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United States securities and exchange commission logo
June 9, 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.
Draft Registration
Statement on Form S-4
Filed May 16, 2022
CIK No. 0001847986
Dear Mr. Grossman:
We have reviewed your draft 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 providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. 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 the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Form S-4 filed May 16, 2022
Cover Page
1. Please revise your
cover page to give prominence to the disclosure that the Sponsor and
Chardan s directors
and executive officers have interests in the business combination that
is different from, or
in addition, to those of your shareholders.
2. Please revise your
cover page to disclose the equity ownership of the public stockholders,
PIPE investors and
Sponsor upon completion of the business combination.
QUESTIONS AND ANSWERS ABOUT THE PROPOSALS, page 10
3. Please highlight the
material risks to public warrant holders, including those arising from
Jonas Grossman
FirstName LastNameJonas Grossman
Chardan NexTech Acquisition 2 Corp.
Comapany
June 9, 2022NameChardan NexTech Acquisition 2 Corp.
June 9,
Page 2 2022 Page 2
FirstName LastName
differences between private and public warrants. Clarify whether
recent common stock
trading prices exceed the threshold that would allow the company to
redeem public
warrants. Clearly explain the steps, if any, the company will take to
notify all
shareholders, including beneficial owners, regarding when the warrants
become eligible
for redemption.
4. We note that certain shareholders agreed to waive their redemption
rights. Please describe
any consideration provided in exchange for this agreement.
5. Please add a question and answer that addresses the positive and
negative factors that the
board considered when determining to enter into the business
combination agreement and
its rationale for approving the transaction.
Risk Factor Summary, page 39
6. Please revise your risk factor summary to ensure that it is no more
than two pages in
length. Refer to Item 105(b) of Regulation S-K.
Fairness Opinion of Duff & Phelps, page 93
7. You disclose that the "Duff & Phelps Opinion was furnished for the
use and benefit of
the Chardan Board in connection with the Business Combination and was
not intended to,
and does not, confer any rights or remedies upon any other person, and
is not intended to
be used, and may not be used, by any other person or for any other
purpose, without Duff
& Phelps express consent." Please also refer to similar language
contained in the
fairness opinion. This disclosure suggests that shareholders may not
consider or rely on
the information in the opinion. Because it is inconsistent with the
disclosures relating to
the opinion, the limitation should be deleted.
Interests of Certain Persons in the Business Combination, page 123
8. Please discuss the fact that Mr. Grossman, sole member of Chardan
NexTech Invesments
II LLC, may have interests in the completion of the business
combination that may be
different from Chardan's public stockholders due to Chardan NexTech
Investments II
LLC participating in the PIPE and Sponsor agreements.
Background of the Business Combination, page 126
9. Please revise your disclosure in this section to include negotiations
relating to material
terms of the transaction, including, but not limited to, structure,
consideration, proposals
and counter-proposals and size of PIPE. In your revised disclosure,
please explain the
reasons for the terms, each party's position on the issues, and how
you reached agreement
on the final terms. Please also discuss the negotiations related to
the material ancillary
agreements related to the business combination.
Chardan's Management's Discussion and Analysis of Financial Condition and
Results of
Operations
Jonas Grossman
FirstName LastNameJonas Grossman
Chardan NexTech Acquisition 2 Corp.
Comapany
June 9, 2022NameChardan NexTech Acquisition 2 Corp.
June 9,
Page 3 2022 Page 3
FirstName LastName
Critical Accounting Policies
Recent Accounting Standards, page 176
10. You disclose here and in the notes to your financial statements that
ASU 2020-06 is
effective for you on January 1, 2024 and that you early adopted on
January 1,
2021. Please reconcile these disclosures with your statement on page
172 that ASU 2020-
06 is effective January 1, 2022 and you are currently assessing the
impact of adoption.
CERTAIN PROJECTED FINANCIAL INFORMATION OF DRAGONFLY, page 205
11. We note your disclosure that the financial projections are based on
numerous assumptions.
Please expand to disclose whether the projections are in line with
historic operating
trends. Address why the change in trends is appropriate or assumptions
are
reasonable. Clearly describe the basis for projecting this growth and
the factors or
contingencies that would affect such growth ultimately materializing.
