Flux Power Holdings, Inc. 10-K

ITEM 9A - CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, as of the end of the period covered by this report, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Act of 1934. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be included in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, relating to the Company, including our consolidated subsidiaries, and was made known to them by others within those entities, particularly during the period when this report was being prepared. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of June 30, 2024 because of the material weaknesses identified in our internal controls over financial reporting. 37 Table of Contents Management’s Report on Internal Control over Financial Reporting The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s principal executive officer and principal financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurances with respect to financial statement preparation and presentation. Additionally, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision of management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and subsequent guidance prepared by the Commission specifically for smaller public companies as of June 30, 2024. Based on that evaluation, our management concluded that our internal control over financial reporting was not effective as of June 30, 2024 due to previously identified material weaknesses resulting from having insufficient personnel resources with technical accounting expertise related to certain aspects of the financial reporting process. In early March of 2024, the Company strengthened its internal financial expertise by hiring a new Chief Financial Officer with over 20 years of experience with publicly traded companies and finance and accounting and who also served as an auditor for 10 years with Ernst & Young LLP, where he became a certified public accountant. As part of its ongoing remedial efforts to strengthen controls and procedures, in May 2024 the Company engaged an external financial consulting firm with extensive technical accounting expertise during the quarter ended March 31, 2024. In addition, In August 2024, the Company engaged an external financial consulting firm to assist the Company with accounting advisory services. After re-evaluation, the Company’s management has concluded that in connection with restatement and due to a lack of sufficiently designed controls that support an effective assessment of our internal controls relating to the prevention of fraud and possible management override of controls, this represents an additional material weakness in the Company’s disclosure controls and procedures and the Company’s internal control over financial reporting. To address this material weakness, management plans to continue to devote significant effort and resources to the remediation and improvement of the Company’s internal control over financial reporting. While the Company has processes to account for its inventory, under the leadership of the Company’s new Chief Financial Officer, the Company intends to strengthen its internal processes and procedures over inventory management and reporting. The Company has begun updating its processes and controls around inventory obsolescence, the timing of its internal inventory audits and implementation of other measures. In addition, in August 2024, the Company has also engaged an external financial consulting firm with extensive technical accounting expertise to assist with the analysis of prior periods, along with an independent law firm to conduct an internal review of the events and activities leading to errors in the financial statements. The Company ’ s management recognizes that a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Additionally, controls can be circumvented by collusion or improper management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, have been detected, and there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. This Annual Report on Form 10-K does not include an attestation report of the Company’s independent registered public accounting firm regarding the effectiveness of the Company’s internal control over financial reporting, as such report is not required due to the Company’s status as a smaller reporting company. Change in Internal Control over Financial Reporting Except as discussed above, there have been no changes in the Company’s internal controls over financial reporting during the fiscal quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. ITEM 9B - OTHER INFORMATION None . ITEM 9C - DISCLOSURE REGARDING FOREIGN JURISDICTION THAT PREVENTS INSPECTIONS Not Applicable. 38 Table of Contents PART III ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The following table and text set forth the names and ages of our current directors, executive officers and significant employees as of January 3, 2025. Our Board of Directors is comprised of only one class. All of the directors will serve until the next annual meeting of stockholders or until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. There are no family relationships among any of the directors and executive officers. From time to time, our directors have received compensation in the form of cash and equity grant for their services on the Board. Name Age Position Ronald F. Dutt 77 Director, Chief Executive Officer and President Kevin S. Royal 60 Chief Financial Officer and Secretary Jeffrey C. Mason (5) 54 Vice President of Operations Michael Johnson 76 Director Lisa Walters-Hoffert (1) (2) 66 Director Dale T. Robinette (1) (3) 60 Director Mark F. Leposky (1) (4) 60 Director (1) Independent Director. (2) Chairperson of the Audit Committee, Member of the Compensation Committee and the Nominating and Governance Committee. (3) Lead Independent Director, Chairperson of the Compensation Committee, Member of the Audit Committee and the Nominating and Governance Committee. (4) Chairperson of the Nominating and Governance Committee, Member of the Audit Committee and the Compensation Committee. Mr. Leposky was elected to the Board on April 18, 2024. (5) On November 7, 2022, Mr. Mason’s position was expanded to include additional Company authority and delegation. (6) Mr. Royal was appointed as Chief Financial Officer and Secretary effective March 4, 2024. There are no arrangements or understandings between our directors and executive officers and any other person pursuant to which any director or officer was or is to be selected as a director or officer. Business Experience Ronald F. Dutt , Chairman, Chief Executive Officer, President, and Director . Mr. Dutt has been our chief executive officer, former interim chief financial officer and director since March 19, 2014. He became our chairman on June 28, 2019. On September 19, 2017, he was also appointed as our president, chief financial officer and corporate secretary. He resigned as chief financial officer and corporate secretary as of December 16, 2018. Previously, he was our chief financial officer since December 7, 2012, and our interim chief executive officer since June 28, 2013. Mr. Dutt has served as the Company’s interim corporate secretary since June 28, 2013. Prior to Flux Power, Mr. Dutt provided chief financial officer and chief operating officer consulting services during 2008 through 2012. In this capacity Mr. Dutt provided financial consulting, including strategic business modeling and managed operations. Prior to 2008, Mr. Dutt served in several capacities as executive vice president, chief financial officer and treasurer for various public and private companies including SOLA International, Directed Electronics, Fritz Companies, DHL Americas, Aptera Motors, Inc., and Visa International. Mr. Dutt holds an MBA in Finance from University of Washington and an undergraduate degree in Chemistry from the University of North Carolina. Additionally, Mr. Dutt served in the United States Navy and received an honorable discharge as a Lieutenant. Based on Mr. Dutt’s past experience as executive vice president, chief financial officer and treasurer for various public and private companies, the Company believes Mr. Dutt is qualified to be on the Board. 39 Table of Contents Kevin S. Royal, Chief Financial Officer and Secretary. Mr. Royal was appointed as our Chief Financial Officer and Secretary effective March 4, 2024. Mr. Royal has over 20 years of experience with publicly traded companies, leading Finance, Accounting, IT, HR, Legal, Investor Relations, and M&A. Since 2023, Mr. Royal has served as a consultant for MCA Financial group. Prior to joining the Company, Mr. Royal served as Executive Vice President and Chief Financial Officer of Zovio Inc. (f/k/a Bridgepoint Education, Inc.) from October 2015 until September 2022. Mr. Royal also previously served as Senior Vice President, Chief Financial Officer, Treasurer and Secretary of Maxwell Technologies, Inc., a developer, manufacturer and marketer of energy storage and power delivery solutions from April 2009 to May 2015. Mr. Royal has held a series of senior finance positions, including appointments as senior vice president and chief financial officer within the semiconductor industry. Mr. Royal has also served as an auditor for 10 years with Ernst & Young LLP, where he became a certified public accountant. Mr. Royal received his Bachelor of Business Administration in Accounting from Harding University and is a Certified Public Accountant in the State of California (inactive). Jeffrey C. Mason, Vice President of Operations. Mr. Mason served as the Director of Manufacturing of the Company from January 2021 to December 2021, and Vice President of Operations since December 2021. On November 7, 2022, Mr. Mason’s position was expanded to include additional Company authority and delegation. Prior to joining the Company, Mr. Mason was the plant manager at NEO Tech from March 2017 to January 2021 after being promoted from Director of Operations from December 2013 to March 2017. Mr. Mason has also worked for Sumitomo Electric Interconnect Products, Inc., Radio Design Labs, Inc., and Motorola Inc. during his career. Mr. Mason received his Master of Business Administration in International Business in 2015 and his Bachelor of Business Administration/Management in 2013 from North Central University. Mr. Mason is also Total Productive Maintenance (TPM) Instructor Certified by the Japan Institute of Plant Maintenance, Tokyo, Japan. Michael Johnson, Director. Mr. Johnson has been our director since July 12, 2012. Mr. Johnson has been a director of Flux Power since it was incorporated. Since 2002, Mr. Johnson has been a director and the chief executive officer of Esenjay Petroleum Corporation (Esenjay Petroleum), a Delaware company located in Corpus Christi, Texas, which is engaged in the business oil exploration and production. Mr. Johnson’s primary responsibility at Esenjay Petroleum is to manage the business and company as chief executive officer. Mr. Johnson is a director and beneficial owner of Esenjay Investments LLC, a Delaware limited liability company engaged in the business of investing in companies, and an affiliate of the Company beneficially owning approximately 26% of our outstanding shares, including common stock underlying options, and warrants that were exercisable or convertible or which would become exercisable or convertible within sixty (60) days. Mr. Johnson received a Bachelor of Science degree in mechanical engineering from the University of Southwestern Louisiana. As a result of Mr. Johnson’s leadership and business experience, he is an industry expert in the natural gas exploration industry and brings a wealth of management and successful company building experience to the board. Based on the foregoing, the Company believes Mr. Johnson is qualified to be on the Board. Lisa Walters-Hoffert, Director. Ms. Walters-Hoffert was appointed to our Board on June 28, 2019. Ms. Walters-Hoffert was a co-founder of Daré Bioscience, Inc. and following the company’s merger with Cerulean Pharma, Inc. in July of 2017, became Chief Financial Officer of the surviving public company (Nasdaq: DARE) and served in this role until January of 2024. For over twenty-five (25) years, Ms. Walters-Hoffert was an investment banker focused on small-cap public companies in the technology and life science sectors. From 2003 to 2015, Ms. Walters-Hoffert worked at Roth Capital Partners as Managing Director in the Investment Banking Division. Ms. Walters-Hoffert has held various positions in the corporate finance and investment banking divisions of Citicorp Securities in San José, Costa Rica and Oppenheimer & Co, Inc. in New York City, New York. Ms. Walters-Hoffert has served as a member of the Board of Directors of the San Diego Venture Group, as Past Chair of the UCSD Librarian’s Advisory Board, and as Past Chair of the Board of Directors of Planned Parenthood of the Pacific Southwest. Ms. Walters-Hoffert currently serves as a member of the Board of Directors of The Elementary Institute of Science in San Diego. Ms. Walters-Hoffert graduated magna cum laude from Duke University with a B.S. in Management Sciences. As a senior financial executive with over twenty-five years of experience in investment banking and corporate finance and based on Ms. Walters-Hoffert’s expertise in audit, compliance, valuation, equity finance, mergers, and corporate strategy, the Company believes Ms. Walters-Hoffert is qualified to be on the Board. Dale T. Robinette, Director . Mr. Robinette was appointed to our Board on June 28, 2019 and our lead independent director on September 10, 2021. Mr. Robinette has been a CEO Coach and Master Chair since 2013 as an independent contractor to Vistage Worldwide, Inc., an executive coaching company. In addition, since 2013 Mr. Robinette has been providing business consulting related to top-line growth and bottom-line improvement through his company EPIQ Development. From 2013 to 2019, Mr. Robinette was the Founder and CEO of EPIQ Space, a marketing website for the satellite industry, a member-based community of suppliers promoting their offerings. Mr. Robinette was with Peregrine Semiconductor, Inc., a manufacturer of high-performance RF CMOS integrated circuits, from 2007 to 2013 in two roles as a Director of Worldwide Sales as well as the Director of the High Reliability Business Unit. Mr. Robinette started his career from 1991 to 2007 at Tyco Electronics Ltd. (known today as TE Connectivity Ltd.), a passive electronics manufacturer, in various sales, sales leadership and product development leadership roles. Mr. Robinette received a Bachelor of Science degree in Business Administration, Marketing from San Diego State University. Based on the above qualifications, the Company believes Mr. Robinette is qualified to be on the Board. 40 Table of Contents Mark F. Leposky, Director. Mr. Leposky was elected to our Board on April 18, 2024. Mr. Leposky has over 30 years of executive experience in operations, engineering, supply chain, product and commercial roles. Mr. Leposky is currently the Executive Vice President and Chief Supply Chain Officer at Topgolf Callaway Brands and has led the company’s supply chain, engineering, and operations organization among other responsibilities since 2012. From 2018 to 2022, he also served as the EVP of Global Operations, Accessories and Licensing, and previously served as Senior Vice Present of Global Operations, Accessories and Licensing from 2012 and 2018 for Topgolf Callaway Brands. Prior to joining Topgolf Callaway Brands, Mr. Leposky was the Co-Founder, President and Chief Executive Officer of Gathering Storm dba Tmax Gear from 2005 to 2011, Chief Supply Chain Officer at Fisher Scientific International from 2004 to 2005 and Chief Operations Officer at TaylorMade Adidas Golf from 2002 to 2004, and has held executive roles at The Coca-Cola Company and United Parcel Service. Mr. Leposky holds a Bachelor of Sciences degree in Industrial Technology from Southern Illinois University, and an MBA from the Keller Graduate School of Management. In addition, Mr. Leposky is also a 16-year infantry veteran of the US Army and Army National Guard, and an avid golfer. Based on the above qualifications, the Board believes the Mr. Leposky’s extensive executive experience within the consumer product and service industry qualifies Mr. Leposky to serve on the Board. Management Transition On November 20, 2024, Ronald Dutt, our chairman and Chief Executive Officer, notified the Company’s Board of Directors of his intention to retire from his positions upon the appointment of a new Chief Executive Officer. The Board has commenced a search for a new Chief Executive Officer and Mr. Dutt will remain with the Company through the search and transition period.  Involvement in Certain Legal Proceedings To the best of our knowledge, during the past ten years, none of our directors or executive officers were involved in any of the following: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. Board Leadership Structure and Role in Risk Oversight Our Board of Directors (“Board”) recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure to provide independent oversight of management. Our Board is currently led by a Chairman of the Board who also serves as our Chief Executive Officer. The Board understands that the right Board leadership structure may vary depending on the circumstances, and our independent directors periodically assess these roles and the Board leadership to ensure the leadership structure best serves the interests of the Company and stockholders. On November 20, 2024, Ronald F. Dutt, our chairman and Chief Executive Officer, notified the Company’s Board that he intends to retire from his positions upon the appointment of a successor. The Board has commenced a search for a new Chief Executive Officer and Mr. Dutt will remain with the Company through the search and transition period. Following Mr. Dutt’s retirement, the Nominating and Governance Committee of the Board has determined that the position of Chairman of the Board shall be held by a non-executive member of the Board On September 10, 2021, the Board adopted the Lead Independent Director Guidelines (“Guidelines.). The Guidelines provide that when the positions of Chief Executive Officer and Chairman of the Board are combined or the Chairman is not an independent director, the independent directors will appoint a lead independent director to serve with the authority and responsibility described in such Guidelines, and as the Board and/or the independent directors may determine from time to time. The Guidelines are available on our website at www.fluxpower.com. Mr. Dutt currently holds the Chairman and Chief Executive Officer roles. Mr. Robinette currently serves as the Lead Independent Director elected by the majority of the Board on September 10, 2021. The responsibilities of the Lead Independent Director include, among others: (i) serving as primary intermediary between non-employee directors and management; (ii) working with the Chairman of the Board to approve the agenda and meeting schedules for the Board; (iii) working with the Chairman of the Board as to the quality, quantity and timeliness of the information provided to directors; (iv) in consultation with the Nominating and Governance Committee, reviewing and reporting on the results of the Board and Committee performance self-evaluations; (v) calling additional meetings of independent directors; and (vi) serving as liaison for consultation and communication with stockholders. 41 Table of Contents We believe that the current leadership structure, with combined Chairman and Chief Executive Officer roles and a Lead Independent Director, has served the Company and its stockholders historically. However, the Nominating and Corporate Governance Committee of the Board has determined that following Mr. Dutt’s retirement as Chairman and Chief Executive Officer, the position of Chairman of the Board shall be held by a non-executive member of the Board. The Board believes that the new proposed leadership structure of a non-executive Chairman in conjunction with a Lead Independent Director will be in the Company’s and its stockholders best interest following the transition of management. Mr. Robinette, Lead Independent Director, possesses understanding and knowledge of the business and affairs of the Company and has the ability to devote a substantial amount of time to serve in this capacity. The Board believes the appointment of a strong Lead Independent Director and the use of regular executive sessions of the non-management directors, along with a majority the Board being composed of independent directors, allow it to maintain effective oversight of management. In addition, our Board as a whole has responsibility for risk oversight. Our Board exercises this risk oversight responsibility directly and through its committees. The risk oversight responsibility of our Board and its committees is informed by reports from our management teams to provide visibility to our Board about the identification, assessment and management of key risks, and our management’s risk mitigation strategies. Our Board has primary responsibility for evaluating strategic and operational risk, including related to significant transactions. Our audit committee has primary responsibility for overseeing our major financial and accounting risk exposures, and, among other things, discusses guidelines and policies with respect to assessing and managing risk with management and our independent auditor. Our compensation committee has responsibility for evaluating risks arising from our compensation and people policies and practices. Our nominating and corporate governance committee has responsibility for evaluating risks relating to our corporate governance practices. Our committees and management provide reports to our Board on these matters. In its governance role, and particularly in exercising its duty of care and diligence, our Board is responsible for ensuring that appropriate risk management policies and procedures are in place to protect the Company’s assets and business. Our Board has broad and ultimate oversight responsibility for our risk management processes and programs and executive management is responsible for the day-to-day evaluation and management of risks to the Company. Board Composition, Committees and Independence Under the rules of Nasdaq, “independent” directors must make up a majority of a listed company’s Board of Directors. In addition, applicable Nasdaq rules require that, subject to specified exceptions, each member of a listed company’s audit and compensation committees be independent within the meaning of the applicable Nasdaq rules. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. 42 Table of Contents Our Board has undertaken a review of the independence of each director and considered whether any director has a material relationship with us that could compromise the director’s ability to exercise independent judgment in carrying out his or her responsibilities. As a result of this review, our Board determined that Ms. Walters-Hoffert, and Messrs. Robinette and Leposky are independent directors as defined in the listing standards of Nasdaq and SEC rules and regulations. A majority of our directors are independent, as required under applicable Nasdaq rules. As required under applicable Nasdaq rules, our independent directors will meet in regularly scheduled executive sessions at which only independent directors are present. Board Committees Our Board has established an Audit Committee, a Compensation Committee, and a Nominating and Governance Committee. The composition and responsibilities of each of the committees is described below. Audit Committee The Audit Committee of the Board of Directors currently consists of three independent directors of which at least one, the Chairperson of the Audit Committee, qualifies as a qualified financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Ms. Walters-Hoffert is the Chairperson of the Audit Committee and financial expert. Messrs. Robinette and Leposky are the other directors who are members of the Audit Committee. The Audit Committee’s duties are to recommend to our Board of Directors the engagement of the independent registered public accounting firm to audit our consolidated financial statements and to review our accounting and auditing principles. The Audit Committee reviews the scope, timing and fees for the annual audit and the results of audit examinations performed by any internal auditors and independent public accountants, including their recommendations to improve the system of accounting and internal controls. The Audit Committee will at all times be composed exclusively of directors who are, in the opinion of our Board of Directors, free from any relationship that would interfere with the exercise of independent judgment as a committee member and who possess an understanding of consolidated financial statements and generally accepted accounting principles. Our Audit Committee operates under a written charter, which is available on our website at www.fluxpower.com . Compensation Committee The Compensation Committee currently consists of three independent directors. The Compensation Committee establishes our executive compensation policy, determines the salary and bonuses of our executive officers and recommends to the Board stock option grants or other incentive equity awards for our executive officers. Mr. Robinette is the Chairperson of the Compensation Committee, and Ms. Walters-Hoffert and Mr. Leposky are members of the Compensation Committee. Each of the members of our Compensation Committee are independent under Nasdaq’s independence standards for compensation committee members. Our chief executive officer often makes recommendations to the Compensation Committee and the Board concerning compensation of other executive officers. The Compensation Committee seeks input on certain compensation policies from the chief executive officer. Our Compensation Committee operates under a written charter, which is available on our website at www.fluxpower.com . Nominating and Governance Committee The Nominating and Governance Committee currently consists of three independent directors. The Nominating and Governance Committee is responsible for matters relating to the corporate governance of our Company and the nomination of members of the Board and committees of the Board. Mr. Leposky is the Chairperson of the Nominating and Governance Committee. Ms. Walters-Hoffert and Mr. Robinette are members of the Nominating and Governance Committee. Each of the members of our Nominating and Governance Committee is independent under Nasdaq’s independence standards. The Nominating and Governance Committee operates under a written charter, which is available on our website at www.fluxpower.com . We seek directors with established strong professional reputations and experience in areas relevant to the strategy and operations of our business. We seek directors who possess the qualities of integrity and candor, who have strong analytical skills and who are willing to engage management and each other in a constructive and collaborative fashion. We also seek directors who have the ability and commitment to devote significant time and energy to serve on the Board and its committees. We believe that all of our directors meet the foregoing qualifications. We do not have a formal policy with respect to diversity. 43 Table of Contents Code of Business Conduct and Ethics Our Board has adopted a Code of Business Conduct and Ethics (the “Code”) that applies to all of our directors, officers, and employees. Any waivers of any provision of this Code for our directors or officers may be granted only by the Board or a committee appointed by the Board. Any waivers of any provisions of this Code for an employee or a representative may be granted only by our chief executive officer or principal accounting officer. We have filed a copy of the Code with the SEC and have made it available on our website at https://www.fluxpower.com/corporate-governance. In addition, we will provide any person, without charge, a copy of this Code. Requests for a copy of the Code may be made by writing to the Company at is c/o Flux Power Holdings, Inc., 2685 S. Melrose Drive, Vista, California 92081. Indemnification Agreements We executed a standard form of indemnification agreement (“Indemnification Agreement”) with each of our Board members and executive officers (each, an “Indemnitee”). Pursuant to and subject to the terms, conditions and limitations set forth in the Indemnification Agreement, we agreed to indemnify each Indemnitee, against any and all expenses incurred in connection with the Indemnitee’s service as our officer, director and or agent, or is or was serving at our request as a director, officer, employee, agent or advisor of another corporation, partnership, joint venture, trust, limited liability company, or other entity or enterprise but only if the Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to our best interest, and in the case of a criminal proceeding, had no reasonable cause to believe that his conduct was unlawful. In addition, the indemnification provided in the indemnification agreement is applicable whether or not negligence or gross negligence of the Indemnitee is alleged or proven. Additionally, the Indemnification Agreement establishes processes and procedures for indemnification claims, advancement of expenses and costs and contribution obligations. Insider Trading Policy and Rule 10b5-1 Trading Programs We have adopted an Insider Trading Policy which prohibits directors, officers and all other employees, or consultants or contractors, as well as family members of such persons (or any other person subject to the policy) from engaging in any transaction involving a purchase or sale of the our securities, including any offer to purchase or offer to sell, based on material nonpublic information regarding the Company (“Material Nonpublic Information”). Under our Insider Trading Policy and pursuant to SEC Rule 10b5-1, directors, officers and employees may establish written programs which permit (i) automatic trading of the Company’s stock through a third-party broker or (ii) trading of the Company’s stock by an independent person (such as an investment bank) who is not aware of Material Nonpublic Information at the time of a trade. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director, executive officer, or other employee when entering into the plan, without further direction from such insider. Delinquent Section 16(a) Reports Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities, to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and Annual Reports concerning their ownership, of Common Stock and other of our equity securities on Forms 3, 4, and 5, respectively. Executive officers, directors and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based solely on our review of Forms 3, 4 and 5 and amendments thereto filed electronically with the SEC during the most recent fiscal year, we believe that all reports required by Section 16(a) for transactions in the fiscal year ended June 30, 2024 were timely filed. 44 Table of Contents ITEM 11 - EXECUTIVE COMPENSATION Compensation for our Named Executive Officers The following table sets forth information concerning all forms of compensation earned by our named executive officers during Fiscal 2024 and Fiscal 2023 for services provided to the Company and its subsidiary. Name and Principal Position Fiscal Year Salary ($) Bonus ($) Stock Awards (1) ($) Option Awards (2) ($) Non-Equity Incentive Plan Compensation ($) All Other Compensation ($) Total ($) Ronald F. Dutt, 2024 $ 375,000 $ — $ — $ 484,155 $ — $ — $ 859,155 Chief Executive Officer, President, and Chairman 2023 $ 290,962 $ 146,273 $ — $ 230,542 $ — $ — $ 667,777 Charles A. Scheiwe 2024 $ 205,200 $ — $ — $ 89,348 $ — $ — $ 294,548 former Chief Financial Officer and Corporate Secretary (4) 2023 $ 205,989 $ 53,613 $ — $ 120,419 $ — $ — $ 380,021 Jeffrey C. Mason (3) 2024 $ 275,000 $ — $ — $ 119,152 $ — $ — $ 394,152 Vice President of Operations 2023 $ 204,346 $ 40,176 $ $ 100,602 $ — $ — $ 345,124 Kevin S. Royal 2024 $ 330,000 $ — $ — $ 200,970 $ — $ — $ 530,970 Chief Financial Officer and Corporate Secretary (5) (1) Represents the fair value of the RSUs granted on grant date. (2) The grant date fair value was determined in accordance with the provisions of FASB ASC Topic No. 718 using the Black-Scholes valuation model with assumptions described in more detail in the notes to our audited financial statements included in this report. (3) On November 7, 2022, Mr. Mason’s position was expanded to include additional Company authority and delegation. (4) On March 1, 2024, Mr. Scheiwe stepped down as the Company’s Chief Financial Officer and Corporate Secretary. (5) Mr. Royal was appointed as the Company’s Chief Financial Officer and Corporate Secretary effective March 4, 2024. 