US Lithium-Ion Battery Company Inks $30 Million Deal

Benzinga

Denis Phares, CEO of Dragonfly Energy, was recently a guest on Benzinga's All-Access.  Dragonfly Energy is a leading green energy storage company. It develops some of the most popular lithium-ion battery products in the recreational vehicle (RV) and marine industries today. Phares detailed the recent deal between his company and Stryton Energy, a manufacturer with over 2,500 employees and 10 manufacturing plants. The agreement grants Stryten Energy a license to market and distribute Dragonfly Energy's Battle Born Batteries globally.

Transcript

00:00Dennis, good morning and welcome to the show.

00:07Good morning, Zunaid.

00:08How are you?

00:09I'm doing well.

00:10I'm sure you're even better with the great news that you had come out earlier today.

00:13But before we dive into that for the folks that might not be familiar at home, give me

00:17a quick breakdown.

00:18What is it that your company does?

00:21We're a lithium ion battery technology company, and we do a lot because we do everything from

00:26the fundamental chemistry and cell manufacturing process development to the production of battery

00:35packs to the sales and marketing of those packs into a number of large end markets.

00:40Awesome.

00:41Now, let's talk about the news that you dropped this morning with Stryton Energy.

00:46About a $30 million agreement, $5 million of that, if I read correctly, is an upfront

00:50licensing fee.

00:51Give us a quick idea of what this deal is all about.

00:55Well, Stryton Energy is a large battery company.

00:59They historically have been a lead acid battery company, and they're obviously looking to

01:06expand into lithium.

01:09They do have some lithium business now, but they wanted to grow faster, basically, and

01:13they were looking for a brand.

01:16They basically identified Battle Born Batteries as the most reputable brand on the market.

01:23They approached us.

01:25In the conversations, they realized that we were a lot more than just a brand as well.

01:30They looked at our dry electrode cell manufacturing technology, and we realized that we had a

01:36pretty significant potential for a longer term collaboration here.

01:40It started out with, hey, we want to use the Battle Born Batteries name.

01:46That obviously is royalty revenue for us.

01:49At the same time, they want us to contract manufacture for them to help them with technical

01:54support.

01:55Longer term, they're interested in domestic supply of cells, and we bring that to the

01:59table as well.

02:01It's a win-win.

02:02Now, let's break down how it works.

02:04I mentioned the $30 million agreement, $5 million is upfront licensing fee.

02:11How does the other $25 million work?

02:12Is that just in royalties as you go ahead and provide and they sell more?

02:15Is that strictly how that works?

02:17Yeah, that's it.

02:18It's $5 million upfront, and then another $25 million as they sell using the Battle

02:23Born name.

02:26Those are just the royalties.

02:27Then there's also the contract manufacturing piece.

02:31There's also the product development piece, the technical support piece.

02:34There's a lot of revenue streams for Dragonfly associated with this deal.

02:38Great for our liquidity, great for our revenues.

02:40Again, longer term, this really is a tremendous relationship for us because Stryton has a

02:53lot of relationships in military.

02:56They distribute, for example, to the largest retailers, places like AutoZone, they manufacture

03:03for interstate batteries.

03:04To see the Battle Born brand in these iconic brick and mortar structures around the country

03:11is just so meaningful for us, and it's great for the brand value in general.

03:15How does it help you expand your presence into the new B2B and markets, particularly

03:20those that you currently aren't serving, especially globally and outside of the US?

03:27That's perfect for us.

03:29We weren't addressing these markets anyway, so to be able to gain some revenue to help

03:33them address these markets, and it helps us bolster the brand in the markets that we

03:37are in.

03:38Yeah.

03:39What benefit does a deal like this bring to the company beyond just the revenue and the

03:43license agreement?

03:44You mentioned you have the expansion globally.

03:46We covered that aspect of it.

03:47Are there any other benefits that the viewer at home might not be thinking about that you

03:51feel is going to be a good opportunity for the company long term?

03:57The long-term relationship, again, has to do with helping us develop the sale manufacturing

04:02processes to give them domestic supply of sales.

04:06Just from a brand value standpoint, imagine how if we are so widespread and there's so

04:11much more exposure for the brand, what it means for our core markets, for the direct-to-consumer

04:17marine markets we're in, for the RV markets, the OEM RV markets we're in, the oil and gas

04:22and heavy-duty trucking markets that we're getting into.

04:24The fact that the Battle Born brand name is going to be that much more visible, obviously,

04:30is going to bring value.

04:32Oftentimes, I tell the viewers, especially in an election cycle like the one that we're

04:35currently in, is that you want to find stocks, you want to find positions and sectors that

04:39are going to be beneficial no matter who wins.

04:41Or if one candidate wins over the other, you get some exposure to that side as well.

04:45For example, when you had President Biden win last time, I was exposed to the cannabis

04:51space because that was something that was ripping.

04:54With this election cycle that's coming up, how do you think, no matter who wins, no matter

04:58what happens, how are you well-positioned as a company to continue growing?

05:02Because sometimes regulations from government can either hit you or go ahead and support

05:07you and be an asset.

05:08No matter what happens in November, how is your company set up for success?

05:12Well, look, there could be regulatory tailwinds.

05:18That's always a possibility.

05:19But for us, it's all about domestic manufacturing.

05:21It doesn't matter who wins.

05:22We want to bolster domestic manufacturing.

05:25We want to bring manufacturing to the United States, whether it's sales or battery packs.

05:29And that's what's going to make us all win in the end.

05:32And then when it comes to the EV space in general, I've seen so many Teslas, a lot of

05:39my friends and families have them.

05:41However, sometimes if you don't have enough chargers out there, you kind of get stuck

05:46because you have to wait like maybe an hour to recharge your battery and you then can

05:50get on the road versus where if you're in a gas vehicle, it takes me about 10 minutes.

05:55How far do you think we are to where it becomes more and more common to just take maybe 10,

05:5915 minutes to charge up your EV vehicles before you get back on the road?

06:04Well, that's all about cell technology, right?

06:07But I have to say the focus of Dragonfly Energy has always been storage.

06:11And I think it's often overlooked.

06:12There's been so much focus on electric vehicles.

06:14Ultimately, what we're interested in is bolstering the grid, allowing for more intermittent

06:19sources of energy like solar and wind.

06:23And I think in the long run, this is going to be good for the economy as we transition

06:27to how we basically make electricity.

06:30Got it.

06:31We've talked about so many things, especially in terms of the news that you dropped here

06:34today and the EV side of things.

06:37Anything else that you were hoping to kind of discuss today, any other topics or things

06:40that are happening with the company that it may have kind of missed out on?

06:44I think this deal itself, it just shows the value that the company has, not just in terms

06:49of the technology, but the brand itself.

06:51This is ultimately a brand deal.

06:53We are getting revenue because of the popularity of our brand.

06:57And obviously, the revenue and liquidity are top of mind for Dragonfly Energy right now

07:02as we really start to deploy domestic manufacturing of cells.

07:06Awesome.

07:07I look forward to more milestones and any other partnerships that you may have.

07:10I know you can't really speak on it, so I won't ask you and put you on the spot, but

07:13whenever they do sign on the dotted line, I hope you'll come back and have more conversations

07:17with us.

07:18Sounds good.

07:19Thanks, Unaid.

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