8-K
Dragonfly Energy Holdings Corp. (DFLI)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 15, 2024
DRAGONFLY
ENERGY HOLDINGS CORP.
(Exact name of registrant as specified in its charter)
| Nevada | 001-40730 | 85-1873463 |
|---|---|---|
| (State<br> or other jurisdiction<br><br> <br>of<br> incorporation) | (Commission<br><br> <br>File<br> Number) | (IRS<br> Employer<br><br> <br>Identification<br> No.) |
| 1190 Trademark Drive, #108<br><br> <br>Reno, Nevada | 89521 | |
| --- | --- | |
| (Address<br> of principal executive offices) | (Zip<br> Code) |
(775)622-3448
Registrant’s
telephone number, including area code
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title<br> of each class | Trading<br> Symbol(s) | Name<br> of each exchange on which registered |
|---|---|---|
| Common<br> stock, par value $0.0001 per share | DFLI | The<br> Nasdaq Global Market |
| Redeemable<br> warrants, exercisable for common stock at an exercise price of $11.50 per share, subject to adjustment | DFLIW | The<br> Nasdaq Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item2.02. Results of Operations and Financial Condition.
On April 15, 2024, Dragonfly Energy Holdings Corp. (the “Company”) issued an earnings release disclosing certain information regarding its results of operations for the fourth quarter and year ended December 31, 2023. As previously announced, following the publication of the press release, the Company will host an earnings call at 5:00 p.m. (Eastern Time) on April 15, 2024, via a webcast. During the webcast, the Company’s financial results for the fourth quarter and year ended December 31, 2023 will be discussed. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated in this Item 2.02 by reference.
Item7.01. Regulation FD Disclosure.
See “Item 2.02 Results of Operation and Financial Condition” above.
The information in this Current Report on Form 8-K under Items 2.02 and 7.01, including the information contained in Exhibit 99.1, is being furnished to the Securities and Exchange Commission (the “SEC”), and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by a specific reference in such filing.
Item9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit<br> No. | Description |
|---|---|
| 99.1 | Press Release of Dragonfly Energy Holdings Corp., dated April 15, 2024. |
| 104 | Cover<br> Page Interactive Data File (embedded within the Inline XBRL document). |
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DRAGONFLY ENERGY HOLDINGS CORP. | ||
|---|---|---|
| Dated:<br> April 15, 2024 | By: | /s/ Denis Phares |
| Name: | Denis<br> Phares | |
| Title: | Chief<br> Executive Officer, Interim Chief Financial Officer and President |
Exhibit99.1
Dragonfly Energy Reports Fourth Quarter 2023 and Full Year Financial Results
| ● | Successful diversification of revenue underway, with launch in Q4 2023 of all-electric auxiliary power units (“APU”) to the trucking industry; Enables compliance with increasing anti-idling regulations, reduction in fuel costs, increased uptime and payloads, and the reduction of harmful emissions |
|---|---|
| ● | In Q4 2023, achieved successful deposition of cathode electrodes, and double-sided dry deposition of both anode and cathode electrodes, at scale, using the Company’s patented dry electrode battery manufacturing process |
| --- | --- |
| ● | Continued expansion of recreational vehicle market share, with OGV Luxury Coach, a division of Forest River Inc., to provide Battle Born lithium batteries as standard equipment on all OGV units |
RENO,NEVADA (April 15, 2024) — Dragonfly Energy Holdings Corp. (“Dragonfly Energy” or the “Company”) (Nasdaq: DFLI), maker of Battle Born Batteries^®^ and an industry leader in energy storage, today reported its financial and operational results for the fourth quarter and full year ended December 31, 2023.
