424B3 1 tm2218377-29_424b3.htm 424B3 tm2218377-29_424b3 - none - 105.1254255s
 Filed Pursuant to Rule 424(b)(3)
 Registration No. 333-266273
PROXY STATEMENT FOR
SPECIAL MEETING OF STOCKHOLDERS OF
CHARDAN NEXTECH ACQUISITION 2 CORP.
PROSPECTUS FOR
50,156,939 SHARES OF COMMON STOCK OF CHARDAN NEXTECH ACQUISITION 2 CORP.,
WHICH WILL BE RENAMED “DRAGONFLY ENERGY HOLDINGS CORP.”
IN CONNECTION WITH THE BUSINESS COMBINATION DESCRIBED HEREIN
The board of directors (the “Chardan Board”) of Chardan NexTech Acquisition 2 Corp., a Delaware corporation (“Chardan”, “we”, “our” or the “Company”), has unanimously approved the transactions (collectively, the “Business Combination”) contemplated by that certain Agreement and Plan of Merger, dated May 15, 2022, as amended on July 12, 2022, (as it may be amended, supplemented or otherwise modified from time to time, the “Business Combination Agreement”), by and among Chardan, Bronco Merger Sub, Inc., a Nevada corporation and a wholly owned direct subsidiary of Chardan (“Merger Sub”), and Dragonfly Energy Corp., a Nevada corporation (“Dragonfly”), a copy of which is attached to this proxy statement/prospectus as Annex A. As used in this proxy statement/prospectus, “New Dragonfly” refers to Chardan after giving effect to the Business Combination. As described in this proxy statement/prospectus, Chardan’s stockholders are being asked to consider a vote upon the Business Combination, among other items.
As a result of and upon the Closing, among other things, all (i) shares of Dragonfly common stock (after giving effect to the conversion of Dragonfly preferred stock into Dragonfly common stock pursuant to Dragonfly’s governing documents) and (ii) options to acquire shares of Dragonfly common stock (as defined below and as described further in the immediately succeeding paragraph), in each case outstanding as of immediately prior to the Closing, will be cancelled in exchange for the right to receive shares of New Dragonfly common stock or assumed and converted into options to acquire shares of New Dragonfly common stock totaling 41,500,000 shares (at a deemed value of $10.00 per share). The portion of the Aggregate Merger Consideration reflecting the conversion of the Dragonfly options is calculated assuming that all New Dragonfly options are net-settled. With respect to the New Dragonfly options received in respect of Dragonfly options that are outstanding immediately prior to the Closing and cash exercised after the Closing, up to 754,813 additional shares of New Dragonfly common stock may be issued. Based on Dragonfly’s outstanding shares and options as of September 14, 2022, at Closing approximately 38,444,217 shares of the Aggregate Merger Consideration will be allocated to holders of outstanding Dragonfly common stock and 3,055,783 shares of the Aggregate Merger Consideration will be allocated to holders of the assumed Dragonfly options. The holders of these shares may from time to time sell, transfer or otherwise dispose of any or all of these shares in a number of different ways and at varying prices, and we will not receive any proceeds from such transactions.
This proxy statement/prospectus relates to the registration of 50,156,939 shares of New Dragonfly common stock which includes (i) 10,156,939 shares of New Dragonfly common stock, including 754,813 shares of New Dragonfly common stock in respect of Dragonfly options that are outstanding immediately prior to the Closing and cash exercised after the Closing, to be issued (or reserved for issuance with respect to New Dragonfly options) to non-affiliates of New Dragonfly as Aggregate Merger Consideration (as defined below) and (ii) 40,000,000 shares of New Dragonfly common stock which may be issued as Earnout Shares (as defined below), in each case, as further described in the section entitled “Proposal No. 1 — The Business Combination Proposal”. The remaining 32,097,874 shares of the Aggregate Merger Consideration will be registered on Form S-1 after the Closing of the Business Combination.
As a result of the Merger, existing holders of Dragonfly capital stock will have the right to receive, subject to achieving specified milestones, up to an aggregate of 40,000,000 additional shares of New Dragonfly common stock in three tranches. The first tranche of 15,000,000 shares is issuable if New Dragonfly’s 2023 total audited revenue is equal to or greater than $250 million and New Dragonfly’s 2023 audited operating income is equal to or greater than $35 million. The second tranche of 12,500,000 shares is issuable upon achieving a volume-weighted average trading price threshold of at least $22.50 on or prior to December 31, 2026, and the third tranche of 12,500,000 shares is issuable upon achieving a volume-weighted average trading price threshold of at least $32.50 on or prior to December 31, 2028. To the extent not previously earned, the second tranche is issuable if the $32.50 price target is achieved by December 31, 2028 (such shares, together, the “Earnout Shares”).
Concurrently with the execution of the Business Combination Agreement, Chardan entered into a subscription agreement (the “Subscription Agreement”) with the Sponsor, pursuant to which, among other things, the Sponsor agreed to subscribe for and purchase, and Chardan agreed to issue and sell to the Sponsor, 500,000 newly issued shares of Chardan common stock (the “PIPE Securities”), for a price of $10.00 per share for gross proceeds of $5 million (the “PIPE Investment”). The number of PIPE Securities that the Sponsor is obligated to purchase under the Subscription Agreement shall be reduced by the number of shares of common stock of Chardan that the Sponsor may purchase in the open market provided such shares are not redeemed (as described below). Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Subscription Agreement” for additional information.

Concurrently with the execution of the Business Combination Agreement, Chardan and Dragonfly entered into a commitment letter (the “Debt Commitment Letter”) with CCM Investments 5 LLC, an affiliate of Chardan Capital Markets (“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”), pursuant to which the Initial Term Loan Lenders have agreed to provide Dragonfly with a senior secured term loan facility in an aggregate principal amount of $75 million (the “Term Loan”) on the Closing Date subject to the satisfaction of a number of specified conditions set forth in the Debt Commitment Letter. The obligations of the Initial Term Loan Lenders to provide the Term Loan will terminate on October 31, 2022 (or such later date reasonably acceptable to the Initial Term Loan Lenders) if the Closing Date has not occurred by such date. The Chardan Lender has 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”), pursuant to which the Backstop Lender has 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 subject only to final documentation that is consistent in all material respects with the Debt Commitment Letter and the Summary of Terms and Conditions attached thereto.
The proceeds of the Term Loan may be used (i) to support the Business Combination, (ii) to repay outstanding indebtedness and other obligations of Dragonfly, (iii) to pay fees and expenses in connection with the foregoing, (iv) to provide additional growth capital and (v) for other general/corporate purposes. The Term Loan must be fully drawn on the Closing Date and will mature four years from the Closing Date.
In connection with the Term Loan, New Dragonfly will also issue to EIP and, upon the consummation of the Backstop Lender’s purchase of the Backstopped Loans, the Backstop Lender (collectively, the “Term Loan Lenders”) the Penny Warrants, exercisable to purchase 3.6% of Dragonfly’s common stock on a fully diluted basis, calculated as of the Closing Date and the $10 Warrants, which are exercisable to purchase 1.6 million shares of Dragonfly’s common stock at $10 per share.
The definitive documentation for the Term Loan has not been finalized and, accordingly, the actual terms of the Term Loan, may differ from those described in this proxy statement/prospectus. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Debt Commitment Letter” for additional information.
Concurrently with the execution of the Business Combination Agreement, Dragonfly and CCM 5, an affiliate of Chardan Capital Markets (CCM 5 in connection with the Equity Facility, or such other affiliate investor as it may designate, the “Equity Facility Investor”), entered into an equity facility letter agreement on May 15, 2022 (the “Equity Facility Letter Agreement”), pursuant to which Chardan and Dragonfly agreed to enter into definitive documentation (the “Equity Facility Definitive Documentation”) prior to the Closing Date to establish a committed equity facility (the “Equity Facility”). The Equity Facility Definitive Documentation will contain terms that are consistent with the Equity Facility Letter Agreement and customary for documentation of this nature. Pursuant to, on the terms of and subject to the satisfaction of the conditions to be set forth in the Equity Facility Definitive Documentation, including the filing and effectiveness of a registration statement registering the resale by the Equity Facility Investor of the shares of New Dragonfly common stock issued to it under the Equity Facility Definitive Documentation, New Dragonfly will have the right from time to time at its option to direct the Equity Facility Investor to purchase up to a specified maximum amount of shares of New Dragonfly common stock, up to a maximum aggregate purchase price of $150,000,000 over the 36-month term of the Equity Facility. The Equity Facility will be structured to allow New Dragonfly, on the terms and subject to the conditions thereof, to raise funds from the issuance of equity on a periodic basis outside the context of a traditional underwritten follow-on offering.
In connection with the Business Combination, the Sponsor and Chardan’s directors and executive officers have interests in the business combination that are different from, or in addition to, Chardan stockholders. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for additional information. As of September 14, 2022, a total of 3,162,500 shares of Chardan’s common stock, or approximately 50.6% of the outstanding shares are owned by the Sponsor and Chardan’s directors and executive officers. As a result, shares of common stock held by the Sponsor will be sufficient to satisfy the quorum requirement for the Meeting. Assuming only the minimum number of shares of common stock to constitute a quorum is present, no shares of Chardan common stock held by the public stockholders, must vote in favor of the Business Combination Proposal for it to be approved.
It is anticipated that upon completion of the Business Combination and assuming minimum redemptions by Chardan public stockholders, Chardan’s public stockholders will retain an ownership interest of approximately 6.6% of New Dragonfly, the Term Loan Lenders will own approximately 3.7% of New Dragonfly assuming the exercise of all Penny Warrants, the Sponsor, officers, directors and other affiliates will own approximately 7.8% of New Dragonfly (including the PIPE Investment), and the Dragonfly stockholders will own approximately 81.9% (excluding the 40,000,000 Earnout Shares) of New Dragonfly. These levels of ownership interest: (a) include the impact of the shares of Chardan common stock issuable upon exercise of the Penny Warrants due to their nominal exercise price but exclude the impact of the $10 Warrants and the shares issuable under the Equity Facility, (b) include the impact of the redemption of 9,556,652 Chardan ordinary shares in connection with the Charter Amendment and assume that no additional Chardan public stockholder exercises redemption rights with respect to its shares for a pro rata portion

of the funds in Chardan’s trust account, (c) assume that no shares are issued pursuant to the Dragonfly Incentive Plan and the 2022 Plan, (d) assume that no shares are issued pursuant to the vesting and exercise of New Dragonfly options for shares of New Dragonfly common stock and (e) assume no exercise of Chardan public warrants and Chardan private placement warrants. If the shares issuable under the Equity Facility, including the Commitment Shares, were assumed to be issued based upon an assumed weighted average VWAP of $10.15 (the redemption price), that could result in up to an additional 14,926,109 shares being issuable, which includes the Commitment Shares, subject the terms, conditions and limitations set forth in the Equity Facility, and result in additional dilution of Chardan’s public stockholders. This number is subject to increase or decrease if the stock price decreases or increases from the assumed price of $10.15. If the redemption price is significantly less than the assumed VWAP of $10.15, Chardan’s public stockholders would experience considerable additional dilution. For example, based upon an assumed VWAP of $6.00, an additional 25,166,667 shares, which includes 166,667 Commitment Shares, would be issuable.
Chardan’s units, common stock and public warrants are currently listed on The Nasdaq Capital Market (the “Nasdaq”) under the symbols “CNTQU,” “CNTQ” and “CNTQW,” respectively. At the Closing, each Chardan unit will separate into its components consisting of one share of Chardan common stock and three-quarters of one warrant to purchase one share of Chardan common stock and, as a result, will no longer trade as a separate security.
This proxy statement/prospectus provides shareholders of Chardan with detailed information about the proposed business combination and other matters to be considered at the special meeting of Chardan. We encourage you to read this entire document, including the Annexes and other documents referred to herein, carefully and in their entirety. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 52 of this proxy statement/prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.
This proxy statement/prospectus is dated September 16, 2022, and
is first being mailed to Chardan’s shareholders on or about September 16, 2022.
HOW TO OBTAIN ADDITIONAL INFORMATION
The proxy statement/prospectus incorporates important business and financial information about Chardan that is not included within or delivered herewith. If you would like to receive additional information or if you want additional copies of this document, agreements contained in the appendices or any other documents filed by Chardan with the SEC, such information is available without charge upon written or oral request. Please contact our proxy solicitor:
Morrow Sodali LLC
333 Ludlow Street, 5th Floor, South Tower
Stamford, CT 06902
Individuals call toll-free: 800-662-5200
Banks and brokers call: 203-658-9400
Email: CNTQ.info@investor.morrowsodali.com
To obtain timely delivery of the documents, you must request them no later than five business days before the date of the Meeting, or no later than September 29, 2022. Please be sure to include your complete name and address in your request. Please see “Where You Can Find Additional Information” to find out where you can find more information about Chardan and Dragonfly. You should rely only on the information contained in the proxy statement/prospectus in deciding how to vote on the Business Combination. Neither Chardan nor Dragonfly has authorized anyone to give any information or to make any representations other than those contained in the proxy statement/prospectus. Do not rely upon any information or representations made outside of the proxy statement/prospectus. The information contained in the proxy statement/prospectus may change after the date of the proxy statement/prospectus. Do not assume after the date of the proxy statement/prospectus that the information contained in the proxy statement/prospectus is still correct.

 
CHARDAN NEXTECH ACQUISITION 2 CORP.
17 STATE STREET, 21ST FLOOR
NEW YORK, NY 10004
Dear Chardan NexTech Acquisition 2 Corp. Stockholders,
On behalf of the board of directors (the “Chardan Board”) of Chardan NexTech Acquisition 2 Corp., a Delaware corporation (“Chardan”, “we” or “our”), we cordially invite you to a special meeting (the “special meeting”) of stockholders of Chardan, which will be held at 10:00 a.m., Eastern Time, on October 6, 2022. In light of the COVID-19 pandemic and to protect the health of stockholders of Chardan and the community, the special meeting will be a completely virtual meeting of stockholders conducted via live webcast. You will be able to attend the special meeting by visiting https://www.cstproxy.com/cnaq/2022 and entering your control number as further explained in the accompanying proxy statement/prospectus. You may also attend the special meeting telephonically by dialing within the U.S. and Canada: +1 800-450-7155 (toll free) or outside of the U.S. and Canada: +1 857-999-9155 and when prompted enter the pin 5046958#.
The Chardan Board has unanimously approved the transactions (collectively, the “Business Combination”) contemplated by that certain Agreement and Plan of Merger, dated May 15, 2022, as amended on July 12, 2022, (as it may be amended, supplemented or otherwise modified from time to time, the “Business Combination Agreement”), by and among Chardan, Bronco Merger Sub, Inc., a Nevada corporation and a wholly owned direct subsidiary of Chardan (“Merger Sub”), and Dragonfly Energy Corp., a Nevada corporation (“Dragonfly”), a copy of which is attached to this proxy statement/prospectus as Annex A. As described in this proxy statement/prospectus, Chardan’s stockholders are being asked to consider a vote upon the Business Combination, among other items. As used in this proxy statement/prospectus, “New Dragonfly” refers to Chardan after giving effect to the Business Combination.
On the Closing Date, Merger Sub will merge with and into Dragonfly (the “Merger”), with Dragonfly as the surviving corporation in the Merger and, after giving effect to the Merger, Dragonfly will be a wholly-owned subsidiary of Chardan (the time that the Merger becomes effective being referred to as the “Effective Time”).
As a result of and upon the Closing, among other things, all (i) shares of Dragonfly common stock (after giving effect to the conversion of Dragonfly preferred stock into Dragonfly common stock pursuant to Dragonfly’s governing documents) and (ii) options to acquire shares of Dragonfly common stock (as defined below and as described further in the immediately succeeding paragraph), in each case outstanding as of immediately prior to the Closing, will be cancelled in exchange for the right to receive shares of New Dragonfly common stock or assumed and converted into options to acquire shares of New Dragonfly common stock totaling 41,500,000 shares (at a deemed value of $10.00 per share). The portion of the Aggregate Merger Consideration reflecting the conversion of the Dragonfly options is calculated assuming that all New Dragonfly options are net-settled. With respect to the New Dragonfly options received in respect of Dragonfly options that are outstanding immediately prior to the Closing and cash exercised after the Closing, up to 754,813 additional shares of New Dragonfly common stock may be issued. Based on Dragonfly’s outstanding shares and options as of September 14, 2022, at Closing approximately 38,444,217 shares of the Aggregate Merger Consideration will be allocated to holders of outstanding Dragonfly common stock and 3,055,783 shares of the Aggregate Merger Consideration will be allocated to holders of the assumed Dragonfly options. The holders of these shares may from time to time sell, transfer or otherwise dispose of any or all of these shares in a number of different ways and at varying prices, and we will not receive any proceeds from such transactions.
This proxy statement/prospectus relates to the registration of 50,156,939 shares of New Dragonfly common stock which includes (i) 10,156,939 shares of New Dragonfly common stock, including 754,813 shares of New Dragonfly common stock in respect of Dragonfly options that are outstanding immediately prior to the Closing and cash exercised after the Closing, to be issued (or reserved for issuance with respect to New Dragonfly options) to non-affiliates of New Dragonfly as Aggregate Merger Consideration (as defined below) and (ii) 40,000,000 shares of New Dragonfly common stock which may be issued as Earnout Shares (as defined below), in each case, as further described in the section entitled “Proposal No. 1 — The Business Combination Proposal”. The remaining 32,097,874 shares of the Aggregate Merger Consideration will be registered on Form S-1 after the Closing of the Business Combination.
 

 
As a result of the Merger, existing holders of Dragonfly capital stock will have the right to receive, subject to achieving specified milestones, up to an aggregate of 40,000,000 additional shares of New Dragonfly common stock in three tranches. The first tranche of 15,000,000 shares is issuable if New Dragonfly’s 2023 total audited revenue is equal to or greater than $250 million and New Dragonfly’s 2023 audited operating income is equal to or greater than $35 million. The second tranche of 12,500,000 shares is issuable upon achieving a volume-weighted average trading price threshold of at least $22.50 on or prior to December 31, 2026, and the third tranche of 12,500,000 shares is issuable upon achieving a volume-weighted average trading price threshold of at least $32.50 on or prior to December 31, 2028. To the extent not previously earned, the second tranche is issuable if the $32.50 price target is achieved by December 31, 2028 (such shares, together, the “Earnout Shares”).
At the special meeting, Chardan stockholders will be asked to consider and vote upon:
(1)   Proposal No. 1 — To consider and vote upon a proposal to approve the Business Combination, including (a) adopting the Business Combination Agreement and (b) approving the other transactions contemplated by the Business Combination Agreement and related agreements described in the accompanying proxy statement/prospectus — we refer to this proposal as the “Business Combination Proposal”;
(2)   Proposal No. 2 — To consider and vote upon a proposal to approve and adopt, assuming the Business Combination Proposal is approved, the third amended and restated certificate of incorporation of Chardan in the form attached hereto as Annex B (the “third amended and restated certificate of incorporation”) — we refer to this proposal as the “Charter Proposal”;
(3)   Proposal No. 3 —  To consider and vote upon a proposal, for purposes of complying with the applicable rules of Nasdaq, to approve the issuance of shares of Chardan’s common stock in connection with the Business Combination, including, without limitation, the Aggregate Merger Consideration, the Earnout Shares, the PIPE Investment, the Term Loan Lender Warrants and the Equity Facility (as described below), assuming the Business Combination Proposal and the Charter Proposal are approved, for purposes of complying with the applicable rules of the Nasdaq — we refer to this proposal as the “Nasdaq Proposal”;
(4)   Proposal No. 4 — To consider and vote on a proposal to approve and adopt, assuming the Business Combination Proposal, the Charter Proposal and the Nasdaq Proposal are approved, for purposes of complying with the applicable rules of the Nasdaq, the New Dragonfly 2022 Incentive Plan (the “2022 Plan”) — we refer to this proposal as the “Incentive Plan Proposal.” A copy of the 2022 Plan is attached to the accompanying proxy statement/ prospectus as Annex G;
(5)   Proposal No. 5 — To consider and vote upon a proposal to approve, assuming the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal and the Incentive Plan Proposal are approved, the New Dragonfly Employee Stock Purchase Plan (the “ESPP”), a copy of which is attached to this proxy statement/prospectus as Annex H, including the authorization of the initial share reserve under the ESPP — we refer to this proposal as the “ESPP Proposal”;
(6)   Proposal No. 6 —  To consider and vote upon a proposal to elect seven (7) directors who will serve as directors of New Dragonfly until their successors are duly elected and qualified, subject to their earlier death, resignation, or removal — we refer to this proposal as the “Director Election Proposal”; and
(7)   Proposal No. 7 — To consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Charter Proposal, the Incentive Plan Proposal, the Nasdaq Proposal, the ESPP Proposal or the Director Election Proposal — we refer to this proposal as the “Adjournment Proposal.
Each of these proposals is more fully described in the accompanying proxy statement/prospectus, which we encourage you to read carefully and in its entirety before voting. Only holders of record of Chardan common stock at the close of business on August 11, 2022 are entitled to notice of the special meeting and to vote and have their votes counted at the special meeting and any adjournments or postponements thereof.
After careful consideration, the Chardan Board has determined that the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the ESPP Proposal, the Director
 

 
Election Proposal and the Adjournment Proposal are fair to and in the best interests of Chardan and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” the Business Combination Proposal, “FOR” the Charter Proposal, “FOR” the Nasdaq Proposal, “FOR” the Incentive Plan Proposal, “FOR” the ESPP Proposal, “FOR” the Director Election Proposal and “FOR” the Adjournment Proposal, if presented. When you consider the Chardan Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that are different from, or in addition to, the interests of Chardan stockholders generally. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for additional information. The Chardan Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Business Combination and in recommending to the Chardan stockholders that they vote in favor of the proposals presented at the special meeting.
Consummation of the Business Combination is conditioned on the approval of each of the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Director Election Proposal. If any of those proposals are not approved, we will not consummate the Business Combination.
Concurrently with the execution of the Business Combination Agreement, Chardan entered into the Subscription Agreement with the Sponsor, pursuant to which, among other things, the Sponsor agreed to subscribe for and purchase, and Chardan agreed to issue and sell to the Sponsor, 500,000 shares of PIPE Securities, for a price of $10.00 per share for gross proceeds of $5 million. The number of PIPE Securities that the Sponsor is obligated to purchase under the Subscription Agreement shall be reduced by the number of shares of common stock of Chardan that the Sponsor may purchase in the open market provided such shares are not redeemed (as described below). Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Subscription Agreement” for additional information.
Concurrently with the execution of the Business Combination Agreement, Chardan and Dragonfly entered into a commitment letter (the “Debt Commitment Letter”) with CCM Investments 5 LLC, an affiliate of Chardan Capital Markets (“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”), pursuant to which the Initial Term Loan Lenders have agreed to provide Dragonfly with a senior secured term loan facility in an aggregate principal amount of $75 million (the “Term Loan”) on the Closing Date subject to the satisfaction of a number of specified conditions set forth in the Debt Commitment Letter. The obligations of the Initial Term Loan Lenders to provide the Term Loan will terminate on October 31, 2022 (or such later date reasonably acceptable to the Initial Term Loan Lenders) if the Closing Date has not occurred by such date. The Chardan Lender has 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”), pursuant to which the Backstop Lender has 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 subject only to final documentation that is consistent in all material respects with the Debt Commitment Letter and the Summary of Terms and Conditions attached thereto.
The proceeds of the Term Loan may be used (i) to support the Business Combination, (ii) to repay outstanding indebtedness and other obligations of Dragonfly, (iii) to pay fees and expenses in connection with the foregoing, (iv) to provide additional growth capital and (v) for other general/corporate purposes. The Term Loan must be fully drawn on the Closing Date and will mature four years from the Closing Date.
In connection with the Term Loan, New Dragonfly will also issue to EIP and, upon the consummation of the Backstop Lender’s purchase of the Backstopped Loans, the Backstop Lender (collectively, the “Term Loan Lenders”) the Penny Warrants, exercisable to purchase 3.6% of Dragonfly’s common stock on a fully diluted basis, calculated as of the Closing Date, and the $10 Warrants, which are exercisable to purchase 1.6 million shares of Dragonfly’s common stock at $10 per share.
The definitive documentation for the Term Loan has not been finalized and, accordingly, the actual terms of the Term Loan, may differ from those described in this proxy statement/prospectus. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Debt Commitment Letter” for additional information.
 

