10-K: Flux Power Faces Revenue Drop, Navigates Nasdaq Delisting Risk

Flux Power Holdings, Inc. reported a substantial revenue decrease and a wider net loss for the fiscal year ended June 30, 2026, while also addressing ongoing Nasdaq listing compliance issues.

Summary

• Flux Power Holdings, Inc. reported a significant decline in revenue for the fiscal year ended June 30, 2026, with revenues falling by 37% to $42.1 million from $66.4 million in the prior year.
• The company experienced a net loss of $7.4 million for fiscal year 2026, an increase from the $6.7 million net loss in fiscal year 2025.
• Flux Power is currently not in compliance with Nasdaq's minimum bid price requirement and is working to regain compliance within a 180-day period, with potential delisting if unsuccessful.
• The company's credit facility with Gibraltar Business Capital (GBC) is in default due to a covenant breach, although GBC has allowed continued access to the line of credit.
• Management has evaluated its liquidity and believes existing cash and anticipated funding sources may not be sufficient to fund planned operations for the next twelve months, raising substantial doubt about the company's ability to continue as a going concern.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as negative due to significant revenue decline, increased net loss, and ongoing concerns about continuing as a going concern, despite efforts to mitigate challenges.

Positives

• The company is actively pursuing supply chain improvements, cost reductions, and product design enhancements to lower product costs and improve gross profit margins.
• Flux Power has secured a new forklift OEM approval, expanding its base of approved equipment applications.
• The company has implemented a Committed Equity Facility with Roth Principal Investments, providing potential access to up to $40 million in capital.
• Management has remediated material weaknesses in internal controls over financial reporting.

Negatives

• Revenue decreased by 37% to $42.1 million in fiscal year 2026 compared to $66.4 million in fiscal year 2025.
• Gross profit decreased by 42% to $12.7 million, and gross profit margin declined by 254 basis points.
• Net loss increased by 12% to $7.4 million in fiscal year 2026 from $6.7 million in fiscal year 2025.
• The company is not in compliance with Nasdaq's minimum bid price requirement and faces potential delisting.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company is in default under its GBC Credit Facility due to a covenant breach.
• The company's largest customer in the material handling sector significantly cut its capital expense budget, impacting revenues.
• The company relies on a single supplier in China for its battery cells, creating supply chain concentration risk.

Risks

• The company's ability to continue as a going concern is subject to significant doubt due to recurring losses, negative cash flows, and reliance on external financing.
• Failure to regain compliance with Nasdaq's minimum bid price requirement could lead to delisting, adversely affecting stock price and market liquidity.
• The default under the GBC Credit Facility could result in termination of commitments and acceleration of debt, potentially forcing bankruptcy protection.
• Tariffs on imported components increase costs and could negatively impact revenues, profitability, and cash flows.
• Dependence on a few major customers makes the company vulnerable to changes in demand or loss of these customers.
• Supply chain disruptions, particularly from the single supplier of battery cells in China, could materially affect business operations.
• The market price of common stock is volatile and could be further depressed by future sales of shares or the perception of such sales.
• The company may need to raise additional capital, and there is no assurance that such capital will be available on acceptable terms or at all.

Future Outlook

The company anticipates revenue growth coupled with improvements in gross margin and lower operating expenses to move closer to profitability and improve cash flow. However, management believes existing cash and anticipated funding sources will not be sufficient to fund planned operations for the next twelve months, raising substantial doubt about its ability to continue as a going concern.

Management Comments

• Management continues to actively evaluate ways to mitigate the impacts of tariffs on our business and financial results.
• We are highly focused on expanding selling and marketing initiatives to secure new customer relationships and support continued migration to lithium of current customers.
• Management has evaluated our expected cash and working capital requirements and believes our existing cash, forecasted gross margin, and proceeds from the Committed Equity Facility and GBC Credit Facility will not be sufficient to meet our anticipated capital requirements to fund planned operations for the next twelve months.

Industry Context

StockSavvy.ai notes that the decline in Flux Power's revenue and increase in net loss occur within a broader industrial equipment market that has seen some customers defer purchases due to economic uncertainty and interest rate variability. The company's focus on lithium-ion solutions aligns with a general industry trend towards electrification and more environmentally friendly alternatives, but competitive pressures and tariff impacts are significant headwinds.

Legal Proceedings

• A securities class action lawsuit was settled for $1.75 million, funded by liability insurers.
• A stockholder derivative complaint was resolved through corporate governance reforms and a payment of $425,000 for attorneys' fees.
• An employment-related litigation case resulted in a settlement of $164,000, subject to court approval.

Related Party Transactions

• The company has a Credit Facility Agreement with Cleveland Capital, L.P. (Cleveland), a related party due to equity ownership, for up to $2,000,000.
• Certain executives and affiliates, including the CEO, CFO, COO, a director, and Cleveland, participated in the Private Placement.

Stakeholder Impact

• Shareholders may experience dilution from potential future equity issuances under the Committed Equity Facility.
• The potential delisting from Nasdaq could negatively impact the market price and liquidity of the stock.
• The company's going concern issues and financial instability could affect employee morale and retention.
• Suppliers may face increased risk due to the company's financial condition and potential for default on obligations.

Next Steps

• Regain compliance with Nasdaq's minimum bid price requirement within 180 days.
• Negotiate an amendment or waiver for the GBC Credit Facility default.
• Continue to pursue supply chain improvements and cost reduction initiatives.
• Expand sales and marketing efforts to secure new customer relationships.
• Evaluate other sources of capital to fund operations and growth.

Key Dates

Recommendation

The company exhibits significant financial distress, including a substantial revenue decline, increased net loss, a going concern warning, and potential Nasdaq delisting. While management is pursuing cost-saving measures and has access to a committed equity facility, the ongoing default on its credit facility and the critical need for further capital raise without guaranteed success present substantial risks. The current financial trajectory suggests a high probability of continued underperformance and potential for further value erosion.

Keywords

lithium-ion energy storage, material handling equipment, airport ground support equipment, GBC Credit Facility, Nasdaq compliance, going concern, tariffs, revenue decline