Flux Power Holdings, Inc. (NASDAQ:FLUX) Q3 2023 Earnings Conference Call May 11, 2023 4:30 PM ET Company Participants Sean Stewart - Investor Relations Ron Dutt - Chief Executive Officer Chuck Scheiwe - Chief Financial Officer Conference Call Participants Chip Moore - EF Hutton Matthew Galinko - Maxim Group Operator Greetings and welcome to the Flux Power Holdings Third Quarter Fiscal 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer sess ...

NASDAQ: FLUX May 11, 2023 This presentation contains forward-looking statements. All statements other than statements of historical fact contained in this presentation, including statements as to the Company's future results of operations and financial position, planned products and services, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expe ...

Commission File Number: 001-31543 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ | --- | --- | --- | |--------------|-------------------------------------------------------------------------------|--------------| | | | | | PART I - | Financial Information | | | | | | | ITEM 1. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | 5 | | ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND | RESULTS OF | | ...

Flux Power Holdings, Inc. (NASDAQ:FLUX) Q2 2023 Earnings Conference Call February 9, 2023 4:30 PM ET Company Participants Ron Dutt - Chief Executive Officer Chuck Scheiwe - Chief Financial Officer Conference Call Participants Amit Dayal - H.C. Wainwright Chip Moore - EF Hutton Matthew Galinko - Maxim Group Operator Greetings, and welcome to the Flux Power Holdings Second Quarter Fiscal 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer ses ...

NASDAQ: FLUX This presentation contains forward-looking statements. All statements other than statements of historical fact contained in this presentation, including statements as to the Company's future results of operations and financial position, planned products and services, business strategy and plans and objectives of management for future operations, are forward-looking statements. The Company has based these forward-looking statements largely on its current expectations and projections about future ...

[Special Note Regarding Forward Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD%20LOOKING%20STATEMENTS) This section provides important disclaimers about forward-looking statements and defines key terms used throughout the report [Forward-Looking Statements Disclosure](index=3&type=section&id=Forward-Looking%20Statements%20Disclosure) This section discloses that the report contains forward-looking statements, which involve known and unknown risks and uncertainties that could cause actual results to differ materially from projections - Forward-looking statements are identified by terms such as 'anticipates,' 'believes,' 'could,' 'estimates,' 'expects,' 'intends,' 'may,' 'plans,' 'potential,' 'predicts,' 'projects,' 'should,' 'would,' and similar expressions[8](index=8&type=chunk) - Key uncertainties include the ability to generate sufficient cash, secure funding, manage working capital, maintain internal controls, realize revenue from backlog, obtain raw materials, manage growth, compete, adapt to technology, and retain key management[9](index=9&type=chunk)[10](index=10&type=chunk)[11](index=11&type=chunk) [Use of Certain Defined Terms](index=4&type=section&id=Use%20of%20Certain%20Defined%20Terms) This section defines key terms used throughout the report for clarity, including 'Company,' 'Flux,' 'we,' 'us,' 'our,' 'Exchange Act,' 'SEC,' and 'Securities Act' - Defined terms include 'Company,' 'Flux,' 'we,' 'us,' and 'our' referring to Flux Power Holdings, Inc. and its wholly owned subsidiary, Flux Power, Inc.[13](index=13&type=chunk) - Other defined terms are 'Exchange Act' (Securities Exchange Act of 1934), 'SEC' (Securities and Exchange Commission), and 'Securities Act' (Securities Act of 1933)[13](index=13&type=chunk) [PART I - Financial Information](index=5&type=section&id=PART%20I%20-%20Financial%20Information) This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [ITEM 1. Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=ITEM%201.