Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2022 | |
Document and Entity Information | |
Document Type | S-1/A |
Entity Registrant Name | DRAGONFLY ENERGY HOLDINGS CORP. |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Central Index Key | 0001847986 |
Amendment Flag | true |
Amendment Description | AMENDMENT NO. 1 |
BALANCE SHEETS
BALANCE SHEETS | Dec. 31, 2021 USD ($) |
Current assets: | |
Cash | $ 799,808 |
Prepaid expenses | 302,590 |
Total Current Assets | 1,102,398 |
Cash held in trust account | 128,421,215 |
Total Assets | 129,523,613 |
Liabilities, Current [Abstract] | |
Accounts payable | 16,862 |
Accrued Liabilities, Current | 31,749 |
Franchise Tax Payable | 65,600 |
Total Current Liabilities | 114,211 |
Warrant liabilities | 2,036,258 |
Total Liabilities | 2,150,469 |
Commitments and Contingencies | |
Common stock subject to possible redemption | 128,397,500 |
Stockholders' Deficit | |
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding at June 30, 2022 and December 31, 2021 | 0 |
Common stock, $0.0001 par value; 50,000,000 shares authorized; 3,162,500 shares issued and outstanding (excluding 12,650,000 and 12,650,000 shares subject to possible redemption) at June 30, 2022 and December 31, 2021, respectively | 317 |
Additional paid-in capital | 0 |
Accumulated deficit | (1,024,673) |
Total Stockholders' Deficit | (1,024,356) |
Total Liabilities, Common Stock Subject to Possible Redemption and Stockholders' Deficit | $ 129,523,613 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) | Aug. 10, 2021 shares | Mar. 04, 2021 shares | Sep. 30, 2022 $ / shares shares | Aug. 05, 2022 shares | Dec. 31, 2021 $ / shares shares | Dec. 31, 2020 $ / shares shares |
Preferred stock, par value, (per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 | |||
Preferred stock, shares issued | 0 | 0 | 0 | |||
Preferred stock, shares outstanding | 0 | 0 | 0 | |||
Common shares, par value, (per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Common stock, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 | |||
Common shares, shares issued | 6,255,848 | |||||
Common shares, shares outstanding | 3,162,500 | 2,875,000 | 6,255,848 | |||
Stock split ratio | 1.1 | 2.875 | ||||
Temporary Equity, Redemption Price Per Share | $ / shares | $ 10.15 | $ 10.15 | ||||
Common stock not subject to redemption | ||||||
Common shares, shares issued | 3,162,500 | 3,162,500 | 3,162,500 | |||
Common shares, shares outstanding | 3,162,500 | 3,162,500 | 3,162,500 | |||
Common stock subject to redemption | ||||||
Common stock subject to redemption, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Temporary Equity, Shares Issued | 3,093,348 | 6,255,848 | 12,650,000 | |||
Shares subject to possible redemption outstanding | 3,093,348 | 6,255,848 | 12,650,000 | 0 | ||
Temporary Equity, Redemption Price Per Share | $ / shares | $ 10.25 | $ 10.15 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS | 12 Months Ended |
Dec. 31, 2021 USD ($) $ / shares shares | |
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS | |
Operating and formation costs | $ 292,074 |
Franchise tax expense | 65,600 |
Loss from operations | (357,674) |
Warrant issuance costs | (18,797) |
Loss on sale of private warrants | (1,253,928) |
Net gain on investments held in Trust Account | 23,715 |
Change in fair value of warrant liability | 3,517,171 |
Net income (loss) | $ 1,910,487 |
Basic weighted average shares outstanding | shares | 7,732,021 |
Basic net income (loss) per common share | $ / shares | $ 0.25 |
Diluted weighted average shares outstanding | shares | 7,991,952 |
Diluted net income (loss) per common share | $ / shares | $ 0.24 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Common stock | Additional Paid-in Capital | Retained Earnings [Member] | Total | |
Balance at the end at Dec. 31, 2020 | $ 317 | $ 24,683 | $ (1,000) | $ 24,000 | |
Balance at the end (in shares) at Dec. 31, 2020 | 3,162,500 | ||||
Balance at the beginning at Jun. 23, 2020 | $ 0 | 0 | 0 | 0 | |
Balance at the beginning (in shares) at Jun. 23, 2020 | 0 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock Issued During Period, Value, New Issues | [1],[2] | $ 317 | 24,683 | 0 | 25,000 |
Net income (loss) | 0 | (1,000) | (1,000) | ||
Balance at the end at Dec. 31, 2020 | $ 317 | 24,683 | (1,000) | 24,000 | |
Balance at the end (in shares) at Dec. 31, 2020 | 3,162,500 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 2,689,709 | ||||
Balance at the end at Sep. 30, 2021 | $ 317 | (245,451) | (245,134) | ||
Balance at the beginning at Dec. 31, 2020 | $ 317 | 24,683 | (1,000) | 24,000 | |
Balance at the beginning (in shares) at Dec. 31, 2020 | 3,162,500 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Temporary Equity, Accretion to Redemption Value, Adjustment | 15,077,329 | 2,934,160 | 18,011,489 | ||
Proceeds from Initial Public Offering Costs allocated to Public Warrants (net of offering costs) | 15,052,646 | 0 | 15,052,646 | ||
Net income (loss) | 0 | 1,910,487 | 1,910,487 | ||
Balance at the end at Dec. 31, 2021 | $ 317 | 0 | (1,024,673) | (1,024,356) | |
Balance at the end (in shares) at Dec. 31, 2021 | 3,162,500 | ||||
Balance at the beginning at Mar. 31, 2021 | $ 317 | 24,683 | (1,000) | 24,000 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (834) | (834) | |||
Balance at the end at Jun. 30, 2021 | 317 | 24,683 | (1,834) | 23,166 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Temporary Equity, Accretion to Redemption Value, Adjustment | 15,077,329 | 2,934,160 | 18,011,489 | ||
Proceeds from Initial Public Offering Costs allocated to Public Warrants (net of offering costs) | 15,052,646 | 15,052,646 | |||
Net income (loss) | 2,690,543 | 2,690,543 | |||
Balance at the end at Sep. 30, 2021 | 317 | (245,451) | (245,134) | ||
Balance at the beginning at Dec. 31, 2021 | 317 | 0 | (1,024,673) | (1,024,356) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 1,191,840 | 1,191,840 | |||
Balance at the end at Mar. 31, 2022 | 317 | 167,167 | 167,484 | ||
Balance at the beginning at Dec. 31, 2021 | $ 317 | $ 0 | (1,024,673) | (1,024,356) | |
Balance at the beginning (in shares) at Dec. 31, 2021 | 3,162,500 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (1,298,108) | ||||
Balance at the end at Sep. 30, 2022 | $ 317 | (2,826,593) | (2,826,276) | ||
Balance at the beginning at Mar. 31, 2022 | 317 | 167,167 | 167,484 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (570,333) | (570,333) | |||
Balance at the end at Jun. 30, 2022 | 317 | (403,166) | (402,849) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Temporary Equity, Accretion to Redemption Value, Adjustment | 503,812 | 503,812 | |||
Net income (loss) | (1,919,615) | (1,919,615) | |||
Balance at the end at Sep. 30, 2022 | $ 317 | $ (2,826,593) | $ (2,826,276) | ||
[1] Includes up to 412,500 shares of common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriter. On August 18, 2021, the underwriters’ exercised the over-allotment option in full, thus these shares are no longer subject to forfeiture (see Note 6). On March 4, 2021, the Company effected a 2.875 -for-1 stock split, resulting in 2,875,000 shares of common stock outstanding (see Note 5). On August 10, 2021, the Company effectuated a 1.1 -for-1 stock split, resulting in an aggregate of 3,162,500 shares of common stock outstanding (see Note 5). All share and per-share amounts have been retroactively restated to reflect the two stock splits. |
STATEMENT OF CHANGES IN STOCKHO
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Parenthetical ) | Aug. 18, 2021 shares |
Over-allotment option | |
Common stock subject to forfeiture | 412,500 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2020 | Dec. 31, 2021 | |
Net Cash Provided by (Used in) Operating Activities [Abstract] | ||
Net income (loss) | $ (1,000) | $ 1,910,487 |
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract] | ||
Warrant issuance costs | 18,797 | |
Net gain on investments held in Trust Account | (23,715) | |
Loss on sale of private warrants | 1,253,928 | |
Change in fair value of warrant liability | 0 | (3,517,171) |
Increase (Decrease) in Operating Capital [Abstract] | ||
Accounts payable | 16,863 | |
Accrued expenses | 1,000 | 30,749 |
Prepaid expenses | (302,590) | |
Franchise tax payable | 65,600 | |
Net cash used in operating activities | (547,052) | |
Net Cash Provided by (Used in) Investing Activities [Abstract] | ||
Cash deposited in Trust Account | (128,397,500) | |
Net cash provided by (used in) investing activities | (128,397,500) | |
Net Cash Provided by (Used in) Financing Activities [Abstract] | ||
Proceeds from initial public offering, net of underwriter's discount paid | 126,000,000 | |
Proceeds from promissory note - related party | 155,000 | |
Repayment of promissory note - related party | (155,000) | |
Proceeds from issuance of Founder Shares to Sponsor | 25,000 | |
Proceeds from sale of private warrants | 4,299,500 | |
Offering costs paid | (580,140) | |
Net cash provided by (used in) financing activities | 25,000 | 129,719,360 |
Net Change in Cash | 25,000 | 774,808 |
Cash - Beginning of Period | 0 | 25,000 |
Cash - End of Period | $ 25,000 | $ 799,808 |
DESCRIPTION OF ORGANIZATION AND
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Chardan NexTech Acquisition 2 Corp (the “Company” or “Chardan”) is a blank check company incorporated in Delaware on June 23, 2020. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). The Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. As of September 30, 2022, the Company had not yet commenced any operations. All activity for the period from June 23, 2020 (Inception) through September 30, 2022 relates to the Company’s formation and initial public offering (“Initial Public Offering”) described below, and, subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The registration statement on Form S-1 (the “Registration Statement”) for the Company’s Initial Public Offering was declared effective on August 10, 2021. On August 13, 2021, the Company consummated the Initial Public Offering of 11,000,000 units (the “Units” and, with respect to the common stock, par value $0.0001 per share, of the Company included in the Units sold, the “Public Shares”, and with respect to the warrants of the Company included in the Units sold, the “Public Warrants”), at $10.00 per Unit, generating gross proceeds of $110,000,000 , which is discussed in Note 3. Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 4,361,456 warrants (the “Private Warrants”, together with the Public Warrants, the “Warrants”) at a price of $0.93 per Private Warrant in a private placement to Chardan NexTech 2 Warrant Holdings LLC, a Delaware limited liability company (“Warrant Holdings” or “Holdings”), an affiliate of Chardan NexTech Investments 2 LLC, a Delaware limited liability company (the “Sponsor”), generating gross proceeds of $4,052,000 , which is described in Note 4. The Company had granted the underwriters in the Initial Public Offering a 45-day option to purchase up to 1,650,000 Units to cover over-allotments, if any (see Note 6). On August 16, 2021, the underwriters fully exercised the over-allotment option and, on August 18, 2021, purchased an additional 1,650,000 Units (the “Over-Allotment Units”) at a purchase price of $10.00 per Over-Allotment Unit, generating gross proceeds of $16,500,000 . Simultaneously with the closing of the exercise of the over-allotment option, the Company consummated the sale of 266,402 warrants (the “Over-Allotment Private Warrants”) at a purchase price of $0.93 per Over-Allotment Private Warrant in a private placement to the Holdings, generating gross proceeds of $247,500 . Following the closing of the Initial Public Offering and underwriters’ over-allotment option, an amount of $128,397,500 from the net proceeds of the sale of the Units and Over-Allotment Units and a portion of the proceeds from the sale of the Private Warrants and Over-Allotment Private Warrants was placed in a trust account (the “Trust Account”) and was invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the Trust Account, as described below. Transaction costs related to the issuances described above amounted to $1,080,140 , consisting of $500,000 of cash underwriting fees and $580,140 of other offering costs. The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account ( $10.15 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The Public Shares subject to redemption was recorded at redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity (“ASC 480”). The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. Notwithstanding the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company. The Company had 12 months, or until August 13, 2022, from the closing of the Initial Public Offering to consummate an initial Business Combination. However, prior to such date, the Stockholders (as defined in this Note 1) approved a proposal to amend the Company’s Amended and Restated Certificate of Incorporation (the “Charter”), to extend the date by which the Company must complete a Business Combination, as further discussed in this Note 1. The initial stockholders have agreed to waive their redemption rights with respect to any shares they own in connection with the consummation of the initial Business Combination, including their Founder Shares and Public Shares that they purchase during or after the offering, if any. In addition, the initial stockholders have agreed to waive their rights to liquidating distributions with respect to their Founder Shares if the Company fails to consummate an initial Business Combination within 18 months (assuming both of the three-month extensions were executed) from the closing of this offering. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering, they will be entitled to receive liquidating distributions with respect to such Public Shares if the Company fails to consummate an initial Business Combination within the required time period. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.15 per Public Share or (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay the Company’s taxes, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Business Combination Agreement On May 15, 2022, Chardan entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Dragonfly Energy Corp., a Nevada corporation (“Dragonfly”), and Bronco Merger Sub, Inc., a Nevada corporation and a direct, wholly owned subsidiary of Chardan (“Merger Sub”). The Merger Agreement provides that, among other things and upon the terms and subject to the conditions thereof, the following transactions will occur: (i) at the closing of the transactions contemplated by the Merger Agreement (the “Closing”), upon the terms and subject to the conditions of the Merger Agreement, in accordance with applicable provisions of the Nevada Revised Statutes (“NRS”) and the Delaware General Corporation Law (“DGCL”), Merger Sub will merge with and into Dragonfly, the separate corporate existence of Merger Sub ceased and Dragonfly was the surviving corporation and a wholly owned subsidiary of Chardan (the “Merger”); (ii) at the Closing, Chardan changed its name to “Dragonfly Energy Holdings Corp.” and is referred to herein as “New Dragonfly”; (iii) as a result of the Merger, among other things, all shares of capital stock of Dragonfly outstanding as of immediately prior to the effective time of the Merger were canceled in exchange for the right to receive shares of common stock, par value $0.0001 per share, of New Dragonfly (“New Dragonfly Common Stock”); (iv) as a result of the Merger, each Dragonfly option outstanding as of immediately prior to the effective time of the Merger converted into the right to receive a New Dragonfly option, subject to certain exceptions and conditions as set forth in the Merger Agreement; (v) at the Closing, 40,000,000 shares of New Dragonfly Common Stock became issuable to existing holders of Dragonfly capital stock or pursuant to the aforementioned converted options; and (vi) following the Closing, existing holders of Dragonfly capital stock will have the right to receive up to an aggregate of 40,000,000 additional shares of New Dragonfly Common Stock in three tranches as follows: (A) New Dragonfly shall issue 15,000,000 shares of New Dragonfly common stock in the aggregate, if, as disclosed in the Annual Report on Form 10-K for the fiscal year ending December 31, 2023 for New Dragonfly filed with the United States Securities and Exchange Commission (the “SEC”), New Dragonfly’s (x) total audited revenue for the year ended December 31, 2023 is equal to or greater than $250,000,000 , and (y) audited operating income for the year ended December 31, 2023 is equal to or greater than $35,000,000 ; (B) New Dragonfly shall issue an additional 12,500,000 shares of New Dragonfly common stock, in the aggregate (the “Second Earnout”), if at any time during the period beginning on the Closing Date and ending on December 31, 2026, the VWAP of the New Dragonfly common stock over any 20 Trading Days (which may or may not be consecutive) within any 30 consecutive Trading Day period is greater than or equal to $22.50 per share of New Dragonfly common stock (the “Second Milestone”); and (C) New Dragonfly shall issue an additional 12,500,000 shares of New Dragonfly common stock, in the aggregate (the “Third Earnout”), if at any time during the period beginning on the Closing Date and ending on December 31, 2028, the VWAP of the New Dragonfly common stock over any 20 Trading Days (which may or may not be consecutive) within any 30 consecutive Trading Day period is greater than or equal to $32.50 per share of New Dragonfly common stock (the “Third Milestone”). Upon the occurrence of the Third Milestone, if the Second Milestone has yet to occur, the Second Milestone will be deemed to have occurred simultaneously with the Third Milestone and the holders of Dragonfly capital stock shall be entitled to receive the Second Earnout as if the Second Milestone had occurred on or prior to December 31, 2026, provided, however, that such date shall only occur once, if at all, and in no event shall such holders be collectively entitled to receive more than an aggregate of 40,000,000 additional shares of New Dragonfly Common Stock. The Board of Directors of Chardan (the “Board”) has unanimously (i) approved and declared advisable the Merger Agreement, the Merger and the other transactions contemplated thereby and (ii) resolved to recommend approval of the Merger Agreement and related matters by the stockholders of Chardan. Upon the consummation of the business combination, the Board will be composed of seven members, five of whom will be designated by Dragonfly and two of whom will be designated by Chardan. On May 15, 2022, concurrently with the execution of the Merger Agreement, Chardan entered into a subscription agreement (the “Subscription Agreement”) with the Sponsor (the “PIPE Investor”). Pursuant to and subject to the terms and conditions contained in the Subscription Agreement, the PIPE Investor has subscribed to purchase up to 500,000 shares of New Dragonfly Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of up to $5,000,000 (the “PIPE Investment”). The Merger Agreement contains customary representations and warranties by Chardan, Merger Sub, and Dragonfly. The representations and warranties of the respective parties to the Merger Agreement generally will not survive the Closing. The Merger Agreement contains additional covenants, including, among others, providing for (i) the parties to conduct their respective businesses in the ordinary course through the Closing, (ii) the parties to not initiate any negotiations or enter into any agreements for certain alternative transactions, (iii) Dragonfly to prepare and deliver to Chardan certain audited and unaudited consolidated financial statements of Dragonfly, (iv) Chardan to prepare and file a proxy statement/registration statement on Form S-4 and take certain other actions to obtain the requisite approval of Chardan stockholders of certain proposals regarding the Merger, (v) the parties to use commercially reasonable efforts to obtain necessary approvals from governmental agencies and (vi) to the extent Closing has not occurred by August 10, 2022, then, pursuant to Chardan’s organizational documents, Chardan shall extend the deadline to consummate its initial business combination by an additional three months from the Termination Date (as defined in Chardan’s Amended and Restated Certificate of Incorporation as in effect on May 15, 2022) (such date, the “Extended Termination Date”); provided that if the Closing has not occurred by the date that is two business days prior to the Extended Termination Date, Chardan shall extend the deadline to consummate its initial business combination by an additional three months from the Extended Termination Date. On July 12, 2022, the Company, Dragonfly and Merger Sub entered into that certain Amendment to the Agreement and Plan of Merger, between the Company, Dragonfly and Merger Sub (the “Amendment”), which amended the Merger Agreement to, among other things, reflect a $ 15 million increase in the consideration to be issued in the business combination in connection with Dragonfly entering into a Stock Purchase Agreement with THOR Industries, Inc. (“THOR”), dated as of July 12, 2022, whereby for $ 15 million in cash, THOR purchased 1,267,502 shares of Dragonfly common stock (the “THOR Investment”). In connection with the THOR Investment, THOR and Dragonfly will enter into a commercial arrangement pursuant to which (i) THOR and certain of THOR’s affiliates will, among other things, transition to lithium-ion batteries manufactured and sold by Dragonfly, and (ii) Dragonfly will, among other things, grant certain board observer rights (with customary limitations) to THOR. Other than as expressly modified by the Amendment, the Merger Agreement remains in full force and effect. Special Meeting to Amend Charter and Investment Management Trust Agreement On August 5, 2022, Chardan held a special meeting (the “Special Meeting”), at which holders of 11,331,512 shares of common stock of Chardan, par value $0.0001 per share (“Chardan Common Stock”), were present in person or by proxy, representing approximately 71.66% of the voting power of the 15,812,500 shares of Chardan Common Stock issued and outstanding entitled to vote at the Special Meeting at the close of business on July 11, 2022, which was the record date (the “Record Date”) for the Special Meeting. Stockholders of record as of the close of business on the Record Date are referred to herein as “Stockholders.” At the Special Meeting, the Stockholders approved the proposal to amend the Company’s Amended and Restated Certificate of Incorporation (the “Charter”) to provide the Company’s officers, directors, initial stockholders and Chardan NexTech 2 Warrant Holdings, LLC (collectively, the “Insiders”) the ability to extend the date by which the Company must complete a business combination up to three (3) times for an additional one (1) month each time (for a maximum of three (3) one-month extensions) upon the deposit into the trust account (the “Trust Account”) by the Insiders, their affiliates or designees of $ 200,000 upon five days’ advance notice prior to August 13, 2022 (or such other applicable deadline) (the “Extension,” and such proposal, the “Charter Amendment”). On July 29, 2022, to effectuate the Charter Amendment, the board of directors of the Company (the “Board”) approved and adopted the Second Amended and Restated Memorandum and Articles of Association of the Company (the “Second A&R Charter”). In connection with the Charter Amendment, Stockholders elected to redeem 9,556,652 shares of Chardan Common Stock, representing approximately 60.44% of the issued and outstanding shares of Chardan Common Stock and 75.55% of the issued outstanding Chardan Common Stock sold in the IPO, resulting in the distribution of $ 97,194,950 from the Trust Account to the redeeming Stockholders. Following such redemptions, approximately $ 31,460,579 remains in the Trust Account and 6,255,848 shares of Chardan Common Stock will remain issued and outstanding . In addition, at the Special Meeting, the Stockholders approved the proposal to amend the Investment Management Trust Agreement, dated August 10, 2021 (the “Trust Agreement”), by and between the Company and Continental Stock Transfer & Company (the “Trustee”) to authorize the Extension and its implementation by the Company (the “Trust Amendment Proposal”). On July 29, 2022, to effectuate the Trust Amendment Proposal, the Board approved and adopted Amendment No. 1 to the Investment Management Trust Agreement (the “Trust Agreement Amendment”). Other Agreements The Business Combination Agreement contemplates the execution of various additional agreements and instruments, on or before the Closing, including, among others, the following: Registration Rights & Certain Restrictions on Transfer The Merger Agreement contemplates that, at the Closing, New Dragonfly, Chardan NexTech Investments 2 LLC, a Delaware limited liability company (the “Sponsor”), Chardan’s initial stockholders, certain stockholders of Dragonfly and certain of each of their respective affiliates, as applicable, and the other parties thereto, will enter into an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which New Dragonfly will agree to register for resale, pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), certain shares of New Dragonfly Common Stock and other equity securities of New Dragonfly that are held by the parties thereto from time to time and the parties thereto will be provided with customary demand and piggyback registration rights. Additionally, the Registration Rights Agreement and the Bylaws of New Dragonfly contain certain restrictions on transfer with respect to (i) shares of New Dragonfly Common Stock and any other equity securities convertible into or exercisable or exchangeable for shares of New Dragonfly Common Stock held by the Dragonfly Stockholders immediately following the Closing (other than any shares purchased in the public market or in the PIPE Investment) and (ii) any Earnout Shares (as defined in the Merger Agreement) issued within six (6) months of the closing date and any shares of New Dragonfly Common Stock issued with respect to or in exchange for such Earnout Shares (the “Lock-up Shares”). Such restrictions begin at the Closing and end on the date that is six months after Closing. Sponsor Support Agreement On May 15, 2022, the Sponsor, Chardan and Dragonfly entered into the Sponsor Support Agreement (the “Sponsor Support Agreement”), pursuant to which, among other things, the Sponsor agreed to (i) vote in favor of the Merger Agreement and the transactions contemplated thereby and against any proposal that would reasonably be expected to result in (x) a breach of any of Chardan’s or Merger Sub’s covenants, agreements or obligations under the Merger Agreement or in any Ancillary Agreements or (y) any Closing conditions set forth in Section 9.1 or 9.3 or the Merger Agreement not being satisfied, (ii) retain and not redeem its holdings in Chardan prior to the Closing, (iii) be subject to certain transfer restrictions with respect to its holdings in Chardan and (iv) be bound by certain provisions of the Merger Agreement as if it were an original signatory thereto, in each case, on the terms and subject to the conditions set forth in the Sponsor Support Agreement. Subscription Agreement On May 15, 2022, concurrently with the execution of the Merger Agreement, Chardan entered into a subscription agreement (the “Subscription Agreement”) with the Sponsor (the “PIPE Investor”). Pursuant to and subject to the terms and conditions contained in the Subscription Agreement, the PIPE Investor has subscribed to purchase up to 500,000 shares of New Dragonfly Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of up to $5,000,000 (the “PIPE Investment”). As set forth in the Subscription Agreement, the PIPE Investor may purchase shares of the Chardan common stock, par value $0.0001 per share (“Chardan Common Stock”) in the open market, and reduce (i) its purchase price under the Subscription Agreement by an amount equal to the number of shares that the PIPE Investor purchased in the open market multiplied by the per share redemption amount received by public stockholders who elect to redeem their shares prior to the Closing and (ii) the number of shares it subscribed for by an amount equal to the number of Shares Subscriber purchased in the open market and not redeemed as contemplated above. The PIPE Investor agreed that it will not exercise its right to vote any shares it may purchase in the open market following the date of the Subscription Agreement and prior to the Closing, in connection with any vote to approve the Merger. The PIPE Investment was consummated substantially concurrently with the Closing. Debt Commitment Letter On May 15, 2022, Chardan and Dragonfly entered into a commitment letter (the “Debt Commitment Letter”), with EICF Agent LLC (“EIP”) and CCM Investments 5 LLC, an affiliate of the Sponsor (“CCM 5”, and collectively with EIP, the “Initial Lenders”), pursuant to which the Initial Lenders have agreed to provide Dragonfly with a senior secured term loan facility in an aggregate principal amount of $75,000,000 (the “Term Loan Facility”) subject to the satisfaction of a number of specified conditions set forth in the Debt Commitment Letter. CCM 5 intends to backstop its commitment under the Debt Commitment Letter by entering into a backstop commitment letter (the “Backstop Commitment Letter”) with certain third party financing sources prior to the Closing Date. The proceeds of the Term Loan Facility will be used (i) to support the Merger, (ii) to repay all outstanding PIUS Debt and other obligations of Dragonfly, (iii) to pay for fees and expenses in connection with the foregoing, (iv) to provide additional growth capital and (v) for other general/corporate purposes. The Term Loan Facility must be fully drawn on the Closing Date, will mature four years from the Closing Date and will be subject to quarterly amortization of 5% per annum beginning 24 months after the Closing Date. Chardan will be a guarantor under the Term Loan Facility. As part of the consideration for the Term Loan Facility, New Dragonfly will also issue to the Initial Lenders (but not CCM 5 to the extent it has not backstopped its commitment pursuant to the Backstop Commitment Letter) on the Closing Date: (i) penny warrants (the “Penny Warrants”) exercisable to purchase 3.6% of New Dragonfly’s common stock on a fully-diluted basis, calculated as of the Closing Date, and (ii) warrants (the “ $10 Per Share Warrants”) exercisable to purchase 1.6 million shares of New Dragonfly’s common stock at $10 per share. The Penny Warrants will have an exercise period of ten years from the date of issuance. The $10 Per Share Warrants will have an exercise period of five years from the date of issuance and will have customary cashless exercise provisions. The warrants will have standard anti-dilution protections. The shares of New Dragonfly common stock issuable upon exercise of the warrants shall have customary registration rights requiring New Dragonfly to file and keep effective a registration statement registering the resale of such shares. Equity Facility Letter Agreement On May 15, 2022, Chardan, Dragonfly and CCM 5 (the “Equity Facility Investor”) entered into a letter agreement (together with the Summary of Indicative Terms attached as an exhibit thereto, the “Equity Facility Letter Agreement”) pursuant to which Chardan and Dragonfly agreed to enter into definitive documentation (the “Equity Facility Definitive Documentation”) to establish a committed equity facility (the “Equity Facility”) prior to the Closing. The Equity Facility Definitive Documentation will contain terms that are consistent with the Equity Facility Letter Agreement and customary for documentation of this nature. Pursuant to and subject to the conditions to be set forth in the Equity Facility Definitive Documentation, New Dragonfly will have the right from time to time at its option to direct the Equity Facility Investor to purchase up to a specified maximum amount of shares of New Dragonfly common stock, up to a maximum aggregate purchase price of $150,000,000 over the 36 -month term of the Equity Facility Letter Agreement. The foregoing descriptions of the Merger Agreement, form of the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement and the transactions and documents contemplated thereby are not complete and are subject to and qualified in their entirety by reference to the Merger Agreement, form of the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement, copies of which were filed on Form 8-K, as filed on May 16, 2022. The Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement have been included to provide investors with information regarding their terms. They are not intended to provide any other factual information about Chardan, Dragonfly, or their affiliates. The representations, warranties, covenants and agreements contained in the Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Registration Rights Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement and the other documents related thereto were made only for purposes of such agreements as of the specific dates therein, were solely for the benefit of the parties to the Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement, as applicable, and may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter or the Equity Facility Letter Agreement, as applicable, instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter or the Equity Facility Letter Agreement and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter or the Equity Facility Letter Agreement, as applicable, which subsequent information may or may not be fully reflected in Chardan’s public disclosures. Risks and Uncertainties Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these unaudited condensed consolidated financial statements. The unaudited condensed consol | NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Chardan NexTech Acquisition 2 Corp (the “Company”) is a blank check company incorporated in Delaware on June 23, 2020. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). The Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. As of December 31, 2021, the Company had not commenced any operations. All activity for the year ended December 31, 2021 and for the period from June 23, 2020 (inception) through December 31, 2020 relates to the Company’s formation and initial public offering (“Initial Public Offering”) described below, and, subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The registration statement on Form S-1 (the “Registration Statement”) for the Company’s Initial Public Offering was declared effective on August 10, 2021. On August 13, 2021, the Company consummated the Initial Public Offering of 11,000,000 units (the “Units” and, with respect to the common stock, par value $0.0001 per share, of the Company included in the Units sold, the “Public Shares”, and with respect to the warrants of the Company included in the Units sold, the “Public Warrants”), at $10.00 per Unit, generating gross proceeds of $110,000,000, which is discussed in Note 3. Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 4,361,456 warrants (the “Private Warrants”, together with the Public Warrants, the “Warrants”) at a price of $0.93 per Private Warrant in a private placement to Chardan NexTech 2 Warrant Holdings LLC, a Delaware limited liability company (“Holdings”), an affiliate of Chardan NexTech Investments 2 LLC, a Delaware limited liability company (the “Sponsor”), generating gross proceeds of $4,052,000, which is described in Note 4. The Company had granted the underwriters in the Initial Public Offering a 45-day option to purchase up to 1,650,000 Units to cover over-allotments, if any (see Note 6). On August 16, 2021, the underwriters fully exercised the over-allotment option and, on August 18, 2021, purchased an additional 1,650,000 Units (the “Over-Allotment Units”) at a purchase price of $10.00 per Over-Allotment Unit, generating gross proceeds of $16,500,000. Simultaneously with the closing of the exercise of the over-allotment option, the Company consummated the sale of 266,402 warrants (the “Over-Allotment Private Warrants”) at a purchase price of $0.93 per Over-Allotment Private Warrant in a private placement to the Holdings, generating gross proceeds of $247,500. Following the closing of the Initial Public Offering and underwriters’ over-allotment option, an amount of $128,397,500 from the net proceeds of the sale of the Units and Over-Allotment Units and a portion of the proceeds from the sale of the Private Warrants and Over-Allotment Private Warrants was placed in a trust account (the “Trust Account”) and was invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “ Investment Company Act Transaction costs related to the issuances described above amounted to $1,080,140, consisting of $500,000 of cash underwriting fees and $580,140 of other offering costs. The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account ($10.15 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The Public Shares subject to redemption was recorded at redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. Notwithstanding the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company. The Company will have 12 months, or August 13, 2022, from the closing of the Initial Public Offering to consummate an initial Business Combination. However, if the Company anticipates that it may not be able to consummate an initial Business Combination within 12 months, the Company’s insiders or their affiliates may, but are not obligated to, extend the period of time to consummate a Business Combination up to two times by an additional three months each time (for a total of up to 18 months, or February 13, 2023, to complete a Business Combination). If the Company is unable to consummate an initial Business Combination within the above time period, the Company will distribute the aggregate amount then on deposit in the Trust Account, pro rata to the Company’s public stockholders, by way of the redemption of their shares and thereafter cease all operations except for the purposes of winding up of the Company’s affairs. In such event, the warrants will expire and be worthless. The initial stockholders have agreed to waive their redemption rights with respect to any shares they own in connection with the consummation of the initial Business Combination, including their Founder Shares and Public Shares that they purchase during or after the offering, if any. In addition, the initial stockholders have agreed to waive their rights to liquidating distributions with respect to their Founder Shares if the Company fails to consummate an initial Business Combination within 18 months (assuming both of the three-month extensions were executed) from the closing of this offering. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering, they will be entitled to receive liquidating distributions with respect to such Public Shares if the Company fails to consummate an initial Business Combination within the required time period. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.15 per Public Share or (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay the Company’s taxes, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Going Concern Consideration As of December 31, 2021, the Company had $799,808 in cash held outside of the Trust Account and working capital of $988,186. The Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. In connection with our assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial Statements — Risks and Uncertainties Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements. The specific impact on the Company's financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements. |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s annual report on Form 10-K as filed with the SEC on March 29, 2022. The interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future periods. Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act Registration Statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited condensed consolidated financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Use of Estimates The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the reporting periods. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did no t have any cash equivalents as of September 30, 2022 and December 31, 2021. Cash and Investments Held in Trust Account The Company’s portfolio of investments is comprised of cash and U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in Net income from investments held in Trust Account in the accompanying statement of operations. The estimated fair values of investments held in the Trust Account are determined using available market information. At September 30, 2022, cash held in the Trust Account was $31,995,703 . As of December 31, 2021, investments held in the Trust Account were $128,421,215 . Common Stock Subject to Possible Redemption The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if any) is classified as liability instruments and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemption upon occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock feature certain redemption rights that is considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. On August 5, 2022, in connection with the Charter Amendment, 9,556,652 shares of Chardan common stock were redeemed, resulting in the distribution of $97,194,950 from the Trust Account to the redeeming stockholders. Following such redemptions, approximately $31,460,579 million remained in the Trust Account and 6,255,848 shares of Common Stock remained issued and outstanding . Accordingly, as of September 30, 2022 and December 31, 2021, 3,093,348 and 12,650,000 shares of common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity (deficit) section of the Company’s unaudited condensed consolidated balance sheets. Effective with the closing of the Initial Public Offering, the Company recognized the accretion from the initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and retained earnings (accumulated deficit). The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Increases or decreases in the carrying amount of redeemable common stock is affected by charges against additional paid -in capital and retained earnings (accumulated deficit). As of September 30, 2022 and December 31, 2021, the common stock reflected in the unaudited condensed consolidated balance sheets are reconciled in the following table: Gross proceeds $ 126,500,000 Less: Proceeds allocated to Public Warrants (15,180,000) Issuance costs allocated to common stock (933,989) Plus: Accretion of common stock to redemption amount 18,011,489 Common stock subject to possible redemption at December 31, 2021 128,397,500 Less: Redemption of common stock by stockholders (97,194,950) Plus: Accretion of common stock to redemption amount 503,812 Common stock subject to possible redemption at September 30, 2022 $ 31,706,363 Offering Costs associated with the Initial Public Offering The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A — Expenses of Offering. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Initial Public Offering. Offering costs directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction in equity. Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately. The Company incurred offering costs amounting to $1,080,140 , consisting of $500,000 of cash underwriting fees and $580,140 of other offering costs. The Company recorded $933,989 of offering costs as a reduction of temporary equity in connection with the redeemable common stock included in the Units. The Company recorded $127,354 as a reduction of permanent equity in connection with the Public Warrants included in the Units and immediately expensed $18,797 of offering costs in connection with the Private Warrants that were classified as liabilities. Warrant Liabilities The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants will be recognized as a non-cash gain or loss on the unaudited condensed consolidated statements of operations. The Company accounts for the Private Warrants issued concurrently in connection with the Initial Public Offering in accordance with ASC 815-40, under which the Private Warrants will not meet the criteria for equity classification and must be recorded as liabilities. As the Private Warrants meet the definition of a derivative as contemplated in ASC 815, the Private Warrants will be measured at fair value at inception and at each reporting date in accordance with ASC 820, Fair Value Measurement (“ASC 820”), with changes in fair value recognized in the unaudited condensed consolidated statements of operations in the period of change. The Public Warrants are not precluded from equity classification, and are accounted for as such on the date of issuance, and each balance sheet date thereafter. Income Taxes The Company complies with the accounting and reporting requirements of ASC 740, Income Taxes (“ASC 740”), which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the unaudited condensed consolidated financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740 prescribes a recognition threshold and a measurement attribute for the unaudited condensed consolidated financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. Net Income (Loss) Per Share of Common Stock The Company complies with accounting and disclosure requirements of ASC 260, Earnings Per Share. Net income (loss) per common share is computed by dividing net earnings by the weighted-average number of shares of common stock outstanding during the period. The Company has not considered the effect of the Warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 14,115,358 shares in the calculation of diluted income (loss) per share, since the exercise of the Warrants are contingent upon the occurrence of future events. The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts): For the Three Months For the Three Months For the Nine Months For the Nine Months Ended Ended Ended Ended September September 30, September 30, September 30, 30, 2022 2021 2022 2021 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ (1,919,615) $ 2,690,543 $ (1,298,108) $ 2,689,709 Denominator: Basic weighted average shares outstanding 10,307,037 9,453,125 13,957,179 5,008,929 Basic net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.54 Diluted weighted average shares outstanding 10,307,037 9,672,826 13,957,179 5,356,456 Diluted net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.50 Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. Fair Value of Financial Instruments The Company applies ASC 820, which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances. The carrying amounts reflected in the unaudited condensed consolidated balance sheet for current assets and current liabilities approximate fair value due to their short-term nature. Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. See Note 10 for additional information on assets and liabilities measured at fair value. Recent Accounting Standards Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements. | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act Registration Statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2021 and 2020. Investments Held in Trust Account The Company’s portfolio of investments is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in Net income (loss) from investments held in Trust Account in the accompanying statement of operations. The estimated fair values of investments held in the Trust Account are determined using available market information. Common Stock Subject to Possible Redemption The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from Equity." Common stock subject to mandatory redemption (if any) is classified as liability instruments and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemption upon occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock feature certain redemption rights that is considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of December 31, 2021, 12,650,000 shares of common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet. Effective with the closing of the Initial Public Offering, the Company recognized the accretion from the initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Increases or decreases in the carrying amount of redeemable common stock is affected by charges against additional paid in capital and accumulated deficit. As of December 31, 2021, the common stock reflected in the balance sheet is reconciled in the following table: Gross proceeds $ 126,500,000 Less: Proceeds allocated to Public Warrants (15,180,000) Issuance costs allocated to common stock (933,989) Plus: Accretion of carrying value to redemption value 18,011,489 Common stock subject to possible redemption $ 128,397,500 Offering Costs associated with the Initial Public Offering The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A — Expenses of Offering Warrant Liabilities The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815, Derivatives and Hedging For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants will be recognized as a non-cash gain or loss on the statements of operations. The Company accounts for the Private Warrants issued concurrently in connection with the Initial Public Offering in accordance with ASC 815-40, under which the Private Warrants will not meet the criteria for equity classification and must be recorded as liabilities. As the Private Warrants meet the definition of a derivative as contemplated in ASC 815, the Private Warrants will be measured at fair value at inception and at each reporting date in accordance with ASC 820, Fair Value Measurement The Public Warrants are not precluded from equity classification, and are accounted for as such on the date of issuance, and each balance sheet date thereafter. Income Taxes The Company complies with the accounting and reporting requirements of ASC Topic 740 — Income Taxes ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The effective tax rate is less than the U.S. statutory corporate tax rate of 21% because of the unrealized change in fair value of warrant liabilities, which was the biggest factor in net income and is not taxable. The Company had a loss from operations during the year ended December 31, 2021. The Company is subject to income tax examinations by major taxing authorities since inception. Net Income (Loss) Per Share of Common Stock Net income (loss) per common share is computed by dividing net earnings by the weighted-average number of shares of common stock outstanding during the period. The Company has not considered the effect of the Warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 14,115,358 shares in the calculation of diluted income per share, since the exercise of the Warrants are contingent upon the occurrence of future events. The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts): For the period from June 23, 2020 (inception) For the year through ended December 31, December 31, 2021 2020 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ 1,910,487 $ (1,000) Denominator: Basic weighted average shares outstanding 7,732,021 2,750,000 Basic net income (loss) per common share $ 0.25 $ (0.00) Diluted weighted average shares outstanding 7,991,952 2,750,000 Diluted net income (loss) per common share $ 0.24 $ (0.00) Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. Fair Value of Financial Instruments The Company applies ASC 820, which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances. The carrying amounts reflected in the balance sheet for current assets and current liabilities approximate fair value due to their short-term nature. Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. See Note 10 for additional information on assets and liabilities measured at fair value. Recent Accounting Standards In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if converted method for all convertible instruments. ASU 2020-06 is effective for the Company on January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective January 1, 2021 using the full retrospective method of transition. The adoption of ASU 2020-06 did not have a material impact on the financial statements for the fiscal year ended December 31, 2021. Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements. |
INITIAL PUBLIC OFFERING
INITIAL PUBLIC OFFERING | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
INITIAL PUBLIC OFFERING | ||
INITIAL PUBLIC OFFERING | NOTE 3. INITIAL PUBLIC OFFERING The Registration Statement for the Company’s Initial Public Offering was declared effective on August 10, 2021. On August 13, 2021, the Company completed its Initial Public Offering of 11,000,000 Units, at $10.00 per Unit, generating gross proceeds of $110,000,000 . Each Unit consisted of one Public Share, and three-quarters of one Public Warrant. Each Public Warrant entitles the holder to purchase one share of common stock at an exercise price of $11.50 per whole share (see Note 7). The Company had granted the underwriters in the Initial Public Offering a 45-day option to purchase up to 1,650,000 additional Units to cover over-allotments, if any (see Note 6). On August 18, 2021, the underwriters fully exercised the over-allotment option and purchased an additional 1,650,000 Over-Allotment Units, generating gross proceeds of $16,500,000 . | NOTE 3. INITIAL PUBLIC OFFERING The Registration Statement for the Company’s Initial Public Offering was declared effective on August 10, 2021. On August 13, 2021, the Company completed its Initial Public Offering of 11,000,000 Units, at $10.00 per Unit, generating gross proceeds of $110,000,000. Each Unit consisted of one Public Share, and three-quarters of one The Company had granted the underwriters in the Initial Public Offering a 45-day option to purchase up to 1,650,000 additional Units to cover over-allotments, if any (see Note 6). On August 18, 2021, the underwriters fully exercised the over-allotment option and purchased an additional 1,650,000 Over-Allotment Units, generating gross proceeds of $16,500,000. |
PRIVATE PLACEMENT
PRIVATE PLACEMENT | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
PRIVATE PLACEMENT | ||
PRIVATE PLACEMENT | NOTE 4. PRIVATE PLACEMENT Simultaneously with the closing of the Initial Public Offering, Holdings purchased an aggregate of 4,361,456 Private Warrants at a price of $0.93 per Private Warrant ($ 4,052,000 in the aggregate). Each Private Warrant entitles the holder to purchase one share of common stock at an exercise price of $11.50 per share (see Note 7). The proceeds from the Private Warrants were added to the proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within 12 months (or up to 18 months if the Company’s time to complete a Business Combination is extended), the proceeds of the sale of the Private Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Warrants will expire worthless. The Company classifies the outstanding Private Warrants as warrant liabilities on the unaudited condensed consolidated balance sheet in accordance with the guidance contained in ASC 815-40. Simultaneously with the closing of the exercise of the over-allotment option (see Note 6), the Company consummated the sale of 266,402 Over-Allotment Private Warrants at a purchase price of $0.93 per Over-Allotment Private Warrant in a private placement to Holdings, generating gross proceeds of $247,500 . | NOTE 4. PRIVATE PLACEMENT Simultaneously with the closing of the Initial Public Offering, Holdings purchased an aggregate of 4,361,456 private warrants at a price of $0.93 per Private Warrant ($4,052,000 in the aggregate). Each Private Warrant entitles the holder to purchase one share of common stock at an exercise price of $11.50 per share (see Note 7). The proceeds from the Private Warrants were added to the proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within 12 months (or up to 18 months if the Company’s time to complete a Business Combination is extended), the proceeds of the sale of the Private Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Warrants will expire worthless. The Company classifies the outstanding Private Warrants as warrant liabilities on the balance sheet in accordance with the guidance contained in ASC 815-40. Simultaneously with the closing of the exercise of the over-allotment option (see Note 6), the Company consummated the sale of 266,402 Over-Allotment Private Warrants at a purchase price of $0.93 per Over-Allotment Private Warrant in a private placement to Holdings, generating gross proceeds of $247,500. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
RELATED PARTY TRANSACTIONS | ||
RELATED PARTY TRANSACTIONS | NOTE 5. RELATED PARTY TRANSACTIONS Founder Shares On June 23, 2020, the Company issued 1,000,000 shares of common stock for an aggregate price of $25,000 (the “Founder Shares”). On March 4, 2021, the Company effected a 2.875-for-1 stock split of its issued and outstanding shares of common stock , resulting in an aggregate of 2,875,000 shares of common stock issued and outstanding. On August 10, 2021, the Company effectuated a 1.1-for-1 stock split , resulting in an aggregate of 3,162,500 shares of common stock outstanding. Shares and the associated amounts have been retroactively restated in these unaudited condensed consolidated financial statements to reflect the two stock splits. The Founder Shares include an aggregated of up to 412,500 shares of common stock subject to forfeiture by the initial stockholders to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the initial stockholders would collectively own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering. On August 18, 2021, the underwriters’ exercised the over-allotment option in full, thus these shares are no longer subject to forfeiture (see Note 6). With certain limited exceptions, 50% of the Founder Shares will not be transferred, assigned, sold or released from escrow until the earlier of (i) six months after the date of the consummation of a Business Combination (the “Escrow Period”) or (ii) the date on which the closing price of the Company’s shares of common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any ten trading days within any 30-trading day period commencing after the consummation of a Business Combination. The remaining 50% of the Founder Shares will not be transferred, assigned, sold or released from escrow until the expiration of the Escrow Period. In either case, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the stockholders having the right to exchange their shares of common stock for cash, securities or other property, and either (1) before the expiration of the Escrow Period, then the Founder Shares will be canceled, or (2) after the expiration of the Escrow Period, release the Founder Shares to the initial stockholders. Promissory Note - Related Party On July 23, 2020, the Sponsor agreed to loan the Company an aggregate of up to $250,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Promissory Note”). The promissory note was non-interest bearing, unsecured and was repaid at August 19, 2021. As of September 30, 2022 and December 31, 2021, there was no outstanding balance under the note. The Promissory Note is no longer available to the Company. On August 8, 2022, the Company notified the Trustee that it was extending the time available to the Company to consummate its initial business combination for an additional one (1) month from August 13, 2022 to September 13, 2022 (“Extension No. 1”). Extension No. 1 provides the Company with additional time to complete its proposed business combination with Dragonfly Energy Corp. (“Dragonfly”), a leader in energy storage and producer of deep cycle lithium-ion storage batteries. Extension No. 1 is the first of up to three (3) one-month extensions permitted under the Company’s Second A&R Charter. In connection with Extension No. 1, the Company’s officers, directors, initial stockholders and Chardan NexTech 2 Warrant Holdings, LLC (collectively, the “Insiders”), their affiliates or designees will deposit an aggregate of $ 200,000 (the “First Extension Payment”) into the Trust Account prior to August 13, 2022, on behalf of the Company. In connection with its First Extension Payment, the Insiders will receive a non-interest bearing, unsecured promissory note equal to the First Extension Payment that will not be repaid if the Company is unable to close a business combination, unless there are funds available outside its Trust Account to do so. On September 6, 2022, the Company notified Continental Stock Transfer & Trust Company that it was extending the time available to the Company to consummate its initial business combination for an additional one (1) month from September 13, 2022 to October 13, 2022 (“Extension No. 2”). Extension No. 2 provides the Company with additional time to complete its proposed business combination with Dragonfly. Extension No. 2 is the second of up to three (3) 1-month extensions permitted under the Company’s Second A&R Charter. In connection with Extension No. 2, the Company’s officers, directors, initial stockholders and Chardan NexTech 2 Warrant Holdings, LLC, their affiliates or designees will deposit an aggregate of $200,000 (the “Second Extension Payment”) into the Trust Account prior to September 12, 2022, on behalf of the Company. In connection with its Second Extension Payment, the Insiders will receive a non-interest bearing, unsecured promissory note equal to the Second Extension Payment that will not be repaid if the Company is unable to close a business combination, unless there are funds available outside its Trust Account to do so. As of September 30, 2022 , the Company had an outstanding balance in promissory note - related party of $400,000 in relation to Extension No 1 and Extension No 2. Administrative Support Agreement The Company entered into an agreement, commencing on the effective date of the Initial Public Offering, to pay an affiliate of the Sponsor a total of $10,000 per month for office space, administrative and support services. Upon completion of a Business Combination or liquidation, the Company will cease paying these monthly fees. As of September 30, 2022, the Company has not exercised its option to use such services. Related Party Loans In order to finance transaction costs in connection with an intended initial Business Combination, the Company’s initial stockholders, officers and directors or any of their respective affiliates may, but are not obligated to, loan the Company funds as may be required from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would be paid upon consummation of an initial Business Combination, without interest. Loans made by Chardan Capital Markets LLC or any of its related persons will not be convertible into any of the Company’s securities and Chardan Capital Markets LLC and its related persons will have no recourse with respect to their ability to convert their loans into any of the Company’s securities. As of September 30, 2022 and December 31, 2021, the Company had no working capital loans outstanding. | NOTE 5. RELATED PARTY TRANSACTIONS Founder Shares On June 23, 2020, the Company issued 1,000,000 shares of common stock for an aggregate price of $25,000 (the “Founder Shares”). On March 4, 2021, the Company effected a 2.875-for-1 stock split of its issued and outstanding shares of common stock, resulting in an aggregate of 2,875,000 shares of common stock issued and outstanding. On August 10, 2021, the Company effectuated a 1.1-for-1 stock split, resulting in an aggregate of 3,162,500 shares of common stock outstanding. Shares and the associated amounts have been retroactively restated in these financial statements to reflect the two stock splits. The Founder Shares include an aggregated of up to 412,500 shares of common stock subject to forfeiture by the initial stockholders to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the initial stockholders would collectively own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering. On August 18, 2021, the underwriters’ exercised the over-allotment option in full, thus these shares are no longer subject to forfeiture (see Note 6). With certain limited exceptions, of the Founder Shares will not be transferred, assigned, sold or released from escrow until the earlier of (i) six months after the date of the consummation of a Business Combination (the “Escrow Period”) or (ii) the date on which the closing price of the Company’s shares of common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any ten trading days within any 30-trading day period commencing after the consummation of a Business Combination. The remaining 50% of the Founder Shares will not be transferred, assigned, sold or released from escrow until the expiration of the Escrow Period. In either case, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the stockholders having the right to exchange their shares of common stock for cash, securities or other property, and either (1) before the expiration of the Escrow Period, then the Founder Shares will be canceled, or (2) after the expiration of the Escrow Period, release the Founder Shares to the initial stockholders. Promissory Note — Related Party On July 23, 2020, the Sponsor agreed to loan the Company an aggregate of up to $250,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the "Promissory Note"). The promissory note was non-interest bearing, unsecured and was repaid at August 19, 2021. As of December 31, 2021 and December 31, 2020, there was no outstanding balance under the note. The Company cannot make any additional draws under this promissory note. Administrative Support Agreement The Company entered into an agreement, commencing on the effective date of the Initial Public Offering, to pay an affiliate of the Sponsor a total of $10,000 per month for office space, administrative and support services. Upon completion of a Business Combination or liquidation, the Company will cease paying these monthly fees. To date, the Company has not exercised its option to use such services. Related Party Loans In order to finance transaction costs in connection with an intended initial Business Combination, the Company’s initial stockholders, officers and directors or any of their respective affiliates may, but are not obligated to, loan the Company funds as may be required from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would be paid upon consummation of an initial Business Combination, without interest. Loans made by Chardan Capital Markets, LLC or any of its related persons will not be convertible into any of the Company’s securities and Chardan Capital Markets, LLC and its related persons will have no recourse with respect to their ability to convert their loans into any of the Company’s securities. As of December 31, 2021 and December 31, 2020, the Company had no working capital loans outstanding. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | ||
COMMITMENTS AND CONTINGENCIES | NOTE 6. COMMITMENTS AND CONTINGENCIES Registration and Stockholder Rights Agreement The holders of the Founder Shares and Private Warrants (and any shares of common stock issuable upon the exercise of the Private Warrants) will be entitled to registration rights pursuant to an agreement to be signed prior to or on the effective date of the Initial Public Offering. The holders of a majority of these securities are entitled to make up to two demands that the Company register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority of the Private Warrants (and underlying securities) can elect to exercise these registration rights at any time after the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to Registration Statements filed subsequent to the consummation of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such Registration Statements. Underwriting Agreement The Company granted the underwriters a 45 -day option to purchase up to 1,650,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. On August 18, 2021, the underwriters fully exercised the over-allotment option to purchase an additional 1,650,000 Units at an offering price of $ 10.00 per Unit for an aggregate purchase price of $ 16,500,000 . In addition, the underwriters were paid a cash underwriting discount of $ 500,000 upon the closing of the Initial Public Offering. Business Combination Marketing Agreement The Company has engaged Chardan Capital Markets LLC as an advisor in connection with the Company’s Business Combination to assist the Company in holding meetings with the stockholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities, assist the Company in obtaining stockholder approval for the Business Combination and assist the Company with press releases and public filings in connection with the Business Combination. The Company will pay Chardan Capital Markets LLC a cash fee for such services upon the consummation of the Company’s initial Business Combination in an amount equal to, in the aggregate, 3.5% of the gross proceeds of the Initial Public Offering. As a result, Chardan Capital Markets LLC will not be entitled to such fee unless the Company consummates the initial Business Combination. Inflation Reduction Act of 2022 On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination. | NOTE 6. COMMITMENTS AND CONTINGENCIES Registration and Stockholder Rights Agreement The holders of the Founder Shares and Private Warrants (and any shares of common stock issuable upon the exercise of the Private Warrants) will be entitled to registration rights pursuant to an agreement to be signed prior to or on the effective date of the Initial Public Offering. The holders of a majority of these securities are entitled to make up to two demands that the Company register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority of the Private Warrants (and underlying securities) can elect to exercise these registration rights at any time after the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to Registration Statements filed subsequent to the consummation of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such Registration Statements. Underwriting Agreement The Company granted the underwriters a 45-day option to purchase up to 1,650,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. On August 18, 2021, the underwriters fully exercised the over-allotment option to purchase an additional 1,650,000 Units at an offering price of $10.00 per Unit for an aggregate purchase price of $16,500,000. In addition, the underwriters were paid a cash underwriting discount of $500,000 upon the closing of the Initial Public Offering. Business Combination Marketing Agreement The Company has engaged Chardan Capital Markets, LLC as an advisor in connection with the Company’s Business Combination to assist the Company in holding meetings with the stockholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities, assist the Company in obtaining stockholder approval for the Business Combination and assist the Company with press releases and public filings in connection with the Business Combination. The Company will pay Chardan Capital Markets, LLC a cash fee for such services upon the consummation of the Company’s initial Business Combination in an amount equal to, in the aggregate, 3.5% of the gross proceeds of the Initial Public Offering. As a result, Chardan Capital Markets, LLC will not be entitled to such fee unless the Company consummates the initial Business Combination. Related Party Extension Loans As discussed in Note 1, the Company may extend the period of time to consummate an initial Business Combination two times, for an additional three months each time (for a total of up to 18 months to complete a Business Combination). In order to extend the time available for the Company to consummate a Business Combination, the initial stockholders or their affiliates or designees must deposit into the Trust Account $1,265,000 ($0.10 per share, or an aggregate of $2,530,000) if extended for each of the full three months), on or prior to the date of the applicable deadline. Any such payments would be made in the form of a loan. The terms of the promissory note to be issued in connection with any such loans have not yet been negotiated. If the Company completes an initial Business Combination, the Company would repay such loaned amounts out of the proceeds of the Trust Account released to the Company. If the Company does not complete an initial Business Combination, the Company will not repay such loans. The initial stockholders and their affiliates or designees are not obligated to fund the Trust Account to extend the time for the Company to complete an initial Business Combination. |
WARRANTS
WARRANTS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
WARRANTS | ||
WARRANTS | NOTE 7. WARRANTS As of September 30, 2022 and December 31, 2021 there were 9,847,500 Public Warrants and 4,627,858 Private Warrants outstanding, respectively. Each whole Public Warrant will entitle the holder to purchase one share of common stock at an exercise price of $ 11.50 per whole share. Each of the Private Warrants is exercisable to purchase one share of common stock at a price of $ 11.50 per share, subject to adjustment. The proceeds from the sale of the Private Warrants were added to the net proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Warrants will be used to fund the redemption of the Public Shares (and the Private Warrants will expire worthless). The Warrants provide for a cashless exercise which the Company’s management determined to be a net settlement feature with no obligation to settle in cash. The net shares issued in a cashless exercise are based on the fair value of the Company’s common stock at the time the Warrants are exercised. Each Warrant shall, when countersigned by the Warrant Agent, entitle the Registered Holder to purchase from the Company the number of shares of common stock at $ 11.50 per share. The Public Warrants may only be exercised for a whole number of Warrant Shares by a Registered Holder. No fractional shares will be issued. A Warrant may be exercised only during the period (“Exercise Period”) commencing 30 days after the completion of the Company’s initial business combination and terminating at 5:00 p.m., New York City time, on the earlier to occur of (i) (A) five years following the completion of the Company’s initial business combination with respect to the Public Warrants, and (B) five years from the effective date of the Registration Statement with respect to the Private Warrants purchased by Chardan NexTech 2 Warrant Holdings LLC, provided that once the Private Warrants are not beneficially owned, directly or indirectly, by Chardan Capital Markets LLC or any of its related persons anymore, the Private Warrants may not be exercised five years following the completion of the Company’s initial business combination, and (ii) the date fixed for redemption of the Warrants as provided in Section 6 of this Warrant Agreement (“Expiration Date”). Except with respect to the right to receive the Redemption Price, each Warrant not exercised on or before the Expiration Date shall become void, and all rights thereunder and all rights shall cease at the close of business on the Expiration Date. The Company may extend the duration of the Warrants by delaying the Expiration Date; provided, however, that the Company (i) may not extend the duration of the Private Warrants by delaying the Expiration Date and (ii) will provide written notice of not less than 10 days to Registered Holders of such extension and that such extension shall be identical in duration among all of the then outstanding Warrants. The Company is not required to issue any fraction of a Warrant Share in connection with the exercise of Warrants, and in any case where the Registered Holder would be entitled under the terms of the Warrants to receive a fraction of a Warrant Share upon the exercise of such Registered Holder’s Warrants, issue or cause to be issued only the largest whole number of Warrant Shares issuable on such exercise (and such fraction of a Warrant Share will be disregarded); provided, that if more than one Warrant certificate is presented for exercise at the same time by the same Registered Holder, the number of whole Warrant Shares which shall be issuable upon the exercise thereof shall be computed on the basis of the aggregate number of Warrant Shares issuable on exercise of all such Warrants. The Private Warrants: (i) will be exercisable either for cash or on a cashless basis at the holders option and (ii) will not be redeemable by the Company, in either case as long as the Private Warrants are held by the initial purchasers or any of their permitted transferees (as prescribed in the Subscription Agreement). The Private Warrants may not be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of, the Private Warrants (or any securities underlying the Private Warrants) for a period of one hundred eighty ( 180 ) days following the effective date of the Registration Statement to anyone other than any member participating in the Public Offering and the officers or partners thereof, if all securities so transferred remain subject to the lock-up restriction for the remainder of the time period. All (and not less than all) of the outstanding Warrants may be redeemed, in whole and not in part, at the option of the Company, at any time from and after the Warrants become exercisable, and prior to their expiration, at the office of the Warrant Agent, at the price of $.01 per Warrant (“Redemption Price”); provided that the last sales price of the common stock has been equal to or greater than $ 16.00 per share (subject to adjustment for splits, dividends, recapitalizations and other similar events) (the “Redemption Trigger Price”), for any ten ( 10 ) trading days within a thirty ( 30 ) trading day period ending on the third business day prior to the date on which notice of redemption is given and provided further that there is a current Registration Statement in effect with respect to the shares of common stock underlying the Warrants for each day in the aforementioned 30 -day trading period and continuing each day thereafter until the Redemption Date. For avoidance of doubt, if and when the warrants become redeemable by the Company, the Company may exercise its redemption right, even if it is unable to register or qualify the Warrant Shares for sale under all applicable state securities laws. The Company accounts for the 4,627,858 Private Warrants issued in connection with the Initial Public Offering in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the Private Warrants do not meet the criteria for equity treatment thereunder, each Private Warrant must be recorded as a liability. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liabilities will be adjusted to its current fair value, with the change in fair value recognized in the Company’s statement of operations. The Company will reassess the classification at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification. The Public Warrants are not precluded from equity classification. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair value are not recognized as long as the contracts continue to be classified in equity. | NOTE 7. WARRANTS As of December 31, 2021 and December 31, 2020 there was 9,487,500 and no Public Warrants and 4,627,858 and no Private Warrants outstanding, respectively. Each whole Public Warrant will entitle the holder to purchase one share of common stock at an exercise price of $11.50 per whole share. Each of the Private Warrants is exercisable to purchase one share of common stock at a price of $11.50 per share, subject to adjustment. The proceeds from the sale of the Private Warrants were added to the net proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Warrants will be used to fund the redemption of the Public Shares (and the Private Warrants will expire worthless). The Warrants provide for a cashless exercise which the Company’s management determined to be a net settlement feature with no obligation to settle in cash. The net shares issued in a cashless exercise are based on the fair value of the Company’s common stock at the time the Warrants are exercised. Each Warrant shall, when countersigned by the Warrant Agent, entitle the Registered Holder to purchase from the Company the number of shares of common stock at $11.50 per share. The Public Warrants may only be exercised for a whole number of Warrant Shares by a Registered Holder. No fractional shares will be issued. A Warrant may be exercised only during the period (“Exercise Period”) commencing 30 days after the completion of the Company’s initial business combination and terminating at 5:00 p.m., New York City time, on the earlier to occur of (i) (A) five years following the completion of the Company’s initial business combination with respect to the Public Warrants, and (B) five years from the effective date of the Registration Statement with respect to the Private Warrants purchased by Chardan NexTech 2 Warrant Holdings LLC, provided that once the Private Warrants are not beneficially owned, directly or indirectly, by Chardan Capital Markets, LLC or any of its related persons anymore, the Private Warrants may not be exercised five years following the completion of the Company’s initial business combination, and (ii) the date fixed for redemption of the Warrants as provided in Section 6 of this Warrant Agreement (“Expiration Date”). Except with respect to the right to receive the Redemption Price, each Warrant not exercised on or before the Expiration Date shall become void, and all rights thereunder and all rights shall cease at the close of business on the Expiration Date. The Company may extend the duration of the Warrants by delaying the Expiration Date; provided, however, that the Company (i) may not extend the duration of the Private Warrants by delaying the Expiration Date and (ii) will provide written notice of not less than 10 days to Registered Holders of such extension and that such extension shall be identical in duration among all of the then outstanding Warrants. The Company is not required to issue any fraction of a Warrant Share in connection with the exercise of Warrants, and in any case where the Registered Holder would be entitled under the terms of the Warrants to receive a fraction of a Warrant Share upon the exercise of such Registered Holder’s Warrants, issue or cause to be issued only the largest whole number of Warrant Shares issuable on such exercise (and such fraction of a Warrant Share will be disregarded); provided, that if more than one Warrant certificate is presented for exercise at the same time by the same Registered Holder, the number of whole Warrant Shares which shall be issuable upon the exercise thereof shall be computed on the basis of the aggregate number of Warrant Shares issuable on exercise of all such Warrants. The Private Warrants: (i) will be exercisable either for cash or on a cashless basis at the holders option and (ii) will not be redeemable by the Company, in either case as long as the Private Warrants are held by the initial purchasers or any of their permitted transferees (as prescribed in the Subscription Agreement). The Private Warrants may not be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of, the Private Warrants (or any securities underlying the Private Warrants) for a period of one hundred eighty (180) days following the effective date of the Registration Statement to anyone other than any member participating in the Public Offering and the officers or partners thereof, if all securities so transferred remain subject to the lock-up restriction for the remainder of the time period. All (and not less than all) of the outstanding Warrants may be redeemed, in whole and not in part, at the option of the Company, at any time from and after the Warrants become exercisable, and prior to their expiration, at the office of the Warrant Agent, at the price of $.01 per Warrant (“Redemption Price”); provided that the last sales price of the common stock has been equal to or greater than $16.00 per share (subject to adjustment for splits, dividends, recapitalizations and other similar events) (the “Redemption Trigger Price”), for any ten (10) trading days within a thirty (30) trading day period ending on the third business day prior to the date on which notice of redemption is given and provided further that there is a current Registration Statement in effect with respect to the shares of common stock underlying the Warrants for each day in the aforementioned 30-day trading period and continuing each day thereafter until the Redemption Date. For avoidance of doubt, if and when the warrants become redeemable by the Company, the Company may exercise its redemption right, even if it is unable to register or qualify the Warrant Shares for sale under all applicable state securities laws. The Company accounts for the 4,627,858 Private Warrants issued in connection with the Initial Public Offering in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the private warrants do not meet the criteria for equity treatment thereunder, each private warrant must be recorded as a liability. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liabilities will be adjusted to its current fair value, with the change in fair value recognized in the Company’s statement of operations. The Company will reassess the classification at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification. The Public Warrants are not precluded from equity classification. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair value are not recognized as long as the contracts continue to be classified in equity. |
STOCKHOLDERS' EQUITY (DEFICIT)
STOCKHOLDERS' EQUITY (DEFICIT) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
STOCKHOLDERS' EQUITY (DEFICIT) | ||
STOCKHOLDERS' EQUITY (DEFICIT) | NOTE 8. STOCKHOLDERS’ EQUITY (DEFICIT) Preferred Stock— The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2022 and December 31, 2021, the Company had no issued or outstanding shares of preferred stock. Common stock —The Company is authorized to issue 50,000,000 shares of common stock with a par value of $0.0001 per share. On August 5, 2022, in connection with the Charter Amendment, 9,556,652 shares of Chardan common stock were redeemed by certain stockholders. As such, on September 30, 2022 and December 31, 2021, there were 6,255,848 and 15,812,500 shares of common stock issued and outstanding , including 3,093,348 and 12,650,000 shares of common stock subject to possible redemption, respectively. Of the 15,812,500 shares of common stock outstanding, up to 412,500 shares were subject to forfeiture to the Company by the initial stockholders for no consideration to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the initial stockholders would collectively own 20% of the Company’s issued and outstanding common stock after the Initial Public Offering. On August 16, 2021, the underwriters’ exercised the over-allotment option in full (see Note 6), thus these shares are no longer subject to forfeiture. Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Unless specified in the Amended and Restated Certificate of Incorporation or bylaws, or as required by applicable law or stock exchange rules, the affirmative vote of a majority of the Company’s shares of common stock that are voted is required to approve any such matter voted on by the Company’s stockholders (other than the election of directors). | NOTE 8. STOCKHOLDERS’ EQUITY (DEFICIT) Preferred stock — December 31, 2021 and December 31, 2020 Common stock — of the Company’s issued and outstanding common stock after the Initial Public Offering. On August 16, 2021, the underwriters’ exercised the over-allotment option in full (see Note 6), thus these shares are no longer subject to forfeiture. Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Unless specified in the Amended and Restated Certificate of Incorporation or bylaws, or as required by applicable law or stock exchange rules, the affirmative vote of a majority of the Company’s shares of common stock that are voted is required to approve any such matter voted on by the Company’s stockholders (other than the election of directors). |
INCOME TAXES
INCOME TAXES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
INCOME TAXES | NOTE 9. INCOME TAXES The Company’s effective tax rate for the three and nine months ended September 30, 2022 was (2.1)% and (3.1)% . The effective tax rate for the three and nine months ended September 30, 2021 was 0.0% .The Company’s effective tax rate differs from the statutory income tax rate of 21% primarily due to the recognition of gains or losses from the changes in the fair value of warrant liabilities and unrealized gains on the investments held in the Trust Account, which are not recognized for tax purposes. The Company has historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to income or loss for the reporting period. The Company has used a discrete effective tax rate method to calculate taxes for the three and nine months ended September 30, 2022. The Company believes that, at this time, the use of the discrete method for the three and nine months ended September 30, 2022 is more appropriate than the estimated annual effective tax rate method as the estimated annual effective tax rate method is not reliable due to a high degree of uncertainty in estimating annual pretax earnings. | NOTE 9. INCOME TAX The Company’s net deferred tax assets (liabilities) as of December 31, 2021 is as follows: Deferred tax assets: Start-up costs $ 61,335 Net operating loss carryforwards 298,437 Total deferred tax assets 359,772 Valuation allowance (354,792) Deferred tax liabilities: Unrealized gain on investments (4,980) Total deferred tax liabilities (4,980) Deferred tax assets, net of allowance $ — The income tax provision for the year ended December 31, 2021 consists of the following: Federal Current $ — Deferred (354,792) State Current — Deferred — Change in valuation allowance 354,792 Income tax provision $ — As of December 31, 2021, the Company has available U.S. federal operating loss carry forwards of approximately $357,674 that may be carried forward indefinitely. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies in making this assessment. After consideration of all the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the year ended December 31, 2021, the valuation allowance was $354,792. A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2021 is as follows: Statutory federal income tax rate 21.0 % State taxes, net of federal tax benefit 0.0 % Change in fair value of derivative warrant liabilities (40.8) % Non-deductible transaction costs 0.2 % Change in valuation allowance 19.6 % Income tax provision 0.0 % Deferred tax assets were deemed to be de minimis as of December 31, 2020. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
FAIR VALUE MEASUREMENTS | ||
