Flux Power to Write Down $1.7 Million in Obsolete Inventory, Requiring Restatement of Certain Previously Issued Financial Statements
Flux Power Holdings, Inc. (NASDAQ: FLUX) has announced a $1.7 million write-down of excess and obsolete inventory, necessitating a restatement of previously issued financial statements for fiscal year 2023 and interim periods of fiscal year 2024. This non-cash charge is primarily attributed to product innovation and design during a period of rapid growth. The company's $16 million revolving credit facility with Gibraltar Business Capital is expected to remain available, subject to meeting lending criteria. CEO Ron Dutt emphasized that these findings should not impact the business's strength, capital access, or positive outlook. Flux Power is implementing enhanced procedures and quality checks to prevent recurrence of inventory accounting issues as they transition to more advanced energy cells.
Flux Power Holdings, Inc. (NASDAQ: FLUX) ha annunciato un declassamento di $1,7 milioni di inventario eccessivo e obsoleto, che richiede una rettifica dei bilanci finanziari precedentemente emessi per l'anno fiscale 2023 e i periodi intermedi dell'anno fiscale 2024. Questa spesa non monetaria è attribuita principalmente all'innovazione e al design del prodotto durante un periodo di rapida crescita. La linea di credito revolving di $16 milioni con Gibraltar Business Capital dovrebbe rimanere disponibile, subordinatamente al rispetto dei criteri di prestito. Il CEO Ron Dutt ha sottolineato che queste scoperte non dovrebbero influire sulla solidità dell'azienda, sull'accesso al capitale o sulle prospettive positive. Flux Power sta attuando procedure migliorate e controlli di qualità per prevenire il ripetersi di problemi contabili legati all'inventario mentre si stanno trasferendo a celle energetiche più avanzate.
Flux Power Holdings, Inc. (NASDAQ: FLUX) ha anunciado un decrimento de $1.7 millones de inventario excedente y obsoleto, lo que requiere una reexpresión de los estados financieros emitidos anteriormente para el año fiscal 2023 y los períodos interinos del año fiscal 2024. Este cargo no monetario se atribuye principalmente a la innovación y el diseño de productos durante un período de rápido crecimiento. La línea de crédito revolvente de $16 millones con Gibraltar Business Capital se espera que siga disponible, sujeto a cumplir con los criterios de préstamo. El CEO Ron Dutt enfatizó que estos hallazgos no deberían afectar la fortaleza del negocio, el acceso al capital o las perspectivas positivas. Flux Power está implementando procedimientos mejorados y controles de calidad para prevenir la recurrencia de problemas contables de inventario mientras realizan la transición a celdas de energía más avanzadas.
플럭스 파워 홀딩스 주식회사(NASDAQ: FLUX)는 170만 달러의 잉여 및 구식 재고 감액을 발표하며, 2023 회계연도 및 2024 회계연도 중간 기간에 대해 이전에 발표한 재무제표를 재작성해야 함을 알렸습니다. 이 비현금 비용은 급속한 성장 기간 동안의 제품 혁신 및 디자인에 주로 기인합니다. 지브롤터 비즈니스 캐피탈과의 1600만 달러 회전 신용 시설은 대출 기준을 충족하는 조건에 따라 사용 가능한 상태로 유지될 것으로 보입니다. CEO 론 더트는 이러한 발견이 기업의 강도, 자본 접근성, 긍정적인 전망에 영향을 미치지 않아야 한다고 강조했습니다. 플럭스 파워는 고급 에너지 셀로의 전환 과정에서 재고 회계 문제의 재발을 방지하기 위해 향상된 절차 및 품질 검사를 시행하고 있습니다.
