0001493152-23-017432 | 10-Q | XBRL Viewer | Dragonfly Energy Holdings Corp

STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

SCHEDULE OF OPTION ACTIVITY AND RELATED INFORMATION

A summary of the Company’s option activity and related information follows:

	Number of Options ⁽¹⁾			Weighted-Average Exercise Price		Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Contractual Life (in years)		Aggregate intrinsic value
Balances, January 1, 2022		3,690,955		$	1.98	$	1.38		8.52	$	6,550
Options granted		-			-		-				-
Options forfeited		(11,584	)		1.44		2.17				-
Options exercised		(48,369	)		0.49		0.83				-
Balances, March 31, 2022		3,631,002		$	2.00	$	1.39		8.29	$	6,377

Balances, January 1, 2023		3,642,958		$	2.02	$	1.21		7.90	$	35,989
Options granted		143,607			7.50		3.82				632
Options forfeited		(19,164	)		7.27		3.71				6
Options exercised		(36,009	)		2.58		1.65				232
Balances, March 31, 2023		3,731,392		$	2.20	$	1.30		6.62	$	3,800

At March 31, 2023
Vested and Exercisable		2,029,985		$	1.53				4.98	$	3,120
Vested and expected to vest		3,731,392		$	2.20				6.62	$	3,800

(1)	Number of options and weighted average exercise price has been adjusted to reflect the exchange of Legacy Dragonfly’s stock options for New Dragonfly stock options at an exchange ratio of approximately 1.182 as a result of the merger.

SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY

There were no grants of restricted stock units prior to October 7, 2022. The following table presents the restricted stock units activity for the three months ended March 31, 2023:

	Number of Shares			Weighted-Average Fair Market Value
Unvested shares at January 1, 2023		180,000		$	14.00
Granted and unvested		461,998			7.50
Vested		(461,998	)		7.50
Unvested shares, March 31, 2023		180,000		$	14.00

Vested as of March 31, 2023		461,998		$	7.50

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($)
$ in Thousands

Redeemable Preferred Stock [Member]

Common Stock [Member]

Additional Paid-in Capital [Member]

Retained Earnings [Member]

Total

Balance at Dec. 31, 2021

$ 2,000

$ 4

$ 1,619

$ 12,438

$ 14,061

Balance, shares at Dec. 31, 2021

10,000,000

20,875,475

Retroactive application of recapitalization

$ (2,000)

2,000

Retroactive application of recapitalization, shares

(10,000,000)

15,621,523

Adjusted balance, beginning of period

$ 4

3,619

12,438

16,061

Adjusted balance, beginning of period, shares

36,496,998

Net income (loss)

(2,298)

Stock compensation expense

288

Exercise of stock options

113

$ 113

Exercise of stock options, shares

100,374

48,369

^[1]

Balance at Mar. 31, 2022

$ 4

4,020

10,140

$ 14,164

Balance, shares at Mar. 31, 2022

36,597,372

Balance at Dec. 31, 2022

$ 4

38,461

(27,133)

11,332

Balance, shares at Dec. 31, 2022

43,272,728

Net income (loss)

4,892

Stock compensation expense

4,487

Exercise of stock options

$ 93

Exercise of stock options, shares

36,009

^[1]

Common stock issued in public offering (ATM), net of costs

597

$ 597

Common stock issued in public offering (ATM), net of costs

73,500,000

Exercise of public warrants

747

$ 747

Exercise of public warrants, shares

64,971,000

64,971

Cashless exercise of liability classified warrants

$ 1

10,166

$ 10,167

Cashless exercise of liability classified warrants, shares

2,348,294

Balance at Mar. 31, 2023

$ 5

$ 54,551

$ (22,241)

$ 32,315

Balance, shares at Mar. 31, 2023

45,795,502

[1]	Number of options and weighted average exercise price has been adjusted to reflect the exchange of Legacy Dragonfly’s stock options for New Dragonfly stock options at an exchange ratio of approximately 1.182 as a result of the merger.

RELATED PARTY (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
RELATED PARTY (Details Narrative) - USD ($) $ in Thousands	Mar. 31, 2023	Mar. 05, 2023	Dec. 31, 2022
Related Party Transaction [Line Items]
Repayment to related party	$ 211		$ 211
Original princial amount		$ 100
Board of Directors Chairman [Member]
Related Party Transaction [Line Items]
Promissory note		$ 1,000
Related Party [Member]
Related Party Transaction [Line Items]
Repayment to related party	1,000
Chief Operating Officer [Member]
Related Party Transaction [Line Items]
Repayment to officer	100
Promissory Note with Related Party \| Chief Financial Officer [Member]
Related Party Transaction [Line Items]
Repayment to officer	$ 469

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

SCHEDULE OF VARIOUS CLASSES OF PROPERTY AND EQUIPMENT AND ESTIMATED USEFUL LIVES

Office furniture and equipment	3 to 7 years
Vehicles	5 years
Machinery and equipment	3 to 7 years
Leasehold improvements	Remaining Term of Lease

SCHEDULE OF DISAGGREGATED REVENUES BY DISTRIBUTION CHANNEL

The following table present our disaggregated revenues by distribution channel:

	2023		2022
	For the Three Months Ended March 31,
	2023		2022
Sales
Retail	$	7,069	$	13,035
Distributor		2,968		2,087
Original equipment manufacture		8,754		3,181
Total	$	18,791	$	18,303
Total sales	$	18,791	$	18,303

FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

SCHEDULE OF FAIR VALUE, ASSETS AND LIABILITIES

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of March 31, 2023:

	Carrying Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
	As of March 31, 2023
Liabilities
Warrant liability- Term Loan	$	4,021	$	4,021	$	-	$	-	$	4,021
Warrant liability- Private placement warrants		120		120		-		120		-
Total liabilities	$	4,141	$	4,141	$	-	$	120	$	4,021

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of December 31, 2022:

	Carrying Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
	As of December 31, 2022
Liabilities
Warrant liability- Term Loan	$	30,841	$	30,841	$	-	$	-	$	30,841
Warrant liability- Private placement warrants		1,990		1,990		-		1,990		-
Total liabilities	$	32,831	$	32,831	$	-	$	1,990	$	30,841

SCHEDULE OF VARIOUS CLASSES OF PROPERTY AND EQUIPMENT AND ESTIMATED USEFUL LIVES (Details)	Mar. 31, 2023
Property, Plant and Equipment [Line Items]
Property, Plant, and Equipment, Useful Life, Term, Description [Extensible Enumeration]	us-gaap:LeaseholdImprovementsMember
Furniture and Fixtures [Member] \| Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	3 years
Furniture and Fixtures [Member] \| Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	7 years
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	5 years
Machinery and Equipment [Member] \| Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	3 years
Machinery and Equipment [Member] \| Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	7 years

SCHEDULE OF INVENTORY (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Raw material	$ 44,310	$ 42,586
Finished goods	7,502	7,260
Total inventory	$ 51,812	$ 49,846

SCHEDULE OF FAIR VALUE, ASSETS AND LIABILITIES (Details) - Fair Value, Recurring [Member] - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Amount	$ 4,141	$ 32,831
Fair Value	4,141	32,831
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	120	1,990
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	4,021	30,841
Term Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Amount	4,021	30,841
Fair Value	4,021	30,841
Term Loan [Member] \| Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Term Loan [Member] \| Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Term Loan [Member] \| Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	4,021	30,841
Private Warrants [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Amount	120	1,990
Fair Value	120	1,990
Private Warrants [Member] \| Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value
Private Warrants [Member] \| Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	120	1,990
Private Warrants [Member] \| Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value

DEBT (Tables)

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

SCHEDULE OF LEVERAGE RATION

Test Period Ending			Leverage Ratio
December 31, 2022 - March 31, 2023			6.75 to 1.00
June 30, 2023 - September 30, 2023			6.00 to 1.00
December 31, 2023 - March 31, 2024			5.00 to 1.00
June 30, 2024 - September 30, 2024			4.00 to 1.00
December 31, 2024 - March 31, 2025			3.25 to 1.00
June 30, 2025 and thereafter			3.00 to 1.00

SCHEDULE OF FUTURE DEBT MATURITIES

At March 31, 2023, the future debt maturities, based on contractual principal payments are as follows:

SCHEDULE OF FUTURE DEBT MATURITIES


For Year Ended December 31,
2023 ⁽¹⁾	$	-
2024		938
2025		3,750
2026		91,775
Total		96,463
Less: Estimated interest paid-in-kind		(19,033	)
Total debt		77,430
Less: Unamortized debt issuance costs, noncurrent		(56,731	)
Total carrying amount		20,699
Less: Current portion of debt		(20,699	)
Total long-term debt	$	-

⁽¹⁾

Represents scheduled payments for the remaining nine-month period ending December 31, 2023

SCHEDULE OF ROLL FORWARD IN WARRANTS (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Change in fair value of warrants	$ 18,523
Private Warrants [Member]
Warrants Outstanding, January 1, 2023	4,627,858
Exercise of warrants	(3,126,472)
Warrants Outstanding, March 31, 2023	1,501,386
Public Warrants [Member]
Warrants Outstanding, January 1, 2023	9,487,500
Exercise of warrants	(64,971)
Warrants Outstanding, March 31, 2023	9,422,529
Term Loan Warrants [Member]
Warrants Outstanding, January 1, 2023	2,593,056
Exercise of warrants	(1,250,000)
Warrants Outstanding, March 31, 2023	1,343,056
Warrant [Member]
Balances, January 1, 2023	$ 30,841
Exercise of warrants	(8,822)
Change in fair value of warrants	(17,998)
Balances, March 31, 2023	$ 4,021

EARNINGS (LOSS) PER SHARE (Tables)

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

SCHEDULE OF INFORMATION NEEDED TO COMPUTE BASIC AND DILUTED EARNINGS PER SHARE

The following table sets forth the information needed to compute basic and diluted earnings (loss) per share for the three months ended March 31, 2023 and 2022:

	March 31, 2023		March 31, 2022
Basic Earnings (Loss) per common share:
Net Income (Loss) available to common shareholders	$	4,892	$	(2,298	)
Weighted average number of common shares-basic		45,104,515		36,542,944
Earnings (Loss) per share, basic	$	0.11	$	(0.06	)

Diluted Earnings (Loss) per common share:
Net Income (Loss) available to common shareholders	$	4,892	$	(2,298	)
Weighted average number of common shares-basic		45,104,515		36,542,944
Dilutive effect related to stock options and warrants		3,351,481		-
Weighted average diluted shares outstanding		48,455,996		36,542,944
Earnings (Loss) per share, diluted	$	0.10	$	(0.06	)

SCHEDULE OF POTENTIAL SHARES OF COMMON STOCK EXCLUDED FROM DILUTED NET (LOSS) INCOME PER SHARE

The following table sets forth the number of potential shares of common stock that have been excluded from diluted net income per share net income (loss) per share because their effect was anti-dilutive:

	March 31, 2023		March 31, 2022
Warrants		10,923,915		-
Restricted stock units		111,015		-
Options		-		3,631,002
Weighted average number of common shares-basic		11,034,930		3,631,002

