8-K: Flux Power Holdings Faces Reporting Delays and Expects Increased Net Loss

Flux Power Holdings anticipates delays in filing its quarterly reports and expects an increased net loss due to restatement-related expenses and executive severance payments.

Summary

• Flux Power Holdings, Inc. announced a delay in filing its Quarterly Report on Form 10-Q for the quarter ended December 31, 2025.
• The delay is attributed to the late completion of the Annual Report on Form 10-K for the fiscal year ended June 30, 2024, restatements of prior financial statements, and the recent engagement of a new independent registered public accounting firm.
• The company completed the restatement process and filed the Form 10-K on January 29, 2025, which included audited financial statements for the fiscal year ended June 30, 2024, and restated financial statements for prior periods.
• The restatements were due to errors relating primarily to inventory, untimely account reconciliation, exclusion of certain product warranty-related expenses, and incorrect presentation of non-cash debt issuance costs.
• Flux Power is also behind on filing its Quarterly Report on Form 10-Q for the period ended September 30, 2024, due to the ongoing financial review and reconciliation process.
• The company expects to report an increase in net loss of approximately $1,000,000 and $500,000 for the three and six months ended December 31, 2024, respectively, compared to the corresponding period in 2023.
• This increase is primarily due to non-recurring charges associated with the restatement process, severance payments to an executive employee, and the accrual of separation payments to be made to the retiring CEO.
• The company is currently unable to estimate the timing for the filing of the September Form 10-Q and the December Form 10-Q but hopes to file as soon as practicable.

Sentiment

Score: 3

Explanation: The sentiment is negative due to reporting delays, increased net loss expectations, and prior financial statement restatements, indicating potential financial and operational challenges.

Positives

• The company has completed the restatement process and filed the Form 10-K with the SEC on January 29, 2025.
• The company has engaged a new independent registered public accounting firm, Haskell & White LLP, for the fiscal year ending June 30, 2025.

Negatives

• There are delays in filing the Quarterly Reports on Form 10-Q for the periods ended September 30, 2024, and December 31, 2024.
• The company expects to report an increase in net loss for the three and six months ended December 31, 2024.
• The restatement process was required due to errors in prior financial statements.

Risks

• The company is unable to estimate the timing for the filing of the delayed quarterly reports.
• The preliminary financial results are subject to change based on the completion and review of the unaudited financial statements.
• Actual results may vary from the estimated net loss increase.

Future Outlook

The company is working to complete and file the September Form 10-Q and December Form 10-Q as soon as practicable, but cannot currently estimate the exact timing.

Management Comments

• The company is currently unable to estimate the timing for the filing of the September Form 10-Q and the December Form 10-Q but hopes to file as soon as practicable.

Industry Context

Delays in financial reporting and restatements can erode investor confidence and potentially impact a company's valuation, especially in a competitive market where timely and accurate information is crucial for decision-making.

Comparison to Industry Standards

• Compared to industry peers such as Romeo Power (before its acquisition) and Workhorse Group, which have also faced financial reporting challenges, Flux Power's situation highlights the importance of robust internal controls and accurate financial reporting.
• Companies like Tesla and BYD, which are leaders in the electric vehicle and battery technology space, maintain rigorous reporting standards, setting a high benchmark for the industry.

Management Changes

Stakeholder Impact

• Shareholders may experience uncertainty due to the delayed financial reporting and expected increase in net loss.
• Employees may be affected by the executive changes and potential cost-cutting measures.
• Creditors may reassess the company's creditworthiness based on the financial challenges.

Next Steps

• The company needs to complete and file the September Form 10-Q and December Form 10-Q.
• Haskell & White LLP needs to complete their review of the quarterly financial statements.

Key Dates