 
Concurrently with the execution of the Business Combination Agreement, Dragonfly and CCM 5 (CCM 5 in connection with the Equity Facility, or such other affiliate investor as it may designate, the “Equity Facility Investor”), entered into an equity facility letter agreement on May 15, 2022 (the “Equity Facility Letter Agreement”), pursuant to which Chardan and Dragonfly agreed to enter into definitive documentation (the “Equity Facility Definitive Documentation”) prior to the Closing Date to establish a committed equity facility (the “Equity Facility”). The Equity Facility Definitive Documentation will contain terms that are consistent with the Equity Facility Letter Agreement and customary for documentation of this nature. Pursuant to, on the terms of and subject to the satisfaction of the conditions to be set forth in the Equity Facility Definitive Documentation, including the filing and effectiveness of a registration statement registering the resale by the Equity Facility Investor of the shares of New Dragonfly common stock issued to it under the Equity Facility Definitive Documentation, New Dragonfly will have the right from time to time at its option to direct the Equity Facility Investor to purchase up to a specified maximum amount of shares of New Dragonfly common stock, up to a maximum aggregate purchase price of $150,000,000 over the 36-month term of the Equity Facility. The Equity Facility will be structured to allow New Dragonfly, on the terms and subject to the conditions thereof, to raise funds from the issuance of equity on a periodic basis outside the context of a traditional underwritten follow-on offering.
All Chardan stockholders are cordially invited to attend the special meeting and we are providing the accompanying proxy statement/prospectus and proxy card in connection with the solicitation of proxies to be voted at the special meeting (or any adjournment or postponement thereof). To ensure your representation at the special meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting and vote, obtain a proxy from your broker or bank.
Chardan’s units, common stock and public warrants are currently listed on the Nasdaq Capital Market (the “Nasdaq”) under the symbols “CNTQU,” “CNTQ” and “CNTQW,” respectively. Chardan will apply for listing, to be effective at the time of the Business Combination, of New Dragonfly common stock and public warrants on the Nasdaq under the proposed symbols “DFLI” and “DFLIW,” respectively. It is a condition of the consummation of the Business Combination that Chardan receive confirmation from the Nasdaq that New Dragonfly has been conditionally approved for listing on the Nasdaq, but there can be no assurance such listing condition will be met or that Chardan will obtain such confirmation from the Nasdaq. If such listing condition is not met or if such confirmation is not obtained, the Business Combination will not be consummated unless the Nasdaq condition set forth in the Business Combination Agreement is waived by the applicable parties.
Pursuant to Chardan’s current certificate of incorporation, a holder of public shares may demand that Chardan redeem such shares for cash if the Business Combination is consummated. Holders of public shares will be entitled to receive cash for these shares only if they demand that Chardan redeem their shares for cash no later than the second business day prior to the originally scheduled vote on the Business Combination Proposal by delivering their stock to the Transfer Agent prior to the vote at the meeting. If the Business Combination is not completed, these shares will not be redeemed. The redemption rights include the requirement that a holder must identify himself, herself or itself in writing as a beneficial holder and provide his, her or its legal name, phone number and address to the Transfer Agent in order to validly redeem his, her or its shares. If a holder of public shares properly demands redemption and votes for or against the Business Combination Proposal, Chardan will redeem each public share for a full pro rata portion of the trust account (as defined in the accompanying proxy statement/prospectus), calculated as of two business days prior to the consummation of the Business Combination.
Chardan is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to comply with certain reduced public company reporting requirements.
The accompanying proxy statement/prospectus provides you with detailed information about the Business Combination and other matters to be considered at the special meeting of Chardan’s stockholders. We encourage you to carefully read the entire document, including the Annexes attached thereto. You should also carefully consider the risk factors described in section entitled “Risk Factors” beginning on page 52.
 

 
Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.
The transactions described in the accompanying proxy statement/prospectus have not been approved or disapproved by the SEC or any state securities commission nor has the SEC or any state securities commission passed upon the merits or fairness of the Business Combination or related transactions, or passed upon the accuracy or adequacy of the disclosure in the accompanying proxy statement/prospectus. Any representation to the contrary is a criminal offense.
Thank you for your participation. We look forward to your continued support.
By Order of the Board of Directors
/s/ Kerry Propper
Kerry Propper
Executive Chairman of the Board of Directors
September 16, 2022
IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS.
TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST TENDER YOUR SHARES TO CHARDAN’S TRANSFER AGENT AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE ORIGINALLY SCHEDULED VOTE ON THE BUSINESS COMBINATION PROPOSAL AT THE SPECIAL MEETING. THE REDEMPTION RIGHTS INCLUDE THE REQUIREMENT THAT A HOLDER MUST IDENTIFY HIMSELF, HERSELF OR ITSELF IN WRITING AS A BENEFICIAL OWNER AND PROVIDE HIS, HER OR ITS LEGAL NAME, PHONE NUMBER AND ADDRESS TO CHARDAN’S TRANSFER AGENT IN ORDER TO VALIDLY REDEEM HIS, HER OR ITS SHARES. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO CHARDAN’S TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT AND WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. PLEASE SEE THE SECTION ENTITLED “SPECIAL MEETING OF CHARDAN STOCKHOLDERS — REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.
The accompanying proxy statement/prospectus is dated September 16, 2022 and is first being mailed to Chardan stockholders on or about September 16, 2022.
 

 
CHARDAN NEXTECH ACQUISITION 2 CORP.
17 STATE STREET, 21ST FLOOR
NEW YORK, NY 10004
NOTICE OF
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON October 6, 2022
TO THE STOCKHOLDERS OF CHARDAN NEXTECH ACQUISITION 2 CORP.
NOTICE IS HEREBY GIVEN that a special meeting (the “Special Meeting”) of stockholders of Chardan NexTech Acquisition 2 Corp., a Delaware corporation (“Chardan”, “we” or “our”), will be held at 10:00 a.m., Eastern Time, on October 6, 2022. In light of the COVID-19 pandemic and to protect the health of stockholders of Chardan and the community, the Special Meeting will be a completely virtual meeting of stockholders conducted via live webcast. You will be able to attend the Special Meeting by visiting https://www.cstproxy.com/cnaq/2022 and entering your control number as further explained in the accompanying proxy statement/prospectus. You may also attend the Special Meeting telephonically by dialing within the U.S. and Canada: +1 800-450-7155 (toll free) or outside of the U.S. and Canada: +1 857-999-9155 and when prompted enter the pin 5046958#.
On behalf of Chardan’s board of directors (the “Chardan Board”), you are cordially invited to attend the special meeting, to conduct the following business items:
(1)   Proposal No. 1 — To consider and vote upon a proposal to approve the transactions (collectively, the “Business Combination”) contemplated by that certain Agreement and Plan of Merger, dated May 15, 2022, as amended on July 12, 2022, (as it may be amended, supplemented or otherwise modified from time to time, the “Business Combination Agreement”), by and among Chardan, Bronco Merger Sub, Inc., a Nevada corporation and a wholly owned direct subsidiary of Chardan (“Merger Sub”), and Dragonfly Energy Corp., a Nevada corporation (“Dragonfly”), a copy of which is attached to this proxy statement/prospectus as Annex A, including (a) adopting the Business Combination Agreement and (b) approving the other transactions contemplated by the Business Combination Agreement and related agreements described in this proxy statement/prospectus — we refer to this proposal as the “Business Combination Proposal”;
(2)   Proposal No. 2 — To consider and vote upon a proposal to approve and adopt, assuming the Business Combination Proposal is approved, the third amended and restated certificate of incorporation of Chardan in the form attached hereto as Annex B (the “third amended and restated certificate of incorporation”) — we refer to this proposal as the “Charter Proposal”;
(3)   Proposal No. 3 — To consider and vote upon a proposal, for purposes of complying with the applicable rules of Nasdaq, to approve the issuance of shares of Chardan’s common stock in connection with the Business Combination, including, without limitation, the Aggregate Merger Consideration, the Earnout Shares, the PIPE Investment, the Term Loan Lender Warrants and the Equity Facility (as described below), assuming the Business Combination Proposal and the Charter Proposal are approved, for purposes of complying with the applicable rules of the Nasdaq — we refer to this proposal as the “Nasdaq Proposal”;
(4)   Proposal No. 4 — To consider and vote on a proposal to approve and adopt, assuming the Business Combination Proposal, the Charter Proposal and the Nasdaq Approval are approved, for purposes of complying with the applicable rules of the Nasdaq, the New Dragonfly 2022 Incentive Plan (the “2022 Plan”) — we refer to this proposal as the “Incentive Plan Proposal.” A copy of the 2022 Plan is attached to the accompanying proxy statement/ prospectus as Annex G;
(5)   Proposal No. 5 — To consider and vote upon a proposal to approve, assuming the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal and the Incentive Plan Proposal are approved, the New Dragonfly Employee Stock Purchase Plan (the “ESPP”), a copy of which is attached to this proxy statement/prospectus as Annex H, including the authorization of the initial share reserve under the ESPP — we refer to this proposal as the “ESPP Proposal”;
(6)   Proposal No. 6 — To consider and vote upon a proposal to elect seven (7) directors who will serve as directors of New Dragonfly until their successors are duly elected and qualified, subject to their earlier death, resignation, or removal — we refer to this proposal as the “Director Election Proposal”; and
 

 
(7)   Proposal No. 7 — To consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the ESPP Proposal or the Director Election Proposal — we refer to this proposal as the “Adjournment Proposal.
Each of these proposals is more fully described in the accompanying proxy statement/prospectus, which we encourage you to read carefully and in its entirety before voting. Only holders of record of Chardan common stock at the close of business on August 11, 2022 are entitled to notice of the special meeting and to vote and have their votes counted at the special meeting and any adjournments or postponements thereof.
After careful consideration, the Chardan Board has determined that the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the ESPP Proposal, the Director Election Proposal the Adjournment Proposal are fair to and in the best interests of Chardan and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” the Business Combination Proposal, “FOR” the Charter Proposal, “FOR” the Nasdaq Proposal, “FOR” the Incentive Plan Proposal, “FOR” the ESPP Proposal, “FOR” the Director Election Proposal and “FOR” the Adjournment Proposal, if presented. When you consider the Chardan Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that are different from, or in addition to, the interests of Chardan stockholders generally. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for additional information. The Chardan Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Business Combination and in recommending to the Chardan stockholders that they vote in favor of the proposals presented at the special meeting.
Consummation of the Business Combination is conditioned on the approval of each of the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Director Election Proposal. If any of those proposals are not approved, we will not consummate the Business Combination.
Concurrently with the execution of the Business Combination Agreement, Chardan entered into the Subscription Agreement with the Sponsor, pursuant to which, among other things, the Sponsor agreed to subscribe for and purchase, and Chardan agreed to issue and sell to the Sponsor, 500,000 PIPE Securities, for a price of $10.00 per share for gross proceeds of $5 million. The number of PIPE Securities that the Sponsor is obligated to purchase under the Subscription Agreement shall be reduced by the number of shares of common stock of Chardan that the Sponsor may purchase in the open market provided such shares are not redeemed (as described below).
Concurrently with the execution of the Business Combination Agreement, Chardan and Dragonfly entered into a commitment letter (the “Debt Commitment Letter”) with CCM Investments 5 LLC, an affiliate of Chardan Capital Markets (the “Chardan Lender”), and EICF Agent LLC (“EIP” and, collectively with the Chardan Lender, the “Initial Term Loan Lenders”), pursuant to which the Initial Term Loan Lenders have agreed to provide Dragonfly with a senior secured term loan facility in an aggregate principal amount of $75 million (the “Term Loan”) on the Closing Date subject to the satisfaction of a number of specified conditions set forth in the Debt Commitment Letter. The obligations of the Initial Term Loan Lenders to provide the Term Loan will terminate on October 31, 2022 (or such later date reasonably acceptable to the Initial Term Loan Lenders) if the Closing Date has not occurred by such date. The Chardan Lender has 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”), pursuant to which the Backstop Lender has 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 subject only to final documentation that is consistent in all material respects with the Debt Commitment Letter and the Summary of Terms and Conditions attached thereto.
The proceeds of the Term Loan may be used (i) to support the Business Combination, (ii) to repay outstanding indebtedness and other obligations of Dragonfly, (iii) to pay fees and expenses in connection with
 

 
the foregoing, (iv) to provide additional growth capital and (v) for other general/corporate purposes. The Term Loan must be fully drawn on the Closing Date and will mature four years from the Closing Date.
In connection with the Term Loan, New Dragonfly will also issue to EIP and, upon the consummation of the Backstop Lender’s purchase of the Backstopped Loans, the Backstop Lender (collectively, the “Term Loan Lenders”) the Penny Warrants, exercisable to purchase 3.6% of Dragonfly’s common stock on a fully diluted basis, calculated as of the Closing Date, and the $10 Warrants, which are exercisable to purchase 1.6 million shares of Dragonfly’s common stock at $10 per share.
The definitive documentation for the Term Loan has not been finalized and, accordingly, the actual terms of the Term Loan, may differ from those described in this proxy statement/prospectus. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Debt Commitment Letter” for additional information.
Concurrently with the execution of the Business Combination Agreement, Dragonfly and CCM Investments 5 LLC, an affiliate of Chardan Capital Markets (or such other affiliate investor as it may designate, the “Equity Facility Investor”), entered into an equity facility letter agreement on May 15, 2022 (the “Equity Facility Letter Agreement”), pursuant to which Chardan and Dragonfly agreed to enter into definitive documentation (the “Equity Facility Definitive Documentation”) prior to the Closing Date to establish a committed equity facility (the “Equity Facility”). The Equity Facility Definitive Documentation will contain terms that are consistent with the Equity Facility Letter Agreement and customary for documentation of this nature. Pursuant to, on the terms of and subject to the satisfaction of the conditions to be set forth in the Equity Facility Definitive Documentation, including the filing and effectiveness of a registration statement registering the resale by the Equity Facility Investor of the shares of New Dragonfly common stock issued to it under the Equity Facility Definitive Documentation, New Dragonfly will have the right from time to time at its option to direct the Equity Facility Investor to purchase up to a specified maximum amount of shares of New Dragonfly common stock, up to a maximum aggregate purchase price of $150,000,000 over the 36-month term of the Equity Facility. The Equity Facility will be structured to allow New Dragonfly, on the terms and subject to the conditions thereof, to raise funds from the issuance of equity on a periodic basis outside the context of a traditional underwritten follow-on offering.
All Chardan stockholders are cordially invited to attend the special meeting and we are providing the accompanying proxy statement/prospectus and proxy card in connection with the solicitation of proxies to be voted at the special meeting (or any adjournment or postponement thereof). To ensure your representation at the special meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting and vote, obtain a proxy from your broker or bank.
Chardan’s units, common stock and public warrants are currently listed on the Nasdaq Capital Market (the “Nasdaq”) under the symbols “CNTQU,” “CNTQ” and “CNTQW,” respectively. Chardan will apply for listing, to be effective at the time of the Business Combination, of New Dragonfly common stock and public warrants on the Nasdaq under the proposed symbols “DFLI” and “DFLIW,” respectively. It is a condition of the consummation of the Business Combination that Chardan receive confirmation from the Nasdaq that New Dragonfly has been conditionally approved for listing on the Nasdaq, but there can be no assurance such listing condition will be met or that Chardan will obtain such confirmation from the Nasdaq. If such listing condition is not met or if such confirmation is not obtained, the Business Combination will not be consummated unless the Nasdaq condition set forth in the Business Combination Agreement is waived by the applicable parties.
Pursuant to Chardan’s current certificate of incorporation, a holder of public shares may demand that Chardan redeem such shares for cash if the Business Combination is consummated. Holders of public shares will be entitled to receive cash for these shares only if they demand that Chardan redeem their shares for cash no later than the second business day prior to the originally scheduled vote on the Business Combination Proposal by delivering their stock to Chardan’s transfer agent prior to the vote at the meeting. If the Business Combination is not completed, these shares will not be redeemed. The redemption rights include the requirement that a holder must identify himself, herself or itself in writing as a beneficial holder and provide his, her or its legal name, phone number and address to Chardan’s transfer agent in order to validly redeem his,
 

 
her or its shares. If a holder of public shares properly demands redemption and votes for or against the Business Combination Proposal, Chardan will redeem each public share for a full pro rata portion of the trust account (as defined in the accompanying proxy statement/prospectus), calculated as of two business days prior to the consummation of the business combination.
All Chardan stockholders are cordially invited to attend the special meeting and we are providing the accompanying proxy statement/prospectus and proxy card in connection with the solicitation of proxies to be voted at the special meeting (or any adjournment or postponement thereof). To ensure your representation at the special meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting and vote, obtain a proxy from your broker or bank.
Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.
Thank you for your participation. We look forward to your continued support.
By Order of the Board of Directors
/s/ Kerry Propper
Kerry Propper
Executive Chairman of the Board of Directors
September 16, 2022
IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS.
TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST ELECT TO HAVE CHARDAN REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO CHARDAN’S TRANSFER AGENT AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE ORIGINALLY SCHEDULED VOTE ON THE BUSINESS COMBINATION PROPOSAL AT THE SPECIAL MEETING. THE REDEMPTION RIGHTS INCLUDE THE REQUIREMENT THAT A HOLDER MUST IDENTIFY HIMSELF, HERSELF OR ITSELF IN WRITING AS A BENEFICIAL OWNER AND PROVIDE HIS, HER OR ITS LEGAL NAME, PHONE NUMBER AND ADDRESS TO CHARDAN’S TRANSFER AGENT IN ORDER TO VALIDLY REDEEM HIS, HER OR ITS SHARES. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO CHARDAN’S TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT AND WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. PLEASE SEE THE SECTION ENTITLED “SPECIAL MEETING OF CHARDAN STOCKHOLDERS — REDEMPTION RIGHTSFOR MORE SPECIFIC INSTRUCTIONS.
 

 
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F-1
INFORMATION NOT REQUIRED IN PROSPECTUS
II-0
ANNEXES
 
ii

 
FREQUENTLY USED TERMS
Unless otherwise stated in this proxy statement or the context otherwise requires, references to:
$10 Warrants” are to the warrants to acquire 1,600,000 shares of New Dragonfly common stock at per share exercise price of $10.00 issued to the Term Loan Lenders;
2022 Plan” are to the Chardan NexTech Acquisition 2 Corp. 2022 Equity Incentive Plan to be adopted by Chardan prior to the Closing;
Aggregate Fully Diluted Company Common Shares” are to, without duplication, (a) the aggregate number of shares of Dragonfly common stock that are (i) the Dragonfly Conversion Shares or (ii) issuable upon, or subject to, the exercise of Dragonfly options (whether or not then vested or exercisable) that are outstanding immediately prior to the Effective Time, minus (b) a number of shares of Dragonfly common stock equal to (A) the aggregate exercise price of such Dragonfly options divided by (B) the Per Share Merger Consideration;
Aggregate Merger Consideration” are to the number of Chardan common stock equal to the quotient obtained by dividing (i) $415,000,000 by (ii) $10.00;
Backstop Commitment Letter” are to that certain backstop commitment letter, dated as of May 20, 2022, by and between the Chardan Lender and the Backstop Lender;
Backstop Lender” are to that certain third-party financing source party to the Backstop Commitment Letter;
Backstopped Loans” are to the aggregate amount of the Term Loan that the Backstop Lender has committed to purchase from the Chardan Lender immediately following the issuance of the Term Loan on the Closing Date;
Business Combination” are to the Merger, together with the other transactions contemplated by the Business Combination Agreement (including the consummation of the PIPE Investment) and the related agreements;
Business Combination Agreement” are to that certain Agreement and Plan of Merger, dated as of May 15, 2022, as amended on July 12, 2022, by and among Chardan, Merger Sub and Dragonfly, as it may be amended, supplemented or otherwise modified from time to time;
Business Combination Marketing Agreement” are to that certain business combination marketing agreement, dated as of August 10, 2021, between Chardan and Chardan Capital Markets;
change of control” are to any transaction or series of transactions (a) following which any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, governmental authority or instrumentality or other entity of any kind (each of the foregoing, a “Person”) or “group” ​(within the meaning of Section 13(d) of the Exchange Act) of persons (other than New Dragonfly, the Surviving Corporation or any of their respective subsidiaries), has direct or indirect beneficial ownership of securities (or rights convertible or exchangeable into securities) representing fifty percent (50%) or more of the voting power of or economic rights or interests in New Dragonfly, the Surviving Corporation or any of their respective subsidiaries, (b) constituting a merger, consolidation, reorganization or other business combination, however effected, following which either (i) the members of the New Dragonfly Board or the Surviving Corporation immediately prior to such merger, consolidation, reorganization or other business combination do not constitute at least a majority of the board of directors of the company surviving the combination or, if the surviving company is a subsidiary, the ultimate parent thereof or (ii) the voting securities of New Dragonfly, the Surviving Corporation or any of their respective subsidiaries immediately prior to such merger, consolidation, reorganization or other business combination do not continue to represent or are not converted into fifty percent (50%) or more of the combined voting power of the then outstanding voting securities of the Person resulting from such combination or, if the surviving company is a subsidiary, the ultimate parent thereof, or (c) the result of which is a sale of all or substantially all of the assets of New Dragonfly or the Surviving Corporation to any Person;
Chardan” are to Chardan NexTech Acquisition 2 Corp., a Delaware corporation;
 
1

 
Chardan Capital Markets” are to Chardan Capital Markets, LLC, a Delaware limited liability company and representative of the underwriters of the Chardan IPO;
Chardan common stock” are, prior to consummation of the Business Combination, to Chardan common stock, par value $0.0001 per share, and, following consummation of the Business Combination, to the common stock, par value $0.0001 per share, of New Dragonfly;
Chardan IPO” are to the initial public offering by Chardan, which closed on August 13, 2021;
Chardan Lender” are to CCM Investments 5 LLC, an affiliate of Chardan Capital Markets;
Chardan option” are to options to purchase Chardan common stock;
Chardan Organizational Documents” are to the bylaws and certificate of incorporation of Chardan, each as amended;
Chardan unit” are to the units of Chardan sold as part of the Chardan IPO;
Chardan Transaction Expenses” are to the following out-of-pocket fees and expenses paid or payable by Chardan or its affiliates (whether or not billed or accrued for) as a result of or in connection with the negotiation, documentation and consummation of the transactions contemplated hereby or Chardan’s initial public offering: (a) all documented fees, costs, expenses, brokerage fees, commissions, finders’ fees and disbursements of financial advisors, investment banks, data room administrators, attorneys, accountants and other advisors and service providers (including any deferred underwriting commissions), (b) fifty percent (50%) of the filing fees incurred in connection with making any filings under Section 8.1 of the Business Combination Agreement, (c) fifty percent (50%) of the filing fees incurred in connection with filing the registration statement, the proxy statement or the proxy statement/registration statement under Section 8.2 of the Business Combination Agreement and the application fees incurred in connection with obtaining approval of the Nasdaq under Section 7.3 of the Business Combination Agreement, (d) repayment of any Working Capital Loans (as defined in the Business Combination Agreement) and (e) any other fees and expenses as a result of or in connection with the negotiation, documentation and consummation of the transactions contemplated hereby, in each case of clauses (a) through (e), solely to the extent such fees and expenses are incurred and unpaid as of the Closing. Chardan Transaction Expenses shall not include any fees and expenses of Chardan’s stockholders (other than Working Capital Loans);
Charter Amendment” means the amendment filed with the Secretary of State of the State of Delaware on August 5, 2022, to provide Chardan’s officers, directors, initial stockholders and Chardan NexTech 2 Warrant Holdings, LLC (collectively, the “Insiders”) the ability to extend the date by which Chardan must complete a business combination up to three (3) times for an additional one (1) month each time (for a maximum of three (3) one-month extensions) upon the deposit into the trust account by the Insiders, their affiliates or designees of $200,000 upon five days’ advance notice prior to August 13, 2022.
Closing” are to the consummation of the Business Combination;
Closing Date” are to the date on which the Business Combination is consummated;
completion window” are to the period following the completion of the Chardan IPO at the end of which, if Chardan has not completed an initial business combination, it will redeem 100% of the public shares at a per share price, payable in cash, equal to (a) the aggregate amount then on deposit in the trust account, including interest earned and not previously released to us for Chardan’s working capital requirements as well as to pay Chardan’s taxes, divided by (b) the number of then-outstanding public shares, subject to applicable law and certain conditions. The completion window ends on August 13, 2022, or as extended by the Insiders up to two times by an additional three months each time (to February 13, 2023, for a total of up to 18 months to complete a business combination);
Debt Commitment Letter” are to that certain commitment letter dated as of May 15, 2022, by and among Chardan, Dragonfly and the Initial Term Loan Lenders;
DGCL” are to the Delaware General Corporation Law, as amended;
 