FourthQuarter 2023 Financial Highlights
| ● | Net<br> Sales were $10.4 million, compared to $20.2 million in Q4 2022 |
|---|---|
| ● | Gross<br> Profit was $2.0 million, compared to $4.0 million in Q4 2022 |
| ● | Operating<br> expenses were $(5.4) million, compared to $(32.9) million in Q4 2022 |
| ● | Net<br> Income of $3.0 million, compared to a Net Loss of $(32.5) million in Q4 2022 |
| ● | Diluted<br> Net Income per share was $0.05, compared to a Net Loss of $(0.76) per share in Q4 2022 |
| ● | EBITDA<br> was $7.4 million, compared to $(28.0) million in Q4 2022 |
| ● | Adjusted<br> EBITDA was $(2.1) million, compared to $(4.7) million in Q4 2022 |
FullYear 2023 Financial Highlights
| ● | Net<br> Sales of $64.4 million, compared to $86.3 million in 2022 |
|---|---|
| ● | Gross<br> Profit of $15.4 million, compared to $23.6 million in 2022 |
| ● | Operating<br> expenses of $(42.9) million, compared to $(58.0) million in 2022 |
| ● | EBITDA<br> for the full year 2023 was $3.4 million, compared to $(32.8) million in 2022 |
| ● | Adjusted<br> EBITDA for the full year 2023 was $(17.1) million, compared to $(7.9) million in 2022 |
Operationaland Business Highlights
| ● | Announced<br> expanded market share with inclusion as standard equipment by recreational vehicle (“RV”)<br> giant, Forest River (link) |
|---|---|
| ● | Announced<br> the John Lennon Educational Tour Bus is now powered by Battle Born Batteries, moving the<br> nonprofit mobile recording studio toward improved sustainability (link) |
| ● | Announced<br> partnership with Ameresco to boost renewable energy and power system applications (link) |
| ● | Announced<br> Coachmen RVs will include Battle Born Batteries as an optional upgrade on its Entourage Class<br> C Motorhomes (link) |
| ● | Announced<br> entrance into heavy-duty trucking market, with new Battle Born All-Electric APU, enabling<br> reduced fuel costs, increased uptime and payload, and lower harmful emissions (link) |
| ● | Announced<br> successful cathode electrode dry deposition, at scale, for American made lithium batteries<br> (link) |
“Despite the near-term growth and market headwinds, we have continued to execute and achieve our stated targets and milestones,” said Denis Phares, Chief Executive Officer of Dragonfly Energy. “In 2023, we completed the pilot line for our patented chemistry-agnostic dry deposition process, proving that we could produce anode and cathode materials at scale, and are now in the process of delivering sample battery cells to customers across several different industries and markets. We are extremely excited about 2024 as the convergence of the new cell manufacturing, the expansion of our customer base and market segments, and the stabilization and return to growth of the RV markets sets the stage for an expected return to growth.”
FourthQuarter and Full Year 2022 Financial and Operating Results
Fourth quarter 2023 Net Sales were $10.4 million, compared to $20.2 million in the fourth quarter of 2022. Full year 2023 Net Sales were $64.4 million, compared to $86.3 million in 2022. Direct-To-Consumer (“DTC”) revenue decreased by $15.6 million as a result of decreased customer demand, particularly in the RV market, due to rising interest rates and inflation.
Fourth quarter 2023 Gross Profit was $2.0 million, compared to $4.0 million in the fourth quarter of 2022. Full year 2023 Gross Profit was $15.4 million, down from $23.6 million in 2023. The year-over-year decline in 2023 gross profit was primarily driven by lower unit volume sales, a change in revenue mix that included a larger percentage of lower margin OEM sales, as well as higher material costs.
Operating Expenses in the fourth quarter of 2023 were $(5.4) million, compared to $(32.9) million in the fourth quarter of 2022. Full year 2023 Operating Expenses were $(42.9) million, down from $(58.0) million. The decrease was primarily driven by the absence of expenses associated with the Business Combination in 2022 and lower overall employee-related costs, partially offset by an increase in stock-based compensation costs, as well as higher compliance, insurance, and professional fees related to public company costs.
Total Other Income in the fourth quarter of 2023 was $6.3 million, compared to a Total Other Expense of $(2.7) million in the prior year quarter. Other Income for fiscal 2023 was approximately $13.6 million, compared to an Other Expenses of $(6.3) million in 2022. The income contribution in 2023 was primarily due to a change in fair market value of a warrant liability in the amount of $29.6 million, partially offset by interest expense of $16.0 million.
