SCHEDULE 13D/A: Dragonfly Energy CEO Denis Phares Affirms Significant Stake and Backs Shareholder Vote for Warrant Issuance

Dragonfly Energy Holdings Corp.'s CEO, Denis Phares, has reaffirmed his substantial 24.7% beneficial ownership stake and entered into a support agreement to vote in favor of issuing up to 1.4 million shares related to penny warrants.

Summary

• Denis Phares, CEO, President, Interim Financial Officer, and Chairman of Dragonfly Energy Holdings Corp., beneficially owns 1,781,287 shares of Common Stock, representing approximately 24.7% of the Issuer's outstanding shares as of December 31, 2024.
• His ownership includes 1,645,964 directly held shares and 135,323 shares held indirectly through the Phares 2021 GRAT.
• He also holds 63,046 restricted stock units (RSUs) that will vest more than 60 days from the filing date, which are not included in the current beneficial ownership percentage.
• Phares entered into a Support Agreement with the Issuer on December 31, 2024.
• Under this agreement, Phares committed to attend shareholder meetings and vote in favor of a proposal to obtain shareholder approval for the issuance of up to 1,400,000 shares of Common Stock.
• These 1,400,000 shares are underlying "penny warrants" issued to certain existing securityholders on or after December 31, 2024, in compliance with Nasdaq Rules 5635(b) and 5635(d).
• Phares states his acquisition of securities is for investment, believing the Issuer is an attractive investment opportunity, and he may adjust his holdings based on market conditions and other factors.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to the CEO's significant ownership stake and stated belief in the company's attractiveness as an investment. However, the potential for significant dilution from the warrant issuance introduces a notable negative aspect, balancing the overall sentiment.

Positives

• The CEO, Denis Phares, maintains a significant beneficial ownership stake of 24.7%, indicating strong alignment with shareholder interests and confidence in the company's future.
• Phares views the Issuer as an "attractive investment opportunity," signaling positive internal sentiment.
• The Support Agreement ensures the CEO's commitment to participate in shareholder meetings and support key corporate actions, potentially streamlining governance.

Negatives

• The potential issuance of up to 1,400,000 shares underlying penny warrants could lead to significant dilution for existing shareholders if approved and exercised, representing approximately 19.4% of the current outstanding shares (1,400,000 / 7,217,232).

Risks

• Potential shareholder dilution from the issuance of up to 1,400,000 shares underlying penny warrants, if approved and exercised.
• The Reporting Person's ability to purchase or sell securities of the Issuer from time to time, which could impact stock price volatility.
• The Reporting Person's significant influence over corporate activities due to his multiple executive and board roles.

Future Outlook

The document indicates a future shareholder vote is required to approve the issuance of up to 1,400,000 shares of Common Stock underlying penny warrants, which were issued to existing securityholders on or after December 31, 2024. The CEO has committed to vote in favor of this proposal.

Management Comments

• "The Reporting Person acquired the securities set forth in Item 5 for investment in the ordinary course of business because of his belief that the Issuer represents an attractive investment opportunity."
• "The Reporting Person may, from time to time, purchase or sell securities of the Issuer depending upon an ongoing evaluation of the investment in the Common Stock of the Issuer, prevailing market conditions, other investment opportunities, other investment considerations and/or other factors, subject to the restrictions set forth in the Support Agreement."

Industry Context

This filing is a standard disclosure of beneficial ownership and a specific agreement by a key insider, Denis Phares, related to a potential share issuance. It does not provide broader industry trends or competitive analysis.

Corporate Governance

Related Party Transactions

• Support Agreement dated December 31, 2024, between Dragonfly Energy Holdings Corp. and Denis Phares (the Reporting Person), who is the Chairman, President, CEO, and Interim Financial Officer of the Issuer. This agreement commits Phares to vote in favor of a proposal to approve the issuance of up to 1,400,000 shares underlying penny warrants.

Stakeholder Impact

• Shareholders: Potential for significant dilution if the 1,400,000 shares underlying penny warrants are issued and exercised. The CEO's continued large stake and stated belief in the company could be seen as a positive signal.
• Management: The CEO's commitment via the Support Agreement aligns his voting power with the company's need to approve the warrant issuance.

Next Steps

• Shareholder meeting to vote on the proposal for the issuance of up to 1,400,000 shares of Common Stock underlying penny warrants.
• Potential future purchases or sales of Issuer securities by the Reporting Person, subject to the Support Agreement.

Key Dates

Recommendation

Keywords

Dragonfly Energy Holdings Corp., Denis Phares, Schedule 13D, Beneficial Ownership, Common Stock, Shareholder Vote, Warrants, Dilution, Corporate Governance, SEC Filing, Investment Opportunity, Nasdaq Rules