<SEC-DOCUMENT>0001641172-25-005558.txt : 20251002
<SEC-HEADER>0001641172-25-005558.hdr.sgml : 20251002
<ACCEPTANCE-DATETIME>20250421161829
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001641172-25-005558
CONFORMED SUBMISSION TYPE:	DRS
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20250421
<PUBLIC-REL-DATE>20251002
DATE AS OF CHANGE:		20250421

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Flux Power Holdings, Inc.
		CENTRAL INDEX KEY:			0001083743
		STANDARD INDUSTRIAL CLASSIFICATION:	MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690]
		ORGANIZATION NAME:           	04 Manufacturing
		EIN:				860931332
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		DRS
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	377-07924
		FILM NUMBER:		25853417

	BUSINESS ADDRESS:	
		STREET 1:		2685 S. MELROSE DRIVE
		CITY:			VISTA
		STATE:			CA
		ZIP:			92081
		BUSINESS PHONE:		877-505-3589

	MAIL ADDRESS:	
		STREET 1:		2685 S. MELROSE DRIVE
		CITY:			VISTA
		STATE:			CA
		ZIP:			92081

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	Lone Pine Holdings, Inc
		DATE OF NAME CHANGE:	20090415

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	Australian Forest Industries
		DATE OF NAME CHANGE:	20070508

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MULTI TECH INTERNATIONAL CORP
		DATE OF NAME CHANGE:	20021204
</SEC-HEADER>
<DOCUMENT>
<TYPE>DRS
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
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<body style="font: 10pt Times New Roman, Times, Serif">

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">This
is a confidential draft submission to the U.S. Securities and Exchange&nbsp;Commission on April 21,
2025.<br /> This draft registration statement has not been publicly filed with the U.S. Securities and Exchange Commission and all
information herein remains strictly confidential.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right"><b>Registration No. 333-</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: right">&nbsp;</p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>