The Company had Net Income of $3.0 million, or $0.05 per diluted share in the fourth quarter of 2023, compared to a Net Loss of $(32.5) million or $(0.76) per diluted share in the prior year quarter. For the full year 2023, the Company had a Net Loss of $(13.8) million, or $(0.26) per diluted share, compared to a Net Loss of $(40.0) million or $(1.04) per diluted share for the full year 2022. The full year results were driven by reduced demand in the RV market, partially offset by lower cost of goods sold, lower operating expenses and increased other income.
EBITDA in the fourth quarter of 2023 was $7.4 million, compared to a negative $(28.0) million in the fourth quarter of 2022. Full year 2023 EBITDA totaled $3.4 million, compared to a negative $(32.8) million in 2022.
In the fourth quarter of 2023, Adjusted EBITDA excluding stock-based compensation, changes in the fair market value of our warrants, and other one-time expenses, was a negative $(2.1) million, compared to a negative $(4.7) million for the fourth quarter of 2022.
For the full year 2023, Adjusted EBITDA excluding stock-based compensation, changes in the fair market value of Dragonfly Energy’s warrants, and other one-time expenses, was a negative $(17.1) million, compared to negative $(7.9) million for the year ended December 31, 2022.
Q1 2024 Outlook
The Company believes that the RV market appears to have stabilized and is showing early signs of recovery. In addition, the Company’s entry into the heavy-duty trucking market, while still in its early stages, is gaining traction and has the potential to be a more meaningful revenue contributor in the second half of 2024.
| ● | Net<br> Sales are expected to range between $12.0 - $13.0 million |
|---|---|
| ● | Gross<br> Margin is expected in the range of 24.0% - 26.0% |
| ● | Operating<br> Expenses are expected to be in a range of $(8.0) - $(9.0) million |
| ● | Other<br> Income (Expense) is expected be an expense in the range of $(3.5) – $(4.5) million |
| ● | Net<br> Loss is expected to be between $(8.0) - $(10.5) million for the first quarter of 2024, or<br> $(0.13) - $(0.17) per share based on approximately 61.0 million shares outstanding |
WebcastInformation
The Dragonfly Energy management team will host a conference call to discuss its fourth quarter and full year 2023 financial results this afternoon, Monday, April 15, 2024, at 5:00 pm E.T. The call can also be accessed live via live webcast by clicking here, or through the Events and Presentations page within the Investor Relations section of Dragonfly Energy’s website at https://investors.dragonflyenergy.com/events-and-presentations/default.aspx. The call can also be accessed live via telephone by dialing (206) 962-3782, toll-free in North America (888) 259-6580, or for international callers +1 (416) 764-8624, and referencing conference ID: 94560450. Please log in to the webcast or dial in to the call at least 10 minutes prior to the start of the event.
An archive of the webcast will be available for a period of time shortly after the call on the Events and Presentations page on the Investor Relations section of Dragonfly Energy’s website, along with the earnings press release.
AboutDragonfly 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.
Forward-LookingStatements
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 the Company’s guidance for 2024 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. Factors that may impact such forward-looking statements include, but are not limited to: improved recovery in the Company’s core markets, including the RV market; the Company’s ability to successfully increase market penetration into target markets; the Company’s ability to penetrate the heavy-duty trucking and other new markets; the growth of the addressable markets that the Company intends to target; the Company’s ability to retain members of its senior management team and other key personnel; the Company’s ability to maintain relationships with key suppliers including suppliers in China; the Company’s ability to maintain relationships with key customers; the Company’s ability to access capital as and when needed under its $150 million ChEF Equity Facility; the Company’s ability to protect its patents and other intellectual property; the Company’s ability to successfully utilize its patented dry electrode battery manufacturing process and optimize solid state cells as well as to produce commercially viable solid state cells in a timely manner or at all, and to scale to mass production; the Company’s ability to achieve the anticipated benefits of its customer arrangements with THOR Industries and THOR Industries’ affiliated brands (including Keystone RV Company); the impact of the coronavirus disease pandemic, including any mutations or variants thereof and/or the Russian/Ukrainian conflict; the Company’s ability to generate revenue from future product sales and its ability to achieve and maintain profitability; and the Company’s ability to compete with other manufacturers in the industry and its ability to engage target customers and successfully convert these customers into meaningful orders in the future. These and other risks and uncertainties are described more fully 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 to be filed with the SEC 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.