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current certificate of incorporation” are to Chardan’s amended and restated certificate of incorporation in effect as of the date of this proxy statement;
Dragonfly” are to Dragonfly Energy Corp., a Nevada corporation;
Dragonfly Charter” are to the Articles of Incorporation of Dragonfly, dated April 11, 2016, as amended;
Dragonfly common stock” are to a share of Dragonfly’s common stock, par value $0.001 per share;
Dragonfly Conversion Shares” are to the aggregate number of shares of Dragonfly common stock that are (i) issued and outstanding immediately prior to the Effective Time and (ii) issuable upon the conversion of the Dragonfly preferred stock immediately prior to the Effective Time in accordance with the governing documents of Dragonfly;
Dragonfly Incentive Plan” are to either or both of Dragonfly’s 2019 Stock Incentive Plan, as amended, and/or Dragonfly’s 2021 Stock Incentive Plan, as amended, as the context requires;
Dragonfly option” are to an option to purchase Dragonfly stock granted under either Dragonfly Incentive Plan;
Dragonfly preferred stock” are to the Series A preferred stock of Dragonfly, par value $0.001 per share;
Dragonfly stock” are to, collectively, the Dragonfly common stock and the Dragonfly preferred stock;
Dragonfly Transaction Expenses” are to the following out-of-pocket fees and expenses paid or payable by Dragonfly or any of its subsidiaries (whether or not billed or accrued for) as a result of or in connection with the negotiation, documentation and consummation of the transactions contemplated hereby: (a) all documented fees, costs, expenses, brokerage fees, commissions, finders’ fees and disbursements of financial advisors, investment banks, data room administrators, attorneys, accountants and other advisors and service providers, (b) fifty percent (50%) of the filing fees incurred in connection with making any filings under Section 8.1 of the Business Combination Agreement, (c) fifty percent (50%) of the filing fees incurred in connection with filing the registration statement, the proxy statement or the proxy statement/registration statement under Section 8.2 of the Business Combination Agreement and the application fees incurred in connection with obtaining approval of the Nasdaq under Section 7.3 of the Business Combination Agreement, (d) change-in-control payments, transaction bonuses, retention payments, severance or similar compensatory payments payable by Dragonfly or any of its subsidiaries to any current or former employee (including any amounts due under any consulting agreement with any such former employee), independent contractor, officer, or director of Dragonfly or any of its subsidiaries as a result of the transactions contemplated hereby (and not tied to any subsequent event or condition, such as a termination of employment), including the employer portion of payroll taxes arising therefrom, (e) amounts owing or that may become owed, payable or otherwise due, directly or indirectly, by Dragonfly or any of its subsidiaries to any affiliate of Dragonfly or any of its subsidiaries in connection with the consummation of the transactions contemplated hereby, including fees, costs and expenses related to the termination of any Affiliate Agreement (as defined in the Business Combination Agreement), and (f) any fees and expenses as a result of or in connection with the negotiation, documentation and consummation of the transactions contemplated hereby, in each case of clauses (a) through (f), solely to the extent such fees and expenses are incurred and unpaid as of the Closing. Dragonfly Transaction Expenses shall not include any fees and expenses of Dragonfly’s stockholders;
Earnout Consideration” or “Earnout Shares” are to the additional 40,000,000 shares of New Dragonfly common stock that may be issued to the Dragonfly stockholders;
Effective Time” are to the date and time at which the Merger becomes effective in accordance with the terms of the Business Combination Agreement, the DGCL and the NRS;
EIP” are to EICF Agent LLC and shall include any affiliated funds of EICF which may provide the Term Loan;
Equity Facility” are to the committed equity facility to be established with the Equity Facility Investor pursuant to the Equity Facility Definitive Documentation;
 
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Equity Facility Commitment Shares” are to the shares of New Dragonfly common stock that New Dragonfly will agree to issue to the Equity Facility Investor as consideration for its irrevocable commitment to purchase the shares of New Dragonfly common stock upon the terms of and subject to the satisfaction of the conditions set forth in the Equity Facility Definitive Documentation;
Equity Facility Definitive Documentation” are to the purchase agreement and registration rights agreement to be entered into between Chardan and the Equity Facility Investor after the signing of the Business Combination Agreement and prior to the Closing Date pursuant to which, and on the terms of and subject to the satisfaction of the conditions set forth therein, including the filing and effectiveness of a registration statement registering the resale by the Equity Facility Investor of the shares of New Dragonfly common stock issued to it under the Equity Facility Definitive Documentation, New Dragonfly will have the right from time to time at its option to direct the Equity Facility Investor to purchase up to a specified maximum amount of shares of New Dragonfly common stock, up to a maximum aggregate purchase price of $150,000,000 over the 36-month term of the Equity Facility;
Equity Facility Investor” are to CCM Investments 5 LLC, an affiliate of Chardan Capital Markets;
Equity Facility Letter Agreement” are to the letter agreement, together with the Summary of Indicative Terms attached as an exhibit thereto, entered into among Chardan, Dragonfly and the Equity Facility Investor on May 15, 2022, pursuant to which Chardan and Dragonfly agreed to enter into the Equity Facility Definitive Documentation prior to the Closing Date to establish the Equity Facility;
Exchange Ratio” are to the quotient obtained by dividing the number of (a) Chardan common stock constituting the Aggregate Merger Consideration, by (b) Aggregate Fully Diluted Company Common Shares;
Founder Shares” are to shares of Chardan common stock held by the Sponsor, Chardan’s directors, and affiliates of Chardan’s management team;
Holdings” are to Chardan NexTech 2 Warrant Holdings LLC, an affiliate of Chardan Capital Markets;
Initial Term Loan Lenders” are to CCM Investments 5 LLC and EICF Agent LLC;
Insiders” are to Chardan’s officers, directors, initial stockholders, and Chardan NexTech 2 Warrant Holdings LLC, an affiliate of the Sponsor;
Investment Management Trust Agreement” are to the Investment Management Trust Agreement, dated as of August 10, 2021, by and between Chardan and Continental Stock Transfer & Trust Company;
LFP batteries” are to lithium-ion batteries using lithium iron phosphate (LiFePO4);
Merger” are to the merger of Merger Sub with and into Dragonfly with Dragonfly being the surviving company in the merger;
Merger Sub” are to Bronco Merger Sub, Inc., a Nevada corporation;
Minimum Cash Balance After Fees” are to cash held by New Dragonfly after payment of Dragonfly Transaction Expenses and deferred underwriter and other fees from the Chardan IPO and receipt of proceeds of the PIPE Investment and the Term Loan;
Nevada Dissenter’s Rights Statutes” are to NRS 92A.300 through 92A.500, inclusive;
New Dragonfly” are to Chardan after the Business Combination;
NRS” are to the Nevada Revised Statutes, as amended;
our common stock” are, prior to consummation of the Business Combination, to Chardan common stock, and, following consummation of the Business Combination, to the common stock, par value $0.0001 per share, of New Dragonfly;
Penny Warrants” are to the warrants issued to the Term Loan Lenders exercisable to purchase for nominal consideration 3.6% of Chardan common stock on a fully diluted basis, calculated as of the Closing Date;
 
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PIPE Investment” are to the private placement pursuant to which Chardan entered into the Subscription Agreement with the Sponsor whereby the Sponsor agreed to subscribe for 500,000 shares of Chardan common stock at a purchase price of $10.00 per share for an aggregate purchase price of $5 million. The number of PIPE Securities that the Sponsor is obligated to purchase under the Subscription Agreement shall be reduced by the number of shares of common stock of Chardan that the Sponsor may purchase in the open market provided such shares are not redeemed;
PIPE Investment Amount” are to the aggregate gross purchase price received by the PIPE Investor pursuant to the PIPE Investment;
PIPE Investor” are to Sponsor (or an affiliate of Sponsor if assigned pursuant to the Subscription Agreement);
PIPE Securities” are to the newly issued shares of Chardan common stock to be sold to the PIPE Investor pursuant to the Subscription Agreement;
private warrants” are to Chardan’s warrants issued to an affiliate of the Sponsor in a private placement simultaneously with the closing of the Chardan IPO;
proxy statement” are to this proxy statement/prospectus;
public shares” are to shares of Chardan common stock sold as part of the units in the Chardan IPO (whether they were purchased in the Chardan IPO or thereafter in the open market);
public stockholders” are to the holders of Chardan’s public shares, including the Sponsor and Chardan’s officers and directors to the extent the Sponsor and Chardan’s officers or directors purchase public shares, provided that each of their status as a “public stockholder” shall only exist with respect to such public shares;
public warrants” are to Chardan’s warrants sold as part of the units in the Chardan IPO (whether they were purchased in the Chardan IPO or thereafter in the open market);
Purchase Date” are to any trading day on which New Dragonfly timely delivers written notice to the Equity Facility Investor in accordance with the terms, conditions and limitations of the Equity Facility Definitive Documentation;
Registration Rights Agreement” are to the Amended and Restated Registration Rights Agreement, to be dated the Closing Date, by and among New Dragonfly and the stockholders named therein;
Sponsor” are to Chardan NexTech Investments 2 LLC, a Delaware limited liability company and an affiliate of Chardan Capital Markets;
Sponsor Support Agreement” are to the Sponsor Support Agreement, dated May 15, 2022, by and among Chardan, Dragonfly and the Sponsor;
Subscription Agreement” are to the common stock subscription agreement entered into by and between Chardan and the Sponsor, dated as of May 15, 2022, and entered into in connection with the PIPE Investment;
Surviving Corporation” are to, at and after the Effective Time, Dragonfly, as the surviving corporation of the Merger;
Term Loan” are to the senior secured term loan facility in an aggregate principal amount of $75 million in connection with the Debt Commitment Letter;
Term Loan Lenders” are to EIP and, upon the consummation of the Backstop Lender’s purchase of the Backstopped Loans, the Backstop Lender;
Term Loan Lender Warrants” are to the Penny Warrants and the $10 Warrants;
Trading Day” are to any day on which shares of Chardan common stock are actually traded on the principal securities exchange or securities market on which shares of Chardan common stock are then traded;
Transfer Agent” are to Continental Stock Transfer & Trust Company, Chardan’s transfer agent;
 
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trust account” are to the trust account of Chardan that holds the proceeds from the Chardan IPO;
VWAP” are to, for any security as of any day or multi-day period, the dollar volume-weighted average price for such security on the principal securities exchange or securities market on which such security is then traded during the period beginning at 9:30:01 a.m., New York time on such day or the first day of such multi-day period (as applicable), and ending at 4:00:00 p.m., New York time on such day or the last day of such multi-day period (as applicable), as reported by Bloomberg through its “HP” function (set to weighted average) or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time on such day or the first day of such multi-day period (as applicable), and ending at 4:00:00 p.m., New York time on such day or the last day of such multi-day period (as applicable), as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported by OTC Markets Group Inc. during such day or multi-day period (as applicable). If the VWAP cannot be calculated for such security for such day or multi-day period (as applicable) on any of the foregoing bases, the VWAP of such security shall be the fair market value per share at the end of such day or multi-day period (as applicable) as reasonably determined by the Board of Directors of Acquiror;
VWAP Purchase Price” are to the purchase price for the shares of New Dragonfly common stock that New Dragonfly may elect to sell to the Equity Facility Investor pursuant to the Equity Facility Definitive Documentation, which will be determined by reference to the VWAP on the applicable Purchase Date, less a fixed 3.5% discount. For purposes of this definition, references to “VWAP” are to the volume-weighted average price of the shares of New Dragonfly common stock on the applicable trading day(s), adjusted to exclude block trades and trades that individually exceed 20,000 shares of New Dragonfly common stock;
warrants” are to the public warrants and the private warrants; and
Warrant Agreement” are to the Warrant Agreement (as amended), dated as of August 10, 2021, by and between Chardan and Continental Stock Transfer & Trust Company.
 
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SUMMARY OF THE MATERIAL TERMS OF THE TRANSACTIONS
This summary term sheet, together with the sections entitled “Questions and Answers About the Proposals” and “Summary of the Proxy Statement,” summarizes certain information contained in this proxy statement and in the Business Combination Agreement, but does not contain all of the information that is important to you. You should carefully read this entire proxy statement, including the attached Annexes, which are incorporated herein by reference, for a more complete understanding of the matters to be considered at the special meeting. In addition, for definitions used commonly throughout this proxy statement, including this summary term sheet, please see the section entitled “Frequently Used Terms.”

Chardan NexTech Acquisition 2 Corp., a Delaware corporation, which we refer to as “Chardan,” “we,” “us” or “our,” is a special purpose acquisition company formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses.

On August 13, 2021, Chardan consummated its initial public offering of 11,000,000 units, with each unit consisting of one share of Chardan common stock and three-quarters of one warrant to purchase one share of Chardan common stock. On August 18, 2021, the underwriters fully exercised their over-allotment option and Chardan sold an additional 1,650,000 units. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $126,500,000. Simultaneously with the consummation of the Chardan IPO, Chardan consummated the private placement of 4,361,456 warrants at a price of $0.93 per warrant, generating total proceeds of $4,052,000. Simultaneously with the closing of the exercise of the underwriters’ over-allotment option, Chardan consummated the sale of an additional 266,402 private warrants at a purchase price of $0.93 per private warrant in a private placement to Holdings, generating gross proceeds of $247,500. Chardan Capital Markets will receive a cash fee for such services upon the consummation of the Merger in an amount equal to, in the aggregate, $4,427,500, being 3.5% of the gross proceeds of the Chardan IPO. Chardan Capital Markets will also receive a cash fee of $1,170,000 for other financial advisory services, including for advisory services provided with respect to placement of potential PIPE investments, and identifying and negotiating lender financing.

Following the consummation of the Chardan IPO, $128,397,500 was deposited into a U.S.-based trust account with Continental Stock Transfer & Trust Company acting as trustee. Except as described in the prospectus for the Chardan IPO, these proceeds will not be released until the earlier of the completion of an initial business combination and Chardan’s redemption of 100% of the outstanding public shares upon its failure to consummate a business combination within the completion window.

Dragonfly Energy Corp., a Nevada corporation, which we refer to as “Dragonfly,” is a manufacturer of non-toxic deep cycle lithium-ion batteries that caters to customers in the recreational vehicle, marine vessel and off-grid residence industries. See the sections entitled “Information About Dragonfly,” “Dragonfly’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Management of New Dragonfly After the Business Combination.

On May 15, 2022, Chardan entered into an Agreement and Plan of Merger with Dragonfly and Merger Sub, which, among other things, provides for Merger Sub to be merged with and into Dragonfly with Dragonfly being the surviving company in the Merger and on July 12, 2022, Chardan entered into the Amendment to the Agreement and Plan of Merger with Dragonfly and Merger Sub to increase the “Base Purchase Price” from $400,000,000 to $415,000,000.

Subject to the terms of the Business Combination Agreement, the aggregate consideration to be paid to equityholders of Dragonfly will be equal to the sum of (a) the Aggregate Merger Consideration plus (b) the Earnout Consideration, if any.

Pursuant to the PIPE Investment, Chardan has agreed to issue and sell to the Sponsor, and the Sponsor has agreed to buy from Chardan, 500,000 shares of Chardan common stock at a purchase price of $10.00 per share for an aggregate commitment of $5 million. The number of PIPE Securities that the Sponsor is obligated to purchase under the Subscription Agreement shall be reduced by the number of shares of common stock of Chardan that the Sponsor may purchase in the open market. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Subscription Agreement” for additional information.
 
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Pursuant to the Debt Commitment Letter, the Initial Term Loan Lenders have agreed to provide to Dragonfly the $75 million Term Loan on the Closing Date, subject to the satisfaction of a number of specified conditions set forth in the Debt Commitment Letter. The Chardan Lender has backstopped its commitment under the Debt Commitment Letter by entering into the Backstop Commitment Letter with the Backstop Lender, pursuant to which the Backstop Lender has committed to purchase from the Chardan Lender the Backstopped Loans (which represent the aggregate amount of the Term Loan to be held by the Chardan Lender on the Closing Date) immediately following the issuance of the Term Loan on the Closing Date subject only to final documentation that is consistent in all material respects with the Debt Commitment Letter and the Summary of Terms and Conditions attached thereto.

New Dragonfly will also issue to EIP and, upon the consummation of the Backstop Lender’s purchase of the Backstopped Loans, the Backstop Lender the Penny Warrants, exercisable to purchase 3.6% of Dragonfly’s common stock on a fully diluted basis, calculated as of the Closing Date, and the $10 Warrants, which are exercisable to purchase 1.6 million shares of Dragonfly’s common stock at $10 per share.

Pursuant to the Equity Facility Letter Agreement, Chardan and Dragonfly agreed to enter into the Equity Facility Definitive Documentation prior to the Closing Date reflecting the terms in the Equity Facility Letter Agreement. Pursuant to, on the terms of and subject to the satisfaction of the conditions set forth in the Equity Facility Definitive Documentation, the Equity Facility Investor will commit to purchase up to an aggregate of $150,000,000 in shares of New Dragonfly’s common stock from time to time at the request of the New Dragonfly, subject to certain limitations and the satisfaction of certain conditions.

It is anticipated that upon completion of the Business Combination and assuming minimum redemptions by Chardan public stockholders, Chardan’s public stockholders will retain an ownership interest of approximately 6.6% of New Dragonfly, the Term Loan Lenders will own approximately 3.7% of New Dragonfly assuming the exercise of all Penny Warrants, the Sponsor, officers, directors and other holders of Founder Shares will retain an ownership interest of approximately 7.8% of New Dragonfly (including the PIPE Investment), and the Dragonfly stockholders will own approximately 81.9% (excluding the 40,000,000 Earnout Shares) of New Dragonfly. These levels of ownership interest: (a) include the impact of the shares of Chardan common stock issuable upon exercise of the Penny Warrants due to their nominal exercise price but exclude the impact of the $10 Warrants and the shares issuable under the Equity Facility, (b) assume that no Chardan public stockholder exercises redemption rights with respect to its shares for a pro rata portion of the funds in Chardan’s trust account, (c) assume that no shares are issued pursuant to the Dragonfly Incentive Plan and the 2022 Plan, (d) assume that no shares are issued pursuant to the vesting and exercise of New Dragonfly options for shares of New Dragonfly common stock and I assume no exercise of Chardan public warrants and Chardan private placement warrants. If the shares issuable under the Equity Facility, including the Commitment Shares, were assumed to be issued based upon an assumed VWAP of $10.15 (the redemption price), that could result in up to an additional 14,926,109 shares being issuable, which includes the Commitment Shares, subject the terms, conditions and limitations set forth in the Equity Facility, and result in additional dilution of Chardan’s public stockholders. This number is subject to increase or decrease if the stock price decreases or increases from the assumed price of $10.15. If the redemption price is significantly less than the assumed VWAP of $10.15, Chardan’s public stockholders would experience considerable additional dilution. For example, based upon an assumed VWAP of $6.00, an additional 25,166,667 shares, which includes 166,667 Commitment Shares, would be issuable.

Chardan management and the Chardan Board considered various factors in determining whether to approve the Business Combination Agreement and the Business Combination contemplated thereby, including the Merger. For more information about the reasons that the Chardan Board considered in determining its recommendation, please see the section entitled “Proposal No. 1 — The Business Combination Proposal.” When you consider the Chardan Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that are different from, or in addition to, the interests of Chardan stockholders generally. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for additional information. The Chardan Board was aware of and
 
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considered these interests, among other matters, in evaluating and negotiating the Business Combination and in recommending to the Chardan stockholders that they vote “FOR” the proposals presented at the special meeting.

At the special meeting, Chardan’s stockholders will be asked to consider and vote on the following proposals:

a proposal to approve the Business Combination, including (a) adopting the Business Combination Agreement and (b) approving the other transactions contemplated by the Business Combination Agreement and related agreements described in the accompanying proxy statement / prospectus. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal”;

a proposal to approve and adopt changes to the certificate of incorporation of Chardan reflected in the third amended and restated certificate of incorporation of Chardan in the form attached hereto as Annex B. Please see the section entitled “Proposal No. 2 — The Charter Proposal”;

a proposal to approve, for purposes of complying with the applicable rules of the Nasdaq, the issuance of shares of Chardan’s common stock in connection with the Business Combination, including, without limitation, the Aggregate Merger Consideration, the Earnout Shares, the PIPE Investment, the Term Loan Lender Warrants and the Equity Facility. Please see the section entitled “Proposal No. 3 — The Nasdaq Proposal”;

a proposal to approve and adopt the 2022 Plan. A copy of the 2022 Plan is attached to the accompanying proxy statement /prospectus as Annex G. Please see the section entitled “Proposal No. 4 — The Incentive Plan Proposal”;

a proposal to approve and adopt the ESPP, a copy of which is attached to this proxy statement/prospectus as Annex H, including the authorization of the initial share reserve under the ESPP. Please see the section entitled “Proposal No. 5 — The ESPP Proposal”;

a proposal to approve and elect seven (7) directors to the New Dragonfly board. Please see the section entitled “Proposal No. 6 — The Director Election Proposal”; and

a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, Incentive Plan Proposal, the ESPP Proposal or the Director Election Proposal. Please see the section entitled “Proposal No. 7 — The Adjournment Proposal.
 
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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS
The questions and answers below highlight only selected information from this proxy statement and only briefly address some commonly asked questions about the special meeting and the proposals to be presented at the special meeting, including with respect to the proposed business combination. The following questions and answers do not include all the information that is important to Chardan stockholders. Stockholders are urged to carefully read this entire proxy statement, including the Annexes and the other documents referred to herein, to fully understand the proposed business combination and the voting procedures for the special meeting.
Q:
Why am I receiving this proxy statement?
A:
Chardan and Dragonfly have agreed to a business combination under the terms of the Business Combination Agreement that is described in this proxy statement. A copy of the Business Combination Agreement is attached to this proxy statement as Annex A, and Chardan encourages its stockholders to read it in its entirety. Chardan’s stockholders are being asked to consider and vote upon a proposal to adopt the Business Combination Agreement and approve the transactions contemplated thereby, which, among other things, includes provisions for Merger Sub to be merged with and into Dragonfly with Dragonfly being the surviving company in the Merger as a wholly owned subsidiary of Chardan. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal.”
This proxy statement and its Annexes contain important information about the proposed business combination and the other matters to be acted upon at the special meeting. You should read this proxy statement and its Annexes carefully and in their entirety.
Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement and its Annexes.
Q:
When and where is the special meeting?
A:
The special meeting will be held on October 6, 2022 at 10:00 a.m. Eastern Time via a virtual meeting. In light of the COVID-19 pandemic and to protect the health of stockholders of Chardan and the community, the Special Meeting will be a completely virtual meeting of stockholders conducted via live webcast. You will be able to attend the Special Meeting by visiting https://www.cstproxy.com/cnaq/2022 and entering your control number as further explained in the accompanying proxy statement/prospectus. You may also attend the Special Meeting telephonically by dialing within the U.S. and Canada: +1 800-450-7155 (toll free) or outside of the U.S. and Canada: +1 857-999-9155 and when prompted enter the pin 5046958#.
Q:
What are the proposals on which I am being asked to vote at the special meeting?
A:
The stockholders of Chardan will be asked to consider and vote on the following proposals at the special meeting:
1.
a proposal to approve the Business Combination, including (a) adopting the Business Combination Agreement and (b) approving the other transactions contemplated by the Business Combination Agreement and related agreements described in this proxy statement. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal”;
2.
a proposal to approve and adopt changes to the certificate of incorporation of Chardan reflected in the third amended and restated certificate of incorporation of Chardan in the form attached hereto as Annex B. Please see the section entitled “Proposal No. 2 — The Charter Proposal”;
3.
a proposal to approve, for purposes of complying with the applicable rules of the Nasdaq, the issuance of shares of Chardan’s common stock in connection with the Business Combination, including, without limitation, the Aggregate Merger Consideration, the Earnout Shares, the PIPE Investment, the Term Loan Lender Warrants and the Equity Facility. Please see the section entitled “Proposal No. 3 — The Nasdaq Proposal”;
4.
a proposal to approve and adopt the 2022 Plan. Please see the section entitled “Proposal No. 4  — The Incentive Plan Proposal”;
 
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5.
a proposal to approve and adopt the ESPP. Please see the section entitled “Proposal No. 5 — The ESPP Proposal”;
6.
a proposal to approve and elect seven (7) directors to the New Dragonfly board. Please see the section entitled “Proposal No. 6 — The Director Election Proposal”; and
7.
a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the ESPP Proposal or the Director Election Proposal. Please see the section entitled “Proposal No. 7 — The Adjournment Proposal.
Chardan will hold the special meeting of its stockholders to consider and vote upon these proposals. This proxy statement contains important information about the proposed business combination and the other matters to be acted upon at the special meeting. Stockholders should read it carefully.
Consummation of the Business Combination is conditioned on the approval of each of the Business Combination Proposal, the Charter Proposal, the Incentive Plan Proposal, the Nasdaq Proposal, the ESPP Proposal and the Director Election Proposal. If any of those proposals are not approved, we will not consummate the Business Combination.
The vote of stockholders is important. Stockholders are encouraged to vote as soon as possible after carefully reviewing this proxy statement.
Q:
How will the COVID-19 pandemic impact in-person voting at the special meeting?
A:
In light of the COVID-19 pandemic and to protect the health of stockholders of Chardan and the community, the Special Meeting will be a completely virtual meeting of stockholders conducted via live webcast.
Q:
Why is Chardan proposing the Business Combination?
A:
Chardan was formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities.
On August 13, 2021, Chardan completed its initial public offering of units, with each unit consisting of one share of its Chardan common stock and three-quarters of one warrant to purchase one share of Chardan common stock at a price of $11.50 per whole share.
Simultaneously with the closing of the Chardan IPO, Chardan NexTech 2 Warrant Holdings LLC, a Delaware limited liability company and an affiliate of the Sponsor (“Holdings”), purchased an aggregate of 4,361,456 private warrants at a price of $0.93 per warrant ($4,052,000 in the aggregate). Simultaneously with the closing of the exercise of the underwriters’ over-allotment option, Holdings purchased an additional 266,402 private warrants at a purchase price of $0.93 per private warrant. Each private warrant entitles the holder to purchase one share of common stock at an exercise price of $11.50 per share.
On August 18, 2021, in connection with the underwriters’ election to fully exercise their over-allotment option, Chardan sold an additional 1,650,000 units. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $16,500,000. A total of $16,747,500, comprised of the proceeds of the sale of the units and the private warrants, in connection with the underwriters full exercise of their over-allotment option, was placed in the trust account.
On August 5, 2022, in connection with the Charter Amendment, 9,556,652 shares of Chardan common stock were redeemed, resulting in the distribution of $97,194,949.68 from the Trust Account to the redeeming stockholders. Following such redemptions, approximately $31,460,578.86 million remains in the Trust Account and 6,255,848 shares of Common Stock will remain issued and outstanding.
On August 8, 2022, Chardan announced that it was extending the time available to the Company to consummate its initial business combination for an additional one (1) month from August 13, 2022 to
 