DEBT (Details Narrative) - USD ($)		3 Months Ended
DEBT (Details Narrative) - USD ($)	Oct. 07, 2022	Mar. 31, 2023	Mar. 31, 2022	Mar. 05, 2023	Nov. 24, 2021
Debt Instrument [Line Items]
Debt instrument, face amount				$ 100,000
Interest expense		$ 3,815,000	$ 1,263,000
Long term debt		77,430,000
Paid in kind interest		1,238,000
Debt Issuance Costs, Net		$ 56,731,000
Liquidity description		The Company shall not permit their Liquidity (determined on a consolidated basis) to be less than $10,000 as of the last day of each fiscal month (commencing with month ending December 31, 2022)
Fixed charge coverage ratio description		The Fixed Charge Coverage Ratio is the ratio of consolidated EBITDA (less capital expenditures and certain other adjustments) to consolidated fixed charges, as defined in the agreement. If Liquidity is less than $15,000 as of the last day of any fiscal quarter (commencing with the quarter ending December 31, 2022), then the Company shall not permit the Fixed Charge Coverage Ratio for the trailing four quarterly periods ending on the last day of any such quarter to be less than 1.15 to 1.00
Capital expenditures description		If consolidated EBITDA for the trailing twelve month period ending on the most recently completed fiscal quarter is less than $15,000, then the level of capital expenditures is limited
Senior Secured Term Loan Facility [Member] \| Term Loan Agreement [Member]
Debt Instrument [Line Items]
Debt instrument, amortization percentage	5.00%
Debt instrument, amortization amount	$ 937,500
Debt instrument, amortization period	24 months
Basis spread on variable rate	13.50%
Senior Secured Term Loan Facility [Member] \| Term Loan Agreement [Member] \| Until April 1 2023 [Member] \| Adjusted Secured Overnight Financing Rate [Member]
Debt Instrument [Line Items]
Variable rate, payable in cash	7.00%
Variable rate, payable in kind	6.50%
Senior Secured Term Loan Facility [Member] \| Term Loan Agreement [Member] \| After April 1, 2023 Until October 1, 2024 [Member] \| Adjusted Secured Overnight Financing Rate [Member]
Debt Instrument [Line Items]
Variable rate, payable in cash	7.00%
Senior Secured Term Loan Facility [Member] \| Term Loan Agreement [Member] \| After April 1, 2023 Until October 1, 2024 [Member] \| Adjusted Secured Overnight Financing Rate [Member] \| Minimum [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	1.00%
Variable rate, payable in cash	11.50%
Variable rate, payable in kind	4.50%
Senior Secured Term Loan Facility [Member] \| Term Loan Agreement [Member] \| After April 1, 2023 Until October 1, 2024 [Member] \| Adjusted Secured Overnight Financing Rate [Member] \| Maximum [Member]
Debt Instrument [Line Items]
Variable rate, payable in cash	13.50%
Variable rate, payable in kind	6.50%
Maximum Senior Leverage Ratio [Member]
Debt Instrument [Line Items]
Debt instrument description		The Senior Leverage Ratio is the ratio of (a) consolidated indebtedness, as defined, on such date minus 100% of the unrestricted cash and cash equivalents held (subject to adjustment) to (b) Consolidated earnings before interest, tax and amortization (“EBITDA”) for the trailing twelve (12) fiscal month period most recently ended. If liquidity, as defined, for any fiscal quarter is less than $17,500, the Senior Leverage Ratio shall not be permitted
Senior Notes [Member]
Debt Instrument [Line Items]
Debt instrument, face amount					$ 45,000,000
Debt instrument, insured amount					$ 45,000,000
Loss on extinguishment		$ 4,824,000
Interest expense			$ 619,000
Amortization of debt issuance costs		613,000
Senior Notes [Member] \| Term Loan Agreement [Member]
Debt Instrument [Line Items]
Debt instrument, face amount		75,000,000
Amortization of debt issuance costs		219,000
Interest expense		3,496,000
Long term debt		20,699,000
Paid in kind interest		2,430,000
Debt Issuance Costs, Net		$ 56,731,000

SCHEDULE OF LEASE COST (Details) - USD ($) $ in Thousands		3 Months Ended
SCHEDULE OF LEASE COST (Details) - USD ($) $ in Thousands	Feb. 02, 2022	Mar. 31, 2023	Mar. 31, 2022
Loss Contingencies [Line Items]
Operating lease cost	$ 23	$ 393	$ 215
Cost of Sales [Member]
Loss Contingencies [Line Items]
Operating lease cost		347	172
Research and Development Expense [Member]
Loss Contingencies [Line Items]
Operating lease cost		22	19
General and Administrative Expense [Member]
Loss Contingencies [Line Items]
Operating lease cost		12	10
Selling and Marketing Expense [Member]
Loss Contingencies [Line Items]
Operating lease cost		$ 12	$ 14

INCOME TAXES

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 13 – INCOME TAXES

The Company’s tax provision and the resulting effective tax rate for interim periods is determined based upon its estimated annual effective tax rate adjusted for the effect of discrete items arising in that quarter. The Company recorded an income tax expense (benefit) of $0 and ($527) during the three months ended March 31, 2023 and 2022, respectively. The effective tax rate differs from the U.S. statutory tax rate primarily due to the valuation allowances on the Company’s deferred tax assets as it is more likely than not that some or all the Company’s deferred tax assets will not be realized. The Company’s policy is to recognize interest and penalties associated with uncertain tax benefits as part of the income tax provision and include accrued interest and penalties with the related income tax liability on the Company’s condensed consolidated balance sheets. The Company has not recognized any interest and penalties in its condensed consolidated statements of operations, nor has it accrued for or made payments for interest and penalties.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//740/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-14

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-21

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 270
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482526/740-270-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 17
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-17

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482603/740-30-50-2

+ Details

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current Assets
Cash	$ 15,791	$ 17,781
Accounts receivable, net of allowance for doubtful accounts	2,969	1,444
Inventory	51,812	49,846
Prepaid expenses	1,820	1,624
Prepaid inventory	1,703	2,002
Prepaid income tax	525	525
Other current assets	396	267
Total Current Assets	75,016	73,489
Property and Equipment
Machinery and equipment	11,147	10,214
Office furniture and equipment	275	275
Leasehold improvements	1,717	1,709
Vehicle	33	195
Total	13,172	12,393
Less accumulated depreciation and amortization	(1,884)	(1,633)
Property and Equipment, Net	11,288	10,760
Operating lease right of use asset	4,205	4,513
Total Assets	90,509	88,762
Current Liabilities
Accounts payable	18,824	13,475
Accrued payroll and other liabilities	8,199	6,295
Customer deposits	418	238
Uncertain tax position liability	128	128
Operating lease liability, current portion	1,215	1,188
Total Current Liabilities	50,483	40,566
Long-Term Liabilities
Warrant liabilities	4,141	32,831
Accrued expenses-long term	361	492
Operating lease liability, net of current portion	3,209	3,541
Total Long-Term Liabilities	7,711	36,864
Total Liabilities	58,194	77,430
Commitments and Contingencies (See Note 5)
Equity
Common stock, 170,000,000 shares at $0.0001 par value, authorized, 45,795,502 and 43,272,728 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	5	4
Preferred stock, 5,000,000 shares at $0.0001 par value, authorized, no shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively
Additional paid in capital	54,551	38,461
Retained deficit	(22,241)	(27,133)
Total Equity	32,315	11,332
Total Liabilities and Shareholders’ Equity	90,509	88,762
Nonrelated Party [Member]
Current Liabilities
Notes payable, related party	20,699	19,242
Related Party [Member]
Current Liabilities
Notes payable, related party	$ 1,000

COMMON STOCK (Tables)

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

SUMMARY OF RESERVED SHARES OF COMMON STOCK FOR ISSUANCE

For the three months ended March 31, 2023 and 2022, the Company had reserved shares of common stock for issuance as follows:

	March 31, 2023		March 31, 2022
Options issued and outstanding		3,731,392		3,631,002
Common stock outstanding		45,795,502		36,581,910
Warrants outstanding		12,266,971		-
Earnout shares		40,000,000		-
Shares available for future issuance		4,319,309		1,205,790
Total		106,113,174		41,418,702

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Used in Operating Activities
Net Income (Loss)	$ 4,892,000	$ (2,298,000)
Adjustments to Reconcile Net Income (Loss) to Net Cash
Stock based compensation	4,487,000	288,000
Amortization of debt discount	219,000	613,000
Change in fair market value of warrant liability	(18,523,000)
Deferred tax liability		(527,000)
Non-cash interest expense (paid-in kind)	1,238,000
Provision for doubtful accounts	52,000
Depreciation and amortization	297,000	192,000
Loss on disposal of property and equipment	116,000	62,000
Changes in Assets and Liabilities
Accounts receivable	(1,577,000)	(1,217,000)
Inventories	(1,966,000)	(5,946,000)
Prepaid expenses	(196,000)	(502,000)
Prepaid inventory	299,000	2,425,000
Other current assets	(129,000)	(637,000)
Other assets	308,000	274,000
Income taxes payable		(11,000)
Accounts payable and accrued expenses	6,465,000	(4,119,000)
Customer deposits	180,000	293,000
Total Adjustments	(8,730,000)	(8,812,000)
Net Cash Used in Operating Activities	(3,838,000)	(11,110,000)
Cash Flows From Investing Activities
Purchase of property and equipment	(589,000)	(4,524,000)
Net Cash Used in Investing Activities	(589,000)	(4,524,000)
Cash Flows From Financing Activities
Proceeds from public offering, net	597,000
Proceeds from note payable, related party	1,000,000
Proceeds from exercise of public warrants	747,000
Proceeds from exercise of options	93,000	111,000
Net Cash Provided by Financing Activities	2,437,000	111,000
Net Decrease in Cash and Restricted Cash	(1,990,000)	(15,523,000)
Beginning cash and restricted cash	17,781,000	28,630,000
Ending cash and restricted cash	15,791,000	13,107,000
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	2,003	658
Supplemental Non-Cash Items
Receivable of options exercised		2,000
Purchases of property and equipment, not yet paid	352,000
Cashless exercise of liability classified warrants	$ 10,167,000

INVENTORY

3 Months Ended

Mar. 31, 2023

Inventory Disclosure [Abstract]

INVENTORY

NOTE 4 - INVENTORY

Inventory consists of the following:

SCHEDULE OF INVENTORY

	March 31, 2023		December 31, 2022
Raw material	$	44,310	$	42,586
Finished goods		7,502		7,260
Total inventory	$	51,812	$	49,846

SUBSEQUENT EVENTS (Details Narrative) - USD ($) $ in Thousands	Apr. 26, 2023	Apr. 01, 2023	Mar. 05, 2023
Subsequent Event [Line Items]
Original princial amount			$ 100
Board of Directors Chairman [Member]
Subsequent Event [Line Items]
Promissory note			$ 1,000
Subsequent Event [Member]
Subsequent Event [Line Items]
Original princial amount		$ 100
Subsequent Event [Member] \| Board of Directors Chairman [Member]
Subsequent Event [Line Items]
Promissory note		$ 1,000
Subsequent Event [Member] \| Ms Harvey [Member]
Subsequent Event [Line Items]
Cash	$ 334,000

- Definition

Amount of currency on hand as well as demand deposits with banks or financial institutions. Includes other kinds of accounts that have the general characteristics of demand deposits. Excludes cash and cash equivalents within disposal group and discontinued operation.