InvestorRelations:
Sioban Hickie
DragonflyIR@icrinc.com
+1 (775) 221-8892
DragonflyEnergy Holdings Corp.
UnauditedCondensed Consolidated Balance Sheets
(U.S. Dollars in Thousands, except share and per share data)
| December 31,<br><br> <br>2022 | |||||
|---|---|---|---|---|---|
| Current Assets | |||||
| Cash and cash equivalents | 12,713 | $ | 17,781 | ||
| Accounts receivable, net of allowance for credit losses | 1,639 | 1,444 | |||
| Inventory | 38,778 | 50,189 | |||
| Prepaid expenses | 772 | 1,624 | |||
| Prepaid inventory | 1,381 | 2,002 | |||
| Prepaid income tax | 519 | 525 | |||
| Other current assets | 118 | 267 | |||
| Total Current Assets | 55,920 | 73,832 | |||
| Property and Equipment | |||||
| Machinery and equipment | 16,714 | 10,214 | |||
| Office furniture and equipment | 319 | 275 | |||
| Leasehold improvements | 1,727 | 1,709 | |||
| Vehicle | 33 | 195 | |||
| Total | 18,793 | 12,393 | |||
| Less accumulated depreciation | (2,824 | ) | (1,633 | ) | |
| Property and Equipment | 15,969 | 10,760 | |||
| Operating lease right of use asset, net | 3,315 | 4,513 | |||
| Total Assets | 75,204 | $ | 89,105 | ||
| Current Liabilities | |||||
| Accounts payable | 10,258 | $ | 13,475 | ||
| Accrued payroll and other liabilities | 7,107 | 6,250 | |||
| Accrued tariffs | 1,713 | 932 | |||
| Customer deposits | 201 | 238 | |||
| Uncertain tax position liability | 91 | 128 | |||
| Notes payable, current portion, net of debt issuance costs | 19,683 | 19,242 | |||
| Operating lease liability, current portion | 1,288 | 1,188 | |||
| Financing lease liability, current portion | 36 | 10 | |||
| Total Current Liabilities | 40,377 | 41,463 | |||
| Long-Term Liabilities | |||||
| Warrant liabilities | 4,463 | 32,831 | |||
| Accrued expenses-long term | 152 | 492 | |||
| Operating lease liability, net of current portion | 2,234 | 3,541 | |||
| Financing lease liability, net of current portion | 66 | 35 | |||
| Total Long-Term Liabilities | 6,915 | 36,899 | |||
| Total Liabilities | 47,292 | 78,362 | |||
| Stockholders’ Equity | |||||
| Preferred stock, 5,000,000 shares at 0.0001 par value, authorized, no shares issued and outstanding as of December 31, 2023 and 2022, respectively | - | - | |||
| Common stock, 250,000,000 shares at 0.0001 par value, authorized, 60,260,282 and 43,272,728 shares issued and outstanding as of December 31, 2023 and 2022, respectively | 6 | 4 | |||
| Additional paid in capital | 69,445 | 38,461 | |||
| Accumulated Deficit | (41,539 | ) | (27,722 | ) | |
| Total Stockholders’ Equity | 27,912 | 10,743 | |||
| Total Liabilities and Stockholders’ Equity | 75,204 | $ | 89,105 |
All values are in US Dollars.
Dragonfly Energy Holdings Corp.
