Free cash flow remains deeply negative, with a 2026Q2 outflow of $1.9M, suggesting that the firm's current operational model is unable to generate internal funding despite low capital intensity.
| Cash from Operations | -8.04M | -7.96M | -9.06M | -14.08M | -4.26M | -6.26M |
| Operating CF Margin % | - | -160.99% | -602.31% | -1140.48% | -589.95% | -490.3% |
| Operating CF Growth % | 37.13% | 12.18% | 35.64% | -230.75% | 31.95% | - |
| Net Income | -8.25M | -9.63M | -7.44M | -9.31M | -10.52M | -9.32M |
| Depreciation & Amortization | 829.23K | 1.08M | 1.28M | 952.51K | 326.49K | 140.99K |
| Stock-Based Compensation | 36.3K | 113.69K | 291.76K | 373.55K | 1.96M | 2.46M |
| Deferred Taxes | 0 | 0 | 0 | 0 | -49.44K | 0 |
| Other Non-Cash Items | 370.44K | 832.41K | -2.85M | -3.79M | 386.75K | 258.48K |
| Working Capital Changes | -451.41K | -358.25K | -343.67K | -2.31M | 3.64M | 198.48K |
| Change in Receivables | -934.73K | -925.91K | -267.61K | -128.39K | 631.8K | -218.33K |
| Change in Inventory | 66.97K | 13.55K | 9.22K | -148.85K | 49.45K | 17.55K |
| Change in Payables | 727.84K | 960.77K | -257.26K | -1.67M | 2.52M | -828.7K |
| Cash from Investing | -243.33K | -180.41K | -111.15K | -1.44M | -1.11M | -1.07M |
| Capital Expenditures | -230.21K | -140.62K | -101.33K | -176.95K | -187.48K | -809.96K |
| CapEx % of Revenue | 4.09% | 2.84% | 6.74% | 14.33% | 25.98% | 63.49% |
| Acquisitions | 0 | 4.39K | 0 | 7.81K | 250.35K | 0 |
| Investments | - | - | - | - | - | - |
| Other Investing | -13.11K | -44.17K | -9.82K | -1.27M | -1.18M | -263.23K |
| Cash from Financing | 6.85M | 14.6M | 4.02M | 20.76M | 2.85M | 6.94M |
| Debt Issued (Net) | -224.03K | -172.15K | -197.65K | -2.41M | 2.5M | -242.4K |
| Equity Issued (Net) | 8.2M | 18.72M | 4.97M | 23.7M | 344K | 6M |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | 0 |
| Share Repurchases | 0 | 0 | 0 | 0 | 0 | 0 |
| Other Financing | -1.12M | -3.94M | -746.31K | -539.15K | 8.1K | 1.18M |
| Net Change in Cash | -1.53M | 6.43M | -5.15M | 5.24M | -2.52M | -385.65K |
| Free Cash Flow | -8.27M | -8.12M | -9.17M | -15.38M | -5.62M | -7.15M |
| FCF Margin % | -147.04% | -164.38% | -609.7% | -1245.8% | -779.01% | -560.31% |
| FCF Growth % | 8.49% | 11.42% | 40.36% | -173.61% | 21.37% | - |
| FCF per Share | -4.15 | -13.32 | -232.87 | -791.13 | -1616.55 | -2373.31 |
| FCF Conversion (FCF/Net Income) | 1.00x | 0.83x | 1.22x | 1.51x | 0.40x | 0.67x |
| Interest Paid | 0 | 0 | 0 | 0 | 0 | 0 |
| Taxes Paid | 0 | 0 | 0 | 0 | 0 | 0 |
Capital structure dilution risk
According to quarterly cash flow statements, DFSC consistently reports negative operating cash flow that frequently exceeds net losses, with an OCF/NI ratio that fluctuated between 0.57 and 1.63 over the last ten quarters, suggesting that accounting accruals are failing to bridge the gap to actual cash generation.
The volatility in the OCF/NI ratio indicates that the company's cash conversion is highly sensitive to the timing of project-based revenue recognition. Investors should monitor whether this divergence stems from aggressive revenue booking on long-term contracts that have yet to yield actual cash inflows.
As reported in financial filings, DFSC's free cash flow remains consistently negative, with quarterly outflows reaching as high as $3.3 million in 2025Q1, reflecting a business model that is currently consuming capital at a rate that significantly outpaces its ability to generate internal funding.
The persistent negative FCF margins, which have dipped as low as -128.3%, underscore the heavy reliance on external financing to sustain operations. This trajectory suggests that the company is in a high-burn phase where scaling revenue has not yet translated into a self-sustaining cash flow profile.
Based on the provided cash flow data, working capital changes have been highly erratic, swinging from a $848.5K inflow in 2025Q4 to a $1.2 million outflow in 2026Q1, which highlights the operational challenges of managing inventory and receivables within a project-heavy defense procurement cycle.
These swings suggest that the company's cash position is vulnerable to the timing of government payments and the accumulation of inventory for upcoming contracts. Such instability in working capital management warrants further investigation into the company's ability to maintain liquidity during extended procurement delays.
Data from recent quarterly reports indicates that DFSC maintains a relatively low capital intensity, with CapEx/Revenue ratios peaking at 6.8% in 2026Q2, suggesting that the primary cash drain is operational overhead rather than heavy investment in physical manufacturing infrastructure or long-term asset replacement.
The modest capital expenditure levels imply that the company's current burn is driven by SG&A and R&D rather than capital-intensive production scaling. This may provide some flexibility, as the company could theoretically throttle back on discretionary spending if external funding sources become constrained.
Quick answers to the most common questions about buying DFSC stock.
DEFSEC Technologies Inc. (DFSC) generated $-8.0M in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
DEFSEC Technologies Inc. (DFSC) reported negative free cash flow of $8.1M in 2025, indicating capital requirements exceeded cash from operations.
DEFSEC Technologies Inc. (DFSC) spent $0.1M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.