Flux Power Holdings, Inc.

Flux Power Holdings, Inc. designs, develops, manufactures, and sells a portfolio of advanced lithium-ion energy storage solutions for electrification of a range of industrial and commercial sectors which include material handling and airport ground support equipment. The company believes the increasing demand for lithium-ion energy storage solutions and more environmentally friendly energy storage solutions in the material handling sector should continue to drive revenue growth. According to Worldwide Industrial Truck Statistics, new lift truck sales reached approximately 2.1 million units worldwide in 2023, with approximately 431,000 units sold in the Americas. The International Truck Association estimates that electric products represented approximately sixty-seven percent of North American shipments in 2023. Research and Markets expects that the global lift truck market will grow at a compound annual growth rate of 5.7% from 2024 through 2030. BloombergNEF estimates that lithium-ion battery prices, which averaged $1,160 per kilowatt hour in 2010, were $156 per kWh in 2019 and dropped to $115 per kWh in 2024.

The company's competitors in the lift equipment market have been primarily major lead acid battery manufacturers, including Stryten Energy, East Penn Manufacturing Company, EnerSys Corporation, and Crown Battery Corporation, though the competitor base offering lithium-ion solutions has grown from a number of early-stage businesses and now includes several larger companies. The key competitive factors in this market are performance, reliability, durability, safety and price. The company believes having the UL Listing covering its core products gives it a significant differentiating competitive advantage. Many of the company's energy storage packs have been tested and approved for use by Toyota Material Handling USA, Inc., Crown Equipment Corporation, and The Raymond Corporation, among the top global lift truck manufacturers by revenue according to Material Handling & Logistics. The company also provides a private label Class 3 Walkie Pallet Pack to two major top 10 forklift OEMs.

The company generates revenue through the sale of products to customers, selling through several different channels including OEMs, lift equipment dealers and battery distributors as well as directly to end users, primarily in North America. Product revenue is recognized as a distinct single performance obligation which occurs at the point in time that title passes to the customer. The company's customers do have a right to return product, but returns have historically been minimal. The company's products, primarily forklift equipment packs, are warrantied for five years unless modified by a separate agreement.

The company's energy storage solution system design is adaptable with three core design modules used in its entire family of small, medium, and large pack forklift products. Currently, the company's energy storage packs use lithium iron phosphate (LiFePO4) battery cells, which it sources from a single supplier located in China. The company also offers 24-volt onboard chargers for its Class 3 Walkie Pallet Packs, and smart wall mounted chargers for larger applications. During fiscal 2025, the company introduced the G96, a higher-voltage battery system with greater capacity for intensive applications in the Airline and Aviation industry and improved the developed G80 design that simplifies maintenance and enhances usability for GSE. Beyond hardware, the company began developing and showcasing SkyEMS, its energy management solution. The company has received two patents, with another patent pending, on advanced technology related to lithium-ion energy storage solutions designed to increase battery life by optimizing the charging cycle, give users a better understanding of the health of their battery in use, and apply artificial intelligence to predictively balance the cells for optimal performance.

During the year ended June 30, 2025, the company had three major customers that each represented more than 10% of revenues on an individual basis, and together represented approximately $48,288,000 or 73% of total revenues. During the year ended June 30, 2024, the company had three major customers that each represented more than 10% of revenues on an individual basis, and together represented approximately $47,178,000 or 78% of total revenues. During the year ended June 30, 2025, the company had one supplier who accounted for more than 10% of total purchases, which represented approximately $15,902,000 or 28% of total purchases. During the year ended June 30, 2024, the company had one supplier who accounted for more than 10% of total purchases, which represented approximately $12,437,000 or 27% of total purchases.

