Flux Power(FLUX) - 2025 Q3 - Quarterly Report

Financial Performance - Revenues for the three months ended March 31, 2025, increased to $16,742,000, up 15.8$14,457,000 in the same period of 2024[17] - Gross profit for the nine months ended March 31, 2025, was $15,968,000, representing a 17.0$13,641,000 for the same period in 2024[17] - Operating loss for the three months ended March 31, 2025, improved to $(1,577,000), a reduction of 38.7$(2,572,000) in the prior year[17] - Net loss for the nine months ended March 31, 2025, was $(5,495,000), a decrease of 9.8$(6,089,000) for the same period in 2024[22] - Revenues for Q1 2025 were $16,742,000, a 16$14,457,000 in Q1 2024, driven by higher demand in material handling and ground support markets[155] - Gross profit for Q1 2025 was $5,287,000, representing 32$1,939,000 from $3,005,000 in Q1 2024, primarily due to increased gross profit[161] - Revenues for the nine months ended March 31, 2025, were$49,697,000, an increase of $2,250,000 or 5$47,447,000 for the same period in 2024[164] - Net loss for the nine months ended March 31, 2025, was $5,495,000, an improvement from a net loss of$6,089,000 in 2024[170] Cash Flow and Liquidity - Cash at the end of the period was $505,000, down from$643,000 at the beginning of the period, indicating a decrease of 21.5%[21] - The Company generated cash flows from operations of $2.2 million for the nine months ended March 31, 2025[41] - Cash flow from operating activities was$2,208,000 for the nine months ended March 31, 2025, compared to a cash outflow of $4,274,000 in 2024[177] - As of March 31, 2025, the company had a cash balance of$0.5 million and anticipated that existing resources would not be sufficient to meet capital needs for the next twelve months[176] Liabilities and Debt - Total current liabilities increased to $34,191,000 as of March 31, 2025, compared to$30,674,000 as of June 30, 2024, reflecting a 11.0% rise[15] - The Company has relied on debt and equity financing for additional funds due to insufficient revenues and operating cash flows[41] - The Company has a revolving loan facility with GBC for up to $15.0 million, maturing on July 28, 2025[49] - The Company entered into a Credit Facility Agreement with Cleveland Capital, L.P. for a line of credit of up to$2,000,000 for working capital purposes[70] - The Company had multiple drawdowns under the GBC Credit Facility totaling $46.9 million and made repayments totaling$49.7 million during the nine months ended March 31, 2025[52] - As of March 31, 2025, the outstanding balance under the GBC Credit Facility was approximately $11.0 million, with up to$5.0 million available for future borrowings[52] - The Company received a waiver for a default related to the EBITDA covenant for the trailing three-month period ended April 30, 2024, subject to certain conditions[53] - The Company paid a non-refundable closing fee of $112,500 upon the execution of the GBC Credit Facility Agreement[50] - The Company agreed to pay GBC a non-refundable amendment fee of$50,000 in cash for the Third Amendment to the Loan and Security Agreement[55] Inventory and Receivables - Accounts receivable increased slightly to $9,847,000 as of March 31, 2025, compared to$9,773,000 as of June 30, 2024[15] - Inventories decreased from $16.977 million as of June 30, 2024, to$16.433 million as of March 31, 2025[47] Operational Challenges and Strategies - The Company expects to increase selling prices of its products to offset the impact of tariffs, which may negatively affect revenues and cash flows[35] - The Company is facing uncertainties due to increased tariffs and supply chain disruptions, which may impact future operations[33] - Management is evaluating strategies to improve profitability, including planned price increases and cost-saving initiatives[45] - The company is actively pursuing alternative sourcing strategies to mitigate the impact of U.S. tariffs on imported materials, particularly from China[138] - The company experienced delays in new orders due to deferrals of forklift purchases, attributed to lower capital spending and interest rate variability[133] Legal and Compliance Issues - The company is involved in various legal proceedings, including a shareholder derivative action related to the same allegations as the securities class action[203] - The company has received a notice from Nasdaq regarding non-compliance with continued listing requirements, which could lead to delisting if not addressed[210] - The company intends to take all reasonable measures to regain compliance with Nasdaq Listing Rules and maintain its listing[211] Research and Development - The company has filed three new patents related to advanced lithium-ion energy storage solutions, focusing on optimizing battery life, enhancing user understanding of battery health, and applying artificial intelligence for predictive balancing[130] - A new partnership was announced to enhance the recycling process for end-of-life lithium-ion batteries, marking a commitment to environmental responsibility[136] - The company is expanding its telemetry solution to improve asset management and service maintenance for customers[135] Employee and Stock Compensation - The Company reported stock-based compensation of $831,000 for the nine months ended March 31, 2025, down from$1,233,000 in the same period of 2024[22] - The 2021 Equity Incentive Plan allows for the issuance of awards for up to 2,000,000 shares, with 872,039 shares available for future grants as of March 31, 2025[93] - The company had 68,228 Restricted Stock Units (RSUs) outstanding as of March 31, 2025, with a weighted average grant date fair value of $4.25[97] - The company granted no stock options during the nine months ended March 31, 2025, while the expected volatility for this period was 80.06%[95]