Reconciliation of GAAP to Non-GAAP Measures (Unaudited)
(U.S. Dollars in Thousands)
| Three<br> Months Ended | Year<br> Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December<br> 31, 2023 | December<br> 31, 2022 | December<br> 31, 2023 | December<br> 31, 2022 | |||||||||
| Net<br> Sales | $ | 10,438 | $ | 20,209 | $ | 64,392 | $ | 86,251 | ||||
| Cost<br> of Goods Sold | 8,405 | 16,152 | 48,946 | 62,633 | ||||||||
| Gross<br> Profit | 2,033 | 4,057 | 15,446 | 23,618 | ||||||||
| Operating<br> Expenses | ||||||||||||
| Research<br> and development | 531 | 813 | 3,863 | 2,764 | ||||||||
| General<br> and administrative | 3,275 | 27,788 | 26,389 | 41,566 | ||||||||
| Selling<br> and marketing | 1,548 | 4,340 | 12,623 | 13,671 | ||||||||
| Total<br> Operating Expenses | 5,354 | 32,941 | 42,875 | 58,001 | ||||||||
| Loss<br> From Operations | (3,321 | ) | (28,884 | ) | (27,429 | ) | (34,383 | ) | ||||
| Other<br> Income (Expense) | ||||||||||||
| Other<br> income (expense) | 19 | 40 | 19 | 40 | ||||||||
| Interest<br> expense, net | (4,110 | ) | (3,322 | ) | (16,015 | ) | (6,979 | ) | ||||
| Change<br> in fair market value of warrant liability | 10,400 | 5,446 | 29,582 | 5,446 | ||||||||
| Debt<br> extinguishment | — | (4,824 | ) | — | (4,824 | ) | ||||||
| Total<br> Other Income (Expense) | 6,309 | (2,660 | ) | 13,586 | (6,317 | ) | ||||||
| Loss<br> Before Taxes | 2,988 | (31,544 | ) | (13,843 | ) | (40,700 | ) | |||||
| Income<br> Tax Benefit | (26 | ) | 991 | (26 | ) | (709 | ) | |||||
| Net<br> Loss | $ | 3,014 | $ | (32,535 | ) | $ | (13,817 | ) | $ | (39,991 | ) | |
| Income<br> (Loss) Per Share- Basic | $ | 0.05 | $ | (0.76 | ) | $ | (0.26 | ) | $ | (1.04 | ) | |
| Income<br> (Loss) Per Share- Diluted | $ | 0.05 | $ | (0.76 | ) | $ | (0.26 | ) | $ | (1.04 | ) | |
| Weighted<br> Average Number of Shares- Basic | 59,590,032 | 42,948,026 | 52,786,481 | 38,565,307 | ||||||||
| Weighted<br> Average Number of Shares- Diluted | 60,597,708 | 42,948,026 | 52,786,481 | 38,565,307 |
DragonflyEnergy Holdings Corp.
UnauditedCondensed Consolidated Statement of Cash Flows
(U.S. Dollars in Thousands)
| Year Ended | ||||||
|---|---|---|---|---|---|---|
| December 31, 2023 | December 31, 2022 | |||||
| Cash Flows From Operating Activities | ||||||
| Net Loss | $ | (13,817 | ) | $ | (39,991 | ) |
| Adjustments to Reconcile Net Loss to Net Cash | ||||||
| Used in Operating Activities | ||||||
| Stock based compensation | 6,710 | 2,467 | ||||
| Debt extinguishment | - | 4,824 | ||||
| Assumption of warrant liability | - | 1,990 | ||||
| Amortization of debt discount | 1,470 | 1,822 | ||||
| Change in fair market value of warrant liability | (29,582 | ) | (5,446 | ) | ||
| Deferred tax liability | - | (453 | ) | |||
| Non-cash interest expense (paid-in-kind) | 4,938 | 1,192 | ||||
| Provision for credit losses | 114 | 108 | ||||
| Depreciation | 1,237 | 891 | ||||
| Loss on disposal of property and equipment | 116 | 56 | ||||
| Write-off of prepaid inventory | 596 | - | ||||
| Changes in Assets and Liabilities | ||||||
| Accounts receivable | (309 | ) | (769 | ) | ||
| Inventories | 11,411 | (22,732 | ) | |||
| Prepaid expenses | 852 | (1,467 | ) | |||
| Prepaid inventory | 25 | 5,459 | ||||
| Other current assets | 149 | 1,520 | ||||
| Other assets | 1,198 | 1,196 | ||||
| Income taxes payable | 6 | (1,156 | ) | |||
| Accounts payable and accrued expenses | (3,527 | ) | 4,428 | |||
| Accrued tariffs | 781 | 433 | ||||
| Uncertain tax position liability | (37 | ) | 128 | |||
| Customer deposits | (37 | ) | (196 | ) | ||
| Total Adjustments | (3,889 | ) | (5,705 | ) | ||
| Net Cash Used in Operating Activities | (17,706 | ) | (45,696 | ) | ||
| Cash Flows From Investing Activities | ||||||
| Proceeds from disposal of property and equipment | - | 35 | ||||