FAIR VALUE MEASUREMENTS | NOTE 10. FAIR VALUE MEASUREMENTS The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value: Amount at Description Fair Value Level 1 Level 2 Level 3 September 30, 2022 Liabilities Warrant liabilities – Private Warrants $ 1,989,979 $ — $ — $ 1,989,979 The remaining balance held in the Trust Account of September 30, 2022 was held in cash. Amount at Description Fair Value Level 1 Level 2 Level 3 December 31, 2021 Assets Investments held in Trust Account: Money Market investments $ 128,421,215 $ 128,421,215 $ — $ — Liabilities Warrant liabilities – Private Warrants $ 2,036,258 $ — $ — $ 2,036,258 The Company utilizes a Black-Scholes method to value the Private Warrants at each reporting period, with changes in fair value recognized in the statement of operations. The estimated fair value of the warrant liabilities is determined using Level 3 inputs. Inherent in a Black-Scholes model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the Private Warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero. The following table provides the significant inputs to the Black-Scholes method for the fair value of the Private Warrants: As of As of September 30, December 31, 2022 2021 Common stock price $ 10.29 $ 9.97 Exercise price $ 11.50 $ 11.50 Dividend yield — % — % Term to Business Combination (years) 3.86 4.61 Volatility 3.3 % 9.1 % Risk-free rate 4.17 % 1.20 % Fair value $ 0.43 $ 0.44 The following table provides a summary of the changes in the fair value of the Company’s Level 3 financial instruments that are measured at fair value on a recurring basis: Fair value as of June 23, 2020 (inception) $ — Initial measurement 5,553,429 Change in valuation inputs or other assumptions (3,517,171) Fair value at December 31, 2021 $ 2,036,258 Change in valuation inputs or other assumptions (1,434,636) Fair value at March 31, 2022 $ 601,622 Change in valuation inputs or other assumptions 277,671 Fair value at June 30, 2022 $ 879,293 Change in valuation inputs or other assumptions 1,110,686 Fair value at September 30, 2022 $ 1,989,979 The Company recognized a gain (loss) in connection with changes in the fair value of warrant liabilities of $(1,110,686) and $4,072,514 within change in fair value of warrant liabilities in the unaudited condensed consolidated statement of operations for the three months ended September 30, 2022 and 2021. The Company recognized a gain in connection with changes in the fair value of warrant liabilities of $46,279 and $4,072,514 within change in fair value of warrant liabilities in the unaudited condensed consolidated statement of operations for the nine months ended September 30, 2022 and 2021. | NOTE 10. FAIR VALUE MEASUREMENTS The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value: Amount at Description Fair Value Level 1 Level 2 Level 3 December 31, 2021 Assets Investments held in Trust Account: Money Market investments $ 128,421,215 $ 128,421,215 $ — $ — Liabilities Warrant liabilities – Private warrants $ 2,036,258 $ — $ — $ 2,036,258 The Company did not have any assets or liabilities measured at fair value as of December 31, 2020. The Company utilizes a Black-Scholes method to value the Private Warrants at each reporting period, with changes in fair value recognized in the statement of operations. The estimated fair value of the warrant liabilities is determined using Level 3 inputs. Inherent in a Black-Scholes model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the Private Warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero. The following table provides the significant inputs to the Black-Scholes method for the fair value of the Private Warrants: Initial As of December 31, Measurement 2021 Stock price $ 10.00 $ 9.97 Strike price $ 11.50 $ 11.50 Dividend yield — % — % Remaining term (in years) 5.00 4.61 Volatility 19.0 % 9.1 % Risk-free rate 0.81 % 1.20 % Fair value of warrants $ 1.20 $ 0.44 The following table provides a summary of the changes in the fair value of the Company’s Level 3 financial instruments that are measured at fair value on a recurring basis: Warrant Liabilities Fair value as of June 23, 2020 (inception) — Initial measurement 5,553,429 Change in valuation inputs or other assumptions (3,517,171) Fair value as of December 31, 2021 2,036,258 Transfers to/from Levels 1, 2, and 3 are recognized the beginning of the reporting period in which a change in valuation technique or methodology occurs. There were no transfers in or out of Level 3 from other levels in the fair value hierarchy for the period from June 23, 2020 (inception) through December 31, 2021. The Company recognized gains in connection with changes in the fair value of warrant liabilities of $3,517,171 within change in fair value of warrant liabilities in the Statements of Operations for the year ended December 31, 2021 and $0 for the period from June 23, 2020 (inception) through December 31, 2020. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
SUBSEQUENT EVENTS | ||
SUBSEQUENT EVENTS | NOTE 11. SUBSEQUENT EVENTS The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed consolidated financial statements were issued. Based upon this review, except as noted below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed consolidated financial statements. Business Combination Closing On October 7, 2022 (the “Closing Date”), Dragonfly Energy Holdings Corp., a Delaware corporation (f/k/a Chardan NexTech Acquisition 2 Corp. (“Chardan”)), consummated the previously announced merger pursuant to the Business Combination Agreement, dated May 15, 2022, as amended by the Amendment to the Business Combination Agreement, dated July 12, 2022, by and among Chardan, Bronco Merger Sub, Inc., a Nevada corporation and a wholly owned subsidiary of Chardan (“Merger Sub”), and Dragonfly Energy Corp., a Nevada corporation (“Legacy Dragonfly”). Chardan’s stockholders approved the Transactions (as defined below) at a special meeting of stockholders held on October 6, 2022. Pursuant to the Business Combination Agreement, Merger Sub merged with and into Legacy Dragonfly (the “Merger” and, together with the other transactions contemplated by the Business Combination Agreement, the “Transactions”), with Legacy Dragonfly continuing as the surviving corporation in the Merger and a wholly-owned subsidiary of Chardan. On the Closing Date, the registrant changed its name from Chardan NexTech Acquisition 2 Corp. to Dragonfly Energy Holdings Corp. Merger Consideration At the Closing, by virtue of the Merger and without any action on the part of Chardan, Merger Sub, Legacy Dragonfly or the holders of any of the following securities: (a) Each outstanding share of Legacy Dragonfly’s common stock, par value $0.001 per share(“Legacy Dragonfly Common Stock”), converted into (i) a certain number of shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”), totaling 41,500,000 shares (including the conversion and assumption of the options to purchase shares of Legacy Dragonfly Common Stock described below), which is equal to (x) $415,000,000 divided by (y) $10.00 (the “Merger Consideration”) and (ii) the contingent right to receive Earnout Shares (as defined below) (which may be zero ) following the Closing. (b) Each option to purchase shares of Legacy Dragonfly Common Stock, was assumed and converted into options to acquire shares of Common Stock. The portion of the Merger Consideration reflecting the conversion of the Legacy Dragonfly options was calculated assuming that all the Company options are net-settled. With respect to the Company options received in respect of Legacy Dragonfly options that are outstanding immediately prior to the Closing and cash exercised after the Closing, up to 627,498 additional shares of Common Stock may be issued. At the Closing, approximately 38,576,648 shares of the Merger Consideration was allocated to holders of outstanding shares of Legacy Dragonfly Common Stock and 3,664,975 shares of the Merger Consideration was allocated to holders of the assumed Legacy Dragonfly options. Earnout Merger Consideration In addition to the Merger Consideration set forth above, additional contingent shares (“Earnout Shares”) may be payable to each holder of shares of Legacy Dragonfly Common Stock in the Merger, subject to achieving specified milestones, up to an aggregate of 40,000,000 additional shares of Common Stock in three tranches. The first tranche of 15,000,000 shares is issuable if the Company’s 2023 total audited revenue is equal to or greater than $250 million and the Company’s 2023 audited operating income is equal to or greater than $35 million. The second tranche of 12,500,000 shares is issuable upon achieving a volume-weighted average trading price threshold of Common Stock over any 20 Trading Days (which may or may not be consecutive) within any 30 consecutive Trading Day period of at least $22.50 on or prior to December 31, 2026, and the third tranche of 12,500,000 shares is issuable upon achieving a volume-weighted average trading price threshold of Common Stock over any 20 Trading Days (which may or may not be consecutive) within any 30 consecutive Trading Day period of at least $32.50 on or prior to December 31, 2028. To the extent not previously earned, the second tranche is issuable if the $ 32.50 price target is achieved by December 31, 2028. Upon the consummation of a change of control transaction during either the second milestone earnout period or the third milestone earnout period, any earnout milestone with respect to such earnout period that has not yet been achieved shall automatically be deemed to have been achieved if a change of control transaction is announced with an imputed share price of Common Stock of at least $22.50 on or prior to the end of second earnout period or $32.50 on prior to the third earnout period. A description of the Merger and the terms of the Business Combination Agreement are included in the proxy statement/prospectus, dated September 16, 2022 (the “Proxy Statement/Prospectus”) as filed with the SEC in the section entitled “Proposal No. 1 — The Business Combination Proposal” of the Proxy Statement/Prospectus. PIPE Investment Pursuant to the subscription agreement, dated as of May 15, 2022 (the “Subscription Agreement”), by and between Chardan and Chardan NexTech Investments 2 LLC (or an affiliate thereof if assigned pursuant to the Subscription Agreement, the “Sponsor”), the Sponsor agreed to purchase, and Chardan agreed to sell to the Sponsor, an aggregate of 500,000 shares of Chardan common stock (“Chardan Common Stock”) for gross proceeds to Chardan of $5 million in a private placement. On September 28, 2022, the Sponsor and Chardan Capital Markets LLC, a New York limited liability company (“CCM LLC”), entered into an assignment, assumption and joinder agreement, pursuant to which the Sponsor assigned all of the Sponsor’s rights, benefits and obligations under the Subscription Agreement to CCM LLC. Under the Subscription Agreement, the number of shares of Chardan Common Stock that CCM LLC was obligated to purchase was to be reduced by the number of shares of Chardan Common Stock that CCM LLC purchased in the open market, provided that such purchased shares were not redeemed, and the aggregate price to be paid under the Subscription Agreement was to be reduced by the amount of proceeds received by the Company because such shares are not redeemed (the “Offset”). During the week of September 26, 2022 CCM LLC acquired in the open market in total 485,000 shares of Common Stock at purchase prices per share ranging from $10.33 to $10.38 (such shares, the “Purchased Shares”). The Purchased Shares were not redeemed, resulting in (i) the Company’s receipt of $5,016,547 from the Trust Account (based on a per share redemption price of $10.34 ) and (ii) a reduction in CCM LLC’s purchase commitment under the Subscription Agreement to zero in accordance with the Offset. Debt Financing Loan Agreement Consistent with the previously disclosed commitment letter (the “Debt Commitment Letter”) between Chardan and Legacy Dragonfly, CCM Investments 5 LLC, an affiliate of CCM LLC (“CCM 5”, and in connection with the Term Loan, the “Chardan Lender”), and EICF Agent LLC (“EIP” and, collectively with the Chardan Lender, the “Initial Term Loan Lenders”), in connection with the Closing, Chardan, Legacy Dragonfly and the Initial Term Loan Lenders entered into the Term Loan, Guarantee and Security Agreement (the “Term Loan Agreement”) setting forth the terms of a senior secured term loan facility in an aggregate principal amount of $75 million (the “Term Loan”). The Chardan Lender backstopped its commitment under the Debt Commitment Letter by entering into a backstop commitment letter, dated as of May 20, 2022 (the “Backstop Commitment Letter”), with a certain third-party financing source (the “Backstop Lender” and collectively with EIP, the “Term Loan Lenders”), pursuant to which the Backstop Lender committed to purchase from the Chardan Lender the aggregate amount of the Term Loan held by the Chardan Lender (the “Backstopped Loans”) immediately following the issuance of the Term Loan on the Closing Date. Pursuant to an assignment agreement, the Backstopped Loans were assigned by CCM 5 to the Backstop Lender on the Closing Date. Pursuant to the terms of the Term Loan Agreement, the Term Loan was advanced in one tranche on the Closing Date. The proceeds of the Term Loan were used (i) to refinance on the Closing Date prior indebtedness, (ii) to support the Transaction under the Business Combination Agreement, (iii) for working capital purposes and other corporate purposes, and (iv) to pay any fees associated with transactions contemplated under the Term Loan Agreement and the other loan documents entered into in connection therewith, including the transactions described in the foregoing clauses (i) and (ii) and fees and expenses related to the business combination. The Term Loan amortizes in the amount of 5% per annum beginning 24 months after the Closing Date and matures on the fourth anniversary of the Closing Date (“Maturity Date”). The Term Loan accrues interest (i) until April 1, 2023, at a per annum rate equal to the adjusted Secured Overnight Financing Rate (“SOFR”) plus a margin equal to 13.5% , of which 7% will be payable in cash and 6.5% will be paid in-kind, (ii) thereafter until October 1, 2024, at a per annum rate equal to adjusted SOFR plus 7% payable in cash plus an amount ranging from 4.5% to 6.5% , depending on the senior leverage ratio of the consolidated company, which will be paid-in-kind and (iii) at all times thereafter, at a per annum rate equal to adjusted SOFR plus a margin ranging from 11.5% to 13.5% payable in cash, depending on the senior leverage ratio of the consolidated company. In each of the foregoing cases, adjusted SOFR will be no less than 1% . Warrant Agreements In connection with the entry into the Term Loan Agreement, and as a required term and condition thereof, the Company entered into (i) the penny warrant to issue penny warrants to the Term Loan Lenders under the Term Loan exercisable to purchase 2,593,056 shares, which is equal to approximately 5.6% of Common Stock calculated on an agreed fully diluted outstanding basis on the issuance date (the “Penny Warrants”) and (ii) the $10 warrant to issue warrants to the Term Loan Lenders under the Term Loan exercisable to purchase 1,600,000 shares of Common Stock at $10 per share (the “ $10 Warrants” and, together with the Penny Warrants, the “Warrants”). The additional shares of Common Stock will dilute the pro forma ownership of the other Company stockholders of proportionately. ChEF Equity Facility Consistent with the previously disclosed equity facility letter agreement between Legacy Dragonfly and CCM 5, the Company and CCM LLC entered into a purchase agreement (the “Purchase Agreement”) and a Registration Rights Agreement (the “ChEF RRA”) in connection with the Closing. Pursuant to the Purchase Agreement, the Company has the right to sell to CCM LLC an amount of shares of Common Stock, up to a maximum aggregate purchase price of $ 150 million, from time to time, pursuant to the terms of the Purchase Agreement. In addition, the Company appointed LifeSci Capital, LLC as “qualified independent underwriter” with respect to the transactions contemplated by the Purchase Agreement. Pursuant to, on the terms of, and subject to the satisfaction of the conditions in the Purchase Agreement, including the filing and effectiveness of a registration statement registering the resale by CCM LLC of the shares of Common Stock issued to it under the Purchase Agreement, the Company will have the right from time to time at its option to direct CCM LLC to purchase up to a specified maximum amount of shares of Common Stock, up to a maximum aggregate purchase price of $ 150 million, over the term of the equity facility (“ChEF Equity Facility”). Other Agreements Related Agreements Concurrently with the execution of the Business Combination Agreement, Chardan, Legacy Dragonfly and the Sponsor entered into a sponsor support agreement. Indemnification of Directors and Officers On the Closing Date, in connection with the consummation of the Transactions, the Company entered into indemnification agreements with each of its directors and executive officers. These agreements, among other things, will require the Company to indemnify the Company’s directors and executive officers for certain expenses, including attorneys’ fees, judgments and fines incurred by a director or executive officer in any action or proceeding arising out of their services as one of the Company’s directors or executive officers or any other company or enterprise to which the person provides services at the Company’s request. Registration Rights Agreement On the Closing Date, in connection with the consummation of the Transactions, the Company entered into the Amended and Restated Registration Rights Agreement with the Sponsor, Chardan’s officers, directors, initial stockholders, CCM LLC and Warrant Holdings, an affiliate of the Sponsor (collectively, the “Insiders”) and certain Legacy Dragonfly stockholders. | NOTE 11. SUBSEQUENT EVENTS The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s annual report on Form 10-K as filed with the SEC on March 29, 2022. The interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future periods. | Basis of Presentation The accompanying financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. |
Emerging Growth Company | Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act Registration Statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited condensed consolidated financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. | Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act Registration Statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. |
Use of Estimates | Use of Estimates The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the reporting periods. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did no t have any cash equivalents as of September 30, 2022 and December 31, 2021. | Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2021 and 2020. |
Investments Held in Trust Account | Investments Held in Trust Account The Company’s portfolio of investments is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in Net income (loss) from investments held in Trust Account in the accompanying statement of operations. The estimated fair values of investments held in the Trust Account are determined using available market information. | |
Common Stock Subject to Possible Redemption | Common Stock Subject to Possible Redemption The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if any) is classified as liability instruments and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemption upon occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock feature certain redemption rights that is considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. On August 5, 2022, in connection with the Charter Amendment, 9,556,652 shares of Chardan common stock were redeemed, resulting in the distribution of $97,194,950 from the Trust Account to the redeeming stockholders. Following such redemptions, approximately $31,460,579 million remained in the Trust Account and 6,255,848 shares of Common Stock remained issued and outstanding . Accordingly, as of September 30, 2022 and December 31, 2021, 3,093,348 and 12,650,000 shares of common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity (deficit) section of the Company’s unaudited condensed consolidated balance sheets. Effective with the closing of the Initial Public Offering, the Company recognized the accretion from the initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and retained earnings (accumulated deficit). The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Increases or decreases in the carrying amount of redeemable common stock is affected by charges against additional paid -in capital and retained earnings (accumulated deficit). As of September 30, 2022 and December 31, 2021, the common stock reflected in the unaudited condensed consolidated balance sheets are reconciled in the following table: Gross proceeds $ 126,500,000 Less: Proceeds allocated to Public Warrants (15,180,000) Issuance costs allocated to common stock (933,989) Plus: Accretion of common stock to redemption amount 18,011,489 Common stock subject to possible redemption at December 31, 2021 128,397,500 Less: Redemption of common stock by stockholders (97,194,950) Plus: Accretion of common stock to redemption amount 503,812 Common stock subject to possible redemption at September 30, 2022 $ 31,706,363 | Common Stock Subject to Possible Redemption The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from Equity." Common stock subject to mandatory redemption (if any) is classified as liability instruments and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemption upon occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock feature certain redemption rights that is considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of December 31, 2021, 12,650,000 shares of common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet. Effective with the closing of the Initial Public Offering, the Company recognized the accretion from the initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Increases or decreases in the carrying amount of redeemable common stock is affected by charges against additional paid in capital and accumulated deficit. As of December 31, 2021, the common stock reflected in the balance sheet is reconciled in the following table: Gross proceeds $ 126,500,000 Less: Proceeds allocated to Public Warrants (15,180,000) Issuance costs allocated to common stock (933,989) Plus: Accretion of carrying value to redemption value 18,011,489 Common stock subject to possible redemption $ 128,397,500 |
Offering Costs associated with the Initial Public Offering | Offering Costs associated with the Initial Public Offering The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A — Expenses of Offering. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Initial Public Offering. Offering costs directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction in equity. Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately. The Company incurred offering costs amounting to $1,080,140 , consisting of $500,000 of cash underwriting fees and $580,140 of other offering costs. The Company recorded $933,989 of offering costs as a reduction of temporary equity in connection with the redeemable common stock included in the Units. The Company recorded $127,354 as a reduction of permanent equity in connection with the Public Warrants included in the Units and immediately expensed $18,797 of offering costs in connection with the Private Warrants that were classified as liabilities. | Offering Costs associated with the Initial Public Offering The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A — Expenses of Offering |
Warrant Liabilities | Warrant Liabilities The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants will be recognized as a non-cash gain or loss on the unaudited condensed consolidated statements of operations. The Company accounts for the Private Warrants issued concurrently in connection with the Initial Public Offering in accordance with ASC 815-40, under which the Private Warrants will not meet the criteria for equity classification and must be recorded as liabilities. As the Private Warrants meet the definition of a derivative as contemplated in ASC 815, the Private Warrants will be measured at fair value at inception and at each reporting date in accordance with ASC 820, Fair Value Measurement (“ASC 820”), with changes in fair value recognized in the unaudited condensed consolidated statements of operations in the period of change. The Public Warrants are not precluded from equity classification, and are accounted for as such on the date of issuance, and each balance sheet date thereafter. | Warrant Liabilities The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815, Derivatives and Hedging For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants will be recognized as a non-cash gain or loss on the statements of operations. The Company accounts for the Private Warrants issued concurrently in connection with the Initial Public Offering in accordance with ASC 815-40, under which the Private Warrants will not meet the criteria for equity classification and must be recorded as liabilities. As the Private Warrants meet the definition of a derivative as contemplated in ASC 815, the Private Warrants will be measured at fair value at inception and at each reporting date in accordance with ASC 820, Fair Value Measurement The Public Warrants are not precluded from equity classification, and are accounted for as such on the date of issuance, and each balance sheet date thereafter. |
Income Taxes | Income Taxes The Company complies with the accounting and reporting requirements of ASC 740, Income Taxes (“ASC 740”), which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the unaudited condensed consolidated financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740 prescribes a recognition threshold and a measurement attribute for the unaudited condensed consolidated financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. | Income Taxes The Company complies with the accounting and reporting requirements of ASC Topic 740 — Income Taxes ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The effective tax rate is less than the U.S. statutory corporate tax rate of 21% because of the unrealized change in fair value of warrant liabilities, which was the biggest factor in net income and is not taxable. The Company had a loss from operations during the year ended December 31, 2021. The Company is subject to income tax examinations by major taxing authorities since inception. |
Net Income (Loss) Per Share of Common Stock | Net Income (Loss) Per Share of Common Stock The Company complies with accounting and disclosure requirements of ASC 260, Earnings Per Share. Net income (loss) per common share is computed by dividing net earnings by the weighted-average number of shares of common stock outstanding during the period. The Company has not considered the effect of the Warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 14,115,358 shares in the calculation of diluted income (loss) per share, since the exercise of the Warrants are contingent upon the occurrence of future events. The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts): For the Three Months For the Three Months For the Nine Months For the Nine Months Ended Ended Ended Ended September September 30, September 30, September 30, 30, 2022 2021 2022 2021 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ (1,919,615) $ 2,690,543 $ (1,298,108) $ 2,689,709 Denominator: Basic weighted average shares outstanding 10,307,037 9,453,125 13,957,179 5,008,929 Basic net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.54 Diluted weighted average shares outstanding 10,307,037 9,672,826 13,957,179 5,356,456 Diluted net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.50 | Net Income (Loss) Per Share of Common Stock Net income (loss) per common share is computed by dividing net earnings by the weighted-average number of shares of common stock outstanding during the period. The Company has not considered the effect of the Warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 14,115,358 shares in the calculation of diluted income per share, since the exercise of the Warrants are contingent upon the occurrence of future events. The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts): For the period from June 23, 2020 (inception) For the year through ended December 31, December 31, 2021 2020 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ 1,910,487 $ (1,000) Denominator: Basic weighted average shares outstanding 7,732,021 2,750,000 Basic net income (loss) per common share $ 0.25 $ (0.00) Diluted weighted average shares outstanding 7,991,952 2,750,000 Diluted net income (loss) per common share $ 0.24 $ (0.00) |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company applies ASC 820, which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances. The carrying amounts reflected in the unaudited condensed consolidated balance sheet for current assets and current liabilities approximate fair value due to their short-term nature. Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. See Note 10 for additional information on assets and liabilities measured at fair value. | Fair Value of Financial Instruments The Company applies ASC 820, which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances. The carrying amounts reflected in the balance sheet for current assets and current liabilities approximate fair value due to their short-term nature. Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. See Note 10 for additional information on assets and liabilities measured at fair value. |
Recent Accounting Standards | Recent Accounting Standards Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements. | Recent Accounting Standards In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if converted method for all convertible instruments. ASU 2020-06 is effective for the Company on January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective January 1, 2021 using the full retrospective method of transition. The adoption of ASU 2020-06 did not have a material impact on the financial statements for the fiscal year ended December 31, 2021. Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements. |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Schedule of reconciliation of common stock reflected in the condensed balance sheet | Gross proceeds $ 126,500,000 Less: Proceeds allocated to Public Warrants (15,180,000) Issuance costs allocated to common stock (933,989) Plus: Accretion of common stock to redemption amount 18,011,489 Common stock subject to possible redemption at December 31, 2021 128,397,500 Less: Redemption of common stock by stockholders (97,194,950) Plus: Accretion of common stock to redemption amount 503,812 Common stock subject to possible redemption at September 30, 2022 $ 31,706,363 | As of December 31, 2021, the common stock reflected in the balance sheet is reconciled in the following table: Gross proceeds $ 126,500,000 Less: Proceeds allocated to Public Warrants (15,180,000) Issuance costs allocated to common stock (933,989) Plus: Accretion of carrying value to redemption value 18,011,489 Common stock subject to possible redemption $ 128,397,500 |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | For the Three Months For the Three Months For the Nine Months For the Nine Months Ended Ended Ended Ended September September 30, September 30, September 30, 30, 2022 2021 2022 2021 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ (1,919,615) $ 2,690,543 $ (1,298,108) $ 2,689,709 Denominator: Basic weighted average shares outstanding 10,307,037 9,453,125 13,957,179 5,008,929 Basic net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.54 Diluted weighted average shares outstanding 10,307,037 9,672,826 13,957,179 5,356,456 Diluted net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.50 | For the period from June 23, 2020 (inception) For the year through ended December 31, December 31, 2021 2020 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ 1,910,487 $ (1,000) Denominator: Basic weighted average shares outstanding 7,732,021 2,750,000 Basic net income (loss) per common share $ 0.25 $ (0.00) Diluted weighted average shares outstanding 7,991,952 2,750,000 Diluted net income (loss) per common share $ 0.24 $ (0.00) |
INCOME TAX (Tables)
INCOME TAX (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
INCOME TAXES | |
Schedule of net deferred tax assets (liabilities) | The Company’s net deferred tax assets (liabilities) as of December 31, 2021 is as follows: Deferred tax assets: Start-up costs $ 61,335 Net operating loss carryforwards 298,437 Total deferred tax assets 359,772 Valuation allowance (354,792) Deferred tax liabilities: Unrealized gain on investments (4,980) Total deferred tax liabilities (4,980) Deferred tax assets, net of allowance $ — |
Schedule of income tax provision | The income tax provision for the year ended December 31, 2021 consists of the following: Federal Current $ — Deferred (354,792) State Current — Deferred — Change in valuation allowance 354,792 Income tax provision $ — |
Schedule of reconciliation of the federal income tax rate to the Company's effective tax rate | A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2021 is as follows: Statutory federal income tax rate 21.0 % State taxes, net of federal tax benefit 0.0 % Change in fair value of derivative warrant liabilities (40.8) % Non-deductible transaction costs 0.2 % Change in valuation allowance 19.6 % Income tax provision 0.0 % |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
FAIR VALUE MEASUREMENTS | ||
Schedule of financial liabilities that are measured at fair value on a recurring basis | Amount at Description Fair Value Level 1 Level 2 Level 3 September 30, 2022 Liabilities Warrant liabilities – Private Warrants $ 1,989,979 $ — $ — $ 1,989,979 Amount at Description Fair Value Level 1 Level 2 Level 3 December 31, 2021 Assets Investments held in Trust Account: Money Market investments $ 128,421,215 $ 128,421,215 $ — $ — Liabilities Warrant liabilities – Private Warrants $ 2,036,258 $ — $ — $ 2,036,258 | Amount at Description Fair Value Level 1 Level 2 Level 3 December 31, 2021 Assets Investments held in Trust Account: Money Market investments $ 128,421,215 $ 128,421,215 $ — $ — Liabilities Warrant liabilities – Private warrants $ 2,036,258 $ — $ — $ 2,036,258 |
Schedule of significant inputs to the Black-Scholes method for the fair value | As of As of September 30, December 31, 2022 2021 Common stock price $ 10.29 $ 9.97 Exercise price $ 11.50 $ 11.50 Dividend yield — % — % Term to Business Combination (years) 3.86 4.61 Volatility 3.3 % 9.1 % Risk-free rate 4.17 % 1.20 % Fair value $ 0.43 $ 0.44 | Initial As of December 31, Measurement 2021 Stock price $ 10.00 $ 9.97 Strike price $ 11.50 $ 11.50 Dividend yield — % — % Remaining term (in years) 5.00 4.61 Volatility 19.0 % 9.1 % Risk-free rate 0.81 % 1.20 % Fair value of warrants $ 1.20 $ 0.44 |
Summary of the changes in the fair value of the Level 3 financial instruments that are measured at fair value on a recurring basis | Fair value as of June 23, 2020 (inception) $ — Initial measurement 5,553,429 Change in valuation inputs or other assumptions (3,517,171) Fair value at December 31, 2021 $ 2,036,258 Change in valuation inputs or other assumptions (1,434,636) Fair value at March 31, 2022 $ 601,622 Change in valuation inputs or other assumptions 277,671 Fair value at June 30, 2022 $ 879,293 Change in valuation inputs or other assumptions 1,110,686 Fair value at September 30, 2022 $ 1,989,979 | Warrant Liabilities Fair value as of June 23, 2020 (inception) — Initial measurement 5,553,429 Change in valuation inputs or other assumptions (3,517,171) Fair value as of December 31, 2021 2,036,258 |
DESCRIPTION OF ORGANIZATION A_2
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (Details) | 9 Months Ended | 12 Months Ended | |||||
Aug. 18, 2021 USD ($) $ / shares shares | Aug. 13, 2021 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) item $ / shares shares | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) item M $ / shares shares | Dec. 31, 2020 $ / shares | Oct. 31, 2020 $ / shares | |
Subsidiary, Sale of Stock [Line Items] | |||||||
Number of units issued | shares | 1,650,000 | ||||||
Common shares, par value, (per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Proceeds from Issuance Initial Public Offering | $ 0 | $ 126,000,000 | $ 126,000,000 | ||||
Proceeds from sale of private warrants | 0 | $ 4,299,500 | 4,299,500 | ||||
Transaction Costs | 1,080,140 | 1,080,140 | |||||
Cash underwriting fee | 500,000 | 500,000 | |||||
Other offering cost | 580,140 | 580,140 | |||||
Cash held outside the Trust Account | 799,808 | ||||||
Working Capital | $ 988,186 | ||||||
Condition for future business combination number of businesses minimum | item | 1 | ||||||
Condition for future business combination threshold Net Tangible Assets | $ 5,000,001 | $ 5,000,001 | |||||
Redemption limit percentage without prior consent | 15 | 15 | |||||
Months to complete acquisition | 12 | 12 | |||||
Private Placement Warrants | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Transaction Costs | $ 18,797 | ||||||
Public Warrants | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Transaction Costs | $ 127,354 | ||||||
Initial Public Offering | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Number of units issued | shares | 11,000,000 | 1,650,000 | |||||
Common shares, par value, (per share) | $ / shares | $ 0.0001 | ||||||
Purchase price, per unit | $ / shares | $ 10 | $ 10.15 | $ 10.15 | $ 10.15 | |||
Proceeds from Issuance Initial Public Offering | $ 110,000,000 | ||||||
Shares issued to underwriters | shares | 1,650,000 | 1,650,000 | |||||
Payments for investment of cash in Trust Account | $ 128,397,500 | ||||||
Private Placement | Private Placement Warrants | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Sale of Private Placement Warrants (in shares) | shares | 4,361,456 | 4,361,456 | 4,361,456 | ||||
Price of warrant | $ / shares | $ 0.93 | $ 0.93 | |||||
Proceeds from sale of private warrants | $ 4,052,000 | $ 4,052,000 | |||||
Private Placement | Public Warrants | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Price of warrant | $ / shares | $ 0.93 | $ 0.93 | |||||
Proceeds from sale of private warrants | $ 4,052,000 | $ 4,052,000 | |||||
Over-allotment option | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Number of units issued | shares | 1,650,000 | 1,650,000 | |||||
Purchase price, per unit | $ / shares | $ 10 | ||||||
Proceeds from Issuance Initial Public Offering | $ 16,500,000 | $ 16,500,000 | |||||
Sale of Private Placement Warrants (in shares) | shares | 266,402 | 266,402 | 266,402 | ||||
Price of warrant | $ / shares | $ 0.93 | ||||||
Proceeds from sale of private warrants | $ 247,500 | ||||||
Shares issued to underwriters | shares | 1,650,000 | 1,650,000 | 1,650,000 | 1,650,000 | |||
Over-allotment option | Private Placement Warrants | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Sale of Private Placement Warrants (in shares) | shares | 266,402 | ||||||
Price of warrant | $ / shares | $ 0.93 | $ 0.93 | |||||
Proceeds from sale of private warrants | $ 247,500 | $ 247,500 |
DESCRIPTION OF ORGANIZATION A_3
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS - Business Combination Agreement (Details) | May 15, 2022 USD ($) director $ / shares shares | Sep. 30, 2022 $ / shares | Dec. 31, 2021 $ / shares | Dec. 31, 2020 $ / shares |
Subsidiary, Sale of Stock [Line Items] | ||||
Common shares, par value, (per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Number of directors | director | 7 | |||
Additional period from termination date | 3 months | |||
New Dragonfly | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Number of common stock shall be issuable to existing holders | shares | 40,000,000 | |||
Threshold period of closing before extended termination date | 2 days | |||
Additional period from extended termination date | 3 months | |||
New Dragonfly | Subscription Agreement | PIPE Investment | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Number of shares subscribed for | shares | 500,000 | |||
Purchase price per share | $ 10 | |||
Aggregate purchase price | $ | $ 5,000,000 | |||
Chardan Nextech Acquisition | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Number of directors | director | 2 | |||
Chardan Nextech Acquisition | PIPE Investment | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Common shares, par value, (per share) | $ 0.0001 |
DESCRIPTION OF ORGANIZATION A_4
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS - Debt Commitment Letter and Equity Facility Investor (Details) - USD ($) | May 15, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Oct. 06, 2021 |
Subsidiary, Sale of Stock [Line Items] | ||||
Exercise price of warrant | $ 11.50 | $ 11.50 | ||
Debt Commitment Letter | Penny Warrants | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Number of warrants to purchase shares issued | 2,593,056 | |||
Equity Facility | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Aggregate purchase price | $ 150,000,000 | |||
New Dragonfly | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Aggregate principal amount | $ 8,000,000 | |||
New Dragonfly | Debt Commitment Letter | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Maturity term | 4 years | |||
New Dragonfly | Debt Commitment Letter | Initial lenders | Penny Warrants | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Percentage of common stock issuable on exercise of warrants | 3.60% | |||
Warrants term | 10 years | |||
New Dragonfly | Debt Commitment Letter | Initial lenders | Warrants | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Number of warrants to purchase shares issued | 1,600,000 | |||
Exercise price of warrant | $ 10 | |||
Warrants term | 5 years | |||
New Dragonfly | Debt Commitment Letter | Term Loan Facility | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Aggregate principal amount | $ 75,000,000 | |||
Quarterly amortization percent per annum | 5% | |||
New Dragonfly | Equity Facility | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Aggregate purchase price | $ 150,000,000 | |||
Purchase term of common stock | 36 months |
BASIS OF PRESENTATION AND SUM_4
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of reconciliation of common stock reflected in the condensed balance sheet (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Dec. 31, 2021 | |
Accretion of carrying value to redemption value | $ (503,812) | $ (18,011,489) | $ (18,011,489) | |
Common stock subject to possible redemption, $0.0001 par value; 3,093,348 and 12,650,000 shares at approximately $10.25 and $10.15 per share at September 30, 2022 and December 31, 2021, respectively | 128,397,500 | |||
Common stock subject to redemption | ||||
Gross proceeds | 126,500,000 | |||
Proceeds allocated to Public Warrants | (15,180,000) | |||
Issuance costs allocated to common stock | (933,989) | |||
Accretion of carrying value to redemption value | $ 503,812 | 18,011,489 | ||
Common stock subject to possible redemption, $0.0001 par value; 3,093,348 and 12,650,000 shares at approximately $10.25 and $10.15 per share at September 30, 2022 and December 31, 2021, respectively | $ 31,706,363 | $ 31,706,363 | $ 128,397,500 |
BASIS OF PRESENTATION AND SUM_5
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of basic and diluted net income per common share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Numerator: | ||||||
Net income (loss) | $ (1,919,615) | $ 2,690,543 | $ (1,000) | $ (1,298,108) | $ 2,689,709 | $ 1,910,487 |
Denominator | ||||||
Basic weighted average shares outstanding | 10,307,037 | 9,453,125 | 2,750,000 | 13,957,179 | 5,008,929 | 7,732,021 |
Diluted weighted average shares outstanding | 10,307,037 | 9,672,826 | 2,750,000 | 13,957,179 | 5,356,456 | 7,991,952 |
Basic net income (loss) per common share | $ (0.19) | $ 0.28 | $ 0 | $ (0.09) | $ 0.54 | $ 0.25 |
Diluted net income (loss) per common share | $ (0.19) | $ 0.28 | $ 0 | $ (0.09) | $ 0.50 | $ 0.24 |
BASIS OF PRESENTATION AND SUM_6
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Dec. 31, 2021 | Aug. 05, 2022 | Dec. 31, 2020 | |
Cash equivalents | $ 0 | $ 0 | $ 0 | |
Cash held in trust account | 31,995,703 | 128,421,215 | ||
Offering costs | 1,080,140 | 1,080,140 | ||
Cash underwriting fee | 500,000 | 500,000 | ||
Other offering cost | 580,140 | 580,140 | ||
Unrecognized tax benefits | 0 | 0 | ||
Unrecognized tax benefits accrued for interest and penalties | $ 0 | $ 0 | ||
Number of shares excluded from calculation of net income per common share because their inclusion would be anti-dilutive | 14,115,358 | 14,115,358 | ||
Statutory tax rate (as a percent) | 21% | 21% | ||
Private Placement Warrants | ||||
Offering costs | $ 18,797 | |||
Common stock subject to redemption | ||||
Shares subject to possible redemption outstanding | 3,093,348 | 12,650,000 | 6,255,848 | 0 |
Offering costs | $ 933,989 | $ 933,989 | ||
Common stock not subject to redemption | ||||
Offering costs | $ 127,354 |
INITIAL PUBLIC OFFERING (Detail
INITIAL PUBLIC OFFERING (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||||
Aug. 18, 2021 | Aug. 13, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Oct. 31, 2020 | |
Subsidiary, Sale of Stock [Line Items] | ||||||
Number of units sold | 1,650,000 | |||||
Proceeds from Issuance Initial Public Offering | $ 0 | $ 126,000,000 | $ 126,000,000 | |||
Exercise price of warrants | $ 11.50 | $ 11.50 | ||||
Public Warrants | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Number of shares issuable per warrant | 1 | 1 | ||||
Exercise price of warrants | $ 11.50 | $ 11.50 | ||||
Initial Public Offering | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Number of units sold | 11,000,000 | 1,650,000 | ||||
Purchase price, per unit | $ 10 | $ 10.15 | $ 10.15 | $ 10.15 | ||
Proceeds from Issuance Initial Public Offering | $ 110,000,000 | |||||
Shares issued to underwriters | 1,650,000 | 1,650,000 | ||||
Under Writing Option Period | 45 days | |||||
Initial Public Offering | Public Warrants | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Number of shares in a unit | 1 | 1 | ||||
Number of warrants in a unit | 1 | 0.5 | ||||
Number of shares issuable per warrant | 1 | 1 | ||||
Exercise price of warrants | $ 11.50 | $ 11.50 | ||||
Over-allotment option | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Number of units sold | 1,650,000 | 1,650,000 | ||||
Purchase price, per unit | $ 10 | |||||
Proceeds from Issuance Initial Public Offering | $ 16,500,000 | $ 16,500,000 | ||||
Shares issued to underwriters | 1,650,000 | 1,650,000 | 1,650,000 | 1,650,000 |
PRIVATE PLACEMENT (Details)
PRIVATE PLACEMENT (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Aug. 13, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Subsidiary, Sale of Stock [Line Items] | ||||
Proceeds from sale of private warrants | $ 0 | $ 4,299,500 | $ 4,299,500 | |
Exercise price of warrant | $ 11.50 | $ 11.50 | ||
Over-allotment option | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Price of warrants | $ 0.93 | |||
Proceeds from sale of private warrants | $ 247,500 | |||
Over-allotment option | Private Placement Warrants | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Price of warrants | $ 0.93 | $ 0.93 | ||
Proceeds from sale of private warrants | $ 247,500 | $ 247,500 | ||
Private Placement | Private Placement Warrants | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Price of warrants | $ 0.93 | $ 0.93 | ||
Proceeds from sale of private warrants | $ 4,052,000 | $ 4,052,000 | ||
Number of shares per warrant | 1 | |||
Exercise price of warrant | $ 11.50 | $ 11.50 |
RELATED PARTY TRANSACTIONS - Fo
RELATED PARTY TRANSACTIONS - Founder Shares (Details) | 6 Months Ended | ||||||
Aug. 10, 2022 | Aug. 18, 2021 D $ / shares | Aug. 10, 2021 shares | Mar. 04, 2021 shares | Jun. 23, 2020 USD ($) item shares | Dec. 31, 2020 USD ($) shares | ||
Related Party Transaction [Line Items] | |||||||
Aggregate purchase price | $ | [1],[2] | $ 25,000 | |||||
Stockholders equity, stock split | the Company effected a 2.875-for-1 stock split of its issued and outstanding shares of common stock | ||||||
Threshold Period After Business Combination In Which Specified Trading Days Within Any Specified Trading Day Period Commences | 30 days | ||||||
Threshold consecutive trading days for transfer, assign or sale of shares or warrants, after the completion of the initial business combination | D | 10 | ||||||
Threshold period after the business combination in which the 20 trading days within any 30 trading day period commences | 30 days | ||||||
Common stock | |||||||
Related Party Transaction [Line Items] | |||||||
Number of shares issued | [1],[2] | 3,162,500 | |||||
Aggregate purchase price | $ | [1],[2] | $ 317 | |||||
Additional Paid-in Capital | |||||||
Related Party Transaction [Line Items] | |||||||
Aggregate purchase price | $ | [1],[2] | $ 24,683 | |||||
Sponsor | |||||||
Related Party Transaction [Line Items] | |||||||
Number of shares issued | 1,000,000 | ||||||
Aggregate purchase price | $ | $ 25,000 | ||||||
Stockholders equity, stock split | the Company effectuated a 1.1-for-1 stock split | the Company effectuated a 1.1-for-1 stock split | |||||
Number of stock split | item | 2 | ||||||
Aggregate number of shares owned | 3,162,500 | 2,875,000 | |||||
Shares subject to forfeiture | 412,500 | ||||||
Percentage of issued and outstanding shares after the Initial Public Offering collectively held by initial stockholders | 20% | ||||||
Percentage of founder shares that will be transferred on certain presumptive conditions | 50 | ||||||
Stock price trigger to transfer, assign or sell any shares or warrants of the company, after the completion of the initial business combination (in dollars per share) | $ / shares | $ 12.50 | ||||||
Percentage of founder shares will not be transferred until the completion of escrow period | 50 | ||||||
Sponsor | Class B Common Stock | |||||||
Related Party Transaction [Line Items] | |||||||
Number of shares issued | 1,000,000 | ||||||
Aggregate purchase price | $ | $ 25,000 | ||||||
Aggregate number of shares owned | 3,162,500 | 2,875,000 | |||||
Shares subject to forfeiture | 412,500 | ||||||
Percentage of issued and outstanding shares after the Initial Public Offering collectively held by initial stockholders | 20% | ||||||
Stock price trigger to transfer, assign or sell any shares or warrants of the company, after the completion of the initial business combination (in dollars per share) | $ / shares | $ 12.50 | ||||||
[1] Includes up to 412,500 shares of common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriter. On August 18, 2021, the underwriters’ exercised the over-allotment option in full, thus these shares are no longer subject to forfeiture (see Note 6). On March 4, 2021, the Company effected a 2.875 -for-1 stock split, resulting in 2,875,000 shares of common stock outstanding (see Note 5). On August 10, 2021, the Company effectuated a 1.1 -for-1 stock split, resulting in an aggregate of 3,162,500 shares of common stock outstanding (see Note 5). All share and per-share amounts have been retroactively restated to reflect the two stock splits. |
RELATED PARTY TRANSACTIONS - Ad
RELATED PARTY TRANSACTIONS - Additional Information (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jul. 23, 2020 | |
Related Party Transaction [Line Items] | ||||
Promissory note - related party | $ 400,000 | $ 0 | ||
Working capital loans warrant | ||||
Related Party Transaction [Line Items] | ||||
Outstanding balance of related party note | 0 | $ 0 | ||
Promissory Note with Related Party | ||||
Related Party Transaction [Line Items] | ||||
Promissory note - related party | $ 250,000 | |||
Outstanding balance of related party note | 0 | 0 | $ 0 | |
Administrative Support Agreement | ||||
Related Party Transaction [Line Items] | ||||
Expenses per month | 10,000 | |||
Expenses incurred and paid | 10,000 | |||
Related Party Loans | ||||
Related Party Transaction [Line Items] | ||||
Outstanding balance of related party note | 0 | 0 | ||
Loan conversion agreement warrant | $ 0 | $ 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||||
Aug. 18, 2021 | Aug. 13, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Commitments And Contingencies [Line Items] | ||||||
Granted term | 45 days | 45 days | ||||
Number of units issued | 1,650,000 | |||||
Unit Price | $ 10 | |||||
Proceeds from issuance of initial public offering | $ 0 | $ 126,000,000 | $ 126,000,000 | |||
Underwriting fees | $ 500,000 | |||||
Aggregate gross proceeds (Percent) | 3.50% | |||||
Cash held outside the Trust Account | $ 316,023 | $ 799,808 | $ 25,000 | |||
Over-allotment option | ||||||
Commitments And Contingencies [Line Items] | ||||||
Number of units issued | 1,650,000 | 1,650,000 | ||||
Unit Price | $ 10 | |||||
Proceeds from issuance of initial public offering | $ 16,500,000 | $ 16,500,000 | ||||
Underwriting fees | $ 500,000 | |||||
Initial Public Offering | ||||||
Commitments And Contingencies [Line Items] | ||||||
Number of units issued | 11,000,000 | 1,650,000 | ||||
Proceeds from issuance of initial public offering | $ 110,000,000 | |||||
Aggregate gross proceeds (Percent) | 3.50% | |||||
Related Party Extension Loans | ||||||
Commitments And Contingencies [Line Items] | ||||||
Cash held outside the Trust Account | $ 1,265,000 | |||||
Share Price | $ 0.10 | |||||
Related Party Extension Loans | Maximum | ||||||
Commitments And Contingencies [Line Items] | ||||||
Cash held outside the Trust Account | $ 2,530,000 |
WARRANTS (Details)
WARRANTS (Details) - $ / shares | 8 Months Ended | 9 Months Ended | 12 Months Ended | ||
Aug. 18, 2021 | Aug. 18, 2021 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Exercise price of warrants | $ 11.50 | $ 11.50 | |||
Warrants exercisable term from the completion of business combination | 30 days | 30 days | |||
Written notice to registered holders | 10 days | 10 days | |||
Period of time registration statement become effective (in days) | 180 days | 180 days | |||
Redemption of warrant | $ 0.01 | $ 0.01 | |||
Warrant redemption condition minimum share price | $ 16 | $ 16 | |||
Threshold trading days for redemption of public warrants | 10 days | 10 days | |||
Threshold consecutive trading days for redemption of warrants | 30 days | 30 days | 30 days | 30 days | |
Private Warrants | |||||
Warrants outstanding | 4,627,858 | 4,627,858 | 0 | ||
Number of shares issuable per warrant | 1 | 1 | |||
Exercise price of warrants | $ 11.50 | $ 11.50 | |||
Sale of Private Placement Warrants (in shares) | 4,627,858 | 4,627,858 | |||
Public Warrants | |||||
Warrants outstanding | 9,847,500 | 9,487,500 | 0 | ||
Number of Shares Issued per Warrant | 1 | ||||
Number of shares issuable per warrant | 1 | 1 | |||
Exercise price of warrants | $ 11.50 | $ 11.50 |
STOCKHOLDERS' EQUITY (DEFICIT)
STOCKHOLDERS' EQUITY (DEFICIT) - Preferred Stock (Details) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
STOCKHOLDERS' EQUITY (DEFICIT) | |||
Preferred shares, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 |
Preferred stock, par value, (per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred shares, shares issued | 0 | 0 | 0 |
Preferred shares, shares outstanding | 0 | 0 | 0 |
STOCKHOLDERS' EQUITY (DEFICIT_2
STOCKHOLDERS' EQUITY (DEFICIT) - Common stock (Details) | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2022 Vote $ / shares shares | Dec. 31, 2021 Vote $ / shares shares | Aug. 05, 2022 shares | Aug. 13, 2021 $ / shares | Aug. 10, 2021 shares | Mar. 04, 2021 shares | Dec. 31, 2020 $ / shares shares | |
Class of Stock [Line Items] | |||||||
Common shares, shares authorized (in shares) | 50,000,000 | 50,000,000 | 50,000,000 | ||||
Common shares, par value, (per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Common shares, shares issued | 6,255,848 | ||||||
Common shares, shares outstanding | 6,255,848 | 3,162,500 | 2,875,000 | ||||
Initial Public Offering | |||||||
Class of Stock [Line Items] | |||||||
Common shares, par value, (per share) | $ / shares | $ 0.0001 | ||||||
Common stock | |||||||
Class of Stock [Line Items] | |||||||
Common shares, shares authorized (in shares) | 50,000,000 | 50,000,000 | |||||
Common shares, par value, (per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||||
Common shares, votes per share | Vote | 1 | 1 | |||||
Common shares, shares issued | 15,812,500 | 15,812,500 | |||||
Common shares, shares outstanding | 15,812,500 | 15,812,500 | 15,812,500 | ||||
Common stock, shares subject to forfeiture (in shares) | 412,500 | 412,500 | |||||
Initial stockholders will collectively own companies issued and outstanding | 20% | ||||||
Common stock | Initial Public Offering | |||||||
Class of Stock [Line Items] | |||||||
Initial stockholders will collectively own companies issued and outstanding | 20% | ||||||
Common stock subject to redemption | |||||||
Class of Stock [Line Items] | |||||||
Common stock subject to possible redemption (in shares) | 12,650,000 |
INCOME TAXES - (Details)
INCOME TAXES - (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
INCOME TAXES | |||||
U.S. federal operating loss carry forwards | $ 357,674 | ||||
Income tax provision (in Percent) | (2.10%) | 0% | (3.10%) | 0% | 0% |
Statutory tax rate (as a percent) | 21% | 21% | |||
Change in valuation allowance | $ 354,792 |
INCOME TAX - Net deferred tax a
INCOME TAX - Net deferred tax assets (liabilities) (Details) | Dec. 31, 2021 USD ($) |
Deferred tax assets: | |
Start-up costs | $ 61,335 |
Net operating loss carryforwards | 298,437 |
Total deferred tax assets | 359,772 |
Valuation allowance | (354,792) |
Deferred tax liabilities: | |
Unrealized gain on investments | (4,980) |
Total deferred tax liabilities | $ (4,980) |
INCOME TAX - Income tax provisi
INCOME TAX - Income tax provision (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Federal | |||||
Deferred | $ (354,792) | ||||
State | |||||
Change in valuation allowance | $ 354,792 | ||||
Income tax provision | $ 39,340 | $ 0 | $ 39,340 | $ 0 |
INCOME TAX - Reconciliation of
INCOME TAX - Reconciliation of the federal income tax rate to the Company's effective tax rate (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Effective Income Tax Rate Reconciliation, Other Reconciling Items, Percent [Abstract] | |||||
Statutory federal income tax rate | 21% | 21% | |||
State taxes, net of federal tax benefit | 0% | ||||
Change in fair value of derivative warrant liabilities | (40.80%) | ||||
Non-deductible transaction costs | 0.20% | ||||
Change in valuation allowance | 19.60% | ||||
Income tax provision | (2.10%) | 0% | (3.10%) | 0% | 0% |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Liabilities: | ||
Warrant liabilities - Private Placement Warrants | $ 1,989,979 | $ 2,036,258 |
Recurring | ||
Assets: | ||
Money Market investments | 128,421,215 | |
Liabilities: | ||
Warrant liabilities - Private Placement Warrants | 1,989,979 | |
Recurring | Private Placement Warrants | ||
Liabilities: | ||
Warrant liabilities - Private Placement Warrants | 2,036,258 | |
Level 1 | ||
Assets: | ||
Money Market investments | 128,421,215 | |
Liabilities: | ||
Warrant liabilities - Private Placement Warrants | 0 | |
Level 1 | Private Placement Warrants | ||
Liabilities: | ||
Warrant liabilities - Private Placement Warrants | 0 | |
Level 1 | Recurring | ||
Assets: | ||
Money Market investments | 128,421,215 | |
Level 2 | ||
Assets: | ||
Money Market investments | 0 | |
Liabilities: | ||
Warrant liabilities - Private Placement Warrants | 0 | |
Level 2 | Private Placement Warrants | ||
Liabilities: | ||
Warrant liabilities - Private Placement Warrants | 0 | |
Level 3 | ||
Assets: | ||
Money Market investments | 0 | |
Liabilities: | ||
Warrant liabilities - Private Placement Warrants | $ 1,989,979 | |
Level 3 | Private Placement Warrants | ||
Liabilities: | ||
Warrant liabilities - Private Placement Warrants | 2,036,258 | |
Level 3 | Recurring | Private Placement Warrants | ||
Liabilities: | ||
Warrant liabilities - Private Placement Warrants | $ 2,036,258 |
FAIR VALUE MEASUREMENTS - Level
FAIR VALUE MEASUREMENTS - Level 3 Fair Value Measurements Inputs (Details) - Level 3 | Sep. 30, 2022 item Y | Dec. 31, 2021 | Dec. 31, 2021 item | Dec. 31, 2021 Y | Aug. 13, 2021 |
Common stock price | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Warrants, measurement input | 0.1029 | 9.97 | 0.0997 | 10 | |
Exercise price | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Warrants, measurement input | 0.1150 | 11.50 | 0.1150 | 11.50 | |
Dividend yield | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Warrants, measurement input | 0 | 0 | |||
Term to Business Combination (years) | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Warrants, measurement input | 3.86 | 4.61 | 4.61 | 5 | |
Volatility | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Warrants, measurement input | 0.033 | 9.1 | 0.091 | 19 | |
Risk-free rate | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Warrants, measurement input | 0.0417 | 1.20 | 0.0120 | 0.81 | |
Fair value | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Warrants, measurement input | 0.0043 | 0.44 | 0.0044 | 1.20 |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Change in the Fair Value of the Warrant Liabilities (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | 18 Months Ended | ||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2021 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||||
Fair value at June 23, 2020 (inception) | $ 879,293 | $ 601,622 | $ 2,036,258 | $ 0 | $ 2,036,258 | $ 0 | |||
Initial measurement | 5,553,429 | ||||||||
Change in valuation inputs or other assumptions | 1,110,686 | 277,671 | (1,434,636) | (3,517,171) | |||||
Fair value at end of period | 1,989,979 | $ 879,293 | $ 601,622 | 1,989,979 | $ 2,036,258 | $ 2,036,258 | |||
Change in fair value of warrant liability | $ 1,110,686 | $ (4,072,514) | $ 0 | $ (46,279) | $ (4,072,514) | $ (3,517,171) |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | Aug. 05, 2022 | Jul. 12, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Aug. 13, 2021 | Aug. 10, 2021 | Mar. 04, 2021 | Dec. 31, 2020 |
SUBSEQUENT EVENTS | ||||||||
Cash | $ 15,000,000 | |||||||
Common Stock, Shares, Issued | 6,255,848 | |||||||
Common Stock, Shares, Outstanding | 6,255,848 | 3,162,500 | 2,875,000 | |||||
Common shares, par value, (per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Cash held in trust account | $ 31,995,703 | $ 128,421,215 | ||||||
Amend Charter and Investment Management Trust Agreement | ||||||||
SUBSEQUENT EVENTS | ||||||||
Period of extension of combination period | 1 month | |||||||
Common Stock, Shares, Issued | 15,812,500 | |||||||
Common Stock, Shares, Outstanding | 15,812,500 | |||||||
Ownership percentage | 71.66% | |||||||
Common shares, par value, (per share) | $ 0.0001 | |||||||
Cash held in trust account | $ 200,000 | |||||||
Redemption of shares | 9,556,652 | |||||||
Percentage of common stock shares | 60.44% | |||||||
Amount of distribution from Trust Account to redeeming Stockholders | $ 97,194,950 | |||||||
Cash in the Trust Account | $ 31,460,579 | |||||||
IPO | ||||||||
SUBSEQUENT EVENTS | ||||||||
Common shares, par value, (per share) | $ 0.0001 | |||||||
IPO | Amend Charter and Investment Management Trust Agreement | ||||||||
SUBSEQUENT EVENTS | ||||||||
Percentage of common stock shares | 75.55% |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Jun. 23, 2020 |
Current assets: | |||||||||
Cash | $ 316,023 | $ 799,808 | $ 25,000 | ||||||
Prepaid expenses | 171,026 | 302,590 | |||||||
Total Current Assets | 487,049 | 1,102,398 | 25,000 | ||||||
Assets held in Trust Account | 31,995,703 | 128,421,215 | |||||||
Total Assets | 32,482,752 | 129,523,613 | 25,000 | ||||||
Current liabilities: | |||||||||
Accounts payable | 990,587 | 16,862 | |||||||
Accrued expenses | 32,759 | 31,749 | 1,000 | ||||||
Franchise tax payable | 150,000 | 65,600 | |||||||
Promissory note - related party | 400,000 | 0 | |||||||
Income tax payable | 39,340 | 0 | |||||||
Total Current Liabilities | 1,612,686 | 114,211 | 1,000 | ||||||
Warrant liabilities | 1,989,979 | 2,036,258 | |||||||
Total Liabilities | 3,602,665 | 2,150,469 | 1,000 | ||||||
Commitments and Contingencies | |||||||||
Common stock subject to possible redemption, $0.0001 par value; 3,093,348 and 12,650,000 shares at approximately $10.25 and $10.15 per share at September 30, 2022 and December 31, 2021, respectively | 128,397,500 | ||||||||
Stockholders' Deficit | |||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued or outstanding at September 30, 2022 and December 31, 2021 | 0 | 0 | 0 | ||||||
Common stock, $0.0001 par value; 50,000,000 shares authorized; 3,162,500 shares issued and outstanding (excluding 3,093,348 and 12,650,000 shares subject to possible redemption) at September 30, 2022 and December 31, 2021, respectively | 317 | 317 | 317 | ||||||
Additional Paid in Capital | 0 | 0 | 24,683 | ||||||
Accumulated deficit | (2,826,593) | (1,024,673) | (1,000) | ||||||
Total Stockholders' Deficit | (2,826,276) | $ (402,849) | $ 167,484 | (1,024,356) | $ (245,134) | $ 23,166 | $ 24,000 | 24,000 | $ 0 |
Total Liabilities, Common Stock Subject to Possible Redemption and Stockholders' Deficit | 32,482,752 | 129,523,613 | $ 25,000 | ||||||
Common stock subject to possible redemption | |||||||||
Current liabilities: | |||||||||
Common stock subject to possible redemption, $0.0001 par value; 3,093,348 and 12,650,000 shares at approximately $10.25 and $10.15 per share at September 30, 2022 and December 31, 2021, respectively | $ 31,706,363 | $ 128,397,500 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2022 | Aug. 05, 2022 | Dec. 31, 2021 | Aug. 10, 2021 | Mar. 04, 2021 | Dec. 31, 2020 |
Common stock subject to redemption, price per share | $ 10.15 | $ 10.15 | ||||
Preferred stock, par value, (per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 | |||
Preferred stock, shares issued | 0 | 0 | 0 | |||
Preferred stock, shares outstanding | 0 | 0 | 0 | |||
Common stock, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Common stock, shares issued | 6,255,848 | |||||
Common stock, shares outstanding | 6,255,848 | 3,162,500 | 2,875,000 | |||
Common stock not subject to possible redemption | ||||||
Common stock, shares issued | 3,162,500 | 3,162,500 | 3,162,500 | |||
Common stock, shares outstanding | 3,162,500 | 3,162,500 | 3,162,500 | |||
Common stock subject to possible redemption | ||||||
Common stock subject to redemption, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Common stock subject to redemption, units sold in the IPO | 3,093,348 | 6,255,848 | 12,650,000 | 0 | ||
Common stock subject to redemption, price per share | $ 10.25 | $ 10.15 |
UNAUDITED CONDENSED STATEMENTS
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS | ||||
Operating and formation costs | $ 999,216 | $ 92,234 | $ 1,623,500 | $ 93,068 |
Franchise tax expense | 50,000 | 24,034 | 150,656 | 24,034 |
Loss from operations | (1,049,216) | (116,268) | (1,774,156) | (117,102) |
Warrant issuance costs | 0 | (18,797) | 0 | (18,797) |
Loss on sale of private warrants | 0 | (1,253,929) | 0 | (1,253,929) |
Net gain on investments held in Trust Account | 279,627 | 7,023 | 469,109 | 7,023 |
Change in fair value of warrant liability | 1,110,686 | (4,072,514) | (46,279) | (4,072,514) |
Net income (loss) before income taxes | (1,880,275) | 2,690,543 | (1,258,768) | 2,689,709 |
Income tax expense | (39,340) | 0 | (39,340) | 0 |
Net income (loss) | $ (1,919,615) | $ 2,690,543 | $ (1,298,108) | $ 2,689,709 |
Basic weighted average shares outstanding | 10,307,037 | 9,453,125 | 13,957,179 | 5,008,929 |
Basic net income (loss) per common share | $ (0.19) | $ 0.28 | $ (0.09) | $ 0.54 |
Diluted weighted average shares outstanding | 10,307,037 | 9,672,826 | 13,957,179 | 5,356,456 |
Diluted net income (loss) per common share | $ (0.19) | $ 0.28 | $ (0.09) | $ 0.50 |
UNAUDITED CONDENSED STATEMENT_2
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Common stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Total |
Balance at the end at Dec. 31, 2020 | $ 317 | $ 24,683 | $ (1,000) | $ 24,000 |
Balance at the end (in shares) at Dec. 31, 2020 | 3,162,500 | |||
Balance at the beginning at Jun. 23, 2020 | $ 0 | 0 | 0 | 0 |
Increase (Decrease) in Stockholders' Equity | ||||
Net income (loss) | 0 | (1,000) | (1,000) | |
Balance at the end at Dec. 31, 2020 | $ 317 | 24,683 | (1,000) | 24,000 |
Balance at the end (in shares) at Dec. 31, 2020 | 3,162,500 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Net income (loss) | 2,689,709 | |||
Balance at the end at Sep. 30, 2021 | $ 317 | (245,451) | (245,134) | |
Balance at the end (in shares) at Sep. 30, 2021 | 3,162,500 | |||
Balance at the beginning at Dec. 31, 2020 | $ 317 | 24,683 | (1,000) | 24,000 |
Balance at the beginning (in shares) at Dec. 31, 2020 | 3,162,500 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Net income (loss) | 0 | 1,910,487 | 1,910,487 | |
Proceeds from Initial Public Offering Costs allocated to Public Warrants (net of offering costs) | 15,052,646 | 0 | 15,052,646 | |
Accretion of common stock to redemption amount | (15,077,329) | (2,934,160) | (18,011,489) | |
Balance at the end at Dec. 31, 2021 | $ 317 | 0 | (1,024,673) | (1,024,356) |
Balance at the end (in shares) at Dec. 31, 2021 | 3,162,500 | |||
Balance at the beginning at Mar. 31, 2021 | $ 317 | 24,683 | (1,000) | 24,000 |
Balance at the beginning (in shares) at Mar. 31, 2021 | 3,162,500 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Net income (loss) | (834) | (834) | ||
Balance at the end at Jun. 30, 2021 | $ 317 | 24,683 | (1,834) | 23,166 |
Balance at the end (in shares) at Jun. 30, 2021 | 3,162,500 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Net income (loss) | 2,690,543 | 2,690,543 | ||
Proceeds from Initial Public Offering Costs allocated to Public Warrants (net of offering costs) | 15,052,646 | 15,052,646 | ||
Accretion of common stock to redemption amount | (15,077,329) | (2,934,160) | (18,011,489) | |
Balance at the end at Sep. 30, 2021 | $ 317 | (245,451) | (245,134) | |
Balance at the end (in shares) at Sep. 30, 2021 | 3,162,500 | |||
Balance at the beginning at Dec. 31, 2021 | $ 317 | 0 | (1,024,673) | (1,024,356) |
Balance at the beginning (in shares) at Dec. 31, 2021 | 3,162,500 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Net income (loss) | 1,191,840 | 1,191,840 | ||
Balance at the end at Mar. 31, 2022 | $ 317 | 167,167 | 167,484 | |
Balance at the end (in shares) at Mar. 31, 2022 | 3,162,500 | |||
Balance at the beginning at Dec. 31, 2021 | $ 317 | $ 0 | (1,024,673) | (1,024,356) |
Balance at the beginning (in shares) at Dec. 31, 2021 | 3,162,500 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Net income (loss) | (1,298,108) | |||
Balance at the end at Sep. 30, 2022 | $ 317 | (2,826,593) | (2,826,276) | |
Balance at the end (in shares) at Sep. 30, 2022 | 3,162,500 | |||
Balance at the beginning at Mar. 31, 2022 | $ 317 | 167,167 | 167,484 | |
Balance at the beginning (in shares) at Mar. 31, 2022 | 3,162,500 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Net income (loss) | (570,333) | (570,333) | ||
Balance at the end at Jun. 30, 2022 | $ 317 | (403,166) | (402,849) | |
Balance at the end (in shares) at Jun. 30, 2022 | 3,162,500 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Net income (loss) | (1,919,615) | (1,919,615) | ||
Accretion of common stock to redemption amount | (503,812) | (503,812) | ||
Balance at the end at Sep. 30, 2022 | $ 317 | $ (2,826,593) | $ (2,826,276) | |
Balance at the end (in shares) at Sep. 30, 2022 | 3,162,500 |
UNAUDITED CONDENSED STATEMENT_3
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash Flows from Operating Activities: | ||
Net income (loss) | $ (1,298,108) | $ 2,689,709 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Warrant issuance costs | 0 | 18,797 |
Net gain on investments held in Trust Account | (469,109) | (7,023) |
Loss on sale of private warrants | 0 | 1,253,928 |
Change in fair value of warrant liability | 46,279 | 4,072,514 |
Changes in operating assets and liabilities: | ||
Accounts payable | 973,726 | 0 |
Accrued expenses | 1,010 | 0 |
Prepaid expenses | 131,564 | (366,584) |
Income tax payable | 39,340 | 0 |
Franchise tax payable | 84,400 | 24,034 |
Net cash used in operating activities | (583,456) | (459,653) |
Cash Flows from Investing Activities: | ||
Cash withdrawn from Trust Account for payment of taxes | 99,671 | 0 |
Cash withdrawn from Trust Account for payment to redeeming stockholders | 97,194,950 | 0 |
Cash deposited into Trust Account | (400,000) | (128,397,500) |
Net cash provided by (used in) investing activities | 96,894,621 | (128,397,500) |
Cash Flows from Financing Activities: | ||
Proceeds from initial public offering, net of underwriter's discount paid | 0 | 126,000,000 |
Proceeds from promissory note - related party | 400,000 | 155,000 |
Payment to redeeming stockholders | (97,194,950) | 0 |
Repayment of promissory note - related party | 0 | (155,000) |
Proceeds from sale of private warrants | 0 | 4,299,500 |
Offering costs paid | 0 | (580,139) |
Net cash provided by (used in) financing activities | (96,794,950) | 129,719,361 |
Net Change in Cash | (483,785) | 862,208 |
Cash - Beginning of Period | 799,808 | 25,000 |
Cash - End of Period | $ 316,023 | $ 887,208 |
DESCRIPTION OF ORGANIZATION A_5
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Chardan NexTech Acquisition 2 Corp (the “Company” or “Chardan”) is a blank check company incorporated in Delaware on June 23, 2020. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). The Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. As of September 30, 2022, the Company had not yet commenced any operations. All activity for the period from June 23, 2020 (Inception) through September 30, 2022 relates to the Company’s formation and initial public offering (“Initial Public Offering”) described below, and, subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The registration statement on Form S-1 (the “Registration Statement”) for the Company’s Initial Public Offering was declared effective on August 10, 2021. On August 13, 2021, the Company consummated the Initial Public Offering of 11,000,000 units (the “Units” and, with respect to the common stock, par value $0.0001 per share, of the Company included in the Units sold, the “Public Shares”, and with respect to the warrants of the Company included in the Units sold, the “Public Warrants”), at $10.00 per Unit, generating gross proceeds of $110,000,000 , which is discussed in Note 3. Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 4,361,456 warrants (the “Private Warrants”, together with the Public Warrants, the “Warrants”) at a price of $0.93 per Private Warrant in a private placement to Chardan NexTech 2 Warrant Holdings LLC, a Delaware limited liability company (“Warrant Holdings” or “Holdings”), an affiliate of Chardan NexTech Investments 2 LLC, a Delaware limited liability company (the “Sponsor”), generating gross proceeds of $4,052,000 , which is described in Note 4. The Company had granted the underwriters in the Initial Public Offering a 45-day option to purchase up to 1,650,000 Units to cover over-allotments, if any (see Note 6). On August 16, 2021, the underwriters fully exercised the over-allotment option and, on August 18, 2021, purchased an additional 1,650,000 Units (the “Over-Allotment Units”) at a purchase price of $10.00 per Over-Allotment Unit, generating gross proceeds of $16,500,000 . Simultaneously with the closing of the exercise of the over-allotment option, the Company consummated the sale of 266,402 warrants (the “Over-Allotment Private Warrants”) at a purchase price of $0.93 per Over-Allotment Private Warrant in a private placement to the Holdings, generating gross proceeds of $247,500 . Following the closing of the Initial Public Offering and underwriters’ over-allotment option, an amount of $128,397,500 from the net proceeds of the sale of the Units and Over-Allotment Units and a portion of the proceeds from the sale of the Private Warrants and Over-Allotment Private Warrants was placed in a trust account (the “Trust Account”) and was invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the Trust Account, as described below. Transaction costs related to the issuances described above amounted to $1,080,140 , consisting of $500,000 of cash underwriting fees and $580,140 of other offering costs. The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account ( $10.15 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The Public Shares subject to redemption was recorded at redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity (“ASC 480”). The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. Notwithstanding the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company. The Company had 12 months, or until August 13, 2022, from the closing of the Initial Public Offering to consummate an initial Business Combination. However, prior to such date, the Stockholders (as defined in this Note 1) approved a proposal to amend the Company’s Amended and Restated Certificate of Incorporation (the “Charter”), to extend the date by which the Company must complete a Business Combination, as further discussed in this Note 1. The initial stockholders have agreed to waive their redemption rights with respect to any shares they own in connection with the consummation of the initial Business Combination, including their Founder Shares and Public Shares that they purchase during or after the offering, if any. In addition, the initial stockholders have agreed to waive their rights to liquidating distributions with respect to their Founder Shares if the Company fails to consummate an initial Business Combination within 18 months (assuming both of the three-month extensions were executed) from the closing of this offering. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering, they will be entitled to receive liquidating distributions with respect to such Public Shares if the Company fails to consummate an initial Business Combination within the required time period. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.15 per Public Share or (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay the Company’s taxes, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Business Combination Agreement On May 15, 2022, Chardan entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Dragonfly Energy Corp., a Nevada corporation (“Dragonfly”), and Bronco Merger Sub, Inc., a Nevada corporation and a direct, wholly owned subsidiary of Chardan (“Merger Sub”). The Merger Agreement provides that, among other things and upon the terms and subject to the conditions thereof, the following transactions will occur: (i) at the closing of the transactions contemplated by the Merger Agreement (the “Closing”), upon the terms and subject to the conditions of the Merger Agreement, in accordance with applicable provisions of the Nevada Revised Statutes (“NRS”) and the Delaware General Corporation Law (“DGCL”), Merger Sub will merge with and into Dragonfly, the separate corporate existence of Merger Sub ceased and Dragonfly was the surviving corporation and a wholly owned subsidiary of Chardan (the “Merger”); (ii) at the Closing, Chardan changed its name to “Dragonfly Energy Holdings Corp.” and is referred to herein as “New Dragonfly”; (iii) as a result of the Merger, among other things, all shares of capital stock of Dragonfly outstanding as of immediately prior to the effective time of the Merger were canceled in exchange for the right to receive shares of common stock, par value $0.0001 per share, of New Dragonfly (“New Dragonfly Common Stock”); (iv) as a result of the Merger, each Dragonfly option outstanding as of immediately prior to the effective time of the Merger converted into the right to receive a New Dragonfly option, subject to certain exceptions and conditions as set forth in the Merger Agreement; (v) at the Closing, 40,000,000 shares of New Dragonfly Common Stock became issuable to existing holders of Dragonfly capital stock or pursuant to the aforementioned converted options; and (vi) following the Closing, existing holders of Dragonfly capital stock will have the right to receive up to an aggregate of 40,000,000 additional shares of New Dragonfly Common Stock in three tranches as follows: (A) New Dragonfly shall issue 15,000,000 shares of New Dragonfly common stock in the aggregate, if, as disclosed in the Annual Report on Form 10-K for the fiscal year ending December 31, 2023 for New Dragonfly filed with the United States Securities and Exchange Commission (the “SEC”), New Dragonfly’s (x) total audited revenue for the year ended December 31, 2023 is equal to or greater than $250,000,000 , and (y) audited operating income for the year ended December 31, 2023 is equal to or greater than $35,000,000 ; (B) New Dragonfly shall issue an additional 12,500,000 shares of New Dragonfly common stock, in the aggregate (the “Second Earnout”), if at any time during the period beginning on the Closing Date and ending on December 31, 2026, the VWAP of the New Dragonfly common stock over any 20 Trading Days (which may or may not be consecutive) within any 30 consecutive Trading Day period is greater than or equal to $22.50 per share of New Dragonfly common stock (the “Second Milestone”); and (C) New Dragonfly shall issue an additional 12,500,000 shares of New Dragonfly common stock, in the aggregate (the “Third Earnout”), if at any time during the period beginning on the Closing Date and ending on December 31, 2028, the VWAP of the New Dragonfly common stock over any 20 Trading Days (which may or may not be consecutive) within any 30 consecutive Trading Day period is greater than or equal to $32.50 per share of New Dragonfly common stock (the “Third Milestone”). Upon the occurrence of the Third Milestone, if the Second Milestone has yet to occur, the Second Milestone will be deemed to have occurred simultaneously with the Third Milestone and the holders of Dragonfly capital stock shall be entitled to receive the Second Earnout as if the Second Milestone had occurred on or prior to December 31, 2026, provided, however, that such date shall only occur once, if at all, and in no event shall such holders be collectively entitled to receive more than an aggregate of 40,000,000 additional shares of New Dragonfly Common Stock. The Board of Directors of Chardan (the “Board”) has unanimously (i) approved and declared advisable the Merger Agreement, the Merger and the other transactions contemplated thereby and (ii) resolved to recommend approval of the Merger Agreement and related matters by the stockholders of Chardan. Upon the consummation of the business combination, the Board will be composed of seven members, five of whom will be designated by Dragonfly and two of whom will be designated by Chardan. On May 15, 2022, concurrently with the execution of the Merger Agreement, Chardan entered into a subscription agreement (the “Subscription Agreement”) with the Sponsor (the “PIPE Investor”). Pursuant to and subject to the terms and conditions contained in the Subscription Agreement, the PIPE Investor has subscribed to purchase up to 500,000 shares of New Dragonfly Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of up to $5,000,000 (the “PIPE Investment”). The Merger Agreement contains customary representations and warranties by Chardan, Merger Sub, and Dragonfly. The representations and warranties of the respective parties to the Merger Agreement generally will not survive the Closing. The Merger Agreement contains additional covenants, including, among others, providing for (i) the parties to conduct their respective businesses in the ordinary course through the Closing, (ii) the parties to not initiate any negotiations or enter into any agreements for certain alternative transactions, (iii) Dragonfly to prepare and deliver to Chardan certain audited and unaudited consolidated financial statements of Dragonfly, (iv) Chardan to prepare and file a proxy statement/registration statement on Form S-4 and take certain other actions to obtain the requisite approval of Chardan stockholders of certain proposals regarding the Merger, (v) the parties to use commercially reasonable efforts to obtain necessary approvals from governmental agencies and (vi) to the extent Closing has not occurred by August 10, 2022, then, pursuant to Chardan’s organizational documents, Chardan shall extend the deadline to consummate its initial business combination by an additional three months from the Termination Date (as defined in Chardan’s Amended and Restated Certificate of Incorporation as in effect on May 15, 2022) (such date, the “Extended Termination Date”); provided that if the Closing has not occurred by the date that is two business days prior to the Extended Termination Date, Chardan shall extend the deadline to consummate its initial business combination by an additional three months from the Extended Termination Date. On July 12, 2022, the Company, Dragonfly and Merger Sub entered into that certain Amendment to the Agreement and Plan of Merger, between the Company, Dragonfly and Merger Sub (the “Amendment”), which amended the Merger Agreement to, among other things, reflect a $ 15 million increase in the consideration to be issued in the business combination in connection with Dragonfly entering into a Stock Purchase Agreement with THOR Industries, Inc. (“THOR”), dated as of July 12, 2022, whereby for $ 15 million in cash, THOR purchased 1,267,502 shares of Dragonfly common stock (the “THOR Investment”). In connection with the THOR Investment, THOR and Dragonfly will enter into a commercial arrangement pursuant to which (i) THOR and certain of THOR’s affiliates will, among other things, transition to lithium-ion batteries manufactured and sold by Dragonfly, and (ii) Dragonfly will, among other things, grant certain board observer rights (with customary limitations) to THOR. Other than as expressly modified by the Amendment, the Merger Agreement remains in full force and effect. Special Meeting to Amend Charter and Investment Management Trust Agreement On August 5, 2022, Chardan held a special meeting (the “Special Meeting”), at which holders of 11,331,512 shares of common stock of Chardan, par value $0.0001 per share (“Chardan Common Stock”), were present in person or by proxy, representing approximately 71.66% of the voting power of the 15,812,500 shares of Chardan Common Stock issued and outstanding entitled to vote at the Special Meeting at the close of business on July 11, 2022, which was the record date (the “Record Date”) for the Special Meeting. Stockholders of record as of the close of business on the Record Date are referred to herein as “Stockholders.” At the Special Meeting, the Stockholders approved the proposal to amend the Company’s Amended and Restated Certificate of Incorporation (the “Charter”) to provide the Company’s officers, directors, initial stockholders and Chardan NexTech 2 Warrant Holdings, LLC (collectively, the “Insiders”) the ability to extend the date by which the Company must complete a business combination up to three (3) times for an additional one (1) month each time (for a maximum of three (3) one-month extensions) upon the deposit into the trust account (the “Trust Account”) by the Insiders, their affiliates or designees of $ 200,000 upon five days’ advance notice prior to August 13, 2022 (or such other applicable deadline) (the “Extension,” and such proposal, the “Charter Amendment”). On July 29, 2022, to effectuate the Charter Amendment, the board of directors of the Company (the “Board”) approved and adopted the Second Amended and Restated Memorandum and Articles of Association of the Company (the “Second A&R Charter”). In connection with the Charter Amendment, Stockholders elected to redeem 9,556,652 shares of Chardan Common Stock, representing approximately 60.44% of the issued and outstanding shares of Chardan Common Stock and 75.55% of the issued outstanding Chardan Common Stock sold in the IPO, resulting in the distribution of $ 97,194,950 from the Trust Account to the redeeming Stockholders. Following such redemptions, approximately $ 31,460,579 remains in the Trust Account and 6,255,848 shares of Chardan Common Stock will remain issued and outstanding . In addition, at the Special Meeting, the Stockholders approved the proposal to amend the Investment Management Trust Agreement, dated August 10, 2021 (the “Trust Agreement”), by and between the Company and Continental Stock Transfer & Company (the “Trustee”) to authorize the Extension and its implementation by the Company (the “Trust Amendment Proposal”). On July 29, 2022, to effectuate the Trust Amendment Proposal, the Board approved and adopted Amendment No. 1 to the Investment Management Trust Agreement (the “Trust Agreement Amendment”). Other Agreements The Business Combination Agreement contemplates the execution of various additional agreements and instruments, on or before the Closing, including, among others, the following: Registration Rights & Certain Restrictions on Transfer The Merger Agreement contemplates that, at the Closing, New Dragonfly, Chardan NexTech Investments 2 LLC, a Delaware limited liability company (the “Sponsor”), Chardan’s initial stockholders, certain stockholders of Dragonfly and certain of each of their respective affiliates, as applicable, and the other parties thereto, will enter into an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which New Dragonfly will agree to register for resale, pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), certain shares of New Dragonfly Common Stock and other equity securities of New Dragonfly that are held by the parties thereto from time to time and the parties thereto will be provided with customary demand and piggyback registration rights. Additionally, the Registration Rights Agreement and the Bylaws of New Dragonfly contain certain restrictions on transfer with respect to (i) shares of New Dragonfly Common Stock and any other equity securities convertible into or exercisable or exchangeable for shares of New Dragonfly Common Stock held by the Dragonfly Stockholders immediately following the Closing (other than any shares purchased in the public market or in the PIPE Investment) and (ii) any Earnout Shares (as defined in the Merger Agreement) issued within six (6) months of the closing date and any shares of New Dragonfly Common Stock issued with respect to or in exchange for such Earnout Shares (the “Lock-up Shares”). Such restrictions begin at the Closing and end on the date that is six months after Closing. Sponsor Support Agreement On May 15, 2022, the Sponsor, Chardan and Dragonfly entered into the Sponsor Support Agreement (the “Sponsor Support Agreement”), pursuant to which, among other things, the Sponsor agreed to (i) vote in favor of the Merger Agreement and the transactions contemplated thereby and against any proposal that would reasonably be expected to result in (x) a breach of any of Chardan’s or Merger Sub’s covenants, agreements or obligations under the Merger Agreement or in any Ancillary Agreements or (y) any Closing conditions set forth in Section 9.1 or 9.3 or the Merger Agreement not being satisfied, (ii) retain and not redeem its holdings in Chardan prior to the Closing, (iii) be subject to certain transfer restrictions with respect to its holdings in Chardan and (iv) be bound by certain provisions of the Merger Agreement as if it were an original signatory thereto, in each case, on the terms and subject to the conditions set forth in the Sponsor Support Agreement. Subscription Agreement On May 15, 2022, concurrently with the execution of the Merger Agreement, Chardan entered into a subscription agreement (the “Subscription Agreement”) with the Sponsor (the “PIPE Investor”). Pursuant to and subject to the terms and conditions contained in the Subscription Agreement, the PIPE Investor has subscribed to purchase up to 500,000 shares of New Dragonfly Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of up to $5,000,000 (the “PIPE Investment”). As set forth in the Subscription Agreement, the PIPE Investor may purchase shares of the Chardan common stock, par value $0.0001 per share (“Chardan Common Stock”) in the open market, and reduce (i) its purchase price under the Subscription Agreement by an amount equal to the number of shares that the PIPE Investor purchased in the open market multiplied by the per share redemption amount received by public stockholders who elect to redeem their shares prior to the Closing and (ii) the number of shares it subscribed for by an amount equal to the number of Shares Subscriber purchased in the open market and not redeemed as contemplated above. The PIPE Investor agreed that it will not exercise its right to vote any shares it may purchase in the open market following the date of the Subscription Agreement and prior to the Closing, in connection with any vote to approve the Merger. The PIPE Investment was consummated substantially concurrently with the Closing. Debt Commitment Letter On May 15, 2022, Chardan and Dragonfly entered into a commitment letter (the “Debt Commitment Letter”), with EICF Agent LLC (“EIP”) and CCM Investments 5 LLC, an affiliate of the Sponsor (“CCM 5”, and collectively with EIP, the “Initial Lenders”), pursuant to which the Initial Lenders have agreed to provide Dragonfly with a senior secured term loan facility in an aggregate principal amount of $75,000,000 (the “Term Loan Facility”) subject to the satisfaction of a number of specified conditions set forth in the Debt Commitment Letter. CCM 5 intends to backstop its commitment under the Debt Commitment Letter by entering into a backstop commitment letter (the “Backstop Commitment Letter”) with certain third party financing sources prior to the Closing Date. The proceeds of the Term Loan Facility will be used (i) to support the Merger, (ii) to repay all outstanding PIUS Debt and other obligations of Dragonfly, (iii) to pay for fees and expenses in connection with the foregoing, (iv) to provide additional growth capital and (v) for other general/corporate purposes. The Term Loan Facility must be fully drawn on the Closing Date, will mature four years from the Closing Date and will be subject to quarterly amortization of 5% per annum beginning 24 months after the Closing Date. Chardan will be a guarantor under the Term Loan Facility. As part of the consideration for the Term Loan Facility, New Dragonfly will also issue to the Initial Lenders (but not CCM 5 to the extent it has not backstopped its commitment pursuant to the Backstop Commitment Letter) on the Closing Date: (i) penny warrants (the “Penny Warrants”) exercisable to purchase 3.6% of New Dragonfly’s common stock on a fully-diluted basis, calculated as of the Closing Date, and (ii) warrants (the “ $10 Per Share Warrants”) exercisable to purchase 1.6 million shares of New Dragonfly’s common stock at $10 per share. The Penny Warrants will have an exercise period of ten years from the date of issuance. The $10 Per Share Warrants will have an exercise period of five years from the date of issuance and will have customary cashless exercise provisions. The warrants will have standard anti-dilution protections. The shares of New Dragonfly common stock issuable upon exercise of the warrants shall have customary registration rights requiring New Dragonfly to file and keep effective a registration statement registering the resale of such shares. Equity Facility Letter Agreement On May 15, 2022, Chardan, Dragonfly and CCM 5 (the “Equity Facility Investor”) entered into a letter agreement (together with the Summary of Indicative Terms attached as an exhibit thereto, the “Equity Facility Letter Agreement”) pursuant to which Chardan and Dragonfly agreed to enter into definitive documentation (the “Equity Facility Definitive Documentation”) to establish a committed equity facility (the “Equity Facility”) prior to the Closing. The Equity Facility Definitive Documentation will contain terms that are consistent with the Equity Facility Letter Agreement and customary for documentation of this nature. Pursuant to and subject to the conditions to be set forth in the Equity Facility Definitive Documentation, New Dragonfly will have the right from time to time at its option to direct the Equity Facility Investor to purchase up to a specified maximum amount of shares of New Dragonfly common stock, up to a maximum aggregate purchase price of $150,000,000 over the 36 -month term of the Equity Facility Letter Agreement. The foregoing descriptions of the Merger Agreement, form of the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement and the transactions and documents contemplated thereby are not complete and are subject to and qualified in their entirety by reference to the Merger Agreement, form of the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement, copies of which were filed on Form 8-K, as filed on May 16, 2022. The Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement have been included to provide investors with information regarding their terms. They are not intended to provide any other factual information about Chardan, Dragonfly, or their affiliates. The representations, warranties, covenants and agreements contained in the Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Registration Rights Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement and the other documents related thereto were made only for purposes of such agreements as of the specific dates therein, were solely for the benefit of the parties to the Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement, as applicable, and may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter or the Equity Facility Letter Agreement, as applicable, instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter or the Equity Facility Letter Agreement and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter or the Equity Facility Letter Agreement, as applicable, which subsequent information may or may not be fully reflected in Chardan’s public disclosures. Risks and Uncertainties Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these unaudited condensed consolidated financial statements. The unaudited condensed consol | NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Chardan NexTech Acquisition 2 Corp (the “Company”) is a blank check company incorporated in Delaware on June 23, 2020. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). The Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. As of December 31, 2021, the Company had not commenced any operations. All activity for the year ended December 31, 2021 and for the period from June 23, 2020 (inception) through December 31, 2020 relates to the Company’s formation and initial public offering (“Initial Public Offering”) described below, and, subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The registration statement on Form S-1 (the “Registration Statement”) for the Company’s Initial Public Offering was declared effective on August 10, 2021. On August 13, 2021, the Company consummated the Initial Public Offering of 11,000,000 units (the “Units” and, with respect to the common stock, par value $0.0001 per share, of the Company included in the Units sold, the “Public Shares”, and with respect to the warrants of the Company included in the Units sold, the “Public Warrants”), at $10.00 per Unit, generating gross proceeds of $110,000,000, which is discussed in Note 3. Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 4,361,456 warrants (the “Private Warrants”, together with the Public Warrants, the “Warrants”) at a price of $0.93 per Private Warrant in a private placement to Chardan NexTech 2 Warrant Holdings LLC, a Delaware limited liability company (“Holdings”), an affiliate of Chardan NexTech Investments 2 LLC, a Delaware limited liability company (the “Sponsor”), generating gross proceeds of $4,052,000, which is described in Note 4. The Company had granted the underwriters in the Initial Public Offering a 45-day option to purchase up to 1,650,000 Units to cover over-allotments, if any (see Note 6). On August 16, 2021, the underwriters fully exercised the over-allotment option and, on August 18, 2021, purchased an additional 1,650,000 Units (the “Over-Allotment Units”) at a purchase price of $10.00 per Over-Allotment Unit, generating gross proceeds of $16,500,000. Simultaneously with the closing of the exercise of the over-allotment option, the Company consummated the sale of 266,402 warrants (the “Over-Allotment Private Warrants”) at a purchase price of $0.93 per Over-Allotment Private Warrant in a private placement to the Holdings, generating gross proceeds of $247,500. Following the closing of the Initial Public Offering and underwriters’ over-allotment option, an amount of $128,397,500 from the net proceeds of the sale of the Units and Over-Allotment Units and a portion of the proceeds from the sale of the Private Warrants and Over-Allotment Private Warrants was placed in a trust account (the “Trust Account”) and was invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “ Investment Company Act Transaction costs related to the issuances described above amounted to $1,080,140, consisting of $500,000 of cash underwriting fees and $580,140 of other offering costs. The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account ($10.15 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The Public Shares subject to redemption was recorded at redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. Notwithstanding the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company. The Company will have 12 months, or August 13, 2022, from the closing of the Initial Public Offering to consummate an initial Business Combination. However, if the Company anticipates that it may not be able to consummate an initial Business Combination within 12 months, the Company’s insiders or their affiliates may, but are not obligated to, extend the period of time to consummate a Business Combination up to two times by an additional three months each time (for a total of up to 18 months, or February 13, 2023, to complete a Business Combination). If the Company is unable to consummate an initial Business Combination within the above time period, the Company will distribute the aggregate amount then on deposit in the Trust Account, pro rata to the Company’s public stockholders, by way of the redemption of their shares and thereafter cease all operations except for the purposes of winding up of the Company’s affairs. In such event, the warrants will expire and be worthless. The initial stockholders have agreed to waive their redemption rights with respect to any shares they own in connection with the consummation of the initial Business Combination, including their Founder Shares and Public Shares that they purchase during or after the offering, if any. In addition, the initial stockholders have agreed to waive their rights to liquidating distributions with respect to their Founder Shares if the Company fails to consummate an initial Business Combination within 18 months (assuming both of the three-month extensions were executed) from the closing of this offering. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering, they will be entitled to receive liquidating distributions with respect to such Public Shares if the Company fails to consummate an initial Business Combination within the required time period. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.15 per Public Share or (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay the Company’s taxes, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Going Concern Consideration As of December 31, 2021, the Company had $799,808 in cash held outside of the Trust Account and working capital of $988,186. The Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. In connection with our assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial Statements — Risks and Uncertainties Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements. The specific impact on the Company's financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements. |