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September 13, 2022 (“Extension No. 1”). Extension No. 1 provides the Company with additional time to complete its proposed business combination with Dragonfly. Extension No. 1 is the first of up to three (3) one-month extensions permitted under the Company’s Second A&R Charter.
The Insiders notified the Company on September 6, 2022 of the Insiders’ intention to extend the date by which the Company must complete a business combination for an additional one (1) month by depositing $200,000 into the Trust Account (the “Extension No. 2”).
Simultaneously with the closing of the exercise of the over-allotment option, we consummated the sale of 266,402 warrants (the “Over-Allotment Private Warrants”) at a purchase price of $0.93 per Over-Allotment Private Warrant in a private placement to Holdings, generating gross proceeds of $247,500. Since the Chardan IPO, Chardan’s activity has been limited to the evaluation of business combination candidates.
Chardan Capital Markets will receive a cash fee for such services upon the consummation of the Merger in an amount equal to, in the aggregate, $4,427,500, being 3.5% of the gross proceeds of the Chardan IPO. Chardan Capital Markets will also receive a cash fee of $1,170,000 for other financial advisory services, including for advisory services provided with respect to placement of potential PIPE investments, and identifying and negotiating lender financing.
Dragonfly is a manufacturer of non-toxic deep cycle lithium-ion batteries that caters to customers in the recreational vehicle (“RV”), marine vessel and off-grid residence industries, with disruptive solid-state cell technology currently under development. See the sections entitled “Information About Dragonfly,” “Dragonfly’s Management’s Discussion and Analysis of Financial Condition and Result of Operations” and “Management of New Dragonfly After The Business Combination
The Chardan Board considered the results of the due diligence review of Dragonfly’s business, including its current prospects for growth in executing upon and achieving its business plan. As a result, Chardan believes that a business combination with Dragonfly will provide Chardan’s stockholders with an opportunity to participate in the ownership of a company with significant growth potential. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — The Chardan Board’s Reasons for Approval of the Business Combination.
Q:
Why is Chardan providing stockholders with the opportunity to vote on the Business Combination?
A:
Under our current certificate of incorporation, we must provide all holders of public shares with the opportunity to have their public shares redeemed upon the consummation of our initial business combination either in conjunction with a tender offer or in conjunction with a stockholder vote. For business and other reasons, we have elected to provide our stockholders with the opportunity to have their public shares redeemed in connection with a stockholder vote rather than a tender offer. Therefore, we are seeking to obtain the approval of our stockholders of the Business Combination Proposal in order to allow our public stockholders to effectuate redemptions of their public shares in connection with the Closing.
Q:
Why is Chardan proposing the Nasdaq Proposal?
A:
Assuming a $10.15 share price, we may issue up to an aggregate of 100,164,107 shares of Chardan common stock, representing up to 1601% of the shares of common stock outstanding on the date of this proxy statement, in connection with the Business Combination, including, without limitation, the Aggregate Merger Consideration, the Earnout Shares, the PIPE Investment, the Term Loan Lender Warrants and the Equity Facility. Nasdaq Listing Rule 5635(a) requires stockholder approval of certain transactions that result in the issuance of 20% or more of a company’s outstanding voting power or shares of common stock outstanding before the issuance of stock or securities. Because we may issue 20% or more of our outstanding voting power and outstanding common stock in connection with the Business Combination, we are required to obtain stockholder approval of such issuances pursuant to the Nasdaq Listing Rules. The Closing is conditioned on the approval of the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Director Election Proposal at the special meeting.
 
12

 
Q:
What will happen in the Business Combination?
A:
Pursuant to the Business Combination Agreement, and upon the terms and subject to the conditions set forth therein, Chardan will acquire Dragonfly in a transaction we refer to as the Business Combination. At the Closing, among other things, Merger Sub will merge with and into Dragonfly with Dragonfly being the surviving company in the Merger as a wholly owned subsidiary of Chardan. As a result of the Merger, at the Closing, Chardan will own 100% of the outstanding common stock of Dragonfly and each share of common stock of Dragonfly will have been cancelled and converted into the right to receive a portion of the Merger consideration.
Q:
Following the Business Combination, will Chardan’s securities continue to trade on a stock exchange?
A:
Yes. We intend to apply to continue the listing of New Dragonfly’s common stock and public warrants on Nasdaq. In connection with the Business Combination, Chardan will change its name to Dragonfly Energy Holdings Corp. and its common stock and warrants will begin trading on the Nasdaq under the symbols “DFLI” and “DFLIW”, respectively. As a result, our publicly traded units will separate into the component securities upon consummation of the Business Combination and will no longer trade as a separate security.
Q:
How will the holders of Chardan’s units be impacted by the Business Combination?
A:
As part of the Chardan IPO and the underwriters’ exercise of their over-allotment option, Chardan issued 12,650,000 units, each consisting of one share of common stock and three-quarters of one warrant to purchase one share of common stock, which currently trade on the Nasdaq under the symbol “CNTQU”. As of the consummation of the Business Combination, Chardan’s outstanding units will be mandatorily separated into their component parts — one share of common stock and three-quarters of one warrant to purchase one share of common stock — and the units will cease trading. As a result, following the Business Combination each unitholder’s account, in lieu of units, will reflect ownership of the number of shares of common stock and warrants underlying such holder’s units. If any unitholder would, upon such separation, be entitled to receive a fractional interest in a warrant, the number of warrants the holder will be entitled to receive will be rounded down to the nearest whole number of warrants.
Q:
How will the Business Combination impact the shares of Chardan outstanding after the Business Combination?
A:
As a result of the Business Combination and the consummation of the transactions contemplated by the Business Combination Agreement and the related agreements, including, without limitation, the PIPE Investment, the amount of common stock outstanding will increase to 45,200,065 shares of Chardan common stock (assuming that no additional shares of Chardan common stock are elected to be redeemed by Chardan stockholders and excluding the Earnout Shares). Additional shares of New Dragonfly common stock may be issuable in the future as a result of the issuance of additional shares that are not currently outstanding, including issuance of shares of New Dragonfly common stock upon exercise of the warrants (including the Chardan public warrants, Chardan private warrants and Term Loan Lender Warrants), pursuant to the Equity Facility and upon exercise of options exercisable by the Dragonfly equityholders from time to time after the Business Combination. The issuance and sale of such shares in the public market could adversely impact the market price of Chardan common stock, even if its business is doing well. Pursuant to the 2022 Plan, a copy of which is attached to this proxy statement as Annex G, following the Closing and subject to the approval of the applicable award agreements by the board of directors of the post-combination entity (or a committee thereof), Chardan may initially grant a number of shares of Chardan common stock equal to 4% of the outstanding shares of Chardan common stock determined on a fully diluted basis as of the Closing.
Q:
Will the management of Dragonfly change in the Business Combination?
A:
Upon consummation of the Business Combination it is expected that the current directors and officers of Dragonfly will continue as directors and officers of New Dragonfly.
 
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Q:
What are the interests of Chardan’s directors and officers in the Business Combination?
A:
In considering the recommendation of the Chardan Board to vote in favor of approval of the Business Combination Proposal and the other proposals, stockholders should keep in mind that the Sponsor and the Insiders have interests in such proposals that are different from, or in addition to, those of Chardan stockholders generally. In particular:

None of Chardan’s officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating their time among various business activities.

Each of Chardan’s officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. We do not believe, however, that the pre-existing fiduciary duties or contractual obligations of our officers and directors will materially undermine our ability to complete the Business Combination, and such pre-existing fiduciary duties and contractual obligations did not materially affect our search for an acquisition target.

Mr. Grossman is the sole member of Sponsor and Holdings. Mr. Grossman is the Chief Executive Officer of, and Mr. Weil is Managing Director and Co-Head of Fintech Investment Banking of, Chardan Capital Markets, an affiliate of the Sponsor. Mr. Grossman and Mr. Propper are also members of the board of directors of Chardan Capital Markets. Mr. Grossman is also the managing member of Chardan International Investments, LLC, an affiliate of the Sponsor.

It is anticipated that upon completion of the Business Combination and assuming minimum redemptions by Chardan public stockholders, the Sponsor, officers, directors and other affiliates and holders of Founder Shares will own approximately 7.8% of New Dragonfly (including the PIPE Investment). This level of ownership interest: (a) include the impact of the shares of Chardan common stock issuable upon exercise of the Penny Warrants due to their nominal exercise price but exclude the impact of the $10 Warrants and the shares issuable under the Equity Facility, (b) assume that no Chardan public stockholder exercises redemption rights with respect to its shares for a pro rata portion of the funds in Chardan’s trust account, (c) assume that no shares are issued pursuant to the Dragonfly Incentive Plan and the 2022 Plan, (d) assume that no shares are issued pursuant to the vesting and exercise of New Dragonfly options for shares of New Dragonfly common stock and (e) assume no exercise of Chardan public warrants and Chardan private placement warrants. If the shares issuable under the Equity Facility, including the Commitment Shares, were assumed to be issued based upon an assumed VWAP of $10.15 (the redemption price), that could result in up to an additional 14,926,109 shares being issuable, which includes the Commitment Shares, subject the terms, conditions and limitations set forth in the Equity Facility, and result in additional dilution of Chardan’s public stockholders. This number is subject to increase or decrease if the stock price decreases or increases from the assumed price of $10.15. If the redemption price is significantly less than the assumed VWAP of $10.15, Chardan’s public stockholders would experience considerable additional dilution. For example, based upon an assumed VWAP of $6.00, an additional 25,166,667 shares, which includes 166,667 Commitment Shares, would be issuable.

If the Business Combination or another business combination is not consummated by August 13, 2022 (unless this deadline is extended pursuant to Chardan’s covenant to extend such deadline under the Business Combination Agreement and pursuant to the Chardan Organizational Documents), Chardan will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and the Chardan Board, dissolving and liquidating. In such event, the Founder Shares and the private warrants and all underlying securities held by the Sponsor and Insiders would be worthless because the holders thereof are not entitled to participate in any redemption or distribution with respect to such shares. Chardan Capital Markets would also not be entitled to receive the fees described below in such an event.

On July 23, 2020, the Sponsor purchased 1,000,000 shares of common stock of Chardan for an aggregate purchase price of $25,000. On March 4, 2021, Chardan effected a 2.875-for-1 stock split, resulting in 2,875,000 shares of common stock being held by the Sponsor (an affiliate of Chardan
 
14

 
Capital Markets). On August 10, 2021, Chardan effectuated a 1.1-for-1 stock split, resulting in an aggregate of 3,162,500 shares of common stock outstanding. On August 18, 2021, the underwriters’ exercised the over-allotment option in full, thus the Founder Shares are no longer subject to forfeiture. Such shares had an aggregate market value of approximately $32,542,125 based upon the closing price of $10.29 per share on the Nasdaq on September 15, 2022. In May and June 2021, the Sponsor transferred 20,000 Founder Shares to each of Messrs. Biele, Boyle, Hardamon, Thakrar and Thomson and Ms. Jardins in consideration for serving as a Chardan independent director.

Pursuant to the terms of the Business Combination Marketing Agreement Chardan engaged Chardan Capital Markets, an affiliate of Sponsor, as an advisor in connection with its business combination. Chardan Capital Markets will receive a cash fee for such services upon the consummation of the Merger in an amount equal to, in the aggregate, $4,427,500, being 3.5% of the gross proceeds of the Chardan IPO. Chardan Capital Markets will also receive a cash fee of $1,170,000 for other financial advisory services, including for advisory services provided with respect to placement of potential PIPE investments, and identifying and negotiating lender financing.

Simultaneously with the closing of the Chardan IPO, Holdings (an affiliate of Sponsor and Chardan Capital Markets) purchased an aggregate of 4,361,456 private warrants at a price of $0.93 per private warrant ($4,052,000 in the aggregate). Simultaneously with the closing of the exercise of the underwriters’ over-allotment option, Holdings purchased an additional 266,402 private warrants at a purchase price of $0.93 per private warrant. Each private warrant entitles the holder to purchase one share of common stock at an exercise price of $11.50 per share. The proceeds from the private warrants were added to the proceeds from the Chardan IPO to be held in the Trust Account. The private warrants had an aggregate market value of $1,249,521.66 based upon the closing price of approximately $0.27 per share on the Nasdaq on September 15, 2022. The private warrants will become worthless if Chardan does not consummate a business combination by August 13, 2022 (unless this deadline is extended pursuant to Chardan’s covenant to extend such deadline under the Business Combination Agreement and pursuant to the Chardan Organizational Documents).

Perry Boyle, current director of Chardan, will become a director of New Dragonfly after the Closing. As such, in the future he may receive cash fees, stock options or stock awards that the post-combination board of directors determines to pay to its executive and non-executive directors.

If Chardan is unable to complete an initial business combination within the completion window, the Sponsor will be liable under certain circumstances to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Chardan for services rendered or contracted for or products sold to Chardan. If Chardan consummates an initial business combination, on the other hand, Chardan will be liable for all such claims.

Chardan’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on Chardan’s behalf, such as identifying and investigating possible business targets and business combinations. However, if Chardan fails to consummate an initial business combination within the completion window, they will not have any claim against the trust account for reimbursement. Accordingly, Chardan may not be able to reimburse these expenses if the Business Combination or another initial business combination, is not completed within the completion window.

The current directors and officers will continue to be indemnified and the liability insurance of the directors and officers will continue.

In connection with the Business Combination, Chardan and the Sponsor, an affiliate of Chardan Capital Markets, entered into the Subscription Agreement, which provides for the Sponsor to purchase an aggregate of 500,000 shares of Chardan common stock upon the terms as set forth in the Subscription Agreement. The number of PIPE Securities that the Sponsor is obligated to purchase under the Subscription Agreement shall be reduced by the number of shares of common stock of Chardan that the Sponsor may purchase in the open market. For additional information, see the sections entitled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Subscription Agreement” and “Certain Relationships and Related Person Transactions — Chardan Related Party Transactions.
 
15

 

In addition, pursuant to the Equity Facility Letter Agreement, Chardan and Dragonfly agreed to enter into the Equity Facility Definitive Documentation prior to the Closing Date reflecting the terms in the Equity Facility Letter Agreement. Pursuant to and on the terms of the Equity Facility Definitive Documentation, the Equity Facility Investor will commit to purchase up to an aggregate of $150,000,000 in shares of New Dragonfly’s common stock from time to time at the request of the New Dragonfly, subject to certain limitations and the satisfaction of certain conditions. Further, New Dragonfly will agree to issue Equity Facility Commitment Shares as consideration for its irrevocable commitment to purchase the shares of New Dragonfly common stock upon the terms and subject to the satisfaction of the conditions set forth in the Equity Facility Definitive Documentation. For additional information, see the sections entitled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Equity Facility Letter Agreement” and “Certain Relationships and Related Person Transactions — Chardan Related Party Transactions.

Pursuant to the Debt Commitment Letter, the Chardan Lender has agreed to provide 60% of the commitment with respect to the Term Loan on the Closing Date subject to the satisfaction of a number of specified conditions set forth in the Debt Commitment Letter. The Chardan Lender has backstopped its commitment under the Debt Commitment Letter by entering into the Backstop Commitment Letter with the Backstop Lender. The Chardan Lender is entitled to payment of fees in connection with the Term Loan pursuant to the fee letter entered into in connection with the Debt Commitment Letter, but, in accordance with the terms of the Backstop Commitment Letter,such fees are to be paid to the Backstop Lenders on the Closing Date. For additional information, see the sections entitled “Proposal No. 1  —  The Business Combination Proposal  —  Related Agreements  —  Debt Commitment Letter” and “Certain Relationships and Related Person Transactions  —  Chardan Related Party Transactions.”

Given the difference in the purchase price the Sponsor and our directors paid for the Founders Shares as compared to the price of the units sold in the Chardan IPO, the Sponsor and our directors may earn a positive rate of return on their investment even if New Dragonfly common stock trades below the price paid for the units in the Chardan IPO and the public stockholders experience a negative rate of return following the completion of the Business Combination.

The Sponsor will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to the public stockholders rather than liquidating Chardan.

The Sponsor and the initial stockholders, among others, will enter into the Registration Rights Agreement which will provide them with registration rights.
Q:
What interests do Dragonfly’s current officers and directors have in the Business Combination?
A:
Certain officers and directors of Dragonfly have interests in the Business Combination that are different from, or in addition to, those of Chardan stockholders generally. In particular:

In connection with the Business Combination, based on the Minimum Cash Balance after fees at closing, Mr. Denis Phares and Sean Nichols, Dragonfly’s co-founders and its Chief Executive Officer and Chief Operating Officer, respectively, are each entitled to a transaction cash bonus. The bonus amount ranges from (i) 5% of the exercise proceeds from the exercise of Chardan’s public warrants (split evenly between them) to (ii) $4,000,000 each. Assuming maximum redemptions and minimum redemptions of Chardan stock, respectively, Mr. Phares and Nichols would (i) receive a cash bonus tied to future public warrant exercises and (ii) $4,000,000 each. See “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination.

As an inducement to hire Mr. John Marchetti as Dragonfly’s Chief Financial Officer, Dragonfly loaned Mr. Marchetti $350,000 to repay amounts owed by him to his former employer and entered into a related Promissory Note with a maturity of March 1, 2026. In consideration of the Business Combination and Dragonfly’s obligations as a publicly traded company, Dragonfly forgave all amounts owed under the Promissory Note effective March 2022.
 
16

 
Q:
What equity stake will current stockholders of Chardan and Dragonfly hold in the New Dragonfly after the closing?
A:
It is anticipated that upon completion of the Business Combination and assuming minimum redemptions by Chardan public stockholders, Chardan’s public stockholders will retain an ownership interest of approximately 6.6% of New Dragonfly, the Term Loan Lenders will own approximately 3.7% of New Dragonfly assuming the exercise of all Penny Warrants, the Sponsor, officers, directors and other holders of Founder Shares will retain an ownership interest of approximately 7.8% of New Dragonfly (including the PIPE Investment), and the Dragonfly stockholders will own approximately 81.9% (excluding the 40,000,000 Earnout Shares) of New Dragonfly. These levels of ownership interest: (a) include the impact of the shares of Chardan common stock issuable upon exercise of the Penny Warrants due to their nominal exercise price but exclude the impact of the $10 Warrants and the shares issuable under the Equity Facility, (b) include the impact of the redemption of 9,556,652 Chardan ordinary shares in connection with the Charter Amendment and assume that no additional Chardan public stockholder exercises redemption rights with respect to its shares for a pro rata portion of the funds in Chardan’s trust account, (c) assume that no shares are issued pursuant to the Dragonfly Incentive Plan and the 2022 Plan, (d) assume that no shares are issued pursuant to the vesting and exercise of New Dragonfly options for shares of New Dragonfly common stock and (e) assume no exercise of Chardan public warrants and Chardan private placement warrants. If the shares issuable under the Equity Facility, including the Commitment Shares, were assumed to be issued based upon an assumed VWAP of $10.15 (the redemption price), that could result in up to an additional 14,926,109 shares being issuable, which includes the Commitment Shares, subject the terms, conditions and limitations set forth in the Equity Facility, and result in additional dilution of Chardan’s public stockholders. This number is subject to increase or decrease if the stock price decreases or increases from the assumed price of $10.15. If the redemption price is significantly less than the assumed VWAP of $10.15, Chardan’s public stockholders would experience considerable additional dilution. For example, based upon an assumed VWAP of $6.00, an additional 25,166,667 shares, which includes 166,667 Commitment Shares, would be issuable. See the section entitled “Proposal No. 4 — The Incentive Plan Proposal” for additional information on the Dragonfly Incentive Plan and the 2022 Plan. If the actual facts are different from these assumptions (which they are likely to be), the percentage ownership retained by the Chardan stockholders will be different.
The following table illustrates varying ownership levels in New Dragonfly, assuming consummation of the Business Combination and minimum redemptions by Chardan public stockholders, 10% redemption by Chardan public stockholders, 50% redemption by Chardan public stockholders, 75% redemption by Chardan public stockholders and the maximum redemptions by Chardan public stockholders:
Minimum
Redemptions(1)
%
10%
Redemption(2)
%
50%
Redemption(3)
%
75%
Redemption(4)
%
Maximum
Redemption(5)
%
Dragonfly existing shareholders(6)(7)
38,444,217 81.9% 38,444,217 82.4% 38,444,217 84.8% 38,444,217 86.4% 38,444,217 87.9%
Chardan existing public stockholders(8)(9)
3,093,348 6.6% 2,784,013 6.0% 1,546,674 3.4% 773,337 1.7% %
Initial Stockholders(10)(11)
3,662,500 7.8% 3,662,500 7.9% 3,662,500 8.1% 3,662,500 8.2% 3,662,500 8.4%
Term Loan Lender(12)(13)
1,722,866 3.7% 1,711,314 3.7% 1,665,106 3.7% 1,636,226 3.7% 1,607,347 3.7%
Pro forma Common Stock(14)
46,922,931
100.0%
46,602,044
100.0%
45,318,497
100.0%
44,516,280
100.0%
43,714,064
100.0%
(1)
Assumes that no additional Chardan public stockholders are redeemed.
(2)
Assumes that 309,335 Chardan public shares are redeemed for aggregate redemption payments of approximately $3,166,058, assuming a $10.24 per share redemption price and based on funds in the Trust Account as of August 11, 2022.
(3)
Assumes that 1,546,674 Chardan public shares are redeemed for aggregate redemption payments of approximately $15,830,290, assuming a $10.24 per share redemption price and based on funds in the Trust Account as of August 11, 2022.
(4)
Assumes that 2,320,011 Chardan public shares are redeemed for aggregate redemption payments of
 
17

 
approximately $23,745,434, assuming a $10.24 per share redemption price and based on funds in the Trust Account as of August 11, 2022.
(5)
Assumes that 3,093,348 Chardan public shares are redeemed for aggregate redemption payments of approximately $31,660,579, assuming a $10.24 per share redemption price and based on funds in the Trust Account as of August 11, 2022.
(6)
Excludes 40,000,000 Earnout Shares payable in three tranches subject to achievement of specified financial information milestones for 2023 or post-Closing trading price milestones for New Dragonfly Common Stock and assumes that no shares are issued pursuant to the Dragonfly Incentive Plan and the 2022 Plan.
(7)
Includes shares of Dragonfly common stock issued pursuant to the THOR Investment.
(8)
Excludes 9,487,500 shares of Common Stock underlying the Public Warrants.
(9)
Reflects the redemption of 9,556,652 public shares in connection with the Charter Amendment.
(10)
Excludes 4,627,858 shares of Common Stock underlying the Private Warrants. Additionally, the Sponsor has agreed that the Private Warrants may not be exercised to the extent an affiliate of the Sponsor is deemed, or it would cause such affiliate to be deemed to beneficially own, more than 7.5% of the New Dragonfly Common Stock.
(11)
Includes 500,000 shares of Common Stock purchased by the Sponsor pursuant to the PIPE Subscription Agreement and 3,162,500 outstanding founder shares. The 3,162,500 outstanding founder shares include 3,052,500 founder shares held by the Sponsor and 110,000 founder shares held by officers and directors of Chardan. Please see the section titled “Beneficial Ownership of Securities.”
(12)
Assumes the exercise and conversion of the Penny Warrants into common stock due to their nominal exercise price. The Penny Warrants are exercisable for 3.6% of fully-diluted outstanding shares of Common Stock post closing. For purposes of such calculation, ownership of Common Stock “on a fully diluted basis” includes (i) all outstanding Common Stock, (ii) shares of Common Stock issuable upon conversion of outstanding convertible bonds, preferred stock and other securities convertible to Common Stock on an as-converted to Common Stock basis, and (iii) all shares of Common Stock subject to outstanding options.
(13)
Excludes 1,600,000 shares of Common Stock underlying the $10 Warrants.
(14)
Excludes shares of Common Stock issuable pursuant to the Equity Facility after Closing.
The following table illustrates ownership levels in New Dragonfly across varying redemption levels, assuming consummation of the Business Combination and taking into consideration all potentially dilutive securities, which are comprised of: (a) $10 Warrants, (b) shares issuable in connection with outstanding Dragonfly options, (c) shares available for issuance pursuant to the 2022 Plan, (d) Chardan public and private warrants, and (e) Earnout Shares.
Minimum
Redemptions(1)
%
10%
Redemption(2)
%
50%
Redemption(3)
%
75%
Redemption(4)
%
Maximum
Redemption(5)
%
Dragonfly existing shareholders(6)
85,194,940 77.9% 85,181,140 78.1% 85,125,940 79.1% 85,091,390 79.6% 85,056,890 80.2%
Chardan existing public
stockholders(7)(8)
12,580,848 11.5% 12,271,513 11.3% 11,034,174 10.2% 10,260,837 9.6% 9,487,500 8.9%
Initial Stockholders(9)(10)
8,290,358 7.6% 8,290,358 7.6% 8,290,358 7.7% 8,290,358 7.8% 8,290,358 7.8%
Term Loan Lender(11)
3,322,866 3.0% 3,311,314 3.0% 3,265,106 3.0% 3,236,226 3.0% 3,207,347 3.0%
Pro forma fully diluted
Common Stock(12)
109,389,012
100.0%
109,054,325
100.0%
107,715,578
100.0%
106,878,811
100.0%
106,042,095
99.9%
(1)
Assumes that no additional Chardan public stockholders are redeemed.
(2)
Assumes that 309,335 Chardan public shares are redeemed for aggregate redemption payments of approximately $3,166,058, assuming a $10.24 per share redemption price and based on funds in the Trust Account as of August 11, 2022.
(3)
Assumes that 1,546,674 Chardan public shares are redeemed for aggregate redemption payments of
 
