Dragonfly Energy Corp. executed a non-binding letter of intent to acquire Chardan NexTech Acquisition 2 Corp. (NasdaqCM:CNTQ) from a group of shareholders in a reverse merger transaction on October 15, 2021. Dragonfly Energy Corp. entered into a definitive agreement to acquire Chardan NexTech Acquisition 2 Corp. from a group of shareholders for approximately $400 million in a reverse merger transaction on May 15, 2022. The business combination values Dragonfly at an implied $500 million pro forma enterprise value. The transaction includes an earn-out provision for up to an additional 40 million shares as follows: 15 million issued if both 2023 audited Revenue and Operating Income reach $250 million and $35 million, respectively; 12.5 million issued at a price target of $22.50 by December 31, 2026; 12.5 million issued at a price target of $32.50 by December 31, 2028. All Dragonfly stockholders will roll 100% of their equity holdings into the new combined company. A commitment letter and term sheet have been agreed in connection with the $75 million term loan and $150 million equity facility, respectively. Concurrently with the execution of the business combination agreement, Chardan entered into a subscription agreement with its sponsor, Chardan NexTech Investments 2 LLC, pursuant to which, among other things, Chardan NexTech Investments 2 agreed to subscribe for and purchase 500,000 newly issued shares of Chardan common stock, for a price of $10.00 per share for gross proceeds of $5 million. Estimated cash proceeds to the combined company are expected to consist of CNTQ's approximately $128 million of cash in trust and an additional $230 million consisting of $75 million senior secured term loan, a $5 million equity investment at $10.00 per share from CNTQ's Sponsor, Chardan NexTech Investments 2 LLC, and a $150 million Chardan Equity Facility from Chardan, an affiliate of CNTQ's sponsor. As a result of the transaction, the combined company will be renamed Dragonfly Energy Holdings Corp. and is expected to be listed on the Nasdaq under the new ticker symbol “DFLI.” Dragonfly Co-Founder, Chairman & Chief Executive Officer, Denis Phares, and the current management team are expected to continue to lead the combined company.

The transaction will require the approval of the stockholders of CNTQ, and is subject to satisfaction or waiver of the conditions stated in the merger agreement, effectiveness of the proxy statement or registration statement on Form S-4, expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, that Chardan have at least $5 million of net tangible assets upon closing, receipt of approval for listing on the Nasdaq Capital Market of the shares of New Dragonfly Common Stock and other customary closing conditions, including the receipt of certain regulatory approvals. The Boards of Directors of each of Dragonfly and CNTQ have unanimously approved the transaction. The Board of Directors of CNTQ has unanimously recommended to CNTQ stockholders the approval of the transaction, and the requisite stockholders of Dragonfly have approved the transaction. The waiting period under HSR expired on June 27, 2022. As of August 2, 2022, Chardan NexTech amended its definitive proxy statement to increase the amount from $100,000 to $200,000 will deposit into the Trust Account upon five days' advance notice prior to August 13, 2022, in order to extend the date by which the Company must complete an initial business combination (which can be extended up to three times for an additional one month each time). As of September 6, 2022, CNTQ notified that it was extending the time available to the Company to consummate its initial business combination for an additional one month from September 13, 2022 to October 13, 2022. Extension No. 2 provides the Company with additional time to complete its proposed business combination with Dragonfly. As of September 19, 2022, registration statement on Form S-4 has been declared effective. As of September 30, 2022, Chardan Capital Markets LLC has acquired in the open market and continues to hold a total of 485,000 shares of Chardan common stock, and hence the aggregate purchase price that Chardan Capital Markets is obligated to pay under the subscription agreement will be reduced from $5 million to zero and the aggregate number of shares of the common stock that is obligated to be purchased will be reduced from 500,000 shares to an aggregate of 15,000 shares of common stock. Chardan NexTech Acquisition 2 Corp. shareholders voted to approve the business combination at its special meeting of shareholders held on October 6, 2022. The transaction is currently expected to close in the second half of 2022.

Justin Zabinski, James Nappo, Jonathan Risting, Alysa Craig, Craig DeDomenico, Lewis Chia, William Bunting and Alexander Choi of Stifel, Nicolaus & Company, Incorporated is serving as financial advisor. Portia Ku, Wenting Yu, Tai Vivatvaraphol, Viq Shariff, Laurie Davis, Kurt J. Berney and Noah K. Kornblith of O'Melveny & Myers, LLP and Parsons Behle & Latimer are serving as legal counsels to Dragonfly. Duff & Phelps, LLC acted as financial advisor and provided fairness opinion to the Board of Chardan. Stephen M. Kotran of Sullivan & Cromwell LLP represented Duff & Phelps.

Chardan Capital Markets, LLC is serving as financial advisor to Chardan. Stifel and Chardan are acting as joint placement agents, Jeffrey A. Brill and Peter D. Serating, Michelle Gasaway, Steven Messina, Victor Hollender, Erica Schohn of Skadden, Arps, Slate, Meagher & Flom LLP and Brownstein Hyatt Farber Schreck, LLP are serving as legal counsels and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal due diligence provider to CNTQ. Energy Impact Partners is serving as lead arranger of the senior secured term loan. Chapman and Cutler LLP is serving as legal counsel to Energy Impact Partners. Chardan Capital Markets will receive a cash fee for such services upon the consummation of the merger in an amount equal to, in the aggregate, $4.4 million. Chardan Capital Markets will also receive a cash fee of $1.2 million for other financial advisory services. As compensation for Duff & Phelps' services in connection with the rendering of the opinion to the Chardan Board, Chardan agreed to pay Duff & Phelps a fee of $0.45 million. A portion of the fee was payable upon delivery of the opinion and a portion is payable upon consummation of the Business Combination. Mark Zimkind of Continental Stock Transfer & Trust Company acted as transfer agent and Morrow & Co., LLC acted as proxy solicitor with a service fee of $27,500 to Chardan.