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United States securities and exchange commission logo
July 5, 2022
Jonas Grossman
Chief Executive Officer
Chardan NexTech Acquisition 2 Corp.
17 State Street, 21st Floor
New York, New York 10004
Re: Chardan NexTech
Acquisition 2 Corp.
Registration
Statement on Form S-4
Filed June 17, 2022
File No. 333-265713
Dear Mr. Grossman:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Form S-4 filed June 17, 2022
General Risk Factors
The uncertainty in global economic conditions, page 56
1. You disclose that you
may be unable to offset material price inflation through increased
prices to customers.
Please update your disclosure to identify actions planned or taken, if
any, to mitigate
inflationary pressures.
Fairness Opinion of Duff & Phelps, page 90
2. We note your response
to our prior comment seven. You state that Duff & Phelps
delivered its opinion
to the Chardan Board "solely in their capacity as members of the
Chardan Board." This
appears to be a limitation on reliance by shareholders in
the fairness opinion.
Shareholders are entitled to rely upon all disclosure contained in the
Jonas Grossman
FirstName LastNameJonas Grossman
Chardan NexTech Acquisition 2 Corp.
Comapany
July 5, 2022NameChardan NexTech Acquisition 2 Corp.
July 5,2 2022 Page 2
Page
FirstName LastName
registration statement/proxy, especially as it relates to the fairness
of the consideration to
be paid. Please delete this limitation here and in Annex I.
U.S. Federal Income Tax Considerations, page 153
3. Please revise the tax disclosure in your registration statement to:
(i) Remove language that
"generally" certain tax consequences will apply and express a firm
opinion for each
material tax consequence or explain why such an opinion cannot be
given; and (ii) state in
your disclosure that the discussion is the opinion of tax counsel and
identify
counsel. Also, we note your intention and expectation that the
transaction qualify as a
reorganization within the meaning of Section 368(a) of the U.S.
Internal Revenue Code of
1986, as amended. Please revise your disclosure to more clearly state
counsel's tax opinion on whether the transaction will qualify as a
reorganization and
include appropriate risk factor disclosure. In addition, please also
file a tax opinion as an
exhibit to the filing. Refer to Item 601(b)(8) of Regulation S-K, per
Item 21(a) of Form S-
4, and, for guidance, Section III of Staff Legal Bulletin No. 19.
Chardan's Management's Discussion and Analysis of Financial Condition and
Results of
Operations
Recent Developments, page 169
4. We note your response to prior comment 10; however, we continue to
note an
inconsistency in your disclosures. Although you now disclose here that
ASU 2020-06 is
effective for you on January 1, 2024 and you are currently assessing
the impact of
adoption, you disclose in the notes to your financial statements on
page F-15 that ASU
2020-06 is effective for you on January 1, 2024 and you early adopted
on January 1,
2021. Please correct or reconcile these disclosures.
Certain Projected Financial Information Of Dragonfly, page 202
5. We note your response to our prior comment 11. Where possible, please
quantify the
material estimates and assumptions used to prepare the Dragonfly
Projected Financial
Information. Please also expand your disclosure to discuss how these
projections relate to
Dragonfly's historical financial results.
Unaudited Pro Forma Condensed Combined Financial Information, page 206
6. We note the Earnout Shares are expected to be recognized at fair value
upon the closing of
the Business Combination and classified in stockholders equity. We
also note the
preliminary fair value of the Earnout Shares is $288.8 million. Based
on the terms of the
Earnout Shares, please more fully explain how you determined the
accounting treatment
for these shares and how you determined equity classification is
appropriate. Please also
disclose and more fully explain how you determined the preliminary
fair value of the
Earnout Shares, including the material assumptions.
7. We note the new shares of common stock that will be issued to
Dragonfly Equity Holders
Jonas Grossman
FirstName LastNameJonas Grossman
Chardan NexTech Acquisition 2 Corp.
Comapany
July 5, 2022NameChardan NexTech Acquisition 2 Corp.
July 5,3 2022 Page 3
Page
FirstName LastName
will be allocated between the holders of Dragonfly common stock and
options to acquire
Dragonfly common stock, after the conversion of Dragonfly preferred
stock into
Dragonfly common stock. Please more fully disclose the conversion
terms of the preferred
stock. We also note disclosures in the forepart of the filing that all
Dragonfly options will
be converted into New Dragonfly options and that the portion of the
Aggregate Merger
Consideration reflecting the conversion of the Dragonfly options is
calculated assuming
all New Dragonfly options are net-settled but Dragonfly options may,
by their terms, be
cash-settled resulting in additional dilution. Please more fully
explain the accounting for
options, including the exchange of Dragonfly options for New Dragonfly
options in the
pro forma financial statements. Please also more fully explain the
terms of Dragonfly
options that could result in cash-settlement and explain how the
potential cash settlement
was considered in determining the appropriate accounting for options
in Dragonfly s
historical financial statements.
Dragonfly Related Party Transactions, page 251
8. You disclose Dragonfly's loan to its Chief Financial Officer, Mr.
Marchetti. Please tell us
on how you intend to comply with Section 13(k) of the Securities
Exchange Act of 1934
with respect to the loan Dragonfly has made to Mr. Marchetti.
Interim Financial Statements - Chardan
Condensed Balance Sheets, page F-22
9. Please correct the number of common shares at redemption value that
are outstanding as
of December 31, 2021 disclosed under redeemable common stock and
stockholders
equity (deficit).
General
10. With a view toward disclosure, please tell us whether your sponsor is,
is controlled by, or
has substantial ties with a non-U.S. person. Please also tell us
whether anyone or any
entity associated with or otherwise involved in the transaction, is,
is controlled by, or has
substantial ties with a non-U.S. person. If so, also include risk
factor disclosure that
addresses how this fact could impact your ability to complete your
initial business
combination. For instance, discuss the risk to investors that you may
not be able to
complete an initial business combination with a U.S. target company
should the
transaction be subject to review by a U.S. government entity, such as
the Committee on
Foreign Investment in the United States (CFIUS), or ultimately
prohibited. Further,
disclose that the time necessary for government review of the
transaction or a decision to
prohibit the transaction could prevent you from completing an initial
business
combination and require you to liquidate. Disclose the consequences of
liquidation to
investors, such as the losses of the investment opportunity in a
target company, any price
appreciation in the combined company, and the warrants, which would
expire worthless.
We remind you that the company and its management are responsible for
the accuracy
Jonas Grossman
Chardan NexTech Acquisition 2 Corp.
July 5, 2022
Page 4
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Heather Clark, Staff Accountant, at (202) 551-3624 or
Anne
McConnell, Staff Accountant, at (202) 551-3709 if you have questions regarding
comments on
the financial statements and related matters. Please contact Bradley Ecker,
Staff Attorney, at
(202) 551-4985 or Sherry Haywood, Staff Attorney, at (202) 551-3345 with any
other questions.
FirstName LastNameJonas Grossman Sincerely,
Comapany NameChardan NexTech Acquisition 2 Corp.
Division of
Corporation Finance
July 5, 2022 Page 4 Office of
Manufacturing
FirstName LastName