Luisa Ingargiola joins Dr. Denis Phares for this episode of the Li-MITLESS ENERGY Podcast to discuss Dragonfly Energy’s journey to the public market. As the Lead Independent Director of the board at Dragonfly Energy, Luisa has played an integral role in advising the company’s leadership and giving them the tools to go public. With her extensive finance experience working as a CFO and sitting on multiple boards, Luisa brings irreplaceable knowledge and a keen understanding of the stock exchange. Throughout the discussion. she shares her insights and experience and how they apply to the work happening behind the scenes at Dragonfly Energy.
Luisa Ingargiola’s Impact on Dragonfly Energy’s Journey to Going Public
Following her graduation from Boston University’s Questrom School of Business with a Bachelor’s degree in Business Administration and a concentration in Finance, Luisa Ingargiola began helping her father with his cleantech company. As an environmentalist and engineer, Luisa’s father was passionate about cleantech and wanted to take the company public but didn’t know how. With her educational background and a few years of hard work, Luisa was able to get her father’s company publicly traded on the NASDAQ. After becoming the CFO for various NASDAQ and NYSE companies and serving on multiple boards, Luisa is using her expertise to champion and grow companies in the cleantech and energy industries.
In this episode of the Li-MITLESS ENERGY Podcast, host Denis Phares welcomes Luisa, who now serves as the Lead Independent Director on the board of Dragonfly Energy. Luisa discusses the rise and fall of SPACs (Special Purpose Acquisition Corporations) as a method of going public, highlighting the complexities and challenges faced by companies during this process. Despite the SPAC market turbulence, Luisa emphasizes the importance of diligence and investor protection. As Dragonfly Energy navigates its path as a public company, the discussion concludes with optimism about the future and the potential for SPACs to remain a viable option for companies seeking to go public.
Listen to the full episode or watch the recording on our YouTube channel, and be sure to keep up with Luisa on LinkedIn!
Podcast Transcript
Denis Phares 0:15
I’m Denis Phares and this is The Li-MITLESS ENERGY Podcast. Today, I’d like to welcome to the podcast Luisa Ingargiola. Welcome to The Li-MITLESS ENERGY Podcast, Luisa.
Luisa Ingargiola 0:25
Thank you. I’m excited to be here.
Denis Phares 0:27
Louisa is a very important person to us here at Dragonfly Energy. She is on the board of directors and she’s actually the lead independent director, and has been on the board since a year and a half.
Luisa Ingargiola 0:40
Yeah, maybe more now.
Denis Phares 0:42
My goodness.
Luisa Ingargiola 0:44
I think it’s a couple of years.
Denis Phares 0:45
Yeah. And I do want to say that you’re a very important person to me because…
Luisa Ingargiola 0:51
Oh, thank you.
Denis Phares 0:51
Yeah. You give me comfort, you bring expertise I don’t have, particularly in the arena of finance. So, let’s go right into that, I want to talk about your background in finance. You actually started as the Chief Financial Officer of a company, so let’s go, let’s go way back. How did you get into this game?
Luisa Ingargiola 1:12
So, my education is in business and finance. And my father, many, many years ago, invented a technology, a cleantech company that was a gasification system that converted liquid waste to hydrogen fuel. And it was his life’s passion, he was an environmentalist. And, one day, he came to me and he said, “I want to bring this company to NASDAQ, we can change the world.” So, I thought, well, I’ll just help him on the side, part-time…
Denis Phares 1:40
So, you weren’t even working at that point in the company.
Luisa Ingargiola 1:42
No, I had small children. I offered to just help him part-time just to see if I could do anything. But, all of a sudden, we started getting traction, and there was a lot of companies interested in investing. We had major customers interested in the fuel like General Motors and NASA. And so, one day, after a few years of work, we rang the NASDAQ bell, and we got it to NASDAQ. So, that was very exciting, I was a CFO that drove all of that. And, from there, I just opened up a whole new world of networks and opportunities.
Denis Phares 2:15
So, your dad’s an engineer, he has a cleantech company.
Luisa Ingargiola 2:18
Yeah.
Denis Phares 2:19
He’s like, “If I take this company public, we can do a lot more. How do I do that? Well, my daughter is in business.” And he just went to you and said, “How do we get this on NASDAQ?”
Luisa Ingargiola 2:28
Yes. And I actually had no idea. I had no idea. I knew finance, but I didn’t know anybody on Wall Street, I didn’t know how to take a company public. And I just started making calls and networked my way into some great attorney who really helped us. And, from there, we got a great investment bank, and we just, step by step, got there. So, I learned a lot along the way, for sure.
