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): March 29, 2023
DRAGONFLY
ENERGY HOLDINGS CORP.
(Exact name of registrant as specified in its charter)
| Delaware | 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 | ****<br><br> <br>89521 | |
| --- | --- | |
| (Address<br> of principal executive offices) | (Zip<br> Code) |
Registrant’s telephone number, including area code: (775) 622-3448
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. ☐
| Item 1.01. | Entry Into a Material Definitive Agreement. |
|---|
See “Item 8.01 Other Events” below.
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On March 29, 2023, Dragonfly Energy Holdings Corp. (the “Company”) issued a press release announcing its financial results for the fourth quarter and year ended December 31, 2022. 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 March 29, 2023, via a webcast. During the webcast, the Company’s financial results for the fourth quarter and year ended December 31, 2022 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.
| Item 7.01. | 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 of 1934, except as shall be expressly set forth by a specific reference in such filing.
Item.8.01. Other Events.
In connection with the preparation of the Company’s financial statements for the year ended December 31, 2022, the Company determined that it would not be in compliance with the Senior Leverage Ratio and Fixed Charge Coverage Ratio tests (the “Tests”) under its term loan agreement (the “Loan Agreement”) as of the last day of the quarter ending March 31, 2023. On March 29, 2023, the Company received a waiver (the “Waiver”) from the lenders under the Loan Agreement in regards to its compliance with the Tests as of the last day of the quarter ending March 31, 2023. A copy of the Waiver is attached as Exhibit 10.1 hereto and incorporated in this Item 8.01 by reference.
In light of the foregoing information, the Company is continuing to work with its accountants to complete the audit of its financial statements for the year ended December 31, 2022 as promptly as possible. The Company intends to file a Notification of Late Filing on Form 12b-25 with the SEC, which will provide the Company with an extension to file its Annual Report on Form 10-K for the year ended December 31, 2022 (the “Form 10-K”). The Company expects to file the Form 10-K on or before April 17, 2023, which is within the 15-calendar day extension period provided for by the SEC under Rule 12b-25.
| Item 9.01. | Financial Statements and Exhibits. |
|---|
(d) Exhibits.
| Exhibit<br> No. | Description |
|---|---|
| 10.1 | Limited Waiver, dated as of March 29, 2023, to the Term Loan, Guarantee and Security Agreement, dated as of October 7, 2022, by and among Dragonfly Energy Holdings Corp., Dragonfly Energy Corp., the lenders from time to time party thereto and Alter Domus (US) LLC. |
| 99.1 | Press Release of Dragonfly Energy Holdings Corp., dated March 29, 2023. |
| 104 | Cover Page Interactive<br> 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: March 29, 2023 | By: | /s/ Denis Phares |
| Name: | Denis Phares | |
| Title: | President and<br> Chief Executive Officer |
Exhibit10.1
ExecutionVersion
LIMITEDWAIVER
This LIMITED WAIVER (this “Waiver”) is made as of March 29, 2023, by and among DRAGONFLY ENERGY CORP. (“Borrower”), DRAGONFLY ENERGY HOLDINGS CORP. (F/K/A CHARDAN NEXTECH ACQUISITION 2 CORP) (“Holdings”), the Lenders signatory hereto (the “Required Lenders”), and ALTER DOMUS (US) LLC, as agent on behalf of the Lenders under the Loan Agreement (as hereinafter defined) (in such capacity, the “Agent”).