<!-- Field: Rule-Page --><div style="margin-top: 0pt; margin-bottom: 0pt; width: 100%"><div style="font-size: 1pt; border-top: Black 4pt solid; border-bottom: Black 1.5pt solid">&nbsp;</div></div><!-- Field: /Rule-Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 18pt"><b>UNITED STATES</b></font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 18pt"><b>SECURITIES AND EXCHANGE
COMMISSION</b></font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 12pt"><b>Washington, D.C.
20549</b></font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 18pt"><b>FORM S-1</b></font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>REGISTRATION STATEMENT</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>UNDER THE SECURITIES ACT OF 1933</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 18pt"><b>FLUX POWER HOLDINGS,
Inc.</b></font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>(Exact name of registrant as specified in its charter)</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1pt solid; width: 32%; text-align: center"><font style="font-size: 10pt"><b>Nevada</b></font></td>
    <td style="padding-bottom: 1pt; white-space: nowrap; width: 2%; text-align: justify">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; width: 32%; text-align: center"><font style="font-size: 10pt"><b>3690</b></font></td>
    <td style="padding-bottom: 1pt; white-space: nowrap; width: 2%; text-align: justify">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; width: 32%; text-align: center"><font style="font-size: 10pt"><b>92-3550089</b></font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: center"><font style="font-size: 10pt"><b>(State or other jurisdiction of<br />
incorporation or organization)</b></font></td>
    <td style="white-space: nowrap; text-align: justify">&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt"><b>(Primary Standard Industrial<br />
Classification Code Number)</b></font></td>
    <td style="white-space: nowrap; text-align: justify">&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt"><b>(I.R.S. Employer<br />
Identification No.)</b></font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2685 S. Melrose Drive, </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Vista, California 92081</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Telephone: (877) 505-3589</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>(Address, including zip code, and telephone number,
including area code, of registrant&rsquo;s principal executive offices)</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Krishna Vanka</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Chief Executive Officer</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>c/o Flux Power Holdings, Inc.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2685 S. Melrose Drive, </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Vista, California 92081</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Telephone: (877) 505-3589</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>(Name, address, including zip code, and telephone
number, including area code, of agent for service)</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><i>Copies to:</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 32%">
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>John P. Yung</b></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Deborah K. Seo<br />
    Lewis Brisbois Bisgaard &amp; Smith LLP<br />
    633 West 5<sup>th</sup> Street, Suite 4000<br />
    Los Angeles, CA 90071<br />
    (213) 358-6174</b></p></td>
    <td style="white-space: nowrap; width: 2%; text-align: justify">&nbsp;</td>
    <td style="width: 32%">&nbsp;</td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 32%">
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>[Law Firm]</b></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">[<b>Address]</b></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>[Address]</b></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>([Phone Number]</b></p></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;________________________</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>Approximate date of commencement
of proposed sale to the public:</b> As soon as practicable after this Registration Statement is declared effective.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. <font style="font-family: Times New Roman, Times, Serif">&#9746;</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering. <font style="font-family: Times New Roman, Times, Serif">&#9744;</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. <font style="font-family: Times New Roman, Times, Serif">&#9744;</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. <font style="font-family: Times New Roman, Times, Serif">&#9744;</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging
growth company. See the definitions of &ldquo;large accelerated filer,&rdquo; &ldquo;accelerated filer,&rdquo; &ldquo;smaller reporting
company,&rdquo; and &ldquo;emerging growth company&rdquo; in Rule 12b-2 of the Exchange Act.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 25%; text-align: justify"><font style="font-size: 10pt">Large accelerated filer</font></td>
    <td style="width: 25%; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</font></td>
    <td style="width: 25%; text-align: justify"><font style="font-size: 10pt">Accelerated filer</font></td>
    <td style="width: 25%; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><font style="font-size: 10pt">Non-accelerated filer</font></td>
    <td style="text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Smaller reporting company</font></td>
    <td style="text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Emerging growth company</font></td>
    <td style="text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. <font style="font-family: Times New Roman, Times, Serif">&#9744;</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="color: #FF0000"><b>The information in
this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed
with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities nor does
it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.</b></font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 34%; text-align: justify"><font style="font-size: 10pt; color: #FF0000">Preliminary Prospectus</font></td>
    <td style="width: 33%; text-align: center"><font style="font-size: 10pt; color: #FF0000">Subject To Completion</font></td>
    <td style="width: 33%; text-align: right"><font style="font-size: 10pt; color: #FF0000">Dated &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
    2025</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><img src="formdrs_001.jpg" alt=""></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">Up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Shares of Common Stock</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">Up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Warrants to purchase up to &nbsp;&nbsp;&nbsp;Shares of Common Stock</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">Up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pre-Funded Warrants to purchase up to &nbsp;&nbsp;&nbsp;Shares of Common Stock</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">Up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Shares of Common Stock Issuable Upon Exercise of the Warrants and the Pre-Funded Warrants</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We are
offering on a best-efforts basis up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our Common Stock, par value $0.001 per
share (the &ldquo;Common Stock&rdquo;) and Common Stock purchase warrants (the &ldquo;Common Warrants&rdquo;) to purchase an aggregate
of up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our Common Stock at an assumed combined public offering price of $
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (equal to the last sale price of our Common Stock as reported by The Nasdaq Capital Market
on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2025), pursuant to this prospectus. Each Common Warrant is assumed to have an exercise
price of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share ( &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the assumed
public offering price per share and accompanying Common Warrant), will be exercisable upon issuance and will expire &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
years from the date of issuance. The Common Stock and Common Warrants are immediately separable and will be issued separately in this
offering.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We are
also offering to those purchasers, if any, whose purchase of Common Stock in this offering would otherwise result in any such purchaser,
together with its affiliates, beneficially owning more than 4.99% (or, at the election of such purchaser, 9.99%) of our outstanding Common
Stock immediately following the consummation of this offering, the opportunity to purchase pre-funded warrants in lieu of shares of our
Common Stock that would otherwise result in such purchaser&rsquo;s beneficial ownership exceeding 4.99% (or, at the election of such purchaser,
9.99%) of our outstanding Common Stock. The purchase price for each pre-funded warrant and Common Warrant will equal the combined public
offering price for the Common Stock and accompanying Common Warrant in this offering, less the $0.001 per share exercise price of each
such pre-funded warrant. Each pre-funded warrant will be exercisable upon issuance and will not expire prior to exercise. The pre-funded
warrants and Common Warrants are immediately separable and will be issued separately in this offering. For each pre-funded warrant we
sell, the number of shares of Common Stock we are offering will be decreased on a one-for-one basis.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">For
purposes of clarity, each share of Common Stock or pre-funded warrant to purchase one share of Common Stock is being sold together with
one Common Warrant to purchase one share of Common Stock. The Common Stock or pre-funded warrant to purchase one share of Common Stock,
together with one Common Warrant to purchase one share of Common Stock is being offered on a best-efforts basis as described in this
prospectus for a maximum aggregate offering amount of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; .This prospectus also relates
to the offering of the shares of our Common Stock issuable upon the exercise of such pre-funded warrants and common warrants sold
in this offering</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our shares of Common Stock are
listed on The Nasdaq Capital Market under the symbol &ldquo;FLUX.&rdquo; On &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025, the
last reported sale price of our Common Stock on The Nasdaq Capital Market was $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share.
All shares numbers for Common Stock, Common Warrant and pre-funded warrant are based on an assumed combined public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share of Common Stock and the accompanying Common Warrant, or public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for
each pre-funded warrant and the accompanying Common Warrant, as applicable. The actual combined public offering price per share and Common
Warrant and the actual combined public offering price per pre-funded warrant and Common Warrant will be determined between us and investors
based on market conditions at the time of pricing, and may be at a discount to the current market price of our Common Stock. Therefore,
the assumed public offering price used throughout this prospectus may not be indicative of the final public offering price.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">There
is no established trading market for the pre-funded warrants or Common Warrants and we do not expect a market to develop. In addition,
we do not intend to list the pre-funded warrants or Common Warrants on The Nasdaq Capital Market, any other national securities exchange
or any other trading system. Without an active trading market, the liquidity of the pre-funded warrants and Common Warrants may be limited.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We have
retained &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; to act as our sole&nbsp;placement agent&nbsp;in connection with the securities
offered by this prospectus. The placement agent&nbsp;is not purchasing or selling any of these securities nor is it required to sell any
specific number or dollar amount of securities, but has agreed to use its reasonable best efforts to solicit offers to purchase the securities
offered by this prospectus. We may not sell all of the securities in this offering. We have agreed to pay the&nbsp;placement agent&nbsp;the&nbsp;placement
agent&nbsp;fees set forth in the table below. There is no minimum number of securities or minimum aggregate amount of proceeds for this
offering to close. This offering will terminate not later than &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; subject to our right to
terminate earlier. Accordingly, neither we nor the placement agent have made any arrangements to place investor funds in an escrow account
or trust account since the placement agent will not receive investor funds in connection with the sale of the securities offered hereunder.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>Investing in our
securities involves a high degree of risk. You should review carefully the risks and uncertainties described in the section entitled
&ldquo;Risk Factors&rdquo; beginning on page 14</b> <b>of this prospectus, and under similar headings in any amendments or
supplements to this prospectus.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>Neither the Securities and
Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal offense.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Per Common Stock and Common Warrant</b></font></td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Per Pre-Funded Warrant and Common Stock</b></font></td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Total<br />
Offering</b><sup>(3)</sup></font></td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 52%"><font style="font-size: 10pt">Public offering price</font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 12%; text-align: right">&nbsp;</td>
    <td style="width: 1%; text-align: right">&nbsp;</td>
    <td style="width: 2%; text-align: right">&nbsp;</td>
    <td style="width: 1%; text-align: left"><font style="font-size: 10pt">$</font></td>
    <td style="width: 12%; text-align: right">&nbsp;</td>
    <td style="width: 1%; text-align: right">&nbsp;</td>
    <td style="width: 2%; text-align: right">&nbsp;</td>
    <td style="width: 1%; text-align: left"><font style="font-size: 10pt">$</font></td>
    <td style="width: 12%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><font style="font-size: 10pt">Placement Agent Fees<sup>(1)</sup></font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td style="text-align: left"><font style="font-size: 10pt">$</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td style="text-align: left"><font style="font-size: 10pt">$</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><font style="font-size: 10pt">Proceeds to us (before expenses)<sup>(2)</sup></font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td style="text-align: left"><font style="font-size: 10pt">$</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td style="text-align: left"><font style="font-size: 10pt">$</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: .25in"><font style="font-size: 10pt">(1)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">We have agreed to pay the placement agent a cash fee equal to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; % of the gross proceeds that are sold in the offering and to reimburse the placement agent for certain expenses. See section titled &ldquo;<i>Plan of Distribution</i>&rdquo; for additional information.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(2)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">The amount of offering proceeds to us presented in this table does not give effect to any exercise of the Common Warrants or pre-funded warrants.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(3)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Assumes no pre-funded warrants are issued.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 63pt; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">The placement
