Business Context and Reporting Period
Company: Flux Power Holdings, Inc. (FLUX)
Filing Type: Form 10-K (Annual Report)
Period Ended: June 30, 2026
Business Overview: Flux designs, develops, manufactures, and sells advanced lithium-ion energy storage solutions for industrial and commercial sectors, primarily material handling (forklifts) and airport ground support equipment (GSE). The company operates as a single reporting segment.
Key Financial Metrics
| Metric | Fiscal 2026 | Fiscal 2025 |
|---|---|---|
| Revenues | $42.1 million | $66.4 million |
| Gross Profit | $12.7 million (30% margin) | $21.7 million (33% margin) |
| Operating Loss | $(6.5) million | $(5.0) million |
| Net Loss | $(7.4) million | $(6.7) million |
| Cash and Cash Equivalents | $0.3 million | $1.3 million |
| Line of Credit Outstanding | $6.3 million | $13.6 million |
| Accumulated Deficit | $(113.8) million | $(106.4) million |
| Order Backlog | $3.7 million | $9.9 million (Q2 2025) |
Material Changes vs. Prior Period
- Revenue Decline: Revenues decreased 37% to $42.1 million, driven by a significant capital expense budget cut by the company's largest material handling customer, increased competition in the GSE market, and pricing pressures from tariffs.
- Margin Compression: Gross profit margin decreased 254 basis points to 30%. This was caused by higher per-unit costs due to tariffs and a loss of operating leverage, partially offset by lower warranty costs.
- Expense Reduction: Selling, general, and administrative (SG&A) expenses decreased 27% to $16.4 million, and R&D expenses decreased 37% to $2.8 million, primarily due to headcount reductions and lower bonus activity.
- Liquidity Position: Cash on hand dropped to $0.3 million. The company repaid a net $7.3 million under its GBC Credit Facility during the year, reducing the outstanding balance to $6.3 million.
Outlook, Risks, and Contingencies
Going Concern and Liquidity
The independent auditor has included an explanatory paragraph regarding substantial doubt about the company's ability to continue as a going concern. Management believes existing cash and forecasted resources are insufficient to fund operations for the next 12 months without additional financing.
Debt Covenant Default
The company is currently in default under its Revolving Note with Gibraltar Business Capital (GBC) due to a failure to meet the minimum EBITDA financial covenant for the trailing three-month period ended February 28, 2026. While GBC has allowed continued use of the line of credit during negotiations, they retain the right to terminate commitments and declare all obligations immediately due and payable.
Financing Initiatives
- Committed Equity Facility (CEF): Entered into a $40 million facility with Roth Principal Investments. Sales are discretionary and subject to a threshold price of $0.50 per share. As of June 30, 2026, only $17,000 in net proceeds were generated.
- Private Placement: Completed a $5.0 million private placement in September 2025, partially funded by the conversion of subordinated debt.
Nasdaq Listing Compliance
The company received notice from Nasdaq on July 24, 2026, that its stock price closed below the $1.00 minimum bid price requirement for 30 consecutive days. The company has 180 days to regain compliance or risk delisting.
Legal Proceedings
Securities class action and stockholder derivative lawsuits were settled in 2025 and 2026. The class action settlement of $1.75 million was fully funded by liability insurers. An employment-related class action was settled for $164,000, pending court approval.
Tariff Impact
Increased U.S. tariffs on lithium-ion batteries and components from China have negatively impacted revenues and profitability. The company sources all battery cells from a single manufacturer in China, creating supply chain and cost risks.
Investor Verification Checklist
- Covenant Waiver Status: Verify if the company has successfully negotiated a waiver or amendment with GBC to resolve the EBITDA default and prevent acceleration of debt.
- Stock Price Threshold: Monitor the stock price relative to the $0.50 threshold required to utilize the Roth Principal Investments equity facility.
- Nasdaq Compliance Plan: Confirm the company's specific plan (e.g., reverse stock split) to regain compliance with the $1.00 minimum bid price requirement within the 180-day window.
- Customer Concentration: Assess the risk associated with the top two customers representing 71% of revenue, particularly given the recent budget cuts by the largest customer.
- Supply Chain Resilience: Evaluate the company's progress in diversifying battery cell suppliers to mitigate reliance on a single Chinese manufacturer and tariff exposure.