WHEREAS, Borrower, Holdings, the Required Lenders and the Agent are parties to that certain Term Loan, Guarantee and Security Agreement dated as of October 7, 2022, (as amended, modified, extended, restated, replaced, and/or supplemented from time to time, the “Loan Agreement”);
WHEREAS, pursuant to Section 4.2(a) of the Loan Agreement, the Credit Parties are required to measure the Senior Leverage Ratio as of the last day of the Fiscal Quarter ending March 31, 2023 if Liquidity (Average) is less than $17,500,000 as of the last day of the Fiscal Quarter ending March 31, 2023 (the “Senior Leverage Ratio Test”);
WHEREAS, pursuant to Section 4.2(c) of the Loan Agreement, the Credit Parties are required to measure the Fixed Charge Coverage Ratio for the trailing four (4) Fiscal Quarter period ending on March 31, 2023 if Liquidity is less than $15,000,000 as of the last day of the Fiscal Quarter ending March 31, 2023 (the “Fixed Charge Coverage Ratio Test” and together with the Senior Leverage Ratio Test, the “Tests”); and
WHEREAS, the Credit Parties have requested that the Agent and the Required Lenders waive the Tests for the Fiscal Quarter ending March 31, 2023 and, subject to the satisfaction of the conditions set forth below, each of the Agent and the Required Lenders are willing to waive the Tests for the Fiscal Quarter ending March 31, 2023 on the terms set forth herein.
NOW THEREFORE, the Credit Parties, the Required Lenders and the Agent each hereby agrees as follows:
1. Defined Terms. All terms used but not otherwise defined herein have the meanings assigned to them in the Loan Agreement.
2. Limited Waiver. Effective in accordance with Section 3 hereof, each of the Agent and the Required Lenders hereby waives the Tests for the Fiscal Quarter ending March 31, 2023; provided that such waiver is applicable only to the Tests for the Fiscal Quarter ending March 31, 2023 and to no other current or prospective financial covenants under the Loan Agreement, whether known or unknown as of the Effective Date.
3. Conditions to Effectiveness. This Waiver shall become effective as of the date first written above (the “Effective Date”) upon the satisfaction of the below:
(a) counterparts of this Waiver shall have been executed and delivered by the Credit Parties, the Agent and the Required Lenders;
(b) the Borrower shall have paid the legal fees and expenses of Chapman and Cutler LLP, counsel for the Required Lenders, incurred in connection with the preparation, negotiation, execution and delivery of this Waiver and other services rendered in connection with the Loan Agreement prior to the date hereof; and
(c) the Borrower shall have paid the legal fees and expenses of Holland & Knight LLP, counsel for the Agent, incurred in connection with the preparation, negotiation, execution and delivery of this Waiver and other services rendered in connection with the Loan Agreement prior to the date hereof.
4. Representations, Warranties and Covenants.
(a) The Credit Parties represent and warrant that after giving effect to this Waiver, the representations and warranties contained in the Loan Agreement are true and correct in all material respects on and as of the date hereof as if such representations and warranties had been made on and as of the date hereof (except to the extent that any such representations and warranties specifically relate to an earlier date).
(b) The Credit Parties represent and warrant that after giving effect to this Waiver, no Default or Event of Default will have occurred and be continuing on and as of the Effective Date.
5. Loan Document. This Waiver is designated a Loan Document by the Agent.
6. Full Force and Effect. Except as expressly set forth herein, nothing contained herein shall be deemed to constitute a waiver of compliance with any term or condition contained in the Loan Agreement or any of the other Loan Documents. Except as expressly amended hereby, the Loan Agreement shall continue unmodified and in full force and effect in accordance with the provisions thereof on the date hereof. This Waiver shall be limited precisely as drafted and shall not imply an obligation on the Agent or any Lender to consent to any matter on any future occasion. As used in the Loan Agreement, the terms “Agreement,” “this Agreement,” “this Loan Agreement,” “herein,” “hereafter,” “hereto,” “hereof” and words of similar import shall mean, unless the context otherwise requires, the Loan Agreement as modified by this Waiver.
7. CHOICE OF LAW. THIS WAIVER SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OFNEW YORK WHICH ARE APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTSOF LAW THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
8. Counterparts. This Waiver may be executed in one or more counterparts, each of which shall constitute an original, but all of which when taken together shall constitute but one instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf) or other transmission method and any counterpart so delivered shall be deemed to be as effective as an original signature page delivered manually.
