Cover
Cover | 3 Months Ended |
Mar. 31, 2023 | |
Cover [Abstract] | |
Document Type | S-1/A |
Amendment Flag | true |
Amendment Description | Amendment No. 2 |
Entity Registrant Name | DRAGONFLY ENERGY HOLDINGS CORP. |
Entity Central Index Key | 0001847986 |
Entity Tax Identification Number | 85-1873463 |
Entity Incorporation, State or Country Code | NV |
Entity Address, Address Line One | 1190 Trademark Drive |
Entity Address, Address Line Two | #108 |
Entity Address, City or Town | Reno |
Entity Address, State or Province | NV |
Entity Address, Postal Zip Code | 89521 |
City Area Code | (775) |
Local Phone Number | 622-3448 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Elected Not To Use the Extended Transition Period | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Current Assets | |||
Cash | $ 15,791 | $ 17,781 | $ 25,586 |
Restricted cash | 3,044 | ||
Accounts receivable, net of allowance for doubtful accounts | 2,969 | 1,444 | 783 |
Inventory | 51,812 | 49,846 | 27,127 |
Prepaid expenses | 1,820 | 1,624 | 293 |
Prepaid inventory | 1,703 | 2,002 | 7,461 |
Prepaid income tax | 525 | 525 | |
Other current assets | 396 | 267 | 1,787 |
Total Current Assets | 75,016 | 73,489 | 66,081 |
Property and Equipment | |||
Machinery and equipment | 11,147 | 10,214 | 3,615 |
Office furniture and equipment | 275 | 275 | 201 |
Leasehold improvements | 1,717 | 1,709 | 1,307 |
Vehicle | 33 | 195 | 195 |
Total | 13,172 | 12,393 | 5,318 |
Less accumulated depreciation and amortization | (1,884) | (1,633) | (857) |
Property and Equipment, Net | 11,288 | 10,760 | 4,461 |
Operating lease right of use asset | 4,205 | 4,513 | 5,709 |
Total Assets | 90,509 | 88,762 | 76,251 |
Current Liabilities | |||
Accounts payable | 18,824 | 13,475 | 11,360 |
Accrued payroll and other liabilities | 8,199 | 6,295 | 2,608 |
Customer deposits | 418 | 238 | 434 |
Uncertain tax position liability | 128 | 128 | |
Income tax payable | 631 | ||
Notes payable, related party | 19,242 | 1,875 | |
Operating lease liability, current portion | 1,215 | 1,188 | 1,082 |
Total Current Liabilities | 50,483 | 40,566 | 17,990 |
Long-Term Liabilities | |||
Notes payable-noncurrent, net of debt issuance costs | 37,053 | ||
Deferred tax liabilities | 453 | ||
Warrant liabilities | 4,141 | 32,831 | |
Accrued expenses-long term | 361 | 492 | |
Operating lease liability, net of current portion | 3,209 | 3,541 | 4,694 |
Total Long-Term Liabilities | 7,711 | 36,864 | 42,200 |
Total Liabilities | 58,194 | 77,430 | 60,190 |
Commitments and Contingencies (See Note 5) | |||
Equity | |||
Common stock, 170,000,000 shares at $0.0001 par value, authorized, 45,795,502 and 43,272,728 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 5 | 4 | 4 |
Preferred stock, 5,000,000 shares at $0.0001 par value, authorized, no shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | |||
Additional paid in capital | 54,551 | 38,461 | 3,619 |
Retained deficit | (22,241) | (27,133) | 12,438 |
Total Equity | 32,315 | 11,332 | 16,061 |
Total Liabilities and Shareholders’ Equity | 90,509 | 88,762 | $ 76,251 |
Nonrelated Party [Member] | |||
Current Liabilities | |||
Notes payable, related party | 20,699 | 19,242 | |
Related Party [Member] | |||
Current Liabilities | |||
Notes payable, related party | $ 1,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | |||
Common stock, shares authorized | 170,000,000 | 170,000,000 | 170,000,000 |
Common shares, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common stock, shares issued | 45,795,502 | 43,272,728 | 36,496,998 |
Common stock, shares outstanding | 45,795,502 | 43,272,728 | 36,496,998 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 0 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Condensed Interim Consolidated
Condensed Interim Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||||
Net Sales | $ 18,791 | $ 18,303 | $ 86,251 | $ 78,000 |
Cost of Goods Sold | 14,048 | 12,808 | 62,247 | 48,375 |
Gross Profit | 4,743 | 5,495 | 24,004 | 29,625 |
Operating Expenses | ||||
Research and development | 880 | 339 | 2,764 | 2,689 |
General and administrative | 9,495 | 3,626 | 41,566 | 10,621 |
Selling and marketing | 4,184 | 3,092 | 13,671 | 9,848 |
Total Operating Expenses | 14,559 | 7,057 | 58,001 | 23,158 |
Loss From Operations | (9,816) | (1,562) | (33,997) | 6,467 |
Other Income (Expense) | ||||
Other income | 40 | 1 | ||
Interest expense | (3,815) | (1,263) | (6,945) | (519) |
Change in fair market value of warrant liability | 18,523 | 5,446 | ||
Debt extinguishment | (4,824) | |||
Total Other Income (Expense) | 14,708 | (1,263) | (6,283) | (518) |
Income (Loss) Before Taxes | 4,892 | (2,825) | (40,280) | 5,949 |
Income Tax (Benefit) Expense | (527) | (709) | 1,611 | |
Net Income (Loss) | $ 4,892 | $ (2,298) | $ (39,571) | $ 4,338 |
Income (Loss) Per Share- Basic | $ 0.11 | $ (0.06) | $ (1.03) | $ 0.12 |
Income (Loss) Per Share- Diluted | $ 0.10 | $ (0.06) | $ (1.03) | $ 0.11 |
Weighted Average Number of Shares- Basic | 45,104,515 | 36,542,944 | 38,565,307 | 35,579,137 |
Weighted Average Number of Shares- Diluted | 48,455,996 | 36,542,944 | 38,565,307 | 37,742,337 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Redeemable Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total | |
Balance at Dec. 31, 2020 | $ 2,000 | $ 4 | $ 451 | $ 8,100 | $ 8,555 | |
Balance, shares at Dec. 31, 2020 | 10,000,000 | 20,040,470 | ||||
Retroactive application of recapitalization | $ (2,000) | 2,000 | 2,000 | |||
Retroactive application of recapitalization, shares | (10,000,000) | 15,469,477 | ||||
Adjusted balance, beginning of period | $ 4 | 2,451 | 8,100 | 10,555 | ||
Adjusted balance, beginning of period, shares | 35,509,947 | |||||
Net income (loss) | 4,338 | 4,338 | ||||
Stock compensation expense | 734 | 734 | ||||
Exercise of stock options | 434 | $ 434 | ||||
Exercise of stock options, shares | 987,051 | 987,051 | [1] | |||
Balance at Dec. 31, 2021 | $ 4 | 3,619 | 12,438 | $ 16,061 | ||
Balance, shares at Dec. 31, 2021 | 36,496,998 | |||||
Before adjusted balance, beginning of period at Dec. 31, 2021 | $ 2,000 | $ 4 | 1,619 | 12,438 | 14,061 | |
Retroactive application of recapitalization | $ (2,000) | 2,000 | 2,000 | |||
Retroactive application of recapitalization, shares | (10,000,000) | 15,621,523 | ||||
Net income (loss) | (2,298) | (2,298) | ||||
Stock compensation expense | 288 | 288 | ||||
Exercise of stock options | 113 | $ 113 | ||||
Exercise of stock options, shares | 100,374 | 48,369 | [2] | |||
Balance, shares | 10,000,000 | 20,875,475 | ||||
Balance at Mar. 31, 2022 | $ 4 | 4,020 | 10,140 | $ 14,164 | ||
Balance, shares at Mar. 31, 2022 | 36,597,372 | |||||
Balance at Dec. 31, 2021 | $ 4 | 3,619 | 12,438 | 16,061 | ||
Balance, shares at Dec. 31, 2021 | 36,496,998 | |||||
Before adjusted balance, beginning of period at Dec. 31, 2021 | $ 2,000 | $ 4 | 1,619 | 12,438 | 14,061 | |
Net income (loss) | (39,571) | (39,571) | ||||
Stock compensation expense | 2,467 | 2,467 | ||||
Exercise of stock options | 706 | $ 706 | ||||
Exercise of stock options, shares | 581,351 | 581,351 | [1] | |||
Common stock issued in public offering (ATM), net of costs | 15,000 | $ 15,000 | ||||
Common stock issued in public offering (ATM), net of costs | 1,498,301 | |||||
Reverse capitalization, net of transaction costs (See Note 3) | ||||||
Reverse capitalization, net of transaction costs, shares (See Note 3) | 4,238,936 | |||||
Cashless exercise of liability classified warrants | 16,669 | 16,669 | ||||
Cashless exercise of liability classified warrants, shares | 457,142 | |||||
Balance at Dec. 31, 2022 | $ 4 | 38,461 | (27,133) | 11,332 | ||
Balance, shares at Dec. 31, 2022 | 43,272,728 | |||||
Net income (loss) | 4,892 | 4,892 | ||||
Stock compensation expense | 4,487 | 4,487 | ||||
Exercise of stock options | 93 | $ 93 | ||||
Exercise of stock options, shares | 36,009 | 36,009 | [2] | |||
Common stock issued in public offering (ATM), net of costs | 597 | $ 597 | ||||
Common stock issued in public offering (ATM), net of costs | 73,500,000 | |||||
Cashless exercise of liability classified warrants | $ 1 | 10,166 | 10,167 | |||
Cashless exercise of liability classified warrants, shares | 2,348,294 | |||||
Exercise of public warrants | 747 | $ 747 | ||||
Exercise of public warrants, shares | 64,971,000 | 64,971 | ||||
Balance at Mar. 31, 2023 | $ 5 | $ 54,551 | $ (22,241) | $ 32,315 | ||
Balance, shares at Mar. 31, 2023 | 45,795,502 | |||||
[1]Number of options and weighted average exercise price has been adjusted to reflect the exchange of Legacy Dragonfly’s stock options for New Dragonfly stock options at an exchange ratio of approximately 1.182 1.182 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Used in Operating Activities | ||||
Net Income (Loss) | $ 4,892,000 | $ (2,298,000) | $ (39,571,000) | $ 4,338,000 |
Adjustments to Reconcile Net Income (Loss) to Net Cash | ||||
Stock based compensation | 4,487,000 | 288,000 | 2,467,000 | 734,000 |
Debt extinguishment | 4,824,000 | |||
Amortization of debt discount | 219,000 | 613,000 | 1,822,000 | 206,000 |
Change in fair market value of warrant liability | (18,523,000) | (5,446,000) | ||
Deferred tax liability | (527,000) | (453,000) | 122,000 | |
Non-cash interest expense (paid-in kind) | 1,238,000 | 1,192,000 | ||
Provision for doubtful accounts | 52,000 | 108,000 | 50,000 | |
Depreciation and amortization | 297,000 | 192,000 | 891,000 | 617,000 |
Loss on disposal of property and equipment | 116,000 | 62,000 | 56,000 | 124,000 |
Assumption of Warrant Liability | 1,990,000 | |||
Changes in Assets and Liabilities | ||||
Accounts receivable | (1,577,000) | (1,217,000) | (769,000) | 1,007,000 |
Inventories | (1,966,000) | (5,946,000) | (22,719,000) | (21,179,000) |
Prepaid expenses | (196,000) | (502,000) | (1,467,000) | 58,000 |
Prepaid inventory | 299,000 | 2,425,000 | 5,459,000 | (6,353,000) |
Other current assets | (129,000) | (637,000) | 1,520,000 | (1,214,000) |
Other assets | 308,000 | 274,000 | 1,196,000 | 1,029,000 |
Income taxes payable | (11,000) | (1,156,000) | (651,000) | |
Accounts payable and accrued expenses | 6,465,000 | (4,119,000) | 4,428,000 | 8,903,000 |
Uncertain tax position liability | 128,000 | (19,000) | ||
Customer deposits | 180,000 | 293,000 | (196,000) | (1,345,000) |
Total Adjustments | (8,730,000) | (8,812,000) | (6,125,000) | (17,911,000) |
Net Cash Used in Operating Activities | (3,838,000) | (11,110,000) | (45,696,000) | (13,573,000) |
Cash Flows From Investing Activities | ||||
Proceeds from disposal of property and equipment | 35,000 | 61,000 | ||
Purchase of property and equipment | (589,000) | (4,524,000) | (6,862,000) | (2,970,000) |
Net Cash Used in Investing Activities | (589,000) | (4,524,000) | (6,827,000) | (2,909,000) |
Cash Flows From Financing Activities | ||||
Proceeds from public offering, net | 597,000 | |||
Proceeds from exercise of public warrants | 747,000 | |||
Proceeds from term loan | 75,000,000 | |||
Proceeds from note payable, related party | 1,000,000 | 45,000,000 | ||
Repayment from note payable | (45,000,000) | |||
Payments of debt issuance costs | (4,032,000) | (6,278,000) | ||
Proceeds from exercise of options | 93,000 | 111,000 | 706,000 | 184,000 |
Proceeds from stock purchase agreement | 15,000,000 | |||
Proceeds from revolving note agreement | 5,000,000 | |||
Repayments of revolving note agreement | (5,000,000) | |||
Net Cash Provided by Financing Activities | 2,437,000 | 111,000 | 41,674,000 | 38,906,000 |
Net Decrease in Cash and Restricted Cash | (1,990,000) | (15,523,000) | (10,849,000) | 22,424,000 |
Beginning cash and restricted cash | 17,781,000 | 28,630,000 | 28,630,000 | 6,206,000 |
Ending cash and restricted cash | 15,791,000 | 13,107,000 | 17,781,000 | 28,630,000 |
Supplemental Disclosures of Cash Flow Information: | ||||
Cash paid for income taxes | 773 | 2,390 | ||
Cash paid for interest | 2,003 | 658 | 2,252 | 313 |
Supplemental Non-Cash Items | ||||
Receivable of options exercised | 2,000 | 250,000 | ||
Purchases of property and equipment, not yet paid | 352,000 | 419,000 | 255,000 | |
Recognition of right of use asset obtained in exchange for operating lease liability | 5,745,000 | |||
Cashless exercise of liability classified warrants | $ 10,167,000 | $ 16,669,000 |
NATURE OF BUSINESS
NATURE OF BUSINESS | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
NATURE OF BUSINESS | NOTE 1 - NATURE OF BUSINESS Dragonfly Energy Holdings Corp. (“New Dragonfly” or the “Company”) sells lithium ion battery packs for use in a wide variety of applications. The Company sells to distributors under the Dragonfly Energy brand 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. On October 7, 2022, a merger transaction between Chardan NexTech Acquisition 2 Corporation (“CNTQ”), Dragonfly Energy Corp. (“Legacy Dragonfly”), and Bronco Merger Sub, Inc. (“Merger Sub”) was completed pursuant to which Merger Sub was merged with and into Legacy Dragonfly, with Legacy Dragonfly surviving the merger. As a result of the merger, Legacy Dragonfly became a wholly owned subsidiary of New Dragonfly. Although New Dragonfly was the legal acquirer of Legacy Dragonfly in the merger, Legacy Dragonfly is deemed to be the accounting acquirer, and the historical financial statements of Legacy Dragonfly became the basis for the historical financial statements of New Dragonfly upon the closing of the merger. New Dragonfly together with its wholly owned subsidiary, Dragonfly Energy Corp., is referred to hereinafter as the “Company.” Furthermore, the historical financial statements of Legacy Dragonfly became the historical financial statements of the Company upon the consummation of the merger. As a result, the financial statements included in this Quarterly Report reflect (i) the historical operating results of Legacy Dragonfly prior to the merger; (ii) the combined results of CNTQ and Legacy Dragonfly following the close of the merger; (iii) the assets and liabilities of Legacy Dragonfly at their historical cost and (iv) the Legacy Dragonfly’s equity structure for all periods presented, as affected by the recapitalization presentation after completion of the merger. | NOTE 1 — NATURE OF BUSINESS Dragonfly Energy Holdings Corp. (“ New Dragonfly Company On October 7, 2022, a merger transaction between Chardan NexTech Acquisition 2 Corporation (“ CNTQ Legacy Dragonfly Merger Sub Although New Dragonfly was the legal acquirer of Legacy Dragonfly in the merger, Legacy Dragonfly is deemed to be the accounting acquirer, and the historical financial statements of Legacy Dragonfly became the basis for the historical financial statements of New Dragonfly upon the closing of the merger. New Dragonfly together with its wholly owned subsidiary, Dragonfly Energy Corp., is referred to hereinafter as the “Company”. Furthermore, the historical financial statements of Legacy Dragonfly became the historical financial statements of the Company upon the consummation of the merger. As a result, the financial statements included in this Annual Report reflect (i) the historical operating results of Legacy Dragonfly prior to the merger; (ii) the combined results of CNTQ and Legacy Dragonfly following the close of the merger; (iii) the assets and liabilities of Legacy Dragonfly at their historical cost and (iv) the Legacy Dragonfly’s equity structure for all periods presented, as affected by the recapitalization presentation after completion of the merger. See Note 3 – Reverse Capitalization |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of consolidation The accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and present the consolidated financial statements of the Company and its wholly owned subsidiary. All significant intercompany transactions and balances are eliminated in consolidation. Basis of presentation The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with U.S. GAAP for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) set forth in Article 8 of Regulation S X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim 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 financial statements should be read along with the Annual Report filed of the Company for the annual period ended December 31, 2022. The consolidated balance sheet as of December 31, 2022 was derived from the audited consolidated financial statements as of and for the year then ended. Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) Going Concern The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. For the three months ended March 31, 2023 and 2022, the Company incurred loss from operations and had negative cash flow from operations. As of March 31, 2023, the Company had $ 15,791 24,533 In connection with the Company’s senior secured term loan facility in an aggregate principal amount of $ 75,000 In addition, the Company may need to raise additional debt and/or equity financings to fund our operations, strategic plans, and meet its financial covenants. The Company has historically been able to raise additional capital through issuance of equity and/or debt financings and the Company intends to use its equity facility and raise additional capital as needed. However, the Company cannot guarantee that it will be able to raise additional equity, contain expenses, or increase revenue, and comply with the financial covenants under the Term Loan. Recently adopted accounting standards In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 determined that this change does not have a material impact to the financial statements or financial statement disclosures. Recently issued accounting pronouncements In August 2020, FASB issued 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) Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 – 60 days 116 90 Inventory Inventories (Note 4), which consist of raw materials and finished goods, are stated at the lower of cost (first in, first out) 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 March 31, 2023 and December 31, 2022, 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 three months ended March 31, 2023 and 2022 was $ 297 192 SCHEDULE OF VARIOUS CLASSES OF PROPERTY AND EQUIPMENT AND ESTIMATED USEFUL LIVES Office furniture and equipment 3 7 Vehicles 5 Machinery and equipment 3 7 Leasehold improvements Remaining Term of Lease Use of Estimates The preparation of financial statements, in conformity with U.S. 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. Warrants The Company applies relevant accounting guidance for warrants to purchase the Company’s stock based on the nature of the relationship with the counterparty. For warrants issued to investors or lenders in exchange for cash or other financial assets, the Company follows guidance issued within Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”), and ASC 815, Derivatives and Hedging (“ASC 815”), to assist in the determination of whether the warrants should be classified as liabilities or equity. Warrants that are determined to require liability classification are measured at fair value upon issuance and are subsequently remeasured to their then fair value at each subsequent reporting period with changes in fair value recorded in current earnings. Warrants that are determined to require equity classification are measured at fair value upon issuance and are not subsequently remeasured unless they are required to be reclassified. Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) 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. 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 typically due within 30 60 418 238 211 434 Disaggregation of Revenue The following table present our disaggregated revenues by distribution channel: SCHEDULE OF DISAGGREGATED REVENUES BY DISTRIBUTION CHANNEL 2023 2022 For the Three Months Ended March 31, 2023 2022 Sales Retail $ 7,069 $ 13,035 Distributor 2,968 2,087 Original equipment manufacture 8,754 3,181 Total $ 18,791 $ 18,303 Total sales $ 18,791 $ 18,303 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 $ 1,007 1,228 Product Warranty The Company offers assurance type warranties from 5 10 400 328 Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Concentrations Receivables from one 50 three 18 10 10 Sales from one 26 Payables to one 67 one 61 For the three months ended March 31, 2023, two 38 10 one 34 Advertising The Company expenses advertising costs as they are incurred and are included in selling and marketing expenses. Advertising expenses amounted to $ 587 781 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 option s 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. Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income Taxes Deferred income tax assets and liabilities 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 $ 128 128 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 | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“ SEC U.S. GAAP Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. For the year ended December 31, 2022, the Company incurred losses and had a negative cash flow from operations. As of December 31, 2022, the Company had $ 17,781 32,923 In connection with the Company’s senior secured term loan facility in an aggregate principal amount of $ 75,000 Term Loan In addition, the Company may need to raise additional debt and/or equity financings to fund its operations and strategic plans and meet its financial covenants. The Company has historically been able to raise additional capital through issuance of equity and/or debt financings and the Company intends to use its equity facility and raise additional capital as needed. However, the Company cannot guarantee that it will be able to raise additional equity, contain expenses, or increase revenue, and comply with the financial covenants under the Term Loan. Recently adopted accounting standards In May 2021, the Financial Accounting Standards Board (“ FASB ASU DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 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 determined that this change does not have a material impact to the financial statements. In August 2020, the FASB issued 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 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 no 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 30-60 days 90 50 Inventory Inventories (Note 5), which consist of raw materials and finished goods, are stated at the lower of cost (first in, first out) 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, 2022 and 2021, no such reserves were necessary. DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 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, 2022 and 2021 was $ 891 617 SCHEDULE OF VARIOUS CLASSES OF PROPERTY AND EQUIPMENT AND ESTIMATED USEFUL LIVES Office furniture and equipment 3 7 Vehicles 5 Machinery and equipment 3 7 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. 