Dragonfly Energy Holdings Corp. reported significant financial challenges in its latest 10-Q filing for the third quarter of 2024. The company recorded net sales of $12.7 million for Q3 2024, a decrease of 19.9% from $15.9 million in Q3 2023. For the nine months ended September 30, 2024, net sales totaled $38.4 million, down 28.8% from $54.0 million in the same period last year. The decline in revenue is attributed to weaker demand from both original equipment manufacturer (OEM) and direct-to-consumer (DTC) customers, influenced by rising interest rates and inflation.

Gross profit for Q3 2024 was $2.9 million, representing a gross margin of 22.5%, down from 28.9% in Q3 2023. The decrease in gross profit was primarily due to a shift towards lower-margin OEM sales, despite a reduction in the cost of goods sold, which fell by 12.8% to $9.9 million. The company reported a net loss of $6.8 million for Q3 2024, an improvement from a net loss of $10.0 million in Q3 2023. However, for the nine months ended September 30, 2024, the net loss increased to $30.8 million, compared to $17.1 million for the same period in 2023.

Total operating expenses for the nine months ended September 30, 2024, decreased to $27.7 million from $37.5 million in 2023, largely due to reduced employee-related costs and lower professional services expenses. Research and development expenses increased by 34.9% to $4.5 million, reflecting higher wage and lease costs.

The company’s cash position has also deteriorated, with cash and cash equivalents decreasing to $8.0 million as of September 30, 2024, down from $12.7 million at the end of 2023. Dragonfly Energy reported a working capital deficit of $9.6 million and has faced challenges in meeting financial covenants related to its senior secured term loan, leading to multiple waivers from lenders.

Strategically, the company has made efforts to enhance its product offerings and market presence, including a recent acquisition of assets from Thomason Jones Company and a licensing agreement with Stryten Energy LLC, which generated an initial licensing fee of $5 million. Despite these initiatives, the company continues to face substantial doubt regarding its ability to continue as a going concern due to ongoing losses and cash flow issues.