BASIS OF PRESENTATION AND SUM_7
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s annual report on Form 10-K as filed with the SEC on March 29, 2022. The interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future periods. Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act Registration Statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited condensed consolidated financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Use of Estimates The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the reporting periods. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did no t have any cash equivalents as of September 30, 2022 and December 31, 2021. Cash and Investments Held in Trust Account The Company’s portfolio of investments is comprised of cash and U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in Net income from investments held in Trust Account in the accompanying statement of operations. The estimated fair values of investments held in the Trust Account are determined using available market information. At September 30, 2022, cash held in the Trust Account was $31,995,703 . As of December 31, 2021, investments held in the Trust Account were $128,421,215 . Common Stock Subject to Possible Redemption The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if any) is classified as liability instruments and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemption upon occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock feature certain redemption rights that is considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. On August 5, 2022, in connection with the Charter Amendment, 9,556,652 shares of Chardan common stock were redeemed, resulting in the distribution of $97,194,950 from the Trust Account to the redeeming stockholders. Following such redemptions, approximately $31,460,579 million remained in the Trust Account and 6,255,848 shares of Common Stock remained issued and outstanding . Accordingly, as of September 30, 2022 and December 31, 2021, 3,093,348 and 12,650,000 shares of common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity (deficit) section of the Company’s unaudited condensed consolidated balance sheets. Effective with the closing of the Initial Public Offering, the Company recognized the accretion from the initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and retained earnings (accumulated deficit). The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Increases or decreases in the carrying amount of redeemable common stock is affected by charges against additional paid -in capital and retained earnings (accumulated deficit). As of September 30, 2022 and December 31, 2021, the common stock reflected in the unaudited condensed consolidated balance sheets are reconciled in the following table: Gross proceeds $ 126,500,000 Less: Proceeds allocated to Public Warrants (15,180,000) Issuance costs allocated to common stock (933,989) Plus: Accretion of common stock to redemption amount 18,011,489 Common stock subject to possible redemption at December 31, 2021 128,397,500 Less: Redemption of common stock by stockholders (97,194,950) Plus: Accretion of common stock to redemption amount 503,812 Common stock subject to possible redemption at September 30, 2022 $ 31,706,363 Offering Costs associated with the Initial Public Offering The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A — Expenses of Offering. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Initial Public Offering. Offering costs directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction in equity. Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately. The Company incurred offering costs amounting to $1,080,140 , consisting of $500,000 of cash underwriting fees and $580,140 of other offering costs. The Company recorded $933,989 of offering costs as a reduction of temporary equity in connection with the redeemable common stock included in the Units. The Company recorded $127,354 as a reduction of permanent equity in connection with the Public Warrants included in the Units and immediately expensed $18,797 of offering costs in connection with the Private Warrants that were classified as liabilities. Warrant Liabilities The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants will be recognized as a non-cash gain or loss on the unaudited condensed consolidated statements of operations. The Company accounts for the Private Warrants issued concurrently in connection with the Initial Public Offering in accordance with ASC 815-40, under which the Private Warrants will not meet the criteria for equity classification and must be recorded as liabilities. As the Private Warrants meet the definition of a derivative as contemplated in ASC 815, the Private Warrants will be measured at fair value at inception and at each reporting date in accordance with ASC 820, Fair Value Measurement (“ASC 820”), with changes in fair value recognized in the unaudited condensed consolidated statements of operations in the period of change. The Public Warrants are not precluded from equity classification, and are accounted for as such on the date of issuance, and each balance sheet date thereafter. Income Taxes The Company complies with the accounting and reporting requirements of ASC 740, Income Taxes (“ASC 740”), which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the unaudited condensed consolidated financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740 prescribes a recognition threshold and a measurement attribute for the unaudited condensed consolidated financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. Net Income (Loss) Per Share of Common Stock The Company complies with accounting and disclosure requirements of ASC 260, Earnings Per Share. Net income (loss) per common share is computed by dividing net earnings by the weighted-average number of shares of common stock outstanding during the period. The Company has not considered the effect of the Warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 14,115,358 shares in the calculation of diluted income (loss) per share, since the exercise of the Warrants are contingent upon the occurrence of future events. The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts): For the Three Months For the Three Months For the Nine Months For the Nine Months Ended Ended Ended Ended September September 30, September 30, September 30, 30, 2022 2021 2022 2021 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ (1,919,615) $ 2,690,543 $ (1,298,108) $ 2,689,709 Denominator: Basic weighted average shares outstanding 10,307,037 9,453,125 13,957,179 5,008,929 Basic net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.54 Diluted weighted average shares outstanding 10,307,037 9,672,826 13,957,179 5,356,456 Diluted net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.50 Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. Fair Value of Financial Instruments The Company applies ASC 820, which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances. The carrying amounts reflected in the unaudited condensed consolidated balance sheet for current assets and current liabilities approximate fair value due to their short-term nature. Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. See Note 10 for additional information on assets and liabilities measured at fair value. Recent Accounting Standards Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements. | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act Registration Statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2021 and 2020. Investments Held in Trust Account The Company’s portfolio of investments is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in Net income (loss) from investments held in Trust Account in the accompanying statement of operations. The estimated fair values of investments held in the Trust Account are determined using available market information. Common Stock Subject to Possible Redemption The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from Equity." Common stock subject to mandatory redemption (if any) is classified as liability instruments and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemption upon occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock feature certain redemption rights that is considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of December 31, 2021, 12,650,000 shares of common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet. Effective with the closing of the Initial Public Offering, the Company recognized the accretion from the initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Increases or decreases in the carrying amount of redeemable common stock is affected by charges against additional paid in capital and accumulated deficit. As of December 31, 2021, the common stock reflected in the balance sheet is reconciled in the following table: Gross proceeds $ 126,500,000 Less: Proceeds allocated to Public Warrants (15,180,000) Issuance costs allocated to common stock (933,989) Plus: Accretion of carrying value to redemption value 18,011,489 Common stock subject to possible redemption $ 128,397,500 Offering Costs associated with the Initial Public Offering The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A — Expenses of Offering Warrant Liabilities The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815, Derivatives and Hedging For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants will be recognized as a non-cash gain or loss on the statements of operations. The Company accounts for the Private Warrants issued concurrently in connection with the Initial Public Offering in accordance with ASC 815-40, under which the Private Warrants will not meet the criteria for equity classification and must be recorded as liabilities. As the Private Warrants meet the definition of a derivative as contemplated in ASC 815, the Private Warrants will be measured at fair value at inception and at each reporting date in accordance with ASC 820, Fair Value Measurement The Public Warrants are not precluded from equity classification, and are accounted for as such on the date of issuance, and each balance sheet date thereafter. Income Taxes The Company complies with the accounting and reporting requirements of ASC Topic 740 — Income Taxes ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The effective tax rate is less than the U.S. statutory corporate tax rate of 21% because of the unrealized change in fair value of warrant liabilities, which was the biggest factor in net income and is not taxable. The Company had a loss from operations during the year ended December 31, 2021. The Company is subject to income tax examinations by major taxing authorities since inception. Net Income (Loss) Per Share of Common Stock Net income (loss) per common share is computed by dividing net earnings by the weighted-average number of shares of common stock outstanding during the period. The Company has not considered the effect of the Warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 14,115,358 shares in the calculation of diluted income per share, since the exercise of the Warrants are contingent upon the occurrence of future events. The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts): For the period from June 23, 2020 (inception) For the year through ended December 31, December 31, 2021 2020 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ 1,910,487 $ (1,000) Denominator: Basic weighted average shares outstanding 7,732,021 2,750,000 Basic net income (loss) per common share $ 0.25 $ (0.00) Diluted weighted average shares outstanding 7,991,952 2,750,000 Diluted net income (loss) per common share $ 0.24 $ (0.00) Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. Fair Value of Financial Instruments The Company applies ASC 820, which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances. The carrying amounts reflected in the balance sheet for current assets and current liabilities approximate fair value due to their short-term nature. Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. See Note 10 for additional information on assets and liabilities measured at fair value. Recent Accounting Standards In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if converted method for all convertible instruments. ASU 2020-06 is effective for the Company on January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective January 1, 2021 using the full retrospective method of transition. The adoption of ASU 2020-06 did not have a material impact on the financial statements for the fiscal year ended December 31, 2021. Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements. |
INITIAL PUBLIC OFFERING_2
INITIAL PUBLIC OFFERING | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
INITIAL PUBLIC OFFERING | ||
INITIAL PUBLIC OFFERING | NOTE 3. INITIAL PUBLIC OFFERING The Registration Statement for the Company’s Initial Public Offering was declared effective on August 10, 2021. On August 13, 2021, the Company completed its Initial Public Offering of 11,000,000 Units, at $10.00 per Unit, generating gross proceeds of $110,000,000 . Each Unit consisted of one Public Share, and three-quarters of one Public Warrant. Each Public Warrant entitles the holder to purchase one share of common stock at an exercise price of $11.50 per whole share (see Note 7). The Company had granted the underwriters in the Initial Public Offering a 45-day option to purchase up to 1,650,000 additional Units to cover over-allotments, if any (see Note 6). On August 18, 2021, the underwriters fully exercised the over-allotment option and purchased an additional 1,650,000 Over-Allotment Units, generating gross proceeds of $16,500,000 . | NOTE 3. INITIAL PUBLIC OFFERING The Registration Statement for the Company’s Initial Public Offering was declared effective on August 10, 2021. On August 13, 2021, the Company completed its Initial Public Offering of 11,000,000 Units, at $10.00 per Unit, generating gross proceeds of $110,000,000. Each Unit consisted of one Public Share, and three-quarters of one The Company had granted the underwriters in the Initial Public Offering a 45-day option to purchase up to 1,650,000 additional Units to cover over-allotments, if any (see Note 6). On August 18, 2021, the underwriters fully exercised the over-allotment option and purchased an additional 1,650,000 Over-Allotment Units, generating gross proceeds of $16,500,000. |
PRIVATE PLACEMENT_2
PRIVATE PLACEMENT | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
PRIVATE PLACEMENT | ||
PRIVATE PLACEMENT | NOTE 4. PRIVATE PLACEMENT Simultaneously with the closing of the Initial Public Offering, Holdings purchased an aggregate of 4,361,456 Private Warrants at a price of $0.93 per Private Warrant ($ 4,052,000 in the aggregate). Each Private Warrant entitles the holder to purchase one share of common stock at an exercise price of $11.50 per share (see Note 7). The proceeds from the Private Warrants were added to the proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within 12 months (or up to 18 months if the Company’s time to complete a Business Combination is extended), the proceeds of the sale of the Private Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Warrants will expire worthless. The Company classifies the outstanding Private Warrants as warrant liabilities on the unaudited condensed consolidated balance sheet in accordance with the guidance contained in ASC 815-40. Simultaneously with the closing of the exercise of the over-allotment option (see Note 6), the Company consummated the sale of 266,402 Over-Allotment Private Warrants at a purchase price of $0.93 per Over-Allotment Private Warrant in a private placement to Holdings, generating gross proceeds of $247,500 . | NOTE 4. PRIVATE PLACEMENT Simultaneously with the closing of the Initial Public Offering, Holdings purchased an aggregate of 4,361,456 private warrants at a price of $0.93 per Private Warrant ($4,052,000 in the aggregate). Each Private Warrant entitles the holder to purchase one share of common stock at an exercise price of $11.50 per share (see Note 7). The proceeds from the Private Warrants were added to the proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within 12 months (or up to 18 months if the Company’s time to complete a Business Combination is extended), the proceeds of the sale of the Private Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Warrants will expire worthless. The Company classifies the outstanding Private Warrants as warrant liabilities on the balance sheet in accordance with the guidance contained in ASC 815-40. Simultaneously with the closing of the exercise of the over-allotment option (see Note 6), the Company consummated the sale of 266,402 Over-Allotment Private Warrants at a purchase price of $0.93 per Over-Allotment Private Warrant in a private placement to Holdings, generating gross proceeds of $247,500. |
RELATED PARTY TRANSACTIONS_2
RELATED PARTY TRANSACTIONS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
RELATED PARTY TRANSACTIONS | ||
RELATED PARTY TRANSACTIONS | NOTE 5. RELATED PARTY TRANSACTIONS Founder Shares On June 23, 2020, the Company issued 1,000,000 shares of common stock for an aggregate price of $25,000 (the “Founder Shares”). On March 4, 2021, the Company effected a 2.875-for-1 stock split of its issued and outstanding shares of common stock , resulting in an aggregate of 2,875,000 shares of common stock issued and outstanding. On August 10, 2021, the Company effectuated a 1.1-for-1 stock split , resulting in an aggregate of 3,162,500 shares of common stock outstanding. Shares and the associated amounts have been retroactively restated in these unaudited condensed consolidated financial statements to reflect the two stock splits. The Founder Shares include an aggregated of up to 412,500 shares of common stock subject to forfeiture by the initial stockholders to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the initial stockholders would collectively own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering. On August 18, 2021, the underwriters’ exercised the over-allotment option in full, thus these shares are no longer subject to forfeiture (see Note 6). With certain limited exceptions, 50% of the Founder Shares will not be transferred, assigned, sold or released from escrow until the earlier of (i) six months after the date of the consummation of a Business Combination (the “Escrow Period”) or (ii) the date on which the closing price of the Company’s shares of common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any ten trading days within any 30-trading day period commencing after the consummation of a Business Combination. The remaining 50% of the Founder Shares will not be transferred, assigned, sold or released from escrow until the expiration of the Escrow Period. In either case, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the stockholders having the right to exchange their shares of common stock for cash, securities or other property, and either (1) before the expiration of the Escrow Period, then the Founder Shares will be canceled, or (2) after the expiration of the Escrow Period, release the Founder Shares to the initial stockholders. Promissory Note - Related Party On July 23, 2020, the Sponsor agreed to loan the Company an aggregate of up to $250,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Promissory Note”). The promissory note was non-interest bearing, unsecured and was repaid at August 19, 2021. As of September 30, 2022 and December 31, 2021, there was no outstanding balance under the note. The Promissory Note is no longer available to the Company. On August 8, 2022, the Company notified the Trustee that it was extending the time available to the Company to consummate its initial business combination for an additional one (1) month from August 13, 2022 to September 13, 2022 (“Extension No. 1”). Extension No. 1 provides the Company with additional time to complete its proposed business combination with Dragonfly Energy Corp. (“Dragonfly”), a leader in energy storage and producer of deep cycle lithium-ion storage batteries. Extension No. 1 is the first of up to three (3) one-month extensions permitted under the Company’s Second A&R Charter. In connection with Extension No. 1, the Company’s officers, directors, initial stockholders and Chardan NexTech 2 Warrant Holdings, LLC (collectively, the “Insiders”), their affiliates or designees will deposit an aggregate of $ 200,000 (the “First Extension Payment”) into the Trust Account prior to August 13, 2022, on behalf of the Company. In connection with its First Extension Payment, the Insiders will receive a non-interest bearing, unsecured promissory note equal to the First Extension Payment that will not be repaid if the Company is unable to close a business combination, unless there are funds available outside its Trust Account to do so. On September 6, 2022, the Company notified Continental Stock Transfer & Trust Company that it was extending the time available to the Company to consummate its initial business combination for an additional one (1) month from September 13, 2022 to October 13, 2022 (“Extension No. 2”). Extension No. 2 provides the Company with additional time to complete its proposed business combination with Dragonfly. Extension No. 2 is the second of up to three (3) 1-month extensions permitted under the Company’s Second A&R Charter. In connection with Extension No. 2, the Company’s officers, directors, initial stockholders and Chardan NexTech 2 Warrant Holdings, LLC, their affiliates or designees will deposit an aggregate of $200,000 (the “Second Extension Payment”) into the Trust Account prior to September 12, 2022, on behalf of the Company. In connection with its Second Extension Payment, the Insiders will receive a non-interest bearing, unsecured promissory note equal to the Second Extension Payment that will not be repaid if the Company is unable to close a business combination, unless there are funds available outside its Trust Account to do so. As of September 30, 2022 , the Company had an outstanding balance in promissory note - related party of $400,000 in relation to Extension No 1 and Extension No 2. Administrative Support Agreement The Company entered into an agreement, commencing on the effective date of the Initial Public Offering, to pay an affiliate of the Sponsor a total of $10,000 per month for office space, administrative and support services. Upon completion of a Business Combination or liquidation, the Company will cease paying these monthly fees. As of September 30, 2022, the Company has not exercised its option to use such services. Related Party Loans In order to finance transaction costs in connection with an intended initial Business Combination, the Company’s initial stockholders, officers and directors or any of their respective affiliates may, but are not obligated to, loan the Company funds as may be required from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would be paid upon consummation of an initial Business Combination, without interest. Loans made by Chardan Capital Markets LLC or any of its related persons will not be convertible into any of the Company’s securities and Chardan Capital Markets LLC and its related persons will have no recourse with respect to their ability to convert their loans into any of the Company’s securities. As of September 30, 2022 and December 31, 2021, the Company had no working capital loans outstanding. | NOTE 5. RELATED PARTY TRANSACTIONS Founder Shares On June 23, 2020, the Company issued 1,000,000 shares of common stock for an aggregate price of $25,000 (the “Founder Shares”). On March 4, 2021, the Company effected a 2.875-for-1 stock split of its issued and outstanding shares of common stock, resulting in an aggregate of 2,875,000 shares of common stock issued and outstanding. On August 10, 2021, the Company effectuated a 1.1-for-1 stock split, resulting in an aggregate of 3,162,500 shares of common stock outstanding. Shares and the associated amounts have been retroactively restated in these financial statements to reflect the two stock splits. The Founder Shares include an aggregated of up to 412,500 shares of common stock subject to forfeiture by the initial stockholders to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the initial stockholders would collectively own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering. On August 18, 2021, the underwriters’ exercised the over-allotment option in full, thus these shares are no longer subject to forfeiture (see Note 6). With certain limited exceptions, of the Founder Shares will not be transferred, assigned, sold or released from escrow until the earlier of (i) six months after the date of the consummation of a Business Combination (the “Escrow Period”) or (ii) the date on which the closing price of the Company’s shares of common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any ten trading days within any 30-trading day period commencing after the consummation of a Business Combination. The remaining 50% of the Founder Shares will not be transferred, assigned, sold or released from escrow until the expiration of the Escrow Period. In either case, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the stockholders having the right to exchange their shares of common stock for cash, securities or other property, and either (1) before the expiration of the Escrow Period, then the Founder Shares will be canceled, or (2) after the expiration of the Escrow Period, release the Founder Shares to the initial stockholders. Promissory Note — Related Party On July 23, 2020, the Sponsor agreed to loan the Company an aggregate of up to $250,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the "Promissory Note"). The promissory note was non-interest bearing, unsecured and was repaid at August 19, 2021. As of December 31, 2021 and December 31, 2020, there was no outstanding balance under the note. The Company cannot make any additional draws under this promissory note. Administrative Support Agreement The Company entered into an agreement, commencing on the effective date of the Initial Public Offering, to pay an affiliate of the Sponsor a total of $10,000 per month for office space, administrative and support services. Upon completion of a Business Combination or liquidation, the Company will cease paying these monthly fees. To date, the Company has not exercised its option to use such services. Related Party Loans In order to finance transaction costs in connection with an intended initial Business Combination, the Company’s initial stockholders, officers and directors or any of their respective affiliates may, but are not obligated to, loan the Company funds as may be required from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would be paid upon consummation of an initial Business Combination, without interest. Loans made by Chardan Capital Markets, LLC or any of its related persons will not be convertible into any of the Company’s securities and Chardan Capital Markets, LLC and its related persons will have no recourse with respect to their ability to convert their loans into any of the Company’s securities. As of December 31, 2021 and December 31, 2020, the Company had no working capital loans outstanding. |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | ||
COMMITMENTS AND CONTINGENCIES | NOTE 6. COMMITMENTS AND CONTINGENCIES Registration and Stockholder Rights Agreement The holders of the Founder Shares and Private Warrants (and any shares of common stock issuable upon the exercise of the Private Warrants) will be entitled to registration rights pursuant to an agreement to be signed prior to or on the effective date of the Initial Public Offering. The holders of a majority of these securities are entitled to make up to two demands that the Company register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority of the Private Warrants (and underlying securities) can elect to exercise these registration rights at any time after the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to Registration Statements filed subsequent to the consummation of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such Registration Statements. Underwriting Agreement The Company granted the underwriters a 45 -day option to purchase up to 1,650,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. On August 18, 2021, the underwriters fully exercised the over-allotment option to purchase an additional 1,650,000 Units at an offering price of $ 10.00 per Unit for an aggregate purchase price of $ 16,500,000 . In addition, the underwriters were paid a cash underwriting discount of $ 500,000 upon the closing of the Initial Public Offering. Business Combination Marketing Agreement The Company has engaged Chardan Capital Markets LLC as an advisor in connection with the Company’s Business Combination to assist the Company in holding meetings with the stockholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities, assist the Company in obtaining stockholder approval for the Business Combination and assist the Company with press releases and public filings in connection with the Business Combination. The Company will pay Chardan Capital Markets LLC a cash fee for such services upon the consummation of the Company’s initial Business Combination in an amount equal to, in the aggregate, 3.5% of the gross proceeds of the Initial Public Offering. As a result, Chardan Capital Markets LLC will not be entitled to such fee unless the Company consummates the initial Business Combination. Inflation Reduction Act of 2022 On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination. | NOTE 6. COMMITMENTS AND CONTINGENCIES Registration and Stockholder Rights Agreement The holders of the Founder Shares and Private Warrants (and any shares of common stock issuable upon the exercise of the Private Warrants) will be entitled to registration rights pursuant to an agreement to be signed prior to or on the effective date of the Initial Public Offering. The holders of a majority of these securities are entitled to make up to two demands that the Company register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock are to be released from escrow. The holders of a majority of the Private Warrants (and underlying securities) can elect to exercise these registration rights at any time after the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to Registration Statements filed subsequent to the consummation of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such Registration Statements. Underwriting Agreement The Company granted the underwriters a 45-day option to purchase up to 1,650,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. On August 18, 2021, the underwriters fully exercised the over-allotment option to purchase an additional 1,650,000 Units at an offering price of $10.00 per Unit for an aggregate purchase price of $16,500,000. In addition, the underwriters were paid a cash underwriting discount of $500,000 upon the closing of the Initial Public Offering. Business Combination Marketing Agreement The Company has engaged Chardan Capital Markets, LLC as an advisor in connection with the Company’s Business Combination to assist the Company in holding meetings with the stockholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities, assist the Company in obtaining stockholder approval for the Business Combination and assist the Company with press releases and public filings in connection with the Business Combination. The Company will pay Chardan Capital Markets, LLC a cash fee for such services upon the consummation of the Company’s initial Business Combination in an amount equal to, in the aggregate, 3.5% of the gross proceeds of the Initial Public Offering. As a result, Chardan Capital Markets, LLC will not be entitled to such fee unless the Company consummates the initial Business Combination. Related Party Extension Loans As discussed in Note 1, the Company may extend the period of time to consummate an initial Business Combination two times, for an additional three months each time (for a total of up to 18 months to complete a Business Combination). In order to extend the time available for the Company to consummate a Business Combination, the initial stockholders or their affiliates or designees must deposit into the Trust Account $1,265,000 ($0.10 per share, or an aggregate of $2,530,000) if extended for each of the full three months), on or prior to the date of the applicable deadline. Any such payments would be made in the form of a loan. The terms of the promissory note to be issued in connection with any such loans have not yet been negotiated. If the Company completes an initial Business Combination, the Company would repay such loaned amounts out of the proceeds of the Trust Account released to the Company. If the Company does not complete an initial Business Combination, the Company will not repay such loans. The initial stockholders and their affiliates or designees are not obligated to fund the Trust Account to extend the time for the Company to complete an initial Business Combination. |
WARRANTS_2
WARRANTS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
WARRANTS | ||
WARRANTS | NOTE 7. WARRANTS As of September 30, 2022 and December 31, 2021 there were 9,847,500 Public Warrants and 4,627,858 Private Warrants outstanding, respectively. Each whole Public Warrant will entitle the holder to purchase one share of common stock at an exercise price of $ 11.50 per whole share. Each of the Private Warrants is exercisable to purchase one share of common stock at a price of $ 11.50 per share, subject to adjustment. The proceeds from the sale of the Private Warrants were added to the net proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Warrants will be used to fund the redemption of the Public Shares (and the Private Warrants will expire worthless). The Warrants provide for a cashless exercise which the Company’s management determined to be a net settlement feature with no obligation to settle in cash. The net shares issued in a cashless exercise are based on the fair value of the Company’s common stock at the time the Warrants are exercised. Each Warrant shall, when countersigned by the Warrant Agent, entitle the Registered Holder to purchase from the Company the number of shares of common stock at $ 11.50 per share. The Public Warrants may only be exercised for a whole number of Warrant Shares by a Registered Holder. No fractional shares will be issued. A Warrant may be exercised only during the period (“Exercise Period”) commencing 30 days after the completion of the Company’s initial business combination and terminating at 5:00 p.m., New York City time, on the earlier to occur of (i) (A) five years following the completion of the Company’s initial business combination with respect to the Public Warrants, and (B) five years from the effective date of the Registration Statement with respect to the Private Warrants purchased by Chardan NexTech 2 Warrant Holdings LLC, provided that once the Private Warrants are not beneficially owned, directly or indirectly, by Chardan Capital Markets LLC or any of its related persons anymore, the Private Warrants may not be exercised five years following the completion of the Company’s initial business combination, and (ii) the date fixed for redemption of the Warrants as provided in Section 6 of this Warrant Agreement (“Expiration Date”). Except with respect to the right to receive the Redemption Price, each Warrant not exercised on or before the Expiration Date shall become void, and all rights thereunder and all rights shall cease at the close of business on the Expiration Date. The Company may extend the duration of the Warrants by delaying the Expiration Date; provided, however, that the Company (i) may not extend the duration of the Private Warrants by delaying the Expiration Date and (ii) will provide written notice of not less than 10 days to Registered Holders of such extension and that such extension shall be identical in duration among all of the then outstanding Warrants. The Company is not required to issue any fraction of a Warrant Share in connection with the exercise of Warrants, and in any case where the Registered Holder would be entitled under the terms of the Warrants to receive a fraction of a Warrant Share upon the exercise of such Registered Holder’s Warrants, issue or cause to be issued only the largest whole number of Warrant Shares issuable on such exercise (and such fraction of a Warrant Share will be disregarded); provided, that if more than one Warrant certificate is presented for exercise at the same time by the same Registered Holder, the number of whole Warrant Shares which shall be issuable upon the exercise thereof shall be computed on the basis of the aggregate number of Warrant Shares issuable on exercise of all such Warrants. The Private Warrants: (i) will be exercisable either for cash or on a cashless basis at the holders option and (ii) will not be redeemable by the Company, in either case as long as the Private Warrants are held by the initial purchasers or any of their permitted transferees (as prescribed in the Subscription Agreement). The Private Warrants may not be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of, the Private Warrants (or any securities underlying the Private Warrants) for a period of one hundred eighty ( 180 ) days following the effective date of the Registration Statement to anyone other than any member participating in the Public Offering and the officers or partners thereof, if all securities so transferred remain subject to the lock-up restriction for the remainder of the time period. All (and not less than all) of the outstanding Warrants may be redeemed, in whole and not in part, at the option of the Company, at any time from and after the Warrants become exercisable, and prior to their expiration, at the office of the Warrant Agent, at the price of $.01 per Warrant (“Redemption Price”); provided that the last sales price of the common stock has been equal to or greater than $ 16.00 per share (subject to adjustment for splits, dividends, recapitalizations and other similar events) (the “Redemption Trigger Price”), for any ten ( 10 ) trading days within a thirty ( 30 ) trading day period ending on the third business day prior to the date on which notice of redemption is given and provided further that there is a current Registration Statement in effect with respect to the shares of common stock underlying the Warrants for each day in the aforementioned 30 -day trading period and continuing each day thereafter until the Redemption Date. For avoidance of doubt, if and when the warrants become redeemable by the Company, the Company may exercise its redemption right, even if it is unable to register or qualify the Warrant Shares for sale under all applicable state securities laws. The Company accounts for the 4,627,858 Private Warrants issued in connection with the Initial Public Offering in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the Private Warrants do not meet the criteria for equity treatment thereunder, each Private Warrant must be recorded as a liability. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liabilities will be adjusted to its current fair value, with the change in fair value recognized in the Company’s statement of operations. The Company will reassess the classification at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification. The Public Warrants are not precluded from equity classification. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair value are not recognized as long as the contracts continue to be classified in equity. | NOTE 7. WARRANTS As of December 31, 2021 and December 31, 2020 there was 9,487,500 and no Public Warrants and 4,627,858 and no Private Warrants outstanding, respectively. Each whole Public Warrant will entitle the holder to purchase one share of common stock at an exercise price of $11.50 per whole share. Each of the Private Warrants is exercisable to purchase one share of common stock at a price of $11.50 per share, subject to adjustment. The proceeds from the sale of the Private Warrants were added to the net proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Warrants will be used to fund the redemption of the Public Shares (and the Private Warrants will expire worthless). The Warrants provide for a cashless exercise which the Company’s management determined to be a net settlement feature with no obligation to settle in cash. The net shares issued in a cashless exercise are based on the fair value of the Company’s common stock at the time the Warrants are exercised. Each Warrant shall, when countersigned by the Warrant Agent, entitle the Registered Holder to purchase from the Company the number of shares of common stock at $11.50 per share. The Public Warrants may only be exercised for a whole number of Warrant Shares by a Registered Holder. No fractional shares will be issued. A Warrant may be exercised only during the period (“Exercise Period”) commencing 30 days after the completion of the Company’s initial business combination and terminating at 5:00 p.m., New York City time, on the earlier to occur of (i) (A) five years following the completion of the Company’s initial business combination with respect to the Public Warrants, and (B) five years from the effective date of the Registration Statement with respect to the Private Warrants purchased by Chardan NexTech 2 Warrant Holdings LLC, provided that once the Private Warrants are not beneficially owned, directly or indirectly, by Chardan Capital Markets, LLC or any of its related persons anymore, the Private Warrants may not be exercised five years following the completion of the Company’s initial business combination, and (ii) the date fixed for redemption of the Warrants as provided in Section 6 of this Warrant Agreement (“Expiration Date”). Except with respect to the right to receive the Redemption Price, each Warrant not exercised on or before the Expiration Date shall become void, and all rights thereunder and all rights shall cease at the close of business on the Expiration Date. The Company may extend the duration of the Warrants by delaying the Expiration Date; provided, however, that the Company (i) may not extend the duration of the Private Warrants by delaying the Expiration Date and (ii) will provide written notice of not less than 10 days to Registered Holders of such extension and that such extension shall be identical in duration among all of the then outstanding Warrants. The Company is not required to issue any fraction of a Warrant Share in connection with the exercise of Warrants, and in any case where the Registered Holder would be entitled under the terms of the Warrants to receive a fraction of a Warrant Share upon the exercise of such Registered Holder’s Warrants, issue or cause to be issued only the largest whole number of Warrant Shares issuable on such exercise (and such fraction of a Warrant Share will be disregarded); provided, that if more than one Warrant certificate is presented for exercise at the same time by the same Registered Holder, the number of whole Warrant Shares which shall be issuable upon the exercise thereof shall be computed on the basis of the aggregate number of Warrant Shares issuable on exercise of all such Warrants. The Private Warrants: (i) will be exercisable either for cash or on a cashless basis at the holders option and (ii) will not be redeemable by the Company, in either case as long as the Private Warrants are held by the initial purchasers or any of their permitted transferees (as prescribed in the Subscription Agreement). The Private Warrants may not be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of, the Private Warrants (or any securities underlying the Private Warrants) for a period of one hundred eighty (180) days following the effective date of the Registration Statement to anyone other than any member participating in the Public Offering and the officers or partners thereof, if all securities so transferred remain subject to the lock-up restriction for the remainder of the time period. All (and not less than all) of the outstanding Warrants may be redeemed, in whole and not in part, at the option of the Company, at any time from and after the Warrants become exercisable, and prior to their expiration, at the office of the Warrant Agent, at the price of $.01 per Warrant (“Redemption Price”); provided that the last sales price of the common stock has been equal to or greater than $16.00 per share (subject to adjustment for splits, dividends, recapitalizations and other similar events) (the “Redemption Trigger Price”), for any ten (10) trading days within a thirty (30) trading day period ending on the third business day prior to the date on which notice of redemption is given and provided further that there is a current Registration Statement in effect with respect to the shares of common stock underlying the Warrants for each day in the aforementioned 30-day trading period and continuing each day thereafter until the Redemption Date. For avoidance of doubt, if and when the warrants become redeemable by the Company, the Company may exercise its redemption right, even if it is unable to register or qualify the Warrant Shares for sale under all applicable state securities laws. The Company accounts for the 4,627,858 Private Warrants issued in connection with the Initial Public Offering in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the private warrants do not meet the criteria for equity treatment thereunder, each private warrant must be recorded as a liability. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liabilities will be adjusted to its current fair value, with the change in fair value recognized in the Company’s statement of operations. The Company will reassess the classification at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification. The Public Warrants are not precluded from equity classification. Equity-classified contracts are initially measured at fair value (or allocated value). Subsequent changes in fair value are not recognized as long as the contracts continue to be classified in equity. |
STOCKHOLDERS' EQUITY (DEFICIT_3
STOCKHOLDERS' EQUITY (DEFICIT) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
STOCKHOLDERS' EQUITY (DEFICIT) | ||
STOCKHOLDERS' EQUITY (DEFICIT) | NOTE 8. STOCKHOLDERS’ EQUITY (DEFICIT) Preferred Stock— The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2022 and December 31, 2021, the Company had no issued or outstanding shares of preferred stock. Common stock —The Company is authorized to issue 50,000,000 shares of common stock with a par value of $0.0001 per share. On August 5, 2022, in connection with the Charter Amendment, 9,556,652 shares of Chardan common stock were redeemed by certain stockholders. As such, on September 30, 2022 and December 31, 2021, there were 6,255,848 and 15,812,500 shares of common stock issued and outstanding , including 3,093,348 and 12,650,000 shares of common stock subject to possible redemption, respectively. Of the 15,812,500 shares of common stock outstanding, up to 412,500 shares were subject to forfeiture to the Company by the initial stockholders for no consideration to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the initial stockholders would collectively own 20% of the Company’s issued and outstanding common stock after the Initial Public Offering. On August 16, 2021, the underwriters’ exercised the over-allotment option in full (see Note 6), thus these shares are no longer subject to forfeiture. Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Unless specified in the Amended and Restated Certificate of Incorporation or bylaws, or as required by applicable law or stock exchange rules, the affirmative vote of a majority of the Company’s shares of common stock that are voted is required to approve any such matter voted on by the Company’s stockholders (other than the election of directors). | NOTE 8. STOCKHOLDERS’ EQUITY (DEFICIT) Preferred stock — December 31, 2021 and December 31, 2020 Common stock — of the Company’s issued and outstanding common stock after the Initial Public Offering. On August 16, 2021, the underwriters’ exercised the over-allotment option in full (see Note 6), thus these shares are no longer subject to forfeiture. Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Unless specified in the Amended and Restated Certificate of Incorporation or bylaws, or as required by applicable law or stock exchange rules, the affirmative vote of a majority of the Company’s shares of common stock that are voted is required to approve any such matter voted on by the Company’s stockholders (other than the election of directors). |
INCOME TAXES_2
INCOME TAXES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
INCOME TAXES | NOTE 9. INCOME TAXES The Company’s effective tax rate for the three and nine months ended September 30, 2022 was (2.1)% and (3.1)% . The effective tax rate for the three and nine months ended September 30, 2021 was 0.0% .The Company’s effective tax rate differs from the statutory income tax rate of 21% primarily due to the recognition of gains or losses from the changes in the fair value of warrant liabilities and unrealized gains on the investments held in the Trust Account, which are not recognized for tax purposes. The Company has historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to income or loss for the reporting period. The Company has used a discrete effective tax rate method to calculate taxes for the three and nine months ended September 30, 2022. The Company believes that, at this time, the use of the discrete method for the three and nine months ended September 30, 2022 is more appropriate than the estimated annual effective tax rate method as the estimated annual effective tax rate method is not reliable due to a high degree of uncertainty in estimating annual pretax earnings. | NOTE 9. INCOME TAX The Company’s net deferred tax assets (liabilities) as of December 31, 2021 is as follows: Deferred tax assets: Start-up costs $ 61,335 Net operating loss carryforwards 298,437 Total deferred tax assets 359,772 Valuation allowance (354,792) Deferred tax liabilities: Unrealized gain on investments (4,980) Total deferred tax liabilities (4,980) Deferred tax assets, net of allowance $ — The income tax provision for the year ended December 31, 2021 consists of the following: Federal Current $ — Deferred (354,792) State Current — Deferred — Change in valuation allowance 354,792 Income tax provision $ — As of December 31, 2021, the Company has available U.S. federal operating loss carry forwards of approximately $357,674 that may be carried forward indefinitely. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies in making this assessment. After consideration of all the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the year ended December 31, 2021, the valuation allowance was $354,792. A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2021 is as follows: Statutory federal income tax rate 21.0 % State taxes, net of federal tax benefit 0.0 % Change in fair value of derivative warrant liabilities (40.8) % Non-deductible transaction costs 0.2 % Change in valuation allowance 19.6 % Income tax provision 0.0 % Deferred tax assets were deemed to be de minimis as of December 31, 2020. |
FAIR VALUE MEASUREMENTS_2
FAIR VALUE MEASUREMENTS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
FAIR VALUE MEASUREMENTS | ||
FAIR VALUE MEASUREMENTS | NOTE 10. FAIR VALUE MEASUREMENTS The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value: Amount at Description Fair Value Level 1 Level 2 Level 3 September 30, 2022 Liabilities Warrant liabilities – Private Warrants $ 1,989,979 $ — $ — $ 1,989,979 The remaining balance held in the Trust Account of September 30, 2022 was held in cash. Amount at Description Fair Value Level 1 Level 2 Level 3 December 31, 2021 Assets Investments held in Trust Account: Money Market investments $ 128,421,215 $ 128,421,215 $ — $ — Liabilities Warrant liabilities – Private Warrants $ 2,036,258 $ — $ — $ 2,036,258 The Company utilizes a Black-Scholes method to value the Private Warrants at each reporting period, with changes in fair value recognized in the statement of operations. The estimated fair value of the warrant liabilities is determined using Level 3 inputs. Inherent in a Black-Scholes model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the Private Warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero. The following table provides the significant inputs to the Black-Scholes method for the fair value of the Private Warrants: As of As of September 30, December 31, 2022 2021 Common stock price $ 10.29 $ 9.97 Exercise price $ 11.50 $ 11.50 Dividend yield — % — % Term to Business Combination (years) 3.86 4.61 Volatility 3.3 % 9.1 % Risk-free rate 4.17 % 1.20 % Fair value $ 0.43 $ 0.44 The following table provides a summary of the changes in the fair value of the Company’s Level 3 financial instruments that are measured at fair value on a recurring basis: Fair value as of June 23, 2020 (inception) $ — Initial measurement 5,553,429 Change in valuation inputs or other assumptions (3,517,171) Fair value at December 31, 2021 $ 2,036,258 Change in valuation inputs or other assumptions (1,434,636) Fair value at March 31, 2022 $ 601,622 Change in valuation inputs or other assumptions 277,671 Fair value at June 30, 2022 $ 879,293 Change in valuation inputs or other assumptions 1,110,686 Fair value at September 30, 2022 $ 1,989,979 The Company recognized a gain (loss) in connection with changes in the fair value of warrant liabilities of $(1,110,686) and $4,072,514 within change in fair value of warrant liabilities in the unaudited condensed consolidated statement of operations for the three months ended September 30, 2022 and 2021. The Company recognized a gain in connection with changes in the fair value of warrant liabilities of $46,279 and $4,072,514 within change in fair value of warrant liabilities in the unaudited condensed consolidated statement of operations for the nine months ended September 30, 2022 and 2021. | NOTE 10. FAIR VALUE MEASUREMENTS The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value: Amount at Description Fair Value Level 1 Level 2 Level 3 December 31, 2021 Assets Investments held in Trust Account: Money Market investments $ 128,421,215 $ 128,421,215 $ — $ — Liabilities Warrant liabilities – Private warrants $ 2,036,258 $ — $ — $ 2,036,258 The Company did not have any assets or liabilities measured at fair value as of December 31, 2020. The Company utilizes a Black-Scholes method to value the Private Warrants at each reporting period, with changes in fair value recognized in the statement of operations. The estimated fair value of the warrant liabilities is determined using Level 3 inputs. Inherent in a Black-Scholes model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the Private Warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero. The following table provides the significant inputs to the Black-Scholes method for the fair value of the Private Warrants: Initial As of December 31, Measurement 2021 Stock price $ 10.00 $ 9.97 Strike price $ 11.50 $ 11.50 Dividend yield — % — % Remaining term (in years) 5.00 4.61 Volatility 19.0 % 9.1 % Risk-free rate 0.81 % 1.20 % Fair value of warrants $ 1.20 $ 0.44 The following table provides a summary of the changes in the fair value of the Company’s Level 3 financial instruments that are measured at fair value on a recurring basis: Warrant Liabilities Fair value as of June 23, 2020 (inception) — Initial measurement 5,553,429 Change in valuation inputs or other assumptions (3,517,171) Fair value as of December 31, 2021 2,036,258 Transfers to/from Levels 1, 2, and 3 are recognized the beginning of the reporting period in which a change in valuation technique or methodology occurs. There were no transfers in or out of Level 3 from other levels in the fair value hierarchy for the period from June 23, 2020 (inception) through December 31, 2021. The Company recognized gains in connection with changes in the fair value of warrant liabilities of $3,517,171 within change in fair value of warrant liabilities in the Statements of Operations for the year ended December 31, 2021 and $0 for the period from June 23, 2020 (inception) through December 31, 2020. |
SUBSEQUENT EVENTS_2
SUBSEQUENT EVENTS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
SUBSEQUENT EVENTS | ||
SUBSEQUENT EVENTS | NOTE 11. SUBSEQUENT EVENTS The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed consolidated financial statements were issued. Based upon this review, except as noted below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed consolidated financial statements. Business Combination Closing On October 7, 2022 (the “Closing Date”), Dragonfly Energy Holdings Corp., a Delaware corporation (f/k/a Chardan NexTech Acquisition 2 Corp. (“Chardan”)), consummated the previously announced merger pursuant to the Business Combination Agreement, dated May 15, 2022, as amended by the Amendment to the Business Combination Agreement, dated July 12, 2022, by and among Chardan, Bronco Merger Sub, Inc., a Nevada corporation and a wholly owned subsidiary of Chardan (“Merger Sub”), and Dragonfly Energy Corp., a Nevada corporation (“Legacy Dragonfly”). Chardan’s stockholders approved the Transactions (as defined below) at a special meeting of stockholders held on October 6, 2022. Pursuant to the Business Combination Agreement, Merger Sub merged with and into Legacy Dragonfly (the “Merger” and, together with the other transactions contemplated by the Business Combination Agreement, the “Transactions”), with Legacy Dragonfly continuing as the surviving corporation in the Merger and a wholly-owned subsidiary of Chardan. On the Closing Date, the registrant changed its name from Chardan NexTech Acquisition 2 Corp. to Dragonfly Energy Holdings Corp. Merger Consideration At the Closing, by virtue of the Merger and without any action on the part of Chardan, Merger Sub, Legacy Dragonfly or the holders of any of the following securities: (a) Each outstanding share of Legacy Dragonfly’s common stock, par value $0.001 per share(“Legacy Dragonfly Common Stock”), converted into (i) a certain number of shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”), totaling 41,500,000 shares (including the conversion and assumption of the options to purchase shares of Legacy Dragonfly Common Stock described below), which is equal to (x) $415,000,000 divided by (y) $10.00 (the “Merger Consideration”) and (ii) the contingent right to receive Earnout Shares (as defined below) (which may be zero ) following the Closing. (b) Each option to purchase shares of Legacy Dragonfly Common Stock, was assumed and converted into options to acquire shares of Common Stock. The portion of the Merger Consideration reflecting the conversion of the Legacy Dragonfly options was calculated assuming that all the Company options are net-settled. With respect to the Company options received in respect of Legacy Dragonfly options that are outstanding immediately prior to the Closing and cash exercised after the Closing, up to 627,498 additional shares of Common Stock may be issued. At the Closing, approximately 38,576,648 shares of the Merger Consideration was allocated to holders of outstanding shares of Legacy Dragonfly Common Stock and 3,664,975 shares of the Merger Consideration was allocated to holders of the assumed Legacy Dragonfly options. Earnout Merger Consideration In addition to the Merger Consideration set forth above, additional contingent shares (“Earnout Shares”) may be payable to each holder of shares of Legacy Dragonfly Common Stock in the Merger, subject to achieving specified milestones, up to an aggregate of 40,000,000 additional shares of Common Stock in three tranches. The first tranche of 15,000,000 shares is issuable if the Company’s 2023 total audited revenue is equal to or greater than $250 million and the Company’s 2023 audited operating income is equal to or greater than $35 million. The second tranche of 12,500,000 shares is issuable upon achieving a volume-weighted average trading price threshold of Common Stock over any 20 Trading Days (which may or may not be consecutive) within any 30 consecutive Trading Day period of at least $22.50 on or prior to December 31, 2026, and the third tranche of 12,500,000 shares is issuable upon achieving a volume-weighted average trading price threshold of Common Stock over any 20 Trading Days (which may or may not be consecutive) within any 30 consecutive Trading Day period of at least $32.50 on or prior to December 31, 2028. To the extent not previously earned, the second tranche is issuable if the $ 32.50 price target is achieved by December 31, 2028. Upon the consummation of a change of control transaction during either the second milestone earnout period or the third milestone earnout period, any earnout milestone with respect to such earnout period that has not yet been achieved shall automatically be deemed to have been achieved if a change of control transaction is announced with an imputed share price of Common Stock of at least $22.50 on or prior to the end of second earnout period or $32.50 on prior to the third earnout period. A description of the Merger and the terms of the Business Combination Agreement are included in the proxy statement/prospectus, dated September 16, 2022 (the “Proxy Statement/Prospectus”) as filed with the SEC in the section entitled “Proposal No. 1 — The Business Combination Proposal” of the Proxy Statement/Prospectus. PIPE Investment Pursuant to the subscription agreement, dated as of May 15, 2022 (the “Subscription Agreement”), by and between Chardan and Chardan NexTech Investments 2 LLC (or an affiliate thereof if assigned pursuant to the Subscription Agreement, the “Sponsor”), the Sponsor agreed to purchase, and Chardan agreed to sell to the Sponsor, an aggregate of 500,000 shares of Chardan common stock (“Chardan Common Stock”) for gross proceeds to Chardan of $5 million in a private placement. On September 28, 2022, the Sponsor and Chardan Capital Markets LLC, a New York limited liability company (“CCM LLC”), entered into an assignment, assumption and joinder agreement, pursuant to which the Sponsor assigned all of the Sponsor’s rights, benefits and obligations under the Subscription Agreement to CCM LLC. Under the Subscription Agreement, the number of shares of Chardan Common Stock that CCM LLC was obligated to purchase was to be reduced by the number of shares of Chardan Common Stock that CCM LLC purchased in the open market, provided that such purchased shares were not redeemed, and the aggregate price to be paid under the Subscription Agreement was to be reduced by the amount of proceeds received by the Company because such shares are not redeemed (the “Offset”). During the week of September 26, 2022 CCM LLC acquired in the open market in total 485,000 shares of Common Stock at purchase prices per share ranging from $10.33 to $10.38 (such shares, the “Purchased Shares”). The Purchased Shares were not redeemed, resulting in (i) the Company’s receipt of $5,016,547 from the Trust Account (based on a per share redemption price of $10.34 ) and (ii) a reduction in CCM LLC’s purchase commitment under the Subscription Agreement to zero in accordance with the Offset. Debt Financing Loan Agreement Consistent with the previously disclosed commitment letter (the “Debt Commitment Letter”) between Chardan and Legacy Dragonfly, CCM Investments 5 LLC, an affiliate of CCM LLC (“CCM 5”, and in connection with the Term Loan, the “Chardan Lender”), and EICF Agent LLC (“EIP” and, collectively with the Chardan Lender, the “Initial Term Loan Lenders”), in connection with the Closing, Chardan, Legacy Dragonfly and the Initial Term Loan Lenders entered into the Term Loan, Guarantee and Security Agreement (the “Term Loan Agreement”) setting forth the terms of a senior secured term loan facility in an aggregate principal amount of $75 million (the “Term Loan”). The Chardan Lender backstopped its commitment under the Debt Commitment Letter by entering into a backstop commitment letter, dated as of May 20, 2022 (the “Backstop Commitment Letter”), with a certain third-party financing source (the “Backstop Lender” and collectively with EIP, the “Term Loan Lenders”), pursuant to which the Backstop Lender committed to purchase from the Chardan Lender the aggregate amount of the Term Loan held by the Chardan Lender (the “Backstopped Loans”) immediately following the issuance of the Term Loan on the Closing Date. Pursuant to an assignment agreement, the Backstopped Loans were assigned by CCM 5 to the Backstop Lender on the Closing Date. Pursuant to the terms of the Term Loan Agreement, the Term Loan was advanced in one tranche on the Closing Date. The proceeds of the Term Loan were used (i) to refinance on the Closing Date prior indebtedness, (ii) to support the Transaction under the Business Combination Agreement, (iii) for working capital purposes and other corporate purposes, and (iv) to pay any fees associated with transactions contemplated under the Term Loan Agreement and the other loan documents entered into in connection therewith, including the transactions described in the foregoing clauses (i) and (ii) and fees and expenses related to the business combination. The Term Loan amortizes in the amount of 5% per annum beginning 24 months after the Closing Date and matures on the fourth anniversary of the Closing Date (“Maturity Date”). The Term Loan accrues interest (i) until April 1, 2023, at a per annum rate equal to the adjusted Secured Overnight Financing Rate (“SOFR”) plus a margin equal to 13.5% , of which 7% will be payable in cash and 6.5% will be paid in-kind, (ii) thereafter until October 1, 2024, at a per annum rate equal to adjusted SOFR plus 7% payable in cash plus an amount ranging from 4.5% to 6.5% , depending on the senior leverage ratio of the consolidated company, which will be paid-in-kind and (iii) at all times thereafter, at a per annum rate equal to adjusted SOFR plus a margin ranging from 11.5% to 13.5% payable in cash, depending on the senior leverage ratio of the consolidated company. In each of the foregoing cases, adjusted SOFR will be no less than 1% . Warrant Agreements In connection with the entry into the Term Loan Agreement, and as a required term and condition thereof, the Company entered into (i) the penny warrant to issue penny warrants to the Term Loan Lenders under the Term Loan exercisable to purchase 2,593,056 shares, which is equal to approximately 5.6% of Common Stock calculated on an agreed fully diluted outstanding basis on the issuance date (the “Penny Warrants”) and (ii) the $10 warrant to issue warrants to the Term Loan Lenders under the Term Loan exercisable to purchase 1,600,000 shares of Common Stock at $10 per share (the “ $10 Warrants” and, together with the Penny Warrants, the “Warrants”). The additional shares of Common Stock will dilute the pro forma ownership of the other Company stockholders of proportionately. ChEF Equity Facility Consistent with the previously disclosed equity facility letter agreement between Legacy Dragonfly and CCM 5, the Company and CCM LLC entered into a purchase agreement (the “Purchase Agreement”) and a Registration Rights Agreement (the “ChEF RRA”) in connection with the Closing. Pursuant to the Purchase Agreement, the Company has the right to sell to CCM LLC an amount of shares of Common Stock, up to a maximum aggregate purchase price of $ 150 million, from time to time, pursuant to the terms of the Purchase Agreement. In addition, the Company appointed LifeSci Capital, LLC as “qualified independent underwriter” with respect to the transactions contemplated by the Purchase Agreement. Pursuant to, on the terms of, and subject to the satisfaction of the conditions in the Purchase Agreement, including the filing and effectiveness of a registration statement registering the resale by CCM LLC of the shares of Common Stock issued to it under the Purchase Agreement, the Company will have the right from time to time at its option to direct CCM LLC to purchase up to a specified maximum amount of shares of Common Stock, up to a maximum aggregate purchase price of $ 150 million, over the term of the equity facility (“ChEF Equity Facility”). Other Agreements Related Agreements Concurrently with the execution of the Business Combination Agreement, Chardan, Legacy Dragonfly and the Sponsor entered into a sponsor support agreement. Indemnification of Directors and Officers On the Closing Date, in connection with the consummation of the Transactions, the Company entered into indemnification agreements with each of its directors and executive officers. These agreements, among other things, will require the Company to indemnify the Company’s directors and executive officers for certain expenses, including attorneys’ fees, judgments and fines incurred by a director or executive officer in any action or proceeding arising out of their services as one of the Company’s directors or executive officers or any other company or enterprise to which the person provides services at the Company’s request. Registration Rights Agreement On the Closing Date, in connection with the consummation of the Transactions, the Company entered into the Amended and Restated Registration Rights Agreement with the Sponsor, Chardan’s officers, directors, initial stockholders, CCM LLC and Warrant Holdings, an affiliate of the Sponsor (collectively, the “Insiders”) and certain Legacy Dragonfly stockholders. | NOTE 11. SUBSEQUENT EVENTS The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements. |
BASIS OF PRESENTATION AND SUM_8
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s annual report on Form 10-K as filed with the SEC on March 29, 2022. The interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future periods. | Basis of Presentation The accompanying financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. |
Emerging Growth Company | Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act Registration Statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited condensed consolidated financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. | Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act Registration Statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. |
Use of Estimates | Use of Estimates The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the reporting periods. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did no t have any cash equivalents as of September 30, 2022 and December 31, 2021. | Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2021 and 2020. |
Cash and Investments Held in Trust Account | Cash and Investments Held in Trust Account The Company’s portfolio of investments is comprised of cash and U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in Net income from investments held in Trust Account in the accompanying statement of operations. The estimated fair values of investments held in the Trust Account are determined using available market information. At September 30, 2022, cash held in the Trust Account was $31,995,703 . As of December 31, 2021, investments held in the Trust Account were $128,421,215 . | |
Common Stock Subject to Possible Redemption | Common Stock Subject to Possible Redemption The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if any) is classified as liability instruments and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemption upon occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock feature certain redemption rights that is considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. On August 5, 2022, in connection with the Charter Amendment, 9,556,652 shares of Chardan common stock were redeemed, resulting in the distribution of $97,194,950 from the Trust Account to the redeeming stockholders. Following such redemptions, approximately $31,460,579 million remained in the Trust Account and 6,255,848 shares of Common Stock remained issued and outstanding . Accordingly, as of September 30, 2022 and December 31, 2021, 3,093,348 and 12,650,000 shares of common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity (deficit) section of the Company’s unaudited condensed consolidated balance sheets. Effective with the closing of the Initial Public Offering, the Company recognized the accretion from the initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and retained earnings (accumulated deficit). The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Increases or decreases in the carrying amount of redeemable common stock is affected by charges against additional paid -in capital and retained earnings (accumulated deficit). As of September 30, 2022 and December 31, 2021, the common stock reflected in the unaudited condensed consolidated balance sheets are reconciled in the following table: Gross proceeds $ 126,500,000 Less: Proceeds allocated to Public Warrants (15,180,000) Issuance costs allocated to common stock (933,989) Plus: Accretion of common stock to redemption amount 18,011,489 Common stock subject to possible redemption at December 31, 2021 128,397,500 Less: Redemption of common stock by stockholders (97,194,950) Plus: Accretion of common stock to redemption amount 503,812 Common stock subject to possible redemption at September 30, 2022 $ 31,706,363 | Common Stock Subject to Possible Redemption The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from Equity." Common stock subject to mandatory redemption (if any) is classified as liability instruments and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemption upon occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock feature certain redemption rights that is considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of December 31, 2021, 12,650,000 shares of common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet. Effective with the closing of the Initial Public Offering, the Company recognized the accretion from the initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit. The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. This method would view the end of the reporting period as if it were also the redemption date for the security. Increases or decreases in the carrying amount of redeemable common stock is affected by charges against additional paid in capital and accumulated deficit. As of December 31, 2021, the common stock reflected in the balance sheet is reconciled in the following table: Gross proceeds $ 126,500,000 Less: Proceeds allocated to Public Warrants (15,180,000) Issuance costs allocated to common stock (933,989) Plus: Accretion of carrying value to redemption value 18,011,489 Common stock subject to possible redemption $ 128,397,500 |
Offering Costs associated with the Initial Public Offering | Offering Costs associated with the Initial Public Offering The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A — Expenses of Offering. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Initial Public Offering. Offering costs directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction in equity. Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately. The Company incurred offering costs amounting to $1,080,140 , consisting of $500,000 of cash underwriting fees and $580,140 of other offering costs. The Company recorded $933,989 of offering costs as a reduction of temporary equity in connection with the redeemable common stock included in the Units. The Company recorded $127,354 as a reduction of permanent equity in connection with the Public Warrants included in the Units and immediately expensed $18,797 of offering costs in connection with the Private Warrants that were classified as liabilities. | Offering Costs associated with the Initial Public Offering The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A — Expenses of Offering |
Warrant Liabilities | Warrant Liabilities The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants will be recognized as a non-cash gain or loss on the unaudited condensed consolidated statements of operations. The Company accounts for the Private Warrants issued concurrently in connection with the Initial Public Offering in accordance with ASC 815-40, under which the Private Warrants will not meet the criteria for equity classification and must be recorded as liabilities. As the Private Warrants meet the definition of a derivative as contemplated in ASC 815, the Private Warrants will be measured at fair value at inception and at each reporting date in accordance with ASC 820, Fair Value Measurement (“ASC 820”), with changes in fair value recognized in the unaudited condensed consolidated statements of operations in the period of change. The Public Warrants are not precluded from equity classification, and are accounted for as such on the date of issuance, and each balance sheet date thereafter. | Warrant Liabilities The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815, Derivatives and Hedging For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants will be recognized as a non-cash gain or loss on the statements of operations. The Company accounts for the Private Warrants issued concurrently in connection with the Initial Public Offering in accordance with ASC 815-40, under which the Private Warrants will not meet the criteria for equity classification and must be recorded as liabilities. As the Private Warrants meet the definition of a derivative as contemplated in ASC 815, the Private Warrants will be measured at fair value at inception and at each reporting date in accordance with ASC 820, Fair Value Measurement The Public Warrants are not precluded from equity classification, and are accounted for as such on the date of issuance, and each balance sheet date thereafter. |
Income Taxes | Income Taxes The Company complies with the accounting and reporting requirements of ASC 740, Income Taxes (“ASC 740”), which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the unaudited condensed consolidated financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740 prescribes a recognition threshold and a measurement attribute for the unaudited condensed consolidated financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. | Income Taxes The Company complies with the accounting and reporting requirements of ASC Topic 740 — Income Taxes ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The effective tax rate is less than the U.S. statutory corporate tax rate of 21% because of the unrealized change in fair value of warrant liabilities, which was the biggest factor in net income and is not taxable. The Company had a loss from operations during the year ended December 31, 2021. The Company is subject to income tax examinations by major taxing authorities since inception. |
Net Income (Loss) Per Share of Common Stock | Net Income (Loss) Per Share of Common Stock The Company complies with accounting and disclosure requirements of ASC 260, Earnings Per Share. Net income (loss) per common share is computed by dividing net earnings by the weighted-average number of shares of common stock outstanding during the period. The Company has not considered the effect of the Warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 14,115,358 shares in the calculation of diluted income (loss) per share, since the exercise of the Warrants are contingent upon the occurrence of future events. The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts): For the Three Months For the Three Months For the Nine Months For the Nine Months Ended Ended Ended Ended September September 30, September 30, September 30, 30, 2022 2021 2022 2021 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ (1,919,615) $ 2,690,543 $ (1,298,108) $ 2,689,709 Denominator: Basic weighted average shares outstanding 10,307,037 9,453,125 13,957,179 5,008,929 Basic net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.54 Diluted weighted average shares outstanding 10,307,037 9,672,826 13,957,179 5,356,456 Diluted net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.50 | Net Income (Loss) Per Share of Common Stock Net income (loss) per common share is computed by dividing net earnings by the weighted-average number of shares of common stock outstanding during the period. The Company has not considered the effect of the Warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 14,115,358 shares in the calculation of diluted income per share, since the exercise of the Warrants are contingent upon the occurrence of future events. The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts): For the period from June 23, 2020 (inception) For the year through ended December 31, December 31, 2021 2020 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ 1,910,487 $ (1,000) Denominator: Basic weighted average shares outstanding 7,732,021 2,750,000 Basic net income (loss) per common share $ 0.25 $ (0.00) Diluted weighted average shares outstanding 7,991,952 2,750,000 Diluted net income (loss) per common share $ 0.24 $ (0.00) |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company applies ASC 820, which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances. The carrying amounts reflected in the unaudited condensed consolidated balance sheet for current assets and current liabilities approximate fair value due to their short-term nature. Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. See Note 10 for additional information on assets and liabilities measured at fair value. | Fair Value of Financial Instruments The Company applies ASC 820, which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances. The carrying amounts reflected in the balance sheet for current assets and current liabilities approximate fair value due to their short-term nature. Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. See Note 10 for additional information on assets and liabilities measured at fair value. |
Recent Accounting Standards | Recent Accounting Standards Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements. | Recent Accounting Standards In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if converted method for all convertible instruments. ASU 2020-06 is effective for the Company on January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective January 1, 2021 using the full retrospective method of transition. The adoption of ASU 2020-06 did not have a material impact on the financial statements for the fiscal year ended December 31, 2021. Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements. |
BASIS OF PRESENTATION AND SUM_9
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Schedule of reconciliation of common stock reflected in the unaudited condensed consolidated balance sheet | Gross proceeds $ 126,500,000 Less: Proceeds allocated to Public Warrants (15,180,000) Issuance costs allocated to common stock (933,989) Plus: Accretion of common stock to redemption amount 18,011,489 Common stock subject to possible redemption at December 31, 2021 128,397,500 Less: Redemption of common stock by stockholders (97,194,950) Plus: Accretion of common stock to redemption amount 503,812 Common stock subject to possible redemption at September 30, 2022 $ 31,706,363 | As of December 31, 2021, the common stock reflected in the balance sheet is reconciled in the following table: Gross proceeds $ 126,500,000 Less: Proceeds allocated to Public Warrants (15,180,000) Issuance costs allocated to common stock (933,989) Plus: Accretion of carrying value to redemption value 18,011,489 Common stock subject to possible redemption $ 128,397,500 |