18

 
approximately $15,830,290, assuming a $10.24 per share redemption price and based on funds in the Trust Account as of August 11, 2022.
(4)
Assumes that 2,320,011 Chardan public shares are redeemed for aggregate redemption payments of approximately $23,745,434, assuming a $10.24 per share redemption price and based on funds in the Trust Account as of August 11, 2022.
(5)
Assumes that 3,093,348 Chardan public shares are redeemed for aggregate redemption payments of approximately $31,660,579, assuming a $10.24 per share redemption price and based on funds in the Trust Account as of August 11, 2022.
(6)
Includes (i) 38,444,217 shares of Common Stock issued at Closing and inclusive of the THOR Investment, (ii) 40,000,000 Earnout Shares payable in three tranches subject to achievement of specified financial information milestones for 2023 or post-Closing trading price milestones for New Dragonfly Common Stock, (iii) shares issuable in connection with outstanding Dragonfly options, and (iv) shares initially available for issuance pursuant to the 2022 Plan. The shares available for issuance pursuant to the 2022 Plan is assumed to be 4% of fully-diluted shares of Common Stock at Closing resulting in a varying number of fully-diluted shares of Common Stock owned by Dragonfly existing shareholders across the varying redemption scenarios.
(7)
Includes 9,487,500 shares of Common Stock underlying the public warrants.
(8)
Reflects the redemption of 9,556,652 public shares in connection with the Charter Amendment.
(9)
Includes 3,162,500 Founder Shares, 4,627,858 private warrants and 500,000 shares of Common Stock purchased by the Sponsor pursuant to the PIPE Subscription Agreement. Although the shares underlying the Private Warrants are included, the Sponsor has agreed that the Private Warrants may not be exercised to the extent an affiliate of the Sponsor is deemed to beneficially own, or it will cause such affiliate to be deemed, to beneficially own, more than 7.5% of the New Dragonfly Common Stock.
(10)
Total of 3,162,500 outstanding Founder Shares includes 3,052,500 Founder Shares held by the Sponsor, and 110,000 Founder Shares held by officers and directors of Chardan. Please see the section titled “Beneficial Ownership of Securities.”
(11)
Assumes the exercise and conversion of the Penny Warrants and the $10 Warrants into Common Stock. The Penny Warrants are exercisable for 3.6% of fully-diluted outstanding shares of Common Stock at Closing. For purposes of such calculation, ownership of Common Stock “on a fully diluted basis” includes (i) all outstanding Common Stock, (ii) shares of Common Stock issuable upon conversion of outstanding convertible bonds, preferred stock and other securities convertible to Common Stock on an as-converted to Common Stock basis, and (iii) all shares of Common Stock subject to outstanding options. The $10 Warrants are exercisable for 1,600,000 shares of Common Stock.
(12)
Excludes shares of common stock issuable pursuant to the Equity Facility after Closing.
Q:
Will Chardan obtain new financing in connection with the Business Combination?
A:
Yes. Chardan has entered into the Subscription Agreement, under which it agreed to issue and sell to the Sponsor, and the Sponsor has agreed to buy from Chardan, 500,000 shares of Chardan common stock at a purchase price of $10.00 per share for an aggregate commitment of $5 million. The number of PIPE Securities that the Sponsor is obligated to purchase under the Subscription Agreement shall be reduced by the number of shares of common stock of Chardan that the Sponsor may purchase in the open market. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Subscription Agreement” for additional information. Chardan and Dragonfly have also entered into the Debt Commitment Letter, pursuant to which the Initial Term Loan Lenders have agreed to provide Dragonfly the $75 million Term Loan. The Initial Term Loan Lenders’ obligations to provide such financing are subject to a number of specified conditions set forth in the Debt Commitment Letter. In addition, pursuant to the Equity Facility Letter Agreement, Chardan and Dragonfly agreed to enter into the Equity Facility Definitive Documentation prior to the Closing Date reflecting the terms in the Equity Facility Letter Agreement. Pursuant to and on the terms of the Equity Facility Definitive Documentation, the Equity Facility Investor will commit to purchase up to an aggregate of $150,000,000 in shares of New Dragonfly’s common stock from time to time at the request of the New Dragonfly, subject to certain limitations and the satisfaction of certain conditions. For more information, please see
 
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the section entitled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Equity Facility Letter Agreement.”
Q:
What conditions must be satisfied to complete the Business Combination?
A:
There are a number of closing conditions in the Business Combination Agreement, including the approval by the Chardan stockholders of the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Director Election Proposal. For a summary of the conditions that must be satisfied or waived prior to completion of the Business Combination, please see the section entitled “Proposal No. 1 — The Business Combination Proposal — The Business Combination Agreement.”
Q:
What happens if I sell my shares of Chardan common stock before the special meeting?
A:
The record date for the special meeting is earlier than the date that the Business Combination is expected to be completed. If you transfer your shares of Chardan common stock after the record date, but before the special meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the special meeting. However, you will not be able to seek redemption of your shares of Chardan common stock because you will no longer be able to deliver them for cancellation upon consummation of the Business Combination. If you transfer your shares of Chardan common stock prior to the record date, you will have no right to vote those shares at the special meeting or redeem those shares for a pro rata portion of the proceeds held in our trust account.
Q:
What constitutes a quorum at the special meeting?
A:
A majority of the voting power of all issued and outstanding shares of common stock entitled to vote as of the record date at the special meeting must be present in person, via the virtual meeting platform, or represented by proxy, at the special meeting to constitute a quorum and in order to conduct business at the special meeting. Abstentions will be counted as present for the purpose of determining a quorum. As of the record date for the special meeting, no shares of our common stock would be required to be present at the special meeting to achieve a quorum.
Q:
What vote is required to approve the proposals presented at the special meeting?
A:
The approval of each of the Business Combination Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Adjournment Proposal requires the affirmative vote of holders of the majority of Chardan’s shares of common stock present at the special meeting and entitled to vote thereon. Accordingly, if a valid quorum is established, a Chardan stockholder’s failure to vote by proxy or to vote at the special meeting with regard to Business Combination Proposal, the Incentive Plan Proposal, the Nasdaq Proposal, the ESPP Proposal and the Adjournment Proposal will have the same effect as a vote “AGAINST” such proposals.
The approval of the Director Election Proposal requires the vote by a plurality of the shares of the Common Stock present at the special meeting and entitled to vote thereon. Accordingly, if a valid quorum is established, a Chardan stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the Director Election Proposal will have no effect on the vote for this proposal.
The approval of the Charter Proposal requires the affirmative vote of holders of a majority of Chardan’s outstanding shares of common stock. Accordingly, if a valid quorum is established, a Chardan stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the Charter Proposal will have the same effect as a vote “AGAINST” such proposal.
Q:
How many votes do I have at the special meeting?
A:
Our stockholders are entitled to one vote on each proposal presented at the special meeting for each share of common stock held of record as of August 11, 2022, the record date for the special meeting. As of the close of business on the record date, there were 6,255,848 outstanding shares of Chardan common stock.
 
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Q:
Did the Chardan Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?
A:
Chardan retained Duff & Phelps as its financial advisor in connection with the Business Combination. In connection with this engagement, the Chardan Board requested that Duff & Phelps evaluate the fairness, from a financial point of view, of the consideration to be paid by Chardan to the Dragonfly shareholders. Duff & Phelps delivered a written fairness opinion to the Chardan Board dated May 13, 2022, in which it concluded that, as of such date and based upon and subject to the assumptions made, scope of analysis considered, matters evaluated and other qualifications and limitations set forth therein, the consideration to be paid by Chardan to the Dragonfly shareholders was fair to Chardan, from a financial point of view. See the section of this proxy statement/prospectus entitled “Fairness Opinion of Duff & Phelps.
Q:
Do I have redemption rights?
A:
If you are a holder of public shares, you have the right to demand that Chardan redeem such shares for a pro rata portion of the cash held in Chardan’s trust account. We sometimes refer to these rights to demand redemption of the public shares as “redemption rights.”
Notwithstanding the foregoing, a holder of public shares, together with any of its affiliates or any other person with whom such holder is acting in concert or as a “group” ​(as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption with respect to more than 20% of the public shares. Accordingly, all public shares in excess of 20% held by a public stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed.
Under Chardan’s current certificate of incorporation, the Business Combination may be consummated only if Chardan has at least $5,000,001 of net tangible assets after giving effect to all holders of public shares that properly demand redemption of their shares for cash.
Q:
How do I exercise my redemption rights?
A:
If you are a holder of public shares and wish to exercise your redemption rights, you must demand that Chardan redeem your shares in cash no later than the second business day preceding the vote on the Business Combination Proposal by delivering your stock to the Transfer Agent physically or electronically using the Depository Trust Company’s DWAC (Deposit and Withdrawal at Custodian) system prior to the vote at the special meeting. Any holder of public shares will be entitled to demand that such holder’s shares be redeemed for a full pro rata portion of the amount then in the trust account (which, for illustrative purposes, was approximately $31,660,579, or approximately $10.24 per share, as of August 11, 2022). Such amount, less any owed but unpaid taxes on the funds in the trust account, will be paid promptly upon consummation of the Business Combination. However, under Delaware law, the proceeds held in the trust account could be subject to claims which could take priority over those of Chardan’s public stockholders exercising redemption rights, regardless of whether such holders vote for or against the Business Combination Proposal. Therefore, the per-share distribution from the trust account in such a situation may be less than originally anticipated due to such claims. Your vote on any proposal other than the Business Combination Proposal will have no impact on the amount you will receive upon exercise of your redemption rights.
Any request for redemption, once made by a holder of public shares, may be withdrawn at any time up to the time the vote is taken with respect to the Business Combination Proposal at the special meeting. If you deliver your shares for redemption to the Transfer Agent and later decide prior to the special meeting not to elect redemption, you may request that the Transfer Agent return the shares (physically or electronically). You may make such request by contacting the Transfer Agent at the address listed at the end of this section.
Any corrected or changed proxy card or written demand of redemption rights must be received by the Transfer Agent prior to the vote taken on the Business Combination Proposal at the special meeting. No demand for redemption will be honored unless the holder’s stock has been delivered (either physically or electronically) to the transfer agent prior to the vote at the special meeting.
 
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If a holder of public shares properly demands their shares be redeemed as described above, then, if the Business Combination is consummated, Chardan will redeem these shares for a pro rata portion of funds deposited in the trust account. If you exercise your redemption rights, then you will be exchanging your shares of Chardan common stock for cash.
Q:
Do I have appraisal rights if I object to the proposed business combination?
A:
Neither Chardan stockholders nor its unit or warrant holders, solely in their capacity as unit or warrant holders, have appraisal rights in connection with the Business Combination under the DGCL.
Please see the section entitled “Appraisal Rights and Dissenter’s Rights” for additional information.
Q:   What happens to the funds deposited in the trust account after consummation of the Business Combination?
A:
The net proceeds of the Chardan IPO and its related transactions (including the exercise of the underwriters’ overallotment option and the sale of private warrants to the Sponsor affiliate), a total of $128,397,500, were placed in the trust account immediately following the Chardan IPO and such related transactions. A portion of the funds in the trust account may be used to pay holders of the public shares who exercise redemption rights prior to the consummation of the Business Combination. After the consummation of the Business Combination, the funds in the trust account will be released to the Company and used to pay fees and expenses incurred in connection with the Business Combination and for working capital purposes of New Dragonfly.
Please see the section entitled “Proposal No. 1 — The Business Combination — Sources and Uses for the Business Combination” for additional information.
Q:
What happens if a substantial number of public stockholders vote in favor of the Business Combination Proposal and exercise their redemption rights?
A:
Chardan’s public stockholders may vote in favor of the Business Combination Proposal and still exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the trust account and the number of public stockholders are substantially reduced as a result of redemptions by public stockholders. Notwithstanding the foregoing, under Chardan’s current certificate of incorporation, the Business Combination may be consummated only if Chardan has at least $5,000,001 of net tangible assets after giving effect to all redemptions by holders of public shares that properly demand redemption of their shares for cash.
Q:
What happens if the Business Combination is not consummated?
A:
If Chardan does not complete the Business Combination with Dragonfly for whatever reason, Chardan would search for another target business with which to complete an initial business combination. If Chardan does not complete a business combination with Dragonfly or another target business by August 13, 2022, or as extended by the Insiders up to two times by an additional three months each time (to February 13, 2023 for a total of up to 18 months to complete a business combination), Chardan must redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to (a) the aggregate amount then on deposit in the trust account, including interest earned and not previously released to us for Chardan’s working capital requirements as well as to pay Chardan’s taxes, divided by (b) the number of then-outstanding public shares, subject to applicable law and certain conditions. Purusant to a letter agreement among Chardan, the Sponsor and the Insiders in connection with the Chardan IPO, the Sponsor and the Insiders have no redemption rights in the event an initial business combination is not effected in the completion window and, accordingly, their Founder Shares will be worthless. Pursuant to the Subscription Agreement, the Sponsor may purchase shares of Chardan common stock in the open market and reduce (i) its purchase price under the Subscription Agreement by the per share redemption amount received by public stockholders who elect to redeem their shares of Chardan common stock prior to the closing of the Business Combination and (ii) the number of shares of Chardan common stock it subscribed for under the Subscription Agreement by an amount equal to the number of shares of Chardan common stock the Sponsor purchased in the open market and not redeemed. Pursuant to the Sponsor Support Agreement, the Sponsor has also agreed to waive redemption rights with respect to any shares purchased in the open market. No specific consideration was ascribed to
 
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the waiver of redemption rights in the Sponsor Support Agreement. Additionally, in the event of such liquidation, there will be no distribution with respect to Chardan’s outstanding warrants. Accordingly, the warrants will be worthless.
Q:
How do the Sponsor and Insiders intend to vote on the proposals?
A:
The Sponsor and the Insiders collectively own of record and are entitled to vote an aggregate of approximately 50.6% of the outstanding shares of Chardan common stock as of the record date. The Sponsor and the Insiders have agreed to vote any Founder Shares and any public shares held by them as of the record date in favor of the Business Combination. The Sponsor and Insiders may have interests in the Business Combination that may conflict with your interests as a stockholder. See the sections entitled “Summary of the Proxy Statement — Interests of Certain Persons in the Business Combination” and “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for additional information.
Q:
What are the factors that the Chardan Board considered when determining to enter into the Business Combination Agreement and its rationale for approving the transactions?
A:
The Chardan Board considered a number of factors that are generally supportive of the Business Combination, including, without limitation, Dragonfly’s development of potentially disruptive technology, the experience possessed by Dragonfly’s officers regarding solid-state and lithium technologies, the fairness opinion of Duff and Phelps and Chardan’s management’s financial analysis and Chardan’s officers’ consultation with technical experts. The Chardan Board also considered a variety of uncertainties and risks, including, without limitation, the possibility that the potential benefits of the Business Combination may not achieved, the conflicts of Chardan’s directors and officers in the Business Combination and the fact that the Business Combination Agreement includes exclusivity restrictions. The Chardan Board concluded that the potential benefits outweighed the potentially negative factors and therefore recommends the approval of the Business Combination. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — The Chardan Board’s Reasons for Approval of the Business Combination.”
Q:
When do you expect the Business Combination to be completed?
A:
It is currently anticipated that the Business Combination will be consummated promptly following the special meeting which is set for October 6, 2022, subject to the satisfaction of customary closing conditions; however, such meeting could be postponed or adjourned, as described above. For a description of the conditions to the completion of the Business Combination, please see the section entitled “Proposal No. 1 — The Business Combination Proposal — The Business Combination Agreement — Conditions to the Closing.
Q:
What do I need to do now?
A:
Chardan urges you to read carefully and consider the information contained in this proxy statement, including the Annexes, and to consider how the Business Combination will affect you as a stockholder, unit holder and/or warrant holder of Chardan. Stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement and on the enclosed proxy card, or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or other nominee.
Q:
How do I vote?
A:
The special meeting will be held at 10:00 a.m. Eastern Time, on October 6, 2022.
If you are a holder of record of Chardan common stock on August 11, 2022, the record date for the meeting, you may submit your proxy in any of the follow ways:

use the toll-free number shown on your proxy card;

visit the website shown on your proxy card to vote via the Internet; or

complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope.
 
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If you are a Chardan stockholder of record as of the record date , you may also cast your vote virtually at the Special Meeting.
If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or obtain a proxy from your broker, bank or nominee.
Q:
If I am not going to attend the special meeting virtually, should I submit my proxy card instead?
A:
Yes. Whether you plan to attend the special meeting or not, please read the enclosed proxy statement carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.
Q:
If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?
A:
No. Under the rules of various national and regional securities exchanges, your broker, bank or nominee cannot vote your shares with respect to non-routine matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. We believe the proposals presented to the stockholders at the special meeting will be considered non-routine and, therefore, your broker, bank or nominee cannot vote your shares without your instruction on any of the proposals presented at the special meeting. If you do not provide instructions with your proxy, your broker, bank or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a broker, bank or nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will not be counted for the purposes of determining the existence of a quorum or for purposes of determining the number of votes cast at the special meeting. Your bank, broker or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.
Q:
How will a broker non-vote impact the results of each proposal?
A:
Broker non-votes will count as a vote “AGAINST” the Charter Proposal but will not have any effect on the outcome of any other proposals.
Q:
May I change my vote after I have mailed my signed proxy card?
A:
Yes. Stockholders of record may send a later-dated, signed proxy card to the Transfer Agent at the address set forth at the end of this section so that it is received prior to the vote at the special meeting or attend the special meeting and vote. Stockholders also may revoke their proxy by sending a notice of revocation to the Transfer Agent, which must be received prior to the vote at the special meeting.
Q:
What happens if I fail to take any action with respect to the special meeting?
A:
If you fail to take any action with respect to the special meeting and the Business Combination is approved by stockholders, the Business Combination will be consummated in accordance with the terms of the Business Combination Agreement. If you fail to take any action with respect to the special meeting and the Business Combination is not approved, we will not consummate the Business Combination.
Q:
What will happen if I sign and return my proxy card without indicating how I wish to vote?
A:
Signed and dated proxies received by us without an indication of how the stockholder intends to vote on a proposal will be voted “FOR” each proposal presented to the stockholders. The proxyholders may use their discretion to vote on any other matters which properly come before the special meeting.
Q:
What should I do if I receive more than one set of voting materials?
A:
Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your Chardan common stock.
 
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Q:
Who can help answer my questions?
A:
If you have questions about the Business Combination or if you need additional copies of the proxy statement or the enclosed proxy card you should contact:
Chardan NexTech Acquisition 2 Corp.
17 State Street, 21st Floor
New York, NY 10004
Tel: (646) 465-9001
You may also contact the proxy solicitor for Chardan at:
Morrow Sodali LLC
333 Ludlow Street, 5th Floor,
South Tower,
Stamford, CT 06902
Individuals call toll-free: 800-662-5200
Banks and brokers call: 203-658-9400
Email: CNTQ.info@investor.morrowsodali.com
To obtain timely delivery, our stockholders must request any additional materials no later than five business days prior to the special meeting. You may also obtain additional information about Chardan from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of public shares and you intend to seek redemption of your public shares, you will need to deliver your stock (either physically or electronically) to the Transfer Agent at the address below no later than the second business day prior to the originally scheduled date of the special meeting. See the section entitled “Special Meeting of Chardan Stockholders — Redemption Rights.
If you have questions regarding the certification of your position or delivery of your stock, please contact:
Continental Stock Transfer & Trust Company
1 State Street 30th Floor
New York, New York 10004
Attention: Mark Zimkind
Email: mzimkind@continentalstock.com
Q:
Who will solicit and pay the cost of soliciting proxies?
A:
The Chardan Board is soliciting your proxy to vote your shares of Chardan common stock on all matters scheduled to come before the special meeting. We will pay the cost of soliciting proxies for the special meeting. We have engaged Morrow Sodali LLC to assist in the solicitation of proxies for the special meeting. We will pay Morrow Sodali LLC a fee of $27,500. We will reimburse Morrow Sodali LLC for reasonable out-of-pocket expenses and will indemnify Morrow Sodali LLC and its affiliates against certain claims, liabilities, losses, damages and expenses. We will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of Chardan common stock for their expenses in forwarding soliciting materials to beneficial owners of Chardan common stock and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.
Q:
What are the U.S. federal income tax consequences of exercising my redemption rights?
A:
It is expected that a holder of public shares that exercises its redemption rights to receive cash from the trust account in exchange for public shares will generally be treated as selling such public shares. There may be certain circumstances, however, in which the redemption may be treated as a distribution for U.S. federal income tax purposes, depending on the amount of public shares that such holder owns or is deemed to own (including through the ownership of warrants). For a more complete discussion of U.S. federal income tax considerations of an exercise of redemption rights, see the section entitled “U.S. Federal Income Tax Considerations.”
 