45 Table of Contents Benefit Plans We do not have any profit-sharing plan or similar plans for the benefit of our officers, directors or employees. However, we may establish such plan in the future. Equity Compensation Plan Information In connection with the reverse acquisition of Flux Power, Inc. in 2012, we assumed the 2010 Plan. As of June 30, 2023, the number of options outstanding to purchase common stock under the 2010 Plan was 21,944. No additional options to purchase common stock may be granted under the 2010 Plan. On February 17, 2015, our shareholders approved our 2014 Equity Incentive Plan (“2014 Plan”), which was amended on July 23, 2018 and on November 5, 2020. The 2014 Plan authorizes the issuance of awards for up to 1,000,000 shares of our common stock in the form of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock units, restricted stock awards and unrestricted stock awards to officers, directors and employees of, and consultants and advisors to, the Company or its affiliates. We granted 100,192 and 175,265 stock options under the 2014 Plan during Fiscal 2024 and Fiscal 2023, respectively. We granted 51,171 and 72,566 restricted stock units under the 2014 Plan during Fiscal 2024 and Fiscal 2023, respectively. On April 29, 2021, at the Company’s annual stockholders meeting, the 2021 Equity Incentive Plan (the “2021 Plan”) was approved by our stockholders. The 2021 Plan authorizes the issuance of awards for up to 2,000,000 shares of our common stock in the form of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock units, restricted stock awards and unrestricted stock awards to officers, directors and employees of, and consultants and advisors to, the Company or its affiliates. We granted 934,012 and 449,176 stock options under the 2021 Plan during Fiscal 2024 and Fiscal 2023, respectively. We granted 17,057 restricted stock units under the 2014 Plan during Fiscal 2024. We did not grant any restricted stock units under the 2021 Plan during Fiscal 2023. As of June 30, 2024, we had 426,363 options outstanding and exercisable and 114,666 RSUs outstanding under the 2021 Plan, the 2014 Plan and the 2010 Plan. The following table sets forth certain information concerning unexercised options, stock that has not vested, and equity compensation plan awards outstanding as of June 30, 2024 for the named executive officers below: Option Awards (1) Stock Awards Name Award Grant Date Award Expiration Date Number of Securities Underlying Unexercised Options Exercisable Number of Securities Underlying Unexercised Options Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options Option Exercise Price ($) Number of Shares or Units of Stock That Have Not Vested Grant Date Market Value of Shares or Units of Stock That Have Not Vested ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested Equity Incentive Plan: Grant Date Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) Ronald F.Dutt 10-20-23 10-20-33 – 223,216 – $ 3.36 – $ – – $ – 10-31-22 10-31-32 20,043 60,132 – 3.43 – – – – 3-15-19 3-14-29 50,000 – – 13.60 – – – – 7-25-18 7-24-28 33,527 – – 19.80 – – – – 6-29-18 6-28-28 50,001 – – 14.40 – – – – 10-26-17 10-25-27 50,000 – – 4.60 – – – – 12-22-15 12-21-25 19,000 – – 5.00 – – – – 10-29-21 10-29-31 – – – – 4,021 23,121 4,021 23,121 11-12-20 11-30-30 – – – – 13,214 117,340 13,214 117,340 Jeffrey C. Mason (2) 10-20-23 10-20-33 – 54,934 – 3.36 – – – – 10-31-22 10-31-32 8,746 26,240 – 3.43 – – – – 10-29-21 10-29-31 – – – – 1,280 7,360 1,280 7,360 Kevin S. Royal (3) 3-4-24 3-4-34 – 55,000 – 5.00 – – – – (1) The fair value of each option grant is estimated at the date of grant using the Black-Scholes option pricing model. Expected volatility is calculated based on the historical volatility of the Company’s stock or, when the expected term exceeds how long the Company’s stock has been publicly traded, based on historical volatility of a comparable peer group of publicly traded companies. The risk-free interest rate is based on the U.S. Treasury yield for a term equal to the expected life of the options at the time of grant. The fair value of each restricted stock unit is the fair value of the Company’s common stock on the grant date. (2) On November 7, 2022, Mr. Mason’s position was expanded to include additional Company authority and delegation. (3) Mr. Royal was appointed as the Company’s Chief Financial Officer and Corporate Secretary effective March 4, 2024. 46 Table of Contents Aggregated Option/Stock Appreciation Right (“SAR”) exercised and Fiscal year-end Option/SAR value table Neither our executive officers nor the other individuals listed in the tables above, exercised options or SARs during Fiscal 2024. 2023 Employee Stock Purchase Plan (the “2023 ESPP”) The 2023 ESPP was approved by the Board on March 6, 2023 and approved by the Company’s stockholders on April 20, 2023. The 2023 ESPP enables eligible employees of the Company and certain of its subsidiaries (a “Participating Subsidiary”) to use payroll deductions to purchase shares of the Company’s Common Stock and acquire an ownership interest in the Company. The maximum aggregate number of shares of the Company’s Common Stock that have been reserved as authorized for the grant of options under the 2023 ESPP is 350,000 shares, subject to adjustment as provided for in the 2023 ESPP. Participation in the 2023 ESPP is voluntary and is limited to eligible employees (as such term is defined in the 2023 ESPP) of the Company or a Participating Subsidiary who (i) has been employed by the Company or a Participating Subsidiary for at least 90 days and (ii) is customarily employed for at least twenty (20) hours per week and more than five (5) months in any calendar year. Each eligible employee may authorize payroll deductions of 1-15% of the eligible employee’s compensation on each pay day to be used to purchase up to 1,500 shares of Common Stock for the employee’s account occurring during an offering period. The 2023 ESPP has a term of ten (10) years commencing on April 20, 2023, the date of approval by the Company’s stockholders, unless otherwise earlier terminated. There were 37,543 and zero shares of stock purchased under the ESPP during Fiscal 2024 and Fiscal 2023, respectfully. Employment Agreements with Executive Officers On February 12, 2021, we entered into an Amended and Restated Employment Agreement with the Company’s president and chief executive officer, Ronald F. Dutt (the “Dutt Employment Agreement”), which amends and restates the Employment Agreement effective December 11, 2012, as amended (the “Prior Agreement”). In addition to the inclusion of terms relating to change in control, termination, severance, benefits and the acceleration of vesting of options and restricted stock units upon certain events, the Dutt Employment Agreement memorialized Mr. Dutt’s continued services as the president and chief executive officer of the Company and its wholly-owned subsidiary, Flux Power, Inc. (“Flux Power”), and the terms pursuant to which he would provide such services. Pursuant to the terms of the Dutt Employment Agreement, Mr. Dutt’s current annual base salary is $375,000. On November 20, 2024, Mr. Dutt notified the Company’s Board of Directors that he intends to retire from his position upon the appointment of a successor. The Board has commenced a search for a new chief executive officer and Mr. Dutt will remain with Flux Power through the search and transition period.  On February 12, 2021, we entered into an Employment Agreement with the Company’s chief financial officer, treasurer and secretary, Charles A. Scheiwe (the “Scheiwe Employment Agreement”). In addition to the inclusion of terms relating to change in control, termination, severance, benefits and the acceleration of vesting of options and restricted stock units upon certain events, the Employment Agreement memorialized Mr. Scheiwe’s continued services as the chief financial officer and secretary of the Company, and as chief financial officer/treasurer and secretary of Flux Power. Pursuant to the terms of the Scheiwe Employment Agreement, Mr. Scheiwe’s annual base salary was $205,200. On February 16, 2024, the Company and Mr. Charles Scheiwe agreed to the stepping down of Mr. Scheiwe as the Company’s Chief Financial Officer and Secretary, including all positions with the Company and Flux Power, Inc., a wholly-owned subsidiary of the Company (“Flux”) and transitioning to a consultant for the Company (“the “Transition”), effective March 1, 2024 (the “Separation Date”).Through the Separation Date, Mr. Scheiwe will be entitled to continue to receive his current salary. In addition, in connection with the Transition, the Board approved the accelerated vesting of unvested portions of outstanding awards previously granted to Mr. Scheiwe under the Company’s 2014 Equity Incentive Plan and 2021 Equity Incentive Plan (the “2021 Plan”). 47 Table of Contents On February 22, 2024, we entered into an Employment Agreement with Mr. Kevin S. Royal, in connection with Mr. Royal’s appointment as Chief Financial Officer and Corporate Secretary, which provides for an annual base salary of $330,000, effective March 4, 2024 (the “Employment Agreement”). The Employment Agreement includes terms relating to change in control, termination, severance, benefits and the acceleration of vesting of options and restricted stock units upon certain events. In addition, Mr. Royal will be eligible for a 60% cash bonus, as a percentage of base salary, and incentive stock options to purchase up to 55,000 shares of the Company’s common stock (the “Options”) under the 2021 Plan. The Options will be subject to the terms and conditions provided in the form of Incentive Stock Option Agreement under the 2021 Plan, will have an exercise price based on the Company’s 10-day volume weighted average price on the grant date, and will expire ten (10) years from the grant date and vest in four (4) equal annual instalments commencing one year after the grant date. Under their respective employment agreement, Messrs. Dutt and Royal, among other things, are (i) eligible for annual target cash bonus and awards of restricted stock units or other equity-based incentive compensation consistent with his position as determined by the Board of Directors (the “Board”) and the Compensation Committee; (ii) entitled to reimbursement for all reasonable business expenses incurred in performing services; and (iii) entitled to certain severance and change of control benefits contingent upon such employee’s agreement to a general release of claims in favor of the Company following termination of employment. Messrs. Dutt and Royal and are also eligible to participate in all customary employee benefit plans or programs generally made available to the senior executive officers. Messrs. Dutt and Royal have each agreed to observe the terms of a standard confidentiality and non-compete agreement for a restricted period of two (2) years. Each of Messrs. Dutt and Royal employment is “at-will” and may be terminated at any time for any reason. Separation Agreements On August 12, 2022, Jonathan Berry, the Company’s Chief Operating Officer, separated from the Company and entered into an Employee Separation and Release dated August 24, 2022 (“Separation Agreement”). Under the Separation Agreement, the Company agreed to provide Mr. Berry with certain payments and benefits comprising of: (i) a separation payment of two hundred five thousand two hundred dollars, less required withholdings, (ii) twenty-eight thousand nine hundred seven and 52/100 dollars, less require holdings, to defray costs for COBRA coverage, and (iii) reimbursement for an amount equal to twelve months for life insurance continuation (collectively, the “Separation Benefits”). In exchange for the Separation Benefits, among other things as set forth in the Separation Agreement, Mr. Berry agreed to a release of claims and waivers in favor of the Company and to certain restrictive covenant obligations, and also reaffirmed his commitment to comply with his existing restrictive covenant obligations. On March 1, 2024 and in connection with the Transition, the Company and Mr. Scheiwe entered into a Separation and Release Agreement (the “Scheiwe Separation Agreement”). Under the Scheiwe Separation Agreement, Mr. Scheiwe will be entitled to: (i) cash severance of $205,200, which is an amount equal to 12 months of Mr. Scheiwe’s base salary in effect as of the Separation Date, (ii) a one-time payment of $22,840.68, less required withholdings, to cover the COBRA premiums for COBRA continuation coverage for a period of twelve (12) months following the Separation Date, and (iii) provided that Mr. Scheiwe timely elects and enrolls in the life insurance continuation coverage, reimbursement for an amount equal to twelve (12) months of such life insurance continuation coverage. The Separation Agreement additionally includes a customary general release of claims by Mr. Scheiwe in favor of the Company and certain related parties. 48 Table of Contents Annual Bonus Plan On November 5, 2020, the Board approved an annual cash bonus plan (the “Annual Bonus Plan”) which allows the Compensation Committee and/or the Board of the Company to set the amount of bonus each fiscal year and the performance criteria. Executive officers and all employees (other than part-time employees and temporary employees) are eligible to participate in the Annual Bonus Plan (“Participants”) as long as the Participant remains an active regular employee of the Company. The Annual Bonus Plan was effective for Fiscal 2021 and is effective each fiscal year thereafter (the “Plan Year”). For each Plan Year, the Compensation Committee establishes an aggregate amount of allocable Bonus under the Annual Bonus Plan and determines the performance goals applicable to a bonus during a Plan Year (the “Participation Criteria”). The Participation Criteria may differ from Participant to Participant and from bonus to bonus. The Participation Criteria for each Plan Year is based on the Company achieving certain performance targets based on annual revenue, gross margin, operating expense and new business development. All of the Company’s executive officers are eligible to participate in the Annual Bonus Plan. On October 20, 2023, the Board approved an amended and restated annual cash bonus plan (the “Amended Annual Bonus Plan”) which allows the Compensation Committee and/or the Board of the Company to set the amount of bonus each fiscal year and the performance criteria. Executive officers and all employees (other than part-time employees and temporary employees) are eligible to participate in the Amended Annual Bonus Plan (“Participants”) as long as the Participant remains an active regular employee of the Company. The Amended Annual Bonus Plan is effective for fiscal year 2024 and each fiscal year thereafter (the “Plan Year”). For each Plan Year, the Compensation Committee will establish an aggregate amount of allocable Bonus under the Amended Annual Bonus Plan and determine the performance goals applicable to a bonus during a Plan Year (the “Participation Criteria”). The Participation Criteria may differ from Participant to Participant and from bonus to bonus. All of the Company’s executive officers are eligible to participate in the Amended Annual Bonus Plan. The Amended Annual Bonus Plan was approved by the Board in anticipation of the Company adopting its “clawback” policy applicable to its executive officers as required under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). Clawback Policy To comply with Section 10D of the Securities Exchange Act of 1934, as amended, Rule 10D-1 promulgated under the Securities Exchange Act of 1934, as amended, and Nasdaq Listing Rule 5608 applicable to incentive-based compensation for executive officers of listed companies, in November 2023, the Board adopted a Policy for the Recovery of Erroneously Awarded Compensation (the “Clawback Policy”) with an effective date of October 2, 2023. Current executive officers of the Company have agreed in writing to the terms and conditions of the Clawback Policy. Under the Clawback Policy, if the Company is required to restate its financial results due to material noncompliance with financial reporting requirements under the federal securities laws, the Company will recoup any erroneously awarded incentive-based compensation from the Company’s current and former executive officers. Administration of the Clawback Policy will be by the Compensation Committee of the Company. Restatement of Prior Financial Statements In connection with the restatements of the Prior Financial Statements undertaken by the Company, the Compensation Committee, as the administrator, completed a recovery analysis under the Company’s Clawback Policy. The Compensation Committee concluded that although bonus amounts were paid to executive officers for fiscal periods ended before the effective date of the Clawback Policy, October 2, 2023, the bonuses will be deemed to be “Received” (as defined in the Clawback Policy) during those fiscal periods before the Clawback Policy became effective. As a result, such amounts would not fall under the definition of “Clawback Eligible Incentive Compensation” (as defined in the Clawback Policy”) and would therefore not be subject to further recovery analysis or actions for recovery. The analysis and conclusion does not include any analysis or recoverable amounts under 304 of the Sarbanes-Oxley Act pursuant to action by SEC. Fiscal 2023 On October 31, 2022, the Compensation Committee also approved the bonus pool and performance criteria for the Annual Bonus Plan for the fiscal year 2023 (the “2023 Bonus”). For the Company’s fiscal year 2023, the performance goals applicable to a bonus are based on the Company achieving certain targets based on the Company’s annual revenue, Adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, and stock-based compensation), functional goals (the “Financial Targets”), in addition to individual performance objectives and additional bonus amounts if the Company’s financial results exceeds certain thresholds of the Financial Targets. The Compensation Committee approved the target cash bonuses under the 2023 Bonus based on the base salary for fiscal year 2023 for the following executive officers: Name Position Fiscal 2023 Base Salary Bonus Percentage of Base Salary Total Target Payout Maximum Payout (1) Ronald F. Dutt Chief Executive Officer $ 300,000 (2) 75 % $ 225,000 $ 270,000 Charles Scheiwe Chief Financial Officer $ 205,200 35 % $ 71,820 $ 86,184 Jeffery C. Mason Vice President of Operations $ 206,000 30 % $ 61,800 $ 74,160 (1) Subject to a bonus cap for achieving above set revenue target and a payout cap for achieving 10% positive Adjusted EBITDA. (2) To be effective during the second fiscal quarter of 2023. 49 Table of Contents Fiscal 2024 Salary Increases On October 20, 2023, pursuant to the recommendation of the Compensation Committee of the Board (the “Compensation Committee”), the Board approved the following salary increases (the “Fiscal 2024 Annual Salary”) to the following executive officers, effective for the fiscal year 2024 (“Fiscal 2024”): Name Position Salary for Fiscal 2023 Salary for Fiscal 2024 Ronald F. Dutt Chief Executive Officer $ 300,000 $ 375,000 Charles Scheiwe* Chief Financial Officer $ 205,200 $ 205,200 Jeffrey Mason Vice President of Operations $ 206,000 $ 230,720 * Plus an additional supplemental payment of $4,000 per month On March 1, 2024, pursuant to the recommendation of the Compensation Committee, the Board approved an adjustment to the base salary for the following named executive officer: Jeff Mason, Vice President of Operations. The adjustment reflects a change in base salary to $275,000, effective March 1, 2024. Fiscal 2024 Bonuses Under the Amended Bonus Plan On October 20, 2023, pursuant to the recommendation of the Compensation Committee, the Board also approved the bonus pool and performance criteria for the Amended Annual Bonus Plan for Fiscal 2024 (the “2024 Bonus”). For Fiscal 2024, the performance goals applicable to a bonus are based on the Company achieving certain targets based on the Company’s full year revenue, Adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, and stock-based compensation) for Fiscal 2024, and functional goals (the “Financial Targets”), in addition to individual performance objectives and goals (the “2024 Performance Matrix”). The Board approved the following cash bonuses under the 2024 Bonus for the following executive officers: Name Position Maximum Payout (1) Special Bonus Maximum Payout (2) Ronald F. Dutt Chief Executive Officer $ 256,281 $ 400,000 Charles Scheiwe Chief Financial Officer $ 91,571 $ - Jeffrey Mason Vice President of Operations $ 94,607 $ 400,000 (1) Full maximum payout assuming targets reached as set forth in the 2024 Performance Matrix. (2) Full maximum payout for achieving certain additional gross margin targets Restricted Stock Unit Grants We did not grant any Restricted Stock Units to any of our executive officers in Fiscal 2024 and Fiscal 2023. Stock Option Grants Fiscal 2024 Grants On October 20, 2023 (the “Fiscal 2024 Grant Date”), pursuant to the recommendation of the Compensation Committee, the Board approved the grant of stock options (the “Fiscal 2024 Options”) under the Company’s 2014 Equity Incentive Plan (the “2014 Plan”) and the Company’s 2021 Equity Incentive Plan (the “2021 Plan” and together with 2014 Plan, the “Plan”) to certain employees of the Company or its subsidiary, Flux Power, Inc. The Fiscal 2024 Options are subject to the terms and conditions provided in the form of the related Incentive Stock Option Agreement under the 2014 Plan (the “2014 Option Agreement”) or the form of Incentive Stock Option Agreement under the 2021 Plan (the “2021 Option Agreement”). Additionally, as previously discussed, Mr. Royal was granted options as part of his chief financial officer employment agreement. 50 Table of Contents The following executive officers of the Company were granted Options in such number, with such vesting schedule, and under the respective Plan, set forth as follows: Name Position Options (1) Vesting Schedule Ronald F. Dutt Chief Executive Officer 223,216 Annually over 3 years from the date of grant Charles Scheiwe Chief Financial Officer 42,750 Annually over 3 years from the date of grant Jeffrey Mason Vice President of Operations 54,934 Annually over 3 years from the date of grant Kevin S. Royal Chief Financial Officer 55,000 Annually over 3 years from the date of grant (1) Subject to $100,000 ISO limitation under the 2021 Plan. Excess, if any, issued as non-qualified stock options. Fiscal 2023 Grants On October 31, 2022 (the “Fiscal 2023 Grant Date”), the Compensation Committee approved the grant of incentive stock options (the “Fiscal 2023 Options”) under the Company’s 2014 Plan and the Company’s 2021 Plan to certain employees of the Company or its subsidiary, Flux Power, Inc. The Options are subject to the terms and conditions provided in the form of the 2014 Option Agreement or the “2021 Option Agreement. The following named executive officers of the Company were granted Stock Options under the 2021 Plan in such number and vesting schedule set forth as follows: Name Position Options (1) Vesting Schedule Ronald F. Dutt Chief Executive Officer 80,175 Annually over 4 years from the date of grant Charles Scheiwe Chief Financial Officer 41,878 Annually over 4 years from the date of grant Jeffrey C. Mason Vice President of Operations 34,986 Annually over 4 years from the date of grant (1) Subject to $100,000 ISO limitation under the 2021 Plan. Excess, if any, issued as non-qualified stock options. Incentive Plans Management, the Committee and the Board will continue to explore and evaluate different long-term and short-term incentives to help attract, retain and motivate our employees to align their interest to our business and financial success through the use of equity award and cash bonuses. Compensation of Non-Executive Directors On January 14, 2022, pursuant to the recommendation and advice of the Compensation Committee of the Board of the Company, the Board approved the following annual compensation package for non-executive directors of the Company for calendar year 2022, as follows: Name Independent Non-Executive Director Position Base Retainer (cash) Chair Fee (cash) Lead Independent Director (cash) Lisa Walters-Hoffert X Audit Chair $ 50,000 $ 7,500 $ - Dale Robinette X Compensation Chair 50,000 5,000 20,000 John A. Cosentino Jr . (1) X Governance Chair 50,000 5,000 (1) - Cheemin Bo-Linn (2) X Board Member 50,000 - - Michael Johnson Board Member 50,000 - - (1) Mr. Cosentino resigned as our director on March 1, 2022. As appreciation for Mr. Cosentino’s board services, the Board approved to (i) accelerate the vesting of the following securities the Board granted in connection with his board services: 435 unvested options and 4,578 restricted stock awards, and (iii) pay his board fees for 3rd quarter of Fiscal 2022. (2) Dr. Bo-Linn was appointed as Chairperson of the Governance Committee on March 3, 2022. For Dr. Bo-Linn’s services as Chairperson, she is entitled to a Chair Fee of $5,000 for calendar year 2022. 51 Table of Contents There was no change to the cash compensation package for non-executive directors of the Company during Fiscal 2023. On March 8, 2023, pursuant to the recommendation and advice of the Compensation Committee of the Board of the Company, the Board approved the following annual compensation package for non-executive directors of the Company for fiscal year ending June 30, 2024, as follows: Name Independent Non-Executive Director Position Base Retainer (cash) Chair Fee (cash) Committee Member Fee (1) (cash) Lead Independent Director ( cash) Lisa Walters-Hoffert X Audit Chair $ 50,000 $ 7,500 $ 5,000 $ - Dale Robinette X Compensation Chair 50,000 5,000 6,250 20,000 Cheemin Bo-Linn (2) X Board Member 50,000 5,000 6,250 - Michael Johnson Board Member 50,000 - - - Mark Leposky (3) X Board Member 50,000 5,000 6,250 - (1) Committee Member Fees: $3,750 for non-chair committee members of the Audit Committee, and $2,500 for non-chair committee members of the Compensation Committee and the Nominating and Governance Committee. (2) Dr. Bo-Linn stepped down as our director on April 18, 2024. As appreciation for Dr. Bo-Linn’s services as a director to the Company, the Board approved to accelerate the vesting of 18,561 unvested restricted stock units, effective as of April 18, 2024. (3) Mr. Leposky was elected as our director on April 18, 2024 and appointed as Chairperson of the Governance Committee on April 18, 2024. For Mr. Leposky’s services, he is entitled to a prorated Chair Fee and Committee Member Fee for the fiscal year ended June 30, 2024. On April 18, 2024, pursuant to the recommendation and advice of the Compensation Committee of the Board of the Company, the Board approved the following annual compensation package for non-executive directors of the Company for the fiscal year ending June 30, 2025, as follows: Name Independent Non-Executive Director Position Base Retainer (cash) Chair Fee (cash) Committee Member Fee (1) (cash) Lead Independent Director (cash) Lisa Walters-Hoffert X Audit Chair $ 50,000 $ 7,500 $ 5,000 $ - Dale Robinette X Compensation Chair 50,000 5,000 6,250 20,000 Mark F. Leposky X Nominating and Governance Chair 50,000 5,000 6,250 - Michael Johnson Board Member 50,000 - - - (1) Committee Member Fees: $3,750 for non-chair committee members of the Audit Committee, and $2,500 for non-chair committee members of the Compensation, Nominating and Governance Committees. 52 Table of Contents Equity Component of Non-Executive Director Compensation In addition, our directors are eligible to receive an annual equity grant of RSUs. Pursuant to grants approved by our Board at the recommendation of the Compensation Committee in April 2022 and 2023, our non-executive directors were granted RSUs under the 2014 Plan. The number of RSUs granted to each non-executive director was equal to the amount of $50,000 divided by the fair market value of the RSUs, with all RSUs subject to vesting restrictions. The fair market value of the RSUs was determined by applying a 10-day volume weighted average stock price prior to the grant issuance date. In April 2022, each of our non-executive directors were granted 17,793 RSUs which fully vested on April 28, 2023. In addition, in August 2022, as compensation for board services provided during the last quarter of Fiscal 2022, Dr. Bo-Linn was granted 5,034 RSUs, of which 1/3 vested immediately, each of the remaining 1/3 of the RSUs will vest on April 29, 2023, and April 29, 2024. Dr. Bo-Linn’s s grant was consistent with the standard equity component of Non-Executive Director Compensation Package as approved by the Board. In April 2023, each of our non-executive directors were granted 16,883 RSUs which are scheduled to fully vest on April 20, 2024. In April 2024, each of our non-executive directors were granted 17,057 RSUs under the 2014 Plan or the 2021 Plan, which are scheduled to fully vest on April 18, 2025. Director Compensation Table Below is a summary of compensation accrued or paid to our non-executive directors during Fiscal 2024 and Fiscal 2023. Mr. Dutt, our chief executive officer and president, received no compensation for his service as a director and is not included in the table. The compensation Mr. Dutt receives as an employee of the Company is included in the section titled “Executive Compensation.” Name Fiscal Year Fees Earned or Paid In Cash ($) Stock Awards (1) ($) All Other Compensation ($) Total ($) Lisa Walters-Hoffert 2024 $ 62,500 $ 80,000 $ - $ 142,500 2023 57,500 50,000 - 107,500 Dale Robinette 2024 81,250 80,000 - 161,250 2023 75,000 50,000 - 125,000 Michael Johnson 2024 50,000 50,000 - 100,000 2023 50,000 50,000 - 100,000 Cheemin Bo-Linn (2) 2024 48,958 - - 48,958 2023 55,000 50,000 - 105,000 Mark F. Leposky (3) 2024 15,312 80,000 95,312 2023 - - - - (1) Represent the fair value of the RSUs granted using the volume weighted average price of the ten days of trading prior to grant date. (2) Dr. Bo-Linn stepped down as our director on April 18, 2024. (3) Mr. Leposky was elected as our director on April 18 , 2024. 53 Table of Contents The following table shows the aggregate number of vested stock options held by our non-employee directors as of June 30, 2024 and June 30, 2023: Name Year Vested Stock Options Lisa Walters-Hoffert 2024 3,948 2023 3,948 Dale Robinette 2024 3,948 2023 3,948 Cheemin Bo-Linn (1) 2024 – 2023 – Michael Johnson 2024 9,948 2023 12,948 Mark F. Leposky (2) 2024 – 2023 – (1) Dr. Bo-Linn stepped down as our director on April 18, 2024. (2) Mr. Leposky was elected as our director on April 18, 2024. 54 Table of Contents ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS BENEFICIAL OWNERSHIP Security Ownership of Principal Stockholders and Management As used in this section, the term beneficial ownership with respect to a security is defined by Rule 13d-3 under the Exchange Act, as consisting of sole or shared voting power (including the power to vote or direct the vote) and/or sole or shared investment power (including the power to dispose of or direct the disposition of) with respect to the security through any contract, arrangement, understanding, relationship or otherwise, subject to community property laws where applicable. As of January 3, 2025, we had a total of 16,842,465 shares of common stock issued and outstanding. The following table sets forth, as of January 3, 2025, information concerning the beneficial ownership of shares of our common stock held by our directors, our named executive officers, our directors and executive officers as a group, and each person known by us to be a beneficial owner of more than five percent (5%) of our outstanding common stock. Unless otherwise indicated, the business address of each of our directors, executive officers and beneficial owners of more than five percent (5%) of our outstanding common stock is c/o Flux Power Holdings, Inc., 2685 S. Melrose Drive, Vista, California 92081. Each person has sole voting and investment power with respect to the shares of our common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated. Name and Address of Beneficial Owner (1) Shares Beneficially Owned % of Ownership Officers and Directors Michael Johnson, Director 4,197,882 (2) 25.1 % Ronald F. Dutt, Chief Executive Officer, President, and Director 376,177 (3) 2.2 Kevin S. Royal, Chief Financial Officer and Secretary – (4) * Jeffrey C. Mason, Vice President of Operations 40,634 (5) * Mark F. Leposky, Director – (6) * Lisa Walters-Hoffert, Director 30,998 (7) * Dale Robinette, Director 43,202 (8) * All Officers and Directors as a group (7 people) 4,688,893 27.5 5% Stockholders Esenjay Investments LLC 4,148,680 (2) 24.9 Cleveland Capital Management L.L.C. 1,174,032 (9) 7.0 1250 Linda Street, Suite 304 Rocky River, OH 44116 Formidable Asset Management, LLC 3,274,325 (10) 19.6 221 E Fourth Street, Suite 2700 Cincinnati OH 45202 * Represents less than 1% of shares outstanding. (1) All addresses above are 2685 S. Melrose Drive, Vista, California 92081, unless otherwise stated. (2) Includes (i) 39,254 shares of common stock held by Mr. Johnson and 4,148,680 shares of common stock held by Esenjay Investments LLC, of which Mr. Johnson is the sole director and beneficial owner, and (ii) 9,948 shares of common stock issuable to Mr. Johnson upon exercise of stock options. 