Schedule of information needed to compute basic and diluted earnings per share | For the Three Months For the Three Months For the Nine Months For the Nine Months Ended Ended Ended Ended September September 30, September 30, September 30, 30, 2022 2021 2022 2021 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ (1,919,615) $ 2,690,543 $ (1,298,108) $ 2,689,709 Denominator: Basic weighted average shares outstanding 10,307,037 9,453,125 13,957,179 5,008,929 Basic net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.54 Diluted weighted average shares outstanding 10,307,037 9,672,826 13,957,179 5,356,456 Diluted net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.50 | For the period from June 23, 2020 (inception) For the year through ended December 31, December 31, 2021 2020 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ 1,910,487 $ (1,000) Denominator: Basic weighted average shares outstanding 7,732,021 2,750,000 Basic net income (loss) per common share $ 0.25 $ (0.00) Diluted weighted average shares outstanding 7,991,952 2,750,000 Diluted net income (loss) per common share $ 0.24 $ (0.00) |
FAIR VALUE MEASUREMENTS (Tabl_2
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
FAIR VALUE MEASUREMENTS | ||
Schedule of financial liabilities that are measured at fair value on a recurring basis | Amount at Description Fair Value Level 1 Level 2 Level 3 September 30, 2022 Liabilities Warrant liabilities – Private Warrants $ 1,989,979 $ — $ — $ 1,989,979 Amount at Description Fair Value Level 1 Level 2 Level 3 December 31, 2021 Assets Investments held in Trust Account: Money Market investments $ 128,421,215 $ 128,421,215 $ — $ — Liabilities Warrant liabilities – Private Warrants $ 2,036,258 $ — $ — $ 2,036,258 | Amount at Description Fair Value Level 1 Level 2 Level 3 December 31, 2021 Assets Investments held in Trust Account: Money Market investments $ 128,421,215 $ 128,421,215 $ — $ — Liabilities Warrant liabilities – Private warrants $ 2,036,258 $ — $ — $ 2,036,258 |
Schedule of significant inputs to the Black-Scholes method for the fair value | As of As of September 30, December 31, 2022 2021 Common stock price $ 10.29 $ 9.97 Exercise price $ 11.50 $ 11.50 Dividend yield — % — % Term to Business Combination (years) 3.86 4.61 Volatility 3.3 % 9.1 % Risk-free rate 4.17 % 1.20 % Fair value $ 0.43 $ 0.44 | Initial As of December 31, Measurement 2021 Stock price $ 10.00 $ 9.97 Strike price $ 11.50 $ 11.50 Dividend yield — % — % Remaining term (in years) 5.00 4.61 Volatility 19.0 % 9.1 % Risk-free rate 0.81 % 1.20 % Fair value of warrants $ 1.20 $ 0.44 |
Summary of the changes in the fair value of the Level 3 financial instruments that are measured at fair value on a recurring basis | Fair value as of June 23, 2020 (inception) $ — Initial measurement 5,553,429 Change in valuation inputs or other assumptions (3,517,171) Fair value at December 31, 2021 $ 2,036,258 Change in valuation inputs or other assumptions (1,434,636) Fair value at March 31, 2022 $ 601,622 Change in valuation inputs or other assumptions 277,671 Fair value at June 30, 2022 $ 879,293 Change in valuation inputs or other assumptions 1,110,686 Fair value at September 30, 2022 $ 1,989,979 | Warrant Liabilities Fair value as of June 23, 2020 (inception) — Initial measurement 5,553,429 Change in valuation inputs or other assumptions (3,517,171) Fair value as of December 31, 2021 2,036,258 |
DESCRIPTION OF ORGANIZATION A_6
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (Details) | 9 Months Ended | 12 Months Ended | |||||
Aug. 18, 2021 USD ($) $ / shares shares | Aug. 13, 2021 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) item $ / shares shares | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) item M $ / shares shares | Dec. 31, 2020 $ / shares | Oct. 31, 2020 $ / shares | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | |||||||
Number of units issued | shares | 1,650,000 | ||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Proceeds from Issuance Initial Public Offering | $ 0 | $ 126,000,000 | $ 126,000,000 | ||||
Proceeds from sale of private warrants | 0 | $ 4,299,500 | 4,299,500 | ||||
Transaction Costs | 1,080,140 | 1,080,140 | |||||
Cash underwriting fee | 500,000 | 500,000 | |||||
Other offering cost | 580,140 | 580,140 | |||||
Cash held outside the Trust Account | 799,808 | ||||||
Working Capital | $ 988,186 | ||||||
Condition for future business combination number of businesses minimum | item | 1 | ||||||
Condition for future business combination threshold Net Tangible Assets | $ 5,000,001 | $ 5,000,001 | |||||
Redemption limit percentage without prior consent | 15 | 15 | |||||
Months to complete acquisition | 12 | 12 | |||||
Private Placement Warrants | |||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | |||||||
Transaction Costs | $ 18,797 | ||||||
Public Warrants | |||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | |||||||
Transaction Costs | $ 127,354 | ||||||
Initial Public Offering | |||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | |||||||
Number of units issued | shares | 11,000,000 | 1,650,000 | |||||
Common stock, par value | $ / shares | $ 0.0001 | ||||||
Purchase price, per unit | $ / shares | $ 10 | $ 10.15 | $ 10.15 | $ 10.15 | |||
Proceeds from Issuance Initial Public Offering | $ 110,000,000 | ||||||
Shares issued to underwriters | shares | 1,650,000 | 1,650,000 | |||||
Payments for investment of cash in Trust Account | $ 128,397,500 | ||||||
Private Placement | Private Placement Warrants | |||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | |||||||
Sale of Private Placement Warrants (in shares) | shares | 4,361,456 | 4,361,456 | 4,361,456 | ||||
Price of warrant | $ / shares | $ 0.93 | $ 0.93 | |||||
Proceeds from sale of private warrants | $ 4,052,000 | $ 4,052,000 | |||||
Private Placement | Public Warrants | |||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | |||||||
Price of warrant | $ / shares | $ 0.93 | $ 0.93 | |||||
Proceeds from sale of private warrants | $ 4,052,000 | $ 4,052,000 | |||||
Over-allotment option | |||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | |||||||
Number of units issued | shares | 1,650,000 | 1,650,000 | |||||
Purchase price, per unit | $ / shares | $ 10 | ||||||
Proceeds from Issuance Initial Public Offering | $ 16,500,000 | $ 16,500,000 | |||||
Sale of Private Placement Warrants (in shares) | shares | 266,402 | 266,402 | 266,402 | ||||
Price of warrant | $ / shares | $ 0.93 | ||||||
Proceeds from sale of private warrants | $ 247,500 | ||||||
Shares issued to underwriters | shares | 1,650,000 | 1,650,000 | 1,650,000 | 1,650,000 | |||
Over-allotment option | Private Placement Warrants | |||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | |||||||
Sale of Private Placement Warrants (in shares) | shares | 266,402 | ||||||
Price of warrant | $ / shares | $ 0.93 | $ 0.93 | |||||
Proceeds from sale of private warrants | $ 247,500 | $ 247,500 |
DESCRIPTION OF ORGANIZATION A_7
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS - Business Combination Agreement (Details) | Aug. 05, 2022 USD ($) $ / shares shares | Jul. 12, 2022 USD ($) shares | May 15, 2022 USD ($) director tranche $ / shares shares | Sep. 30, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Aug. 13, 2021 $ / shares | Aug. 10, 2021 shares | Mar. 04, 2021 shares | Dec. 31, 2020 $ / shares shares | Dec. 31, 2019 shares |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||
Number of directors | director | 7 | |||||||||
Additional period from termination date | 3 months | |||||||||
Cash | $ | $ 15,000,000 | |||||||||
Number of shares purchased | 1,267,502 | |||||||||
Common stock, shares issued | 6,255,848 | |||||||||
Common stock, shares outstanding | 6,255,848 | 3,162,500 | 2,875,000 | |||||||
Assets held in Trust Account | $ | $ 31,995,703 | $ 128,421,215 | ||||||||
IPO | ||||||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||||||||
Common stock, par value | $ / shares | $ 0.0001 | |||||||||
Amend Charter and Investment Management Trust Agreement | ||||||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||||||||
Common stock, par value | $ / shares | $ 0.0001 | |||||||||
Number of shares purchased | 11,331,512 | |||||||||
Ownership percentage | 71.66% | |||||||||
Common stock, shares issued | 15,812,500 | |||||||||
Common stock, shares outstanding | 15,812,500 | |||||||||
Period of extension of combination period | 1 month | |||||||||
Assets held in Trust Account | $ | $ 200,000 | |||||||||
Redemption of shares | 9,556,652 | |||||||||
Percentage of common stock shares | 60.44% | |||||||||
Distribution from Trust Account to redeeming Stockholders | $ | $ 97,194,950 | |||||||||
Remaining cash in the trust account | $ | $ 31,460,579 | |||||||||
Amend Charter and Investment Management Trust Agreement | IPO | ||||||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||||||||
Percentage of common stock shares | 75.55% | |||||||||
New Dragonfly | ||||||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||||||||
Number of common stock shall be issuable to existing holders | 40,000,000 | |||||||||
Threshold period of closing before extended termination date | 2 days | |||||||||
Additional period from extended termination date | 3 months | |||||||||
New Dragonfly | Subscription Agreement | PIPE Investment | ||||||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||||||||
Number of shares subscribed for | 500,000 | |||||||||
Purchase price per share | $ / shares | $ 10 | |||||||||
Aggregate purchase price | $ | $ 5,000,000 | |||||||||
New Dragonfly | ||||||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0002 | $ 0.0002 | $ 0.0002 | ||||||
Number of additional common stock shall be issuable to existing holders | 40,000,000 | |||||||||
Number of tranches for common stocks issuance | tranche | 3 | |||||||||
Number of directors | director | 5 | |||||||||
Common stock, shares issued | 22,634,276 | 20,875,475 | 20,040,470 | 20,000,000 | ||||||
Common stock, shares outstanding | 22,634,276 | 20,875,475 | 20,040,470 | |||||||
Redemption of shares | 10,000,000 | 10,000,000 | 10,000,000 | |||||||
New Dragonfly | First Earnout | ||||||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||||||||
Number of additional common stock shall be issuable to existing holders | 15,000,000 | |||||||||
New Dragonfly | First Earnout | Minimum | ||||||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||||||||
Total audited revenue | $ | $ 250,000,000 | |||||||||
Audited operating income | $ | $ 35,000,000 | |||||||||
New Dragonfly | Second Earnout | ||||||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||||||||
Number of additional common stock shall be issuable to existing holders | 12,500,000 | |||||||||
Threshold trading days for VWAC | 20 days | |||||||||
Threshold consecutive trading days for VWAC | 30 days | |||||||||
VWAC per share | $ / shares | $ 22.50 | |||||||||
New Dragonfly | Third Earnout | ||||||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||||||||
VWAC per share | $ / shares | $ 32.50 | |||||||||
Chardan Nextech Acquisition | ||||||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||||||||
Number of directors | director | 2 | |||||||||
Chardan Nextech Acquisition | PIPE Investment | ||||||||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||||||||
Common stock, par value | $ / shares | $ 0.0001 |
DESCRIPTION OF ORGANIZATION A_8
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS - Debt Commitment Letter and Equity Facility Investor (Details) - USD ($) | May 15, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Oct. 06, 2021 |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||
Exercise price of warrant | $ 11.50 | $ 11.50 | ||
Debt Commitment Letter | Penny Warrants | ||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||
Number of warrants to purchase shares issued | 2,593,056 | |||
Equity Facility | ||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||
Aggregate purchase price | $ 150,000,000 | |||
New Dragonfly | ||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||
Maximum borrowing capacity | $ 8,000,000 | |||
New Dragonfly | Debt Commitment Letter | ||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||
Maturity term | 4 years | |||
New Dragonfly | Debt Commitment Letter | Initial lenders | Penny Warrants | ||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||
Percentage of common stock issuable on exercise of warrants | 3.60% | |||
Warrants term | 10 years | |||
New Dragonfly | Debt Commitment Letter | Initial lenders | Warrants | ||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||
Number of warrants to purchase shares issued | 1,600,000 | |||
Exercise price of warrant | $ 10 | |||
Warrants term | 5 years | |||
New Dragonfly | Debt Commitment Letter | Term Loan Facility | ||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||
Maximum borrowing capacity | $ 75,000,000 | |||
Quarterly amortization percent per annum | 5% | |||
New Dragonfly | Equity Facility | ||||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | ||||
Aggregate purchase price | $ 150,000,000 | |||
Purchase term of common stock | 36 months |
BASIS OF PRESENTATION AND SU_10
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of reconciliation of common stock reflected in the unaudited condensed consolidated balance sheet (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Dec. 31, 2021 | |
Accretion of common stock to redemption amount | $ (503,812) | $ (18,011,489) | $ (18,011,489) | |
Common stock subject to possible redemption | 128,397,500 | |||
Common stock subject to possible redemption | ||||
Gross proceeds | 126,500,000 | |||
Proceeds allocated to Public Warrants | (15,180,000) | |||
Issuance costs allocated to common stock | (933,989) | |||
Redemption of common stock by stockholders | $ (97,194,950) | |||
Accretion of common stock to redemption amount | 503,812 | 18,011,489 | ||
Common stock subject to possible redemption | $ 31,706,363 | $ 31,706,363 | $ 128,397,500 |
BASIS OF PRESENTATION AND SU_11
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Basic and diluted net income per common share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Numerator: | ||||||
Net income (loss) | $ (1,919,615) | $ 2,690,543 | $ (1,000) | $ (1,298,108) | $ 2,689,709 | $ 1,910,487 |
Denominator | ||||||
Basic weighted average shares outstanding | 10,307,037 | 9,453,125 | 2,750,000 | 13,957,179 | 5,008,929 | 7,732,021 |
Diluted weighted average shares outstanding | 10,307,037 | 9,672,826 | 2,750,000 | 13,957,179 | 5,356,456 | 7,991,952 |
Basic net income (loss) per common share | $ (0.19) | $ 0.28 | $ 0 | $ (0.09) | $ 0.54 | $ 0.25 |
Diluted net income (loss) per common share | $ (0.19) | $ 0.28 | $ 0 | $ (0.09) | $ 0.50 | $ 0.24 |
BASIS OF PRESENTATION AND SU_12
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Aug. 05, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash equivalents | $ 0 | $ 0 | $ 0 | |
Cash held in trust account | 31,995,703 | 128,421,215 | ||
Offering costs | 1,080,140 | 1,080,140 | ||
Cash underwriting fee | 500,000 | 500,000 | ||
Other offering cost | 580,140 | 580,140 | ||
Unrecognized tax benefits | 0 | 0 | ||
Unrecognized tax benefits accrued for interest and penalties | $ 0 | $ 0 | ||
Purchase an aggregate shares | 14,115,358 | 14,115,358 | ||
Public Warrants | ||||
Offering costs | $ 127,354 | |||
Private Warrants | ||||
Offering costs | $ 18,797 | |||
Common stock subject to redemption | ||||
Redemption of shares | 9,556,652 | |||
Distribution from Trust Account to redeeming Stockholders | $ 97,194,950 | |||
Remaining cash in the trust account | $ 31,460,579,000,000 | |||
Shares subject to possible redemption issued | 6,255,848 | 3,093,348 | 12,650,000 | |
Shares subject to possible redemption outstanding | 6,255,848 | 3,093,348 | 12,650,000 | 0 |
Offering costs | $ 933,989 | $ 933,989 | ||
Common stock not subject to redemption | ||||
Offering costs | $ 127,354 |
INITIAL PUBLIC OFFERING (Deta_2
INITIAL PUBLIC OFFERING (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||||
Aug. 18, 2021 | Aug. 13, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Oct. 31, 2020 | |
INITIAL PUBLIC OFFERING | ||||||
Number of units sold | 1,650,000 | |||||
Proceeds from Issuance Initial Public Offering | $ 0 | $ 126,000,000 | $ 126,000,000 | |||
Exercise price of warrants | $ 11.50 | $ 11.50 | ||||
Public Warrants | ||||||
INITIAL PUBLIC OFFERING | ||||||
Number of shares issuable per warrant | 1 | 1 | ||||
Exercise price of warrants | $ 11.50 | $ 11.50 | ||||
Initial Public Offering | ||||||
INITIAL PUBLIC OFFERING | ||||||
Number of units sold | 11,000,000 | 1,650,000 | ||||
Purchase price, per unit | $ 10 | $ 10.15 | $ 10.15 | $ 10.15 | ||
Proceeds from Issuance Initial Public Offering | $ 110,000,000 | |||||
Shares issued to underwriters | 1,650,000 | 1,650,000 | ||||
Under Writing Option Period | 45 days | |||||
Initial Public Offering | Public Warrants | ||||||
INITIAL PUBLIC OFFERING | ||||||
Number of shares in a unit | 1 | 1 | ||||
Number of warrants in a unit | 1 | 0.5 | ||||
Number of shares issuable per warrant | 1 | 1 | ||||
Exercise price of warrants | $ 11.50 | $ 11.50 | ||||
Over-allotment option | ||||||
INITIAL PUBLIC OFFERING | ||||||
Number of units sold | 1,650,000 | 1,650,000 | ||||
Purchase price, per unit | $ 10 | |||||
Proceeds from Issuance Initial Public Offering | $ 16,500,000 | $ 16,500,000 | ||||
Shares issued to underwriters | 1,650,000 | 1,650,000 | 1,650,000 | 1,650,000 |
PRIVATE PLACEMENT (Details)_2
PRIVATE PLACEMENT (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Aug. 13, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
PRIVATE PLACEMENT | ||||
Proceeds from sale of private warrants | $ 0 | $ 4,299,500 | $ 4,299,500 | |
Exercise price of warrant | $ 11.50 | $ 11.50 | ||
Over-allotment option | ||||
PRIVATE PLACEMENT | ||||
Number of warrants to purchase shares issued | 266,402 | 266,402 | 266,402 | |
Price of warrants | $ 0.93 | |||
Proceeds from sale of private warrants | $ 247,500 | |||
Over-allotment option | Private Placement Warrants | ||||
PRIVATE PLACEMENT | ||||
Number of warrants to purchase shares issued | 266,402 | |||
Price of warrants | $ 0.93 | $ 0.93 | ||
Proceeds from sale of private warrants | $ 247,500 | $ 247,500 | ||
Private Placement | Private Placement Warrants | ||||
PRIVATE PLACEMENT | ||||
Number of warrants to purchase shares issued | 4,361,456 | 4,361,456 | 4,361,456 | |
Price of warrants | $ 0.93 | $ 0.93 | ||
Proceeds from sale of private warrants | $ 4,052,000 | $ 4,052,000 | ||
Number of shares per warrant | 1 | |||
Exercise price of warrant | $ 11.50 | $ 11.50 | ||
Business combination extension period | 12 months | |||
Private Placement | Private Placement Warrants | Maximum | ||||
PRIVATE PLACEMENT | ||||
Business combination extension period | 18 months |
RELATED PARTY TRANSACTIONS - _2
RELATED PARTY TRANSACTIONS - Founder Shares (Details) | 6 Months Ended | ||||||
Aug. 10, 2022 | Aug. 18, 2021 D $ / shares | Aug. 10, 2021 shares | Mar. 04, 2021 shares | Jun. 23, 2020 USD ($) item shares | Dec. 31, 2020 USD ($) shares | ||
Related Party Transaction [Line Items] | |||||||
Aggregate purchase price | $ | [1],[2] | $ 25,000 | |||||
Stockholders equity, stock split | the Company effected a 2.875-for-1 stock split of its issued and outstanding shares of common stock | ||||||
Threshold Period After Business Combination In Which Specified Trading Days Within Any Specified Trading Day Period Commences | 30 days | ||||||
Threshold consecutive trading days for transfer, assign or sale of shares or warrants, after the completion of the initial business combination | D | 10 | ||||||
Threshold period after the business combination in which the 20 trading days within any 30 trading day period commences | 30 days | ||||||
Common stock | |||||||
Related Party Transaction [Line Items] | |||||||
Number of shares issued | [1],[2] | 3,162,500 | |||||
Aggregate purchase price | $ | [1],[2] | $ 317 | |||||
Additional Paid-in Capital | |||||||
Related Party Transaction [Line Items] | |||||||
Aggregate purchase price | $ | [1],[2] | $ 24,683 | |||||
Sponsor | |||||||
Related Party Transaction [Line Items] | |||||||
Number of shares issued | 1,000,000 | ||||||
Aggregate purchase price | $ | $ 25,000 | ||||||
Stockholders equity, stock split | the Company effectuated a 1.1-for-1 stock split | the Company effectuated a 1.1-for-1 stock split | |||||
Number of stock split | item | 2 | ||||||
Aggregate number of shares owned | 3,162,500 | 2,875,000 | |||||
Shares subject to forfeiture | 412,500 | ||||||
Percentage of issued and outstanding shares after the Initial Public Offering collectively held by initial stockholders | 20% | ||||||
Percentage of founder shares that will be transferred on certain presumptive conditions | 50 | ||||||
Stock price trigger to transfer, assign or sell any shares or warrants of the company, after the completion of the initial business combination (in dollars per share) | $ / shares | $ 12.50 | ||||||
Percentage of founder shares will not be transferred until the completion of escrow period | 50 | ||||||
Sponsor | Class B Common Stock | |||||||
Related Party Transaction [Line Items] | |||||||
Number of shares issued | 1,000,000 | ||||||
Aggregate purchase price | $ | $ 25,000 | ||||||
Aggregate number of shares owned | 3,162,500 | 2,875,000 | |||||
Shares subject to forfeiture | 412,500 | ||||||
Percentage of issued and outstanding shares after the Initial Public Offering collectively held by initial stockholders | 20% | ||||||
Stock price trigger to transfer, assign or sell any shares or warrants of the company, after the completion of the initial business combination (in dollars per share) | $ / shares | $ 12.50 | ||||||
[1] Includes up to 412,500 shares of common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriter. On August 18, 2021, the underwriters’ exercised the over-allotment option in full, thus these shares are no longer subject to forfeiture (see Note 6). On March 4, 2021, the Company effected a 2.875 -for-1 stock split, resulting in 2,875,000 shares of common stock outstanding (see Note 5). On August 10, 2021, the Company effectuated a 1.1 -for-1 stock split, resulting in an aggregate of 3,162,500 shares of common stock outstanding (see Note 5). All share and per-share amounts have been retroactively restated to reflect the two stock splits. |
RELATED PARTY TRANSACTIONS - _3
RELATED PARTY TRANSACTIONS - Additional Information (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||||||
Sep. 06, 2022 | Aug. 08, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 11, 2022 | Aug. 12, 2022 | Dec. 31, 2020 | Jul. 23, 2020 | |
Related Party Transaction [Line Items] | ||||||||
Promissory note - related party | $ 400,000 | $ 0 | ||||||
Cash held outside the Trust Account | 316,023 | 799,808 | $ 25,000 | |||||
Working capital loans warrant | ||||||||
Related Party Transaction [Line Items] | ||||||||
Outstanding balance of related party note | 0 | 0 | ||||||
Promissory Note with Related Party | ||||||||
Related Party Transaction [Line Items] | ||||||||
Promissory note - related party | $ 250,000 | |||||||
Outstanding balance of related party note | 0 | 0 | $ 0 | |||||
Business combination extension period | 1 month | 1 month | ||||||
Cash held outside the Trust Account | $ 200,000 | $ 200,000 | ||||||
Promissory Note with Related Party | Second A&R Charter | ||||||||
Related Party Transaction [Line Items] | ||||||||
Business combination extension period | 1 month | 1 month | ||||||
Promissory Note with Related Party | Maximum | ||||||||
Related Party Transaction [Line Items] | ||||||||
Business combination extension period | 3 months | 3 months | ||||||
Promissory Note with Related Party | Extension No 1 and Extension No 2 | ||||||||
Related Party Transaction [Line Items] | ||||||||
Outstanding balance of related party note | 400,000 | |||||||
Administrative Support Agreement | ||||||||
Related Party Transaction [Line Items] | ||||||||
Expenses per month | 10,000 | |||||||
Expenses incurred and paid | 10,000 | |||||||
Related Party Loans | ||||||||
Related Party Transaction [Line Items] | ||||||||
Outstanding balance of related party note | 0 | 0 | ||||||
Loan conversion agreement warrant | $ 0 | $ 0 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details) | 9 Months Ended | 12 Months Ended | |||
Aug. 18, 2021 USD ($) $ / shares shares | Aug. 13, 2021 USD ($) shares | Sep. 30, 2022 USD ($) item shares | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) shares | |
COMMITMENTS AND CONTINGENCIES | |||||
Number of demands | item | 2 | ||||
Granted term | 45 days | 45 days | |||
Number of units issued | shares | 1,650,000 | ||||
Unit Price | $ / shares | $ 10 | ||||
Proceeds from issuance of initial public offering | $ 0 | $ 126,000,000 | $ 126,000,000 | ||
Underwriting fees | $ 500,000 | ||||
Aggregate gross proceeds (Percent) | 3.50% | ||||
Over-allotment option | |||||
COMMITMENTS AND CONTINGENCIES | |||||
Number of units issued | shares | 1,650,000 | 1,650,000 | |||
Unit Price | $ / shares | $ 10 | ||||
Proceeds from issuance of initial public offering | $ 16,500,000 | $ 16,500,000 | |||
Underwriting fees | $ 500,000 | ||||
Initial Public Offering | |||||
COMMITMENTS AND CONTINGENCIES | |||||
Number of units issued | shares | 11,000,000 | 1,650,000 | |||
Proceeds from issuance of initial public offering | $ 110,000,000 | ||||
Aggregate gross proceeds (Percent) | 3.50% |
WARRANTS (Details)_2
WARRANTS (Details) - $ / shares | 8 Months Ended | 9 Months Ended | 12 Months Ended | ||
Aug. 18, 2021 | Aug. 18, 2021 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Exercise price of warrants | $ 11.50 | $ 11.50 | |||
Warrants exercisable term from the completion of business combination | 30 days | 30 days | |||
Written notice to registered holders | 10 days | 10 days | |||
Period of time registration statement become effective (in days) | 180 days | 180 days | |||
Redemption of warrant | $ 0.01 | $ 0.01 | |||
Warrant redemption condition minimum share price | $ 16 | $ 16 | |||
Threshold trading days for redemption of public warrants | 10 days | 10 days | |||
Threshold consecutive trading days for redemption of warrants | 30 days | 30 days | 30 days | 30 days | |
Private Warrants | |||||
Warrants outstanding | 4,627,858 | 4,627,858 | 0 | ||
Number of shares issuable per warrant | 1 | 1 | |||
Exercise price of warrants | $ 11.50 | $ 11.50 | |||
Sale of Private Placement Warrants (in shares) | 4,627,858 | 4,627,858 | |||
Public Warrants | |||||
Warrants outstanding | 9,847,500 | 9,487,500 | 0 | ||
Number of Shares Issued per Warrant | 1 | ||||
Number of shares issuable per warrant | 1 | 1 | |||
Exercise price of warrants | $ 11.50 | $ 11.50 |
STOCKHOLDERS' EQUITY (DEFICIT_4
STOCKHOLDERS' EQUITY (DEFICIT) - Preferred Stock (Details) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
STOCKHOLDERS' EQUITY (DEFICIT) | |||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 |
Preferred stock, par value, (per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 0 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
STOCKHOLDERS' EQUITY (DEFICIT_5
STOCKHOLDERS' EQUITY (DEFICIT) - Common stock (Details) | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2022 Vote $ / shares shares | Dec. 31, 2021 Vote $ / shares shares | Aug. 05, 2022 shares | Aug. 10, 2021 shares | Mar. 04, 2021 shares | Dec. 31, 2020 $ / shares shares | |
Class of Stock [Line Items] | ||||||
Common shares, shares authorized (in shares) | 50,000,000 | 50,000,000 | 50,000,000 | |||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Common stock, shares outstanding | 6,255,848 | 3,162,500 | 2,875,000 | |||
Common stock | ||||||
Class of Stock [Line Items] | ||||||
Common shares, shares authorized (in shares) | 50,000,000 | 50,000,000 | ||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | ||||
Common stock shares issued including shares subject to possible redemption | 6,255,848 | 15,812,500 | ||||
Common stock shares outstanding including shares subject to possible redemption | 6,255,848 | 15,812,500 | ||||
Common shares, votes per share | Vote | 1 | 1 | ||||
Common stock, shares outstanding | 15,812,500 | 15,812,500 | 15,812,500 | |||
Common stock, shares subject to forfeiture (in shares) | 412,500 | 412,500 | ||||
Initial stockholders will collectively own companies issued and outstanding | 20% | |||||
Common stock subject to redemption | ||||||
Class of Stock [Line Items] | ||||||
Redemption of shares | 9,556,652 | |||||
Shares subject to possible redemption issued | 3,093,348 | 12,650,000 | 6,255,848 | |||
Shares subject to possible redemption outstanding | 3,093,348 | 12,650,000 | 6,255,848 | 0 | ||
Common stock subject to possible redemption (in shares) | 12,650,000 |
INCOME TAXES - (Details)_2
INCOME TAXES - (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
INCOME TAXES | |||||
Income tax provision (in Percent) | (2.10%) | 0% | (3.10%) | 0% | 0% |
Statutory tax rate (as a percent) | 21% | 21% |
FAIR VALUE MEASUREMENTS (Deta_2
FAIR VALUE MEASUREMENTS (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Liabilities: | ||
Warrant liabilities | $ 1,989,979 | $ 2,036,258 |
Recurring | ||
Assets: | ||
Money Market investments | 128,421,215 | |
Liabilities: | ||
Warrant liabilities | 1,989,979 | |
Recurring | Private Placement Warrants | ||
Liabilities: | ||
Warrant liabilities | 2,036,258 | |
Level 1 | ||
Assets: | ||
Money Market investments | 128,421,215 | |
Liabilities: | ||
Warrant liabilities | 0 | |
Level 1 | Private Placement Warrants | ||
Liabilities: | ||
Warrant liabilities | 0 | |
Level 1 | Recurring | ||
Assets: | ||
Money Market investments | 128,421,215 | |
Level 2 | ||
Assets: | ||
Money Market investments | 0 | |
Liabilities: | ||
Warrant liabilities | 0 | |
Level 2 | Private Placement Warrants | ||
Liabilities: | ||
Warrant liabilities | 0 | |
Level 3 | ||
Assets: | ||
Money Market investments | 0 | |
Liabilities: | ||
Warrant liabilities | $ 1,989,979 | |
Level 3 | Private Placement Warrants | ||
Liabilities: | ||
Warrant liabilities | 2,036,258 | |
Level 3 | Recurring | Private Placement Warrants | ||
Liabilities: | ||
Warrant liabilities | $ 2,036,258 |
FAIR VALUE MEASUREMENTS - Lev_2
FAIR VALUE MEASUREMENTS - Level 3 Fair Value Measurements Inputs (Details) - Level 3 | Sep. 30, 2022 item Y | Dec. 31, 2021 | Dec. 31, 2021 item | Dec. 31, 2021 Y | Aug. 13, 2021 |
Common stock price | |||||
FAIR VALUE MEASUREMENTS | |||||
Warrants, measurement input | 0.1029 | 9.97 | 0.0997 | 10 | |
Exercise price | |||||
FAIR VALUE MEASUREMENTS | |||||
Warrants, measurement input | 0.1150 | 11.50 | 0.1150 | 11.50 | |
Dividend yield | |||||
FAIR VALUE MEASUREMENTS | |||||
Warrants, measurement input | 0 | 0 | |||
Term to Business Combination (years) | |||||
FAIR VALUE MEASUREMENTS | |||||
Warrants, measurement input | 3.86 | 4.61 | 4.61 | 5 | |
Volatility | |||||
FAIR VALUE MEASUREMENTS | |||||
Warrants, measurement input | 0.033 | 9.1 | 0.091 | 19 | |
Risk-free rate | |||||
FAIR VALUE MEASUREMENTS | |||||
Warrants, measurement input | 0.0417 | 1.20 | 0.0120 | 0.81 | |
Fair value | |||||
FAIR VALUE MEASUREMENTS | |||||
Warrants, measurement input | 0.0043 | 0.44 | 0.0044 | 1.20 |
FAIR VALUE MEASUREMENTS - Cha_2
FAIR VALUE MEASUREMENTS - Change in the Fair Value of the Warrant Liabilities (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | 18 Months Ended | ||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2021 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||||||
Fair value at June 23, 2020 (inception) | $ 879,293 | $ 601,622 | $ 2,036,258 | $ 0 | $ 2,036,258 | $ 0 | |||
Initial measurement | 5,553,429 | ||||||||
Change in valuation inputs or other assumptions | 1,110,686 | 277,671 | (1,434,636) | (3,517,171) | |||||
Fair value at end of period | 1,989,979 | $ 879,293 | $ 601,622 | 1,989,979 | $ 2,036,258 | $ 2,036,258 | |||
Change in fair value of warrant liability | $ 1,110,686 | $ (4,072,514) | $ 0 | $ (46,279) | $ (4,072,514) | $ (3,517,171) |
SUBSEQUENT EVENTS - Merger Cons
SUBSEQUENT EVENTS - Merger Consideration and Earnout Merger Consideration (Details) - USD ($) | Oct. 07, 2022 | May 15, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
SUBSEQUENT EVENTS | |||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
New Dragonfly | |||||
SUBSEQUENT EVENTS | |||||
Merger consideration in shares | 40,000,000 | ||||
Subsequent events | New Dragonfly | |||||
SUBSEQUENT EVENTS | |||||
Common stock, par value | $ 0.0001 | ||||
Merger consideration in shares | 41,500,000 | ||||
Aggregate merger consideration | $ 415,000,000 | ||||
Share price | $ 10 | ||||
Contingent right to receive Earnout Shares | $ 0 | ||||
Maximum number of additional shares issuable as merger consideration | 627,498 | ||||
Earnout merger consideration in shares | 40,000,000 | ||||
Subsequent events | New Dragonfly | Holders of outstanding shares of Legacy Dragonfly Common Stock | |||||
SUBSEQUENT EVENTS | |||||
Merger consideration in shares | 38,576,648 | ||||
Subsequent events | New Dragonfly | Holders of outstanding shares of Legacy Dragonfly Common Stock | First Earnout | |||||
SUBSEQUENT EVENTS | |||||
Earnout merger consideration in shares | 15,000,000 | ||||
Subsequent events | New Dragonfly | Holders of outstanding shares of Legacy Dragonfly Common Stock | First Earnout | Minimum | |||||
SUBSEQUENT EVENTS | |||||
Total audited revenue | $ 250 | ||||
Audited operating income | $ 35 | ||||
Subsequent events | New Dragonfly | Holders of outstanding shares of Legacy Dragonfly Common Stock | Second Earnout | |||||
SUBSEQUENT EVENTS | |||||
Earnout merger consideration in shares | 12,500,000 | ||||
Threshold trading days for VWAC | 20 days | ||||
Threshold consecutive trading days for VWAC | 30 days | ||||
VWAC per share | $ 22.50 | ||||
Imputed share price per share | $ 22.50 | ||||
Subsequent events | New Dragonfly | Holders of outstanding shares of Legacy Dragonfly Common Stock | Third Earnout | |||||
SUBSEQUENT EVENTS | |||||
Earnout merger consideration in shares | 12,500,000 | ||||
Threshold trading days for VWAC | 20 days | ||||
Threshold consecutive trading days for VWAC | 30 days | ||||
VWAC per share | $ 32.50 | ||||
Imputed share price per share | $ 32.50 | ||||
Subsequent events | New Dragonfly | Holders of the assumed Legacy Dragonfly options | |||||
SUBSEQUENT EVENTS | |||||
Merger consideration in shares | 3,664,975 | ||||
Subsequent events | Legacy Dragonfly Common Stock | |||||
SUBSEQUENT EVENTS | |||||
Common stock, par value | $ 0.001 |
SUBSEQUENT EVENTS - PIPE Invest
SUBSEQUENT EVENTS - PIPE Investment (Details) - USD ($) | Sep. 26, 2022 | May 15, 2022 |
Chardan Capital Markets LLC | ||
SUBSEQUENT EVENTS | ||
Number of share purchased in open market | 485,000 | |
Chardan Capital Markets LLC | Maximum | ||
SUBSEQUENT EVENTS | ||
Purchase price per share | $ 10.38 | |
Subscription Agreement | ||
SUBSEQUENT EVENTS | ||
Proceeds from Trust Account for non-redemption of Purchased Shares | $ 5,016,547 | |
Per share redemption price | $ 10.34 | |
Purchase commitment | $ 0 | |
Subscription Agreement | Minimum | ||
SUBSEQUENT EVENTS | ||
Purchase price per share | $ 10.33 | |
Subscription Agreement | PIPE Investment | ||
SUBSEQUENT EVENTS | ||
Chardan common stock, shares to be issued | 500,000 | |
Gross proceeds | $ 5 |
SUBSEQUENT EVENTS - Debt Financ
SUBSEQUENT EVENTS - Debt Financing (Details) - Debt Commitment Letter | Oct. 07, 2022 USD ($) tranche |
SUBSEQUENT EVENTS | |
Interest rate margin (as a percent) | 13.50% |
Term Loan Facility | |
SUBSEQUENT EVENTS | |
Aggregate principal amount | $ | $ 75 |
Term Loan Facility | Subsequent events | |
SUBSEQUENT EVENTS | |
Number of tranches for issuance | tranche | 1 |
Amortization of debt percentage | 5% |
Amortization period of debt, beginning after the Closing Date | 24 months |
Term Loan Facility | Subsequent events | Adjusted Secured Overnight Financing Rate | Minimum | |
SUBSEQUENT EVENTS | |
Interest rate margin (as a percent) | 1% |
Term Loan Facility | Subsequent events | Until April 1, 2023 | Adjusted Secured Overnight Financing Rate | |
SUBSEQUENT EVENTS | |
Interest rate margin payable in cash (as a percent) | 7% |
Interest rate margin payable in kind (as a percent) | 6.50% |
Term Loan Facility | Subsequent events | Thereafter until October 1, 2024 | Maximum | |
SUBSEQUENT EVENTS | |
Interest rate margin payable in kind (as a percent) | 6.50% |
Term Loan Facility | Subsequent events | Thereafter until October 1, 2024 | Adjusted Secured Overnight Financing Rate | |
SUBSEQUENT EVENTS | |
Interest rate margin payable in cash (as a percent) | 7% |
Term Loan Facility | Subsequent events | Thereafter until October 1, 2024 | Adjusted Secured Overnight Financing Rate | Minimum | |
SUBSEQUENT EVENTS | |
Interest rate margin payable in kind (as a percent) | 4.50% |
Term Loan Facility | Subsequent events | At all times thereafter | Adjusted Secured Overnight Financing Rate | Minimum | |
SUBSEQUENT EVENTS | |
Interest rate margin payable in cash (as a percent) | 11.50% |
Term Loan Facility | Subsequent events | At all times thereafter | Adjusted Secured Overnight Financing Rate | Maximum | |
SUBSEQUENT EVENTS | |
Interest rate margin payable in cash (as a percent) | 13.50% |
SUBSEQUENT EVENTS - Warrant Agr
SUBSEQUENT EVENTS - Warrant Agreements (Details) - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
SUBSEQUENT EVENTS | ||
Exercise price of warrants | $ 11.50 | $ 11.50 |
Debt Commitment Letter | Penny Warrants | ||
SUBSEQUENT EVENTS | ||
Number of warrants to purchase shares issued | 2,593,056 | |
Debt Commitment Letter | $10 warrants | ||
SUBSEQUENT EVENTS | ||
Number of warrants to purchase shares issued | 1,600,000 | |
Percentage of common stock issuable on exercise of warrants | 5.60% | |
Exercise price of warrants | $ 10 | |
Equity Facility | ||
SUBSEQUENT EVENTS | ||
Maximum aggregate purchase price | $ 150 |
BALANCE SHEETS_2
BALANCE SHEETS - USD ($) | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Jun. 23, 2020 | Dec. 31, 2019 |
Current Assets | ||||||||||
Cash | $ 316,023 | $ 799,808 | $ 25,000 | |||||||
Prepaid expenses | 171,026 | 302,590 | ||||||||
Total Current Assets | 487,049 | 1,102,398 | 25,000 | |||||||
Property and Equipment | ||||||||||
Total Assets | 32,482,752 | 129,523,613 | 25,000 | |||||||
Current Liabilities | ||||||||||
Accounts payable | 990,587 | 16,862 | ||||||||
Uncertain tax position liability | 0 | 0 | ||||||||
Income tax payable | 39,340 | 0 | ||||||||
Total Current Liabilities | 1,612,686 | 114,211 | 1,000 | |||||||
Long-Term Liabilities | ||||||||||
Total Liabilities | 3,602,665 | 2,150,469 | 1,000 | |||||||
Commitments and Contingencies (See Note 2) | ||||||||||
Redeemable Preferred Stock | ||||||||||
Common stock subject to possible redemption, $0.0001 par value; 3,093,348 and 12,650,000 shares at approximately $10.25 and $10.15 per share at September 30, 2022 and December 31, 2021, respectively | 128,397,500 | |||||||||
Stockholders' Deficit | ||||||||||
Common stock, $0.0001 par value; 50,000,000 shares authorized; 3,162,500 shares issued and outstanding (excluding 3,093,348 and 12,650,000 shares subject to possible redemption) at September 30, 2022 and December 31, 2021, respectively | 317 | 317 | 317 | |||||||
Additional paid in capital | 0 | 0 | 24,683 | |||||||
Retained earnings | (2,826,593) | (1,024,673) | (1,000) | |||||||
Total Stockholders' Deficit | (2,826,276) | $ (402,849) | $ 167,484 | (1,024,356) | $ (245,134) | $ 23,166 | $ 24,000 | 24,000 | $ 0 | |
Total Liabilities, Common Stock Subject to Possible Redemption and Stockholders' Deficit | 32,482,752 | 129,523,613 | 25,000 | |||||||
New Dragonfly | ||||||||||
Current Assets | ||||||||||
Cash | 10,517,000 | 25,586,000 | 6,206,000 | |||||||
Restricted cash | 3,044,000 | 3,044,000 | 0 | |||||||
Accounts receivable, net of allowance for doubtful accounts | 3,820,000 | 783,000 | 1,840,000 | |||||||
Inventory | 39,487,000 | 27,127,000 | 5,948,000 | |||||||
Prepaid expenses | 1,552,000 | 293,000 | 351,000 | |||||||
Prepaid inventory | 3,729,000 | 7,461,000 | 1,108,000 | |||||||
Other current assets | 3,901,000 | 1,787,000 | 324,000 | |||||||
Total Current Assets | 66,346,000 | 66,081,000 | 15,777,000 | |||||||
Property and Equipment | ||||||||||
Machinery and equipment | 9,004,000 | 3,615,000 | 1,535,000 | |||||||
Office furniture and equipment | 275,000 | 201,000 | 157,000 | |||||||
Leasehold improvements | 1,709,000 | 1,307,000 | 635,000 | |||||||
Vehicle | 234,000 | 195,000 | 33,000 | |||||||
Property and Equipment, gross | 11,222,000 | 5,318,000 | 2,360,000 | |||||||
Less accumulated depreciation and amortization | (1,406,000) | (857,000) | (323,000) | |||||||
Property and Equipment, Net | 9,816,000 | 4,461,000 | 2,037,000 | |||||||
Operating lease right of use asset | 4,878,000 | 5,709,000 | 5,709,000 | 993,000 | ||||||
Total Assets | 82,294,000 | 76,251,000 | 18,807,000 | |||||||
Current Liabilities | ||||||||||
Accounts payable | 6,477,000 | 11,360,000 | 3,091,000 | |||||||
Accrued payroll and other liabilities | 4,374,000 | 2,608,000 | 767,000 | |||||||
Customer deposits | 287,000 | 434,000 | 1,779,000 | |||||||
Uncertain tax position liability | 0 | 19,000 | ||||||||
Income tax payable | 0 | 631,000 | 1,282,000 | |||||||
Notes payable, current portion | 16,529,000 | 1,875,000 | 0 | |||||||
Short-term operating lease liabilities | 1,157,000 | 1,082,000 | 1,082,000 | 225,000 | ||||||
Total Current Liabilities | 28,824,000 | 17,990,000 | 7,163,000 | |||||||
Long-Term Liabilities | ||||||||||
Notes payable-noncurrent, net of debt issuance costs | 24,182,000 | 37,053,000 | 0 | |||||||
Deferred tax liabilities | 0 | 453,000 | 331,000 | |||||||
Long-term operating lease liabilities | 3,821,000 | 4,694,000 | 4,694,000 | 758,000 | ||||||
Total Long-Term Liabilities | 28,003,000 | 42,200,000 | 1,089,000 | |||||||
Total Liabilities | 56,827,000 | 60,190,000 | 8,252,000 | |||||||
Commitments and Contingencies (See Note 2) | ||||||||||
Redeemable Preferred Stock | ||||||||||
Common stock subject to possible redemption, $0.0001 par value; 3,093,348 and 12,650,000 shares at approximately $10.25 and $10.15 per share at September 30, 2022 and December 31, 2021, respectively | 2,000,000 | 2,000,000 | 2,000,000 | 2,000,000 | $ 2,000,000 | |||||
Stockholders' Deficit | ||||||||||
Common stock, $0.0001 par value; 50,000,000 shares authorized; 3,162,500 shares issued and outstanding (excluding 3,093,348 and 12,650,000 shares subject to possible redemption) at September 30, 2022 and December 31, 2021, respectively | 5,000 | 4,000 | 4,000 | |||||||
Additional paid in capital | 18,480,000 | 1,619,000 | 451,000 | |||||||
Retained earnings | 4,982,000 | 12,438,000 | 8,100,000 | |||||||
Total Stockholders' Deficit | 23,467,000 | 14,061,000 | $ 13,430,000 | 8,555,000 | $ 1,314,000 | |||||
Total Liabilities, Common Stock Subject to Possible Redemption and Stockholders' Deficit | $ 82,294,000 | $ 76,251,000 | $ 18,807,000 |
BALANCE SHEETS (Parenthetical_2
BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2022 | Aug. 05, 2022 | May 15, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Aug. 10, 2021 | Mar. 04, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Common stock, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 | ||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||
Common stock, shares issued | 6,255,848 | ||||||||
Common stock, shares outstanding | 6,255,848 | 3,162,500 | 2,875,000 | ||||||
New Dragonfly | |||||||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | ||||||
Preferred stock, par value | $ 0.0002 | $ 0.0002 | |||||||
Preferred stock, shares issued | 10,000,000 | 10,000,000 | 10,000,000 | ||||||
Common stock subject to redemption, units sold in the IPO | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | ||||
Common stock, shares authorized | 40,000,000 | 40,000,000 | 40,000,000 | ||||||
Common stock, par value | $ 0.0002 | $ 0.0001 | $ 0.0002 | $ 0.0002 | |||||
Common stock, shares issued | 22,634,276 | 20,875,475 | 20,040,470 | 20,000,000 | |||||
Common stock, shares outstanding | 22,634,276 | 20,875,475 | 20,040,470 |
STATEMENTS OF INCOME
STATEMENTS OF INCOME - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Expenses | ||
Loss from operations | $ (357,674) | |
Other Income (Expense) | ||
Net income (loss) | $ 1,910,487 | |
Earnings Per Share - Basic | $ 0.25 | |
Earnings Per Share - Diluted | $ 0.24 | |
Weighted Average Number of Shares - Basic | 7,732,021 | |
Weighted Average Number of Shares - Diluted | 7,991,952 | |
New Dragonfly | ||
Net Sales | $ 78,000,000 | $ 47,187,000 |
Cost of Goods Sold | 48,375,000 | 26,580,000 |
Gross Profit | 29,625,000 | 20,607,000 |
Operating Expenses | ||
Research and development | 2,689,000 | 1,239,000 |
General and administrative | 10,621,000 | 4,662,000 |
Selling and marketing | 9,848,000 | 5,960,000 |
Total Operating Expenses | 23,158,000 | 11,861,000 |
Loss from operations | 6,467,000 | 8,746,000 |
Other Income (Expense) | ||
Other Income | 1,000 | 15,000 |
Interest Income (expense) | (519,000) | 3,000 |
Total Other Income (Expense) | (518,000) | 18,000 |
Net income (loss) before income taxes | 5,949,000 | 8,764,000 |
Income Tax Expense | 1,611,000 | 1,886,000 |
Net income (loss) | $ 4,338,000 | $ 6,878,000 |
Earnings Per Share - Basic | $ 0.15 | $ 0.23 |
Earnings Per Share - Diluted | $ 0.13 | $ 0.21 |
Weighted Average Number of Shares - Basic | 20,101,129 | 20,040,470 |
Weighted Average Number of Shares - Diluted | 21,931,108 | 21,388,785 |
STATEMENTS OF SHAREHOLDERS' EQU
STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) | Common stock New Dragonfly | Common stock | Additional Paid-in Capital New Dragonfly | Additional Paid-in Capital | Retained Earnings [Member] New Dragonfly | Retained Earnings [Member] | New Dragonfly | Total |
Balance at the beginning at Dec. 31, 2019 | $ 2,000,000 | |||||||
Balance at the beginning (in shares) at Dec. 31, 2019 | 10,000,000 | |||||||
Balance at the end at Dec. 31, 2020 | $ 2,000,000 | |||||||
Balance at the end (in shares) at Dec. 31, 2020 | 10,000,000 | |||||||
Balance at the beginning at Dec. 31, 2019 | $ 4,000 | $ 88,000 | $ 1,222,000 | $ 1,314,000 | ||||
Balance at the beginning (in shares) at Dec. 31, 2019 | 20,000,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 6,878,000 | $ 6,878,000 | ||||||
Stock compensation expense | 351,000 | $ 351,000 | ||||||
Stock compensation expense (in shares) | 8,200,000 | |||||||
Exercise of stock options | 12,000 | $ 12,000 | ||||||
Options exercised | 32,270 | |||||||
Balance at the end at Dec. 31, 2020 | $ 4,000 | $ 317 | 451,000 | $ 24,683 | 8,100,000 | $ (1,000) | $ 8,555,000 | $ 24,000 |
Balance at the end (in shares) at Dec. 31, 2020 | 20,040,470 | 3,162,500 | 20,040,470 | |||||
Balance at the end at Dec. 31, 2020 | $ 2,000,000 | |||||||
Balance at the end (in shares) at Dec. 31, 2020 | 10,000,000 | |||||||
Balance at the beginning at Jun. 23, 2020 | $ 0 | 0 | 0 | 0 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 0 | (1,000) | (1,000) | |||||
Balance at the end at Dec. 31, 2020 | $ 4,000 | $ 317 | 451,000 | 24,683 | 8,100,000 | (1,000) | $ 8,555,000 | 24,000 |
Balance at the end (in shares) at Dec. 31, 2020 | 20,040,470 | 3,162,500 | 20,040,470 | |||||
Balance at the end at Sep. 30, 2021 | $ 2,000,000 | |||||||
Balance at the end (in shares) at Sep. 30, 2021 | 10,000,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 4,421,000 | $ 4,421,000 | 2,689,709 | |||||
Stock compensation expense | 428,000 | 428,000 | ||||||
Exercise of stock options | 26,000 | $ 26,000 | ||||||
Options exercised | 49,727 | 49,727 | ||||||
Balance at the end at Sep. 30, 2021 | $ 4,000 | $ 317 | 905,000 | 12,521,000 | (245,451) | $ 13,430,000 | (245,134) | |
Balance at the end (in shares) at Sep. 30, 2021 | 20,090,197 | 3,162,500 | ||||||
Balance at the beginning at Dec. 31, 2020 | $ 2,000,000 | |||||||
Balance at the beginning (in shares) at Dec. 31, 2020 | 10,000,000 | |||||||
Balance at the end at Dec. 31, 2021 | $ 2,000,000 | 128,397,500 | ||||||
Balance at the end (in shares) at Dec. 31, 2021 | 10,000,000 | |||||||
Balance at the beginning at Dec. 31, 2020 | $ 4,000 | $ 317 | 451,000 | 24,683 | 8,100,000 | (1,000) | $ 8,555,000 | 24,000 |
Balance at the beginning (in shares) at Dec. 31, 2020 | 20,040,470 | 3,162,500 | 20,040,470 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 0 | 4,338,000 | 1,910,487 | $ 4,338,000 | 1,910,487 | |||
Stock compensation expense | 734,000 | 734,000 | ||||||
Exercise of stock options | 434,000 | $ 434,000 | ||||||
Options exercised | 835,005 | |||||||
Balance at the end at Dec. 31, 2021 | $ 4,000 | $ 317 | 1,619,000 | 0 | 12,438,000 | (1,024,673) | $ 14,061,000 | (1,024,356) |
Balance at the end (in shares) at Dec. 31, 2021 | 20,875,475 | 3,162,500 | 20,875,475 | |||||
Balance at the beginning at Mar. 31, 2021 | $ 317 | 24,683 | (1,000) | 24,000 | ||||
Balance at the beginning (in shares) at Mar. 31, 2021 | 3,162,500 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | (834) | (834) | ||||||
Balance at the end at Jun. 30, 2021 | $ 317 | 24,683 | (1,834) | 23,166 | ||||
Balance at the end (in shares) at Jun. 30, 2021 | 3,162,500 | |||||||
Balance at the end at Sep. 30, 2021 | $ 2,000,000 | |||||||
Balance at the end (in shares) at Sep. 30, 2021 | 10,000,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 2,690,543 | 2,690,543 | ||||||
Balance at the end at Sep. 30, 2021 | $ 4,000 | $ 317 | 905,000 | 12,521,000 | (245,451) | $ 13,430,000 | (245,134) | |
Balance at the end (in shares) at Sep. 30, 2021 | 20,090,197 | 3,162,500 | ||||||
Balance at the beginning at Dec. 31, 2021 | $ 2,000,000 | 128,397,500 | ||||||
Balance at the beginning (in shares) at Dec. 31, 2021 | 10,000,000 | |||||||
Balance at the beginning at Dec. 31, 2021 | $ 4,000 | $ 317 | 1,619,000 | 0 | 12,438,000 | (1,024,673) | $ 14,061,000 | (1,024,356) |
Balance at the beginning (in shares) at Dec. 31, 2021 | 20,875,475 | 3,162,500 | 20,875,475 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 1,191,840 | 1,191,840 | ||||||
Balance at the end at Mar. 31, 2022 | $ 317 | 167,167 | 167,484 | |||||
Balance at the end (in shares) at Mar. 31, 2022 | 3,162,500 | |||||||
Balance at the beginning at Dec. 31, 2021 | $ 2,000,000 | 128,397,500 | ||||||
Balance at the beginning (in shares) at Dec. 31, 2021 | 10,000,000 | |||||||
Balance at the end at Sep. 30, 2022 | $ 2,000,000 | |||||||
Balance at the end (in shares) at Sep. 30, 2022 | 10,000,000 | |||||||
Balance at the beginning at Dec. 31, 2021 | $ 4,000 | $ 317 | 1,619,000 | $ 0 | 12,438,000 | (1,024,673) | $ 14,061,000 | (1,024,356) |
Balance at the beginning (in shares) at Dec. 31, 2021 | 20,875,475 | 3,162,500 | 20,875,475 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | (7,456,000) | $ (7,456,000) | (1,298,108) | |||||
Stock compensation expense | 1,155,000 | 1,155,000 | ||||||
Exercise of stock options | 707,000 | $ 707,000 | ||||||
Options exercised | 491,299 | 491,299 | ||||||
Balance at the end at Sep. 30, 2022 | $ 5,000 | $ 317 | 18,480,000 | 4,982,000 | (2,826,593) | $ 23,467,000 | (2,826,276) | |
Balance at the end (in shares) at Sep. 30, 2022 | 22,634,276 | 3,162,500 | 22,634,276 | |||||
Balance at the beginning at Mar. 31, 2022 | $ 317 | 167,167 | 167,484 | |||||
Balance at the beginning (in shares) at Mar. 31, 2022 | 3,162,500 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | (570,333) | (570,333) | ||||||
Balance at the end at Jun. 30, 2022 | $ 317 | (403,166) | (402,849) | |||||
Balance at the end (in shares) at Jun. 30, 2022 | 3,162,500 | |||||||
Balance at the end at Sep. 30, 2022 | $ 2,000,000 | |||||||
Balance at the end (in shares) at Sep. 30, 2022 | 10,000,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | (1,919,615) | (1,919,615) | ||||||
Balance at the end at Sep. 30, 2022 | $ 5,000 | $ 317 | $ 18,480,000 | $ 4,982,000 | $ (2,826,593) | $ 23,467,000 | $ (2,826,276) | |
Balance at the end (in shares) at Sep. 30, 2022 | 22,634,276 | 3,162,500 | 22,634,276 |
STATEMENTS OF CASH FLOWS_2
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from Operating Activities | ||
Net Income | $ 1,910,487 | |
Changes in Assets and Liabilities | ||
Prepaid expenses | (302,590) | |
Net cash used in operating activities | (547,052) | |
Cash Flows From Investing Activities | ||
Net cash provided by (used in) investing activities | (128,397,500) | |
Cash Flows From Financing Activities | ||
Net cash provided by (used in) financing activities | 129,719,360 | |
Cash - Beginning of Period | 25,000 | |
Cash - End of Period | 799,808 | $ 25,000 |
New Dragonfly | ||
Cash flows from Operating Activities | ||
Net Income | 4,338,000 | 6,878,000 |
Adjustments to Reconcile Net Income to Net Cash (Used in) Provided by Operating Activities | ||
Stock based compensation | 734,000 | 351,000 |
Amortization of debt discount | 206,000 | 0 |
Deferred income tax provision | 122,000 | 210,000 |
Depreciation and amortization | 617,000 | 198,000 |
Provision for doubtful accounts | 50,000 | 0 |
Loss on disposal of property and equipment | 124,000 | 0 |
Changes in Assets and Liabilities | ||
Accounts receivable | 1,007,000 | (1,640,000) |
Inventories | (21,179,000) | (3,406,000) |
Prepaid expenses | 58,000 | (309,000) |
Prepaid inventory | (6,353,000) | (630,000) |
Other current assets | (1,214,000) | (253,000) |
Other assets | 1,029,000 | 144,000 |
Income tax payable | (651,000) | 1,279,000 |
Accounts payable and other liabilities | 8,903,000 | 2,159,000 |
Uncertain tax position liability | (19,000) | 19,000 |
Customer deposits | (1,345,000) | 1,640,000 |
Total Adjustments | (19,764,000) | (997,000) |
Net cash used in operating activities | (13,573,000) | 6,640,000 |
Cash Flows From Investing Activities | ||
Purchase of property and equipment | (2,970,000) | (1,410,000) |
Proceeds from disposal of property and equipment | 61,000 | 0 |
Net cash provided by (used in) investing activities | (2,909,000) | (1,410,000) |
Cash Flows From Financing Activities | ||
Proceeds from note payable | 45,000,000 | 0 |
Payments of debt issuance costs | (6,278,000) | 0 |
Proceeds from exercise of options | 184,000 | 12,000 |
Proceeds from revolving note agreement | 5,000,000 | 0 |
Repayments of revolving note agreement | (5,000,000) | 0 |
Net cash provided by (used in) financing activities | 38,906,000 | 12,000 |
Net Increase in Cash and Restricted Cash | 22,424,000 | 5,242,000 |
Cash - Beginning of Period | 6,206,000 | 964,000 |
Cash - End of Period | 28,630,000 | 6,206,000 |
Supplemental Disclosures of Cash Flow Information: | ||
Cash paid for income taxes | 2,390,000 | 292,000 |
Cash paid for interest | 313,000 | 0 |
Supplemental Non-Cash Items | ||
Receivable of options exercised | 250,000 | 0 |
Purchases of property and equipment, not yet paid | 255,000 | 0 |
Recognition of right of use asset obtained in exchange for operating lease liability | $ 5,745,000 | $ 661,000 |
NATURE OF BUSINESS
NATURE OF BUSINESS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
NATURE OF BUSINESS | NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Chardan NexTech Acquisition 2 Corp (the “Company” or “Chardan”) is a blank check company incorporated in Delaware on June 23, 2020. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). The Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. As of September 30, 2022, the Company had not yet commenced any operations. All activity for the period from June 23, 2020 (Inception) through September 30, 2022 relates to the Company’s formation and initial public offering (“Initial Public Offering”) described below, and, subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The registration statement on Form S-1 (the “Registration Statement”) for the Company’s Initial Public Offering was declared effective on August 10, 2021. On August 13, 2021, the Company consummated the Initial Public Offering of 11,000,000 units (the “Units” and, with respect to the common stock, par value $0.0001 per share, of the Company included in the Units sold, the “Public Shares”, and with respect to the warrants of the Company included in the Units sold, the “Public Warrants”), at $10.00 per Unit, generating gross proceeds of $110,000,000 , which is discussed in Note 3. Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 4,361,456 warrants (the “Private Warrants”, together with the Public Warrants, the “Warrants”) at a price of $0.93 per Private Warrant in a private placement to Chardan NexTech 2 Warrant Holdings LLC, a Delaware limited liability company (“Warrant Holdings” or “Holdings”), an affiliate of Chardan NexTech Investments 2 LLC, a Delaware limited liability company (the “Sponsor”), generating gross proceeds of $4,052,000 , which is described in Note 4. The Company had granted the underwriters in the Initial Public Offering a 45-day option to purchase up to 1,650,000 Units to cover over-allotments, if any (see Note 6). On August 16, 2021, the underwriters fully exercised the over-allotment option and, on August 18, 2021, purchased an additional 1,650,000 Units (the “Over-Allotment Units”) at a purchase price of $10.00 per Over-Allotment Unit, generating gross proceeds of $16,500,000 . Simultaneously with the closing of the exercise of the over-allotment option, the Company consummated the sale of 266,402 warrants (the “Over-Allotment Private Warrants”) at a purchase price of $0.93 per Over-Allotment Private Warrant in a private placement to the Holdings, generating gross proceeds of $247,500 . Following the closing of the Initial Public Offering and underwriters’ over-allotment option, an amount of $128,397,500 from the net proceeds of the sale of the Units and Over-Allotment Units and a portion of the proceeds from the sale of the Private Warrants and Over-Allotment Private Warrants was placed in a trust account (the “Trust Account”) and was invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the Trust Account, as described below. Transaction costs related to the issuances described above amounted to $1,080,140 , consisting of $500,000 of cash underwriting fees and $580,140 of other offering costs. The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account ( $10.15 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The Public Shares subject to redemption was recorded at redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity (“ASC 480”). The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. Notwithstanding the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company. The Company had 12 months, or until August 13, 2022, from the closing of the Initial Public Offering to consummate an initial Business Combination. However, prior to such date, the Stockholders (as defined in this Note 1) approved a proposal to amend the Company’s Amended and Restated Certificate of Incorporation (the “Charter”), to extend the date by which the Company must complete a Business Combination, as further discussed in this Note 1. The initial stockholders have agreed to waive their redemption rights with respect to any shares they own in connection with the consummation of the initial Business Combination, including their Founder Shares and Public Shares that they purchase during or after the offering, if any. In addition, the initial stockholders have agreed to waive their rights to liquidating distributions with respect to their Founder Shares if the Company fails to consummate an initial Business Combination within 18 months (assuming both of the three-month extensions were executed) from the closing of this offering. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering, they will be entitled to receive liquidating distributions with respect to such Public Shares if the Company fails to consummate an initial Business Combination within the required time period. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.15 per Public Share or (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay the Company’s taxes, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Business Combination Agreement On May 15, 2022, Chardan entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Dragonfly Energy Corp., a Nevada corporation (“Dragonfly”), and Bronco Merger Sub, Inc., a Nevada corporation and a direct, wholly owned subsidiary of Chardan (“Merger Sub”). The Merger Agreement provides that, among other things and upon the terms and subject to the conditions thereof, the following transactions will occur: (i) at the closing of the transactions contemplated by the Merger Agreement (the “Closing”), upon the terms and subject to the conditions of the Merger Agreement, in accordance with applicable provisions of the Nevada Revised Statutes (“NRS”) and the Delaware General Corporation Law (“DGCL”), Merger Sub will merge with and into Dragonfly, the separate corporate existence of Merger Sub ceased and Dragonfly was the surviving corporation and a wholly owned subsidiary of Chardan (the “Merger”); (ii) at the Closing, Chardan changed its name to “Dragonfly Energy Holdings Corp.” and is referred to herein as “New Dragonfly”; (iii) as a result of the Merger, among other things, all shares of capital stock of Dragonfly outstanding as of immediately prior to the effective time of the Merger were canceled in exchange for the right to receive shares of common stock, par value $0.0001 per share, of New Dragonfly (“New Dragonfly Common Stock”); (iv) as a result of the Merger, each Dragonfly option outstanding as of immediately prior to the effective time of the Merger converted into the right to receive a New Dragonfly option, subject to certain exceptions and conditions as set forth in the Merger Agreement; (v) at the Closing, 40,000,000 shares of New Dragonfly Common Stock became issuable to existing holders of Dragonfly capital stock or pursuant to the aforementioned converted options; and (vi) following the Closing, existing holders of Dragonfly capital stock will have the right to receive up to an aggregate of 40,000,000 additional shares of New Dragonfly Common Stock in three tranches as follows: (A) New Dragonfly shall issue 15,000,000 shares of New Dragonfly common stock in the aggregate, if, as disclosed in the Annual Report on Form 10-K for the fiscal year ending December 31, 2023 for New Dragonfly filed with the United States Securities and Exchange Commission (the “SEC”), New Dragonfly’s (x) total audited revenue for the year ended December 31, 2023 is equal to or greater than $250,000,000 , and (y) audited operating income for the year ended December 31, 2023 is equal to or greater than $35,000,000 ; (B) New Dragonfly shall issue an additional 12,500,000 shares of New Dragonfly common stock, in the aggregate (the “Second Earnout”), if at any time during the period beginning on the Closing Date and ending on December 31, 2026, the VWAP of the New Dragonfly common stock over any 20 Trading Days (which may or may not be consecutive) within any 30 consecutive Trading Day period is greater than or equal to $22.50 per share of New Dragonfly common stock (the “Second Milestone”); and (C) New Dragonfly shall issue an additional 12,500,000 shares of New Dragonfly common stock, in the aggregate (the “Third Earnout”), if at any time during the period beginning on the Closing Date and ending on December 31, 2028, the VWAP of the New Dragonfly common stock over any 20 Trading Days (which may or may not be consecutive) within any 30 consecutive Trading Day period is greater than or equal to $32.50 per share of New Dragonfly common stock (the “Third Milestone”). Upon the occurrence of the Third Milestone, if the Second Milestone has yet to occur, the Second Milestone will be deemed to have occurred simultaneously with the Third Milestone and the holders of Dragonfly capital stock shall be entitled to receive the Second Earnout as if the Second Milestone had occurred on or prior to December 31, 2026, provided, however, that such date shall only occur once, if at all, and in no event shall such holders be collectively entitled to receive more than an aggregate of 40,000,000 additional shares of New Dragonfly Common Stock. The Board of Directors of Chardan (the “Board”) has unanimously (i) approved and declared advisable the Merger Agreement, the Merger and the other transactions contemplated thereby and (ii) resolved to recommend approval of the Merger Agreement and related matters by the stockholders of Chardan. Upon the consummation of the business combination, the Board will be composed of seven members, five of whom will be designated by Dragonfly and two of whom will be designated by Chardan. On May 15, 2022, concurrently with the execution of the Merger Agreement, Chardan entered into a subscription agreement (the “Subscription Agreement”) with the Sponsor (the “PIPE Investor”). Pursuant to and subject to the terms and conditions contained in the Subscription Agreement, the PIPE Investor has subscribed to purchase up to 500,000 shares of New Dragonfly Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of up to $5,000,000 (the “PIPE Investment”). The Merger Agreement contains customary representations and warranties by Chardan, Merger Sub, and Dragonfly. The representations and warranties of the respective parties to the Merger Agreement generally will not survive the Closing. The Merger Agreement contains additional covenants, including, among others, providing for (i) the parties to conduct their respective businesses in the ordinary course through the Closing, (ii) the parties to not initiate any negotiations or enter into any agreements for certain alternative transactions, (iii) Dragonfly to prepare and deliver to Chardan certain audited and unaudited consolidated financial statements of Dragonfly, (iv) Chardan to prepare and file a proxy statement/registration statement on Form S-4 and take certain other actions to obtain the requisite approval of Chardan stockholders of certain proposals regarding the Merger, (v) the parties to use commercially reasonable efforts to obtain necessary approvals from governmental agencies and (vi) to the extent Closing has not occurred by August 10, 2022, then, pursuant to Chardan’s organizational documents, Chardan shall extend the deadline to consummate its initial business combination by an additional three months from the Termination Date (as defined in Chardan’s Amended and Restated Certificate of Incorporation as in effect on May 15, 2022) (such date, the “Extended Termination Date”); provided that if the Closing has not occurred by the date that is two business days prior to the Extended Termination Date, Chardan shall extend the deadline to consummate its initial business combination by an additional three months from the Extended Termination Date. On July 12, 2022, the Company, Dragonfly and Merger Sub entered into that certain Amendment to the Agreement and Plan of Merger, between the Company, Dragonfly and Merger Sub (the “Amendment”), which amended the Merger Agreement to, among other things, reflect a $ 15 million increase in the consideration to be issued in the business combination in connection with Dragonfly entering into a Stock Purchase Agreement with THOR Industries, Inc. (“THOR”), dated as of July 12, 2022, whereby for $ 15 million in cash, THOR purchased 1,267,502 shares of Dragonfly common stock (the “THOR Investment”). In connection with the THOR Investment, THOR and Dragonfly will enter into a commercial arrangement pursuant to which (i) THOR and certain of THOR’s affiliates will, among other things, transition to lithium-ion batteries manufactured and sold by Dragonfly, and (ii) Dragonfly will, among other things, grant certain board observer rights (with customary limitations) to THOR. Other than as expressly modified by the Amendment, the Merger Agreement remains in full force and effect. Special Meeting to Amend Charter and Investment Management Trust Agreement On August 5, 2022, Chardan held a special meeting (the “Special Meeting”), at which holders of 11,331,512 shares of common stock of Chardan, par value $0.0001 per share (“Chardan Common Stock”), were present in person or by proxy, representing approximately 71.66% of the voting power of the 15,812,500 shares of Chardan Common Stock issued and outstanding entitled to vote at the Special Meeting at the close of business on July 11, 2022, which was the record date (the “Record Date”) for the Special Meeting. Stockholders of record as of the close of business on the Record Date are referred to herein as “Stockholders.” At the Special Meeting, the Stockholders approved the proposal to amend the Company’s Amended and Restated Certificate of Incorporation (the “Charter”) to provide the Company’s officers, directors, initial stockholders and Chardan NexTech 2 Warrant Holdings, LLC (collectively, the “Insiders”) the ability to extend the date by which the Company must complete a business combination up to three (3) times for an additional one (1) month each time (for a maximum of three (3) one-month extensions) upon the deposit into the trust account (the “Trust Account”) by the Insiders, their affiliates or designees of $ 200,000 upon five days’ advance notice prior to August 13, 2022 (or such other applicable deadline) (the “Extension,” and such proposal, the “Charter Amendment”). On July 29, 2022, to effectuate the Charter Amendment, the board of directors of the Company (the “Board”) approved and adopted the Second Amended and Restated Memorandum and Articles of Association of the Company (the “Second A&R Charter”). In connection with the Charter Amendment, Stockholders elected to redeem 9,556,652 shares of Chardan Common Stock, representing approximately 60.44% of the issued and outstanding shares of Chardan Common Stock and 75.55% of the issued outstanding Chardan Common Stock sold in the IPO, resulting in the distribution of $ 97,194,950 from the Trust Account to the redeeming Stockholders. Following such redemptions, approximately $ 31,460,579 remains in the Trust Account and 6,255,848 shares of Chardan Common Stock will remain issued and outstanding . In addition, at the Special Meeting, the Stockholders approved the proposal to amend the Investment Management Trust Agreement, dated August 10, 2021 (the “Trust Agreement”), by and between the Company and Continental Stock Transfer & Company (the “Trustee”) to authorize the Extension and its implementation by the Company (the “Trust Amendment Proposal”). On July 29, 2022, to effectuate the Trust Amendment Proposal, the Board approved and adopted Amendment No. 1 to the Investment Management Trust Agreement (the “Trust Agreement Amendment”). Other Agreements The Business Combination Agreement contemplates the execution of various additional agreements and instruments, on or before the Closing, including, among others, the following: Registration Rights & Certain Restrictions on Transfer The Merger Agreement contemplates that, at the Closing, New Dragonfly, Chardan NexTech Investments 2 LLC, a Delaware limited liability company (the “Sponsor”), Chardan’s initial stockholders, certain stockholders of Dragonfly and certain of each of their respective affiliates, as applicable, and the other parties thereto, will enter into an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which New Dragonfly will agree to register for resale, pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), certain shares of New Dragonfly Common Stock and other equity securities of New Dragonfly that are held by the parties thereto from time to time and the parties thereto will be provided with customary demand and piggyback registration rights. Additionally, the Registration Rights Agreement and the Bylaws of New Dragonfly contain certain restrictions on transfer with respect to (i) shares of New Dragonfly Common Stock and any other equity securities convertible into or exercisable or exchangeable for shares of New Dragonfly Common Stock held by the Dragonfly Stockholders immediately following the Closing (other than any shares purchased in the public market or in the PIPE Investment) and (ii) any Earnout Shares (as defined in the Merger Agreement) issued within six (6) months of the closing date and any shares of New Dragonfly Common Stock issued with respect to or in exchange for such Earnout Shares (the “Lock-up Shares”). Such restrictions begin at the Closing and end on the date that is six months after Closing. Sponsor Support Agreement On May 15, 2022, the Sponsor, Chardan and Dragonfly entered into the Sponsor Support Agreement (the “Sponsor Support Agreement”), pursuant to which, among other things, the Sponsor agreed to (i) vote in favor of the Merger Agreement and the transactions contemplated thereby and against any proposal that would reasonably be expected to result in (x) a breach of any of Chardan’s or Merger Sub’s covenants, agreements or obligations under the Merger Agreement or in any Ancillary Agreements or (y) any Closing conditions set forth in Section 9.1 or 9.3 or the Merger Agreement not being satisfied, (ii) retain and not redeem its holdings in Chardan prior to the Closing, (iii) be subject to certain transfer restrictions with respect to its holdings in Chardan and (iv) be bound by certain provisions of the Merger Agreement as if it were an original signatory thereto, in each case, on the terms and subject to the conditions set forth in the Sponsor Support Agreement. Subscription Agreement On May 15, 2022, concurrently with the execution of the Merger Agreement, Chardan entered into a subscription agreement (the “Subscription Agreement”) with the Sponsor (the “PIPE Investor”). Pursuant to and subject to the terms and conditions contained in the Subscription Agreement, the PIPE Investor has subscribed to purchase up to 500,000 shares of New Dragonfly Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of up to $5,000,000 (the “PIPE Investment”). As set forth in the Subscription Agreement, the PIPE Investor may purchase shares of the Chardan common stock, par value $0.0001 per share (“Chardan Common Stock”) in the open market, and reduce (i) its purchase price under the Subscription Agreement by an amount equal to the number of shares that the PIPE Investor purchased in the open market multiplied by the per share redemption amount received by public stockholders who elect to redeem their shares prior to the Closing and (ii) the number of shares it subscribed for by an amount equal to the number of Shares Subscriber purchased in the open market and not redeemed as contemplated above. The PIPE Investor agreed that it will not exercise its right to vote any shares it may purchase in the open market following the date of the Subscription Agreement and prior to the Closing, in connection with any vote to approve the Merger. The PIPE Investment was consummated substantially concurrently with the Closing. Debt Commitment Letter On May 15, 2022, Chardan and Dragonfly entered into a commitment letter (the “Debt Commitment Letter”), with EICF Agent LLC (“EIP”) and CCM Investments 5 LLC, an affiliate of the Sponsor (“CCM 5”, and collectively with EIP, the “Initial Lenders”), pursuant to which the Initial Lenders have agreed to provide Dragonfly with a senior secured term loan facility in an aggregate principal amount of $75,000,000 (the “Term Loan Facility”) subject to the satisfaction of a number of specified conditions set forth in the Debt Commitment Letter. CCM 5 intends to backstop its commitment under the Debt Commitment Letter by entering into a backstop commitment letter (the “Backstop Commitment Letter”) with certain third party financing sources prior to the Closing Date. The proceeds of the Term Loan Facility will be used (i) to support the Merger, (ii) to repay all outstanding PIUS Debt and other obligations of Dragonfly, (iii) to pay for fees and expenses in connection with the foregoing, (iv) to provide additional growth capital and (v) for other general/corporate purposes. The Term Loan Facility must be fully drawn on the Closing Date, will mature four years from the Closing Date and will be subject to quarterly amortization of 5% per annum beginning 24 months after the Closing Date. Chardan will be a guarantor under the Term Loan Facility. As part of the consideration for the Term Loan Facility, New Dragonfly will also issue to the Initial Lenders (but not CCM 5 to the extent it has not backstopped its commitment pursuant to the Backstop Commitment Letter) on the Closing Date: (i) penny warrants (the “Penny Warrants”) exercisable to purchase 3.6% of New Dragonfly’s common stock on a fully-diluted basis, calculated as of the Closing Date, and (ii) warrants (the “ $10 Per Share Warrants”) exercisable to purchase 1.6 million shares of New Dragonfly’s common stock at $10 per share. The Penny Warrants will have an exercise period of ten years from the date of issuance. The $10 Per Share Warrants will have an exercise period of five years from the date of issuance and will have customary cashless exercise provisions. The warrants will have standard anti-dilution protections. The shares of New Dragonfly common stock issuable upon exercise of the warrants shall have customary registration rights requiring New Dragonfly to file and keep effective a registration statement registering the resale of such shares. Equity Facility Letter Agreement On May 15, 2022, Chardan, Dragonfly and CCM 5 (the “Equity Facility Investor”) entered into a letter agreement (together with the Summary of Indicative Terms attached as an exhibit thereto, the “Equity Facility Letter Agreement”) pursuant to which Chardan and Dragonfly agreed to enter into definitive documentation (the “Equity Facility Definitive Documentation”) to establish a committed equity facility (the “Equity Facility”) prior to the Closing. The Equity Facility Definitive Documentation will contain terms that are consistent with the Equity Facility Letter Agreement and customary for documentation of this nature. Pursuant to and subject to the conditions to be set forth in the Equity Facility Definitive Documentation, New Dragonfly will have the right from time to time at its option to direct the Equity Facility Investor to purchase up to a specified maximum amount of shares of New Dragonfly common stock, up to a maximum aggregate purchase price of $150,000,000 over the 36 -month term of the Equity Facility Letter Agreement. The foregoing descriptions of the Merger Agreement, form of the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement and the transactions and documents contemplated thereby are not complete and are subject to and qualified in their entirety by reference to the Merger Agreement, form of the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement, copies of which were filed on Form 8-K, as filed on May 16, 2022. The Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement have been included to provide investors with information regarding their terms. They are not intended to provide any other factual information about Chardan, Dragonfly, or their affiliates. The representations, warranties, covenants and agreements contained in the Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Registration Rights Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement and the other documents related thereto were made only for purposes of such agreements as of the specific dates therein, were solely for the benefit of the parties to the Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement, as applicable, and may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter or the Equity Facility Letter Agreement, as applicable, instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter or the Equity Facility Letter Agreement and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter or the Equity Facility Letter Agreement, as applicable, which subsequent information may or may not be fully reflected in Chardan’s public disclosures. Risks and Uncertainties Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these unaudited condensed consolidated financial statements. The unaudited condensed consol | NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Chardan NexTech Acquisition 2 Corp (the “Company”) is a blank check company incorporated in Delaware on June 23, 2020. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). The Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. As of December 31, 2021, the Company had not commenced any operations. All activity for the year ended December 31, 2021 and for the period from June 23, 2020 (inception) through December 31, 2020 relates to the Company’s formation and initial public offering (“Initial Public Offering”) described below, and, subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The registration statement on Form S-1 (the “Registration Statement”) for the Company’s Initial Public Offering was declared effective on August 10, 2021. On August 13, 2021, the Company consummated the Initial Public Offering of 11,000,000 units (the “Units” and, with respect to the common stock, par value $0.0001 per share, of the Company included in the Units sold, the “Public Shares”, and with respect to the warrants of the Company included in the Units sold, the “Public Warrants”), at $10.00 per Unit, generating gross proceeds of $110,000,000, which is discussed in Note 3. Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 4,361,456 warrants (the “Private Warrants”, together with the Public Warrants, the “Warrants”) at a price of $0.93 per Private Warrant in a private placement to Chardan NexTech 2 Warrant Holdings LLC, a Delaware limited liability company (“Holdings”), an affiliate of Chardan NexTech Investments 2 LLC, a Delaware limited liability company (the “Sponsor”), generating gross proceeds of $4,052,000, which is described in Note 4. The Company had granted the underwriters in the Initial Public Offering a 45-day option to purchase up to 1,650,000 Units to cover over-allotments, if any (see Note 6). On August 16, 2021, the underwriters fully exercised the over-allotment option and, on August 18, 2021, purchased an additional 1,650,000 Units (the “Over-Allotment Units”) at a purchase price of $10.00 per Over-Allotment Unit, generating gross proceeds of $16,500,000. Simultaneously with the closing of the exercise of the over-allotment option, the Company consummated the sale of 266,402 warrants (the “Over-Allotment Private Warrants”) at a purchase price of $0.93 per Over-Allotment Private Warrant in a private placement to the Holdings, generating gross proceeds of $247,500. Following the closing of the Initial Public Offering and underwriters’ over-allotment option, an amount of $128,397,500 from the net proceeds of the sale of the Units and Over-Allotment Units and a portion of the proceeds from the sale of the Private Warrants and Over-Allotment Private Warrants was placed in a trust account (the “Trust Account”) and was invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “ Investment Company Act Transaction costs related to the issuances described above amounted to $1,080,140, consisting of $500,000 of cash underwriting fees and $580,140 of other offering costs. The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account ($10.15 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The Public Shares subject to redemption was recorded at redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. Notwithstanding the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company. The Company will have 12 months, or August 13, 2022, from the closing of the Initial Public Offering to consummate an initial Business Combination. However, if the Company anticipates that it may not be able to consummate an initial Business Combination within 12 months, the Company’s insiders or their affiliates may, but are not obligated to, extend the period of time to consummate a Business Combination up to two times by an additional three months each time (for a total of up to 18 months, or February 13, 2023, to complete a Business Combination). If the Company is unable to consummate an initial Business Combination within the above time period, the Company will distribute the aggregate amount then on deposit in the Trust Account, pro rata to the Company’s public stockholders, by way of the redemption of their shares and thereafter cease all operations except for the purposes of winding up of the Company’s affairs. In such event, the warrants will expire and be worthless. The initial stockholders have agreed to waive their redemption rights with respect to any shares they own in connection with the consummation of the initial Business Combination, including their Founder Shares and Public Shares that they purchase during or after the offering, if any. In addition, the initial stockholders have agreed to waive their rights to liquidating distributions with respect to their Founder Shares if the Company fails to consummate an initial Business Combination within 18 months (assuming both of the three-month extensions were executed) from the closing of this offering. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering, they will be entitled to receive liquidating distributions with respect to such Public Shares if the Company fails to consummate an initial Business Combination within the required time period. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.15 per Public Share or (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay the Company’s taxes, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Going Concern Consideration As of December 31, 2021, the Company had $799,808 in cash held outside of the Trust Account and working capital of $988,186. The Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. In connection with our assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial Statements — Risks and Uncertainties Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements. The specific impact on the Company's financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements. |
New Dragonfly | ||
NATURE OF BUSINESS | NOTE 1 – NATURE OF BUSINESS Dragonfly Energy Corp., (the “Company”), was organized as a limited liability company in the State of Nevada on October 15, 2012. The Company was reorganized as a corporation under the laws of the State of Nevada on April 11, 2016. The Company sells lithium-ion battery packs for use in a wide variety of applications. The company sells to distributors under the Dragonfly Energy Corp name, and sells direct to consumers under the trade name Battleborn Batteries. In addition, the Company develops technology for improved lithium-ion battery manufacturing and assembly methods. | NOTE 1 — NATURE OF BUSINESS Dragonfly Energy Corp., (the “Company”), was organized as a limited liability company in the State of Nevada on October 15, 2012. The Company was reorganized as a corporation under the laws of the State of Nevada on April 11, 2016. The Company sells lithium-ion battery packs for use in a wide variety of applications. The Company sells to distributors under the Dragonfly Energy Corp name and sells direct to consumers under the trade name Battleborn Batteries. In addition, the Company develops technology for improved lithium-ion battery manufacturing and assembly methods. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