Flux Power Holdings, Inc. (NASDAQ: FLUX) a annoncé une dépréciation de 1,7 million de dollars d'inventaire excédentaire et obsolète, nécessitant une réexamen des états financiers précédemment publiés pour l'exercice fiscal 2023 et les périodes intermédiaires de l'exercice fiscal 2024. Cette charge non monétaire est principalement attribuée à l'innovation et au design de produits pendant une période de croissance rapide. La ligne de crédit rotatif de 16 millions de dollars avec Gibraltar Business Capital devrait rester disponible, sous réserve du respect des critères de prêt. Le PDG Ron Dutt a souligné que ces constatations ne devraient pas avoir d'impact sur la force de l'entreprise, l'accès aux capitaux ou les perspectives positives. Flux Power met en œuvre des procédures améliorées et des contrôles de qualité pour empêcher la récurrence de problèmes de comptabilité des stocks alors qu'ils passent à des cellules énergétiques plus avancées.
Flux Power Holdings, Inc. (NASDAQ: FLUX) hat eine Abwertung von 1,7 Millionen Dollar für übermäßige und veraltete Bestände angekündigt, die eine Neufassung der zuvor veröffentlichten Finanzberichte für das Geschäftsjahr 2023 und die Zwischenzeiträume des Geschäftsjahres 2024 erfordert. Diese nicht monetäre Belastung ist hauptsächlich auf Produktinnovation und -design während einer Phase des schnellen Wachstums zurückzuführen. Das 16 Millionen Dollar revolving Kreditfazilität mit Gibraltar Business Capital soll weiterhin verfügbar sein, vorausgesetzt, die Kreditkriterien werden erfüllt. CEO Ron Dutt betonte, dass diese Ergebnisse die Stärke des Unternehmens, den Zugang zu Kapital oder die positive Aussicht nicht beeinträchtigen sollten. Flux Power implementiert verbesserte Verfahren und Qualitätskontrollen, um eine Wiederholung von Bestandsbuchhaltungsproblemen zu verhindern, während sie zu fortschrittlicheren Energiespeichern übergehen.
- The $16 million revolving credit facility remains available, subject to lending criteria
- Implementation of enhanced procedures and quality checks to prevent future inventory accounting issues
- Company maintains a positive outlook for future growth and innovation
- $1.7 million write-down of excess and obsolete inventory
- Restatement of financial statements for fiscal year 2023 and interim periods of fiscal year 2024
- Potential additional adjustments may be identified during the review process
Insights
The $1.7 million inventory write-down and subsequent financial restatement signals significant challenges in Flux Power's inventory management and financial reporting processes. While the non-cash nature of the charge mitigates immediate liquidity concerns, it raises questions about the company's internal controls and operational efficiency. The need for restatement across multiple reporting periods suggests systemic issues that could erode investor confidence.
Positively, the retention of the $16 million credit facility provides a financial cushion, but investors should monitor closely if lending criteria are met. The appointment of a new CFO and implementation of enhanced procedures indicate proactive steps towards improvement, but the effectiveness of these measures remains to be seen. Investors should scrutinize future financial reports for signs of improved inventory management and more accurate reporting.
The inventory write-down points to significant supply chain management issues at Flux Power. In a rapidly evolving industry like lithium-ion energy storage, maintaining an agile and responsive supply chain is crucial. The $1.7 million in obsolete inventory suggests a disconnect between product development, market demand and inventory planning.
While product innovation is commendable, it must be balanced with efficient inventory turnover to prevent obsolescence. This incident highlights the need for better forecasting models, more frequent inventory reviews and potentially a just-in-time inventory system. The company's ability to adapt its supply chain strategy will be critical for future profitability and competitiveness in the fast-paced energy storage market.
Flux Power's inventory write-down reflects the challenges of operating in the rapidly evolving lithium-ion energy storage sector. The obsolescence of $1.7 million in inventory due to product innovation underscores the pace of technological change in this industry. While it's a setback, it also indicates that Flux is actively innovating, which is important for long-term competitiveness.