%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for Flux Power Holdings, Inc., including balance sheets, statements of operations, stockholders' equity, and cash flows [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the unaudited condensed consolidated balance sheets as of December 31, 2022, and June 30, 2022 Condensed Consolidated Balance Sheets (December 31, 2022 vs. June 30, 2022) | ASSETS | December 31, 2022 (Unaudited) | June 30, 2022 | | :-------------------------- | :---------------------------- | :------------ | | Cash | $157,000 | $485,000 | | Accounts receivable | $10,467,000 | $8,609,000 | | Inventories, net | $19,507,000 | $16,262,000 | | Other current assets | $884,000 | $1,261,000 | | Total current assets | $31,015,000 | $26,617,000 | | Right of use assets | $2,601,000 | $2,597,000 | | Property, plant and equipment, net | $1,561,000 | $1,578,000 | | Other assets | $115,000 | $89,000 | | **Total assets** | **$35,292,000** | **$30,881,000** | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Accounts payable | $12,797,000 | $6,645,000 | | Accrued expenses | $2,298,000 | $2,209,000 | | Line of credit | $6,811,000 | $4,889,000 | | Deferred revenue | $81,000 | $163,000 | | Customer deposits | $29,000 | $175,000 | | Finance lease payable, current portion | $64,000 | $- | | Office lease payable, current portion | $542,000 | $504,000 | | Accrued interest | $1,000 | $1,000 | | Total current liabilities | $22,623,000 | $14,586,000 | | Office lease payable, less current portion | $2,079,000 | $2,361,000 | | Finance lease payable, less current portion | $172,000 | $- | | **Total liabilities** | **$24,874,000** | **$16,947,000** | | Stockholders' equity: | | | | Common stock | $16,000 | $16,000 | | Additional paid-in capital | $96,036,000 | $95,732,000 | | Accumulated deficit | $(85,634,000) | $(81,814,000) | | **Total stockholders' equity** | **$10,418,000** | **$13,934,000** | | **Total liabilities and stockholders' equity** | **$35,292,000** | **$30,881,000** | - Total assets increased by **$4.411 million** (14.28%) from June 30, 2022, to December 31, 2022[18](index=18&type=chunk) - Total liabilities increased by **$7.927 million** (46.78%) from June 30, 2022, to December 31, 2022, primarily due to increases in accounts payable and line of credit[18](index=18&type=chunk) - Total stockholders' equity decreased by **$3.516 million** (25.23%) from June 30, 2022, to December 31, 2022, mainly due to an increased accumulated deficit[18](index=18&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section presents the unaudited condensed consolidated statements of operations for the three and six months ended December 31, 2022 and 2021 Condensed Consolidated Statements of Operations (Three Months Ended December 31) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | | :----------------- | :------------------------------ | :------------------------------ | | Revenues | $17,158,000 | $7,690,000 | | Cost of sales | $13,050,000 | $6,648,000 | | Gross profit | $4,108,000 | $1,042,000 | | Operating expenses | $5,412,000 | $6,088,000 | | Operating loss | $(1,304,000) | $(5,046,000) | | Net loss | $(1,681,000) | $(5,077,000) | | Net loss per share | $(0.10) | $(0.32) | Condensed Consolidated Statements of Operations (Six Months Ended December 31) | Metric | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :----------------- | :---------------------------- | :---------------------------- | | Revenues | $34,998,000 | $13,961,000 | | Cost of sales | $26,942,000 | $11,581,000 | | Gross profit | $8,056,000 | $2,380,000 | | Operating expenses | $11,171,000 | $11,553,000 | | Operating loss | $(3,115,000) | $(9,173,000) | | Net loss | $(3,820,000) | $(9,207,000) | | Net loss per share | $(0.24) | $(0.62) | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section presents the unaudited condensed consolidated statements of stockholders' equity for the six months ended December 31, 2022 and 2021 Stockholders' Equity Changes (Six Months Ended December 31, 2022) | Item | Shares | Common Stock Amount | Additional Paid-in Capital | Accumulated Deficit | Total | | :--------------------------------------- | :----------- | :------------------ | :------------------------- | :------------------ | :------------- | | Balance at June 30, 2022 | 15,996,658 | $16,000 | $95,732,000 | $(81,814,000) | $13,934,000 | | Issuance of common stock – exercised options and RSU settlement | 32,820 | $- | $- | $- | $- | | Stock based compensation | - | $- | $304,000 | $- | $304,000 | | Net loss | - | $- | $- | $(3,820,000) | $(3,820,000) | | Balance at December 31, 2022 | 16,029,478 | $16,000 | $96,036,000 | $(85,634,000) | $10,418,000 | Stockholders' Equity Changes (Six Months Ended December 31, 2021) | Item | Shares | Common Stock Amount | Additional Paid-in Capital | Accumulated Deficit | Total | | :--------------------------------------- | :----------- | :------------------ | :------------------------- | :------------------ | :------------- | | Balance at June 30, 2021 | 13,652,164 | $14,000 | $79,197,000 | $(66,205,000) | $13,006,000 | | Issuance of common stock and warrants – registered direct offering, net of costs | 2,142,860 | $2,000 | $14,074,000 | $- | $14,076,000 | | Issuance of common stock – public offering, net of costs | 190,782 | $- | $1,602,000 | $- | $1,602,000 | | Issuance of common stock – exercised options | 1,696 | $- | $- | $- | $- | | Stock based compensation | - | $- | $449,000 | $- | $449,000 | | Net loss | - | $- | $- | $(9,207,000) | $(9,207,000) | | Balance at December 31, 2021 | 15,987,502 | $16,000 | $95,217,000 | $(75,411,000) | $19,822,000 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the unaudited condensed consolidated statements of cash flows for the six months ended December 31, 2022 and 2021 Condensed Consolidated Statements of Cash Flows (Six Months Ended December 31) | Cash Flow Activity | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :-------------------------- | :---------------------------- | :---------------------------- | | Net cash used in operating activities | $(1,892,000) | $(15,401,000) | | Net cash used in investing activities | $(336,000) | $(530,000) | | Net cash provided by financing activities | $1,900,000 | $19,073,000 | | Net change in cash | $(328,000) | $3,142,000 | | Cash, beginning of period | $485,000 | $4,713,000 | | Cash, end of period | $157,000 | $7,855,000 | - Net cash used in operating activities significantly decreased from **$(15.4) million** in 2021 to **$(1.9) million** in 2022, indicating improved operational cash management[25](index=25&type=chunk) - Net cash provided by financing activities decreased from **$19.1 million** in 2021 to **$1.9 million** in 2022, reflecting less reliance on external financing compared to the prior year[25](index=25&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanatory notes to the unaudited condensed consolidated financial statements, covering business nature, accounting policies, and specific financial items [Note 1 - Nature of Business](index=9&type=section&id=NOTE%201%20-%20NATURE%20OF%20BUSINESS) Flux Power Holdings, Inc. designs, develops, manufactures, and sells advanced lithium-ion energy storage solutions for industrial commercial sectors like material handling and airport ground support equipment - Flux Power Holdings, Inc. (Flux) was incorporated in 2008 in Nevada, with operations conducted through its wholly owned subsidiary, Flux Power, Inc., a California corporation[28](index=28&type=chunk) - The Company designs, develops, manufactures, and sells advanced lithium-ion energy storage solutions for material handling, airport ground support equipment (GSE), and stationary energy storage[29](index=29&type=chunk) - These solutions are presented as reliable, high-performing, cost-effective, and environmentally friendly alternatives to traditional lead-acid and propane-based solutions[29](index=29&type=chunk) [Note 2 - Summary of Significant Accounting Policies](index=9&type=section&id=NOTE%202%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note details the company's significant accounting policies, net loss per common share calculation, and liquidity considerations, including plans to achieve profitability - No material changes in significant accounting policies or their application since the Annual Report on Form 10-K for the fiscal year ended June 30, 2022[31](index=31&type=chunk) - Net loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding, with basic and diluted loss per share being the same due to net losses[34](index=34&type=chunk)[35](index=35&type=chunk) - The Company has historically generated negative cash flows from operations, with an accumulated deficit of **$85.6 million** at December 31, 2022, but anticipates increased revenues and improved gross margins to fund operations[9](index=9&type=chunk)[37](index=37&type=chunk)[41](index=41&type=chunk) Potentially Dilutive Common Shares Excluded from Diluted EPS | Item | December 31, 2022 | December 31, 2021 | | :-------------- | :---------------- | :---------------- | | Stock options | 1,019,602 | 513,606 | | RSUs | 216,989 | 292,932 | | Warrants | 1,371,914 | 1,286,313 | | **Total** | **2,608,505** | **2,092,851** | [Note 3 – Accrued Expenses](index=11&type=section&id=NOTE%203%20%E2%80%93%20ACCRUED%20EXPENSES) This note details the composition of accrued expenses, primarily payroll, PTO, and warranty liabilities, which increased slightly to **$2.298 million** at December 31, 2022 Accrued Expenses Composition | Accrued Expense Item | December 31, 2022 | June 30, 2022 | | :------------------- | :---------------- | :------------ | | Payroll and bonus accrual | $719,000 | $767,000 | | PTO accrual | $412,000 | $430,000 | | Warranty liability | $1,167,000 | $1,012,000 | | **Total Accrued expenses** | **$2,298,000** | **$2,209,000**| - Warranty liability increased by **$155,000** (15.32%) from June 30, 2022, to December 31, 2022[43](index=43&type=chunk) [Note 4 – Notes Payable](index=11&type=section&id=NOTE%204%20%E2%80%93%20NOTES%20PAYABLE) This note outlines the Company's revolving line of credit with Silicon