New Dragonfly | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2021. Recently adopted accounting standards : In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt Modifications and Extinguishments (Subtopic 470 50), Compensation Stock Based Compensation (Topic 718), and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815 40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity Classified Written Call Options. This ASU provides guidance which clarified an issuer’s accounting for modification or exchanges of freestanding equity classified written call options that remain equity classified after modification or exchange. The provisions of ASU No. 2021-04 are effective January 1, 2022. This ASU shall be applied on a prospective basis. The adoption of this guidance did not have a material impact on the accompanying consolidated financial statements. Recently issued accounting pronouncements: In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB subsequently issued amendments to ASU 2016-13, which have the same effective date and transition date of January 1, 2023. These standards replace the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measure at amortized cost to be presented at the net amount expected to be collected. The Company does not expect this change in guidance to have a material impact to its financial statements. In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. The amendments in this update will be effective for the Company on January 1, 2024 and may be early adopted at the beginning of fiscal year 2023. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows. Immaterial error correction The Company corrected an immaterial error and recognized $857 in expenses during the third quarter ending September 30, 2022 related to costs previously incorrectly deferred within other current assets on the balance sheet. Of this amount, $450 is related to costs incurred during the fourth quarter ending December 31, 2021 and the remaining $407 were incurred during the nine months ended September 30, 2022. Cash, Restricted Cash, and Cash Equivalents The Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents as of September 30, 2022 and December 31, 2021. The Company also maintains a restricted cash balance to satisfy its note payable requirements (Refer to Note 5). From time to time the Company has amounts on deposit with financial institutions that exceed federally insured limits. The Company has not experienced any significant losses in such accounts, nor does management believe it is exposed to any significant credit risk. Accounts Receivable The Company’s trade receivables are recorded when billed and represent claims against third parties that will be settled in cash. Generally, payment is due from customers within 30 days of the invoice date and the contracts do not have significant financing components. Trade accounts receivables are recorded gross and are net of any applicable allowance. The Company has an allowance for doubtful accounts as of September 30, 2022 and December 31, 2021 of $54 and $50 , respectively. Inventory Inventories (Note 3), which consist of raw materials, work in process and finished goods, are stated at the lower of cost (weighted average) or net realizable value, net of reserves for obsolete inventory. We continually analyze our slow moving and excess inventories. Based on historical and projected sales volumes and anticipated selling prices, we established reserves. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates its estimate of future demand. Products that are determined to be obsolete are written down to net realizable value. As of September 30, 2022 and December 31, 2021, no such reserves were necessary. Property and Equipment Property and equipment are stated at cost, including the cost of significant improvements and renovations. Costs of routine repairs and maintenance are charged to expense as incurred. Depreciation and amortization are calculated by the straight line method over the estimated useful lives for owned property, or, for leasehold improvements, over the shorter of the asset’s useful life or term of the lease. Depreciation expense for the Nine months ended September 30, 2022 and 2021 was $648 and $432 , respectively. The various classes of property and equipment and estimated useful lives are as follows: Office furniture and equipment 3 to 7 years Vehicles 5 years Machinery and equipment 3 to 7 years Leasehold improvements Remaining Term of Lease Use of Estimates The preparation of financial statements in conformity with “GAAP” requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Revenue Recognition Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five step model to contracts when it is probable the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company excludes from the transaction price all taxes that are assessed by a governmental authority and imposed on and concurrent with the Company’s revenue transactions, and therefore presents these taxes (such as sales tax) on a net basis in operating revenues on the Statements of Operations. Revenue is recognized when control of the promised goods is transferred to the customer or reseller, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Revenue associated with products holding rights of return are recognized when the Company concludes there is not a risk of significant revenue reversal in the future periods for the expected consideration in the transaction. There are no material instances including discounts and refunds where variable consideration is constrained and not recorded at the initial time of sale. Generally, our revenue is recognized at a point in time for standard promised goods at the time of shipment when title and risk of loss pass to the customer. The Company may receive payments at the onset of the contract before delivery of goods for customers in the retail channel. Payment terms for distributors and OEMs are due within 30 - 60 days after shipment. In such instances, the Company records a customer deposit liability. The Company recognizes these contract liabilities as sales after the revenue criteria are met. The company had $1,779 of contract liabilities as of January 1, 2021. As of September 30, 2022 and December 31, 2021, the contract liability related to the Company’s customer deposits approximated $287 and $434 , respectively. The entire contract liability balance as of December 31, 2021 was recognized as revenue during the Nine months ended September 30, 2022. Disaggregation of Revenue The following table presents our disaggregated revenues by distribution channel: For the Nine Months Ended September 30, Sales 2022 2021 Retail $ 35,211 $ 44,221 Distributor 6,544 6,910 Original equipment manufacture 24,287 6,690 Total 66,042 57,821 Shipping and Handling Shipping and handling fees paid by customers are recorded within net sales, with the related expenses recorded in cost of sales. Shipping and handling costs associated with outbound freight are included in Sales and marketing expenses. Shipping and handling costs associated with outbound freight totaled $4,042 and $3,912 for the Nine months ended September 30, 2022 and 2021, respectively. Concentrations Receivables from one customer comprised approximately 43% of accounts receivable as of September 30 2022. Receivables from two customers comprised approximately 42% and 16% , respectively, of accounts receivable as of December 31, 2021. For the nine months ended September 30, 2022, one customer accounted for approximately 20% of the Company’s total revenue. There are no significant revenue concentrations for the nine months ended September 30, 2021. Payables to one vendor comprised approximately 45% of accounts payable as of September 30, 2022. There are no significant payable concentrations as of December 31, 2021 For the nine months ended September 30, 2022, one vendor accounted for approximately 24% of the Company’s total purchases. For the nine months ended September 30, 2021, two vendors accounted for approximately 20% and 12% of the Company’s total purchases. Research and Development The Company expenses research and development costs as incurred. Research and development expenses include salaries, contractor and consultant fees, supplies and materials, as well as costs related to other overhead such as depreciation, facilities, utilities, and other departmental expenses. The costs we incur with respect to internally developed technology and engineering services are included in research and development expenses as incurred as they do not directly relate to acquisition or construction of materials, property or intangible assets that have alternative future uses. Advertising The Company expenses advertising costs as they are incurred and are included in selling and marketing expenses. Advertising expenses amounted to $1,777 and $1,069 for the nine months ended September 30, 2022 and 2021, respectively. Stock-Based Compensation The Company accounts for stock based compensation arrangements with employees and non employee consultants using a fair value method which requires the recognition of compensation expense for costs related to all stock based payments, including stock options (Note 6). The fair value method requires the Company to estimate the fair value of stock based payment awards to employees and non employees on the date of grant using an option pricing model. Stock based compensation costs are based on the fair value of the underlying option calculated using the Black Scholes option pricing model and recognized as expense on a straight line basis over the requisite service period, which is the vesting period. The Company measures equity based compensation awards granted to non employees at fair value as the awards vest and recognizes the resulting value as compensation expense at each financial reporting period. Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, expected dividend yield, expected term, risk free rate of return, and the estimated fair value of the underlying common stock. Due to the lack of company specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The group of representative companies have characteristics similar to the Company, including stage of product development and focus on the lithium ion battery industry. The Company uses the simplified method, which is the average of the final vesting tranche date and the contractual term, to calculate the expected term for options granted to employees as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The risk free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company uses an assumed dividend yield of zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. The Company accounts for forfeitures as they occur. Earnings per Common Share We calculate basic earnings per share pursuant to the two-class method as a result of the issuance of Series A Preferred stock in 2016. Our Series A Preferred Stock is considered a participating security because, in the event that we pay a dividend or make a distribution on the outstanding common stock, we shall also pay each holder of the Series Preferred Stock a dividend on an as-converted basis. The two-class method is an earnings allocation formula that determines earnings per share for common stock and participating securities according to dividend and participation rights in undistributed earnings. Under this method, all earnings, distributed and undistributed, are allocated to common shares and participating securities based on their respective rights to receive dividends. Diluted earnings per common share is calculated using the treasury stock method for options. The following table sets forth the information needed to compute basic and diluted earnings per share for the Nine months ended September 30, 2022 and 2021: September 30, September 30, 2022 2021 Basic (Loss) Earnings per common share Net (Loss) Income $ (7,456) $ 4,421 (Loss) Income available for distribution (7,456) 4,421 Income allocated to participating securities — (1,469) Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 September 30, September 30, 2022 2021 Basic (loss) Earnings per common share: Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 Weighted average number of common shares-basic 21,384,734 20,063,211 (Loss) Earnings per share, basic $ (0.35) $ 0.15 Diluted (loss) earnings per common share: Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 Weighted average number of common shares-basic 21,384,734 20,063,211 Dilutive effect related to stock options — 1,862,894 Weighted average diluted shares outstanding 21,384,734 21,926,105 (Loss) Earnings per share, diluted $ (0.35) $ 0.13 The following table sets forth the number of potential shares of common stock that have been excluded from diluted net (loss) income per share net (loss) income per share because their effect was anti-dilutive: September 30, September 30, 2022 2021 Options 3,100,524 — Weighted average number of common shares‑basic 3,100,524 — Income Taxes Deferred income tax assets and liabilities (Note 5) are determined based on the estimated future tax effects of net operating loss, credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company recognizes a tax benefit for an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The Company’s accounting policy is to include penalties and interest related to income taxes if any, in selling, general and administrative expenses. Segment Reporting Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the Company’s Chief Executive Officer to make decisions with respect to resource allocation and assessment of performance. To date, the Company has viewed its operations and manages its business as one operating segment. COVID-19 The Company is closely monitoring the impact of COVID-19 on its business, including how it will affect its customers, workforce, suppliers, vendors, and production and distribution channels, as well as its financial statements. The extent to which COVID-19 impacts the Company's business and financial results will depend on numerous evolving factors, including, but not limited to: the magnitude and duration of COVID-19, the extent to which it will impact macroeconomic conditions, including interest rates, employment rates and consumer confidence, the speed of the anticipated recovery, and governmental, business and individual consumer reactions to the pandemic. While there was not a material impact to the Company's financial statements as of September 30, 2022 and December 31, 2021 and for the nine months ended September 30, 2022 and 2021, respectively, COVID-19 could result in material impacts to the Company's financial statements in future reporting periods. | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These accompanying financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Reclassifications Certain amounts disclosed in prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported income, cash flows, total assets, or shareholders’ equity as previously reported. Recently adopted accounting standards: In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The new standard reduces the complexity of accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The Company adopted this guidance effective January 1, 2021 which did not have a material impact on the accompanying financial statements. Recently issued accounting pronouncements: In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB subsequently issued amendments to ASU 2016-13, which have the same effective date and transition date of January 1, 2023. These standards replace the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measure at amortized cost to be presented at the net amount expected to be collected. The Company does not expect this change in guidance to have a material impact to its financial statements. In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt Modifications and Extinguishments (Subtopic 470 50), Compensation Stock Based Compensation (Topic 718), and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity Classified Written Call Options. This ASU provides guidance which clarified an issuer’s accounting for modification or exchanges of freestanding equity classified written call options that remain equity classified after modification or exchange. The provisions of ASU 2021-04 are effective January 1, 2022. This ASU shall be applied on a prospective basis. The Company determined that the change in guidance did not have a material impact to its financial statements. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Cash, Restricted Cash, and Cash Equivalents The Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents as of December 31, 2021 or 2020. The Company also maintains a restricted cash balance to satisfy its note payable requirements (Refer to Note 5). From time to time the Company has amounts on deposit with financial institutions that exceed federally insured limits. The Company has not experienced any significant losses in such accounts, nor does management believe it is exposed to any significant credit risk. Accounts Receivable The Company’s trade receivables are recorded when billed and represent claims against third parties that will be settled in cash. Generally, payment is due from customers within 30 days of the invoice date and the contracts do not have significant financing components. Trade accounts receivables are recorded gross and are net of any applicable allowance. The Company has an allowance for doubtful accounts as of December 31, 2021 and 2020 of $50 and $0, respectively. Inventory Inventories (Note 3), which consist of raw materials, work in process and finished goods, are stated at the lower of cost (weighted average) or net realizable value, net of reserves for obsolete inventory. We continually analyze our slow moving and excess inventories. Based on historical and projected sales volumes and anticipated selling prices, we established reserves. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates its estimate of future demand. Products that are determined to be obsolete are written down to net realizable value. As of December 31, 2021 and 2020, no such reserves were necessary. Property and Equipment Property and equipment are stated at cost, including the cost of significant improvements and renovations. Costs of routine repairs and maintenance are charged to expense as incurred. Depreciation and amortization are calculated by the straight-line method over the estimated useful lives for owned property, or, for leasehold improvements, over the shorter of the asset’s useful life or term of the lease. Depreciation expense for the years ended December 31, 2021 and 2020 was $617 and $198, respectively. The various classes of property and equipment and estimated useful lives are as follows: Office furniture and equipment 3 to 7 years Machinery and equipment 3 to 7 years Leasehold improvements Remaining Term of Lease Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Impairment of Long-Lived Assets The Company evaluates its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of these asset may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over its remaining life. When indications of impairment are present and the estimated undiscounted future cash flows from the use of these assets is less than the assets’ carrying value, the related assets will be written down to fair value. There were no impairments of the Company’s long-lived assets for the periods presented. Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Leases At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company records the associated lease liability and corresponding right-of-use asset upon commencement of the lease using the implicit rate or a discount rate based on a credit-adjusted secured borrowing rate commensurate with the term of the lease. The Company additionally evaluates leases at their inception to determine if they are to be accounted for as an operating lease or a finance lease. A lease is accounted for as a finance lease if it meets one of the following five criteria: the lease has a purchase option that is reasonably certain of being exercised, the present value of the future cash flows is substantially all of the fair market value of the underlying asset, the lease term is for a significant portion of the remaining economic life of the underlying asset, the title to the underlying asset transfers at the end of the lease term, or if the underlying asset is of such a specialized nature that it is expected to have no alternative uses to the lessor at the end of the term. Leases that do not meet the finance lease criteria are accounted for as an operating lease. The Company does not have any finance leases as of December 31, 2021 or 2020. Operating lease assets represent a right to use an underlying asset for the lease term and operating lease liabilities represent an obligation to make lease payments arising from the lease. Operating lease liabilities with a term greater than one year and their corresponding right-of-use assets are recognized on the balance sheet at the commencement date of the lease based on the present value of lease payments over the expected lease term. Certain adjustments to the right- of-use asset may be required for items such as initial direct costs paid or incentives received. As the Company’s leases do not typically provide an implicit rate, the Company utilizes the appropriate incremental borrowing rate, determined as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and in a similar economic environment. Lease cost is recognized on a straight-line basis over the lease term and variable lease payments are recognized as operating expenses in the period in which the obligation for those payments is incurred. Variable lease payments primarily include common area maintenance, utilities, real estate taxes, insurance, and other operating costs that are passed on from the lessor in proportion to the space leased by the Company. The Company has elected the practical expedient to not separate between lease and non-lease components. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue Recognition Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company excludes from the transaction price all taxes that are assessed by a governmental authority and imposed on and concurrent with the Company’s revenue transactions, and therefore presents these taxes (such as sales tax) on a net basis in operating revenues on the Statements of Income. Revenue is recognized when control of the promised goods is transferred to the customer or distributor, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Revenue associated with products holding rights of return are recognized when the Company concludes there is not a risk of significant revenue reversal in the future periods for the expected consideration in the transaction. There are no material instances including discounts and refunds where variable consideration is constrained and not recorded at the initial time of sale. Generally, our revenue is recognized at a point in time for standard promised goods at the time of shipment when title and risk of loss pass to the customer. The Company may receive payments at the onset of the contract before delivery of goods for customers in the retail channel. In such instances, the Company records a customer deposit liability. Payment terms for distributors and OEMs are due within 30-60 days after shipment. The Company recognizes these contract liabilities as sales after the revenue criteria are met. As of December 31, 2021 and 2020, the contract liability related to the Company’s customer deposits approximated $434 and $1,779, respectively. The entire contract liability balance as of December 31, 2020 was recognized as revenue during the year ended December 31, 2021. Disaggregation of Revenue: The following table present our disaggregated revenues by distribution channel: Sales 2021 2020 Retail $ 59,042 $ 33,314 Distributor 10,733 10,381 Original equipment manufacture 8,225 3,492 Total $ 78,000 $ 47,187 Shipping and Handling Shipping and handling fees paid by customers are recorded within net sales, with the related expenses recorded in cost of sales. Shipping and handling costs associated with outbound freight are included in sales and marketing expenses. Shipping and handling costs associated with outbound freight totaled $5,105 and $2,568 for the years ended December 31, 2021 and 2020, respectively. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Product Warranty The Company offers assurance type warranties from 5 to 10 years on its products. The Company estimates the costs associated with the warranty obligation using historical data of warranty claims and costs incurred to satisfy those claims. The Company estimates, based upon a review of historical warranty claim experience, the costs that may be incurred under our warranties and record a liability in the amount of such estimate at the time a product is sold. Factors that affect our warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our recorded warranty liability and adjust the accrual as claims data and historical experience warrants. The Company has assessed the costs of fulfilling its existing assurance type warranties and has determined that the estimated outstanding warranty obligation on December 31, 2021 and 2020 are immaterial to the Company’s financial statements. Returns and Sales Allowances The provision for returns and sales allowances is determined by an analysis of the historical rate of returns and sales allowances over recent quarters and adjusted to reflect management’s future expectations. The Company has accrued for sales allowances as of December 31, 2021 in the amount of $170. There was no accrual for sales allowances as of December 31, 2020. Concentrations There are no significant revenue concentrations for the years ended December 31, 2021 and 2020. Receivables from two customers comprised approximately 42% and 16%, respectively, of accounts receivable as of December 31, 2021. Receivables from one customer comprised approximately 22% of accounts receivable as of December 31, 2020. There are no other significant accounts receivable concentrations. For the year ended December 31, 2021, three vendors accounted for approximately 27%, 10% and 10% of the Company’s total purchases, respectively. For the year ended December 31, 2020, four vendors accounted for approximately 19%, 14%, 11% and 10% of the Company’s total purchases, respectively. Research and Development The Company expenses research and development costs as incurred. Research and development expenses include salaries, contractor and consultant fees, supplies and materials, as well as costs related to other overhead such as depreciation, facilities, utilities, and other departmental expenses. The costs we incur with respect to internally developed technology and engineering services are included in research and development expenses as incurred as they do not directly relate to acquisition or construction of materials, property or intangible assets that have alternative future uses. Advertising The Company expenses advertising costs as they are incurred and are included in selling and marketing expenses. Advertising expenses amounted to $1,690 and $1,069 for the years ending 2021 and 2020, respectively. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Stock-Based Compensation The Company accounts for stock-based compensation arrangements with employees and non-employee consultants using a fair value method which requires the recognition of compensation expense for costs related to all stock-based payments, including stock options (Note 8). The fair value method requires the Company to estimate the fair value of stock-based payment awards to employees and non-employees on the date of grant using an option pricing model. Stock-based compensation costs are based on the fair value of the underlying option calculated using the Black Scholes option pricing model and recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. The Company measures equity-based compensation awards granted to non-employees at fair value as the awards vest and recognizes the resulting value as compensation expense at each financial reporting period. Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, expected dividend yield, expected term, risk free rate of return, and the estimated fair value of the underlying common stock. Due to the lack of company specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The group of representative companies have characteristics similar to the Company and focus on the lithium-ion battery industry. The Company uses the simplified method, which is the average of the final vesting tranche date and the contractual term, to calculate the expected term for options granted to employees as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company uses an assumed dividend yield of zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. The Company accounts for forfeitures as they occur. Income Taxes Deferred income tax assets and liabilities (Note 7) are determined based on the estimated future tax effects of net operating loss, credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company recognizes a tax benefit for an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The Company has a liability of $0 and $19 as of December 31, 2021 and 2020, respectively, of uncertain tax positions. The Company’s accounting policy is to include penalties and interest related to income taxes if any, in selling, general and administrative expenses. Earnings per Common Share We calculate basic earnings per share pursuant to the two-class method as a result of the issuance of Series A Preferred stock in 2016. Our Series A Preferred Stock is considered a participating security because, in the event that we pay a dividend or make a distribution on the outstanding common stock, we shall also pay each holder of the Series Preferred Stock a dividend on an as-converted basis. The two-class method is an earnings allocation formula that determines earnings per share for common stock and participating securities according to dividend and participation rights in undistributed earnings. Under this method, all earnings, distributed and undistributed, are allocated to common shares and participating securities based on their respective rights to receive dividends. Diluted earnings per common share is calculated using the treasury stock method for options. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The following table sets forth the information needed to compute basic and diluted earnings per share for the years ended December 31, 2021 and 2020: December 31, December 31, 2021 2020 Basic Earnings per common share Net Income $ 4,338 $ 6,878 Income available for distribution 4,338 6,878 Income allocated to participating securities, Net (1,405) (2,290) Income available to common shareholders $ 2,933 $ 4,588 December 31, December 31, 2021 2020 Basic earnings per common share: Net Income available to common shareholders $ 2,933 $ 4,588 Weighted average number of common shares-basic 20,101,129 20,040,470 Earnings per share, basic $ 0.15 $ 0.23 Diluted earnings per common share: Net Income available to common shareholders $ 2,933 $ 4,588 Weighted average number of common shares-basic 20,101,129 20,040,470 Dilutive effect related to stock options 1,829,979 1,348,315 Weighted average diluted shares outstanding 21,931,108 21,388,785 Earnings per share, diluted $ 0.13 $ 0.21 For all periods presented, there were no outstanding shares that were potentially anti-dilutive. Segment Reporting Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the Company’s Chief Executive Officer to make decisions with respect to resource allocation and assessment of performance. To date, the Company has viewed its operations and manages its business as one operating segment. Fair Value of Financial Instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement” approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their short-term nature. COVID-19 On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law. The CARES Act provides a substantial stimulus and assistance package intended to address the impact of COVID-19, including tax relief and government loans, grants, and investments. The CARES Act did not have a material impact on the Company’s financial statements. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The Company is closely monitoring the impact of COVID-19 on its business, including how it will affect its customers, workforce, suppliers, vendors, and production and distribution channels, as well as its financial statements. The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous evolving factors, including, but not limited to the magnitude and duration of COVID-19, the extent to which it will impact macroeconomic conditions, including interest rates, employment rates and consumer confidence, the speed of the anticipated recovery, and governmental, business, and individual consumer reactions to the pandemic. We have experienced longer lead times in the supply of our components because of global supply chain disruptions caused in-part by the ongoing COVID-19 pandemic, which have led to the build-up in inventory as well as the significant increase in prepaid inventory as suppliers are requiring upfront deposits. While there was not a material impact to the Company’s financial statements as of and for the years ended December 31, 2021 and 2020, respectively, COVID-19 could result in material impacts to the Company’s financial statements in future reporting periods. |
INVENTORY
INVENTORY | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
New Dragonfly | ||
INVENTORY | NOTE 3 – INVENTORY On September 30, 2022 and December 31, 2021 inventory consists of the following: September 30, December 31, 2022 2021 Raw material $ 29,631 $ 22,885 Finished goods 9,856 4,242 Total inventory $ 39,487 $ 27,127 | NOTE 3 — INVENTORY Inventory consists of the following as of: December 31, December 31, 2021 2020 Raw material $ 22,885 $ 4,419 Work in process — 172 Finished goods 4,242 1,357 Total inventory $ 27,127 $ 5,948 |
OPERATING LEASES
OPERATING LEASES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
New Dragonfly | ||
OPERATING LEASES | NOTE 4 – OPERATING LEASES The Company has leased premises that expire at various dates through September of 2025 with options to renew for an additional 5 years subject to various operating leases. The Company originally had leases related to the main office, warehouse space, research and development lab, engineering office, and sales office, all located in Reno, Nevada. The original leases required annual escalating monthly payments ranging from $4 to $11 . In December of 2020, the Company entered a fourth amendment lease and effective April 30, 2021, the Company terminated its original main office, warehouse and sales office lease and moved these spaces to a larger premise that is also located in Reno, Nevada that required annual escalating monthly payments ranging from $56 to $63 . In December of 2021, the Company entered into another lease for additional warehouse space located in Reno, Nevada that required annual escalating monthly payments ranging from $47 to $55 . On February 2, 2022, the Company entered into a 124 - month lease agreement in Reno, Nevada. The lease calls for monthly base rent of $230 , $23 of fix operating expense costs, and estimated monthly property taxes of $21 . The monthly base rent and fixed operating expense costs are subject to escalation of 3% and 2.4% , respectively, on an annual basis. The first payment is due upon substantial completion of construction of the building which is expected to be within 2 years from the effective date. As of September 30, 2022, the lease has not commenced as the Company does not have control over the asset. The following table presents the breakout of the operating leases as of: September 30, December 31, 2022 2021 Operating lease right-of-use assets $ 4,878 $ 5,709 Short-term operating lease liabilities 1,157 1,082 Long-term operating lease liabilities 3,821 4,694 Total operating lease liabilities $ 4,978 $ 5,776 Weighted average remaining lease term 3.8 years 4.6 years Weighted average discount rate 5.2 % 5.2 % Assumptions used in determining our incremental borrowing rate include our implied credit rating and an estimate of secured borrowing rates based on comparable market data. At September 30, 2022, the future minimum lease payments under these operating leases are as follows: 2022 $ 342 2023 1,399 2024 1,435 2025 1,440 2026 893 Total lease payments 5,509 Less imputed interest 531 Total operating lease liabilities $ 4,978 | NOTE 4 — OPERATING LEASES The Company has leased premises that expire at various dates through September of 2025 with options to renew for an additional 5 years subject to various operating leases. As of December 31, 2020, the Company had a main office, warehouse space, research and development lab, engineering office, and sales office all located in Reno, Nevada that required annual escalating monthly payments ranging from $4 to $11. In December of 2020, the Company entered a fourth amendment lease and effective April 30, 2021, the Company moved its main office, warehouse, and sales office to a larger premise that is also located in Reno, Nevada that required annual escalating monthly payments ranging from $56 to $63. In December of 2021, the Company entered into another lease for additional warehouse space located in Reno, Nevada that required annual escalating monthly payments ranging from $47 to $55. The following table presents the breakout of the operating leases as of: December 31, December 31, 2021 2020 Operating lease right-of-use assets $ 5,709 $ 993 Short-term operating lease liabilities 1,082 225 Long-term operating lease liabilities 4,694 758 Total operating lease liabilities $ 5,776 $ 983 Weighted average remaining lease term 4.6 years 3.9 years Weighted average discount rate 5.2 % 6.0 % Assumptions used in determining our incremental borrowing rate include our implied credit rating and an estimate of secured borrowing rates based on comparable market data. NOTE 4 — OPERATING LEASES (continued) Cash paid for amounts included in the measurement of lease liabilities was $952 and $148 for the years ended December 31, 2021 and 2020, respectively. These amounts are included in operating cash flows. At December 31, 2021, the future minimum lease payments under these operating leases are as follows: 2022 $ 1,357 2023 1,399 2024 1,435 2025 1,440 2026 893 Total lease payments 6,524 Less imputed interest 748 Total operating lease liabilities 5,776 December 31, December 31, Lease cost Classification 2021 2020 Operating lease cost Cost of goods sold $ 633 $ 179 Operating lease cost Research and development 103 — Operating lease cost General and administration 42 144 Operating lease cost Selling and marketing 42 — Total lease cost $ 820 $ 323 All lease costs included in the schedule above are fixed lease costs. |
LONG TERM DEBT
LONG TERM DEBT | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
New Dragonfly | ||
LONG TERM DEBT | NOTE 5 – LONG TERM DEBT Financing - Trust Indenture On November 24, 2021, the Company entered into agreements to issue $45,000 in fixed rate senior notes (Series 2021-6 Notes) pursuant to a Trust Indenture held by UMB Bank, as trustee and disbursing agent, and Newlight Capital, LLC as servicer. The trust and debt documents also require a Lender Collateral Residual Value Insurance Policy (the “Insurance Policy”, with UMB Bank as named insured for $45,000 ), and a placement agent, which is Tribe Capital Markets, LLC. On the closing date of the financing, the Company received a wire for $35,474 , which is comprised of the gross proceeds of $45,000 less $3,188 in deposits to certain reserve accounts (see “ Reserve Accounts ” below), and $6,338 in expenses withdrawn from the gross proceeds, which included $4,725 in prepaid policy premiums and related costs underlying the Insurance Policy (see “ Collateral ” below), a prepaid loan monitoring fee of $60 and $1,553 in debt issuance costs. The obligation for the Series 2021-6 Notes underlying the Trust Indenture is $45,000 in principal on the date of the closing of the financing. The debt bears interest at 5.50% per annum accruing monthly on a 360-day basis. Late payments will be subject to a $50 late fee and default interest based on a rate 5 percentage points above the applicable interest immediately prior to such default. The Company is making interest-only payments on the unpaid principal amount in arrears, commencing December 1, 2021 and ending on November 1, 2022 (for interest accruing from the Closing Date through October 31, 2022). Beginning on December 1, 2022, the Company will repay the debt in twenty-four equal installments of principal in the amount of $1,875 , plus accrued interest on the unpaid principal amount. Any remaining obligations will be due and payable on November 1, 2024 (the “Maturity Date”). The obligations under the Trust Indenture will be deemed to be repaid or prepaid to the same extent, in the same amounts and at the same times, as the Series 2021-6 Notes are redeemed with funds provided except for payments made from the proceeds of the Insurance Policy (see “Collateral” below) as such funds must be reimbursed by the Company to the insurer. During the nine months ended September 30, 2022, a total of $1,873 of interest expense was incurred under the debt. Amortization of the debt issuance costs amounted to $1,783 during the nine months ended September 30, 2022. The net balance of $40,712 at September 30, 2022 consists of $45,000 in principal less $4,288 in unamortized debt discount. In connection with the Business Combination on October 7, 2022, the outstanding principal balance of the loan was paid in full. Reserve Accounts Initial deposits into the reserve accounts consisted of the following items: Payment Reserve Fund $ 3,044 Capitalized Interest Fund 144 Total $ 3,188 The Payment Reserve Fund is a debt service fund to be maintained by UMB Bank, and the initial deposit is equal to the maximum amount of monthly interest and principal debt service payment due on the Series 2021-6 notes, plus interest earned on special redemptions (redemptions related to certain defaults on the debt). These funds may be utilized by UMB Bank to fund certain shortfalls and a special redemption, but otherwise such funds are released pro rata to the Company based on principal payments made by the Company on the Series 2021-6 Notes. Since this is a deposit account maintained by the trustee and restricted for release upon the occurrence of future events, this deposit will be treated as restricted cash. The balance at September 30, 2022 remained at $3,044 . The Capitalized Interest Fund was created to hold the interest that will accrue from the closing date until the first payment due on December 15, 2021. The initial deposit, therefore, was treated as prepaid interest. These funds were utilized to pay the interest incurred through that first payment date, therefore the balance as of September 30, 2022 was $0 . Both above funds, to the extent that they are deposited into interest-bearing accounts, will earn interest that UMB Bank will transfer into an Interest Earnings Fund, which funds will be held in escrow until the earlier of maturity or when the debt obligations are paid in full (assuming no events of default). There were no funds deposited into interest-bearing accounts at September 30, 2022 or December 31, 2021. Financial Covenants The Company is subject to certain financial covenants which include maintaining minimum adjusted EBITDA, Capital Expenditures and Minimum Fixed Charge Coverage Ratio requirements. The Company was in compliance with all financial covenants as of September 30, 2022 and December 31, 2021. Long Term Debt Maturities At September 30, 2022, the future debt maturities are as follows: For Years Ended December 31, 2022 (3 months) $ 1,875 2023 22,500 2024 20,625 Total 45,000 Less: Unamortized debt issuance costs, noncurrent (4,289) Total debt 40,711 Less: current portion of debt, net of debt discount (16,529) Total long‑term debt $ 24,182 | NOTE 5 — LONG TERM DEBT Financing — Trust Indenture On November 24, 2021, the Company entered into agreements to issue $45,000 in fixed rate senior notes (Series 2021-6 Notes) pursuant to a Trust Indenture held by UMB Bank, as trustee and disbursing agent, and Newlight Capital, LLC as servicer. The trust and debt documents also require a Lender Collateral Residual Value Insurance Policy (the “Insurance Policy”, with UMB Bank as named insured for $45,000), and a placement agent, which is Tribe Capital Markets, LLC. On the closing date of the financing, the Company received a wire for $35,474, which is comprised of the gross proceeds of $45,000 less $3,188 in deposits to certain reserve accounts (see “ Reserve Accounts Collateral NOTE 5 — LONG TERM DEBT (continued) The obligation for the Series 2021-6 Notes underlying the Trust Indenture is $45,000 in principle on the date of the closing of the financing. The debt bears interest at 5.50% per annum accruing monthly on a 360-day basis. Late payments will be subject to a $50 late fee and default interest based on a rate 5 percentage points above the applicable interest immediately prior to such default. The Company will make interest-only payments on the unpaid principal amount in arrears, commencing December 1, 2021 and ending on November 1, 2022 (for interest accruing from the Closing Date through October 31, 2022). Beginning on December 1, 2022, the Company will repay the debt in twenty-four equal installments of principal in the amount of $1,875, plus accrued interest on the unpaid principal amount. Any remaining obligations will be due and payable on November 1, 2024. The obligations under the Trust Indenture will be deemed to be repaid or prepaid to the same extent, in the same amounts and at the same times, as the Series 2021-6 Notes are redeemed with funds provided except for payments made from the proceeds of the Insurance Policy (see “Collateral” below) as such funds must be reimbursed by the Company to the insurer. During the year ended December 31, 2021, a total of $390 of interest expense was incurred under the debt. Amortization of the debt issuance costs under the interest method amounted to $77 during the year ended December 31, 2021. Reserve Accounts Deposits into the reserve accounts consisted of the following items: Payment Reserve Fund $ 3,044 Capitalized Interest Fund 144 Total $ 3,188 The Payment Reserve Fund is a debt service fund to be maintained by UMB Bank, and the initial deposit is equal to the maximum amount of monthly interest and principal debt service payment due on the Series 2021-6 notes, plus interest earned on special redemptions (see Special Redemptions The Capitalized Interest Fund was created to hold the interest that will accrue from the closing date until the first payment due on December 15, 2021. The initial deposit, therefore, was treated as prepaid interest. These funds were utilized to pay the interest incurred through that first payment date Both above funds, to the extent that they are deposited into interest-bearing accounts, will earn interest that UMB Bank will transfer into an Interest Earnings Fund, which funds will be held in escrow until the earlier of maturity or when the debt obligations are paid in full (assuming no events of default). There were no funds deposited into interest-bearing accounts for the period ended December 31, 2021. NOTE 5 — LONG TERM DEBT (continued) Special Redemptions If the Company fails to make a scheduled payments of principal and interest as required under the loan agreements on the due dates, and fails to cure such non-payment within 10 days, UMB Bank may, upon the direction of the registered noteholders of at least 75% of the principal amount outstanding under the Series 2021-6 Notes, declare that an event of “Special Redemption” has occurred, and such failure shall trigger the provisions of the Insurance Policy. These provisions include filing of a claim notice with the insurer, withdrawal of the unpaid amount from the Payment Reserve Fund and pay such amount to the holders of those Series 2021-6 Notes, and acceleration of the Series 2021-6 Notes that remain outstanding after the payment. Collateral As collateral for payment of the debt and certain obligations related to performance under the Trust Indenture and related transaction documents, the Company and the guarantors granted to Newlight Capital, LLC, as representative and for the benefit of UMB Bank a continuing security interest in all substantially all of the assets of the Company. Under the terms of the Trust Indenture, the Insurance Policy is required as additional collateral guaranteeing the payments under the debt by the Company. The Company determined this was not a direct incremental cost of the financing. The premium costs were recognized as a debt issuance cost. The term of the policy aligns with the term of the debt (three years, unless reduced due to default provisions). The secured party (UMB Bank, as trustee) would not have the right to sell or repledge either the intellectual property or the insurance collateral unless and until the Company defaults and a claim is made. Loan Monitoring Fees The Company will incur ongoing monitoring service by NewLight Capital LLC for 24 months at $180 total expense. These services entail monitoring of financial records and information related to collateral enforcement on an ongoing basis. The $60 prepayment funded at closing was recognized as a prepaid expense and will be amortized straight-line over the first 8 months of the agreement. Financial Covenants The Company must comply with certain financial covenants, including minimum adjusted EBITDA, capital expenditures and minimum fixed charge coverage ratio. These covenants are not effective as of December 31, 2021 but will begin to take effect with the fiscal quarter ending March 31, 2022. NOTE 5 — LONG TERM DEBT (continued) Long-Term Debt Maturities At December 31, 2021, the future debt maturities are as follows: 2022 $ 1,875 2023 22,500 2024 20,625 Total 45,000 Less: Unamortized debt issuance costs (6,072) Total debt 38,928 Less: current portion of debt (1,875) Total long-term debt $ 37,053 |
REVOLVING NOTE AGREEMENT
REVOLVING NOTE AGREEMENT | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
New Dragonfly | ||
REVOLVING NOTE AGREEMENT | NOTE 6 – REVOLVING NOTE AGREEMENT On October 6, 2021, the Company entered into a revolving note agreement with a lender to borrow up to $8,000 . The borrowing amount is limited and based on the lesser of maximum principal amount ( $8.0 million) and the sum equal to 80% of eligible accounts receivable and 50% of eligible inventory. Interest on each advance shall accrue at the prime rate announced by Bank from time to time, as and when such rate changes. The revolving credit amount is collateralized by all assets of the Corporation. The Company drew an initial amount of $5,000 under the facility, which it subsequently re-paid and the revolving note was terminated as a closing condition of the 2021-6 Notes. | NOTE 6 — REVOLVING NOTE AGREEMENT On October 6, 2021, the Company entered into a revolving note agreement with a lender to borrow up to $8,000. The borrowing amount is limited and based on the lesser of maximum principal amount ($8.0 million) and the sum equal to 80% of eligible accounts receivable and 50% of eligible inventory. Interest on each advance shall accrue at the prime rate announced by Bank from time to time, as and when such rate changes. The revolving credit amount is collateralized by all assets of the Corporation. The Company drew an initial amount of $5,000 under the facility, which it subsequently re-paid and the revolving note was terminated as a closing condition of the Series 2021-6 notes. |
INCOME TAXES_2_3
INCOME TAXES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
INCOME TAXES | NOTE 9. INCOME TAXES The Company’s effective tax rate for the three and nine months ended September 30, 2022 was (2.1)% and (3.1)% . The effective tax rate for the three and nine months ended September 30, 2021 was 0.0% .The Company’s effective tax rate differs from the statutory income tax rate of 21% primarily due to the recognition of gains or losses from the changes in the fair value of warrant liabilities and unrealized gains on the investments held in the Trust Account, which are not recognized for tax purposes. The Company has historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to income or loss for the reporting period. The Company has used a discrete effective tax rate method to calculate taxes for the three and nine months ended September 30, 2022. The Company believes that, at this time, the use of the discrete method for the three and nine months ended September 30, 2022 is more appropriate than the estimated annual effective tax rate method as the estimated annual effective tax rate method is not reliable due to a high degree of uncertainty in estimating annual pretax earnings. | NOTE 9. INCOME TAX The Company’s net deferred tax assets (liabilities) as of December 31, 2021 is as follows: Deferred tax assets: Start-up costs $ 61,335 Net operating loss carryforwards 298,437 Total deferred tax assets 359,772 Valuation allowance (354,792) Deferred tax liabilities: Unrealized gain on investments (4,980) Total deferred tax liabilities (4,980) Deferred tax assets, net of allowance $ — The income tax provision for the year ended December 31, 2021 consists of the following: Federal Current $ — Deferred (354,792) State Current — Deferred — Change in valuation allowance 354,792 Income tax provision $ — As of December 31, 2021, the Company has available U.S. federal operating loss carry forwards of approximately $357,674 that may be carried forward indefinitely. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies in making this assessment. After consideration of all the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the year ended December 31, 2021, the valuation allowance was $354,792. A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2021 is as follows: Statutory federal income tax rate 21.0 % State taxes, net of federal tax benefit 0.0 % Change in fair value of derivative warrant liabilities (40.8) % Non-deductible transaction costs 0.2 % Change in valuation allowance 19.6 % Income tax provision 0.0 % Deferred tax assets were deemed to be de minimis as of December 31, 2020. |
New Dragonfly | ||
INCOME TAXES | NOTE 7 — INCOME TAXES The income tax expense consists of the following items: 2021 2020 Current $ 1,489 $ 1,676 Deferred 122 210 Total tax expense $ 1,611 $ 1,886 Components of deferred tax assets (liabilities) are as follows: 2021 2020 Leases $ 14 $ (15) Stock based compensation 35 19 Allowance for bad debt 59 — Fixed assets and intangibles (606) (345) Inventory (Sec. 263A) 45 10 Net deferred tax liability $ (453) $ (331) NOTE 7 — INCOME TAXES (continued) Reconciliation between the effective tax rate on income from continuing operations and the statutory rate for the year ending December 31, 2021, is as follows: Tax Percentage Federal income tax provision at statutory rates $ 1,249 21.00 % Permanent differences (other than tax) 188 3.16 % State taxes, net 128 2.15 % Deferred true-up 56 0.94 % Research and development credits — — % Uncertain tax positions (19) (0.32) % Other 9 0.15 % Total $ 1,611 Effective tax rate 27.08 % Reconciliation between the effective tax rate on income from continuing operations and the statutory rate for the year ending December 31, 2020 is as follows: Tax Percentage Federal income tax provision at statutory rates $ 1,840 21.00 % Permanent differences (other than tax) 87 0.99 % State taxes, net 9 0.10 % Deferred true-up (2) (0.02) % Research and development credits (75) (0.86) % Uncertain tax positions 19 0.22 % Other 8 0.11 % Total $ 1,886 Effective tax rate 21.52 % The tax returns of the Company are open for three years form the date of filing. At the report date, federal tax returns are open for the Company for 2018, 2019 and 2020. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
New Dragonfly | ||
STOCK-BASED COMPENSATION | NOTE 10 – STOCK-BASED COMPENSATION A summary of the Company’s option activity and related information follows: Weighted ‑ Average Weighted ‑ Average Remaining Aggregate Number of Weighted ‑ Average Grant Date Contractual Life intrinsic Options Exercise Price Fair Value (in years) value Balances, January 1, 2021 2,563,080 $ 0.45 $ — 7.92 $ 650,965 Options granted 1,000,538 3.41 1.94 — Options forfeited (299,939) 1.21 1.83 — Options exercised (49,727) 0.53 — — Balances, September 30, 2021 3,213,952 $ 1.30 $ — 7.80 $ 7,616,691 Balances, January 1, 2022 3,122,398 $ 1.98 $ — 8.52 $ 6,549,591 Options granted 509,500 4.08 1.81 — Options forfeited (40,075) 3.29 2.07 — Options exercised (491,299) 1.44 — — Balances, September 30, 2022 3,100,524 $ 2.40 $ — 8.22 $ 5,220,204 At September 30, 2022 Vested and Exercisable 864,984 $ 1.53 7.83 $ 2,201,553 Vested and expected to vest 2,235,540 $ 2.73 8.37 $ 3,018,651 Share-based compensation expense for options totaling $1,155 and $428 was recognized in our statements of income for the nine months ended September 30, 2022 and 2021, respectively. Of the $1,155 of share-based compensation incurred during the nine months ended September 30, 2022, $189 is allocated to cost of goods sold, $307 to research and development, $326 to selling and marketing, and $333 to general and administrative expenses. Of the $428 of share-based compensation incurred during the nine months ended September 30, 2021, $145 is allocated to cost of goods sold, $55 to research and development, $89 to selling and marketing, and $139 to general and administrative expenses. As of September 30, 2022, there were 540,902 shares of unissued authorized and available for future awards under the plans. | NOTE 8 — STOCK-BASED COMPENSATION On August 12, 2019, the Board of Directors approved the 2019 Stock Incentive Plan (the “Plan”) with a term of ten years. The Plan is administered by the Board of Directors, which is authorized to grant, at its discretion, awards to employees, directors, and consultants. The maximum number of common shares reserved for grants of awards under the Plan is 3,000,000 shares. The Plan provides for the grant of stock options (both incentive stock options and nonqualified stock options), and the grants and sale of restricted stock units (RSUs). Shares issued under this Plan may be drawn from authorized and unissued shares, or shares reacquired by the Company. In July of 2021, the Board of Directors approved the 2021 Stock Incentive Plan (the “Plan”) with a term of ten years. The Plan is administered by the Board of Directors, which is authorized to grant, at its discretion, awards to employees, directors, and consultants. The maximum number of common shares reserved for grants of awards under the Plan is 1,000,000 shares. The Plan provides for the grant of stock options (both incentive stock options and nonqualified stock options), and the grants and sale of restricted stock units (RSUs). Shares issued under this Plan may be drawn from authorized and unissued shares, or shares reacquired by the Company. NOTE 8 — STOCK-BASED COMPENSATION (continued) If an incentive award granted under the Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to us in connection with an incentive award, the shares subject to such award and the surrendered shares will become available for future awards under the Plan. The number of shares subject to the Plan, and the number of shares and terms of any Incentive Award may be adjusted in the event of any change in our outstanding common stock by reason of any stock dividend, spin-off, stock split, reverse stock split, recapitalization, reclassification, merger, consolidation, liquidation, business combination or exchange of shares, or similar transaction. A summary of the Company’s option activity and related information follows: Weighted Weighted- Average Aggregate Weighted- Average Remaining intrinsic Number of Average Grant Date Contractual value Options Exercise Price Fair Value Life (in years) (in thousands) Balances, January 1, 2020 2,157,950 $ 0.39 0.39 8.54 651 Options granted 620,950 0.69 1.92 — Options forfeited (183,550) 0.52 0.93 — Options exercised (32,270) 0.46 0.64 — Balances, December 31, 2020 2,563,080 $ 0.45 0.72 7.92 651 Options granted 1,750,551 3.41 2.03 3,551 Options forfeited (356,228) 1.44 1.82 — Options exercised (835,005) 0.51 0.53 442 Balances, December 31, 2021 3,122,398 $ 1.98 1.38 8.52 6,550 At December 31, 2021 Vested and Exercisable 550,601 $ 0.88 7.42 1,762 Vested and expected to vest 3,122,398 $ 1.98 7.92 6,550 Share-based compensation expense for options totaling $734 and $324 was recognized in our statements of income for the years ended December 31, 2021 and 2020, respectively. Of the $734 of share-based compensation incurred during the year ended December 31, 2021, $252 is allocated to cost of goods sold, $95 to research and development, $156 to selling and marketing, and $231 to general and administrative expenses. Of the $324 of share-based compensation incurred during the year ended December 31, 2020, $48 is allocated to cost of goods sold, $23 to research and development, $61 to selling and marketing, and $192 to general and administrative expenses. The Company did not receive payment for 615,124 of the 835,005 options exercised during the period ended December 31, 2021 and accordingly a receivable of $250 was recognized and included in other current assets on the balance sheet. This payment was received on January 4, 2022. As of December 31, 2021, there were 10,327 shares of unissued authorized and available for future awards under the plans. As of December 31, 2021, the Company had stock-based compensation expense of $3,646, related to unvested stock options not yet recognized that are expected to be recognized over an estimated weighted average period of 2.9 years. NOTE 8 — STOCK-BASED COMPENSATION (continued) The valuation methodology used to determine the fair value of the options issued during the year was the Black Scholes option pricing model. The Black Scholes model requires the use of a number of assumptions including volatility of the stock price, the fair value of the underlying stock, the average risk-free interest rate, and the weighted average expected life of the options. The fair value of the underlying stock is determined by the Board of Directors. Given the absence of a public trading market, the Board of Directors utilizes a 409A valuation which considers numerous objective and subjective factors to determine the fair value of our common stock. These factors included but are not limited to: (i) the rights, preferences and privileges of convertible preferred stock relative to common stock; (ii) the lack of marketability of common stock; (iii) stage and development of the Company’s business; (iv) general economic conditions; and (v) the likelihood of achieving a liquidity event, such as an initial public offering (“IPO”) or sale of the Company, given prevailing market conditions. To evaluate the fair value of the underlying shares for grants between two independent valuations and after the last independent valuation, a linear interpolation framework is used to evaluate the fair value of the underlying shares. The expected term was estimated using the simplified method. 2021 2020 Weighted average fair value of options granted $ 1.73 – 2.18 $ 1.30 – 2.39 Risk-free interest rate 1.08 % 0.46 % Volatility 52.6 % 52.5 % Expected life (years) 6.02 5.95 Dividend yield 0.00 % 0.00 % |
REDEEMABLE PREFERRED STOCK RIGH
REDEEMABLE PREFERRED STOCK RIGHTS | 12 Months Ended |
Dec. 31, 2021 | |
New Dragonfly | |
REDEEMABLE PREFERRED STOCK RIGHTS | NOTE 9 — REDEEMABLE PREFERRED STOCK RIGHTS Dividends The Company shall not declare, pay, or set aside any dividends on shares of any other class or series of capital stock of the Company (other than dividends on shares of Common Stock payable in shares of Common Stock) unless the holders of Series A Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series A preferred stock in an amount as set forth in the amended and restated certificate of incorporation. No dividends have been declared to date. Voting Rights The holders of Preferred Stock are entitled to vote, together with the holders of common stock, on all matters submitted to stockholders for a vote. Each preferred stockholder is entitled to the number of votes equal to the number of shares of common stock into which each preferred share is convertible at the time of such vote. The holders of record of the shares of Series A Preferred Stock, exclusively and as a separate class, shall be entitled to elect one director of the Corporation (the “Series A Director”). The Series A Director shall be given two votes on any action requiring the vote or approval of the Board of Directors. The holders of record of the shares of Common Stock, exclusively and as a separate class, shall be entitled to elect two directors of the Corporation, the “Common Stock Director A” and the “Common Stock Director B”). The Common Stock Director A shall be given three votes on any action requiring the vote or approval of the Board of Directors and the Common Stock Director B shall be given one vote on any action requiring the vote or approval of the Board of Directors. Any director elected as provided above may be removed without caused by, and only by, the affirmative vote of the holders of the shares of the class or series of capital stock entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that purpose or pursuant to a written consent of stockholders. NOTE 9 — REDEEMABLE PREFERRED STOCK RIGHTS (continued) Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Assets Sales In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or deemed liquidation event, as defined, the holders of shares of Series A Preferred Stock then outstanding (the “Series A shareholders”) shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders prior to payment to common shareholders, an amount per share equal to the greater of (i) the Series A Original Issue Price, plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Series A preferred Stock been converted into Common Stock immediately prior to such liquidation event. If upon the occurrence of such liquidation event, if the assets of the Corporation available for distribution to its stockholders are insufficient to pay the Series A shareholders the full amount to which they shall be entitled, the Series A shareholders will be entitled to a pro rata distribution of assets in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full. Upon the occurrence of such liquidation event, and after the payment of all preferential amounts required to be paid to the Series A holders, the remaining assets of the Corporation available for distribution to its stockholders shall be distributed among the holders of shares of Common Stock, pro rata based on the number of shares held by each such holder. Redemption The preferred shares are subject to mandatory redemption based on the occurrence of certain “deemed liquidation events” as defined which include a merger or consolidation or the sale, exchange, lease, transfer, exclusive license, or other disposition by the Company of all or substantially all of the Company’s assets. If the Company does not affect a dissolution of the Corporation under Nevada Law within ninety days after a deemed liquidation event, then the Company is required to send written notice to each holder of Series A Preferred Stock no later than the ninetieth day after the deemed liquidation event advising such holders of their right to require the redemption of such shares of Preferred Stock. Dissolution of the Corporation under Nevada Law with ninety days after a deemed liquidation event is not within the control of the Company. As such the Preferred Stock is precluded from permanent equity classification and has been presented as mezzanine equity. Conversion rights Each share of Series A Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of common stock as is determined by dividing the Series A Original Issue Price by the Series A Conversion Price of $0.20. Such initial conversion price may be converted into common stock, subject to certain adjustments. Mandatory conversion Upon either (a) the closing of the sale of shares of Common Stock at a price of at least $1 per share, in a firm- commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $25,000 of gross proceeds to the Corporation or (b) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of more than 50% of the then outstanding shares of Series A Preferred Stock, then (i) all outstanding shares of Series A Preferred Stock shall automatically be converted into shares of Common Stock, at the then effective conversion rate and (ii) such shares may not be reissued by the Corporation. |
COMMON STOCK
COMMON STOCK | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
STOCKHOLDERS' EQUITY (DEFICIT) | NOTE 8. STOCKHOLDERS’ EQUITY (DEFICIT) Preferred Stock— The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2022 and December 31, 2021, the Company had no issued or outstanding shares of preferred stock. Common stock —The Company is authorized to issue 50,000,000 shares of common stock with a par value of $0.0001 per share. On August 5, 2022, in connection with the Charter Amendment, 9,556,652 shares of Chardan common stock were redeemed by certain stockholders. As such, on September 30, 2022 and December 31, 2021, there were 6,255,848 and 15,812,500 shares of common stock issued and outstanding , including 3,093,348 and 12,650,000 shares of common stock subject to possible redemption, respectively. Of the 15,812,500 shares of common stock outstanding, up to 412,500 shares were subject to forfeiture to the Company by the initial stockholders for no consideration to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the initial stockholders would collectively own 20% of the Company’s issued and outstanding common stock after the Initial Public Offering. On August 16, 2021, the underwriters’ exercised the over-allotment option in full (see Note 6), thus these shares are no longer subject to forfeiture. Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Unless specified in the Amended and Restated Certificate of Incorporation or bylaws, or as required by applicable law or stock exchange rules, the affirmative vote of a majority of the Company’s shares of common stock that are voted is required to approve any such matter voted on by the Company’s stockholders (other than the election of directors). | NOTE 8. STOCKHOLDERS’ EQUITY (DEFICIT) Preferred stock — December 31, 2021 and December 31, 2020 Common stock — of the Company’s issued and outstanding common stock after the Initial Public Offering. On August 16, 2021, the underwriters’ exercised the over-allotment option in full (see Note 6), thus these shares are no longer subject to forfeiture. Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Unless specified in the Amended and Restated Certificate of Incorporation or bylaws, or as required by applicable law or stock exchange rules, the affirmative vote of a majority of the Company’s shares of common stock that are voted is required to approve any such matter voted on by the Company’s stockholders (other than the election of directors). |
New Dragonfly | ||
STOCKHOLDERS' EQUITY (DEFICIT) | NOTE 9 – COMMON STOCK Common stockholders are entitled to dividends if and when declared by the Board of Directors subject to the rights of the preferred stockholders. As of September 30, 2022 and December 31, 2021, no dividends on common stock had been declared by the Company. On July 12, 2022, Dragonfly entered into a Stock Purchase Agreement with THOR Industries, whereby THOR purchased 1,267,502 shares of Dragonfly common stock for $11.8343 per share or $15,000 in cash. The Stock Purchase agreement was issued in connection with a binding agreement among the parties whereby the parties would use commercially reasonable efforts to enter into a mutually agreed distribution and joint development agreement. The final terms of the agreement have not yet been determined. As of September 30, 2022 and December 31, 2021, the Company had reserved shares of common stock for issuance as follows: September 30, December 31, 2022 2021 Convertible preferred stock outstanding 10,000,000 10,000,000 Options issued and outstanding 3,100,524 3,122,398 Common stock outstanding 22,634,276 20,875,475 Shares available for future issuance (1) 540,902 10,327 Total 36,275,702 34,008,200 (1) During March 2022, the Company increased the shares authorized under the plan by 1,000,000 | NOTE 10 — COMMON STOCK The Company is authorized to issue up to 40,000,000 shares of common stock with $0.0002 par value. At December 31, 2021 and 2020, there were 20,875,475 and 20,040,470 shares issued outstanding Common stockholders are entitled to dividends if and when declared by the Board of Directors subject to the rights of the preferred stockholders. As of December 31, 2021 and 2020, no dividends on common stock had been declared by the Company. At December 31, 2021 and 2020, the Company had reserved shares of common stock for issuance as follows: 2021 2020 Convertible preferred stock outstanding 10,000,000 10,000,000 Options issued and outstanding 3,122,398 2,563,080 Common stock outstanding 20,875,475 20,040,470 Shares available for future issuance 10,327 404,650 Total 34,008,200 33,008,200 In November of 2020, the board of directors approved and granted 8,200 common shares to consultants for historical services provided. The shares were fair valued at $3.41 per share for total compensation of $27. The amount was expensed immediately and is included in selling, general and administrative expenses. |
SUBSEQUENT EVENTS_2_3
SUBSEQUENT EVENTS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
SUBSEQUENT EVENTS | NOTE 11. SUBSEQUENT EVENTS The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed consolidated financial statements were issued. Based upon this review, except as noted below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed consolidated financial statements. Business Combination Closing On October 7, 2022 (the “Closing Date”), Dragonfly Energy Holdings Corp., a Delaware corporation (f/k/a Chardan NexTech Acquisition 2 Corp. (“Chardan”)), consummated the previously announced merger pursuant to the Business Combination Agreement, dated May 15, 2022, as amended by the Amendment to the Business Combination Agreement, dated July 12, 2022, by and among Chardan, Bronco Merger Sub, Inc., a Nevada corporation and a wholly owned subsidiary of Chardan (“Merger Sub”), and Dragonfly Energy Corp., a Nevada corporation (“Legacy Dragonfly”). Chardan’s stockholders approved the Transactions (as defined below) at a special meeting of stockholders held on October 6, 2022. Pursuant to the Business Combination Agreement, Merger Sub merged with and into Legacy Dragonfly (the “Merger” and, together with the other transactions contemplated by the Business Combination Agreement, the “Transactions”), with Legacy Dragonfly continuing as the surviving corporation in the Merger and a wholly-owned subsidiary of Chardan. On the Closing Date, the registrant changed its name from Chardan NexTech Acquisition 2 Corp. to Dragonfly Energy Holdings Corp. Merger Consideration At the Closing, by virtue of the Merger and without any action on the part of Chardan, Merger Sub, Legacy Dragonfly or the holders of any of the following securities: (a) Each outstanding share of Legacy Dragonfly’s common stock, par value $0.001 per share(“Legacy Dragonfly Common Stock”), converted into (i) a certain number of shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”), totaling 41,500,000 shares (including the conversion and assumption of the options to purchase shares of Legacy Dragonfly Common Stock described below), which is equal to (x) $415,000,000 divided by (y) $10.00 (the “Merger Consideration”) and (ii) the contingent right to receive Earnout Shares (as defined below) (which may be zero ) following the Closing. (b) Each option to purchase shares of Legacy Dragonfly Common Stock, was assumed and converted into options to acquire shares of Common Stock. The portion of the Merger Consideration reflecting the conversion of the Legacy Dragonfly options was calculated assuming that all the Company options are net-settled. With respect to the Company options received in respect of Legacy Dragonfly options that are outstanding immediately prior to the Closing and cash exercised after the Closing, up to 627,498 additional shares of Common Stock may be issued. At the Closing, approximately 38,576,648 shares of the Merger Consideration was allocated to holders of outstanding shares of Legacy Dragonfly Common Stock and 3,664,975 shares of the Merger Consideration was allocated to holders of the assumed Legacy Dragonfly options. Earnout Merger Consideration In addition to the Merger Consideration set forth above, additional contingent shares (“Earnout Shares”) may be payable to each holder of shares of Legacy Dragonfly Common Stock in the Merger, subject to achieving specified milestones, up to an aggregate of 40,000,000 additional shares of Common Stock in three tranches. The first tranche of 15,000,000 shares is issuable if the Company’s 2023 total audited revenue is equal to or greater than $250 million and the Company’s 2023 audited operating income is equal to or greater than $35 million. The second tranche of 12,500,000 shares is issuable upon achieving a volume-weighted average trading price threshold of Common Stock over any 20 Trading Days (which may or may not be consecutive) within any 30 consecutive Trading Day period of at least $22.50 on or prior to December 31, 2026, and the third tranche of 12,500,000 shares is issuable upon achieving a volume-weighted average trading price threshold of Common Stock over any 20 Trading Days (which may or may not be consecutive) within any 30 consecutive Trading Day period of at least $32.50 on or prior to December 31, 2028. To the extent not previously earned, the second tranche is issuable if the $ 32.50 price target is achieved by December 31, 2028. Upon the consummation of a change of control transaction during either the second milestone earnout period or the third milestone earnout period, any earnout milestone with respect to such earnout period that has not yet been achieved shall automatically be deemed to have been achieved if a change of control transaction is announced with an imputed share price of Common Stock of at least $22.50 on or prior to the end of second earnout period or $32.50 on prior to the third earnout period. A description of the Merger and the terms of the Business Combination Agreement are included in the proxy statement/prospectus, dated September 16, 2022 (the “Proxy Statement/Prospectus”) as filed with the SEC in the section entitled “Proposal No. 1 — The Business Combination Proposal” of the Proxy Statement/Prospectus. PIPE Investment Pursuant to the subscription agreement, dated as of May 15, 2022 (the “Subscription Agreement”), by and between Chardan and Chardan NexTech Investments 2 LLC (or an affiliate thereof if assigned pursuant to the Subscription Agreement, the “Sponsor”), the Sponsor agreed to purchase, and Chardan agreed to sell to the Sponsor, an aggregate of 500,000 shares of Chardan common stock (“Chardan Common Stock”) for gross proceeds to Chardan of $5 million in a private placement. On September 28, 2022, the Sponsor and Chardan Capital Markets LLC, a New York limited liability company (“CCM LLC”), entered into an assignment, assumption and joinder agreement, pursuant to which the Sponsor assigned all of the Sponsor’s rights, benefits and obligations under the Subscription Agreement to CCM LLC. Under the Subscription Agreement, the number of shares of Chardan Common Stock that CCM LLC was obligated to purchase was to be reduced by the number of shares of Chardan Common Stock that CCM LLC purchased in the open market, provided that such purchased shares were not redeemed, and the aggregate price to be paid under the Subscription Agreement was to be reduced by the amount of proceeds received by the Company because such shares are not redeemed (the “Offset”). During the week of September 26, 2022 CCM LLC acquired in the open market in total 485,000 shares of Common Stock at purchase prices per share ranging from $10.33 to $10.38 (such shares, the “Purchased Shares”). The Purchased Shares were not redeemed, resulting in (i) the Company’s receipt of $5,016,547 from the Trust Account (based on a per share redemption price of $10.34 ) and (ii) a reduction in CCM LLC’s purchase commitment under the Subscription Agreement to zero in accordance with the Offset. Debt Financing Loan Agreement Consistent with the previously disclosed commitment letter (the “Debt Commitment Letter”) between Chardan and Legacy Dragonfly, CCM Investments 5 LLC, an affiliate of CCM LLC (“CCM 5”, and in connection with the Term Loan, the “Chardan Lender”), and EICF Agent LLC (“EIP” and, collectively with the Chardan Lender, the “Initial Term Loan Lenders”), in connection with the Closing, Chardan, Legacy Dragonfly and the Initial Term Loan Lenders entered into the Term Loan, Guarantee and Security Agreement (the “Term Loan Agreement”) setting forth the terms of a senior secured term loan facility in an aggregate principal amount of $75 million (the “Term Loan”). The Chardan Lender backstopped its commitment under the Debt Commitment Letter by entering into a backstop commitment letter, dated as of May 20, 2022 (the “Backstop Commitment Letter”), with a certain third-party financing source (the “Backstop Lender” and collectively with EIP, the “Term Loan Lenders”), pursuant to which the Backstop Lender committed to purchase from the Chardan Lender the aggregate amount of the Term Loan held by the Chardan Lender (the “Backstopped Loans”) immediately following the issuance of the Term Loan on the Closing Date. Pursuant to an assignment agreement, the Backstopped Loans were assigned by CCM 5 to the Backstop Lender on the Closing Date. Pursuant to the terms of the Term Loan Agreement, the Term Loan was advanced in one tranche on the Closing Date. The proceeds of the Term Loan were used (i) to refinance on the Closing Date prior indebtedness, (ii) to support the Transaction under the Business Combination Agreement, (iii) for working capital purposes and other corporate purposes, and (iv) to pay any fees associated with transactions contemplated under the Term Loan Agreement and the other loan documents entered into in connection therewith, including the transactions described in the foregoing clauses (i) and (ii) and fees and expenses related to the business combination. The Term Loan amortizes in the amount of 5% per annum beginning 24 months after the Closing Date and matures on the fourth anniversary of the Closing Date (“Maturity Date”). The Term Loan accrues interest (i) until April 1, 2023, at a per annum rate equal to the adjusted Secured Overnight Financing Rate (“SOFR”) plus a margin equal to 13.5% , of which 7% will be payable in cash and 6.5% will be paid in-kind, (ii) thereafter until October 1, 2024, at a per annum rate equal to adjusted SOFR plus 7% payable in cash plus an amount ranging from 4.5% to 6.5% , depending on the senior leverage ratio of the consolidated company, which will be paid-in-kind and (iii) at all times thereafter, at a per annum rate equal to adjusted SOFR plus a margin ranging from 11.5% to 13.5% payable in cash, depending on the senior leverage ratio of the consolidated company. In each of the foregoing cases, adjusted SOFR will be no less than 1% . Warrant Agreements In connection with the entry into the Term Loan Agreement, and as a required term and condition thereof, the Company entered into (i) the penny warrant to issue penny warrants to the Term Loan Lenders under the Term Loan exercisable to purchase 2,593,056 shares, which is equal to approximately 5.6% of Common Stock calculated on an agreed fully diluted outstanding basis on the issuance date (the “Penny Warrants”) and (ii) the $10 warrant to issue warrants to the Term Loan Lenders under the Term Loan exercisable to purchase 1,600,000 shares of Common Stock at $10 per share (the “ $10 Warrants” and, together with the Penny Warrants, the “Warrants”). The additional shares of Common Stock will dilute the pro forma ownership of the other Company stockholders of proportionately. ChEF Equity Facility Consistent with the previously disclosed equity facility letter agreement between Legacy Dragonfly and CCM 5, the Company and CCM LLC entered into a purchase agreement (the “Purchase Agreement”) and a Registration Rights Agreement (the “ChEF RRA”) in connection with the Closing. Pursuant to the Purchase Agreement, the Company has the right to sell to CCM LLC an amount of shares of Common Stock, up to a maximum aggregate purchase price of $ 150 million, from time to time, pursuant to the terms of the Purchase Agreement. In addition, the Company appointed LifeSci Capital, LLC as “qualified independent underwriter” with respect to the transactions contemplated by the Purchase Agreement. Pursuant to, on the terms of, and subject to the satisfaction of the conditions in the Purchase Agreement, including the filing and effectiveness of a registration statement registering the resale by CCM LLC of the shares of Common Stock issued to it under the Purchase Agreement, the Company will have the right from time to time at its option to direct CCM LLC to purchase up to a specified maximum amount of shares of Common Stock, up to a maximum aggregate purchase price of $ 150 million, over the term of the equity facility (“ChEF Equity Facility”). Other Agreements Related Agreements Concurrently with the execution of the Business Combination Agreement, Chardan, Legacy Dragonfly and the Sponsor entered into a sponsor support agreement. Indemnification of Directors and Officers On the Closing Date, in connection with the consummation of the Transactions, the Company entered into indemnification agreements with each of its directors and executive officers. These agreements, among other things, will require the Company to indemnify the Company’s directors and executive officers for certain expenses, including attorneys’ fees, judgments and fines incurred by a director or executive officer in any action or proceeding arising out of their services as one of the Company’s directors or executive officers or any other company or enterprise to which the person provides services at the Company’s request. Registration Rights Agreement On the Closing Date, in connection with the consummation of the Transactions, the Company entered into the Amended and Restated Registration Rights Agreement with the Sponsor, Chardan’s officers, directors, initial stockholders, CCM LLC and Warrant Holdings, an affiliate of the Sponsor (collectively, the “Insiders”) and certain Legacy Dragonfly stockholders. | NOTE 11. SUBSEQUENT EVENTS The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements. |
New Dragonfly | ||
SUBSEQUENT EVENTS | NOTE 11 – SUBSEQUENT EVENTS The Company evaluated subsequent events and transactions that occurred after the balance sheet date through November 14, 2022, the date that the condensed financial statements were available to be issued. Based upon this review, other than noted below, the Company did not identify any subsequent events that would have required adjustment to or disclosure in the condensed financial statements. On October 7, 2022, the Company's stockholders approved the Business Combination, by and among the company formerly known as CNTQ, Dragonfly Energy Corp., and Bronco Merger Sub, Inc., pursuant to which Bronco Merger Sub, Inc. was merged with and into Dragonfly, with Dragonfly surviving the merger. As a result of the Merger, and upon consummation of the Merger and other transactions contemplated by the Business Combination Agreement, Dragonfly became a wholly owned subsidiary of CNTQ. Upon the closing of the Business Combination the Company changed it's name to Dragonfly Energy Holdings Corp. ("New Dragonfly"), with stockholders of Dragonfly becoming stockholders of New Dragonfly. The following transactions at closing of the Merger included: ● Merger sub merged with and into Dragonfly, with Dragonfly surviving as a wholly owned subsidiary of New Dragonfly; ● each issued and outstanding share of capital stock of Dragonfly converted into a number of shares of New Dragonfly Common Stock equal to the product of (x) the conversion ratio applicable to such share, under Dragonfly's certificate of incorporation multiplied by (y) 1.182 , which is the quotient obtained by dividing (a) 41,500 by (b) the number of Fully-Diluted Shares as defined in the Business Combination Agreement; ● each Dragonfly Option converted into an option to purchase a number of shares of New Dragonfly Common Stock in Accordance with the terms and subject to the conditions of the Business Combination Agreement; ● each Dragonfly Warrant, to the extent outstanding and unexercised, converted into a warrant to acquire shares of New Dragonfly Common Stock in accordance with the terms and subject to the conditions of the Business Combination Agreement, and ● each share of CNTQ Class A Common Stock that was issued and outstanding immediately prior to the Merger became one share of New Dragonfly Common Stock. In connection with the term loan agreement issued in the PIPE financing (as described in note 1 of the financial statements), the Company entered into (i) the penny warrant to issue penny warrants to the Term Loan Lenders under the Term Loan exercisable to purchase 2,593,056 shares, which is equal to approximately 5.6% of Common Stock calculated on an agreed fully diluted outstanding basis on the issuance date (the “Penny Warrants”) and (ii) the $10 warrant to issue warrants to the Term Loan Lenders under the Term Loan exercisable to purchase 1,600,000 shares of Common Stock at $10 per share (the “$10 Warrants” and, together with the Penny Warrants, the “Warrants”). The additional shares of Common Stock will dilute the pro forma ownership of the other Company stockholders of proportionately. On October 7, 2022, the Company entered into a purchase agreement and registration rights agreement with CCM LLC. Pursuant to the purchase agreement, the Company has the right to sell to CCM LLC an amount of shares of common stock, up to a maximum aggregate purchase price of $150 million, from time to time, pursuant to the terms of the Purchase Agreement. In addition, the Company appointed LifeSci Capital, LLC as a "qualified independent underwriter" with respect to the transactions contemplated by the Purchase agreement. On November 4, 2022, the Board of the Company announced that Sean Nichols, the Company’s Chief Operating Officer, would be leaving the Company. Mr. Nichols and the Company have entered into a separation and release agreement (the “Separation Agreement”) on November 2, 2022. Pursuant to the Separation Agreement, Mr. Nichols will receive a cash payment of $100,000 in one installment in December 2022 and a cash payment of $1,000,000 in 24 monthly installments commencing in December 2022. Mr. Nichols’ outstanding equity awards granted by the Company will fully vest and, in the case of options, will be exercisable for 12 months following his termination date. The Separation Agreement also provides the Company will pay a portion of Mr. Nichols’ premiums to continue participation in the Company’s health insurance plans for up to 18 months following his termination. The Separation Agreement includes a general release of claims by Mr. Nichols and certain restrictive covenants in favor of the Company, including non-competition and non-solicitation covenants for 12 months following his termination date. | NOTE 11 — SUBSEQUENT EVENTS The Company has evaluated subsequent events from December 31, 2021 through April 20, 2022, which is the date the financial statements were available for issuance and has determined that there are no subsequent events requiring adjustment to or disclosure in the financial statements, other than as follows: On January 1, 2022, the Company (the “Buyer”) entered into an asset purchase agreement (the “APA”) with Bourns Production, Inc., a Nevada corporation (the “Seller”) pursuant to which the Buyer acquired machinery and equipment of the Seller as set forth in the APA for a purchase price of $197. On February 2, 2022, the Company entered into a 124-month lease agreement in Reno, Nevada. The lease calls for monthly base rent of $230, $23 of fix operating expense costs, and estimated monthly property taxes of $21. The monthly base rent and fixed operating expense costs are subject to escalation of 3% and 2.4%, respectively, on an annual basis. The first payment is due upon substantial completion of construction of the building which is expected to be within 2 years from the effective date. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s annual report on Form 10-K as filed with the SEC on March 29, 2022. The interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future periods. | Basis of Presentation The accompanying financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. |
Recently issued accounting pronouncements | Recent Accounting Standards Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements. | Recent Accounting Standards In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if converted method for all convertible instruments. ASU 2020-06 is effective for the Company on January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective January 1, 2021 using the full retrospective method of transition. The adoption of ASU 2020-06 did not have a material impact on the financial statements for the fiscal year ended December 31, 2021. Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements. |
Cash, Restricted Cash, and Cash Equivalents | Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did no t have any cash equivalents as of September 30, 2022 and December 31, 2021. | Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2021 and 2020. |
Use of Estimates | Use of Estimates The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the reporting periods. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. |
Concentrations | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. |
Income Taxes | Income Taxes The Company complies with the accounting and reporting requirements of ASC 740, Income Taxes (“ASC 740”), which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the unaudited condensed consolidated financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740 prescribes a recognition threshold and a measurement attribute for the unaudited condensed consolidated financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. | Income Taxes The Company complies with the accounting and reporting requirements of ASC Topic 740 — Income Taxes ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The effective tax rate is less than the U.S. statutory corporate tax rate of 21% because of the unrealized change in fair value of warrant liabilities, which was the biggest factor in net income and is not taxable. The Company had a loss from operations during the year ended December 31, 2021. The Company is subject to income tax examinations by major taxing authorities since inception. |
Earnings per Common Share | Net Income (Loss) Per Share of Common Stock The Company complies with accounting and disclosure requirements of ASC 260, Earnings Per Share. Net income (loss) per common share is computed by dividing net earnings by the weighted-average number of shares of common stock outstanding during the period. The Company has not considered the effect of the Warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 14,115,358 shares in the calculation of diluted income (loss) per share, since the exercise of the Warrants are contingent upon the occurrence of future events. The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts): For the Three Months For the Three Months For the Nine Months For the Nine Months Ended Ended Ended Ended September September 30, September 30, September 30, 30, 2022 2021 2022 2021 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ (1,919,615) $ 2,690,543 $ (1,298,108) $ 2,689,709 Denominator: Basic weighted average shares outstanding 10,307,037 9,453,125 13,957,179 5,008,929 Basic net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.54 Diluted weighted average shares outstanding 10,307,037 9,672,826 13,957,179 5,356,456 Diluted net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.50 | Net Income (Loss) Per Share of Common Stock Net income (loss) per common share is computed by dividing net earnings by the weighted-average number of shares of common stock outstanding during the period. The Company has not considered the effect of the Warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 14,115,358 shares in the calculation of diluted income per share, since the exercise of the Warrants are contingent upon the occurrence of future events. The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts): For the period from June 23, 2020 (inception) For the year through ended December 31, December 31, 2021 2020 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ 1,910,487 $ (1,000) Denominator: Basic weighted average shares outstanding 7,732,021 2,750,000 Basic net income (loss) per common share $ 0.25 $ (0.00) Diluted weighted average shares outstanding 7,991,952 2,750,000 Diluted net income (loss) per common share $ 0.24 $ (0.00) |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company applies ASC 820, which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances. The carrying amounts reflected in the unaudited condensed consolidated balance sheet for current assets and current liabilities approximate fair value due to their short-term nature. Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. See Note 10 for additional information on assets and liabilities measured at fair value. | Fair Value of Financial Instruments The Company applies ASC 820, which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances. The carrying amounts reflected in the balance sheet for current assets and current liabilities approximate fair value due to their short-term nature. Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. See Note 10 for additional information on assets and liabilities measured at fair value. |
New Dragonfly | ||
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2021. | Basis of Presentation These accompanying financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with generally accepted accounting principles in the United States of America (“GAAP”). |
Reclassifications | Reclassifications Certain amounts disclosed in prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported income, cash flows, total assets, or shareholders’ equity as previously reported. | |