9. Headings. The headings of this Waiver are for the purposes of reference only and shall not affect the construction of this Waiver.
10. Successors and Assigns. The provisions of this Waiver shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that none of the Credit Parties may assign or transfer any of its rights or obligations under this Waiver without the prior written consent of the Agent.
11. Severability. The illegality or unenforceability of any provision of this Waiver or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Amendment or any instrument or agreement required hereunder.
[Signaturepages follow]
| 2 |
| --- |
IN WITNESS WHEREOF, the parties hereto have caused this Limited Waiver to be duly executed by their duly authorized officers, all as of the date and year first above written.
| BORROWER: | DRAGONFLY ENERGY CORP. | |
|---|---|---|
| By: | /s/ Denis Phares | |
| Name: | Denis<br> Phares, Ph.D. | |
| Title: | Chairman & CEO | |
| HOLDINGS : | DRAGONFLY ENERGY HOLDINGS CORP. (F/K/A | |
| --- | --- | --- |
| CHARDAN NEXTECH ACQUISITION 2 CORP.) | ||
| By: | /s/ Denis Phares | |
| Name: | Denis<br> Phares, Ph.D. | |
| Title: | Chairman & CEO |
Signature Page to Limited Waiver
| AGENT: | ALTER DOMUS (US) LLC | |
|---|---|---|
| By: | /s/ Pinju Chiu | |
| Name: | Pinju Chiu | |
| Title: | Associate<br> Counsel |
Signature Page to Limited Waiver
| LENDERS: | ENERGY IMPACT CREDIT FUND I LP | |
|---|---|---|
| By: | Energy<br> Impact Credit Fund I GP LLC, its general partner | |
| By: | /s/ Harry Giovani | |
| Name: | Harry<br> Giovani | |
| Title: | Authorized<br> Signatory | |
| ENERGY IMPACT CREDIT FUND II LP | ||
| --- | --- | |
| By: | Energy<br> Impact Credit Fund II GP LLC, its general partner | |
| By: | /s/ Harry Giovani | |
| Name: | Harry<br> Giovani | |
| Title: | Authorized<br> Signatory |
Signature Page to Limited Waiver
| BP HOLDINGS XVII LP | |
|---|---|
| By: | BPC<br> AS Cayman LLC, its General Partner |
| By: | BPC<br> AS LLC, its Manager |
| By: | /s/ Michael Haynes |
| Name: | Michael Haynes |
| Title: | Portfolio<br> Manager |
Signature Page to Limited Waiver
Exhibit 99.1
Dragonfly Energy Reports Fourth Quarter and Full Year 2022 Financial Results
Fullyear 2022 Revenue grew to $86.3 million, 10.6% higher compared to 2021
RENO,NEVADA (March 29, 2023) — Dragonfly Energy Holdings Corp. (“Dragonfly” or the “Company”) (Nasdaq: DFLI), an industry leader in energy storage and producer of deep cycle lithium-ion storage batteries, today reported financial and operational results for the fourth quarter and full year of 2022.