Valley Bank, detailing amendments that increased the facility to **$14.0 million** and modified covenants - The Revolving LOC with SVB was initially **$4.0 million**, increased to **$6.0 million** in October 2021, and then to **$8.0 million** in June 2022[44](index=44&type=chunk)[45](index=45&type=chunk) - The interest rate for the Revolving LOC was amended to a floating rate equal to the greater of Prime Rate plus 3.50% or 7.50%[40](index=40&type=chunk) - As of December 31, 2022, the outstanding balance under the Revolving LOC was approximately **$6.8 million**[50](index=50&type=chunk) - Subsequent to the reporting period, on January 10, 2023, the SVB Credit Facility was increased by **$6.0 million** to a total of **$14.0 million**[49](index=49&type=chunk)[51](index=51&type=chunk) [Note 5 - Related Party Debt Agreements](index=12&type=section&id=NOTE%205%20-%20RELATED%20PARTY%20DEBT%20AGREEMENTS) This note describes the Subordinated Line of Credit Facility with related parties, providing **$3.0 million to $5.0 million** for working capital at a 15.0% annual interest rate - The Subordinated LOC provides a short-term line of credit between **$3.0 million** and **$5.0 million** for working capital purposes[52](index=52&type=chunk) - As of December 31, 2022, the Lenders committed to an aggregate of **$4.0 million**[52](index=52&type=chunk) - Each Note bears an interest rate of **15.0%** per annum, payable on the Due Date (extended to December 31, 2023) or upon an event of Default[54](index=54&type=chunk) - In connection with the Subordinated LOC, the Company issued five-year warrants to the Lenders to purchase an aggregate of **128,000 shares** of common stock at an exercise price of **$2.53 per share**[57](index=57&type=chunk) [Note 6 - Stockholders' Equity](index=13&type=section&id=NOTE%206%20-%20STOCKHOLDERS%27%20EQUITY) This note details changes in stockholders' equity, including ATM and RDO offerings, warrants, stock options, and Restricted Stock Units (RSUs) - Under the ATM Offering, the Company sold **1,169,564 shares** of common stock for net proceeds of approximately **$13.7 million** from December 21, 2020, through December 31, 2022[62](index=62&type=chunk) - A Registered Direct Offering (RDO) in September 2021 sold **2,142,860 shares** of common stock and warrants for **1,071,430 shares**, generating approximately **$15.0 million** in gross proceeds[65](index=65&type=chunk) Warrants Outstanding (December 31, 2022) | Metric | Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contract Term ( years) | | :-------------------------------------- | :----------------- | :------------------------------ | :------------------------------------------------- | | Outstanding at June 30, 2022 | 1,455,119 | $6.10 | | | Warrants cancelled | (83,205) | $4.00 | | | **Outstanding at December 31, 2022** | **1,371,914** | **$6.23** | **3.92** | Stock Options Activity (Six Months Ended December 31, 2022) | Metric | Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contract Term ( years) | | :-------------------------------------- | :--------------- | :------------------------------ | :------------------------------------------------- | | Outstanding at June 30, 2022 | 503,433 | $11.03 | | | Granted | 624,441 | $3.43 | | | Exercised | (22,500) | $4.60 | | | Forfeited and cancelled | (85,772) | $13.46 | | | **Outstanding at December 31, 2022** | **1,019,602** | **$6.32** | **7.98** | | Exercisable at December 31, 2022 | 399,922 | $10.79 | **5.10** | Restricted Stock Units (RSUs) Activity (Six Months Ended December 31, 2022) | Metric | Number of Shares | Weighted Average Grant Fair Value | Weighted Average Remaining Contract Term ( years) | | :-------------------------------------- | :--------------- | :-------------------------------- | :------------------------------------------------- | | Outstanding at June 30, 2022 | 304,221 | $6.06 | | | Granted | 5,034 | $2.70 | | | Vested and settled | (32,248) | $3.49 | | | Forfeited and cancelled | (60,018) | $6.51 | | | **Outstanding at December 31, 2022** | **216,989** | **$5.92** | **1.07** | Stock-based Compensation Expense | Expense Category | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :--------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Research and development | $43,000 | $54,000 | $69,000 | $90,000 | | Selling and administrative | $166,000 | $195,000 | $235,000 | $359,000 | | **Total stock-based compensation expense** | **$209,000** | **$249,000** | **$304,000** | **$449,000** | [Note 7 - Concentrations](index=17&type=section&id=NOTE%207%20-%20CONCENTRATIONS) This note highlights concentrations of credit risk, customer base, and suppliers, with cash in a single bank and reliance on a few major customers and one key supplier - Cash balances are