Recently adopted accounting standards | Recently adopted accounting standards : In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt Modifications and Extinguishments (Subtopic 470 50), Compensation Stock Based Compensation (Topic 718), and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815 40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity Classified Written Call Options. This ASU provides guidance which clarified an issuer’s accounting for modification or exchanges of freestanding equity classified written call options that remain equity classified after modification or exchange. The provisions of ASU No. 2021-04 are effective January 1, 2022. This ASU shall be applied on a prospective basis. The adoption of this guidance did not have a material impact on the accompanying consolidated financial statements. | Recently adopted accounting standards: In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The new standard reduces the complexity of accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The Company adopted this guidance effective January 1, 2021 which did not have a material impact on the accompanying financial statements. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements: In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB subsequently issued amendments to ASU 2016-13, which have the same effective date and transition date of January 1, 2023. These standards replace the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measure at amortized cost to be presented at the net amount expected to be collected. The Company does not expect this change in guidance to have a material impact to its financial statements. In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. The amendments in this update will be effective for the Company on January 1, 2024 and may be early adopted at the beginning of fiscal year 2023. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows. | Recently issued accounting pronouncements: In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB subsequently issued amendments to ASU 2016-13, which have the same effective date and transition date of January 1, 2023. These standards replace the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measure at amortized cost to be presented at the net amount expected to be collected. The Company does not expect this change in guidance to have a material impact to its financial statements. In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt Modifications and Extinguishments (Subtopic 470 50), Compensation Stock Based Compensation (Topic 718), and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity Classified Written Call Options. This ASU provides guidance which clarified an issuer’s accounting for modification or exchanges of freestanding equity classified written call options that remain equity classified after modification or exchange. The provisions of ASU 2021-04 are effective January 1, 2022. This ASU shall be applied on a prospective basis. The Company determined that the change in guidance did not have a material impact to its financial statements. |
Cash, Restricted Cash, and Cash Equivalents | Cash, Restricted Cash, and Cash Equivalents The Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents as of September 30, 2022 and December 31, 2021. The Company also maintains a restricted cash balance to satisfy its note payable requirements (Refer to Note 5). From time to time the Company has amounts on deposit with financial institutions that exceed federally insured limits. The Company has not experienced any significant losses in such accounts, nor does management believe it is exposed to any significant credit risk. | Cash, Restricted Cash, and Cash Equivalents The Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents as of December 31, 2021 or 2020. The Company also maintains a restricted cash balance to satisfy its note payable requirements (Refer to Note 5). From time to time the Company has amounts on deposit with financial institutions that exceed federally insured limits. The Company has not experienced any significant losses in such accounts, nor does management believe it is exposed to any significant credit risk. |
Accounts Receivable | Accounts Receivable The Company’s trade receivables are recorded when billed and represent claims against third parties that will be settled in cash. Generally, payment is due from customers within 30 days of the invoice date and the contracts do not have significant financing components. Trade accounts receivables are recorded gross and are net of any applicable allowance. The Company has an allowance for doubtful accounts as of September 30, 2022 and December 31, 2021 of $54 and $50 , respectively. | Accounts Receivable The Company’s trade receivables are recorded when billed and represent claims against third parties that will be settled in cash. Generally, payment is due from customers within 30 days of the invoice date and the contracts do not have significant financing components. Trade accounts receivables are recorded gross and are net of any applicable allowance. The Company has an allowance for doubtful accounts as of December 31, 2021 and 2020 of $50 and $0, respectively. |
Inventory | Inventory Inventories (Note 3), which consist of raw materials, work in process and finished goods, are stated at the lower of cost (weighted average) or net realizable value, net of reserves for obsolete inventory. We continually analyze our slow moving and excess inventories. Based on historical and projected sales volumes and anticipated selling prices, we established reserves. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates its estimate of future demand. Products that are determined to be obsolete are written down to net realizable value. As of September 30, 2022 and December 31, 2021, no such reserves were necessary. | Inventory Inventories (Note 3), which consist of raw materials, work in process and finished goods, are stated at the lower of cost (weighted average) or net realizable value, net of reserves for obsolete inventory. We continually analyze our slow moving and excess inventories. Based on historical and projected sales volumes and anticipated selling prices, we established reserves. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates its estimate of future demand. Products that are determined to be obsolete are written down to net realizable value. As of December 31, 2021 and 2020, no such reserves were necessary. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, including the cost of significant improvements and renovations. Costs of routine repairs and maintenance are charged to expense as incurred. Depreciation and amortization are calculated by the straight line method over the estimated useful lives for owned property, or, for leasehold improvements, over the shorter of the asset’s useful life or term of the lease. Depreciation expense for the Nine months ended September 30, 2022 and 2021 was $648 and $432 , respectively. The various classes of property and equipment and estimated useful lives are as follows: Office furniture and equipment 3 to 7 years Vehicles 5 years Machinery and equipment 3 to 7 years Leasehold improvements Remaining Term of Lease | Property and Equipment Property and equipment are stated at cost, including the cost of significant improvements and renovations. Costs of routine repairs and maintenance are charged to expense as incurred. Depreciation and amortization are calculated by the straight-line method over the estimated useful lives for owned property, or, for leasehold improvements, over the shorter of the asset’s useful life or term of the lease. Depreciation expense for the years ended December 31, 2021 and 2020 was $617 and $198, respectively. The various classes of property and equipment and estimated useful lives are as follows: Office furniture and equipment 3 to 7 years Machinery and equipment 3 to 7 years Leasehold improvements Remaining Term of Lease |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with “GAAP” requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company evaluates its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of these asset may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over its remaining life. When indications of impairment are present and the estimated undiscounted future cash flows from the use of these assets is less than the assets’ carrying value, the related assets will be written down to fair value. There were no impairments of the Company’s long-lived assets for the periods presented. | |
Commitments and Contingencies | Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. | Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. |
Leases | Leases At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company records the associated lease liability and corresponding right-of-use asset upon commencement of the lease using the implicit rate or a discount rate based on a credit-adjusted secured borrowing rate commensurate with the term of the lease. The Company additionally evaluates leases at their inception to determine if they are to be accounted for as an operating lease or a finance lease. A lease is accounted for as a finance lease if it meets one of the following five criteria: the lease has a purchase option that is reasonably certain of being exercised, the present value of the future cash flows is substantially all of the fair market value of the underlying asset, the lease term is for a significant portion of the remaining economic life of the underlying asset, the title to the underlying asset transfers at the end of the lease term, or if the underlying asset is of such a specialized nature that it is expected to have no alternative uses to the lessor at the end of the term. Leases that do not meet the finance lease criteria are accounted for as an operating lease. The Company does not have any finance leases as of December 31, 2021 or 2020. Operating lease assets represent a right to use an underlying asset for the lease term and operating lease liabilities represent an obligation to make lease payments arising from the lease. Operating lease liabilities with a term greater than one year and their corresponding right-of-use assets are recognized on the balance sheet at the commencement date of the lease based on the present value of lease payments over the expected lease term. Certain adjustments to the right- of-use asset may be required for items such as initial direct costs paid or incentives received. As the Company’s leases do not typically provide an implicit rate, the Company utilizes the appropriate incremental borrowing rate, determined as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and in a similar economic environment. Lease cost is recognized on a straight-line basis over the lease term and variable lease payments are recognized as operating expenses in the period in which the obligation for those payments is incurred. Variable lease payments primarily include common area maintenance, utilities, real estate taxes, insurance, and other operating costs that are passed on from the lessor in proportion to the space leased by the Company. The Company has elected the practical expedient to not separate between lease and non-lease components. | |
Revenue Recognition | Revenue Recognition Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five step model to contracts when it is probable the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company excludes from the transaction price all taxes that are assessed by a governmental authority and imposed on and concurrent with the Company’s revenue transactions, and therefore presents these taxes (such as sales tax) on a net basis in operating revenues on the Statements of Operations. Revenue is recognized when control of the promised goods is transferred to the customer or reseller, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Revenue associated with products holding rights of return are recognized when the Company concludes there is not a risk of significant revenue reversal in the future periods for the expected consideration in the transaction. There are no material instances including discounts and refunds where variable consideration is constrained and not recorded at the initial time of sale. Generally, our revenue is recognized at a point in time for standard promised goods at the time of shipment when title and risk of loss pass to the customer. The Company may receive payments at the onset of the contract before delivery of goods for customers in the retail channel. Payment terms for distributors and OEMs are due within 30 - 60 days after shipment. In such instances, the Company records a customer deposit liability. The Company recognizes these contract liabilities as sales after the revenue criteria are met. The company had $1,779 of contract liabilities as of January 1, 2021. As of September 30, 2022 and December 31, 2021, the contract liability related to the Company’s customer deposits approximated $287 and $434 , respectively. The entire contract liability balance as of December 31, 2021 was recognized as revenue during the Nine months ended September 30, 2022. | Revenue Recognition Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company excludes from the transaction price all taxes that are assessed by a governmental authority and imposed on and concurrent with the Company’s revenue transactions, and therefore presents these taxes (such as sales tax) on a net basis in operating revenues on the Statements of Income. Revenue is recognized when control of the promised goods is transferred to the customer or distributor, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Revenue associated with products holding rights of return are recognized when the Company concludes there is not a risk of significant revenue reversal in the future periods for the expected consideration in the transaction. There are no material instances including discounts and refunds where variable consideration is constrained and not recorded at the initial time of sale. Generally, our revenue is recognized at a point in time for standard promised goods at the time of shipment when title and risk of loss pass to the customer. The Company may receive payments at the onset of the contract before delivery of goods for customers in the retail channel. In such instances, the Company records a customer deposit liability. Payment terms for distributors and OEMs are due within 30-60 days after shipment. The Company recognizes these contract liabilities as sales after the revenue criteria are met. As of December 31, 2021 and 2020, the contract liability related to the Company’s customer deposits approximated $434 and $1,779, respectively. The entire contract liability balance as of December 31, 2020 was recognized as revenue during the year ended December 31, 2021. Disaggregation of Revenue: The following table present our disaggregated revenues by distribution channel: Sales 2021 2020 Retail $ 59,042 $ 33,314 Distributor 10,733 10,381 Original equipment manufacture 8,225 3,492 Total $ 78,000 $ 47,187 Shipping and Handling Shipping and handling fees paid by customers are recorded within net sales, with the related expenses recorded in cost of sales. Shipping and handling costs associated with outbound freight are included in sales and marketing expenses. Shipping and handling costs associated with outbound freight totaled $5,105 and $2,568 for the years ended December 31, 2021 and 2020, respectively. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Product Warranty The Company offers assurance type warranties from 5 to 10 years on its products. The Company estimates the costs associated with the warranty obligation using historical data of warranty claims and costs incurred to satisfy those claims. The Company estimates, based upon a review of historical warranty claim experience, the costs that may be incurred under our warranties and record a liability in the amount of such estimate at the time a product is sold. Factors that affect our warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our recorded warranty liability and adjust the accrual as claims data and historical experience warrants. The Company has assessed the costs of fulfilling its existing assurance type warranties and has determined that the estimated outstanding warranty obligation on December 31, 2021 and 2020 are immaterial to the Company’s financial statements. Returns and Sales Allowances The provision for returns and sales allowances is determined by an analysis of the historical rate of returns and sales allowances over recent quarters and adjusted to reflect management’s future expectations. The Company has accrued for sales allowances as of December 31, 2021 in the amount of $170. There was no accrual for sales allowances as of December 31, 2020. |
Concentrations | Concentrations Receivables from one customer comprised approximately 43% of accounts receivable as of September 30 2022. Receivables from two customers comprised approximately 42% and 16% , respectively, of accounts receivable as of December 31, 2021. For the nine months ended September 30, 2022, one customer accounted for approximately 20% of the Company’s total revenue. There are no significant revenue concentrations for the nine months ended September 30, 2021. Payables to one vendor comprised approximately 45% of accounts payable as of September 30, 2022. There are no significant payable concentrations as of December 31, 2021 For the nine months ended September 30, 2022, one vendor accounted for approximately 24% of the Company’s total purchases. For the nine months ended September 30, 2021, two vendors accounted for approximately 20% and 12% of the Company’s total purchases. | Concentrations There are no significant revenue concentrations for the years ended December 31, 2021 and 2020. Receivables from two customers comprised approximately 42% and 16%, respectively, of accounts receivable as of December 31, 2021. Receivables from one customer comprised approximately 22% of accounts receivable as of December 31, 2020. There are no other significant accounts receivable concentrations. For the year ended December 31, 2021, three vendors accounted for approximately 27%, 10% and 10% of the Company’s total purchases, respectively. For the year ended December 31, 2020, four vendors accounted for approximately 19%, 14%, 11% and 10% of the Company’s total purchases, respectively. |
Research and Development | Research and Development The Company expenses research and development costs as incurred. Research and development expenses include salaries, contractor and consultant fees, supplies and materials, as well as costs related to other overhead such as depreciation, facilities, utilities, and other departmental expenses. The costs we incur with respect to internally developed technology and engineering services are included in research and development expenses as incurred as they do not directly relate to acquisition or construction of materials, property or intangible assets that have alternative future uses. | Research and Development The Company expenses research and development costs as incurred. Research and development expenses include salaries, contractor and consultant fees, supplies and materials, as well as costs related to other overhead such as depreciation, facilities, utilities, and other departmental expenses. The costs we incur with respect to internally developed technology and engineering services are included in research and development expenses as incurred as they do not directly relate to acquisition or construction of materials, property or intangible assets that have alternative future uses. |
Advertising | Advertising The Company expenses advertising costs as they are incurred and are included in selling and marketing expenses. Advertising expenses amounted to $1,777 and $1,069 for the nine months ended September 30, 2022 and 2021, respectively. | Advertising The Company expenses advertising costs as they are incurred and are included in selling and marketing expenses. Advertising expenses amounted to $1,690 and $1,069 for the years ending 2021 and 2020, respectively. |
Stock-Based Compensation | Stock-Based Compensation Stock based compensation costs are based on the fair value of the underlying option calculated using the Black Scholes option pricing model and recognized as expense on a straight line basis over the requisite service period, which is the vesting period. The Company measures equity based compensation awards granted to non employees at fair value as the awards vest and recognizes the resulting value as compensation expense at each financial reporting period. | Stock-Based Compensation The Company accounts for stock-based compensation arrangements with employees and non-employee consultants using a fair value method which requires the recognition of compensation expense for costs related to all stock-based payments, including stock options (Note 8). The fair value method requires the Company to estimate the fair value of stock-based payment awards to employees and non-employees on the date of grant using an option pricing model. Stock-based compensation costs are based on the fair value of the underlying option calculated using the Black Scholes option pricing model and recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. The Company measures equity-based compensation awards granted to non-employees at fair value as the awards vest and recognizes the resulting value as compensation expense at each financial reporting period. Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, expected dividend yield, expected term, risk free rate of return, and the estimated fair value of the underlying common stock. Due to the lack of company specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The group of representative companies have characteristics similar to the Company and focus on the lithium-ion battery industry. The Company uses the simplified method, which is the average of the final vesting tranche date and the contractual term, to calculate the expected term for options granted to employees as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company uses an assumed dividend yield of zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. The Company accounts for forfeitures as they occur. |
Income Taxes | Income Taxes Deferred income tax assets and liabilities (Note 5) are determined based on the estimated future tax effects of net operating loss, credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company recognizes a tax benefit for an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The Company’s accounting policy is to include penalties and interest related to income taxes if any, in selling, general and administrative expenses. | Income Taxes Deferred income tax assets and liabilities (Note 7) are determined based on the estimated future tax effects of net operating loss, credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company recognizes a tax benefit for an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The Company has a liability of $0 and $19 as of December 31, 2021 and 2020, respectively, of uncertain tax positions. The Company’s accounting policy is to include penalties and interest related to income taxes if any, in selling, general and administrative expenses. |
Earnings per Common Share | Earnings per Common Share We calculate basic earnings per share pursuant to the two-class method as a result of the issuance of Series A Preferred stock in 2016. Our Series A Preferred Stock is considered a participating security because, in the event that we pay a dividend or make a distribution on the outstanding common stock, we shall also pay each holder of the Series Preferred Stock a dividend on an as-converted basis. The two-class method is an earnings allocation formula that determines earnings per share for common stock and participating securities according to dividend and participation rights in undistributed earnings. Under this method, all earnings, distributed and undistributed, are allocated to common shares and participating securities based on their respective rights to receive dividends. Diluted earnings per common share is calculated using the treasury stock method for options. The following table sets forth the information needed to compute basic and diluted earnings per share for the Nine months ended September 30, 2022 and 2021: September 30, September 30, 2022 2021 Basic (Loss) Earnings per common share Net (Loss) Income $ (7,456) $ 4,421 (Loss) Income available for distribution (7,456) 4,421 Income allocated to participating securities — (1,469) Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 September 30, September 30, 2022 2021 Basic (loss) Earnings per common share: Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 Weighted average number of common shares-basic 21,384,734 20,063,211 (Loss) Earnings per share, basic $ (0.35) $ 0.15 Diluted (loss) earnings per common share: Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 Weighted average number of common shares-basic 21,384,734 20,063,211 Dilutive effect related to stock options — 1,862,894 Weighted average diluted shares outstanding 21,384,734 21,926,105 (Loss) Earnings per share, diluted $ (0.35) $ 0.13 The following table sets forth the number of potential shares of common stock that have been excluded from diluted net (loss) income per share net (loss) income per share because their effect was anti-dilutive: September 30, September 30, 2022 2021 Options 3,100,524 — Weighted average number of common shares‑basic 3,100,524 — | Earnings per Common Share We calculate basic earnings per share pursuant to the two-class method as a result of the issuance of Series A Preferred stock in 2016. Our Series A Preferred Stock is considered a participating security because, in the event that we pay a dividend or make a distribution on the outstanding common stock, we shall also pay each holder of the Series Preferred Stock a dividend on an as-converted basis. The two-class method is an earnings allocation formula that determines earnings per share for common stock and participating securities according to dividend and participation rights in undistributed earnings. Under this method, all earnings, distributed and undistributed, are allocated to common shares and participating securities based on their respective rights to receive dividends. Diluted earnings per common share is calculated using the treasury stock method for options. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The following table sets forth the information needed to compute basic and diluted earnings per share for the years ended December 31, 2021 and 2020: December 31, December 31, 2021 2020 Basic Earnings per common share Net Income $ 4,338 $ 6,878 Income available for distribution 4,338 6,878 Income allocated to participating securities, Net (1,405) (2,290) Income available to common shareholders $ 2,933 $ 4,588 December 31, December 31, 2021 2020 Basic earnings per common share: Net Income available to common shareholders $ 2,933 $ 4,588 Weighted average number of common shares-basic 20,101,129 20,040,470 Earnings per share, basic $ 0.15 $ 0.23 Diluted earnings per common share: Net Income available to common shareholders $ 2,933 $ 4,588 Weighted average number of common shares-basic 20,101,129 20,040,470 Dilutive effect related to stock options 1,829,979 1,348,315 Weighted average diluted shares outstanding 21,931,108 21,388,785 Earnings per share, diluted $ 0.13 $ 0.21 For all periods presented, there were no outstanding shares that were potentially anti-dilutive. |
Segment Reporting | Segment Reporting Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the Company’s Chief Executive Officer to make decisions with respect to resource allocation and assessment of performance. To date, the Company has viewed its operations and manages its business as one operating segment. | Segment Reporting Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the Company’s Chief Executive Officer to make decisions with respect to resource allocation and assessment of performance. To date, the Company has viewed its operations and manages its business as one operating segment. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement” approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their short-term nature. | |
COVID-19 | COVID-19 The Company is closely monitoring the impact of COVID-19 on its business, including how it will affect its customers, workforce, suppliers, vendors, and production and distribution channels, as well as its financial statements. The extent to which COVID-19 impacts the Company's business and financial results will depend on numerous evolving factors, including, but not limited to: the magnitude and duration of COVID-19, the extent to which it will impact macroeconomic conditions, including interest rates, employment rates and consumer confidence, the speed of the anticipated recovery, and governmental, business and individual consumer reactions to the pandemic. While there was not a material impact to the Company's financial statements as of September 30, 2022 and December 31, 2021 and for the nine months ended September 30, 2022 and 2021, respectively, COVID-19 could result in material impacts to the Company's financial statements in future reporting periods. | COVID-19 On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law. The CARES Act provides a substantial stimulus and assistance package intended to address the impact of COVID-19, including tax relief and government loans, grants, and investments. The CARES Act did not have a material impact on the Company’s financial statements. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The Company is closely monitoring the impact of COVID-19 on its business, including how it will affect its customers, workforce, suppliers, vendors, and production and distribution channels, as well as its financial statements. The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous evolving factors, including, but not limited to the magnitude and duration of COVID-19, the extent to which it will impact macroeconomic conditions, including interest rates, employment rates and consumer confidence, the speed of the anticipated recovery, and governmental, business, and individual consumer reactions to the pandemic. We have experienced longer lead times in the supply of our components because of global supply chain disruptions caused in-part by the ongoing COVID-19 pandemic, which have led to the build-up in inventory as well as the significant increase in prepaid inventory as suppliers are requiring upfront deposits. While there was not a material impact to the Company’s financial statements as of and for the years ended December 31, 2021 and 2020, respectively, COVID-19 could result in material impacts to the Company’s financial statements in future reporting periods. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Schedule of information needed to compute basic and diluted earnings per share | For the Three Months For the Three Months For the Nine Months For the Nine Months Ended Ended Ended Ended September September 30, September 30, September 30, 30, 2022 2021 2022 2021 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ (1,919,615) $ 2,690,543 $ (1,298,108) $ 2,689,709 Denominator: Basic weighted average shares outstanding 10,307,037 9,453,125 13,957,179 5,008,929 Basic net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.54 Diluted weighted average shares outstanding 10,307,037 9,672,826 13,957,179 5,356,456 Diluted net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.50 | For the period from June 23, 2020 (inception) For the year through ended December 31, December 31, 2021 2020 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ 1,910,487 $ (1,000) Denominator: Basic weighted average shares outstanding 7,732,021 2,750,000 Basic net income (loss) per common share $ 0.25 $ (0.00) Diluted weighted average shares outstanding 7,991,952 2,750,000 Diluted net income (loss) per common share $ 0.24 $ (0.00) |
New Dragonfly | ||
Schedule of various classes of property and equipment and estimated useful lives | Office furniture and equipment 3 to 7 years Vehicles 5 years Machinery and equipment 3 to 7 years Leasehold improvements Remaining Term of Lease | Office furniture and equipment 3 to 7 years Machinery and equipment 3 to 7 years Leasehold improvements Remaining Term of Lease |
Schedule of disaggregated revenues by distribution channel | The following table presents our disaggregated revenues by distribution channel: For the Nine Months Ended September 30, Sales 2022 2021 Retail $ 35,211 $ 44,221 Distributor 6,544 6,910 Original equipment manufacture 24,287 6,690 Total 66,042 57,821 | The following table present our disaggregated revenues by distribution channel: Sales 2021 2020 Retail $ 59,042 $ 33,314 Distributor 10,733 10,381 Original equipment manufacture 8,225 3,492 Total $ 78,000 $ 47,187 |
Schedule of information needed to compute basic and diluted earnings per share | September 30, September 30, 2022 2021 Basic (Loss) Earnings per common share Net (Loss) Income $ (7,456) $ 4,421 (Loss) Income available for distribution (7,456) 4,421 Income allocated to participating securities — (1,469) Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 September 30, September 30, 2022 2021 Basic (loss) Earnings per common share: Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 Weighted average number of common shares-basic 21,384,734 20,063,211 (Loss) Earnings per share, basic $ (0.35) $ 0.15 Diluted (loss) earnings per common share: Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 Weighted average number of common shares-basic 21,384,734 20,063,211 Dilutive effect related to stock options — 1,862,894 Weighted average diluted shares outstanding 21,384,734 21,926,105 (Loss) Earnings per share, diluted $ (0.35) $ 0.13 | The following table sets forth the information needed to compute basic and diluted earnings per share for the years ended December 31, 2021 and 2020: December 31, December 31, 2021 2020 Basic Earnings per common share Net Income $ 4,338 $ 6,878 Income available for distribution 4,338 6,878 Income allocated to participating securities, Net (1,405) (2,290) Income available to common shareholders $ 2,933 $ 4,588 December 31, December 31, 2021 2020 Basic earnings per common share: Net Income available to common shareholders $ 2,933 $ 4,588 Weighted average number of common shares-basic 20,101,129 20,040,470 Earnings per share, basic $ 0.15 $ 0.23 Diluted earnings per common share: Net Income available to common shareholders $ 2,933 $ 4,588 Weighted average number of common shares-basic 20,101,129 20,040,470 Dilutive effect related to stock options 1,829,979 1,348,315 Weighted average diluted shares outstanding 21,931,108 21,388,785 Earnings per share, diluted $ 0.13 $ 0.21 For all periods presented, there were no outstanding shares that were potentially anti-dilutive. |
INVENTORY (Tables)
INVENTORY (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
New Dragonfly | ||
Schedule of inventories | On September 30, 2022 and December 31, 2021 inventory consists of the following: September 30, December 31, 2022 2021 Raw material $ 29,631 $ 22,885 Finished goods 9,856 4,242 Total inventory $ 39,487 $ 27,127 | Inventory consists of the following as of: December 31, December 31, 2021 2020 Raw material $ 22,885 $ 4,419 Work in process — 172 Finished goods 4,242 1,357 Total inventory $ 27,127 $ 5,948 |
OPERATING LEASES (Tables)
OPERATING LEASES (Tables) - New Dragonfly | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Schedule of table representing the breakout of the operating leases | The following table presents the breakout of the operating leases as of: September 30, December 31, 2022 2021 Operating lease right-of-use assets $ 4,878 $ 5,709 Short-term operating lease liabilities 1,157 1,082 Long-term operating lease liabilities 3,821 4,694 Total operating lease liabilities $ 4,978 $ 5,776 Weighted average remaining lease term 3.8 years 4.6 years Weighted average discount rate 5.2 % 5.2 % | The following table presents the breakout of the operating leases as of: December 31, December 31, 2021 2020 Operating lease right-of-use assets $ 5,709 $ 993 Short-term operating lease liabilities 1,082 225 Long-term operating lease liabilities 4,694 758 Total operating lease liabilities $ 5,776 $ 983 Weighted average remaining lease term 4.6 years 3.9 years Weighted average discount rate 5.2 % 6.0 % |
Schedule of the future minimum lease payments under the operating leases | At September 30, 2022, the future minimum lease payments under these operating leases are as follows: 2022 $ 342 2023 1,399 2024 1,435 2025 1,440 2026 893 Total lease payments 5,509 Less imputed interest 531 Total operating lease liabilities $ 4,978 | At December 31, 2021, the future minimum lease payments under these operating leases are as follows: 2022 $ 1,357 2023 1,399 2024 1,435 2025 1,440 2026 893 Total lease payments 6,524 Less imputed interest 748 Total operating lease liabilities 5,776 |
Schedule of classification of lease cost | December 31, December 31, Lease cost Classification 2021 2020 Operating lease cost Cost of goods sold $ 633 $ 179 Operating lease cost Research and development 103 — Operating lease cost General and administration 42 144 Operating lease cost Selling and marketing 42 — Total lease cost $ 820 $ 323 All lease costs included in the schedule above are fixed lease costs. |
LONG TERM DEBT (Tables)
LONG TERM DEBT (Tables) - New Dragonfly | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Summary of deposits into reserve accounts | Initial deposits into the reserve accounts consisted of the following items: Payment Reserve Fund $ 3,044 Capitalized Interest Fund 144 Total $ 3,188 | Deposits into the reserve accounts consisted of the following items: Payment Reserve Fund $ 3,044 Capitalized Interest Fund 144 Total $ 3,188 |
Summary of future debt maturities | At September 30, 2022, the future debt maturities are as follows: For Years Ended December 31, 2022 (3 months) $ 1,875 2023 22,500 2024 20,625 Total 45,000 Less: Unamortized debt issuance costs, noncurrent (4,289) Total debt 40,711 Less: current portion of debt, net of debt discount (16,529) Total long‑term debt $ 24,182 | At December 31, 2021, the future debt maturities are as follows: 2022 $ 1,875 2023 22,500 2024 20,625 Total 45,000 Less: Unamortized debt issuance costs (6,072) Total debt 38,928 Less: current portion of debt (1,875) Total long-term debt $ 37,053 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Schedule of components of deferred tax assets (liabilities) | The Company’s net deferred tax assets (liabilities) as of December 31, 2021 is as follows: Deferred tax assets: Start-up costs $ 61,335 Net operating loss carryforwards 298,437 Total deferred tax assets 359,772 Valuation allowance (354,792) Deferred tax liabilities: Unrealized gain on investments (4,980) Total deferred tax liabilities (4,980) Deferred tax assets, net of allowance $ — |
Schedule of reconciliation between the effective tax rate on income from continuing operations and the statutory rate | A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2021 is as follows: Statutory federal income tax rate 21.0 % State taxes, net of federal tax benefit 0.0 % Change in fair value of derivative warrant liabilities (40.8) % Non-deductible transaction costs 0.2 % Change in valuation allowance 19.6 % Income tax provision 0.0 % |
New Dragonfly | |
Schedule of income tax expense | The income tax expense consists of the following items: 2021 2020 Current $ 1,489 $ 1,676 Deferred 122 210 Total tax expense $ 1,611 $ 1,886 |
Schedule of components of deferred tax assets (liabilities) | Components of deferred tax assets (liabilities) are as follows: 2021 2020 Leases $ 14 $ (15) Stock based compensation 35 19 Allowance for bad debt 59 — Fixed assets and intangibles (606) (345) Inventory (Sec. 263A) 45 10 Net deferred tax liability $ (453) $ (331) |
Schedule of reconciliation between the effective tax rate on income from continuing operations and the statutory rate | Reconciliation between the effective tax rate on income from continuing operations and the statutory rate for the year ending December 31, 2021, is as follows: Tax Percentage Federal income tax provision at statutory rates $ 1,249 21.00 % Permanent differences (other than tax) 188 3.16 % State taxes, net 128 2.15 % Deferred true-up 56 0.94 % Research and development credits — — % Uncertain tax positions (19) (0.32) % Other 9 0.15 % Total $ 1,611 Effective tax rate 27.08 % Reconciliation between the effective tax rate on income from continuing operations and the statutory rate for the year ending December 31, 2020 is as follows: Tax Percentage Federal income tax provision at statutory rates $ 1,840 21.00 % Permanent differences (other than tax) 87 0.99 % State taxes, net 9 0.10 % Deferred true-up (2) (0.02) % Research and development credits (75) (0.86) % Uncertain tax positions 19 0.22 % Other 8 0.11 % Total $ 1,886 Effective tax rate 21.52 % |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) - New Dragonfly | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Schedule of option activity and related information | A summary of the Company’s option activity and related information follows: Weighted ‑ Average Weighted ‑ Average Remaining Aggregate Number of Weighted ‑ Average Grant Date Contractual Life intrinsic Options Exercise Price Fair Value (in years) value Balances, January 1, 2021 2,563,080 $ 0.45 $ — 7.92 $ 650,965 Options granted 1,000,538 3.41 1.94 — Options forfeited (299,939) 1.21 1.83 — Options exercised (49,727) 0.53 — — Balances, September 30, 2021 3,213,952 $ 1.30 $ — 7.80 $ 7,616,691 Balances, January 1, 2022 3,122,398 $ 1.98 $ — 8.52 $ 6,549,591 Options granted 509,500 4.08 1.81 — Options forfeited (40,075) 3.29 2.07 — Options exercised (491,299) 1.44 — — Balances, September 30, 2022 3,100,524 $ 2.40 $ — 8.22 $ 5,220,204 At September 30, 2022 Vested and Exercisable 864,984 $ 1.53 7.83 $ 2,201,553 Vested and expected to vest 2,235,540 $ 2.73 8.37 $ 3,018,651 | A summary of the Company’s option activity and related information follows: Weighted Weighted- Average Aggregate Weighted- Average Remaining intrinsic Number of Average Grant Date Contractual value Options Exercise Price Fair Value Life (in years) (in thousands) Balances, January 1, 2020 2,157,950 $ 0.39 0.39 8.54 651 Options granted 620,950 0.69 1.92 — Options forfeited (183,550) 0.52 0.93 — Options exercised (32,270) 0.46 0.64 — Balances, December 31, 2020 2,563,080 $ 0.45 0.72 7.92 651 Options granted 1,750,551 3.41 2.03 3,551 Options forfeited (356,228) 1.44 1.82 — Options exercised (835,005) 0.51 0.53 442 Balances, December 31, 2021 3,122,398 $ 1.98 1.38 8.52 6,550 At December 31, 2021 Vested and Exercisable 550,601 $ 0.88 7.42 1,762 Vested and expected to vest 3,122,398 $ 1.98 7.92 6,550 |
Schedule of valuation assumptions of options | 2021 2020 Weighted average fair value of options granted $ 1.73 – 2.18 $ 1.30 – 2.39 Risk-free interest rate 1.08 % 0.46 % Volatility 52.6 % 52.5 % Expected life (years) 6.02 5.95 Dividend yield 0.00 % 0.00 % |
COMMON STOCK (Tables)
COMMON STOCK (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
New Dragonfly | ||
Summary of reserved shares of common stock for issuance | September 30, December 31, 2022 2021 Convertible preferred stock outstanding 10,000,000 10,000,000 Options issued and outstanding 3,100,524 3,122,398 Common stock outstanding 22,634,276 20,875,475 Shares available for future issuance (1) 540,902 10,327 Total 36,275,702 34,008,200 (1) During March 2022, the Company increased the shares authorized under the plan by 1,000,000 | 2021 2020 Convertible preferred stock outstanding 10,000,000 10,000,000 Options issued and outstanding 3,122,398 2,563,080 Common stock outstanding 20,875,475 20,040,470 Shares available for future issuance 10,327 404,650 Total 34,008,200 33,008,200 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash, Restricted Cash, and Cash Equivalents and Accounts Receivable (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash equivalents | $ 0 | $ 0 | $ 0 |
New Dragonfly | |||
Cash equivalents | $ 0 | $ 0 | 0 |
Period within which payment is due from customers | 30 days | 30 days | |
Allowance for doubtful accounts | $ 54,000 | $ 50,000 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment And Impairment Of Long-Lived Assets (Details) - New Dragonfly - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property and Equipment | ||||
Depreciation and amortization | $ 648 | $ 432 | $ 617 | $ 198 |
Impairment of Long-Lived Assets | $ 0 | |||
Office furniture and equipment | Minimum | ||||
Property and Equipment | ||||
Estimated useful life (in years) | 3 years | 3 years | ||
Office furniture and equipment | Maximum | ||||
Property and Equipment | ||||
Estimated useful life (in years) | 7 years | 7 years | ||
Machinery and equipment | Minimum | ||||
Property and Equipment | ||||
Estimated useful life (in years) | 3 years | 3 years | ||
Machinery and equipment | Maximum | ||||
Property and Equipment | ||||
Estimated useful life (in years) | 7 years | 7 years | ||
Leasehold improvements | ||||
Property and Equipment | ||||
Remaining Term of Lease | Remaining Term of Lease | Remaining Term of Lease |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) - New Dragonfly - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Customer deposits | $ 287 | $ 434 | $ 1,779 | |
Shipping and handling costs | $ 4,042 | $ 3,912 | 5,105 | 2,568 |
Accrual for sales allowances | $ 170 | $ 0 | ||
Minimum | ||||
Disaggregation of Revenue [Line Items] | ||||
Payment term for distributors and OEMs | 30 years | 30 days | ||
Term of product warranty provided | 5 years | |||
Maximum | ||||
Disaggregation of Revenue [Line Items] | ||||
Payment term for distributors and OEMs | 60 days | 60 days | ||
Term of product warranty provided | 10 years |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Disaggregation Of Revenues (Details) - New Dragonfly - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Total Sales | $ 66,042 | $ 57,821 | $ 78,000 | $ 47,187 |
Retail | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Sales | 35,211 | 44,221 | 59,042 | 33,314 |
Distributor | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Sales | 6,544 | 6,910 | 10,733 | 10,381 |
Original equipment manufacture | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Sales | $ 24,287 | $ 6,690 | $ 8,225 | $ 3,492 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentrations (Details) - New Dragonfly | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2022 customer item | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2021 customer | Dec. 31, 2021 item | Dec. 31, 2020 customer | |
Concentration Risk [Line Items] | ||||||
Number of customers | 1 | 2 | 1 | |||
Number of vendors | 1 | 3 | 2 | 4 | ||
Receivables | Credit Concentration Risk | Customer 1 | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk (in percent) | 43% | 42% | 22% | |||
Receivables | Credit Concentration Risk | Customer 2 | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk (in percent) | 16% | |||||
Total Purchases | Supplier Concentration Risk | Vendor A | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk (in percent) | 20% | 27% | ||||
Total Purchases | Supplier Concentration Risk | Vendor B | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk (in percent) | 12% | 10% | ||||
Total Purchases | Supplier Concentration Risk | Vendor C | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk (in percent) | 10% | |||||
Total Purchases | Supplier Concentration Risk | Vendor D | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk (in percent) | 19% | |||||
Total Purchases | Supplier Concentration Risk | Vendor E | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk (in percent) | 14% | |||||
Total Purchases | Supplier Concentration Risk | Vendor F | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk (in percent) | 11% | |||||
Total Purchases | Supplier Concentration Risk | Vendor G | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk (in percent) | 10% | |||||
Total Purchases | Supplier Concentration Risk | Customer 1 | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk (in percent) | 24% |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising, Stock-Based Compensation and Income Taxes (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Uncertain tax position liability | $ 0 | $ 0 | ||
New Dragonfly | ||||
Advertising expenses | $ 1,777,000 | $ 1,069,000 | $ 1,690,000 | $ 1,069,000 |
Dividend yield (in percent) | 0% | 0% | 0% | |
Uncertain tax position liability | $ 0 | $ 19,000 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings per Common Share And Segment Reporting (Details) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2022 USD ($) $ / shares shares | Jun. 30, 2022 USD ($) | Mar. 31, 2022 USD ($) | Sep. 30, 2021 USD ($) $ / shares shares | Jun. 30, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2020 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) segment $ / shares shares | Sep. 30, 2021 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2020 USD ($) $ / shares shares | |
Basic Earnings per common share | |||||||||||
Net income | $ (1,919,615) | $ (570,333) | $ 1,191,840 | $ 2,690,543 | $ (834) | $ (1,000) | $ (1,000) | $ (1,298,108) | $ 2,689,709 | $ 1,910,487 | |
Income available to common shareholders | (1,919,615) | 2,690,543 | (1,000) | (1,298,108) | 2,689,709 | 1,910,487 | |||||
Basic earnings per common share: | |||||||||||
Net Income available to common shareholders | $ (1,919,615) | $ 2,690,543 | $ (1,000) | $ (1,298,108) | $ 2,689,709 | $ 1,910,487 | |||||
Weighted Average Number of Shares - Basic | shares | 10,307,037 | 9,453,125 | 2,750,000 | 13,957,179 | 5,008,929 | 7,732,021 | |||||
Earnings Per Share - Basic | $ / shares | $ (0.19) | $ 0.28 | $ 0 | $ (0.09) | $ 0.54 | $ 0.25 | |||||
Diluted earnings per common share: | |||||||||||
Net Income available to common shareholders | $ (1,919,615) | $ 2,690,543 | $ (1,000) | $ (1,298,108) | $ 2,689,709 | $ 1,910,487 | |||||
Weighted Average Number of Shares - Basic | shares | 10,307,037 | 9,453,125 | 2,750,000 | 13,957,179 | 5,008,929 | 7,732,021 | |||||
Weighted average diluted shares outstanding (in shares) | shares | 10,307,037 | 9,672,826 | 2,750,000 | 13,957,179 | 5,356,456 | 7,991,952 | |||||
Earnings Per Share - Diluted | $ / shares | $ (0.19) | $ 0.28 | $ 0 | $ (0.09) | $ 0.50 | $ 0.24 | |||||
Number of shares excluded from calculation of net income per common share because their inclusion would be anti-dilutive | shares | 14,115,358 | 14,115,358 | |||||||||
New Dragonfly | |||||||||||
Basic Earnings per common share | |||||||||||
Net income | $ (7,456,000) | $ 4,421,000 | $ 4,338,000 | $ 6,878,000 | |||||||
Income available for distribution | (7,456,000) | 4,421,000 | 4,338,000 | 6,878,000 | |||||||
Income allocated to participating securities, Net | 1,469,000 | (1,405,000) | (2,290,000) | ||||||||
Income available to common shareholders | (7,456,000) | 2,952,000 | 2,933,000 | 4,588,000 | |||||||
Basic earnings per common share: | |||||||||||
Net Income available to common shareholders | $ (7,456,000) | $ 2,952,000 | $ 2,933,000 | $ 4,588,000 | |||||||
Weighted Average Number of Shares - Basic | shares | 21,131,993 | 20,063,211 | 20,101,129 | 20,040,470 | |||||||
Earnings Per Share - Basic | $ / shares | $ (0.35) | $ 0.15 | $ 0.15 | $ 0.23 | |||||||
Diluted earnings per common share: | |||||||||||
Net Income available to common shareholders | $ (7,456,000) | $ 2,952,000 | $ 2,933,000 | $ 4,588,000 | |||||||
Weighted Average Number of Shares - Basic | shares | 21,131,993 | 20,063,211 | 20,101,129 | 20,040,470 | |||||||
Dilutive effect related to stock options (in shares) | shares | 0 | 1,862,894 | 1,829,979 | 1,348,315 | |||||||
Weighted average diluted shares outstanding (in shares) | shares | 21,131,993 | 21,926,105 | 21,931,108 | 21,388,785 | |||||||
Earnings Per Share - Diluted | $ / shares | $ (0.35) | $ 0.13 | $ 0.13 | $ 0.21 | |||||||
Number of shares excluded from calculation of net income per common share because their inclusion would be anti-dilutive | shares | 3,100,524 | 0 | 0 | 0 | |||||||
Number of operating segments | 1 | 1 | 1 |
INVENTORY (Details)
INVENTORY (Details) - New Dragonfly - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Raw material | $ 29,631 | $ 22,885 | $ 4,419 |
Work in process | 0 | 172 | |
Finished goods | 9,856 | 4,242 | 1,357 |
Total inventory | $ 39,487 | $ 27,127 | $ 5,948 |
OPERATING LEASES (Details)
OPERATING LEASES (Details) - New Dragonfly - USD ($) $ in Thousands | 1 Months Ended | 8 Months Ended | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Sep. 30, 2022 | Dec. 31, 2020 | |
Renewal lease term | 5 years | 5 years | 5 years | ||
Annual escalating monthly payments, minimum | $ 47 | $ 56 | $ 56 | $ 4 | $ 4 |
Annual escalating monthly payments, maximum | $ 55 | $ 63 | $ 63 | $ 11 | $ 11 |
OPERATING LEASES - Breakout of
OPERATING LEASES - Breakout of operating leases (Details) - New Dragonfly - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | |
Operating lease right of use asset | $ 5,709 | $ 993 | $ 4,878 | $ 5,709 |
Short-term operating lease liabilities | 1,082 | 225 | 1,157 | 1,082 |
Long-term operating lease liabilities | 4,694 | 758 | 3,821 | 4,694 |
Total operating lease liabilities | $ 5,776 | $ 983 | $ 4,978 | $ 5,776 |
Weighted average remaining lease term | 4 years 7 months 6 days | 3 years 10 months 24 days | 3 years 9 months 18 days | 4 years 7 months 6 days |
Weighted average discount rate | 5.20% | 6% | 5.20% | 5.20% |
Cash paid for amounts included in the measurement of lease liabilities | $ 952 | $ 148 |
OPERATING LEASES - Future Minim
OPERATING LEASES - Future Minimum Lease Payments (Details) - New Dragonfly - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
2022 | $ 1,399 | $ 1,357 | ||
2023 | 1,435 | 1,399 | ||
2024 | 1,440 | 1,435 | ||
2025 | 893 | 1,440 | ||
2026 | 893 | |||
Total lease payments | 5,509 | 6,524 | ||
Less imputed interest | 531 | 748 | ||
Total operating lease liabilities | $ 4,978 | $ 5,776 | $ 5,776 | $ 983 |
OPERATING LEASES - Lease cost (
OPERATING LEASES - Lease cost (Details) - New Dragonfly - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Lessee, Lease, Description [Line Items] | ||
Lease cost | $ 820 | $ 323 |
Cost of Sales [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Lease cost | 633 | 179 |
Research and Development Expense [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Lease cost | 103 | 0 |
General and Administrative Expense [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Lease cost | 42 | 144 |
Selling and Marketing Expense [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Lease cost | $ 42 | $ 0 |
LONG TERM DEBT (Details)
LONG TERM DEBT (Details) - New Dragonfly $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 USD ($) installment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Nov. 24, 2021 USD ($) | |
LONG TERM DEBT | ||||
Net proceeds from debt | $ 35,474 | |||
Gross proceeds from debt | 45,000 | $ 0 | ||
Deposits to certain reserve accounts | 3,188 | $ 3,188 | ||
Prepaid loan monitoring fee | 60 | |||
Number of equal installments of principal to be paid | installment | 24 | |||
Series 2021-6 Notes | ||||
LONG TERM DEBT | ||||
Face amount of debt | $ 45,000 | 45,000 | 45,000 | |
Insured amount | $ 45,000 | |||
Net proceeds from debt | 35,474 | |||
Gross proceeds from debt | 45,000 | 45,000 | ||
Deposits to certain reserve accounts | 3,188 | 3,188 | ||
Expenses withdrawn from gross proceeds | 6,338 | 6,338 | ||
Prepaid loan monitoring fee | 60 | 60 | ||
Prepaid policy premiums and related costs | $ 4,725 | 4,725 | ||
Other debt issuance costs | $ 1,553 | |||
Interest per annum | 5.50% | 5.50% | ||
Late fee | $ 50 | $ 50 | ||
Default interest rate | 5% | 5% | ||
Number of equal installments of principal to be paid | 24 | |||
Periodic principal amount | $ 1,875 | $ 1,875 | ||
Interest expense incurred | 1,873 | 390 | ||
Amortization of the debt issuance costs | $ 1,783 | $ 77 |
LONG TERM DEBT - Future debt ma
LONG TERM DEBT - Future debt maturities (Details) - New Dragonfly - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | Nov. 24, 2021 | |
Payment Reserve Fund | $ 3,044 | $ 3,044 | $ 3,044 |
Capitalized Interest Fund | 0 | 144 | 144 |
Total | 3,188 | $ 3,188 | |
Funds deposited into interest-bearing accounts | $ 0 | $ 0 |
LONG TERM DEBT - Additional Inf
LONG TERM DEBT - Additional Information (Details) - New Dragonfly $ in Thousands | 12 Months Ended |
Dec. 31, 2021 USD ($) | |
Term of non payment for special redemptions | 10 days |
Percentage of registered noteholders required for special redemptions | 75% |
Term of debt | 3 years |
Ongoing monitoring service fees term | 24 months |
Loan monitoring fees | $ 180 |
Prepaid loan monitoring fee | $ 60 |
Loan monitoring fees, amortization term | 8 months |
LONG TERM DEBT - Future debt _2
LONG TERM DEBT - Future debt maturities (Details) - New Dragonfly - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Future debt maturities | ||
2022 | $ 22,500 | $ 1,875 |
2023 | 20,625 | 22,500 |
2024 | 20,625 | |
Total | 45,000 | 45,000 |
Less: Unamortized debt issuance costs | (6,072) | |
Total debt | 40,711 | 38,928 |
Less: current portion of debt | (16,529) | (1,875) |
Total long-term debt | $ 24,182 | $ 37,053 |
REVOLVING NOTE AGREEMENT (Detai
REVOLVING NOTE AGREEMENT (Details) - New Dragonfly - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Oct. 06, 2021 | Oct. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Maximum borrowing capacity | $ 8,000 | |||
Percentage of eligible accounts receivable | 80% | |||
Percentage of eligible inventory | 50% | |||
Proceeds from revolving note agreement | $ 5,000 | $ 5,000 | $ 5,000 | $ 0 |
INCOME TAXES - Income tax expen
INCOME TAXES - Income tax expense (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Total tax expense | $ 39,340 | $ 0 | $ 39,340 | $ 0 | ||
New Dragonfly | ||||||
Current | $ 1,489,000 | $ 1,676,000 | ||||
Deferred | (1,707,000) | (148,000) | 122,000 | 210,000 | ||
Total tax expense | $ (1,700,000) | $ 1,981,000 | $ 1,611,000 | $ 1,886,000 |
INCOME TAXES - Components of de
INCOME TAXES - Components of deferred tax assets (liabilities) (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Total deferred tax liabilities | $ (4,980) | |
New Dragonfly | ||
Leases | 14,000 | $ (15,000) |
Stock based compensation | 35,000 | 19,000 |
Allowance for bad debt | 59,000 | 0 |
Fixed assets and intangibles | (606,000) | (345,000) |
Inventory (Sec. 263A) | 45,000 | 10,000 |
Total deferred tax liabilities | $ (453,000) | $ (331,000) |
INCOME TAXES - Reconciliation b
INCOME TAXES - Reconciliation between the effective tax rate on income from continuing operations and the statutory rate (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Tax | ||||||
Total tax expense | $ 39,340 | $ 0 | $ 39,340 | $ 0 | ||
Percentage | ||||||
Federal income tax provision at statutory rates | 21% | 21% | ||||
State taxes, net | 0% | |||||
Income tax provision | (2.10%) | 0% | (3.10%) | 0% | 0% | |
New Dragonfly | ||||||
Tax | ||||||
Federal income tax provision at statutory rates | $ 1,249,000 | $ 1,840,000 | ||||
Permanent differences (other than tax) | 188,000 | 87,000 | ||||
State taxes, net | 128,000 | 9,000 | ||||
Deferred true-up | 56,000 | (2,000) | ||||
Research and development credits | 0 | (75,000) | ||||
Uncertain tax positions | (19,000) | 19,000 | ||||
Other | 9,000 | 8,000 | ||||
Total tax expense | $ (1,700,000) | $ 1,981,000 | $ 1,611,000 | $ 1,886,000 | ||
Percentage | ||||||
Federal income tax provision at statutory rates | 21% | 21% | ||||
Permanent differences (other than tax) | 3.16% | 0.99% | ||||
State taxes, net | 2.15% | 0.10% | ||||
Deferred true-up | 0.94% | (0.02%) | ||||
Research and development credits | 0% | (0.86%) | ||||
Uncertain tax positions | (0.32%) | 0.22% | ||||
Other | 0.15% | 0.11% | ||||
Income tax provision | 27.08% | 21.52% |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - New Dragonfly - shares | 1 Months Ended | |
Aug. 12, 2019 | Jul. 31, 2021 | |
2019 Stock Incentive Plan | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Term of plan | 10 years | |
Maximum number of common shares reserved for grants | 3,000,000 | |
2021 Stock Incentive Plan | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Term of plan | 10 years | |
Maximum number of common shares reserved for grants | 1,000,000 |
STOCK-BASED COMPENSATION - Opti
STOCK-BASED COMPENSATION - Option activity (Details) - New Dragonfly - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||
Nov. 30, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Number of Options | ||||||
Balances at the beginning | 3,122,398 | 2,563,080 | 2,563,080 | 2,157,950 | ||
Options granted | 509,500 | 1,000,538 | 1,750,551 | 620,950 | ||
Options forfeited | (40,075) | (299,939) | (356,228) | (183,550) | ||
Options exercised | (491,299) | (49,727) | (835,005) | (32,270) | ||
Balances at the end | 3,100,524 | 3,213,952 | 3,122,398 | 2,563,080 | 2,157,950 | |
Vested and Exercisable | 864,984 | 550,601 | ||||
Vested and expected to vest | 2,235,540 | 3,122,398 | ||||
Weighted-Average Exercise Price | ||||||
Balances at the beginning (in dollars per share) | $ 1.98 | $ 0.45 | $ 0.45 | $ 0.39 | ||
Options granted (in dollars per share) | $ 3.41 | 4.08 | 3.41 | 3.41 | 0.69 | |
Options forfeited (in dollars per share) | 3.29 | 1.21 | 1.44 | 0.52 | ||
Options exercised (in dollars per share) | 1.44 | 0.53 | 0.51 | 0.46 | ||
Balances at the end (in dollars per share) | 2.40 | 1.30 | 1.98 | 0.45 | $ 0.39 | |
Vested and Exercisable (in dollars per share) | 1.53 | 0.88 | ||||
Vested and expected to vest (in dollars per share) | 2.73 | 1.98 | ||||
Weighted- Average Grant Date Fair Value | ||||||
Balances at the beginning (in dollars per share) | 1.38 | 0.72 | 0.72 | 0.39 | ||
Options granted (in dollars per share) | 1.81 | 1.94 | 2.03 | 1.92 | ||
Options forfeited (in dollars per share) | $ 2.07 | $ 1.83 | 1.82 | 0.93 | ||
Options exercised (in dollars per share) | 0.53 | 0.64 | ||||
Balances at the end (in dollars per share) | $ 1.38 | $ 0.72 | $ 0.39 | |||
Weighted Average Remaining Contractual Life (in years) and aggregate intrinsic value | ||||||
Weighted Average Remaining Contractual Life (in years) | 8 years 2 months 19 days | 7 years 9 months 18 days | 8 years 6 months 7 days | 7 years 11 months 1 day | 8 years 6 months 14 days | |
Vested and Exercisable (in years) | 7 years 9 months 29 days | 7 years 5 months 1 day | ||||
Vested and expected to vest (in years) | 8 years 4 months 13 days | 7 years 11 months 1 day | ||||
Balances at the beginning (in dollars) | $ 6,549,591 | $ 650,965 | $ 650,965 | $ 651,000 | ||
Options granted (in dollars) | 3,551,000 | |||||
Options exercised (in dollars) | 442,000 | |||||
Balances at the end (in dollars) | 5,220,204 | $ 7,616,691 | 6,549,591 | $ 650,965 | $ 651,000 | |
Vested and Exercisable (in dollars) | 2,201,553 | 1,762,000 | ||||
Vested and expected to vest (in dollars) | $ 3,018,651 | $ 6,550,000 |
STOCK-BASED COMPENSATION - Shar
STOCK-BASED COMPENSATION - Share-based compensation expense (Details) - New Dragonfly - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||
Nov. 30, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Total compensation | $ 27 | $ 1,155 | $ 428 | $ 734 | $ 324 |
Payments not received for options exercised | 615,124 | ||||
Number of options exercised | 491,299 | 49,727 | 835,005 | 32,270 | |
Shares unissued authorized and available for future awards | 540,902 | 10,327 | 404,650 | ||
Stock-based compensation expense related to unvested stock options not yet recognized | $ 3,646 | ||||
Unrecognized stock-based compensation expense expected to be recognized over an estimated weighted average period | 2 years 10 months 24 days | ||||
Other Current Assets [Member] | |||||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Amount receivable for options exercised | $ 250 | ||||
Cost of Sales [Member] | |||||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Total compensation | $ 189 | $ 145 | 252 | $ 48 | |
Research and Development Expense [Member] | |||||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Total compensation | 307 | 55 | 95 | 23 | |
Selling and Marketing Expense [Member] | |||||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Total compensation | 326 | 89 | 156 | 61 | |
General and Administrative Expense [Member] | |||||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Total compensation | $ 333 | $ 139 | $ 231 | $ 192 |
STOCK-BASED COMPENSATION - Valu
STOCK-BASED COMPENSATION - Valuation methodology (Details) - New Dragonfly - $ / shares | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Risk-free interest rate | 1.08% | 0.46% | |
Volatility | 52.60% | 52.50% | |
Expected life (years) | 6 years 7 days | 5 years 11 months 12 days | |
Dividend yield (in percent) | 0% | 0% | 0% |
Minimum | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Weighted average fair value of options granted | $ 1.73 | $ 1.30 | |
Maximum | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Weighted average fair value of options granted | $ 2.18 | $ 2.39 |
REDEEMABLE PREFERRED STOCK RI_2
REDEEMABLE PREFERRED STOCK RIGHTS (Details) - New Dragonfly $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2021 USD ($) $ / shares | |
Temporary Equity [Line Items] | |
Dividends declared | $ 0 |
Series A Director | |
Temporary Equity [Line Items] | |
Number of votes per director | 2 |
Common Stock Director A | |
Temporary Equity [Line Items] | |
Number of votes per director | 3 |
Common Stock Director B | |
Temporary Equity [Line Items] | |
Number of votes per director | 1 |
Series A Preferred Stock [Member] | |
Temporary Equity [Line Items] | |
Number of directors elected by share holders | 1 |
Conversion price | $ 0.20 |
Percentage of votes for mandatory conversion of stock | 50% |
Common stock | |
Temporary Equity [Line Items] | |
Number of directors elected by share holders | 2 |
Stock price trigger for mandatory conversion of stock | $ 1 |
Minimum gross proceeds for mandatory conversion of stock | $ | $ 25,000 |
COMMON STOCK (Details)
COMMON STOCK (Details) - $ / shares | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Aug. 05, 2022 | May 15, 2022 | Aug. 10, 2021 | Mar. 04, 2021 | Dec. 31, 2019 | |
Common stock, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 | |||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Common stock, shares issued | 6,255,848 | |||||||
Common stock, shares outstanding | 6,255,848 | 3,162,500 | 2,875,000 | |||||
New Dragonfly | ||||||||
Common stock, shares authorized | 40,000,000 | 40,000,000 | 40,000,000 | |||||
Common stock, par value | $ 0.0002 | $ 0.0002 | $ 0.0002 | $ 0.0001 | ||||
Common stock, shares issued | 22,634,276 | 20,875,475 | 20,040,470 | 20,000,000 | ||||
Common stock, shares outstanding | 22,634,276 | 20,875,475 | 20,040,470 | |||||
Dividends on common stock declared | $ 0 | $ 0 | $ 0 |
COMMON STOCK- Issuance (Details
COMMON STOCK- Issuance (Details) - shares | Sep. 30, 2022 | Aug. 05, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Aug. 10, 2021 | Mar. 04, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Common shares, shares outstanding | 6,255,848 | 3,162,500 | 2,875,000 | |||||
New Dragonfly | ||||||||
Shares subject to possible redemption outstanding | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | |||
Options issued and outstanding | 3,100,524 | 3,122,398 | 3,213,952 | 2,563,080 | 2,157,950 | |||
Common shares, shares outstanding | 22,634,276 | 20,875,475 | 20,040,470 | |||||
Shares available for future issuance | 540,902 | 10,327 | 404,650 | |||||
Total | 36,275,702 | 34,008,200 | 33,008,200 |
COMMON STOCK - Additional infor
COMMON STOCK - Additional information (Details) - New Dragonfly - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||
Nov. 30, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Common shares granted to consultants for historical services provided | 8,200 | 8,200,000 | |||
Fair value of shares | $ 3.41 | $ 4.08 | $ 3.41 | $ 3.41 | $ 0.69 |
Total compensation | $ 27 | $ 1,155 | $ 428 | $ 734 | $ 324 |
SUBSEQUENT EVENTS - Asset purch
SUBSEQUENT EVENTS - Asset purchase agreement (Details) - Bourns Production, Inc - New Dragonfly $ in Thousands | Jan. 01, 2022 USD ($) |
Subsequent Event [Line Items] | |
Purchase price for acquiring machinery and equipment | $ 197 |
Subsequent Event | |
Subsequent Event [Line Items] | |
Purchase price for acquiring machinery and equipment | $ 197 |
SUBSEQUENT EVENTS - lease agree
SUBSEQUENT EVENTS - lease agreement (Details) - New Dragonfly $ in Thousands | Feb. 02, 2022 USD ($) |
Subsequent Event [Line Items] | |
Lease agreement term | 124 months |
Monthly base rent | $ 230 |
Fix operating expense costs | 23 |
Estimated monthly property taxes | $ 21 |
Percentage of escalation of monthly base rent | 3% |
Percentage of escalation of fix operating expense costs | 2.40% |
Subsequent Event | |
Subsequent Event [Line Items] | |
Lease agreement term | 124 months |
Monthly base rent | $ 230 |
Fix operating expense costs | 23 |
Estimated monthly property taxes | $ 21 |
Percentage of escalation of monthly base rent | 3% |
Percentage of escalation of fix operating expense costs | 2.40% |
Term of due of first payment | 2 years |
UNAUDITED CONDENSED BALANCE SHE
UNAUDITED CONDENSED BALANCE SHEETS - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash | $ 316,023 | $ 799,808 |
Prepaid expenses | 171,026 | 302,590 |
Total Current Assets | 487,049 | 1,102,398 |
Property and Equipment | ||
Total Assets | 32,482,752 | 129,523,613 |
Current liabilities: | ||
Accounts payable | 990,587 | 16,862 |
Income tax payable | 39,340 | 0 |
Total Current Liabilities | 1,612,686 | 114,211 |
Long-Term Liabilities | ||
Total Liabilities | 3,602,665 | 2,150,469 |
Commitments and Contingencies | ||
Redeemable Preferred Stock | ||
Common stock subject to possible redemption, $0.0001 par value; 3,093,348 and 12,650,000 shares at approximately $10.25 and $10.15 per share at September 30, 2022 and December 31, 2021, respectively | 128,397,500 | |
Equity | ||
Common stock, $0.0001 par value; 50,000,000 shares authorized; 3,162,500 shares issued and outstanding (excluding 3,093,348 and 12,650,000 shares subject to possible redemption) at September 30, 2022 and December 31, 2021, respectively | 317 | 317 |
Additional paid-in capital | 0 | 0 |
Accumulated deficit | (2,826,593) | (1,024,673) |
Total Stockholders' Deficit | (2,826,276) | (1,024,356) |
Total Liabilities, Common Stock Subject to Possible Redemption and Stockholders' Deficit | 32,482,752 | 129,523,613 |
New Dragonfly | ||
Current assets: | ||
Cash | 10,517,000 | 25,586,000 |
Restricted cash | 3,044,000 | 3,044,000 |
Accounts receivable, net of allowance for doubtful accounts | 3,820,000 | 783,000 |
Inventory | 39,487,000 | 27,127,000 |
Prepaid expenses | 1,552,000 | 293,000 |
Prepaid inventory | 3,729,000 | 7,461,000 |
Prepaid income tax | 296,000 | 0 |
Other current assets | 3,901,000 | 1,787,000 |
Total Current Assets | 66,346,000 | 66,081,000 |
Property and Equipment | ||
Machinery and equipment | 9,004,000 | 3,615,000 |
Office furniture and equipment | 275,000 | 201,000 |
Leasehold improvements | 1,709,000 | 1,307,000 |
Vehicle | 234,000 | 195,000 |
Property and Equipment, gross | 11,222,000 | 5,318,000 |
Less accumulated depreciation and amortization | (1,406,000) | (857,000) |
Property and Equipment, Net | 9,816,000 | 4,461,000 |
Operating lease right of use asset | 4,878,000 | 5,709,000 |
Deferred tax asset | 1,254,000 | 0 |
Total Assets | 82,294,000 | 76,251,000 |
Current liabilities: | ||
Accounts payable | 6,477,000 | 11,360,000 |
Accrued payroll and other liabilities | 4,374,000 | 2,608,000 |
Customer deposits | 287,000 | 434,000 |
Income tax payable | 0 | 631,000 |
Notes payable- current portion net of debt issuance costs | 16,529,000 | 1,875,000 |
Operating lease liability, current portion | 1,157,000 | 1,082,000 |
Total Current Liabilities | 28,824,000 | 17,990,000 |
Long-Term Liabilities | ||
Notes payable-noncurrent, net of debt issuance costs | 24,182,000 | 37,053,000 |
Deferred tax liabilities | 0 | 453,000 |
Operating lease liability, net of current portion | 3,821,000 | 4,694,000 |
Total Long-Term Liabilities | 28,003,000 | 42,200,000 |
Total Liabilities | 56,827,000 | 60,190,000 |
Commitments and Contingencies | ||
Redeemable Preferred Stock | ||
Common stock subject to possible redemption, $0.0001 par value; 3,093,348 and 12,650,000 shares at approximately $10.25 and $10.15 per share at September 30, 2022 and December 31, 2021, respectively | 2,000,000 | 2,000,000 |
Equity | ||
Common stock, $0.0001 par value; 50,000,000 shares authorized; 3,162,500 shares issued and outstanding (excluding 3,093,348 and 12,650,000 shares subject to possible redemption) at September 30, 2022 and December 31, 2021, respectively | 5,000 | 4,000 |
Additional paid-in capital | 18,480,000 | 1,619,000 |
Accumulated deficit | 4,982,000 | 12,438,000 |
Total Stockholders' Deficit | 23,467,000 | 14,061,000 |
Total Liabilities, Common Stock Subject to Possible Redemption and Stockholders' Deficit | $ 82,294,000 | $ 76,251,000 |
UNAUDITED CONDENSED BALANCE S_2
UNAUDITED CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2022 | Aug. 05, 2022 | May 15, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Aug. 10, 2021 | Mar. 04, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Common stock, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 | ||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||
Common stock, shares issued | 6,255,848 | ||||||||
Common stock, shares outstanding | 6,255,848 | 3,162,500 | 2,875,000 | ||||||
New Dragonfly | |||||||||
Redemption of shares | 10,000,000 | 10,000,000 | 10,000,000 | ||||||
Common stock subject to redemption, par value | $ 0.0002 | $ 0.0002 | |||||||
Shares subject to possible redemption issued | 10,000,000 | 10,000,000 | 10,000,000 | ||||||
Common stock subject to redemption, units sold in the IPO | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | ||||
Common stock, shares authorized | 40,000,000 | 40,000,000 | 40,000,000 | ||||||
Common stock, par value | $ 0.0002 | $ 0.0001 | $ 0.0002 | $ 0.0002 | |||||
Common stock, shares issued | 22,634,276 | 20,875,475 | 20,040,470 | 20,000,000 | |||||
Common stock, shares outstanding | 22,634,276 | 20,875,475 | 20,040,470 |
UNAUDITED CONDENSED STATEMENT_4
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Expenses | ||||
Loss from operations | $ (1,774,156) | $ (117,102) | $ (357,674) | |
Other Expense | ||||
Net income (loss) before income taxes | (1,258,768) | 2,689,709 | ||
(Benefit) Provision for Income Taxes | 39,340 | 0 | ||
Net income (loss) | $ (1,298,108) | $ 2,689,709 | $ 1,910,487 | |
Basic net income (loss) per common share | $ (0.09) | $ 0.54 | $ 0.25 | |
Diluted net income (loss) per common share | $ (0.09) | $ 0.50 | $ 0.24 | |
Basic weighted average shares outstanding | 13,957,179 | 5,008,929 | 7,732,021 | |
Diluted weighted average shares outstanding | 13,957,179 | 5,356,456 | 7,991,952 | |
New Dragonfly | ||||
Net Sales | $ 66,042,000 | $ 57,821,000 | $ 78,000,000 | $ 47,187,000 |
Cost of Goods Sold | 46,481,000 | 34,314,000 | 48,375,000 | 26,580,000 |
Gross Profit | 19,561,000 | 23,507,000 | 29,625,000 | 20,607,000 |
Operating Expenses | ||||
Research and development | 1,951,000 | 1,899,000 | 2,689,000 | 1,239,000 |
General and administrative | 13,716,000 | 8,428,000 | 10,621,000 | 4,662,000 |
Selling and marketing | 9,331,000 | 6,654,000 | 9,848,000 | 5,960,000 |
Total Operating Expenses | 24,998,000 | 16,981,000 | 23,158,000 | 11,861,000 |
Loss from operations | (5,437,000) | 6,526,000 | 6,467,000 | 8,746,000 |
Other Expense | ||||
Interest expense | (3,657,000) | (519,000) | 3,000 | |
Loss on disposition of assets | (62,000) | (124,000) | ||
Total Other Income (Expense) | (3,719,000) | (124,000) | (518,000) | 18,000 |
Net income (loss) before income taxes | (9,156,000) | 6,402,000 | 5,949,000 | 8,764,000 |
(Benefit) Provision for Income Taxes | (1,700,000) | 1,981,000 | 1,611,000 | 1,886,000 |
Net income (loss) | $ (7,456,000) | $ 4,421,000 | $ 4,338,000 | $ 6,878,000 |
Basic net income (loss) per common share | $ (0.35) | $ 0.15 | $ 0.15 | $ 0.23 |
Diluted net income (loss) per common share | $ (0.35) | $ 0.13 | $ 0.13 | $ 0.21 |
Basic weighted average shares outstanding | 21,131,993 | 20,063,211 | 20,101,129 | 20,040,470 |
Diluted weighted average shares outstanding | 21,131,993 | 21,926,105 | 21,931,108 | 21,388,785 |
UNAUDITED CONDENSED STATEMENT_5
UNAUDITED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) | Common stock New Dragonfly | Common stock | Additional Paid-in Capital New Dragonfly | Additional Paid-in Capital | Retained Earnings [Member] New Dragonfly | Retained Earnings [Member] | New Dragonfly | Total | |
Balance at the beginning at Dec. 31, 2019 | $ 2,000,000 | ||||||||
Balance at the beginning (in shares) at Dec. 31, 2019 | 10,000,000 | ||||||||
Balance at the end at Dec. 31, 2020 | $ 2,000,000 | ||||||||
Balance at the end (in shares) at Dec. 31, 2020 | 10,000,000 | ||||||||
Balance at the beginning at Dec. 31, 2019 | $ 4,000 | $ 88,000 | $ 1,222,000 | $ 1,314,000 | |||||
Balance at the beginning (in shares) at Dec. 31, 2019 | 20,000,000 | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | 6,878,000 | $ 6,878,000 | |||||||
Stock compensation expense | 351,000 | 351,000 | |||||||
Exercise of stock options | 12,000 | $ 12,000 | |||||||
Options exercised | 32,270 | ||||||||
Balance at the end at Dec. 31, 2020 | $ 4,000 | $ 317 | 451,000 | $ 24,683 | 8,100,000 | $ (1,000) | $ 8,555,000 | $ 24,000 | |
Balance at the end (in shares) at Dec. 31, 2020 | 20,040,470 | 3,162,500 | 20,040,470 | ||||||
Balance at the end at Dec. 31, 2020 | $ 2,000,000 | ||||||||
Balance at the end (in shares) at Dec. 31, 2020 | 10,000,000 | ||||||||
Balance at the beginning at Jun. 23, 2020 | $ 0 | 0 | 0 | 0 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | 0 | (1,000) | (1,000) | ||||||
Aggregate purchase price | [1],[2] | $ 317 | 24,683 | 0 | 25,000 | ||||
Number of shares issued | [1],[2] | 3,162,500 | |||||||
Balance at the end at Dec. 31, 2020 | $ 4,000 | $ 317 | 451,000 | 24,683 | 8,100,000 | (1,000) | $ 8,555,000 | 24,000 | |
Balance at the end (in shares) at Dec. 31, 2020 | 20,040,470 | 3,162,500 | 20,040,470 | ||||||
Balance at the end at Sep. 30, 2021 | $ 2,000,000 | ||||||||
Balance at the end (in shares) at Sep. 30, 2021 | 10,000,000 | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | 4,421,000 | $ 4,421,000 | 2,689,709 | ||||||
Stock compensation expense | 428,000 | 428,000 | |||||||
Exercise of stock options | 26,000 | $ 26,000 | |||||||
Options exercised | 49,727 | 49,727 | |||||||
Balance at the end at Sep. 30, 2021 | $ 4,000 | $ 317 | 905,000 | 12,521,000 | (245,451) | $ 13,430,000 | (245,134) | ||
Balance at the end (in shares) at Sep. 30, 2021 | 20,090,197 | 3,162,500 | |||||||
Balance at the beginning at Dec. 31, 2020 | $ 2,000,000 | ||||||||
Balance at the beginning (in shares) at Dec. 31, 2020 | 10,000,000 | ||||||||
Balance at the end at Dec. 31, 2021 | $ 2,000,000 | 128,397,500 | |||||||
Balance at the end (in shares) at Dec. 31, 2021 | 10,000,000 | ||||||||
Balance at the beginning at Dec. 31, 2020 | $ 4,000 | $ 317 | 451,000 | 24,683 | 8,100,000 | (1,000) | $ 8,555,000 | 24,000 | |
Balance at the beginning (in shares) at Dec. 31, 2020 | 20,040,470 | 3,162,500 | 20,040,470 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | 0 | 4,338,000 | 1,910,487 | $ 4,338,000 | 1,910,487 | ||||
Stock compensation expense | 734,000 | 734,000 | |||||||
Exercise of stock options | 434,000 | $ 434,000 | |||||||
Options exercised | 835,005 | ||||||||
Balance at the end at Dec. 31, 2021 | $ 4,000 | $ 317 | 1,619,000 | 0 | 12,438,000 | (1,024,673) | $ 14,061,000 | (1,024,356) | |
Balance at the end (in shares) at Dec. 31, 2021 | 20,875,475 | 3,162,500 | 20,875,475 | ||||||
Balance at the beginning at Mar. 31, 2021 | $ 317 | 24,683 | (1,000) | 24,000 | |||||
Balance at the beginning (in shares) at Mar. 31, 2021 | 3,162,500 | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | (834) | (834) | |||||||
Balance at the end at Jun. 30, 2021 | $ 317 | 24,683 | (1,834) | 23,166 | |||||
Balance at the end (in shares) at Jun. 30, 2021 | 3,162,500 | ||||||||
Balance at the end at Sep. 30, 2021 | $ 2,000,000 | ||||||||
Balance at the end (in shares) at Sep. 30, 2021 | 10,000,000 | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | 2,690,543 | 2,690,543 | |||||||
Balance at the end at Sep. 30, 2021 | $ 4,000 | $ 317 | 905,000 | 12,521,000 | (245,451) | $ 13,430,000 | (245,134) | ||
Balance at the end (in shares) at Sep. 30, 2021 | 20,090,197 | 3,162,500 | |||||||
Balance at the beginning at Dec. 31, 2021 | $ 2,000,000 | 128,397,500 | |||||||
Balance at the beginning (in shares) at Dec. 31, 2021 | 10,000,000 | ||||||||
Balance at the beginning at Dec. 31, 2021 | $ 4,000 | $ 317 | 1,619,000 | 0 | 12,438,000 | (1,024,673) | $ 14,061,000 | (1,024,356) | |
Balance at the beginning (in shares) at Dec. 31, 2021 | 20,875,475 | 3,162,500 | 20,875,475 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | 1,191,840 | 1,191,840 | |||||||
Balance at the end at Mar. 31, 2022 | $ 317 | 167,167 | 167,484 | ||||||
Balance at the end (in shares) at Mar. 31, 2022 | 3,162,500 | ||||||||
Balance at the beginning at Dec. 31, 2021 | $ 2,000,000 | 128,397,500 | |||||||
Balance at the beginning (in shares) at Dec. 31, 2021 | 10,000,000 | ||||||||
Balance at the end at Sep. 30, 2022 | $ 2,000,000 | ||||||||
Balance at the end (in shares) at Sep. 30, 2022 | 10,000,000 | ||||||||
Balance at the beginning at Dec. 31, 2021 | $ 4,000 | $ 317 | 1,619,000 | $ 0 | 12,438,000 | (1,024,673) | $ 14,061,000 | (1,024,356) | |
Balance at the beginning (in shares) at Dec. 31, 2021 | 20,875,475 | 3,162,500 | 20,875,475 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | (7,456,000) | $ (7,456,000) | (1,298,108) | ||||||
Stock compensation expense | 1,155,000 | 1,155,000 | |||||||
Aggregate purchase price | $ 1,000 | 14,999,000 | 15,000,000 | ||||||
Number of shares issued | 1,267,502 | ||||||||
Exercise of stock options | 707,000 | $ 707,000 | |||||||
Options exercised | 491,299 | 491,299 | |||||||
Balance at the end at Sep. 30, 2022 | $ 5,000 | $ 317 | 18,480,000 | 4,982,000 | (2,826,593) | $ 23,467,000 | (2,826,276) | ||
Balance at the end (in shares) at Sep. 30, 2022 | 22,634,276 | 3,162,500 | 22,634,276 | ||||||
Balance at the beginning at Mar. 31, 2022 | $ 317 | 167,167 | 167,484 | ||||||
Balance at the beginning (in shares) at Mar. 31, 2022 | 3,162,500 | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | (570,333) | (570,333) | |||||||
Balance at the end at Jun. 30, 2022 | $ 317 | (403,166) | (402,849) | ||||||
Balance at the end (in shares) at Jun. 30, 2022 | 3,162,500 | ||||||||
Balance at the end at Sep. 30, 2022 | $ 2,000,000 | ||||||||
Balance at the end (in shares) at Sep. 30, 2022 | 10,000,000 | ||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | (1,919,615) | (1,919,615) | |||||||
Balance at the end at Sep. 30, 2022 | $ 5,000 | $ 317 | $ 18,480,000 | $ 4,982,000 | $ (2,826,593) | $ 23,467,000 | $ (2,826,276) | ||
Balance at the end (in shares) at Sep. 30, 2022 | 22,634,276 | 3,162,500 | 22,634,276 | ||||||
[1] Includes up to 412,500 shares of common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriter. On August 18, 2021, the underwriters’ exercised the over-allotment option in full, thus these shares are no longer subject to forfeiture (see Note 6). On March 4, 2021, the Company effected a 2.875 -for-1 stock split, resulting in 2,875,000 shares of common stock outstanding (see Note 5). On August 10, 2021, the Company effectuated a 1.1 -for-1 stock split, resulting in an aggregate of 3,162,500 shares of common stock outstanding (see Note 5). All share and per-share amounts have been retroactively restated to reflect the two stock splits. |
UNAUDITED CONDENSED STATEMENT_6
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash Flows from Operating Activities: | ||||
Net income (loss) | $ (1,298,108) | $ 2,689,709 | $ 1,910,487 | |
Changes in operating assets and liabilities: | ||||
Prepaid expenses | 131,564 | (366,584) | (302,590) | |
Income tax payable | 39,340 | 0 | ||
Net cash used in operating activities | (583,456) | (459,653) | (547,052) | |
Cash Flows from Investing Activities: | ||||
Net cash provided by (used in) investing activities | 96,894,621 | (128,397,500) | (128,397,500) | |
Cash Flows from Financing Activities: | ||||
Net cash provided by (used in) financing activities | (96,794,950) | 129,719,361 | 129,719,360 | |
Cash - Beginning of Period | 799,808 | 25,000 | 25,000 | |
Cash - End of Period | 316,023 | 887,208 | 799,808 | $ 25,000 |
New Dragonfly | ||||
Cash Flows from Operating Activities: | ||||
Net income (loss) | (7,456,000) | 4,421,000 | 4,338,000 | 6,878,000 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||
Stock based compensation | 1,155,000 | 428,000 | 734,000 | 351,000 |
Amortization of debt discount | 1,783,000 | 0 | 206,000 | 0 |
Deferred income tax provision | (1,707,000) | (148,000) | 122,000 | 210,000 |
Depreciation and amortization | 648,000 | 432,000 | 617,000 | 198,000 |
Loss on disposal of property and equipment | 62,000 | 124,000 | 124,000 | 0 |
Changes in operating assets and liabilities: | ||||
Accounts receivable | (3,037,000) | 402,000 | 1,007,000 | (1,640,000) |
Inventories | (12,360,000) | (11,183,000) | (21,179,000) | (3,406,000) |
Prepaid expenses | (1,259,000) | 206,000 | 58,000 | (309,000) |
Prepaid inventory | 3,732,000 | (5,254,000) | (6,353,000) | (630,000) |
Other current assets | (2,114,000) | 170,000 | (1,214,000) | (253,000) |
Other assets | 831,000 | 880,000 | 1,029,000 | 144,000 |
Income tax payable | (927,000) | (57,000) | (651,000) | 1,279,000 |
Accounts payable and accrued expenses | (3,915,000) | 7,602,000 | ||
Uncertain tax position liability | 0 | (19,000) | (19,000) | 19,000 |
Customer deposits | (147,000) | (737,000) | (1,345,000) | 1,640,000 |
Total Adjustments | (17,255,000) | (7,154,000) | ||
Net cash used in operating activities | (24,711,000) | (2,733,000) | (13,573,000) | 6,640,000 |
Cash Flows from Investing Activities: | ||||
Purchase of property and equipment | (6,065,000) | (2,540,000) | (2,970,000) | (1,410,000) |
Proceeds from disposal of property and equipment | 0 | 61,000 | 61,000 | 0 |
Net cash provided by (used in) investing activities | (6,065,000) | (2,479,000) | (2,909,000) | (1,410,000) |
Cash Flows from Financing Activities: | ||||
Proceeds from exercise of options | 707,000 | 26,000 | 184,000 | 12,000 |
Proceeds from stock purchase agreement | 15,000,000 | 0 | ||
Net cash provided by (used in) financing activities | 15,707,000 | 26,000 | 38,906,000 | 12,000 |
Net Increase in Cash and Restricted Cash | (15,069,000) | (5,186,000) | 22,424,000 | 5,242,000 |
Cash - Beginning of Period | 28,630,000 | 6,206,000 | 6,206,000 | 964,000 |
Cash - End of Period | 13,561,000 | 1,020,000 | 28,630,000 | 6,206,000 |
Supplemental Disclosures of Cash Flow Information: | ||||
Cash paid for income taxes | 981,000 | 2,077,000 | 2,390,000 | 292,000 |
Cash paid for interest | 1,873,000 | 0 | 313,000 | 0 |
Supplemental Non-Cash Items | ||||
Recognition of right of use asset obtained in exchange for operating lease liability | $ 0 | $ 3,120,000 | $ 5,745,000 | $ 661,000 |
NATURE OF BUSINESS_2