+ References + Details

SCHEDULE OF POTENTIAL SHARES OF COMMON STOCK EXCLUDED FROM DILUTED NET (LOSS) INCOME PER SHARE (Details) - shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Purchase an aggregate shares	11,034,930	3,631,002
Share-Based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Purchase an aggregate shares		3,631,002
Restricted Stock Units (RSUs) [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Purchase an aggregate shares	111,015
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Purchase an aggregate shares	10,923,915

COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	Feb. 02, 2022	Mar. 31, 2023	Mar. 31, 2022
Loss Contingencies [Line Items]
Monthly base rent	$ 230
Operating lease costs	23	$ 393	$ 215
Estimated monthly property taxes	$ 21
Percentage of escalation of monthly base rent	3.00%
Percentage of escalation of fix operating expense costs	2.40%
Term of due of first payment	2 years
Number of Shares		40,000,000
Audited revenue		$ 250,000
Audited operating income		$ 35,000
Share-Based Payment Arrangement, Tranche One [Member]
Loss Contingencies [Line Items]
Earnout shares issuable		15,000,000
Share-Based Payment Arrangement, Tranche Two [Member]
Loss Contingencies [Line Items]
Earnout shares issuable		12,500,000
Volume weighted average price per share		$ 32.50
Share-Based Payment Arrangement, Tranche Two [Member] \| Holders of Outstanding Shares of Legacy Dragonfly Common Stock [Member]
Loss Contingencies [Line Items]
Volume weighted average price per share		$ 22.50
Share-Based Payment Arrangement, Tranche Three [Member]
Loss Contingencies [Line Items]
Earnout shares issuable		12,500,000
Share-Based Payment Arrangement, Tranche Three [Member] \| Holders of Outstanding Shares of Legacy Dragonfly Common Stock [Member]
Loss Contingencies [Line Items]
Volume weighted average price per share		$ 32.50
Minimum [Member]
Loss Contingencies [Line Items]
Lease payments		$ 111
Maximum [Member]
Loss Contingencies [Line Items]
Lease payments		$ 128

Cover - shares	3 Months Ended
Cover - shares	Mar. 31, 2023	May 10, 2023
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2023
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity File Number	001-40730
Entity Registrant Name	DRAGONFLY ENERGY HOLDINGS CORP.
Entity Central Index Key	0001847986
Entity Tax Identification Number	85-1873463
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	1190 Trademark Drive
Entity Address, Address Line Two	#108
Entity Address, City or Town	Reno
Entity Address, State or Province	NV
Entity Address, Postal Zip Code	89521
City Area Code	(775)
Local Phone Number	622-3448
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		45,885,513
Common stock, par value $0.0001 per share
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	DFLI
Security Exchange Name	NASDAQ
Redeemable Warrants, exercisable for common stock at an exercise price of $11.50 per share, subject to adjustment
Title of 12(b) Security	Redeemable Warrants, exercisable for common stock at an exercise price of $11.50 per share, subject to adjustment
Trading Symbol	DFLIW
Security Exchange Name	NASDAQ

- Details

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Period Type:

SUMMARY OF RESERVED SHARES OF COMMON STOCK FOR ISSUANCE (Details) - shares

Mar. 31, 2023

Dec. 31, 2022

Mar. 31, 2022

Dec. 31, 2021

Equity [Abstract]

Options issued and outstanding

^[1]

3,731,392

3,642,958

3,631,002

3,690,955

Common stock outstanding

45,795,502

43,272,728

36,581,910

Warrants outstanding

12,266,971

Earnout shares

40,000,000

Shares available for future issuance

4,319,309

1,205,790

Total

106,113,174

41,418,702

[1]	Number of options and weighted average exercise price has been adjusted to reflect the exchange of Legacy Dragonfly’s stock options for New Dragonfly stock options at an exchange ratio of approximately 1.182 as a result of the merger.

COMMON STOCK

3 Months Ended

Mar. 31, 2023

Equity [Abstract]

COMMON STOCK

NOTE 10 - COMMON STOCK

The Company is authorized to issue up to 170,000,000 shares of common stock with $0.0001 par value. Common stockholders are entitled to dividends if and when declared by the Board of Directors subject to the rights of the preferred stockholders.

For the three months ended March 31, 2023 and 2022, the Company had reserved shares of common stock for issuance as follows:

	March 31, 2023		March 31, 2022
Options issued and outstanding		3,731,392		3,631,002
Common stock outstanding		45,795,502		36,581,910
Warrants outstanding		12,266,971		-
Earnout shares		40,000,000		-
Shares available for future issuance		4,319,309		1,205,790
Total		106,113,174		41,418,702

ChEF Equity Facility

The Company and Chardan Capital Markets LLC, a New York limited liability company (“CCM LLC”) entered into a purchase agreement (the “Purchase Agreement”) and a Registration Rights Agreement (the “ChEF RRA”) in connection with the merger. Pursuant to the Purchase Agreement, the Company has the right to sell to CCM LLC an amount of shares of Common Stock, up to a maximum aggregate purchase price of $150 million, pursuant to the terms of the Purchase Agreement. In addition, the Company appointed LifeSci Capital, LLC as “qualified independent underwriter” with respect to the transactions contemplated by the Purchase Agreement. Under the terms of the Purchase Agreement, the Company issued 73,500 shares pursuant to the Purchase Agreement with CCM LLC for aggregate net proceeds to the Company of $597 from the period January 1, 2023 through March 31, 2023.

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

NOTE 11 - STOCK-BASED COMPENSATION

Share-based compensation expense for options and RSUs totaling $4,487 and $288 was recognized in the Company’s consolidated statements of operations for the three months ended March 31, 2023 and 2022, respectively. Of the $4,487 of share-based compensation incurred during the three months ended March 31, 2023, $36 is allocated to cost of goods sold, $29 to research and development, $856 to selling and marketing, and $3,566 to general and administrative expenses. Of the $288 of share-based compensation incurred during the three months ended March 31, 2022, $97 is allocated to cost of goods sold, $37 to research and development, $60 to selling and marketing, and $94 to general and administrative expenses.

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

NOTE 11 - STOCK-BASED COMPENSATION (CONTINUED)

A summary of the Company’s option activity and related information follows:

	Number of Options ⁽¹⁾			Weighted-Average Exercise Price		Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Contractual Life (in years)		Aggregate intrinsic value
Balances, January 1, 2022		3,690,955		$	1.98	$	1.38		8.52	$	6,550
Options granted		-			-		-				-
Options forfeited		(11,584	)		1.44		2.17				-
Options exercised		(48,369	)		0.49		0.83				-
Balances, March 31, 2022		3,631,002		$	2.00	$	1.39		8.29	$	6,377

Balances, January 1, 2023		3,642,958		$	2.02	$	1.21		7.90	$	35,989
Options granted		143,607			7.50		3.82				632
Options forfeited		(19,164	)		7.27		3.71				6
Options exercised		(36,009	)		2.58		1.65				232
Balances, March 31, 2023		3,731,392		$	2.20	$	1.30		6.62	$	3,800

At March 31, 2023
Vested and Exercisable		2,029,985		$	1.53				4.98	$	3,120
Vested and expected to vest		3,731,392		$	2.20				6.62	$	3,800

(1)	Number of options and weighted average exercise price has been adjusted to reflect the exchange of Legacy Dragonfly’s stock options for New Dragonfly stock options at an exchange ratio of approximately 1.182 as a result of the merger.

Restricted Stock Units

On October 7, 2022, the Company granted 180,000 restricted stock units under the 2022 plan which vest one year from the grant date. The fair value of the restricted stock units on the date of grant was $2,520, which is recognized as compensation expense over the requisite service period based on the value of the underlying shares on the date of grant. On February 10, 2023, the Company granted 461,998 restricted stock units under the 2022 plan which vest immediately. The fair value of the restricted stock units on the date of grant was $3,464 and was recorded as compensation expense.

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

NOTE 11 - STOCK-BASED COMPENSATION (CONTINUED)

Restricted Stock Units (Continued)

There were no grants of restricted stock units prior to October 7, 2022. The following table presents the restricted stock units activity for the three months ended March 31, 2023:

	Number of Shares			Weighted-Average Fair Market Value
Unvested shares at January 1, 2023		180,000		$	14.00
Granted and unvested		461,998			7.50
Vested		(461,998	)		7.50
Unvested shares, March 31, 2023		180,000		$	14.00

Vested as of March 31, 2023		461,998		$	7.50

As of March 31, 2023, there were 4,319,309 shares of unissued authorized and available for future awards under the 2022 Equity Incentive Plan and Employee Stock Purchase Plan.

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Common stock, shares authorized	170,000,000	170,000,000
Common shares, par value	$ 0.0001	$ 0.0001
Common stock, shares outstanding	45,795,502	43,272,728
Common stock, shares issued	45,795,502	43,272,728
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares outstanding	0	0
Preferred stock, shares issued	0	0

DEBT

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

DEBT

NOTE 6 - DEBT

Financing Trust Indenture

On November 24, 2021, the Company entered into agreements to issue $45,000 in fixed rate senior notes (Series 2021 6 Notes) pursuant to a Trust Indenture held by UMB Bank, as trustee and disbursing agent, and Newlight Capital, LLC as servicer. The trust and debt documents also require a Lender Collateral Residual Value Insurance Policy (the “Insurance Policy”, with UMB Bank as named insured for $45,000), and a placement agent, which is Tribe Capital Markets, LLC.

In connection with the merger on October 7, 2022 (the “Closing Date”), the Company entered into a Term Loan, Guarantee and Security Agreement (see “Term Loan Agreement” below) and the outstanding principal balance for the Series 2021-6 Notes underlying the Trust Indenture was paid in full. A loss on extinguishment of $4,824 was recognized upon settlement. During the three months ended March 31, 2022, a total of $619 of interest expense was incurred under the debt. Amortization of the debt issuance costs amounted to $613 during the three months ended March 31, 2022.

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

NOTE 6 - DEBT (CONTINUED)

Term Loan Agreement

On October 7, 2022, in connection with the merger, CNTQ, Legacy Dragonfly and CCM Investments 5 LLC, an affiliate of CCM LLC (“CCM 5”, and in connection with the Term Loan, the “Chardan Lender”), and EICF Agent LLC (“EIP” and, collectively with the Chardan Lender, the “Initial Term Loan Lenders”) entered into the Term Loan Agreement setting forth the terms of the Term Loan. The Chardan Lender backstopped its commitment under the Debt Commitment Letter by entering into a backstop commitment letter, dated as of May 20, 2022 (the “Backstop Commitment Letter”), with a certain third party financing source (the “Backstop Lender” and collectively with EIP, the “Term Loan Lenders”), pursuant to which the Backstop Lender committed to purchase from the Chardan Lender the aggregate amount of the Term Loan held by the Chardan Lender (the “Backstopped Loans”) immediately following the issuance of the Term Loan on the Closing Date. Pursuant to an assignment agreement, the Backstopped Loans were assigned by CCM 5 to the Backstop Lender on the Closing Date.