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. Warrants The Company applies relevant accounting guidance for warrants to purchase the Company’s stock based on the nature of the relationship with the counterparty. For warrants issued to investors or lenders in exchange for cash or other financial assets, the Company follows guidance issued within ASC 480, Distinguishing Liabilities from Equity (“ ASC 480 ASC 815 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 Consolidated Statements of Operations. DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 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 1,779 238 434 Disaggregation of Revenue The following table present our disaggregated revenues by distribution channel: SCHEDULE OF DISAGGREGATED REVENUES BY DISTRIBUTION CHANNEL Sales 2022 2021 Retail $ 43,344 $ 59,042 Distributor 9,102 10,733 Original equipment manufacture 33,805 8,225 Total $ 86,251 $ 78,000 Total sales $ 86,251 $ 78,000 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 $ 5,440 5,105 Product Warranty The Company offers assurance type warranties from 5 10 328 0 DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Concentrations Receivables from three 18 10 10 two 42 16 Revenue from one 22 Payables to one 61 For the year ended December 31, 2022, one 28 three 27 10 10 Deferred Financing Costs The incremental cost, including the fair value of warrants, directly associated with obtaining debt financing is capitalized as deferred financing costs upon the issuance of the debt and amortized over the term of the related debt agreement using the effective-interest method with such amortized amounts included as a component of interest expense in the consolidated statement of operations. Unamortized deferred financing costs are presented on the consolidated balance sheets as a direct deduction from the carrying amount of the related debt obligation. 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 $ 2,334 1,690 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 14). 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. Restricted stock unit awards are valued based on the closing trading value of the Company’s common stock on the date of grant and then amortized on a straight-line basis over the requisite service period of the award. 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. DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Income Taxes Deferred income tax assets and liabilities (Note 9) 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 $ 128 0 The Company’s accounting policy is to include penalties and interest related to income taxes if any, in selling, general and administrative expenses. We regularly assess the need to record a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Net (Loss) Earnings per Common Share Basic net (loss) earnings per share is calculated by dividing net (loss) earnings by the weighted-average number of common shares outstanding during the period. Diluted net (loss) earnings per share is calculated using the weighted-average number of common shares outstanding during the period and, if dilutive, the weighted-average number of potential shares of common stock. The weighted-average number of common shares included in the computation of diluted net (loss) earnings gives effect to all potentially dilutive common equivalent shares, including outstanding stock options and warrants. Common stock equivalent shares are excluded from the computation of diluted net (loss) earnings per share if their effect is antidilutive. In periods in which the Company reports a net loss, diluted net loss per share is generally the same as basic net loss per share since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. As the Merger has been accounted for as a reverse recapitalization, the consolidated financial statements of the merged entity reflect the continuation of the pre-merger Legacy Dragonfly financial statements; Dragonfly equity has been retroactively adjusted to the earliest period presented to reflect the legal capital of the legal acquirer, CNTQ. As a result, net (loss) earnings per share was also retrospectively adjusted for periods ended prior to the Merger. See Note 3 - Reverse Capitalization Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement including the use of an identified asset(s) and the Company’s control over the use of that identified asset. The Company elected, as allowed under Financial Accounting Standards Board (“FASB”) Accounting Standard Update (“ASU”) 2016-02, Leases (“ASC 842”), to not recognize leases with a lease term of one year or less on its balance sheet. Leases with a term greater than one year are recognized on the balance sheet as right-of-use (“ROU”) assets and current and non-current lease liabilities, as applicable. 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 DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) |
REVERSE CAPITALIZATION
REVERSE CAPITALIZATION | 12 Months Ended |
Dec. 31, 2022 | |
Reverse Capitalization | |
REVERSE CAPITALIZATION | Note 3 – REVERSE CAPITALIZATION On October 7, 2022, Legacy Dragonfly consummated a merger with CNTQ. Legacy Dragonfly was deemed to be the accounting acquirer in the merger. The determination was primarily based on Legacy Dragonfly’s stockholders having a majority of the voting power in the combined Company, Legacy Dragonfly having the ability to appoint a majority of the Board of Directors of the Company, Legacy Dragonfly’s existing management team comprising the senior management of the combined Company, Legacy Dragonfly comprising the ongoing operations of the combined Company and the combined Company assumed the name “Dragonfly Energy Holdings Corp.”. Accordingly, for accounting purposes, the merger was treated as the equivalent of Legacy Dragonfly issuing stock for the net assets of CNTQ, accompanied by a recapitalization. The net assets of CNTQ are stated at historical cost, with no goodwill or other intangible assets recorded. In accordance with guidance applicable to these circumstances, the equity structure has been restated in all comparable periods up to October 7, 2022, to reflect the number of shares of the Company’s common stock, $ 0.0001 1.182 Immediately before the closing of the merger, and prior to the PIPE Financing 6,265 500,000 PIPE Financing The PIPE Financing was consummated on September 26, 2022 and resulted in gross proceeds of an additional approximately $ 5,017 , prior to payment of the transaction costs. As part of the PIPE Financing, the Company entered an initial Term Loan for an aggregate principal amount of $ 75,000 . The Company incurred debt issuance costs of $ 1,950 of original issuance discount and additional $ 2,081 of transaction costs that were allocated to the Term Loan, resulting in net cash proceeds of $ 70,969 . In addition, $ 52,956 of Term Loan warrants based on their combined relative fair values was recorded as a debt discount resulting in initial carrying amount of debt of $ 18,013 . Pursuant to the terms of the loan agreement, the Term Loan was advanced in one tranche on the closing date and the funds were used to refinance on the closing date prior indebtedness of $ 42,492 (including payment of make-whole interest related to early extinguishment of debt), (ii) to support the Transaction under the Merger 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 merger. The direct and incremental transaction costs of approximately $ 13,221 were allocated to all instruments assumed and issued in the merger on a relative fair value basis. As such, the Company allocated $ 2,081 to the Term Loan, $ 9,633 to equity instruments, which was expensed in general and administrative expenses as the offering costs exceeded the proceeds received, and $ 1,507 Additionally, pursuant to the terms of the merger, the Company assumed $ 18,072 10,197 Upon the closing of the merger, the Company’s certificate of incorporation was amended and restated to, among other things, increase the total number of authorized shares of all classes of capital stock to 175,000,000 170,000,000 5,000,000 0.0001 Upon the closing of the merger, holders of Legacy Dragonfly common stock and preferred stock received shares of common stock in an amount determined by application of the Exchange Ratio. For periods prior to the merger, the reported share and per share amounts have been retroactively converted by applying the Exchange Ratio. The consolidated assets, liabilities, and results of operations prior to the merger are those of Legacy Dragonfly. The following table summarizes the elements of the merger allocated to the Consolidated Statements of Operations: SCHEDULE OF MERGER CASH FLOW AND SHAREHOLDERS EQUITY Amounts Cash: CNTQ trust and PIPE Investors $ 10,979 Cash: CNTQ 303 Gross Proceeds 11,282 Net liabilities assumed in merger transaction (1,017 ) Warrant liability assumed in merger (1,990 ) CNTQ note payable settlement at close (400 ) CNTQ transaction costs paid at close (18,072 ) Net deficit assumed in recapitalization $ (10,197 ) DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Number of Shares Common stock, outstanding prior to merger 3,093,348 Less: Redemption of CNTQ shares (2,016,912 ) CNTQ Public Shares 1,076,436 CNTQ Sponsor Shares 3,162,500 Merger and PIPE financing shares 4,238,936 Legacy Dragonfly shares (1)(2) 38,576,650 Total shares of common stock immediately after the merger 42,815,586 (1) -The number of Legacy Dragonfly shares was determined from the shares of Legacy Dragonfly outstanding immediately prior to the closing of the merger converted at the Exchange Ratio. All fractional shares were rounded down. (2) - The preferred shares of Legacy Dragonfly were exchanged on a 1 to 1 ratio to common stock and the shares were then exchanged for shares of Dragonfly Energy Holdings Corp. at the Exchange Ratio. Warrants As part of the reverse capitalization transaction, the Company issued public warrants, private placement warrants and Term Loan warrants. Refer to Note 12 for a further description of the warrants. Earnout The former holders of shares of Legacy Dragonfly common stock (including shares received as a result of the conversion of Legacy Dragonfly Preferred Stock into New Dragonfly Common Stock) are entitled to receive their pro rata share of up to 40,000,000 Earnout Shares 15,000,000 250,000 35,000 12,500,000 22.50 12,500,000 32.50 32.50 DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) The Company accounts for the Earnout Shares as either equity-classified or liability-classified instruments based on an assessment of the Earnout Shares specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ ASC 480 14.00 ; (2) a risk-free rate of 4.24 %; (3) projected revenue and EBITDA of $ 255,100 and $ 41,000 respectively; (4) expected volatility of future annual revenue and future annual EBITDA of 42.0 % and 64.0 % respectively; (5) discount rate of 4.24 %; and (6) expected probability of change in control of 15.0 %. The accounting treatment of the Earnout Shares have been recognized at fair value upon the closing of the merger and classified in stockholders’ equity. Because the merger is accounted for as a reverse recapitalization, the recognition of the Earnout Shares has been treated as a deemed dividend and has been recorded within additional-paid-in-capital and has no net impact on additional paid-in capital. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | ||
FAIR VALUE MEASUREMENTS | NOTE 3 - FAIR VALUE MEASUREMENTS ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes between the following: ● Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. ● Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for a similar asset or liability, either directly or indirectly. ● Level 3 inputs are unobservable inputs that reflect the Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) NOTE 3 - FAIR VALUE MEASUREMENTS (CONTINUED) The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of March 31, 2023: SCHEDULE OF FAIR VALUE, ASSETS AND LIABILITIES Carrying Amount Fair Value (Level 1) (Level 2) (Level 3) As of March 31, 2023 Liabilities Warrant liability- Term Loan $ 4,021 $ 4,021 $ - $ - $ 4,021 Warrant liability- Private placement warrants 120 120 - 120 - Total liabilities $ 4,141 $ 4,141 $ - $ 120 $ 4,021 The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of December 31, 2022: Carrying Amount Fair Value (Level 1) (Level 2) (Level 3) As of December 31, 2022 Liabilities Warrant liability- Term Loan $ 30,841 $ 30,841 $ - $ - $ 30,841 Warrant liability- Private placement warrants 1,990 1,990 - 1,990 - Total liabilities $ 32,831 $ 32,831 $ - $ 1,990 $ 30,841 The carrying amounts of accounts receivable and accounts payable are considered level 1 and approximate fair value as of March 31, 2023 and December 31, 2022 because of the relatively short maturity of these instruments. The carrying value of the term loan as of March 31, 2023 and December 31, 2022 approximates fair value as the interest rate does not differ significantly from the current market rates available to the Company for similar debt and is considered level 2. Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) | Note 4 - FAIR VALUE MEASUREMENTS ASC 820, Fair Value Measurements and Disclosures (“ ASC 820 ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes between the following: ● Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. ● Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for a similar asset or liability, either directly or indirectly. ● Level 3 inputs are unobservable inputs that reflect the Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of December 31, 2022 and 2021: SCHEDULE OF FAIR VALUE, ASSETS AND LIABILITIES As of December 31, 2022 Carrying Amount Fair Value (Level 1) (Level 2) (Level 3) Liabilities Warrant liability-Term Loan $ 30,841 $ 30,841 $ - $ - $ 30,841 Warrant liability-Private Placement Warrants 1,990 1,990 - 1,990 - Total liabilities $ 32,831 $ 32,831 $ - $ 1,990 $ 30,841 There were no assets or liabilities that were measured at fair value as of December 31, 2021. The carrying amounts of accounts receivable and accounts payable are considered level 1 and approximate fair value as of December 31, 2022 and 2021 because of the relatively short maturity of these instruments. The carrying value of the term loan and fixed rate senior notes as of December 31, 2022 and 2021, respectively, are considered level 2 and approximates their fair value as the interest rate does not differ significantly from the current market rates available to the Company for similar debt. |
INVENTORY
INVENTORY | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | ||
INVENTORY | NOTE 4 - INVENTORY Inventory consists of the following: SCHEDULE OF INVENTORY March 31, 2023 December 31, 2022 Raw material $ 44,310 $ 42,586 Finished goods 7,502 7,260 Total inventory $ 51,812 $ 49,846 | NOTE 5 — INVENTORY Inventory consists of the following: SCHEDULE OF INVENTORY December 31, December 31, Raw material $ 42,586 $ 22,885 Finished goods 7,260 4,242 Total inventory $ 49,846 $ 27,127 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
COMMITMENTS AND CONTINGENCIES | NOTE 5 - COMMITMENTS AND CONTINGENCIES Litigation From time to time the Company may be named in claims arising in the ordinary course of business. Currently, no legal proceedings, governmental actions, administrative actions, investigations or claims are pending against the Company or involve the Company that, in the opinion of the Company’s management, could reasonably be expected to have a material adverse effect on the Company’s business and financial condition. Operating Leases The Company has leases related to the main office, warehouse space, research and development lab, and engineering office, all located in Reno, Nevada. The leases require annual escalating monthly payments ranging from $ 111 128 230 23 21 3 2.4 2 The following table presents the breakout of the operating leases as of: SCHEDULE OF TABLE REPRESENTING THE BREAKOUT OF THE OPERATING LEASES March 31, 2023 December 31, 2022 Operating lease right-of-use assets $ 4,205 $ 4,513 Short-term operating lease liabilities 1,215 1,188 Long-term operating lease liabilities 3,209 3,541 Total operating lease liabilities $ 4,424 $ 4,729 Weighted average remaining lease term 3.4 3.6 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. Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) NOTE 5 - COMMITMENTS AND CONTINGENCIES (CONTINUED) Operating Leases (Continued) At March 31, 2023, the future minimum lease payments under these operating leases are as follows: SCHEDULE OF THE FUTURE MINIMUM LEASE PAYMENTS UNDER THE OPERATING LEASES Fiscal Years Ending Amount December 31, 2023 (1) $ 1,054 December 31, 2024 1,435 December 31, 2025 1,435 December 31, 2026 893 Total lease payments 4,817 Less imputed interest 393 Total operating lease liabilities $ 4,424 (1) Represents scheduled payments for the remaining nine-month period ending December 31, 2023. SCHEDULE OF LEASE COST Lease cost Classification March 31, 2023 March 31, 2022 Operating lease cost Cost of goods sold $ 347 $ 172 Operating lease cost Research and development 22 19 Operating lease cost General and administration 12 10 Operating lease cost Selling and marketing 12 14 Total lease cost $ 393 $ 215 Earnout The former holders of shares of Legacy Dragonfly common stock (including shares received as a result of the conversion of Legacy Dragonfly Preferred Stock into New Dragonfly Common Stock) are entitled to receive their pro rata share of up to 40,000,000 15,000,000 250,000 35,000 12,500,000 22.50 12,500,000 32.50 32.50 Other Contingencies See Note 7 for further discussion regarding contingent consideration arising from the April 2022 asset purchase agreement with Thomason Jones Company, LLC. Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) | NOTE 6 — COMMITMENTS AND CONTINGENCIES Litigation From time to time the Company may be named in claims arising in the ordinary course of business. Currently, no legal proceedings, governmental actions, administrative actions, investigations or claims are pending against the Company or involve the Company that, in the opinion of the Company’s management, could reasonably be expected to have a material adverse effect on the Company’s business and financial condition. DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Operating Leases The Company has leases related to the main office, warehouse space, research and development lab, and engineering office, all located in Reno, Nevada. The leases require annual escalating monthly payments ranging from $ 60 74 47 55 124 230 23 21 3 2.4 2 The following table presents the breakout of the operating leases as of: SCHEDULE OF TABLE REPRESENTING THE BREAKOUT OF THE OPERATING LEASES December 31, December 31, Operating lease right-of-use assets $ 4,513 $ 5,709 Short-term operating lease liabilities 1,188 1,082 Long-term operating lease liabilities 3,541 4,694 Total operating lease liabilities $ 4,729 $ 5,776 Weighted average remaining lease term 3.6 4.6 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 December 31, 2022, the future minimum lease payments under these operating leases are as follows: SCHEDULE OF THE FUTURE MINIMUM LEASE PAYMENTS UNDER THE OPERATING LEASES 2023 $ 1,399 2024 1,435 2025 1,440 2026 893 Total lease payments 5,167 Less imputed interest 438 Total operating lease liabilities $ 4,729 SCHEDULE OF LEASE COST December 31, December 31, Lease cost Classification 2022 2021 Operating lease cost Cost of goods sold $ 1,476 $ 633 Operating lease cost Research and development 95 103 Operating lease cost General and administration 50 42 Operating lease cost Selling and marketing 49 42 Total lease cost $ 1,670 $ 820 All lease costs included in the schedule above are fixed. DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Other Contingencies See Note 10 for further discussion regarding contingent consideration arising from the April 2022 Asset Purchase agreement with Thomason Jones Company, LLC. See Note 3 for further discussion regarding the earnout related to the reverse capitalization transaction. |
DEBT
DEBT | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Debt Disclosure [Abstract] | ||