| Purchase of property and equipment | (6,885 | ) | (6,862 | ) | ||
| Net Cash Used in Investing Activities | (6,885 | ) | (6,827 | ) | ||
| Cash Flows From Financing Activities | ||||||
| Proceeds from public offering | 24,177 | - | ||||
| Payments from public offering costs | (1,258 | ) | - | |||
| Proceeds from note payable, related party | 1,000 | - | ||||
| Repayment of note payable, related party | (1,000 | ) | - | |||
| Proceeds from term loan | - | 75,000 | ||||
| Repayment of note payable | (5,275 | ) | (45,000 | ) | ||
| Proceeds from exercise of public warrants | 747 | - | ||||
| Payment of debt issuance costs | - | (4,032 | ) | |||
| Proceeds from exercise of options | 586 | 706 | ||||
| Proceeds from stock purchase agreement | - | 15,000 | ||||
| Proceeds from exercise of investor warrants | 546 | - | ||||
| Net Cash Provided by Financing Activities | 19,523 | 41,674 | ||||
| Net Decrease in cash and cash equivalents | (5,068 | ) | (10,849 | ) | ||
| Cash and cash equivalents - beginning of year | 17,781 | 28,630 | ||||
| Cash and cash equivalents - end of year | $ | 12,713 | $ | 17,781 |
Useof Non-GAAP Financial Measures
The Company provides non-GAAP financial measures including EBITDA and Adjusted EBITDA as a supplement to GAAP financial information to enhance the overall understanding of the Company’s financial performance and to assist investors in evaluating the Company’s results of operations, period over period. Adjusted non-GAAP measures exclude significant unusual items. Investors should consider these non-GAAP measures as a supplement to, and not a substitute for financial information prepared on a GAAP basis.
AdjustedEBITDA
Adjusted EBITDA is considered a non-GAAP financial measure under the rules of the SEC because it excludes certain amounts included in net loss calculated in accordance with GAAP. Specifically, the Company calculates Adjusted EBITDA by GAAP net loss adjusted to exclude stock-based compensation expense, business combination related expenses and other one-time, non-recurring items.
The Company has included Adjusted EBITDA because it is a key measure used by Dragonfly’s management team to evaluate its operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses. As such, the Company believes Adjusted EBITDA is helpful in highlighting trends in the ongoing core operating results of the business.
Adjusted EBITDA has limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of net loss or other results as reported under GAAP. Some of these limitations are:
| ● | Adjusted<br> EBITDA does not reflect the Company’s cash expenditures, future requirements for capital expenditures, or contractual commitments; |
|---|---|
| ● | Adjusted<br> EBITDA does not reflect changes in, or cash requirements for, the Company’s working capital needs; |
| ● | Adjusted<br> EBITDA does not reflect the Company’s tax expense or the cash requirements to pay taxes; |
| ● | although<br> amortization and depreciation are non-cash charges, the assets being amortized and depreciated will often have to be replaced in<br> the future and Adjusted EBITDA does not reflect any cash requirements for such replacements; |
| ● | Adjusted<br> EBITDA should not be construed as an inference that the Company’s future results will be unaffected by unusual or non-recurring<br> items for which the Company may adjust in historical periods; and |
| ● | other<br>companies in the industry may calculate Adjusted EBITDA differently than the Company does, limiting its usefulness as a comparative measure. |
Reconciliationsof Non-GAAP Financial Measures
EBITDAand Adjusted EBITDA
The following table presents reconciliations of EBITDA and Adjusted EBITDA to the most directly comparable GAAP financial measure for each of the periods indicated.
