RENO, Nev., May 16, 2022 /PRNewswire/ -- Dragonfly Energy Corp. ("Dragonfly" or the "Company"), a leader in energy storage and producer of deep cycle lithium-ion storage batteries, and Chardan NexTech Acquisition 2 Corp. ("CNTQ") (Nasdaq: CNTQ), a publicly traded special purpose acquisition company, today announced a definitive agreement for a business combination that will result in Dragonfly becoming a publicly listed company. Upon closing of the transaction, the combined company will be renamed Dragonfly Energy and is expected to be listed on the Nasdaq under the new ticker symbol "DFLI."

Creating a New Standard for Environmentally Impactful Energy Storage
Dragonfly has created state-of-the-art lithium-ion batteries equipped with a proprietary battery management system that are currently used in recreational vehicles ("RVs"), marine vessels, material handling, and off-grid residences and solar applications.  Dragonfly's integrated lithium-ion products replace large and environmentally toxic lead-acid batteries and provide safe, efficient, and affordable energy storage solutions for a clean, renewable future.

Sold direct-to-consumers under the Battle Born Batteries™ brand and to original equipment manufacturers ("OEMs"), such as Keystone RV, a subsidiary of Thor Industries (NYSE: THO), and Midwest Automotive, a subsidiary of REV Group (NYSE: REVG), under the Dragonfly EnergyTM brand, Dragonfly generated $78 million of revenue and nearly $9 million of adjusted EBITDA in 2021, both representing an 80+% CAGR since 2018.  As Dragonfly penetrates new and existing markets, the Company anticipates continued growth with 2022 and 2023 revenue forecasts of $115 million and $255 million, respectively, and 2022 and 2023 adjusted EBITDA forecasts of $12 million and $41 million, respectively.  CNTQ believes that an investment in Dragonfly presents a compelling opportunity at a 32% discount to its peers' 2023 revenue multiples.

Dragonfly intends to use a portion of the proceeds raised from this transaction to accelerate the development and commercialization of its revolutionary All-Solid-State-Battery technology.  All-Solid-State-Batteries are non-flammable and are designed to allow for efficient, distributed energy storage that enables renewables to be cost competitive with fossil fuels while further stabilizing the power grid.

Dragonfly Co-Founder, Chairman & Chief Executive Officer, Dr. Denis Phares, and the current management team are expected to continue to lead the combined company.  

Dr. Phares said: "CNTQ shares our vision for providing the safe and cost-effective distributed storage solution required for our renewable energy future and supports our unique customer-centric approach to technology and innovation.  This transaction will help us grow our core business and facilitate the development and large-scale deployment of our All-Solid-State-Battery technology."

Jonas Grossman, Chief Executive Officer and Director of CNTQ, added, "As an innovator in the battery space, Dragonfly can transform distributed energy storage with the growth and commercialization of its All-Solid-State-Battery technology.  We are excited to support the team as they become a public company."

Transaction Overview
The business combination values Dragonfly at an implied $500.1 million pro forma enterprise value. Estimated cash proceeds to the combined company are expected to consist of CNTQ's approximately $128 million of cash in trust (assuming no redemptions) and an additional $230 million consisting of $75 million senior secured term loan (used in part to refinance approximately $45 million of outstanding Dragonfly indebtedness), a $5 million equity investment at $10.00 per share from CNTQ's Sponsor, Chardan NexTech Investments 2 LLC, and a $150 million Chardan Equity Facility (ChEFTM) from Chardan, an affiliate of CNTQ's sponsor.

The transaction includes an earn-out provision for up to an additional 40 million shares as follows: 15 million issued if both 2023 audited Revenue and Operating Income reach $250 million and $35 million, respectively; 12.5 million issued at a price target of $22.50 by December 31, 2026; 12.5 million issued at a price target of $32.50 by December 31, 2028. All Dragonfly stockholders will roll 100% of their equity holdings into the new combined company.

A commitment letter and term sheet have been agreed in connection with the $75 million term loan and $150 million equity facility, respectively.  The availability of these facilities is subject to the negotiation and execution of related definitive documentation, customary funding conditions and closing of the business combination.    

The Boards of Directors of each of Dragonfly and CNTQ have unanimously approved the transaction, the Board of Directors of CNTQ has unanimously recommended to CNTQ stockholders the approval of the transaction, and the requisite stockholders of Dragonfly have approved the transaction. The transaction will require the approval of the stockholders of CNTQ, and is subject to satisfaction or waiver of the conditions stated in the merger agreement and other customary closing conditions, including the receipt of certain regulatory approvals. The transaction is currently expected to close in the second half of 2022.

Additional information about the proposed transaction, including a copy of the merger agreement and investor presentation, will be provided in a Current Report on Form 8-K to be filed by CNTQ with the Securities and Exchange Commission ("SEC") and will be available on the  Dragonfly investor relations page at www.dragonflyenergy.com/investors and at www.sec.gov. More information about the proposed transaction will also be described in CNTQ's proxy statement/prospectus relation to the business combination, which it will file with the SEC.

Advisors
Stifel, Nicolaus & Company, Incorporated is serving as financial advisor. O'Melveny & Myers, LLP and Parsons Beble & Latimer are serving as legal counsel to Dragonfly. 

Chardan is serving as financial advisor, Stifel and Chardan are acting as joint placement agents, Skadden, Arps, Slate, Meagher & Flom LLP and Brownstein Hyatt Farber Schreck, LLP are serving as legal counsel to CNTQ.

Energy Impact Partners is serving as lead arranger of the senior secured term loan. Chapman and Cutler LLP is serving as legal counsel to Energy Impact Partners.

Read the full press release.