UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-31543

FLUX POWER HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Nevada		86-0931332
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

2685 S. Melrose Drive, Vista, California		92081
(Address of principal executive offices)		(Zip Code)

877-505-3589

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares of registrant’s common stock outstanding as of February 6, 2023 was 16,029,478.

FLUX POWER HOLDINGS, INC.

FORM 10-Q

For the Quarterly Period Ended December 31, 2022

Table of Contents

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 OPERATIONS	20
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	27
ITEM 4.	CONTROLS AND PROCEDURES	28

PART II - Other Information

ITEM 1.	LEGAL PROCEEDINGS	29
ITEM 1A.	RISK FACTORS	29
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	29
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	29
ITEM 4.	MINE SAFETY DISCLOSURES	29
ITEM 5.	OTHER INFORMATION	29
ITEM 6.	EXHIBITS	30

SIGNATURES		31

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This report contains forward-looking statements. The forward-looking statements are contained principally in the section captioned “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described in the section captioned “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 filed with the SEC on September 28, 2022. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would,” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. You should read these factors and the other cautionary statements made in this report and in the documents we incorporate by reference into this report as being applicable to all related forward-looking statements wherever they appear in this report or the documents we incorporate by reference into this report. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements.

Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements include, among other things, statements relating to:

	●	to date we have not generated sufficient cash to fund our operations. At December 31, 2022, we had a cash balance of $157,000 and an accumulated deficit of $85.6 million. Our operating plan and forecast include a number of estimates and assumptions including our ability to execute our proposed plans, to generate revenue from our current backlog, to increase both revenue and gross profit, to implement cost reductions and to maintain access to financing under existing debt agreements. If we are not successful in executing our plans as expected, our ability to continue as a going concern will be adversely affected;

	●	our ability to secure sufficient funding to support our current and proposed operations, which could be more difficult considering the negative impact of the COVID-19 pandemic on our operations, customer demand and supply chain, difficult stock market conditions as well as investor sentiment regarding our industry and our stock;

	●	our ability to manage our working capital requirements efficiently;

	●	our ability to maintain our credit facilities and obtain the necessary funds as needed;

	●	our ability to maintain effective internal controls, our ability to record, process and report financial information timely and accurately could be adversely affected and could result in a material misstatement in our financial statements, which could subject us to litigation or investigations, require management resources, increase our expenses, negatively affect investor confidence in our financial statements and adversely impact the trading price of our common stock.

	●	our ability to realize revenue from the current backlog is dependent on among other things, the delivery of key parts from our vendors in a timely manner. Backlog may not be indicative of future operating results, and existing orders may be cancelled, modified or otherwise altered by customers. We can provide no assurance as to the profitability of the contracts reflected in our backlog;

	●	our ability to obtain raw materials and other supplies for our products at existing or competitive prices and on a timely basis, particularly considering the impact of COVID-19 pandemic and inflation on our suppliers and supply chain;

	●	our anticipated growth strategies and our ability to manage the expansion of our business operations effectively;

	●	our ability to maintain or increase our market share in the competitive markets in which we do business;

	●	our ability to grow our revenue, increase our gross profit margin and become a profitable business;

	●	our ability to fulfill our backlog of open sales orders given delays in the receipt of key component parts and other potential manufacturing disruptions posed by the ongoing COVID-19 pandemic and general supply chain issues;

	●	our ability to keep up with rapidly changing technologies and evolving industry standards, including our ability to achieve technological advances;

	●	our dependence on the growth in demand for our products;

	●	our ability to compete with larger companies with far greater resources than we have;

	●	our ability to shift to new suppliers and incorporate new components into our products in a manner that is not disruptive to our business;

	●	our ability to obtain and maintain UL Listings and OEM approvals for our energy storage solutions;

	●	our ability to diversify our product offerings and capture new market opportunities;

	●	our ability to source our needs for skilled labor, machinery, parts, and raw materials economically;

	●	our ability to attract and retain key members of our senior management;

	●	our ability to continue to operate safely and effectively during the COVID-19 pandemic; and

	●	our dependence on few major customers.

Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference, and file as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

Use of Certain Defined Terms

Except where the context otherwise requires and for the purposes of this report only:

	●	the “Company,” “Flux,” “we,” “us,” and “our” refer to the combined business of Flux Power Holdings, Inc., a Nevada corporation and its wholly owned subsidiary, Flux Power, Inc., a California corporation (“Flux Power”);

	●	“Exchange Act” refers the Securities Exchange Act of 1934, as amended;

	●	“SEC” refers to the Securities and Exchange Commission; and

	●	“Securities Act” refers to the Securities Act of 1933, as amended.

PART I - Financial Information

Item 1. Financial Statements

FLUX POWER HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	December 31, 2022			June 30, 2022
	(Unaudited)
ASSETS

Current assets:
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

Current liabilities:
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:

Preferred stock, $0.001 par value; 500,000 shares authorized; none issued and outstanding		-			-
Common stock, $0.001 par value; 30,000,000 shares authorized; 16,029,478 and 15,996,658 shares issued and outstanding at December 31, 2022 and June 30, 2022, respectively		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

The accompanying notes are an integral part of these condensed consolidated financial statements.

FLUX POWER HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	2022			2021			2022			2021
	Three Months Ended December 31,						Six Months Ended December 31,
	2022			2021			2022			2021
Revenues	$	17,158,000		$	7,690,000		$	34,998,000		$	13,961,000
Cost of sales		13,050,000			6,648,000			26,942,000			11,581,000

Gross profit		4,108,000			1,042,000			8,056,000			2,380,000

Operating expenses:
Selling and administrative		4,250,000			4,000,000			8,786,000			7,498,000
Research and development		1,162,000			2,088,000			2,385,000			4,055,000
Total operating expenses		5,412,000			6,088,000			11,171,000			11,553,000

Operating loss		(1,304,000	)		(5,046,000	)		(3,115,000	)		(9,173,000	)

Other income		8,000			-			8,000			-
Interest expense		(385,000	)		(31,000	)		(713,000	)		(34,000	)

Net loss	$	(1,681,000	)	$	(5,077,000	)	$	(3,820,000	)	$	(9,207,000	)

Net loss per share - basic and diluted	$	(0.10	)	$	(0.32	)	$	(0.24	)	$	(0.62	)

Weighted average number of common shares outstanding - basic and diluted		16,020,183			15,987,502			16,008,740			14,895,989

The accompanying notes are an integral part of these condensed consolidated financial statements.

FLUX POWER HOLDING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)


	Common Stock
	Shares		Capital 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		1,678		-		-		-			-
Stock based compensation		-		-		95,000

SEC Form 10-Q filed by Flux Power Holdings Inc.