agent expects that delivery of the securities against payment will be made on or about &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2025, subject to satisfaction of customary closing conditions.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><i>Sole Placement Agent&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><b>The date of this prospectus is </b> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<b>, 2025.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>TABLE OF CONTENTS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt"><a href="#a_001">ABOUT THIS PROSPECTUS</a></font></td>
    <td style="white-space: nowrap; vertical-align: bottom; width: 0.5in; text-align: center">1</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: justify"><a href="#a_002"><font style="font-size: 10pt">MARKET AND INDUSTRY DATA</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">1</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: justify"><a href="#a_003"><font style="font-size: 10pt">CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">1</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: justify"><a href="#a_004"><font style="font-size: 10pt">PROSPECTUS SUMMARY</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">4</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: justify"><a href="#a_005"><font style="font-size: 10pt">THE OFFERING</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">12</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt"><a href="#a_006">RISK FACTORS</a></font></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">14</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: justify"><a href="#a_007"><font style="font-size: 10pt">USE OF PROCEEDS</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">30</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: justify"><a href="#a_008"><font style="font-size: 10pt">MARKET INFORMATION FOR COMMON STOCK AND DIVIDEND POLICY</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">30</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: justify"><a href="#a_009"><font style="font-size: 10pt">CAPITALIZATION</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">31</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: justify"><a href="#a_010"><font style="font-size: 10pt">DILUTION</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">33</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top"><a href="#a_011"><font style="font-size: 10pt">MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">34</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: justify"><a href="#a_012"><font style="font-size: 10pt">BUSINESS</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">55</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: justify"><a href="#a_013"><font style="font-size: 10pt">MANAGEMENT</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">67</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: justify"><a href="#a_014"><font style="font-size: 10pt">EXECUTIVE COMPENSATION</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">73</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt"><a href="#a_014a">CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS</a></font></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">83</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt"><a href="#a_014b">PRINCIPAL SECURITYHOLDERS</a></font></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">84</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: justify"><a href="#a_015"><font style="font-size: 10pt">DESCRIPTION OF CAPITAL</font> <font style="font-size: 10pt">STOCK</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">85</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: justify"><a href="#a_016"><font style="font-size: 10pt">DESCRIPTION OF SECURITIES WE ARE OFFERING</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">87</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: justify"><a href="#a_017"><font style="font-size: 10pt">PLAN OF DISTRIBUTION</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">90</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: justify"><a href="#a_018"><font style="font-size: 10pt">LEGAL MATTERS</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">92</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: justify"><a href="#a_019"><font style="font-size: 10pt">EXPERTS</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">92</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top"><a href="#a_020"><font style="font-size: 10pt">CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">92</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: justify"><a href="#a_021"><font style="font-size: 10pt">WHERE YOU CAN FIND MORE INFORMATION</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">93</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: justify"><a href="#a_022"><font style="font-size: 10pt">INDEX TO FINANCIAL STATEMENTS</font></a></td>
    <td style="white-space: nowrap; vertical-align: bottom; text-align: center">F-1</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Neither we nor the placement agent has authorized
anyone to provide you with information other than that contained in this prospectus or any free writing prospectus prepared by or on behalf
of us or to which we have referred you. We and the placement agent take no responsibility for, and can provide no assurance as to the
reliability of, any other information that others may give you. We are offering to sell, and seeking offers to buy, the securities only
in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date on
the front cover page of this prospectus, or other earlier date stated in this prospectus, regardless of the time of delivery of this prospectus
or of any sale of our securities.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>No action is being taken in any jurisdiction outside
the United States to permit a public offering of our securities or possession or distribution of this prospectus in that jurisdiction.
Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about
and to observe any restrictions as to this offering and the distribution of this prospectus applicable to that jurisdiction.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><a name="a_001"></a>ABOUT THIS PROSPECTUS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Neither we nor the placement agent
have authorized anyone to provide you with any information or to make any representations other than that contained in this prospectus
or in any free writing prospectus we may authorize to be delivered or made available to you. We take no responsibility for, and can provide
no assurance as to the reliability of, any other information that others may give you. Neither we nor the placement agent are making an
offer to sell securities in any jurisdiction in which the offer or sale is not permitted. The information in this prospectus is accurate
only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our shares of Common Stock
and the information in any free writing prospectus that we may provide to you in connection with this offering is accurate only as of
the date of that free writing prospectus. Our business, financial condition, results of operations and prospects may have changed since
those dates.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">You should
rely only on the information contained in this prospectus and any free writing prospectus prepared by or on behalf of us or to which we
have referred you. We or the placement agent have not authorized anyone to provide you with information that is different. We and the
placement agent are offering to sell the Common Stock, Pre-funded warrants and Common Warrants, only in jurisdictions where offers and
sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or any sale of the Common Stock, pre-funded warrants and Common Warrants.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">For investors
outside the United States: We have not, and the placement agent have not, done anything that would permit this offering, or possession
or distribution of this prospectus, in any jurisdiction where action for that purpose is required, other than in the United States. Persons
outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating
to, the offering of the securities and the distribution of this prospectus outside of the United States.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Unless the context otherwise requires,
the &ldquo;Company,&rdquo; &ldquo;Flux,&rdquo; &ldquo;we,&rdquo; &ldquo;us,&rdquo; and &ldquo;our&rdquo; refer to the combined business
of Flux Power Holdings, Inc., a Nevada corporation and its wholly owned subsidiary, Flux Power, Inc., a California corporation (&ldquo;Flux
Power&rdquo;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><b><a name="a_002"></a>MARKET AND INDUSTRY DATA</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">This
prospectus contains statistical data, estimates and information concerning our industry, including market position and the size and growth
rates of the markets in which we participate, that are based on independent industry publications and reports or other publicly available
information, as well as other information based on our internal sources. Although we believe the market and industry data included in
this prospectus are reliable and are based on reasonable assumptions, these data involve many assumptions and limitations, and you are
cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained
in these industry publications and reports. The industry in which we operate is subject to a high degree of uncertainty and risk due to
a variety of factors, including those described in the sections entitled &ldquo;Risk Factors&rdquo; and &ldquo;Cautionary Note Regarding
Forward-Looking Statements.&rdquo; These and other factors could cause results to differ materially from those expressed in these publications
and reports.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Certain
information included in this prospectus concerning our industry and the markets served by us, including our market share, is also based
on our good-faith estimates derived from our management&rsquo;s knowledge of the industry and other information currently available to
us.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><b><a name="a_003"></a>CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">This prospectus contains forward-looking
statements. The forward-looking statements are contained principally in the sections entitled &ldquo;Business,&rdquo; &ldquo;Risk Factors,&rdquo;
and &ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations.&rdquo; These statements involve
known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially
different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and
uncertainties include, but are not limited to, the factors described in the section captioned &ldquo;Risk Factors&rdquo; below. In some
cases, you can identify forward-looking statements by terms such as &ldquo;anticipates,&rdquo; &ldquo;believes,&rdquo; &ldquo;could,&rdquo;
&ldquo;estimates,&rdquo; &ldquo;expects,&rdquo; &ldquo;intends,&rdquo; &ldquo;may,&rdquo; &ldquo;plans,&rdquo; &ldquo;potential,&rdquo;
&ldquo;predicts,&rdquo; &ldquo;projects,&rdquo; &ldquo;should,&rdquo; &ldquo;would,&rdquo; and similar expressions intended to identify
forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions
and subject to risks and uncertainties. You should read these factors and the other cautionary statements made in this prospectus and
in the documents we incorporate by reference into this prospectus as being applicable to all related forward-looking statements wherever
they appear in this prospectus or the documents we incorporate by reference into this prospectus. If one or more of these factors materialize,
or if any underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future
results, performance or achievements expressed or implied by these forward-looking statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Given
these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements include,
among other things, statements relating to:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify; text-indent: 45pt; background-color: white">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&nbsp;</td>
    <td style="width: 0.25in; text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to continue as a going concern;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to comply with the terms of our agreement with Gibraltar Business Capital, LLC (&ldquo;GBC&rdquo;) for our credit facility, which we have relied on historically and currently rely on to meet our anticipated capital resources and to fund our operations;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">the expense, timing and outcome of legal proceedings relating to our accounting practices, financial disclosures and employment policies and practices, which includes, but is not limited to, a pending purported federal securities class action and shareholder derivative lawsuit, certain employment lawsuits and other legal and governmental proceedings, investigations and information requests that may be initiated or that may be asserted; </font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to meet projected revenue targets and generate cash from operations as a result of delays in new orders for our energy storage solutions, reflecting corresponding deferrals of new forklift purchases caused by lower capital spending in the market sector that we serve and interest rate variability affecting selected large customer fleets;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to remediate material weaknesses in our controls and procedures and also those identified in our internal control over financial reporting, or to accurately or timely report our financial condition or results of operations, which may adversely affect our business and stock price;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to regain compliance and continue to meet the continued listing standards of the Nasdaq Stock Market LLC;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">substantial unanticipated costs for accounting, legal and consultancy fees we incurred in connection with the restatements and internal investigation, and we expect to continue to incur additional costs;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to secure sufficient funding to support our current and proposed operations;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to manage our working capital requirements efficiently;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to obtain the necessary funds from our credit facilities;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to obtain raw materials and other supplies for our products at existing or competitive prices and on a timely basis;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our anticipated growth strategies and our ability to manage the expansion of our business operations effectively;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to maintain or increase our market share in the competitive markets in which we do business;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to grow our revenue, increase our gross profit margin and become a profitable business;</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&nbsp;</td>
    <td style="width: 0.25in; text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to fulfill our backlog of open sales orders due to delays in the receipt of key component parts and other potential manufacturing disruptions;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to keep up with rapidly changing technologies and evolving industry standards, including our ability to achieve technological advances;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our dependence on the growth in demand for our products;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to compete with larger companies with far greater resources than us;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to shift to new suppliers and incorporate new components into our products in a manner that is not disruptive to our business;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to obtain and maintain UL Listings and OEM approvals for our energy storage solutions;</font></td></tr>

<tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
<tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&nbsp;</td>
    <td style="width: 0.25in; text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to diversify our product offerings and capture new market opportunities;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to source our needs for skilled labor, machinery, parts, and raw materials economically;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our ability to retain and/or successfully recruit key members of our senior management, including but not limited to recruitment of a new chief executive officer;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">our dependence on our major customers; and</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">the impact of tariffs on our ability to cost-effectively source battery packs and materials used in our products.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify; text-indent: 45pt; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Also, forward-looking statements
represent our estimates and assumptions only as of the date of this prospectus. You should read this prospectus and the documents that
we reference, and file as exhibits to this prospectus completely and with the understanding that our actual future results may be materially
different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or
to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information
becomes available in the future.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The forward-looking statements
contained in this prospectus are based on our current expectations and beliefs concerning future developments and their potential effects
on our business. There can be no assurance that future developments affecting our business will be those that we have anticipated. These
forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may
cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These
risks and uncertainties include, but are not limited to, those factors described in the section entitled &ldquo;Risk Factors.&rdquo; Moreover,
we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not
possible for us to predict all such risk factors, nor can we assess the effect of all such risk factors on our business or the extent
to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking
statements. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results
may vary in material respects from those projected in these forward-looking statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The forward-looking statements
made by us in this prospectus speak only as of the date of this prospectus. Except to the extent required under the federal securities
laws and rules and regulations of the SEC, we disclaim any obligation to update any forward-looking statement to reflect events or circumstances
after the date on which the statement is made or to reflect the occurrence of unanticipated events. In light of these risks and uncertainties,
there is no assurance that the events or results suggested by the forward-looking statements will in fact occur, and you should not place
undue reliance on these forward-looking statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><b><a name="a_004"></a>PROSPECTUS SUMMARY</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>The
following summary highlights selected information contained in elsewhere in this prospectus. This summary is not complete and does not
contain all of the information you should consider before investing in our securities. You should read this entire prospectus carefully,
including the sections entitled &ldquo;Risk Factors,&rdquo; &ldquo;Cautionary Note Regarding Forward-Looking Statements,&rdquo; and &ldquo;Management&rsquo;s
Discussion and Analysis of Financial Condition and Results of Operations,&rdquo; and our consolidated financial statements and the related
notes included elsewhere in this prospectus, before making an investment decision.</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Overview</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We design, develop, manufacture,
and sell 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 (&ldquo;GSE&rdquo;), and other commercial and industrial applications.
We believe our mobile and stationary energy storage solutions provide our customers a reliable, high performing, cost effective, and more
environmentally friendly alternative as compared to traditional lead acid and propane-based solutions. Our 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 &ldquo;state of the art&rdquo; real time monitoring of pack performance. We
believe 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 our revenue growth.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Our Strategy</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Our long-term
strategy is to meet the rapidly growing demand for lithium-ion energy solutions and to be the supplier of choice, targeting large companies
having demanding energy storage needs. We have established selling relationships with equipment OEMs and customers with large fleets of
forklifts and GSE. We intend to reach this goal by investing in research and development to expand our product mix, by expanding our sales
and marketing efforts, improving our customer support efforts and continuing our efforts to increase production capacity and efficiencies.
Our research and development efforts will continue to focus on providing adaptable, reliable and cost-effective energy storage solutions
for our customers.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our largest sector of penetration
thus far has been the material handling sector which we believe is a multi-billion-dollar addressable market. We believe the sector will
provide us with an opportunity to grow our business as we enhance our product mix and service levels and grow our sales to large fleets
of forklifts and GSE. Applications of our modular packs for other industrial and commercial uses, such as mobile energy storage, are providing
additional current and future growth opportunities. We intend to continue to expand and diversify our supply chain and customer base and
seek further partnerships that provide synergy to meeting our growth and &ldquo;building scale&rdquo; objectives.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Recent Developments</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Management Transition</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On March 10, 2025, Mr.
Ronald F. Dutt, our former chairman and Chief Executive Officer, notified the Company&rsquo;s Board of Directors (the &ldquo;Board&rdquo;)
of his decision to retire and resign from his position as director, Chairman of the Board, Chief Executive Officer and President of the
Company and its wholly owned subsidiary, Flux Power, Inc. (&ldquo;Flux Power&rdquo;), effective March 10, 2025. Mr. Dutt&rsquo;s stepping
down is for personal reasons and not due to any disagreement with the Company&rsquo;s management team or the Company&rsquo;s Board on
any matter relating to the operations, policies or practices of the Company or any issues regarding the Company&rsquo;s accounting policies
or practices.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In connection with Mr. Dutt&rsquo;s
retirement, the Board appointed Mr. Dale T. Robinette as the new Chairman of the Board, effective March 10, 2025. Mr. Robinette also currently
serves as an independent director, chairperson of the Compensation Committee, and a member of both the Audit
Committee and the Nominating and Governance Committee. In addition, the Board appointed Mr. Krishna Vanka as director, Chief Executive
Officer and President of the Company and Flux Power, effective March 10, 2025.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Credit Facility</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On July 28, 2023, we entered into
a certain Loan and Security Agreement (the &ldquo;Agreement&rdquo;) with Gibraltar Business Capital, LLC, a Delaware limited liability
company (&ldquo;GBC&rdquo;). The Agreement provides the Company with a senior secured revolving loan facility (the &ldquo;GBC Credit Facility&rdquo;)
for up to $15.0 million (the &ldquo;Revolving Loan Commitment&rdquo;). 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 &ldquo;Maturity Date&rdquo;), unless extended, modified or renewed
(the &ldquo;Revolving Note&rdquo;). 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. 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&rsquo; 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 (&ldquo;SOFR&rdquo;, 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 bears interest at a rate per annum equal to three percent (3.0%) above the rate that is
otherwise applicable to such amounts. We paid GBC a non-refundable closing fee for the GBC Credit Facility of $112,500 upon the execution
of the Agreement. In addition, we are 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In April 2024, we notified GBC
of a certain event of default with respect to the Company&rsquo;s anticipated failure to maintain the EBITDA covenant for the trailing
three (3) month period ended April 30, 2024, (the &ldquo;Default&rdquo;). On May 8, 2024, the Company received a waiver from GBC, (the
&ldquo;Waiver&rdquo;) which waived the Default, subject to satisfaction of the following conditions: (i) receipt of a counterpart of the
Waiver duly executed by us; (ii) receipt of the waiver fee of $20,000; (iii) receipt of the representations and warranties from us 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On May 31, 2024, we entered into
the Third Amendment to Loan and Security Agreement (the &ldquo;Third Amendment&rdquo;) 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. In consideration
for the Third Amendment, the Company agreed to pay GBC a non-refundable amendment fee of $50,000 in cash.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Under the Agreement, upon an occurrence
of an event of default, GBC may, at its option, declare its commitments to the Company to be terminated and all obligations to be immediately
due and payable, all without demand, notice or further action of any kind required on the part of GBC, and/or exercise other remedies
available to it among other things including its rights as a secured party. On August 30, 2024, GBC agreed to waive the Company&rsquo;s
non-compliance with, and the effects of its non-compliance under, various representations, financial covenants and non-financial covenants
relating to the Company&rsquo;s restatement (the &ldquo;August Waiver&rdquo;). On January 17, 2025, GBC agreed to waive our non-compliance
with, and the effects of our non-compliance under, various representations, financial covenants and non-financial covenants relating to
our financial restatements and our failure to maintain the EBITDA Minimum for certain financial periods (the &ldquo;January Waiver&rdquo;).
As a result of the August Waiver and January Waiver, the Company expects that its revolving credit facility remains available subject
to meeting certain lending criteria under the Loan Agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On January 22, 2025, we entered
into Amendment No. 4 to Loan and Security Agreement (the &ldquo;Fourth Amendment&rdquo;) 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We rely on our credit facility
with GBC to meet our anticipated capital resources and to fund our operations. The availability of the GBC Credit Facility is subject
to satisfaction of certain affirmative covenants and financial covenants including maintaining minimum tangible net worth, and certain
limitations on dispositions of assets. The Agreement also contains usual and customary events of default (with customary grace periods,
as applicable) and provides that, upon the occurrence of an event of default, payment of all amounts payable under the GBC Credit Facility
may be accelerated and/or GBC&rsquo;s commitment may be terminated by GBC without any action by GBC. Due to our inability to satisfy certain
financial covenants and other covenants under the agreement with GBC we have previously needed to obtain waivers from GBC. In the event
we are unable to comply with terms of the Agreement or to obtain a waiver from GBC, funds will be unavailable to us under the GBC Credit
Facility, and our operations, financial condition and business will be materially and adversely affected.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b><i>Nasdaq Stock Market
Notices</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On October 16, 2024, the Company
received a notice (the &ldquo;October Notice&rdquo;) from the Listing Qualifications Department (the &ldquo;Staff&rdquo;) of the Nasdaq
Stock Market (&ldquo;Nasdaq&rdquo;) stating that because the Company had not yet filed its Form 10-K for the fiscal year ended June 30,
2024 (the &ldquo;Form 10-K&rdquo;), the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) (the &ldquo;Listing Rule 5250(c)(1)&rdquo;),
which requires Nasdaq-listed companies to timely file all required periodic financial reports with the Securities and Exchange Commission.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On November
20, 2024, the Company received a notice (the &ldquo;November Notice,&rdquo; together with the October Notice, the &ldquo;Notices&rdquo;)
from the Staff of Nasdaq stating that because the Company had not yet filed its Form 10-Q for the period ended September 30, 2024 (the
&ldquo;September Form 10-Q&rdquo;) and because the Company remains delinquent in filing its Form 10-K (together with the Form
10-Q, the &ldquo;Delinquent Reports&rdquo;), the Company does not comply with the Listing Rule 5250(c)(1). The notices stated that the
Company had until December 16, 2024 to submit a plan to regain compliance with the Listing Rule 5250(c)(1)(the &ldquo;Plan&rdquo;). If
Nasdaq accepts the Company&rsquo;s Plan to regain compliance, then Nasdaq may grant the Company up to 180 calendar days from the Form
10-K filing due date, or until April 14, 2025, to file the Delinquent Reports to regain compliance. If Nasdaq does not accept the Company&rsquo;s
Plan, then the Company will have the opportunity to appeal that decision to a Nasdaq Hearings Panel. The Notice had no immediate effect
on the listing of the Company&rsquo;s Common Stock on Nasdaq. On December 16, 2024, the Company filed a plan with Nasdaq to regain Nasdaq
compliance, including requesting an extension to file the Delinquent Reports by no later than April 14, 2025. If Nasdaq does not accept
the Company&rsquo;s Plan and the Company fails to prevail in its appeal to Nasdaq, or if the Company fails to meet the Nasdaq listing
requirements and do not regain compliance, the Company&rsquo;s Common Stock will be subject to delisting by Nasdaq. On January 29, 2025,
the Company filed the Form 10-K and received letter from Nasdaq on January 31, 2025 informing the Company of its partial compliance with
the Listing Rule 5250(c)(1)as it relates to the Form 10-K.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On February
21, 2025, the Company received an additional notice (the &ldquo;Notice&rdquo;) from the Staff of Nasdaq stating that because the Company
had not yet filed its Form 10-Q for the period ended December 31, 2024 (the &ldquo;December Form 10-Q&rdquo;) and because the Company
remained delinquent in filing its Form 10-Q for the period ended September 30, 2024 (the &ldquo;September Form 10-Q&rdquo; and together
with the December Form 10-Q, the &ldquo;Delinquent Reports&rdquo;), the Company failed to comply with Listing Rule 5250(c)(1), which
requires Nasdaq-listed companies to timely file all required periodic financial reports with the Securities and Exchange Commission.
The Notice stated that as a result of this additional delinquency, the Company must submit an update to its original plan to regain compliance
with respect to the filing requirement. The update was due by March 10, 2025. If Nasdaq accepts the Company&rsquo;s update to its original
plan to regain compliance, then Nasdaq may grant the Company up to 180 calendar days from the due date of the initial delinquent filing,
the Form 10-K for the fiscal year ended June 30, 2024, or until April 14, 2025, to file the Delinquent Reports to regain compliance.
The Notice had no immediate effect on the listing of the Company&rsquo;s Common Stock on NASDAQ. The update to the compliance plan was
submitted to Nasdaq on February 25, 2025. In the event our Common Stock is delisted, our stock price and market liquidity of our stock
will be adversely affected which will impact the ability of the Company&rsquo;s stockholders to sell securities in the market. Further,
delisting from Nasdaq markets could also have other negative effects, including potential loss of confidence by partners, lenders, suppliers
and employees. The Company filed the September Form 10-Q and December Form 10-Q on March 20, 2025 and is now current with its required
periodic financial reports to be filed with the Securities and Exchange Commission under the Listing Rule.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On January 31, 2025, the Company
received a notice from The NASDAQ Stock Market LLC (&ldquo;Nasdaq&rdquo;) notifying the Company that based on its stockholders&rsquo;
equity of $194,000 as reported in its Form 10-K for the fiscal year ended June 30, 2024, the Company is no longer in compliance with Nasdaq
Listing Rule 5550(b)(1), which requires the Company to maintain a minimum of $2,500,000 in stockholders&rsquo; equity for continued listing
on The Nasdaq Capital Market (the &ldquo;Stockholders&rsquo; Equity Requirement&rdquo;). Pursuant to the Notice, the Company had 45 calendar
days from the date of the Notice, or until March 17, 2025, to submit a plan to regain compliance. If it accepts the plan, Nasdaq can grant
an extension of up to 180 calendar days from the date of the Notice to evidence compliance. In the event the plan is not accepted by Nasdaq,
or in the event the plan is accepted by Nasdaq and the 180-day extension period is granted, but the Company fails to regain compliance
within such plan period, the Company would have the right to a hearing before an independent panel. The hearing request would stay any
suspension or delisting action pending the conclusion of the hearing process and the expiration of any additional extension period granted
by the panel following the hearing. On March 17, 2025, the Company submitted a plan to regain compliance with the Stockholders&rsquo;
Equity Requirement. The Company intends to take all reasonable measures available to regain compliance under the Nasdaq Listing Rules
and to remain listed on Nasdaq. There can be no assurances that the Company will be able to regain compliance with the Stockholders&rsquo;
Equity Requirement or that the Company will otherwise be in compliance with all applicable requirements for continued listing on the Nasdaq
Capital Market.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Corporate Background</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We were incorporated in Nevada
in 1998. In May 2012, we changed our name to Flux Power Holdings, Inc. We operate our business through our wholly-owned subsidiary, Flux
Power. Our principal executive office is located at 2685 S. Melrose Drive, Vista, CA 92081. The telephone number at
our principal executive office is (760) 741-3589 (FLUX).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Summary of Risk Factors</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our business is subject to multiple
risks and uncertainties, as more fully described in &ldquo;Risk Factors&rdquo; and elsewhere in this prospectus. We urge you to read the
section entitled &ldquo;Risk Factors&rdquo; and this prospectus in full. Our principal risks may be summarized as follows:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>Risk Factors Relating to Our
Business &nbsp;(for a more detailed discussion, see &ldquo;<i>Risk&nbsp;Factors-Risks&nbsp;Related to Our Business&rdquo;</i>&nbsp;beginning
on page 14 of this prospectus)</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Our independent registered public accounting firm has included an explanatory paragraph relating to our
ability to continue as a going concern in its report on our audited financial statements included in this prospectus. Our audited financial
statements at June 30, 2024, and for the year then ended, were prepared assuming that we will continue as a going concern.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">We have a history of losses and negative working capital and we have insufficient cash to continue our
operations for the next 12 months and our continued operations are dependent on us raising capital and these conditions give rise to substantial
doubt over the Company&rsquo;s ability to continue as a going concern.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.25in">&nbsp;</p>