Denis Phares 2:51
That’s a crazy story.
Luisa Ingargiola 2:53
Yeah. And that was in 2012, by the way. So, it’s been a little while.
Denis Phares 2:56
So, 2012, you became a CFO. How long? You said for about a year?
Luisa Ingargiola 3:05
Five years. From 2007 to 2012, we worked on this.
Denis Phares 3:09
2007 to 2012, you kind of learned the game and took the company public in 2012 onto NASDAQ. And, from there, you became a public company CFO.
Luisa Ingargiola 3:25
Correct. And I was on the board of directors of that company. And, from there, we raised over $50 million in capital as a NASDAQ company over time. And we developed an acetylene replacement fuel that was much cleaner called (?Mana Gas?) and much cleaner than what was available. And we started selling it, but it’s very, very difficult, as you know, to sell a disruptive product in an entrenched industry, which it was. And so, at some point, we had some offers. We controlled the company through a supermajority vote our family did, and, at some point, we had some offers from some other groups that wanted to come in and take the company to the next level. So, the family kind of bowed out and let a new CEO come in, a new CFO, and they took the company a different direction and ended up going private. And so, at the end of the day, it wasn’t exactly what we had hoped for, but I learned a lot along the way, for sure.
Denis Phares 4:23
Why was the initial target NASDAQ?
Luisa Ingargiola 4:28
We actually went to New York Stock Exchange as well. But, initially, we had several choices. When you have a startup, you can either go to a venture fund or a private equity group to try and raise private capital, or you can go the public company route. So, typically, if you go to a venture capital fund, they essentially own you and your first board. They’re not going to give a lot of cash to a new company without significant teeth; controlling the board, the operations, cash raising. And so, we learned very quickly that that really wasn’t a path we wanted. We wanted our own freedom, we didn’t want a lot of debt. And so, we decided first to start with the OTC actually. So we went to the OTC, and then we uplisted to NASDAQ after that.
Denis Phares 5:14
Okay. That’s over the counter. Just public and…
Luisa Ingargiola 5:16
Over the counter. I’m sorry, yes.
Denis Phares 5:17
… Not on an exchange.
Luisa Ingargiola 5:19
Exactly. Sorry.
Denis Phares 5:19
Okay. So, the reason I ask is your dad’s like, “Okay, I want to be on the NASDAQ.” That’s kind of a tech thing. That’s the tech exchange.
Luisa Ingargiola 5:26
Right. It is a tech exchange. Yeah, that’s it exactly. I’m sorry, I didn’t get to that point of it. But yes.
Denis Phares 5:30
So, what happened after that company? Where did you go from there?
Luisa Ingargiola 5:34
So, from there, I started to receive some offers to join other boards of directors. And so, that was very exciting for me. So, I had joined a couple of very early stage NASDAQ companies just to kind of get my feet wet on what was involved in being a public company director, and what were the next steps, how do you raise capital. So, I just slowly grew and grew over the years. And then, eventually became the CFO of another company. A NASDAQ company that’s actually a biotech company. But I’ve always stayed in… My heart has always been in cleantech and the technology space. So, I’m currently on the board of another company called ElectroMechanica, that’s an electric car company. I’ve been on the board of a drone company, and a automotive technology company, all different kinds of companies.
Denis Phares 6:26
Obviously, our background at Dragonfly Energy, we’re a green tech company. We do have… I think I probably would have a great relationship with your father if…
Luisa Ingargiola 6:39
Yes, you absolutely would love to talk to my father. (Laughs)
Denis Phares 6:43
It’s funny that, as starting a technology company, for me, it didn’t occur to me about being public until much later on. I didn’t even know that was in the realm of possibilities. But when it did come time, like, when I did start thinking about it, and I started reading up, and like, what does it mean to be on exchange? Certainly, NASDAQ sort of percolated to the top. So, I will say it was right around that time that we realized, as a company, we needed a board of directors that was not comprised of just management. And so, we were very fortunate to be introduced to you and you were excited to join.
Luisa Ingargiola 7:29
Yeah, I was very excited.