held in a single California commercial bank, with FDIC insurance up to **$250,000**; cash balance at December 31, 2022, was **$157,000**[88](index=88&type=chunk) - Three major customers represented **67% of revenues** for the three months ended December 31, 2022, and **64%** for the six months ended December 31, 2022[89](index=89&type=chunk) - One supplier accounted for **32% of total purchases** for the three months ended December 31, 2022, and **29%** for the six months ended December 31, 2022[92](index=92&type=chunk) [Note 8 - Commitments and Contingencies](index=18&type=section&id=NOTE%208%20-%20COMMITMENTS%20AND%20CONTINGENCIES) This note addresses legal proceedings, operating leases, and new finance leases, with no material legal actions and an industrial space lease expiring in November 2026 - The Company is not aware of any material legal proceedings currently pending or expected against it[94](index=94&type=chunk) - The Company leases approximately **61,900 square feet** of industrial space under a lease expiring November 20, 2026[95](index=95&type=chunk)[96](index=96&type=chunk) Total Rent Expense | Period | Rent Expense | | :----------------------------------- | :----------- | | Three months ended December 31, 2022 | $217,000 | | Three months ended December 31, 2021 | $215,000 | | Six months ended December 31, 2022 | $439,000 | | Six months ended December 31, 2021 | $429,000 | - New finance leases for a corporate vehicle (60-month term) and manufacturing/testing equipment (36-month term) commenced in September and October 2022, respectively[98](index=98&type=chunk)[99](index=99&type=chunk) Future Minimum Lease Payments (Operating and Finance Leases) | Year Ending June 30, | Operating Leases | Finance Leases | | :------------------- | :--------------- | :------------- | | 2023 (remaining six months) | $385,000 | $36,000 | | 2024 | $791,000 | $81,000 | | 2025 | $815,000 | $80,000 | | 2026 | $840,000 | $32,000 | | 2027 | $359,000 | $15,000 | | Thereafter | $- | $20,000 | | **Total Future Minimum Lease Payments** | **$3,190,000** | **$264,000** | | Less: discount | $(569,000) | $(28,000) | | **Total lease liability** | **$2,621,000** | **$236,000** | [Note 9 - Subsequent Events](index=19&type=section&id=NOTE%209%20-%20SUBSEQUENT%20EVENTS) This note discloses a subsequent event where the SVB revolving line of credit was increased from **$8.0 million to $14.0 million** on January 10, 2023 - On January 10, 2023, the revolving line of credit with SVB was increased from **$8.0 million** to **$14.0 million**[102](index=102&type=chunk) - The Fourth Amendment removed the liquidity ratio financial covenant and amended the definition of Borrowing Base[102](index=102&type=chunk) - As of February 6, 2023, **$5.7 million** remained available for future draws under the SVB Credit Facility[102](index=102&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the Company's financial condition and operational results, covering business overview, recent developments, and liquidity [Business Overview](index=20&type=section&id=Business%20Overview) Flux Power designs and manufactures lithium-ion energy storage solutions for industrial sectors, focusing on material handling and expanding product mix through R&D - Flux Power designs, develops, manufactures, and sells advanced lithium-ion energy storage solutions for industrial sectors like material handling and airport ground support equipment (GSE)[105](index=105&type=chunk) - The long-term strategy focuses on meeting growing demand, expanding product mix through R&D, increasing sales and marketing, improving customer support, and enhancing production capacity[106](index=106&type=chunk) - The material handling sector is the largest area of penetration, with additional growth opportunities in other industrial and commercial uses like solar energy storage[107](index=107&type=chunk) New Orders, Shipments, and Backlog Activity (Last Six Fiscal Quarters) | Quarter Ended | Backlog (Beginning) | New Orders | Shipments | Ending Backlog | | :--------------- | :------------------ | :---------- | :---------- | :------------- | | September 30, 2021 | $12,624,000 | $13,122,000 | $6,313,000 | $19,433,000 | | December 31, 2021 | $19,433,000 | $19,819,000 | $7,837,000 | $31,415,000 | | March 31, 2022 | $31,415,000 | $20,495,000 | $13,317,000 | $38,593,000 | | June 30, 2022 | $38,593,000 | $11,622,000 | $15,195,000 | $35,020,000 | | September 30, 2022 | $35,020,000 | $9,678,000 | $17,840,000 | $26,858,000 | | December 31, 2022 | $26,858,000 | $20,652,000 | $17,158,000 | $30,352,000 | - As of February 6, 2023, the order backlog was approximately **$29.8 million**[109](index=109&type=chunk) [Business Updates](index=21&type=section&id=Business%20Updates) This section discusses ongoing