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    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.25in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">We have identified material weaknesses in our internal control over financial reporting. If we are unable
to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain an
effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations,
which may adversely affect our business and stock price.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">The restatement of our previously issued financial statements has had a material adverse impact on us,
including increased costs, loss of investor confidence, the increased possibility of legal or administrative proceedings and non-compliance
with the Nasdaq listing rules.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">We, and certain of our current and former officers and directors, face litigation and legal proceedings
which could adversely affect our business, financial condition, results of operations or cash flows.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">We will need to raise additional capital or financing to continue to execute and expand our business.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">In the event of default of the Revolving Note under the GBC Credit Facility, such default could adversely
affect our business, financial condition, results of operations or liquidity.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">We are dependent on one supplier for our battery cells, and the inability of this supplier to continue
to deliver, or their refusal to deliver, our battery cells at prices and volumes acceptable to us would have a material adverse effect
on our business, prospects and operating results.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Backlog may not be indicative of future operating results.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Economic conditions may adversely affect consumer spending and the overall general health of our customers,
which, in turn, may adversely affect our financial condition, results of operations and cash resources.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">We are dependent on a few customers for the majority of our net revenues, and our success depends on demand
from OEMs and other users of our battery products.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">We do not have long-term contracts with our customers.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Real or perceived hazards associated with Lithium-ion battery technology may affect demand for our products.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Our products may experience quality problems from time to time that could result in negative publicity,
litigation, product recalls and warranty claims, which could result in decreased revenues and harm to our brands.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">We may be subject to product liability claims.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Tariffs could be imposed on lithium-ion batteries or on any other component parts by the United States
government or a resulting trade war could have a material adverse effect on our results of operations.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Increases in costs, disruption of supply or shortage of raw materials, in particular lithium-ion phosphate
cells, could harm our business.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Our success depends on our ability to develop new products and capabilities that respond to customer demand,
industry trends or actions by our competitors and failure to do so may cause us to lose our competitiveness in the battery industry and
may cause our profits to decline.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.25in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.25in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Our business will be adversely affected if we are unable to protect our intellectual property rights from
unauthorized use or infringement by third parties.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Our patent applications may not result in issued patents, which may have a material adverse effect on
our ability to prevent others from commercially exploiting products similar to ours.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">We rely on trade secret protections through confidentiality agreements with our employees, customers and
other parties; the breach of such agreements could adversely affect our business and results of operations.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Our business depends substantially on the continuing efforts of the members of our senior management team
and our business may be severely disrupted if we lose their services or are unable to recruit qualified replacements in the event of departures.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">If we are forced to implement workforce reductions, our staff resources will be stretched making our ability
to comply with legal and regulatory requirements as a public company difficult.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Compliance with changing regulations concerning corporate governance and public disclosure may result
in additional expenses.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">We may face significant costs relating to environmental regulations for the storage and shipment of our
lithium-ion energy storage solutions.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Natural disasters, public health crises, political crises and other catastrophic events or other events
outside of our control may damage our sole facility or the facilities of third parties on which we depend, and could impact consumer spending.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Security breaches, loss of data and other disruptions could compromise sensitive information related to
our business, prevent us from accessing critical information or expose us to liability, which could adversely affect our business and
our reputation.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>Risks Related to Ownership
of Our Common Stock and this Offering (for a more detailed discussion, see &ldquo;<i>Risks Related to Ownership of Our Common Stock and
this Offering&rdquo;</i>&nbsp;beginning on page 25 of this prospectus)</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">We may receive proceeds from the offering in an amount insufficient to meet our business goals.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">The sale of our Common Stock in this offering, including any shares issuable upon exercise of any pre-funded
warrants or Common Warrants, and any future sales of our Common Stock, or the perception that such sales could occur, may depress our
stock price and our ability to raise funds in new stock offerings.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">There is no public market for the pre-funded warrants and Common Warrants to purchase Common Stock in
this offering.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">We may not receive any additional funds upon the exercise of the pre-funded warrants or Common Warrants.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Significant holders or beneficial holders of our Common Stock may not be permitted to exercise pre-funded
warrants that they hold.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.25in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 1in; text-align: justify; text-indent: -0.25in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">The holders of the pre-funded warrants and Common Warrants will have no rights as Common Stockholders
until such holders exercise their pre-funded warrants or Common Warrants and acquire shares of our Common Stock.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Because the public offering price of our securities will be substantially higher than the pro forma as
adjusted net tangible book value per share of our outstanding Common Stock following this offering, new investors will experience immediate
and substantial dilution.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">The price of our stock may be volatile, which could result in substantial losses for investors. Further,
an active, liquid and orderly trading market for our Common Stock may not be sustained, and we do not know what the market price of our
Common Stock will be, and as a result it may be difficult for you to sell your shares of our Common Stock.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">If securities or industry analysts do not publish research or publish inaccurate or unfavorable research
about our business, our stock price and trading volume could decline.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Sales and issuances of our Common Stock or other securities could result in additional dilution of the
percentage ownership of our stockholders and could cause our share price to fall.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">If we fail to comply with the continued listing standards of the Nasdaq Capital Market, our Common Stock
could be delisted. If it is delisted, the market value and the liquidity of our Common Stock would be impacted.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">The market price of our Common Stock could become volatile, or our trading volume become weak, either
of which could lead to the price of our stock being depressed at a time when you may want to sell.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">The ownership of our stock is highly concentrated in our management.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">We do not intend to pay dividends on shares of our Common Stock for the foreseeable future.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">We are not currently in compliance with the continued listing requirements for the Nasdaq Stock Market.
If we fail to regain compliance or to meet the continued listing requirements, our Common Stock may be delisted, which could affect the
market price of our Common Stock, hurt your ability to sell your shares and negatively impact our ability to access the capital markets.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">&middot;</font></td><td style="text-align: justify">Preferred Stock may be issued under our Articles of Incorporation, which may have superior rights to our
Common Stock.</td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Summary of Financial Information</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company&rsquo;s Annual Report
on Form 10-K for the fiscal year June 30, 2024 (&ldquo;2024 10-K&rdquo;), filed with the SEC on January 29, 2025, included restatement
of prior year consolidated financial statements and disclosures to correct material misstatements, as explained in Note 2 &ndash; Restatement
of Previously Issued Financial Statements in the notes to consolidated financial statements of the 2024 10-K.&nbsp; Financial statements
and notes to the consolidated financial statements from the 2024 10-K are presented in this prospectus as filed on January 29, 2025, including
referencing certain financial statements and other disclosures as &ldquo;restated&rdquo;.&nbsp; In accordance with generally accepted
accounting principles, after the initial filing of restated information, such financial statements and other disclosures used in subsequent
filings are not subject to being identified as &ldquo;restated&rdquo;.&nbsp; Accordingly, none of the financial statements and other information
restated in the 2024 10-K is identified as restated elsewhere in this prospectus.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">The following
tables present our summary consolidated financial and other data as of and for the periods indicated. The summary consolidated statements
of operations data for the fiscal&nbsp;years ended June 30, 2024 and 2023 are derived from our audited financial statements included elsewhere
in this prospectus. The summary consolidated statements of operations data for the six months ended December 31, 2024 and 2023 are derived
from our unaudited financial statements included elsewhere in this prospectus.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">The summarized
financial information presented below is derived from and should be read in conjunction with our consolidated financial statements including
the notes to those financial statements, which are included elsewhere in this prospectus along with the sections entitled &ldquo;<i>Risk
Factors</i>&rdquo;, &ldquo;<i>Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations</i>&rdquo; and
&ldquo;<i>Capitalization</i>.&rdquo; Our historical results are not necessarily indicative of results that should be expected in any future
period.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Consolidated Statements of Operations Data</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>&nbsp;</i></b></p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="white-space: nowrap">&nbsp;</td><td style="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Six Months ended December 31,</td><td style="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year ended June 30,</td><td style="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2024</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2023</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2024</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2023</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center">(Unaudited)</td><td style="font-weight: bold">&nbsp;</td><td>&nbsp;</td>
    <td colspan="2" style="text-align: center">&nbsp;</td><td>&nbsp;</td><td>&nbsp;</td>
    <td colspan="2" style="text-align: center">&nbsp;</td><td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 44%; padding-left: 0pt">Revenues</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">32,955,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">32,990,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">60,824,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">66,488,000</td><td style="width: 1%; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1pt; padding-left: 0pt">Cost of sales</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">22,274,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">23,374,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">43,591,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">50,598,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 0pt">Gross profit</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">10,681,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">9,616,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">17,233,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">15,890,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 0pt">Operating expenses:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: 9pt; padding-left: 0pt">Selling and administrative</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">11,100,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">9,318,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">18,932,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">17,620,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt; text-indent: 9pt; padding-left: 0pt">Research and development</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">2,272,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">2,530,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">4,916,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">4,682,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt; text-indent: 0.25in; padding-left: 0pt">Total operating expenses</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">13,372,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">11,848,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">23,848,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">22,302,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 0pt">Operating loss</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(2,691,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(2,232,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(6,615,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(6,412,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 0pt">Other income (expense):</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: 9pt; padding-left: 0pt">Other income</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&ndash;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&ndash;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&ndash;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">8,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt; text-indent: 9pt; padding-left: 0pt">Interest income (expense), net</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(3,556,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(3,084,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(1,718,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(1,339,000</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt; padding-left: 0pt">Net loss</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(6,247,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(5,316,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(8,333,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(7,743,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt; padding-left: 0pt">Net loss per share - basic and diluted</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(0.37</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(0.32</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(0.50</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(0.48</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0pt">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt; padding-left: 0pt">Weighted average number of common shares outstanding - basic and diluted</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 2.5pt double; text-align: right">16,682,465</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 2.5pt double; text-align: right">16,495,727</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 2.5pt double; text-align: right">16,548,533</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 2.5pt double; text-align: right">16,055,256</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Consolidated Balance Sheets Data</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>&nbsp;</i></b></p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="white-space: nowrap; font-weight: bold; border-bottom: Black 1pt solid">As of</td><td style="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December 31, 2024</td><td style="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="white-space: nowrap; font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">June 30, 2024</td><td style="white-space: nowrap; padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">(Unaudited)</td><td style="font-weight: bold">&nbsp;</td><td>&nbsp;</td>
    <td colspan="2" style="text-align: center">&nbsp;</td><td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; padding-left: 0pt">Cash</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">883,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">643,000</td><td style="width: 1%; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 0pt">Working capital deficit</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(5,229,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(2,336,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 0pt">Total assets</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">28,959,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">32,301,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 0pt">Line of credit and subordinated debt</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">10,693,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">13,834,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 0pt">Total stockholders&rsquo; equity (deficit)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(2,737,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">194,000</td><td style="text-align: left">&nbsp;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>&nbsp;</i></b></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>&nbsp;&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><a name="a_005"></a>THE OFFERING</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 192px"><font style="font-size: 10pt"><b>Common Stock offered by us </b></font></td>
    <td style="width: 10px">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of Common Stock plus up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our Common Stock underlying the Common Warrants, based on an assumed combined public offering price of &nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per Common Stock, which is equal to the last reported sale price of our Common Stock as reported by The Nasdaq Capital Market on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2025.</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt"><b>Common Warrants offered by us</b></font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Common warrants to purchase up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our Common Stock, which will be exercisable during the period commencing on the date of their issuance and ending &nbsp;&nbsp; years from such date at an exercise price of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share of Common Stock. The Common Warrants will be sold together with the Common Stock but issued separately from the Common Stock and may be transferred separately immediately thereafter. A Common Warrant to purchase one share of our Common Stock will be issued for every share of Common Stock purchased in this offering.&nbsp;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt"><b>Pre-Funded Warrants offered by us</b></font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">We are also offering to certain purchasers whose purchase of our Common Stock in this offering would otherwise result in the purchaser, together with its affiliates, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding shares of Common Stock immediately following the consummation of this offering, the opportunity to purchase pre-funded warrants (together with the Common Warrants, the &ldquo;Warrants&rdquo;) in lieu of Common Stock that would otherwise result in any such purchaser&rsquo;s beneficial ownership exceeding 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding shares of Common Stock. Each pre-funded warrant will be exercisable for one share of Common Stock. The purchase price of each pre-funded warrant and the accompanying Common Warrant will equal the price at which the Common Stock and the accompanying Common Warrant are being sold to the public in this offering, minus $0.001, and the exercise price of each pre-funded warrant will be $0.001 per share. The pre-funded warrants will be exercisable immediately and may be exercised at any time until exercised in full. For each pre-funded warrant we sell, the number of shares of Common Stock we are offering will be decreased on a one-for-one basis. Because we will issue one Common Warrant for each share of Common Stock and for each pre-funded warrant to purchase one share of Common Stock sold in this offering, the number of Common Warrants sold in this offering will not change as a result of a change in the mix of the shares of our Common Stock and pre-funded warrants sold.</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt"><b>Public Offering Price</b></font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">$ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share of Common Stock and accompanying Common Warrant, or $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per pre-funded warrant and accompany Common Warrant, as applicable.</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt"><b>Best Efforts</b></font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">We have agreed to issue and sell the securities offered hereby to the
    purchasers through the placement agent. The placement agent is not required to buy or sell any specific number or dollar amount of
    the securities offered hereby, but it will use its reasonable best efforts to solicit offers to purchase the securities offered by
    this prospectus. See &ldquo;Plan of Distribution&rdquo; on page 90 of this prospectus.</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Shares of Common Stock to be<br />
    Outstanding Immediately After</b></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>this Offering <sup>(1)</sup></b></p></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of Common Stock assuming (a) the sale of the maximum number of Common Stock in this offering, (b) no exercise of the Common Warrants issued in this offering, and (c) no sale of pre-funded warrants.</font></td></tr>
</table>