55 Table of Contents (3) Includes 41,930 shares of common stock, 317,012 shares of common stock issuable upon exercise of stock options and 17,235 shares of common stock issuable upon vesting of restricted stock units within 60 days. (4) Mr. Royal was appointed as Chief Financial Officer and Secretary effective March 4, 2024. (5) Includes 3,552 shares of common stock, 35,802 shares of common stock issuable upon exercise of stock options and 1,280 shares of common stock issuable up vesting of restricted stock units within 60 days. (6) Mr. Leposky was elected as a director on April 18, 2024. (7) Includes 27,050 shares of common stock and 3,948 shares of common stock issuable upon exercise of stock options. (8) Includes 39,254 shares of common stock and 3,948 shares of common stock issuable upon exercise of stock options. (9) Based on Amendment No. 7 to Schedule 13G filed jointly by Cleveland, Rocky River Specific Opportunities Fund LLC, Wade Massad, John Shiry and Cleveland Capital Management, L.L.C. with the SEC on February 7, 2024, reporting information as of December 31, 2023. Reflects 1,174,032 shares of common stock held by certain private funds managed by Cleveland Capital Management, L.L.C., or by its principals, and hold shared voting and dispositive power with respect to such shares. Excludes (i) 18,700 shares of common stock individually held by Mr. Massad and (ii) 50,000 shares of common stock individually held by Mr. Shiry. (10) Based on Schedule 13D filed by Formidable Asset Management, LLC with the SEC on October 31, 2023. Reflects (i) 548,226 shares of common stock held by Formidable Asset Management, LLC, and (ii) 2,726,099 shares of common stock held by certain accounts managed by Formidable Asset Management, LLC, and hold shared voting and dispositive power with respect to such shares. ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The following includes a summary of certain relationships and transactions, including transactions since July 1, 2022 to January 3, 2025 and any currently proposed transactions, to which we were or are to be a participant, in which (1) the amount involved exceeded or will exceed the lesser of (i) $120,000 or (ii) one percent (1%) of the average of our total assets for the last two completed fiscal years, and (2) any of our directors, executive officers or holders of more than five percent (5%) of our capital stock, or any affiliate or member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest other than compensation and other arrangements that are described under the section titled “Executive Compensation.” Pursuant to the Audit Committee’s written charter, our Audit Committee has the responsibility to review, approve and oversee transactions between the Company and any related person (as defined in Item 404 of Regulation S-K) and any potential conflict of interest situations on an ongoing basis, in accordance with our policies and procedures, and to develop policies and procedures for the Audit Committee’s approval of related party transactions. Line of Credit Facility and Subordinated Unsecured Promissory Note On November 2, 2023, we entered into a Credit Facility Agreement (the “Credit Facility”) with Cleveland (the “Lender”). The Credit Facility provides the Company with a line of credit of up to $2,000,000 for working capital purposes (“LOC”). In connection with the LOC, the Company issued a subordinated unsecured promissory note for $2,000,000 (the “Commitment Amount”) in favor of the Lender (the “Note”). 56 Table of Contents Pursuant to the terms of the Credit Facility, the Lender agreed to make loans (each such loan, an “Advance”) up to such Lender’s Commitment Amount to the Company from time to time, until August 15, 2025 (the “Due Date”). The Note accrues interest at Secured Overnight Financing Rate plus nine percent (9%) per annum on each Advance from and after the date of disbursement of such Advance. All indebtedness, obligations and liabilities of the Company to the Lender is subject to the rights of Gibraltar Business Capital, LLC, a Delaware limited liability company (together with its successors and assigns, “GBC”), pursuant to a Subordination Agreement dated on or about November 2, 2023, by and between the Lender and GBC (the “Subordination Agreement”). Subject to the Subordination Agreement, the Company may, from time to time, prior to the Due Date, draw down, repay, and re-borrow on the Note, by giving notice to the Lenders of the amount to be requested to be drawn down. Subject to the Subordination Agreement, the Note is payable upon the earlier of (i) the Due Date or (ii) on occurrence of an event of Default (as defined in the Note). As consideration of the Lender’s commitment to provide the Advances, we agreed to issue the Lender warrants to purchase 41,196 shares of common stock (the “Warrants”) which are exercisable immediately from the date of issuance, expire on the five (5) year anniversary of the date of issuance and have an exercise price of $3.24 per share. DIRECTOR INDEPENDENCE A majority of our Board of Directors are independent directors, see discussion above under “Item 10. Directors, Executives and Corporate Governance – Board Composition, Committees and Independence.” ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES Independent Auditor For the fiscal years ended June 30, 2024 and 2023, the Company’s independent public accounting firm was Baker Tilly US, LLP Fees Paid to Principal Independent Registered Public Accounting Firm The aggregate fees billed by our Independent Registered Public Accounting Firm, for the fiscal years ended June 30, 2024 and 2023 are as follows: Fiscal 2024 Fiscal 2023 Audit fees (1) $ 833,000 $ 256,000 Audit related fees (2) – – Tax fees (3) – – All other fees (4) – – Total $ 833,000 $ 256,000 (1) Audit fees represent fees for professional services provided in connection with the audit of our annual financial statements and the review of our quarterly financial statements and those services normally provided in connection with statutory or regulatory filings or engagements including comfort letters, consents and other services related to SEC matters. This information is presented as of the latest practicable date for this annual report. (2) Audit-related fees represent fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and not reported above under “Audit Fees.” (3) Baker Tilly US, LLP did not provide us with tax compliance, tax advice or tax planning services. (4) All other fees include fees billed by our independent auditors for products or services other than as described in the immediately preceding three categories. No such fees were incurred during the fiscal years ended June 30, 2024 or 2023. Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm Our audit committee’s policy is to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm, the scope of services provided by our independent registered public accounting firm and the fees for the services to be performed. These services may include audit services, audit-related services, tax services and other services. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Our independent registered public accounting firm and management are required to periodically report to the audit committee regarding the extent of services provided by our independent registered public accounting firm in accordance with this preapproval, and the fees for the services performed to date. All of the services relating to the fees described in the table above were approved by our audit committee. 57 Table of Contents PART IV ITEM 15 - EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) (1) Financial Statements The following financial statements of Flux Power Holdings, Inc., and Report of Baker Tilly US, LLP, independent registered public accounting firm, are included in this report: Page Report of Independent Registered Public Accounting Firm – (Baker Tilly US, LLP, San Diego, CA PCAOB Firm ID# 23 ) F-1 Consolidated Balance Sheets as of June 30, 2024, 202 3 (restated) and 2022 (restated) F-2 Consolidated Statements of Operations for the Years Ended June 30, 2024, 2023 (restated) and 202 2 (restated) F-3 Consolidated Statements of Stockholders’ Equity for the Years Ended June 30, 2024, 2023 (restated) and 2022 (restated) F-4 Consolidated Statements of Cash Flows for the Years Ended June 30, 2024, 2023 (restated) and 2022 (restated) F-5 Notes to the Consolidated Financial Statements F-6 (2) Financial Statement Schedules: All schedules have been omitted because the required information is included in the financial statements or notes thereto or because they are not required. 58 Table of Contents (3) Exhibits: The exhibits required by Item 601 of Regulation S-K are listed in subparagraph (b) below. (b) The following exhibits are filed as part of this Report Exhibit No. Description 2.1 Securities Exchange Agreement dated May 18, 2012. Incorporated by reference to Exhibit 2.1 on Form 8-K filed with the SEC on May 24, 2012. 2.2 Amendment No. 1 to the Securities Exchange Agreement dated June 13, 2012. Incorporated by reference to Exhibit 2.2 on Form 8-K filed with the SEC on June 18, 2012. 3.1 Restated Articles of Incorporation. Incorporated by reference to Exhibit 3.1 on Form 8-K filed with the SEC on February 19, 2015. 3.2 Amended and Restated Bylaws of Flux Power Holdings, Inc. Incorporated by reference to Exhibit 3.1 on Form 8-K filed with the SEC on May 31, 2012. 3.3 Certificate of Amendment to Articles of Incorporation. Incorporated by reference to Exhibit 3.1 on Form 8-K filed with the SEC on August 18, 2017. 3.4 Certificate of Change. Incorporated by reference to Exhibit 3.1 on Form 8-K filed with the SEC on July 12, 2019. 4(vi) Description of Securities. Incorporated by reference to Exhibit 4(vi) on Form 10-K filed with the SEC on September 28, 2020. 4.1 Form of Warrant. Incorporated by reference to Exhibit 4.1 on Form 8-K filed with the SEC on September 23, 2021. 4.2 Form of Warrant Certificate. Incorporated by reference to Exhibit 4.1 on Form 8-K filed with the SEC on May 13, 2022. 4.3 Warrant to Purchase Stock issued to Silicon Valley Bank, dated June 23, 2022. Incorporated by reference to Exhibit 4.1 on Form 8-K filed with the SEC on June 28, 2022. 4.4 Form of Warrant. Incorporated by reference to Exhibit 4.1 on Form 8-K filed with the SEC on November 3, 2023. 10.1# Form of Indemnification Agreement. Incorporated by reference to Exhibit 10.1 on Form 8-K filed with the SEC on April 9, 2019. 10.2 Lease Agreement dated April 25, 2019. Incorporated by reference to Exhibit 10.1 on Form 8-K filed with the SEC on April 30, 2019. 10.3 First Amendment to Standard Industrial/Commercial Multi-Tenant Lease with Accutek dated March 1, 2020. Incorporated by reference to Exhibit 10.1 on Form 8-K filed with the SEC on March 5, 2020. 10.4 Form of Representative Warrant. Incorporated by reference to Exhibit 10.1 on Form 10-Q filed with the SEC on November 12, 2020. 10.5# Flux Power Holdings, Inc. 2010 Stock Plan: Form of Stock Option Agreement. Incorporated by reference to Exhibit 10.6 on Form 8-K filed with the SEC on June 18, 2012. 10.6# 2014 Equity Incentive Plan. Incorporated by reference to Exhibit 10.23 on Form 10-Q filed with the SEC on May 15, 2015. 10.7# Amendment to the Flux Power Holdings Inc. 2014 Equity Incentive Plan. Incorporated by reference to Exhibit 10.20 on Form 10-K filed with the SEC on September 27, 2018. 10.8# Amendment No. 2 to the Flux Power Holdings Inc. 2014 Equity Incentive Plan Incorporated by reference to Exhibit 10.1 on Form 8-K filed with the SEC on November 9, 2020. 10.9# Form of Restricted Stock Unit Award Agreement. Incorporated by reference to Exhibit 10.2 on Form 8-K filed with the SEC on November 9, 2020. 10.10# Form of Performance Restricted Stock Unit Award Agreement. Incorporated by reference to Exhibit 10.3 on Form 8-K filed with the SEC on November 9, 2020. 10.11# Annual Cash Bonus Plan. Incorporated by reference to Exhibit 10.4 on Form 8-K filed with the SEC on November 9, 2020. 10.12# Amended and Restated Employment Agreement by and between Flux Power Holdings, Inc. and Ronald F. Dutt. Incorporated by reference to Exhibit 10.1 on Form 8-K filed with the SEC on February 17, 2021. 10.13# Employment Agreement by and between Flux Power Holdings, Inc. and Charles A. Scheiwe. Incorporated by reference to Exhibit 10.2 on Form 8-K filed with the SEC on February 17, 2021. 59 Table of Contents 10.14# 2021 Equity Incentive Plan. Incorporated by reference to Exhibit 10.1 on Form 8-K filed with the SEC on May 4, 2021. 10.15# Form of Restricted Stock Unit Award Agreement – Non-Executive Director. Incorporated by reference to Exhibit 10.2 on Form 8-K filed with the SEC on May 4, 2021. 10.16# Form of Performance Restricted Stock Unit Award. Incorporated by reference to Exhibit 10.3 on Form 8-K filed with the SEC on November 2, 2021. 10.17 Flux Power Holdings, Inc. 2023 Employee Stock Purchase Plan. Incorporated by reference to Exhibit 10.1 on Form 8-K filed with the SEC on April 21, 2023. 10.18 Loan and Security Agreement. Incorporated by reference to Exhibit 10.1 on Form 8-K filed with the SEC on August 3, 2023. 10.19 Intellectual Property Security Agreement. Incorporated by reference to Exhibit 10.2 on Form 8-K filed with the SEC on August 3, 2023. 10.20 Form of Revolving Note. Incorporated by reference to Exhibit 10.3 on Form 8-K filed with the SEC on August 3, 2023. 10.21 Amended and Restated Annual Bonus Plan. Incorporated by reference to Exhibit 10.1 on Form 8-K filed with the SEC on October 24, 2023. 10.22 Credit Facility Agreement dated November 2, 2023. Incorporated by reference to Exhibit 10.1 on Form 8-K filed with the SEC on November 3, 2023. 10.23 Form of Subordinated Unsecured Promissory Note (Cleveland). Incorporated by reference to Exhibit 10.2 on Form 8-K filed with the SEC on November 3, 2023. 10.24 Amendment No. 2 to Loan and Security Agreement (GBC). Incorporated by reference to Exhibit 10.1 on Form 8-K filed on February 1, 2024. 10.25# Form of Separation and Release Agreement (Charles Scheiwe). Incorporated by reference to Exhibit 10.1 on Form 8-K filed on February 23, 2024. 10.26 Form of Consulting Agreement (Charles Scheiwe). Incorporated by reference to Exhibit 10.2 on Form 8-K filed on February 23, 2024. 10.27# Employment Agreement (Kevin S. Royal). Incorporated by reference to Exhibit 10.3 on Form 8-K filed on February 23, 2024. 10.28 Waiver Agreement dated May 8, 2024. Incorporated by reference to Exhibit 10.5 on Form 10-Q filed on May 13, 2024. 10.29 Amendment No. 3 to Loan and Security Agreement (GBC). Incorporated by reference to Exhibit 10.1 on Form 8-K filed on August 14, 2024. 10.30* Waiver to Loan and Security Agreement dated August 30, 2024. 10.31* Waiver to Loan and Security Agreement dated January 17, 2025. 10.32 Amendment No. 4 to Loan and Security Agreement (GBC). Incorporated by reference to Exhibit 10.1 on Form 8-K filed on January 28, 2025. 14.1 Code of Business Conduct and Ethics. Incorporated by reference to Exhibit 99.4 on Form 8-K filed with the SEC on July 2, 2019. 19.1* Insider Trading Compliance Program Policy. 21.1 Subsidiaries. Incorporated by reference to Exhibit 21.1 on Form 8-K filed with the SEC on June 18, 2012. 23.1* Consent of Independent Registered Public Accounting Firm. 31.1* Certifications of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act. 31.2* Certifications of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act. 32.1* Certifications of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act. 32.2* Certifications of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act. 97.1* Policy for the Recovery of Erroneously Awarded Compensation 101.INS* Inline XBRL Instance Document. 101.SCH* Inline XBRL Taxonomy Extension Schema. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase. 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase. 104 Cover Page Interactive Data File, formatted in Inline XBRL (included as Exhibit 101). * Filed herewith. # Indicates management contract or compensatory plan or arrangement. ITEM 16 – FORM 10-K SUMMARY None . 60 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Flux Power Holdings, Inc. Dated: January 29, 2025 By: /s/ Ronald F. Dutt Ronald F. Dutt Chief Executive Officer (Principal Executive Officer) By: /s/ Kevin S. Royal Kevin S. Royal Chief Financial Officer ( Principal Financial Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Ronald F. Dutt Director, Chief Executive Officer, January 29, 2025 Ronald F. Dutt President and Director (Principal Executive Officer) /s/ Kevin S. Royal Chief Financial Officer January 29, 2025 Kevin S. Royal (Principal Financial Officer) /s/ Michael Johnson Director January 29, 2025 Michael Johnson /s/ Mark Leposky Director January 29, 2025 Mark Leposky /s/ Lisa Walters-Hoffert Director January 29, 2025 Lisa Walters-Hoffert /s/ Dale Robinette Director January 29, 2025 Dale Robinette 61 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Flux Power Holdings, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Flux Power Holdings, Inc. (the “Company”) as of June 30, 2024, 2023 and 2022, the related consolidated statements of operations, stockholders’ equity, and cash flows, for each of the three years in the period ended June 30, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2024, in conformity with accounting principles generally accepted in the United States of America. Restatement of Previously Issued Financial Statements As discussed in Note 2 to the consolidated financial statements, the Company has restated prior year consolidated financial statements to correct misstatements. Going Concern Uncertainty The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company’s current liquidity position and projected cash needs raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ BAKER TILLY US, LLP We have served as the Company’s auditor since 2012. San Diego, California January 29, 2025 F- 1 Table of Contents FLUX POWER HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS June 30, June 30, June 30, 2024 2023 2022 Restated Restated ASSETS Current assets: Cash $ 643,000 $ 2,379,000 $ 485,000 Accounts receivable, net of allowance for credit losses of $ 55,000 , $ 0 and $ 0 at June 30, 2024, 2023 and 2022, respectively 9,773,000 8,800,000 8,609,000 Inventories, net 16,977,000 16,158,000 14,440,000 Other current assets 945,000 918,000 1,261,000 Total current assets 28,338,000 28,255,000 24,795,000 Right of use asset 2,096,000 2,854,000 2,597,000 Property, plant and equipment, net 1,749,000 1,789,000 1,578,000 Other assets 118,000 120,000 89,000 Total assets $ 32,301,000 $ 33,018,000 $ 29,059,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 11,395,000 $ 9,872,000 $ 6,645,000 Accrued expenses 3,926,000 3,181,000 2,209,000 Line of credit 13,834,000 9,912,000 4,889,000 Deferred revenue 485,000 131,000 163,000 Customer deposits 18,000 82,000 175,000 Finance leases payable, current portion 156,000 143,000 - Office leases payable, current portion 734,000 644,000 504,000 Accrued interest 126,000 2,000 1,000 Total current liabilities 30,674,000 23,967,000 14,586,000 Long term liabilities: Finance leases payable, less current portion 112,000 273,000 - Office leases payable, less current portion 1,321,000 2,055,000 2,361,000 Total liabilities 32,107,000 26,295,000 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; 16,682,465 , 16,462,215 and 15,996,658 shares issued and outstanding at June 30, 2024, 2023 and 2022, respectively 17,000 16,000 16,000 Additional paid-in capital 99,889,000 98,086,000 95,732,000 Accumulated deficit ( 99,712,000 ) ( 91,379,000 ) ( 83,636,000 ) Total stockholders’ equity 194,000 6,723,000 12,112,000 Total liabilities and stockholders’ equity $ 32,301,000 $ 33,018,000 $ 29,059,000 The accompanying notes are an integral part of these consolidated financial statements. F- 2 Table of Contents FLUX POWER HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS 2024 2023 2022 Year ended June 30, 2024 2023 2022 Restated Restated Revenues $ 60,824,000 $ 66,488,000 $ 42,333,000 Cost of sales 43,591,000 50,598,000 36,726,000 Gross profit 17,233,000 15,890,000 5,607,000 Operating expenses: Selling and administrative 18,932,000 17,620,000 15,515,000 Research and development 4,916,000 4,682,000 6,313,000 Total operating expenses 23,848,000 22,302,000 21,828,000 Operating loss ( 6,615,000 ) ( 6,412,000 ) ( 16,221,000 ) Other income (expense): Other income - 8,000 - Interest income (expense), net ( 1,718,000 ) ( 1,339,000 ) ( 252,000 ) Net loss $ ( 8,333,000 ) $ ( 7,743,000 ) $ ( 16,473,000 ) Net loss per share - basic and diluted $ ( 0.50 ) $ ( 0.48 ) $ ( 1.07 ) Weighted average number of common shares outstanding - basic and diluted 16,548,533 16,055,256 15,439,530 The accompanying notes are an integral part of these consolidated financial statements. F- 3 Table of Contents FLUX POWER HOLDING, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Shares Capital Stock Amount Additional Paid-in Capital Accumulated Deficit Total Common Stock Shares Capital Stock Amount Additional Paid-in Capital Accumulated Deficit Total Balance, as restated, at June 30, 2023 16,462,215 $ 16,000 $ 98,086,000 $ ( 91,379,000 ) $ 6,723,000 Issuance of common stock — exercised options and RSU settlements 182,707 1,000 35,000 - 36,000 Issuance of common stock – ESPP 37,543 - 105,000 - 105,000 Fair value of warrants issued - - 92,000 - 92,000 Stock-based compensation - - 1,571,000 - 1,571,000 Net loss - - - ( 8,333,000 ) ( 8,333,000 ) Balance at June 30, 2024 16,682,465 $ 17,000 $ 99,889,000 $ ( 99,712,000 ) $ 194,000 Common Stock Shares Capital Stock Amount Additional Paid-in Capital Accumulated Deficit Total Balance, as restated, at June 30, 2022 15,996,658 $ 16,000 $ 95,732,000 $ ( 83,636,000 ) $ 12,112,000 Issuance of common stock — public offering, net of costs 355,309 - 1,556,000 - 1,556,000 Issuance of common stock - exercised options and RSU settlement 110,248 - - - - Stock-based compensation - - 798,000 - 798,000 Net loss - - - ( 7,743,000 ) ( 7,743,000 ) Balance as restated, at June 30, 2023 16,462,215 $ 16,000 $ 98,086,000 $ ( 91,379,000 ) $ 6,723,000 Common Stock Shares Capital Stock Amount Additional Paid-in Capital Accumulated Deficit Total Balance, as restated, at June 30, 2021 * 13,652,164 $ 14,000 $ 79,197,000 $ ( 67,163,000 ) $ 12,048,000 Balance 13,652,164 $ 14,000 $ 79,197,000 $ ( 67,163,000 $ 12,048,000 Issuance of common stock and warrants - registered direct offering, net of costs 2,142,860 2,000 13,969,000 - 13,971,000 Issuance of common stock — public offering, net of costs 190,782 - 1,602,000 - 1,602,000 Issuance of common stock - exercised options and RSU settlement 10,852 - - - - Fair value of warrants issued - 253,000 253,000 Stock-based compensation - - 711,000 - 711,000 Net loss - - - ( 16,473,000 ) ( 16,473,000 ) Balance, as restated, at June 30, 2022 15,996,658 $ 16,000 $ 95,732,000 $ ( 83,636,000 ) $ 12,112,000 Balance 15,996,658 $ 16,000 $ 95,732,000 $ ( 83,636,000 $ 12,112,000 * June 30, 2021 total shareholders’ equity, as restated, reflects the impact of restatement adjustments related to periods prior to the year ended June 30, 2022. The impact of restatement is a decrease of $ 958,000 to accumulated deficit at June 30, 2021. The accompanying notes are an integral part of these consolidated financial statements. F- 4 Table of Contents FLUX POWER HOLDING, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS 2024 2023 2022 Year ended June 30, 2024 2023 2022 Restated Restated Cash flows from operating activities: Net loss $ ( 8,333,000 ) $ ( 7,743,000 ) $ ( 16,473,000 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 1,045,000 899,000 575,000 Stock-based compensation 1,571,000 798,000 711,000 Amortization of debt issuance costs 230,000 482,000 – Non-cash lease expense 606,000 512,000 438,000 Inventory write downs 490,000 690,000 665,000 Changes in operating assets and liabilities: Accounts receivable ( 973,000 ) ( 191,000 ) ( 2,512,000 ) Inventories ( 1,309,000 ) ( 2,408,000 ) ( 5,550,000 ) Other assets ( 163,000 ) ( 170,000 ) ( 549,000 ) Accounts payable 1,523,000 3,227,000 ( 530,000 ) Accrued expenses 745,000 972,000 ( 374,000 ) Accrued interest 124,000 ( 32,000 ) 139,000 Office leases payable ( 644,000 ) 1,000 ( 1,000 ) Deferred revenue 354,000 ( 518,000 ) ( 436,000 ) Customer deposits ( 64,000 ) ( 93,000 ) 4,000 Net cash used in operating activities ( 4,798,000 ) ( 3,574,000 ) ( 23,893,000 ) Cash flows from investing activities: Purchases of equipment ( 853,000 ) ( 1,032,000 ) ( 797,000 ) Proceeds from sale of fixed assets - 8,000 - Net cash used in investing activities ( 853,000 ) ( 1,024,000 ) ( 797,000 ) Cash flows from financing activities: Proceeds from the issuance of common stock in registered direct offering, net of offering costs - - 13,971,000 Proceeds from the issuance of common stock in public offering, net of offering costs - 1,556,000 1,602,000 Proceeds from stock option exercises and employee stock purchase plan exercises 141,000 - - Proceeds from revolving line of credit 67,209,000 63,400,000 8,450,000 Payment of revolving line of credit ( 63,287,000 ) ( 58,377,000 ) ( 3,561,000 ) Payment of finance leases ( 148,000 ) ( 87,000 ) – Net cash provided by financing activities 3,915,000 6,492,000 20,462,000 Net change in cash ( 1,736,000 ) 1,894,000 ( 4,228,000 ) Cash, beginning of period 2,379,000 485,000 4,713,000 Cash, end of period $ 643,000 $ 2,379,000 $ 485,000 Supplemental Disclosures of Non-Cash Investing and Financing Activities: Initial right of use asset recognition $ - $ 855,000 $ - Common stock issued for vested RSUs $ 538,000 $ 417,000 $ 21,000 Warrants issued in connection with borrowing agreements, recorded as debt issuance cost $ 92,000 $ - $ 253,000 Supplemental cash flow information: Interest paid $ 1,409,000 $ 1,127,000 $ 151,000 The accompanying notes are an integral part of these consolidated financial statements. F- 5 Table of Contents FLUX POWER HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2024 and JUNE 30, 2023 NOTE 1 – NATURE OF BUSINESS Nature of Business Flux Power Holdings, Inc. (“Flux”) was incorporated in 2008 in the State of Nevada, and Flux’s operations are conducted through its wholly owned subsidiary, Flux Power, Inc. (“Flux Power”), a California corporation (collectively, the “Company”). The Company designs, develops, manufactures, and sells a portfolio of advanced lithium-ion energy storage solutions for electrification of a range of industrial commercial sectors which include material handling, airport ground support equipment (“GSE”), and stationary energy storage. The Company believes its mobile and stationary energy storage solutions provide customers with a reliable, high performing, cost effective, and more environmentally friendly alternative as compared to traditional lead acid and propane-based solutions. The Company’s modular and scalable design allows different configurations of lithium-ion energy storage solutions to be paired with our proprietary wireless battery management system to provide the level of energy storage required and “state of the art” real time monitoring of pack performance. The Company believes that 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. NOTE 2 – Restatement of Previously Issued Financial Statements In connection with the preparation of its consolidated financial statements as of and for the year ended June 30, 2024, the Company identified multiple prior-period misstatements. In accordance with Staff Accounting Bulletins No. 99 (“SAB No. 99”) Topic 1.M, “Materiality” and SAB No. 99 Topic 1.N “Considering the Effects of Misstatements when Quantifying Misstatements in the Current Year Financial Statements,” the Company assessed the materiality of these misstatements to its previously issued consolidated financial statements. Based upon the Company’s evaluation of both quantitative and qualitative factors, the Company concluded the misstatements were material to the Company’s previously issued consolidated financial statements for the fiscal years ended June 30, 2023 and 2022. Accordingly, the Company is restating its previously issued audited consolidated financial statements and related notes as of and for the fiscal years ended June 30, 2023 and 2022. See Note 15 – Restatement of Previously Issued Financial Statements for the effects of the restatement as of and for the fiscal years ended June 30, 2023 and 2022 and the restated amounts reflected within Note 4 – Inventories, Note 11 – Income Taxes and Note 12 – Concentrations. See Note 16 – Quarterly Financial Summary (Unaudited) for the effects of the restatement on the interim periods within the fiscal years ended June 30, 2024, 2023 and 2022 NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the Company’s significant accounting policies which have been consistently applied in the preparation of the accompanying consolidated financial statements follows: Principles of Consolidation The consolidated financial statements include Flux Power Holdings, Inc. and its wholly-owned subsidiary Flux Power, Inc. after elimination of all intercompany accounts and transactions. Liquidity and Financial Condition The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. However, substantial doubt about the Company’s ability to continue as a going concern exists. Historically, the Company’s revenues and operating cash flows have not been sufficient to sustain its operations and the Company has relied on debt and equity financing for additional funds. The Company has incurred an accumulated deficit of $ 99.7 million through June 30, 2024, and for the year ended June 30, 2024 generated negative cash flows from operations of $ 4.8 million and incurred a net loss of $ 8.3 million. As of December 31, 2024, the Company had a cash balance of $ 1.0 million, $ 6.3 million available funding under the Gibraltar Business Capital (“GBC”) Credit Facility, and $ 1.0 million available for future draws under the Subordinated LOC. In addition, the Company’s operations have been impacted by delays in new orders of its energy storage solutions due to corresponding deferrals of new forklift purchases mainly caused by lower capital spending in the market sector that the Company serves and interest rate variability affecting selected large customer fleets which have impacted the Company’s ability to meet projected revenue targets and generate cash from operations. Management has evaluated the Company’s expected cash requirements, including investments in additional sales and marketing and research and development, capital expenditures and working capital requirements, and believes the Company’s existing cash and funding available under the GBC Credit Facility and the Subordinated LOC, along with the forecasted gross margin, 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. These steps include actual and planned price increases for our 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 its gross margin will move it closer to profitability. The planned gross margin improvement tasks include, but are not limited to, a plan to drive bill of material costs down while increasing price of our products for new orders. We also continue to execute our cost reduction, sourcing, and pricing