FourthQuarter 2022 Financial Highlights
| ● | Net<br> Sales of $20.2 million were unchanged compared to Q4 2021 |
|---|---|
| ● | Gross<br> Profit of $4.4 million, decreased $1.7 million from $6.1 million in Q4 2021 |
| ● | Operating<br> expenses of $(12.5) million, were higher compared to $(6.2) million in Q4 2021 |
| ● | EBITDA<br> was a negative $(7.8) million, lower compared to $0.1 million in Q4 2021 |
| ● | Adjusted<br> EBITDA was a negative $(4.8) million, compared $1.0 million in Q4 2021 |
FullYear 2022 Financial Highlights
| ● | Net<br> Sales of $86.3 million were 10.6% higher compared to $78.0 million in 2021 |
|---|---|
| ● | Gross<br> Profit of $24.0 million was lower compared to $29.6 million in 2021 |
| ● | Operating<br> expenses of $(37.5) million, increased compared to $(23.2) million in 2021 |
| ● | EBITDA<br> for the full year 2022 was a negative $(12.6) million, compared to $7.1 million in 2021 |
| ● | Adjusted<br> EBITDA for the full year 2022 was a negative $(7.9) million, compared to $8.5 million in 2021 |
| ● | Cash<br> was $17.8 million, and debt was $76.2 million on December 31, 2022 |
Operationaland Business Highlights
| ● | Number<br> of batteries sold in 2022 was 28.6% higher at 95,949 units compared to 74,632 units sold in 2021 |
|---|---|
| ● | Launch<br> of Dragonfly IntelLigence™ providing reliable communication capabilities via unique mesh network, enabling accurate remote<br> monitoring for entire lithium battery banks via Dragonfly Mobile App |
| ● | Granted<br> patent for “systems and methods for dry powder coating layers of an electrochemical cell” enabling development of non-flammable<br> cells |
“We executed well in 2022, with strong Net Sales and record growth within the OEM segment, while effectively managing headwinds that challenged the wider industry,” said Denis Phares, CEO of Dragonfly Energy. “We have a robust patent portfolio and we continued to innovate, offering great new products like out IntelLigence line, and Dragonfly’s dry powder coating cell manufacturing technology and non-flammable battery technology, for which we have already begun production of the cell pilot. We are excited to execute on our plan for the next 18 months and we look forward to sharing our progress in the coming quarters.”
FourthQuarter and Full Year 2022 Financial and Operating Results
Fourth quarter 2022 Net Sales were $20.2 million, which was unchanged versus the fourth quarter of 2021. Full year 2022 Net Sales increased 10.6% to $86.3 million compared to $78.0 million in 2021. While total battery unit sales increased, we saw a significant mix shift toward OEMs, which typically carry lower average sale prices.
Fourth quarter 2022 Gross Profit was $4.4 million, lower compared to $6.1 million in the fourth quarter of 2021. Full year 2022 Gross Profit was $24.0 million, lower than in 2021 at $29.6 million. The decline in both periods was primarily driven by a change in revenue mix that favored a larger percentage of lower margin OEM sales, as well as a relative increase in some components of cost of goods.
Fourth quarter 2022 Operating Expenses were $(12.5) million, which was higher compared to $(6.2) million in the fourth quarter of 2021. Full year 2022 Operating Expenses of $(37.5) million, increased compared to $(23.2) million in 2021. The fourth quarter and full year included business combination and other deal related expenses of $(1.1) million associated with the company going public in October 2022.
Fourth quarter 2022 Net Loss was $(11.7) million, compared to a Net Loss of $(0.1) million in the fourth quarter of 2021. The Company recognized a Net Loss for the full year 2022 of $(19.1) million, versus Net Income of $4.3 million in 2021.
Fourth quarter 2022 EBITDA was $(7.8) million, compared to $0.1 million in 2021. Full year 2022 EBITDA was $(12.6) million, compared to $7.1 million in 2021.
Fourth quarter 2022 Adjusted EBITDA, excluding stock-based compensation, deal-related expenses and other one-time items, was $(4.8) million, compared to $0.9 million in the fourth quarter of 2021. Full year 2022 Adjusted EBITDA excluding stock-based compensation, deal-related expenses and other one-time items, was $(7.9) million, compared to $8.5 million in 2021.
The Company ended the fourth quarter of 2022 with $17.8 million in cash and $76.2 million in debt. Dragonfly retains strong financial flexibility with access to a $150 million equity line of credit.