<p style="margin: 0">&nbsp;</p>

<p style="margin: 0"></p>

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<p style="margin: 0">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 192px"><font style="font-size: 10pt"><b>Use of Proceeds</b></font></td>
    <td style="width: 10px">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">We intend to use the net proceeds from this offering for working
    capital and general corporate purposes.&nbsp;&nbsp;The amount of net proceeds and payments therefrom will depend on the actual
    amount of the&nbsp;proceeds we will receive from the offering and will be subject to the discretion of and timing by the Board. See
    section titled &ldquo;<i>Use of Proceeds</i>&rdquo; on page 30 of this prospectus. </font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt"><b>Risk Factors</b></font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Investing in our securities involve significant risks. See &ldquo;Risk
    Factors&rdquo; on page 14 of this prospectus and under similar headings in the documents incorporated by reference into this
    prospectus for a discussion of the factors you should carefully consider before deciding to invest in our securities.</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt"><b>Trading Symbol</b></font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Our shares of Common Stock are listed on The Nasdaq Capital Market under the symbols &ldquo;FLUX.&rdquo;&nbsp;&nbsp;There is no established public trading market for the Common Warrants or pre-funded warrants to be sold in this offering and we do not expect a market to develop. In addition, we do not intend to apply for listing of the Common Warrants and the pre-funded warrants on The Nasdaq Capital Market, any other national securities exchange or any other trading system.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: .25in"><font style="font-size: 10pt"><sup>(1)</sup></font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">The number of shares of Common Stock that will be outstanding after this offering as shown above is based on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of Common Stock issued and outstanding as of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2025, but excludes the following:</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&nbsp;</td>
    <td style="width: 0.25in; text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">shares Common Stock issuable pursuant to restricted stock units,
    granted under our 2021 Equity Incentive Plan (the &#8220;2021 Plan&#8221;&#8221;) as of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    2025 with a weighted-average exercise price of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">shares of Common Stock reserved and available for future issuance under our&nbsp;&nbsp;2021 Plan as of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2025;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">shares Common Stock issuable pursuant to options outstanding, granted under our 2021 Plan, as of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, with an exercise price of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">shares Common Stock issuable pursuant to warrants outstanding, as of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, with a weighted average exercise price&nbsp;&nbsp;of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, and </font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of Common Stock issuable upon the exercise of the Common Warrants to be issued in connection with this offering.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">Unless otherwise indicated, all information
in this prospectus assumes:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&nbsp;</td>
    <td style="width: 0.25in"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">no exercise of the outstanding options and warrants described above; and</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">no exercise of the Common Warrants and no sale of pre-funded warrants in this offering.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><a name="a_006"></a>RISK FACTORS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">An investment in our Common Stock
involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other
information in this prospectus, including the section titled &ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition
and Results of Operations&rdquo; and our consolidated financial statements and related notes included herein, before deciding whether
to invest in our securities. Our business, results of operations, financial condition, and prospects could also be harmed by risks and
uncertainties that are not presently known to us or that we currently believe are not material. If any of the risks actually occur, our
business, results of operations, financial condition, and prospects could be materially and adversely affected. Unless otherwise indicated,
references in these risk factors to our business being harmed will include harm to our business, reputation, brand, financial condition,
results of operations, and prospects. In such event, the market price of our securities could decline.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Risk Factors Relating to Our Business</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Our independent registered
public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our
audited financial statements included in this prospectus. Our audited financial statements at June 30, 2024, and for the year then ended,
were prepared assuming that we will continue as a going concern. </i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Management has evaluated the Company&rsquo;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&rsquo;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&rsquo;s anticipated capital requirements
to fund planned operations for the next twelve months following the filing date of this prospectus.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The report from our independent
registered public accounting firm for the year ended June 30, 2024 includes an explanatory paragraph stating that our current liquidity
position and projected cash needs raise substantial doubt about our ability to continue as a going concern, along with management&rsquo;s
assessment and strategies. The perception that we may not be able to continue as a going concern may make it difficult for us to raise
new funds and to operate our business due to concerns about our ability to meet our contractual obligations. There is no assurance that
sufficient financing will be available when needed or on reasonable terms to allow us to continue our operations. Our ability to continue
as a going concern is contingent upon, among other factors, the availability of the GBC Credit Facility or obtaining alternate financing.
We cannot provide any assurance that we will be able to raise additional capital. See <i>Liquidity and Financial Condition</i> in Note
3 &ndash; Summary of Significant Accounting Policies to the audited consolidated financial statements for additional information.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>We have a history of losses
and negative working capital and we have insufficient cash to continue our operations for the next 12 months and our continued operations
are dependent on us raising capital and these conditions give rise to substantial doubt over the Company&rsquo;s ability to continue as
a going concern.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We have historically experienced
net losses and until we generate sufficient revenue, we anticipate that we will continue to experience losses in the near future.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As of December 31, 2024, we had
approximately $883,000 in cash, an accumulated deficit of approximately $103,268,000, and a working capital deficit of approximately
$5,229,000. We believe that our existing cash balance of $883,000 as of December 31, 2024, and our anticipated expenditures and commitments
for the next twelve months, will not enable us to fund our operating expenses and capital expenditure requirements for the next twelve
months. As of June 30, 2024 and 2023, we had a cash balance of $0.6 million and $2.4 million, respectively. Until such time as we generate
sufficient cash to fund our operations, we will need additional capital to continue our operations thereafter. These conditions give rise
to substantial doubt over the Company&rsquo;s ability to continue as a going concern. We will need to raise additional capital to support
our operations and execute our business plan. We will be required to pursue sources of additional capital through various means, including
debt or equity financings. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other
convertible securities that will have additional dilutive effects. Further, the sale of or the perception of the sale of a substantial
number of our Common Stock will adversely affect the price of our Common Stock due to our limited trading volume. In addition, the sale
of a substantial number of our Common Stock may adversely affect the share price that we may obtain in future financings and may adversely
affect our ability to conduct and complete future financings. We cannot assure that additional funds will be available when needed from
any source or, if available, will be available on terms that are acceptable to us and may cause existing stockholders both book value
and ownership dilution. Further, we may incur substantial costs in pursuing future capital and/or financing, including investment banking
fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses
in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial
condition and results of operations. Our ability to obtain needed financing may be impaired by such factors as the weakness of capital
markets, and the fact that we have not been profitable, which could impact the availability and cost of future financings. If the amount
of capital we are able to raise from financing activities is not sufficient to satisfy our capital needs, we may have to reduce our operations
accordingly.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We have historically relied on
equity financings, borrowings under short-term loans with related parties, credit facilities and/or cash resources from operating activities
to fund our operations. Specifically, we have relied heavily on a credit facility with GBC, and there can be no assurance that we will
be able to maintain this facility, obtain additional funds via a new facility or that funds will be available on terms acceptable to us,
if at all. Failure to maintain the GBC debt facility without a replacement facility would have material adverse impact on our operations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">If we were to access additional
capital via an equity or equity-linked financing, such funding would result in dilution of the ownership interests of our current stockholders.
If funds are not available on acceptable terms, we may be required to curtail our operations or take other actions to preserve our cash,
which may have a material adverse effect on our future cash flows and results of operations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>We have identified material
weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses, or if we identify
additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able
to accurately or timely report our financial condition or results of operations, which may adversely affect our business and stock price.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Based on management&rsquo;s evaluation
of our disclosure controls and procedures as of June 30, 2024, we identified material weaknesses in our internal controls over financial
reporting. The material weaknesses were based on our ineffective oversight of our internal control over financial reporting and lack of
sufficient personnel resources with technical accounting expertise related to certain aspects of the financial reporting process. While
management intends to increase the use of third-party consultants and technical accounting experts and to implement measures designed
to improve our internal control over financial reporting to remediate material weaknesses, there can be no assurance that these steps
will be effective.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As previously disclosed, we have
concluded that the previously issued audited consolidated financial statements as of and for the fiscal year ended June 30, 2023 and the
unaudited consolidated financial statements as of and for the quarters ended September 30, 2023, December 31, 2023, and March 31, 2024,
which were filed with the Securities and Exchange Commission (&ldquo;SEC&rdquo;) on September 21, 2023, November 9, 2023, February 8,
2024 and May 13, 2024, respectively, should no longer be relied upon because of errors in such financial statements relating to the improper
accounting for inventory and a restatement should be undertaken. As a part of this restatement and evaluation process, we also discovered
that:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&nbsp;</td>
    <td style="width: 0.25in"><font style="font-size: 10pt">(a)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">the Company&rsquo;s original estimate of the overstatement of inventories had risen due to additional excess and obsolete inventory identified related to inventory components not recorded at the lower of cost or net realizable value, as well as consigned inventory not reconciled in a timely manner;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">(b)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">the Company had not properly recognized revenue in the periods in which the related performance obligations had been satisfied for a contract with a certain customer, and that the Company had improperly recorded accounts receivable pertaining to that contract as a reduction to its accounts payable owed to that customer although the right of offset conditions under ASC 210-20 had not been met, resulting in misstatements to revenues, accounts receivable and accounts payable;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">(c)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">the Company had 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;</font></td></tr>
</table>

<p style="margin: 0">&nbsp;</p>

<p style="margin: 0"></p>

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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&nbsp;</td>
    <td style="width: 0.25in"><font style="font-size: 10pt">(d)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">the Company had various clearing accounts that had not been reconciled in a timely manner, resulting in misstatements of accounts payable, inventories and cost of sales;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">(e)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">the Company had not included certain product warranty-related expenses within the proper periods 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; and</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">(f)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">the Company erroneously presented non-cash debt issuance cost incurred in conjunction with credit facility arrangements as a non-cash adjustment to reconcile net loss to net cash used in operating activities in the consolidated cash flow statements when such cost should have been recognized as a change in other assets.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As a result, we have determined
to restate our audited consolidated financial statements for the fiscal years ended June 30, 2023 and 2022, including all related unaudited
consolidated interim financial statements within the fiscal years ended June 30, 2024, 2023 and 2022.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">After re-evaluation, the Company&rsquo;s
management has concluded that considering the errors described above, this represents an additional material weakness in the Company&rsquo;s
disclosure controls and procedures and the Company&rsquo;s internal control over financial reporting. The material weakness was based
upon a lack of sufficiently designed controls over the prevention of fraud and possible management override of controls. To address this
material weakness, management plans to continue to devote significant effort and resources to the remediation and improvement of the Company&rsquo;s
internal control over financial reporting. The design of any system of controls also is based in part upon 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. Moreover, the effectiveness of our controls and procedures may be limited by a variety of factors, including faulty
human judgment and simple errors, omissions or mistakes; fraudulent action of an individual or collusion of two or more people; inappropriate
management override of procedures; and the possibility that any enhancements to controls and procedures may still not be adequate to assure
timely and accurate financial control. 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We are committed to remediating
our material weakness. However, there can be no assurance as to when this material weakness will be remediated or that additional material
weaknesses will not arise in the future. If we are unable to maintain effective internal control over financial reporting, our ability
to record, process and report financial information in a timely manner and accurately could be adversely affected and could result in
a material misstatement in our financial statements, which could subject us to litigation or investigations, require management resources,
increase our expenses, negatively affect investor confidence in our financial statements and adversely impact the trading price of our
Common Stock.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>The restatement of our previously
issued financial statements has had a material adverse impact on us, including increased costs, loss of investor confidence, the increased
possibility of legal or administrative proceedings and non-compliance with the Nasdaq listing rules.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In connection with the restatements,
we have become subject to a number of additional risks and uncertainties, including:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&nbsp;</td>
    <td style="width: 0.25in; text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">We incurred substantial unanticipated costs for accounting, legal and consultancy fees in connection with the restatements and internal investigation, and we expect to continue to incur additional costs;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">The SEC may institute a formal investigation of the Company&rsquo;s financial statements. In such an event, investigation will divert our management&rsquo;s time and attention and cause us to incur substantial costs. These investigations can also lead to fines or injunctions or orders with respect to future activities, as well as further substantial costs and diversion of management time and attention; </font></td></tr>
</table>