DEBT | NOTE 6 - DEBT Financing Trust Indenture On November 24, 2021, the Company entered into agreements to issue $ 45,000 45,000 In connection with the merger on October 7, 2022 (the “Closing Date”), the Company entered into a Term Loan, Guarantee and Security Agreement (see “Term Loan Agreement” below) and the outstanding principal balance for the Series 2021-6 Notes underlying the Trust Indenture was paid in full. A loss on extinguishment of $ 4,824 619 613 Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) NOTE 6 - DEBT (CONTINUED) Term Loan Agreement On October 7, 2022, in connection with the merger, CNTQ, Legacy Dragonfly and 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”) entered into the Term Loan Agreement setting forth the terms of 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 (including the obligations underlying the Trust Indenture), (ii) to support the Transaction under the merger 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 merger. The Term Loan amortizes in the amount of 5 937.5 24 months 13.5 7 6.5 7 4.5 6.5 11.5 13.5 1 In addition to optional prepayments by the Company upon written notice, the Term Loan Agreement provides for mandatory prepayments upon receipt of proceeds from certain transactions or casualty events. Beginning on the date the financial statements for the year ended December 31, 2023 are required to be delivered to the Term Loan Lenders, the Company will be required to prepay the Term Loan based on excess cash flow, as defined in the agreement. Unless the obligations under the Term Loan are accelerated under the terms of the agreement, the maturity date will be October 7, 2026. The Term Loan Lenders have been granted a first priority lien, and security interest in, the mortgaged properties underlying the Company’s mortgages. Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) NOTE 6 - DEBT (CONTINUED) Term Loan Agreement (Continued) During the three months ended March 31, 2023, a total of $ 3,496 219 20,699 75,000 2,430 56,731 Financial Covenants Maximum Senior Leverage Ratio The Senior Leverage Ratio is the ratio of (a) consolidated indebtedness, as defined, on such date minus 100% of the unrestricted cash and cash equivalents held (subject to adjustment) to (b) Consolidated earnings before interest, tax and amortization (“EBITDA”) for the trailing twelve (12) fiscal month period most recently ended. If liquidity, as defined, for any fiscal quarter is less than $17,500, the Senior Leverage Ratio shall not be permitted SCHEDULE OF LEVERAGE RATION Test Period Ending Leverage Ratio December 31, 2022 - March 31, 2023 6.75 to 1.00 June 30, 2023 - September 30, 2023 6.00 to 1.00 December 31, 2023 - March 31, 2024 5.00 to 1.00 June 30, 2024 - September 30, 2024 4.00 to 1.00 December 31, 2024 - March 31, 2025 3.25 to 1.00 June 30, 2025 and thereafter 3.00 to 1.00 Liquidity The Company shall not permit their Liquidity (determined on a consolidated basis) to be less than $10,000 as of the last day of each fiscal month (commencing with month ending December 31, 2022) Fixed Charge Coverage Ratio The Fixed Charge Coverage Ratio is the ratio of consolidated EBITDA (less capital expenditures and certain other adjustments) to consolidated fixed charges, as defined in the agreement. If Liquidity is less than $15,000 as of the last day of any fiscal quarter (commencing with the quarter ending December 31, 2022), then the Company shall not permit the Fixed Charge Coverage Ratio for the trailing four quarterly periods ending on the last day of any such quarter to be less than 1.15 to 1.00 Capital Expenditures If consolidated EBITDA for the trailing twelve month period ending on the most recently completed fiscal quarter is less than $15,000, then the level of capital expenditures is limited On March 29, 2023, the Company obtained a waiver from Alter Domus (US) LLC, as administrative agent for the lenders (the “Administrative Agent”) and the Term Loan Lenders of its failures to satisfy the fixed charge coverage ratio and maximum senior leverage ratio with respect to the minimum cash requirements under the Term Loan during the quarter ended March 31, 2023. As a result of the uncertainty of maintaining compliance with financial covenants the Company has continued to classify the entire term loan balance within current liabilities on the balance sheet. Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) NOTE 6 - DEBT (CONTINUED) Debt Maturities At March 31, 2023, the future debt maturities, based on contractual principal payments are as follows: SCHEDULE OF FUTURE DEBT MATURITIES For Year Ended December 31, 2023 (1) $ - 2024 938 2025 3,750 2026 91,775 Total 96,463 Less: Estimated interest paid-in-kind (19,033 ) Total debt 77,430 Less: Unamortized debt issuance costs, noncurrent (56,731 ) Total carrying amount 20,699 Less: Current portion of debt (20,699 ) Total long-term debt $ - (1) Represents scheduled payments for the remaining nine-month period ending December 31, 2023 | NOTE 7 — LONG-TERM DEBT DEBT Financing — Trust Indenture On November 24, 2021, the Company entered into agreements to issue $ 45,000 Series 2021-6 Notes Servicer Insurance Policy 45,000 Upon 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 subsection labeled Reserve Accounts 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 subsection labelled Collateral 60 and $ 1,553 in debt issuance costs. The obligation for the Series 2021-6 Notes underlying the Trust Indenture is $ 45,000 5.50 50 5 twenty four 1,875 November 1, 2024 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 subsection labelled Collateral During the year ended December 31, 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 year ended December 31, 2022. In connection with the merger on October 7, 2022, the Company entered into a Term Loan, Guarantee and Security Agreement (see subsection labeled Term Loan Agreement 4,824 was recognized upon settlement. The net balance of $ 40,712 45,000 4,288 DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Reserve Accounts Deposits into the reserve accounts consisted of the following items: SCHEDULE OF DEPOSITS INTO RESERVE ACCOUNTS 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 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 was a deposit account maintained by the trustee and restricted for release upon the occurrence of future events, this deposit was treated as restricted cash. The Capitalized Interest Fund was created to hold the interest that accrued 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 December 31, 2021 was $ 3,088 Both above funds, to the extent that they are deposited into interest bearing accounts, 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 December 31, 2022 or December 31, 2021. In connection with the merger, the Company settled the Trust Indenture and the balance in the Payment Reserve Fund was offset against the proceeds. 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 substantially all of the assets of the Company, including certain intellectual property assets. 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 but rather a cost for maintaining the collateral, recognized under the guidance at ASC 860-30, Transfers and Servicing, Secured Borrowing and Collateral. The premium costs were recognized as a prepaid expense and were being amortized straight line over the term of the policy (three years, unless reduced due to default provisions). The secured party (i.e., 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 defaulted and a claim was made. Upon settlement of the debt underlying the Trust Indenture, the collateral requirements for the Insurance Policy were eliminated. Loan Monitoring Fees The Company was to incur ongoing monitoring service by NewLight Capital, LLC for 24 months 180 60 10 months 77 10 In connection with the merger, prepayment on that date of $ 33 DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Financial Covenants – Trust Indenture The Company was obligated to comply with certain covenants which included a minimum adjusted EBITDA, capital expenditure requirement and minimum fixed charge coverage ratio. The Company was in compliance with all financial covenants as of December 31, 2021 and through October 7, 2022, the date of the settlement of the obligations underlying the Trust Indenture. Term Loan Agreement On October 7, 2022, in connection with the merger, CNTQ, Legacy Dragonfly and CCM Investments 5 LLC (“ CCM 5 EIP Initial Term Loan Lenders Term Loan Agreement 75,000 Backstop Commitment Letter Backstop Lender Term Loan Lenders Backstopped Loans 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 (including the obligations underlying the Trust Indenture), (ii) to support the Transaction under the Merger 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 5 937.5 24 months Maturity Date SOFR 13.5 7 6.5 7 4.5 6.5 11.5 13.5 1 DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) In addition to optional prepayments by the Company upon written notice, the Term Loan Agreement provides for mandatory prepayments upon receipt of proceeds from certain transactions or casualty events. Beginning on the date the financial statements for the year ended December 31, 2023 are required to be delivered to the Term Loan Lenders, the Company will be required to prepay the Term Loan based on excess cash flow, as defined in the agreement. In connection with the entry into the Term Loan Agreement, and as a required term and condition thereof, the Company issued (i) the penny warrants to the Term Loan Lenders exercisable to purchase an aggregate of 2,593,056 1,600,000 10 Unless the obligations under the Term Loan are accelerated under the terms of the agreement, the maturity date will be October 7, 2026. The Term Loan Lenders have been granted a first priority lien, and security interest in, the mortgaged properties underlying the Company’s mortgages. During the year ended December 31, 2022, a total of $ 3,195 38 19,242 75,000 1,192 56,950 Financial Covenants – Term Loan Maximum Senior Leverage Ratio The senior leverage ratio is the ratio of (a) consolidated indebtedness, as defined, on such date minus 100% of the unrestricted cash and cash equivalents held (subject to adjustment) to (b) Consolidated EBITDA for the trailing twelve (12) fiscal month period most recently ended. If liquidity, as defined, for any fiscal quarter is less than $17,500, the senior leverage ratio shall not be permitted SCHEDULE OF LEVERAGE RATION Test Period Ending Leverage Ratio December 31, 2022 – March 31, 2023 6.75 to 1.00 June 30, 2023 – September 30, 2023 6.00 to 1.00 December 31, 2023 – March 31, 2024 5.00 to 1.00 June 30, 2024 – September 30, 2024 4.00 to 1.00 December 31, 2024 – March 31, 2025 3.25 to 1.00 June 30, 2025 and thereafter 3.00 to 1.00 Liquidity The Company shall not permit their liquidity (determined on a consolidated basis) to be less than $10,000 as of the last day of each fiscal month (commencing with month ending December 31, 2022). Fixed Charge Coverage Ratio The fixed charge coverage ratio is the ratio of consolidated EBITDA (less capital expenditures and certain other adjustments) to consolidated fixed charges, as defined in the agreement. If liquidity is less than $15,000 as of the last day of any fiscal quarter (commencing with the quarter ending December 31, 2022), then the Company shall not permit the fixed charge coverage ratio for the trailing four quarterly periods ending on the last day of any such quarter to be less than 1.15 : 1.00. Capital Expenditures If consolidated EBITDA for the trailing twelve-month period ending on the most recently completed fiscal quarter is less than $15,000, then the level of capital expenditures is limited. DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Long-Term Debt Maturities At December 31, 2022, the future debt maturities are as follows: SCHEDULE OF FUTURE DEBT MATURITIES For the Years Ending December 31, Future Debt Maturities 2023 $ - 2024 938 2025 3,750 2026 91,809 Total 96,497 Less: Estimated interest paid-in-kind (20,305 ) Total debt 76,192 Less: Unamortized debt issuance costs, non-current (56,950 ) Total carrying amount 19,242 Less: current portion of debt (19,242 ) Total long-term debt $ - On March 29, 2023, the Company obtained a waiver from the Administrative Agent and the Term Loan Lenders of its failures to satisfy the fixed charge coverage ratio and maximum senior leverage ratio with respect to the minimum cash requirements under the Term Loan during the quarter ended March 31, 2023. The Company concluded it is probable it will not comply with future financial covenants. As a result, the Company classified the entire Term Loan balance in current liabilities on the balance sheet as of December 31, 2022. |
REVOLVING NOTE AGREEMENT
REVOLVING NOTE AGREEMENT | 12 Months Ended |
Dec. 31, 2022 | |
Revolving Note Agreement | |
REVOLVING NOTE AGREEMENT | Note 8 - 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 of $8,000 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 US Bank from time to time, as and when such rate changes. The revolving credit amount is collateralized by all assets of the Company. 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. DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) |
INCOME TAXES
INCOME TAXES | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
INCOME TAXES | NOTE 13 – INCOME TAXES The Company’s tax provision and the resulting effective tax rate for interim periods is determined based upon its estimated annual effective tax rate adjusted for the effect of discrete items arising in that quarter. The Company recorded an income tax expense (benefit) of $ 0 527 | Note 9 - INCOME TAXES The income tax expense consists of the following items: SCHEDULE OF INCOME TAX EXPENSE 2022 2021 Current $ (257 ) $ 1,489 Deferred (452 ) 122 Total tax expense $ (709 ) $ 1,611 Components of deferred tax assets (liabilities) are as follows: SCHEDULE OF COMPONENTS OF DEFERRED TAX ASSETS (LIABILITIES) 2022 2021 Deferred tax assets: Lease liability $ 1,071 $ 1,221 Stock based compensation 139 35 Accrued expenses 506 - Allowance for bad debt 75 59 Research and development credit 200 - Fixed assets and intangibles 25 - Interest expense 1,595 - Prepaid expenses 960 - Net Operating Loss 3,727 - Inventory (Sec. 263A) 62 45 Deferred tax asset $ 8,360 $ 1,360 Deferred tax liabilities: Right of Use Asset $ 1,036 $ 1,207 Fixed assets and intangibles - 606 Deferred tax liability $ 1,036 $ 1,813 Net deferred tax asset (liability) $ 7,324 $ (453 ) Valuation Allowance (7,324 ) - Net deferred tax asset $ - $ (453 ) Reconciliation between the effective tax rate on income from continuing operations and the statutory rate for the years ended December 31, 2022 and 2021, are as follows: SCHEDULE OF RECONCILIATION BETWEEN THE EFFECTIVE TAX RATE ON INCOME FROM CONTINUING OPERATIONS AND THE STATUTORY RATE 2022 2021 Tax Percentage Tax Percentage Book income (loss) before taxes $ (8,459 ) 21.00% $ 1,249 21.00% Permanent differences (transaction costs) 2,185 (5.42)% - - Permanent differences (warrants) (1,144 ) 2.84% - - Permanent differences (other -other than tax) 458 (1.14)% 188 3.16% State taxes, net (722 ) 1.79% 128 2.15% Deferred true-up (288 ) 0.71% 56 0.94% Research and development credits (200 ) 0.50% Uncertain tax positions 128 (0.32)% (19 ) (0.32)% Other 9 (0.02)% 9 0.15% Change in valuation allowance 7,324 (18.18)% - - Total $ (709 ) $ 1,611 Effective tax rate 1.76% 27.08% The tax returns of the Company are open for three years form the date of filing. At the report date, the statute of limitations for federal and state tax returns are open for the Company for 2019, 2020 and 2021. Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has not yet evaluated if section 382 was triggered. Subject to the limitations described below, as of December 31, 2022, the Company had federal net operating loss carryforwards of approximately $ 16,140 , available to reduce future taxable income which do not expire, but are limited to 80 % utilization against taxable income. As of December 31, 2022, the Company had state net operating loss carryforwards of approximately $ 6,747 , available to reduce future taxable income, which start to expire in 2037. The Company also had research and development credits of $ 200 2042 . DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Management of the Company evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets and determined that it is more likely than not that the Company will not recognize the benefits of the deferred tax assets. As a result, a full valuation allowance was recorded as of December 31, 2022. The valuation allowance as of December 31, 2022 was $ 7,324 As part of the Tax Cuts and Jobs Act that was enacted in December of 2017, taxpayers are required to capitalize research and development expenses and amortize them over five years if the expense is incurred in the US and over fifteen years if incurred in a foreign jurisdiction. The effective date for that provision is for tax years beginning on or after January 1, 2022. The new capitalization requirement increased deferred tax assets related to research and development expenses and decreased taxable loss in the current year, both of which were offset by a full valuation allowance. The roll-forward of the Company’s gross uncertain tax positions is as follows: SCHEDULE OF GROSS UNCERTAIN TAX POSITIONS Gross Uncertain Tax Position Balance January 1, 2021 $ 19 Additions for current year tax positions - Reductions for prior year tax positions (19 ) Balance- December 31, 2021 - Additions for current year tax positions 128 Balance- December 31, 2022 $ 128 The Company’s total uncertain tax positions increased during the year ended December 31, 2022 as a result of a reserve established on federal research and development credits generated in the current year. None of the uncertain tax positions that, if realized, would affect the Company’s effective tax rate in future periods due to a valuation allowance provided against the Company’s net deferred tax assets. |
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | ||
ASSET PURCHASE AGREEMENT | NOTE 7 - ASSET PURCHASE AGREEMENT Bourns Production, Inc On January 1, 2022, the Company entered into an asset purchase agreement (the “APA”) with Bourns Productions, Inc., a Nevada corporation (“Bourns Productions”) pursuant to which the Company acquired machinery, equipment and a lease for a podcast studio from Bourns Productions as set forth in the APA for a purchase price of $ 197 Thomason Jones Company, LLC In April 2022, the Company entered into an Asset Purchase Agreement (the “April 2022 Asset Purchase Agreement”) with William Thomason, Richard Jones, and Thomason Jones Company, LLC (“Thomason Jones”) whereby the Company acquired inventory and intellectual property assets for up to $ 700 1,000 444 Contingent Compensation If, within twenty-four months of the Agreement the Company realizes $ 3,000 1,000 417 1,147 782 Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) | Note 10 – ASSET PURCHASE AGREEMENT Bourns Productions, Inc. On January 1, 2022, the Company entered into an asset purchase agreement (the “ APA Bourns Productions 197 Thomason Jones Company, LLC In April 2022, the Company entered into an Asset Purchase Agreement with William Thomason, Richard Jones, and Thomason Jones Company, LLC (“ Thomason Jones 444 1,000 Earn Out 444 Contingent Compensation If, within twenty-four months of the Agreement the Company realizes $ 3,000 1,000 417 782 |
RELATED PARTY
RELATED PARTY | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Related Party Transactions [Abstract] | ||
RELATED PARTY | NOTE 8 - RELATED PARTY The Company loaned its Chief Financial Officer $ 469 On October 25, 2022, the Company entered into a separation and release of claims agreement with its Chief Operating Officer (“COO”). As consideration for the COO’s execution of the agreement, the Company agreed to pay the employee a lump sum payment of $ 100 1,000 In February 2023, the Company entered into an agreement with its former COO in which the ownership of a Company van was transferred to the former COO in connection with his severance. The Company accounted for the cost of the van as an employee bonus, resulting in $116 of general and administrative expense for the current period. On March 5, 2023, the Company entered into a convertible promissory note (the “Note”) with a board member in the amount of $ 1,000 100 | Note 11 - RELATED PARTY The Company loaned its Chief Financial Officer $ 469 On October 25, 2022, the Company entered into a separation and release of claims agreement with its Chief Operating Officer (“ COO 100 1,000 DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) |
WARRANTS
WARRANTS | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Warrants | ||