On May 28, 2025, the company filed a Certificate of Amendment to increase the number of authorized shares of common stock from 30,000,000 to 75,000,000. On July 11, 2025, the company entered into a settlement term sheet to fully resolve the class action litigation captioned Kassam v. Flux Power Holdings, Inc. et al., with the settlement providing for the company establishing a $1.75 million escrowed settlement fund. The company expects its liability insurers to directly fund approximately $1.15 million of the settlement fund, and the company estimates it will contribute approximately $600,000 to the settlement fund as its remaining retention/deductible related to its insurance policy. On July 18, 2025, the company entered into a Securities Purchase Agreement to sell an initial aggregate amount of approximately $2.9 million in Prefunded Warrants at a purchase price equal to $19.369 per warrant. On September 15, 2025, the company entered into an amended and restated securities purchase agreement pursuant to which the Purchasers agreed to subscribe for and purchase an aggregate of 258,144 Prefunded Warrants and 1,214,769 Common Warrants for gross proceeds of approximately $5.0 million. On September 15, 2025, concurrently with the closing of the Private Placement, the company entered into a Debt Satisfaction Agreement with Cleveland Capital, L.P. pursuant to which all obligations under the Cleveland Note and Subordinated LOC were deemed paid in full and the Subordinated LOC was terminated. On September 16, 2025, the Nasdaq Hearings Panel determined to grant the company an exception to demonstrate compliance with the Stockholders' Equity Requirement and granted the company's request for continued listing, subject to filing a Form 10-K for the period ending June 30, 2025 on or before September 30, 2025 and demonstrating compliance with the Stockholder's Equity Requirement on or before October 31, 2025.

Revenues for fiscal 2025 increased $5,610,000 or 9%, to $66,434,000, compared to $60,824,000 for fiscal 2024. Gross profit for fiscal 2025 increased $4,507,000 or 26%, to $21,740,000, compared to $17,233,000 for fiscal 2024. Gross profit margin increased to 33% for fiscal 2025 compared to 28% for fiscal 2024. Net loss during fiscal 2025 decreased $1,659,000 or 20%, to a net loss of $6,674,000 compared to a net loss of $8,333,000 for fiscal 2024. Net loss per share - basic and diluted was $(0.40) for fiscal 2025 compared to $(0.50) for fiscal 2024. As of June 30, 2025, the company had an accumulated deficit of $106.4 million. For fiscal 2025, the company generated positive cash flows from operations of $0.6 million.

The company's long-term strategy is to meet the rapidly growing demand for lithium-ion energy solutions and to be the supplier of choice, targeting large companies having energy storage needs. The company has established selling relationships with customers with large fleets of forklifts and GSE. The company's largest sector of penetration thus far has been the material handling sector, which it believes is a multi-billion-dollar addressable market. The company intends to continue to expand its supply chain and customer partnerships and seek further partnerships and/or acquisitions that provide synergy to meeting its growth and building scale objectives. The company recently added its second tier one OEM private label battery program to supplement its strong OEM relationships and approvals, which marks a significant milestone for its S-Series line, which now includes products with the UL Type EE certification. The company also announced a new partnership aimed at enhancing the recycling process for end-of-life lithium-ion batteries with the largest critical battery components recycling company in the U.S. The company is also expanding its deployment of its telemetry solution providing customers with state of health, better asset management, and a platform for more timely management of service and maintenance requirements. Applications of the company's modular packs for other industrial and commercial uses, such as mobile energy storage systems, are providing additional current growth and further opportunities.

With strategic supply chain and profitability improvement initiatives, lower costs and higher volume purchasing, the company is targeting gross margin improvement to continue. The company's near-term priority will be to achieve profitability within its capital constraints, and accordingly it will continue to pursue supply chain improvements, gross margin expansion initiatives and cost reductions. The company is focusing on business expansion to accelerate gross margins by leveraging current high-profile proven customer relationships to respond to growing demand of large fleets for lithium-ion value proposition, pursuing new markets that can leverage its technology and manufacturing capabilities, expanding features of its popular SkyBMS telemetry, expanding its manufacturing and service capacities, capitalizing on its leadership position with new product offerings particularly to exploit the rising demand for higher power applications, and ensuring its research efforts support other chemistries as they may become available.

The company has seen improvements in its sourcing and purchasing activity, reflecting its efforts to expand and optimize its vendor strategy, including more secondary sources to minimize stock-outs, lower costs from increasing sources, and controlled delivery times, as reflected in its current inventory levels. The company's final assembly, testing and shipping of its energy storage solutions are completed within its ISO 9001 certified facility in Vista, California, which includes six assembly lines. The company's corporate headquarters and production facility totals approximately 63,200 square feet. As of June 30, 2025 and August 31, 2025, the company had 101 and 99 employees, respectively. The company has taken steps to reduce its cash burn rate through a reduction in force of approximately 15% of its work force.

