Dragonfly Energy(US:DFLI)2025-11-14 21:16Sales Performance - For the quarter ended September 30, 2025, the company sold 10,977 batteries, generating net sales of $16.0 million, compared to 10,283 batteries and $12.7 million in net sales for the same quarter in 2024, reflecting a year-over-year increase of 26% in net sales [210]. - The company has sold over 360,000 batteries since 2020, with total net sales of $45.6 million for the nine months ended September 30, 2025, up from $38.4 million for the same period in 2024, indicating a growth of 18% [210]. - Net sales increased by $3.2 million, or 25.5%, to $16.0 million for the three months ended September 30, 2025, compared to $12.7 million for the same period in 2024 [257]. - Net sales for the nine months ended September 30, 2025, increased by $7.1 million, or 18.6%, to $45.6 million compared to $38.4 million for the same period in 2024 [269]. Financial Performance - The company reported a net loss of $11.1 million for the quarter ended September 30, 2025, compared to a net loss of $6.8 million for the same quarter in 2024, representing an increase in losses of approximately 63% [218]. - The company generated a net loss of $24.9 million for the nine months ended September 30, 2025, an improvement from a net loss of $30.8 million for the same period in 2024 [277]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $(6.5) million, compared to $(14.5) million for the same period in 2024 [296]. - Total other expense increased to $7.3 million for the three months ended September 30, 2025, compared to $0.8 million for the same period in 2024, primarily due to higher interest expense [263]. - Interest expense related to debt securities was $16.5 million for the nine months ended September 30, 2025, compared to $15.3 million for the same period in 2024 [275]. Operational Challenges - The company has faced challenges in maintaining relationships with key customers and suppliers, which could impact its ability to generate revenue and achieve profitability [212]. - The company is currently dependent on a limited number of suppliers for lithium iron phosphate cells and a single manufacturing facility, which poses risks to its production capabilities [212][214]. - The company has not achieved the first tranche milestone of $250 million in total audited revenue for 2023, which would have allowed for the issuance of additional shares [225]. Capital and Funding - As of September 30, 2025, the company had cash totaling $3.8 million and indicated a need to raise additional funds to support ongoing operations and capital expenditures [218][219]. - The company raised approximately $3.2 million from the Initial Offerings and $4.2 million from the Second Offering, excluding any proceeds from the exercise of the Private Placement Convertible Preferred Warrants [230]. - The company completed the July 2025 Public Offering, raising gross proceeds of approximately $5.5 million and net proceeds of $4.7 million after deducting underwriting discounts and commissions [235]. - The First October 2025 Offering raised gross proceeds of approximately $28.8 million and net proceeds of $26.9 million after deducting underwriting discounts and commissions [236]. - The company expects to raise additional funds for ongoing costs, including research and development for solid-state batteries and facility expansions [303]. Research and Development - The company is developing proprietary solid-state cell technology, which is expected to be a key differentiator in the energy storage market, with successful demonstrations of producing anode and cathode materials at scale in August and October 2023, respectively [217]. - Research and development expenses decreased by $1.0 million, or 64.1%, to $0.6 million for the three months ended September 30, 2025, compared to $1.6 million for the same period in 2024 [260]. - The company is currently focused on scaling its proprietary dry electrode process for domestic production of full LFP cells, with plans to return to solid-state chemistry as capital becomes available [247]. Cost Management - Cost of goods sold increased by $1.4 million, or 14.0%, to $11.2 million for the three months ended September 30, 2025, compared to $9.9 million for the same period in 2024 [258]. - Gross profit increased by $1.9 million, or 65.0%, to $4.7 million for the three months ended September 30, 2025, with a gross profit percentage increase of 7.1% to 29.7% [259]. - Gross profit for the nine months ended September 30, 2025, increased by $4.2 million, or 46.0%, to $13.3 million, with a gross profit percentage increase of 5.5% to 29.1% [271]. Strategic Initiatives - The company launched the Battle Born DualFlow Power Pack, a hybrid electrification solution for the trucking industry, as part of its corporate optimization initiative aimed at driving near-term revenue and profit [213]. - The company plans to expand into new end markets for LFP batteries, including rail, specialty vehicles, and data centers, which may incur significant marketing costs [241]. - The company has signed a Commercial Offtake Agreement for lithium supply, which is expected to help manage costs over time [243]. Debt and Liabilities - The company entered into a Sixth Amendment to the Term Loan Agreement, adjusting the fixed interest rate to 12% per annum and waiving certain financial covenants through December 31, 2026 [300]. - A prepayment of $45.0 million was made on the Term Loan, and $5.0 million of principal was forgiven by the Term Loan Lenders, leaving approximately $19.0 million outstanding [305]. - The total debt was reduced from $72.0 million to approximately $19.0 million following the Sixth Amendment, deferring near-term cash interest requirements [306]. - The estimated future obligations include $2.9 million in short-term operating lease liabilities and $21.1 million in long-term operating lease liabilities as of September 30, 2025 [318].