1Q& Full Year 2023 Guidance
Firstquarter 2023:
| ● | Net<br> Sales are expected to range between $17 - $19 million, as softer demand from within the DTC segment is expected to be more than offset<br> by growth within the OEM segment |
|---|---|
| ● | Gross<br> Margin is expected to increase modestly due to lower overhead, depreciation and labor costs |
| ● | Operating<br> Expenses are expected to be $11.5 - $12.5 million, in-line with recent quarters when excluding the impacts from our business combination |
| ● | Other<br> Income (Expense) is expected be an expense in the range of $(3.5) - $(3.7) million |
| ● | Net<br> Losses are expected to be between $(10.5) - $(11.5) million for the quarter, or ($0.27) - ($0.30) per share based on 38.7 million<br> shares outstanding. |
Fullyear 2023:
| ● | Revenue<br> growth is expected to accelerate as the year passes, with particular strength coming from the OEM business in the second half of<br> 2023 |
|---|---|
| ● | Net<br> Sales are expected to be between $112 - $122 million, or 36% higher year-over-year at the mid-point of the range |
| ● | Gross<br> Margins are expected to increase modestly on a year-over-year basis |
| ● | Operating<br> Expenses are expected to increase, but at a slower rate than revenue |
| ● | Net<br> Income is expected to return to being positive in the second half of 2023 |
WebcastInformation
The Dragonfly Energy management team will host a conference call to discuss its fourth quarter and full year 2022 financial results this afternoon, Wednesday, March 29, 2023, at 5pm ET. The call can also be accessed live via telephone by dialing (888) 886-7786 or for international callers (416) 764-8658, and referencing Dragonfly Energy. Please log in to the webcast or dial in to the call at least 10 minutes prior to the start of the event. The live webcast of the conference will also be available at https://investors.dragonflyenergy.com/events-and-presentations/default.aspx on the Events and Presentations page on the Investor Relations section of Dragonfly’s website.
AboutDragonfly
Dragonfly Energy Holdings Corp. (Nasdaq: DFLI) headquartered in Reno, Nevada, is a leading supplier of deep cycle lithium-ion batteries. Dragonfly’s research and development initiatives are revolutionizing the energy storage industry through innovative technologies and manufacturing processes. Today, Dragonfly’s non-toxic deep cycle lithium-ion batteries are displacing lead-acid batteries across a wide range of end-markets, including RVs, marine vessels, off-grid installations, and other storage applications. Dragonfly is also focused on delivering an energy storage solution to enable a more sustainable and reliable smart grid through the future deployment of the Company’s proprietary and patented solid-state cell technology. To learn more, visit www.dragonflyenergy.com/investors.
Forward-LookingStatements
The 2022 financial results contained in this press release are subject to finalization in connection with the completion of the audit and the preparation of the Company’s Annual Report Form 10-K report for the year ended December 31, 2022. 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 2023 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: the Company’s ability to recognize the anticipated benefits of the of the Company’s recent business combination with Chardan NexTech Acquisition 2 Corp. and related transactions; the Company’s ability to successfully increase market penetration into target markets; the growth of the addressable markets that the Company intends to target; 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; and the Company’s ability to generate revenue from future product sales and its ability to achieve and maintain profitability. 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 Registration Statement on Form S-4 relating to the business combination declared effective by the U.S. Securities and Exchange Commission the (“SEC”) on September 16, 2022 and in the Company’s subsequent filings with the SEC.
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.
DragonflyContacts:
InvestorRelations
Sioban Hickie, ICR, Inc.
DragonflyIR@icrinc.com
DragonflyEnergy Holdings Corp.