<p style="margin: 0">&nbsp;</p>

<p style="margin: 0"></p>

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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="text-align: justify; width: 0.5in">&nbsp;</td>
    <td style="text-align: justify; width: 0.25in"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Our ability to regain compliance and continue to meet the continued listing standards of the Nasdaq Stock Market; and</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">A pending purported federal securities class action lawsuit has been filed against us, Ronald F. Dutt, our former chairman, Chief Executive Officer and President and our former Chief Financial Officer, Charles A. Scheiwe. The outcome of litigation is uncertain and we may not be successful in defending against these and future claims. In addition, the Company is named as a nominal defendant in a pending purported shareholder derivative lawsuit. These proceedings, and any other regulatory proceedings or actions, can be lengthy, time consuming and disruptive to normal business operations and could cause us to incur significant defense costs, including costs associated with the indemnification of our officers and directors, and could damage our reputation or adversely affect our stock price. Any adverse ruling or unfavorable resolution in any legal or regulatory proceeding or action could have a material adverse effect on our business, operating results, or financial condition. For additional information regarding certain of the matters in which we are involved, see &ldquo;Legal Proceedings,&rdquo; contained in Business section of this prospectus.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>We, and certain of our current
and former officers and directors, face litigation and legal proceedings which could adversely affect our business, financial condition,
results of operations or cash flows.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We are
subject to lawsuits, legal proceedings and claims in the normal course of our business, which can be expensive, lengthy, and disruptive
to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. We are currently the subject
of complaints alleging violations of various laws, including but not limited to certain employment lawsuits, a shareholder class action
lawsuit and a derivative lawsuit, which are further described under the heading &ldquo;Legal Proceedings&rdquo; elsewhere in this prospectus,
and in the future could also be subject to other proceedings. These proceedings and any other regulatory proceedings or actions may be
time consuming, could cause us to incur significant defense costs and could damage our reputation or adversely affect our stock price.
Any adverse ruling or unfavorable resolution in any legal or regulatory proceeding or action could have a material adverse effect on our
business, operating results or financial condition. For additional information regarding certain of the matters in which we are involved,
see &ldquo;Legal Proceedings,&rdquo; contained in Business Section of this prospectus.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>We will need to raise additional
capital or financing to continue to execute and expand our business.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We expect
that our existing cash and additional funding which we believe are available under our GBC Credit Facility, combined with funds available
to us under our subordinated line of credit and from our operations, will not be sufficient to meet our anticipated capital resources
and to fund our planned operations for the next twelve months <font style="background-color: white">(see </font><i>Liquidity and Financial
Condition</i> in Note 3 &ndash; Summary of Significant Accounting Policies to the audited consolidated financial statements for additional
information). However, the use of such credit facilities remains subject to performance metrics, certain restrictions and compliance with
loan covenants. If we are unable to meet the conditions provided in the loan documents, these funds will not be available to us. In addition,
should there be any delays in the receipts of key component parts, due in part to supply chain disruptions, our ability to fulfil the
backlog of sales orders will be negatively impacted resulting in lower availability of cash resources from operations. We may be required
to access other forms of capital to support our expanded operations and execute our business plan by issuing equity or convertible debt
securities, or by entering into another form of structured financing or strategic transaction. Our ability to access such forms of capital
will be impacted by investor confidence in our business strategy as well as market conditions In addition, our failure to timely file
our fiscal 2024 annual report on form 10-K and subsequent fiscal 2025 interim quarterly reports on Form 10-Q means that we currently are
ineligible to use a registration statement on Form S-3. We will not be eligible to use a registration statement on Form S-3 again until
we have timely filed all materials and reports required to be filed pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act
of 1934 for a period of at least twelve (12) calendar months immediately preceding the filing of a new registration statement on Form
S-3. The inability to use a Form S-3 registration statement will limit our ability to raise capital through sales of our securities in
a timely and cost-efficient manner.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">In the
event we are required to obtain additional funds, there is no guarantee that additional funds will be available on a timely basis or on
acceptable terms. To the extent that we raise additional funds by issuing equity or convertible debt securities, our stockholders may
experience additional dilution and such financing may involve restrictive covenants. Newly issued securities may include preferences,
superior voting rights, and the issuance of warrants or other convertible securities that will have additional dilutive effects. We cannot
assure that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable
to us. Further, we may incur substantial costs in pursuing future capital and/or financing. We may also be required to recognize non-cash
expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial
condition and results of operations. Our ability to obtain needed financing may be impaired by such factors as the weakness of capital
markets, and the fact that we have not been profitable, which could impact the availability and cost of future financings. If such funds
are not available when required, management will be required to curtail investments in additional sales and marketing and product development,
which may have a material adverse effect on future cash flows and results of operations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><b><i>In
the event of default of the Revolving Note under the GBC Credit Facility, such default could adversely affect our business, financial
condition, results of operations or liquidity.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">The loans
and other obligations of the Company under the GBC Credit Facility are secured by substantially all of our tangible and intangible assets
(including, without limitation, intellectual property) pursuant to the terms of a Loan and Security Agreement with GBC dated July 28,
2023 (the &ldquo;Agreement&rdquo;) and an Intellectual Property Security Agreement (the &ldquo;IP Security Agreement&rdquo;). The GBC
Credit Facility is evidenced by a revolving note, which matures on July 28, 2025 (the &ldquo;Maturity Date&rdquo;), unless extended, modified,
or renewed (the &ldquo;Revolving Note&rdquo;). 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. The holder of the Revolving
Note is entitled to all of the benefits and security provided for in the Agreement. All Revolving Loans shall be repaid by the Borrower
on the Maturity Date, unless payable sooner pursuant to the provisions of the Agreement. As a secured party, upon an event of default,
GBC will have a first priority right to the collateral granted to them under the Agreement and IP Security Agreement, and we may lose
our ownership interest in the assets pledged as security interest. Events of default have occurred under the GBC Credit Facility associated
with certain EBITDA requirements that were not achieved for the three-month period ending April 30, 2024, May 31, 2024 and July 31, 2024,
non-compliance with various representations, financial covenants and non-financial covenants relating to our financial restatements under
the Agreement. We have obtained waivers with respect to such defaults, which each waive any failure of the Company to be in compliance
with such representations, financial covenants and non-financial covenants under the Agreement. We may need to seek waivers in the future
and we cannot provide any assurance that such waivers will be available should we not be in compliance with the terms of the GBC Credit
Facility in the future. If we had not been able to obtain such waivers, we would have had events of default under the GBC Credit Facility
and GBC could terminate their commitments under the facility and foreclose against substantially all our assets. We would likely be forced
to seek bankruptcy protection and our investors could lose the full value of their investment in our Common Stock. As such, a default
and/or loss of our collateral will have a material adverse effect on our operations, business and financial condition.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><b><i>We
are dependent on one supplier for our battery cells, and the inability of this supplier to continue to deliver, or their refusal to deliver,
our battery cells at prices and volumes acceptable to us would have a material adverse effect on our business, prospects and operating
results.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We do not manufacture the battery
cells used in our energy storage solutions. Our battery cells, which are an integral part of our energy storage solutions, are sourced
from a single manufacturer located in China. While we obtain components for our products and systems from multiple sources whenever possible,
we have spent a great deal of time in developing and testing our battery cells that we receive from our main supplier. Additionally, our
operations are materially dependent upon the continued market acceptance and quality of this manufacturer&rsquo;s products and its ability
to continue to manufacture products that are competitive and that comply with laws relating to environmental and efficiency standards.
Our inability to obtain products from our main supplier or a decline in market acceptance of its products could have a material adverse
effect on our business, results of operations and financial condition. From time to time we have experienced shortages, allocations and
discontinuances of certain components and products, resulting in delays in filling orders. Qualifying new suppliers to compensate for
such shortages may be time-consuming and costly. In addition, we may have to recertify our UL Listings for the battery cells from new
suppliers, which in turn has led to delays in product acceptance. Similar delays may occur in the future. Furthermore, the performance
of the components from our supplier as incorporated in our products may not meet the quality requirements of our customers.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">To date, we have no qualified
alternative sources for our battery cells although we research and assess cells from other suppliers on an ongoing basis. We generally
do not maintain long-term agreements with our current supplier. While we believe that we will be able to establish additional supplier
relationships for our battery cells, we may be unable to do so in the short term or at all at prices, quality or costs that are favorable
to us. We intend to undertake and diversify suppliers for our battery cells to lessen this concentration, however, in the near term, this
relationship is a critical component in our business and operations. The loss of this supplier, significant changes in our product requirements,
delays of significant orders could have a material adverse effect upon the Company&rsquo;s business, operating results and financial condition.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Changes in business conditions,
wars, regulatory requirements, economic conditions and cycles, governmental changes, pandemic, and other factors beyond our control could
also affect our suppliers&rsquo; ability to deliver components to us on a timely basis or cause us to terminate our relationship with
them and require us to find replacements, which we may have difficulty doing. Furthermore, if we experience significant increased demand,
or need to replace our existing suppliers, there can be no assurance that additional supplies of component parts will be available when
required on terms that are favorable to us, at all, or that any supplier would allocate sufficient supplies to us in order to meet our
requirements or fill our orders in a timely manner. In the past, we have replaced certain suppliers because of their failure to provide
components that met our quality control standards. The loss of any limited source supplier or the disruption in the supply of components
from these suppliers could lead to delays in the deliveries of our battery products and systems to our customers, which could hurt our
relationships with our customers and also materially adversely affect our business, prospects and operating results.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><b><i>Backlog
may not be indicative of future operating results.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Future revenue for the Company
can be influenced by order backlog. Backlog represents the dollar amount of revenues we expect to recognize in the future from contracts
awarded and in progress. Backlog substantially represents new orders. Backlog is not a measure defined by generally accepted accounting
principles and is not a measure of contract profitability. Our methodology for determining backlog may not be comparable to methodologies
used by other companies in determining their backlog amounts. The backlog values we disclose include anticipated revenues associated with:
(1) the original contract amounts; (2) change orders for which we have received written confirmations from the applicable customers; (3)
change orders for which we expect to receive confirmations in the ordinary course of business; and (4) claims that we have made against
customers. In addition, the timing of order placement, size, and customer delivery dates can create unusual fluctuations in backlog.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We include unapproved change orders
for which we expect to receive confirmations in the ordinary course of business in backlog, generally to the extent of the lesser of the