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SUMMARY OF THE PROXY STATEMENT
This summary highlights selected information from this proxy statement and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the special meeting, including the Business Combination Proposal, you should read this entire document carefully, including the Annexes and other documents referred to herein. The Business Combination Agreement is the legal document that governs the Business Combination. It is also described in detail in this proxy statement in the section entitled “Proposal No. 1 — The Business Combination Proposal — Business Combination Agreement.”
Unless otherwise specified, all share calculations (a) exclude the impact of the shares of Chardan common stock underlying warrants, (b) assume that no Chardan public stockholder exercises redemption rights with respect to its shares for a pro rata portion of the funds in Chardan’s trust account and (c) assume that no shares are issued pursuant to the 2022 Plan.
The Parties
Chardan
Chardan NexTech Acquisition 2 Corp. is a blank check company formed under the laws of Delaware on June 23, 2020. Chardan was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses.
On August 13, 2021, Chardan closed its initial public offering of 11,000,000 units, with each unit consisting of one share of its common stock and three-quarters of one warrant to purchase one share of its common stock at a purchase price of $11.50 per share, subject to adjustment as provided in Chardan’s final prospectus filed with the SEC on August 5, 2021 (File No. 333-254010). On August 18, 2021, the underwriters fully exercised their over-allotment option and purchased 1,650,000 additional units. At $10.00 per unit, the units from the Chardan IPO and exercise of the underwriters’ over-allotment option generated total gross proceeds of $126,500,000.
Simultaneously with the consummation of the Chardan IPO, Chardan consummated the private sale of 4,361,456 warrants at $0.93 per warrant for an aggregate purchase price of $4,052,000. Simultaneously with the closing of the exercise of the underwriters’ over-allotment option, Chardan consummated the sale of an additional 266,402 private warrants at a purchase price of $0.93 per private warrant in a private placement to Holdings, generating gross proceeds of $247,500. A total of $128,397,500 was deposited into the trust account and the remaining net proceeds became available to be used as working capital to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses. The Chardan IPO was conducted pursuant to a registration statement on Form S-1 that became effective on August 10, 2021. As of August 11, 2022, there was approximately $31,660,579 held in the trust account.
On August 5, 2022, in connection with the Charter Amendment, 9,556,652 shares of Chardan common stock were redeemed, resulting in the distribution of $97,194,949.68 from the Trust Accounting to the redeeming stockholders.
On August 8, 2022, Chardan announced that it was extending the time available to the Company to consummate its initial business combination for an additional one (1) month from August 13, 2022 to September 13, 2022 (“Extension No. 1”). Extension No. 1 provides the Company with additional time to complete its proposed business combination with Dragonfly. Extension No. 1 is the first of up to three (3) one-month extensions permitted under the Company’s Second A&R Charter.
The Insiders notified the Company on September 6, 2022 of the Insiders’ intention to extend the date by which the Company must complete a business combination for an additional one (1) month by depositing $200,000 into the Trust Account (the “Extension No. 2”).
Chardan Capital Markets will receive a cash fee for such services upon the consummation of the Merger in an amount equal to, in the aggregate, $4,427,500, being 3.5% of the gross proceeds of the Chardan IPO. Chardan Capital Markets will also receive a cash fee of $1,170,000 for other financial advisory services,
 
26

 
including for advisory services provided with respect to placement of potential PIPE investments, and identifying and negotiating lender financing.
Chardan’s units, common stock and warrants are listed on the Nasdaq under the symbols “CNTQU,” “CNTQ” and “CNTQW,” respectively.
The mailing address of Chardan’s principal executive office is 17 State Street, 21st Floor, New York, NY 10004. Its telephone number is (646) 465-9000. After the consummation of the Business Combination, its principal executive office will be that of Dragonfly.
Merger Sub
Merger Sub is a wholly owned subsidiary of Chardan formed solely for the purpose of effectuating the Merger described herein (“Merger Sub”). Merger Sub was incorporated under the laws of Nevada as a corporation on May 10, 2022. Merger Sub owns no material assets and does not operate any business.
The mailing address of Merger Sub’s principal executive office is 17 State Street, 21st Floor, New York, NY 10004. Its telephone number is (646) 465-9000. After the consummation of the Business Combination, Merger Sub will cease to exist as a separate legal entity.
Dragonfly
Dragonfly, which was originally formed on October 15, 2012 as Dragonfly Energy LLC, a Nevada limited liability company, converted into a Nevada corporation by filing articles of conversion and articles of incorporation under the laws of Nevada on April 11, 2016. Dragonfly is based in Reno, Nevada and is a manufacturer of non-toxic deep cycle lithium-ion batteries that caters to customers in the recreational vehicle (“RV”), marine vessel and off-grid residence industries, with disruptive solid-state cell technology currently under development. Dragonfly believes that green energy is more than just a trend. Dragonfly’s goal is to develop technology to deliver environmentally impactful solutions for energy storage to everyone globally. Dragonfly believes that the innovative design of our lithium-ion batteries is ideally suited for the demands of modern customers who rely on consumer electronics, connected devices and smart appliances that require continuous, reliable electricity, regardless of location. Dragonfly has a dual-brand strategy, Dragonfly Energy (“Dragonfly Energy”) and Battle Born Batteries (“Battle Born”). Battle Born branded products are primarily sold direct to consumers, while the Dragonfly Energy brand is primarily sold to original equipment manufacturers (“OEMs”). Dragonfly’s principal executive office is 1190 Trademark Dr. #108, Reno, Nevada 89521. Its telephone number is (775) 622-3448.
Emerging Growth Company
Chardan is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933 (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, it is eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find Chardan’s securities less attractive as a result, there may be a less active trading market for Chardan’s securities and the prices of its securities may be more volatile or otherwise impacted.
New Dragonfly could remain an emerging growth company until the last day of the fiscal year following the fifth anniversary of the completion of the Chardan IPO. However, if (a) New Dragonfly’s total annual gross revenue exceed $1.07 billion, (b) New Dragonfly is deemed to be a large accelerated filer, which means the market value of New Dragonfly common stock that is held by non-affiliates exceeds $700.0 million as of the end of the prior fiscal year’s second fiscal quarter, or (c) New Dragonfly’s non-convertible debt issued within a three-year period exceeds $1.0 billion, New Dragonfly would cease to be an emerging growth company
 
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as of the following fiscal year. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
The Business Combination Proposal
As discussed elsewhere in this proxy statement/prospectus, Chardan is asking its stockholders to approve the Business Combination Agreement, pursuant to which, among other things, on the Closing Date, Merger Sub will merge with and into Dragonfly, with Dragonfly as the surviving company in the Merger and, after giving effect to such Merger, Dragonfly will be a wholly owned subsidiary of Chardan. The Aggregate Merger Consideration to be received by equityholders of Dragonfly as of immediately prior to the Closing will be 41,500,000 shares of Chardan common stock (at a deemed value of $10.00 per share) or, as applicable, shares underlying options based on Dragonfly common stock. The portion of the Aggregate Merger Consideration reflecting the conversion of the Dragonfly options is calculated assuming that all New Dragonfly options are net-settled. With respect to the New Dragonfly options received in respect of Dragonfly options that are outstanding immediately prior to the Closing and cash exercised after the Closing, up to 3,474,256 additional shares of New Dragonfly common stock may be issued. Dragonfly stockholders will also have the contingent right to receive up to 40,000,000 Earnout Shares. For further details, see “Business Combination Proposal — Consideration to Dragonfly Holders in the Business Combination.”
The Earnout Shares (up to 40,000,000 shares) will be issued, if at all, to the Dragonfly stockholders in three tranches. The first tranche of 15,000,000 shares is issuable if New Dragonfly’s 2023 total audited revenue is equal to or greater than $250,000,000 and New Dragonfly’s 2023 audited operating income is equal to or greater than $35,000,000. The second tranche of 12,500,000 shares is issuable upon achieving a volume-weighted average trading price threshold of at least $22.50 on or prior to December 31, 2026, and the third tranche of 12,500,000 shares is issuable upon achieving a volume-weighted average trading price threshold of at least $32.50 on or prior to December 31, 2028. To the extent not previously earned, the second tranche is issuable if the $32.50 price target is achieved by December 31, 2028 (such shares, together, the “Earnout Shares”).
After consideration of the factors identified and discussed in the section entitled “Business Combination Proposal — The Chardan Board’s Reasons for the Approval of the Business Combination,” the Chardan Board concluded (i) that the terms and conditions of the Business Combination Agreement and the transactions contemplated thereby are advisable, fair to and in the best interests of Chardan and its stockholders and (ii) that it would recommend that its stockholders adopt the Business Combination Agreement and approve the Business Combination. For more information about the transactions contemplated by the Business Combination Agreement, see “Business Combination Proposal.”
The consummation of the Business Combination is conditioned upon, among other things, (i) the approval by our stockholders of the proposals set forth herein and approval of Dragonfly’s stockholders of the transactions contemplated by the Business Combination Agreement (which such approval by Dragonfly’s stockholders was obtained and delivered by execution of a written consent by the requisite equityholders of Dragonfly); (ii) this proxy statement/prospectus receiving SEC clearance; (iii) applicable waiting periods under the HSR Act expiring or terminating (the waiting period expired on June 27, 2022); (iv) the Company Preferred Conversion occurring immediately prior to the Effective Time; (v) Dragonfly (x) if the debt financing as contemplated by the Debt Commitment Letter is consummated, delivering the Payoff Consent (as defined in the Business Combination Agreement) and the Payoff Letter (as defined below) and repaying all outstanding PIUS Debt (as defined in the Business Combination Agreement) or (y) if the debt financing as contemplated by the Debt Commitment Letter is not consummated, refinancing the PIUS Debt on mutually agreeable terms; (vi) the amendment of the Key Employment Agreements, which shall continue to be in full force and effect and shall not have been terminated for any reason; and (vii) the approval by Nasdaq of our initial listing application in connection with the Business Combination. Therefore, unless these conditions are waived by the applicable parties to the Business Combination Agreement, the Business Combination Agreement could terminate and the Business Combination may not be consummated. For further details, see “Business Combination Proposal — Conditions to Closing of the Business Combination.”
 
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Matters Being Voted On
The stockholders of Chardan will be asked to consider and vote on the following proposals at the special meeting:
(1)   a proposal to approve the Business Combination, including (a) adopting the Business Combination Agreement and (b) approving the other transactions contemplated by the Business Combination Agreement and related agreements described in this proxy statement. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal” for additional information;
(2)   a proposal to approve and adopt changes to the certificate of incorporation of Chardan reflected in the third amended and restated certificate of incorporation of Chardan in the form attached hereto as Annex B. Please see the section entitled “Proposal No. 2 — The Charter Proposal” for additional information;
(3)   a proposal to approve, for purposes of complying with the applicable rules of the Nasdaq, the issuance of shares of Chardan’s common stock in connection with the Business Combination, including, without limitation, the Aggregate Merger Consideration, the Earnout Shares, the PIPE Investment, the Term Loan Lender Warrants and the Equity Facility. Please see the section entitled “Proposal No. 3 — The Nasdaq Proposal” for additional information;
(4)   a proposal to approve and adopt the 2022 Plan. Please see the section entitled “Proposal No. 4 —  The Incentive Plan Proposal” for additional information;
(5)   a proposal to approve the ESPP. Please see the section entitled “Proposal No. 5 — The ESPP Proposal” for additional information;
(6)   a proposal to approve and elect seven (7) directors to the New Dragonfly board. Please see the section entitled “Proposal No. 6 — The Director Election Proposal” for additional information; and
(7)   a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the ESPP Proposal or the Director Election Proposal. Please see the section entitled “Proposal No. 7 — The Adjournment Proposal” for additional information.
Date, Time and Place of Special Meeting of Chardan’s Stockholders
The special meeting of stockholders of Chardan will be held at 10:00 a.m. Eastern Time, on October 6, 2022 via a virtual meeting.
At the special meeting, stockholders will be asked to consider and vote upon the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Director Election Proposal and, if necessary, the Adjournment Proposal to permit further solicitation and vote of proxies if Chardan is not able to consummate the Business Combination.
Registering for the Special Meeting
If you are a registered stockholder, you will receive a proxy card from the Transfer Agent. The card will contain instructions on how to attend the Special Meeting, including how to register for the virtual Special Meeting.
If you do not have access to Internet, you can listen only to the meeting by dialing +1 800-450-7155 (or +1 857-999-9155 if you are located outside the United States and Canada (standard rates apply)) and when prompted enter the pin number. Please note that you will not be able to vote or ask questions at the Special Meeting if you choose to participate telephonically.
Voting Power; Record Date
Stockholders will be entitled to vote or direct votes to be cast at the special meeting if they owned shares of Chardan common stock at the close of business on August 11, 2022, which is the record date for the special
 
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meeting. Stockholders will have one vote for each share of Chardan common owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. Chardan warrants do not have voting rights. On the record date, there were 6,255,848 shares of Chardan common stock outstanding, of which 3,093,348 were public shares with the rest being held by the Sponsor and certain Insiders.
Quorum and Vote of Chardan Stockholders
A quorum of Chardan stockholders is necessary to hold a valid meeting. A quorum will be present at the special meeting if a majority of the outstanding shares entitled to vote at the meeting are represented in person (via the virtual meeting platform) or by proxy. Proxies that are marked “ABSTAIN” will be treated as shares present for purposes of determining the presence of a quorum on all matters. Broker non-votes will not be counted for the purposes of determining the existence of a quorum or for purposes of determining the number of votes cast at the special meeting.
The Sponsor and certain Insiders own of record and are entitled to vote approximately 50.6% of the outstanding shares of Chardan common stock as of the record date. Such shares, as well as any shares of common stock acquired in the aftermarket by the Sponsor, will be voted in favor of the proposals presented at the special meeting.
The proposals presented at the special meeting will require the following votes:

The approval of each of the Business Combination Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the ESPP Proposal, the Director Election Proposal and the Adjournment Proposal requires the affirmative vote of holders of the majority of Chardan’s shares of common stock present at the special meeting and entitled to vote thereon. Accordingly, if a valid quorum is established, a Chardan stockholder’s failure to vote by proxy or to vote at the special meeting with regard to Business Combination Proposal, the Incentive Plan Proposal, the Nasdaq Proposal, the ESPP Proposal, the Director Election Proposal and the Adjournment Proposal will have the same effect as a vote “AGAINST” such proposals.
The approval of the Charter Proposal requires the affirmative vote of holders of a majority of Chardan’s outstanding shares of common stock. Accordingly, if a valid quorum is established, a Chardan stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the Charter Proposal will have the same effect as a vote “AGAINST” such proposal.
Consummation of the Business Combination is conditioned on the approval of each of the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the ESPP Proposal and the Director Election Proposal. If any of those proposals are not approved, we will not consummate the Business Combination.
Redemption Rights
Pursuant to Chardan’s current certificate of incorporation, a holder of public shares may demand that Chardan redeem such shares for cash if the Business Combination is consummated. Holders of public shares will be entitled to receive cash for these shares only if they demand that Chardan redeem their shares for cash no later than the second business day prior to the originally scheduled vote on the Business Combination Proposal by delivering their stock to the Transfer Agent prior to the vote at the meeting. The redemption rights include the requirement that a holder must identify himself, herself or itself in writing as a beneficial holder and provide his, her or its legal name, phone number and address to the transfer agent in order to validly redeem his, her or its shares. If the Business Combination is not completed, these shares will not be redeemed. If a holder of public shares properly demands redemption, Chardan will redeem each public share for a full pro rata portion of the trust account, calculated as of two business days prior to the consummation of the Business Combination. As of August 11, 2022, this would amount to approximately $10.24 per share. If a holder of public shares exercises its redemption rights, then it will be exchanging its shares of Chardan common stock for cash and will no longer own the shares. Please see the section entitled “Special Meeting of Chardan Stockholders — Redemption Rights” for a detailed description of the procedures to be followed if you wish to redeem your shares for cash.
 
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Notwithstanding the foregoing, a holder of public shares, together with any of its affiliates or any other person with whom such holder is acting in concert or as a “group” ​(as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption rights with respect to more than 20% of the public shares. Accordingly, all public shares in excess of 20% held by a public stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or was a “group,” will not be redeemed for cash.
The Business Combination will not be consummated if Chardan has net tangible assets of less than $5,000,001 after taking into account holders of public shares that have properly demanded redemption of their shares for cash.
Holders of Chardan warrants will not have redemption rights with respect to such securities.
Appraisal Rights / Dissenter’s Rights
Chardan stockholders, Chardan unitholders and Chardan warrant holders do not have appraisal rights in connection with the Business Combination under the DGCL.
Under the Nevada Dissenter’s Rights Statutes (NRS 92A.300 through NRS 92A.500, inclusive), any Dragonfly stockholder who does not vote or sign a written consent (and who does not cause or permit the stockholder’s shares to be voted) in favor of the Merger will have the right to dissent from the Merger and, in lieu of receiving the Per Share Merger Consideration with respect to the stockholder’s Dragonfly shares, obtain payment of the fair value (as defined in NRS 92A.320) of the stockholder’s Dragonfly shares, but only if the stockholder complies with all other applicable requirements under the Nevada Dissenter’s Rights Statutes. The Dragonfly stockholders must also approve the Merger, and the Dragonfly Stockholder Approval must be obtained and delivered to Chardan (which such approval was obtained and delivered by execution of a written consent by the requisite equityholders of Dragonfly).
Please see the section entitled “Appraisal Rights and Dissenter’s Rights” for additional information.
Proxy Solicitation
Proxies may be solicited by mail, telephone or in person. Chardan has engaged Morrow Sodali LLC to assist in the solicitation of proxies. If a stockholder grants a proxy, it may still vote its shares during the meeting if it revokes its proxy before the special meeting. A stockholder may also change its vote by submitting a later-dated proxy as described in the section entitled “Special Meeting of Chardan Stockholders — Revoking Your Proxy.”
Interests of Certain Persons in the Business Combination
In considering the recommendation of the Chardan Board to vote in favor of approval of the Business Combination Proposal and the other proposals, stockholders should keep in mind that the Sponsor and the Insiders have interests in such proposals that are different from, or in addition to, those of Chardan stockholders generally. In particular:

None of Chardan’s officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating their time among various business activities.

Each of Chardan’s officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. We do not believe, however, that the pre-existing fiduciary duties or contractual obligations of our officers and directors will materially undermine our ability to complete the Business Combination, and such pre-existing fiduciary duties and contractual obligations did not materially affect our search for an acquisition target.

Mr. Grossman is the sole member of Sponsor and Holdings. Mr. Grossman is the Chief Executive Officer of, and Mr. Weil is Managing Director and Co-Head of Fintech Investment Banking of, Chardan Capital Markets, an affiliate of the Sponsor. Mr. Grossman and Mr. Propper are also
 
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members of the board of directors of Chardan Capital Markets. Mr. Grossman is also the managing member of Chardan International Investments, LLC, an affiliate of the Sponsor.

It is anticipated that upon completion of the Business Combination and assuming minimum redemptions by Chardan public stockholders, the Sponsor, officers, directors and other affiliates and holders of Founder Shares will own approximately 7.8% of New Dragonfly (including the PIPE Investment). This level of ownership interest: (a) include the impact of the shares of Chardan common stock issuable upon exercise of the Penny Warrants due to their nominal exercise price but exclude the impact of the $10 Warrants and the shares issuable under the Equity Facility, (b) assume that no Chardan public stockholder exercises redemption rights with respect to its shares for a pro rata portion of the funds in Chardan’s trust account, (c) assume that no shares are issued pursuant to the Dragonfly Incentive Plan and the 2022 Plan, (d) assume that no shares are issued pursuant to the vesting and exercise of New Dragonfly options for shares of New Dragonfly common stock and (e) assume no exercise of Chardan public warrants and Chardan private placement warrants. If the shares issuable under the Equity Facility, including the Commitment Shares, were assumed to be issued based upon an assumed VWAP of $10.15 (the redemption price), that could result in up to an additional 14,926,109 shares being issuable, which includes the Commitment Shares, subject the terms, conditions and limitations set forth in the Equity Facility, and result in additional dilution of Chardan’s public stockholders. This number is subject to increase or decrease if the stock price decreases or increases from the assumed price of $10.15. If the redemption price is significantly less than the assumed VWAP of $10.15, Chardan’s public stockholders would experience considerable additional dilution. For example, based upon an assumed VWAP of $6.00, an additional 25,166,667 shares, which includes 166,667 Commitment Shares, would be issuable.

If the Business Combination or another business combination is not consummated by August 13, 2022 (unless this deadline is extended pursuant to Chardan’s covenant to extend such deadline under the Business Combination Agreement and pursuant to the Chardan Organizational Documents), Chardan will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and the Chardan Board, dissolving and liquidating. In such event, the Founder Shares and the private warrants and all underlying securities held by the Sponsor and Insiders would be worthless because the holders thereof are not entitled to participate in any redemption or distribution with respect to such shares. Chardan Capital Markets would also not be entitled to receive the fees described below in such an event.

On July 23, 2020, the Sponsor purchased 1,000,000 shares of common stock of Chardan for an aggregate purchase price of $25,000. On March 4, 2021, Chardan effected a 2.875-for-1 stock split, resulting in 2,875,000 shares of common stock being held by the Sponsor (an affiliate of Chardan Capital Markets). On August 10, 2021, Chardan effectuated a 1.1-for-1 stock split, resulting in an aggregate of 3,162,500 shares of common stock outstanding. On August 18, 2021, the underwriters’ exercised the over-allotment option in full, thus the Founder Shares are no longer subject to forfeiture. Such shares had an aggregate market value of approximately $32,542,125 based upon the closing price of $10.29 per share on the Nasdaq on September 15, 2022. In May and June 2021, the Sponsor transferred 20,000 Founder Shares to each of Messrs. Biele, Boyle, Hardamon, Thakrar and Thomson and Ms. Jardins.

Pursuant to the terms of the Business Combination Marketing Agreement Chardan engaged Chardan Capital Markets, an affiliate of Sponsor, as an advisor in connection with its business combination. Chardan Capital Markets will receive a cash fee for such services upon the consummation of the Merger in an amount equal to, in the aggregate, $4,427,500, being 3.5% of the gross proceeds of the Chardan IPO. Chardan Capital Markets will also receive a cash fee of $1,170,000 for other financial advisory services, including for advisory services provided with respect to placement of potential PIPE investments, and identifying and negotiating lender financing.

Simultaneously with the closing of the Chardan IPO, Holdings (an affiliate of Sponsor and Chardan Capital Markets) purchased an aggregate of 4,361,456 private warrants at a price of $0.93 per private placement warrant ($4,052,000 in the aggregate). Simultaneously with the closing of the exercise of the underwriters’ over-allotment option, Holdings purchased an additional 266,402 private warrants at a purchase price of $0.93 per private placement warrant. Each private placement warrant entitles the
 
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holder to purchase one share of common stock at an exercise price of $11.50 per share. The proceeds from the private warrants were added to the proceeds from the Chardan IPO to be held in the Trust Account. The private warrants had an aggregate market value of $1,249,521.66 based upon the closing price of approximately $0.27 per share on the Nasdaq on September 15, 2022. The private warrants will become worthless if Chardan does not consummate a business combination by August 13, 2022 (unless this deadline is extended pursuant to Chardan’s covenant to extend such deadline under the Business Combination Agreement and pursuant to the Chardan Organizational Documents).

Perry Boyle, current director of Chardan, will become a director of New Dragonfly after the Closing. As such, in the future he may receive cash fees, stock options or stock awards that the post-combination board of directors determines to pay to its executive and non-executive directors.

If Chardan is unable to complete an initial business combination within the completion window, the Sponsor will be liable under certain circumstances to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Chardan for services rendered or contracted for or products sold to Chardan. If Chardan consummates an initial business combination, on the other hand, Chardan will be liable for all such claims.

Chardan’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on Chardan’s behalf, such as identifying and investigating possible business targets and business combinations. However, if Chardan fails to consummate an initial business combination within the completion window, they will not have any claim against the trust account for reimbursement. Accordingly, Chardan may not be able to reimburse these expenses if the Business Combination or another initial business combination, is not completed within the completion window.

The current directors and officers will continue to be indemnified and the liability insurance of the directors and officers will continue.

In connection with the Business Combination, Chardan and the Sponsor, an affiliate of Chardan Capital Markets, entered into the Subscription Agreement, which provides for the Sponsor to purchase an aggregate of 500,000 shares of Chardan common stock upon the terms as set forth in the Subscription Agreement. The number of PIPE Securities that the Sponsor is obligated to purchase under the Subscription Agreement shall be reduced by the number of shares of common stock of Chardan that the Sponsor may purchase in the open market. For additional information, see the sections entitled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Subscription Agreement” and “Certain Relationships and Related Person Transactions — Chardan Related Party Transactions.”

In addition, pursuant to the Equity Facility Letter Agreement, Chardan and Dragonfly agreed to enter into the Equity Facility Definitive Documentation prior to the Closing Date reflecting the terms in the Equity Facility Letter Agreement. Pursuant to and on the terms of the Equity Facility Definitive Documentation, the Equity Facility Investor will commit to purchase up to an aggregate of $150,000,000 in shares of New Dragonfly’s common stock from time to time at the request of the New Dragonfly, subject to certain limitations and the satisfaction of certain conditions. Further, New Dragonfly will agree to issue Equity Facility Commitment Shares as consideration for its irrevocable commitment to purchase the shares of New Dragonfly common stock upon the terms and subject to the satisfaction of the conditions set forth in the Equity Facility Definitive Documentation. For additional information, see the sections entitled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Equity Facility Letter Agreement” and “Certain Relationships and Related Person Transactions — Chardan Related Party Transactions.”

Pursuant to the Debt Commitment Letter, the Chardan Lender has agreed to provide 60% of the commitment with respect to the Term Loan on the Closing Date subject to the satisfaction of a number of specified conditions set forth in the Debt Commitment Letter. The Chardan Lender has backstopped its commitment under the Debt Commitment Letter by entering into the Backstop Commitment Letter with the Backstop Lender. The Chardan Lender is entitled to payment of fees in connection with the Term Loan pursuant to the fee letter entered into in connection with the Debt
 
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Commitment Letter, but, in accordance with the terms of the Backstop Commitment Letter, such fees are to be paid to the Backstop Lenders on the Closing Date. For additional information, see the sections entitled “Proposal No. 1 — The Business Combination Proposal — Related Agreements — Debt Commitment Letter” and “Certain Relationships and Related Person Transactions — Chardan Related Party Transactions.”

Given the difference in the purchase price the Sponsor and our directors paid for the Founders Shares as compared to the price of the units sold in the Chardan IPO, the Sponsor and our directors may earn a positive rate of return on their investment even if New Dragonfly common stock trades below the price paid for the units in the Chardan IPO and the public stockholders experience a negative rate of return following the completion of the Business Combination.

The Sponsor will benefit from the completion of a business combination and may be incentivized to complete an acquisition of a less favorable target company or on terms less favorable to the public stockholders rather than liquidating Chardan.

The Sponsor and the initial stockholders, among others, will enter into the Registration Rights Agreement which will provide them with registration rights.
Stockholders should also keep in mind that certain officers and directors of Dragonfly have interests in the Business Combination that are different from, or in addition to, those of Chardan stockholders generally.

In connection with the Business Combination, based on the Minimum Cash Balance after fees at closing, Mr. Denis Phares and Sean Nichols, Dragonfly’s co-founders and its Chief Executive Officer and Chief Operating Officer, respectively, are each entitled to a transaction cash bonus. The bonus amount ranges from (i) 5% of the exercise proceeds from the exercise of Chardan’s public warrants (split evenly between them) to (ii) $4,000,000 each. Assuming maximum redemptions and minimum redemptions of Chardan stock, respectively, Mr. Phares and Nichols would (i) receive a cash bonus tied to future public warrant exercises and (ii) $4,000,000 each. See “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination.