recovery initiatives in efforts to increase our gross margins and improve cash flow from operations. Unforeseen factors in the general economy beyond management’s control could potentially have negative impact on the planned gross margin improvement plan. Management is continuing to evaluate other sources of capital to fund its operations and growth. However, there can be no assurance that the Company will be able to realize the plans for improved operations or access necessary additional financing when needed to provide sufficient liquidity to continue its operations over the next twelve months. If such liquidity is not available when required, management will be required to curtail investments in new product development, which may have a material adverse effect on future cash flows and results of operations and the Company’s ability to continue operating as a going concern. The accompanying consolidated financial statements do not include any adjustments that would be necessary should the Company be unable to continue as a going concern and, therefore, be required to liquidate its assets and discharge its liabilities in other than the normal course of business and at amounts that may differ from those reflected in the accompanying consolidated financial statements. F- 6 Table of Contents Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as certain financial statement disclosures. Significant estimates include valuation allowances relating to inventory and deferred tax assets. While management believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from these estimates. Cash and Cash Equivalents As of June 30, 2024, 2023 and 2022, cash was approximately $ 0.6 million, $ 2.4 million and $ 0.5 million, respectively. Cash consisted of funds held in a non-interest-bearing bank deposit account. The Company considers all liquid short-term investments with maturities of less than three months when acquired to be cash equivalents. The Company had no cash equivalents at June 30, 2024, 2023 and 2022. Fair Values of Financial Instruments The carrying amount of our cash, accounts payable, accounts receivable, and accrued liabilities approximate their estimated fair values due to the short-term maturities of those financial instruments. The carrying amount of the line of credit agreement approximates its fair values as interest approximates current market interest rates for similar instruments. Management has concluded that it is not practical to determine the estimated fair value of amounts due to related parties because the transactions cannot be assumed to have been consummated at arm’s length, the terms are not deemed to be market terms, there are no quoted values available for these instruments, and an independent valuation would not be practical due to the lack of data regarding similar instruments, if any, and the associated potential costs. The Company does not have any other assets or liabilities that are measured at fair value on a recurring or non-recurring basis. Accounts Receivable Accounts receivable are carried at their estimated collectible amounts. The Company has not experienced significant issues related to the collection of its accounts receivable. As of June 30, 2024, the company has an allowance for credit losses of $ 55,000 . The company did not record an allowance for credit losses during the years ended June 30, 2023 and 2022. Inventories Inventories consist primarily of battery management systems and the related subcomponents and are stated at the lower of cost (first-in, first-out) or net realizable value. The Company evaluates inventories to determine if write-downs are necessary due to obsolescence or if the inventory levels are in excess of anticipated demand at market value based on consideration of historical sales and product development plans. The Company recorded an adjustment related to obsolete inventory in the amount of approximately $ 490,000 , $ 690,000 and $ 665,000 during the years ended June 30, 2024, 2023 (as restated) and 2022 (as restated), respectively. Property, Plant and Equipment Property, plant and equipment are stated at cost, net of accumulated depreciation. Depreciation and amortization are provided using the straight-line method over the estimated useful lives, of the related assets ranging from three to five years , or, in the case of leasehold improvements, over the lesser of the useful life of the related asset or the lease term. Stock-based Compensation Pursuant to the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 718-10, Compensation-Stock Compensation , which establishes accounting for equity instruments exchanged for employee service, we utilize the Black-Scholes option pricing model to estimate the fair value of employee stock option awards at the date of grant, which requires the input of highly subjective assumptions, including expected volatility and expected life. Changes in these inputs and assumptions can materially affect the measure of estimated fair value of our share-based compensation. These assumptions are subjective and generally require significant analysis and judgment to develop. When estimating fair value, some of the assumptions will be based on, or determined from, external data and other assumptions may be derived from our historical experience with stock-based payment arrangements. The appropriate weight to place on historical experience is a matter of judgment, based on relevant facts and circumstances. F- 7 Table of Contents Common stock or equity instruments such as warrants issued for services to non-employees are valued at their estimated fair value at the measurement date (the date when a firm commitment for performance of the services is reached, typically the date of issuance, or when performance is complete). If the total value exceeds the par value of the stock issued, the value in excess of the par value is added to the additional paid-in-capital. Revenue Recognition The Company recognizes revenue in accordance to the ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) for all contracts. The Company derives its revenue from the sale of products to customers. The Company sells its products primarily through a distribution network of equipment dealers, OEMs and battery distributors in primarily North America. The Company recognizes revenue for the products when all significant risks and rewards have been transferred to the customer, there is no continuing managerial involvement associated with ownership of the goods sold is retained, no effective control over the goods sold is retained, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transactions will flow to the Company and the costs incurred or to be incurred with respect to the transaction can be measured reliably. Product revenue is recognized as a distinct single performance obligation which for the Company’s three major customers represents the point in time that they receive delivery of the products, and for all other customers represents the point in time that the Company ships the products. Our customers do have a right to return product but our returns have historically been minimal. Product Warranties The Company evaluates its exposure to product warranty obligations based on historical experience. Our products, primarily lift equipment packs, are warrantied for five years unless modified by a separate agreement. As of June 30, 2024, 2023 and 2022, the Company carried warranty liability of approximately $ 3,018,000 , $ 1,600,000 and $ 1,012,000 , respectively, which is included in accrued expenses on the Company’s consolidated balance sheets. Impairment of Long-lived Assets In accordance with authoritative guidance for the impairment or disposal of long-lived assets, if indicators of impairment exist, the Company assesses the recoverability of the affected long-lived assets by determining whether the carrying value of such assets can be recovered through the undiscounted future operating cash flows. If impairment is indicated, the Company measures the amount of such impairment by comparing the carrying value of the asset to the present value of the expected future cash flows associated with the use of the asset. The Company believes that no impairment indicators were present, and accordingly no impairment losses were recognized during the fiscal years ended June 30, 2024, 2023 and 2022. Research and Development The Company is actively engaged in new product development efforts. Research and development costs relating to possible future products are expensed as incurred. Income Taxes Pursuant to FASB ASC Topic No. 740, Income Taxes, deferred tax assets or liabilities are recorded to reflect the future tax consequences of temporary differences between the financial reporting basis of assets and liabilities and their tax basis at each year-end. These amounts are adjusted, as appropriate, to reflect enacted changes in tax rates expected to be in effect when the temporary differences reverse. The Company has analyzed filing positions in all of the federal and state jurisdictions where the Company is required to file income tax returns, as well as all open tax years in these jurisdictions. As a result, no unrecognized tax benefits have been identified as of June 30, 2024, 2023 or 2022 and, accordingly, no additional tax liabilities have been recorded. The Company records deferred tax assets and liabilities based on the differences between the financial statement and tax bases of assets and liabilities and on operating loss carry forwards using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. F- 8 Table of Contents Net Loss Per Common Share The Company calculates basic loss per common share by dividing net loss by the weighted average number of common shares outstanding during the periods. Diluted loss per common share includes the impact from all dilutive potential common shares relating to outstanding convertible securities. For the fiscal years ended June 30, 2024, 2023 and 2022, basic and diluted weighted-average common shares outstanding were 16,548,533 , 16,055,256 and 15,439,530 , respectively. The Company incurred a net loss for the fiscal years ended June 30, 2024, 2023 and 2022, and therefore, basic and diluted loss per share for each fiscal year were the same because potential common share equivalents would have been anti-dilutive. The potentially dilutive common shares outstanding at June 30, 2024, 2023 and 2022 that were excluded from diluted weighted-average common shares outstanding represent shares underlying outstanding stock options, RSUs and warrants, as follows: SCHEDULE OF DILUTIVE COMMON SHARES OUTSTANDING EXCLUDED FROM DILUTIVE WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 2024 2023 2022 Year ended June 30, 2024 2023 2022 Stock options 1,605,060 973,400 503,433 RSUs 114,666 193,749 304,221 Warrants 1,413,110 1,455,119 1,455,119 Antidilutive securities 3,132,836 2,622,268 2,262,773 Adopted Accounting Pronouncements The Company did not adopt any new accounting pronouncements during the year ended June 30, 2024. Recently Issued Accounting Pronouncements In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires more detailed income tax disclosures. The guidance requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction. The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively. The standard is effective for our fiscal year ending June 30, 2026, with early adoption permitted. The Company is evaluating the disclosure requirements related to the new standard. In November 2023, the FASB issued ASU 2023-07, “ Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ”, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The standard is effective annually for our fiscal year ending June 30, 2025 and interim periods thereafter. Early adoption is permitted. The Company is evaluating the disclosure requirements related to the new standard. NOTE 4 – INVENTORIES Inventories consist of the following: SCHEDULE OF INVENTORIES 2024 2023 2022 June 30, 2024 2023 2022 Restated Restated Raw materials $ 12,850,000 $ 11,507,000 $ 11,495,000 Work in process 474,000 1,277,000 927,000 Finished goods 3,653,000 3,374,000 2,018,000 Total Inventories $ 16,977,000 $ 16,158,000 $ 14,440,000 Inventories consist primarily of our energy storage systems and the related subcomponents, and are stated at the lower of cost or net realizable value. NOTE 5 – OTHER CURRENT ASSETS Other current assets consist of the following: SCHEDULE OF OTHER CURRENT ASSETS 2024 2023 2022 June 30, 2024 2023 2022 Prepaid insurance $ 419,000 $ 573,000 $ 478,000 Prepaid expenses 181,000 202,000 343,000 Other 345,000 143,000 440,000 Total other current assets $ 945,000 $ 918,000 $ 1,261,000 F- 9 Table of Contents NOTE 6 – ACCRUED EXPENSES Accrued expenses consist of the following: SCHEDULE OF ACCRUED EXPENSES 2024 2023 2022 June 30, 2024 2023 2022 Payroll and bonus accrual $ 471,000 $ 1,157,000 $ 767,000 PTO accrual 437,000 412,000 430,000 Warranty liability 3,018,000 1,600,000 1,012,000 Other - 12,000 - Total accrued expenses $ 3,926,000 $ 3,181,000 $ 2,209,000 NOTE 7 – PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consist of the following: SCHEDULE OF PROPERTY PLANT AND EQUIPMENT NET 2024 2023 2022 June 30, 2024 2023 2022 Machinery and equipment $ 1,352,000 $ 1,169,000 $ 808,000 Office equipment 2,690,000 2,153,000 1,574,000 Furniture and equipment 274,000 273,000 256,000 Vehicles - - 20,000 Leasehold improvements 148,000 81,000 56,000 CIP 106,000 43,000 - Property, plant and equipment, gross 4,570,000 3,719,000 2,714,000 Less: accumulated depreciation ( 2,821,000 ) ( 1,930,000 ) ( 1,136,000 ) Total property, plant and equipment, net $ 1,749,000 $ 1,789,000 $ 1,578,000 Depreciation expense was approximately $ 1,045,000 , $ 899,000 and $ 575,000 , for the fiscal years ended June 30, 2024, 2023 and 2022, respectively, and is included in selling and administrative expenses in the accompanying consolidated statements of operations. NOTE 8 – NOTES PAYABLE Revolving Line of Credit Gibraltar Business Capital Credit Facility On July 28, 2023, the Company entered into a Loan and Security Agreement (the “Agreement”) with GBC. The Agreement provides the Company with a senior secured revolving loan facility for up to $ 15.0 million (the “Revolving Loan Commitment”). The revolving amount available under the GBC Credit Facility is equal to the lesser of the Revolving Loan Commitment and the borrowing base amount (as defined in the Agreement). The GBC Credit Facility is evidenced by a revolving note, which matures on July 28, 2025 (the “Maturity Date”), unless extended, modified or renewed (the “Revolving Note”). Provided that there is no event of default, the Maturity Date can automatically be extended for one (1) year period upon payment of a renewal fee for each such extension in the amount of three-quarters of one percent ( 0.75 %) of the Revolving Loan Commitment, which fee will be due and payable on or before the applicable Maturity Date. F- 10 Table of Contents In addition, subject to conditions and terms set forth in the Agreement, the Company may request an increase in the Revolving Loan Commitment from time to time upon not less than 30 days’ notice to GBC which increase may be made at the sole discretion of GBC, as long as: (a) the requested increase is in a minimum amount of $ 1,000,000 , and (b) the total increases do not exceed $ 5,000,000 and no more than five (5) increases are made. Outstanding principal under the GBC Credit Facility accrues interest at Secured Overnight Financing Rate (“SOFR”, as defined in the Agreement) plus five and one half of one percent ( 5.50 %) per annum with such interest payment due monthly on the last day of the month. In the event of default, the amounts due under the Agreement bear interest at a rate per annum equal to three percent ( 3.0 %) above the rate that is otherwise applicable to such amounts. The Company paid GBC a non-refundable closing fee for the GBC Credit Facility of $ 112,500 upon the execution of the Agreement. In addition, the Company is required to pay a monthly unused line fee equal to one-half of one percent ( 0.50 %) per annum on the difference between the Revolving Loan Commitment and the average outstanding principal balance of the revolving loan(s) for such month. The obligations under the GBC Credit Facility may be prepaid in whole or in part at any time upon an exit fee of (a) two percent ( 2.00 %) of the Revolving Loan Commitment if the obligations are paid in full during the first year after the closing date, or (b) one percent ( 1.00 %) of the Revolving Loan Commitment if the obligations are paid in full one year after the closing date, provided, that, the exit fee will be waived if such prepayment occurs in connection with the refinancing of the obligations with Bank of America, N.A., as lender. On November 2, 2023, the Company entered into the First Amendment to Loan and Security Agreement (the “First Amendment”) with Gibraltar Business Capital, LLC (“GBC”), which amended certain definition of the Subordinated Debt referenced in the Loan and Security Agreement dated July 28, 2023 as Subordinated Debt owed by Borrower to Cleveland Capital L.P. pursuant to that certain Subordinated Unsecured Promissory Note, dated as of November 1, 2023, in the aggregate principal amount of $ 2,000,000 . On January 30, 2024, the Company entered into the Second Amendment to Loan and Security Agreement (the “Second Amendment”) with GBC, which amended certain terms of the Loan and Security Agreement dated July 28, 2023, including but not limited to, (i) increasing the commitment amount from $ 15.0 million to $ 16.0 million, (ii) adding an additional non-refundable closing fee in the amount of $ 7,500 in cash for the increase in the commitment amount to $ 16 million, (iii) amending the definition of “Eligible Accounts;” and (iv) amending the EBITDA Minimum financial covenant of the Company. In consideration for the Second Amendment, the Company agreed to pay GBC a non-refundable amendment fee of $ 10,000 in cash, in addition to the $ 7,500 non-refundable closing fee paid. The loans and other obligations of the Company under the GBC Credit Facility are secured by substantially all of the tangible and intangible assets of the Company (including, without limitation, intellectual property) pursuant to the terms of the Agreement and the Intellectual Property Security Agreement entered into by and among the Company and GBC on July 28, 2023. During the year ended June 30, 2024, the Company had multiple drawdowns under the GBC Credit Facility totaling $ 65.8 million, inclusive of the full repayment of the SVB Credit Facility, and made multiple repayments totaling $ 52.0 million. As of June 30, 2024, the outstanding balance under the GBC Credit Facility was approximately $ 13.8 million, with up to $ 2.2 million available for future borrowings, subject to borrowing base limitations. In April 2024, the Company notified GBC of a certain event of default with respect to the Company’s anticipated failure to maintain the EBITDA covenant for the trailing three (3) month period ended April 30, 2024, or Default. On May 8, 2024, the Company received a Waiver, which waived the Default, subject to satisfaction of the following conditions: (i) receipt of a counterpart of the Waiver duly executed by the Company; (ii) receipt of the waiver fee of $20,000; (iii) receipt of the representations and warranties from the Company that after giving effect to the Waiver, the representations and warranties contained in the Agreement, the Waiver and the other Loan Documents shall be true and correct; and (iv) after giving effect to the Waiver, no additional event of default shall have occurred and be continuing on and as of the effective date of the Waiver. F- 11 Table of Contents On May 31, 2024, the Company entered into the Third Amendment to Loan and Security Agreement (the “Third Amendment”) with GBC which amended certain terms of the Loan and Security Agreement dated July 28, 2023, including but not limited to amending the EBITDA Minimum financial covenant of the Company. In consideration for the Third Amendment, the Company agreed to pay GBC a non-refundable amendment fee of $ 50,000 in cash. Silicon Valley Bank Credit Facility On November 9, 2020, the Company entered into a Loan and Security Agreement (“Loan and Security Agreement”) with Silicon Valley Bank (“SVB”). On October 29, 2021, the Company entered into a First Amendment to Loan and Security Agreement (“First Amendment” and together with the Agreement, the “Loan Agreement”) with SVB which amended certain terms of the Agreement including, but not limited to, increasing the amount of the revolving line of credit from $ 4.0 million to $ 6.0 million, and extending the maturity date to November 7, 2022 . The First Amendment provided the Company with a senior secured credit facility for up to $ 6.0 million available on a revolving basis (“Revolving LOC”). Outstanding principal under the Revolving LOC accrued interest at a floating rate per annum equal to the greater of (i) Prime Rate plus two and a half percent (2.50%), or (ii) five and three-quarters percent (5.75%). The Company paid a non-refundable commitment fee of $ 15,000 upon execution of the Agreement and an additional non-refundable commitment fee of $22,500 in connection with the First Amendment. On June 23, 2022, the Company entered into a Second Amendment to Loan and Security Agreement (“Second Amendment” and together with the Loan Agreement, the “Second Amended Loan Agreement”) with SVB, which amended certain terms of the Loan Agreement, including but not limited to, (i) increasing the amount of the revolving line of credit to $ 8.0 million, (ii) changing the financial covenants of the Company from one based on tangible net worth to another based on adjusted EBITDA (as defined in the Second Amendment) on a trailing six (6) month basis and liquidity ratio certified as of the end of each month pursuant to the calculations set forth therein, and (iii) allowing for the assignment and transfer by SVB of all of its obligations, rights and benefits under the Agreement and Loan Documents (as defined in the Agreement and except for the Warrants). In addition, under the Second Amendment, the interest rate terms for the outstanding principal under the Revolving LOC were amended to accrue interest at a floating per annum rate equal to the greater of either (A) Prime Rate plus three and one-half of one percent (3.50%) or (B) seven and one-half of one percent (7.50%). Interest payments are due monthly on the last day of the month. In addition, the Company is required to pay a quarterly unused facility fee equal to one-quarter of one percent (0.25%) per annum of the average daily unused portion of the $8.0 million commitment under the SVB Credit Facility, depending upon availability of borrowings under the Revolving LOC. Pursuant to the Second Amendment, the Company paid SVB a non-refundable amendment fee of $ 5,000 and SVB’s legal fees and expenses incurred in connection with the Second Amendment. In connection with the Second Amendment, the Company issued a twelve-year warrant to SVB and its designee, SVB Financial Group, to purchase up to 40,806 shares of common stock of the Company at an exercise price of $ 2.23 per share pursuant to the terms set forth therein. On November 7, 2022, the Company entered into a Third Amendment to Loan and Security Agreement (“Third Amendment”) with SVB, which amended certain terms of the Second Amended Loan Agreement (together with the Third Amendment, the “Third Amended Loan Agreement”), including but not limited to, (i) extending the maturity date from November 7, 2022 to May 7, 2023 (the “Extension Period”), (ii) amending the financial covenants of the Company to cover the Extension Period and to include a liquidity ratio financial covenant, and (iii) amending the definition of Permitted Liens (as defined in the Third Amendment). Pursuant to the Third Amendment, the Company paid SVB a non-refundable amendment fee of $ 12,500 and SVB’s legal fees and expenses incurred in connection with the Third Amendment. On January 10, 2023, the Company entered into a Fourth Amendment to Loan and Security Agreement (the “Fourth Amendment”) with SVB, which amended certain terms of the Third Amended Loan Agreement including but not limited to, (i) increasing the amount of the SVB Credit Facility from $ 8.0 million to $ 14.0 million, (ii) removing the liquidity ratio financial covenant of the Company under Section 6.9 of the Third Amended Loan Agreement, (iii) amending the definition of Borrowing Base (as defined in the Fourth Amendment), which includes a new defined term for Net Orderly Liquidation Value (as defined in the Fourth Amendment), and (iv) removing certain defined liquidity terms under Section 13.1 of the Third Amended Loan Agreement. Pursuant to the Fourth Amendment, the Company paid SVB a non-refundable amendment fee of $ 10,000 and SVB’s legal fees and expenses incurred in connection with the Fourth Amendment. F- 12 Table of Contents On April 27, 2023, the Company entered into a Fifth Amendment to Loan and Security Agreement (the “Fifth Amendment”) with SVB which further amended certain terms of the credit facility (together with the Fifth Amendment, the “Agreement”), including but not limited to, (i) extending the maturity date from May 7, 2023 to December 31, 2023 (the “2023 Extension Period”), (ii) amending the EBITDA financial covenant of the Company to cover the 2023 Extension Period, and (iii) amending the definition of EBITDA (as defined in the Fifth Amendment). Pursuant to the Fifth Amendment, the Company agreed to pay SVB a non-refundable amendment fee of Thirty Thousand Dollars ($ 30,000 ) and SVB’s legal fees and expenses incurred in connection with the Fifth Amendment. In addition, SVB also agreed to waive compliance by the Company of the former EBITDA financial covenant as of the month ended March 31, 2023. On July 28, 2023, the Company repaid in full all principal outstanding under the SVB Credit Facility, together with all accrued and unpaid interest and related fees, with a portion of the funds from the GBC Credit Facility and terminated the Loan and Security Agreement with SVB, as amended. During the year ended June 30, 2024, the Company had multiple Revolving LOC drawdowns totaling $ 1.4 million and multiple Revolving LOC payments totaling $ 11.3 million inclusive of the final repayment of the LOC in full. NOTE 9 – RELATED PARTY DEBT AGREEMENTS At June 30, 2024,2023 and 2022, the Company had no related party debt balance outstanding. Below are the activities for the Company’s related party debt agreements that existed during the years ended June 30, 2024, 2023 and 2022. Subordinated Line of Credit Facilities Cleveland Capital, L.P. Credit Facility On November 2, 2023, the Company entered into a Credit Facility Agreement (the “Credit Facility”) with Cleveland Capital, L.P., (the “Lender”). The Credit Facility provides the Company with a line of credit of up to $ 2,000,000 for working capital purposes (“2023 Subordinated LOC”). In connection with the LOC, the Company issued a subordinated unsecured promissory note for $ 2,000,000 (the “Commitment Amount”) in favor of the Lender (the “Note”). Pursuant to the terms of the Credit Facility, the Lender agreed to make loans (each such loan, an “Advance”) up to such Lender’s Commitment Amount to the Company from time to time, until August 15, 2025 (the “Due Date”). The Note accrues interest at Secured Overnight Financing Rate plus nine percent ( 9 %) per annum on each Advance from and after the date of disbursement of such Advance. All indebtedness, obligations and liabilities of the Company to the Lender are subject to the rights of Gibraltar Business Capital, LLC (together with its successors and assigns, “GBC”), pursuant to a Subordination Agreement dated on or about November 2, 2023, by and between the Lender and GBC (the “Subordination Agreement”). Subject to the Subordination Agreement, the Company may, from time to time, prior to the Due Date, draw down, repay, and re-borrow on the Note, by giving notice to the Lenders of the amount to be requested to be drawn down. Subject to the Subordination Agreement, the Note is payable upon the earlier of (i) the Due Date or (ii) on occurrence of an event of Default (as defined in the Note). As consideration of the Lender’s commitment to provide the Advances to the Company, the Company issued the Lender warrants to purchase 41,196 shares of common stock (the “Warrants”) which rights are represented by a warrant certificate (“Warrant Certificate”). Subject to certain ownership limitations, the Warrants are exercisable immediately from the date of issuance, expire on the five ( 5 ) year anniversary of the date of issuance and have an exercise price of $ 3.24 per share. The exercise price of the Warrants is subject to certain adjustments, including stock dividends, stock splits, combinations and reclassifications of the common stock. In the event of a Triggering Event (as defined in the Warrant Certificate), the holder of the Warrants will be entitled to exercise the Warrants and receive the same amount and kind of securities, cash or property as such holder would have been entitled to receive upon the occurrence of such Triggering Event if such holder had exercised the rights represented by the Warrant Certificate immediately prior to the Triggering Event. Additionally, upon the holder’s request, the continuing or surviving corporation as a result of such Triggering Event will issue to such holder a new warrant of like tenor evidencing the right to purchase the adjusted amount of securities, cash or property and the adjusted warrant price. (See Note 10 – Stockholders’ Equity). F- 13 Table of Contents 2022 Subordinated LOC On May 11, 2022, the Company entered into a Credit Facility Agreement (the “2022 Subordinated LOC”) with Cleveland, Herndon Plant Oakley, Ltd., (“HPO”), and other lenders (together with Cleveland and HPO, the “Lenders”). The 2022 Subordinated LOC provided the Company with a short-term line of credit not less than $ 3,000,000 and not more than $ 5,000,000 , to be used by the Company for working capital purposes. In connection with the 2022 Subordinated LOC, the Company issued a separate subordinated unsecured promissory note in favor of each respective Lender (each promissory note, a “Note”) for each Lender’s commitment amount (each such commitment amount, a “Commitment Amount”). Pursuant to the terms of the 2022 Subordinated LOC, each Lender severally agrees to make loans (each such loan, an “Advance”) up to such Lender’s Commitment Amount to the Company from time to time, until December 31, 2022 (the “Due Date”). On December 15, 2022, the Board of Directors of the Company elected to extend the Due Date to December 31, 2023. The Company may, from time to time, prior to the Due Date, draw down, repay, and re-borrow on the Note, by giving notice to the Lenders of the amount to be requested to be drawn down. Each Note bears an interest rate of 15.0 % per annum on each Advance from and after the date of disbursement of such Advance and is payable on (i) the Due Date in cash or shares of common stock of the Company (the “Common Stock”) at the sole election of the Company, unless such Due Date is extended pursuant to the Note, or (ii) on occurrence of an event of Default (as defined in the Note). The Due Date may be extended (i) at the sole election of the Company for one (1) additional year period from the Due Date upon the payment of a commitment fee equal to two percent ( 2 %) of the Commitment Amount to the Lender within thirty (30) days prior to the original Due Date, or (ii) by the Lender in writing. In addition, each Lender signed a Subordination Agreement by and between the Lenders and SVB dated as of May 11, 2022 (the “Subordination Agreement”) for the purposes of subordinating the right to payment under the Note to SVB’s indebtedness by the Company now outstanding or hereinafter incurred. On December 15, 2022, the Board of Directors of the Company elected to extend the Due Date to December 31, 2023 and the Company paid the Lenders an extension fee in the aggregate amount of $ 80,000 . On July 28, 2023, in conjunction with the concurrent termination of the SVB Revolving LOC and the entry into a new credit facility with Gibraltar Business Capital (“GBC”), each Lender signed a Subordination Agreement by and between the Lenders and GBC dated as of July 28, 2023 (the “GBC Subordination Agreement”) for the purposes of subordinating the right to payment under the Note to GBC’s indebtedness by the