The company anticipates that research and development will continue to be a substantial part of its strategic priorities in the future. Research and development expenses for fiscal 2025 were $4,464,000, compared to $4,916,000 for fiscal 2024. Net cash used in investing activities during fiscal 2025 was $653,000, primarily due to purchases of furniture and office equipment, warehouse equipment and other related costs. The company has never declared or paid any cash dividends on shares of its common stock and does not anticipate paying cash dividends in the foreseeable future.

The company has experienced some delays in new orders of its energy storage solutions due to corresponding deferrals of new forklift purchases mainly caused by lower capital spending by certain large customer fleets. Some customers have attributed lower capital spending to concerns over the economy and the uncertainty of higher interest rates, as well as broader geopolitical uncertainty. More recently, the economic impacts and costs of higher global tariffs implemented by the U.S government have affected new purchase orders. The impact of deferrals and uncertainties related to new customer orders have required additional selling strategies to support the company's targeted sales trajectory. In April 2025, the U.S. government increased import tariffs across a wide range of countries at various rates, including on product imports from almost all countries and individualized higher tariffs on certain countries. Due to the uncertainties pertaining to tariffs and tariff levels, it is difficult for the company to reliably forecast the ongoing impact to its business or that of its customers but it is expected that tariffs would negatively impact revenues, profitability and cash flows. The company's battery cells, which are an integral part of its energy storage solutions, are sourced from a single manufacturer located in China. In response to business uncertainties resulting from tariffs, the company temporarily paused imports from its supplier in China, though the pause was short-lived as both parties quickly agreed to modified terms.

The company's independent registered public accounting firm has included an explanatory paragraph relating to the company's ability to continue as a going concern. Management believes the company's existing cash, funding available under the GBC Credit Facility, forecasted gross margins and $3.8 million of cash proceeds from the $5.0 million Private Placement will not be sufficient to meet anticipated capital resources to fund planned operations for the next twelve months. The company has a history of losses, with net losses of $6.7 million and $8.3 million for fiscal 2025 and 2024, respectively, and an accumulated deficit of $106.4 million as of June 30, 2025. The company has identified material weaknesses in its internal control over financial reporting, including ineffective oversight and lack of sufficient personnel resources with technical accounting expertise. The company is not currently in compliance with Nasdaq's minimum $2,500,000 stockholders' equity requirement for continued listing, and as of March 31, 2025, stockholders' equity was a deficit of $4,372,000. The company is dependent on one supplier in China for its battery cells, and during fiscal 2025, one supplier accounted for approximately $15,902,000 or 28% of total purchases. The U.S. government is imposing increased tariffs on certain products imported into the U.S., including lithium-ion batteries, and the company anticipates incurring incremental tariff costs. Three major customers together represented approximately $48,288,000 or 73% of total revenues during fiscal 2025, and the company does not have long-term contracts with its customers.

Management's message emphasizes the company's near-term priority to achieve profitability within its capital constraints, pursuing supply chain improvements, gross margin expansion initiatives and cost reductions. Management states that with strategic supply chain and profitability improvement initiatives, lower costs and higher volume purchasing, the company is targeting gross margin improvement to continue. Management also highlights that the company is highly focused on expanding sales and marketing initiatives to secure new customer relationships and support continued migration to lithium of current customers. Management notes that the company has evaluated its expected cash requirements and believes the company's existing cash, funding available under the GBC Credit Facility, forecasted gross margins and $3.8 million of cash proceeds from the $5.0 million Private Placement, which closed on September 15, 2025, will not be sufficient to meet the company's anticipated capital resources to fund planned operations for the next twelve months following the filing date of this Annual Report on Form 10-K. Management is evaluating strategies to improve profitability of operations and to obtain additional funding, including actual and planned price increases for energy storage solutions, a number of cost saving initiatives including product cost efficiencies and planned operating cost savings. Based on the company's existing backlog and customer orders, management anticipates increased revenues, together with the improvements in gross margin, will move the company closer to profitability.