Pursuant to the terms of the Term Loan Agreement, the Term Loan was advanced in one tranche on the Closing Date. The proceeds of the Term Loan were used (i) to refinance on the Closing Date prior indebtedness (including the obligations underlying the Trust Indenture), (ii) to support the Transaction under the merger Agreement, (iii) for working capital purposes and other corporate purposes, and (iv) to pay any fees associated with transactions contemplated under the Term Loan Agreement and the other loan documents entered into in connection therewith, including the transactions described in the foregoing clauses (i) and (ii) and fees and expenses related to the merger. The Term Loan amortizes in the amount of 5% per annum (or $937.5 on the first day of each calendar quarter) beginning 24 months after the Closing Date and matures on the fourth anniversary of the Closing Date (“Maturity Date”). The Term Loan accrues interest (i) until April 1, 2023, at a per annum rate equal to the adjusted Secured Overnight Financing Rate (“SOFR”) plus a margin equal to 13.5%, of which 7% will be payable in cash and 6.5% will be paid in kind, (ii) thereafter until October 1, 2024, at a per annum rate equal to adjusted SOFR plus 7% payable in cash plus an amount ranging from 4.5% to 6.5%, depending on the senior leverage ratio of the consolidated company, which will be paid in kind and (iii) at all times thereafter, at a per annum rate equal to adjusted SOFR plus a margin ranging from 11.5% to 13.5% payable in cash, depending on the senior leverage ratio of the consolidated company. In each of the foregoing cases, adjusted SOFR will be no less than 1%.

In addition to optional prepayments by the Company upon written notice, the Term Loan Agreement provides for mandatory prepayments upon receipt of proceeds from certain transactions or casualty events. Beginning on the date the financial statements for the year ended December 31, 2023 are required to be delivered to the Term Loan Lenders, the Company will be required to prepay the Term Loan based on excess cash flow, as defined in the agreement.

Unless the obligations under the Term Loan are accelerated under the terms of the agreement, the maturity date will be October 7, 2026.

The Term Loan Lenders have been granted a first priority lien, and security interest in, the mortgaged properties underlying the Company’s mortgages.

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

NOTE 6 - DEBT (CONTINUED)

Term Loan Agreement (Continued)

During the three months ended March 31, 2023, a total of $3,496 of interest expense was incurred under the debt. Amortization of the debt issuance costs amounted to $219 during the three months ended March 31, 2023. The carrying balance of $20,699 on March 31, 2023 consisted of $75,000 in principal, plus $2,430 PIK interest, less $56,731 in unamortized debt discount related to the debt issuance costs.

Financial Covenants

Maximum Senior Leverage Ratio

The Senior Leverage Ratio is the ratio of (a) consolidated indebtedness, as defined, on such date minus 100% of the unrestricted cash and cash equivalents held (subject to adjustment) to (b) Consolidated earnings before interest, tax and amortization (“EBITDA”) for the trailing twelve (12) fiscal month period most recently ended. If liquidity, as defined, for any fiscal quarter is less than $17,500, the Senior Leverage Ratio shall not be permitted, as of the last day of any fiscal quarter ending during any period set forth below, to exceed the ratio set forth opposite such period in the table below:

SCHEDULE OF LEVERAGE RATION

Test Period Ending			Leverage Ratio
December 31, 2022 - March 31, 2023			6.75 to 1.00
June 30, 2023 - September 30, 2023			6.00 to 1.00
December 31, 2023 - March 31, 2024			5.00 to 1.00
June 30, 2024 - September 30, 2024			4.00 to 1.00
December 31, 2024 - March 31, 2025			3.25 to 1.00
June 30, 2025 and thereafter			3.00 to 1.00

Liquidity

The Company shall not permit their Liquidity (determined on a consolidated basis) to be less than $10,000 as of the last day of each fiscal month (commencing with month ending December 31, 2022).

Fixed Charge Coverage Ratio

The Fixed Charge Coverage Ratio is the ratio of consolidated EBITDA (less capital expenditures and certain other adjustments) to consolidated fixed charges, as defined in the agreement. If Liquidity is less than $15,000 as of the last day of any fiscal quarter (commencing with the quarter ending December 31, 2022), then the Company shall not permit the Fixed Charge Coverage Ratio for the trailing four quarterly periods ending on the last day of any such quarter to be less than 1.15 to 1.00.

Capital Expenditures

If consolidated EBITDA for the trailing twelve month period ending on the most recently completed fiscal quarter is less than $15,000, then the level of capital expenditures is limited.

On March 29, 2023, the Company obtained a waiver from Alter Domus (US) LLC, as administrative agent for the lenders (the “Administrative Agent”) and the Term Loan Lenders of its failures to satisfy the fixed charge coverage ratio and maximum senior leverage ratio with respect to the minimum cash requirements under the Term Loan during the quarter ended March 31, 2023. As a result of the uncertainty of maintaining compliance with financial covenants the Company has continued to classify the entire term loan balance within current liabilities on the balance sheet.

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

NOTE 6 - DEBT (CONTINUED)

Debt Maturities

At March 31, 2023, the future debt maturities, based on contractual principal payments are as follows:

SCHEDULE OF FUTURE DEBT MATURITIES


For Year Ended December 31,
2023 ⁽¹⁾	$	-
2024		938
2025		3,750
2026		91,775
Total		96,463
Less: Estimated interest paid-in-kind		(19,033	)
Total debt		77,430
Less: Unamortized debt issuance costs, noncurrent		(56,731	)
Total carrying amount		20,699
Less: Current portion of debt		(20,699	)
Total long-term debt	$	-

⁽¹⁾

Represents scheduled payments for the remaining nine-month period ending December 31, 2023

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 470
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//470/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1E
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

+ Details

WARRANTS

3 Months Ended

Mar. 31, 2023

Warrants

WARRANTS

NOTE 9 - WARRANTS

Common Stock Warrants classified as Equity

Public Warrants

Each Public Warrant entitles the holder to the right to purchase one share of common stock at an exercise price of $11.50 per share. No fractional shares will be issued upon exercise of the Public Warrants. The Company may elect to redeem the Public Warrants subject to certain conditions, in whole and not in part, at a price of $0.01 per Public Warrant if (i) 30 days’ prior written notice of redemption is provided to the holders, and (ii) the last reported sale price of the Company’s common stock equals or exceeds $16.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third business day prior to the date on which the Company sends the notice of redemption to the warrant holders. Upon issuance of a redemption notice by the Company, the warrant holders have a period of 30 days to exercise for cash, or on a cashless basis. On the Closing Date, there were 9,487,500 Public Warrants issued and outstanding. The Public Warrants are not precluded from equity classification and are accounted for as such on the date of issuance, and each balance sheet date thereafter.

The measurements of the Public Warrants after the detachment of the Public Warrants from the Units are classified as Level 1 due to the use of an observable market quote in an active market under the ticker DFLIW. For periods subsequent to the detachment of the Public Warrants from the Units, the close price of the Public Warrant price was used as the fair value of the Warrants as of each relevant date.

During the quarter ended March 31, 2023, the Company received proceeds from public warrant exercises of $747 in exchange for 64,971 common shares.

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

NOTE 9 - WARRANTS (CONTINUED)

Common Stock Warrants classified as Liability

Private Placement Warrants

The Private Placement Warrants may not be redeemed by the Company so long as the Private Placement Warrants are held by the initial purchasers, or such purchasers’ permitted transferees. The Private Warrants: (i) will be exercisable either for cash or on a cashless basis at the holders option and (ii) will not be redeemable by the Company, in either case as long as the Private Warrants are held by the initial purchasers or any of their permitted transferees (as prescribed in the Subscription Agreement). The Private Warrants may not be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of, the Private Warrants (or any securities underlying the Private Warrants) for a period of one hundred eighty (180) days following the effective date of the Registration Statement to anyone other than any member participating in the Public Offering and the officers or partners thereof, if all securities so transferred remain subject to the lock-up restriction for the remainder of the time period. During the three months ended March 31, 2023, private placement warrant holders exercised 3,126,472 warrants on a cashless basis, with the Company agreeing to issue 1,100,000 shares of common stock in connection with such exercise. There were 1,501,386 and 4,627,858 private warrants issued and outstanding as of March 31, 2023 and December 31, 2022, respectively. The Company accounts for the Private Warrants issued in connection with the Initial Public Offering in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the private warrants do not meet the criteria for equity treatment thereunder, each private warrant must be recorded as a liability. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liabilities will be adjusted to its current fair value, with the change in fair value recognized in the Company’s statement of operations. The Company will reassess the classification at each balance sheet date.

The Private Placement Warrants are classified as Level 2 as the transfer of private placement warrants to anyone who is not a permitted transferee would result in the Private Placement Warrants having substantially similar terms as the Public Warrants (with the exception of a different remaining life). We determined, through use of a Binomial Lattice model, that the fair value of each Private Placement Warrant less a discount for the difference in remaining life is equivalent to that of each Public Warrant.

Term Loan Warrants

In connection with the entry into the Term Loan Agreement, and as a required term and condition thereof, the Company issued (i) the penny warrants to the Term Loan Lenders exercisable to purchase an aggregate of 2,593,056 shares (the “Penny Warrants”) and (ii) the $10 warrants to issue warrants to the Term Loan Lenders exercisable to purchase an aggregate of 1,600,000 shares of common stock at $10 per share (the “$10 Warrants” and, together with the Penny Warrants, the “Term Loan Warrants”). The $10 Warrants were exercised on a cashless basis on October 10, 2022, with the Company issuing 457,142 shares of Common Stock in connection with such exercise. During the three months ended March 31, 2023, penny warrant holders exercised 1,250,000 warrants on a cashless basis, with the Company agreeing to issue 1,248,294 shares of common stock in connection with such exercise. The Company concluded the warrants are not considered indexed to the Company’s stock and to be accounted for as liabilities under ASC 815. As such, the estimated fair value is recognized as a liability each reporting period, with changes in the fair value recognized within income each period.

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

NOTE 9 - WARRANTS (CONTINUED)

Common Stock Warrants classified as Liability (Continued)

The following table provides the significant inputs to the Black-Scholes method for the fair value of the Penny Warrants:

SCHEDULE FAIR VALUE WARRANTS

	As of March 31, 2023			As of December 31, 2022
Common stock price	$	3.00		$	11.09
Exercise price		0.01			0.01
Dividend yield		0	%		0	%
Term		9.52			9.77
Volatility		89.00	%		90.00	%
Risk-free rate		3.43	%		3.90	%
Fair value	$	2.99		$	11.89

The following table presents a roll-forward of the Company’s warrants from January 1, 2023 to March 31, 2023:

SCHEDULE OF ROLL FORWARD IN WARRANTS

Private Warrants:

	Common Stock Warrants
Warrants Outstanding, January 1, 2023		4,627,858
Exercise of warrants		(3,126,472	)
Warrants Outstanding, March 31, 2023		1,501,386

There were no private warrants issued, exercised and outstanding from the period January 1, 2022 through March 31, 2022.

Public Warrants:

	Common Stock Warrants
Warrants Outstanding, January 1, 2023		9,487,500
Exercise of warrants		(64,971	)
Warrants Outstanding, March 31, 2023		9,422,529

There were no public warrants issued, exercised and outstanding from the period January 1, 2022 through March 31, 2022.