Company then incurred and outstanding or thereinafter incurred. The 2022 Subordinated LOC included customary representations, warranties and covenants by the Company and the Lenders. The Company has also agreed to pay the legal fees of Cleveland’s counsel in an amount up to $ 10,000 . In addition, each Note also provides that, upon the occurrence of a Default, at the option of the Lender, the entire outstanding principal balance, all accrued but unpaid interest and/or Late Charges (as defined in the Note) at once will become due and payable upon written notice to the Company by the Lender. In connection with entry into the 2022 Subordinated LOC, the Company paid to each Lender a one-time commitment fee in cash equal to 3.5 % of such Lender’s Commitment Amount. In addition, in consideration of the Lenders’ commitment to provide the Advances to the Company, the Company issued the Lenders five-year warrants to purchase an aggregate of 128,000 shares of common stock at an exercise price of $ 2.53 per share that are, subject to certain ownership limitations, exercisable immediately (the “Warrants”) (the number of warrants issued to each Lender is equal to the product of (i) 160,000 shares of common stock multiplied by (ii) the ratio represented by each Lender’s Commitment Amount divided by the $5,000,000). Pursuant to a selling agreement, dated as of May 11, 2022, the Company retained HPO as its placement agent in connection with the Subordinated LOC. As compensation for services rendered in conjunction with the Subordinated LOC, the Company paid HPO a finder fee equal to 3 % of the Commitment Amount from each such Lender placed by HPO in cash. On November 2, 2023, the 2022 Subordinated LOC was terminated. F- 14 Table of Contents NOTE 10 – STOCKHOLDERS’ EQUITY At-The-Market (“ATM”) Offering On December 21, 2020 the Company entered into a Sales Agreement (the “Sales Agreement”) with H.C. Wainwright & Co., LLC (“HCW”) to sell shares of its common stock, par value $ 0.001 (the “Common Stock”) from time to time, through an “at-the-market offering” program (the “ATM Offering”). On October 5, 2023, the Company terminated the Sales Agreement with HCW pursuant to the terms of the Sales Agreement. From December 21, 2020 through October 5, 2023, the Company sold an aggregate of 1,524,873 shares of common stock at an average price of $ 10.45 per share for gross proceeds of approximately $ 15.9 million under the ATM Offering. The Company received net proceeds of approximately $ 15.3 million, net of commissions and other offering related expenses. Public Offering Registered Direct Offering On September 27, 2021, the Company closed a registered direct offering, priced at-the-market under Nasdaq rules (“RDO”) for the sale of 2,142,860 shares of common stock and warrants to purchase up to an aggregate of 1,071,430 shares of common stock, at an offering price of $ 7.00 per share and associated warrant for gross proceeds of approximately $ 15.0 million prior to deducting offering expenses totaling approximately $ 1.0 million. The associated warrants have an exercise price equal to $ 7.00 per share and are exercisable upon issuance and expire in five years. HCW acted as the exclusive placement agent for the registered direct offering. The securities sold in the RDO were sold pursuant to a “shelf” registration statement on Form S-3 (File No. 333-249521), including a base prospectus, previously filed with the Securities and Exchange Commission (the “SEC”) on October 16, 2020 and declared effective by the SEC on October 26, 2020. The registered direct offering of the securities was made by means of a prospectus supplement dated September 22, 2021 and filed with the SEC, that forms a part of the effective registration statement. The “shelf” registration statement expired on October 26, 2023. Warrants In connection with the Company’s RDO, in September 2021 the Company issued five-year warrants to the RDO investors to purchase up to 1,071,430 shares of the Company’s common stock at an exercise price of $ 7.00 per share and were estimated to have a fair value of approximately $ 3,874,000 . The warrants were exercisable immediately and are limited to beneficial ownership of 4.99 % at any point in time in accordance with the warrant agreement. In May 2022 and in conjunction with entry into a credit facility with Cleveland, HPO, and other lenders (together with Cleveland and HPO, the “Lenders”), the Company issued five-year warrants to the Lenders to purchase up to 128,000 shares of the Company’s common stock at an exercise price of $ 2.53 per share and had a fair value of approximately $ 173,000 . In June 2022 and in conjunction with the entry into the Second Amendment to Loan and Security Agreement with SVB, the Company issued twelve -year warrants to SVB and its designee, SVB Financial Group, to purchase up to 40,806 shares of the Company’s common stock at an exercise price of $ 2.23 per share and had a fair value of approximately $ 80,000 . In November 2023 and in conjunction with the entry into the 2023 Subordinated LOC, the Company issued five -year warrants to Cleveland Capital, L.P. to purchase up to 41,196 shares of the Company’s common stock at an exercise price of $ 3.24 per share with a fair value of approximately $ 92,000 . Warrant detail for the year ended June 30, 2024 is reflected below: SCHEDULE OF STOCK WARRANT ACTIVITY Number of Warrants Weighted Average Exercise Price Per Warrant Weighted Average Remaining Contract Term (# years) Warrants outstanding and exercisable at June 30, 2023 1,455,119 $ 6.10 Warrants issued 41,196 3.24 Warrants exercised - - Warrants forfeited and cancelled ( 83,205 ) 4.00 Warrants outstanding and exercisable at June 30, 2024 1,413,110 6.14 2.48 F- 15 Table of Contents Warrant detail for the year ended June 30, 2023 is reflected below: Number of Warrants Weighted Average Exercise Price Per Warrant Weighted Average Remaining Contract Term (# years) Warrants outstanding and exercisable at June 30, 2022 1,455,119 $ 6.10 Warrants issued - - Warrants outstanding and exercisable at June 30, 2023 1,455,119 6.10 3.17 Warrant detail for the year ended June 30, 2022 is reflected below: Number of Warrants Weighted Average Exercise Price Per Warrant Weighted Average Remaining Contract Term (# years) Warrants outstanding and exercisable at June 30, 2021 214,883 $ 4.49 Warrants issued 1,240,236 6.38 Warrants outstanding and exercisable at June 30, 2022 1,455,119 6.10 4.17 The Company uses the Black-Scholes valuation model to calculate the fair value of warrants. The fair value of warrants was measured at the issuance date using the assumptions in the table below: SCHEDULE OF FAIR VALUE ASSUMPTIONS OF WARRANTS Year ended June 30, 2024 2023 (1) 2022 Expected volatility 83.70 % - 82.45 % Risk free interest rate 4.65 % - 2.89 % Dividend yield - % - - % Expected term (years) 5.00 5.00 (1) No warrants were issued during the year ended June 30, 2023. Equity Award Plans In connection with the reverse acquisition of Flux Power, Inc. in 2012, the Company assumed the 2010 Plan. As of June 30, 2024, there weren’t any options to purchase common stock outstanding under the 2010 Plan. No additional options may be granted under the 2010 Plan. On February 17, 2015, the Company’s stockholders approved the 2014 Equity Incentive Plan (the “2014 Plan”). The 2014 Plan offers certain employees, directors, and consultants the opportunity to acquire the Company’s common stock subject to vesting requirements and serves to encourage such persons to remain employed by the Company and to attract new employees. The 2014 Plan allows for the award of the Company’s common stock and stock options, up to 1,000,000 shares of the Company’s common stock. As of June 30, 2024, 89,922 shares of the Company’s common stock were available for future grants under the 2014 Plan. On April 29, 2021, the Company’s stockholders approved the 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan authorizes the issuance of awards for up to 2,000,000 shares of common stock in the form of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock units, restricted stock awards and unrestricted stock awards to officers, directors and employees of, and consultants and advisors to, the Company or its affiliates. As of June 30, 2024, 777,551 shares of the Company’s common stock were available for future grants under the 2021 Plan. F- 16 Table of Contents On October 31, 2022, the Board of Directors authorized a total of 624,441 stock options to be granted under the Company’s 2014 Plan and 2021 Plan. Stock Options Activity in stock options during the year ended June 30, 2024 and related balances outstanding as of that date are reflected below: SCHEDULE OF STOCK OPTIONS ACTIVITY Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (# years) Aggregate intrinsic Value Weighted Average Grant Date Fair Value Outstanding at June 30, 2023 973,400 $ 6.44 Granted 1,034,204 3.45 $ 2.24 Exercised ( 100,104 ) 3.40 $ 97,593 Forfeited and cancelled ( 302,440 ) 5.66 Outstanding at June 30, 2024 1,605,060 4.85 7.96 – Exercisable at June 30, 2024 426,363 8.72 4.92 – Activity in stock options during the year ended June 30, 2023 and related balances outstanding as of that date are reflected below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (# years) Aggregate intrinsic Value Weighted Average Grant Date Fair Value Outstanding at June 30, 2022 503,433 $ 11.03 Granted 624,441 3.43 $ 2.88 Exercised ( 22,500 ) 4.60 $ 2,700 Forfeited and cancelled ( 131,974 ) 10.03 Outstanding at June 30, 2023 973,400 6.44 7.40 Exercisable at June 30, 2023 398,922 10.77 4.61 Activity in stock options during the year ended June 30, 2022 and related balances outstanding as of that date are reflected below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (# years) Aggregate intrinsic Value Outstanding at June 30, 2021 531,205 $ 11.02 Exercised ( 3,400 ) 4.65 $ 15,752 Forfeited and cancelled ( 24,372 ) 11.65 Outstanding and exercisable at June 30, 2022 503,433 11.03 5.66 F- 17 Table of Contents The Company uses the Black-Scholes valuation model to calculate the fair value of stock options. The fair value of stock options was measured at the grant date using the assumptions (annualized percentages) in the table below: SCHEDULE OF FAIR VALUE ASSUMPTIONS OF STOCK OPTIONS Year ended June 30, 2024 2023 2022 (1) Expected volatility 80.06 % 90.12 % - Risk free interest rate 4.86 4.21 - Forfeiture rate 20.00 20.00 - Dividend yield – – - Expected term (years) 6.00 6.25 (1) No stock options were granted during the year ended June 30, 2022. Restricted Stock Units On November 5, 2020, the Company’s Board of Directors approved an amendment to the 2014 Plan, to allow for grants of Restricted Stock Units (“RSUs”). Subject to vesting requirements set forth in the RSU Award Agreement, one share of common stock is issuable for one vested RSU. On April 29, 2021, a total of 18,312 time-based RSUs were authorized by the Company’s Board of Directors to be granted under the amended 2014 Option Plan. On October 29, 2021, the Board of Directors authorized the following RSUs to be granted under the amended 2014 Option Plan: (i) a total of 97,828 RSUs to certain executive officers of which 48,914 were performance-based RSUs and 48,914 were time-based RSUs, and (ii) a total of 81,786 time-based RSUs to certain other key employees. The RSUs are subject to the terms and conditions provided in (i) the Restricted Stock Unit Award Agreement for time-based awards (“Time-based Award Agreement”), and (ii) the Performance Restricted Stock Unit Award Agreement for performance-based awards (“Performance-based Award Agreement”). Under the amended 2014 Option Plan and 2021 Plan, a total of 68,228 and 57,532 of time-based RSUs were authorized on April 18, 2024 and April 20, 2023, respectively, by the Company’s Board of Directors to be granted to the Company’s four non-executive directors. Activity in RSUs during the year ended June 30, 2024 and related balances outstanding as of that date are reflected below: SCHEDULE OF RESTRICTED STOCK UNITS ACTIVITY Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (# years) Outstanding at June 30, 2023 193,749 $ 6.09 Granted 68,228 4.25 Vested and settled ( 136,956 ) 5.55 Forfeited and cancelled ( 10,355 ) 6.91 Outstanding at June 30, 2024 114,666 5.56 0.61 Activity in RSUs during the year ended June 30, 2023 and related balances outstanding as of that date are reflected below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (# years) Outstanding at June 30, 2022 304,221 $ 6.06 Granted 72,566 3.44 Vested and settled ( 109,676 ) 3.77 Forfeited and cancelled ( 73,362 ) 6.80 Outstanding at June 30, 2023 193,749 6.09 0.98 F- 18 Table of Contents Activity in RSUs during the year ended June 30, 2022 and related balances outstanding as of that date are reflected below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (# years) Outstanding at June 30, 2021 131,652 $ 9.25 Granted 250,786 4.82 Vested and settled ( 9,156 ) 11.56 Forfeited and cancelled ( 69,061 ) 6.93 Outstanding at June 30, 2022 304,221 6.06 1.82 Employee Stock Purchase Plan On March 6, 2023, the Company’s Board of Directors approved the 2023 Employee Stock Purchase Plan (the “2023 ESPP”), which subsequently was approved by the Company’s stockholders on April 20, 2023. The 2023 ESPP enables eligible employees of the Company and certain of its subsidiaries (a “Participating Subsidiary”) to use payroll deductions to purchase shares of the Company’s Common Stock and acquire an ownership interest in the Company. The maximum aggregate number of shares of the Company’s Common Stock that have been reserved as authorized for the grant of options under the 2023 ESPP is 350,000 shares, subject to adjustment as provided for in the 2023 ESPP. Participation in the 2023 ESPP is voluntary and is limited to eligible employees (as such term is defined in the 2023 ESPP) of the Company or a Participating Subsidiary who (i) has been employed by the Company or a Participating Subsidiary for at least 90 days and (ii) is customarily employed for at least twenty (20) hours per week and more than five (5) months in any calendar year. Each eligible employee may authorize payroll deductions of 1-15% of the eligible employee’s compensation on each pay day to be used to purchase up to 1,500 shares of Common Stock for the employee’s account occurring during an offering period. The 2023 ESPP has a term of ten (10) years commencing on April 20, 2023, the date of approval by the Company’s stockholders, unless otherwise earlier terminated. On March 28, 2024, participants in the 2023 ESPP purchased an aggregate total of 37,543 shares of common stock at a price equal to 85 % of $ 3.30 , which was the closing price of the Company’s common stock on the offering date pursuant to the provisions of the 2023 ESPP. At June 30, 2024, 312,457 shares of the Company’s common stock were available for future grants under the 2023 ESPP. Stock-based Compensation Stock-based compensation expense for the fiscal years ended June 30, 2024 and 2023 represents the estimated fair value of stock options, RSUs and ESPP offerings at the time of grant amortized under the straight-line method over the expected vesting period and reduced for estimated forfeitures of options and RSUs. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from original estimates. At June 30, 2024, the aggregate intrinsic value of the outstanding options and the exercisable options were zero and zero , respectively. The following table summarizes stock-based compensation expense for employee and non-employee option and RSU grants: SCHEDULE OF STOCK-BASED COMPENSATION EXPENSES Year ended June 30, 2024 2023 2022 Research and development $ 1,335,000 $ 173,000 $ 144,000 Selling and administrative 236,000 625,000 567,000 Total stock-based compensation expense $ 1,571,000 $ 798,000 $ 711,000 At June 30, 2024, the unamortized stock-based compensation expense relating to outstanding stock options and RSUs was approximately $ 2,282,000 and $ 319,000 , respectively, and these amounts are expected to be expensed over the weighted-average remaining recognition period of 1.60 years and 0.44 years, respectively. F- 19 Table of Contents NOTE 11 – INCOME TAXES Pursuant to the provisions of FASB ASC Topic No. 740 Income Taxes (“ASC 740”), deferred income taxes reflect the net effect of (a) temporary difference between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating loss and tax credit carryforwards. A valuation allowance of approximately $ 26,483,000 , $ 24,696,000 and $ 23,461,000 has been established to offset the net deferred tax assets as of June 30, 2024, 2023 and 2022, respectively, due to uncertainties surrounding the Company’s ability to generate future taxable income to realize these assets. The Company is subject to taxation in the United States, California and Georgia. The Company’s tax years from 2010 and forward are subject to examination by the United States and state taxing authorities due to the carry forward of unutilized net operating losses and research and development credits, as applicable. The Company has incurred losses since inception. A current state income tax provision of $ 3,000 has been recorded for state minimum and net worth taxes. Significant components of the Company’s net deferred tax assets and liabilities are shown in the table below. SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES Year ended June 30, 2024 2023 2022 Restated Restated Deferred tax assets: Net operating loss carryforwards $ 21,553,000 $ 20,941,000 $ 20,780,000 Research and development credit carryforward 27,000 27,000 27,000 Capitalized research and development expenses 1,987,000 1,320,000 – Stock compensation 638,000 971,000 1,636,000 Disallowed interest expense 431,000 – – Lease liability 567,000 736,000 802,000 Other, net 1,785,000 1,366,000 943,000 Gross deferred tax assets 26,988,000 25,361,000 24,188,000 Less valuation allowance ( 26,483,000 ) ( 24,696,000 ) ( 23,461,000 ) Total deferred tax assets 505,000 665,000 727,000 Deferred tax liabilities: Right of use asset ( 505,000 ) ( 665,000 ) ( 727,000 ) Total deferred tax liabilities ( 505,000 ) ( 665,000 ) ( 727,000 ) Total net deferred tax liabilities $ – $ – $ – At June 30, 2024, the Company had unused net operating loss (“NOL”) carryovers of approximately $ 74,816,000 and $ 84,522,000 that are available to offset future federal and state taxable income, respectively. Federal NOL carryforwards arising after 2017 of approximately $ 42,408,000 do not expire. Federal NOL carryforwards arising before 2018 of approximately $ 22,408,000 and all of the state NOL carryforward begin to expire in 2030 . The provision for income taxes on earnings subject to income taxes differs from the statutory federal rate at June 30, 2024 and 2023, due to the following: SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION Year ended June 30, 2024 2023 2022 Restated Restated Federal income taxes at 21 % $ ( 1,749,000 ) $ ( 1,625,000 ) $ ( 3,459,000 ) State income taxes, net ( 546,000 ) ( 485,000 ) ( 1,151,000 ) Permanent differences and other 241,000 152,000 102,000 Other true ups 270,000 725,000 ( 113,000 ) Change in valuation allowance 1,787,000 1,235,000 4,621,000 Provision for income taxes $ 3,000 $ 2,000 $ - F- 20 Table of Contents Internal Revenue Code Sections 382 limits the use of our net operating loss carryforwards if there has been a cumulative change in ownership of more than 50% within a three-year period. The Company has not yet completed a Section 382 net operating loss analysis. If such analysis determines there is a limitation on the use on net operating loss carryforwards to offset future taxable income, the recorded deferred tax asset relating to such net operating loss carryforwards will be reduced. However, as the Company has recorded a full valuation allowance against its net deferred tax assets, there would be no impact on the Company’s consolidated financial statements as of June 30, 2024, 2023 and 2022. Under ASC 740, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, ASC 740 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. In accordance with ASC 740, there are no unrecognized tax benefits as of June 30, 2024, 2023 or 2022. NOTE 12 – CONCENTRATIONS Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and unsecured trade accounts receivable. The Company maintains cash balances in non-interest-bearing bank deposit accounts at a California commercial bank. The Company’s cash balance at this institution is secured by the Federal Deposit Insurance Corporation up to $ 250,000 . As of June 30, 2024, 2023 and 2022, cash was approximately $ 643,000 , $ 2.4 million and $ 485,000 , respectively. On March 10, 2023, the Federal Deposit Insurance Corporation (the “FDIC”) issued a press release stating that Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. In a joint statement issued by the Department of the Treasury, Board of Governors of the Federal Reserve System and Federal Deposit Insurance Corporation on March 12, 2023, the Department of Treasury took actions to enable the FDIC to complete its resolution of SVB in a manner that fully protects all depositors. According to the joint statement (the “Statement”), depositors will have access to all of their money starting Monday, March 13, 2023. On March 13, 2023, Silicon Valley Bridge Bank, N.A., the new entity formed by the FDIC announced appointment of a new CEO, who provided assurance of immediate restoration of full banking services. On March 27, 2023, First Citizens BancShares, Inc. announced that it has entered into an agreement with the FDIC to purchase all of the assets and liabilities of Silicon Valley Bridge Bank, N.A. The Company has not experienced any losses in such accounts. Management believes that the Company is not exposed to any significant credit risk with respect to its cash. Customer Concentrations During the year ended June 30, 2024, the Company had three (3) major customers that each represented more than 10% of its revenues on an individual basis, and together represented approximately $ 47,178,000 or 78 % of its total revenues. During the year ended June 30, 2023, the Company had three (3) major customers (as restated) that each represented more than 10% of its revenues on an individual basis, and together represented approximately $ 53,140,000 (as restated) or 80 % (as restated) of its total revenues. During the year ended June 30, 2022, the Company had four (4) major customers that each represented more than 10% of its revenues on an individual basis, and together represented approximately $ 35,229,000 (as restated) or 83 % (as restated) of its total revenues. Suppliers/Vendor Concentrations The Company obtains a limited number of components and supplies included in its products from a small group of suppliers. During the year ended June 30, 2024 the Company had one (1) supplier who accounted for more than 10% of its total purchases which represented approximately $ 12,437,000 or 27 % of its total purchases. During the year ended June 30, 2023 the Company had one (1) supplier who accounted for more than 10% of its total purchases which represented approximately $ 17,022,000 or 31 % of its total purchases. During the year ended June 30, 2022 the Company had one (1) supplier who accounted for more than 10% of its total purchases which represented approximately $ 13,884,000 or 28 % of its total purchases NOTE 13 – COMMITMENTS AND CONTINGENCIES Legal Proceedings From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in any legal proceedings that may arise from time to time may harm the Company’s business. To the best of its knowledge, except for the legal proceedings disclosed below, there are no other material legal proceedings pending against the Company. F- 21 Table of Contents Securities Class Action On November 1, 2024, plaintiff Asfa Kassam filed a purported federal securities class action complaint in the United States District Court, District of Nevada, captioned Kassam v. Flux Power Holdings, Inc. et al. (No. 2:24-cv-02051), against the Company, our Chief Executive Officer, Ronald F. Dutt, and our former Chief Financial Officer, Charles A. Scheiwe. The complaint generally alleges that the defendants made false and misleading statements in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The action purports to be brought on behalf of those who purchased or otherwise acquired the Company’s publicly traded securities between November 11, 2022 and September 30, 2024, and seeks unspecified damages and other relief. On January 14, 2025, the court granted an unopposed motion to transfer the case to the Southern District of California for all further proceedings. The case is in its early stages and a lead plaintiff has yet to be appointed. Management believes these claims to be meritless and intends to vigorously defend against them. Shareholder Derivative Action On January 7, 2025, plaintiff Ronald Pearl filed a purported shareholder derivative complaint in the United States District Court, District of Nevada, captioned Pearl v. Dutt, et al . (No. 2:25-cv-00042), against current and former officers and directors of the Company, naming the Company as a nominal defendant. The complaint generally arises out of the same allegations contained in the Kassam securities class action and alleges claims for breach of fiduciary duties and related claims. The action purports to be brought derivatively on behalf of the Company and seeks damages and other various relief. Employment Related Actions On April 30, 2024, a former employee (the “Employee”) filed a class action complaint against the Company and Insperity, its third-party payroll service provider, in San Diego County Superior Court for claims including failure to pay minimum wage, failure to pay overtime, failure to provide meal periods, failure to provide rest breaks, failure to pay wages at separation, failure to provide accurate wage statements, failure to reimburse business expenses, failure to produce employment records and unfair competition, which he has purported to assert on behalf of himself and all other individuals who worked for the Company or Insperity, as non-exempt employees in California between April 30, 2020 and the present (the “Employment Proceeding”). On July 1, 2024, the Company filed an answer to the complaint that none of the asserted claims possessed any merit, contended that many of the asserted claims were subject to immediate dismissal, and contended that certain of the asserted claims were subject to binding arbitration. On October 14, 2024, the Employee elected to dismiss Insperity from the action without prejudice. On July 5, 2024, the Employee filed a representative action complaint against the Company and Insperity in San Diego County Superior Court for Violation of Private Attorneys’ General Act (“PAGA”), seeking an unspecified amount of penalties and attorneys’ fees based on allegations that the Compnay violated certain California employment laws (the “PAGA Proceeding”). On August 8, 2024, the Company filed an answer to the complaint in which the Company denied that any of the asserted claims possessed any merit and contended that certain of the asserted claims were subject to binding arbitration. On December 10, 2024, the Company and the Employee stipulated to the consolidation of Employment Lawsuit and the PAGA Action. As of the date hereof, both proceedings are currently pending consolidation by the court. Upon consolidation, the Company intends to move to have the Employee’s action claims dismissed, the Employee’s individual claims compelled to binding arbitration and the Employee’s representative PAGA claims stayed pending the arbitration of his individual claims. On October 22, 2024, the Employee elected to dismiss Insperity from the action without prejudice. On January 25, 2024, a former CPM, LTD Inc. (“CPM”) employee filed a complaint against CPM, a third-party staffing service provider, Flux Power, Inc., and Flux Power Holdings, Inc. (collectively, the “Defendants”) in San Diego County Superior Court for claims including harassment, failure to prevent harassment, retaliation, wrongful termination, failure to provide meal periods and rest breaks, failure to provide accurate wage statements, and failure to pay wages at separation. CPM is a San Diego based staffing company that provided employees (including the plaintiff) to the Company. The plaintiff has alleged that the Company and CPM were “joint employers” to the plaintiff under California law and are jointly liable for the plaintiff’s claims. The plaintiff is seeking an unspecified amount of unpaid wages, statutory penalties, emotional distress damages, punitive damages, and attorneys’ fees from Defendants. On June 21, 2024, the Company filed an answer to the complaint in which the Company denied that any of the asserted claims possessed any merit and contended that certain of the asserted claims were subject to binding arbitration. It is not possible at this time to reasonably assess the final outcomes of these proceedings or reasonably to estimate the possible loss or range of loss with respect to these proceedings. The Company intends to vigorously defend against these claims. Operating Leases On April 25, 2019 the Company signed a Standard Industrial/Commercial Multi-Tenant Lease (“Lease”) with Accutek to rent approximately 45,600 square feet of industrial space at 2685 S. Melrose Drive, Vista, California. The Lease has an initial term of seven years and four months and commenced on or about June 28, 2019. The lease contains an option to extend the term for two periods of 24 months each, and the right of first refusal to lease an additional approximate 15,300 square feet. The monthly rental rate was $ 42,400 for the first 12 months, escalating at 3 % each year. On February 26, 2020, the Company entered into the First Amendment to Standard Industrial/Commercial Multi-Tenant Lease dated April 25, 2019 (the “Amendment”) with Accutek to rent an additional 16,309 rentable square feet of space plus a residential unit of approximately 1,230 rentable square feet (for a total of approximately 17,539 rentable square feet). The lease for the additional space commenced 30 days following the occupancy date of the additional space and will terminate concurrently with the term of the original lease, which expires on November 20, 2026 . The base rent for the additional space is the same rate as the space rented under the terms of the original lease, $ 0.93 per rentable square foot (subject to 3% annual increase). In connection with the Amendment, the Company purchased certain existing office furniture for a total purchase price of $ 8,300 . On December 16, 2022 the Company signed a Lease Agreement with MM Parker Court Associates, LLC to rent approximately 4,892 square feet of office space at Building 1959 Parker Court, Suite E, Atlanta, Georgia. The Lease has an initial term of five years and three months and commenced on or about February 1, 2023. The monthly rental rate was approximately $ 2,300 for the first 6 months, and $ 4,700 for months 7 to 12, escalating at 5 % each year. Total rent expense was approximately $ 942,000 , $ 899,000 and $ 867,000 for the fiscal years ended June 30, 2024, 2023 and 2022, respectively. Finance Leases The Company has finance leases outstanding as of June 30, 2024 as follows: SCHEDULE OF FINANCE LEASES Lease Date Property Leased Lease Term (months) Commencement Date Monthly Lease Payment(1) 9/2/2022 Vehicle 60 9/10/2022 $ 1,100 10/17/2022 Manufacturing equipment 36 10/17/2022 $ 5,500 1/24/2023 Manufacturing equipment 36 1/24/2023 $ 6,700 3/2/2023 Manufacturing equipment 36 3/2/2023 $ 1,000 (1) Excludes sales tax and other fees. Lease costs are amortized on a straight-line basis over their respective lease terms. Depreciation expense related to leased assets was approximately $ 153,000 and $ 86,000 for the years ended June 30, 2024 and 2023, respectively. Interest expense on leased liabilities was approximately $ 29,000 and $ 23,000 for the years ended June 30, 2024 and 2023, respectively. The Company did not have any finance leases during the year ended June 30, 2022. Future minimum lease payments as of June 30, 2024 are as follows: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS Operating Leases Finance Leases Years ending June 30, 2025 $ 882,000 $ 172,000 2026 910,000 85,000 2027 433,000 15,000 2028 64,000 21,000 2029 - - Total future minimum lease payments 2,289,000 293,000 Less: discount ( 234,000 ) ( 25,000 ) Total lease liability 2,055,000 268,000 Less: leases payable, current portion ( 734,000 ) ( 