Filing summary
Important identity note: The supplied filing is Chardan NexTech Acquisition 2 Corp.’s Form 10-Q for the quarter ended September 30, 2021—not a filing by Dragonfly Energy Holdings Corp. It describes a blank-check company (SPAC), not Dragonfly’s operating business.
Business context and reporting period
The unaudited report covers the three and nine months ended September 30, 2021. Chardan NexTech Acquisition 2 was formed to pursue a business combination and had not begun operating activities or generated operating revenue. It completed its IPO in August 2021 and was seeking a target company.
Financial results and position
- Revenue: No operating revenue. The company reported non-operating trust investment income.
- Net income: $2.69 million for both the quarter ($2,690,543) and nine-month period ($2,689,709). The quarter’s income was primarily driven by a $4.07 million non-cash gain from the change in fair value of warrant liabilities; it also included a $1.25 million loss on sale of private warrants and $116,268 in operating and franchise-tax costs.
- Cash flow: Nine-month operating cash use was $459,653; investing cash use was $128.40 million, principally the IPO proceeds deposited in trust; financing cash provided was $129.72 million. Cash outside the trust was $887,208 at quarter-end.
- Assets and liquidity: Total assets were $129.66 million, including $128.40 million in trust investments. Working capital was reported as a $1.23 million surplus. The trust funds are primarily reserved for a business combination or redemption and should not be viewed as ordinary operating cash.
- Debt and liabilities: No long-term debt or lease obligations were reported, and no working-capital loans were outstanding. Total liabilities were $1.51 million, including $1.48 million of private-warrant liabilities.
- Margins: Not meaningful because the company had no operating revenue.
Changes versus prior comparable periods
The prior-year comparison reflects the company’s early formation period, when it reported a $1,000 net loss and had not completed its IPO. The 2021 results reflect the IPO, trust investments, warrant accounting, and related costs; consequently, the reported profit is not an indication of operating performance. Cash outside the trust increased from $25,000 at December 31, 2020 to $887,208 at September 30, 2021.
Outlook, risks, and unusual items
- The company had 12 months from the August 13, 2021 IPO closing—until August 13, 2022—to complete a business combination, with up to two three-month extensions potentially available. Insiders or affiliates were not obligated to fund extensions.
- Management disclosed substantial doubt about the company’s ability to continue as a going concern within one year after issuance, citing limited cash outside the trust and expected costs of pursuing an acquisition. Completion of a business combination was the stated plan, with no assurance of success or timely completion.
- The company revised prior financial-statement classification of redeemable shares, moving them outside permanent equity. The filing says the correction was non-cash and did not affect cash, operating expenses, or total cash flows.
- Disclosure controls and procedures were deemed ineffective at September 30, 2021 because of a material weakness related to the redeemable-share classification. Management described remediation efforts but gave no assurance they would have the intended effect.
- COVID-19 could adversely affect the company’s financial position or target search, but the impact was not determinable. No material changes to previously disclosed risk factors, legal proceedings, or subsequent events requiring disclosure were reported.
Key facts for investors to verify
- Confirm the registrant: this text identifies Chardan NexTech Acquisition 2 Corp., not Dragonfly Energy Holdings Corp.
- Review the material weakness, the revised redeemable-share classification, and the progress and effectiveness of remediation.
- Assess cash available outside the trust, expected transaction costs, and the going-concern warning separately from trust-account funds.
- Verify business-combination timing, extension funding, redemption terms, and the potential dilution and accounting effects of warrants.
- Distinguish the reported net income from recurring operations; the company had no operating revenue and income was substantially affected by a non-cash warrant fair-value gain.