However, the need for financial restatements raises concerns about the company's ability to accurately forecast and manage its technological transitions. As the energy storage market continues to grow, Flux Power will need to balance innovation with better inventory management to capitalize on opportunities. Investors should watch for improvements in the company's product lifecycle management and its ability to align R&D with market demands.
“Flux Power, with the leadership of our new CFO Kevin Royal, is taking all appropriate measures to rectify the inventory accounting issues related to our transition to more advanced energy cells, including implementing enhanced procedures and quality checks to mitigate the possibility of it recurring,” said Ron Dutt, CEO of Flux Power. “We believe that these findings will not impact the strength of the business, our access to capital through our financing partner or the Company’s positive outlook for our future – which will be fueled by continued innovation, maintaining a disciplined cost structure and driving organic growth.”
The Company intends to restate its financial statements for the periods noted above as soon as practicable. Additional information related to the restatements is available in the Company’s Form 8-K filed with the Securities and Exchange Commission today.
About Flux Power Holdings, Inc.
Flux Power (NASDAQ: FLUX) designs, manufactures, and sells advanced lithium-ion energy storage solutions for electrification of a range of industrial and commercial sectors including material handling, airport ground support equipment (GSE), and stationary energy storage. Flux Power’s lithium-ion battery packs, including the proprietary battery management system (BMS) and telemetry, provide customers with a better performing, lower cost of ownership, and more environmentally friendly alternative, in many instances, to traditional lead acid and propane-based solutions. Lithium-ion battery packs reduce CO2 emissions and help improve sustainability and ESG metrics for fleets. For more information, please visit www.fluxpower.com.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, and other securities law. Forward-looking statements are statements that are not historical facts. Words and phrases such as “anticipated,” “forward,” “will,” “would,” “could,” “may,” “intend,” “remain,” “potential,” “prepare,” “expected,” “believe,” “plan,” “seek,” “continue,” “estimate,” “and similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to, statements with respect to: the expected adjustments to the Company’s financial statements, including the estimated amount and impact of adjustments on the Company’s financial statements, expectations with respect to the Company’s internal control over financial reporting and disclosure controls and procedures and related remediation, the potential for additional adjustments to the Company’s financial statements and additional restatements, the Company’s ability to access its revolving credit facility, expected filing of its Form 10-K, and effect and impact on Company’s business and credit facility. All of such statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the Company’s control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Such risks and uncertainties include, but are not limited to, the completion of the review and preparation of the Company’s financial statements and internal control over financial reporting and disclosure controls and procedures and the timing thereof; the discovery of additional information resulting to additional adjustments; delays in the Company’s financial reporting, including as a result of unanticipated factors; the Company’s ability to obtain necessary waivers or amendments to its credit facility in the future; the risk that the Company may become subject to stockholder lawsuits or claims; the Company’s ability to remediate material weaknesses in its internal control over financial reporting; risks inherent in estimates or judgments relating to the Company’s critical accounting policies, or any of the Company’s estimates or projections, which may prove to be inaccurate; unanticipated factors in addition to the foregoing that may impact the Company’s financial and business projections and guidance and may cause the Company’s actual results and outcomes to materially differ from its estimates, projections and guidance; and those risks and uncertainties identified in the “Risk Factors” sections of the Company’s Annual Report on Form 10-K for the year ended June 30, 2023, and its other subsequent filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements. All forward-looking statements contained in this press release speak only as of the date on which they were made. Except to the extent required by law, the Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made.
Flux, Flux Power, and associated logos are trademarks of Flux Power Holdings, Inc. All other third-party brands, products, trademarks, or registered marks are the property of and used to identify the products or services of their respective owners.
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Source: Flux Power Holdings, Inc.
FAQ
What is the amount of inventory write-down announced by Flux Power (FLUX)?
Which financial periods will be restated by Flux Power (FLUX) due to the inventory write-down?
Will the inventory write-down affect Flux Power's (FLUX) cash flow?
Is Flux Power's (FLUX) credit facility with Gibraltar Business Capital affected by this announcement?