156,000 ) Leases payable, noncurrent portion $ 1,321,000 $ 112,000 The weighted average remaining lease term for operating leases was 2.6 years, 3.6 years and 4.4 years as of June 30, 2024, 2023 and 2022, respectively. The weighted average discount rate for operating leases was 8.8 %, 8.9 % and 10.0 % as of June 30, 2024, 2023 and 2022, respectively. The weighted average remaining lease term for finance leases was 1.6 years and 2.6 years as of June 30, 2024 and 2023, respectively. The weighted average discount rate for finance leases was 1.9 % and 1.7 % as of June 30, 2024 and 2023, respectively. There were no finance leases as of June 30, 2022. NOTE 14 – SUBSEQUENT EVENTS Management Transition On November 20, 2024, Ronald F. Dutt, the Company’s chairman and Chief Executive Officer, notified the Company’s Board of Directors of his intentions to retire from his positions upon the appointment of a new Chief Executive Officer. The Board has commenced a search for a new Chief Executive Officer and Mr. Dutt will remain with the Company through the search and transition period. Waivers to Loan and Security Agreement with Gibraltar Business Capital As previously announced in the Company’s Form 8-K filed with the SEC on September 5, 2024, the Board of Directors of the Company, including its audit committee members, concluded on August 30, 2024 that the previously issued audited consolidated financial statements for the fiscal years ended June 30, 2023 and 2022, and all of the quarterly unaudited consolidated financial statements within the fiscal years ended June 30, 2024, 2023 and 2022 (collectively, the “Prior Financial Statements”), could no longer be relied upon due to material accounting errors identified by management. See Note 15 – Restatement of Previously Issued Financial Statements. The Company notified GBC that the restatement of historical financial statements was likely to result in event of default with respect to the Company’s failure to maintain the EDITDA covenant for the trailing three (3) month periods ended July 31, 2023 and August 31, 2023, or Default. On August 30, 2025, the Company received a Waiver, which waived the Default, subject to satisfaction of the following conditions: (i) receipt of a counterpart of the Waiver duly executed by the Company; and (ii) receipt of the representations and warranties from the Company that after giving effect to the Waiver, the representations and warranties contained in the Agreement, the Waiver and the other Loan Documents shall be true and correct; and (iii) after giving effect to the Waiver, no additional event of default shall have occurred and be continuing on and as of the effective date of the Waiver. The Company’s failure to file this Annual Report on Form 10-K for the year ended June 30, 2024 in a timely manner resulted in an event of default with respect to the covenant to timely deliver a copy of the Company’s annual audited financial statements. Additionally, the Company notified GBC that it appeared likely that as a result of the restatement it would fail to maintain the EBITDA covenant for the trailing three (3) month periods ended May 31, 2024 and July 31, 2024, or Default. On January 17, 2025, the Company received a Waiver, which waived the Defaults, subject to satisfaction of the following conditions: (i) receipt of a counterpart of the Waiver duly executed by the Company; and (ii) receipt of the waiver fee of $25,000; and (iii) receipt of the representations and warranties from the Company that after giving effect to the Waiver, the representations and warranties contained in the Agreement, the Waiver and the other Loan Documents shall be true and correct; and (iv) after giving effect to the Waiver, no additional event of default shall have occurred and be continuing on and as of the effective date of the Waiver . Amendment to Loan and Security Agreement with Gibraltar Business Capital On January 22, 2025, we entered into Amendment No. 4 to Loan and Security Agreement (the “Fourth Amendment”) with GBC which amended certain terms of the Loan and Security Agreement dated July 28, 2023, as amended, relating to the EBITDA Minimum financial covenant of the Company. In consideration for the Fourth Amendment, the Company agreed to pay GBC a non-refundable amendment fee of $ 50,000 in cash, as follows: (i) $ 25,000 shall be due and payable on March 1, 2025, and (ii) $ 25,000 shall be due and payable on April 1, 2025. NOTE 15 – RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS As described in Note 2 – Restatement of Previously Issued Financial Statements, and as further described below, in connection with the preparation of its consolidated financial statements as of and for the year ended June 30, 2024, the Company identified multiple prior-period misstatements that were improperly accounted for in its previously issued audited consolidated financial statements for the fiscal years ended June 30, 2023 and 2022. The nature of the restatement adjustments and their impact on previously reported consolidated financial statements are as follows: (a) Inventories. The Company did not properly evaluate its calculation of its excess and obsolescence reserve on its finished goods and raw materials inventories, resulting in an overstatement of inventories of $ 926,000 and $ 764,000 as of June 30, 2023 and 2022, respectively, an understatement of accumulated deficit of $ 521,000 as of June 30, 2021, and an understatement of cost of sales of $ 162,000 and $ 243,000 for the years ended June 30, 2023, and 2022, respectively. In addition, certain inventory components were not properly recorded at the lower of cost or net realizable value, resulting in an overstatement of inventories of $ 781,000 and $ 607,000 as of June 30, 2023 and 2022, respectively, an understatement of accumulated deficit of $ 296,000 as of June 30, 2021, and an understatement of cost of sales of $ 174,000 and $ 311,000 for the years ended June 30, 2023 and 2022, respectively. Further, certain loaner service packs and consigned inventory were not reconciled in a timely manner, resulting in an overstatement of inventories of $ 670,000 and $ 210,000 as of June 30, 2023 and 2022, respectively, and an understatement of cost of sales of $ 460,000 and $ 210,000 for the years ended June 30, 2023 and 2022, respectively. Additionally, the Company did not properly present inventory write downs on the consolidated statement of cash flows resulting in an understatement of inventory write downs of $ 354,000 and $ 111,000 and corresponding overstatement of changes in inventories of $ 354,000 and $ 111,000 on the consolidated statement of cash flows for the years ended June 30, 2023 and 2022, respectively. (b) Revenues. The Company did not properly recognize revenue in the periods in which the related performance obligations were satisfied for a certain contract with a customer, resulting in an understatement of revenues of $ 151,000 for the year ended June 30, 2023 and a corresponding understatement of accounts receivable of $ 151,000 as of June 30, 2023. (c) Expense classification. The Company improperly recorded various inventory write downs to research and development expenses although such expenses did not meet the classification criteria for research and development under ASC 730, resulting in an overstatement of research and development expenses and a corresponding understatement of cost of sales of $ 208,000 and $ 828,000 for the years ended June 30, 2023 and 2022, respectively. (d) Other. The Company had various clearing accounts that were not reconciled in a timely manner, resulting in an understatement of accounts payable of $ 137,000 as of June 30, 2023, overstatement of inventories of $ 461,000 and $ 241,000 as of June 30, 2023 and 2022, respectively, an understatement of accumulated deficit of $ 141,000 as of June 30, 2021, and understatement of cost of sales of $ 357,000 and $ 100,000 for the years ended June 30, 2023 and 2022, respectively. (e) Cash flow presentation of debt issuance cost in the form of issued Company stock warrants. The Company erroneously presented $ 253,000 of debt issuance cost incurred in conjunction with credit facility arrangements made during the year ended June 30, 2022 as fair value of warrants issued, an adjustment to reconcile net loss to cash used in operating activities in the Company’s consolidated statement of cash flows for the year ended June 30, 2022. As debt issuance costs are recorded as a current asset, the presentation overstated items reconciling net loss to cash used in operating activities and understated the change in other assets in the consolidated statement of cash flows. Additionally, the Company improperly omitted the non-cash disclosure related to the issuance of warrants within the supplemental disclosures of non-cash investing and financing activities for the year ended June 30, 2022. Below are the restated consolidated balance sheets as of June 30, 2023 and 2022, and the restated consolidated statements of operations, statements of stockholders’ equity and statements of cash flows for each of the years ended June 30, 2023 and 2022 that summarize the effects of the restatement. F- 22 Table of Contents SCHEDULE OF ADJUSTMENT FOR CORRECTION TO PREVIOUS PERIODS FLUX POWER HOLDINGS, INC. CONSOLIDATED BALANCE SHEET As previously reported Restatement adjustments Reference As restated June 30, 2023 As previously reported Restatement adjustments Reference As restated ASSETS Current assets: Cash $ 2,379,000 $ – $ 2,379,000 Accounts receivable (b) 8,649,000 151,000 (b) 8,800,000 Inventories, net (a)(d) 18,996,000 ( 2,838,000 ) (a) (d) 16,158,000 Other current assets 918,000 - 918,000 Total current assets 30,942,000 ( 2,687,000 ) 28,255,000 Right of use asset 2,854,000 – 2,854,000 Property, plant and equipment, net 1,789,000 – 1,789,000 Other assets 120,000 – 120,000 Total assets $ 35,705,000 $ ( 2,687,000 ) $ 33,018,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable (b)(d) $ 9,735,000 $ 137,000 (d) $ 9,872,000 Accrued expenses 3,181,000 – 3,181,000 Line of credit 9,912,000 – 9,912,000 Deferred revenue 131,000 – 131,000 Customer deposits 82,000 – 82,000 Finance leases payable, current portion 143,000 – 143,000 Office leases payable, current portion 644,000 – 644,000 Accrued interest 2,000 – 2,000 Total current liabilities 23,830,000 137,000 23,967,000 Long term liabilities: Finance leases payable, less current portion 273,000 – 273,000 Office leases payable, less current portion 2,055,000 – 2,055,000 Total liabilities 26,158,000 137,000 26,295,000 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; 16,462,215 shares issued and outstanding 16,000 – 16,000 Additional paid-in capital 98,086,000 – 98,086,000 Accumulated deficit (a)(b)(d) ( 88,555,000 ) ( 2,824,000 ) (a) (b) (d) ( 91,379,000 ) Total stockholders’ equity 9,547,000 ( 2,824,000 ) 6,723,000 Total liabilities and stockholders’ equity $ 35,705,000 $ ( 2,687,000 ) $ 33,018,000 F- 23 Table of Contents FLUX POWER HOLDINGS, INC. CONSOLIDATED BALANCE SHEET As previously reported Restatement adjustments Reference As restated June 30, 2022 As previously reported Restatement adjustments Reference As restated ASSETS Current assets: Cash $ 485,000 $ – $ 485,000 Accounts receivable 8,609,000 – 8,609,000 Inventories, net (a)(d) 16,262,000 ( 1,822,000 ) (a) (d) 14,440,000 Other current assets 1,261,000 – 1,261,000 Total current assets 26,617,000 ( 1,822,000 ) 24,795,000 Right of use asset 2,597,000 – 2,597,000 Property, plant and equipment, net 1,578,000 – 1,578,000 Other assets 89,000 – 89,000 Total assets $ 30,881,000 $ ( 1,822,000 ) $ 29,059,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 6,645,000 $ – $ 6,645,000 Accrued expenses 2,209,000 – 2,209,000 Line of credit 4,889,000 – 4,889,000 Deferred revenue 163,000 – 163,000 Customer deposits 175,000 – 175,000 Office leases payable, current portion 504,000 – 504,000 Accrued interest 1,000 – 1,000 Total current liabilities 14,586,000 – 14,586,000 Long term liabilities: Office leases payable, less current portion 2,361,000 – 2,361,000 Total liabilities 16,947,000 – 16,947,000 Stockholders’ equity: Preferred stock, $ 0.001 par value; 500,000 shares authorized; none issued and outstanding - - - Preferred stock value - - - Common stock, $ 0.001 par value; 30,000,000 shares authorized; 15,996,658 shares issued and outstanding 16,000 – 16,000 Common stock value 16,000 – 16,000 Additional paid-in capital 95,732,000 95,732,000 Accumulated deficit (a)(d) ( 81,814,000 ) ( 1,822,000 ) (a) (d) ( 83,636,000 ) Total stockholders’ equity 13,934,000 ( 1,822,000 ) 12,112,000 Total liabilities and stockholders’ equity $ 30,881,000 $ ( 1,822,000 ) $ 29,059,000 F- 24 Table of Contents FLUX POWER HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS As previously reported Restatement adjustments Reference As restated Year ended June 30, 2023 As previously reported Restatement adjustments Reference As restated Revenues (b) $ 66,337,000 $ 151,000 (b) $ 66,488,000 Cost of sales (a)(c)(d) 49,237,000 1,361,000 (a) (c) (d) 50,598,000 Gross profit 17,100,000 ( 1,210,000 ) 15,890,000 Operating expenses: Selling and administrative 17,620,000 – 17,620,000 Research and development (c) 4,890,000 ( 208,000 ) (c) 4,682,000 Total operating expenses 22,510,000 ( 208,000 ) 22,302,000 Operating loss ( 5,410,000 ) ( 1,002,000 ) ( 6,412,000 ) Other income (expense): Other income 8,000 – 8,000 Interest income (expense), net ( 1,339,000 ) – ( 1,339,000 ) Net loss $ ( 6,741,000 ) $ ( 1,002,000 ) $ ( 7,743,000 ) Net loss per share - basic and diluted $ ( 0.42 ) $ ( 0.06 ) $ ( 0.48 ) Weighted average number of common shares outstanding - basic and diluted 16,055,256 16,055,256 16,055,256 F- 25 Table of Contents As previously reported Restatement adjustments Reference As restated Year ended June 30, 2022 As previously reported Restatement adjustments Reference As restated Revenues $ 42,333,000 $ – $ 42,333,000 Cost of sales (a)(c)(d) 35,034,000 1,692,000 (a) (c) (d) 36,726,000 Gross profit 7,299,000 ( 1,692,000 ) 5,607,000 Operating expenses: Selling and administrative 15,515,000 – 15,515,000 Research and development (c) 7,141,000 ( 828,000 ) (c) 6,313,000 Total operating expenses 22,656,000 ( 828,000 ) 21,828,000 Operating loss ( 15,357,000 ) ( 864,000 ) ( 16,221,000 ) Other income (expense): Interest income (expense), net ( 252,000 ) – ( 252,000 ) Net loss $ ( 15,609,000 ) $ ( 864,000 ) $ ( 16,473,000 ) Net loss per share - basic and diluted $ ( 1.01 ) $ ( 0.06 ) $ ( 1.07 ) Weighted average number of common shares outstanding - basic and diluted 15,439,530 15,439,530 15,439,530 F- 26 Table of Contents FLUX POWER HOLDING, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY Reference Shares Capital Stock Amount Additional Paid-in Capital Accumulated Deficit Total Common Stock Reference Shares Capital Stock Amount Additional Paid-in Capital Accumulated Deficit Total As previously reported Balance, June 30, 2022 15,996,658 $ 16,000 $ 95,732,000 $ ( 81,814,000 ) $ 13,934,000 Issuance of common stock and warrants - registered direct offering, net of costs Issuance of common stock and warrants - registered direct offering, net of costs, shares Issuance of common stock – public offering, net of costs 355,309 – 1,556,000 – 1,556,000 Issuance of common stock – exercised options and RSU settlement 110,248 – – – – Fair value of warrants issued Stock-based compensation – – 798,000 – 798,000 Net loss – – – ( 6,741,000 ) ( 6,741,000 ) Balance, June 30, 2023 16,462,215 16,000 98,086,000 ( 88,555,000 ) 9,547,000 Adjustments Balance, June 30, 2022 (a)(d) (a) (d) – – – ( 1,822,000 ) ( 1,822,000 ) Net loss (a) (b) (d) (a) (b) (d) – – – ( 1,002,000 ) ( 1,002,000 ) Balance, June 30, 2023 – – – ( 2,824,000 ) ( 2,824,000 ) As restated Balance, June 30, 2022 15,996,658 16,000 95,732,000 ( 83,636,000 ) 12,112,000 Issuance of common stock – public offering, net of costs 355,309 – 1,556,000 – 1,556,000 Issuance of common stock – exercised options and RSU settlement 110,248 – – – – Stock-based compensation – – 798,000 – 798,000 Net loss – – – ( 7,743,000 ) ( 7,743,000 ) Balance, June 30, 2023 16,462,215 $ 16,000 $ 98,086,000 $ ( 91,379,000 ) $ 6,723,000 F- 27 Table of Contents FLUX POWER HOLDING, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY Reference Shares Capital Stock Amount Additional Paid-in Capital Accumulated Deficit Total Common Stock Reference Shares Capital Stock Amount Additional Paid-in Capital Accumulated Deficit Total As previously reported Balance, June 30, 2021 13,652,164 $ 14,000 $ 79,197,000 $ ( 66,205,000 ) $ 13,006,000 Issuance of common stock and warrants - registered direct offering, net of costs 2,142,860 2,000 13,969,000 – 13,971,000 Issuance of common stock – public offering, net of costs 190,782 – 1,602,000 – 1,602,000 Issuance of common stock - exercised options and RSU settlement 10,852 – – – – Fair value of warrants issued – – 253,000 – 253,000 Stock-based compensation – – 711,000 – 711,000 Net loss – – – ( 15,609,000 ) ( 15,609,000 ) Balance, June 30, 2022 15,996,658 16,000 95,732,000 ( 81,814,000 ) 13,934,000 Adjustments Balance, June 30, 2021 (a)(d) (a) (d) – – – ( 958,000 ) ( 958,000 ) Net loss (a)(d) (a) (d) – – – ( 864,000 ) ( 864,000 ) Balance, June 30, 2022 – – – ( 1,822,000 ) ( 1,822,000 ) As restated Balance, June 30, 2021 13,652,164 14,000 79,197,000 ( 67,163,000 ) 12,048,000 Balance 13,652,164 14,000 79,197,000 ( 67,163,000 ) 12,048,000 Issuance of common stock and warrants - registered direct offering, net of costs 2,142,860 2,000 13,969,000 – 13,971,000 Issuance of common stock – public offering, net of costs 190,782 – 1,602,000 – 1,602,000 Issuance of common stock - exercised options and RSU settlement 10,852 – – – – Fair value of warrants issued – – 253,000 – 253,000 Stock-based compensation – – 711,000 – 711,000 Net loss – – – ( 16,473,000 ) ( 16,473,000 ) Balance, June 30, 2022 15,996,658 $ 16,000 $ 95,732,000 $ ( 83,636,000 ) $ 12,112,000 Balance 15,996,658 $ 16,000 $ 95,732,000 $ ( 83,636,000 ) $ 12,112,000 F- 28 Table of Contents FLUX POWER HOLDING, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS As previously reported Restatement adjustments Reference As restated Year ended June 30, 2023 As previously reported Restatement adjustments Reference As restated Cash flows from operating activities: Net loss (a)(b)(d) $ ( 6,741,000 ) $ ( 1,002,000 ) (a) (b) (d) $ ( 7,743,000 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 899,000 – 899,000 Stock-based compensation 798,000 – 798,000 Fair value of warrants issued as debt discount cost Amortization of debt issuance costs 482,000 – 482,000 Non-cash lease expense 512,000 – 512,000 Inventory write downs (a) – 690,000 (a) 690,000 Changes in operating assets and liabilities: Accounts receivable (b) ( 40,000 ) ( 151,000 ) (b) ( 191,000 ) Inventories (a)(d) ( 2,734,000 ) 326,000 (a) (d) ( 2,408,000 ) Other assets ( 170,000 ) – ( 170,000 ) Accounts payable (b)(d) 3,090,000 137,000 (d) 3,227,000 Accrued expenses 972,000 – 972,000 Accrued interest ( 32,000 ) – ( 32,000 ) Office leases payable 1,000 – 1,000 Deferred revenue ( 518,000 ) – ( 518,000 ) Customer deposits ( 93,000 ) – ( 93,000 ) Net cash used in operating activities ( 3,574,000 ) – ( 3,574,000 ) Cash flows from investing activities: Purchases of equipment ( 1,032,000 ) – ( 1,032,000 ) Proceeds from sale of fixed assets 8,000 – 8,000 Net cash used in investing activities ( 1,024,000 ) – ( 1,024,000 ) Cash flows from financing activities: Proceeds from the issuance of common stock in registered direct offering, net of offering costs Proceeds from the issuance of common stock in public offering, net of offering costs 1,556,000 – 1,556,000 Proceeds from revolving line of credit 63,400,000 – 63,400,000 Payment of revolving line of credit ( 58,377,000 ) – ( 58,377,000 ) Payment of finance leases ( 87,000 ) – ( 87,000 ) Net cash provided by financing activities 6,492,000 – 6,492,000 Net change in cash 1,894,000 – 1,894,000 Cash, beginning of period 485,000 – 485,000 Cash, end of period $ 2,379,000 $ – $ 2,379,000 Supplemental Disclosures of Non-Cash Investing and Financing Activities: Initial right of use asset recognition $ 855,000 $ – $ 855,000 Common stock issued for vested RSUs $ 417,000 $ – $ 417,000 Supplemental cash flow information: Interest paid $ 1,127,000 $ – $ 1,127,000 F- 29 Table of Contents FLUX POWER HOLDING, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS As previously reported Restatement adjustments Reference As restated Year ended June 30, 2022 As previously reported Restatement adjustments Reference As restated Cash flows from operating activities: Net loss (a)(d) $ ( 15,609,000 ) $ ( 864,000 ) (a) (d) $ ( 16,473,000 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 575,000 – 575,000 Stock-based compensation 711,000 – 711,000 Fair value of warrants issued as debt discount cost 253,000 ( 253,000 ) (e) – Non-cash lease expense 438,000 – 438,000 Inventory write downs (a) 61,000 604,000 (a) 665,000 Changes in operating assets and liabilities: (a) Accounts receivable ( 2,512,000 ) – ( 2,512,000 ) Inventories (a)(d) ( 5,810,000 ) 260,000 (a) (d) ( 5,550,000 ) Other assets ( 802,000 ) 253,000 (e) ( 549,000 ) Accounts payable ( 530,000 ) – ( 530,000 ) Accrued expenses ( 374,000 ) – ( 374,000 ) Accrued interest 139,000 – 139,000 Office leases payable ( 1,000 ) – ( 1,000 ) Deferred revenue ( 436,000 ) – ( 436,000 ) Customer deposits 4,000 – 4,000 Net cash used in operating activities ( 23,893,000 ) – ( 23,893,000 ) Cash flows from investing activities: Purchases of equipment ( 797,000 ) – ( 797,000 ) Net cash used in investing activities ( 797,000 ) – ( 797,000 ) Cash flows from financing activities: Proceeds from the issuance of common stock in registered direct offering, net of offering costs 13,971,000 – 13,971,000 Proceeds from the issuance of common stock in public offering, net of offering costs 1,602,000 – 1,602,000 Proceeds from revolving line of credit 8,450,000 – 8,450,000 Payment of revolving line of credit ( 3,561,000 ) – ( 3,561,000 ) Net cash provided by financing activities 20,462,000 – 20,462,000 - Net change in cash ( 4,228,000 ) – ( 4,228,000 ) Cash, beginning of period 4,713,000 – 4,713,000 Cash, end of period $ 485,000 $ – $ 485,000 Supplemental Disclosures of Non-Cash Investing and Financing Activities: Common stock issued for vested RSUs $ 21,000 $ – $ 21,000 Warrants issued in connection with borrowing agreements, recorded as debt issuance cost $ – $ 253,000 (e) $ 253,000 Supplemental cash flow information: Interest paid $ 151,000 $ - $ 151,000 (a) Inventories. The Company did not properly evaluate its calculation of its excess and obsolescence reserve on its finished goods and raw materials inventories, resulting in an overstatement of inventories and an understatement of cost of sales. In addition, certain inventory components were not properly recorded at the lower of cost or net realizable value, resulting in an overstatement of inventory and an understatement of cost of sales. Further, certain loaner service packs and consigned inventory were not reconciled timely, resulting in an overstatement of inventory and an understatement of cost of sales. Lastly, the Company also corrected the cash flow presentation related to inventory write downs on the statement of cash flows. (b) Revenue. The Company did not properly recognize revenue in the periods which the related performance obligations were satisfied for a certain contract with a customer. Additionally, the Company improperly recorded accounts receivable from the same contract with a customer as a reduction to its accounts payable owed to the customer prior to the right of offset conditions under ASC 210-20 being met. As a result, revenues, accounts receivable, and accounts payable were misstated. (c) Expense classification. The Company improperly recorded various inventory write downs to research and development expenses although such expenses did not meet the classification criteria for research and development under ASC 730, resulting in an overstatement of research and development expenses and a corresponding understatement of cost of sales. (d) Other. The Company had various clearing accounts that were not reconciled in a timely manner, resulting in misstatements of accounts payable, inventories and cost of sales. F- 30 Table of Contents NOTE 16 – QUARTERLY FINANCIAL SUMMARY (Unaudited) The following tables present the impact of the restatement for the quarters ended March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021 (collectively, the “Restated Quarters”). These tables also include financial information pertaining to the quarter ended June 30, 2024. The unaudited condensed consolidated interim financial statements reflect all adjustments, consisting only of normal and recurring items, necessary to present fairly the Company’s financial position, the results of operations, statements of cash flows, and changes in stockholder’s equity for the quarters ended within the Restated Quarters. The nature of the restatement adjustments and their impact on previously reported unaudited condensed consolidated interim financial statements are as follows: (a) Inventories. The Company did not properly evaluate its calculation of its excess and obsolescence reserve on its finished goods and raw materials inventories, resulting in an overstatement of inventories and an understatement of cost of sales. In addition, certain inventory components were not properly recorded at the lower of cost or net realizable value, resulting in an overstatement of inventories and an understatement of cost of sales. Further, certain loaner service packs and consigned inventory were not reconciled in a timely manner, resulting in an overstatement of inventories and an understatement of cost of sales. Additionally, the Company did not properly present inventory write downs on the consolidated statement of cash flows resulting in an understatement of inventory write downs and corresponding overstatement of changes in inventories on the consolidated statement of cash flows. (b) Revenue. The Company did not properly recognize revenue in the periods which the related performance obligations were satisfied for a certain contract with a customer. Additionally, the Company improperly recorded accounts receivable from the same contract with a customer as a reduction to its accounts payable owed to the customer prior to the right of offset conditions under ASC 210-20 being met. As a result, revenues, accounts receivable, and accounts payable were misstated. (c) Expense classification. The Company improperly recorded various inventory write downs to research and development expenses although such expenses did not meet the classification criteria for research and development under ASC 730, resulting in an overstatement of research and development expenses and a corresponding understatement of cost of sales. (d) Other. The Company had various clearing accounts that were not reconciled in a timely manner, resulting in misstatements of accounts payable, inventories and cost of sales. (e) Product warranty liability. The Company did not include certain product warranty-related expenses within the proper period in its calculation of its product warranty reserve estimate, resulting in an understatement of accrued expenses, an understatement of accounts payable and an understatement of cost of sales. (f) Cash flow presentation of debt issuance cost in the form of issued Company stock warrants. The Company erroneously presented debt issuance cost incurred in conjunction with credit facility arrangements as fair value of warrants issued, an adjustment to reconcile net loss to net cash used in operating activities in the Company’s consolidated statement of cash flows. As debt issuance costs are recorded as a current asset, the presentation overstated adjustments to reconcile net loss to cash used in operating activities and understated the change in other assets in the consolidated statement of cash flows. Additionally, the Company improperly omitted the non-cash disclosure related to the issuance of warrants within the supplemental disclosures of non-cash investing and financing activities. Summarized Financial Items The following tables set forth summarized quarterly financial information of the Restated Quarters, including the effects of the restatement on our previously reported consolidated statements of operations, and the quarter ended June 30, 2024. SCHEDULE OF SUMMARIZED FINANCIAL ITEMS June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 Fiscal year 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 Restated Restated Restated Revenues $ 13,377,000 $ 14,457,000 $ 18,203,000 $ 14,787,000 Gross profit 3,592,000 4,025,000 5,381,000 4,235,000 Operating loss ( 1,811,000 ) ( 2,572,000 ) ( 447,000 ) ( 1,785,000 ) Net loss ( 2,244,000 ) ( 3,005,000 ) ( 896,000 ) ( 2,188,000 ) Net loss per share – basic and diluted $ ( 0.13 ) $ ( 0.18 ) $ ( 0.06 ) $ ( 0.13 ) F- 31 Table of Contents June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 Fiscal year 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 Restated Restated Restated Restated Revenues $ 16,403,000 $ 15,087,000 $ 17,158,000 $ 17,840,000 Gross profit 3,601,000 4,677,000 3,993,000 3,619,000 Operating loss ( 1,832,000 ) ( 1,229,000 ) ( 1,419,000 ) ( 1,932,000 ) Net loss ( 2,200,000 ) ( 1,487,000 ) ( 1,796,000 ) ( 2,260,000 ) Net loss per share – basic and diluted $ ( 0.13 ) $ ( 0.10 ) $ ( 0.11 ) $ ( 0.14 ) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 Fiscal year 2022 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 Restated Restated Restated Restated Revenues $ 15,195,000 $ 13,177,000 $ 7,690,000 $ 6,271,000 Gross profit 2,714,000 1,601,000 187,000 1,105,000 Operating loss ( 2,672,000 ) ( 3,841,000 ) ( 5,348,000 ) ( 4,360,000 ) Net loss ( 2,838,000 ) ( 3,893,000 ) ( 5,379,000 ) ( 4,363,000 ) Net loss per share – basic and diluted $ ( 0.18 ) $ ( 0.24 ) $ ( 0.33 ) $ ( 0.32 ) Quarterly Financial Summary The net impact of the restatement on our quarterly and year-to-date unaudited condensed financial statements is as follows: SCHEDULE OF QUARTERLY FINANCIAL SUMMARY F- 32 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, September 30, Fiscal year 2024 March 31, December 31, September 30, 2024 2023 2023 Restated Restated Restated ASSETS Current assets: Cash $ 1,250,000 $ 1,584,000 $ 1,139,000 Accounts receivable 10,468,000 12,726,000 10,840,000 Inventories, net 17,362,000 15,554,000 16,591,000 Other current assets 840,000 942,000 1,053,000 Total current assets 29,920,000 30,806,000 29,623,000 Right of use asset 2,291,000 2,482,000 2,670,000 Property, plant and equipment, net 1,705,000 1,680,000 1,747,000 Other assets 118,000 119,000 119,000 Total assets $ 34,034,000 $ 35,087,000 $ 34,159,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 11,394,000 $ 10,361,000 $ 10,202,000 Accrued expenses 3,900,000 3,350,000 3,782,000 Line of credit 13,645,000 13,575,000 11,986,000 Deferred revenue 343,000 310,000 336,000 Customer deposits 18,000 232,000 17,000 Finance leases payable, current portion 153,000 150,000 147,000 Office leases payable, current portion 712,000 689,000 667,000 Accrued interest 136,000 130,000 102,000 Total current liabilities 30,301,000 28,797,000 27,239,000 Long term liabilities: Finance leases payable, less current portion 153,000 191,000 229,000 Office leases payable, less current portion 1,511,000 1,698,000 1,880,000 Total liabilities 31,965,000 30,686,000 29,348,000 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; 16,599,683 , 16,532,275 and 16,478,237 shares issued and outstanding at March 31, 2024, December 31, 2023 and September 30, 2023, respectively 17,000 17,000 16,000 Additional paid-in capital 99,520,000 98,847,000 98,362,000 Accumulated deficit ( 97,468,000 ) ( 94,463,000 ) ( 93,567,000 ) Total stockholders’ equity 2,069,000 4,401,000 4,811,000 Total liabilities and stockholders’ equity $ 34,034,000 $ 35,087,000 $ 34,159,000 F- 33 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, September 30, Fiscal year 2023 March 31, December 31, September 30, 2023 2022 2022 Restated Restated Restated ASSETS Current assets: Cash $ 790,000 $ 157,000 $ 306,000 Accounts receivable 9,881,000 10,507,000 11,596,000 Inventories, net 18,859,000 17,449,000 16,935,000 Other current assets 775,000 884,000 1,308,000 Total current assets 30,305,000 28,997,000 30,145,000 Right of use asset 3,035,000 2,601,000 2,558,000 Property, plant and equipment, net 1,724,000 1,561,000 1,758,000 Other assets 119,000 115,000 42,000 Total assets $ 35,183,000 $ 33,274,000 $ 34,503,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 