WARRANTS | NOTE 9 - WARRANTS Common Stock Warrants classified as Equity Public Warrants Each Public Warrant entitles the holder to the right to purchase one share of common stock at an exercise price of $ 11.50 0.01 16.00 9,487,500 The measurements of the Public Warrants after the detachment of the Public Warrants from the Units are classified as Level 1 due to the use of an observable market quote in an active market under the ticker DFLIW. For periods subsequent to the detachment of the Public Warrants from the Units, the close price of the Public Warrant price was used as the fair value of the Warrants as of each relevant date. During the quarter ended March 31, 2023, the Company received proceeds from public warrant exercises of $ 747 64,971 Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) NOTE 9 - WARRANTS (CONTINUED) Common Stock Warrants classified as Liability Private Placement Warrants The Private Placement Warrants may not be redeemed by the Company so long as the Private Placement Warrants are held by the initial purchasers, or such purchasers’ permitted transferees. 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. During the three months ended March 31, 2023, private placement warrant holders exercised 3,126,472 1,100,000 1,501,386 4,627,858 The Private Placement Warrants are classified as Level 2 as the transfer of private placement warrants to anyone who is not a permitted transferee would result in the Private Placement Warrants having substantially similar terms as the Public Warrants (with the exception of a different remaining life). We determined, through use of a Binomial Lattice model, that the fair value of each Private Placement Warrant less a discount for the difference in remaining life is equivalent to that of each Public Warrant. Term Loan Warrants In connection with the entry into the Term Loan Agreement, and as a required term and condition thereof, the Company issued (i) the penny warrants to the Term Loan Lenders exercisable to purchase an aggregate of 2,593,056 1,600,000 10 457,142 1,250,000 1,248,294 Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) NOTE 9 - WARRANTS (CONTINUED) Common Stock Warrants classified as Liability (Continued) The following table provides the significant inputs to the Black-Scholes method for the fair value of the Penny Warrants: SCHEDULE FAIR VALUE WARRANTS As of March 31, 2023 As of December 31, 2022 Common stock price $ 3.00 $ 11.09 Exercise price 0.01 0.01 Dividend yield 0 % 0 % Term 9.52 9.77 Volatility 89.00 % 90.00 % Risk-free rate 3.43 % 3.90 % Fair value $ 2.99 $ 11.89 The following table presents a roll-forward of the Company’s warrants from January 1, 2023 to March 31, 2023: SCHEDULE OF ROLL FORWARD IN WARRANTS Private Warrants: Common Stock Warrants Warrants Outstanding, January 1, 2023 4,627,858 Exercise of warrants (3,126,472 ) Warrants Outstanding, March 31, 2023 1,501,386 There were no private warrants issued, exercised and outstanding from the period January 1, 2022 through March 31, 2022. Public Warrants: Common Stock Warrants Warrants Outstanding, January 1, 2023 9,487,500 Exercise of warrants (64,971 ) Warrants Outstanding, March 31, 2023 9,422,529 There were no public warrants issued, exercised and outstanding from the period January 1, 2022 through March 31, 2022. Term Loan Warrants: Common Stock Warrants Warrants Outstanding, January 1, 2023 2,593,056 Exercise of warrants (1,250,000 ) Warrants Outstanding, March 31, 2023 1,343,056 There were no term loan warrants issued, exercised and outstanding from the period January 1, 2022 through March 31, 2022. The following table presents a roll forward of the aggregate fair values of the Company’s warrant liabilities for which fair value is determined by Level 3 Inputs. The only class of warrants that were determined to be Level 3 are the term loan warrants. Warrant Liability Balances, January 1, 2023 $ 30,841 Exercise of warrants (8,822 ) Change in fair value of warrants (17,998 ) Balances, March 31, 2023 $ 4,021 Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) | Note 12 - WARRANTS In connection with the merger discussed in Note 3, the Company assumed the outstanding public and private placement warrants of CNTQ. Refer to Note 7 for further description of the warrants issued in connection with the Term Loan. Common Stock Warrants classified as Equity Public Warrants Each Public Warrant entitles the holder to the right to purchase one share of common stock at an exercise price of $ 11.50 0.01 16.00 9,487,500 The measurements of the Public Warrants after the detachment of the Public Warrants from the Units are classified as Level 1 due to the use of an observable market quote in an active market under the ticker DFLIW. For periods subsequent to the detachment of the Public Warrants from the Units, the close price of the Public Warrant price was used as the fair value of the Warrants as of each relevant date. Common Stock Warrants classified as Liability Private Placement Warrants The Private Placement Warrants may not be redeemed by the Company so long as the Private Placement Warrants are held by the initial purchasers, or such purchasers’ permitted transferees. 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. On the Closing Date and as of December 31, 2022, there were 4,627,858 DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) The Company accounts for the 4,627,858 SCHEDULE OF WARRANT CLASSIFICATION AT EACH BALANCE SHEET DATE Warrant Class Shares Inception Initial Exercise Expiration Private Placement Warrants 4,627,858 $ 1,990 10/7/2022 $ 11.5 8/11/2026 The private placement warrants are classified as Level 2 as the transfer of Private Placement Warrants to anyone who is not a permitted transferee would result in the Private Placement Warrants having substantially similar terms as the Public Warrants (with the exception of a different remaining life). We determined, through use of a Binomial Lattice model, that the fair value of each Private Placement Warrant less a discount for the difference in remaining life is equivalent to that of each Public Warrant. Term Loan Warrants In connection with the entry into the Term Loan Agreement, and as a required term and condition thereof, the Company issued (i) the penny warrants to the Term Loan Lenders exercisable to purchase an aggregate of 2,593,056 shares (the “ Penny Warrants 1,600,000 shares of common stock at $ 10 per share (the “$10 Warrants” and, together with the Penny Warrants, the “ Term Loan Warrants”). The $10 Warrants were exercised on a cashless basis on October 10, 2022, with the Company agreeing to issue 457,142 shares of common stock in connection with such exercise. The Company concluded the warrants are not considered indexed to the Company’s stock and to be accounted for as liabilities under ASC 815. As such, the estimated fair value is recognized as a liability each reporting period, with changes in the fair value recognized within income each period. The following table provides the significant inputs to the Black-Scholes method for the fair value of the Penny Warrants: SCHEDULE FAIR VALUE WARRANTS Initial Measurement As of Common stock price $ 14.00 $ 11.09 Exercise price $ 0.01 $ 0.01 Dividend yield 0 0 Term 10 9.77 Volatility 94.00 90.00 Risk-free rate 3.90 3.90 Fair value $ 13.99 $ 11.89 DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) The following table provides the significant inputs to the Black-Scholes method for the fair value of the $10 Warrants: Initial Common stock price $ 14.00 Exercise price $ 10.00 Dividend yield 0 Term 10 Volatility 85.00 Risk-free rate 4.10 Fair value $ 10.42 The following tables presents a roll-forward of the Company’s warrants from January 1, 2022 to December 31, 2022: SCHEDULE OF ROLL FORWARD IN WARRANTS Private Warrants: Common Stock Warrants **Warrants Outstanding, January 1, 2022 - Assumed in the merger 4,627,858 Exercised subsequent to the merger - Warrants Outstanding, December 31, 2022 4,627,858 **There were no warrants issued, exercised and outstanding prior to January 1, 2022. Public Warrants: Common Stock Warrants **Warrants Outstanding, January 1, 2022 - Assumed in the merger 9,487,500 Exercised subsequent to the merger - Warrants Outstanding, December 31, 2022 9,487,500 **There were no warrants issued, exercised and outstanding prior to January 1, 2022. Term Loan Warrants: Common Stock Warrants ** - Issued in conjunction with merger 4,193,056 Exercised subsequent to the merger (1,600,000 ) Warrants Outstanding, December 31, 2022 2,593,056 ** There were no warrants issued, exercised and outstanding prior to January 1, 2022. The following table presents a roll-forward of the aggregate fair values of the Company’s warrant liabilities for which fair value is determined by Level 3 Inputs. The only class of warrants that were determined to be Level 3 are the term loan warrants. Warrant Liability Balances, January 1, 2022 ** $ - Issuance of warrants 52,956 Exercise of warrants (16,669 ) Change in fair value of warrants (5,446 ) Balances, December 31, 2022 $ 30,841 ** There were no warrants issued, exercised and outstanding prior to January 1, 2022. DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) |
COMMON STOCK
COMMON STOCK | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Equity [Abstract] | ||
COMMON STOCK | NOTE 10 - COMMON STOCK The Company is authorized to issue up to 170,000,000 0.0001 For the three months ended March 31, 2023 and 2022, the Company had reserved shares of common stock for issuance as follows: SUMMARY OF RESERVED SHARES OF COMMON STOCK FOR ISSUANCE March 31, 2023 March 31, 2022 Options issued and outstanding 3,731,392 3,631,002 Common stock outstanding 45,795,502 36,581,910 Warrants outstanding 12,266,971 - Earnout shares 40,000,000 - Shares available for future issuance 4,319,309 1,205,790 Total 106,113,174 41,418,702 ChEF Equity Facility The Company and Chardan Capital Markets LLC, a New York limited liability company (“CCM LLC”) entered into a purchase agreement (the “Purchase Agreement”) and a Registration Rights Agreement (the “ChEF RRA”) in connection with the merger. 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 73,500 597 | Note 13 - COMMON STOCK The Company is authorized to issue up to 170,000,000 0.0001 43,272,728 36,496,998 On June 12, 2022, Dragonfly entered into a Stock Purchase Agreement with THOR Industries, whereby THOR purchased shares of Dragonfly common stock for $ 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 December 31, 2022 and 2021, the Company had reserved shares of common stock for issuance as follows: SUMMARY OF RESERVED SHARES OF COMMON STOCK FOR ISSUANCE December 31, 2022 December 31, 2021 Options issued and outstanding 3,642,958 3,690,955 Common stock outstanding 43,272,728 36,496,998 Warrants outstanding 16,708,414 - Earnout shares 40,000,000 - Shares available for future issuance 1 4,924,914 12,207 Total 108,549,014 40,200,160 (1) Refer to Stock Incentive Plan amendment at Note 14 ChEF Equity Facility The Company and CCM LLC entered into a purchase agreement (the “ Purchase Agreement ChEF RRA 150,000 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 $ 150,000 ChEF Equity Facility Under the terms of the Purchase Agreement, CCM LLC will not be obligated to (but may, at its option, choose to) purchase shares of common stock to the extent the number of shares to be purchased would exceed the lowest of the number of shares of common stock (i) which would result in beneficial ownership (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder) by CCM LLC, together with its affiliates, of more than 9.9%, (ii) which would cause the aggregate purchase price on the applicable VWAP Purchase Date (as defined in the Purchase Agreement) for such purchases to exceed $3,000 and (iii) equal to 20% of the total number of shares of common stock that would count towards VWAP on the applicable Purchase Date of such purchase The net proceeds from any sales under the Purchase Agreement will depend on the frequency with, and prices at, which shares of common stock are sold to CCM LLC. To the extent the Company sells shares of common stock under the Purchase Agreement, it currently plans to use any proceeds therefrom for working capital and other general corporate purposes. In addition, pursuant to the ChEF RRA, the Company has agreed to provide CCM LLC with certain registration rights with respect to the shares of common stock issued subject to the Purchase Agreement. The Purchase Agreement will automatically terminate on the earliest to occur of (i) the 36-month anniversary of the later of (x) the closing of the merger and (y) effective date of the Initial Registration Statement (as defined in the Purchase Agreement), (ii) the date on which CCM LLC shall have purchased 150,000,000 of shares of common stock pursuant to the Purchase Agreement, (iii) the date on which common stock shall have failed to be listed or quoted on Nasdaq or any successor principal market and (iv) the commencement of certain bankruptcy proceedings or similar transactions with respect to the Company or all or substantially all of its property. DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | ||
STOCK-BASED COMPENSATION | NOTE 11 - STOCK-BASED COMPENSATION Share-based compensation expense for options and RSUs totaling $ 4,487 288 4,487 36 29 856 3,566 288 97 37 60 94 Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) NOTE 11 - STOCK-BASED COMPENSATION (CONTINUED) A summary of the Company’s option activity and related information follows: SCHEDULE OF OPTION ACTIVITY AND RELATED INFORMATION Number of Options (1) Weighted-Average Exercise Price Weighted-Average Grant Date Fair Value Weighted-Average Remaining Contractual Life (in years) Aggregate intrinsic value Balances, January 1, 2022 3,690,955 $ 1.98 $ 1.38 8.52 $ 6,550 Options granted - - - - Options forfeited (11,584 ) 1.44 2.17 - Options exercised (48,369 ) 0.49 0.83 - Balances, March 31, 2022 3,631,002 $ 2.00 $ 1.39 8.29 $ 6,377 Balances, January 1, 2023 3,642,958 $ 2.02 $ 1.21 7.90 $ 35,989 Options granted 143,607 7.50 3.82 632 Options forfeited (19,164 ) 7.27 3.71 6 Options exercised (36,009 ) 2.58 1.65 232 Balances, March 31, 2023 3,731,392 $ 2.20 $ 1.30 6.62 $ 3,800 At March 31, 2023 Vested and Exercisable 2,029,985 $ 1.53 4.98 $ 3,120 Vested and expected to vest 3,731,392 $ 2.20 6.62 $ 3,800 (1) Number of options and weighted average exercise price has been adjusted to reflect the exchange of Legacy Dragonfly’s stock options for New Dragonfly stock options at an exchange ratio of approximately 1.182 Restricted Stock Units On October 7, 2022, the Company granted 180,000 2,520 461,998 3,464 Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) NOTE 11 - STOCK-BASED COMPENSATION (CONTINUED) Restricted Stock Units (Continued) There were no grants of restricted stock units prior to October 7, 2022. The following table presents the restricted stock units activity for the three months ended March 31, 2023: SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY Number of Shares Weighted-Average Fair Market Value Unvested shares at January 1, 2023 180,000 $ 14.00 Granted and unvested 461,998 7.50 Vested (461,998 ) 7.50 Unvested shares, March 31, 2023 180,000 $ 14.00 Vested as of March 31, 2023 461,998 $ 7.50 As of March 31, 2023, there were 4,319,309 | Note 14 - STOCK-BASED COMPENSATION On August 12, 2019, the Board of Directors approved the 2019 Stock Incentive Plan (the “ 2019 Plan ten years 3,000,000 RSUs In July of 2021, the Board of Directors approved the 2021 Stock Incentive Plan (the “ 2021 Plan Prior Plans ten years 1,000,000 2,000,000 In connection with the merger, shareholders and board members approved the 2022 Equity Incentive Plan (the “ 2022 Plan 2,785,950 If an incentive award granted under the 2022 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 2022 Plan. The number of shares subject to the 2022 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. The Company maintains an Employee Stock Purchase Plan (“ ESPP 2,464,400 1 1,500,000 A summary of the Company’s option activity and related information follows: SCHEDULE OF OPTION ACTIVITY AND RELATED INFORMATION Number of Options (1) Weighted- Weighted- Weighted- Aggregate Intrinsic value Balances, January 1, 2021 3,029,791 $ 0.45 $ 0.72 7.92 $ 651 Options granted 2,069,309 3.41 2.03 3,551 Options forfeited (421,094 ) 1.44 1.82 - Options exercised (987,051 ) 0.51 0.53 442 Balances, December 31, 2021 3,690,955 $ 1.98 $ 1.38 8.52 $ 6,550 Balances, January 1, 2022 3,690,955 $ 1.98 $ 1.38 8.52 $ 6,550 Options granted 572,428 3.46 1.57 - Options forfeited (39,074 ) 3.13 1.73 - Options exercised (581,351 ) 1.16 0.89 - Balances, December 31, 2022 3,642,958 $ 2.02 $ 1.21 7.90 $ 35,898 At December 31, 2022 Vested and Exercisable 1,646,304 $ 1.48 7.13 $ 17,114 Vested and expected to vest 3,642,958 $ 2.02 7.90 $ 35,898 (1) Number of options and weighted average exercise price has been adjusted to reflect the exchange of Legacy Dragonfly’s stock options for New Dragonfly stock options at an exchange ratio of approximately 1.182 Share-based compensation expense for options and RSUs totaling $ 2,467 734 2,467 155 149 654 1,509 734 252 95 156 231 As of December 31, 2022, there were 4,924,914 shares of unissued authorized and available for future awards under the plans. DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 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 expected term was estimated using the simplified method due to lack of sufficient history of option exercises. SCHEDULE OF VALUATION ASSUMPTIONS OF OPTIONS 2022 2021 Weighted average fair value of options granted $ 1.57 $ 2.05 Risk-free interest rate 2.71% 1.08% Volatility 45.0% 52.6 Expected life (years) 5.68 6.02 Dividend yield 0.00% 0.00% Restricted Stock Units On October 7, 2022, the Company granted 180,000 2,520 There were no grants of restricted stock units prior to October 7, 2022. The following table presents the restricted stock units activity for the year ended December 31, 2022: SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY Number of Shares Weighted-Average Fair Market Value Unvested shares, December 31, 2021 - - Granted and unvested 180,000 $ 14.00 Vested - - Forfeited/Cancelled - - Unvested shares, December 31, 2022 180,000 $ 14.00 Vested as of December 31, 2022 - $ - |
REDEEMABLE PREFERRED STOCK RIGH
REDEEMABLE PREFERRED STOCK RIGHTS | 12 Months Ended |
Dec. 31, 2022 | |
Redeemable Preferred Stock Rights | |
REDEEMABLE PREFERRED STOCK RIGHTS | Note 15 - REDEEMABLE PREFERRED STOCK RIGHTS In connection with the merger, Legacy Redeemable Convertible Preferred Stock previously classified as temporary equity was retroactively adjusted, converted into common stock at an exchange ratio of approximately 1.182 The following describes the rights and preferences of the Legacy Dragonfly Redeemable Convertible Preferred Stock prior to the conversion in the merger: 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 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 Series A Director two The holders of record of the shares of common stock, exclusively and as a separate class, shall be entitled to elect two Common Stock Director A Common Stock Director B three one DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 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 Company or deemed liquidation event, as defined, the holders of shares of Series A Preferred Stock then outstanding (the “ Series A shareholders 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 Company 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 Company 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 Mandatory Conversion Upon either (a) the closing of the sale of shares of common stock at a price of at least $ 1.00 25,000 50 |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Earnings Per Share [Abstract] | ||
EARNINGS (LOSS) PER SHARE | NOTE 12 - EARNINGS (LOSS) PER SHARE Earnings (Loss) per Common Share The following table sets forth the information needed to compute basic and diluted earnings (loss) per share for the three months ended March 31, 2023 and 2022: SCHEDULE OF INFORMATION NEEDED TO COMPUTE BASIC AND DILUTED EARNINGS PER SHARE March 31, 2023 March 31, 2022 Basic Earnings (Loss) per common share: Net Income (Loss) available to common shareholders $ 4,892 $ (2,298 ) Weighted average number of common shares-basic 45,104,515 36,542,944 Earnings (Loss) per share, basic $ 0.11 $ (0.06 ) Diluted Earnings (Loss) per common share: Net Income (Loss) available to common shareholders $ 4,892 $ (2,298 ) Weighted average number of common shares-basic 45,104,515 36,542,944 Dilutive effect related to stock options and warrants 3,351,481 - Weighted average diluted shares outstanding 48,455,996 36,542,944 Earnings (Loss) per share, diluted $ 0.10 $ (0.06 ) The following table sets forth the number of potential shares of common stock that have been excluded from diluted net income per share net income (loss) per share because their effect was anti-dilutive: SCHEDULE OF POTENTIAL SHARES OF COMMON STOCK EXCLUDED FROM DILUTED NET (LOSS) INCOME PER SHARE March 31, 2023 March 31, 2022 Warrants 10,923,915 - Restricted stock units 111,015 - Options - 3,631,002 Weighted average number of common shares-basic 11,034,930 3,631,002 | Note 16 - EARNINGS (LOSS) PER SHARE Earnings (Loss) per Common Share The following table sets forth the information needed to compute basic and diluted (loss) earnings per share for the years ended December 31, 2022 and December 31, 2021: SCHEDULE OF INFORMATION NEEDED TO COMPUTE BASIC AND DILUTED EARNINGS PER SHARE December 31, 2022 December 31, 2021 Basic (Loss) Earnings per common share: Net (Loss) Income available to common shareholders $ (39,571 ) $ 4,338 Weighted average number of common shares-basic 38,565,307 35,579,137 (Loss) Earnings per share, basic $ (1.03 ) $ 0.12 Diluted (Loss) earnings per common share: Net (Loss) Income available to common shareholders $ (39,571 ) $ 4,338 Weighted average number of common shares-basic 38,565,307 35,579,137 Dilutive effect related to stock options - 2,163,200 Weighted average diluted shares outstanding 38,565,307 37,742,337 (Loss) Earnings per share, diluted $ (1.03 ) $ 0.11 DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) The following table sets forth the number of potential shares of common stock that have been excluded from diluted net income per share net (loss) income per share because their effect was anti-dilutive: SCHEDULE OF POTENTIAL SHARES OF COMMON STOCK EXCLUDED FROM DILUTED NET (LOSS) INCOME PER SHARE December 31, 2022 December 31, 2021 Warrants 16,708,414 - Restricted stock units 180,000 - Options 3,642,958 - Weighted average number of common shares-basic 20,531,372 - |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Subsequent Events | ||
SUBSEQUENT EVENTS | NOTE 17 – SUBSEQUENT EVENTS On March 5, 2023, the Company entered into a convertible promissory note with a board member in the amount of $ 1,000 100 On March 29, 2023, the Company obtained a waiver from the Administrative Agent and the Term Loan Lenders of its failures to satisfy the fixed charge coverage ratio and maximum senior leverage ratio with respect to the minimum cash requirements under the Term Loan during the quarter ended March 31, 2023. On March 31, 2023, the Company changed its state of incorporation from the State of Delaware to the State of Nevada (the “ Reincorporation Plan of Conversion Under the terms of the Purchase Agreement described in Note 13 the Company issued 98,500 671 | |
SUBSEQUENT EVENTS | NOTE 14 – SUBSEQUENT EVENTS On April 1, 2023 the Company paid the $ 1,000 100 On April 26, 2023 (the “Separation Date”), the Company’s Chief Legal Officer’s employment with the Company ended and her employment agreement was deemed terminated as of that date by the Company without cause for purposes of determining severance thereunder. Under the terms of her employment agreement, Ms. Harvey is entitled to receive cash severance equal to $ 334,000 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | ||
Basis of presentation | Basis of presentation The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with U.S. GAAP for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) set forth in Article 8 of Regulation S X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim 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 financial statements should be read along with the Annual Report filed of the Company for the annual period ended December 31, 2022. The consolidated balance sheet as of December 31, 2022 was derived from the audited consolidated financial statements as of and for the year then ended. Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) | Basis of Presentation The accompanying consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“ SEC U.S. GAAP |