Term Loan Warrants:

	Common Stock Warrants
Warrants Outstanding, January 1, 2023		2,593,056
Exercise of warrants		(1,250,000	)
Warrants Outstanding, March 31, 2023		1,343,056

There were no term loan warrants issued, exercised and outstanding from the period January 1, 2022 through March 31, 2022.

The following table presents a roll forward of the aggregate fair values of the Company’s warrant liabilities for which fair value is determined by Level 3 Inputs. The only class of warrants that were determined to be Level 3 are the term loan warrants.

	Warrant Liability
Balances, January 1, 2023	$	30,841
Exercise of warrants		(8,822	)
Change in fair value of warrants		(17,998	)
Balances, March 31, 2023	$	4,021

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

SCHEDULE FAIR VALUE WARRANTS (Details)	Mar. 31, 2023 $ / shares	Dec. 31, 2022 $ / shares
Common stock price		$ 11.09
Common stock price		$ 11.89
Measurement Input, Share Price [Member]
Common stock price		0.01
Measurement Input, Expected Dividend Rate [Member]
Common stock price		0
Measurement Input, Expected Term [Member]
Term		9 years 9 months 7 days
Measurement Input, Price Volatility [Member]
Common stock price		90.00
Measurement Input, Risk Free Interest Rate [Member]
Common stock price		3.90
Initial Measurement [Member]
Common stock price	$ 3.00
Common stock price	$ 2.99
Initial Measurement [Member] \| Measurement Input, Share Price [Member]
Common stock price	0.01
Initial Measurement [Member] \| Measurement Input, Expected Dividend Rate [Member]
Common stock price	0
Initial Measurement [Member] \| Measurement Input, Expected Term [Member]
Term	9 years 6 months 7 days
Initial Measurement [Member] \| Measurement Input, Price Volatility [Member]
Common stock price	89.00
Initial Measurement [Member] \| Measurement Input, Risk Free Interest Rate [Member]
Common stock price	3.43

SCHEDULE OF OPTION ACTIVITY AND RELATED INFORMATION (Details) (Parenthetical)	3 Months Ended
	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Stock option exchange ratio	1.182

SCHEDULE OF THE FUTURE MINIMUM LEASE PAYMENTS UNDER THE OPERATING LEASES (Details) - USD ($)
$ in Thousands

Mar. 31, 2023

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

December 31, 2023

^[1]

$ 1,054

1,435

1,435

893

4,817

Less imputed interest

393

Total operating lease liabilities

$ 4,424

$ 4,729

[1]	Represents scheduled payments for the remaining nine-month period ending December 31, 2023.

INCOME TAXES (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Income tax expense benefit		$ 527

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

NATURE OF BUSINESS

3 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NATURE OF BUSINESS

NOTE 1 - NATURE OF BUSINESS

Dragonfly Energy Holdings Corp. (“New Dragonfly” or the “Company”) sells lithium ion battery packs for use in a wide variety of applications. The Company sells to distributors under the Dragonfly Energy brand name, and sells direct to consumers under the trade name Battleborn Batteries. In addition, the Company develops technology for improved lithium ion battery manufacturing and assembly methods.

On October 7, 2022, a merger transaction between Chardan NexTech Acquisition 2 Corporation (“CNTQ”), Dragonfly Energy Corp. (“Legacy Dragonfly”), and Bronco Merger Sub, Inc. (“Merger Sub”) was completed pursuant to which Merger Sub was merged with and into Legacy Dragonfly, with Legacy Dragonfly surviving the merger. As a result of the merger, Legacy Dragonfly became a wholly owned subsidiary of New Dragonfly.

Although New Dragonfly was the legal acquirer of Legacy Dragonfly in the merger, Legacy Dragonfly is deemed to be the accounting acquirer, and the historical financial statements of Legacy Dragonfly became the basis for the historical financial statements of New Dragonfly upon the closing of the merger. New Dragonfly together with its wholly owned subsidiary, Dragonfly Energy Corp., is referred to hereinafter as the “Company.”

Furthermore, the historical financial statements of Legacy Dragonfly became the historical financial statements of the Company upon the consummation of the merger. As a result, the financial statements included in this Quarterly Report reflect (i) the historical operating results of Legacy Dragonfly prior to the merger; (ii) the combined results of CNTQ and Legacy Dragonfly following the close of the merger; (iii) the assets and liabilities of Legacy Dragonfly at their historical cost and (iv) the Legacy Dragonfly’s equity structure for all periods presented, as affected by the recapitalization presentation after completion of the merger.

SCHEDULE OF FUTURE DEBT MATURITIES (Details)
$ in Thousands

Mar. 31, 2023

USD ($)

Debt Disclosure [Abstract]

^[1]

938

3,750

91,775

96,463

Less: Estimated interest paid-in-kind

(19,033)

Total debt

77,430

Less: Unamortized debt issuance costs, noncurrent

(56,731)

Total carrying amount

20,699

Less: Current portion of debt

(20,699)

Total long-term debt

[1]	Represents scheduled payments for the remaining nine-month period ending December 31, 2023

RELATED PARTY

3 Months Ended

Mar. 31, 2023

RELATED PARTY

NOTE 8 - RELATED PARTY

The Company loaned its Chief Financial Officer $469 to repay amounts owed by him to his former employer and entered into a related Promissory Note with a maturity date of March 1, 2026. The loan was forgiven in full in March of 2022 and was recorded within general and administrative expense.

On October 25, 2022, the Company entered into a separation and release of claims agreement with its Chief Operating Officer (“COO”). As consideration for the COO’s execution of the agreement, the Company agreed to pay the employee a lump sum payment of $100 which is included in general and administrative expenses in the statements of operations, payments equivalent to $1,000 divided into 24 monthly payments commencing on December 1, 2022, and all outstanding equity-based compensation awards to become fully vested and exercisable. The COO shall have 12 months from the termination date to exercise outstanding options.

In February 2023, the Company entered into an agreement with its former COO in which the ownership of a Company van was transferred to the former COO in connection with his severance. The Company accounted for the cost of the van as an employee bonus, resulting in $116 of general and administrative expense for the current period.

On March 5, 2023, the Company entered into a convertible promissory note (the “Note”) with a board member in the amount of $1,000, or the Principal Amount. Upon execution of the Note and funding of the original principal sum, a payment of $100 ( the “Loan Fee”) was fully earned as of the date of the Note and was due and payable in full in cash on April 4, 2023. The Company paid the Principal Amount and the Loan Fee on April 1, 2023 and April 4, 2023, respectively.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-6

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(g)(3))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(e))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483575/946-220-S99-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//850/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-6

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483326/850-10-50-1

+ Details

SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY (Details) - Restricted Stock Units (RSUs) [Member]	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares , beginning balance	180,000
Weighted average fair market value , beginning balance \| $ / shares	$ 14.00
Number of shares granted and unvested	461,998
Weighted average fair market value granted and unvested \| $ / shares	$ 7.50
Number of shares vested	(461,998)
Weighted average fair market value vested \| $ / shares	$ 7.50
Number of shares , ending balance	180,000
Weighted average fair market value , beginning balance \| $ / shares	$ 14.00
Number of shares ,vested	461,998
Weighted average fair market value,vested	7.50

WARRANTS (Tables)

3 Months Ended

Mar. 31, 2023

Warrants

SCHEDULE FAIR VALUE WARRANTS

The following table provides the significant inputs to the Black-Scholes method for the fair value of the Penny Warrants:

SCHEDULE FAIR VALUE WARRANTS

	As of March 31, 2023			As of December 31, 2022
Common stock price	$	3.00		$	11.09
Exercise price		0.01			0.01
Dividend yield		0	%		0	%
Term		9.52			9.77
Volatility		89.00	%		90.00	%
Risk-free rate		3.43	%		3.90	%
Fair value	$	2.99		$	11.89

SCHEDULE OF ROLL FORWARD IN WARRANTS

The following table presents a roll-forward of the Company’s warrants from January 1, 2023 to March 31, 2023:

SCHEDULE OF ROLL FORWARD IN WARRANTS

Private Warrants:

	Common Stock Warrants
Warrants Outstanding, January 1, 2023		4,627,858
Exercise of warrants		(3,126,472	)
Warrants Outstanding, March 31, 2023		1,501,386

There were no private warrants issued, exercised and outstanding from the period January 1, 2022 through March 31, 2022.

Public Warrants:

	Common Stock Warrants
Warrants Outstanding, January 1, 2023		9,487,500
Exercise of warrants		(64,971	)
Warrants Outstanding, March 31, 2023		9,422,529

There were no public warrants issued, exercised and outstanding from the period January 1, 2022 through March 31, 2022.

Term Loan Warrants:

	Common Stock Warrants
Warrants Outstanding, January 1, 2023		2,593,056
Exercise of warrants		(1,250,000	)
Warrants Outstanding, March 31, 2023		1,343,056

There were no term loan warrants issued, exercised and outstanding from the period January 1, 2022 through March 31, 2022.

	Warrant Liability
Balances, January 1, 2023	$	30,841
Exercise of warrants		(8,822	)
Change in fair value of warrants		(17,998	)
Balances, March 31, 2023	$	4,021

COMMON STOCK (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Common stock, shares authorized	170,000,000	170,000,000
Common stock, par value	$ 0.0001	$ 0.0001
Purchase Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of shares issued	73,500
Aggregate net proceeds	$ 597
Purchase Agreement [Member] \| Maximum [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Aggregated purchase price	$ 150,000

SCHEDULE OF LEVERAGE RATION (Details)	3 Months Ended
SCHEDULE OF LEVERAGE RATION (Details)	Mar. 31, 2023
December 31, 2022 - March 31, 2023 [Member]
Line of Credit Facility [Line Items]
Leverage ratio	6.75 to 1.00
June 30, 2023 - September 30, 2023 [Member]
Line of Credit Facility [Line Items]
Leverage ratio	6.00 to 1.00
December 31, 2024 - March 31, 2025 [Member]
Line of Credit Facility [Line Items]
Leverage ratio	5.00 to 1.00
June 30, 2024 - September 30, 2024 [Member]
Line of Credit Facility [Line Items]
Leverage ratio	4.00 to 1.00
December 31, 2024 - March 31, 2025 [Member]
Line of Credit Facility [Line Items]
Leverage ratio	3.25 to 1.00
June 30, 2025 and Thereafter [Member]
Line of Credit Facility [Line Items]
Leverage ratio	3.00 to 1.00

Condensed Interim Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Statement [Abstract]
Net Sales	$ 18,791	$ 18,303
Cost of Goods Sold	14,048	12,808
Gross Profit	4,743	5,495
Operating Expenses
Research and development	880	339
General and administrative	9,495	3,626
Selling and marketing	4,184	3,092
Total Operating Expenses	14,559	7,057
Loss From Operations	(9,816)	(1,562)
Other Income (Expense)
Interest expense	(3,815)	(1,263)
Change in fair market value of warrant liability	18,523
Total Other Income (Expense)	14,708	(1,263)
Income (Loss) Before Taxes	4,892	(2,825)
Income Tax (Benefit) Expense		(527)
Net Income (Loss)	$ 4,892	$ (2,298)
Income (Loss) Per Share- Basic	$ 0.11	$ (0.06)
Income (Loss) Per Share- Diluted	$ 0.10	$ (0.06)
Weighted Average Number of Shares- Basic	45,104,515	36,542,944
Weighted Average Number of Shares- Diluted	48,455,996	36,542,944

SCHEDULE OF INFORMATION NEEDED TO COMPUTE BASIC AND DILUTED EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Basic Earnings (Loss) per common share:
Net Income (Loss) available to common shareholders	$ 4,892	$ (2,298)
Weighted average number of common shares-basic	45,104,515	36,542,944
Earnings (Loss) per share, basic	$ 0.11	$ (0.06)
Diluted Earnings (Loss) per common share:
Dilutive effect related to stock options and warrants	3,351,481
Weighted average diluted shares outstanding	48,455,996	36,542,944
Earnings (Loss) per share, diluted	$ 0.10	$ (0.06)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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- Definition

Amount, after deduction of tax, noncontrolling interests, dividends on preferred stock and participating securities; of income (loss) available to common shareholders.

