Dragonfly Energy Shares Surge After Eliminating Preferred Stock Obligations Through Share Exchange

Dragonfly Energy Holdings Corp. (NASDAQ:DFLI) shares are trading higher Tuesday after the company announced it had eliminated its Series A Preferred Stock through a negotiated share exchange agreement on Monday.

What To Know: Under the terms of the agreement, Dragonfly issued 2.1 million common shares in exchange for the surrender of all outstanding Series A Preferred Stock. The move fully satisfies the company's obligations under the Series A Preferred agreements.

CEO Denis Phares stated that this settlement resolves risks tied to conversion rights and dividend obligations associated with the preferred shares. He emphasized that the transaction strengthens Dragonfly's capital structure and improves financial flexibility by removing potential future dilution concerns. The company believes this action better positions it to focus on growth and profitability initiatives.

The exchange was completed under Section 3(a)(9) of the Securities Act, allowing the transaction to proceed without formal registration. Dragonfly clarified that the announcement does not constitute an offer to sell or solicit shares in any jurisdiction where such actions would be unlawful.

The market responded positively, with Dragonfly shares jumping more than 100% following the announcement, reflecting investor approval of the company's steps to simplify its equity structure and eliminate preferred stock-related obligations.

DFLI Price Action: Dragonfly Energy shares were up 97.7% at 52 cents at the time of writing, according to Benzinga Pro.

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