Going Concern | Going Concern The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. For the three months ended March 31, 2023 and 2022, the Company incurred loss from operations and had negative cash flow from operations. As of March 31, 2023, the Company had $ 15,791 24,533 In connection with the Company’s senior secured term loan facility in an aggregate principal amount of $ 75,000 In addition, the Company may need to raise additional debt and/or equity financings to fund our operations, strategic plans, and meet its financial covenants. The Company has historically been able to raise additional capital through issuance of equity and/or debt financings and the Company intends to use its equity facility and raise additional capital as needed. However, the Company cannot guarantee that it will be able to raise additional equity, contain expenses, or increase revenue, and comply with the financial covenants under the Term Loan. | Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. For the year ended December 31, 2022, the Company incurred losses and had a negative cash flow from operations. As of December 31, 2022, the Company had $ 17,781 32,923 In connection with the Company’s senior secured term loan facility in an aggregate principal amount of $ 75,000 Term Loan In addition, the Company may need to raise additional debt and/or equity financings to fund its operations and strategic plans and meet its financial covenants. The Company has historically been able to raise additional capital through issuance of equity and/or debt financings and the Company intends to use its equity facility and raise additional capital as needed. However, the Company cannot guarantee that it will be able to raise additional equity, contain expenses, or increase revenue, and comply with the financial covenants under the Term Loan. |
Recently adopted accounting standards | Recently adopted accounting standards In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 determined that this change does not have a material impact to the financial statements or financial statement disclosures. | Recently adopted accounting standards In May 2021, the Financial Accounting Standards Board (“ FASB ASU DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) |
Recently issued accounting pronouncements | Recently issued accounting pronouncements In August 2020, FASB issued 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) Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) | 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 determined that this change does not have a material impact to the financial statements. In August 2020, the FASB issued 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 |
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 no 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 – 60 days 116 90 | 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 30-60 days 90 50 |
Inventory | Inventory Inventories (Note 4), which consist of raw materials and finished goods, are stated at the lower of cost (first in, first out) 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 March 31, 2023 and December 31, 2022, no such reserves were necessary. | Inventory Inventories (Note 5), which consist of raw materials and finished goods, are stated at the lower of cost (first in, first out) 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, 2022 and 2021, no such reserves were necessary. DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) |
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 three months ended March 31, 2023 and 2022 was $ 297 192 SCHEDULE OF VARIOUS CLASSES OF PROPERTY AND EQUIPMENT AND ESTIMATED USEFUL LIVES Office furniture and equipment 3 7 Vehicles 5 Machinery and equipment 3 7 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, 2022 and 2021 was $ 891 617 SCHEDULE OF VARIOUS CLASSES OF PROPERTY AND EQUIPMENT AND ESTIMATED USEFUL LIVES Office furniture and equipment 3 7 Vehicles 5 Machinery and equipment 3 7 Leasehold improvements Remaining Term of Lease |
Use of Estimates | Use of Estimates The preparation of financial statements, in conformity with U.S. 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. | |
Warrants | Warrants The Company applies relevant accounting guidance for warrants to purchase the Company’s stock based on the nature of the relationship with the counterparty. For warrants issued to investors or lenders in exchange for cash or other financial assets, the Company follows guidance issued within Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”), and ASC 815, Derivatives and Hedging (“ASC 815”), to assist in the determination of whether the warrants should be classified as liabilities or equity. Warrants that are determined to require liability classification are measured at fair value upon issuance and are subsequently remeasured to their then fair value at each subsequent reporting period with changes in fair value recorded in current earnings. Warrants that are determined to require equity classification are measured at fair value upon issuance and are not subsequently remeasured unless they are required to be reclassified. Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) | Warrants The Company applies relevant accounting guidance for warrants to purchase the Company’s stock based on the nature of the relationship with the counterparty. For warrants issued to investors or lenders in exchange for cash or other financial assets, the Company follows guidance issued within ASC 480, Distinguishing Liabilities from Equity (“ ASC 480 ASC 815 |
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. | |
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. 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 typically due within 30 60 418 238 211 434 | 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 Consolidated Statements of Operations. DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 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 1,779 238 434 |
Disaggregation of Revenue | Disaggregation of Revenue The following table present our disaggregated revenues by distribution channel: SCHEDULE OF DISAGGREGATED REVENUES BY DISTRIBUTION CHANNEL 2023 2022 For the Three Months Ended March 31, 2023 2022 Sales Retail $ 7,069 $ 13,035 Distributor 2,968 2,087 Original equipment manufacture 8,754 3,181 Total $ 18,791 $ 18,303 Total sales $ 18,791 $ 18,303 | Disaggregation of Revenue The following table present our disaggregated revenues by distribution channel: SCHEDULE OF DISAGGREGATED REVENUES BY DISTRIBUTION CHANNEL Sales 2022 2021 Retail $ 43,344 $ 59,042 Distributor 9,102 10,733 Original equipment manufacture 33,805 8,225 Total $ 86,251 $ 78,000 Total sales $ 86,251 $ 78,000 |
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 $ 1,007 1,228 | 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 $ 5,440 5,105 |
Product Warranty | Product Warranty The Company offers assurance type warranties from 5 10 400 328 Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) | Product Warranty The Company offers assurance type warranties from 5 10 328 0 DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) |
Concentrations | Concentrations Receivables from one 50 three 18 10 10 Sales from one 26 Payables to one 67 one 61 For the three months ended March 31, 2023, two 38 10 one 34 | Concentrations Receivables from three 18 10 10 two 42 16 Revenue from one 22 Payables to one 61 For the year ended December 31, 2022, one 28 three 27 10 10 |
Deferred Financing Costs | Deferred Financing Costs The incremental cost, including the fair value of warrants, directly associated with obtaining debt financing is capitalized as deferred financing costs upon the issuance of the debt and amortized over the term of the related debt agreement using the effective-interest method with such amortized amounts included as a component of interest expense in the consolidated statement of operations. Unamortized deferred financing costs are presented on the consolidated balance sheets as a direct deduction from the carrying amount of the related debt obligation. | |
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. | |
Advertising | Advertising The Company expenses advertising costs as they are incurred and are included in selling and marketing expenses. Advertising expenses amounted to $ 587 781 | Advertising The Company expenses advertising costs as they are incurred and are included in selling and marketing expenses. Advertising expenses amounted to $ 2,334 1,690 |
Stock-Based Compensation | 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 option s 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. Dragonfly Energy Holdings Corp. Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except share and per share data) 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 14). 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. Restricted stock unit awards are valued based on the closing trading value of the Company’s common stock on the date of grant and then amortized on a straight-line basis over the requisite service period of the award. 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. |
Income Taxes | Income Taxes Deferred income tax assets and liabilities 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 $ 128 128 | Income Taxes Deferred income tax assets and liabilities (Note 9) 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 $ 128 0 The Company’s accounting policy is to include penalties and interest related to income taxes if any, in selling, general and administrative expenses. We regularly assess the need to record a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. |
Net (Loss) Earnings per Common Share | Net (Loss) Earnings per Common Share Basic net (loss) earnings per share is calculated by dividing net (loss) earnings by the weighted-average number of common shares outstanding during the period. Diluted net (loss) earnings per share is calculated using the weighted-average number of common shares outstanding during the period and, if dilutive, the weighted-average number of potential shares of common stock. The weighted-average number of common shares included in the computation of diluted net (loss) earnings gives effect to all potentially dilutive common equivalent shares, including outstanding stock options and warrants. Common stock equivalent shares are excluded from the computation of diluted net (loss) earnings per share if their effect is antidilutive. In periods in which the Company reports a net loss, diluted net loss per share is generally the same as basic net loss per share since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. As the Merger has been accounted for as a reverse recapitalization, the consolidated financial statements of the merged entity reflect the continuation of the pre-merger Legacy Dragonfly financial statements; Dragonfly equity has been retroactively adjusted to the earliest period presented to reflect the legal capital of the legal acquirer, CNTQ. As a result, net (loss) earnings per share was also retrospectively adjusted for periods ended prior to the Merger. See Note 3 - Reverse Capitalization | |
Leases | Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement including the use of an identified asset(s) and the Company’s control over the use of that identified asset. The Company elected, as allowed under Financial Accounting Standards Board (“FASB”) Accounting Standard Update (“ASU”) 2016-02, Leases (“ASC 842”), to not recognize leases with a lease term of one year or less on its balance sheet. Leases with a term greater than one year are recognized on the balance sheet as right-of-use (“ROU”) assets and current and non-current lease liabilities, as applicable. | |
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 | 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 DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) |
Principles of consolidation | Principles of consolidation The accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and present the consolidated financial statements of the Company and its wholly owned subsidiary. All significant intercompany transactions and balances are eliminated in consolidation. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | ||
SCHEDULE OF VARIOUS CLASSES OF PROPERTY AND EQUIPMENT AND ESTIMATED USEFUL LIVES | SCHEDULE OF VARIOUS CLASSES OF PROPERTY AND EQUIPMENT AND ESTIMATED USEFUL LIVES Office furniture and equipment 3 7 Vehicles 5 Machinery and equipment 3 7 Leasehold improvements Remaining Term of Lease | SCHEDULE OF VARIOUS CLASSES OF PROPERTY AND EQUIPMENT AND ESTIMATED USEFUL LIVES Office furniture and equipment 3 7 Vehicles 5 Machinery and equipment 3 7 Leasehold improvements Remaining Term of Lease |
SCHEDULE OF DISAGGREGATED REVENUES BY DISTRIBUTION CHANNEL | The following table present our disaggregated revenues by distribution channel: SCHEDULE OF DISAGGREGATED REVENUES BY DISTRIBUTION CHANNEL 2023 2022 For the Three Months Ended March 31, 2023 2022 Sales Retail $ 7,069 $ 13,035 Distributor 2,968 2,087 Original equipment manufacture 8,754 3,181 Total $ 18,791 $ 18,303 Total sales $ 18,791 $ 18,303 | The following table present our disaggregated revenues by distribution channel: SCHEDULE OF DISAGGREGATED REVENUES BY DISTRIBUTION CHANNEL Sales 2022 2021 Retail $ 43,344 $ 59,042 Distributor 9,102 10,733 Original equipment manufacture 33,805 8,225 Total $ 86,251 $ 78,000 Total sales $ 86,251 $ 78,000 |
REVERSE CAPITALIZATION (Tables)
REVERSE CAPITALIZATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Reverse Capitalization | |
SCHEDULE OF MERGER CASH FLOW AND SHAREHOLDERS EQUITY | The following table summarizes the elements of the merger allocated to the Consolidated Statements of Operations: SCHEDULE OF MERGER CASH FLOW AND SHAREHOLDERS EQUITY Amounts Cash: CNTQ trust and PIPE Investors $ 10,979 Cash: CNTQ 303 Gross Proceeds 11,282 Net liabilities assumed in merger transaction (1,017 ) Warrant liability assumed in merger (1,990 ) CNTQ note payable settlement at close (400 ) CNTQ transaction costs paid at close (18,072 ) Net deficit assumed in recapitalization $ (10,197 ) DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) Number of Shares Common stock, outstanding prior to merger 3,093,348 Less: Redemption of CNTQ shares (2,016,912 ) CNTQ Public Shares 1,076,436 CNTQ Sponsor Shares 3,162,500 Merger and PIPE financing shares 4,238,936 Legacy Dragonfly shares (1)(2) 38,576,650 Total shares of common stock immediately after the merger 42,815,586 (1) -The number of Legacy Dragonfly shares was determined from the shares of Legacy Dragonfly outstanding immediately prior to the closing of the merger converted at the Exchange Ratio. All fractional shares were rounded down. (2) - The preferred shares of Legacy Dragonfly were exchanged on a 1 to 1 ratio to common stock and the shares were then exchanged for shares of Dragonfly Energy Holdings Corp. at the Exchange Ratio. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | ||
SCHEDULE OF FAIR VALUE, ASSETS AND LIABILITIES | The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of March 31, 2023: SCHEDULE OF FAIR VALUE, ASSETS AND LIABILITIES Carrying Amount Fair Value (Level 1) (Level 2) (Level 3) As of March 31, 2023 Liabilities Warrant liability- Term Loan $ 4,021 $ 4,021 $ - $ - $ 4,021 Warrant liability- Private placement warrants 120 120 - 120 - Total liabilities $ 4,141 $ 4,141 $ - $ 120 $ 4,021 The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of December 31, 2022: Carrying Amount Fair Value (Level 1) (Level 2) (Level 3) As of December 31, 2022 Liabilities Warrant liability- Term Loan $ 30,841 $ 30,841 $ - $ - $ 30,841 Warrant liability- Private placement warrants 1,990 1,990 - 1,990 - Total liabilities $ 32,831 $ 32,831 $ - $ 1,990 $ 30,841 | SCHEDULE OF FAIR VALUE, ASSETS AND LIABILITIES As of December 31, 2022 Carrying Amount Fair Value (Level 1) (Level 2) (Level 3) Liabilities Warrant liability-Term Loan $ 30,841 $ 30,841 $ - $ - $ 30,841 Warrant liability-Private Placement Warrants 1,990 1,990 - 1,990 - Total liabilities $ 32,831 $ 32,831 $ - $ 1,990 $ 30,841 |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | ||
SCHEDULE OF INVENTORY | Inventory consists of the following: SCHEDULE OF INVENTORY March 31, 2023 December 31, 2022 Raw material $ 44,310 $ 42,586 Finished goods 7,502 7,260 Total inventory $ 51,812 $ 49,846 | Inventory consists of the following: SCHEDULE OF INVENTORY December 31, December 31, Raw material $ 42,586 $ 22,885 Finished goods 7,260 4,242 Total inventory $ 49,846 $ 27,127 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
SCHEDULE OF TABLE REPRESENTING THE BREAKOUT OF THE OPERATING LEASES | The following table presents the breakout of the operating leases as of: SCHEDULE OF TABLE REPRESENTING THE BREAKOUT OF THE OPERATING LEASES March 31, 2023 December 31, 2022 Operating lease right-of-use assets $ 4,205 $ 4,513 Short-term operating lease liabilities 1,215 1,188 Long-term operating lease liabilities 3,209 3,541 Total operating lease liabilities $ 4,424 $ 4,729 Weighted average remaining lease term 3.4 3.6 Weighted average discount rate 5.2 % 5.2 % | The following table presents the breakout of the operating leases as of: SCHEDULE OF TABLE REPRESENTING THE BREAKOUT OF THE OPERATING LEASES December 31, December 31, Operating lease right-of-use assets $ 4,513 $ 5,709 Short-term operating lease liabilities 1,188 1,082 Long-term operating lease liabilities 3,541 4,694 Total operating lease liabilities $ 4,729 $ 5,776 Weighted average remaining lease term 3.6 4.6 Weighted average discount rate 5.2% 5.2% |
SCHEDULE OF THE FUTURE MINIMUM LEASE PAYMENTS UNDER THE OPERATING LEASES | At March 31, 2023, the future minimum lease payments under these operating leases are as follows: SCHEDULE OF THE FUTURE MINIMUM LEASE PAYMENTS UNDER THE OPERATING LEASES Fiscal Years Ending Amount December 31, 2023 (1) $ 1,054 December 31, 2024 1,435 December 31, 2025 1,435 December 31, 2026 893 Total lease payments 4,817 Less imputed interest 393 Total operating lease liabilities $ 4,424 (1) Represents scheduled payments for the remaining nine-month period ending December 31, 2023. | At December 31, 2022, the future minimum lease payments under these operating leases are as follows: SCHEDULE OF THE FUTURE MINIMUM LEASE PAYMENTS UNDER THE OPERATING LEASES 2023 $ 1,399 2024 1,435 2025 1,440 2026 893 Total lease payments 5,167 Less imputed interest 438 Total operating lease liabilities $ 4,729 |
SCHEDULE OF LEASE COST | SCHEDULE OF LEASE COST Lease cost Classification March 31, 2023 March 31, 2022 Operating lease cost Cost of goods sold $ 347 $ 172 Operating lease cost Research and development 22 19 Operating lease cost General and administration 12 10 Operating lease cost Selling and marketing 12 14 Total lease cost $ 393 $ 215 | SCHEDULE OF LEASE COST December 31, December 31, Lease cost Classification 2022 2021 Operating lease cost Cost of goods sold $ 1,476 $ 633 Operating lease cost Research and development 95 103 Operating lease cost General and administration 50 42 Operating lease cost Selling and marketing 49 42 Total lease cost $ 1,670 $ 820 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Debt Disclosure [Abstract] | ||
SCHEDULE OF DEPOSITS INTO RESERVE ACCOUNTS | Deposits into the reserve accounts consisted of the following items: SCHEDULE OF DEPOSITS INTO RESERVE ACCOUNTS Payment Reserve Fund $ 3,044 Capitalized Interest Fund 144 Total $ 3,188 | |
SCHEDULE OF LEVERAGE RATION | SCHEDULE OF LEVERAGE RATION Test Period Ending Leverage Ratio December 31, 2022 - March 31, 2023 6.75 to 1.00 June 30, 2023 - September 30, 2023 6.00 to 1.00 December 31, 2023 - March 31, 2024 5.00 to 1.00 June 30, 2024 - September 30, 2024 4.00 to 1.00 December 31, 2024 - March 31, 2025 3.25 to 1.00 June 30, 2025 and thereafter 3.00 to 1.00 | SCHEDULE OF LEVERAGE RATION Test Period Ending Leverage Ratio December 31, 2022 – March 31, 2023 6.75 to 1.00 June 30, 2023 – September 30, 2023 6.00 to 1.00 December 31, 2023 – March 31, 2024 5.00 to 1.00 June 30, 2024 – September 30, 2024 4.00 to 1.00 December 31, 2024 – March 31, 2025 3.25 to 1.00 June 30, 2025 and thereafter 3.00 to 1.00 |
SCHEDULE OF FUTURE DEBT MATURITIES | At March 31, 2023, the future debt maturities, based on contractual principal payments are as follows: SCHEDULE OF FUTURE DEBT MATURITIES For Year Ended December 31, 2023 (1) $ - 2024 938 2025 3,750 2026 91,775 Total 96,463 Less: Estimated interest paid-in-kind (19,033 ) Total debt 77,430 Less: Unamortized debt issuance costs, noncurrent (56,731 ) Total carrying amount 20,699 Less: Current portion of debt (20,699 ) Total long-term debt $ - (1) Represents scheduled payments for the remaining nine-month period ending December 31, 2023 | At December 31, 2022, the future debt maturities are as follows: SCHEDULE OF FUTURE DEBT MATURITIES For the Years Ending December 31, Future Debt Maturities 2023 $ - 2024 938 2025 3,750 2026 91,809 Total 96,497 Less: Estimated interest paid-in-kind (20,305 ) Total debt 76,192 Less: Unamortized debt issuance costs, non-current (56,950 ) Total carrying amount 19,242 Less: current portion of debt (19,242 ) Total long-term debt $ - |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
SCHEDULE OF INCOME TAX EXPENSE | The income tax expense consists of the following items: SCHEDULE OF INCOME TAX EXPENSE 2022 2021 Current $ (257 ) $ 1,489 Deferred (452 ) 122 Total tax expense $ (709 ) $ 1,611 |
SCHEDULE OF COMPONENTS OF DEFERRED TAX ASSETS (LIABILITIES) | Components of deferred tax assets (liabilities) are as follows: SCHEDULE OF COMPONENTS OF DEFERRED TAX ASSETS (LIABILITIES) 2022 2021 Deferred tax assets: Lease liability $ 1,071 $ 1,221 Stock based compensation 139 35 Accrued expenses 506 - Allowance for bad debt 75 59 Research and development credit 200 - Fixed assets and intangibles 25 - Interest expense 1,595 - Prepaid expenses 960 - Net Operating Loss 3,727 - Inventory (Sec. 263A) 62 45 Deferred tax asset $ 8,360 $ 1,360 Deferred tax liabilities: Right of Use Asset $ 1,036 $ 1,207 Fixed assets and intangibles - 606 Deferred tax liability $ 1,036 $ 1,813 Net deferred tax asset (liability) $ 7,324 $ (453 ) Valuation Allowance (7,324 ) - Net deferred tax asset $ - $ (453 ) |
