demonstrate the real-world benefits of our EAPU and liftgate power systems. Our general theme when discussing our solutions with fleets is, let's use the diesel engine to move freight, but let's turn it off in all other instances. Importantly, our ongoing trials have yielded significant improvements in idle times. In most cases, we completely eliminate idling during the mandatory 10-hour rest period. In other cases, we have reduced idling from the mid-30% range to low single digits. This represents real savings for fleets in both fuel and maintenance costs and greatly increases driver comfort through uninterrupted rest. Another point of differentiation for our solution affirmed by the fleets is that there is no green premium. Our solution offers rapid and profitable decarbonization without additional costs. which is especially important for companies with stated ESG goals. This extends not just to our customers, but also to their clients, the shippers, who are often larger corporations with ESG requirements. Importantly, this allows for the adoption of our lithium batteries into trucking fleets without the need for government mandates. I'd like to take a moment to share the significant progress we have made in developing our distribution channels. Our batteries are now approved for installation at Daimler Trucks CTS, Rush Enterprises CVS, and Fontaine Modification, which are all PDI or modification and outfit centers. This ensures our batteries are readily available to ship on brand new trucks and can be included in the purchase price of the tractor, transitioning them from an operating expense to a capital asset. It's important to note that lithium batteries represent a disruptive technology with transformative potential in the trucking market and beyond. Traditional distribution channels for battery sales are not currently suitable for our products, which require specialized system integration and offer extended lifespans, often exceeding the ownership term of the initial buyer. This industry shift underscores the critical role of our Daimler CTS and other truck modification centers in driving widespread adoption and accelerating market growth. Additionally, we have recently powered liftgate operations for an independent Pepsi bottler, Refreshment Services Pepsi, enhancing their sustainability and reliability. The ability to turn the engine off during deliveries and while parked in customer parking lots has been particularly beneficial, reducing both emissions and operating costs. And lastly, We were excited to announce earlier this week that Highway Transport, a fleet of over 500 trucks, plans to make a full switch to our all-electric APU products, including for both new trucks and retrofitting existing ones. Working with Highway Transport, which has been a leader in sustainability within the industry through their Green Treads program, represents a major milestone in our mission to reshape the transportation industry. We believe this partnership will encourage additional fleets to also make the switch to experience the same cost, sustainability, and driver retention benefit. The heavy-duty trucking market presents exciting growth opportunities due to the substantial potential for reducing diesel fuel costs and emissions. With a typical Class 8 truck replacement cycle of four to five years and over 272,900 units ordered in the past 12 months, the market is robust. Our focus on sleeper cab installations, representing approximately 40% of Class 8 production, positions us strategically within this growing segment. We also continue to advance our efforts in the oil and gas industry. We're preparing for the deployment of our certified power systems with a legacy equipment and Agnes systems, addressing the growing need to mitigate methane leakage. We believe this partnership opens a significant new market for us, driven by the new EPA mandates through the methane emissions reduction program. In the first quarter of 2024, we achieved the necessary certifications for our products to be deployed throughout the oil and gas industry. These certifications allow us to offer solutions that are both reliable and compliant with stringent industry standards. The first deployment is expected in September, focusing on reducing methane leakage into the atmosphere. This market holds particular significance due to the new EPA mandate, which funds methane mitigation equipment and imposes fines for methane leakage. We believe a successful deployment could potentially lead to thousands of installations over the next 18 months. Over the last quarter, we have been working diligently to qualify and source ancillary equipment for the first system deployment, as well as driving efficiencies in the design. This work ensures that our solutions meet industry standards while providing cost-effective and efficient operations for our customers. Additionally, our existing integrators, who were using our batteries in non-certified applications, can now use our certified batteries to access more hazardous vapor locations. We believe this market represents a significant opportunity for Dragonfly Energy. With increasing regulatory pressure and the need for more sustainable operations, Our technology is positioned to make a substantial impact. We look forward to sharing more details and results from these deployments in the coming quarters. Regarding our core RV market, the latest RV Industry Association report forecasts a median annual growth rate of 13.8%. RV shipments were up 7.8% in the second quarter of 2024 compared to the first quarter. Tollable RVs led by conventional travel trailers ended June up 11.4%, while motorhomes finished down 33.2% compared to the same month in 2023. In the second quarter of 2024, our OEM revenue was $6.7 million, a decrease influenced largely by a severe hailstorm in mid-March that significantly damaged Airstream's touring coach production facility and pre-inventory chassis. This incident paused Airstream's production for months, with one line returning to work last month and the other expected to come back online in Q3. The estimated impact on our sales for Q2 is approximately $450,000. One challenge we face in this price-sensitive consumer market is that less expensive and entry-level towable units typically do not come equipped with higher priced items, which can be added in the aftermarket. Meanwhile, the motorized market, where our batteries are often provided, has experienced a decline. This dynamic creates both opportunities and challenges as we navigate these market shifts. A bright spot among our OEMs is a recent announcement from Airstream. They have launched a shorter floor plan for their Tradewinds model, following the success of the initial model that included three of our batteries. Airstream continues to explore ways to incorporate the innovative design of our batteries and systems into their offerings, further solidifying our partnership and expanding our market presence. Another bright spot is our system integration within these OEMs. Our complete system solutions, which include power conversion, charging, and energy storage, are growing our content per solution that we are able to offer on OEM vehicles. Our focus remains on expanding our RV market share, particularly as we approach the new model year in Q3 and the release of our Dragonfly Intelligence line of batteries. We anticipate continued growth in this sector throughout the year. We are committed to maintaining strong relationships with our OEM partners and continuously innovating to meet their needs. Our efforts have positioned us well to capitalize on growing demand in the RV market and beyond. I will now turn the call back over to Dennis Ferris to discuss our second quarter 2024 financial results.