Denis Phares 7:30
Did you feel, at that time, as a private company, clearly a relatively novice management team, at least, from a public point of view? Did that give you any pause, or did you have anxiety about that? Were you like, “Oh, yeah, I want to take this one by the horns and bring it to…”
Luisa Ingargiola 7:50
So, I actually love the whole management team, especially you. I think that what I found is a lot of founders and CEOs have such a big ego that they don’t want to listen to advice. And when you don’t have any public company experience, and you don’t want to listen to advice, it’s a very dangerous combination because it’s very easy to go down a rabbit hole and end up with a problem on the regulatory side. It’s just very, very difficult to navigate if you haven’t done it for many years. So, I found, immediately, that you were just soaking up whatever information you could get. That you were very eager to learn, and you were happy to take advice, or, at the end of the day, you’re the CEO, you’re the final decision maker, but at least you would listen to different points of view and want to learn to become a public company executive. So, that didn’t give me any pause at all, that you didn’t have that background, and some of the others didn’t have that background. And I also knew that we could build a team with that background. That you, at the end of the day, you’re the backbone of the company, you’re the founder, the inventor, and you surround yourself with a great team, and you get all the skill set you need.
Denis Phares 8:55
Right. So, right around that time, you come on board, we are certainly down the road of ‘we want to be a public company.’ And we were on a dual track, that is we were considering a regular way IPO and a SPAC. One thing that you brought to the table, you were actually on, and are, on the board of a SPAC, so, of course, we ended up going public through a SPAC. So, let’s talk about that route. Okay, SPAC101, what is a SPAC?
Luisa Ingargiola 9:29
Okay, SPAC101. SPAC stands for Special Purpose Acquisition Corporation. And essentially, they’ve been around for many, many years. People don’t realize it just because it’s the latest hot thing in the last couple years, but it’s been around for at least 5 to 10 years. I don’t know how long, but quite a while. And essentially, the Securities and Exchange Commission as developed, and NASDAQ, and even the New York Stock Exchange developed a way for a company to go public as a shell. In other words, as long as they qualified financially for the minimum rules of NASDAQ, they didn’t have to actually own a company. They could come into NASDAQ as a public company as a shell with the sole purpose of finding a target and bringing them public. And it caught on like wildfire because, all of a sudden, you could raise a whole bunch of money, and put it in trust, and let the management team of the SPAC search out a target company to merge with. And all the people that invested in the company that had their money in trust could either decide to stay along for the ride or redeem their cash and keep a warrant in the company in the future. So, it just became a very lucrative tool for a lot of investors, and it was very favorable on the market for a long time.
Denis Phares 10:44
So, if we go back 2020, 2021, this mechanism to go public boomed, and a lot of these target companies ended up raising billions of dollars through these SPAC. So, let’s talk about the evolution then. It was a really, really hot market. As we were kind of going through the process, the whole idea of going public through a SPAC kind of fell out of favor. Why?
Luisa Ingargiola 11:13
So, I think what happened is that the market got flooded with SPACs that were searching for a target. So, a SPAC has a shelf life, usually it’s 18 to 24 months, depending on how it’s… So, they can’t just stay on NASDAQ with no operations for 10 years, they have a shelf life, after which point, they’re going to get delisted. So, what happened was hundreds of SPACs came on the market at the same time, and then, hundreds of SPACs were out looking for a target all at the same time. So, what happened was the targets, valuation, it’s the law of supply and demand. There was not a lot of supply of target companies, but there was a lot of demand. So, the price of these target companies rose exponentially to a point that was unreasonable. So, I’ll give you one example. The SPAC I’m on the board of, I won’t go into details on names, of course, but there was a target company that my board of directors that’s very savvy believed the target company was worth between 700,000 – 800,000. However, to be competitive, we offered 1.2 billion for this company…
Denis Phares 12:15
Sorry, 700 or 800 million.
Luisa Ingargiola 12:16
800 million. I’m so sorry. The company…
Denis Phares 12:19
You would have overpaid.
Luisa Ingargiola 12:21
Yes, we would have overpaid. Sorry, I’ve had a long day. So we believe the target company was worth 700 to 800 million, we offered 1.2 billion because we wanted to be competitive, and actually sold for 1.5 billion. But really, it was only worth 700 or 800 million. So, what happens, the companies go public at a very high valuation, and the stock goes… Because there’s more natural market forces that are going to bring that stock valuation back to reality.
Denis Phares 12:53
So, that overvaluation was competition among the SPACs to get that target.
Luisa Ingargiola 12:57
Yes, exactly.
Denis Phares 12:59
And then, of course, you’re trading on the public markets and investors are like, “That is an overvalued company.”
Luisa Ingargiola 13:05
Yes. And they sold, and then they shorted, and shorted, and shorted. So, next thing you know, a whole flurry of SPACs came out, and their stock price just tanked immediately after. And that was the end of the good old SPAC days. And that happened right around the time when you had finalized the path into a SPAC. But, at some point, you can’t pull back anymore. You just have to run with it.
Denis Phares 13:30
But certainly made for fun times for us.
