DEF 14A: Dragonfly Energy Holdings Corp. Seeks Stockholder Approval for Reverse Stock Split and Director Elections at 2024 Annual Meeting

Dragonfly Energy Holdings Corp. is holding its 2024 Annual Meeting of Stockholders virtually on November 12, 2024, to vote on director elections, a potential reverse stock split, and other corporate matters.

Summary

• Dragonfly Energy Holdings Corp. is convening its 2024 Annual Meeting of Stockholders on November 12, 2024, to address several key proposals.
• Stockholders will vote to elect two directors to the Board for terms expiring in 2027.
• A significant proposal involves authorizing the Board to enact a reverse stock split within one year, at a ratio between 1:5 and 1:20, to regain compliance with Nasdaq's minimum bid price requirement.
• The meeting will also address the ratification of Marcum LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2024.
• Additionally, stockholders will vote on a proposal to adjourn the Annual Meeting if there are insufficient votes to approve the Reverse Stock Split Proposal.
• The Board urges stockholders to vote on these matters, emphasizing that their vote is important regardless of the number of shares owned.
• As of the record date, October 7, 2024, there were 62,776,944 shares of common stock outstanding.

Sentiment

Score: 4

Explanation: The document contains both positive aspects, such as proactive measures to regain Nasdaq compliance, and negative aspects, such as the need for a reverse stock split and liquidity concerns. The overall sentiment is slightly negative due to the financial challenges faced by the company.

Positives

• The company is taking proactive steps to regain compliance with Nasdaq's minimum bid price requirement through the proposed reverse stock split.
• Stockholders have the opportunity to participate in the Annual Meeting virtually, ensuring accessibility regardless of location.
• The Board is seeking stockholder input on key decisions, including director elections and the ratification of the independent auditor.
• The company has a process in place for stockholders to communicate with the Board and its committees.

Negatives

• The need for a reverse stock split indicates that the company's stock price has been below Nasdaq's minimum bid price requirement.
• The company has obtained waivers from its Administrative Agent and Term Loan Lenders of its failures to satisfy the Senior Leverage Ratio and Fixed Charge Coverage Ratio tests with respect to the minimum cash requirements under the Term Loan during multiple quarters.
• The company has issued multiple tranches of penny warrants to Term Loan Lenders in connection with waivers of financial tests under the Term Loan.

Risks

• The reverse stock split may not increase the market price of the common stock, and any increase may not be long-term or permanent.
• Even if the reverse stock split is approved, there is no assurance that the company will continue to meet the continued listing requirements of the Nasdaq Capital Market.
• The reverse stock split may result in some stockholders owning odd lots of less than 100 shares of common stock on a post-split basis, which may be more difficult to sell.
• The company's liquidity is a concern, as evidenced by the need for waivers from lenders regarding financial covenants.
• The issuance of penny warrants to lenders may dilute existing stockholders' equity.

Future Outlook

The company intends to have at least two diverse directors by August 6, 2026, as required by Nasdaq rules. The Board may implement a reverse stock split within one year of stockholder approval to regain compliance with Nasdaq listing requirements.

Management Comments

• On behalf of the Board and the employees of Dragonfly Energy Holdings Corp., we thank you for your continued support and look forward to speaking with you at the Annual Meeting, stated Denis Phares, President, Chief Executive Officer, Interim Chief Financial Officer, and Chairman of the Board.

Industry Context

The document does not provide specific details on how this announcement relates to broader industry trends or competitors.

Related Party Transactions

• On March 5, 2023, the company issued the unsecured promissory note (the March 2023 Note) in the principal amount of $1.0 million to Brian Nelson, one of our directors, in a private placement in exchange for cash in an equal amount.
• On January 30, 2024, the company issued an unsecured convertible promissory note (the January Note) in the principal amount of $1.0 million (the January Principal Amount) to Brian Nelson, one of our directors, in a private placement in exchange for cash in an equal amount.
• On February 27, 2024 the company issued a convertible promissory (the February Note) in the amount of $1.7 million (the February Principal Amount) to Mr. Nelson, in a private placement in exchange for cash in an equal amount.

Stakeholder Impact

• The reverse stock split could impact stockholders by potentially increasing the stock price, but also by potentially reducing liquidity and creating odd lots.
• Employees may be affected by the company's financial performance and its ability to meet its obligations.
• The company's suppliers and creditors may be impacted by its liquidity and financial stability.

Next Steps

• Stockholders need to vote on the proposals outlined in the proxy statement.
• The Board will determine whether to implement the reverse stock split and, if so, at what ratio.
• The company will continue to work towards regaining compliance with Nasdaq listing requirements.
• The company will need to address its liquidity concerns and financial covenant compliance.

Key Dates

Keywords

reverse stock split, annual meeting, director election, proxy statement, corporate governance, Nasdaq, Marcum LLP, DFLI, Dragonfly Energy