supply chain disruptions, mitigation strategies like price increases and inventory build-up, and strategic initiatives for profitability and cash flow breakeven - Supply chain disruptions, including delivery delays and increased costs for steel and electrical components, continue to impact the business[111](index=111&type=chunk) - The Company implemented price increases in October 2021 and April 2022 and increased inventory to **$19.5 million** by December 31, 2022, to mitigate these issues[111](index=111&type=chunk) - Strategic initiatives to achieve profitability and cash flow breakeven include gross margin improvements and business expansion through customer relationships, new markets, and enhanced capacities[112](index=112&type=chunk)[113](index=113&type=chunk)[116](index=116&type=chunk) [Recent Corporate Developments](index=22&type=section&id=Recent%20Corporate%20Developments) This section highlights the Fourth Amendment to the Loan and Security Agreement with SVB, increasing the revolving line of credit to **$14.0 million** and modifying covenants - On January 10, 2023, the Company entered into a Fourth Amendment to its Loan and Security Agreement with Silicon Valley Bank (SVB), increasing the revolving line of credit from **$8.0 million** to **$14.0 million**[118](index=118&type=chunk) - The amendment also removed the liquidity ratio financial covenant and modified the definition of Borrowing Base[118](index=118&type=chunk) - As of February 6, 2023, **$5.7 million** remained available for future draws under the SVB Credit Facility[118](index=118&type=chunk) [Results of Operations and Financial Condition (Three Months Ended December 31)](index=22&type=section&id=Results%20of%20Operations%20and%20Financial%20Condition%20(Three%20Months%20Ended%20December%2031)) This section analyzes the Company's financial performance for the three months ended December 31, highlighting significant changes in revenues, gross profit, and net loss Key Financials (Three Months Ended December 31) | Metric | 2022 ($) | % of Revenues (2022) | 2021 ($) | % of Revenues (2021) | | :----------------------------- | :---------- | :------------------- | :---------- | :------------------- | | Revenues | 17,158,000 | 100% | 7,690,000 | 100% | | Cost of sales | 13,050,000 | 76% | 6,648,000 | 86% | | Gross profit | 4,108,000 | 24% | 1,042,000 | 14% | | Selling and administrative | 4,250,000 | 25% | 4,000,000 | 53% | | Research and development | 1,162,000 | 7% | 2,088,000 | 27% | | Total operating expenses | 5,412,000 | 32% | 6,088,000 | 80% | | Operating loss | (1,304,000) | -8% | (5,046,000) | -66% | | Other income | 8,000 | 0% | - | 0% | | Interest expense, net | (385,000) | -2% | (31,000) | -0% | | Net loss | (1,681,000) | -10% | (5,077,000) | -66% | - Revenues increased by **$9.468 million** (123%) due to higher sales volume and average selling prices[115](index=115&type=chunk) - Gross profit increased by **$3.066 million** (294%), with gross profit margin improving by **10 percentage points to 24%** due to higher volume and gross margin improvement initiatives[123](index=123&type=chunk) - Net loss decreased by **$3.396 million** (67%) to **$(1.681) million**, primarily due to increased gross profit and decreased operating expenses, partially offset by higher interest expense[148](index=148&type=chunk) [Results of Operations and Financial Condition (Six Months Ended December 31)](index=24&type=section&id=Results%20of%20Operations%20and%20Financial%20Condition%20(Six%20Months%20Ended%20December%2031)) This section analyzes the Company's financial performance for the six months ended December 31, highlighting significant changes in revenues, gross profit, and net loss Key Financials (Six Months Ended December 31) | Metric | 2022 ($) | % of Revenues (2022) | 2021 ($) | % of Revenues (2021) | | :----------------------------- | :---------- | :------------------- | :---------- | :------------------- | | Revenues | 34,998,000 | 100% | 13,961,000 | 100% | | Cost of sales | 26,942,000 | 77% | 11,581,000 | 83% | | Gross profit | 8,056,000 | 23% | 2,380,000 | 17% | | Selling and administrative | 8,786,000 | 25% | 7,498,000 | 54% | | Research and development | 2,385,000 | 7% | 4,055,000 | 29% | | Total operating expenses | 11,171,000 | 32% | 11,553,000 | 83% | | Operating loss | (3,115,000) | -9% | (9,173,000) | -66% | | Other income | 8,000 | 0% | - | 0% | | Interest expense, net | (713,000) | -2% | (34,000) | -0% | | Net loss | (3,820,000) | -11% | (9,207,000) | -66% | - Revenues increased by **$21.037 million** (151%) due to higher sales volume and average selling prices[168](index=168&type=chunk) - Gross profit increased by **$5.676 million** (238%), with gross profit margin improving by **6 percentage points to 23%** due to