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 years ended December 31, 2022 and 2021, are as follows: SCHEDULE OF RECONCILIATION BETWEEN THE EFFECTIVE TAX RATE ON INCOME FROM CONTINUING OPERATIONS AND THE STATUTORY RATE 2022 2021 Tax Percentage Tax Percentage Book income (loss) before taxes $ (8,459 ) 21.00% $ 1,249 21.00% Permanent differences (transaction costs) 2,185 (5.42)% - - Permanent differences (warrants) (1,144 ) 2.84% - - Permanent differences (other -other than tax) 458 (1.14)% 188 3.16% State taxes, net (722 ) 1.79% 128 2.15% Deferred true-up (288 ) 0.71% 56 0.94% Research and development credits (200 ) 0.50% Uncertain tax positions 128 (0.32)% (19 ) (0.32)% Other 9 (0.02)% 9 0.15% Change in valuation allowance 7,324 (18.18)% - - Total $ (709 ) $ 1,611 Effective tax rate 1.76% 27.08% |
SCHEDULE OF GROSS UNCERTAIN TAX POSITIONS | The roll-forward of the Company’s gross uncertain tax positions is as follows: SCHEDULE OF GROSS UNCERTAIN TAX POSITIONS Gross Uncertain Tax Position Balance January 1, 2021 $ 19 Additions for current year tax positions - Reductions for prior year tax positions (19 ) Balance- December 31, 2021 - Additions for current year tax positions 128 Balance- December 31, 2022 $ 128 |
WARRANTS (Tables)
WARRANTS (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Warrants | ||
SCHEDULE OF WARRANT CLASSIFICATION AT EACH BALANCE SHEET DATE | SCHEDULE OF WARRANT CLASSIFICATION AT EACH BALANCE SHEET DATE Warrant Class Shares Inception Initial Exercise Expiration Private Placement Warrants 4,627,858 $ 1,990 10/7/2022 $ 11.5 8/11/2026 | |
SCHEDULE FAIR VALUE WARRANTS | The following table provides the significant inputs to the Black-Scholes method for the fair value of the Penny Warrants: SCHEDULE FAIR VALUE WARRANTS As of March 31, 2023 As of December 31, 2022 Common stock price $ 3.00 $ 11.09 Exercise price 0.01 0.01 Dividend yield 0 % 0 % Term 9.52 9.77 Volatility 89.00 % 90.00 % Risk-free rate 3.43 % 3.90 % Fair value $ 2.99 $ 11.89 | The following table provides the significant inputs to the Black-Scholes method for the fair value of the Penny Warrants: SCHEDULE FAIR VALUE WARRANTS Initial Measurement As of Common stock price $ 14.00 $ 11.09 Exercise price $ 0.01 $ 0.01 Dividend yield 0 0 Term 10 9.77 Volatility 94.00 90.00 Risk-free rate 3.90 3.90 Fair value $ 13.99 $ 11.89 DRAGONFLY ENERGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) The following table provides the significant inputs to the Black-Scholes method for the fair value of the $10 Warrants: Initial Common stock price $ 14.00 Exercise price $ 10.00 Dividend yield 0 Term 10 Volatility 85.00 Risk-free rate 4.10 Fair value $ 10.42 |
SCHEDULE OF ROLL FORWARD IN WARRANTS | The following table presents a roll-forward of the Company’s warrants from January 1, 2023 to March 31, 2023: SCHEDULE OF ROLL FORWARD IN WARRANTS Private Warrants: Common Stock Warrants Warrants Outstanding, January 1, 2023 4,627,858 Exercise of warrants (3,126,472 ) Warrants Outstanding, March 31, 2023 1,501,386 There were no private warrants issued, exercised and outstanding from the period January 1, 2022 through March 31, 2022. Public Warrants: Common Stock Warrants Warrants Outstanding, January 1, 2023 9,487,500 Exercise of warrants (64,971 ) Warrants Outstanding, March 31, 2023 9,422,529 There were no public warrants issued, exercised and outstanding from the period January 1, 2022 through March 31, 2022. Term Loan Warrants: Common Stock Warrants Warrants Outstanding, January 1, 2023 2,593,056 Exercise of warrants (1,250,000 ) Warrants Outstanding, March 31, 2023 1,343,056 There were no term loan warrants issued, exercised and outstanding from the period January 1, 2022 through March 31, 2022. The following table presents a roll forward of the aggregate fair values of the Company’s warrant liabilities for which fair value is determined by Level 3 Inputs. The only class of warrants that were determined to be Level 3 are the term loan warrants. Warrant Liability Balances, January 1, 2023 $ 30,841 Exercise of warrants (8,822 ) Change in fair value of warrants (17,998 ) Balances, March 31, 2023 $ 4,021 | The following tables presents a roll-forward of the Company’s warrants from January 1, 2022 to December 31, 2022: SCHEDULE OF ROLL FORWARD IN WARRANTS Private Warrants: Common Stock Warrants **Warrants Outstanding, January 1, 2022 - Assumed in the merger 4,627,858 Exercised subsequent to the merger - Warrants Outstanding, December 31, 2022 4,627,858 **There were no warrants issued, exercised and outstanding prior to January 1, 2022. Public Warrants: Common Stock Warrants **Warrants Outstanding, January 1, 2022 - Assumed in the merger 9,487,500 Exercised subsequent to the merger - Warrants Outstanding, December 31, 2022 9,487,500 **There were no warrants issued, exercised and outstanding prior to January 1, 2022. Term Loan Warrants: Common Stock Warrants ** - Issued in conjunction with merger 4,193,056 Exercised subsequent to the merger (1,600,000 ) Warrants Outstanding, December 31, 2022 2,593,056 ** There were no warrants issued, exercised and outstanding prior to January 1, 2022. The following table presents a roll-forward of the aggregate fair values of the Company’s warrant liabilities for which fair value is determined by Level 3 Inputs. The only class of warrants that were determined to be Level 3 are the term loan warrants. Warrant Liability Balances, January 1, 2022 ** $ - Issuance of warrants 52,956 Exercise of warrants (16,669 ) Change in fair value of warrants (5,446 ) Balances, December 31, 2022 $ 30,841 ** There were no warrants issued, exercised and outstanding prior to January 1, 2022. |
COMMON STOCK (Tables)
COMMON STOCK (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Equity [Abstract] | ||
SUMMARY OF RESERVED SHARES OF COMMON STOCK FOR ISSUANCE | For the three months ended March 31, 2023 and 2022, the Company had reserved shares of common stock for issuance as follows: SUMMARY OF RESERVED SHARES OF COMMON STOCK FOR ISSUANCE March 31, 2023 March 31, 2022 Options issued and outstanding 3,731,392 3,631,002 Common stock outstanding 45,795,502 36,581,910 Warrants outstanding 12,266,971 - Earnout shares 40,000,000 - Shares available for future issuance 4,319,309 1,205,790 Total 106,113,174 41,418,702 | As of December 31, 2022 and 2021, the Company had reserved shares of common stock for issuance as follows: SUMMARY OF RESERVED SHARES OF COMMON STOCK FOR ISSUANCE December 31, 2022 December 31, 2021 Options issued and outstanding 3,642,958 3,690,955 Common stock outstanding 43,272,728 36,496,998 Warrants outstanding 16,708,414 - Earnout shares 40,000,000 - Shares available for future issuance 1 4,924,914 12,207 Total 108,549,014 40,200,160 (1) Refer to Stock Incentive Plan amendment at Note 14 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | ||
SCHEDULE OF OPTION ACTIVITY AND RELATED INFORMATION | A summary of the Company’s option activity and related information follows: SCHEDULE OF OPTION ACTIVITY AND RELATED INFORMATION Number of Options (1) Weighted-Average Exercise Price Weighted-Average Grant Date Fair Value Weighted-Average Remaining Contractual Life (in years) Aggregate intrinsic value Balances, January 1, 2022 3,690,955 $ 1.98 $ 1.38 8.52 $ 6,550 Options granted - - - - Options forfeited (11,584 ) 1.44 2.17 - Options exercised (48,369 ) 0.49 0.83 - Balances, March 31, 2022 3,631,002 $ 2.00 $ 1.39 8.29 $ 6,377 Balances, January 1, 2023 3,642,958 $ 2.02 $ 1.21 7.90 $ 35,989 Options granted 143,607 7.50 3.82 632 Options forfeited (19,164 ) 7.27 3.71 6 Options exercised (36,009 ) 2.58 1.65 232 Balances, March 31, 2023 3,731,392 $ 2.20 $ 1.30 6.62 $ 3,800 At March 31, 2023 Vested and Exercisable 2,029,985 $ 1.53 4.98 $ 3,120 Vested and expected to vest 3,731,392 $ 2.20 6.62 $ 3,800 (1) Number of options and weighted average exercise price has been adjusted to reflect the exchange of Legacy Dragonfly’s stock options for New Dragonfly stock options at an exchange ratio of approximately 1.182 | A summary of the Company’s option activity and related information follows: SCHEDULE OF OPTION ACTIVITY AND RELATED INFORMATION Number of Options (1) Weighted- Weighted- Weighted- Aggregate Intrinsic value Balances, January 1, 2021 3,029,791 $ 0.45 $ 0.72 7.92 $ 651 Options granted 2,069,309 3.41 2.03 3,551 Options forfeited (421,094 ) 1.44 1.82 - Options exercised (987,051 ) 0.51 0.53 442 Balances, December 31, 2021 3,690,955 $ 1.98 $ 1.38 8.52 $ 6,550 Balances, January 1, 2022 3,690,955 $ 1.98 $ 1.38 8.52 $ 6,550 Options granted 572,428 3.46 1.57 - Options forfeited (39,074 ) 3.13 1.73 - Options exercised (581,351 ) 1.16 0.89 - Balances, December 31, 2022 3,642,958 $ 2.02 $ 1.21 7.90 $ 35,898 At December 31, 2022 Vested and Exercisable 1,646,304 $ 1.48 7.13 $ 17,114 Vested and expected to vest 3,642,958 $ 2.02 7.90 $ 35,898 (1) Number of options and weighted average exercise price has been adjusted to reflect the exchange of Legacy Dragonfly’s stock options for New Dragonfly stock options at an exchange ratio of approximately 1.182 |
SCHEDULE OF VALUATION ASSUMPTIONS OF OPTIONS | SCHEDULE OF VALUATION ASSUMPTIONS OF OPTIONS 2022 2021 Weighted average fair value of options granted $ 1.57 $ 2.05 Risk-free interest rate 2.71% 1.08% Volatility 45.0% 52.6 Expected life (years) 5.68 6.02 Dividend yield 0.00% 0.00% | |
SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY | There were no grants of restricted stock units prior to October 7, 2022. The following table presents the restricted stock units activity for the three months ended March 31, 2023: SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY Number of Shares Weighted-Average Fair Market Value Unvested shares at January 1, 2023 180,000 $ 14.00 Granted and unvested 461,998 7.50 Vested (461,998 ) 7.50 Unvested shares, March 31, 2023 180,000 $ 14.00 Vested as of March 31, 2023 461,998 $ 7.50 | There were no grants of restricted stock units prior to October 7, 2022. The following table presents the restricted stock units activity for the year ended December 31, 2022: SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY Number of Shares Weighted-Average Fair Market Value Unvested shares, December 31, 2021 - - Granted and unvested 180,000 $ 14.00 Vested - - Forfeited/Cancelled - - Unvested shares, December 31, 2022 180,000 $ 14.00 Vested as of December 31, 2022 - $ - |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Earnings Per Share [Abstract] | ||
SCHEDULE OF INFORMATION NEEDED TO COMPUTE BASIC AND DILUTED EARNINGS PER SHARE | The following table sets forth the information needed to compute basic and diluted earnings (loss) per share for the three months ended March 31, 2023 and 2022: SCHEDULE OF INFORMATION NEEDED TO COMPUTE BASIC AND DILUTED EARNINGS PER SHARE March 31, 2023 March 31, 2022 Basic Earnings (Loss) per common share: Net Income (Loss) available to common shareholders $ 4,892 $ (2,298 ) Weighted average number of common shares-basic 45,104,515 36,542,944 Earnings (Loss) per share, basic $ 0.11 $ (0.06 ) Diluted Earnings (Loss) per common share: Net Income (Loss) available to common shareholders $ 4,892 $ (2,298 ) Weighted average number of common shares-basic 45,104,515 36,542,944 Dilutive effect related to stock options and warrants 3,351,481 - Weighted average diluted shares outstanding 48,455,996 36,542,944 Earnings (Loss) per share, diluted $ 0.10 $ (0.06 ) | The following table sets forth the information needed to compute basic and diluted (loss) earnings per share for the years ended December 31, 2022 and December 31, 2021: SCHEDULE OF INFORMATION NEEDED TO COMPUTE BASIC AND DILUTED EARNINGS PER SHARE December 31, 2022 December 31, 2021 Basic (Loss) Earnings per common share: Net (Loss) Income available to common shareholders $ (39,571 ) $ 4,338 Weighted average number of common shares-basic 38,565,307 35,579,137 (Loss) Earnings per share, basic $ (1.03 ) $ 0.12 Diluted (Loss) earnings per common share: Net (Loss) Income available to common shareholders $ (39,571 ) $ 4,338 Weighted average number of common shares-basic 38,565,307 35,579,137 Dilutive effect related to stock options - 2,163,200 Weighted average diluted shares outstanding 38,565,307 37,742,337 (Loss) Earnings per share, diluted $ (1.03 ) $ 0.11 |
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 income per share net income (loss) per share because their effect was anti-dilutive: SCHEDULE OF POTENTIAL SHARES OF COMMON STOCK EXCLUDED FROM DILUTED NET (LOSS) INCOME PER SHARE March 31, 2023 March 31, 2022 Warrants 10,923,915 - Restricted stock units 111,015 - Options - 3,631,002 Weighted average number of common shares-basic 11,034,930 3,631,002 | The following table sets forth the number of potential shares of common stock that have been excluded from diluted net income per share net (loss) income per share because their effect was anti-dilutive: SCHEDULE OF POTENTIAL SHARES OF COMMON STOCK EXCLUDED FROM DILUTED NET (LOSS) INCOME PER SHARE December 31, 2022 December 31, 2021 Warrants 16,708,414 - Restricted stock units 180,000 - Options 3,642,958 - Weighted average number of common shares-basic 20,531,372 - |
SCHEDULE OF VARIOUS CLASSES OF
SCHEDULE OF VARIOUS CLASSES OF PROPERTY AND EQUIPMENT AND ESTIMATED USEFUL LIVES (Details) | 12 Months Ended | |
Dec. 31, 2022 | Mar. 31, 2023 | |
Property, Plant and Equipment [Line Items] | ||
Property, Plant, and Equipment, Useful Life, Term, Description [Extensible Enumeration] | Leasehold Improvements [Member] | |
Furniture and Fixtures [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life (in years) | 3 years | 3 years |
Furniture and Fixtures [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life (in years) | 7 years | 7 years |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life (in years) | 5 years | 5 years |
Machinery and Equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life (in years) | 3 years | 3 years |
Machinery and Equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life (in years) | 7 years | 7 years |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives | Remaining Term of Lease |
SCHEDULE OF DISAGGREGATED REVEN
SCHEDULE OF DISAGGREGATED REVENUES BY DISTRIBUTION CHANNEL (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Total sales | $ 18,791 | $ 18,303 | $ 86,251 | $ 78,000 |
Sales Channel, Directly to Consumer [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total sales | 7,069 | 13,035 | 43,344 | 59,042 |
Sales Channel, Through Intermediary [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total sales | 2,968 | 2,087 | 9,102 | 10,733 |
Original Equipment Manufacture [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total sales | $ 8,754 | $ 3,181 | $ 33,805 | $ 8,225 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 3 Months Ended | 12 Months Ended | |||||
Mar. 31, 2023 USD ($) Segment Vendor Customer | Mar. 31, 2022 USD ($) Vendor | Dec. 31, 2022 USD ($) Segment Vendor Customer | Dec. 31, 2021 USD ($) Vendor Customer | Mar. 05, 2023 USD ($) | Jan. 01, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Product Information [Line Items] | |||||||
Cash and cash equivalents | $ 15,791,000 | $ 17,781,000 | $ 25,586,000 | ||||
Working capital | $ 24,533,000 | 32,923,000 | |||||
Loan amount | $ 100,000 | ||||||
Cash equivalents | 0 | 0 | |||||
Restricted cash | $ 0 | ||||||
Period within which payment is due from customers | 30 – 60 days | 30-60 days | |||||
Allowance for doubtful accounts | $ 116,000 | $ 90,000 | 50,000 | ||||
Depreciation expense | 297,000 | $ 192,000 | 891,000 | 617,000 | |||
Customer deposits | 418,000 | 238,000 | 434,000 | $ 1,779,000 | |||
Shipping and handling costs | 1,007,000 | 1,228,000 | 5,440,000 | 5,105,000 | |||
Warrant obilgation outstanding | $ 400,000 | $ 328,000 | $ 0 | ||||
Number of vendors | Customer | 1 | 3 | 2 | ||||
Advertising expense | $ 587,000 | $ 781,000 | $ 2,334,000 | $ 1,690,000 | |||
Uncertain tax positions | $ 128,000 | $ 128,000 | $ 19,000 | ||||
Number of operating segments | Segment | 1 | 1 | |||||
Customer deposits | $ 211,000 | $ 211,000 | |||||
Revenues | $ 434 | ||||||
Accounts Receivable [Member] | Credit Concentration Risk [Member] | Customer One [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration risk, percentage | 50% | 18% | 42% | ||||
Accounts Receivable [Member] | Credit Concentration Risk [Member] | Customer Two [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration risk, percentage | 10% | 16% | |||||
Accounts Receivable [Member] | Credit Concentration Risk [Member] | Customer Three [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration risk, percentage | 10% | ||||||
Revenue from Contract with Customer Benchmark [Member] | Customer Concentration Risk [Member] | |||||||
Product Information [Line Items] | |||||||
Number of vendors | Customer | 1 | ||||||
Revenue from Contract with Customer Benchmark [Member] | Customer Concentration Risk [Member] | Customer One [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration risk, percentage | 22% | ||||||
Total Purchases [Member] | Supplier Concentration Risk [Member] | |||||||
Product Information [Line Items] | |||||||
Number of vendors | Customer | 1 | ||||||
Number of vendors | Vendor | 2 | 1 | 1 | 3 | |||
Total Purchases [Member] | Supplier Concentration Risk [Member] | Vendor One [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration risk, percentage | 38% | 28% | 27% | ||||
Total Purchases [Member] | Supplier Concentration Risk [Member] | Vendor Two [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration risk, percentage | 10% | 10% | |||||
Total Purchases [Member] | Supplier Concentration Risk [Member] | Vendor Three [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration risk, percentage | 10% | ||||||
Total Purchases [Member] | Supplier Concentration Risk [Member] | One Vendor [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration risk, percentage | 34% | ||||||
Accounts Payable [Member] | Customer Concentration Risk [Member] | Vendor [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration risk, percentage | 61% | ||||||
Accounts Payable [Member] | Supplier Concentration Risk [Member] | |||||||
Product Information [Line Items] | |||||||
Number of vendors | Customer | 1 | 1 | |||||
Accounts Payable [Member] | Supplier Concentration Risk [Member] | Vendor [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration risk, percentage | 67% | 61% | |||||
Sales [Member] | Customer Concentration Risk [Member] | |||||||
Product Information [Line Items] | |||||||
Number of vendors | Customer | 1 | ||||||
Sales [Member] | Customer Concentration Risk [Member] | Customer One [Member] | |||||||
Product Information [Line Items] | |||||||
Concentration risk, percentage | 26% | ||||||
Minimum [Member] | |||||||
Product Information [Line Items] | |||||||
Payment term for distributors and OEMs | 30 days | 30 days | |||||
Term of product warranty provided | 5 years | 5 years | |||||
Maximum [Member] | |||||||
Product Information [Line Items] | |||||||
Payment term for distributors and OEMs | 60 days | 60 days | |||||
Term of product warranty provided | 10 years | 10 years | |||||
Senior Secured Term Loan Facility [Member] | Term Loan [Member] | |||||||
Product Information [Line Items] | |||||||
Loan amount | $ 75,000,000 | $ 75,000,000 |
SCHEDULE OF MERGER CASH FLOW AN
SCHEDULE OF MERGER CASH FLOW AND SHAREHOLDERS EQUITY (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 26, 2022 | Dec. 31, 2022 | ||
Short-Term Debt [Line Items] | |||
CNTQ transaction costs paid at close | $ 18,072 | ||
Net deficit assumed in recapitalization | $ 10,197 | ||
Common stock, outstanding prior to merger | 36,496,998 | ||
Total shares of common stock immediately after the merger | 43,272,728 | ||
CNTQ Trust And PIPE Investors [Member] | |||
Short-Term Debt [Line Items] | |||
Gross Proceeds | $ 10,979 | ||
CNTQ [Member] | |||
Short-Term Debt [Line Items] | |||
Gross Proceeds | 303 | ||
PIPE Financing [Member] | |||
Short-Term Debt [Line Items] | |||
Gross Proceeds | 11,282 | ||
Net liabilities assumed in merger transaction | (1,017) | ||
Warrant liability assumed in merger | (1,990) | ||
CNTQ note payable settlement at close | (400) | ||
CNTQ transaction costs paid at close | (18,072) | ||
Net deficit assumed in recapitalization | $ (10,197) | ||
Common stock, outstanding prior to merger | 3,093,348 | ||
Less: Redemption of CNTQ shares | (2,016,912) | ||
Merger and PIPE financing shares | 4,238,936 | ||
Legacy Dragonfly shares | [1],[2] | 38,576,650 | |
Total shares of common stock immediately after the merger | 42,815,586 | ||
PIPE Financing [Member] | CNTQ Public [Member] | |||
Short-Term Debt [Line Items] | |||
CNTQ Sponsor Shares | 1,076,436 | ||
PIPE Financing [Member] | CNTQ Sponsor [Member] | |||
Short-Term Debt [Line Items] | |||
CNTQ Sponsor Shares | 3,162,500 | ||
[1]-The number of Legacy Dragonfly shares was determined from the shares of Legacy Dragonfly outstanding immediately prior to the closing of the merger converted at the Exchange Ratio. All fractional shares were rounded down.[2]The preferred shares of Legacy Dragonfly were exchanged on a 1 to 1 ratio to common stock and the shares were then exchanged for shares of Dragonfly Energy Holdings Corp. at the Exchange Ratio. |
REVERSE CAPITALIZATION (Details
REVERSE CAPITALIZATION (Details Narrative) | 3 Months Ended | 12 Months Ended | ||||
Oct. 07, 2022 USD ($) $ / shares shares | Sep. 26, 2022 USD ($) | Mar. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Mar. 05, 2023 USD ($) | |
Common stock, par value, (per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Recapitalization exchange ratio | 1.182 | 1.182 | ||||
Redemption value | $ 6,265,000 | |||||
Debt Instrument, Face Amount | $ 100,000 | |||||
Payments of Debt Issuance Costs | $ 4,032,000 | $ 6,278,000 | ||||
Proceeds from Loans | $ 70,969,000 | |||||
Carrying amount of debt | $ 20,699,000 | $ 19,242,000 | ||||
Transaction cost | 18,072,000 | |||||
Proceeds from issuance of long term debts | 10,197,000 | |||||
Capital stock, shares authorized | shares | 175,000,000 | |||||
Common stock, shares authorized | shares | 170,000,000 | 170,000,000 | 170,000,000 | |||
Preferred stock, shares authorized | shares | 5,000,000 | 5,000,000 | 5,000,000 | |||
Preferred stock, par value, (per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Number of Shares | shares | 40,000,000 | 40,000,000 | ||||