BalanceSheet
YearsEnded December 31, 2022 and 2021
(inthousands)
| 2021 | |||
| Current Assets | |||
| Cash | 17,781 | $ | 25,586 |
| Restricted cash | - | 3,044 | |
| Accounts receivable, net of allowance for doubtful accounts | 1,444 | 783 | |
| Inventory | 49,846 | 27,127 | |
| Prepaid expenses | 2,167 | 293 | |
| Prepaid inventory | 2,002 | 7,461 | |
| Prepaid income tax | 525 | - | |
| Other current assets | 267 | 1,787 | |
| Total Current Assets | 74,032 | 66,081 | |
| Property and Equipment | |||
| Property and Equipment, Net | 10,760 | 4,461 | |
| Operating lease right of use asset | 4,513 | 5,709 | |
| Total Assets | 89,305 | $ | 76,251 |
| Current Liabilities | |||
| Accounts payable trade | 14,018 | $ | 11,360 |
| Accrued payroll and other liabilities | 6,295 | 2,608 | |
| Customer deposits | 238 | 434 | |
| Uncertain tax position liability | 128 | - | |
| Income tax payable | - | 631 | |
| Notes payable, current portion | - | 1,875 | |
| Operating lease liability, current portion | 1,188 | 1,082 | |
| Total Current Liabilities | 21,867 | 17,990 | |
| Long Term Liabilities | |||
| Notes payable non current, net of debt discount | 19,242 | 37,053 | |
| Warrant liabilities | 32,831 | - | |
| Deferred tax liabilities | - | 453 | |
| Accrued expenses long term | 492 | 0 | |
| Operating lease liability, net of current portion | 3,541 | 4,694 | |
| Total Long Term Liabilities | 56,106 | 42,200 | |
| Total Liabilities | 77,973 | 60,190 | |
| Equity | |||
| Common stock, 170,000,000 shares at 0.0001 par value, authorized, 43,272,728<br> and 36,496,998 shares issued and outstanding as of December 31, 2022 and 2021, respectively | 4 | 4 | |
| Preferred stock, 5,000,000 shares at 0.0001 par value, authorized, no shares issued and<br> outstanding as of December 31, 2022 and 2021, respectively | - | - | |
| Additional paid in capital | 18,001 | 3,619 | |
| Retained (deficit) earnings | (6,673) | 12,438 | |
| Total Equity | 11,332 | 16,061 | |
| Total Liabilities and Shareholders’ Equity | $89,305 | $ | 76,251 |
All values are in US Dollars.
The financial data presented for the year ended December 31, 2022 should be considered preliminary and is subject to completion of the Company’s annual close procedures and the Company’s independent auditor has not yet completed their audit.
Dragonfly Energy Holdings Corp.
Statement of Operations
Years Ended December 31, 2022 and 2021
(in thousands, except share and per share data)
| Unaudited | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| Net Sales | $ | 86,251 | $ | 78,000 | ||
| Cost of Goods Sold | 62,247 | 48,375 | ||||
| Gross Profit | 24,004 | 29,625 | ||||
| Operating Expenses | ||||||
| Research and development | 2,764 | 2,689 | ||||
| General and administrative | 21,106 | 10,621 | ||||
| Selling and marketing | 13,671 | 9,848 | ||||
| Total Operating Expenses | 37,541 | 23,158 | ||||
| (Loss) Income From Operations | (13,537 | ) | 6,467 | |||
| Other Income (Expense) | ||||||
| Other Income | 40 | 1 | ||||
| Interest expense | (6,945 | ) | (519 | ) | ||
| Change in fair market value of warrant liability | 5,446 | - | ||||
| Debt extinguishment | (4,824 | ) | - | |||
| Total Other Expense | (6,283 | ) | (518 | ) | ||
| (Loss) Income Before Taxes | (19,820 | ) | 5,949 | |||
| Income Tax (Benefit) Expense | (709 | ) | 1,611 | |||
| Net (Loss) Income | $ | (19,111 | ) | $ | 4,338 | |
| (Loss) Earnings Per Share Basic | ($ | 0.50 | ) | $ | 0.12 | |
| (Loss) Earnings Per Share Diluted | ($ | 0.50 | ) | $ | 0.11 | |
| Weighted Average Number of Shares Basic | 38,565,307 | 35,579,137 | ||||
| Weighted Average Number of Shares Diluted | 38,565,307 | 37,742,337 |
DragonflyEnergy Holdings Corp.