Luisa Ingargiola 13:34
Yes, it was very fun.
Denis Phares 13:35
We’ve been through quite a lot together, Luisa.
Luisa Ingargiola 13:39
Yes, we have.
Denis Phares 13:40
But it ended up working out for us. The SPAC mechanism itself is not an evil thing.
Luisa Ingargiola 13:49
No, I totally agree.
Denis Phares 13:49
It’s a viable mechanism. So, if that law of supply and demand that you’re alluding to, the number of SPACs and the number of reasonable targets matches up, you think this will continue on in the future?
Luisa Ingargiola 14:02
Absolutely. I think you’re right. The mechanism itself is a very sound mechanism. Investors that invest in the original SPAC are very protected in the trust account. And it’s a very viable option. I think that the SPAC market is going to stabilize now because a lot of SPACs are basically falling off, they’ve timed out, their shelf life is over. And the remaining SPACs, the market will stabilize and it’ll be a great future. I don’t know if there’ll be a huge boom again, but it’ll be a great future for sure.
Denis Phares 14:34
Right. I think, at Dragonfly, we were really tailor-made for a SPAC because we have revenue. We’re actually a profitable company, while, at the same time, we had a large upside with some of the new solid-state technology that we’re deploying.
Luisa Ingargiola 14:50
Absolutely. And that’s an interesting point. There’s a lot of SPACs that went public, that found targets that were early-stage companies with no revenue at all, that didn’t have a real strong business.
Denis Phares 15:01
These are not public companies, they shouldn’t be public companies.
Luisa Ingargiola 15:05
Exactly. They were too early to be public and they took advantage of the SPAC opportunity. There was nothing wrong with it. Everything was fully disclosed, the majority of them, from a regulatory standpoint, there’s nothing that prevented them from going public. But certainly, the value proposition wasn’t there for investors. So, that became problematic or different.
Denis Phares 15:24
But in the good old days of the SPACs where there was a lot of SPACs and not a lot of targets, one thing that kind of lagged would be diligence of the targets, right?
Luisa Ingargiola 15:36
Yes.
Denis Phares 15:37
So, by the time we were out, we were diligenced so much that… I think I don’t have a suitable analogy for that. But we were heavily diligenced. I think part of the reason that the SPAC became a four-letter word over time is because there was a lack of diligence. And the SEC finally cracked down. So, when the SEC started looking at specs, in particular, and coming out with new rules, first of all, that halted SPACs for some time. And then, did that, you think, initiate some of the sort of the sentiment ‘the party’s over’?
Luisa Ingargiola 16:18
That definitely played a big role because the SEC kind of crackdown on SPACs happened right around the same time when the overvalued SPAC started to go down after the mergers. And the SEC, I don’t think intentionally halted SPAC, it’s a very complicated financial reason. But, essentially, all these SPACs have warrants that go along with them to purchase additional stock…
Denis Phares 16:46
Those are options to buy stock.
Luisa Ingargiola 16:49
Exactly, options to buy stock. They’re called warrants in this case, and they were considered an equity instrument. So, all the SPACs, hundreds of SPACs, put them on the balance sheet as an equity instrument. When the SEC took a look at it, without going into too much technical detail, there were some redemption rights that really moved it from the equity side to the liability side on the balance sheet. And again, not to get too complicated, but that meant that hundreds of SPACs had to restate their financial statements. And all of the auditors — there’s a limited number of auditors and accounting firms that were dealing with this — did not have the bandwidth to restate 300 financial statements, and that halted the SPAC market. And unfortunately, a lot of SPACs timed out during that time. They were just about to close on a merger and the walls caved in because they couldn’t get the deal done. And then, they just timed out. A lot of deals collapsed during that time for sure.
Denis Phares 17:52
Yeah. It is crazy that an accounting rule changed by the SEC that devastated the market.
Luisa Ingargiola 17:55
Yes. Devastated the market for… And I was right in the middle of that. So, on the SPAC board that I’m on, luckily, we didn’t have to restate financials, but we ended up being very late in our financial statement filings because all the auditors were trying to restate. So, it was very difficult, it cost companies a lot of money. And the SEC had the right to do that because, I think, at the end of the day, they probably weren’t valued incorrectly, if you really look at the technical language, but it was just unfortunate.
Denis Phares 18:26
You did get pretty technical there.
Luisa Ingargiola 18:29
Sorry.