Audited revenue | $ 250,000,000 | $ 250,000 | ||||
Audited operating income | $ 35,000,000 | $ 35,000 | ||||
Share Price | $ / shares | $ 11.09 | |||||
Measurement Input, Risk Free Interest Rate [Member] | ||||||
Warrants and Rights Outstanding, Measurement Input | 3.90 | |||||
Fair Value, Inputs, Level 3 [Member] | Measurement Input, Commodity Forward Price [Member] | ||||||
Share Price | $ / shares | $ 14 | |||||
Fair Value, Inputs, Level 3 [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||||||
Warrants and Rights Outstanding, Measurement Input | 4.24 | |||||
Fair Value, Inputs, Level 3 [Member] | Measurement Input, Revenue Multiple [Member] | ||||||
Warrants and Rights Outstanding, Measurement Input | 42 | |||||
Debt Instrument, Fair Value Disclosure | $ 255,100,000 | |||||
Fair Value, Inputs, Level 3 [Member] | Measurement Input, EBITDA Multiple [Member] | ||||||
Warrants and Rights Outstanding, Measurement Input | 64 | |||||
Debt Instrument, Fair Value Disclosure | $ 41,000,000 | |||||
Fair Value, Inputs, Level 3 [Member] | Measurement Input, Discount Rate [Member] | ||||||
Warrants and Rights Outstanding, Measurement Input | 4.24 | |||||
Fair Value, Inputs, Level 3 [Member] | Measurement Input, Expected Dividend Payment [Member] | ||||||
Warrants and Rights Outstanding, Measurement Input | 15 | |||||
Holders Of Outstanding Shares Of Legacy Dragonfly Common Stock [Member] | Second Tranche [Member] | ||||||
Volume weighted average price per share | $ / shares | $ 22.50 | |||||
Holders Of Outstanding Shares Of Legacy Dragonfly Common Stock [Member] | Any Time During Period Beginning On Closing Date And Ending On December 312028 [Member] | ||||||
Volume weighted average price per share | $ / shares | $ 32.50 | |||||
Share-Based Payment Arrangement, Tranche One [Member] | ||||||
Earnout shares issuable | shares | 15,000,000 | 15,000,000 | ||||
Share-Based Payment Arrangement, Tranche Two [Member] | ||||||
Earnout shares issuable | shares | 12,500,000 | 12,500,000 | ||||
Volume weighted average price per share | $ / shares | $ 32.50 | $ 32.50 | ||||
Share-Based Payment Arrangement, Tranche Two [Member] | Holders Of Outstanding Shares Of Legacy Dragonfly Common Stock [Member] | ||||||
Volume weighted average price per share | $ / shares | $ 22.50 | |||||
Share-Based Payment Arrangement, Tranche Three [Member] | ||||||
Earnout shares issuable | shares | 12,500,000 | 12,500,000 | ||||
Share-Based Payment Arrangement, Tranche Three [Member] | Holders Of Outstanding Shares Of Legacy Dragonfly Common Stock [Member] | ||||||
Volume weighted average price per share | $ / shares | $ 32.50 | |||||
Additional Paid-in Capital [Member] | ||||||
Transaction cost | 9,633,000 | |||||
Warrant Liabilities [Member] | ||||||
Transaction cost | 1,507,000 | |||||
Term Loan [Member] | ||||||
Transaction cost | 2,081,000 | |||||
Term Loan Warrants [Member] | ||||||
Debt Instrument, Unamortized Discount | 52,956,000 | |||||
Carrying amount of debt | 18,013,000 | |||||
Extinguishment of Debt, Amount | 42,492,000 | |||||
Transaction cost | 13,221,000 | |||||
PIPE Financing [Member] | ||||||
Stock Repurchased During Period, Shares | shares | 2,016,912 | |||||
Proceeds from Short-Term Debt | 5,017,000 | |||||
Debt Instrument, Face Amount | 75,000,000 | |||||
Payments of Debt Issuance Costs | 1,950,000 | |||||
Payments of Financing Costs | $ 2,081,000 | |||||
Transaction cost | $ (18,072,000) | |||||
Proceeds from issuance of long term debts | $ (10,197,000) | |||||
Common Class A [Member] | ||||||
Stock Repurchased During Period, Shares | shares | 500,000 |
SCHEDULE OF FAIR VALUE, ASSETS
SCHEDULE OF FAIR VALUE, ASSETS AND LIABILITIES (Details) - Fair Value, Recurring [Member] - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying Amount | $ 4,141 | $ 32,831 |
Fair Value | 4,141 | 32,831 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | ||
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 120 | 1,990 |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 4,021 | 30,841 |
Term Loan [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying Amount | 4,021 | 30,841 |
Fair Value | 4,021 | 30,841 |
Term Loan [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | ||
Term Loan [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | ||
Term Loan [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 4,021 | 30,841 |
Private Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying Amount | 120 | 1,990 |
Fair Value | 120 | 1,990 |
Private Warrants [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | ||
Private Warrants [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value | 120 | 1,990 |
Private Warrants [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair Value |
SCHEDULE OF INVENTORY (Details)
SCHEDULE OF INVENTORY (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | |||
Raw material | $ 44,310 | $ 42,586 | $ 22,885 |
Finished goods | 7,502 | 7,260 | 4,242 |
Total inventory | $ 51,812 | $ 49,846 | $ 27,127 |
SCHEDULE OF TABLE REPRESENTING
SCHEDULE OF TABLE REPRESENTING THE BREAKOUT OF THE OPERATING LEASES (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Commitments and Contingencies Disclosure [Abstract] | |||
Operating lease right-of-use assets | $ 4,205 | $ 4,513 | $ 5,709 |
Short-term operating lease liabilities | 1,215 | 1,188 | 1,082 |
Long-term operating lease liabilities | 3,209 | 3,541 | 4,694 |
Total operating lease liabilities | $ 4,424 | $ 4,729 | $ 5,776 |
Weighted average remaining lease term | 3 years 4 months 24 days | 3 years 7 months 6 days | 4 years 7 months 6 days |
Weighted average discount rate | 5.20% | 5.20% | 5.20% |
SCHEDULE OF THE FUTURE MINIMUM
SCHEDULE OF THE FUTURE MINIMUM LEASE PAYMENTS UNDER THE OPERATING LEASES (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
December 31, 2023 | $ 1,054 | [1] | $ 1,399 | |
December 31, 2024 | 1,435 | 1,435 | ||
December 31, 2025 | 1,435 | 1,440 | ||
December 31, 2026 | 893 | 893 | ||
Total lease payments | 4,817 | 5,167 | ||
Less imputed interest | 393 | 438 | ||
Total operating lease liabilities | $ 4,424 | $ 4,729 | $ 5,776 | |
[1]Represents scheduled payments for the remaining nine-month period ending December 31, 2023. |
SCHEDULE OF LEASE COST (Details
SCHEDULE OF LEASE COST (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Feb. 02, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Loss Contingencies [Line Items] | |||||
Operating lease cost | $ 23 | $ 393 | $ 215 | $ 1,670 | $ 820 |
Cost of Sales [Member] | |||||
Loss Contingencies [Line Items] | |||||
Operating lease cost | 347 | 172 | 1,476 | 633 | |
Research and Development Expense [Member] | |||||
Loss Contingencies [Line Items] | |||||
Operating lease cost | 22 | 19 | 95 | 103 | |
General and Administrative Expense [Member] | |||||
Loss Contingencies [Line Items] | |||||
Operating lease cost | 12 | 10 | 50 | 42 | |
Selling and Marketing Expense [Member] | |||||
Loss Contingencies [Line Items] | |||||
Operating lease cost | $ 12 | $ 14 | $ 49 | $ 42 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Feb. 02, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Loss Contingencies [Line Items] | |||||
Contract term | 124 months | ||||
Monthly base rent | $ 230,000 | ||||
Operating lease costs | 23,000 | $ 393,000 | $ 215,000 | $ 1,670,000 | $ 820,000 |
Estimated monthly property taxes | $ 21,000 | ||||
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 | ||||
Number of Shares | 40,000,000 | 40,000,000 | |||
Audited revenue | $ 250,000,000 | $ 250,000 | |||
Audited operating income | $ 35,000,000 | $ 35,000 | |||
Share-Based Payment Arrangement, Tranche One [Member] | |||||
Loss Contingencies [Line Items] | |||||
Earnout shares issuable | 15,000,000 | 15,000,000 | |||
Share-Based Payment Arrangement, Tranche Two [Member] | |||||
Loss Contingencies [Line Items] | |||||
Earnout shares issuable | 12,500,000 | 12,500,000 | |||
Volume weighted average price per share | $ 32.50 | $ 32.50 | |||
Share-Based Payment Arrangement, Tranche Two [Member] | Holders Of Outstanding Shares Of Legacy Dragonfly Common Stock [Member] | |||||
Loss Contingencies [Line Items] | |||||
Volume weighted average price per share | $ 22.50 | ||||
Share-Based Payment Arrangement, Tranche Three [Member] | |||||
Loss Contingencies [Line Items] | |||||
Earnout shares issuable | 12,500,000 | 12,500,000 | |||
Share-Based Payment Arrangement, Tranche Three [Member] | Holders Of Outstanding Shares Of Legacy Dragonfly Common Stock [Member] | |||||
Loss Contingencies [Line Items] | |||||
Volume weighted average price per share | $ 32.50 | ||||
Minimum [Member] | |||||
Loss Contingencies [Line Items] | |||||
Lease payments | $ 111,000 | $ 60,000 | 47,000 | ||
Maximum [Member] | |||||
Loss Contingencies [Line Items] | |||||
Lease payments | $ 128,000 | $ 74,000 | $ 55,000 |
SCHEDULE OF DEPOSITS INTO RESER
SCHEDULE OF DEPOSITS INTO RESERVE ACCOUNTS (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Disclosure [Abstract] | ||
Payment Reserve Fund | $ 3,044 | |
Capitalized Interest Fund | 144 | $ 3,088 |
Total | $ 3,188 |
SCHEDULE OF LEVERAGE RATION (De
SCHEDULE OF LEVERAGE RATION (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
December 31, 2022 - March 31, 2023 [Member] | ||
Line of Credit Facility [Line Items] | ||
Leverage ratio | 6.75 to 1.00 | 6.75 to 1.00 |
June 30, 2023 - September 30, 2023 [Member] | ||
Line of Credit Facility [Line Items] | ||
Leverage ratio | 6.00 to 1.00 | 6.00 to 1.00 |
December 31, 2024 - March 31, 2025 [Member] | ||
Line of Credit Facility [Line Items] | ||
Leverage ratio | 5.00 to 1.00 | 5.00 to 1.00 |
June 30, 2024 - September 30, 2024 [Member] | ||
Line of Credit Facility [Line Items] | ||
Leverage ratio | 4.00 to 1.00 | 4.00 to 1.00 |
December Thirty One Two Thousand Twenty Four To March Thirty One Two Thousand Twenty Five [Member] | ||
Line of Credit Facility [Line Items] | ||
Leverage ratio | 3.25 to 1.00 | 3.25 to 1.00 |
June 30, 2025 and Thereafter [Member] | ||
Line of Credit Facility [Line Items] | ||
Leverage ratio | 3.00 to 1.00 | 3.00 to 1.00 |
SCHEDULE OF FUTURE DEBT MATURIT
SCHEDULE OF FUTURE DEBT MATURITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |||
2023 | [1] | ||
2024 | 938 | 938 | |
2025 | 3,750 | 3,750 | |
2026 | 91,775 | 91,809 | |
Total | 96,463 | 96,497 | |
Less: Estimated interest paid-in-kind | (19,033) | (20,305) | |
Total debt | 77,430 | 76,192 | |
Less: Unamortized debt issuance costs, noncurrent | (56,731) | (56,950) | |
Total carrying amount | 20,699 | 19,242 | |
Less: Current portion of debt | (20,699) | (19,242) | |
Total long-term debt | |||
[1]Represents scheduled payments for the remaining nine-month period ending December 31, 2023 |
DEBT (Details Narrative)
DEBT (Details Narrative) | 3 Months Ended | 12 Months Ended | ||||||
Oct. 07, 2022 USD ($) | Mar. 31, 2023 USD ($) $ / shares shares | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) Installment $ / shares shares | Dec. 31, 2021 USD ($) | Mar. 05, 2023 USD ($) | Oct. 10, 2022 shares | Nov. 24, 2021 USD ($) | |
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 100,000 | |||||||
Issuance of notes payable | $ 35,474,000 | |||||||
Proceeds from Notes Payable | $ 1,000,000 | $ 45,000,000 | ||||||
Deposits in reserve accounts | 3,188,000 | |||||||
Prepaid loan monitoring fee | $ 33,000 | 60,000 | ||||||
Loss on extinguishment | (4,824,000) | |||||||
Long term debt | 77,430,000 | 76,192,000 | ||||||
Capitalized interest fund | $ 144,000 | 3,088,000 | ||||||
Ongoing monitoring service fees term | 24 months | |||||||
Loan monitoring fees | $ 77,000 | 10,000 | ||||||
Loan monitoring fees, amortization term | 10 months | |||||||
SharePrice | $ / shares | $ 11.09 | |||||||
Paid in kind interest | 1,238,000 | $ 1,192,000 | ||||||
Debt Issuance Costs, Net | $ 56,731,000 | $ 56,950,000 | ||||||
Liquidity description | The Company shall not permit their Liquidity (determined on a consolidated basis) to be less than $10,000 as of the last day of each fiscal month (commencing with month ending December 31, 2022) | The Company shall not permit their liquidity (determined on a consolidated basis) to be less than $10,000 as of the last day of each fiscal month (commencing with month ending December 31, 2022). | ||||||
Fixed charge coverage ratio description | The Fixed Charge Coverage Ratio is the ratio of consolidated EBITDA (less capital expenditures and certain other adjustments) to consolidated fixed charges, as defined in the agreement. If Liquidity is less than $15,000 as of the last day of any fiscal quarter (commencing with the quarter ending December 31, 2022), then the Company shall not permit the Fixed Charge Coverage Ratio for the trailing four quarterly periods ending on the last day of any such quarter to be less than 1.15 to 1.00 | The fixed charge coverage ratio is the ratio of consolidated EBITDA (less capital expenditures and certain other adjustments) to consolidated fixed charges, as defined in the agreement. If liquidity is less than $15,000 as of the last day of any fiscal quarter (commencing with the quarter ending December 31, 2022), then the Company shall not permit the fixed charge coverage ratio for the trailing four quarterly periods ending on the last day of any such quarter to be less than 1.15 : 1.00. | ||||||
Capital expenditures description | If consolidated EBITDA for the trailing twelve month period ending on the most recently completed fiscal quarter is less than $15,000, then the level of capital expenditures is limited | If consolidated EBITDA for the trailing twelve-month period ending on the most recently completed fiscal quarter is less than $15,000, then the level of capital expenditures is limited. | ||||||
Interest expense | $ 3,815,000 | 1,263,000 | $ 6,945,000 | $ 519,000 | ||||
Penny Warrants [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Warrants exercisable | shares | 2,593,056 | 2,593,056 | ||||||
Warrants 10 [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Warrants exercisable | shares | 1,600,000 | 1,600,000 | 457,142 | |||||
SharePrice | $ / shares | $ 10 | $ 10 | ||||||
Senior Secured Term Loan Facility [Member] | Term Loan Agreement [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 75,000,000 | |||||||
Debt instrument, amortization percentage | 5% | |||||||
Debt instrument, amortization amount | $ 937,500 | |||||||
Debt instrument, amortization period | 24 months | |||||||
Basis spread on variable rate | 13.50% | |||||||
Senior Secured Term Loan Facility [Member] | Term Loan Agreement [Member] | Until April 1 2023 [Member] | Adjusted Secured Overnight Financing Rate [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate, payable in cash | 7% | |||||||
Variable rate, payable in kind | 6.50% | |||||||
Senior Secured Term Loan Facility [Member] | Term Loan Agreement [Member] | After April 1, 2023 Until October 1, 2024 [Member] | Adjusted Secured Overnight Financing Rate [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate, payable in cash | 7% | |||||||
Senior Secured Term Loan Facility [Member] | Term Loan Agreement [Member] | After April 1, 2023 Until October 1, 2024 [Member] | Adjusted Secured Overnight Financing Rate [Member] | Minimum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 1% | |||||||
Variable rate, payable in cash | 11.50% | |||||||
Variable rate, payable in kind | 4.50% | |||||||
Senior Secured Term Loan Facility [Member] | Term Loan Agreement [Member] | After April 1, 2023 Until October 1, 2024 [Member] | Adjusted Secured Overnight Financing Rate [Member] | Maximum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Variable rate, payable in cash | 13.50% | |||||||
Variable rate, payable in kind | 6.50% | |||||||
Maximum Senior Leverage Ratio [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument description | The Senior Leverage Ratio is the ratio of (a) consolidated indebtedness, as defined, on such date minus 100% of the unrestricted cash and cash equivalents held (subject to adjustment) to (b) Consolidated earnings before interest, tax and amortization (“EBITDA”) for the trailing twelve (12) fiscal month period most recently ended. If liquidity, as defined, for any fiscal quarter is less than $17,500, the Senior Leverage Ratio shall not be permitted | The senior leverage ratio is the ratio of (a) consolidated indebtedness, as defined, on such date minus 100% of the unrestricted cash and cash equivalents held (subject to adjustment) to (b) Consolidated EBITDA for the trailing twelve (12) fiscal month period most recently ended. If liquidity, as defined, for any fiscal quarter is less than $17,500, the senior leverage ratio shall not be permitted | ||||||
New Light Capital LLC [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Loan monitoring fees | $ 180,000 | |||||||
Senior Notes [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | 45,000,000 | $ 45,000,000 | ||||||
Debt instrument, insured amount | $ 45,000,000 | |||||||
Proceeds from Notes Payable | 45,000,000 | |||||||
Deposits in reserve accounts | 3,188,000 | |||||||
Expenses withdrawn from gross proceeds | 6,338,000 | |||||||
Prepaid policy premiums amount | 4,725,000 | |||||||
Prepaid loan monitoring fee | 60,000 | |||||||
Debt issuance costs other | $ 1,553,000 | |||||||
Interest rate stated percentage | 5.50% | |||||||
Debt instrument, late fee | $ 50 | |||||||
Debt instrument, default interest rate | 5% | |||||||
Number of equal installments of principal to be paid | Installment | 24 | |||||||
Periodic payment, principal | $ 1,875,000 | |||||||
Maturity date | Nov. 01, 2024 | |||||||
Interest expense | $ 1,873,000 | |||||||
Amortization of debt issuance costs | $ 613,000 | 1,783,000 | ||||||
Loss on extinguishment | 4,824,000 | 4,824,000 | ||||||
Long term debt | 40,712,000 | |||||||
Debt unamortized discount | 4,288,000 | |||||||
Interest expense | $ 619,000 | |||||||
Senior Notes [Member] | Term Loan Agreement [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | 75,000,000 | 75,000,000 | ||||||
Interest expense | 3,496,000 | 3,195,000 | ||||||
Amortization of debt issuance costs | 219,000 | 38,000 | ||||||
Long term debt | 20,699,000 | 19,242,000 | ||||||
Paid in kind interest | 2,430,000 | 1,192,000 | ||||||
Debt Issuance Costs, Net | $ 56,731,000 | $ 56,950,000 |
REVOLVING NOTE AGREEMENT (Detai
REVOLVING NOTE AGREEMENT (Details Narrative) $ in Thousands | Oct. 06, 2021 USD ($) |
Revolving Note Agreement | |
Line of Credit Facility, Maximum Borrowing Capacity | $ 8,000 |
Percentage of eligible account receivable | 80% |
percentage of eligible inventory | 50% |
Proceeds from Lines of Credit | $ 5,000 |
SCHEDULE OF INCOME TAX EXPENSE
SCHEDULE OF INCOME TAX EXPENSE (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Current | $ (257) | $ 1,489 | ||
Deferred | (452) | 122 | ||
Total tax expense | $ (527) | $ (709) | $ 1,611 |
SCHEDULE OF COMPONENTS OF DEFER
SCHEDULE OF COMPONENTS OF DEFERRED TAX ASSETS (LIABILITIES) (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Lease liability | $ 1,071 | $ 1,221 |
Stock based compensation | 139 | 35 |
Accrued expenses | 506 | |
Allowance for bad debt | 75 | 59 |
Research and development credit | 200 | |
Fixed assets and intangibles | 25 | |
Interest expense | 1,595 | |
Prepaid expenses | 960 | |
Net Operating Loss | 3,727 | |
Inventory (Sec. 263A) | 62 | 45 |
Deferred tax asset | 8,360 | 1,360 |
Right of Use Asset | 1,036 | 1,207 |
Fixed assets and intangibles | 606 | |
Deferred tax liability | 1,036 | 1,813 |
Net deferred tax asset (liability) | 7,324 | (453) |
Valuation Allowance | (7,324) | |
Net deferred tax asset | $ (453) |
SCHEDULE OF RECONCILIATION BETW
SCHEDULE OF RECONCILIATION BETWEEN THE EFFECTIVE TAX RATE ON INCOME FROM CONTINUING OPERATIONS AND THE STATUTORY RATE (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Book income (loss) before taxes, tax | $ (8,459) | $ 1,249 | ||
Book income (loss) before taxes, percent | 21% | 21% | ||
Permanent differences (transaction costs), tax | $ 2,185 | |||
Permanent differences (transaction costs), percent | (5.42%) | |||
Permanent differences (warrants), tax | $ (1,144) | |||
Permanent differences (warrants), percent | 2.84% | |||
Permanent differences (other -other than tax), tax | $ 458 | $ 188 | ||
Permanent differences (other -other than tax), percent | (1.14%) | 3.16% | ||
State taxes net, tax | $ (722) | $ 128 | ||
State taxes net, percent | 1.79% | 2.15% | ||
Deferred true-up, tax | $ (288) | $ 56 | ||
Deferred true-up, percent | 0.71% | 0.94% | ||
Research and development credits, tax | $ (200) | |||
Research and development credits, percent | 0.50% | |||
Uncertain tax positions, tax | $ 128 | $ (19) | ||
Uncertain tax positions, percent | (0.32%) | (0.32%) | ||
Other, tax | $ 9 | $ 9 | ||
Other, percent | (0.02%) | 0.15% | ||
Change in valuation allowance, tax | $ 7,324 | |||
Change in valuation allowance, percent | (18.18%) | |||
Total, tax | $ (527) | $ (709) | $ 1,611 | |
Effective tax rate, percent | 1.76% | 27.08% |
SCHEDULE OF GROSS UNCERTAIN TAX
SCHEDULE OF GROSS UNCERTAIN TAX POSITIONS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Balance- December 31, 2021 | $ 19 | |
Additions for current year tax positions | 128 | |
Reductions for prior year tax positions | (19) | |
Balance- December 31, 2022 | $ 128 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Operating Loss Carryforwards [Line Items] | ||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21% | 21% | ||
Deferred tax assets, valuation allowance | $ 7,324,000 | |||
Income tax expense benefit | $ 527,000 | 709,000 | $ (1,611,000) | |
Domestic Tax Authority [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating Loss Carryforwards | $ 16,140,000 | |||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 80% | |||
Deferred Tax Assets, Tax Credit Carryforwards, Research | $ 200 | |||
Tax credit carry forward expiration year | 2042 | |||
State and Local Jurisdiction [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating Loss Carryforwards | $ 6,747,000 |
ASSET PURCHASE AGREEMENT (Detai
ASSET PURCHASE AGREEMENT (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Jan. 01, 2022 | Apr. 30, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Asset Acquisition [Line Items] | ||||||
Revenues | $ 434 | |||||
Repayment to related party | 211,000 | $ 211,000 | ||||