Statementof Cash Flows
YearsEnded December 31, 2022 and 2021
(inthousands)
| Unaudited | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| Cash flows from Operating Activities | ||||||
| Net (Loss) Income | $ | (19,111 | ) | $ | 4,338 | |
| Adjustments to Reconcile Net (Loss) Income to Net Cash | ||||||
| Used in Operating Activities | ||||||
| Stock based compensation | 1,837 | 734 | ||||
| Debt extinguishment | 4,824 | - | ||||
| Amortization of debt discount | 1,822 | 206 | ||||
| Change in fair market value of warrant liability | (5,446 | ) | - | |||
| Deferred tax liability | (453 | ) | 122 | |||
| Non cash interest expense (paid in kind) | 1,192 | - | ||||
| Provision for doubtful accounts | 108 | 50 | ||||
| Depreciation and amortization | 891 | 617 | ||||
| Loss on disposal of property and equipment | 56 | 124 | ||||
| Changes in Assets and Liabilities | ||||||
| Accounts receivable | (769 | ) | 1,007 | |||
| Inventories | (22,719 | ) | (21,179 | ) | ||
| Prepaid expenses | (1,839 | ) | 58 | |||
| Prepaid inventory | 5,459 | (6,353 | ) | |||
| Other current assets | 1,520 | (1,214 | ) | |||
| Other assets | 1,196 | 1,029 | ||||
| Income taxes payable | (1,156 | ) | (651 | ) | ||
| Accounts payable and accrued expenses | 3,783 | 8,903 | ||||
| Uncertain tax position liability | 128 | (19 | ) | |||
| Customer deposits | (196 | ) | (1,345 | ) | ||
| Total Adjustments | (9,762 | ) | (17,911 | ) | ||
| Net Cash Used in Operating Activities | (28,873 | ) | (13,573 | ) | ||
| Cash Flows From Investing Activities | ||||||
| Proceeds from disposal of property and equipment | - | 61 | ||||
| Purchase of property and equipment | (6,405 | ) | (2,970 | ) | ||
| Net Cash Used in Investing Activities | (6,405 | ) | (2,909 | ) | ||
| Cash Flows From Financing Activities | ||||||
| Proceeds from term loan | 75,000 | - | ||||
| Proceeds from note payable | - | 45,000 | ||||
| Repayment from note payable | (45,000 | ) | - | |||
| Payments of OID debt issuance costs | (4,032 | ) | (6,278 | ) | ||
| Effect of recapitalization | (7,190 | ) | - | |||
| Transaction costs | (9,633 | ) | ||||
| Proceeds from exercise of options | 706 | 184 | ||||
| Proceeds from stock purchase agreement | 15,000 | - | ||||
| Proceeds from revolving note agreement | - | 5,000 | ||||
| Repayments of revolving note agreement | - | (5,000 | ) | |||
| Net Cash Provided by Financing Activities | 24,851 | 38,906 | ||||
| Net (Decrease) / Increase in Cash and Restricted Cash | (10,849 | ) | 22,424 | |||
| Beginning cash and restricted cash | 28,630 | 6,206 | ||||
| Ending cash and restricted cash | $ | 17,781 | $ | 28,630 | ||
| Supplemental Disclosures of Cash Flow Information: | ||||||
| Cash paid for income taxes | $ | 773 | $ | 2,390 | ||
| Cash paid for interest | $ | 2,252 | $ | 313 | ||
| Supplemental Non Cash Items | ||||||
| Receivable of options exercised | $ | - | $ | 250 | ||
| Purchases of property and equipment, not yet paid | $ | 419 | $ | 255 | ||
| Recognition of right of use asset obtained in exchange<br> for operating lease liability | $ | - | $ | 5,745 | ||
| Warrant liability assumed in merger | $ | 1,990 | $ | - | ||
| Recognition of warrant liability | $ | 52,956 | $ | - | ||
| Cashless exercise of liability classified warrants | $ | 16,669 | $ | - |
DragonflyEnergy Holdings Corp.