As an inducement to hire Mr. John Marchetti as Dragonfly’s Chief Financial Officer, Dragonfly loaned Mr. Marchetti $350,000 to repay amounts owed by him to his former employer and entered into a related Promissory Note with a maturity of March 1, 2026. In consideration of the Business Combination and Dragonfly’s obligations as a publicly traded company, Dragonfly forgave all amounts owed under the Promissory Note effective March 2022.
Board of Directors following the Business Combination
Upon completion of the Business Combination, New Dragonfly’s board of directors will be composed of seven members. New Dragonfly expects that six of its directors will meet the independence requirements under the Nasdaq Listed Company Manual. In accordance with the Business Combination Agreement, Perry Boyle was designated as a director designated by Chardan, and Luisa Ingargiola and Brian Nelson were designated as directors by Dragonfly’s board of directors. Please see the section entitled “Management of New Dragonfly After the Business Combination” for additional information.
Other Agreements Relating to the Business Combination
Subscription Agreement
Concurrently with the execution of the Business Combination Agreement, Chardan entered into the Subscription Agreement with the Sponsor, pursuant to which, among other things, the Sponsor agreed to subscribe for and purchase, and Chardan agreed to issue and sell to the Sponsor, 500,000 shares of PIPE Securities, immediately prior to or substantially concurrently with the Closing, for a price of $10.00 per share for gross proceeds of $5 million. The Subscription Agreement contains customary representations, warranties, covenants and agreements of Chardan and the Sponsor. The obligation of the parties to consummate the PIPE Investment is conditioned upon, among other things, (i) satisfaction or waiver of the conditions precedent to the closing of the transactions set forth in the Business Combination Agreement and (ii) there not being any amendment or modification to the Business Combination Agreement that would reasonably be
 
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expected to materially and adversely affect the economic benefits that the Sponsor would reasonably expect to receive under the Subscription Agreement. The closing under the Subscription Agreement will occur substantially concurrently with the Closing.
Registration Rights Agreement
At the consummation of the Business Combination, New Dragonfly intends to enter into the Registration Rights Agreement with the Sponsor, the Insiders, certain Dragonfly stockholders, the Sponsor and Holdings, substantially in the form attached as Annex H to this proxy statement, pursuant to which, among other things, New Dragonfly will agree to register for resale, pursuant to Rule 415 under the Securities Act, the registrable securities that are held by the holders party to the Registration Rights Agreement from time to time. Pursuant to the Registration Rights Agreement, New Dragonfly will be required to submit to or file with the SEC, within 30 calendar days after the Closing, a shelf registration statement covering the issuance and the resale of all such registrable securities on a delayed or continuous basis, and to use commercially reasonable efforts to have such shelf registration statement declared effective as soon as practicable after the filing thereof, but no later than the earlier of (i) 90 calendar days after the filing thereof if the SEC notifies New Dragonfly that it will “review” the shelf registration statement and (ii) the 10th business day after the date New Dragonfly is notified (orally or in writing, whichever is earlier) by the SEC that the shelf registration statement will not be “reviewed” or will not be subject to further review.
Sponsor Support Agreement
Concurrently with the execution of the Business Combination Agreement, Chardan, Dragonfly and the Sponsor entered into a sponsor support agreement (the “Sponsor Support Agreement”), pursuant to which the Sponsor agreed, among other things, (i) to vote, or cause to be voted, at any meeting of the stockholders of Chardan all of its shares of Chardan common stock held of record or acquired after the date of the Sponsor Support Agreement (excluding shares of any common stock acquired in public market) (a) in favor of the proposals set forth in this proxy statement and (b) against any proposal that would reasonably be expected to result in (x) a breach of any of Chardan’s or Merger Sub’s covenants, agreements or obligations under the Business Combination Agreement or in any Ancillary Agreements or (y) any Closing conditions set forth in Section 9.1 or 9.3 of the Business Combination Agreement not being satisfied; (ii) to not redeem any of such Chardan common stock; (iii) to be bound by certain other covenants and agreements related to the Business Combination and (iv) to be bound by certain transfer restrictions with respect to such shares of Chardan common stock, in each case, on the terms and subject to the conditions set forth in the Sponsor Support Agreement. Pursuant to the Sponsor Support Agreement, the Sponsor has also agreed to waive redemption rights with respect to any shares purchased in the open market.
Debt Commitment Letter and Backstop Commitment Letter
Concurrently with the execution of the Business Combination Agreement, Chardan and Dragonfly entered into a commitment letter (the “Debt Commitment Letter”) with CCM Investments 5 LLC, an affiliate of Chardan Capital Markets (“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”), pursuant to which the Initial Term Loan Lenders have agreed to provide Dragonfly with a senior secured term loan facility in an aggregate principal amount of $75 million (the “Term Loan”) on the Closing Date subject to the satisfaction of a number of specified conditions set forth in the Debt Commitment Letter. The obligations of the Initial Term Loan Lenders to provide the Term Loan will terminate on October 31, 2022 (or such later date reasonably acceptable to the Initial Term Loan Lenders) if the Closing Date has not occurred by such date. The Chardan Lender has 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”), pursuant to which the Backstop Lender has 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 subject only to final documentation that is consistent in all material respects with the Debt Commitment Letter and the Summary of Terms and Conditions attached thereto.
 
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Equity Facility Letter Agreement
On May 15, 2022, Chardan, Dragonfly and the Equity Facility Investor entered into the Equity Facility Letter Agreement pursuant to which Chardan and Dragonfly agreed to enter into the Equity Facility Definitive Documentation prior to the Closing Date to establish the Equity Facility. Pursuant to, on the terms of and subject to the satisfaction of the conditions to be set forth in the Equity Facility Definitive Documentation, including the filing and effectiveness of a registration statement registering the resale by the Equity Facility Investor of the shares of New Dragonfly common stock issued to it under the Equity Facility Definitive Documentation, New Dragonfly will have the right from time to time at its option to direct the Equity Facility Investor to purchase up to a specified maximum amount of shares of New Dragonfly common stock, up to a maximum aggregate purchase price of $150,000,000 over the 36-month term of the Equity Facility.
Recommendation to Stockholders
The Chardan Board believes that the Business Combination Proposal and the other proposals to be presented at the special meeting are fair to and in the best interest of Chardan’s stockholders and unanimously recommends that its stockholders vote “FOR” the Business Combination Proposal, “FOR” the Charter Proposal, “FOR” the Nasdaq Proposal, “FOR” the Incentive Plan Proposal, “FOR” the ESPP Proposal, “For” the Director Election Proposal and “FOR” the Adjournment Proposal, if presented.
When you consider the Chardan Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that are different from, or in addition to, the interests of Chardan stockholders generally. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for additional information. The Chardan Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Business Combination and in recommending to the Chardan stockholders that they vote “FOR” the proposals presented at the special meeting.
Conditions to the Closing
Conditions to Each Party’s Obligations
The respective obligations of each party to the Business Combination Agreement to consummate the transactions contemplated by the Business Combination are subject to the satisfaction or, if permitted by applicable law, written waiver by the party whose benefit such condition exists of the following conditions:

no governmental authority shall have enacted, issued, promulgated, enforced or entered any law, judgment, decree, executive order or award which is then in effect and has the effect of making the transactions, including the Merger, illegal or otherwise prohibiting or enjoining consummation of the transactions, including the Merger;

this proxy statement shall have received SEC clearance;

the waiting period or periods under the HSR Act applicable to the transactions contemplated by the Business Combination Agreement and the Ancillary Agreements (as defined in the Business Combination Agreement) shall have expired or been terminated (the waiting period expired on June 27, 2022);

the Chardan common stock to be issued in connection with the transactions shall have been approved for listing on Nasdaq;

Chardan shall have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act and inclusive of the PIPE Investment Amount actually received by Chardan prior to or substantially concurrently with the Closing);

the Business Combination Agreement and, to the extent required, the transactions contemplated by the Business Combination Agreement (including the Merger) shall have been approved by the affirmative vote of the holders of the requisite number of Chardan common stock being obtained in
 
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accordance with Chardan’s current certificate of incorporation and bylaws, applicable law, and the rules and regulations of Nasdaq; and

the Business Combination Agreement and, to the extent required, the transactions contemplated by the Business Combination Agreement (including the Merger) shall have been approved by the requisite number of stockholders of Dragonfly in accordance with the Nevada Revised Statutes, Dragonfly’s governing documents and agreements between Dragonfly and its stockholders (“Dragonfly Stockholder Approval”). The Dragonfly Stockholder Approval was obtained and delivered to Chardan immediately following the execution of the Business Combination Agreement by execution of a written consent by the requisite equityholders of Dragonfly.
Other Conditions to the Obligations of Chardan
The obligations of Chardan to consummate the transactions contemplated by the Business Combination Agreement are subject to the satisfaction or, if permitted by applicable law, written waiver by Chardan of the following further conditions:

certain of the representations and warranties of Dragonfly pertaining to the capitalization of Dragonfly must be true and correct in all but de minimis respects as of the Closing Date, except with respect to such representations and warranties which speak as to an earlier date, which representations and warranties shall be true and correct in all but de minimis respects at and as of such date;

each of the Dragonfly Fundamental Representations (other than those portions of the capitalization representations referenced in the preceding bullet point) must be true and correct in all material respects, in each case as of the Closing Date, except with respect to such representations and warranties which speak as to an earlier date, which representations and warranties shall be true and correct in all material respects at and as of such date;

the other representations and warranties of Dragonfly shall be true and correct (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” or any similar limitation set forth in the Business Combination Agreement) as of the Closing Date (or, if given as of an earlier date, as of such earlier date), except where the failure of such representations and warranties to be true and correct, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect;

Dragonfly shall have performed and complied in all material respects with the covenants and agreements required to be performed or complied with by it under the Business Combination Agreement as of or prior to the Closing;

the Company Preferred Conversion shall have occurred or will occur immediately prior to the Effective Time;

The Key Employment Agreements shall have been amended in accordance with the terms of the applicable amendments, and shall continue to be in full force and effect and shall not have been terminated for any reason;

Dragonfly shall have (x) if the debt financing as contemplated by the Debt Commitment Letter is consummated, delivered the Payoff Consent (as defined in the Business Combination Agreement) and Payoff Letter (as defined below) and repaid all outstanding PIUS Debt (as defined in the Business Combination Agreement) or (y) if the debt financing as contemplated by the Debt Commitment Letter is not consummated, refinanced the PIUS Debt on mutually agreeable terms; and

no Material Adverse Effect shall have occurred since the date of the Business Combination Agreement.
Other Conditions to the Obligations of Dragonfly
The obligations of Dragonfly to consummate the transactions contemplated by the Business Combination Agreement are subject to the satisfaction or, if permitted by applicable law, written waiver by Dragonfly of the following further conditions:

certain of the representations and warranties of Chardan regarding the capitalization of Chardan, must be true and correct in all but de minimis respects as of the Closing Date, except with respect to
 
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such representations and warranties which speak as to an earlier date, which representations and warranties shall be true and correct in all but de minimis respects at and as of such date, except for changes after the date of the Business Combination Agreement which are contemplated or expressly permitted by the Business Combination Agreement;

the other representations and warranties regarding Chardan and Merger Sub shall be true and correct (without giving effect to any limitation of “materiality” or “material adverse effect” or any similar limitation set forth in the Business Combination Agreement) as of the Closing Date, except where the failure of such representations and warranties to be true and correct, individually or in the aggregate, would not reasonably be expected to result in a material adverse effect on Chardan’s ability to consummate the transactions contemplated by the Business Combination Agreement; and

Chardan shall have performed and complied in all material respects with the covenants and agreements required to be performed or complied with by it under the Business Combination Agreement.
U.S. Federal Income Tax Considerations of the Exercise of Redemption Rights
For a discussion of U.S. federal income tax considerations of (i) the exercise of redemption rights to holders of Chardan public shares and (ii) the Merger to Dragonfly stockholders, please see the information set forth in the section entitled “U.S. Federal Income Tax Considerations.”
Anticipated Accounting Treatment
The Business Combination will be accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with U.S. generally accepted accounting principles. Under this method of accounting, Chardan is treated as the “acquired” company for financial reporting purposes. Dragonfly has been determined to be the accounting acquirer because Dragonfly, as a group, will retain a majority of the outstanding shares of New Dragonfly as of the closing of the Business Combination, they will nominate five of the seven members of the board of directors as of the closing of the Business Combination, Dragonfly’s management will continue to manage New Dragonfly and Dragonfly’s business will comprise the ongoing operations of New Dragonfly.
Business of Dragonfly
Dragonfly is a manufacturer of non-toxic deep cycle lithium-ion batteries that caters to customers in the RV, marine vessel and off-grid residence industries, with potentially disruptive solid-state cell technology currently under development. Dragonfly believes that green energy is more than just a trend. Dragonfly’s goal is to develop technology to deliver environmentally impactful solutions for energy storage to everyone globally. Dragonfly believes that the innovative design of its lithium-ion batteries is ideally suited for the demands of modern customers who rely on consumer electronics, connected devices and smart appliances that require continuous, reliable electricity, regardless of location. Dragonfly is leveraging the expertise of its Chief Executive Officer and Chairman of the Board, who holds a M.B.A. from University of Nevada — Reno, a Ph.D. in Engineering from the California Institute of Technology and a B.S. in Physics from Villanova University.
Dragonfly’s deep cycle LFP batteries provide numerous advantages compared to incumbent products, such as lead-acid batteries. LFP batteries are non-toxic and environmentally friendly, do not rely on scarce or controversial metals and are a highly cost-effective storage solution. As Dragonfly develops its proprietary solid-state cell technology, it believes its use of LFP will continue to provide significant advantages over the lithium-ion technology in development by other companies, which still incorporate less stable components in their chemistries (such as sulfide glasses, which are chemically unstable and form hydrogen sulfide when exposed to air).
Dragonfly currently focuses on three main end markets: RVs, marine vessels and off-grid storage and, in the medium- to longer-term, it plan on expanding into several new markets. Within its current markets, Dragonfly’s aim is to replace incumbent lead-acid batteries. Dragonfly’s batteries are primarily designed to provide consumers with a long-lasting, highly efficient power source for powering appliances, consumer electronics and other smart devices located inside RVs, marine vessels or off-grid residences and, other than
 
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for certain smaller marine vessels, are not intended for propulsion. Dragonfly’s batteries are powertrain agnostic, with the ability to operate on internal combustion engine vehicles or electric vehicles.
In addition to our conventional LFP batteries, Dragonfly’s experienced research and development team, headed by its co-founder and CEO, is currently developing the next generation of LFP solid-state cells.
Ownership of the Post-Business Combination Company After Closing
It is anticipated that upon completion of the Business Combination and assuming minimum redemptions by Chardan public stockholders, Chardan’s public stockholders will retain an ownership interest of approximately 6.6% of New Dragonfly, the Term Loan Lenders will own approximately 3.7% of New Dragonfly assuming the exercise of all Penny Warrants, the Sponsor, officers, directors and other holders of Founder Shares will retain an ownership interest of approximately 7.8% of New Dragonfly (including the PIPE Investment), and the Dragonfly stockholders will own approximately 81.9% (excluding the 40,000,000 Earnout Shares) of New Dragonfly. These levels of ownership interest: (a) include the impact of the shares of Chardan common stock issuable upon exercise of the Penny Warrants due to their nominal exercise price but exclude the impact of the $10 Warrants and the shares issuable under the Equity Facility, (b) include the impact of the redemption of 9,556,652 Chardan ordinary shares in connection with the Charter Amendment and assume that no additional Chardan public stockholder exercises redemption rights with respect to its shares for a pro rata portion of the funds in Chardan’s trust account, (c) assume that no shares are issued pursuant to the Dragonfly Incentive Plan and the 2022 Plan, (d) assume that no shares are issued pursuant to the vesting and exercise of New Dragonfly options for shares of New Dragonfly common stock and (e) assume no exercise of Chardan public warrants and Chardan private placement warrants. If the shares issuable under the Equity Facility, including the Commitment Shares, were assumed to be issued based upon an assumed VWAP of $10.15 (the redemption price), that could result in up to an additional 14,876,847 shares being issuable, subject the terms, conditions and limitations set forth in the Equity Facility, and result in additional dilution of Chardan’s public stockholders. This number is subject to increase or decrease if the stock price decreases or increases from the assumed price of $10.15. If the redemption price is significantly less than the assumed VWAP of $10.15, Chardan’s public stockholders would experience considerable additional dilution. For example, based upon an assumed VWAP of $6.00, an additional 25,166,667 shares, which includes 166,667 Commitment Shares, would be issuable. See the section entitled “Proposal No. 3 — The Incentive Plan Proposal” for additional information on the Dragonfly Incentive Plan and the 2022 Plan. If the actual facts are different from these assumptions (which they are likely to be), the percentage ownership retained by the Chardan stockholders will be different.
The following table illustrates varying ownership levels in New Dragonfly, assuming consummation of the Business Combination and minimum redemptions by Chardan public stockholders, 10% redemption by Chardan public stockholders, 50% redemption by Chardan public stockholders, 75% redemption by Chardan public stockholders and the maximum redemptions by Chardan public stockholders:
 
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Minimum
Redemptions(1)
%
10%
Redemption(2)
%
50%
Redemption(3)
%
75%
Redemption(4)
%
Maximum
Redemption(5)
%
Dragonfly existing shareholders(6)(7) 
38,444,217 81.9% 38,444,217 82.4% 38,444,217 84.8% 38,444,217 86.4% 38,444,217 87.9%
Chardan existing public stockholders(8)(9)
3,093,348 6.6% 2,784,013 6.0% 1,546,674 3.4% 773,337 1.7% %
Initial Stockholders(10)(11)
3,662,500 7.8% 3,662,500 7.9% 3,662,500 8.1% 3,662,500 8.2% 3,662,500 8.4%
Term Loan Lender(12)(13)
1,722,866 3.7% 1,711,314 3.7% 1,665,106 3.7% 1,636,226 3.7% 1,607,347 3.7%
Pro forma Common Stock(14)
46,922,931
100.0%
46,602,044
100.0%
45,318,497
100.0%
44,516,280
100.0%
43,714,064
100.0%
Potential sources of dilution:
Earnout Shares
40,000,000 40,000,000 40,000,000 40,000,000 40,000,000
Public Warrants
9,487,500 9,487,500 9,487,500 9,487,500 9,487,500
Private Warrants
4,627,858 4,627,858 4,627,858 4,627,858 4,627,858
Dragonfly Options
6,750,723 6,736,923 6,681,723 6,647,173 6,612,673
$10 Warrants
1,600,000 1,600,000 1,600,000 1,600,000 1,600,000
(1)
Assumes that no additional Chardan public stockholders are redeemed.
(2)
Assumes that 309,335 Chardan public shares are redeemed for aggregate redemption payments of approximately $3,166,058, assuming a $10.24 per share redemption price and based on funds in the Trust Account as of August 11, 2022.
(3)
Assumes that 1,546,674 Chardan public shares are redeemed for aggregate redemption payments of approximately $15,830,290, assuming a $10.24 per share redemption price and based on funds in the Trust Account as of August 11, 2022.
(4)
Assumes that 2,320,011 Chardan public shares are redeemed for aggregate redemption payments of approximately $23,745,434, assuming a $10.24 per share redemption price and based on funds in the Trust Account as of August 11, 2022.
(5)
Assumes that 3,093,348 Chardan public shares are redeemed for aggregate redemption payments of approximately $31,660,579, assuming a $10.24 per share redemption price and based on funds in the Trust Account as of August 11, 2022.
(6)
Excludes 40,000,000 Earnout Shares payable in three tranches subject to achievement of specified financial information milestones for 2023 or post-Closing trading price milestones for New Dragonfly Common Stock and assumes that no shares are issued pursuant to the Dragonfly Incentive Plan and the 2022 Plan.
(7)
Includes shares of Dragonfly common stock issued pursuant to the THOR Investment.
(8)
Excludes 9,487,500 shares of Common Stock underlying the Public Warrants.
(9)
Reflects the redemption of 9,556,652 public shares in connection with the Charter Amendment.
(10)
Excludes 4,627,858 shares of Common Stock underlying the Private Warrants. Additionally, the Sponsor has agreed that the Private Warrants may not be exercised to the extent an affiliate of the Sponsor is deemed to beneficially own, or it would cause such affiliate to be deemed to beneficially own, more than 7.5% of the New Dragonfly Common Stock.
(11)
Includes 500,000 shares of Common Stock purchased by the Sponsor pursuant to the PIPE Subscription Agreement and 3,162,500 outstanding founder shares. The 3,162,500 outstanding founder shares include 3,052,500 founder shares held by the Sponsor and 110,000 founder shares held by officers and directors of Chardan. Please see the section titled “Beneficial Ownership of Securities.”
(12)
Assumes the exercise and conversion of the Penny Warrants into common stock due to their nominal exercise price. The Penny Warrants are exercisable for 3.6% of fully-diluted outstanding shares of Common Stock post closing. For purposes of such calculation, ownership of Common Stock “on a fully diluted basis” includes (i) all outstanding Common Stock, (ii) shares of Common Stock issuable upon conversion of outstanding convertible bonds, preferred stock and other securities convertible to Common Stock on an as-converted to Common Stock basis, and (iii) all shares of Common Stock subject to outstanding options.
 
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(13)
Excludes 1,600,000 shares of Common Stock underlying the $10 Warrants.
(14)
Excludes shares of Common Stock issuable pursuant to the Equity Facility after Closing.
In connection with the Chardan IPO and the Business Combination, Chardan paid or will pay certain fees to Chardan Capital Markets LLC and to Stifel, Nicolaus & Company, Incorporated for advisory services. The following table illustrates the effective fee percentages paid to such advisors based on the varying levels of redemptions by Chardan public stockholders:
Minimum
Redemptions
10%
Redemption
50%
Redemption
75%
Redemption
Maximum
Redemption
Unredeemed public shares
3,093,348 2,784,013 1,546,674 773,337
Trust proceeds to Dragonfly
$ 31,660,579 $ 28,494,521 $ 15,830,290 $ 7,915,145 $
PIPE Investment
$ 5,000,000 $ 5,000,000 $ 5,000,000 $ 5,000,000 $ 5,000,000
THOR Investment
$ 15,000,000 $ 15,000,000 $ 15,000,000 $ 15,000,000 $ 15,000,000
Term Loan
$ 75,000,000 $ 75,000,000 $ 75,000,000 $ 75,000,000 $ 75,000,000
Business Combination Marketing
Agreement – Chardan Capital
Markets
$ 4,427,500 $ 4,427,500 $ 4,427,500 $ 4,427,500 $ 4,427,500
Financial advisory services – Chardan Capital Markets
$ 1,170,000 $ 1,170,000 $ 1,170,000 $ 1,170,000 $ 1,170,000
Capital market advisory services – Stifel
$ 2,730,000 $ 2,730,000 $ 2,730,000 $ 2,730,000 $ 2,730,000
Financial advisory services – Stifel
$ 8,000,000 $ 8,000,000 $ 8,000,000 $ 8,000,000 $ 8,000,000
Effective fee (%)
12.89% 13.22% 14.73% 15.87% 17.19%
Risk Factor Summary
In evaluating the proposals to be presented at the special meeting, you should carefully read this proxy statement and especially consider the factors discussed in the section entitled “Risk Factors.” The occurrence of one or more of the events or circumstances described in that section, alone or in combination with other events or circumstances, may have a material adverse effect on (i) the ability of Chardan and Dragonfly to complete the Business Combination, and (ii) the business, cash flows, financial condition and results of operations of the company following consummation of the Business Combination. These risks include:
Risks Related to Dragonfly’s Existing Lithium-Ion Battery Operations

Our business and future growth depends on the needs and success of our customers.

We operate in a competitive industry. We expect that the level of competition will increase and the nature of our competitors will change as we develop new LFP battery products for, and enter into, new markets, and as the competitive landscape evolves.

We may not succeed in our medium- and long-term strategy of entering into new end markets for LFP batteries and our success depends, in part, on our ability to successfully develop and manufacture new products for, and acquire customers in, these new markets and successfully grow our operations and production capabilities (including, in time, our ability to manufacture solid-state cells in-house).

We currently rely on two suppliers to provide our LFP cells and a single supplier for the manufacture of our battery management system. Any disruption in the operations of these key suppliers could adversely affect our business and results of operations.

We are currently, and likely will continue to be, dependent on a single manufacturing facility. If our facility becomes inoperable for any reason, or our automation and expansion plans do not yield the desired effects, our ability to produce our products could be negatively impacted.
 
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Risks Related to Dragonfly’s Solid-State Technology Development

We face significant engineering challenges in our attempts to develop and manufacture solid-state battery cells and these efforts may be delayed or fail which could negatively impact our business.

We expect to make significant investments in our continued research and development of solid-state battery technology development, and we may be unable to adequately control the costs associated with manufacturing our solid-state battery cells.

If our solid-state batteries fail to perform as expected, our ability to further develop, market and sell our solid-state batteries could be harmed.
Risks Related to Intellectual Property

We rely heavily upon our intellectual property portfolio. If we are unable to protect our intellectual property rights, our business and competitive position would be harmed.

We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause us to incur substantial costs.
General Risk Factors

The uncertainty in global economic conditions, including as a result of the COVID-19 pandemic and the Russia-Ukraine conflict, could reduce consumer spending and disrupt our supply chain which could negatively affect our results of operations.

