STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

Note 11 - STOCK-BASED COMPENSATION

Share-based compensation expense for options and RSUs totaling $5,441 and $719 was recognized in the Company’s consolidated statements of operations for the six months ended June 30, 2023 and 2022, respectively. Share-based compensation expense for options and RSUs totaling $954 and $431 was recognized in the Company’s consolidated statements of operations for the three months ended June 30, 2023 and 2022, respectively.

Share-based compensation for the six months ended June 30, 2023 and 2022 was allocated as follows:

	June 30,
	2023		2022
Cost of goods sold	$	75	$	143
Research and development		49		171
Selling and marketing		971		192
General and administrative expense		4,346		213
Total	$	5,441	$	719

Share-based compensation for the three months ended June 30, 2023 and 2022 was allocated as follows:

	June 30,
	2023		2022
Cost of goods sold	$	39	$	46
Research and development		20		134
Selling and marketing		115		132
General and administrative expense		780		119
Total	$	954	$	431

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		602,275			4.08		1.81				-
Options forfeited		(30,468	)		2.93		2.32				-
Options exercised		(254,623	)		0.94		2.39				-
Balances, June 30, 2022		4,008,139		$	2.36	$	1.72		8.43	$	5,845
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		(238,345	)		3.53		1.62				369
Options exercised		(105,121	)		3.07		5.91				298
Balances, June 30, 2023		3,443,099		$	2.11	$	1.27		6.16	$	1,520
At June 30, 2023
Vested and Exercisable		2,164,874		$	1.55				4.89	$	1,389
Vested and expected to vest		3,443,099		$	2.11				6.16	$	1,520

(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. See Note 1 for additional information.

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 vested immediately. The fair value of the restricted stock units on the date of grant was $3,464 and was recorded as compensation expense during the six months ended June 30, 2023. During the first six months of 2023, the Company granted an additional 28,000 restricted stock units which have not vested. The fair value of the 28,000 unvested restricted stock units was $105 and an expense of $7 was recorded during the six months ended June 30, 2023.

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 six months ended June 30, 2023:

	Number of Shares			Weighted-Average Fair Market Value
Unvested shares at January 1, 2023		180,000		$	14.00
Granted and unvested		489,998			7.29
Vested		(461,998	)		7.50
Unvested shares, June 30, 2023		208,000		$	14.00
Vested and exercisable as of June 30, 2023		-		$	-

As of June 30, 2023, there were 4,434,916 shares of unissued authorized and available for future awards under the 2022 Equity Incentive Plan and Employee Stock Purchase Plan.