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+ Details

INVENTORY (Tables)

3 Months Ended

Mar. 31, 2023

Inventory Disclosure [Abstract]

SCHEDULE OF INVENTORY

Inventory consists of the following:

SCHEDULE OF INVENTORY

	March 31, 2023		December 31, 2022
Raw material	$	44,310	$	42,586
Finished goods		7,502		7,260
Total inventory	$	51,812	$	49,846

SCHEDULE OF OPTION ACTIVITY AND RELATED INFORMATION (Details) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

Mar. 31, 2023

Mar. 31, 2022

Share-Based Payment Arrangement [Abstract]

Number of Options, Balance at the beginning

^[1]

3,642,958

3,690,955

Weighted- Average Exercise Price - Balances at the beginning

$ 2.02

$ 1.98

Weighted- Average Grant Date Fair Value, Balances at the beginning

$ 1.21

$ 1.38

Weighted- Average Remaining Contractual Life (in years)

7 years 10 months 24 days

8 years 6 months 7 days

Aggregate Intrinsic value Balances at the beginning

$ 35,989

$ 6,550

Number of Options granted

^[1]

143,607

Weighted- Average Exercise Price Options granted

$ 7.50

Weighted- Average Grant Date Fair Value, Options granted

$ 3.82

Aggregate Intrinsic value Options granted

$ 632

Number of Options forfeited

^[1]

(19,164)

(11,584)

Weighted- Average Exercise Price Options forfeited

$ 7.27

$ 1.44

Weighted- Average Grant Date Fair Value, Options forfeited

$ 3.71

$ 2.17

Aggregate Intrinsic value Options forfeited

$ 6

Number of Options exercised

^[1]

(36,009)

(48,369)

Weighted- Average Exercise Price Options exercised

$ 2.58

$ 0.49

Weighted- Average Grant Date Fair Value, Options exercised

$ 1.65

$ 0.83

Aggregate Intrinsic value Options exercised

$ 232

Number of Options, Balance at the end

^[1]

3,731,392

3,631,002

Weighted- Average Exercise Price Balances at the end

$ 2.20

$ 2.00

Weighted- Average Grant Date Fair Value,Balances at the end

$ 1.30

$ 1.39

Weighted- Average Remaining Contractual Life (in years)

6 years 7 months 13 days

8 years 3 months 14 days

Aggregate Intrinsic value Balances at the end

$ 3,800

$ 6,377

Number of Options, Vested and Exercisable

^[1]

2,029,985

Weighted- Average Exercise Price Vested and Exercisable

$ 1.53

Weighted- Average Remaining Contractual Life (in years)

4 years 11 months 23 days

Aggregate Intrinsic value Vested and Exercisable

$ 3,120

Number of Options, Vested and expected to vest

^[1]

3,731,392

Weighted- Average Exercise Price Vested and expected to vest (in dollars per share)

$ 2.20

Weighted- Average Remaining Contractual Life (in years)

6 years 7 months 13 days

Aggregate Intrinsic value Vested and expected to vest

$ 3,800

[1]	Number of options and weighted average exercise price has been adjusted to reflect the exchange of Legacy Dragonfly’s stock options for New Dragonfly stock options at an exchange ratio of approximately 1.182 as a result of the merger.

COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 5 - COMMITMENTS AND CONTINGENCIES

Litigation

From time to time the Company may be named in claims arising in the ordinary course of business. Currently, no legal proceedings, governmental actions, administrative actions, investigations or claims are pending against the Company or involve the Company that, in the opinion of the Company’s management, could reasonably be expected to have a material adverse effect on the Company’s business and financial condition.

Operating Leases

The Company has leases related to the main office, warehouse space, research and development lab, and engineering office, all located in Reno, Nevada. The leases require annual escalating monthly payments ranging from $111 to $128. On February 2, 2022, the Company entered into a 124-month lease agreement in Reno, Nevada. The lease calls for monthly base rent of $230, $23 of fixed operating expense costs, and estimated monthly property taxes of $21. The monthly base rent and fixed operating expense costs are subject to escalation of 3% and 2.4%, respectively, on an annual basis. The first payment is due upon substantial completion of construction of the building which is expected to be within 2 years from the effective date. As of March 31, 2023, the lease has not commenced as the Company does not have control over the asset.

The following table presents the breakout of the operating leases as of:

	March 31, 2023			December 31, 2022
Operating lease right-of-use assets	$	4,205		$	4,513
Short-term operating lease liabilities		1,215			1,188
Long-term operating lease liabilities		3,209			3,541
Total operating lease liabilities	$	4,424		$	4,729
Weighted average remaining lease term		3.4 years			3.6 years
Weighted average discount rate		5.2	%		5.2	%

Assumptions used in determining our incremental borrowing rate include our implied credit rating and an estimate of secured borrowing rates based on comparable market data.

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

NOTE 5 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

Operating Leases (Continued)

At March 31, 2023, the future minimum lease payments under these operating leases are as follows:

Fiscal Years Ending	Amount
December 31, 2023 ⁽¹⁾	$	1,054
December 31, 2024		1,435
December 31, 2025		1,435
December 31, 2026		893
Total lease payments		4,817
Less imputed interest		393
Total operating lease liabilities	$	4,424

⁽¹⁾

Represents scheduled payments for the remaining nine-month period ending December 31, 2023.

SCHEDULE OF LEASE COST

Lease cost

Classification
March 31, 2023 March 31, 2022

Operating lease cost Cost of goods sold $ 347 $ 172

Operating lease cost Research and development 22 19

Operating lease cost General and administration 12 10

Operating lease cost Selling and marketing 12 14

Total lease cost $ 393 $ 215

Earnout

The former holders of shares of Legacy Dragonfly common stock (including shares received as a result of the conversion of Legacy Dragonfly Preferred Stock into New Dragonfly Common Stock) are entitled to receive their pro rata share of up to 40,000,000 additional shares of common stock (the “Earnout Shares”). The Earnout Shares are issuable in three tranches. The first tranche of 15,000,000 shares is issuable if New Dragonfly’s 2023 total audited revenue is equal to or greater than $250,000 and New Dragonfly’s 2023 audited operating income is equal to or greater than $35,000. The second tranche of 12,500,000 shares is issuable upon achieving a volume-weighted average trading price threshold of at least $22.50 on or prior to December 31, 2026 and the third tranche of 12,500,000 is issuable upon achieving a volume-weighted average trading price threshold of at least $32.50 on or prior to December 31, 2028. To the extent not previously earned, the second tranche is issuable if the $32.50 price target is achieved by December 31, 2028.

Other Contingencies

See Note 7 for further discussion regarding contingent consideration arising from the April 2022 asset purchase agreement with Thomason Jones Company, LLC.

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2023

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 14 – SUBSEQUENT EVENTS

On April 1, 2023 the Company paid the $1,000 Principal Amount on the Note previously issued to Brian Nelson on March 5, 2023. Upon execution of the Note and funding of the Principal Amount, a payment of the $100 Loan Fee, was fully earned as of the date of the note and was due and paid in full in cash on April 4, 2023.

On April 26, 2023 (the “Separation Date”), the Company’s Chief Legal Officer’s employment with the Company ended and her employment agreement was deemed terminated as of that date by the Company without cause for purposes of determining severance thereunder. Under the terms of her employment agreement, Ms. Harvey is entitled to receive cash severance equal to $334,000 payable in 52 biweekly installments commencing 30 days from the Separation Date. Ms. Harvey’s outstanding options granted by the Company fully vested, and are exercisable for three (3) months following the Separation Date.

ASSET PURCHASE AGREEMENT

3 Months Ended

Mar. 31, 2023

Business Combination and Asset Acquisition [Abstract]

ASSET PURCHASE AGREEMENT

NOTE 7 - ASSET PURCHASE AGREEMENT

Bourns Production, Inc

On January 1, 2022, the Company entered into an asset purchase agreement (the “APA”) with Bourns Productions, Inc., a Nevada corporation (“Bourns Productions”) pursuant to which the Company acquired machinery, equipment and a lease for a podcast studio from Bourns Productions as set forth in the APA for a purchase price of $197 which approximated fair market value.

Thomason Jones Company, LLC

In April 2022, the Company entered into an Asset Purchase Agreement (the “April 2022 Asset Purchase Agreement”) with William Thomason, Richard Jones, and Thomason Jones Company, LLC (“Thomason Jones”) whereby the Company acquired inventory and intellectual property assets for up to $700 cash plus contingent payments of $1,000 each to William Thomason and Richard Jones (the “Earn Out”). The Company determined the contingent consideration to be recognized as contingent compensation to Mr. Thomason and Mr. Jones. The Company concluded the purchase price to be $444 and was allocated in its entirety to inventory.

Contingent Compensation

If, within twenty-four months of the Agreement the Company realizes $3,000 in gross sales of product either (a) sold under the Wakespeed brand and/or (b) which incorporates any portion of Purchased IP as listed within the agreement, then the Company will pay to Thomason and Jones each the amount of $1,000 as soon as reasonably practicable. This payment may be made in cash or common stock, in the sole discretion of the Company. As a result, the Company determined that a liability should be recorded ratably over the 24 month period. The Company recognized immediate compensation expense within sales and marketing of $417 on October 1, 2022 for amounts that should have been accrued for during the period April 2022 through September 2022. In October 2022, the Company determined the sales goals will most likely be achieved within 18 months. As a result, the Company changed its estimate prospectively and accelerated the accrual as if the sales goals would be achieved within an 18 month period from the date of acquisition. As a result, the Company recorded an accrual related to the Earn Out in the amount of $1,147 and $782 as of March 31, 2023 and December 31, 2022.