| Dragonfly<br> Energy Holdings Corp. | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Reconciliation of GAAP to Non-GAAP Measures (Unaudited) | ||||||||||||
| (U.S.<br> Dollars in Thousands) | ||||||||||||
| Three Months Ended | Year Ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||
| Net (loss) | $ | 3,014 | $ | (32,535 | ) | $ | (13,817 | ) | $ | (39,991 | ) | |
| Interest Expense | 4,110 | 3,322 | 16,015 | 6,979 | ||||||||
| Taxes | (26 | ) | 991 | (26 | ) | (709 | ) | |||||
| Depreciation | 328 | 243 | 1,237 | 891 | ||||||||
| EBITDA | $ | 7,426 | $ | (27,979 | ) | $ | 3,409 | $ | (32,830 | ) | ||
| Adjusted for: | ||||||||||||
| Stock Based Compensation^(1)^ | 323 | 1,312 | 6,710 | 2,467 | ||||||||
| June 2023 Offering Costs^(2)^ | - | - | 904 | - | ||||||||
| Promissory Note Forgiveness^(3)^ | - | - | - | 469 | ||||||||
| Loss on Disposal of Assets | 596 | 56 | 712 | 56 | ||||||||
| Separation Agreement^(4)^ | - | 1,197 | 720 | 1,197 | ||||||||
| Business Combination Expenses^(5)^ | - | 21,337 | - | 21,337 | ||||||||
| Debt Extinguishment^(6)^ | - | 4,824 | - | 4,824 | ||||||||
| Change in fair market value of warrant liability^(7)^ | (10,400 | ) | (5,446 | ) | (29,582 | ) | (5,446 | ) | ||||
| Adjusted EBITDA | $ | (2,055 | ) | $ | (4,699 | ) | $ | (17,127 | ) | $ | (7,926 | ) |
| (1) | Stock-Based<br> Compensation is comprised of costs associated with option and RSU grants made to the Company’s employees, consultants<br> and board members. | |||||||||||
| --- | --- | |||||||||||
| (2) | June<br> 2023 Offering Costs related to the warrant liability are comprised of fees and expenses, including legal, accounting and other expenses<br> associated with this offering. | |||||||||||
| (3) | Promissory<br> Note Foregiveness is comprised of the loan that was forgiven, prior to the Business Combination, in connection with the promissory<br> note, with a maturity date of March 1, 2026, between the Company and John Marchetti, its Senior Vice President of Operations<br> and former Chief Financial Officer. | |||||||||||
| (4) | Separation<br> Agreement in 2022 is comprised of $1.2 million in cash severance associated with the Separation Agreement dated October 25, 2022,<br> as amended on November 14, 2022 between the Company and Sean Nichols, its former Chief Operating Officer. Seperation Agreement<br> in 2023 is comprised of $720 in cash severance associated with the Separation Agreement dated April 26, 2023, between the Company and<br> its former Chief Legal Officer. | |||||||||||
| (5) | Business<br> Combination Expenses is comprised of fees and expenses, including legal, accounting and other expenses asscociated with the Business<br> Combination. | |||||||||||
| (6) | Debt<br> Extinguishment expenses are comprised of expenses incurred in connection with the early debt repayment of the Series 2021-6 Notes<br> that occurred in conjunction with the Business Combination. | |||||||||||
| (7) | Change<br> in fair market value of warrant liability represents the change in fair value from the date the warrants were issued through December<br> 31, 2023. |
Source: Dragonfly Energy Holdings Corp.