Selling and marketing expense | 4,184,000 | $ 3,092,000 | 13,671,000 | $ 9,848,000 | ||
Related Party [Member] | ||||||
Asset Acquisition [Line Items] | ||||||
Repayment to related party | 1,000,000 | 1,000,000 | ||||
Bourns Production, Inc | ||||||
Asset Acquisition [Line Items] | ||||||
Purchase price for acquiring machinery and equipment | $ 197,000 | |||||
Thomason Jones Company LLC [Member] | ||||||
Asset Acquisition [Line Items] | ||||||
Purchase price for acquiring machinery and equipment | 444,000 | |||||
Contingent payments | $ 1,000,000 | |||||
Revenues | 3,000,000 | 3,000,000 | ||||
Selling and marketing expense | 417,000 | 417,000 | ||||
Accrued expense | 1,147,000 | 782,000 | ||||
Thomason Jones Company LLC [Member] | April 2022 Asset Purchase Agreement [Member] | ||||||
Asset Acquisition [Line Items] | ||||||
Purchase price for acquiring machinery and equipment | 444,000 | |||||
Contingent payments | 1,000,000 | |||||
Thomason Jones Company LLC [Member] | Related Party [Member] | ||||||
Asset Acquisition [Line Items] | ||||||
Repayment to related party | $ 1,000,000 | $ 1,000,000 | ||||
Thomason Jones Company LLC [Member] | Maximum [Member] | ||||||
Asset Acquisition [Line Items] | ||||||
Purchase price for acquiring machinery and equipment | 444,000 | |||||
Thomason Jones Company LLC [Member] | Maximum [Member] | April 2022 Asset Purchase Agreement [Member] | ||||||
Asset Acquisition [Line Items] | ||||||
Purchase price for acquiring machinery and equipment | $ 700,000 |
RELATED PARTY (Details Narrativ
RELATED PARTY (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | Mar. 05, 2023 | |
Related Party Transaction [Line Items] | |||
Repayment to related party | $ 211 | $ 211 | |
Loan amount | $ 100 | ||
Board of Directors Chairman [Member] | |||
Related Party Transaction [Line Items] | |||
Promissory note | $ 1,000 | ||
Related Party [Member] | |||
Related Party Transaction [Line Items] | |||
Repayment to related party | 1,000 | 1,000 | |
Chief Operating Officer [Member] | |||
Related Party Transaction [Line Items] | |||
Repayment to officer | 100 | 100 | |
Promissory Note with Related Party | Chief Financial Officer [Member] | |||
Related Party Transaction [Line Items] | |||
Repayment to officer | $ 469 | $ 469 |
SCHEDULE OF WARRANT CLASSIFICAT
SCHEDULE OF WARRANT CLASSIFICATION AT EACH BALANCE SHEET DATE (Details) - $ / shares | 12 Months Ended | |||
Dec. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2021 | |
Number of warrants outstanding | 16,708,414 | 12,266,971 | ||
Exercise price | $ 11.50 | $ 11.50 | ||
Warrant [Member] | ||||
Number of warrants outstanding | 4,627,858 | |||
Fair value | 1,990 | |||
Expiration date | Oct. 07, 2022 | |||
Exercise price | $ 11.5 | |||
Expiration date | Aug. 11, 2026 |
SCHEDULE FAIR VALUE WARRANTS (D
SCHEDULE FAIR VALUE WARRANTS (Details) | Mar. 31, 2023 $ / shares | Dec. 31, 2022 $ / shares |
Common stock price | $ 11.09 | |
Common stock price | $ 11.89 | |
Measurement Input, Share Price [Member] | ||
Common stock price | 0.01 | |
Measurement Input, Expected Dividend Rate [Member] | ||
Common stock price | 0 | |
Measurement Input, Expected Term [Member] | ||
Term | 9 years 9 months 7 days | |
Measurement Input, Price Volatility [Member] | ||
Common stock price | 90 | |
Measurement Input, Risk Free Interest Rate [Member] | ||
Common stock price | 3.90 | |
Initial Measurement [Member] | ||
Common stock price | $ 3 | $ 14 |
Common stock price | $ 2.99 | 13.99 |
Initial Measurement [Member] | 10 Warrants [Member] | ||
Common stock price | 14 | |
Common stock price | $ 10.42 | |
Initial Measurement [Member] | Measurement Input, Share Price [Member] | ||
Common stock price | 0.01 | 0.01 |
Initial Measurement [Member] | Measurement Input, Share Price [Member] | 10 Warrants [Member] | ||
Common stock price | 10 | |
Initial Measurement [Member] | Measurement Input, Expected Dividend Rate [Member] | ||
Common stock price | 0 | 0 |
Initial Measurement [Member] | Measurement Input, Expected Dividend Rate [Member] | 10 Warrants [Member] | ||
Common stock price | 0 | |
Initial Measurement [Member] | Measurement Input, Expected Term [Member] | ||
Term | 9 years 6 months 7 days | 10 years |
Initial Measurement [Member] | Measurement Input, Expected Term [Member] | 10 Warrants [Member] | ||
Term | 10 years | |
Initial Measurement [Member] | Measurement Input, Price Volatility [Member] | ||
Common stock price | 89 | 94 |
Initial Measurement [Member] | Measurement Input, Price Volatility [Member] | 10 Warrants [Member] | ||
Common stock price | 85 | |
Initial Measurement [Member] | Measurement Input, Risk Free Interest Rate [Member] | ||
Common stock price | 3.43 | 3.90 |
Initial Measurement [Member] | Measurement Input, Risk Free Interest Rate [Member] | 10 Warrants [Member] | ||
Common stock price | 4.10 |
SCHEDULE OF ROLL FORWARD IN WAR
SCHEDULE OF ROLL FORWARD IN WARRANTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | ||||
Change in fair value of warrants | $ 18,523 | $ 5,446 | |||||
Private Warrants [Member] | |||||||
Warrants Outstanding, January 1, 2023 | 4,627,858 | ||||||
Assumed in the merger | 4,627,858 | ||||||
Exercise of warrants | (3,126,472) | ||||||
Warrants Outstanding, March 31, 2023 | 1,501,386 | 4,627,858 | |||||
Public Warrants [Member] | |||||||
Warrants Outstanding, January 1, 2023 | 9,487,500 | ||||||
Assumed in the merger | 9,487,500 | ||||||
Exercise of warrants | (64,971) | ||||||
Warrants Outstanding, March 31, 2023 | 9,422,529 | 9,487,500 | |||||
Term Loan Warrants [Member] | |||||||
Warrants Outstanding, January 1, 2023 | 2,593,056 | [1] | [1] | ||||
Exercise of warrants | (1,250,000) | (1,600,000) | |||||
Warrants Outstanding, March 31, 2023 | 1,343,056 | 2,593,056 | [1] | ||||
Issued in conjunction with merger | 4,193,056 | ||||||
Warrant [Member] | |||||||
Balances, January 1, 2023 | $ 30,841 | [2] | [2] | ||||
Issuance of warrants | 52,956 | ||||||
Exercise of warrants | (8,822) | (16,669) | |||||
Change in fair value of warrants | (17,998) | (5,446) | |||||
Balances, March 31, 2023 | $ 4,021 | $ 30,841 | [2] | ||||
[1]There were no warrants issued, exercised and outstanding prior to January 1, 2022.[2]There were no warrants issued, exercised and outstanding prior to January 1, 2022. |
WARRANTS (Details Narrative)
WARRANTS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2023 | Dec. 31, 2022 | Oct. 10, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | |
Class of Warrant or Right [Line Items] | |||||
Exercise price of warrants | $ 11.50 | $ 11.50 | |||
Share Price | $ 11.09 | ||||
Warrants outstanding | 12,266,971 | 16,708,414 | |||
Exercise of public warrants | $ 747 | ||||
Exercise of public warrants, shares | 64,971 | ||||
Common Stock [Member] | |||||
Class of Warrant or Right [Line Items] | |||||
Exercise of public warrants | |||||
Exercise of public warrants, shares | 64,971,000 | ||||
Warrants, shares | 73,500,000 | 1,498,301 | |||
Public Warrants [Member] | |||||
Class of Warrant or Right [Line Items] | |||||
Exercise price of warrants | $ 0.01 | $ 0.01 | |||
Share Price | $ 16 | $ 16 | |||
Warrants outstanding | 9,487,500 | 9,487,500 | |||
Private Warrants [Member] | |||||
Class of Warrant or Right [Line Items] | |||||
Warrants outstanding | 4,627,858 | ||||
Private Warrants [Member] | IPO [Member] | |||||
Class of Warrant or Right [Line Items] | |||||
Warrants outstanding | 4,627,858 | ||||
Penny Warrants [Member] | |||||
Class of Warrant or Right [Line Items] | |||||
Warrants to purchase shares | 2,593,056 | 2,593,056 | |||
Penny Warrants [Member] | Common Stock [Member] | |||||
Class of Warrant or Right [Line Items] | |||||
Warrants to purchase shares | 1,250,000 | ||||
Warrants 10 [Member] | |||||
Class of Warrant or Right [Line Items] | |||||
Share Price | $ 10 | $ 10 | |||
Warrants to purchase shares | 1,600,000 | 1,600,000 | 457,142 | ||
Warrants 10 [Member] | Common Stock [Member] | |||||
Class of Warrant or Right [Line Items] | |||||
Warrants to purchase shares | 1,248,294 | ||||
Private Placement Warrants [Member] | |||||
Class of Warrant or Right [Line Items] | |||||
Warrants outstanding | 1,501,386 | 4,627,858 | |||
Warrants to purchase shares | 3,126,472 | ||||
Warrants, shares | 1,100,000 |
SUMMARY OF RESERVED SHARES OF C
SUMMARY OF RESERVED SHARES OF COMMON STOCK FOR ISSUANCE (Details) - shares | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | [2] | ||||
Equity [Abstract] | ||||||||||
Options issued and outstanding | 3,731,392 | [1] | 3,642,958 | [1],[2] | 3,631,002 | [1] | 3,690,955 | [1],[2] | 3,029,791 | |
Common stock outstanding | 45,795,502 | 43,272,728 | 36,581,910 | 36,496,998 | ||||||
Warrants outstanding | 12,266,971 | 16,708,414 | ||||||||
Earnout shares | 40,000,000 | 40,000,000 | ||||||||
Shares available for future issuance | 4,319,309 | 4,924,914 | [3] | 1,205,790 | 12,207 | [3] | ||||
Total | 106,113,174 | 108,549,014 | 41,418,702 | 40,200,160 | ||||||
[1]Number of options and weighted average exercise price has been adjusted to reflect the exchange of Legacy Dragonfly’s stock options for New Dragonfly stock options at an exchange ratio of approximately 1.182 1.182 |
COMMON STOCK (Details Narrative
COMMON STOCK (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Jun. 12, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Oct. 07, 2022 | Mar. 31, 2022 | |
Common stock, shares authorized | 170,000,000 | 170,000,000 | 170,000,000 | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Common stock, shares issued | 45,795,502 | 43,272,728 | 36,496,998 | |||
Common stock, shares outstanding | 45,795,502 | 43,272,728 | 36,496,998 | 36,581,910 | ||
Stock Issued During Period, Value, New Issues | $ 597,000 | $ 15,000,000 | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Terms of Award | the 36-month anniversary of the later of (x) the closing of the merger and (y) effective date of the Initial Registration Statement (as defined in the Purchase Agreement), (ii) the date on which CCM LLC shall have purchased 150,000,000 of shares of common stock pursuant to the Purchase Agreement, (iii) the date on which common stock shall have failed to be listed or quoted on Nasdaq or any successor principal market and (iv) the commencement of certain bankruptcy proceedings or similar transactions with respect to the Company or all or substantially all of its property. | |||||
Aggregate net proceeds | $ 15,000,000 | |||||
Purchase Agreement [Member] | ||||||
Number of shares issued | 73,500 | |||||
Aggregate net proceeds | $ 597,000 | |||||
Purchase Agreement [Member] | Maximum [Member] | ||||||
Aggregated purchase price | $ 150,000,000 | $ 150,000 | ||||
THOR Industries [Member] | ||||||
Stock Issued During Period, Value, New Issues | $ 15,000,000 | |||||
C C M L L C [Member] | Purchase Agreement [Member] | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Terms of Award | which would result in beneficial ownership (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder) by CCM LLC, together with its affiliates, of more than 9.9%, (ii) which would cause the aggregate purchase price on the applicable VWAP Purchase Date (as defined in the Purchase Agreement) for such purchases to exceed $3,000 and (iii) equal to 20% of the total number of shares of common stock that would count towards VWAP on the applicable Purchase Date of such purchase | |||||
C C M L L C [Member] | Purchase Agreement [Member] | Maximum [Member] | ||||||
Aggregated purchase price | $ 150,000 |
SCHEDULE OF OPTION ACTIVITY AND
SCHEDULE OF OPTION ACTIVITY AND RELATED INFORMATION (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | ||||||
Share-Based Payment Arrangement [Abstract] | |||||||||
Number of Options, Balance at the beginning | [2] | 3,642,958 | [1] | 3,690,955 | [1] | 3,690,955 | [1] | 3,029,791 | |
Weighted- Average Exercise Price - Balances at the beginning | $ 2.02 | $ 1.98 | $ 1.98 | $ 0.45 | |||||
Weighted- Average Grant Date Fair Value, Balances at the beginning | $ 1.21 | $ 1.38 | $ 1.38 | $ 0.72 | |||||
Weighted- Average Remaining Contractual Life (in years) | 7 years 10 months 24 days | 8 years 6 months 7 days | 8 years 6 months 7 days | 7 years 11 months 1 day | |||||
Aggregate Intrinsic value Balances at the beginning | $ 35,898 | $ 6,550 | $ 6,550 | $ 651 | |||||
Number of Options granted | 143,607 | [1] | [1] | 572,428 | [2] | 2,069,309 | [2] | ||
Weighted- Average Exercise Price Options granted | $ 7.50 | $ 3.46 | $ 3.41 | ||||||
Weighted- Average Grant Date Fair Value, Options granted | $ 3.82 | $ 1.57 | $ 2.03 | ||||||
Aggregate Intrinsic value Options granted | $ 632 | $ 3,551 | |||||||
Number of Options forfeited | (19,164) | [1] | (11,584) | [1] | (39,074) | [2] | (421,094) | [2] | |
Weighted- Average Exercise Price Options forfeited | $ 7.27 | $ 1.44 | $ 3.13 | $ 1.44 | |||||
Weighted- Average Grant Date Fair Value, Options forfeited | $ 3.71 | $ 2.17 | $ 1.73 | $ 1.82 | |||||
Aggregate Intrinsic value Options forfeited | $ 6 | ||||||||
Number of Options exercised | (36,009) | [1] | (48,369) | [1] | (581,351) | [2] | (987,051) | [2] | |
Weighted- Average Exercise Price Options exercised | $ 2.58 | $ 0.49 | $ 1.16 | $ 0.51 | |||||
Weighted- Average Grant Date Fair Value, Options exercised | $ 1.65 | $ 0.83 | $ 0.89 | $ 0.53 | |||||
Aggregate Intrinsic value Options exercised | $ 232 | $ 442 | |||||||
Number of Options, Balance at the end | [1] | 3,731,392 | 3,631,002 | 3,642,958 | [2] | 3,690,955 | [2] | ||
Weighted- Average Exercise Price Balances at the end | $ 2.20 | $ 2 | $ 2.02 | $ 1.98 | |||||
Weighted- Average Grant Date Fair Value,Balances at the end | $ 1.30 | $ 1.39 | $ 1.21 | $ 1.38 | |||||
Weighted- Average Remaining Contractual Life (in years) | 6 years 7 months 13 days | 8 years 3 months 14 days | 7 years 10 months 24 days | 8 years 6 months 7 days | |||||
Aggregate Intrinsic value Balances at the end | $ 35,898 | $ 6,550 | |||||||
Number of Options, Vested and Exercisable | 2,029,985 | [1] | 1,646,304 | [2] | |||||
Weighted- Average Exercise Price Vested and Exercisable | $ 1.53 | $ 1.48 | |||||||
Weighted- Average Remaining Contractual Life (in years) | 4 years 11 months 23 days | 7 years 1 month 17 days | |||||||
Aggregate Intrinsic value Vested and Exercisable | $ 3,120 | $ 17,114 | |||||||
Number of Options, Vested and expected to vest | 3,731,392 | [1] | 3,642,958 | [2] | |||||
Weighted- Average Exercise Price Vested and expected to vest (in dollars per share) | $ 2.20 | $ 2.02 | |||||||
Weighted- Average Remaining Contractual Life (in years) | 6 years 7 months 13 days | 7 years 10 months 24 days | |||||||
Aggregate Intrinsic value Vested and expected to vest | $ 3,800 | $ 35,898 | |||||||
Aggregate Intrinsic value Balances at the beginning | 35,989 | $ 6,550 | 6,550 | ||||||
Aggregate Intrinsic value Balances at the end | $ 3,800 | $ 6,377 | $ 35,989 | $ 6,550 | |||||
[1]Number of options and weighted average exercise price has been adjusted to reflect the exchange of Legacy Dragonfly’s stock options for New Dragonfly stock options at an exchange ratio of approximately 1.182 1.182 |
SCHEDULE OF OPTION ACTIVITY A_2
SCHEDULE OF OPTION ACTIVITY AND RELATED INFORMATION (Details) (Parenthetical) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | |||
Stock option exchange ratio | 1.182 | 1.182 | 1.182 |
SCHEDULE OF VALUATION ASSUMPTIO
SCHEDULE OF VALUATION ASSUMPTIONS OF OPTIONS (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||
Weighted average fair value of options granted | $ 1.57 | $ 2.05 |
Risk-free interest rate | 2.71% | 1.08% |
Volatility | 45% | 52.60% |
Expected life | 5 years 8 months 4 days | 6 years 7 days |
Dividend yield | 0% | 0% |
SCHEDULE OF RESTRICTED STOCK UN
SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Number of shares , beginning balance | 180,000 | |
Weighted average fair market value , beginning balance | $ 14 | |
Number of shares granted and unvested | 461,998 | 180,000 |
Weighted average fair market value granted and unvested | $ 7.50 | $ 14 |
Number of shares vested | 461,998 | |
Weighted average fair market value vested | $ 7.50 | |
Number of shares forfeited and cancelled | ||
Weighted average fair market value forfeited and cancelled | ||
Number of shares , ending balance | 180,000 | 180,000 |
Weighted average fair market value , beginning balance | $ 14 | $ 14 |
Number of shares ,vested | 461,998 | |
Weighted average fair market value,vested | 7.50 | |
Number of shares vested | (461,998) |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||
Feb. 10, 2023 | Oct. 07, 2022 | Aug. 12, 2019 | Jul. 31, 2021 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | May 31, 2022 | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Common stock reserved for issuance | 106,113,174 | 41,418,702 | 108,549,014 | 40,200,160 | |||||||
Total compensation | $ 4,487 | $ 288 | $ 2,467 | $ 734 | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant | 4,319,309 | 1,205,790 | 4,924,914 | [1] | 12,207 | [1] | |||||
Cost of Sales [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Total compensation | $ 36 | $ 97 | $ 155 | $ 252 | |||||||
Research and Development Expense [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Total compensation | 29 | 37 | 149 | 95 | |||||||
Selling and Marketing Expense [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Total compensation | 856 | 60 | 654 | 156 | |||||||
General and Administrative Expense [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Total compensation | 3,566 | 94 | $ 1,509 | 231 | |||||||
Restricted Stock Units (RSUs) [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Total compensation | $ 4,487 | $ 288 | $ 734 | ||||||||
Restricted Stock Units | 461,998 | 180,000 | 180,000 | 180,000 | |||||||
Restricted stock units, value | $ 3,464 | $ 2,520 | |||||||||
Common Stock [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Warrants, shares | 73,500,000 | 1,498,301 | |||||||||
2019 Stock Incentive Plan [Member] | |||||||||||
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 [Member] | |||||||||||
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 | 2,000,000 | |||||||||
2022 Stock Incentive Plan [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Common stock reserved for issuance | 2,785,950 | ||||||||||
2022 Stock Incentive Plan [Member] | Common Stock [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Warrants, shares | 2,464,400 | 1,500,000 | |||||||||
Outstanding shares percentage | 1% | ||||||||||
Two Thousand Twenty Two Equity Incentive And Employee Stock Purchase Plan [Member] | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Unissued authorized and available for future awards | 4,319,309 | ||||||||||
[1]Refer to Stock Incentive Plan amendment at Note 14 |
REDEEMABLE PREFERRED STOCK RI_2
REDEEMABLE PREFERRED STOCK RIGHTS (Details Narrative) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 USD ($) director $ / shares | Oct. 07, 2022 | |
Recapitalization exchange ratio | 1.182 | 1.182 |
Dividends declared | $ / shares | $ 0 | |
Director [Member] | Common Stock [Member] | ||
Number of votes per director | 2 | |
Series A Director [Member] | ||
Number of directors elected by share holders | 2 | |
Common Stock Director A [Member] | ||
Number of votes per director | 3 | |
Common Stock Director B [Member] | ||
Number of votes per director | 1 | |
Series A Preferred Stock [Member] | ||
Conversion price | $ / shares | $ 0.20 | |
Percentage of votes for mandatory conversion of stock | 50% | |
Series A Preferred Stock [Member] | Director [Member] | ||
Number of directors elected by share holders | 1 | |
Common Stock [Member] | ||
Stock price trigger for mandatory conversion of stock | $ / shares | $ 1 | |
Minimum gross proceeds for mandatory conversion of stock | $ | $ 25,000 |
SCHEDULE OF INFORMATION NEEDED
SCHEDULE OF INFORMATION NEEDED TO COMPUTE BASIC AND DILUTED EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Basic Earnings (Loss) per common share: | ||||
Net Income (Loss) available to common shareholders | $ 4,892 | $ (2,298) | $ (39,571) | $ 4,338 |
Weighted average number of common shares-basic | 45,104,515 | 36,542,944 | 38,565,307 | 35,579,137 |
Earnings (Loss) per share, basic | $ 0.11 | $ (0.06) | $ (1.03) | $ 0.12 |
Diluted Earnings (Loss) per common share: | ||||
Dilutive effect related to stock options and warrants | 3,351,481 | 2,163,200 | ||
Weighted average diluted shares outstanding | 48,455,996 | 36,542,944 | 38,565,307 | 37,742,337 |
Earnings (Loss) per share, diluted | $ 0.10 | $ (0.06) | $ (1.03) | $ 0.11 |
SCHEDULE OF POTENTIAL SHARES OF
SCHEDULE OF POTENTIAL SHARES OF COMMON STOCK EXCLUDED FROM DILUTED NET (LOSS) INCOME PER SHARE (Details) - shares | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Purchase an aggregate shares | 11,034,930 | 3,631,002 | 20,531,372 | |
Share-Based Payment Arrangement, Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Purchase an aggregate shares | 3,631,002 | 3,642,958 | ||
Restricted Stock Units (RSUs) [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Purchase an aggregate shares | 111,015 | 180,000 | ||
Warrant [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Purchase an aggregate shares | 10,923,915 | 16,708,414 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
May 05, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Apr. 26, 2023 | Apr. 01, 2023 | Mar. 05, 2023 | |
Subsequent Event [Line Items] | |||||||
Loan amount | $ 100 | ||||||
Aggregate net proceeds | $ 15,000 | ||||||
Purchase Agreement [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Number of shares issued | 73,500 | ||||||
Aggregate net proceeds | $ 597 | ||||||
Board of Directors Chairman [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Promissory note | 1,000 | ||||||
Subsequent Event [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Loan amount | $ 100 | 100 | |||||
Subsequent Event [Member] | Purchase Agreement [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Number of shares issued | 98,500 | ||||||
Aggregate net proceeds | $ 671 | ||||||
Subsequent Event [Member] | Board of Directors Chairman [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Promissory note | $ 1,000 | $ 1,000 | |||||
Subsequent Event [Member] | Ms Harvey [Member] | |||||||
Subsequent Event [Line Items] | |||||||
Cash | $ 334,000 |