higher volume and gross margin improvement initiatives[170](index=170&type=chunk) - Net loss decreased by **$5.387 million** (59%) to **$(3.820) million**, primarily due to increased gross profit and decreased operating expenses, partially offset by higher interest expense[153](index=153&type=chunk) Adjusted EBITDA Reconciliation (Six Months Ended December 31) | Metric | 2022 ($) | 2021 ($) | | :----------------------------- | :---------- | :---------- | | Net loss | (3,820,000) | (9,207,000) | | Interest, net | 713,000 | 34,000 | | Income tax provision | - | - | | Depreciation and amortization | 371,000 | 259,000 | | EBITDA | (2,736,000) | (8,914,000) | | Stock-based compensation | 304,000 | 449,000 | | **Adjusted EBITDA** | **(2,432,000)** | **(8,465,000)** | - Adjusted EBITDA loss improved from **$(8.465) million** in 2021 to **$(2.432) million** in 2022[154](index=154&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's historical negative cash flows from operations, current liquidity position, and plans to fund future operations through increased revenues and credit facilities - The Company has historically generated negative cash flows from operations, with **$(1.9) million** for the six months ended December 31, 2022, and **$(23.9) million** for the year ended June 30, 2022[157](index=157&type=chunk) - Management anticipates increased revenues and improved gross margins from existing backlog (**$62.4 million** in new orders over 12 months) to fund operations for the next twelve months[157](index=157&type=chunk) Cash Flow Summary (Six Months Ended December 31) | Cash Flow Activity | 2022 ($) | 2021 ($) | | :-------------------------- | :---------- | :---------- | | Net cash used in operating activities | (1,892,000) | (15,401,000)| | Net cash used in investing activities | (336,000) | (530,000) | | Net cash provided by financing activities | 1,900,000 | 19,073,000 | | Net change in cash | (328,000) | 3,142,000 | - As of February 6, 2023, the Company had **$964,000** in cash, **$5.7 million** remaining under the SVB Credit Facility, and **$4.0 million** available under the Subordinated LOC, expected to be sufficient for planned operations[175](index=175&type=chunk) - The Company may utilize the remaining **$5.7 million** available under its ATM offering if necessary and intends to explore additional capital sources[161](index=161&type=chunk) [Critical Accounting Policies](index=27&type=section&id=Critical%20Accounting%20Policies) This section notes that interim financial statements are prepared in accordance with GAAP, requiring estimates and assumptions, with detailed policies in the Annual Report on Form 10-K - The unaudited interim financial statements are prepared in accordance with GAAP, requiring estimates and assumptions that affect reported amounts[187](index=187&type=chunk) - Information on critical accounting policies, which involve subjective or complex judgments, is contained in Item 7 of the Annual Report on Form 10-K for the fiscal year ended June 30, 2022[187](index=187&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, Flux Power Holdings, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[163](index=163&type=chunk) [ITEM 4. Controls and Procedures](index=28&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section details the Company's evaluation of disclosure controls and procedures, concluding effectiveness, and reports remediation of prior material weaknesses in internal control over financial reporting - Management concluded that the Company's disclosure controls and procedures were effective as of December 31, 2022[189](index=189&type=chunk) - Material weaknesses in internal control over financial reporting as of June 30, 2022, related to ineffective oversight and insufficient review of warranty reserve calculations, have been remediated[124](index=124&type=chunk) - Remediation efforts included implementing additional control procedures, strengthening senior management review, and adding a second level of review for manual journal entries[124](index=124&type=chunk) - No other material changes in internal controls over financial reporting occurred during the quarter ended December 31, 2022[141](index=141&type=chunk) [PART II - Other Information](index=29&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This part provides additional information not covered in the financial statements, including legal proceedings, risk factors, equity sales, and exhibits [ITEM 1. Legal Proceedings](index=29&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The Company is not currently involved in any material legal proceedings and is unaware of any pending or expected material legal actions - The Company is not aware of any material legal proceedings currently pending or