Description of the Business Combination, page 209
12. Please clarify whether the Penny Warrants are exercisable for 3.6% of
fully-diluted
outstanding shares or whether they are exercisable for 1,536,367
shares post closing.
Please also describe any other material terms of the Penny Warrants.
Unaudited Pro Forma Condensed Combined Financial Information
Notes to Unaudited Pro Forma Condensed Combined Financial Information
Note 3. Adjustments to Unaudited Pro Forma Condensed Combined Financial
Information
Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet, page 216
13. We refer to adjustment D. Please tell us where you reflected the
elimination of
Dragonfly's historical debt. In this regard, we note adjustments to
cash for the use of cash
to payoff the debt and to notes payable, current portion, but we note
no adjustment to
notes payable, non-current portion.
14. We refer to adjustment I. Please tell us where this adjustment is
reflected in the pro forma
balance sheet, as we note no adjustment labeled "I."
Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations,
page 217
15. Please revise adjustment EE to provide your calculation of interest
expense under the new
Term Loan Facility.
16. Based on your disclosure in note D that the pro forma balance sheet
reflects the repayment
of Dragonfly's historical debt and the write off of unamortized debt
discount, it is not clear
to us why the pro forma statement of operations does not reflect the
non-recurring loss of
$6.1 million that will result from the debt extinguishment. Please
clarify or revise.
Note 4. Net Loss per Share, page 217
Jonas Grossman
FirstName LastNameJonas Grossman
Chardan NexTech Acquisition 2 Corp.
Comapany
June 9, 2022NameChardan NexTech Acquisition 2 Corp.
June 9,
Page 4 2022 Page 4
FirstName LastName
17. Please revise note 4 to clarify that the pro forma loss per share
calculations also exclude
40 million additional shares of common stock that may be issued as a
result of the Earnout
Agreement.
BENEFICIAL OWNERSHIP OF SECURITIES, page 250
18. Please disclose the sponsor and its affiliates' total potential
interest in the combined
company, assuming exercise and conversion of all securities.
Financial Statements, page F-1
19. Please update your financial statements and all related disclosures in
accordance with
Rule 8-08 of Regulation S-X. Please also provide updated financial
statements and
related disclosures for Dragonfly, the predecessor, in accordance with
Rule 8-08 of
Regulation S-X.
General
20. We note that the SPAC IPO underwriter performed additional services
after the IPO and
part of the IPO underwriting fee was deferred and conditioned on the
completion of a
business combination. Please quantify the aggregate fees payable to
the SPAC IPO
underwriter that are contingent on completion of a business
combination.
21. Please disclose whether and how your business segments, products,
lines of service,
projects, or operations are materially impacted by supply chain
disruptions. For example,
discuss whether you have or expect to:
suspend the production, purchase, sale or maintenance of certain
items due to a lack
of raw materials, parts, or equipment; inventory shortages;
closed factories or stores;
reduced headcount; or delayed projects;
experience labor shortages that impact your business;
experience cybersecurity attacks in your supply chain;
experience higher costs due to constrained capacity or increased
commodity prices or
challenges sourcing materials (e.g., nickel, palladium, neon,
cobalt, iron, platinum or
other raw material sourced from Russia, Belarus, or Ukraine);
experience surges or declines in consumer demand for which you are
unable to
adequately adjust your supply; or
be unable to supply products at competitive prices or at all due
to export
restrictions, sanctions, tariffs, trade barriers, or political or
trade tensions among
countries, or the ongoing invasion.
Explain whether and how you have undertaken efforts to mitigate the
impact and where
possible quantify the impact to your business. In this regard, we note
your disclosure that,
as a result of global supply chain disruptions, you have "experienced
a build-up in
inventory and a significant increase in prepaid inventory as suppliers
have required
upfront deposits."
Jonas Grossman
Chardan NexTech Acquisition 2 Corp.
June 9, 2022
Page 5
22. We note your reliance on a single source supplier for your proprietary
battery
management system. Please tell us what consideration you gave to Item
601(b)(10)(ii)(B)
of Regulation S-K.
23. Please disclose all material terms of the Equity Facility Letter
Agreement, including all
material terms of the Equity Facility Commitment Shares.
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
June 9, 2022 Page 5 Office of
Manufacturing
FirstName LastName