10,855,000 $ 12,837,000 $ 13,505,000 Accrued expenses 2,604,000 2,298,000 2,228,000 Line of credit 10,491,000 6,811,000 5,651,000 Deferred revenue – 81,000 347,000 Customer deposits 135,000 29,000 10,000 Finance leases payable, current portion 140,000 64,000 13,000 Office leases payable, current portion 616,000 542,000 523,000 Accrued interest 3,000 1,000 2,000 Total current liabilities 24,844,000 22,663,000 22,279,000 Long term liabilities: Finance leases payable, less current portion 311,000 172,000 55,000 Office leases payable, less current portion 2,223,000 2,079,000 2,222,000 Total liabilities 27,378,000 24,914,000 24,556,000 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; 16,156,432 , 16,029,478 and 15,998,336 shares issued and outstanding at March 31, 2023, December 31, 2022 and September 30, 2022, respectively 16,000 16,000 16,000 Additional paid-in capital 96,968,000 96,036,000 95,827,000 Accumulated deficit ( 89,179,000 ) ( 87,692,000 ) ( 85,896,000 ) Total stockholders’ equity 7,805,000 8,360,000 9,947,000 Total liabilities and stockholders’ equity $ 35,183,000 $ 33,274,000 $ 34,503,000 F- 34 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, September 30, Fiscal Year 2022 March 31, December 31, September 30, 2022 2021 2021 Restated Restated Restated ASSETS Current assets: Cash $ 3,804,000 $ 7,855,000 $ 15,737,000 Accounts receivable 9,508,000 5,184,000 4,511,000 Inventories, net 19,297,000 18,090,000 12,655,000 Other current assets 577,000 868,000 1,026,000 Total current assets 33,186,000 31,997,000 33,929,000 Right of use asset 2,711,000 2,821,000 2,929,000 Property, plant and equipment, net 1,588,000 1,627,000 1,471,000 Other assets 89,000 89,000 89,000 Total assets $ 37,574,000 $ 36,534,000 $ 38,418,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 13,361,000 $ 9,239,000 $ 9,298,000 Accrued expenses 2,142,000 2,233,000 1,908,000 Line of credit 3,500,000 3,500,000 – Deferred revenue 313,000 140,000 127,000 Customer deposits 690,000 – 322,000 Office leases payable, current portion 486,000 469,000 452,000 Accrued interest 2,000 3,000 3,000 Total current liabilities 20,494,000 15,584,000 12,110,000 Long term liabilities: Office leases payable, less current portion 2,493,000 2,621,000 2,745,000 Total liabilities 22,987,000 18,205,000 14,855,000 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; 15,992,080 , 15,987,502 and 15,987,502 shares issued and outstanding at March 31, 2022, December 31, 2021 and September 30, 2021, respectively 16,000 16,000 16,000 Additional paid-in capital 95,369,000 95,217,000 95,073,000 Accumulated deficit ( 80,798,000 ) ( 76,904,000 ) ( 71,526,000 ) Total stockholders’ equity 14,587,000 18,329,000 23,563,000 Total liabilities and stockholders’ equity $ 37,574,000 $ 36,534,000 $ 38,418,000 F- 35 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) As previously reported Restatement adjustments Reference As restated March 31, 2024 As previously reported Restatement adjustments Reference As restated ASSETS Current assets: Cash $ 1,250,000 $ – $ 1,250,000 Accounts receivable (b) 10,404,000 64,000 (b) 10,468,000 Inventories, net (a)(d) 20,174,000 ( 2,812,000 ) (a) (d) 17,362,000 Other current assets 840,000 - 840,000 Total current assets 32,668,000 ( 2,748,000 ) 29,920,000 Right of use asset 2,291,000 – 2,291,000 Property, plant and equipment, net 1,705,000 – 1,705,000 Other assets 118,000 – 118,000 Total assets $ 36,782,000 $ ( 2,748,000 ) $ 34,034,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable (b)(d)(e) $ 11,050,000 $ 344,000 (b) (d) (e) $ 11,394,000 Accrued expenses (e) 3,645,000 255,000 (e) 3,900,000 Line of credit 13,645,000 – 13,645,000 Deferred revenue 343,000 – 343,000 Customer deposits 18,000 – 18,000 Finance leases payable, current portion 153,000 – 153,000 Office leases payable, current portion 712,000 – 712,000 Accrued interest 136,000 – 136,000 Total current liabilities 29,702,000 599,000 30,301,000 Long term liabilities: Finance leases payable, less current portion 153,000 – 153,000 Office leases payable, less current portion 1,511,000 – 1,511,000 Total liabilities 31,366,000 599,000 31,965,000 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; 16,599,683 shares issued and outstanding 17,000 – 17,000 Additional paid-in capital 99,520,000 – 99,520,000 Accumulated deficit (a)(d)(e) ( 94,121,000 ) ( 3,347,000 ) (a) (d) (e) ( 97,468,000 ) Total stockholders’ equity 5,416,000 ( 3,347,000 ) 2,069,000 Total liabilities and stockholders’ equity $ 36,782,000 $ ( 2,748,000 ) $ 34,034,000 F- 36 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) As previously reported Restatement adjustments Reference As restated December 31, 2023 As previously reported Restatement adjustments Reference As restated ASSETS Current assets: Cash $ 1,584,000 $ – $ 1,584,000 Accounts receivable (b) 12,579,000 147,000 (b) 12,726,000 Inventories, net (a)(d) 18,283,000 ( 2,729,000 ) (a) (d) 15,554,000 Other current assets 942,000 - 942,000 Total current assets 33,388,000 ( 2,582,000 ) 30,806,000 Right of use asset 2,482,000 – 2,482,000 Property, plant and equipment, net 1,680,000 – 1,680,000 Other assets 119,000 – 119,000 Total assets $ 37,669,000 $ ( 2,582,000 ) $ 35,087,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable (b)(d)(e) $ 10,021,000 $ 340,000 (b) (d) (e) $ 10,361,000 Accrued expenses (e) 3,290,000 60,000 (e) 3,350,000 Line of credit 13,575,000 – 13,575,000 Deferred revenue 310,000 – 310,000 Customer deposits 232,000 – 232,000 Finance leases payable, current portion 150,000 – 150,000 Office leases payable, current portion 689,000 – 689,000 Accrued interest 130,000 – 130,000 Total current liabilities 28,397,000 400,000 28,797,000 Long term liabilities: Finance leases payable, less current portion 191,000 – 191,000 Office leases payable, less current portion 1,698,000 – 1,698,000 Total liabilities 30,286,000 400,000 30,686,000 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; 16,532,275 shares issued and outstanding 17,000 – 17,000 Additional paid-in capital 98,847,000 – 98,847,000 Accumulated deficit (a)(d)(e) ( 91,481,000 ) ( 2,982,000 ) (a) (d) (e) ( 94,463,000 ) Total stockholders’ equity 7,383,000 ( 2,982,000 ) 4,401,000 Total liabilities and stockholders’ equity $ 37,669,000 $ ( 2,582,000 ) $ 35,087,000 F- 37 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) As previously reported Restatement adjustments Reference As restated September 30, 2023 As previously reported Restatement adjustments Reference As restated ASSETS Current assets: Cash $ 1,139,000 $ – $ 1,139,000 Accounts receivable (b) 10,699,000 141,000 (b) 10,840,000 Inventories, net (a)(d) 19,495,000 ( 2,904,000 ) (a) (d) 16,591,000 Other current assets 1,053,000 - 1,053,000 Total current assets 32,386,000 ( 2,763,000 ) 29,623,000 Right of use asset 2,670,000 – 2,670,000 Property, plant and equipment, net 1,747,000 – 1,747,000 Other assets 119,000 – 119,000 Total assets $ 36,922,000 $ ( 2,763,000 ) $ 34,159,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable (d) $ 10,065,000 $ 137,000 (d) $ 10,202,000 Accrued expenses 3,782,000 – 3,782,000 Line of credit 11,986,000 – 11,986,000 Deferred revenue 336,000 – 336,000 Customer deposits 17,000 – 17,000 Finance leases payable, current portion 147,000 – 147,000 Office leases payable, current portion 667,000 – 667,000 Accrued interest 102,000 – 102,000 Total current liabilities 27,102,000 137,000 27,239,000 Long term liabilities: Finance leases payable, less current portion 229,000 – 229,000 Office leases payable, less current portion 1,880,000 – 1,880,000 Total liabilities 29,211,000 137,000 29,348,000 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; 16,478,237 shares issued and outstanding 16,000 – 16,000 Additional paid-in capital 98,362,000 – 98,362,000 Accumulated deficit (a)(b)(d) ( 90,667,000 ) ( 2,900,000 ) (a) (b) (d) ( 93,567,000 ) Total stockholders’ equity 7,711,000 ( 2,900,000 ) 4,811,000 Total liabilities and stockholders’ equity $ 36,922,000 $ ( 2,763,000 ) $ 34,159,000 F- 38 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) As previously reported Restatement adjustments Reference As restated March 31, 2023 As previously reported Restatement adjustments Reference As restated ASSETS Current assets: Cash $ 790,000 $ – $ 790,000 Accounts receivable (b) 9,853,000 28,000 (b) 9,881,000 Inventories, net (a)(d) 20,959,000 ( 2,100,000 ) (a) (d) 18,859,000 Other current assets 775,000 - 775,000 Total current assets 32,377,000 ( 2,072,000 ) 30,305,000 Right of use asset 3,035,000 – 3,035,000 Property, plant and equipment, net 1,724,000 – 1,724,000 Other assets 119,000 – 119,000 Total assets $ 37,255,000 $ ( 2,072,000 ) $ 35,183,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable (b) $ 10,827,000 $ 28,000 (b) $ 10,855,000 Accrued expenses 2,604,000 – 2,604,000 Line of credit 10,491,000 – 10,491,000 Customer deposits 135,000 – 135,000 Finance leases payable, current portion 140,000 – 140,000 Office leases payable, current portion 616,000 – 616,000 Accrued interest 3,000 – 3,000 Total current liabilities 24,816,000 28,000 24,844,000 Long term liabilities: Finance leases payable, less current portion 311,000 – 311,000 Office leases payable, less current portion 2,223,000 – 2,223,000 Total liabilities 27,350,000 28,000 27,378,000 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; 16,156,432 shares issued and outstanding 16,000 – 16,000 Additional paid-in capital 96,968,000 – 96,968,000 Accumulated deficit (a)(d) ( 87,079,000 ) ( 2,100,000 ) (a) (d) ( 89,179,000 ) Total stockholders’ equity 9,905,000 ( 2,100,000 ) 7,805,000 Total liabilities and stockholders’ equity $ 37,255,000 $ ( 2,072,000 ) $ 35,183,000 F- 39 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) As previously reported Restatement adjustments Reference As restated December 31, 2022 As previously reported Restatement adjustments Reference As restated ASSETS Current assets: Cash $ 157,000 $ – $ 157,000 Accounts receivable (b) 10,467,000 40,000 (b) 10,507,000 Inventories, net (a)(d) 19,507,000 ( 2,058,000 ) (a) (d) 17,449,000 Other current assets 884,000 - 884,000 Total current assets 31,015,000 ( 2,018,000 ) 28,997,000 Right of use asset 2,601,000 – 2,601,000 Property, plant and equipment, net 1,561,000 – 1,561,000 Other assets 115,000 – 115,000 Total assets $ 35,292,000 $ ( 2,018,000 ) $ 33,274,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable (b) $ 12,797,000 $ 40,000 (b) $ 12,837,000 Accrued expenses 2,298,000 – 2,298,000 Line of credit 6,811,000 – 6,811,000 Deferred revenue 81,000 – 81,000 Customer deposits 29,000 – 29,000 Finance leases payable, current portion 64,000 – 64,000 Office leases payable, current portion 542,000 – 542,000 Accrued interest 1,000 – 1,000 Total current liabilities 22,623,000 40,000 22,663,000 Long term liabilities: Finance leases payable, less current portion 172,000 – 172,000 Office leases payable, less current portion 2,079,000 – 2,079,000 Total liabilities 24,874,000 40,000 24,914,000 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 shares issued and outstanding 16,000 – 16,000 Additional paid-in capital 96,036,000 – 96,036,000 Accumulated deficit (a)(d) ( 85,634,000 ) ( 2,058,000 ) (a) (d) ( 87,692,000 ) Total stockholders’ equity 10,418,000 ( 2,058,000 ) 8,360,000 Total liabilities and stockholders’ equity $ 35,292,000 $ ( 2,018,000 ) $ 33,274,000 F- 40 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) As previously reported Restatement adjustments Reference As restated September 30, 2022 As previously reported Restatement adjustments Reference As restated ASSETS Current assets: Cash $ 306,000 $ – $ 306,000 Accounts receivable 11,596,000 - 11,596,000 Inventories, net (a)(d) 18,878,000 ( 1,943,000 ) (a) (d) 16,935,000 Other current assets 1,308,000 - 1,308,000 Total current assets 32,088,000 ( 1,943,000 ) 30,145,000 Right of use asset 2,558,000 – 2,558,000 Property, plant and equipment, net 1,758,000 – 1,758,000 Other assets 42,000 – 42,000 Total assets $ 36,446,000 $ ( 1,943,000 ) $ 34,503,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 13,505,000 $ – $ 13,505,000 Accrued expenses 2,228,000 – 2,228,000 Line of credit 5,651,000 – 5,651,000 Deferred revenue 347,000 – 347,000 Customer deposits 10,000 – 10,000 Finance leases payable, current portion 13,000 – 13,000 Office leases payable, current portion 523,000 – 523,000 Accrued interest 2,000 – 2,000 Total current liabilities 22,279,000 – 22,279,000 Long term liabilities: Finance leases payable, less current portion 55,000 – 55,000 Office leases payable, less current portion 2,222,000 – 2,222,000 Total liabilities 24,556,000 – 24,556,000 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; 15,998,336 shares issued and outstanding 16,000 – 16,000 Additional paid-in capital 95,827,000 – 95,827,000 Accumulated deficit (a)(d) ( 83,953,000 ) ( 1,943,000 ) (a) (d) ( 85,896,000 ) Total stockholders’ equity 11,890,000 ( 1,943,000 ) 9,947,000 Total liabilities and stockholders’ equity $ 36,446,000 $ ( 1,943,000 ) $ 34,503,000 F- 41 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) As previously reported Restatement adjustments Reference As restated March 31, 2022 As previously reported Restatement adjustments Reference As restated ASSETS Current assets: Cash $ 3,804,000 $ – $ 3,804,000 Accounts receivable 9,508,000 - 9,508,000 Inventories, net (a) (d) 20,934,000 ( 1,637,000 ) (a) (d) 19,297,000 Other current assets 577,000 - 577,000 Total current assets 34,823,000 ( 1,637,000 ) 33,186,000 Right of use asset 2,711,000 – 2,711,000 Property, plant and equipment, net 1,588,000 – 1,588,000 Other assets 89,000 – 89,000 Total assets $ 39,211,000 $ ( 1,637,000 ) $ 37,574,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 13,361,000 $ – $ 13,361,000 Accrued expenses 2,142,000 – 2,142,000 Line of credit 3,500,000 – 3,500,000 Deferred revenue 313,000 – 313,000 Customer deposits 690,000 – 690,000 Office leases payable, current portion 486,000 – 486,000 Accrued interest 2,000 – 2,000 Total current liabilities 20,494,000 – 20,494,000 Long term liabilities: Office leases payable, less current portion 2,493,000 – 2,493,000 Total liabilities 22,987,000 – 22,987,000 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; 15,992,080 shares issued and outstanding 16,000 – 16,000 Additional paid-in capital 95,369,000 – 95,369,000 Accumulated deficit (a) (d) ( 79,161,000 ) ( 1,637,000 ) (a) (d) ( 80,798,000 ) Total stockholders’ equity 16,224,000 ( 1,637,000 ) 14,587,000 Total liabilities and stockholders’ equity $ 39,211,000 $ ( 1,637,000 ) $ 37,574,000 F- 42 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) As previously reported Restatement adjustments Reference As restated December 31, 2021 As previously reported Restatement adjustments Reference As restated ASSETS Current assets: Cash $ 7,855,000 $ – $ 7,855,000 Accounts receivable 5,184,000 - 5,184,000 Inventories, net (a) (d) 19,583,000 ( 1,493,000 ) (a) (d) 18,090,000 Other current assets 868,000 - 868,000 Total current assets 33,490,000 ( 1,493,000 ) 31,997,000 Right of use asset 2,821,000 – 2,821,000 Property, plant and equipment, net 1,627,000 – 1,627,000 Other assets 89,000 – 89,000 Total assets $ 38,027,000 $ ( 1,493,000 ) $ 36,534,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 9,239,000 $ – $ 9,239,000 Accrued expenses 2,233,000 – 2,233,000 Line of credit 3,500,000 – 3,500,000 Deferred revenue 140,000 – 140,000 Office leases payable, current portion 469,000 – 469,000 Accrued interest 3,000 – 3,000 Total current liabilities 15,584,000 – 15,584,000 Long term liabilities: Office leases payable, less current portion 2,621,000 – 2,621,000 Total liabilities 18,205,000 – 18,205,000 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; 15,987,502 shares issued and outstanding 16,000 – 16,000 Additional paid-in capital 95,217,000 – 95,217,000 Accumulated deficit (a) (d) ( 75,411,000 ) ( 1,493,000 ) (a) (d) ( 76,904,000 ) Total stockholders’ equity 19,822,000 ( 1,493,000 ) 18,329,000 Total liabilities and stockholders’ equity $ 38,027,000 $ ( 1,493,000 ) $ 36,534,000 F- 43 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) As previously reported Restatement adjustments Reference As restated September 30, 2021 As previously reported Restatement adjustments Reference As restated ASSETS Current assets: Cash $ 15,737,000 $ – $ 15,737,000 Accounts receivable 4,511,000 - 4,511,000 Inventories, net (a)(d) 13,846,000 ( 1,191,000 ) (a) (d) 12,655,000 Other current assets 1,026,000 - 1,026,000 Total current assets 35,120,000 ( 1,191,000 ) 33,929,000 Right of use asset 2,929,000 – 2,929,000 Property, plant and equipment, net 1,471,000 – 1,471,000 Other assets 89,000 – 89,000 Total assets $ 39,609,000 $ ( 1,191,000 ) $ 38,418,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 9,298,000 $ – $ 9,298,000 Accrued expenses 1,908,000 – 1,908,000 Deferred revenue 127,000 – 127,000 Customer deposits 322,000 – 322,000 Office leases payable, current portion 452,000 – 452,000 Accrued interest 3,000 – 3,000 Total current liabilities 12,110,000 – 12,110,000 Long term liabilities: Office leases payable, less current portion 2,745,000 – 2,745,000 Total liabilities 14,855,000 – 14,855,000 Stockholders’ equity: Preferred stock, $ 0.001 par value; 500,000 shares authorized; none issued and outstanding - - - Preferred stock value - - - Common stock, $ 0.001 par value; 30,000,000 shares authorized; 15,987,502 shares issued and outstanding 16,000 – 16,000 Common stock value 16,000 – 16,000 Additional paid-in capital 95,073,000 – 95,073,000 Accumulated deficit ( 70,335,000 ) ( 1,191,000 ) (a) (d) ( 71,526,000 ) Total stockholders’ equity 24,754,000 ( 1,191,000 ) 23,563,000 Total liabilities and stockholders’ equity $ 39,609,000 $ ( 1,191,000 ) $ 38,418,000 F- 44 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three months ended Nine months ended Three months ended Six months ended Three months ended Fiscal year 2024 March 31, 2024 December 31, 2023 September 30, 2023 Three months ended Nine months ended Three months ended Six months ended Three months ended Restated Restated Restated Restated Restated Revenues $ 14,457,000 $ 47,447,000 $ 18,203,000 $ 32,990,000 $ 14,787,000 Cost of sales 10,432,000 33,806,000 12,822,000 23,374,000 10,552,000 Gross profit 4,025,000 13,641,000 5,381,000 9,616,000 4,235,000 Operating expenses: Selling and administrative 5,311,000 14,629,000 4,593,000 9,318,000 4,725,000 Research and development 1,286,000 3,816,000 1,235,000 2,530,000 1,295,000 Total operating expenses 6,597,000 18,445,000 5,828,000 11,848,000 6,020,000 Operating loss ( 2,572,000 ) ( 4,804,000 ) ( 447,000 ) ( 2,232,000 ) ( 1,785,000 ) Other income (expense): Other income Interest income (expense), net ( 433,000 ) ( 1,285,000 ) ( 449,000 ) ( 852,000 ) ( 403,000 ) Net loss $ ( 3,005,000 ) $ ( 6,089,000 ) $ ( 896,000 ) $ ( 3,084,000 ) $ ( 2,188,000 ) Net loss per share - basic and diluted $ ( 0.18 ) $ ( 0.37 ) $ ( 0.06 ) $ ( 0.19 ) $ ( 0.13 ) Weighted average number of common shares outstanding - basic and diluted 16,538,998 16,510,046 16,516,700 16,495,727 16,474,754 F- 45 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three months ended Nine months ended Three months ended Six months ended Three months ended Fiscal year 2023 March 31, 2023 December 31, 2022 September 30, 2022 Three months ended Nine months ended Three months ended Six months ended Three months ended Restated Restated Restated Restated Restated Revenues $ 15,087,000 $ 50,085,000 $ 17,158,000 $ 34,998,000 $ 17,840,000 Cost of sales 10,410,000 37,796,000 13,165,000 27,386,000 14,221,000 Gross profit 4,677,000 12,289,000 3,993,000 7,612,000 3,619,000 Operating expenses: Selling and administrative 4,724,000 13,510,000 4,250,000 8,786,000 4,536,000 Research and development 1,182,000 3,359,000 1,162,000 2,177,000 1,015,000 Total operating expenses 5,906,000 16,869,000 5,412,000 10,963,000 5,551,000 Operating loss ( 1,229,000 ) ( 4,580,000 ) ( 1,419,000 ) ( 3,351,000 ) ( 1,932,000 ) Other income (expense): Other income – 8,000 8,000 8,000 – Interest income (expense), net ( 258,000 ) ( 971,000 ) ( 385,000 ) ( 713,000 ) ( 328,000 ) Net loss $ ( 1,487,000 ) $ ( 5,543,000 ) $ ( 1,796,000 ) $ ( 4,056,000 ) $ ( 2,260,000 ) Net loss per share - basic and diluted $ ( 0.10 ) $ ( 0.35 ) $ ( 0.11 ) $ ( 0.25 ) $ ( 0.14 ) Weighted average number of common shares outstanding - basic and diluted 16,048,054 16,021,653 16,020,183 16,008,740 15,997,296 F- 46 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three months ended Nine months ended Three months ended Six months ended Three months ended Fiscal year 2022 March 31, 2022 December 31, 2021 September 30, 2021 Three months ended Nine months ended Three months ended Six months ended Three months ended Restated Restated Restated Restated Restated Revenues $ 13,177,000 $ 27,138,000 $ 7,690,000 $ 13,961,000 $ 6,271,000 Cost of sales 11,576,000 24,245,000 7,503,000 12,669,000 5,166,000 Gross profit 1,601,000 2,893,000 187,000 1,292,000 1,105,000 Operating expenses: Selling and administrative 3,904,000 11,402,000 4,000,000 7,498,000 3,498,000 Research and development 1,538,000 5,040,000 1,535,000 3,502,000 1,967,000 Total operating expenses 5,442,000 16,442,000 5,535,000 11,000,000 5,465,000 Operating loss ( 3,841,000 ) ( 13,549,000 ) ( 5,348,000 ) ( 9,708,000 ) ( 4,360,000 ) Other income (expense): Interest income (expense), net ( 52,000 ) ( 86,000 ) ( 31,000 ) ( 34,000 ) ( 3,000 ) Net loss $ ( 3,893,000 ) $ ( 13,635,000 ) $ ( 5,379,000 ) $ ( 9,742,000 ) $ ( 4,363,000 ) Net loss per share - basic and diluted $ ( 0.24 ) $ ( 0.89 ) $ ( 0.33 ) $ ( 0.65 ) $ ( 0.32 ) Weighted average number of common shares outstanding - basic and diluted 15,988,926 15,254,983 15,987,502 14,895,989 13,804,475 F- 47 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) As previously reported Restatement adjustments Reference As restated Three months ended March 31, 2024 As previously reported Restatement adjustments Reference As restated Revenues $ 14,457,000 $ – $ 14,457,000 Cost of sales (a)(e) 10,067,000 365,000 (a) (e) 10,432,000 Gross profit 4,390,000 ( 365,000 ) 4,025,000 Operating expenses: Selling and administrative 5,311,000 – 5,311,000 Research and development 1,286,000 – 1,286,000 Total operating expenses 6,597,000 – 6,597,000 Operating loss ( 2,207,000 ) ( 365,000 ) ( 2,572,000 ) Other income (expense): Interest income (expense), net ( 433,000 ) – ( 433,000 ) Net loss $ ( 2,640,000 ) $ ( 365,000 ) $ ( 3,005,000 ) Net loss per share - basic and diluted $ ( 0.16 ) $ ( 0.02 ) $ ( 0.18 ) Weighted average number of common shares outstanding - basic and diluted 16,538,998 16,538,998 16,538,998 As previously reported Restatement adjustments Reference As restated Three months ended December 31, 2023 As previously reported Restatement adjustments Reference As restated Revenues (b) $ 18,344,000 $ ( 141,000 ) (b) $ 18,203,000 Cost of sales (a)(c)(d)(e) 12,676,000 146,000 (a) (c) (d) (e) 12,822,000 Gross profit 5,668,000 ( 287,000 ) 5,381,000 Operating expenses: Selling and administrative 4,593,000 – 4,593,000 Research and development (c) 1,440,000 ( 205,000 ) (c) 1,235,000 Total operating expenses 6,033,000 ( 205,000 ) 5,828,000 Operating loss ( 365,000 ) ( 82,000 ) ( 447,000 ) Other income (expense): Interest income (expense), net ( 449,000 ) – ( 449,000 ) Net loss $ ( 814,000 ) $ ( 82,000 ) $ ( 896,000 ) Net loss per share - basic and diluted $ ( 0.05 ) $ ( 0.01 ) $ ( 0.06 ) Weighted average number of common shares outstanding - basic and diluted 16,516,700 16,516,700 16,516,700 F- 48 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) As previously reported Restatement adjustments Reference As restated Three months ended September 30, 2023 As previously reported Restatement adjustments Reference As restated Revenues (b) $ 14,797,000 $ ( 10,000 ) (b) $ 14,787,000 Cost of sales (a) 10,486,000 66,000 (a) 10,552,000 Gross profit 4,311,000 ( 76,000 ) 4,235,000 Operating expenses: Selling and administrative 4,725,000 – 4,725,000 Research and development 1,295,000 – 1,295,000 Total operating expenses 6,020,000 – 6,020,000 Operating loss ( 1,709,000 ) ( 76,000 ) ( 1,785,000 ) Other income (expense): Interest income (expense), net ( 403,000 ) – ( 403,000 ) Net loss $ ( 2,112,000 ) $ ( 76,000 ) $ ( 2,188,000 ) Net loss per share - basic and diluted $ ( 0.13 ) $ ( 0.00 ) $ ( 0.13 ) Weighted average number of common shares outstanding - basic and diluted 16,474,754 16,474,754 16,474,754 As previously reported Restatement adjustments Reference As restated Three months ended March 31, 2023 As previously reported Restatement adjustments Reference As restated Revenues $ 15,087,000 $ – $ 15,087,000 Cost of sales (a)(d) 10,368,000 42,000 (a) (d) 10,410,000 Gross profit 4,719,000 ( 42,000 ) 4,677,000 Operating expenses: Selling and administrative 4,724,000 – 4,724,000 Research and development 1,182,000 – 1,182,000 Total operating expenses 5,906,000 – 5,906,000 Operating loss ( 1,187,000 ) ( 42,000 ) ( 1,229,000 ) Other income (expense): Interest income (expense), net ( 258,000 ) – ( 258,000 ) Net loss $ ( 1,445,000 ) $ ( 42,000 ) $ ( 1,487,000 ) Net loss per share - basic and diluted $ ( 0.09 ) $ ( 0.01 ) $ ( 0.10 ) Weighted average number of common shares outstanding - basic and diluted 16,048,054 16,048,054 16,048,054 F- 49 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) As previously reported Restatement adjustments Reference As restated Three months ended December 31, 2022 As previously reported Restatement adjustments Reference As restated Revenues $ 17,158,000 $ – $ 17,158,000 Cost of sales (a)(d) 13,050,000 115,000 (a) (d) 13,165,000 Gross profit 4,108,000 ( 115,000 ) 3,993,000 Operating expenses: Selling and administrative 4,250,000 – 4,250,000 Research and development 1,162,000 – 1,162,000 Total operating expenses 5,412,000 – 5,412,000 Operating loss ( 1,304,000 ) ( 115,000 ) ( 1,419,000 ) Other income (expense): Other income 8,000 – 8,000 Interest income (expense), net ( 385,000 ) – ( 385,000 ) Net loss $ ( 1,681,000 ) $ ( 115,000 ) $ ( 1,796,000 ) Net loss per share - basic and diluted $ ( 0.10 ) $ ( 0.01 ) $ ( 0.11 ) Weighted average number of common shares outstanding - basic and diluted 16,020,183 16,020,183 16,020,183 As previously reported Restatement adjustments Reference As restated Three months ended September 30, 2022 As previously reported Restatement adjustments Reference As restated Revenues $ 17,840,000 $ – $ 17,840,000 Cost of sales (a)(c)(d) 13,892,000 329,000 (a) (c) (d) 14,221,000 Gross profit 3,948,000 ( 329,000 ) 3,619,000 Operating expenses: Selling and administrative 4,536,000 – 4,536,000 Research and development (c) 1,223,000 ( 208,000 ) (c) 1,015,000 Total operating expenses 5,759,000 ( 208,000 ) 5,551,000 Operating loss ( 1,811,000 ) ( 121,000 ) ( 1,932,000 ) Other income (expense): Interest income (expense), net ( 328,000 ) – ( 328,000 ) Net loss $ ( 2,139,000 ) $ ( 121,000 ) $ ( 2,260,000 ) Net loss per share - basic and diluted $ ( 0.13 ) $ ( 0.01 ) $ ( 0.14 ) Weighted average number of common shares outstanding - basic and diluted 15,997,296 15,997,296 15,997,296 F- 50 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) As previously reported Restatement adjustments Reference As restated Three months ended March 31, 2022 As previously reported Restatement adjustments Reference As restated Revenues $ 13,177,000 $ – $ 13,177,000 Cost of sales (a)(c)(d) 11,257,000 319,000 (a) (c) (d) 11,576,000 Gross profit 1,920,000 ( 319,000 ) 1,601,000 Operating expenses: Selling and administrative 3,904,000 – 3,904,000 Research and development (c) 1,713,000 ( 175,000 ) (c) 1,538,000 Total operating expenses 5,617,000 ( 175,000 ) 5,442,000 Operating loss ( 3,697,000 ) ( 144,000 ) ( 3,841,000 ) Other income (expense): Interest income (expense), net ( 52,000 ) – ( 52,000 ) Net loss $ ( 3,749,000 ) $ ( 144,000 ) $ ( 3,893,000 ) Net loss per share - basic and diluted $ ( 0.23 ) $ ( 0.01 ) $ ( 0.24 ) Weighted average number of common shares outstanding - basic and diluted 15,988,926 15,988,926 15,988,926 As previously reported Restatement adjustments Reference As restated Three months ended December 31, 2021 As previously reported Restatement adjustments Reference As restated Revenues $ 7,690,000 $ – $ 7,690,000 Cost of sales (a)(c)(d) 6,648,000 855,000 (a) (c) (d) 7,503,000 Gross profit 1,042,000 ( 855,000 ) 187,000 Operating expenses: Selling and administrative 4,000,000 – 4,000,000 Research and development (c) 2,088,000 ( 553,000 ) (c) 1,535,000 Total operating expenses 6,088,000 ( 553,000 ) 5,535,000 Operating loss ( 5,046,000 ) ( 302,000 ) ( 5,348,000 ) Other income (expense): Interest income (expense), net ( 31,000 ) – ( 31,000 ) Net loss $ ( 5,077,000 ) $ ( 302,000 ) $ ( 5,379,000 ) Net loss per share - basic and diluted $ ( 0.32 ) $ ( 0.01 ) $ ( 0.33 ) Weighted average number of common shares outstanding - basic and diluted 15,987,502 15,987,502 15,987,502 F- 51 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) As previously reported Restatement adjustments Reference As restated Three months ended September 30, 2021 As previously reported Restatement adjustments Reference As restated Revenues $ 6,271,000 $ – $ 6,271,000 Cost of sales (a)(d) 4,933,000 233,000 (a) (d) 5,166,000 Gross profit 1,338,000 ( 233,000 ) 1,105,000 Operating expenses: Selling and administrative 3,498,000 – 3,498,000 Research and development 1,967,000 – 1,967,000 Total operating expenses 5,465,000 – 5,465,000 Operating loss ( 4,127,000 ) ( 233,000 ) ( 4,360,000 ) Other income (expense): Interest income (expense), net ( 3,000 ) – ( 3,000 ) Net loss $ ( 4,130,000 ) $ ( 233,000 ) $ ( 4,363,000 ) Net loss per share - basic and diluted $ ( 0.30 ) $ ( 0.02 ) $ ( 0.32 ) Weighted average number of common shares outstanding - basic and diluted 13,804,475 13,804,475 13,804,475 As previously reported Restatement adjustments Reference As restated Six months ended December 31, 2023 As previously reported Restatement adjustments Reference As restated Revenues (b) $ 33,141,000 $ ( 151,000 ) (b) $ 32,990,000 Cost of sales (a)(c)(d)(e) 23,162,000 212,000 (a) (c) (d) (e) 23,374,000 Gross profit 9,979,000 ( 363,000 ) 9,616,000 Operating expenses: Selling and administrative 9,318,000 – 9,318,000 Research and development (c) 2,735,000 ( 205,000 ) (c) 2,530,000 Total operating expenses 12,053,000 ( 205,000 ) 11,848,000 Operating loss ( 2,074,000 ) ( 158,000 ) ( 2,232,000 ) Other income (expense): Interest income (expense), net ( 852,000 ) – ( 852,000 ) Net loss $ ( 2,926,000 ) $ ( 158,000 ) $ ( 3,084,000 ) Net loss per share - basic and diluted $ ( 0.18 ) $ ( 0.01 ) $ ( 0.19 ) Weighted average number of common shares outstanding - basic and diluted 16,495,727 16,495,727 16,495,727 F- 52 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) As previously reported Restatement adjustments Reference As restated Six months ended December 31, 2022 As previously reported Restatement adjustments Reference As restated Revenues $ 34,998,000 $ – $ 34,998,000 Cost of sales (a)(c)(d) 26,942,000 444,000 (a) (c) (d) 27,386,000 Gross profit 8,056,000 ( 444,000 ) 7,612,000 Operating expenses: Selling and administrative 8,786,000 – 8,786,000 Research and development (c) 2,385,000 ( 208,000 ) (c) 2,177,000 Total operating expenses 11,171,000 ( 208,000 ) 10,963,000 Operating loss ( 3,115,000 ) ( 236,000 ) ( 3,351,000 ) Other income (expense): Other income 8,000 – 8,000 Interest income (expense), net ( 713,000 ) – ( 713,000 ) Net loss $ ( 3,820,000 ) $ ( 236,000 ) $ ( 4,056,000 ) Net loss per share - basic and diluted $ ( 0.24 ) $ ( 0.01 ) $ ( 0.25 ) Weighted average number of common shares outstanding - basic and diluted 16,008,740 16,008,740 16,008,740 As previously reported Restatement adjustments Reference As restated Six months ended December 31, 2021 As previously reported Restatement adjustments Reference As restated Revenues $ 13,961,000 $ – $ 13,961,000 Cost of sales (a)(c)(d) 11,581,000 1,088,000 (a) (c) (d) 12,669,000 Gross profit 2,380,000 ( 1,088,000 ) 1,292,000 Operating expenses: Selling and administrative 7,498,000 – 7,498,000 Research and development (c) 4,055,000 ( 553,000 ) (c) 3,502,000 Total operating expenses 11,553,000 ( 553,000 ) 11,000,000 Operating loss ( 9,173,000 ) ( 535,000 ) ( 9,708,000 ) Other income (expense): Interest income (expense), net ( 34,000 ) – ( 34,000 ) Net loss $ ( 9,207,000 ) $ ( 535,000 ) $ ( 9,742,000 ) Net loss per share - basic and diluted $ ( 0.62 ) $ ( 0.03 ) $ ( 0.65 ) Weighted average number of common shares outstanding - basic and diluted 14,895,989 14,895,989 14,895,989 F- 53 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) As previously reported Restatement adjustments Reference