Flux Power(US:FLUX)2026-02-12 21:10Financial Performance - Total revenues for the three months ended December 31, 2025, were $14,121,000, a decrease of 16.1% compared to $16,830,000 for the same period in 2024[18]. - Gross profit for the six months ended December 31, 2025, was $8,660,000, down 18.9% from $10,681,000 in 2024[18]. - Operating income for the three months ended December 31, 2025, was $795,000, compared to a loss of $1,479,000 in the same period of 2024[18]. - Net income for the three months ended December 31, 2025, was $601,000, a significant improvement from a net loss of $1,887,000 in 2024[18]. - Revenues for the six months ended December 31, 2025, were $27,296,000, a decrease of $5,659,000 or 17% compared to $32,955,000 for the same period in 2024[181]. - Net loss for the six months ended December 31, 2025, was $1,961,000, an improvement from a net loss of $3,556,000 for the same period in 2024[187]. - Adjusted EBITDA for the quarter ended December 31, 2025, was a gain of $1,463,000, an increase of $1,333,000 compared to $130,000 for the same quarter in 2024[188]. Cash and Liquidity - Cash and cash equivalents at the end of the period were $928,000, down from $1,334,000 at the end of June 2025[16]. - The company reported a net cash used in operating activities of $4,274,000 for the six months ended December 31, 2025[22]. - As of December 31, 2025, the company had a cash balance of $0.9 million and $11.3 million of available funding under the Gibraltar Business Capital Credit Facility[44]. - Net cash provided by financing activities for the six months ended December 31, 2025, was $4,153,000, primarily from net cash proceeds of $12,942,000 from the Public Offering and Private Placement[202]. Debt and Liabilities - Total current liabilities decreased to $22,126,000 as of December 31, 2025, from $39,618,000 as of June 30, 2025, representing a reduction of 44.4%[16]. - The outstanding balance under the GBC Credit Facility was approximately $4.7 million as of December 31, 2025, with up to $11.3 million available for future borrowings[69]. - The Company secured a revolving loan facility of up to $16.0 million with Gibraltar Business Capital, increasing from the previous $15.0 million commitment[59]. - The company expects to face a compliance covenant breach under the GBC Credit Facility in late February 2026, raising concerns about its ability to continue as a going concern[51]. Inventory and Assets - Total assets decreased to $30,112,000 as of December 31, 2025, from $34,752,000 as of June 30, 2025, a decline of 13.5%[16]. - The company’s total inventories as of December 31, 2025, amounted to $15.7 million, a decrease from $17.2 million as of June 30, 2025[52]. - Other current assets totaled $2,486,000, an increase from $1,865,000 as of June 30, 2025, representing a growth of approximately 33.2%[53]. Stock and Equity - The company issued 4,416,000 shares of common stock in a public offering, raising $9,760,000 net of offering costs[20]. - The Company completed a Public Offering of 3,840,000 shares at a price of $2.50 per share, resulting in net proceeds of approximately $9,760,000 after offering costs[158]. - The Company issued five-year warrants in connection with the Private Placement, allowing the purchase of 1,214,766 shares at an exercise price of $1.715 per share[90]. - As of December 31, 2025, the Company had 2,496,198 outstanding and exercisable common stock warrants with a weighted average exercise price of $4.06[91]. Operational Challenges - The company believes that ongoing global tariff uncertainties have negatively impacted its revenues, profitability, and cash flows[36]. - The company is actively evaluating strategies to mitigate the impacts of tariffs and improve cash flow from operations[47]. - The company has implemented cost reduction strategies and increased selling prices of energy storage solutions to improve profitability[47]. - The order backlog as of December 31, 2025, was approximately $3.8 million, reflecting a decrease due to significant customers reducing order patterns and shifting to shorter lead times[149]. Internal Controls and Compliance - Management has identified material weaknesses in internal controls over financial reporting as of December 31, 2025, due to insufficient personnel resources and inadequately designed controls[213]. - The Company disclosed that its disclosure controls and procedures were not effective as of June 30, 2024, due to material weaknesses in internal controls over financial reporting[214]. - The previously issued audited consolidated financial statements for the fiscal year ended June 30, 2023, and the unaudited consolidated financial statements for the quarters ended September 30, 2023, December 31, 2023, and March 31, 2024, should no longer be relied upon due to errors in inventory accounting[214]. Customer and Supplier Relationships - The Company had two major customers during the three months ended December 31, 2025, representing approximately $11,038,000 or 78% of total revenues[111]. - The Company had one supplier that accounted for approximately $4,184,000 or 34% of total purchases during the three months ended December 31, 2025[114]. - The Company had one supplier that accounted for approximately $7,518,000 or 28% of total purchases during the six months ended December 31, 2024[115].