Denis Phares 18:30
No, that’s good. It does highlight the importance, just in general, if you are a management team that’s focused on running a company that’s focused on doing technology, and then you’re looking to raise capital, and you run into all these financial instruments that are… I like to think I’m smart, I had a hard time keeping up with… It was dizzying, the different mechanisms, and just going through the SPAC process, how you’ve got to raise the pipe, and you’ve got to accommodate redemptions, which, by the time we went out, were just ridiculously high. But having somebody like you on the board, having someone like you who understood it, who’d been through it all was very comforting for me. That’s what I was trying to say at the beginning.
Luisa Ingargiola 19:12
Oh, thank you. No, I feel the same about you. I’ve been really excited to learn. I really didn’t know much about solid-state batteries, and I learned so much. So excited about it. So, thank you.
Denis Phares 19:24
So, well, you’re welcome. Now we’re on the other side of it. Now we’re a public company. We still have the SPAC label, even though we have no affiliation with any SPAC at this point, but went public as a SPAC company. And, of course, we focus on just building this company and building value. In your opinion, how does that SPAC label for us wane? Does it wane? How does that evolve?
Luisa Ingargiola 19:52
So, I do believe over time the SPAC label is going to wane. First of all, you’re executing extremely well on your plan, and you have a real technology. And as investors learn more and more about you, the SPAC won’t matter because it was just a vehicle to go public, it really has no relevance whatsoever on your future from a public company standpoint, other than you have some shareholders that were in the SPAC that are now your shareholders. So, other than that, there’s really no major difference from investor viewpoint, just to focus on your company and your management team and your execution. I think, over time, the SPAC will no longer be a four-letter word, it’ll be considered more of a positive vehicle, and so, that’ll change, the tides will change. And also, your stock actually performed quite well compared to some of the other SPACs. So, I think that helped too.
Denis Phares 20:44
I would have to mention our SPAC, the Chardan NexTech, that we did end up merging with, we have a good relationship with them. I think we worked very well together in navigating the difficult markets that we were in. And part of it is they were involved in selecting two of our board members, which they did so in a very thoughtful way. I think we have two strong board members because of that. So, I think, in general, it is a good mechanism. Under certain circumstances going public through a SPAC makes sense. And for us, it did.
Luisa Ingargiola 21:21
Yeah, I completely agree.
Denis Phares 21:22
So it’s not going away. SPACs aren’t going away.
Luisa Ingargiola 21:26
No. Not that I know of, unless the SEC wakes up one day and doesn’t like them anymore. But I think we’re good.
Denis Phares 21:31
But that’s the thing. If it’s not abused, if it’s actually done that way that there’s good diligence, and you’re not trying to pull the wool over investors, I don’t know that that’s happened, but I think that’s the impression for some people.
Luisa Ingargiola 21:44
No, I agree. I agree, for sure.
Denis Phares 21:46
Yeah. So, it’s kind of funny that a woman with a business degree, her dad starts a company, and that’s how you got into it. He just asked you to come in, you took it through NASDAQ, learned how to join boards, joined boards of SPACs, learned how to do SPACs, and it basically made it all possible for us culminated with Dragonfly Energy.
Luisa Ingargiola 22:15
I was excited because I was able to bring… I don’t want to join a board unless I’m going to add value, and I felt like my SPAC experience could really help add some value when you’re negotiating some of the fine-tuned items of the merger. And so, it was really exciting for me.
Denis Phares 22:30
Right. That’s obviously one thing. You’re also the audit committee chair. And so, I can’t stress enough, just as a founder, as a tech guy, having that expertise, having someone like that who can navigate those waters is so important.
Luisa Ingargiola 22:46
Thank you. And I have to say, you’ve surrounded yourself with an incredible management team. Your CFO, John Marchetti, is extremely knowledgeable, has a wealth of background, and he’s been very strong. So, as an audit chair, typically, I don’t manage the CFO, but I have some oversight responsibility. And it’s great to have such a strong CFO and CEO leading the company, for sure.
Denis Phares 23:09
Thank you. And how we ended up with John is a whole other story, I guess we’ll leave that for next time. Well, thank you so much for joining today. Welcome to Reno. Welcome back to Reno.
Luisa Ingargiola 23:19
Thank you, I’m excited to be here. I love this area. It’s beautiful.
Denis Phares 23:22
Yeah. We’re going to have… Well, you’re here for a board meeting.
Luisa Ingargiola 23:25
Yes, I’m here for a board meeting tomorrow. Exciting times.
Denis Phares 23:29
All right. Well, thank you.
Luisa Ingargiola 23:30
Thank you.
Denis Phares 23:32
Well, that’s going to do it for today’s episode. Be sure to subscribe to The Li-MITLESS ENERGY Podcast on any of your favorite podcast platforms.
[End Of Recording]