The loss of one or more members of our senior management team, other key personnel or our failure to attract additional qualified personnel may adversely affect our business and our ability to achieve our anticipated level of growth.

Our operating and financial results forecast relies in large part upon assumptions and analyses developed by us. If these assumptions or analyses prove to be incorrect, our actual operating results may be materially different from our forecasted results.

If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of customer service, or adequately address competitive challenges.
Risks Related to Dragonfly’s Financial Position and Capital Requirements

Our business is capital intensive, and we may not be able to raise additional capital on attractive terms, if at all. Any further indebtedness we incur may limit our operational flexibility in the future.

Restrictions imposed by our outstanding indebtedness and any future indebtedness may limit our ability to operate our business and to finance our future operations or capital needs or to engage in acquisitions or other business activities necessary to achieve growth.

We will enter into the definitive documentation with respect to the Term Loan for the purposes of consummating the Business Combination which may adversely affect our leverage and financial condition and thus negatively impact the value of our shareholders’ investment in us.
Risks Related to Ownership of Chardan Securities and the Business Combination

The Sponsor, certain members of the Chardan Board and certain Chardan officers have interests in the Business Combination that are different from or are in addition to the Chardan stockholders in recommending that stockholders vote in favor of approval of the Business Combination Proposal and approval of the other proposals described in this proxy statement.

If Chardan is unable to complete the Business Combination or another initial business combination by August 13, 2022 (unless this deadline is extended pursuant to Chardan’s covenant to extend such deadline under the Business Combination Agreement and pursuant to the Chardan Organizational Documents), Chardan will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval of its remaining stockholders and the Chardan Board, dissolving and liquidating. In such event, third parties may bring claims against
 
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Chardan and, as a result, the proceeds held in the trust account could be reduced and the per-share liquidation price received by stockholders could be less than $10.00 per share.

The unaudited pro forma financial information included elsewhere in this proxy statement may not be indicative of what New Dragonfly’s actual financial position or results of operations would have been.
Risks Related to Ownership of New Dragonfly’s Common Stock

Warrants will become exercisable for New Dragonfly’s common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to New Dragonfly’s stockholders.

Insiders will continue to have substantial influence over New Dragonfly after the Business Combination, which could limit your ability to affect the outcome of key transactions, including a change of control.

Chardan’s public stockholders will experience immediate dilution as a consequence of, among other transactions, the issuance of Chardan common stock as consideration in the Business Combination, the PIPE Investment, the Term Loan and the Equity Facility in addition to immediate dilution from the issuance of the Equity Facility Commitment Shares. Having a minority share position may reduce the influence that Chardan’s current stockholders have on the management of New Dragonfly.

We may issue additional shares of Chardan common stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of your shares.
 
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SUMMARY HISTORICAL FINANCIAL INFORMATION OF DRAGONFLY
The information presented below is derived from Dragonfly’s unaudited financial statements included elsewhere in this proxy statement/prospectus for the six months ended June 30, 2022 and 2021 and the balance sheet data as of June 30, 2022 and Dragonfly's audited financial statements included elsewhere in this proxy statement/prospectus as of and for the years ended December 31, 2021 and 2020.
Dragonfly’s historical results are not necessarily indicative of the results that may be expected for any other period in the future. You should read the selected historical financial data set forth below together with Dragonfly’s financial statements and the accompanying notes included elsewhere in this proxy statement, the information in the section entitled “Dragonfly’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other financial information contained elsewhere in this proxy statement.
Dragonfly is providing the following selected historical consolidated financial information to assist you in your analysis of the financial aspects of the Business Combination.
For the six months ended June 30,
2022
2021
(in thousands)
Net Sales
$ 39,925 $ 38,973
Cost of Goods Sold
27,402 22,939
Gross profit
12,523 16,034
Operating expenses
Research and development
1,198 1,196
Sales and marketing
5,973 4,213
General and administrative
7,421 5,393
Total Operating expenses
14,592 10,802
(Loss) Income From Operations
(2,069) 5,232
Other (Expense) Income
Interest (Expense) Income
(2,450)
(Loss) Gain on Disposition of Assets
(62) 62
Total Other (Expense) Income
(2,512) 62
(Loss) Income Before Taxes
(4,581) 5,294
(Benefit) Provision for Income Tax
(814) 1,117
Net (Loss) Income
$ (3,767) $ 4,177
For the year ended December 31,
2021
2020
(in thousands)
Net Sales
$ 78,000 $ 47,187
Cost of Goods Sold
48,375 26,580
Gross profit
29,625 20,607
Operating expenses
Research and development
2,689 1,239
Sales and marketing
10,621 4,662
General and administrative
9,848 5,960
Total Operating expenses
23,158 11,861
Income From Operations
6,467 8,746
 
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For the year ended December 31,
2021
2020
(in thousands)
Other (Expense) Income
Other Income
1 15
Interest (Expense) Income
(519) 3
Total Other (Expense) Income
(518) 18
Income Before Taxes
5,949 8,764
Income Tax Expense
1,611 1,886
Net Income
$ 4,338 $ 6,878
As of June 30,
As of December 31,
2022
2021
2020
(in thousands)
Balance Sheet Data:
Cash
$ 1,055 $ 25,586 $ 6,206
Total Assets
$ 74,154 $ 76,251 $ 18,807
Total Liabilities
$ 60,939 $ 60,190 $ 8,252
Total Equity
$ 11,215 $ 14,061 $ 8,555
Total Liabilities, Redeemable Preferred Stock and Shareholders’ Equity
$ 74,154 $ 76,251 $ 18,807
 
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SUMMARY HISTORICAL FINANCIAL INFORMATION OF CHARDAN
Chardan is providing the following summary historical financial information to assist you in your analysis of the financial aspects of the Business Combination.
Chardan’s statements of operations and cash flows data for the six months ended June 30, 2022 and the audited financial statements of Chardan as of December 31, 2021 and consolidated balance sheet data as of June 30, 2022 are derived from Chardan’s financial statements included elsewhere in this proxy statement/prospectus.
This information is only a summary and should be read in conjunction with Chardan’s financial statements and related notes and the sections entitled “Chardan’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this proxy statement/prospectus. The historical results included below and elsewhere in this proxy statement are not indicative of the future performance of Chardan.
June 30, 2022
Balance Sheet Data:
Cash
$ 350
Investments held in Trust Account
$ 128,611
Total assets
$ 129,192
Total liabilities
$ 1,196
Common stock subject to possible redemption
$ 128,398
Total stockholders’ deficit
$ (402)
For the Six
Months Ended
June 30, 2022
For the Year Ended
December 31, 2021
Statement of Operations Data:
Loss from operations
$ (725) $ (358)
Warrant issuance costs
$ $ (19)
Loss on sale of private warrants
$ $ (1,254)
Change in fair value of warrant liability
$ 1,157 $ 3,517
Net gain on investments held in Trust Account
$ 189 $ 24
Net income (loss)
$ 621 $ 1,910
Basic weighted average shares outstanding
15,812,500 7,732,021
Basic net income (loss) per share of common stock
$ 0.04 $ 0.25
Diluted weighted average shares outstanding
15,812,500 7,991,952
Diluted net income (loss) per share of common stock
$ 0.04 $ 0.24
Statement of Cash Flows Data:
Net cash used in operating activities
$ (450) $ (547)
Net cash used in investing activities
$ $ (128,398)
Net cash provided by financing activities
$ $ 129,719
 
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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following summary unaudited pro forma condensed combined financial data (the “Summary Pro Forma Information”) gives effect to the Business Combination and related transactions. The Business Combination will be accounted for as a reverse recapitalization, in accordance with GAAP. Under this method of accounting, Chardan will be treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination will be reflected as the equivalent of Dragonfly issuing shares for the net assets of Chardan, followed by a recapitalization whereby no goodwill or other intangible assets are recorded. Operations prior to the Business Combination will be those of Dragonfly. There will be no accounting effect or change in the carrying amount of the assets and liabilities as a result of the Business Combination. The summary unaudited pro forma condensed combined balance sheet as of June 30, 2022 gives effect to the Business Combination as if it had occurred on June 30, 2022. The summary unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2022 and the year ended December 31, 2021 gives effect to the Business Combination as if they had occurred on January 1, 2021.
The Summary Pro Forma Information has been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial information included in the section titled “Unaudited Pro Forma Condensed Combined Financial Information” in this proxy statement/prospectus and the accompanying notes thereto. The unaudited pro forma condensed combined financial information is based upon, and should be read in conjunction with, the historical financial statements and related notes of Chardan and Dragonfly for the applicable periods included elsewhere in this proxy statement/ prospectus. The Summary Pro Forma Information has been presented for informational purposes only and is not necessarily indicative of what Dragonfly’s financial position or results of operations actually would have been had the Business Combination been completed as of the dates indicated. In addition, the Summary Pro Forma Information does not purport to project the future financial position or operating results of Dragonfly following the reverse recapitalization.
The unaudited pro forma condensed combined financial information has been prepared using the assumptions below with respect to the potential redemption into cash of Chardan ordinary shares:

Assuming Minimum Redemptions: This scenario assumes that no additional public stockholders of Chardan exercise redemption rights with respect to their public shares for a pro rata share of the funds in the Trust Account.

Assuming Maximum Redemptions: This scenario assumes that 3,093,348 shares of Chardan common stock subject to redemption are redeemed for an aggregate payment of approximately $31.7 million (based on an estimated per share redemption price of approximately $10.24 that was calculated using the $31.7 million of cash in the Trust Account divided by 3,093,348 Chardan shares of Common Stock subject to redemption assuming the pro forma maximum redemption scenario pursuant to the Business Combination Agreement).
Pro Forma Combined
Assuming
Minimum
Redemptions
Assuming
Maximum
Redemptions
Summary Unaudited Pro Forma Condensed Combined Statement of Operations Data For the Six Months Ended June 30, 2022
Net loss
$ (7,891) $ (7,891)
Basic and diluted net loss per share
$ (0.17) $ (0.18)
Weighted average shares outstanding
46,922,931 43,714,064
Summary Unaudited Pro Forma Condensed Combined Statement of Operations Data For the Year Ended December 31, 2021
Net loss
$ (34,266) $ (30,266)
Basic and diluted net loss per share
$ (0.73) $ (0.69)
Weighted average shares outstanding
46,922,931 43,714,064
 
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Pro Forma Combined
Assuming
Minimum
Redemptions
Assuming
Maximum
Redemptions
Summary Unaudited Pro Forma Condensed Combined Balance Sheet Data
As of June 30, 2022
Total assets
$ 120,068 $ 92,407
Total liabilities
$ 72,763 $ 72,763
Total stockholders’ equity (deficit)
$ 47,305 $ 19,644
 
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement contains certain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended, including certain financial forecasts and projections. All statements other than statements of historical fact contained in this proxy statement, including statements as to the transactions contemplated by the business combination and related agreements, future results of operations and financial position, revenue and other metrics, planned products and services, business strategy and plans, objectives of management for future operations of Dragonfly, market size and growth opportunities, competitive position and technological and market trends, are forward-looking statements. Some of these forward-looking statements can be identified by the use of forward-looking words, including “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “plan,” “targets,” “projects,” “could,” “would,” “continue,” “forecast” or the negatives of these terms or variations of them or similar expressions. All forward-looking statements are subject to risks, uncertainties, and other factors (some of which are beyond the control of Dragonfly or Chardan) which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. All forward-looking statements are based upon estimates, forecasts and assumptions that, while considered reasonable by Chardan and its management, and Dragonfly and its management, as the case may be, are inherently uncertain and many factors may cause the actual results to differ materially from current expectations.
Factors that may impact such forward-looking statements include:

the occurrence of any event, change or other circumstances that could give rise to the termination of the Business Combination Agreement;

the outcome of any legal proceedings that may be instituted against Chardan, Dragonfly or others following announcement of the Business Combination and the transactions contemplated in the Business Combination Agreement;

the inability to complete the transactions contemplated by the Business Combination Agreement due to the failure to obtain approval of the stockholders of Chardan or other conditions to closing in the Business Combination Agreement;

the ability to obtain or maintain the listing of New Dragonfly common stock on the Nasdaq following the Business Combination;

changes to the proposed structure of the Business Combination that may be required or appropriate as a result of applicable laws or regulations or as a condition to obtaining regulatory approval of the Business Combination;

the ability to meet Nasdaq’s listing standards following the consummation of the business Combination;

the risk that the proposed transaction disrupts current plans and operations of Dragonfly as a result of the announcement and consummation of the Business Combination;

the inability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, the ability of New Dragonfly to grow and manage growth profitably, maintain relationships with customers, compete within its industry and retain its key employees;

the ability of Dragonfly to successfully increase market penetration into its target markets

the addressable markets that Dragonfly intends to target do not grow as expected;

the loss of any members of Dragonfly’s senior management team or other key personnel;

the loss of any relationships with key suppliers including suppliers in China;

the loss of any relationships with key customers;

the inability to protect Dragonfly’s patents and other intellectual property;
 
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the failure to successfully optimize solid state cells or to produce commercially viable solid state cells in a timely manner or at all, or to scale to mass production;

costs related to the proposed Business Combination;

changes in applicable laws or regulations;

the possibility that Dragonfly or the combined company may be adversely affected by other economic, business and/or competitive factors (including an economic slowdown or inflationary pressures);

Dragonfly’s estimates of its growth and projected financial results for 2022 and 2023 and meeting or satisfying the underlying assumptions with respect thereto;

the risk that the Business Combination may not be completed in a timely manner or at all, which may adversely affect the price of Chardan’s securities;

the risk that the transaction may not be completed by Chardan’s Business Combination deadline (as may be extended pursuant to Chardan’s governing documents);

the impact of the novel coronavirus disease pandemic, including any mutations or variants thereof, and its effect on business and financial conditions;

inability to complete the PIPE investment, the Term Loan and equity line (“ChEF”) in connection with the Business Combination;

the potential for events or circumstances that result in Dragonfly’s failure to timely achieve the anticipated benefits of Dragonfly’s customer arrangements with THOR;

New Dragonfly’s ability to raise additional capital to fund its operations;

New Dragonfly’s ability to generate revenue from future product sales and its ability to achieve and maintain profitability;

the accuracy of New Dragonfly’s projections and estimates regarding its expenses, capital requirements, cash utilization, and need for additional financing;

the expected uses of the net proceeds from the Business Combination;

the potential scope and value of New Dragonfly’s intellectual property and proprietary rights;

developments relating to New Dragonfly’s competitors and its industry;

New Dragonfly’s ability to engage target customers and successfully convert these customers into meaningful orders in the future;

New Dragonfly’s reliance on two suppliers for its LFP cells and a single supplier for the manufacture of its battery management system;

New Dragonfly’s likely dependence on a single manufacturing facility;

New Dragonfly’s increasing reliance on software and hardware that is highly complex and technical; and

other risks and uncertainties indicated in this proxy statement/prospectus, including those under the heading “Risk Factors” in this proxy statement/prospectus, and other filings that have been made or will be made with the SEC by Chardan and New Dragonfly, as applicable.
The forward-looking statements contained in this proxy statement are based on Chardan’s and Dragonfly’s current expectations and beliefs concerning future developments and their potential effects on the Business Combination and Dragonfly. There can be no assurance that future developments affecting Chardan and/or Dragonfly will be those that Chardan or Dragonfly has anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond Chardan’s and/or Dragonfly’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects
 
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from those projected in these forward-looking statements. Chardan and Dragonfly will not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Before a stockholder grants its proxy or instructs how its vote should be cast or votes on the Business Combination Proposal, the Charter Proposal, the Nasdaq Proposal, the Incentive Plan Proposal, the ESPP Proposal, the Director Election Proposal or the Adjournment Proposal, it should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement/prospectus may adversely affect Chardan and Dragonfly.
 
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RISK FACTORS
The following risk factors will apply to the business and operations of New Dragonfly following the Closing. These risk factors are not exhaustive and stockholders should carefully consider the following risk factors in addition to the other information included in this proxy statement/prospectus, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements,” before deciding how to vote their shares of Chardan common stock. Please see the section entitled “Where You Can Find More Information” in this proxy statement/prospectus. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to complete or realize the anticipated benefits of the Business Combination, and may have a material adverse effect on the business, financial condition and operating results of Dragonfly and New Dragonfly following the Business Combination. The risks discussed below may not prove to be exhaustive and are based on certain assumptions made by Chardan and Dragonfly that later may prove to be incorrect or incomplete. Chardan, Dragonfly and New Dragonfly may face additional risks and uncertainties that are not presently known to Chardan or Dragonfly or that Chardan and Dragonfly currently deem immaterial, which may also impair New Dragonfly’s business, financial condition or operating results. The following discussion should be read in conjunction with the financial statements of Dragonfly and the financial statements of Chardan and the notes thereto included elsewhere in this proxy statement/prospectus.
Unless the context otherwise requires, all references in this section to “we,” “us,” or “our” refer to Dragonfly and its subsidiaries prior to the Closing and the business and operations of New Dragonfly as directly or indirectly affected by Dragonfly by virtue of New Dragonfly’s ownership of the business of Dragonfly.
Risks Related to Dragonfly’s Existing Lithium-Ion Battery Operations
Our business and future growth depends on the needs and success of our customers.
The demand for our products, including sales to original equipment manufacturers (“OEMs”), ultimately depends on consumers in our current end markets (primarily owners of recreational vehicles (“RVs”), marine vessels and off-grid residences). The performance and growth of these markets is impacted by numerous factors, including macro-economic conditions, consumer spending, travel restrictions, fuel costs and energy demands (including an increasing trend towards the use of green energy). Increases or decreases in these variables may significantly impact the demand for our products. If we fail to accurately predict demand, we may be unable to meet our customers’ needs, resulting in the loss of potential sales, or we may produce excess products, resulting in increased inventory and overcapacity in our production facilities, increasing our unit production cost and decreasing our operating margins.
An increasing proportion of our revenue has been and is expected to continue to be derived from sales to RV OEMs. Our RV OEM sales have been on a purchase order basis, without firm revenue commitments, and we expect that this will likely continue to be the case. For example, under our supply arrangement with Keystone RV Company (“Keystone”), the largest manufacturer of towable RVs in North America, Keystone has agreed to fulfill certain of its LFP battery requirements exclusively through us for at least one year, with potential annual renewals. However, although in time we expect Keystone to be significant contributor to our projected growth in RV OEM battery sales, this arrangement may not deliver the anticipated benefits, as there are no firm purchase commitments, sales will continue to be made on a purchase order basis, Keystone is permitted to purchase other LFP batteries from third parties and this arrangement may not be renewed. In addition, we have recently agreed to a strategic investment by THOR Industries (“THOR”), which, among other things, contemplates a future, mutually agreed exclusive distribution agreement with THOR in North America. Although we expect that THOR will be a be significant contributor to our projected growth in RV OEM battery sales, this arrangement may not deliver the anticipated benefits and this distribution agreement will, in the future, preclude us from dealing with other large RV OEMs and their associated brands in North America or otherwise could negatively impact our relationships with those RV OEMs to whom we may be permitted to supply our batteries. Increased overall RV OEM sales may not materialize as expected or at all and we may fail to achieve our targeted sales levels. Future RV OEM sales are subject to a number of risks and uncertainties, including the number of RVs that these OEMs manufacture and sell (which can be impacted by a variety of events including those disrupting our OEM customers’ operations due to supply chain disruptions or labor constraints); the degree to which our OEM customers incorporate/design-in our batteries into their
 
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RV product lines; the extent to which RV owners, if applicable, opt to purchase our batteries upon initial purchase of their RV or in the aftermarket; and our continued ability to successfully develop and introduce reliable and cost-effective batteries meeting evolving industry standards and customer specifications and preferences. Our failure to adequately address any of these risks may result in lost sales which could have a material adverse effect on our business, financial condition and results of operations.
In addition, our near-term growth depends, in part, on the continued growth of the end markets in which we currently operate. Although the total addressable market for RVs, marine vessels and off-grid residences is estimated to reach $12 billion by 2025, these markets may not grow as expected or at all, and we may be unable to maintain existing customers and/or attract new customers in these markets. Our failure to maintain or expand our share of these growing markets could have a material adverse effect on our business, financial condition and results of operations.
We may not be able to engage target customers successfully and convert these customers into meaningful orders in the future.
Our success, and our ability to increase sales and operate profitably, depends on our ability to identify target customers and convert these customers into meaningful orders, as well as our continued development of existing customer relationships. Although we have developed a multi-pronged sales and marketing strategy to penetrate our end markets and reach a range of customers, this strategy may not continue to be effective in reaching or converting target customers into orders, or as we expand into additional markets. Recently, we have also dedicated more resources to developing relationships with certain key RV OEMs, such as Keystone, which we aim to convert into collaborations on custom designs and/or long-term contractual arrangements. We may be unable to convert these relationships into meaningful orders or renew these arrangements going forward, which may require us to expend additional cost and management resources to engage other target customers.
Our sales to any future or current customers may decrease for reasons outside our control, including loss of market share by customers to whom we supply products, reduced or delayed customer requirements, supply and/or manufacturing issues affecting production, reputational harm or continued price reductions. Furthermore, in order to attract and convert customers we must continue to develop batteries that address our current and future customers’ needs. Our failure to achieve any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.
We operate in a competitive industry. We expect that the level of competition will increase and the nature of our competitors will change as we develop new LFP battery products for, and enter into, new markets, and as the competitive landscape evolves. These competitive and other factors could result in lost potential sales and lower average selling prices and profitability for our products.
We compete with traditional lead-acid battery manufacturers and lithium-ion battery manufacturers, who primarily either import their products or components or manufacture products under a private label. As we continue to expand into new markets, develop new products and move towards production of our solid-state cells, we will experience competition with a wider range of companies. These include companies focused on solid-state cell production, vertically integrated energy companies and other technology-focused energy storage companies. We believe our main competitive advantage in displacing incumbent lead-acid batteries is that we produce a lighter, safer, higher performing, cost-effective battery with a longer lifespan. We believe our go-to-market strategy, established brand, proven reliability and relationships with OEMs and end consumers both (i) enable us to compete effectively against other battery manufacturers and (ii) position us favorably to expand into new addressable markets. However, OEM sales typically result in lower average selling prices and related margins, which could result in overall margin erosion, affect our growth or require us to raise our prices. As a result, we may be unable to maintain this competitive advantage given the rapidly developing nature of the industry in which we operate.
Our current competitors have, and future competitors may have, greater resources than we do. Our competitors may be able to devote greater resources to the development of their current and future technologies. These competitors may also be able to devote greater resources to sales and marketing efforts, affording them great access to customers, and may be able to establish cooperative or strategic relationships amongst themselves or with third parties that may further enhance their competitive positioning. In addition,
 
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foreign producers may be able to employ labor at significantly lower costs than producers in the United States, expand their export capacity and increase their marketing presence in our major end markets. We expect actual and potential competitors to continue their efforts to develop alternative battery technologies and introduce new products with more desirable, attractive features. These new technologies and products may be introduced sooner than our offerings and could gain greater market acceptance. Although we believe we are a leader in developing solid-state battery technology (particularly for the RV, marine vessel and off-grid residence markets which require cost-effective batteries with a long-life span), new competitors may emerge, alternative approaches to solid-state battery technology may be developed and competitors may seek to market solid-state battery technologies better suited for other applications (such as electric vehicles (“EVs”)) to our target markets.
Additional competitive and other factors may result in lost sales opportunities and declines in average sales prices and overall product profitability. These include rapidly evolving technologies, industry standards, economic conditions and end-customer preferences. Our failure to adapt to or address these factors as they arise could have a material adverse effect on our business, financial condition and results of operations.
We may not succeed in our medium- and long-term strategy of entering into new end markets for LFP batteries and our success depends, in part, on our ability to successfully develop and manufacture new products for, and acquire customers in, these new markets and successfully grow our operations and production capabilities (including, in time, our ability to manufacture solid-state cells in-house).
Our future success depends, in part, upon our ability to expand into additional end markets identified by us as opportunities for our LFP batteries. These markets include industrial, specialty and work vehicles, material handling, solar integration, and emergency and standby power in the medium term, and data centers, rail, telecom and distributed on-grid storage in the longer term. Our ability to expand into these markets depends on a number of factors, including the continued growth of these markets, having sufficient capital to expand our product offerings (including in the longer term batteries incorporating, once developed, our solid-state cells) and manufacturing capacity, developing products adapted to customer needs and preferences in these markets, our successful expansion of our manufacturing capabilities in order to meet customer demand, our ability to identify and convert potential customers within these markets and our ability to attract and retain qualified personnel to assist in these efforts. Although we intend to devote resources and management time to understanding these new markets, we may face difficulties in understanding and accurately predicting the demographics, preferences and purchasing habits of customers and consumers in these markets. If we fail to execute on our growth strategies in accordance with our expectations, our sales growth would be limited to the growth of existing products and existing end markets, and this could have a material adverse effect on our business, financial condition and results of operations.
Further, if we are unable to manage the growth of our operations effectively to match the growth in sales, we may incur unexpected expenses and be unable to meet our customers’ requirements, which could materially adversely affect our business, financial condition and results of o