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)	3 Months Ended		12 Months Ended
	Mar. 31, 2023 USD ($) Segment Vendor Customer	Mar. 31, 2022 USD ($) Vendor	Dec. 31, 2022 USD ($) Customer	Mar. 05, 2023 USD ($)
Product Information [Line Items]
Cash and cash equivalents	$ 15,791,000		$ 17,781,000
Working capital	$ 24,533,000
Loan amount				$ 100,000
Period within which payment is due from customers	30 – 60 days
Allowance for doubtful accounts	$ 116,000		90,000
Depreciation expense	297,000	$ 192,000
Customer deposits	418,000		238,000
Customer deposits	211,000		211,000
Revenues	434
Shipping and handling costs	1,007,000	1,228,000
Warrant obilgation outstanding	$ 400,000		$ 328,000
Number of vendors \| Customer	1		3
Advertising expense	$ 587,000	$ 781,000
Uncertain tax positions	$ 128,000		$ 128,000
Number of operating segments \| Segment	1
Accounts Receivable [Member] \| Credit Concentration Risk [Member] \| Customer One [Member]
Product Information [Line Items]
Concentration risk, percentage	50.00%		18.00%
Accounts Receivable [Member] \| Credit Concentration Risk [Member] \| Customer Two [Member]
Product Information [Line Items]
Concentration risk, percentage			10.00%
Accounts Receivable [Member] \| Credit Concentration Risk [Member] \| Customer Three [Member]
Product Information [Line Items]
Concentration risk, percentage			10.00%
Sales [Member] \| Customer Concentration Risk [Member]
Product Information [Line Items]
Number of vendors \| Customer	1
Sales [Member] \| Customer Concentration Risk [Member] \| Customer One [Member]
Product Information [Line Items]
Concentration risk, percentage	26.00%
Accounts Payable [Member] \| Customer Concentration Risk [Member] \| Vendor [Member]
Product Information [Line Items]
Concentration risk, percentage			61.00%
Accounts Payable [Member] \| Supplier Concentration Risk [Member]
Product Information [Line Items]
Number of vendors \| Customer	1		1
Accounts Payable [Member] \| Supplier Concentration Risk [Member] \| Vendor [Member]
Product Information [Line Items]
Concentration risk, percentage	67.00%
Total Purchases [Member] \| Supplier Concentration Risk [Member]
Product Information [Line Items]
Number of vendors \| Vendor	2	1
Total Purchases [Member] \| Supplier Concentration Risk [Member] \| Vendor One [Member]
Product Information [Line Items]
Concentration risk, percentage	38.00%
Total Purchases [Member] \| Supplier Concentration Risk [Member] \| Vendor Two [Member]
Product Information [Line Items]
Concentration risk, percentage	10.00%
Total Purchases [Member] \| Supplier Concentration Risk [Member] \| One Vendor [Member]
Product Information [Line Items]
Concentration risk, percentage		34.00%
Minimum [Member]
Product Information [Line Items]
Payment term for distributors and OEMs	30 days
Term of product warranty provided	5 years
Maximum [Member]
Product Information [Line Items]
Payment term for distributors and OEMs	60 days
Term of product warranty provided	10 years
Senior Secured Term Loan Facility [Member] \| Term Loan [Member]
Product Information [Line Items]
Loan amount	$ 75,000,000

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and present the consolidated financial statements of the Company and its wholly owned subsidiary. All significant intercompany transactions and balances are eliminated in consolidation.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with U.S. GAAP for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) set forth in Article 8 of Regulation S X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These financial statements should be read along with the Annual Report filed of the Company for the annual period ended December 31, 2022. The consolidated balance sheet as of December 31, 2022 was derived from the audited consolidated financial statements as of and for the year then ended.

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

Going Concern

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

For the three months ended March 31, 2023 and 2022, the Company incurred loss from operations and had negative cash flow from operations. As of March 31, 2023, the Company had $15,791 in cash and cash equivalents and working capital of $24,533. The Company’s ability to achieve profitability and positive cash flow depends on its ability to increase revenue, contain its expenses and maintain compliance with the financial covenants in its outstanding indebtedness agreements.

In connection with the Company’s senior secured term loan facility in an aggregate principal amount of $75,000 (the “Term Loan”), the Company is obligated to comply with certain financial covenants, which include maintaining a maximum senior leverage ratio, minimum liquidity, a springing fixed charge coverage ratio, and maximum capital expenditures (See Note 6). On March 29, 2023, the Company obtained a waiver from the Term Loan administrative agent and lenders of its failures to satisfy the fixed charge coverage ratio and maximum senior leverage ratio with respect to the minimum cash requirements under the Term Loan during the quarter ended March 31, 2023. It is probable that the Company will fail to meet these covenants within the next twelve months. If the Company is unable to obtain a waiver or if the Company is unable to comply with such covenants, the lenders have the right to accelerate the maturity of the Term Loan. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

In addition, the Company may need to raise additional debt and/or equity financings to fund our operations, strategic plans, and meet its financial covenants. The Company has historically been able to raise additional capital through issuance of equity and/or debt financings and the Company intends to use its equity facility and raise additional capital as needed. However, the Company cannot guarantee that it will be able to raise additional equity, contain expenses, or increase revenue, and comply with the financial covenants under the Term Loan.

Recently adopted accounting standards:

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB subsequently issued amendments to ASU 2016-13, which have the same effective date and transition date of January 1, 2023. These standards replace the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measure at amortized cost to be presented at the net amount expected to be collected. The Company determined that this change does not have a material impact to the financial statements or financial statement disclosures.

Recently issued accounting pronouncements:

In August 2020, FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. The amendments in this update will be effective for the Company on January 1, 2024. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Accounts Receivable

The Company’s trade receivables are recorded when billed and represent claims against third parties that will be settled in cash. Generally, payment is due from customers within 30 – 60 days of the invoice date and the contracts do not have significant financing components. Trade accounts receivables are recorded gross and are net of any applicable allowance. The Company has an allowance for doubtful accounts as of March 31, 2023 and December 31, 2022 of $116 and $90, respectively.

Inventory

Inventories (Note 4), which consist of raw materials and finished goods, are stated at the lower of cost (first in, first out) or net realizable value, net of reserves for obsolete inventory. We continually analyze our slow moving and excess inventories. Based on historical and projected sales volumes and anticipated selling prices, we established reserves. Inventory that is in excess of current and projected use is reduced by an allowance to a level that approximates its estimate of future demand. Products that are determined to be obsolete are written down to net realizable value. As of March 31, 2023 and December 31, 2022, no such reserves were necessary.

Property and Equipment

Property and equipment are stated at cost, including the cost of significant improvements and renovations. Costs of routine repairs and maintenance are charged to expense as incurred. Depreciation and amortization are calculated by the straight line method over the estimated useful lives for owned property, or, for leasehold improvements, over the shorter of the asset’s useful life or term of the lease. Depreciation expense for the three months ended March 31, 2023 and 2022 was $297 and $192, respectively. The various classes of property and equipment and estimated useful lives are as follows:

Office furniture and equipment	3 to 7 years
Vehicles	5 years
Machinery and equipment	3 to 7 years
Leasehold improvements	Remaining Term of Lease

Use of Estimates

The preparation of financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Warrants

The Company applies relevant accounting guidance for warrants to purchase the Company’s stock based on the nature of the relationship with the counterparty. For warrants issued to investors or lenders in exchange for cash or other financial assets, the Company follows guidance issued within Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”), and ASC 815, Derivatives and Hedging (“ASC 815”), to assist in the determination of whether the warrants should be classified as liabilities or equity. Warrants that are determined to require liability classification are measured at fair value upon issuance and are subsequently remeasured to their then fair value at each subsequent reporting period with changes in fair value recorded in current earnings. Warrants that are determined to require equity classification are measured at fair value upon issuance and are not subsequently remeasured unless they are required to be reclassified.

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition

Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

Revenue is recognized when control of the promised goods is transferred to the customer or reseller, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Revenue associated with products holding rights of return are recognized when the Company concludes there is not a risk of significant revenue reversal in the future periods for the expected consideration in the transaction. There are no material instances including discounts and refunds where variable consideration is constrained and not recorded at the initial time of sale. Generally, our revenue is recognized at a point in time for standard promised goods at the time of shipment when title and risk of loss pass to the customer.

The Company may receive payments at the onset of the contract before delivery of goods for customers in the retail channel. Payment terms for distributors and OEMs are typically due within 30-60 days after shipment. In such instances, the Company records a customer deposit liability. The Company recognizes these contract liabilities as sales after the revenue criteria are met. As of March 31, 2023 and December 31, 2022, the contract liability related to the Company’s customer deposits approximated $418 and $238, respectively. The Company recognized $211 of contract liability pertaining to the year ended December 31, 2022 as of March 31, 2023. The entire contract liability balance of $434 as of January 1, 2022 was recognized as revenue during the three months ended March 31, 2022.

Disaggregation of Revenue

The following table present our disaggregated revenues by distribution channel:

	2023		2022
	For the Three Months Ended March 31,
	2023		2022
Sales
Retail	$	7,069	$	13,035
Distributor		2,968		2,087
Original equipment manufacture		8,754		3,181
Total	$	18,791	$	18,303
Total sales	$	18,791	$	18,303

Shipping and Handling

Shipping and handling fees paid by customers are recorded within net sales, with the related expenses recorded in cost of sales. Shipping and handling costs associated with outbound freight are included in sales and marketing expenses. Shipping and handling costs associated with outbound freight totaled $1,007 and $1,228 for the three months ended March 31, 2023 and 2022, respectively.

Product Warranty

The Company offers assurance type warranties from 5 to 10 years on its products. The Company estimates the costs associated with the warranty obligation using historical data of warranty claims and costs incurred to satisfy those claims. The Company estimates, based upon a review of historical warranty claim experience, the costs that may be incurred under our warranties and record a liability in the amount of such estimate at the time a product is sold. Factors that affect our warranty liability include the number of units sold, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our recorded warranty liability and adjust the accrual as claims data and historical experience warrants. The Company has assessed the costs of fulfilling its existing assurance type warranties and has determined that the estimated outstanding warranty obligation on March 31, 2023 and December 31, 2022 to be $400 and $328, respectively.

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Concentrations

Receivables from one customer comprised approximately 50% of accounts receivable as of March 31, 2023. Receivables from three customers comprised approximately 18%, 10% and 10%, respectively, of accounts receivable as of December 31, 2022. There are no other significant accounts receivable concentration.

Sales from one customer comprised approximately 26% of revenue for the three months ended March 31, 2023. There were no significant revenue concentrations for the three months ended March 31, 2022.

Payables to one vendor comprised approximately 67% of accounts payables as of March 31, 2023. Payables to one vendor comprised approximately 61% of accounts payables as of December 31, 2022.

For the three months ended March 31, 2023, two vendors accounted for approximately 38% and 10%, respectively, of the Company’s total purchases. For the three months ended March 31, 2022, one vendor accounted for approximately 34% of the Company’s total purchases.

Advertising

The Company expenses advertising costs as they are incurred and are included in selling and marketing expenses. Advertising expenses amounted to $587 and $781 for the three months ended March 31, 2023, and 2022, respectively.

Stock-Based Compensation

The Company accounts for stock-based compensation arrangements with employees and non-employee consultants using a fair value method which requires the recognition of compensation expense for costs related to all stock-based payments, including stock options (Note 11). The fair value method requires the Company to estimate the fair value of stock-based payment awards to employees and non-employees on the date of grant using an option pricing model. Stock based compensation costs are based on the fair value of the underlying option calculated using the Black Scholes option pricing model and recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. Restricted stock unit awards are valued based on the closing trading value of the Company’s common stock on the date of grant and then amortized on a straight-line basis over the requisite service period of the award. The Company measures equity-based compensation awards granted to non-employees at fair value as the awards vest and recognizes the resulting value as compensation expense at each financial reporting period.

Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatility, expected dividend yield, expected term, risk free rate of return, and the estimated fair value of the underlying common stock. Due to the lack of company specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The group of representative companies have characteristics similar to the Company, including stage of product development and focus on the lithium ion battery industry. The Company uses the simplified method, which is the average of the final vesting tranche date and the contractual term, to calculate the expected term for options granted to employees as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company uses an assumed dividend yield of zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. The Company accounts for forfeitures as they occur.

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes

Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss, credit carryforwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company recognizes a tax benefit for an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The Company has a liability of $128 and $128 as of March 31, 2023, and December 31, 2022, respectively, of uncertain tax positions. The Company’s accounting policy is to include penalties and interest related to income taxes if any, in selling, general and administrative expenses.

Segment Reporting

Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the Company’s Chief Executive Officer to make decisions with respect to resource allocation and assessment of performance. To date, the Company has viewed its operations and manages its business as one operating segment.

SCHEDULE OF DISAGGREGATED REVENUES BY DISTRIBUTION CHANNEL (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Disaggregation of Revenue [Line Items]
Total sales	$ 18,791	$ 18,303
Sales Channel, Directly to Consumer [Member]
Disaggregation of Revenue [Line Items]
Total sales	7,069	13,035
Sales Channel, Through Intermediary [Member]
Disaggregation of Revenue [Line Items]
Total sales	2,968	2,087
Original Equipment Manufacture [Member]
Disaggregation of Revenue [Line Items]
Total sales	$ 8,754	$ 3,181

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 924
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479941/924-10-S99-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 30
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-30

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-42

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 40
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-40

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-41

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 4
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-4

+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Principles of consolidation

Principles of consolidation

Basis of presentation

Basis of presentation

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

Going Concern

Going Concern

Recently adopted accounting standards

Recently adopted accounting standards:

Recently issued accounting pronouncements

Recently issued accounting pronouncements:

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Accounts Receivable

Accounts Receivable

Inventory

Inventory

Property and Equipment

Property and Equipment

Office furniture and equipment	3 to 7 years
Vehicles	5 years
Machinery and equipment	3 to 7 years
Leasehold improvements	Remaining Term of Lease

Use of Estimates

Use of Estimates

Warrants

Warrants

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition

Revenue Recognition

Disaggregation of Revenue

Disaggregation of Revenue

The following table present our disaggregated revenues by distribution channel:

	2023		2022
	For the Three Months Ended March 31,
	2023		2022
Sales
Retail	$	7,069	$	13,035
Distributor		2,968		2,087
Original equipment manufacture		8,754		3,181
Total	$	18,791	$	18,303
Total sales	$	18,791	$	18,303

Shipping and Handling

Shipping and Handling

Product Warranty

Product Warranty

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Concentrations

Concentrations

Sales from one customer comprised approximately 26% of revenue for the three months ended March 31, 2023. There were no significant revenue concentrations for the three months ended March 31, 2022.

Payables to one vendor comprised approximately 67% of accounts payables as of March 31, 2023. Payables to one vendor comprised approximately 61% of accounts payables as of December 31, 2022.

Advertising

Advertising

Stock-Based Compensation

Stock-Based Compensation

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes

Income Taxes

Segment Reporting

Segment Reporting

FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 3 - FAIR VALUE MEASUREMENTS

ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes between the following:

●	Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

●	Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for a similar asset or liability, either directly or indirectly.

●	Level 3 inputs are unobservable inputs that reflect the Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability.

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

NOTE 3 - FAIR VALUE MEASUREMENTS (CONTINUED)

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of March 31, 2023:

	Carrying Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
	As of March 31, 2023
Liabilities
Warrant liability- Term Loan	$	4,021	$	4,021	$	-	$	-	$	4,021
Warrant liability- Private placement warrants		120		120		-		120		-
Total liabilities	$	4,141	$	4,141	$	-	$	120	$	4,021

The following table presents assets and liabilities that were measured at fair value in the Consolidated Balance Sheets on a recurring basis as of December 31, 2022:

	Carrying Amount		Fair Value		(Level 1)		(Level 2)		(Level 3)
	As of December 31, 2022
Liabilities
Warrant liability- Term Loan	$	30,841	$	30,841	$	-	$	-	$	30,841
Warrant liability- Private placement warrants		1,990		1,990		-		1,990		-
Total liabilities	$	32,831	$	32,831	$	-	$	1,990	$	30,841

The carrying amounts of accounts receivable and accounts payable are considered level 1 and approximate fair value as of March 31, 2023 and December 31, 2022 because of the relatively short maturity of these instruments.

The carrying value of the term loan as of March 31, 2023 and December 31, 2022 approximates fair value as the interest rate does not differ significantly from the current market rates available to the Company for similar debt and is considered level 2.

Dragonfly Energy Holdings Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

STOCK-BASED COMPENSATION (Details Narrative) - USD ($) $ in Thousands			3 Months Ended
	Feb. 10, 2023	Oct. 07, 2022	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total compensation			$ 4,487	$ 288
2022 Equity Incentive Plan and Employee Stock Purchase Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unissued authorized and available for future awards			4,319,309
Cost of Sales [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total compensation			$ 36	97
Research and Development Expense [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total compensation			29	37
Selling and Marketing Expense [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total compensation			856	60
General and Administrative Expense [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total compensation			3,566	94
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Total compensation			$ 4,487	$ 288
Restricted Stock Units	461,998	180,000	180,000		180,000
Restricted stock units, value	$ 3,464	$ 2,520

WARRANTS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022	Oct. 10, 2022	Mar. 31, 2022
Class of Warrant or Right [Line Items]
Exercise price of warrants	$ 11.50
Share price		$ 11.09
Warrants outstanding	12,266,971
Exercise of public warrants	$ 747
Exercise of public warrants, shares	64,971
Common Stock [Member]
Class of Warrant or Right [Line Items]
Exercise of public warrants
Exercise of public warrants, shares	64,971,000
Warrants, shares	73,500,000
Public Warrants [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants	$ 0.01
Share price	$ 16.00
Warrants outstanding	9,487,500
Private Placement Warrants [Member]
Class of Warrant or Right [Line Items]
Warrants outstanding	1,501,386	4,627,858
Warrants to purchase shares	3,126,472
Warrants, shares	1,100,000
Penny Warrants [Member]
Class of Warrant or Right [Line Items]
Warrants to purchase shares	2,593,056
Penny Warrants [Member] \| Common Stock [Member]
Class of Warrant or Right [Line Items]
Warrants to purchase shares	1,250,000
10 Warrants [Member]
Class of Warrant or Right [Line Items]
Share price	$ 10
Warrants to purchase shares	1,600,000		457,142
10 Warrants [Member] \| Common Stock [Member]
Class of Warrant or Right [Line Items]
Warrants to purchase shares		1,248,294

EARNINGS (LOSS) PER SHARE

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER SHARE

NOTE 12 - EARNINGS (LOSS) PER SHARE

Earnings (Loss) per Common Share

The following table sets forth the information needed to compute basic and diluted earnings (loss) per share for the three months ended March 31, 2023 and 2022:

	March 31, 2023		March 31, 2022
Basic Earnings (Loss) per common share:
Net Income (Loss) available to common shareholders	$	4,892	$	(2,298	)
Weighted average number of common shares-basic		45,104,515		36,542,944
Earnings (Loss) per share, basic	$	0.11	$	(0.06	)

Diluted Earnings (Loss) per common share:
Net Income (Loss) available to common shareholders	$	4,892	$	(2,298	)
Weighted average number of common shares-basic		45,104,515		36,542,944
Dilutive effect related to stock options and warrants		3,351,481		-
Weighted average diluted shares outstanding		48,455,996		36,542,944
Earnings (Loss) per share, diluted	$	0.10	$	(0.06	)

	March 31, 2023		March 31, 2022
Warrants		10,923,915		-
Restricted stock units		111,015		-
Options		-		3,631,002
Weighted average number of common shares-basic		11,034,930		3,631,002

SCHEDULE OF TABLE REPRESENTING THE BREAKOUT OF THE OPERATING LEASES (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Operating lease right-of-use assets	$ 4,205	$ 4,513
Short-term operating lease liabilities	1,215	1,188
Long-term operating lease liabilities	3,209	3,541
Total operating lease liabilities	$ 4,424	$ 4,729
Weighted average remaining lease term	3 years 4 months 24 days	3 years 7 months 6 days
Weighted average discount rate	5.20%	5.20%

COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

SCHEDULE OF TABLE REPRESENTING THE BREAKOUT OF THE OPERATING LEASES

The following table presents the breakout of the operating leases as of:

	March 31, 2023			December 31, 2022
Operating lease right-of-use assets	$	4,205		$	4,513
Short-term operating lease liabilities		1,215			1,188
Long-term operating lease liabilities		3,209			3,541
Total operating lease liabilities	$	4,424		$	4,729
Weighted average remaining lease term		3.4 years			3.6 years
Weighted average discount rate		5.2	%		5.2	%

SCHEDULE OF THE FUTURE MINIMUM LEASE PAYMENTS UNDER THE OPERATING LEASES

At March 31, 2023, the future minimum lease payments under these operating leases are as follows:

Fiscal Years Ending	Amount
December 31, 2023 ⁽¹⁾	$	1,054
December 31, 2024		1,435
December 31, 2025		1,435
December 31, 2026		893
Total lease payments		4,817
Less imputed interest		393
Total operating lease liabilities	$	4,424

⁽¹⁾

Represents scheduled payments for the remaining nine-month period ending December 31, 2023.

SCHEDULE OF LEASE COST

Lease cost	Classification	March 31, 2023		March 31, 2022
Operating lease cost	Cost of goods sold	$	347	$	172
Operating lease cost	Research and development		22		19
Operating lease cost	General and administration		12		10
Operating lease cost	Selling and marketing		12		14
Total lease cost		$	393	$	215

ASSET PURCHASE AGREEMENT (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended
ASSET PURCHASE AGREEMENT (Details Narrative) - USD ($)	Jan. 01, 2022	Apr. 30, 2022	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Asset Acquisition [Line Items]
Revenues			$ 434
Repayment to related party			211,000		$ 211,000
Selling and marketing expense			4,184,000	$ 3,092,000
Related Party [Member]
Asset Acquisition [Line Items]
Repayment to related party			1,000,000
Bourns Production, Inc [Member]
Asset Acquisition [Line Items]
Purchase price for acquiring machinery and equipment	$ 197,000
Thomason Jones Company LLC [Member]
Asset Acquisition [Line Items]
Purchase price for acquiring machinery and equipment			444,000
Contingent payments		$ 1,000,000
Revenues			3,000,000
Selling and marketing expense			417,000
Accrued expense			1,147,000		$ 782,000
Thomason Jones Company LLC [Member] \| Related Party [Member]
Asset Acquisition [Line Items]
Repayment to related party			$ 1,000,000
Thomason Jones Company LLC [Member] \| Maximum [Member]
Asset Acquisition [Line Items]
Purchase price for acquiring machinery and equipment		$ 700,000