expected against it[129](index=129&type=chunk)[142](index=142&type=chunk) [ITEM 1A. Risk Factors](index=29&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section refers investors to the comprehensive discussion of risks in the Company's Annual Report on Form 10-K, emphasizing the high degree of investment risk - An investment in the Company's common stock involves a high degree of risk[130](index=130&type=chunk) - Investors should carefully consider the risks outlined in the 'Risk Factors' section of the Annual Report on Form 10-K for the fiscal year ended June 30, 2022[130](index=130&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities and use of proceeds to report[131](index=131&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=29&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section indicates that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities to report[143](index=143&type=chunk) [ITEM 4. Mine Safety Disclosures](index=29&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This section states that mine safety disclosures are not applicable to the Company's operations - Mine safety disclosures are not applicable to the Company[131](index=131&type=chunk) [ITEM 5. Other Information](index=29&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section indicates that there is no other information to report for the period - No other information to report[132](index=132&type=chunk) [ITEM 6. Exhibits](index=30&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed as part of the report, including the Fourth Amendment to Loan and Security Agreement and Sarbanes-Oxley Act certifications - Exhibits include the Fourth Amendment to Loan and Security Agreement (dated January 10, 2023), Certifications of the CEO and CFO under Sections 302 and 906 of the Sarbanes-Oxley Act, and various Inline XBRL Taxonomy Extension Documents[134](index=134&type=chunk) [Signatures](index=31&type=section&id=SIGNATURES) This section contains the duly authorized signatures of Flux Power Holdings, Inc.'s CEO and CFO, affirming the report's submission on February 9, 2023 - The report was signed on behalf of Flux Power Holdings, Inc. by Ronald F. Dutt (Chief Executive Officer) and Charles A. Scheiwe (Chief Financial Officer) on February 9, 2023[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)

Flux Power Holdings, Inc. (NASDAQ:FLUX) Q1 2023 Earnings Conference Call November 10, 2022 4:30 PM ET Company Participants Peter Geantil - Director of Product Development and Marketing Ron Dutt - CEO Chuck Scheiwe - CFO Conference Call Participants Chip Moore - EF Hutton Amit Dayal - H.C. Wainwright Matthew Galinko - Maxim Group Operator Greetings, and welcome to the Flux Power Holdings First Quarter Fiscal 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A q ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Title of Each Class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.001 per share FLUX Nasdaq Capital Market FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-31543 FLUX POWER HOLD ...

Company Overview - Flux Power's market capitalization is $37 million with 16 million shares outstanding and a float of 114 million[7] - The company specializes in developing sustainable lithium-ion energy storage solutions for material handling, airport ground support, and other industrial equipment[8] - Flux Power has shipped total battery packs throughout North America[49] Financial Performance - Revenue increased by 89% to $132 million in Q3'22 compared to $70 million in Q3'21[10] - The company achieved its 15th consecutive quarter of year-over-year revenue growth[10] - Customer order backlog reached a record $386 million as of March 31, 2022[10, 65] - Inventory increased to $209 million as of March 31, 2022, due to pre-purchasing to support increasing sales orders[65] Market and Growth - The estimated lithium-ion market share of electric forklifts is approximately 5%[42] - The addressable annual market for electric forklifts is $25 billion[42] - The electric forklift market size is estimated to reach $3 billion by 2030, with lithium market share growing to 70% ($2 billion) and Flux Power aiming for $800 million in annual revenue[42] - The estimated market size of internal combustion Ground Support Equipment (GSE) that can be replaced by electric GSE is over $400 million[48]

Third Quarter 2022 Financial Results Conference Call NASDAQ: FLUX May 12, 2022 Safe Harbor Language This presentation contains forward-looking statements. All statements other than statements of historical fact contained in this presentation, including statements as to the Company's future results of operations and financial position, planned products and services, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known a ...