NATURE OF BUSINESS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Chardan NexTech Acquisition 2 Corp (the “Company” or “Chardan”) is a blank check company incorporated in Delaware on June 23, 2020. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). The Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. As of September 30, 2022, the Company had not yet commenced any operations. All activity for the period from June 23, 2020 (Inception) through September 30, 2022 relates to the Company’s formation and initial public offering (“Initial Public Offering”) described below, and, subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The registration statement on Form S-1 (the “Registration Statement”) for the Company’s Initial Public Offering was declared effective on August 10, 2021. On August 13, 2021, the Company consummated the Initial Public Offering of 11,000,000 units (the “Units” and, with respect to the common stock, par value $0.0001 per share, of the Company included in the Units sold, the “Public Shares”, and with respect to the warrants of the Company included in the Units sold, the “Public Warrants”), at $10.00 per Unit, generating gross proceeds of $110,000,000 , which is discussed in Note 3. Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 4,361,456 warrants (the “Private Warrants”, together with the Public Warrants, the “Warrants”) at a price of $0.93 per Private Warrant in a private placement to Chardan NexTech 2 Warrant Holdings LLC, a Delaware limited liability company (“Warrant Holdings” or “Holdings”), an affiliate of Chardan NexTech Investments 2 LLC, a Delaware limited liability company (the “Sponsor”), generating gross proceeds of $4,052,000 , which is described in Note 4. The Company had granted the underwriters in the Initial Public Offering a 45-day option to purchase up to 1,650,000 Units to cover over-allotments, if any (see Note 6). On August 16, 2021, the underwriters fully exercised the over-allotment option and, on August 18, 2021, purchased an additional 1,650,000 Units (the “Over-Allotment Units”) at a purchase price of $10.00 per Over-Allotment Unit, generating gross proceeds of $16,500,000 . Simultaneously with the closing of the exercise of the over-allotment option, the Company consummated the sale of 266,402 warrants (the “Over-Allotment Private Warrants”) at a purchase price of $0.93 per Over-Allotment Private Warrant in a private placement to the Holdings, generating gross proceeds of $247,500 . Following the closing of the Initial Public Offering and underwriters’ over-allotment option, an amount of $128,397,500 from the net proceeds of the sale of the Units and Over-Allotment Units and a portion of the proceeds from the sale of the Private Warrants and Over-Allotment Private Warrants was placed in a trust account (the “Trust Account”) and was invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the Trust Account, as described below. Transaction costs related to the issuances described above amounted to $1,080,140 , consisting of $500,000 of cash underwriting fees and $580,140 of other offering costs. The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account ( $10.15 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The Public Shares subject to redemption was recorded at redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity (“ASC 480”). The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. Notwithstanding the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company. The Company had 12 months, or until August 13, 2022, from the closing of the Initial Public Offering to consummate an initial Business Combination. However, prior to such date, the Stockholders (as defined in this Note 1) approved a proposal to amend the Company’s Amended and Restated Certificate of Incorporation (the “Charter”), to extend the date by which the Company must complete a Business Combination, as further discussed in this Note 1. The initial stockholders have agreed to waive their redemption rights with respect to any shares they own in connection with the consummation of the initial Business Combination, including their Founder Shares and Public Shares that they purchase during or after the offering, if any. In addition, the initial stockholders have agreed to waive their rights to liquidating distributions with respect to their Founder Shares if the Company fails to consummate an initial Business Combination within 18 months (assuming both of the three-month extensions were executed) from the closing of this offering. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering, they will be entitled to receive liquidating distributions with respect to such Public Shares if the Company fails to consummate an initial Business Combination within the required time period. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.15 per Public Share or (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay the Company’s taxes, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Business Combination Agreement On May 15, 2022, Chardan entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Dragonfly Energy Corp., a Nevada corporation (“Dragonfly”), and Bronco Merger Sub, Inc., a Nevada corporation and a direct, wholly owned subsidiary of Chardan (“Merger Sub”). The Merger Agreement provides that, among other things and upon the terms and subject to the conditions thereof, the following transactions will occur: (i) at the closing of the transactions contemplated by the Merger Agreement (the “Closing”), upon the terms and subject to the conditions of the Merger Agreement, in accordance with applicable provisions of the Nevada Revised Statutes (“NRS”) and the Delaware General Corporation Law (“DGCL”), Merger Sub will merge with and into Dragonfly, the separate corporate existence of Merger Sub ceased and Dragonfly was the surviving corporation and a wholly owned subsidiary of Chardan (the “Merger”); (ii) at the Closing, Chardan changed its name to “Dragonfly Energy Holdings Corp.” and is referred to herein as “New Dragonfly”; (iii) as a result of the Merger, among other things, all shares of capital stock of Dragonfly outstanding as of immediately prior to the effective time of the Merger were canceled in exchange for the right to receive shares of common stock, par value $0.0001 per share, of New Dragonfly (“New Dragonfly Common Stock”); (iv) as a result of the Merger, each Dragonfly option outstanding as of immediately prior to the effective time of the Merger converted into the right to receive a New Dragonfly option, subject to certain exceptions and conditions as set forth in the Merger Agreement; (v) at the Closing, 40,000,000 shares of New Dragonfly Common Stock became issuable to existing holders of Dragonfly capital stock or pursuant to the aforementioned converted options; and (vi) following the Closing, existing holders of Dragonfly capital stock will have the right to receive up to an aggregate of 40,000,000 additional shares of New Dragonfly Common Stock in three tranches as follows: (A) New Dragonfly shall issue 15,000,000 shares of New Dragonfly common stock in the aggregate, if, as disclosed in the Annual Report on Form 10-K for the fiscal year ending December 31, 2023 for New Dragonfly filed with the United States Securities and Exchange Commission (the “SEC”), New Dragonfly’s (x) total audited revenue for the year ended December 31, 2023 is equal to or greater than $250,000,000 , and (y) audited operating income for the year ended December 31, 2023 is equal to or greater than $35,000,000 ; (B) New Dragonfly shall issue an additional 12,500,000 shares of New Dragonfly common stock, in the aggregate (the “Second Earnout”), if at any time during the period beginning on the Closing Date and ending on December 31, 2026, the VWAP of the New Dragonfly common stock over any 20 Trading Days (which may or may not be consecutive) within any 30 consecutive Trading Day period is greater than or equal to $22.50 per share of New Dragonfly common stock (the “Second Milestone”); and (C) New Dragonfly shall issue an additional 12,500,000 shares of New Dragonfly common stock, in the aggregate (the “Third Earnout”), if at any time during the period beginning on the Closing Date and ending on December 31, 2028, the VWAP of the New Dragonfly common stock over any 20 Trading Days (which may or may not be consecutive) within any 30 consecutive Trading Day period is greater than or equal to $32.50 per share of New Dragonfly common stock (the “Third Milestone”). Upon the occurrence of the Third Milestone, if the Second Milestone has yet to occur, the Second Milestone will be deemed to have occurred simultaneously with the Third Milestone and the holders of Dragonfly capital stock shall be entitled to receive the Second Earnout as if the Second Milestone had occurred on or prior to December 31, 2026, provided, however, that such date shall only occur once, if at all, and in no event shall such holders be collectively entitled to receive more than an aggregate of 40,000,000 additional shares of New Dragonfly Common Stock. The Board of Directors of Chardan (the “Board”) has unanimously (i) approved and declared advisable the Merger Agreement, the Merger and the other transactions contemplated thereby and (ii) resolved to recommend approval of the Merger Agreement and related matters by the stockholders of Chardan. Upon the consummation of the business combination, the Board will be composed of seven members, five of whom will be designated by Dragonfly and two of whom will be designated by Chardan. On May 15, 2022, concurrently with the execution of the Merger Agreement, Chardan entered into a subscription agreement (the “Subscription Agreement”) with the Sponsor (the “PIPE Investor”). Pursuant to and subject to the terms and conditions contained in the Subscription Agreement, the PIPE Investor has subscribed to purchase up to 500,000 shares of New Dragonfly Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of up to $5,000,000 (the “PIPE Investment”). The Merger Agreement contains customary representations and warranties by Chardan, Merger Sub, and Dragonfly. The representations and warranties of the respective parties to the Merger Agreement generally will not survive the Closing. The Merger Agreement contains additional covenants, including, among others, providing for (i) the parties to conduct their respective businesses in the ordinary course through the Closing, (ii) the parties to not initiate any negotiations or enter into any agreements for certain alternative transactions, (iii) Dragonfly to prepare and deliver to Chardan certain audited and unaudited consolidated financial statements of Dragonfly, (iv) Chardan to prepare and file a proxy statement/registration statement on Form S-4 and take certain other actions to obtain the requisite approval of Chardan stockholders of certain proposals regarding the Merger, (v) the parties to use commercially reasonable efforts to obtain necessary approvals from governmental agencies and (vi) to the extent Closing has not occurred by August 10, 2022, then, pursuant to Chardan’s organizational documents, Chardan shall extend the deadline to consummate its initial business combination by an additional three months from the Termination Date (as defined in Chardan’s Amended and Restated Certificate of Incorporation as in effect on May 15, 2022) (such date, the “Extended Termination Date”); provided that if the Closing has not occurred by the date that is two business days prior to the Extended Termination Date, Chardan shall extend the deadline to consummate its initial business combination by an additional three months from the Extended Termination Date. On July 12, 2022, the Company, Dragonfly and Merger Sub entered into that certain Amendment to the Agreement and Plan of Merger, between the Company, Dragonfly and Merger Sub (the “Amendment”), which amended the Merger Agreement to, among other things, reflect a $ 15 million increase in the consideration to be issued in the business combination in connection with Dragonfly entering into a Stock Purchase Agreement with THOR Industries, Inc. (“THOR”), dated as of July 12, 2022, whereby for $ 15 million in cash, THOR purchased 1,267,502 shares of Dragonfly common stock (the “THOR Investment”). In connection with the THOR Investment, THOR and Dragonfly will enter into a commercial arrangement pursuant to which (i) THOR and certain of THOR’s affiliates will, among other things, transition to lithium-ion batteries manufactured and sold by Dragonfly, and (ii) Dragonfly will, among other things, grant certain board observer rights (with customary limitations) to THOR. Other than as expressly modified by the Amendment, the Merger Agreement remains in full force and effect. Special Meeting to Amend Charter and Investment Management Trust Agreement On August 5, 2022, Chardan held a special meeting (the “Special Meeting”), at which holders of 11,331,512 shares of common stock of Chardan, par value $0.0001 per share (“Chardan Common Stock”), were present in person or by proxy, representing approximately 71.66% of the voting power of the 15,812,500 shares of Chardan Common Stock issued and outstanding entitled to vote at the Special Meeting at the close of business on July 11, 2022, which was the record date (the “Record Date”) for the Special Meeting. Stockholders of record as of the close of business on the Record Date are referred to herein as “Stockholders.” At the Special Meeting, the Stockholders approved the proposal to amend the Company’s Amended and Restated Certificate of Incorporation (the “Charter”) to provide the Company’s officers, directors, initial stockholders and Chardan NexTech 2 Warrant Holdings, LLC (collectively, the “Insiders”) the ability to extend the date by which the Company must complete a business combination up to three (3) times for an additional one (1) month each time (for a maximum of three (3) one-month extensions) upon the deposit into the trust account (the “Trust Account”) by the Insiders, their affiliates or designees of $ 200,000 upon five days’ advance notice prior to August 13, 2022 (or such other applicable deadline) (the “Extension,” and such proposal, the “Charter Amendment”). On July 29, 2022, to effectuate the Charter Amendment, the board of directors of the Company (the “Board”) approved and adopted the Second Amended and Restated Memorandum and Articles of Association of the Company (the “Second A&R Charter”). In connection with the Charter Amendment, Stockholders elected to redeem 9,556,652 shares of Chardan Common Stock, representing approximately 60.44% of the issued and outstanding shares of Chardan Common Stock and 75.55% of the issued outstanding Chardan Common Stock sold in the IPO, resulting in the distribution of $ 97,194,950 from the Trust Account to the redeeming Stockholders. Following such redemptions, approximately $ 31,460,579 remains in the Trust Account and 6,255,848 shares of Chardan Common Stock will remain issued and outstanding . In addition, at the Special Meeting, the Stockholders approved the proposal to amend the Investment Management Trust Agreement, dated August 10, 2021 (the “Trust Agreement”), by and between the Company and Continental Stock Transfer & Company (the “Trustee”) to authorize the Extension and its implementation by the Company (the “Trust Amendment Proposal”). On July 29, 2022, to effectuate the Trust Amendment Proposal, the Board approved and adopted Amendment No. 1 to the Investment Management Trust Agreement (the “Trust Agreement Amendment”). Other Agreements The Business Combination Agreement contemplates the execution of various additional agreements and instruments, on or before the Closing, including, among others, the following: Registration Rights & Certain Restrictions on Transfer The Merger Agreement contemplates that, at the Closing, New Dragonfly, Chardan NexTech Investments 2 LLC, a Delaware limited liability company (the “Sponsor”), Chardan’s initial stockholders, certain stockholders of Dragonfly and certain of each of their respective affiliates, as applicable, and the other parties thereto, will enter into an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which New Dragonfly will agree to register for resale, pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), certain shares of New Dragonfly Common Stock and other equity securities of New Dragonfly that are held by the parties thereto from time to time and the parties thereto will be provided with customary demand and piggyback registration rights. Additionally, the Registration Rights Agreement and the Bylaws of New Dragonfly contain certain restrictions on transfer with respect to (i) shares of New Dragonfly Common Stock and any other equity securities convertible into or exercisable or exchangeable for shares of New Dragonfly Common Stock held by the Dragonfly Stockholders immediately following the Closing (other than any shares purchased in the public market or in the PIPE Investment) and (ii) any Earnout Shares (as defined in the Merger Agreement) issued within six (6) months of the closing date and any shares of New Dragonfly Common Stock issued with respect to or in exchange for such Earnout Shares (the “Lock-up Shares”). Such restrictions begin at the Closing and end on the date that is six months after Closing. Sponsor Support Agreement On May 15, 2022, the Sponsor, Chardan and Dragonfly entered into the Sponsor Support Agreement (the “Sponsor Support Agreement”), pursuant to which, among other things, the Sponsor agreed to (i) vote in favor of the Merger Agreement and the transactions contemplated thereby and against any proposal that would reasonably be expected to result in (x) a breach of any of Chardan’s or Merger Sub’s covenants, agreements or obligations under the Merger Agreement or in any Ancillary Agreements or (y) any Closing conditions set forth in Section 9.1 or 9.3 or the Merger Agreement not being satisfied, (ii) retain and not redeem its holdings in Chardan prior to the Closing, (iii) be subject to certain transfer restrictions with respect to its holdings in Chardan and (iv) be bound by certain provisions of the Merger Agreement as if it were an original signatory thereto, in each case, on the terms and subject to the conditions set forth in the Sponsor Support Agreement. Subscription Agreement On May 15, 2022, concurrently with the execution of the Merger Agreement, Chardan entered into a subscription agreement (the “Subscription Agreement”) with the Sponsor (the “PIPE Investor”). Pursuant to and subject to the terms and conditions contained in the Subscription Agreement, the PIPE Investor has subscribed to purchase up to 500,000 shares of New Dragonfly Common Stock at a purchase price of $10.00 per share for an aggregate purchase price of up to $5,000,000 (the “PIPE Investment”). As set forth in the Subscription Agreement, the PIPE Investor may purchase shares of the Chardan common stock, par value $0.0001 per share (“Chardan Common Stock”) in the open market, and reduce (i) its purchase price under the Subscription Agreement by an amount equal to the number of shares that the PIPE Investor purchased in the open market multiplied by the per share redemption amount received by public stockholders who elect to redeem their shares prior to the Closing and (ii) the number of shares it subscribed for by an amount equal to the number of Shares Subscriber purchased in the open market and not redeemed as contemplated above. The PIPE Investor agreed that it will not exercise its right to vote any shares it may purchase in the open market following the date of the Subscription Agreement and prior to the Closing, in connection with any vote to approve the Merger. The PIPE Investment was consummated substantially concurrently with the Closing. Debt Commitment Letter On May 15, 2022, Chardan and Dragonfly entered into a commitment letter (the “Debt Commitment Letter”), with EICF Agent LLC (“EIP”) and CCM Investments 5 LLC, an affiliate of the Sponsor (“CCM 5”, and collectively with EIP, the “Initial Lenders”), pursuant to which the Initial Lenders have agreed to provide Dragonfly with a senior secured term loan facility in an aggregate principal amount of $75,000,000 (the “Term Loan Facility”) subject to the satisfaction of a number of specified conditions set forth in the Debt Commitment Letter. CCM 5 intends to backstop its commitment under the Debt Commitment Letter by entering into a backstop commitment letter (the “Backstop Commitment Letter”) with certain third party financing sources prior to the Closing Date. The proceeds of the Term Loan Facility will be used (i) to support the Merger, (ii) to repay all outstanding PIUS Debt and other obligations of Dragonfly, (iii) to pay for fees and expenses in connection with the foregoing, (iv) to provide additional growth capital and (v) for other general/corporate purposes. The Term Loan Facility must be fully drawn on the Closing Date, will mature four years from the Closing Date and will be subject to quarterly amortization of 5% per annum beginning 24 months after the Closing Date. Chardan will be a guarantor under the Term Loan Facility. As part of the consideration for the Term Loan Facility, New Dragonfly will also issue to the Initial Lenders (but not CCM 5 to the extent it has not backstopped its commitment pursuant to the Backstop Commitment Letter) on the Closing Date: (i) penny warrants (the “Penny Warrants”) exercisable to purchase 3.6% of New Dragonfly’s common stock on a fully-diluted basis, calculated as of the Closing Date, and (ii) warrants (the “ $10 Per Share Warrants”) exercisable to purchase 1.6 million shares of New Dragonfly’s common stock at $10 per share. The Penny Warrants will have an exercise period of ten years from the date of issuance. The $10 Per Share Warrants will have an exercise period of five years from the date of issuance and will have customary cashless exercise provisions. The warrants will have standard anti-dilution protections. The shares of New Dragonfly common stock issuable upon exercise of the warrants shall have customary registration rights requiring New Dragonfly to file and keep effective a registration statement registering the resale of such shares. Equity Facility Letter Agreement On May 15, 2022, Chardan, Dragonfly and CCM 5 (the “Equity Facility Investor”) entered into a letter agreement (together with the Summary of Indicative Terms attached as an exhibit thereto, the “Equity Facility Letter Agreement”) pursuant to which Chardan and Dragonfly agreed to enter into definitive documentation (the “Equity Facility Definitive Documentation”) to establish a committed equity facility (the “Equity Facility”) prior to the Closing. The Equity Facility Definitive Documentation will contain terms that are consistent with the Equity Facility Letter Agreement and customary for documentation of this nature. Pursuant to and subject to the conditions to be set forth in the Equity Facility Definitive Documentation, New Dragonfly will have the right from time to time at its option to direct the Equity Facility Investor to purchase up to a specified maximum amount of shares of New Dragonfly common stock, up to a maximum aggregate purchase price of $150,000,000 over the 36 -month term of the Equity Facility Letter Agreement. The foregoing descriptions of the Merger Agreement, form of the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement and the transactions and documents contemplated thereby are not complete and are subject to and qualified in their entirety by reference to the Merger Agreement, form of the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement, copies of which were filed on Form 8-K, as filed on May 16, 2022. The Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement have been included to provide investors with information regarding their terms. They are not intended to provide any other factual information about Chardan, Dragonfly, or their affiliates. The representations, warranties, covenants and agreements contained in the Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Registration Rights Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement and the other documents related thereto were made only for purposes of such agreements as of the specific dates therein, were solely for the benefit of the parties to the Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter and the Equity Facility Letter Agreement, as applicable, and may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter or the Equity Facility Letter Agreement, as applicable, instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter or the Equity Facility Letter Agreement and should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Merger Agreement, the Registration Rights Agreement, the Sponsor Support Agreement, the Subscription Agreement, the Debt Commitment Letter or the Equity Facility Letter Agreement, as applicable, which subsequent information may or may not be fully reflected in Chardan’s public disclosures. Risks and Uncertainties Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these unaudited condensed consolidated financial statements. The unaudited condensed consol | NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Chardan NexTech Acquisition 2 Corp (the “Company”) is a blank check company incorporated in Delaware on June 23, 2020. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). The Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. As of December 31, 2021, the Company had not commenced any operations. All activity for the year ended December 31, 2021 and for the period from June 23, 2020 (inception) through December 31, 2020 relates to the Company’s formation and initial public offering (“Initial Public Offering”) described below, and, subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The registration statement on Form S-1 (the “Registration Statement”) for the Company’s Initial Public Offering was declared effective on August 10, 2021. On August 13, 2021, the Company consummated the Initial Public Offering of 11,000,000 units (the “Units” and, with respect to the common stock, par value $0.0001 per share, of the Company included in the Units sold, the “Public Shares”, and with respect to the warrants of the Company included in the Units sold, the “Public Warrants”), at $10.00 per Unit, generating gross proceeds of $110,000,000, which is discussed in Note 3. Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 4,361,456 warrants (the “Private Warrants”, together with the Public Warrants, the “Warrants”) at a price of $0.93 per Private Warrant in a private placement to Chardan NexTech 2 Warrant Holdings LLC, a Delaware limited liability company (“Holdings”), an affiliate of Chardan NexTech Investments 2 LLC, a Delaware limited liability company (the “Sponsor”), generating gross proceeds of $4,052,000, which is described in Note 4. The Company had granted the underwriters in the Initial Public Offering a 45-day option to purchase up to 1,650,000 Units to cover over-allotments, if any (see Note 6). On August 16, 2021, the underwriters fully exercised the over-allotment option and, on August 18, 2021, purchased an additional 1,650,000 Units (the “Over-Allotment Units”) at a purchase price of $10.00 per Over-Allotment Unit, generating gross proceeds of $16,500,000. Simultaneously with the closing of the exercise of the over-allotment option, the Company consummated the sale of 266,402 warrants (the “Over-Allotment Private Warrants”) at a purchase price of $0.93 per Over-Allotment Private Warrant in a private placement to the Holdings, generating gross proceeds of $247,500. Following the closing of the Initial Public Offering and underwriters’ over-allotment option, an amount of $128,397,500 from the net proceeds of the sale of the Units and Over-Allotment Units and a portion of the proceeds from the sale of the Private Warrants and Over-Allotment Private Warrants was placed in a trust account (the “Trust Account”) and was invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “ Investment Company Act Transaction costs related to the issuances described above amounted to $1,080,140, consisting of $500,000 of cash underwriting fees and $580,140 of other offering costs. The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account ($10.15 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The Public Shares subject to redemption was recorded at redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. Notwithstanding the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company. The Company will have 12 months, or August 13, 2022, from the closing of the Initial Public Offering to consummate an initial Business Combination. However, if the Company anticipates that it may not be able to consummate an initial Business Combination within 12 months, the Company’s insiders or their affiliates may, but are not obligated to, extend the period of time to consummate a Business Combination up to two times by an additional three months each time (for a total of up to 18 months, or February 13, 2023, to complete a Business Combination). If the Company is unable to consummate an initial Business Combination within the above time period, the Company will distribute the aggregate amount then on deposit in the Trust Account, pro rata to the Company’s public stockholders, by way of the redemption of their shares and thereafter cease all operations except for the purposes of winding up of the Company’s affairs. In such event, the warrants will expire and be worthless. The initial stockholders have agreed to waive their redemption rights with respect to any shares they own in connection with the consummation of the initial Business Combination, including their Founder Shares and Public Shares that they purchase during or after the offering, if any. In addition, the initial stockholders have agreed to waive their rights to liquidating distributions with respect to their Founder Shares if the Company fails to consummate an initial Business Combination within 18 months (assuming both of the three-month extensions were executed) from the closing of this offering. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering, they will be entitled to receive liquidating distributions with respect to such Public Shares if the Company fails to consummate an initial Business Combination within the required time period. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.15 per Public Share or (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay the Company’s taxes, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Going Concern Consideration As of December 31, 2021, the Company had $799,808 in cash held outside of the Trust Account and working capital of $988,186. The Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. In connection with our assessment of going concern considerations in accordance with FASB ASC Topic 205-40, “Presentation of Financial Statements — Risks and Uncertainties Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements. The specific impact on the Company's financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements. |
New Dragonfly | ||
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | NOTE 1 – NATURE OF BUSINESS Dragonfly Energy Corp., (the “Company”), was organized as a limited liability company in the State of Nevada on October 15, 2012. The Company was reorganized as a corporation under the laws of the State of Nevada on April 11, 2016. The Company sells lithium-ion battery packs for use in a wide variety of applications. The company sells to distributors under the Dragonfly Energy Corp name, and sells direct to consumers under the trade name Battleborn Batteries. In addition, the Company develops technology for improved lithium-ion battery manufacturing and assembly methods. | NOTE 1 — NATURE OF BUSINESS Dragonfly Energy Corp., (the “Company”), was organized as a limited liability company in the State of Nevada on October 15, 2012. The Company was reorganized as a corporation under the laws of the State of Nevada on April 11, 2016. The Company sells lithium-ion battery packs for use in a wide variety of applications. The Company sells to distributors under the Dragonfly Energy Corp name and sells direct to consumers under the trade name Battleborn Batteries. In addition, the Company develops technology for improved lithium-ion battery manufacturing and assembly methods. |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
New Dragonfly | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2021. Recently adopted accounting standards : In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt Modifications and Extinguishments (Subtopic 470 50), Compensation Stock Based Compensation (Topic 718), and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815 40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity Classified Written Call Options. This ASU provides guidance which clarified an issuer’s accounting for modification or exchanges of freestanding equity classified written call options that remain equity classified after modification or exchange. The provisions of ASU No. 2021-04 are effective January 1, 2022. This ASU shall be applied on a prospective basis. The adoption of this guidance did not have a material impact on the accompanying consolidated financial statements. Recently issued accounting pronouncements: In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB subsequently issued amendments to ASU 2016-13, which have the same effective date and transition date of January 1, 2023. These standards replace the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measure at amortized cost to be presented at the net amount expected to be collected. The Company does not expect this change in guidance to have a material impact to its financial statements. In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. The amendments in this update will be effective for the Company on January 1, 2024 and may be early adopted at the beginning of fiscal year 2023. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows. Immaterial error correction The Company corrected an immaterial error and recognized $857 in expenses during the third quarter ending September 30, 2022 related to costs previously incorrectly deferred within other current assets on the balance sheet. Of this amount, $450 is related to costs incurred during the fourth quarter ending December 31, 2021 and the remaining $407 were incurred during the nine months ended September 30, 2022. Cash, Restricted Cash, and Cash Equivalents The Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents as of September 30, 2022 and December 31, 2021. The Company also maintains a restricted cash balance to satisfy its note payable requirements (Refer to Note 5). From time to time the Company has amounts on deposit with financial institutions that exceed federally insured limits. The Company has not experienced any significant losses in such accounts, nor does management believe it is exposed to any significant credit risk. Accounts Receivable The Company’s trade receivables are recorded when billed and represent claims against third parties that will be settled in cash. Generally, payment is due from customers within 30 days of the invoice date and the contracts do not have significant financing components. Trade accounts receivables are recorded gross and are net of any applicable allowance. The Company has an allowance for doubtful accounts as of September 30, 2022 and December 31, 2021 of $54 and $50 , respectively. Inventory Inventories (Note 3), which consist of raw materials, work in process and finished goods, are stated at the lower of cost (weighted average) or net realizable value, net of reserves for obsolete inventory. We continually analyze our slow moving and excess inventories. Based on historical and projected sales volumes and anticipated selling prices, we established reserves. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates its estimate of future demand. Products that are determined to be obsolete are written down to net realizable value. As of September 30, 2022 and December 31, 2021, no such reserves were necessary. Property and Equipment Property and equipment are stated at cost, including the cost of significant improvements and renovations. Costs of routine repairs and maintenance are charged to expense as incurred. Depreciation and amortization are calculated by the straight line method over the estimated useful lives for owned property, or, for leasehold improvements, over the shorter of the asset’s useful life or term of the lease. Depreciation expense for the Nine months ended September 30, 2022 and 2021 was $648 and $432 , respectively. The various classes of property and equipment and estimated useful lives are as follows: Office furniture and equipment 3 to 7 years Vehicles 5 years Machinery and equipment 3 to 7 years Leasehold improvements Remaining Term of Lease Use of Estimates The preparation of financial statements in conformity with “GAAP” requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Revenue Recognition Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five step model to contracts when it is probable the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company excludes from the transaction price all taxes that are assessed by a governmental authority and imposed on and concurrent with the Company’s revenue transactions, and therefore presents these taxes (such as sales tax) on a net basis in operating revenues on the Statements of Operations. Revenue is recognized when control of the promised goods is transferred to the customer or reseller, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Revenue associated with products holding rights of return are recognized when the Company concludes there is not a risk of significant revenue reversal in the future periods for the expected consideration in the transaction. There are no material instances including discounts and refunds where variable consideration is constrained and not recorded at the initial time of sale. Generally, our revenue is recognized at a point in time for standard promised goods at the time of shipment when title and risk of loss pass to the customer. The Company may receive payments at the onset of the contract before delivery of goods for customers in the retail channel. Payment terms for distributors and OEMs are due within 30 - 60 days after shipment. In such instances, the Company records a customer deposit liability. The Company recognizes these contract liabilities as sales after the revenue criteria are met. The company had $1,779 of contract liabilities as of January 1, 2021. As of September 30, 2022 and December 31, 2021, the contract liability related to the Company’s customer deposits approximated $287 and $434 , respectively. The entire contract liability balance as of December 31, 2021 was recognized as revenue during the Nine months ended September 30, 2022. Disaggregation of Revenue The following table presents our disaggregated revenues by distribution channel: For the Nine Months Ended September 30, Sales 2022 2021 Retail $ 35,211 $ 44,221 Distributor 6,544 6,910 Original equipment manufacture 24,287 6,690 Total 66,042 57,821 Shipping and Handling Shipping and handling fees paid by customers are recorded within net sales, with the related expenses recorded in cost of sales. Shipping and handling costs associated with outbound freight are included in Sales and marketing expenses. Shipping and handling costs associated with outbound freight totaled $4,042 and $3,912 for the Nine months ended September 30, 2022 and 2021, respectively. Concentrations Receivables from one customer comprised approximately 43% of accounts receivable as of September 30 2022. Receivables from two customers comprised approximately 42% and 16% , respectively, of accounts receivable as of December 31, 2021. For the nine months ended September 30, 2022, one customer accounted for approximately 20% of the Company’s total revenue. There are no significant revenue concentrations for the nine months ended September 30, 2021. Payables to one vendor comprised approximately 45% of accounts payable as of September 30, 2022. There are no significant payable concentrations as of December 31, 2021 For the nine months ended September 30, 2022, one vendor accounted for approximately 24% of the Company’s total purchases. For the nine months ended September 30, 2021, two vendors accounted for approximately 20% and 12% of the Company’s total purchases. Research and Development The Company expenses research and development costs as incurred. Research and development expenses include salaries, contractor and consultant fees, supplies and materials, as well as costs related to other overhead such as depreciation, facilities, utilities, and other departmental expenses. The costs we incur with respect to internally developed technology and engineering services are included in research and development expenses as incurred as they do not directly relate to acquisition or construction of materials, property or intangible assets that have alternative future uses. Advertising The Company expenses advertising costs as they are incurred and are included in selling and marketing expenses. Advertising expenses amounted to $1,777 and $1,069 for the nine months ended September 30, 2022 and 2021, respectively. Stock-Based Compensation The Company accounts for stock based compensation arrangements with employees and non employee consultants using a fair value method which requires the recognition of compensation expense for costs related to all stock based payments, including stock options (Note 6). The fair value method requires the Company to estimate the fair value of stock based payment awards to employees and non employees on the date of grant using an option pricing model. Stock based compensation costs are based on the fair value of the underlying option calculated using the Black Scholes option pricing model and recognized as expense on a straight line basis over the requisite service period, which is the vesting period. The Company measures equity based compensation awards granted to non employees at fair value as the awards vest and recognizes the resulting value as compensation expense at each financial reporting period. Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, expected dividend yield, expected term, risk free rate of return, and the estimated fair value of the underlying common stock. Due to the lack of company specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The group of representative companies have characteristics similar to the Company, including stage of product development and focus on the lithium ion battery industry. The Company uses the simplified method, which is the average of the final vesting tranche date and the contractual term, to calculate the expected term for options granted to employees as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The risk free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company uses an assumed dividend yield of zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. The Company accounts for forfeitures as they occur. Earnings per Common Share We calculate basic earnings per share pursuant to the two-class method as a result of the issuance of Series A Preferred stock in 2016. Our Series A Preferred Stock is considered a participating security because, in the event that we pay a dividend or make a distribution on the outstanding common stock, we shall also pay each holder of the Series Preferred Stock a dividend on an as-converted basis. The two-class method is an earnings allocation formula that determines earnings per share for common stock and participating securities according to dividend and participation rights in undistributed earnings. Under this method, all earnings, distributed and undistributed, are allocated to common shares and participating securities based on their respective rights to receive dividends. Diluted earnings per common share is calculated using the treasury stock method for options. The following table sets forth the information needed to compute basic and diluted earnings per share for the Nine months ended September 30, 2022 and 2021: September 30, September 30, 2022 2021 Basic (Loss) Earnings per common share Net (Loss) Income $ (7,456) $ 4,421 (Loss) Income available for distribution (7,456) 4,421 Income allocated to participating securities — (1,469) Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 September 30, September 30, 2022 2021 Basic (loss) Earnings per common share: Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 Weighted average number of common shares-basic 21,384,734 20,063,211 (Loss) Earnings per share, basic $ (0.35) $ 0.15 Diluted (loss) earnings per common share: Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 Weighted average number of common shares-basic 21,384,734 20,063,211 Dilutive effect related to stock options — 1,862,894 Weighted average diluted shares outstanding 21,384,734 21,926,105 (Loss) Earnings per share, diluted $ (0.35) $ 0.13 The following table sets forth the number of potential shares of common stock that have been excluded from diluted net (loss) income per share net (loss) income per share because their effect was anti-dilutive: September 30, September 30, 2022 2021 Options 3,100,524 — Weighted average number of common shares‑basic 3,100,524 — Income Taxes Deferred income tax assets and liabilities (Note 5) are determined based on the estimated future tax effects of net operating loss, credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company recognizes a tax benefit for an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The Company’s accounting policy is to include penalties and interest related to income taxes if any, in selling, general and administrative expenses. Segment Reporting Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the Company’s Chief Executive Officer to make decisions with respect to resource allocation and assessment of performance. To date, the Company has viewed its operations and manages its business as one operating segment. COVID-19 The Company is closely monitoring the impact of COVID-19 on its business, including how it will affect its customers, workforce, suppliers, vendors, and production and distribution channels, as well as its financial statements. The extent to which COVID-19 impacts the Company's business and financial results will depend on numerous evolving factors, including, but not limited to: the magnitude and duration of COVID-19, the extent to which it will impact macroeconomic conditions, including interest rates, employment rates and consumer confidence, the speed of the anticipated recovery, and governmental, business and individual consumer reactions to the pandemic. While there was not a material impact to the Company's financial statements as of September 30, 2022 and December 31, 2021 and for the nine months ended September 30, 2022 and 2021, respectively, COVID-19 could result in material impacts to the Company's financial statements in future reporting periods. | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These accompanying financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Reclassifications Certain amounts disclosed in prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported income, cash flows, total assets, or shareholders’ equity as previously reported. Recently adopted accounting standards: In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The new standard reduces the complexity of accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The Company adopted this guidance effective January 1, 2021 which did not have a material impact on the accompanying financial statements. Recently issued accounting pronouncements: In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB subsequently issued amendments to ASU 2016-13, which have the same effective date and transition date of January 1, 2023. These standards replace the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measure at amortized cost to be presented at the net amount expected to be collected. The Company does not expect this change in guidance to have a material impact to its financial statements. In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt Modifications and Extinguishments (Subtopic 470 50), Compensation Stock Based Compensation (Topic 718), and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity Classified Written Call Options. This ASU provides guidance which clarified an issuer’s accounting for modification or exchanges of freestanding equity classified written call options that remain equity classified after modification or exchange. The provisions of ASU 2021-04 are effective January 1, 2022. This ASU shall be applied on a prospective basis. The Company determined that the change in guidance did not have a material impact to its financial statements. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Cash, Restricted Cash, and Cash Equivalents The Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents as of December 31, 2021 or 2020. The Company also maintains a restricted cash balance to satisfy its note payable requirements (Refer to Note 5). From time to time the Company has amounts on deposit with financial institutions that exceed federally insured limits. The Company has not experienced any significant losses in such accounts, nor does management believe it is exposed to any significant credit risk. Accounts Receivable The Company’s trade receivables are recorded when billed and represent claims against third parties that will be settled in cash. Generally, payment is due from customers within 30 days of the invoice date and the contracts do not have significant financing components. Trade accounts receivables are recorded gross and are net of any applicable allowance. The Company has an allowance for doubtful accounts as of December 31, 2021 and 2020 of $50 and $0, respectively. Inventory Inventories (Note 3), which consist of raw materials, work in process and finished goods, are stated at the lower of cost (weighted average) or net realizable value, net of reserves for obsolete inventory. We continually analyze our slow moving and excess inventories. Based on historical and projected sales volumes and anticipated selling prices, we established reserves. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates its estimate of future demand. Products that are determined to be obsolete are written down to net realizable value. As of December 31, 2021 and 2020, no such reserves were necessary. Property and Equipment Property and equipment are stated at cost, including the cost of significant improvements and renovations. Costs of routine repairs and maintenance are charged to expense as incurred. Depreciation and amortization are calculated by the straight-line method over the estimated useful lives for owned property, or, for leasehold improvements, over the shorter of the asset’s useful life or term of the lease. Depreciation expense for the years ended December 31, 2021 and 2020 was $617 and $198, respectively. The various classes of property and equipment and estimated useful lives are as follows: Office furniture and equipment 3 to 7 years Machinery and equipment 3 to 7 years Leasehold improvements Remaining Term of Lease Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Impairment of Long-Lived Assets The Company evaluates its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of these asset may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over its remaining life. When indications of impairment are present and the estimated undiscounted future cash flows from the use of these assets is less than the assets’ carrying value, the related assets will be written down to fair value. There were no impairments of the Company’s long-lived assets for the periods presented. Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Leases At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company records the associated lease liability and corresponding right-of-use asset upon commencement of the lease using the implicit rate or a discount rate based on a credit-adjusted secured borrowing rate commensurate with the term of the lease. The Company additionally evaluates leases at their inception to determine if they are to be accounted for as an operating lease or a finance lease. A lease is accounted for as a finance lease if it meets one of the following five criteria: the lease has a purchase option that is reasonably certain of being exercised, the present value of the future cash flows is substantially all of the fair market value of the underlying asset, the lease term is for a significant portion of the remaining economic life of the underlying asset, the title to the underlying asset transfers at the end of the lease term, or if the underlying asset is of such a specialized nature that it is expected to have no alternative uses to the lessor at the end of the term. Leases that do not meet the finance lease criteria are accounted for as an operating lease. The Company does not have any finance leases as of December 31, 2021 or 2020. Operating lease assets represent a right to use an underlying asset for the lease term and operating lease liabilities represent an obligation to make lease payments arising from the lease. Operating lease liabilities with a term greater than one year and their corresponding right-of-use assets are recognized on the balance sheet at the commencement date of the lease based on the present value of lease payments over the expected lease term. Certain adjustments to the right- of-use asset may be required for items such as initial direct costs paid or incentives received. As the Company’s leases do not typically provide an implicit rate, the Company utilizes the appropriate incremental borrowing rate, determined as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and in a similar economic environment. Lease cost is recognized on a straight-line basis over the lease term and variable lease payments are recognized as operating expenses in the period in which the obligation for those payments is incurred. Variable lease payments primarily include common area maintenance, utilities, real estate taxes, insurance, and other operating costs that are passed on from the lessor in proportion to the space leased by the Company. The Company has elected the practical expedient to not separate between lease and non-lease components. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue Recognition Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company excludes from the transaction price all taxes that are assessed by a governmental authority and imposed on and concurrent with the Company’s revenue transactions, and therefore presents these taxes (such as sales tax) on a net basis in operating revenues on the Statements of Income. Revenue is recognized when control of the promised goods is transferred to the customer or distributor, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Revenue associated with products holding rights of return are recognized when the Company concludes there is not a risk of significant revenue reversal in the future periods for the expected consideration in the transaction. There are no material instances including discounts and refunds where variable consideration is constrained and not recorded at the initial time of sale. Generally, our revenue is recognized at a point in time for standard promised goods at the time of shipment when title and risk of loss pass to the customer. The Company may receive payments at the onset of the contract before delivery of goods for customers in the retail channel. In such instances, the Company records a customer deposit liability. Payment terms for distributors and OEMs are due within 30-60 days after shipment. The Company recognizes these contract liabilities as sales after the revenue criteria are met. As of December 31, 2021 and 2020, the contract liability related to the Company’s customer deposits approximated $434 and $1,779, respectively. The entire contract liability balance as of December 31, 2020 was recognized as revenue during the year ended December 31, 2021. Disaggregation of Revenue: The following table present our disaggregated revenues by distribution channel: Sales 2021 2020 Retail $ 59,042 $ 33,314 Distributor 10,733 10,381 Original equipment manufacture 8,225 3,492 Total $ 78,000 $ 47,187 Shipping and Handling Shipping and handling fees paid by customers are recorded within net sales, with the related expenses recorded in cost of sales. Shipping and handling costs associated with outbound freight are included in sales and marketing expenses. Shipping and handling costs associated with outbound freight totaled $5,105 and $2,568 for the years ended December 31, 2021 and 2020, respectively. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Product Warranty The Company offers assurance type warranties from 5 to 10 years on its products. The Company estimates the costs associated with the warranty obligation using historical data of warranty claims and costs incurred to satisfy those claims. The Company estimates, based upon a review of historical warranty claim experience, the costs that may be incurred under our warranties and record a liability in the amount of such estimate at the time a product is sold. Factors that affect our warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our recorded warranty liability and adjust the accrual as claims data and historical experience warrants. The Company has assessed the costs of fulfilling its existing assurance type warranties and has determined that the estimated outstanding warranty obligation on December 31, 2021 and 2020 are immaterial to the Company’s financial statements. Returns and Sales Allowances The provision for returns and sales allowances is determined by an analysis of the historical rate of returns and sales allowances over recent quarters and adjusted to reflect management’s future expectations. The Company has accrued for sales allowances as of December 31, 2021 in the amount of $170. There was no accrual for sales allowances as of December 31, 2020. Concentrations There are no significant revenue concentrations for the years ended December 31, 2021 and 2020. Receivables from two customers comprised approximately 42% and 16%, respectively, of accounts receivable as of December 31, 2021. Receivables from one customer comprised approximately 22% of accounts receivable as of December 31, 2020. There are no other significant accounts receivable concentrations. For the year ended December 31, 2021, three vendors accounted for approximately 27%, 10% and 10% of the Company’s total purchases, respectively. For the year ended December 31, 2020, four vendors accounted for approximately 19%, 14%, 11% and 10% of the Company’s total purchases, respectively. Research and Development The Company expenses research and development costs as incurred. Research and development expenses include salaries, contractor and consultant fees, supplies and materials, as well as costs related to other overhead such as depreciation, facilities, utilities, and other departmental expenses. The costs we incur with respect to internally developed technology and engineering services are included in research and development expenses as incurred as they do not directly relate to acquisition or construction of materials, property or intangible assets that have alternative future uses. Advertising The Company expenses advertising costs as they are incurred and are included in selling and marketing expenses. Advertising expenses amounted to $1,690 and $1,069 for the years ending 2021 and 2020, respectively. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Stock-Based Compensation The Company accounts for stock-based compensation arrangements with employees and non-employee consultants using a fair value method which requires the recognition of compensation expense for costs related to all stock-based payments, including stock options (Note 8). The fair value method requires the Company to estimate the fair value of stock-based payment awards to employees and non-employees on the date of grant using an option pricing model. Stock-based compensation costs are based on the fair value of the underlying option calculated using the Black Scholes option pricing model and recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. The Company measures equity-based compensation awards granted to non-employees at fair value as the awards vest and recognizes the resulting value as compensation expense at each financial reporting period. Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, expected dividend yield, expected term, risk free rate of return, and the estimated fair value of the underlying common stock. Due to the lack of company specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The group of representative companies have characteristics similar to the Company and focus on the lithium-ion battery industry. The Company uses the simplified method, which is the average of the final vesting tranche date and the contractual term, to calculate the expected term for options granted to employees as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company uses an assumed dividend yield of zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. The Company accounts for forfeitures as they occur. Income Taxes Deferred income tax assets and liabilities (Note 7) are determined based on the estimated future tax effects of net operating loss, credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company recognizes a tax benefit for an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The Company has a liability of $0 and $19 as of December 31, 2021 and 2020, respectively, of uncertain tax positions. The Company’s accounting policy is to include penalties and interest related to income taxes if any, in selling, general and administrative expenses. Earnings per Common Share We calculate basic earnings per share pursuant to the two-class method as a result of the issuance of Series A Preferred stock in 2016. Our Series A Preferred Stock is considered a participating security because, in the event that we pay a dividend or make a distribution on the outstanding common stock, we shall also pay each holder of the Series Preferred Stock a dividend on an as-converted basis. The two-class method is an earnings allocation formula that determines earnings per share for common stock and participating securities according to dividend and participation rights in undistributed earnings. Under this method, all earnings, distributed and undistributed, are allocated to common shares and participating securities based on their respective rights to receive dividends. Diluted earnings per common share is calculated using the treasury stock method for options. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The following table sets forth the information needed to compute basic and diluted earnings per share for the years ended December 31, 2021 and 2020: December 31, December 31, 2021 2020 Basic Earnings per common share Net Income $ 4,338 $ 6,878 Income available for distribution 4,338 6,878 Income allocated to participating securities, Net (1,405) (2,290) Income available to common shareholders $ 2,933 $ 4,588 December 31, December 31, 2021 2020 Basic earnings per common share: Net Income available to common shareholders $ 2,933 $ 4,588 Weighted average number of common shares-basic 20,101,129 20,040,470 Earnings per share, basic $ 0.15 $ 0.23 Diluted earnings per common share: Net Income available to common shareholders $ 2,933 $ 4,588 Weighted average number of common shares-basic 20,101,129 20,040,470 Dilutive effect related to stock options 1,829,979 1,348,315 Weighted average diluted shares outstanding 21,931,108 21,388,785 Earnings per share, diluted $ 0.13 $ 0.21 For all periods presented, there were no outstanding shares that were potentially anti-dilutive. Segment Reporting Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the Company’s Chief Executive Officer to make decisions with respect to resource allocation and assessment of performance. To date, the Company has viewed its operations and manages its business as one operating segment. Fair Value of Financial Instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement” approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their short-term nature. COVID-19 On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law. The CARES Act provides a substantial stimulus and assistance package intended to address the impact of COVID-19, including tax relief and government loans, grants, and investments. The CARES Act did not have a material impact on the Company’s financial statements. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The Company is closely monitoring the impact of COVID-19 on its business, including how it will affect its customers, workforce, suppliers, vendors, and production and distribution channels, as well as its financial statements. The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous evolving factors, including, but not limited to the magnitude and duration of COVID-19, the extent to which it will impact macroeconomic conditions, including interest rates, employment rates and consumer confidence, the speed of the anticipated recovery, and governmental, business, and individual consumer reactions to the pandemic. We have experienced longer lead times in the supply of our components because of global supply chain disruptions caused in-part by the ongoing COVID-19 pandemic, which have led to the build-up in inventory as well as the significant increase in prepaid inventory as suppliers are requiring upfront deposits. While there was not a material impact to the Company’s financial statements as of and for the years ended December 31, 2021 and 2020, respectively, COVID-19 could result in material impacts to the Company’s financial statements in future reporting periods. |
INVENTORY_2
INVENTORY | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
New Dragonfly | ||
INVENTORY | NOTE 3 – INVENTORY On September 30, 2022 and December 31, 2021 inventory consists of the following: September 30, December 31, 2022 2021 Raw material $ 29,631 $ 22,885 Finished goods 9,856 4,242 Total inventory $ 39,487 $ 27,127 | NOTE 3 — INVENTORY Inventory consists of the following as of: December 31, December 31, 2021 2020 Raw material $ 22,885 $ 4,419 Work in process — 172 Finished goods 4,242 1,357 Total inventory $ 27,127 $ 5,948 |
OPERATING LEASES_2
OPERATING LEASES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
New Dragonfly | ||
OPERATING LEASES | NOTE 4 – OPERATING LEASES The Company has leased premises that expire at various dates through September of 2025 with options to renew for an additional 5 years subject to various operating leases. The Company originally had leases related to the main office, warehouse space, research and development lab, engineering office, and sales office, all located in Reno, Nevada. The original leases required annual escalating monthly payments ranging from $4 to $11 . In December of 2020, the Company entered a fourth amendment lease and effective April 30, 2021, the Company terminated its original main office, warehouse and sales office lease and moved these spaces to a larger premise that is also located in Reno, Nevada that required annual escalating monthly payments ranging from $56 to $63 . In December of 2021, the Company entered into another lease for additional warehouse space located in Reno, Nevada that required annual escalating monthly payments ranging from $47 to $55 . On February 2, 2022, the Company entered into a 124 - month lease agreement in Reno, Nevada. The lease calls for monthly base rent of $230 , $23 of fix operating expense costs, and estimated monthly property taxes of $21 . The monthly base rent and fixed operating expense costs are subject to escalation of 3% and 2.4% , respectively, on an annual basis. The first payment is due upon substantial completion of construction of the building which is expected to be within 2 years from the effective date. As of September 30, 2022, the lease has not commenced as the Company does not have control over the asset. The following table presents the breakout of the operating leases as of: September 30, December 31, 2022 2021 Operating lease right-of-use assets $ 4,878 $ 5,709 Short-term operating lease liabilities 1,157 1,082 Long-term operating lease liabilities 3,821 4,694 Total operating lease liabilities $ 4,978 $ 5,776 Weighted average remaining lease term 3.8 years 4.6 years Weighted average discount rate 5.2 % 5.2 % Assumptions used in determining our incremental borrowing rate include our implied credit rating and an estimate of secured borrowing rates based on comparable market data. At September 30, 2022, the future minimum lease payments under these operating leases are as follows: 2022 $ 342 2023 1,399 2024 1,435 2025 1,440 2026 893 Total lease payments 5,509 Less imputed interest 531 Total operating lease liabilities $ 4,978 | NOTE 4 — OPERATING LEASES The Company has leased premises that expire at various dates through September of 2025 with options to renew for an additional 5 years subject to various operating leases. As of December 31, 2020, the Company had a main office, warehouse space, research and development lab, engineering office, and sales office all located in Reno, Nevada that required annual escalating monthly payments ranging from $4 to $11. In December of 2020, the Company entered a fourth amendment lease and effective April 30, 2021, the Company moved its main office, warehouse, and sales office to a larger premise that is also located in Reno, Nevada that required annual escalating monthly payments ranging from $56 to $63. In December of 2021, the Company entered into another lease for additional warehouse space located in Reno, Nevada that required annual escalating monthly payments ranging from $47 to $55. The following table presents the breakout of the operating leases as of: December 31, December 31, 2021 2020 Operating lease right-of-use assets $ 5,709 $ 993 Short-term operating lease liabilities 1,082 225 Long-term operating lease liabilities 4,694 758 Total operating lease liabilities $ 5,776 $ 983 Weighted average remaining lease term 4.6 years 3.9 years Weighted average discount rate 5.2 % 6.0 % Assumptions used in determining our incremental borrowing rate include our implied credit rating and an estimate of secured borrowing rates based on comparable market data. NOTE 4 — OPERATING LEASES (continued) Cash paid for amounts included in the measurement of lease liabilities was $952 and $148 for the years ended December 31, 2021 and 2020, respectively. These amounts are included in operating cash flows. At December 31, 2021, the future minimum lease payments under these operating leases are as follows: 2022 $ 1,357 2023 1,399 2024 1,435 2025 1,440 2026 893 Total lease payments 6,524 Less imputed interest 748 Total operating lease liabilities 5,776 December 31, December 31, Lease cost Classification 2021 2020 Operating lease cost Cost of goods sold $ 633 $ 179 Operating lease cost Research and development 103 — Operating lease cost General and administration 42 144 Operating lease cost Selling and marketing 42 — Total lease cost $ 820 $ 323 All lease costs included in the schedule above are fixed lease costs. |
LONG TERM DEBT_2
LONG TERM DEBT | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
New Dragonfly | ||
LONG TERM DEBT | NOTE 5 – LONG TERM DEBT Financing - Trust Indenture On November 24, 2021, the Company entered into agreements to issue $45,000 in fixed rate senior notes (Series 2021-6 Notes) pursuant to a Trust Indenture held by UMB Bank, as trustee and disbursing agent, and Newlight Capital, LLC as servicer. The trust and debt documents also require a Lender Collateral Residual Value Insurance Policy (the “Insurance Policy”, with UMB Bank as named insured for $45,000 ), and a placement agent, which is Tribe Capital Markets, LLC. On the closing date of the financing, the Company received a wire for $35,474 , which is comprised of the gross proceeds of $45,000 less $3,188 in deposits to certain reserve accounts (see “ Reserve Accounts ” below), and $6,338 in expenses withdrawn from the gross proceeds, which included $4,725 in prepaid policy premiums and related costs underlying the Insurance Policy (see “ Collateral ” below), a prepaid loan monitoring fee of $60 and $1,553 in debt issuance costs. The obligation for the Series 2021-6 Notes underlying the Trust Indenture is $45,000 in principal on the date of the closing of the financing. The debt bears interest at 5.50% per annum accruing monthly on a 360-day basis. Late payments will be subject to a $50 late fee and default interest based on a rate 5 percentage points above the applicable interest immediately prior to such default. The Company is making interest-only payments on the unpaid principal amount in arrears, commencing December 1, 2021 and ending on November 1, 2022 (for interest accruing from the Closing Date through October 31, 2022). Beginning on December 1, 2022, the Company will repay the debt in twenty-four equal installments of principal in the amount of $1,875 , plus accrued interest on the unpaid principal amount. Any remaining obligations will be due and payable on November 1, 2024 (the “Maturity Date”). The obligations under the Trust Indenture will be deemed to be repaid or prepaid to the same extent, in the same amounts and at the same times, as the Series 2021-6 Notes are redeemed with funds provided except for payments made from the proceeds of the Insurance Policy (see “Collateral” below) as such funds must be reimbursed by the Company to the insurer. During the nine months ended September 30, 2022, a total of $1,873 of interest expense was incurred under the debt. Amortization of the debt issuance costs amounted to $1,783 during the nine months ended September 30, 2022. The net balance of $40,712 at September 30, 2022 consists of $45,000 in principal less $4,288 in unamortized debt discount. In connection with the Business Combination on October 7, 2022, the outstanding principal balance of the loan was paid in full. Reserve Accounts Initial deposits into the reserve accounts consisted of the following items: Payment Reserve Fund $ 3,044 Capitalized Interest Fund 144 Total $ 3,188 The Payment Reserve Fund is a debt service fund to be maintained by UMB Bank, and the initial deposit is equal to the maximum amount of monthly interest and principal debt service payment due on the Series 2021-6 notes, plus interest earned on special redemptions (redemptions related to certain defaults on the debt). These funds may be utilized by UMB Bank to fund certain shortfalls and a special redemption, but otherwise such funds are released pro rata to the Company based on principal payments made by the Company on the Series 2021-6 Notes. Since this is a deposit account maintained by the trustee and restricted for release upon the occurrence of future events, this deposit will be treated as restricted cash. The balance at September 30, 2022 remained at $3,044 . The Capitalized Interest Fund was created to hold the interest that will accrue from the closing date until the first payment due on December 15, 2021. The initial deposit, therefore, was treated as prepaid interest. These funds were utilized to pay the interest incurred through that first payment date, therefore the balance as of September 30, 2022 was $0 . Both above funds, to the extent that they are deposited into interest-bearing accounts, will earn interest that UMB Bank will transfer into an Interest Earnings Fund, which funds will be held in escrow until the earlier of maturity or when the debt obligations are paid in full (assuming no events of default). There were no funds deposited into interest-bearing accounts at September 30, 2022 or December 31, 2021. Financial Covenants The Company is subject to certain financial covenants which include maintaining minimum adjusted EBITDA, Capital Expenditures and Minimum Fixed Charge Coverage Ratio requirements. The Company was in compliance with all financial covenants as of September 30, 2022 and December 31, 2021. Long Term Debt Maturities At September 30, 2022, the future debt maturities are as follows: For Years Ended December 31, 2022 (3 months) $ 1,875 2023 22,500 2024 20,625 Total 45,000 Less: Unamortized debt issuance costs, noncurrent (4,289) Total debt 40,711 Less: current portion of debt, net of debt discount (16,529) Total long‑term debt $ 24,182 | NOTE 5 — LONG TERM DEBT Financing — Trust Indenture On November 24, 2021, the Company entered into agreements to issue $45,000 in fixed rate senior notes (Series 2021-6 Notes) pursuant to a Trust Indenture held by UMB Bank, as trustee and disbursing agent, and Newlight Capital, LLC as servicer. The trust and debt documents also require a Lender Collateral Residual Value Insurance Policy (the “Insurance Policy”, with UMB Bank as named insured for $45,000), and a placement agent, which is Tribe Capital Markets, LLC. On the closing date of the financing, the Company received a wire for $35,474, which is comprised of the gross proceeds of $45,000 less $3,188 in deposits to certain reserve accounts (see “ Reserve Accounts Collateral NOTE 5 — LONG TERM DEBT (continued) The obligation for the Series 2021-6 Notes underlying the Trust Indenture is $45,000 in principle on the date of the closing of the financing. The debt bears interest at 5.50% per annum accruing monthly on a 360-day basis. Late payments will be subject to a $50 late fee and default interest based on a rate 5 percentage points above the applicable interest immediately prior to such default. The Company will make interest-only payments on the unpaid principal amount in arrears, commencing December 1, 2021 and ending on November 1, 2022 (for interest accruing from the Closing Date through October 31, 2022). Beginning on December 1, 2022, the Company will repay the debt in twenty-four equal installments of principal in the amount of $1,875, plus accrued interest on the unpaid principal amount. Any remaining obligations will be due and payable on November 1, 2024. The obligations under the Trust Indenture will be deemed to be repaid or prepaid to the same extent, in the same amounts and at the same times, as the Series 2021-6 Notes are redeemed with funds provided except for payments made from the proceeds of the Insurance Policy (see “Collateral” below) as such funds must be reimbursed by the Company to the insurer. During the year ended December 31, 2021, a total of $390 of interest expense was incurred under the debt. Amortization of the debt issuance costs under the interest method amounted to $77 during the year ended December 31, 2021. Reserve Accounts Deposits into the reserve accounts consisted of the following items: Payment Reserve Fund $ 3,044 Capitalized Interest Fund 144 Total $ 3,188 The Payment Reserve Fund is a debt service fund to be maintained by UMB Bank, and the initial deposit is equal to the maximum amount of monthly interest and principal debt service payment due on the Series 2021-6 notes, plus interest earned on special redemptions (see Special Redemptions The Capitalized Interest Fund was created to hold the interest that will accrue from the closing date until the first payment due on December 15, 2021. The initial deposit, therefore, was treated as prepaid interest. These funds were utilized to pay the interest incurred through that first payment date Both above funds, to the extent that they are deposited into interest-bearing accounts, will earn interest that UMB Bank will transfer into an Interest Earnings Fund, which funds will be held in escrow until the earlier of maturity or when the debt obligations are paid in full (assuming no events of default). There were no funds deposited into interest-bearing accounts for the period ended December 31, 2021. NOTE 5 — LONG TERM DEBT (continued) Special Redemptions If the Company fails to make a scheduled payments of principal and interest as required under the loan agreements on the due dates, and fails to cure such non-payment within 10 days, UMB Bank may, upon the direction of the registered noteholders of at least 75% of the principal amount outstanding under the Series 2021-6 Notes, declare that an event of “Special Redemption” has occurred, and such failure shall trigger the provisions of the Insurance Policy. These provisions include filing of a claim notice with the insurer, withdrawal of the unpaid amount from the Payment Reserve Fund and pay such amount to the holders of those Series 2021-6 Notes, and acceleration of the Series 2021-6 Notes that remain outstanding after the payment. Collateral As collateral for payment of the debt and certain obligations related to performance under the Trust Indenture and related transaction documents, the Company and the guarantors granted to Newlight Capital, LLC, as representative and for the benefit of UMB Bank a continuing security interest in all substantially all of the assets of the Company. Under the terms of the Trust Indenture, the Insurance Policy is required as additional collateral guaranteeing the payments under the debt by the Company. The Company determined this was not a direct incremental cost of the financing. The premium costs were recognized as a debt issuance cost. The term of the policy aligns with the term of the debt (three years, unless reduced due to default provisions). The secured party (UMB Bank, as trustee) would not have the right to sell or repledge either the intellectual property or the insurance collateral unless and until the Company defaults and a claim is made. Loan Monitoring Fees The Company will incur ongoing monitoring service by NewLight Capital LLC for 24 months at $180 total expense. These services entail monitoring of financial records and information related to collateral enforcement on an ongoing basis. The $60 prepayment funded at closing was recognized as a prepaid expense and will be amortized straight-line over the first 8 months of the agreement. Financial Covenants The Company must comply with certain financial covenants, including minimum adjusted EBITDA, capital expenditures and minimum fixed charge coverage ratio. These covenants are not effective as of December 31, 2021 but will begin to take effect with the fiscal quarter ending March 31, 2022. NOTE 5 — LONG TERM DEBT (continued) Long-Term Debt Maturities At December 31, 2021, the future debt maturities are as follows: 2022 $ 1,875 2023 22,500 2024 20,625 Total 45,000 Less: Unamortized debt issuance costs (6,072) Total debt 38,928 Less: current portion of debt (1,875) Total long-term debt $ 37,053 |
REVOLVING NOTE AGREEMENT_2
REVOLVING NOTE AGREEMENT | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
New Dragonfly | ||
REVOLVING NOTE AGREEMENT | NOTE 6 – REVOLVING NOTE AGREEMENT On October 6, 2021, the Company entered into a revolving note agreement with a lender to borrow up to $8,000 . The borrowing amount is limited and based on the lesser of maximum principal amount ( $8.0 million) and the sum equal to 80% of eligible accounts receivable and 50% of eligible inventory. Interest on each advance shall accrue at the prime rate announced by Bank from time to time, as and when such rate changes. The revolving credit amount is collateralized by all assets of the Corporation. The Company drew an initial amount of $5,000 under the facility, which it subsequently re-paid and the revolving note was terminated as a closing condition of the 2021-6 Notes. | NOTE 6 — REVOLVING NOTE AGREEMENT On October 6, 2021, the Company entered into a revolving note agreement with a lender to borrow up to $8,000. The borrowing amount is limited and based on the lesser of maximum principal amount ($8.0 million) and the sum equal to 80% of eligible accounts receivable and 50% of eligible inventory. Interest on each advance shall accrue at the prime rate announced by Bank from time to time, as and when such rate changes. The revolving credit amount is collateralized by all assets of the Corporation. The Company drew an initial amount of $5,000 under the facility, which it subsequently re-paid and the revolving note was terminated as a closing condition of the Series 2021-6 notes. |
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT | 9 Months Ended |
Sep. 30, 2022 | |
New Dragonfly | |
ASSET PURCHASE AGREEMENT | NOTE 7 – ASSET PURCHASE AGREEMENT On January 1, 2022, the Company (the “Buyer”) entered into an asset purchase agreement (the “APA”) with Bourns Production, Inc., a Nevada corporation (the “Seller”) pursuant to which the Buyer acquired machinery and equipment of the Seller as set forth in the APA for a purchase price of $197 which approximated fair market value. |
RELATED PARTY
RELATED PARTY | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
RELATED PARTY | NOTE 5. RELATED PARTY TRANSACTIONS Founder Shares On June 23, 2020, the Company issued 1,000,000 shares of common stock for an aggregate price of $25,000 (the “Founder Shares”). On March 4, 2021, the Company effected a 2.875-for-1 stock split of its issued and outstanding shares of common stock , resulting in an aggregate of 2,875,000 shares of common stock issued and outstanding. On August 10, 2021, the Company effectuated a 1.1-for-1 stock split , resulting in an aggregate of 3,162,500 shares of common stock outstanding. Shares and the associated amounts have been retroactively restated in these unaudited condensed consolidated financial statements to reflect the two stock splits. The Founder Shares include an aggregated of up to 412,500 shares of common stock subject to forfeiture by the initial stockholders to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the initial stockholders would collectively own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering. On August 18, 2021, the underwriters’ exercised the over-allotment option in full, thus these shares are no longer subject to forfeiture (see Note 6). With certain limited exceptions, 50% of the Founder Shares will not be transferred, assigned, sold or released from escrow until the earlier of (i) six months after the date of the consummation of a Business Combination (the “Escrow Period”) or (ii) the date on which the closing price of the Company’s shares of common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any ten trading days within any 30-trading day period commencing after the consummation of a Business Combination. The remaining 50% of the Founder Shares will not be transferred, assigned, sold or released from escrow until the expiration of the Escrow Period. In either case, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the stockholders having the right to exchange their shares of common stock for cash, securities or other property, and either (1) before the expiration of the Escrow Period, then the Founder Shares will be canceled, or (2) after the expiration of the Escrow Period, release the Founder Shares to the initial stockholders. Promissory Note - Related Party On July 23, 2020, the Sponsor agreed to loan the Company an aggregate of up to $250,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Promissory Note”). The promissory note was non-interest bearing, unsecured and was repaid at August 19, 2021. As of September 30, 2022 and December 31, 2021, there was no outstanding balance under the note. The Promissory Note is no longer available to the Company. On August 8, 2022, the Company notified the Trustee that it was extending the time available to the Company to consummate its initial business combination for an additional one (1) month from August 13, 2022 to September 13, 2022 (“Extension No. 1”). Extension No. 1 provides the Company with additional time to complete its proposed business combination with Dragonfly Energy Corp. (“Dragonfly”), a leader in energy storage and producer of deep cycle lithium-ion storage batteries. Extension No. 1 is the first of up to three (3) one-month extensions permitted under the Company’s Second A&R Charter. In connection with Extension No. 1, the Company’s officers, directors, initial stockholders and Chardan NexTech 2 Warrant Holdings, LLC (collectively, the “Insiders”), their affiliates or designees will deposit an aggregate of $ 200,000 (the “First Extension Payment”) into the Trust Account prior to August 13, 2022, on behalf of the Company. In connection with its First Extension Payment, the Insiders will receive a non-interest bearing, unsecured promissory note equal to the First Extension Payment that will not be repaid if the Company is unable to close a business combination, unless there are funds available outside its Trust Account to do so. On September 6, 2022, the Company notified Continental Stock Transfer & Trust Company that it was extending the time available to the Company to consummate its initial business combination for an additional one (1) month from September 13, 2022 to October 13, 2022 (“Extension No. 2”). Extension No. 2 provides the Company with additional time to complete its proposed business combination with Dragonfly. Extension No. 2 is the second of up to three (3) 1-month extensions permitted under the Company’s Second A&R Charter. In connection with Extension No. 2, the Company’s officers, directors, initial stockholders and Chardan NexTech 2 Warrant Holdings, LLC, their affiliates or designees will deposit an aggregate of $200,000 (the “Second Extension Payment”) into the Trust Account prior to September 12, 2022, on behalf of the Company. In connection with its Second Extension Payment, the Insiders will receive a non-interest bearing, unsecured promissory note equal to the Second Extension Payment that will not be repaid if the Company is unable to close a business combination, unless there are funds available outside its Trust Account to do so. As of September 30, 2022 , the Company had an outstanding balance in promissory note - related party of $400,000 in relation to Extension No 1 and Extension No 2. Administrative Support Agreement The Company entered into an agreement, commencing on the effective date of the Initial Public Offering, to pay an affiliate of the Sponsor a total of $10,000 per month for office space, administrative and support services. Upon completion of a Business Combination or liquidation, the Company will cease paying these monthly fees. As of September 30, 2022, the Company has not exercised its option to use such services. Related Party Loans In order to finance transaction costs in connection with an intended initial Business Combination, the Company’s initial stockholders, officers and directors or any of their respective affiliates may, but are not obligated to, loan the Company funds as may be required from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would be paid upon consummation of an initial Business Combination, without interest. Loans made by Chardan Capital Markets LLC or any of its related persons will not be convertible into any of the Company’s securities and Chardan Capital Markets LLC and its related persons will have no recourse with respect to their ability to convert their loans into any of the Company’s securities. As of September 30, 2022 and December 31, 2021, the Company had no working capital loans outstanding. | NOTE 5. RELATED PARTY TRANSACTIONS Founder Shares On June 23, 2020, the Company issued 1,000,000 shares of common stock for an aggregate price of $25,000 (the “Founder Shares”). On March 4, 2021, the Company effected a 2.875-for-1 stock split of its issued and outstanding shares of common stock, resulting in an aggregate of 2,875,000 shares of common stock issued and outstanding. On August 10, 2021, the Company effectuated a 1.1-for-1 stock split, resulting in an aggregate of 3,162,500 shares of common stock outstanding. Shares and the associated amounts have been retroactively restated in these financial statements to reflect the two stock splits. The Founder Shares include an aggregated of up to 412,500 shares of common stock subject to forfeiture by the initial stockholders to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the initial stockholders would collectively own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering. On August 18, 2021, the underwriters’ exercised the over-allotment option in full, thus these shares are no longer subject to forfeiture (see Note 6). With certain limited exceptions, of the Founder Shares will not be transferred, assigned, sold or released from escrow until the earlier of (i) six months after the date of the consummation of a Business Combination (the “Escrow Period”) or (ii) the date on which the closing price of the Company’s shares of common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any ten trading days within any 30-trading day period commencing after the consummation of a Business Combination. The remaining 50% of the Founder Shares will not be transferred, assigned, sold or released from escrow until the expiration of the Escrow Period. In either case, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the stockholders having the right to exchange their shares of common stock for cash, securities or other property, and either (1) before the expiration of the Escrow Period, then the Founder Shares will be canceled, or (2) after the expiration of the Escrow Period, release the Founder Shares to the initial stockholders. Promissory Note — Related Party On July 23, 2020, the Sponsor agreed to loan the Company an aggregate of up to $250,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the "Promissory Note"). The promissory note was non-interest bearing, unsecured and was repaid at August 19, 2021. As of December 31, 2021 and December 31, 2020, there was no outstanding balance under the note. The Company cannot make any additional draws under this promissory note. Administrative Support Agreement The Company entered into an agreement, commencing on the effective date of the Initial Public Offering, to pay an affiliate of the Sponsor a total of $10,000 per month for office space, administrative and support services. Upon completion of a Business Combination or liquidation, the Company will cease paying these monthly fees. To date, the Company has not exercised its option to use such services. Related Party Loans In order to finance transaction costs in connection with an intended initial Business Combination, the Company’s initial stockholders, officers and directors or any of their respective affiliates may, but are not obligated to, loan the Company funds as may be required from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would be paid upon consummation of an initial Business Combination, without interest. Loans made by Chardan Capital Markets, LLC or any of its related persons will not be convertible into any of the Company’s securities and Chardan Capital Markets, LLC and its related persons will have no recourse with respect to their ability to convert their loans into any of the Company’s securities. As of December 31, 2021 and December 31, 2020, the Company had no working capital loans outstanding. |
New Dragonfly | ||
RELATED PARTY | NOTE 8 – RELATED PARTY The Company loaned its Chief Financial Officer $469 to repay amounts owed by him to his former employer and entered into a related Promissory Note with a maturity date of March 1, 2026. The loan was forgiven in full in March of 2022 and was recorded within general and administrative expense. |
COMMON STOCK_2
COMMON STOCK | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
COMMON STOCK | NOTE 8. STOCKHOLDERS’ EQUITY (DEFICIT) Preferred Stock— The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2022 and December 31, 2021, the Company had no issued or outstanding shares of preferred stock. Common stock —The Company is authorized to issue 50,000,000 shares of common stock with a par value of $0.0001 per share. On August 5, 2022, in connection with the Charter Amendment, 9,556,652 shares of Chardan common stock were redeemed by certain stockholders. As such, on September 30, 2022 and December 31, 2021, there were 6,255,848 and 15,812,500 shares of common stock issued and outstanding , including 3,093,348 and 12,650,000 shares of common stock subject to possible redemption, respectively. Of the 15,812,500 shares of common stock outstanding, up to 412,500 shares were subject to forfeiture to the Company by the initial stockholders for no consideration to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the initial stockholders would collectively own 20% of the Company’s issued and outstanding common stock after the Initial Public Offering. On August 16, 2021, the underwriters’ exercised the over-allotment option in full (see Note 6), thus these shares are no longer subject to forfeiture. Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Unless specified in the Amended and Restated Certificate of Incorporation or bylaws, or as required by applicable law or stock exchange rules, the affirmative vote of a majority of the Company’s shares of common stock that are voted is required to approve any such matter voted on by the Company’s stockholders (other than the election of directors). | NOTE 8. STOCKHOLDERS’ EQUITY (DEFICIT) Preferred stock — December 31, 2021 and December 31, 2020 Common stock — of the Company’s issued and outstanding common stock after the Initial Public Offering. On August 16, 2021, the underwriters’ exercised the over-allotment option in full (see Note 6), thus these shares are no longer subject to forfeiture. Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Unless specified in the Amended and Restated Certificate of Incorporation or bylaws, or as required by applicable law or stock exchange rules, the affirmative vote of a majority of the Company’s shares of common stock that are voted is required to approve any such matter voted on by the Company’s stockholders (other than the election of directors). |
New Dragonfly | ||