As restated Nine months ended March 31, 2024 As previously reported Restatement adjustments Reference As restated Revenues (b) $ 47,598,000 $ ( 151,000 ) (b) $ 47,447,000 Cost of sales (a)(c)(d)(e) 33,229,000 577,000 (a) (c) (d) (e) 33,806,000 Gross profit 14,369,000 ( 728,000 ) 13,641,000 Operating expenses: Selling and administrative 14,629,000 – 14,629,000 Research and development (c) 4,021,000 ( 205,000 ) (c) 3,816,000 Total operating expenses 18,650,000 ( 205,000 ) 18,445,000 Operating loss ( 4,281,000 ) ( 523,000 ) ( 4,804,000 ) Other income (expense): Interest income (expense), net ( 1,285,000 ) – ( 1,285,000 ) Net loss $ ( 5,566,000 ) $ ( 523,000 ) $ ( 6,089,000 ) Net loss per share - basic and diluted $ ( 0.34 ) $ ( 0.03 ) $ ( 0.37 ) Weighted average number of common shares outstanding - basic and diluted 16,510,046 16,510,046 16,510,046 As previously reported Restatement adjustments Reference As restated Nine months ended March 31, 2023 As previously reported Restatement adjustments Reference As restated Revenues $ 50,085,000 $ – $ 50,085,000 Cost of sales (a)(c)(d) 37,310,000 486,000 (a) (c) (d) 37,796,000 Gross profit 12,775,000 ( 486,000 ) 12,289,000 Operating expenses: Selling and administrative 13,510,000 – 13,510,000 Research and development (c) 3,567,000 ( 208,000 ) (c) 3,359,000 Total operating expenses 17,077,000 ( 208,000 ) 16,869,000 Operating loss ( 4,302,000 ) ( 278,000 ) ( 4,580,000 ) Other income (expense): Other income 8,000 – 8,000 Interest income (expense), net ( 971,000 ) – ( 971,000 ) Net loss $ ( 5,265,000 ) $ ( 278,000 ) $ ( 5,543,000 ) Net loss per share - basic and diluted $ ( 0.33 ) $ ( 0.02 ) $ ( 0.35 ) Weighted average number of common shares outstanding - basic and diluted 16,021,653 16,021,653 16,021,653 F- 54 Table of Contents FLUX POWER HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) As previously reported Restatement adjustments Reference As restated Nine months ended March 31, 2022 As previously reported Restatement adjustments Reference As restated Revenues $ 27,138,000 $ – $ 27,138,000 Cost of sales (a)(c)(d) 22,838,000 1,407,000 (a) (c) (d) 24,245,000 Gross profit 4,300,000 ( 1,407,000 ) 2,893,000 Operating expenses: Selling and administrative 11,402,000 – 11,402,000 Research and development (c) 5,768,000 ( 728,000 ) (c) 5,040,000 Total operating expenses 17,170,000 ( 728,000 ) 16,442,000 Operating loss ( 12,870,000 ) ( 679,000 ) ( 13,549,000 ) Other income (expense): Interest income (expense), net ( 86,000 ) – ( 86,000 ) Net loss $ ( 12,956,000 ) $ ( 679,000 ) $ ( 13,635,000 ) Net loss per share - basic and diluted $ ( 0.85 ) $ ( 0.04 ) $ ( 0.89 ) Weighted average number of common shares outstanding - basic and diluted 15,254,983 15,254,983 15,254,983 F- 55 Table of Contents FLUX POWER HOLDING, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) Shares Capital Stock Amount Additional Paid-in Capital Accumulated Deficit Total Common Stock Reference Shares Capital Stock Amount Additional Paid-in Capital Accumulated Deficit Total Balance, as restated, June 30, 2023 16,462,215 $ 16,000 $ 98,086,000 $ ( 91,379,000 ) $ 6,723,000 Activity, as reported 16,022 – 276,000 ( 2,112,000 ) ( 1,836,000 ) Adjustments (a) (b) (a) (b) – – – ( 76,000 ) ( 76,000 ) Balance, as restated, September 30, 2023 16,478,237 16,000 98,362,000 ( 93,567,000 ) 4,811,000 Activity, as reported 54,038 1,000 485,000 ( 814,000 ) ( 328,000 ) Adjustments (a)(b)(d)(e) (a) (b) (d) (e) – – – ( 82,000 ) ( 82,000 ) Balance, as restated, December 31, 2023 16,532,275 17,000 98,847,000 ( 94,463,000 ) 4,401,000 Activity, as reported 67,408 – 673,000 ( 2,640,000 ) ( 1,967,000 ) Adjustments (a) (e) (a) (e) – – – ( 365,000 ) ( 365,000 ) Balance, as restated, March 31, 2024 16,599,683 $ 17,000 $ 99,520,000 $ ( 97,468,000 ) $ 2,069,000 Common Stock Reference Shares Capital Stock Amount Additional Paid-in Capital Accumulated Deficit Total Balance, as restated, June 30, 2022 15,996,658 $ 16,000 $ 95,732,000 $ ( 83,636,000 ) $ 12,112,000 Activity, as reported 1,678 – 95,000 ( 2,139,000 ) ( 2,044,000 ) Adjustments (a) (d) (a) (d) – – – ( 121,000 ) ( 121,000 ) Balance, as restated, September 30, 2022 15,998,336 16,000 95,827,000 ( 85,896,000 ) 9,947,000 Activity, as reported 31,142 – 209,000 ( 1,681,000 ) ( 1,472,000 ) Adjustments (a) (d) (a) (d) – – – ( 115,000 ) ( 115,000 ) Balance, as restated, December 31, 2022 16,029,478 16,000 96,036,000 ( 87,692,000 ) 8,360,000 Activity, as reported 126,954 – 932,000 ( 1,445,000 ) ( 513,000 ) Adjustments (a) (d) (a) (d) – – – ( 42,000 ) ( 42,000 ) Balance, as restated, March 31, 2023 16,156,432 $ 16,000 $ 96,968,000 $ ( 89,179,000 ) $ 7,805,000 Common Stock Reference Shares Capital Stock Amount Additional Paid-in Capital Accumulated Deficit Total Balance, as restated, June 30, 2021 * 13,652,164 $ 14,000 $ 79,197,000 $ ( 67,163,000 ) $ 12,048,000 Activity, as reported 2,335,338 2,000 15,876,000 ( 4,130,000 ) 11,748,000 Adjustments (a) (d) (a) (d) – – – ( 233,000 ) ( 233,000 ) Balance, as restated, September 30, 2021 15,987,502 16,000 95,073,000 ( 71,526,000 ) 23,563,000 Activity, as reported – – 144,000 ( 5,077,000 ) ( 4,933,000 ) Adjustments (a) (d) (a) (d) – – – ( 302,000 ) ( 302,000 ) Balance, as restated, December 31, 2021 15,987,502 16,000 95,217,000 ( 76,905,000 ) 18,328,000 Activity, as reported 4,578 – 152,000 ( 3,749,000 ) ( 3,597,000 ) Adjustments (a) (d) (a) (d) – – – ( 144,000 ) ( 144,000 ) Balance, as restated, March 31, 2022 15,992,080 $ 16,000 $ 95,369,000 $ ( 80,798,000 ) $ 14,587,000 * June 30, 2021 total shareholders’ equity, as restated, reflects the impact of restatement adjustments related to periods prior to the year ended June 30, 2022. The impact of restatement is a decrease of $ 958,000 to accumulated deficit at June 30, 2021. F- 56 Table of Contents FLUX POWER HOLDING, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine months ended March 31, 2024 Six months ended December 31, 2023 Three months ended September 30, 2023 Fiscal Year 2024 Nine months ended March 31, 2024 Six months ended December 31, 2023 Three months ended September 30, 2023 Restated Restated Restated Cash flows from operating activities: Net loss $ ( 6,089,000 ) $ ( 3,084,000 ) $ ( 2,188,000 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 787,000 523,000 261,000 Stock-based compensation 1,233,000 670,000 276,000 Amortization of debt issuance costs 161,000 134,000 81,000 Non-cash lease expense 448,000 296,000 146,000 Inventory write downs 358,000 233,000 113,000 Changes in operating assets and liabilities: Accounts receivable ( 1,668,000 ) ( 3,926,000 ) ( 2,040,000 ) Inventories ( 1,562,000 ) 371,000 ( 546,000 ) Other assets 11,000 ( 65,000 ) ( 215,000 ) Accounts payable 1,522,000 489,000 330,000 Accrued expenses 719,000 169,000 601,000 Accrued interest 134,000 128,000 100,000 Office leases payable ( 476,000 ) ( 312,000 ) ( 152,000 ) Deferred revenue 212,000 179,000 205,000 Customer deposits ( 64,000 ) 150,000 ( 65,000 ) Net cash used in operating activities ( 4,274,000 ) ( 4,045,000 ) ( 3,093,000 ) Cash flows from investing activities: Purchases of equipment ( 588,000 ) ( 338,000 ) ( 181,000 ) Proceeds from sale of fixed assets Net cash used in investing activities ( 588,000 ) ( 338,000 ) ( 181,000 ) Cash flows from financing activities: Proceeds from stock option exercises and employee stock purchase plan exercises 110,000 – – Proceeds from the issuance of common stock in registered direct offering, net of offering costs Proceeds from the issuance of common stock in public offering, net of offering costs Proceeds from revolving line of credit 52,820,000 35,868,000 18,055,000 Payment of revolving line of credit ( 49,087,000 ) ( 32,205,000 ) ( 15,981,000 ) Payment of finance leases ( 110,000 ) ( 75,000 ) ( 40,000 ) Net cash provided by financing activities 3,733,000 3,588,000 2,034,000 Net change in cash ( 1,129,000 ) ( 795,000 ) ( 1,240,000 ) Cash, beginning of period 2,379,000 2,379,000 2,379,000 Cash, end of period $ 1,250,000 $ 1,584,000 $ 1,139,000 Supplemental Disclosures of Non-Cash Investing and Financing Activities: Common stock issued for vested RSUs $ 222,000 $ 183,000 $ – Warrants issued in connection with borrowing agreements, recorded as debt issuance cost $ 92,000 $ 92,000 $ – Supplemental cash flow information: Interest paid $ 1,000,000 $ 605,000 $ 223,000 F- 57 Table of Contents FLUX POWER HOLDING, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine months ended March 31, 2023 Six months ended December 31, 2022 Three months ended September 30, 2022 Fiscal Year 2023 Nine months ended March 31, 2023 Six months ended December 31, 2022 Three months ended September 30, 2022 Restated Restated Restated Cash flows from operating activities: Net loss $ ( 5,543,000 ) $ ( 4,056,000 ) $ ( 2,260,000 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 647,000 371,000 172,000 Stock-based compensation 539,000 304,000 95,000 Amortization of debt issuance costs 445,000 368,000 229,000 Non-cash lease expense 370,000 236,000 117,000 Inventory write downs 191,000 88,000 43,000 Changes in operating assets and liabilities: Accounts receivable ( 1,272,000 ) ( 1,898,000 ) ( 2,987,000 ) Inventories ( 4,610,000 ) ( 3,097,000 ) ( 2,538,000 ) Other assets 11,000 ( 17,000 ) ( 229,000 ) Accounts payable 4,210,000 6,192,000 6,860,000 Accrued expenses 395,000 89,000 9,000 Accrued interest 2,000 – 1,000 Office leases payable ( 379,000 ) ( 244,000 ) ( 120,000 ) Deferred revenue ( 163,000 ) ( 82,000 ) 184,000 Customer deposits ( 40,000 ) ( 146,000 ) ( 165,000 ) Net cash used in operating activities ( 5,197,000 ) ( 1,892,000 ) ( 589,000 ) Cash flows from investing activities: Purchases of equipment ( 753,000 ) ( 344,000 ) ( 352,000 ) Proceeds from sale of fixed assets 8,000 8,000 – Net cash used in investing activities ( 745,000 ) ( 336,000 ) ( 352,000 ) Cash flows from financing activities: Proceeds from the issuance of common stock in public offering, net of offering costs 697,000 – – Proceeds from revolving line of credit 48,800,000 30,550,000 12,900,000 Payment of revolving line of credit ( 43,198,000 ) ( 28,628,000 ) ( 12,138,000 ) Payment of finance leases ( 52,000 ) ( 22,000 ) – Net cash provided by financing activities 6,247,000 1,900,000 762,000 Net change in cash 305,000 ( 328,000 ) ( 179,000 ) Cash, beginning of period 485,000 485,000 485,000 Cash, end of period $ 790,000 $ 157,000 $ 306,000 Supplemental Disclosures of Non-Cash Investing and Financing Activities: Initial right of use asset recognition $ 855,000 $ 258,000 $ 78,000 Common stock issued for vested RSUs $ 114,000 $ 114,000 $ 5,000 Supplemental cash flow information: Interest paid $ 524,000 $ 288,000 $ 99,000 F- 58 Table of Contents FLUX POWER HOLDING, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine months ended March 31, 2022 Six months ended December 31, 2021 Three months ended September 30, 2021 Fiscal Year 2022 Nine months ended March 31, 2022 Six months ended December 31, 2021 Three months ended September 30, 2021 Restated Restated Restated Cash flows from operating activities: Net loss $ ( 13,635,000 ) $ ( 9,742,000 ) $ ( 4,363,000 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 412,000 259,000 123,000 Stock-based compensation 601,000 449,000 200,000 Noncash lease expense 324,000 214,000 106,000 Inventory write downs 482,000 351,000 110,000 Changes in operating assets and liabilities: Accounts receivable ( 3,411,000 ) 913,000 1,586,000 Inventories ( 10,224,000 ) ( 8,886,000 ) ( 3,210,000 ) Other assets ( 118,000 ) ( 408,000 ) ( 567,000 ) Accounts payable 6,186,000 2,064,000 2,123,000 Accrued expenses ( 441,000 ) ( 350,000 ) ( 675,000 ) Accrued interest – 1,000 1,000 Office leases payable ( 322,000 ) ( 211,000 ) ( 104,000 ) Deferred revenue 289,000 116,000 103,000 Customer deposits 519,000 ( 171,000 ) 151,000 Net cash used in operating activities ( 19,338,000 ) ( 15,401,000 ) ( 4,416,000 ) Cash flows from investing activities: Purchases of equipment ( 644,000 ) ( 530,000 ) ( 238,000 ) Net cash used in investing activities ( 644,000 ) ( 530,000 ) ( 238,000 ) Cash flows from financing activities: Proceeds from the issuance of common stock in registered direct offering, net of offering costs 13,971,000 13,971,000 14,076,000 Proceeds from the issuance of common stock in public offering, net of offering costs 1,602,000 1,602,000 1,602,000 Proceeds from revolving line of credit 3,500,000 3,500,000 – Net cash provided by financing activities 19,073,000 19,073,000 15,678,000 Net change in cash ( 909,000 ) 3,142,000 11,024,000 Cash, beginning of period 4,713,000 4,713,000 4,713,000 Cash, end of period $ 3,804,000 $ 7,855,000 $ 15,737,000 Supplemental Disclosures of Non-Cash Investing and Financing Activities: Common stock issued for vested RSUs $ 9,700 $ – $ – Supplemental cash flow information: Interest paid $ 86,000 $ 33,000 $ 2,000 F- 59 Table of Contents FLUX POWER HOLDING, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) As previously reported Restatement adjustments Reference As restated Nine months ended March 31, 2024 As previously reported Restatement adjustments Reference As restated Cash flows from operating activities: Net loss (a)(b)(d)(e) $ ( 5,566,000 ) $ ( 523,000 ) (a) (b) (d) (e) $ ( 6,089,000 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 787,000 – 787,000 Stock-based compensation 1,233,000 – 1,233,000 Fair value of warrants issued as debt discount cost 92,000 ( 92,000 ) (f) 0 Amortization of debt issuance costs 161,000 – 161,000 Non-cash lease expense 448,000 – 448,000 Inventory write downs (a) 13,000 345,000 (a) 358,000 Changes in operating assets and liabilities: Accounts receivable (b) ( 1,755,000 ) 87,000 (b) ( 1,668,000 ) Inventories (a)(d) ( 1,191,000 ) ( 371,000 ) (a) (d) ( 1,562,000 ) Other assets ( 81,000 ) 92,000 (f) 11,000 Accounts payable (b)(d)(e) 1,315,000 207,000 (b) (d) (e) 1,522,000 Accrued expenses (e) 464,000 255,000 (e) 719,000 Accrued interest 134,000 – 134,000 Office leases payable ( 476,000 ) – ( 476,000 ) Deferred revenue 212,000 – 212,000 Customer deposits ( 64,000 ) – ( 64,000 ) Net cash used in operating activities ( 4,274,000 ) – ( 4,274,000 ) Cash flows from investing activities: Purchases of equipment ( 588,000 ) – ( 588,000 ) Net cash used in investing activities ( 588,000 ) – ( 588,000 ) Cash flows from financing activities: Proceeds from stock option exercises and employee stock purchase plan exercises 110,000 – 110,000 Proceeds from revolving line of credit 52,820,000 – 52,820,000 Payment of revolving line of credit ( 49,087,000 ) – ( 49,087,000 ) Payment of finance leases ( 110,000 ) – ( 110,000 ) Net cash provided by financing activities 3,733,000 – 3,733,000 Net change in cash ( 1,129,000 ) – ( 1,129,000 ) Cash, beginning of period 2,379,000 – 2,379,000 Cash, end of period $ 1,250,000 $ – $ 1,250,000 Supplemental Disclosures of Non-Cash Investing and Financing Activities: Common stock issued for vested RSUs $ 222,000 $ – $ 222,000 Warrants issued in connection with borrowing agreements, recorded as debt issuance cost $ – $ 92,000 (f) $ 92,000 Supplemental cash flow information: Interest paid $ 1,000,000 $ – $ 1,000,000 F- 60 Table of Contents FLUX POWER HOLDING, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) As previously reported Restatement adjustments Reference As restated Six months ended December 31, 2023 As previously reported Restatement adjustments Reference As restated Cash flows from operating activities: Net loss (a)(b)(d)(e) $ ( 2,926,000 ) $ ( 158,000 ) (a) (b) (d) (e) $ ( 3,084,000 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 523,000 ( 92,000 ) (f) 523,000 Stock-based compensation 670,000 – 670,000 Fair value of warrants issued as debt discount cost (f) 92,000 ( 92,000 ) (f) – Amortization of debt issuance costs 134,000 – 134,000 Non-cash lease expense 296,000 – 296,000 Inventory write downs (a) ( 2,000 ) 235,000 (a) 233,000 Changes in operating assets and liabilities: Accounts receivable (b) ( 3,930,000 ) 4,000 (b) ( 3,926,000 ) Inventories (a)(d) 715,000 ( 344,000 ) (a) (d) 371,000 Other assets (f) ( 157,000 ) 92,000 (f) ( 65,000 ) Accounts payable (b)(d)(e) 286,000 203,000 (b) (d) (e) 489,000 Accrued expenses (e) 109,000 60,000 (e) 169,000 Accrued interest 128,000 – 128,000 Office leases payable ( 312,000 ) – ( 312,000 ) Deferred revenue 179,000 – 179,000 Customer deposits 150,000 – 150,000 Net cash used in operating activities ( 4,045,000 ) – ( 4,045,000 ) Cash flows from investing activities: Purchases of equipment ( 338,000 ) – ( 338,000 ) Net cash used in investing activities ( 338,000 ) – ( 338,000 ) Cash flows from financing activities: Proceeds from revolving line of credit 35,868,000 – 35,868,000 Payment of revolving line of credit ( 32,205,000 ) – ( 32,205,000 ) Payment of finance leases ( 75,000 ) – ( 75,000 ) Net cash provided by financing activities 3,588,000 – 3,588,000 Net change in cash ( 795,000 ) – ( 795,000 ) Cash, beginning of period 2,379,000 – 2,379,000 Cash, end of period $ 1,584,000 $ – $ 1,584,000 Supplemental Disclosures of Non-Cash Investing and Financing Activities: Common stock issued for vested RSUs $ 183,000 $ – $ 183,000 Warrants issued in connection with borrowing agreements, recorded as debt issuance cost (f) $ - $ 92,000 (f) $ 92,000 Supplemental cash flow information: Interest paid $ 605,000 $ – $ 605,000 F- 61 Table of Contents FLUX POWER HOLDING, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) As previously reported Restatement adjustments Reference As restated Three months ended September 30, 2023 As previously reported Restatement adjustments Reference As restated Cash flows from operating activities: Net loss (a)(b) $ ( 2,112,000 ) $ ( 76,000 ) (a) (b) $ ( 2,188,000 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 261,000 – 261,000 Stock-based compensation 276,000 – 276,000 Amortization of debt issuance costs 81,000 – 81,000 Non-cash lease expense 146,000 – 146,000 Inventory write downs (a) ( 3,000 ) 116,000 (a) 113,000 Changes in operating assets and liabilities: Accounts receivable (b) ( 2,050,000 ) 10,000 (b) ( 2,040,000 ) Inventories (a) ( 496,000 ) ( 50,000 ) (a) ( 546,000 ) Other assets ( 215,000 ) – ( 215,000 ) Accounts payable 330,000 – 330,000 Accrued expenses 601,000 – 601,000 Accrued interest 100,000 – 100,000 Office leases payable ( 152,000 ) – ( 152,000 ) Deferred revenue 205,000 – 205,000 Customer deposits ( 65,000 ) – ( 65,000 ) Net cash used in operating activities ( 3,093,000 ) – ( 3,093,000 ) Cash flows from investing activities: Purchases of equipment ( 181,000 ) – ( 181,000 ) Net cash used in investing activities ( 181,000 ) – ( 181,000 ) Cash flows from financing activities: Proceeds from the issuance of common stock in registered direct offering, net of offering costs Proceeds from revolving line of credit 18,055,000 – 18,055,000 Payment of revolving line of credit ( 15,981,000 ) – ( 15,981,000 ) Payment of finance leases ( 40,000 ) – ( 40,000 ) Net cash provided by financing activities 2,034,000 – 2,034,000 Net change in cash ( 1,240,000 ) – ( 1,240,000 ) Cash, beginning of period 2,379,000 – 2,379,000 Cash, end of period $ 1,139,000 $ – $ 1,139,000 Supplemental cash flow information: Interest paid $ 223,000 $ – $ 223,000 F- 62 Table of Contents FLUX POWER HOLDING, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) As previously reported Restatement adjustments Reference As restated Nine months ended March 31, 2023 As previously reported Restatement adjustments Reference As restated Cash flows from operating activities: Net loss (a)(d) $ ( 5,265,000 ) $ ( 278,000 ) (a) (d) $ ( 5,543,000 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 647,000 – 647,000 Stock-based compensation 539,000 – 539,000 Amortization of debt issuance costs 445,000 – 445,000 Non-cash lease expense 370,000 – 370,000 Inventory write downs (a) 214,000 ( 23,000 ) (a) 191,000 Changes in operating assets and liabilities: – Accounts receivable (b) ( 1,244,000 ) ( 28,000 ) (b) ( 1,272,000 ) Inventories (a)(d) ( 4,911,000 ) 301,000 (a) (d) ( 4,610,000 ) Other assets 11,000 – 11,000 Accounts payable (b) 4,182,000 28,000 (b) 4,210,000 Accrued expenses 395,000 – 395,000 Accrued interest 2,000 – 2,000 Office leases payable ( 379,000 ) – ( 379,000 ) Deferred revenue ( 163,000 ) – ( 163,000 ) Customer deposits ( 40,000 ) – ( 40,000 ) Net cash used in operating activities ( 5,197,000 ) – ( 5,197,000 ) Cash flows from investing activities: Purchases of equipment ( 753,000 ) – ( 753,000 ) Proceeds from sale of fixed assets 8,000 – 8,000 Net cash used in investing activities ( 745,000 ) – ( 745,000 ) Cash flows from financing activities: Proceeds from the issuance of common stock in public offering, net of offering costs 697,000 – 697,000 Proceeds from revolving line of credit 48,800,000 – 48,800,000 Payment of revolving line of credit ( 43,198,000 ) – ( 43,198,000 ) Payment of finance leases ( 52,000 ) – ( 52,000 ) Net cash provided by financing activities 6,247,000 – 6,247,000 Net change in cash 305,000 – 305,000 Cash, beginning of period 485,000 – 485,000 Cash, end of period $ 790,000 $ – $ 790,000 Supplemental Disclosures of Non-Cash Investing and Financing Activities: Initial right of use asset recognition $ 855,000 $ – $ 855,000 Common stock issued for vested RSUs $ 114,000 $ – $ 114,000 Supplemental cash flow information: Interest paid $ 524,000 $ – $ 524,000 F- 63 Table of Contents FLUX POWER HOLDING, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) As previously reported Restatement adjustments Reference As restated Six months ended December 31, 2022 As previously reported Restatement adjustments Reference As restated Cash flows from operating activities: Net loss (a)(d) $ ( 3,820,000 ) $ ( 236,000 ) (a) (d) $ ( 4,056,000 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 371,000 – 371,000 Stock-based compensation 304,000 – 304,000 Amortization of debt issuance costs 368,000 – 368,000 Non-cash lease expense 236,000 – 236,000 Inventory write downs (a) 135,000 ( 47,000 ) (a) 88,000 Changes in operating assets and liabilities: Accounts receivable (b) ( 1,858,000 ) ( 40,000 ) (b) ( 1,898,000 ) Inventories (a)(d) ( 3,380,000 ) 283,000 (a) (d) ( 3,097,000 ) Other assets ( 17,000 ) – ( 17,000 ) Accounts payable (b) 6,152,000 40,000 (b) 6,192,000 Accrued expenses 89,000 – 89,000 Office leases payable ( 244,000 ) – ( 244,000 ) Deferred revenue ( 82,000 ) – ( 82,000 ) Customer deposits ( 146,000 ) – ( 146,000 ) Net cash used in operating activities ( 1,892,000 ) – ( 1,892,000 ) Cash flows from investing activities: Purchases of equipment ( 344,000 ) – ( 344,000 ) Proceeds from sale of fixed assets 8,000 – 8,000 Net cash used in investing activities ( 336,000 ) – ( 336,000 ) Cash flows from financing activities: Proceeds from revolving line of credit 30,550,000 – 30,550,000 Payment of revolving line of credit ( 28,628,000 ) – ( 28,628,000 ) Payment of finance leases ( 22,000 ) – ( 22,000 ) Net cash provided by financing activities 1,900,000 – 1,900,000 Net change in cash ( 328,000 ) – ( 328,000 ) Cash, beginning of period 485,000 – 485,000 Cash, end of period $ 157,000 $ – $ 157,000 Supplemental Disclosures of Non-Cash Investing and Financing Activities: Initial right of use asset recognition $ 258,000 $ – $ 258,000 Common stock issued for vested RSUs $ 114,000 $ – $ 114,000 Supplemental cash flow information: Interest paid $ 288,000 $ – $ 288,000 F- 64 Table of Contents FLUX POWER HOLDING, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) As previously reported Restatement adjustments Reference As restated Three months ended September 30, 2022 As previously reported Restatement adjustments Reference As restated Cash flows from operating activities: Net loss (a)(d) $ ( 2,139,000 ) $ ( 121,000 ) (a) (d) $ ( 2,260,000 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 172,000 – 172,000 Stock-based compensation 95,000 – 95,000 Amortization of debt issuance costs 229,000 – 229,000 Non-cash lease expense 117,000 – 117,000 Inventory write downs (a) 25,000 18,000 (a) 43,000 Changes in operating assets and liabilities: Accounts receivable ( 2,987,000 ) – ( 2,987,000 ) Inventories (a)(d) ( 2,641,000 ) 103,000 (a) (d) ( 2,538,000 ) Other assets ( 229,000 ) – ( 229,000 ) Accounts payable 6,860,000 – 6,860,000 Accrued expenses 9,000 – 9,000 Accrued interest 1,000 – 1,000 Office leases payable ( 120,000 ) – ( 120,000 ) Deferred revenue 184,000 – 184,000 Customer deposits ( 165,000 ) – ( 165,000 ) Net cash used in operating activities ( 589,000 ) – ( 589,000 ) Cash flows from investing activities: Purchases of equipment ( 352,000 ) – ( 352,000 ) Net cash used in investing activities ( 352,000 ) – ( 352,000 ) Cash flows from financing activities: Proceeds from revolving line of credit 12,900,000 – 12,900,000 Payment of revolving line of credit ( 12,138,000 ) – ( 12,138,000 ) Net cash provided by financing activities 762,000 – 762,000 Net change in cash ( 179,000 ) – ( 179,000 ) Cash, beginning of period 485,000 – 485,000 Cash, end of period $ 306,000 $ – $ 306,000 Supplemental Disclosures of Non-Cash Investing and Financing Activities: Initial right of use asset recognition $ 78,000 $ – $ 78,000 Common stock issued for vested RSUs $ 5,000 $ – $ 5,000 Supplemental cash flow information: Interest paid $ 99,000 $ – $ 99,000 F- 65 Table of Contents FLUX POWER HOLDING, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) As previously reported Restatement adjustments Reference As restated Nine months ended March 31, 2022 As previously reported Restatement adjustments Reference As restated Cash flows from operating activities: Net loss (a)(d) $ ( 12,956,000 ) $ ( 679,000 ) (a) (d) $ ( 13,635,000 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 412,000 – 412,000 Stock-based compensation 601,000 – 601,000 Non-cash lease expense 324,000 – 324,000 Inventory write downs (a) 109,000 373,000 (a) 482,000 Changes in operating assets and liabilities: Accounts receivable ( 3,411,000 ) – ( 3,411,000 ) Inventories (a)(d) ( 10,530,000 ) 306,000 (a) (d) ( 10,224,000 ) Other assets ( 118,000 ) – ( 118,000 ) Accounts payable 6,186,000 – 6,186,000 Accrued expenses ( 441,000 ) – ( 441,000 ) Office leases payable ( 322,000 ) – ( 322,000 ) Deferred revenue 289,000 – 289,000 Customer deposits 519,000 – 519,000 Net cash used in operating activities ( 19,338,000 ) – ( 19,338,000 ) Cash flows from investing activities: Purchases of equipment ( 644,000 ) – ( 644,000 ) Net cash used in investing activities ( 644,000 ) – ( 644,000 ) Cash flows from financing activities: Proceeds from the issuance of common stock in registered direct offering, net of offering costs 13,971,000 – 13,971,000 Proceeds from the issuance of common stock in public offering, net of offering costs 1,602,000 – 1,602,000 Proceeds from revolving line of credit 3,500,000 – 3,500,000 Net cash provided by financing activities 19,073,000 – 19,073,000 Net change in cash ( 909,000 ) – ( 909,000 ) Cash, beginning of period 4,713,000 – 4,713,000 Cash, end of period $ 3,804,000 $ – $ 3,804,000 Supplemental Disclosures of Non-Cash Investing and Financing Activities: Common stock issued for vested RSUs $ 9,700 $ – $ 9,700 Supplemental cash flow information: Interest paid $ 86,000 $ – $ 86,000 F- 66 Table of Contents FLUX POWER HOLDING, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) As previously reported Restatement adjustments Reference As restated Six months ended December 31, 2021 As previously reported Restatement adjustments Reference As restated Cash flows from operating activities: Net loss (a)(d) $ ( 9,207,000 ) $ ( 535,000 ) (a) (d) $ ( 9,742,000 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 259,000 – 259,000 Stock-based compensation 449,000 – 449,000 Non-cash lease expense 214,000 – 214,000 Inventory write downs (a) 169,000 182,000 (a) 351,000 Changes in operating assets and liabilities: Accounts receivable 913,000 – 913,000 Inventories (a)(d) ( 9,239,000 ) 353,000 (a) (d) ( 8,886,000 ) Other assets ( 408,000 ) – ( 408,000 ) Accounts payable 2,064,000 – 2,064,000 Accrued expenses ( 350,000 ) – ( 350,000 ) Accrued interest 1,000 – 1,000 Office leases payable ( 211,000 ) – ( 211,000 ) Deferred revenue 116,000 – 116,000 Customer deposits ( 171,000 ) – ( 171,000 ) Net cash used in operating activities ( 15,401,000 ) – ( 15,401,000 ) Cash flows from investing activities: Purchases of equipment ( 530,000 ) – ( 530,000 ) Net cash used in investing activities ( 530,000 ) – ( 530,000 ) Cash flows from financing activities: Proceeds from the issuance of common stock in registered direct offering, net of offering costs 13,971,000 13,971,000 Proceeds from the issuance of common stock in public offering, net of offering costs 1,602,000 – 1,602,000 Proceeds from revolving line of credit 3,500,000 – 3,500,000 Net cash provided by financing activities 19,073,000 – 19,073,000 Net change in cash 3,142,000 – 3,142,000 Cash, beginning of period 4,713,000 – 4,713,000 Cash, end of period $ 7,855,000 $ – $ 7,855,000 Supplemental cash flow information: Interest paid $ 33,000 $ – $ 33,000 F- 67 Table of Contents FLUX POWER HOLDING, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) As previously reported Restatement adjustments Reference As restated Three months ended September 30, 2021 As previously reported Restatement adjustments Reference As restated Cash flows from operating activities: Net loss (a)(d) $ ( 4,130,000 ) $ ( 233,000 ) (a) (d) $ ( 4,363,000 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 123,000 – 123,000 Stock-based compensation 200,000 – 200,000 Non-cash lease expense 106,000 – 106,000 Inventory write downs (a) 24,000 86,000 (a) 110,000 Changes in operating assets and liabilities: Accounts receivable 1,586,000 – 1,586,000 Inventories (a)(d) ( 3,357,000 ) 147,000 (a) (d) ( 3,210,000 ) Other assets ( 567,000 ) – ( 567,000 ) Accounts payable 2,123,000 – 2,123,000 Accrued expenses ( 675,000 ) – ( 675,000 ) Accrued interest 1,000 – 1,000 Office leases payable ( 104,000 ) – ( 104,000 ) Deferred revenue 103,000 – 103,000 Customer deposits 151,000 – 151,000 Net cash used in operating activities ( 4,416,000 ) – ( 4,416,000 ) Cash flows from investing activities: Purchases of equipment ( 238,000 ) – ( 238,000 ) Net cash used in investing activities ( 238,000 ) – ( 238,000 ) Cash flows from financing activities: Proceeds from the issuance of common stock in registered direct offering, net of offering costs 14,076,000 – 14,076,000 Proceeds from the issuance of common stock in public offering, net of offering costs 1,602,000 – 1,602,000 Net cash provided by financing activities 15,678,000 – 15,678,000 Net change in cash 11,024,000 – 11,024,000 Cash, beginning of period 4,713,000 – 4,713,000 Cash, end of period $ 15,737,000 $ – $ 15,737,000 Supplemental cash flow information: Interest paid $ 2,000 $ – $ 2,000 (a) Inventories. The Company did not properly evaluate its calculation of its excess and obsolescence reserve on its finished goods and raw materials inventories, resulting in an overstatement of inventories and an understatement of cost of sales. In addition, certain inventory components were not properly recorded at the lower of cost or net realizable value, resulting in an overstatement of inventory and an understatement of cost of sales. Further, certain loaner service packs and consigned inventory were not reconciled timely, resulting in an overstatement of inventory and an understatement of cost of sales. Lastly, the Company also corrected the cash flow presentation related to inventory write downs on the statement of cash flows. (b) Revenue recognition. The Company improperly recognized revenue during the three months ended September 30, 2023 related to performance obligations satisfied during three months ended June 30, 2023, resulting in an understatement of revenue in the three months ended June 30, 2023 and an overstatement of revenue in the three months ended September 30, 2023. (c) Expense classification. The Company improperly recorded various inventory write-downs to research and development expenses although such expenses did not meet the classification criteria for research and development under ASC 730, resulting in an overstatement of research and development expenses and an understatement of cost of sales. (d) Other. The Company had various clearing accounts that were not reconciled timely, resulting in an understatement of accounts payable, overstatement of inventories, and understatement of cost of sales. (e) Product warranty liability. The Company did not include certain product warranty-related expenses within the proper period in its calculation of its product warranty reserve estimate, resulting in an understatement of accrued expenses and an understatement of cost of sales. F- 68