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RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
 12 Months Ended
Jun. 30, 2024
Accounting Changes and Error Corrections [Abstract]  
RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

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.

 

 

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    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   $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    (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 

 

 

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    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   -    -       - 
Common stock, $0.001 par value; 30,000,000 shares authorized; 15,996,658 shares issued and outstanding   16,000    –       16,000 
Additional paid-in capital   95,732,000            95,732,000 
Accumulated deficit    (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 

 

 

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   $66,337,000   $151,000   (b)  $66,488,000 
Cost of sales    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    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 

 

 

   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    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    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 

 

 

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 – 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      –    –    –    (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)   –    –    –    (1,822,000)   (1,822,000)
Net loss   (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 

 

 

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)   –    –    –    (958,000)   (958,000)
Net loss   (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 
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 

 

 

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   $(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 
Amortization of debt issuance costs   482,000    –       482,000 
Non-cash lease expense   512,000    –       512,000 
Inventory write downs    –    690,000   (a)   690,000 
Changes in operating assets and liabilities:                   
Accounts receivable (b)   (40,000)   (151,000)  (b)   (191,000)
Inventories    (2,734,000)   326,000   (a) (d)   (2,408,000)
Other assets   (170,000)   –       (170,000)
Accounts payable    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 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 

 

 

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   $(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    61,000    604,000   (a)   665,000 
Changes in operating assets and liabilities:                   
Accounts receivable   (2,512,000)   –       (2,512,000)
Inventories    (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.