COMMON STOCK | NOTE 9 – COMMON STOCK Common stockholders are entitled to dividends if and when declared by the Board of Directors subject to the rights of the preferred stockholders. As of September 30, 2022 and December 31, 2021, no dividends on common stock had been declared by the Company. On July 12, 2022, Dragonfly entered into a Stock Purchase Agreement with THOR Industries, whereby THOR purchased 1,267,502 shares of Dragonfly common stock for $11.8343 per share or $15,000 in cash. The Stock Purchase agreement was issued in connection with a binding agreement among the parties whereby the parties would use commercially reasonable efforts to enter into a mutually agreed distribution and joint development agreement. The final terms of the agreement have not yet been determined. As of September 30, 2022 and December 31, 2021, the Company had reserved shares of common stock for issuance as follows: September 30, December 31, 2022 2021 Convertible preferred stock outstanding 10,000,000 10,000,000 Options issued and outstanding 3,100,524 3,122,398 Common stock outstanding 22,634,276 20,875,475 Shares available for future issuance (1) 540,902 10,327 Total 36,275,702 34,008,200 (1) During March 2022, the Company increased the shares authorized under the plan by 1,000,000 | NOTE 10 — COMMON STOCK The Company is authorized to issue up to 40,000,000 shares of common stock with $0.0002 par value. At December 31, 2021 and 2020, there were 20,875,475 and 20,040,470 shares issued outstanding Common stockholders are entitled to dividends if and when declared by the Board of Directors subject to the rights of the preferred stockholders. As of December 31, 2021 and 2020, no dividends on common stock had been declared by the Company. At December 31, 2021 and 2020, the Company had reserved shares of common stock for issuance as follows: 2021 2020 Convertible preferred stock outstanding 10,000,000 10,000,000 Options issued and outstanding 3,122,398 2,563,080 Common stock outstanding 20,875,475 20,040,470 Shares available for future issuance 10,327 404,650 Total 34,008,200 33,008,200 In November of 2020, the board of directors approved and granted 8,200 common shares to consultants for historical services provided. The shares were fair valued at $3.41 per share for total compensation of $27. The amount was expensed immediately and is included in selling, general and administrative expenses. |
STOCK-BASED COMPENSATION_2
STOCK-BASED COMPENSATION | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
New Dragonfly | ||
STOCK-BASED COMPENSATION | NOTE 10 – STOCK-BASED COMPENSATION A summary of the Company’s option activity and related information follows: Weighted ‑ Average Weighted ‑ Average Remaining Aggregate Number of Weighted ‑ Average Grant Date Contractual Life intrinsic Options Exercise Price Fair Value (in years) value Balances, January 1, 2021 2,563,080 $ 0.45 $ — 7.92 $ 650,965 Options granted 1,000,538 3.41 1.94 — Options forfeited (299,939) 1.21 1.83 — Options exercised (49,727) 0.53 — — Balances, September 30, 2021 3,213,952 $ 1.30 $ — 7.80 $ 7,616,691 Balances, January 1, 2022 3,122,398 $ 1.98 $ — 8.52 $ 6,549,591 Options granted 509,500 4.08 1.81 — Options forfeited (40,075) 3.29 2.07 — Options exercised (491,299) 1.44 — — Balances, September 30, 2022 3,100,524 $ 2.40 $ — 8.22 $ 5,220,204 At September 30, 2022 Vested and Exercisable 864,984 $ 1.53 7.83 $ 2,201,553 Vested and expected to vest 2,235,540 $ 2.73 8.37 $ 3,018,651 Share-based compensation expense for options totaling $1,155 and $428 was recognized in our statements of income for the nine months ended September 30, 2022 and 2021, respectively. Of the $1,155 of share-based compensation incurred during the nine months ended September 30, 2022, $189 is allocated to cost of goods sold, $307 to research and development, $326 to selling and marketing, and $333 to general and administrative expenses. Of the $428 of share-based compensation incurred during the nine months ended September 30, 2021, $145 is allocated to cost of goods sold, $55 to research and development, $89 to selling and marketing, and $139 to general and administrative expenses. As of September 30, 2022, there were 540,902 shares of unissued authorized and available for future awards under the plans. | NOTE 8 — STOCK-BASED COMPENSATION On August 12, 2019, the Board of Directors approved the 2019 Stock Incentive Plan (the “Plan”) with a term of ten years. The Plan is administered by the Board of Directors, which is authorized to grant, at its discretion, awards to employees, directors, and consultants. The maximum number of common shares reserved for grants of awards under the Plan is 3,000,000 shares. The Plan provides for the grant of stock options (both incentive stock options and nonqualified stock options), and the grants and sale of restricted stock units (RSUs). Shares issued under this Plan may be drawn from authorized and unissued shares, or shares reacquired by the Company. In July of 2021, the Board of Directors approved the 2021 Stock Incentive Plan (the “Plan”) with a term of ten years. The Plan is administered by the Board of Directors, which is authorized to grant, at its discretion, awards to employees, directors, and consultants. The maximum number of common shares reserved for grants of awards under the Plan is 1,000,000 shares. The Plan provides for the grant of stock options (both incentive stock options and nonqualified stock options), and the grants and sale of restricted stock units (RSUs). Shares issued under this Plan may be drawn from authorized and unissued shares, or shares reacquired by the Company. NOTE 8 — STOCK-BASED COMPENSATION (continued) If an incentive award granted under the Plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to us in connection with an incentive award, the shares subject to such award and the surrendered shares will become available for future awards under the Plan. The number of shares subject to the Plan, and the number of shares and terms of any Incentive Award may be adjusted in the event of any change in our outstanding common stock by reason of any stock dividend, spin-off, stock split, reverse stock split, recapitalization, reclassification, merger, consolidation, liquidation, business combination or exchange of shares, or similar transaction. A summary of the Company’s option activity and related information follows: Weighted Weighted- Average Aggregate Weighted- Average Remaining intrinsic Number of Average Grant Date Contractual value Options Exercise Price Fair Value Life (in years) (in thousands) Balances, January 1, 2020 2,157,950 $ 0.39 0.39 8.54 651 Options granted 620,950 0.69 1.92 — Options forfeited (183,550) 0.52 0.93 — Options exercised (32,270) 0.46 0.64 — Balances, December 31, 2020 2,563,080 $ 0.45 0.72 7.92 651 Options granted 1,750,551 3.41 2.03 3,551 Options forfeited (356,228) 1.44 1.82 — Options exercised (835,005) 0.51 0.53 442 Balances, December 31, 2021 3,122,398 $ 1.98 1.38 8.52 6,550 At December 31, 2021 Vested and Exercisable 550,601 $ 0.88 7.42 1,762 Vested and expected to vest 3,122,398 $ 1.98 7.92 6,550 Share-based compensation expense for options totaling $734 and $324 was recognized in our statements of income for the years ended December 31, 2021 and 2020, respectively. Of the $734 of share-based compensation incurred during the year ended December 31, 2021, $252 is allocated to cost of goods sold, $95 to research and development, $156 to selling and marketing, and $231 to general and administrative expenses. Of the $324 of share-based compensation incurred during the year ended December 31, 2020, $48 is allocated to cost of goods sold, $23 to research and development, $61 to selling and marketing, and $192 to general and administrative expenses. The Company did not receive payment for 615,124 of the 835,005 options exercised during the period ended December 31, 2021 and accordingly a receivable of $250 was recognized and included in other current assets on the balance sheet. This payment was received on January 4, 2022. As of December 31, 2021, there were 10,327 shares of unissued authorized and available for future awards under the plans. As of December 31, 2021, the Company had stock-based compensation expense of $3,646, related to unvested stock options not yet recognized that are expected to be recognized over an estimated weighted average period of 2.9 years. NOTE 8 — STOCK-BASED COMPENSATION (continued) The valuation methodology used to determine the fair value of the options issued during the year was the Black Scholes option pricing model. The Black Scholes model requires the use of a number of assumptions including volatility of the stock price, the fair value of the underlying stock, the average risk-free interest rate, and the weighted average expected life of the options. The fair value of the underlying stock is determined by the Board of Directors. Given the absence of a public trading market, the Board of Directors utilizes a 409A valuation which considers numerous objective and subjective factors to determine the fair value of our common stock. These factors included but are not limited to: (i) the rights, preferences and privileges of convertible preferred stock relative to common stock; (ii) the lack of marketability of common stock; (iii) stage and development of the Company’s business; (iv) general economic conditions; and (v) the likelihood of achieving a liquidity event, such as an initial public offering (“IPO”) or sale of the Company, given prevailing market conditions. To evaluate the fair value of the underlying shares for grants between two independent valuations and after the last independent valuation, a linear interpolation framework is used to evaluate the fair value of the underlying shares. The expected term was estimated using the simplified method. 2021 2020 Weighted average fair value of options granted $ 1.73 – 2.18 $ 1.30 – 2.39 Risk-free interest rate 1.08 % 0.46 % Volatility 52.6 % 52.5 % Expected life (years) 6.02 5.95 Dividend yield 0.00 % 0.00 % |
SUBSEQUENT EVENTS_2_3_4
SUBSEQUENT EVENTS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
SUBSEQUENT EVENTS | NOTE 11. SUBSEQUENT EVENTS The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed consolidated financial statements were issued. Based upon this review, except as noted below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed consolidated financial statements. Business Combination Closing On October 7, 2022 (the “Closing Date”), Dragonfly Energy Holdings Corp., a Delaware corporation (f/k/a Chardan NexTech Acquisition 2 Corp. (“Chardan”)), consummated the previously announced merger pursuant to the Business Combination Agreement, dated May 15, 2022, as amended by the Amendment to the Business Combination Agreement, dated July 12, 2022, by and among Chardan, Bronco Merger Sub, Inc., a Nevada corporation and a wholly owned subsidiary of Chardan (“Merger Sub”), and Dragonfly Energy Corp., a Nevada corporation (“Legacy Dragonfly”). Chardan’s stockholders approved the Transactions (as defined below) at a special meeting of stockholders held on October 6, 2022. Pursuant to the Business Combination Agreement, Merger Sub merged with and into Legacy Dragonfly (the “Merger” and, together with the other transactions contemplated by the Business Combination Agreement, the “Transactions”), with Legacy Dragonfly continuing as the surviving corporation in the Merger and a wholly-owned subsidiary of Chardan. On the Closing Date, the registrant changed its name from Chardan NexTech Acquisition 2 Corp. to Dragonfly Energy Holdings Corp. Merger Consideration At the Closing, by virtue of the Merger and without any action on the part of Chardan, Merger Sub, Legacy Dragonfly or the holders of any of the following securities: (a) Each outstanding share of Legacy Dragonfly’s common stock, par value $0.001 per share(“Legacy Dragonfly Common Stock”), converted into (i) a certain number of shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”), totaling 41,500,000 shares (including the conversion and assumption of the options to purchase shares of Legacy Dragonfly Common Stock described below), which is equal to (x) $415,000,000 divided by (y) $10.00 (the “Merger Consideration”) and (ii) the contingent right to receive Earnout Shares (as defined below) (which may be zero ) following the Closing. (b) Each option to purchase shares of Legacy Dragonfly Common Stock, was assumed and converted into options to acquire shares of Common Stock. The portion of the Merger Consideration reflecting the conversion of the Legacy Dragonfly options was calculated assuming that all the Company options are net-settled. With respect to the Company options received in respect of Legacy Dragonfly options that are outstanding immediately prior to the Closing and cash exercised after the Closing, up to 627,498 additional shares of Common Stock may be issued. At the Closing, approximately 38,576,648 shares of the Merger Consideration was allocated to holders of outstanding shares of Legacy Dragonfly Common Stock and 3,664,975 shares of the Merger Consideration was allocated to holders of the assumed Legacy Dragonfly options. Earnout Merger Consideration In addition to the Merger Consideration set forth above, additional contingent shares (“Earnout Shares”) may be payable to each holder of shares of Legacy Dragonfly Common Stock in the Merger, subject to achieving specified milestones, up to an aggregate of 40,000,000 additional shares of Common Stock in three tranches. The first tranche of 15,000,000 shares is issuable if the Company’s 2023 total audited revenue is equal to or greater than $250 million and the Company’s 2023 audited operating income is equal to or greater than $35 million. The second tranche of 12,500,000 shares is issuable upon achieving a volume-weighted average trading price threshold of Common Stock over any 20 Trading Days (which may or may not be consecutive) within any 30 consecutive Trading Day period of at least $22.50 on or prior to December 31, 2026, and the third tranche of 12,500,000 shares is issuable upon achieving a volume-weighted average trading price threshold of Common Stock over any 20 Trading Days (which may or may not be consecutive) within any 30 consecutive Trading Day period of at least $32.50 on or prior to December 31, 2028. To the extent not previously earned, the second tranche is issuable if the $ 32.50 price target is achieved by December 31, 2028. Upon the consummation of a change of control transaction during either the second milestone earnout period or the third milestone earnout period, any earnout milestone with respect to such earnout period that has not yet been achieved shall automatically be deemed to have been achieved if a change of control transaction is announced with an imputed share price of Common Stock of at least $22.50 on or prior to the end of second earnout period or $32.50 on prior to the third earnout period. A description of the Merger and the terms of the Business Combination Agreement are included in the proxy statement/prospectus, dated September 16, 2022 (the “Proxy Statement/Prospectus”) as filed with the SEC in the section entitled “Proposal No. 1 — The Business Combination Proposal” of the Proxy Statement/Prospectus. PIPE Investment Pursuant to the subscription agreement, dated as of May 15, 2022 (the “Subscription Agreement”), by and between Chardan and Chardan NexTech Investments 2 LLC (or an affiliate thereof if assigned pursuant to the Subscription Agreement, the “Sponsor”), the Sponsor agreed to purchase, and Chardan agreed to sell to the Sponsor, an aggregate of 500,000 shares of Chardan common stock (“Chardan Common Stock”) for gross proceeds to Chardan of $5 million in a private placement. On September 28, 2022, the Sponsor and Chardan Capital Markets LLC, a New York limited liability company (“CCM LLC”), entered into an assignment, assumption and joinder agreement, pursuant to which the Sponsor assigned all of the Sponsor’s rights, benefits and obligations under the Subscription Agreement to CCM LLC. Under the Subscription Agreement, the number of shares of Chardan Common Stock that CCM LLC was obligated to purchase was to be reduced by the number of shares of Chardan Common Stock that CCM LLC purchased in the open market, provided that such purchased shares were not redeemed, and the aggregate price to be paid under the Subscription Agreement was to be reduced by the amount of proceeds received by the Company because such shares are not redeemed (the “Offset”). During the week of September 26, 2022 CCM LLC acquired in the open market in total 485,000 shares of Common Stock at purchase prices per share ranging from $10.33 to $10.38 (such shares, the “Purchased Shares”). The Purchased Shares were not redeemed, resulting in (i) the Company’s receipt of $5,016,547 from the Trust Account (based on a per share redemption price of $10.34 ) and (ii) a reduction in CCM LLC’s purchase commitment under the Subscription Agreement to zero in accordance with the Offset. Debt Financing Loan Agreement Consistent with the previously disclosed commitment letter (the “Debt Commitment Letter”) between Chardan and Legacy Dragonfly, CCM Investments 5 LLC, an affiliate of CCM LLC (“CCM 5”, and in connection with the Term Loan, the “Chardan Lender”), and EICF Agent LLC (“EIP” and, collectively with the Chardan Lender, the “Initial Term Loan Lenders”), in connection with the Closing, Chardan, Legacy Dragonfly and the Initial Term Loan Lenders entered into the Term Loan, Guarantee and Security Agreement (the “Term Loan Agreement”) setting forth the terms of a senior secured term loan facility in an aggregate principal amount of $75 million (the “Term Loan”). The Chardan Lender backstopped its commitment under the Debt Commitment Letter by entering into a backstop commitment letter, dated as of May 20, 2022 (the “Backstop Commitment Letter”), with a certain third-party financing source (the “Backstop Lender” and collectively with EIP, the “Term Loan Lenders”), pursuant to which the Backstop Lender committed to purchase from the Chardan Lender the aggregate amount of the Term Loan held by the Chardan Lender (the “Backstopped Loans”) immediately following the issuance of the Term Loan on the Closing Date. Pursuant to an assignment agreement, the Backstopped Loans were assigned by CCM 5 to the Backstop Lender on the Closing Date. Pursuant to the terms of the Term Loan Agreement, the Term Loan was advanced in one tranche on the Closing Date. The proceeds of the Term Loan were used (i) to refinance on the Closing Date prior indebtedness, (ii) to support the Transaction under the Business Combination Agreement, (iii) for working capital purposes and other corporate purposes, and (iv) to pay any fees associated with transactions contemplated under the Term Loan Agreement and the other loan documents entered into in connection therewith, including the transactions described in the foregoing clauses (i) and (ii) and fees and expenses related to the business combination. The Term Loan amortizes in the amount of 5% per annum beginning 24 months after the Closing Date and matures on the fourth anniversary of the Closing Date (“Maturity Date”). The Term Loan accrues interest (i) until April 1, 2023, at a per annum rate equal to the adjusted Secured Overnight Financing Rate (“SOFR”) plus a margin equal to 13.5% , of which 7% will be payable in cash and 6.5% will be paid in-kind, (ii) thereafter until October 1, 2024, at a per annum rate equal to adjusted SOFR plus 7% payable in cash plus an amount ranging from 4.5% to 6.5% , depending on the senior leverage ratio of the consolidated company, which will be paid-in-kind and (iii) at all times thereafter, at a per annum rate equal to adjusted SOFR plus a margin ranging from 11.5% to 13.5% payable in cash, depending on the senior leverage ratio of the consolidated company. In each of the foregoing cases, adjusted SOFR will be no less than 1% . Warrant Agreements In connection with the entry into the Term Loan Agreement, and as a required term and condition thereof, the Company entered into (i) the penny warrant to issue penny warrants to the Term Loan Lenders under the Term Loan exercisable to purchase 2,593,056 shares, which is equal to approximately 5.6% of Common Stock calculated on an agreed fully diluted outstanding basis on the issuance date (the “Penny Warrants”) and (ii) the $10 warrant to issue warrants to the Term Loan Lenders under the Term Loan exercisable to purchase 1,600,000 shares of Common Stock at $10 per share (the “ $10 Warrants” and, together with the Penny Warrants, the “Warrants”). The additional shares of Common Stock will dilute the pro forma ownership of the other Company stockholders of proportionately. ChEF Equity Facility Consistent with the previously disclosed equity facility letter agreement between Legacy Dragonfly and CCM 5, the Company and CCM LLC entered into a purchase agreement (the “Purchase Agreement”) and a Registration Rights Agreement (the “ChEF RRA”) in connection with the Closing. Pursuant to the Purchase Agreement, the Company has the right to sell to CCM LLC an amount of shares of Common Stock, up to a maximum aggregate purchase price of $ 150 million, from time to time, pursuant to the terms of the Purchase Agreement. In addition, the Company appointed LifeSci Capital, LLC as “qualified independent underwriter” with respect to the transactions contemplated by the Purchase Agreement. Pursuant to, on the terms of, and subject to the satisfaction of the conditions in the Purchase Agreement, including the filing and effectiveness of a registration statement registering the resale by CCM LLC of the shares of Common Stock issued to it under the Purchase Agreement, the Company will have the right from time to time at its option to direct CCM LLC to purchase up to a specified maximum amount of shares of Common Stock, up to a maximum aggregate purchase price of $ 150 million, over the term of the equity facility (“ChEF Equity Facility”). Other Agreements Related Agreements Concurrently with the execution of the Business Combination Agreement, Chardan, Legacy Dragonfly and the Sponsor entered into a sponsor support agreement. Indemnification of Directors and Officers On the Closing Date, in connection with the consummation of the Transactions, the Company entered into indemnification agreements with each of its directors and executive officers. These agreements, among other things, will require the Company to indemnify the Company’s directors and executive officers for certain expenses, including attorneys’ fees, judgments and fines incurred by a director or executive officer in any action or proceeding arising out of their services as one of the Company’s directors or executive officers or any other company or enterprise to which the person provides services at the Company’s request. Registration Rights Agreement On the Closing Date, in connection with the consummation of the Transactions, the Company entered into the Amended and Restated Registration Rights Agreement with the Sponsor, Chardan’s officers, directors, initial stockholders, CCM LLC and Warrant Holdings, an affiliate of the Sponsor (collectively, the “Insiders”) and certain Legacy Dragonfly stockholders. | NOTE 11. SUBSEQUENT EVENTS The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements. |
New Dragonfly | ||
SUBSEQUENT EVENTS | NOTE 11 – SUBSEQUENT EVENTS The Company evaluated subsequent events and transactions that occurred after the balance sheet date through November 14, 2022, the date that the condensed financial statements were available to be issued. Based upon this review, other than noted below, the Company did not identify any subsequent events that would have required adjustment to or disclosure in the condensed financial statements. On October 7, 2022, the Company's stockholders approved the Business Combination, by and among the company formerly known as CNTQ, Dragonfly Energy Corp., and Bronco Merger Sub, Inc., pursuant to which Bronco Merger Sub, Inc. was merged with and into Dragonfly, with Dragonfly surviving the merger. As a result of the Merger, and upon consummation of the Merger and other transactions contemplated by the Business Combination Agreement, Dragonfly became a wholly owned subsidiary of CNTQ. Upon the closing of the Business Combination the Company changed it's name to Dragonfly Energy Holdings Corp. ("New Dragonfly"), with stockholders of Dragonfly becoming stockholders of New Dragonfly. The following transactions at closing of the Merger included: ● Merger sub merged with and into Dragonfly, with Dragonfly surviving as a wholly owned subsidiary of New Dragonfly; ● each issued and outstanding share of capital stock of Dragonfly converted into a number of shares of New Dragonfly Common Stock equal to the product of (x) the conversion ratio applicable to such share, under Dragonfly's certificate of incorporation multiplied by (y) 1.182 , which is the quotient obtained by dividing (a) 41,500 by (b) the number of Fully-Diluted Shares as defined in the Business Combination Agreement; ● each Dragonfly Option converted into an option to purchase a number of shares of New Dragonfly Common Stock in Accordance with the terms and subject to the conditions of the Business Combination Agreement; ● each Dragonfly Warrant, to the extent outstanding and unexercised, converted into a warrant to acquire shares of New Dragonfly Common Stock in accordance with the terms and subject to the conditions of the Business Combination Agreement, and ● each share of CNTQ Class A Common Stock that was issued and outstanding immediately prior to the Merger became one share of New Dragonfly Common Stock. In connection with the term loan agreement issued in the PIPE financing (as described in note 1 of the financial statements), the Company entered into (i) the penny warrant to issue penny warrants to the Term Loan Lenders under the Term Loan exercisable to purchase 2,593,056 shares, which is equal to approximately 5.6% of Common Stock calculated on an agreed fully diluted outstanding basis on the issuance date (the “Penny Warrants”) and (ii) the $10 warrant to issue warrants to the Term Loan Lenders under the Term Loan exercisable to purchase 1,600,000 shares of Common Stock at $10 per share (the “$10 Warrants” and, together with the Penny Warrants, the “Warrants”). The additional shares of Common Stock will dilute the pro forma ownership of the other Company stockholders of proportionately. On October 7, 2022, the Company entered into a purchase agreement and registration rights agreement with CCM LLC. Pursuant to the purchase agreement, the Company has the right to sell to CCM LLC an amount of shares of common stock, up to a maximum aggregate purchase price of $150 million, from time to time, pursuant to the terms of the Purchase Agreement. In addition, the Company appointed LifeSci Capital, LLC as a "qualified independent underwriter" with respect to the transactions contemplated by the Purchase agreement. On November 4, 2022, the Board of the Company announced that Sean Nichols, the Company’s Chief Operating Officer, would be leaving the Company. Mr. Nichols and the Company have entered into a separation and release agreement (the “Separation Agreement”) on November 2, 2022. Pursuant to the Separation Agreement, Mr. Nichols will receive a cash payment of $100,000 in one installment in December 2022 and a cash payment of $1,000,000 in 24 monthly installments commencing in December 2022. Mr. Nichols’ outstanding equity awards granted by the Company will fully vest and, in the case of options, will be exercisable for 12 months following his termination date. The Separation Agreement also provides the Company will pay a portion of Mr. Nichols’ premiums to continue participation in the Company’s health insurance plans for up to 18 months following his termination. The Separation Agreement includes a general release of claims by Mr. Nichols and certain restrictive covenants in favor of the Company, including non-competition and non-solicitation covenants for 12 months following his termination date. | NOTE 11 — SUBSEQUENT EVENTS The Company has evaluated subsequent events from December 31, 2021 through April 20, 2022, which is the date the financial statements were available for issuance and has determined that there are no subsequent events requiring adjustment to or disclosure in the financial statements, other than as follows: On January 1, 2022, the Company (the “Buyer”) entered into an asset purchase agreement (the “APA”) with Bourns Production, Inc., a Nevada corporation (the “Seller”) pursuant to which the Buyer acquired machinery and equipment of the Seller as set forth in the APA for a purchase price of $197. On February 2, 2022, the Company entered into a 124-month lease agreement in Reno, Nevada. The lease calls for monthly base rent of $230, $23 of fix operating expense costs, and estimated monthly property taxes of $21. The monthly base rent and fixed operating expense costs are subject to escalation of 3% and 2.4%, respectively, on an annual basis. The first payment is due upon substantial completion of construction of the building which is expected to be within 2 years from the effective date. |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s annual report on Form 10-K as filed with the SEC on March 29, 2022. The interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future periods. | Basis of Presentation The accompanying financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. |
Recent Accounting Standards | Recent Accounting Standards Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements. | Recent Accounting Standards In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if converted method for all convertible instruments. ASU 2020-06 is effective for the Company on January 1, 2024 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective January 1, 2021 using the full retrospective method of transition. The adoption of ASU 2020-06 did not have a material impact on the financial statements for the fiscal year ended December 31, 2021. Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did no t have any cash equivalents as of September 30, 2022 and December 31, 2021. | Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2021 and 2020. |
Use of Estimates | Use of Estimates The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the reporting periods. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Deposit Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. |
Net Income (Loss) Per Share of Common Stock | Net Income (Loss) Per Share of Common Stock The Company complies with accounting and disclosure requirements of ASC 260, Earnings Per Share. Net income (loss) per common share is computed by dividing net earnings by the weighted-average number of shares of common stock outstanding during the period. The Company has not considered the effect of the Warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 14,115,358 shares in the calculation of diluted income (loss) per share, since the exercise of the Warrants are contingent upon the occurrence of future events. The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts): For the Three Months For the Three Months For the Nine Months For the Nine Months Ended Ended Ended Ended September September 30, September 30, September 30, 30, 2022 2021 2022 2021 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ (1,919,615) $ 2,690,543 $ (1,298,108) $ 2,689,709 Denominator: Basic weighted average shares outstanding 10,307,037 9,453,125 13,957,179 5,008,929 Basic net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.54 Diluted weighted average shares outstanding 10,307,037 9,672,826 13,957,179 5,356,456 Diluted net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.50 | Net Income (Loss) Per Share of Common Stock Net income (loss) per common share is computed by dividing net earnings by the weighted-average number of shares of common stock outstanding during the period. The Company has not considered the effect of the Warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 14,115,358 shares in the calculation of diluted income per share, since the exercise of the Warrants are contingent upon the occurrence of future events. The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts): For the period from June 23, 2020 (inception) For the year through ended December 31, December 31, 2021 2020 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ 1,910,487 $ (1,000) Denominator: Basic weighted average shares outstanding 7,732,021 2,750,000 Basic net income (loss) per common share $ 0.25 $ (0.00) Diluted weighted average shares outstanding 7,991,952 2,750,000 Diluted net income (loss) per common share $ 0.24 $ (0.00) |
Income Taxes | Income Taxes The Company complies with the accounting and reporting requirements of ASC 740, Income Taxes (“ASC 740”), which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the unaudited condensed consolidated financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740 prescribes a recognition threshold and a measurement attribute for the unaudited condensed consolidated financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. | Income Taxes The Company complies with the accounting and reporting requirements of ASC Topic 740 — Income Taxes ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2021 and December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The effective tax rate is less than the U.S. statutory corporate tax rate of 21% because of the unrealized change in fair value of warrant liabilities, which was the biggest factor in net income and is not taxable. The Company had a loss from operations during the year ended December 31, 2021. The Company is subject to income tax examinations by major taxing authorities since inception. |
New Dragonfly | ||
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2021. | Basis of Presentation These accompanying financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with generally accepted accounting principles in the United States of America (“GAAP”). |
Recently adopted accounting standards | Recently adopted accounting standards : In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt Modifications and Extinguishments (Subtopic 470 50), Compensation Stock Based Compensation (Topic 718), and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815 40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity Classified Written Call Options. This ASU provides guidance which clarified an issuer’s accounting for modification or exchanges of freestanding equity classified written call options that remain equity classified after modification or exchange. The provisions of ASU No. 2021-04 are effective January 1, 2022. This ASU shall be applied on a prospective basis. The adoption of this guidance did not have a material impact on the accompanying consolidated financial statements. | Recently adopted accounting standards: In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The new standard reduces the complexity of accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The Company adopted this guidance effective January 1, 2021 which did not have a material impact on the accompanying financial statements. |
Recent Accounting Standards | Recently issued accounting pronouncements: In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB subsequently issued amendments to ASU 2016-13, which have the same effective date and transition date of January 1, 2023. These standards replace the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measure at amortized cost to be presented at the net amount expected to be collected. The Company does not expect this change in guidance to have a material impact to its financial statements. In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. The amendments in this update will be effective for the Company on January 1, 2024 and may be early adopted at the beginning of fiscal year 2023. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows. | Recently issued accounting pronouncements: In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB subsequently issued amendments to ASU 2016-13, which have the same effective date and transition date of January 1, 2023. These standards replace the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measure at amortized cost to be presented at the net amount expected to be collected. The Company does not expect this change in guidance to have a material impact to its financial statements. In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt Modifications and Extinguishments (Subtopic 470 50), Compensation Stock Based Compensation (Topic 718), and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity Classified Written Call Options. This ASU provides guidance which clarified an issuer’s accounting for modification or exchanges of freestanding equity classified written call options that remain equity classified after modification or exchange. The provisions of ASU 2021-04 are effective January 1, 2022. This ASU shall be applied on a prospective basis. The Company determined that the change in guidance did not have a material impact to its financial statements. |
Immaterial error correction | Immaterial error correction The Company corrected an immaterial error and recognized $857 in expenses during the third quarter ending September 30, 2022 related to costs previously incorrectly deferred within other current assets on the balance sheet. Of this amount, $450 is related to costs incurred during the fourth quarter ending December 31, 2021 and the remaining $407 were incurred during the nine months ended September 30, 2022. | |
Cash and Cash Equivalents | Cash, Restricted Cash, and Cash Equivalents The Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents as of September 30, 2022 and December 31, 2021. The Company also maintains a restricted cash balance to satisfy its note payable requirements (Refer to Note 5). From time to time the Company has amounts on deposit with financial institutions that exceed federally insured limits. The Company has not experienced any significant losses in such accounts, nor does management believe it is exposed to any significant credit risk. | Cash, Restricted Cash, and Cash Equivalents The Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents as of December 31, 2021 or 2020. The Company also maintains a restricted cash balance to satisfy its note payable requirements (Refer to Note 5). From time to time the Company has amounts on deposit with financial institutions that exceed federally insured limits. The Company has not experienced any significant losses in such accounts, nor does management believe it is exposed to any significant credit risk. |
Accounts Receivable | Accounts Receivable The Company’s trade receivables are recorded when billed and represent claims against third parties that will be settled in cash. Generally, payment is due from customers within 30 days of the invoice date and the contracts do not have significant financing components. Trade accounts receivables are recorded gross and are net of any applicable allowance. The Company has an allowance for doubtful accounts as of September 30, 2022 and December 31, 2021 of $54 and $50 , respectively. | Accounts Receivable The Company’s trade receivables are recorded when billed and represent claims against third parties that will be settled in cash. Generally, payment is due from customers within 30 days of the invoice date and the contracts do not have significant financing components. Trade accounts receivables are recorded gross and are net of any applicable allowance. The Company has an allowance for doubtful accounts as of December 31, 2021 and 2020 of $50 and $0, respectively. |
Inventory | Inventory Inventories (Note 3), which consist of raw materials, work in process and finished goods, are stated at the lower of cost (weighted average) or net realizable value, net of reserves for obsolete inventory. We continually analyze our slow moving and excess inventories. Based on historical and projected sales volumes and anticipated selling prices, we established reserves. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates its estimate of future demand. Products that are determined to be obsolete are written down to net realizable value. As of September 30, 2022 and December 31, 2021, no such reserves were necessary. | Inventory Inventories (Note 3), which consist of raw materials, work in process and finished goods, are stated at the lower of cost (weighted average) or net realizable value, net of reserves for obsolete inventory. We continually analyze our slow moving and excess inventories. Based on historical and projected sales volumes and anticipated selling prices, we established reserves. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates its estimate of future demand. Products that are determined to be obsolete are written down to net realizable value. As of December 31, 2021 and 2020, no such reserves were necessary. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, including the cost of significant improvements and renovations. Costs of routine repairs and maintenance are charged to expense as incurred. Depreciation and amortization are calculated by the straight line method over the estimated useful lives for owned property, or, for leasehold improvements, over the shorter of the asset’s useful life or term of the lease. Depreciation expense for the Nine months ended September 30, 2022 and 2021 was $648 and $432 , respectively. The various classes of property and equipment and estimated useful lives are as follows: Office furniture and equipment 3 to 7 years Vehicles 5 years Machinery and equipment 3 to 7 years Leasehold improvements Remaining Term of Lease | Property and Equipment Property and equipment are stated at cost, including the cost of significant improvements and renovations. Costs of routine repairs and maintenance are charged to expense as incurred. Depreciation and amortization are calculated by the straight-line method over the estimated useful lives for owned property, or, for leasehold improvements, over the shorter of the asset’s useful life or term of the lease. Depreciation expense for the years ended December 31, 2021 and 2020 was $617 and $198, respectively. The various classes of property and equipment and estimated useful lives are as follows: Office furniture and equipment 3 to 7 years Machinery and equipment 3 to 7 years Leasehold improvements Remaining Term of Lease |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with “GAAP” requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Commitments and Contingencies | Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. | Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. |
Revenue Recognition | Revenue Recognition Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five step model to contracts when it is probable the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company excludes from the transaction price all taxes that are assessed by a governmental authority and imposed on and concurrent with the Company’s revenue transactions, and therefore presents these taxes (such as sales tax) on a net basis in operating revenues on the Statements of Operations. Revenue is recognized when control of the promised goods is transferred to the customer or reseller, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Revenue associated with products holding rights of return are recognized when the Company concludes there is not a risk of significant revenue reversal in the future periods for the expected consideration in the transaction. There are no material instances including discounts and refunds where variable consideration is constrained and not recorded at the initial time of sale. Generally, our revenue is recognized at a point in time for standard promised goods at the time of shipment when title and risk of loss pass to the customer. The Company may receive payments at the onset of the contract before delivery of goods for customers in the retail channel. Payment terms for distributors and OEMs are due within 30 - 60 days after shipment. In such instances, the Company records a customer deposit liability. The Company recognizes these contract liabilities as sales after the revenue criteria are met. The company had $1,779 of contract liabilities as of January 1, 2021. As of September 30, 2022 and December 31, 2021, the contract liability related to the Company’s customer deposits approximated $287 and $434 , respectively. The entire contract liability balance as of December 31, 2021 was recognized as revenue during the Nine months ended September 30, 2022. | Revenue Recognition Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company excludes from the transaction price all taxes that are assessed by a governmental authority and imposed on and concurrent with the Company’s revenue transactions, and therefore presents these taxes (such as sales tax) on a net basis in operating revenues on the Statements of Income. Revenue is recognized when control of the promised goods is transferred to the customer or distributor, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Revenue associated with products holding rights of return are recognized when the Company concludes there is not a risk of significant revenue reversal in the future periods for the expected consideration in the transaction. There are no material instances including discounts and refunds where variable consideration is constrained and not recorded at the initial time of sale. Generally, our revenue is recognized at a point in time for standard promised goods at the time of shipment when title and risk of loss pass to the customer. The Company may receive payments at the onset of the contract before delivery of goods for customers in the retail channel. In such instances, the Company records a customer deposit liability. Payment terms for distributors and OEMs are due within 30-60 days after shipment. The Company recognizes these contract liabilities as sales after the revenue criteria are met. As of December 31, 2021 and 2020, the contract liability related to the Company’s customer deposits approximated $434 and $1,779, respectively. The entire contract liability balance as of December 31, 2020 was recognized as revenue during the year ended December 31, 2021. Disaggregation of Revenue: The following table present our disaggregated revenues by distribution channel: Sales 2021 2020 Retail $ 59,042 $ 33,314 Distributor 10,733 10,381 Original equipment manufacture 8,225 3,492 Total $ 78,000 $ 47,187 Shipping and Handling Shipping and handling fees paid by customers are recorded within net sales, with the related expenses recorded in cost of sales. Shipping and handling costs associated with outbound freight are included in sales and marketing expenses. Shipping and handling costs associated with outbound freight totaled $5,105 and $2,568 for the years ended December 31, 2021 and 2020, respectively. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Product Warranty The Company offers assurance type warranties from 5 to 10 years on its products. The Company estimates the costs associated with the warranty obligation using historical data of warranty claims and costs incurred to satisfy those claims. The Company estimates, based upon a review of historical warranty claim experience, the costs that may be incurred under our warranties and record a liability in the amount of such estimate at the time a product is sold. Factors that affect our warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our recorded warranty liability and adjust the accrual as claims data and historical experience warrants. The Company has assessed the costs of fulfilling its existing assurance type warranties and has determined that the estimated outstanding warranty obligation on December 31, 2021 and 2020 are immaterial to the Company’s financial statements. Returns and Sales Allowances The provision for returns and sales allowances is determined by an analysis of the historical rate of returns and sales allowances over recent quarters and adjusted to reflect management’s future expectations. The Company has accrued for sales allowances as of December 31, 2021 in the amount of $170. There was no accrual for sales allowances as of December 31, 2020. |
Disaggregation of Revenue | Disaggregation of Revenue The following table presents our disaggregated revenues by distribution channel: For the Nine Months Ended September 30, Sales 2022 2021 Retail $ 35,211 $ 44,221 Distributor 6,544 6,910 Original equipment manufacture 24,287 6,690 Total 66,042 57,821 | |
Shipping and Handling | Shipping and Handling Shipping and handling fees paid by customers are recorded within net sales, with the related expenses recorded in cost of sales. Shipping and handling costs associated with outbound freight are included in Sales and marketing expenses. Shipping and handling costs associated with outbound freight totaled $4,042 and $3,912 for the Nine months ended September 30, 2022 and 2021, respectively. | |
Concentration of Credit Risk | Concentrations Receivables from one customer comprised approximately 43% of accounts receivable as of September 30 2022. Receivables from two customers comprised approximately 42% and 16% , respectively, of accounts receivable as of December 31, 2021. For the nine months ended September 30, 2022, one customer accounted for approximately 20% of the Company’s total revenue. There are no significant revenue concentrations for the nine months ended September 30, 2021. Payables to one vendor comprised approximately 45% of accounts payable as of September 30, 2022. There are no significant payable concentrations as of December 31, 2021 For the nine months ended September 30, 2022, one vendor accounted for approximately 24% of the Company’s total purchases. For the nine months ended September 30, 2021, two vendors accounted for approximately 20% and 12% of the Company’s total purchases. | Concentrations There are no significant revenue concentrations for the years ended December 31, 2021 and 2020. Receivables from two customers comprised approximately 42% and 16%, respectively, of accounts receivable as of December 31, 2021. Receivables from one customer comprised approximately 22% of accounts receivable as of December 31, 2020. There are no other significant accounts receivable concentrations. For the year ended December 31, 2021, three vendors accounted for approximately 27%, 10% and 10% of the Company’s total purchases, respectively. For the year ended December 31, 2020, four vendors accounted for approximately 19%, 14%, 11% and 10% of the Company’s total purchases, respectively. |
Research and Development | Research and Development The Company expenses research and development costs as incurred. Research and development expenses include salaries, contractor and consultant fees, supplies and materials, as well as costs related to other overhead such as depreciation, facilities, utilities, and other departmental expenses. The costs we incur with respect to internally developed technology and engineering services are included in research and development expenses as incurred as they do not directly relate to acquisition or construction of materials, property or intangible assets that have alternative future uses. | Research and Development The Company expenses research and development costs as incurred. Research and development expenses include salaries, contractor and consultant fees, supplies and materials, as well as costs related to other overhead such as depreciation, facilities, utilities, and other departmental expenses. The costs we incur with respect to internally developed technology and engineering services are included in research and development expenses as incurred as they do not directly relate to acquisition or construction of materials, property or intangible assets that have alternative future uses. |
Advertising | Advertising The Company expenses advertising costs as they are incurred and are included in selling and marketing expenses. Advertising expenses amounted to $1,777 and $1,069 for the nine months ended September 30, 2022 and 2021, respectively. | Advertising The Company expenses advertising costs as they are incurred and are included in selling and marketing expenses. Advertising expenses amounted to $1,690 and $1,069 for the years ending 2021 and 2020, respectively. |
Stock-Based Compensation | Stock-Based Compensation Stock based compensation costs are based on the fair value of the underlying option calculated using the Black Scholes option pricing model and recognized as expense on a straight line basis over the requisite service period, which is the vesting period. The Company measures equity based compensation awards granted to non employees at fair value as the awards vest and recognizes the resulting value as compensation expense at each financial reporting period. | Stock-Based Compensation The Company accounts for stock-based compensation arrangements with employees and non-employee consultants using a fair value method which requires the recognition of compensation expense for costs related to all stock-based payments, including stock options (Note 8). The fair value method requires the Company to estimate the fair value of stock-based payment awards to employees and non-employees on the date of grant using an option pricing model. Stock-based compensation costs are based on the fair value of the underlying option calculated using the Black Scholes option pricing model and recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. The Company measures equity-based compensation awards granted to non-employees at fair value as the awards vest and recognizes the resulting value as compensation expense at each financial reporting period. Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, expected dividend yield, expected term, risk free rate of return, and the estimated fair value of the underlying common stock. Due to the lack of company specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The group of representative companies have characteristics similar to the Company and focus on the lithium-ion battery industry. The Company uses the simplified method, which is the average of the final vesting tranche date and the contractual term, to calculate the expected term for options granted to employees as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company uses an assumed dividend yield of zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. The Company accounts for forfeitures as they occur. |
Net Income (Loss) Per Share of Common Stock | Earnings per Common Share We calculate basic earnings per share pursuant to the two-class method as a result of the issuance of Series A Preferred stock in 2016. Our Series A Preferred Stock is considered a participating security because, in the event that we pay a dividend or make a distribution on the outstanding common stock, we shall also pay each holder of the Series Preferred Stock a dividend on an as-converted basis. The two-class method is an earnings allocation formula that determines earnings per share for common stock and participating securities according to dividend and participation rights in undistributed earnings. Under this method, all earnings, distributed and undistributed, are allocated to common shares and participating securities based on their respective rights to receive dividends. Diluted earnings per common share is calculated using the treasury stock method for options. The following table sets forth the information needed to compute basic and diluted earnings per share for the Nine months ended September 30, 2022 and 2021: September 30, September 30, 2022 2021 Basic (Loss) Earnings per common share Net (Loss) Income $ (7,456) $ 4,421 (Loss) Income available for distribution (7,456) 4,421 Income allocated to participating securities — (1,469) Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 September 30, September 30, 2022 2021 Basic (loss) Earnings per common share: Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 Weighted average number of common shares-basic 21,384,734 20,063,211 (Loss) Earnings per share, basic $ (0.35) $ 0.15 Diluted (loss) earnings per common share: Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 Weighted average number of common shares-basic 21,384,734 20,063,211 Dilutive effect related to stock options — 1,862,894 Weighted average diluted shares outstanding 21,384,734 21,926,105 (Loss) Earnings per share, diluted $ (0.35) $ 0.13 The following table sets forth the number of potential shares of common stock that have been excluded from diluted net (loss) income per share net (loss) income per share because their effect was anti-dilutive: September 30, September 30, 2022 2021 Options 3,100,524 — Weighted average number of common shares‑basic 3,100,524 — | Earnings per Common Share We calculate basic earnings per share pursuant to the two-class method as a result of the issuance of Series A Preferred stock in 2016. Our Series A Preferred Stock is considered a participating security because, in the event that we pay a dividend or make a distribution on the outstanding common stock, we shall also pay each holder of the Series Preferred Stock a dividend on an as-converted basis. The two-class method is an earnings allocation formula that determines earnings per share for common stock and participating securities according to dividend and participation rights in undistributed earnings. Under this method, all earnings, distributed and undistributed, are allocated to common shares and participating securities based on their respective rights to receive dividends. Diluted earnings per common share is calculated using the treasury stock method for options. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The following table sets forth the information needed to compute basic and diluted earnings per share for the years ended December 31, 2021 and 2020: December 31, December 31, 2021 2020 Basic Earnings per common share Net Income $ 4,338 $ 6,878 Income available for distribution 4,338 6,878 Income allocated to participating securities, Net (1,405) (2,290) Income available to common shareholders $ 2,933 $ 4,588 December 31, December 31, 2021 2020 Basic earnings per common share: Net Income available to common shareholders $ 2,933 $ 4,588 Weighted average number of common shares-basic 20,101,129 20,040,470 Earnings per share, basic $ 0.15 $ 0.23 Diluted earnings per common share: Net Income available to common shareholders $ 2,933 $ 4,588 Weighted average number of common shares-basic 20,101,129 20,040,470 Dilutive effect related to stock options 1,829,979 1,348,315 Weighted average diluted shares outstanding 21,931,108 21,388,785 Earnings per share, diluted $ 0.13 $ 0.21 For all periods presented, there were no outstanding shares that were potentially anti-dilutive. |
Income Taxes | Income Taxes Deferred income tax assets and liabilities (Note 5) are determined based on the estimated future tax effects of net operating loss, credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company recognizes a tax benefit for an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The Company’s accounting policy is to include penalties and interest related to income taxes if any, in selling, general and administrative expenses. | Income Taxes Deferred income tax assets and liabilities (Note 7) are determined based on the estimated future tax effects of net operating loss, credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company recognizes a tax benefit for an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The Company has a liability of $0 and $19 as of December 31, 2021 and 2020, respectively, of uncertain tax positions. The Company’s accounting policy is to include penalties and interest related to income taxes if any, in selling, general and administrative expenses. |
Segment Reporting | Segment Reporting Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the Company’s Chief Executive Officer to make decisions with respect to resource allocation and assessment of performance. To date, the Company has viewed its operations and manages its business as one operating segment. | Segment Reporting Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the Company’s Chief Executive Officer to make decisions with respect to resource allocation and assessment of performance. To date, the Company has viewed its operations and manages its business as one operating segment. |
COVID-19 | COVID-19 The Company is closely monitoring the impact of COVID-19 on its business, including how it will affect its customers, workforce, suppliers, vendors, and production and distribution channels, as well as its financial statements. The extent to which COVID-19 impacts the Company's business and financial results will depend on numerous evolving factors, including, but not limited to: the magnitude and duration of COVID-19, the extent to which it will impact macroeconomic conditions, including interest rates, employment rates and consumer confidence, the speed of the anticipated recovery, and governmental, business and individual consumer reactions to the pandemic. While there was not a material impact to the Company's financial statements as of September 30, 2022 and December 31, 2021 and for the nine months ended September 30, 2022 and 2021, respectively, COVID-19 could result in material impacts to the Company's financial statements in future reporting periods. | COVID-19 On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law. The CARES Act provides a substantial stimulus and assistance package intended to address the impact of COVID-19, including tax relief and government loans, grants, and investments. The CARES Act did not have a material impact on the Company’s financial statements. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The Company is closely monitoring the impact of COVID-19 on its business, including how it will affect its customers, workforce, suppliers, vendors, and production and distribution channels, as well as its financial statements. The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous evolving factors, including, but not limited to the magnitude and duration of COVID-19, the extent to which it will impact macroeconomic conditions, including interest rates, employment rates and consumer confidence, the speed of the anticipated recovery, and governmental, business, and individual consumer reactions to the pandemic. We have experienced longer lead times in the supply of our components because of global supply chain disruptions caused in-part by the ongoing COVID-19 pandemic, which have led to the build-up in inventory as well as the significant increase in prepaid inventory as suppliers are requiring upfront deposits. While there was not a material impact to the Company’s financial statements as of and for the years ended December 31, 2021 and 2020, respectively, COVID-19 could result in material impacts to the Company’s financial statements in future reporting periods. |
SUMMARY OF SIGNIFICANT ACCOU_13
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Schedule of information needed to compute basic and diluted earnings per share | For the Three Months For the Three Months For the Nine Months For the Nine Months Ended Ended Ended Ended September September 30, September 30, September 30, 30, 2022 2021 2022 2021 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ (1,919,615) $ 2,690,543 $ (1,298,108) $ 2,689,709 Denominator: Basic weighted average shares outstanding 10,307,037 9,453,125 13,957,179 5,008,929 Basic net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.54 Diluted weighted average shares outstanding 10,307,037 9,672,826 13,957,179 5,356,456 Diluted net income (loss) per share $ (0.19) $ 0.28 $ (0.09) $ 0.50 | For the period from June 23, 2020 (inception) For the year through ended December 31, December 31, 2021 2020 Basic and diluted net income (loss) per share: Numerator: Net income (loss) $ 1,910,487 $ (1,000) Denominator: Basic weighted average shares outstanding 7,732,021 2,750,000 Basic net income (loss) per common share $ 0.25 $ (0.00) Diluted weighted average shares outstanding 7,991,952 2,750,000 Diluted net income (loss) per common share $ 0.24 $ (0.00) |
New Dragonfly | ||
Schedule of various classes of property and equipment and estimated useful lives | Office furniture and equipment 3 to 7 years Vehicles 5 years Machinery and equipment 3 to 7 years Leasehold improvements Remaining Term of Lease | Office furniture and equipment 3 to 7 years Machinery and equipment 3 to 7 years Leasehold improvements Remaining Term of Lease |
Schedule of disaggregated revenues by distribution channel | The following table presents our disaggregated revenues by distribution channel: For the Nine Months Ended September 30, Sales 2022 2021 Retail $ 35,211 $ 44,221 Distributor 6,544 6,910 Original equipment manufacture 24,287 6,690 Total 66,042 57,821 | The following table present our disaggregated revenues by distribution channel: Sales 2021 2020 Retail $ 59,042 $ 33,314 Distributor 10,733 10,381 Original equipment manufacture 8,225 3,492 Total $ 78,000 $ 47,187 |
Schedule of information needed to compute basic and diluted earnings per share | September 30, September 30, 2022 2021 Basic (Loss) Earnings per common share Net (Loss) Income $ (7,456) $ 4,421 (Loss) Income available for distribution (7,456) 4,421 Income allocated to participating securities — (1,469) Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 September 30, September 30, 2022 2021 Basic (loss) Earnings per common share: Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 Weighted average number of common shares-basic 21,384,734 20,063,211 (Loss) Earnings per share, basic $ (0.35) $ 0.15 Diluted (loss) earnings per common share: Net (Loss) Income available to common shareholders $ (7,456) $ 2,952 Weighted average number of common shares-basic 21,384,734 20,063,211 Dilutive effect related to stock options — 1,862,894 Weighted average diluted shares outstanding 21,384,734 21,926,105 (Loss) Earnings per share, diluted $ (0.35) $ 0.13 | The following table sets forth the information needed to compute basic and diluted earnings per share for the years ended December 31, 2021 and 2020: December 31, December 31, 2021 2020 Basic Earnings per common share Net Income $ 4,338 $ 6,878 Income available for distribution 4,338 6,878 Income allocated to participating securities, Net (1,405) (2,290) Income available to common shareholders $ 2,933 $ 4,588 December 31, December 31, 2021 2020 Basic earnings per common share: Net Income available to common shareholders $ 2,933 $ 4,588 Weighted average number of common shares-basic 20,101,129 20,040,470 Earnings per share, basic $ 0.15 $ 0.23 Diluted earnings per common share: Net Income available to common shareholders $ 2,933 $ 4,588 Weighted average number of common shares-basic 20,101,129 20,040,470 Dilutive effect related to stock options 1,829,979 1,348,315 Weighted average diluted shares outstanding 21,931,108 21,388,785 Earnings per share, diluted $ 0.13 $ 0.21 For all periods presented, there were no outstanding shares that were potentially anti-dilutive. |
Schedule of potential shares of common stock excluded from diluted net (loss) income per share | The following table sets forth the number of potential shares of common stock that have been excluded from diluted net (loss) income per share net (loss) income per share because their effect was anti-dilutive: September 30, September 30, 2022 2021 Options 3,100,524 — Weighted average number of common shares‑basic 3,100,524 — |
INVENTORY (Tables)_2
INVENTORY (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
New Dragonfly | ||
Schedule of inventories | On September 30, 2022 and December 31, 2021 inventory consists of the following: September 30, December 31, 2022 2021 Raw material $ 29,631 $ 22,885 Finished goods 9,856 4,242 Total inventory $ 39,487 $ 27,127 | Inventory consists of the following as of: December 31, December 31, 2021 2020 Raw material $ 22,885 $ 4,419 Work in process — 172 Finished goods 4,242 1,357 Total inventory $ 27,127 $ 5,948 |
OPERATING LEASES (Tables)_2
OPERATING LEASES (Tables) - New Dragonfly | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Schedule of table representing the breakout of the operating leases | The following table presents the breakout of the operating leases as of: September 30, December 31, 2022 2021 Operating lease right-of-use assets $ 4,878 $ 5,709 Short-term operating lease liabilities 1,157 1,082 Long-term operating lease liabilities 3,821 4,694 Total operating lease liabilities $ 4,978 $ 5,776 Weighted average remaining lease term 3.8 years 4.6 years Weighted average discount rate 5.2 % 5.2 % | The following table presents the breakout of the operating leases as of: December 31, December 31, 2021 2020 Operating lease right-of-use assets $ 5,709 $ 993 Short-term operating lease liabilities 1,082 225 Long-term operating lease liabilities 4,694 758 Total operating lease liabilities $ 5,776 $ 983 Weighted average remaining lease term 4.6 years 3.9 years Weighted average discount rate 5.2 % 6.0 % |
Schedule of the future minimum lease payments under the operating leases | At September 30, 2022, the future minimum lease payments under these operating leases are as follows: 2022 $ 342 2023 1,399 2024 1,435 2025 1,440 2026 893 Total lease payments 5,509 Less imputed interest 531 Total operating lease liabilities $ 4,978 | At December 31, 2021, the future minimum lease payments under these operating leases are as follows: 2022 $ 1,357 2023 1,399 2024 1,435 2025 1,440 2026 893 Total lease payments 6,524 Less imputed interest 748 Total operating lease liabilities 5,776 |
LONG TERM DEBT (Tables)_2
LONG TERM DEBT (Tables) - New Dragonfly | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Summary of deposits into reserve accounts | Initial deposits into the reserve accounts consisted of the following items: Payment Reserve Fund $ 3,044 Capitalized Interest Fund 144 Total $ 3,188 | Deposits into the reserve accounts consisted of the following items: Payment Reserve Fund $ 3,044 Capitalized Interest Fund 144 Total $ 3,188 |
Summary of future debt maturities | At September 30, 2022, the future debt maturities are as follows: For Years Ended December 31, 2022 (3 months) $ 1,875 2023 22,500 2024 20,625 Total 45,000 Less: Unamortized debt issuance costs, noncurrent (4,289) Total debt 40,711 Less: current portion of debt, net of debt discount (16,529) Total long‑term debt $ 24,182 | At December 31, 2021, the future debt maturities are as follows: 2022 $ 1,875 2023 22,500 2024 20,625 Total 45,000 Less: Unamortized debt issuance costs (6,072) Total debt 38,928 Less: current portion of debt (1,875) Total long-term debt $ 37,053 |
COMMON STOCK (Tables)_2
COMMON STOCK (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
New Dragonfly | ||
Summary of reserved shares of common stock for issuance | September 30, December 31, 2022 2021 Convertible preferred stock outstanding 10,000,000 10,000,000 Options issued and outstanding 3,100,524 3,122,398 Common stock outstanding 22,634,276 20,875,475 Shares available for future issuance (1) 540,902 10,327 Total 36,275,702 34,008,200 (1) During March 2022, the Company increased the shares authorized under the plan by 1,000,000 | 2021 2020 Convertible preferred stock outstanding 10,000,000 10,000,000 Options issued and outstanding 3,122,398 2,563,080 Common stock outstanding 20,875,475 20,040,470 Shares available for future issuance 10,327 404,650 Total 34,008,200 33,008,200 |
STOCK-BASED COMPENSATION (Tab_2
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
New Dragonfly | ||
Schedule of option activity and related information | A summary of the Company’s option activity and related information follows: Weighted ‑ Average Weighted ‑ Average Remaining Aggregate Number of Weighted ‑ Average Grant Date Contractual Life intrinsic Options Exercise Price Fair Value (in years) value Balances, January 1, 2021 2,563,080 $ 0.45 $ — 7.92 $ 650,965 Options granted 1,000,538 3.41 1.94 — Options forfeited (299,939) 1.21 1.83 — Options exercised (49,727) 0.53 — — Balances, September 30, 2021 3,213,952 $ 1.30 $ — 7.80 $ 7,616,691 Balances, January 1, 2022 3,122,398 $ 1.98 $ — 8.52 $ 6,549,591 Options granted 509,500 4.08 1.81 — Options forfeited (40,075) 3.29 2.07 — Options exercised (491,299) 1.44 — — Balances, September 30, 2022 3,100,524 $ 2.40 $ — 8.22 $ 5,220,204 At September 30, 2022 Vested and Exercisable 864,984 $ 1.53 7.83 $ 2,201,553 Vested and expected to vest 2,235,540 $ 2.73 8.37 $ 3,018,651 | A summary of the Company’s option activity and related information follows: Weighted Weighted- Average Aggregate Weighted- Average Remaining intrinsic Number of Average Grant Date Contractual value Options Exercise Price Fair Value Life (in years) (in thousands) Balances, January 1, 2020 2,157,950 $ 0.39 0.39 8.54 651 Options granted 620,950 0.69 1.92 — Options forfeited (183,550) 0.52 0.93 — Options exercised (32,270) 0.46 0.64 — Balances, December 31, 2020 2,563,080 $ 0.45 0.72 7.92 651 Options granted 1,750,551 3.41 2.03 3,551 Options forfeited (356,228) 1.44 1.82 — Options exercised (835,005) 0.51 0.53 442 Balances, December 31, 2021 3,122,398 $ 1.98 1.38 8.52 6,550 At December 31, 2021 Vested and Exercisable 550,601 $ 0.88 7.42 1,762 Vested and expected to vest 3,122,398 $ 1.98 7.92 6,550 |
SUMMARY OF SIGNIFICANT ACCOU_14
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash, Restricted Cash, and Cash Equivalents and Accounts Receivable (Details) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2021 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash equivalents | $ 0 | $ 0 | $ 0 | $ 0 |
New Dragonfly | ||||
Cash equivalents | 0 | $ 0 | $ 0 | 0 |
Period within which payment is due from customers | 30 days | 30 days | ||
Allowance for doubtful accounts | 50,000 | $ 54,000 | $ 50,000 | $ 0 |
New Dragonfly | Immaterial error correction due to costs previously deferred incorrectly | ||||
Expense due to previous immaterial error | 857,000 | |||
Amount of immaterial error | $ 450,000 | $ 407,000 |
SUMMARY OF SIGNIFICANT ACCOU_15
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment and Impairment of Long Lived Assets (Details) - New Dragonfly - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property and Equipment | ||||
Depreciation and amortization | $ 648 | $ 432 | $ 617 | $ 198 |
Office furniture and equipment | Minimum | ||||
Property and Equipment | ||||
Estimated useful life (in years) | 3 years | 3 years | ||
Office furniture and equipment | Maximum | ||||
Property and Equipment | ||||
Estimated useful life (in years) | 7 years | 7 years | ||
Vehicles | ||||
Property and Equipment | ||||
Estimated useful life (in years) | 5 years | |||
Machinery and equipment | Minimum | ||||
Property and Equipment | ||||
Estimated useful life (in years) | 3 years | 3 years | ||
Machinery and equipment | Maximum | ||||
Property and Equipment | ||||
Estimated useful life (in years) | 7 years | 7 years | ||
Leasehold improvements | ||||
Property and Equipment | ||||
Remaining Term of Lease | Remaining Term of Lease | Remaining Term of Lease |
SUMMARY OF SIGNIFICANT ACCOU_16
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition and Shipping and Handling (Details) - New Dragonfly - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue Recognition | ||||
Contract liability related to customer deposits | $ 287 | $ 434 | $ 1,779 | |
Shipping and handling costs | $ 4,042 | $ 3,912 | $ 5,105 | $ 2,568 |
Minimum | ||||
Revenue Recognition | ||||
Payment term for distributors and OEMs | 30 years | 30 days | ||
Maximum | ||||
Revenue Recognition | ||||
Payment term for distributors and OEMs | 60 days | 60 days |
SUMMARY OF SIGNIFICANT ACCOU_17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Disaggregated revenues by distribution channel (Details) - New Dragonfly - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue Recognition | ||||
Total Sales | $ 66,042 | $ 57,821 | $ 78,000 | $ 47,187 |
Retail | ||||
Revenue Recognition | ||||
Total Sales | 35,211 | 44,221 | 59,042 | 33,314 |
Distributor | ||||
Revenue Recognition | ||||
Total Sales | 6,544 | 6,910 | 10,733 | 10,381 |
Original equipment manufacture | ||||
Revenue Recognition | ||||
Total Sales | $ 24,287 | $ 6,690 | $ 8,225 | $ 3,492 |
SUMMARY OF SIGNIFICANT ACCOU_18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentrations (Details) - New Dragonfly | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2022 customer item | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2021 customer | Dec. 31, 2021 item | Dec. 31, 2020 customer | |
Concentrations | ||||||
Number of customers | 1 | 2 | 1 | |||
Number of vendors | 1 | 3 | 2 | 4 | ||
Receivables | Credit Concentration Risk | Customer one | ||||||
Concentrations | ||||||
Concentration risk (in percent) | 43% | 42% | 22% | |||
Receivables | Credit Concentration Risk | Customer two | ||||||
Concentrations | ||||||
Concentration risk (in percent) | 16% | |||||
Revenue | Customer concentration risk | Customer one | ||||||
Concentrations | ||||||
Concentration risk (in percent) | 20% | |||||
Payables | Supplier Concentration Risk | Vendor one | ||||||
Concentrations | ||||||
Concentration risk (in percent) | 45% | |||||
Purchases | Supplier Concentration Risk | Vendor one | ||||||
Concentrations | ||||||
Concentration risk (in percent) | 20% | 27% | ||||
Purchases | Supplier Concentration Risk | Vendor two | ||||||
Concentrations | ||||||
Concentration risk (in percent) | 12% | 10% | ||||
Purchases | Supplier Concentration Risk | Customer one | ||||||
Concentrations | ||||||
Concentration risk (in percent) | 24% |
SUMMARY OF SIGNIFICANT ACCOU_19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising, Stock-Based Compensation and Segment Reporting (Details) - New Dragonfly $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 USD ($) segment | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Advertising expenses | $ 1,777 | $ 1,069 | $ 1,690 | $ 1,069 |
Dividend yield (in percent) | 0% | 0% | 0% | |
Number of operating segments | 1 | 1 | 1 |
SUMMARY OF SIGNIFICANT ACCOU_20
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Information needed to compute basic and diluted earnings per share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Basic (Loss) Earnings per common share | |||||||||||
Net income | $ (1,919,615) | $ (570,333) | $ 1,191,840 | $ 2,690,543 | $ (834) | $ (1,000) | $ (1,000) | $ (1,298,108) | $ 2,689,709 | $ 1,910,487 | |
Income available to common shareholders | (1,919,615) | 2,690,543 | (1,000) | (1,298,108) | 2,689,709 | 1,910,487 | |||||
Basic (loss) Earnings per common share: | |||||||||||
Net Income available to common shareholders | $ (1,919,615) | $ 2,690,543 | $ (1,000) | $ (1,298,108) | $ 2,689,709 | $ 1,910,487 | |||||
Weighted Average Number of Shares - Basic | 10,307,037 | 9,453,125 | 2,750,000 | 13,957,179 | 5,008,929 | 7,732,021 | |||||
Earnings Per Share - Basic | $ (0.19) | $ 0.28 | $ 0 | $ (0.09) | $ 0.54 | $ 0.25 | |||||
Diluted (loss) earnings per common share: | |||||||||||
Net Income available to common shareholders | $ (1,919,615) | $ 2,690,543 | $ (1,000) | $ (1,298,108) | $ 2,689,709 | $ 1,910,487 | |||||
Weighted Average Number of Shares - Basic | 10,307,037 | 9,453,125 | 2,750,000 | 13,957,179 | 5,008,929 | 7,732,021 | |||||
Weighted average diluted shares outstanding (in shares) | 10,307,037 | 9,672,826 | 2,750,000 | 13,957,179 | 5,356,456 | 7,991,952 | |||||
Earnings Per Share - Diluted | $ (0.19) | $ 0.28 | $ 0 | $ (0.09) | $ 0.50 | $ 0.24 | |||||
New Dragonfly | |||||||||||
Basic (Loss) Earnings per common share | |||||||||||
Net income | $ (7,456,000) | $ 4,421,000 | $ 4,338,000 | $ 6,878,000 | |||||||
(Loss) Income available for distribution | (7,456,000) | 4,421,000 | 4,338,000 | 6,878,000 | |||||||
Income allocated to participating securities | (1,469,000) | 1,405,000 | 2,290,000 | ||||||||
Income available to common shareholders | (7,456,000) | 2,952,000 | 2,933,000 | 4,588,000 | |||||||
Basic (loss) Earnings per common share: | |||||||||||
Net Income available to common shareholders | $ (7,456,000) | $ 2,952,000 | $ 2,933,000 | $ 4,588,000 | |||||||
Weighted Average Number of Shares - Basic | 21,131,993 | 20,063,211 | 20,101,129 | 20,040,470 | |||||||
Earnings Per Share - Basic | $ (0.35) | $ 0.15 | $ 0.15 | $ 0.23 | |||||||
Diluted (loss) earnings per common share: | |||||||||||
Net Income available to common shareholders | $ (7,456,000) | $ 2,952,000 | $ 2,933,000 | $ 4,588,000 | |||||||
Weighted Average Number of Shares - Basic | 21,131,993 | 20,063,211 | 20,101,129 | 20,040,470 | |||||||
Dilutive effect related to stock options | 0 | 1,862,894 | 1,829,979 | 1,348,315 | |||||||
Weighted average diluted shares outstanding (in shares) | 21,131,993 | 21,926,105 | 21,931,108 | 21,388,785 | |||||||
Earnings Per Share - Diluted | $ (0.35) | $ 0.13 | $ 0.13 | $ 0.21 |
SUMMARY OF SIGNIFICANT ACCOU_21
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Potential shares of common stock excluded from diluted net (loss) income per share (Details) - shares | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Purchase an aggregate shares | 14,115,358 | 14,115,358 | ||
New Dragonfly | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Purchase an aggregate shares | 3,100,524 | 0 | 0 | 0 |
Options | New Dragonfly | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Purchase an aggregate shares | 3,100,524 | 0 |
INVENTORY (Details)_2
INVENTORY (Details) - New Dragonfly - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Raw material | $ 29,631 | $ 22,885 | $ 4,419 |
Finished goods | 9,856 | 4,242 | 1,357 |
Total inventory | $ 39,487 | $ 27,127 | $ 5,948 |
OPERATING LEASES (Details)_2
OPERATING LEASES (Details) - New Dragonfly - USD ($) $ in Thousands | 1 Months Ended | 8 Months Ended | 9 Months Ended | 12 Months Ended | ||
Feb. 02, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Sep. 30, 2022 | Dec. 31, 2020 | |
Renewal lease term | 5 years | 5 years | 5 years | |||
Annual escalating monthly payments, minimum | $ 47 | $ 56 | $ 56 | $ 4 | $ 4 | |
Annual escalating monthly payments, maximum | $ 55 | $ 63 | $ 63 | $ 11 | $ 11 | |
Lease agreement term | 124 months | |||||
Monthly base rent | $ 230 | |||||
Fix operating expense costs | 23 | |||||
Estimated monthly property taxes | $ 21 | |||||
Percentage of escalation of monthly base rent | 3% | |||||
Percentage of escalation of fix operating expense costs | 2.40% | |||||
Expected completion period of construction of building | 2 years |
OPERATING LEASES - Breakout o_2
OPERATING LEASES - Breakout of operating leases (Details) - New Dragonfly - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Operating lease right-of-use assets | $ 4,878 | $ 5,709 | $ 5,709 | $ 993 |
Short-term operating lease liabilities | 1,157 | 1,082 | 1,082 | 225 |
Long-term operating lease liabilities | 3,821 | 4,694 | 4,694 | 758 |
Total operating lease liabilities | $ 4,978 | $ 5,776 | $ 5,776 | $ 983 |
Weighted average remaining lease term | 3 years 9 months 18 days | 4 years 7 months 6 days | 4 years 7 months 6 days | 3 years 10 months 24 days |
Weighted average discount rate | 5.20% | 5.20% | 5.20% | 6% |
OPERATING LEASES - Future Min_2
OPERATING LEASES - Future Minimum Lease Payments (Details) - New Dragonfly - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
2022 | $ 342 | |||
2023 | 1,399 | $ 1,357 | ||
2024 | 1,435 | 1,399 | ||
2025 | 1,440 | 1,435 | ||
2026 | 893 | 1,440 | ||
Total lease payments | 5,509 | 6,524 | ||
Less imputed interest | 531 | 748 | ||
Total operating lease liabilities | $ 4,978 | $ 5,776 | $ 5,776 | $ 983 |
LONG TERM DEBT (Details)_2
LONG TERM DEBT (Details) - New Dragonfly $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 USD ($) installment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Nov. 24, 2021 USD ($) | |
LONG TERM DEBT | ||||
Net proceeds from debt | $ 35,474 | |||
Gross proceeds from debt | 45,000 | $ 0 | ||
Deposits to certain reserve accounts | 3,188 | $ 3,188 | ||
Prepaid loan monitoring fee | 60 | |||
Debt issuance costs | 6,278 | $ 0 | ||
Number of equal installments of principal to be paid | installment | 24 | |||
Net balance of debt | $ 40,711 | 38,928 | ||
Unamortized debt discount | 6,072 | |||
Series 2021-6 Notes | ||||
LONG TERM DEBT | ||||
Face amount of debt | 45,000 | 45,000 | 45,000 | |
Insured amount | $ 45,000 | |||
Net proceeds from debt | 35,474 | |||
Gross proceeds from debt | 45,000 | 45,000 | ||
Deposits to certain reserve accounts | 3,188 | 3,188 | ||
Expenses withdrawn from gross proceeds | 6,338 | 6,338 | ||
Prepaid policy premiums and related costs | 4,725 | 4,725 | ||
Prepaid loan monitoring fee | 60 | $ 60 | ||
Debt issuance costs | $ 1,553 | |||
Interest per annum | 5.50% | 5.50% | ||
Late fee | $ 50 | $ 50 | ||
Default interest rate | 5% | 5% | ||
Number of equal installments of principal to be paid | 24 | |||
Periodic principal amount | $ 1,875 | $ 1,875 | ||
Interest expense incurred | 1,873 | 390 | ||
Amortization of the debt issuance costs | 1,783 | $ 77 | ||
Net balance of debt | 40,712 | |||
Unamortized debt discount | $ 4,288 |
LONG TERM DEBT - Initial deposi
LONG TERM DEBT - Initial deposits into the reserve accounts (Details) - New Dragonfly - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | Nov. 24, 2021 | |
Payment Reserve Fund | $ 3,044 | $ 3,044 | $ 3,044 |
Capitalized Interest Fund | 0 | 144 | 144 |
Total | 3,188 | $ 3,188 | |
Funds deposited into interest-bearing accounts | $ 0 | $ 0 |
LONG TERM DEBT - Future debt _3
LONG TERM DEBT - Future debt maturities (Details) - New Dragonfly - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Future debt maturities | ||
2022 | $ 1,875 | |
2023 | 22,500 | $ 1,875 |
2024 | 20,625 | 22,500 |
Total | 45,000 | 45,000 |
Less: Unamortized debt issuance costs, noncurrent | (4,289) | |
Total debt | 40,711 | 38,928 |
Less: current portion of debt, net of debt discount | (16,529) | (1,875) |
Total long-term debt | $ 24,182 | $ 37,053 |
REVOLVING NOTE AGREEMENT (Det_2
REVOLVING NOTE AGREEMENT (Details) - New Dragonfly - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Oct. 06, 2021 | Oct. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Maximum borrowing capacity | $ 8,000 | |||
Percentage of eligible accounts receivable | 80% | |||
Percentage of eligible inventory | 50% | |||
Proceeds from revolving note agreement | $ 5,000 | $ 5,000 | $ 5,000 | $ 0 |
ASSET PURCHASE AGREEMENT (Detai
ASSET PURCHASE AGREEMENT (Details) $ in Thousands | Jan. 01, 2022 USD ($) |
New Dragonfly | Bourns Production, Inc | |
Asset Acquisition [Line Items] | |
Purchase price for acquiring machinery and equipment | $ 197 |
RELATED PARTY (Details)
RELATED PARTY (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
New Dragonfly | Promissory Note with Related Party | Chief Financial Officer | |
Related Party Transaction [Line Items] | |
Repayment amount owned | $ 469 |
COMMON STOCK (Details)_2
COMMON STOCK (Details) - USD ($) | 1 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Jul. 12, 2022 | Mar. 31, 2022 | Dec. 31, 2020 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Aug. 05, 2022 | Sep. 30, 2021 | Aug. 10, 2021 | Mar. 04, 2021 | Dec. 31, 2019 | ||
Value of shares issued | [1],[2] | $ 25,000 | ||||||||||
Common shares, shares outstanding | 6,255,848 | 3,162,500 | 2,875,000 | |||||||||
New Dragonfly | ||||||||||||
Dividends on common stock declared | $ 0 | $ 0 | $ 0 | |||||||||
Value of shares issued | $ 15,000,000 | |||||||||||
Shares subject to possible redemption outstanding | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | ||||||
Options issued and outstanding | 2,563,080 | 3,100,524 | 3,122,398 | 2,563,080 | 3,213,952 | 2,157,950 | ||||||
Common shares, shares outstanding | 20,040,470 | 22,634,276 | 20,875,475 | 20,040,470 | ||||||||
Shares available for future issuance | 404,650 | 540,902 | 10,327 | 404,650 | ||||||||
Total | 33,008,200 | 36,275,702 | 34,008,200 | 33,008,200 | ||||||||
Additional number of shares authorized | 1,000,000 | |||||||||||
THOR Industries | New Dragonfly | ||||||||||||
Number of shares issued | 1,267,502 | |||||||||||
Issue price per share | $ 11.8343 | |||||||||||
Value of shares issued | $ 15,000,000 | |||||||||||
[1] Includes up to 412,500 shares of common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriter. On August 18, 2021, the underwriters’ exercised the over-allotment option in full, thus these shares are no longer subject to forfeiture (see Note 6). On March 4, 2021, the Company effected a 2.875 -for-1 stock split, resulting in 2,875,000 shares of common stock outstanding (see Note 5). On August 10, 2021, the Company effectuated a 1.1 -for-1 stock split, resulting in an aggregate of 3,162,500 shares of common stock outstanding (see Note 5). All share and per-share amounts have been retroactively restated to reflect the two stock splits. |
STOCK-BASED COMPENSATION - Op_2
STOCK-BASED COMPENSATION - Option activity (Details) - New Dragonfly - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||
Nov. 30, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Number of Options | ||||||
Balances at the beginning | 3,122,398 | 2,563,080 | 2,563,080 | 2,157,950 | ||
Options granted | 509,500 | 1,000,538 | 1,750,551 | 620,950 | ||
Options forfeited | (40,075) | (299,939) | (356,228) | (183,550) | ||
Options exercised | (491,299) | (49,727) | (835,005) | (32,270) | ||
Balances at the end | 3,100,524 | 3,213,952 | 3,122,398 | 2,563,080 | 2,157,950 | |
Vested and Exercisable | 864,984 | 550,601 | ||||
Vested and expected to vest | 2,235,540 | 3,122,398 | ||||
Weighted-Average Exercise Price | ||||||
Balances at the beginning (in dollars per share) | $ 1.98 | $ 0.45 | $ 0.45 | $ 0.39 | ||
Options granted (in dollars per share) | $ 3.41 | 4.08 | 3.41 | 3.41 | 0.69 | |
Options forfeited (in dollars per share) | 3.29 | 1.21 | 1.44 | 0.52 | ||
Options exercised (in dollars per share) | 1.44 | 0.53 | 0.51 | 0.46 | ||
Balances at the end (in dollars per share) | 2.40 | 1.30 | 1.98 | 0.45 | $ 0.39 | |
Vested and Exercisable (in dollars per share) | 1.53 | 0.88 | ||||
Vested and expected to vest (in dollars per share) | 2.73 | 1.98 | ||||
Weighted- Average Grant Date Fair Value | ||||||
Options granted (in dollars per share) | 1.81 | 1.94 | 2.03 | 1.92 | ||
Options forfeited (in dollars per share) | $ 2.07 | $ 1.83 | $ 1.82 | $ 0.93 | ||
Weighted Average Remaining Contractual Life (in years) and aggregate intrinsic value | ||||||
Weighted Average Remaining Contractual Life (in years) | 8 years 2 months 19 days | 7 years 9 months 18 days | 8 years 6 months 7 days | 7 years 11 months 1 day | 8 years 6 months 14 days | |
Vested and Exercisable (in years) | 7 years 9 months 29 days | 7 years 5 months 1 day | ||||
Vested and expected to vest (in years) | 8 years 4 months 13 days | 7 years 11 months 1 day | ||||
Balances at the beginning (in dollars) | $ 6,549,591 | $ 650,965 | $ 650,965 | $ 651,000 | ||
Balances at the end (in dollars) | 5,220,204 | $ 7,616,691 | 6,549,591 | $ 650,965 | $ 651,000 | |
Vested and Exercisable (in dollars) | 2,201,553 | 1,762,000 | ||||
Vested and expected to vest (in dollars) | $ 3,018,651 | $ 6,550,000 |
STOCK-BASED COMPENSATION - Sh_2
STOCK-BASED COMPENSATION - Share-based compensation expense (Details) - New Dragonfly - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||
Nov. 30, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Total compensation | $ 27 | $ 1,155 | $ 428 | $ 734 | $ 324 |
Shares unissued authorized and available for future awards | 540,902 | 10,327 | 404,650 | ||
Cost of Sales [Member] | |||||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Total compensation | $ 189 | 145 | $ 252 | $ 48 | |
Research and Development Expense [Member] | |||||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Total compensation | 307 | 55 | 95 | 23 | |
Selling and Marketing Expense [Member] | |||||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Total compensation | 326 | 89 | 156 | 61 | |
General and Administrative Expense [Member] | |||||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||||
Total compensation | $ 333 | $ 139 | $ 231 | $ 192 |
SUBSEQUENT EVENTS (Details)_2
SUBSEQUENT EVENTS (Details) - New Dragonfly - Subsequent Event | 1 Months Ended | |
Oct. 07, 2022 USD ($) item $ / shares shares | Dec. 31, 2022 USD ($) installment | |
Penny Warrants | ||
Subsequent Event [Line Items] | ||
Sale of Private Placement Warrants (in shares) | shares | 2,593,056 | |
Percentage of common stock issuable on exercise of warrants | 5.60% | |
$10 Warrants | ||
Subsequent Event [Line Items] | ||
Sale of Private Placement Warrants (in shares) | shares | 1,600,000 | |
Common stock per share | $ / shares | $ 10 | |
Business Combination Agreement | ||
Subsequent Event [Line Items] | ||
Multiplication factor | item | 1,182 | |
Denominator considered for multiplication factor | item | 41,500 | |
Number of shares issued for each share prior to merger | shares | 1 | |
Purchase agreement with CCM LLC | ||
Subsequent Event [Line Items] | ||
Maximum aggregate purchase price | $ | $ 150,000,000 | |
Separation and release agreement | Nichols | ||
Subsequent Event [Line Items] | ||
Amount of cash payment in one installment | $ | $ 100,000 | |
Amount of cash payment in monthly installments | $ | $ 1,000,000 | |
Number of installments for cash payment | installment | 1 | |
Period of options exercisable from termination date | 12 months | |
Period for payment of health insurance premiums from termination date by company | 18 months | |
Period for non-competition and non-solicitation covenants from termination date | 12 months |