Statementof Operations
QuartersEnded December 31, 2022 and 2021
(inthousands, except share and per share data)
| Unaudited | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| Net Sales | $ | 20,209 | $ | 20,179 | ||
| Cost of Goods Sold | 15,766 | 14,061 | ||||
| Gross Profit | 4,443 | 6,118 | ||||
| Operating Expenses | ||||||
| Research and development | 813 | 790 | ||||
| General and administrative | 7,328 | 2,191 | ||||
| Selling and marketing | 4,340 | 3,194 | ||||
| Total Operating Expenses | 12,481 | 6,175 | ||||
| (Loss) Income From Operations | (8,038 | ) | (57 | ) | ||
| Other Income (Expense) | ||||||
| Other Income | 40 | 1 | ||||
| Interest expense | (3,288 | ) | (395 | ) | ||
| Change in fair market value of warrant liability | 5,446 | - | ||||
| Debt extinguishment | (4,824 | ) | - | |||
| Total Other Expense | (2,626 | ) | (394 | ) | ||
| (Loss) Income Before Taxes | (10,664 | ) | (451 | ) | ||
| Income Tax (Benefit) Expense | 991 | (371 | ) | |||
| Net (Loss) Income | $ | (11,655 | ) | ($ | 80 | ) |
| (Loss) Earnings Per Share Basic | $ | (0.27 | ) | $ | (0.00 | ) |
| (Loss) Earnings Per Share Diluted | $ | (0.27 | ) | $ | (0.00 | ) |
| Weighted Average Number of Shares Basic | 42,948,026 | 36,102,440 | ||||
| Weighted Average Number of Shares Diluted | 42,948,026 | 36,102,440 |
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<br> 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.
DragonflyEnergy Holdings Corp.
YearsEnded December 31, 2022 and 2021
(inthousands, except share and per share data)
| Unaudited<br><br> <br>2022 | 2021 | ||||
|---|---|---|---|---|---|
| EBITDA Calculation | |||||
| Net Income | $ | (19,111 | ) | $ | 4,338 |
| Plus: Interest & Other Income | 6,283 | 518 | |||
| Plus: Taxes | (709 | ) | 1,611 | ||
| Plus: Depreciation & Amortization | 892 | 617 | |||
| EBITDA | $ | (12,645 | ) | $ | 7,084 |
| Adjustments to EBITDA | |||||
| Plus: Stock Based Compensation | 1,837 | 734 | |||
| Plus: ERP Implementation | - | 233 | |||
| Plus: Promissory Note Forgiveness | 469 | - | |||
| Plus: Loss on Disposal of Assets | 54 | 124 | |||
| Plus: Separation Agreement | 1,197 | - | |||
| Plus: Business Combination Expenses | 1,137 | 295 | |||
| Adjusted EBITDA | $ | (7,951 | ) | $ | 8,470 |
DragonflyEnergy Holdings Corp.
QuartersEnded December 31, 2022 and 2021
(inthousands, except share and per share data)
| Unaudited<br><br> <br>2022 | 2021 | |||||
|---|---|---|---|---|---|---|
| EBITDA Calculation | ||||||
| Net Income | $ | (11,655 | ) | $ | (80 | ) |
| Plus: Interest & Other Income | 2,578 | 394 | ||||
| Plus:Taxes | 991 | (371 | ) | |||
| Plus:Depreciation & Amortization | 243 | 185 | ||||
| EBITDA | $ | (7,843 | ) | $ | 128 | |
| Adjustments to EBITDA | ||||||
| Plus:Stock Based Compensation | 682 | 185 | ||||
| Plus:ERP Implementation | - | 32 | ||||
| Plus:Loss on Disposal of Assets | (6 | ) | - | |||
| Plus:Separtation Agreement | 1,197 | 185 | ||||
| Plus:Business Comination Expenses | 1,137 | 295 | ||||
| Adjusted EBITDA | $ | (4,833 | ) | $ | 825 |