amount management expects to recover or the associated costs incurred. Any revenue that would represent profit associated with unapproved
change orders is generally excluded from backlog until written confirmation is obtained from the applicable customer. However, consideration
is given to our history with the customer as well as the contractual basis under which we may be operating. Accordingly, in certain cases
based on our historical experience in resolving unapproved change orders with a customer, the associated profit may be included in backlog.
However, if an unapproved change order is under dispute or has been previously rejected by the customer, the associated amount of revenue
is treated as a claim.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">For amounts included in backlog
that are attributable to claims, we include unapproved claims in backlog when we have a legal basis to do so, consider collection to be
probable and believe we can reliably estimate the ultimate value. Claims revenue is included in backlog to the extent of the lesser of
the amount management expects to recover or associated costs incurred.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Backlog may not be indicative
of future operating results, and projects in our backlog may be cancelled, modified or otherwise altered by customers. Our ability to
realize revenue from the current backlog is dependent on among other things, the delivery of key parts from our vendors in a timely manner.
We can provide no assurance as to the profitability of our contracts reflected in backlog.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Economic conditions may
adversely affect consumer spending and the overall general health of our customers, which, in turn, may adversely affect our financial
condition, results of operations and cash resources.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Uncertainty about the current
and future global economic conditions may cause our customers to defer purchases or cancel purchase orders for our products in response
to tighter credit, decreased cash availability and weakened consumer confidence. Our financial success is sensitive to changes in general
economic conditions, both globally and nationally. Recessionary economic cycles, higher interest borrowing rates, higher fuel and other
energy costs, inflation, increases in commodity prices, higher levels of unemployment, higher consumer debt levels, higher tax rates and
other changes in tax laws or other economic factors that may affect consumer spending or buying habits could continue to adversely affect
the demand for our products. If credit pressures or other financial difficulties result in insolvency for our customers, it could adversely
impact our financial results. There can be no assurances that government and consumer responses to the disruptions in the financial markets
will restore consumer confidence.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>We are dependent on a few
customers for the majority of our net revenues, and our success depends on demand from OEMs and other users of our battery products.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Historically a majority of our
product sales have been generated from a small number of OEMs and customers, including three (3) customers who, on an aggregate basis,
made up 77% of our sales for the year ended June 30, 2024, and three (3) customers who, on an aggregate basis, made up 80% of our sales
for the year ended June 30, 2023. As a result, our success depends on continued demand from this small group of customers and their willingness
to incorporate our battery products in their equipment. The loss of a significant customer would have an adverse effect on our revenues.
There is no assurance that we will be successful in our efforts to convince end users to accept our products. Our failure to gain acceptance
of our products could have a material adverse effect on our financial condition and results of operations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Additionally, OEMs, their dealers
and battery distributors may be subject to changes in demand for their equipment which could significantly affect our business, financial
condition and results of operations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>We do not have long-term
contracts with our customers.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We do not have long-term contracts
with our customers. Future agreements with respect to pricing, returns, promotions, among other things, are subject to periodic negotiation
with each customer. No assurance can be given that our customers will continue to do business with us. The loss of any of our significant
customers will have a material adverse effect on our business, results of operations, financial condition and liquidity. In addition,
the uncertainty of product orders can make it difficult to forecast our sales and allocate our resources in a manner consistent with actual
sales, and our expense levels are based in part on our expectations of future sales. If our expectations regarding future sales are inaccurate,
we may be unable to reduce costs in a timely manner to adjust for sales shortfalls.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Real or perceived hazards
associated with Lithium-ion battery technology may affect demand for our products.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Press reports have highlighted
situations in which lithium-ion batteries in automobiles and consumer products have caught fire or exploded. In response, the use and
transportation of lithium-ion batteries has been prohibited or restricted in certain circumstances. This publicity has resulted in a public
perception that lithium-ion batteries are dangerous and unpredictable. Although we believe our energy storage solutions are safe, these
perceived hazards may result in customer reluctance to adopt our lithium-ion based technology.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Our products may experience
quality problems from time to time that could result in negative publicity, litigation, product recalls and warranty claims, which could
result in decreased revenues and harm to our brands.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">A catastrophic failure of our
battery modules could cause personal or property damages for which we would be potentially liable. Damage to or the failure of our energy
storage solutions to perform to customer specifications could result in unexpected warranty expenses or result in a product recall, which
would be time consuming and expensive. Such circumstances could result in negative publicity or lawsuits filed against us related to the
perceived quality of our products which could harm our brand and decrease demand for our products.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>We may be subject to product
liability claims</i></b>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">If one of our products were to
cause injury to someone or cause property damage, including as a result of product malfunctions, defects, or improper installation, then
we could be exposed to product liability claims. We could incur significant costs and liabilities if we are sued and if damages are awarded
against us. Further, any product liability claim we face could be expensive to defend and could divert management&rsquo;s attention. The
successful assertion of a product liability claim against us could result in potentially significant monetary damages, penalties or fines,
subject us to adverse publicity, damage our reputation and competitive position, and adversely affect sales of our products. In addition,
product liability claims, injuries, defects, or other problems experienced by other companies in the solar industry could lead to unfavorable
market conditions for the industry as a whole, and may have an adverse effect on our ability to attract new customers, thus harming our
growth and financial performance. Although we carry product liability insurance, it may be insufficient in amount to cover our claims.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Tariffs could be imposed
on lithium-ion batteries or on any other component parts by the United States government or a resulting trade war could have a material
adverse effect on our results of operations.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The lithium-ion battery industry
has been subjected to tariffs implemented by the United States government on goods imported from China. There is an ongoing risk of new
or additional tariffs being put in place on lithium-ion batteries or related parts which would dramatically increase the cost of our energy
storage solutions. Since all of our lithium-ion batteries are manufactured in China, current and potential tariffs on lithium-ion batteries
imported by us from China could increase our costs, require us to increase prices to our customers or, if we are unable to do so, result
in lower gross margins on the products sold by us. China has already imposed tariffs on a wide range of American products in retaliation
for the American tariffs on steel and aluminum. Additional tariffs could be imposed by China in response to actual or threatened tariffs
on products imported from China. The imposition of additional tariffs by the United States could trigger the adoption of tariffs by other
countries as well. Any resulting escalation of trade tensions, including a &ldquo;trade war,&rdquo; could have a significant adverse effect
on world trade and the world economy, as well as on our results of operations. At this time, we cannot predict how such enacted tariffs
will impact our business. Tariffs on components imported by us from China could have a material adverse effect on our business and results
of operations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Increases in costs, disruption
of supply or shortage of raw materials, in particular lithium-ion phosphate cells, could harm our business.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We may experience increases in
the costs, or a sustained interruption in the supply or shortage, of raw materials. Any such cost increase or supply interruption could
materially negatively impact our business, prospects, financial condition and operating results. For instance, we are exposed to multiple
risks relating to price fluctuations for lithium-iron phosphate cells.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">These risks include:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify; text-indent: 45pt">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: .75in">&nbsp;</td>
    <td style="width: .25in"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">the inability or unwillingness of battery manufacturers to supply the number of lithium-iron phosphate cells required to support our sales as demand for such rechargeable battery cells increases;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">disruption in the supply of cells due to quality issues or recalls by the battery cell manufacturers; and</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">an increase in the cost of raw materials, such as iron and phosphate, used in lithium-iron phosphate cells.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Our success depends on
our ability to develop new products and capabilities that respond to customer demand, industry trends or actions by our competitors and
failure to do so may cause us to lose our competitiveness in the battery industry and may cause our profits to decline.&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our success will depend on our
ability to develop new products and capabilities that respond to customer demand, industry trends or actions by our competitors. There
is no assurance that we will be able to successfully develop new products and capabilities that adequately respond to these forces. In
addition, changes in legislative, regulatory or industry requirements or in competitive technologies may render certain of our products
obsolete or less attractive. If we are unable to offer products and capabilities that satisfy customer demand, respond adequately to changes
in industry trends or legislative changes and maintain our competitive position in our markets, our financial condition and results of
operations would be materially and adversely affected<b><i>.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The research and development of
new products and technologies is costly and time consuming, and there are no assurances that our research and development efforts will
be either successful or completed within anticipated timeframes, if at all. Our failure to technologically evolve and/or develop new or
enhanced products may cause us to lose competitiveness in the battery market. In addition, in order to compete effectively in the renewable
battery industry, we must be able to launch new products to meet our customers&rsquo; demands in a timely manner. However, we cannot provide
assurance that we will be able to install and certify any equipment needed to produce new products in a timely manner, or that the transitioning
of our manufacturing facility and resources to full production under any new product programs will not impact production rates or other
operational efficiency measures at our manufacturing facility. In addition, new product introductions and applications are risky, and
may suffer from a lack of market acceptance, delays in related product development and failure of new products to operate properly. Any
failure by us to successfully launch new products, or a failure by us to meet our customers criteria in order to accept such products,
could adversely affect our results.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Our business will be adversely
affected if we are unable to protect our intellectual property rights from unauthorized use or infringement by third parties.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Any failure to protect our intellectual
proprietary rights could result in our competitors offering similar products, potentially resulting in the loss of some of our competitive
advantage and a decrease in our revenue, which would adversely affect our business, prospects, financial condition and operating results.
Our success depends, at least in part, on our ability to protect our core technology and intellectual property. To accomplish this, we
rely on a combination of patents, patent applications, trade secrets, including know-how, employee and third-party nondisclosure agreements,
copyright laws, trademarks, intellectual property licenses and other contractual rights to establish and protect our proprietary rights
in our technology.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The protections provided by patent
laws will be important to our future opportunities. However, such patents and agreements and various other measures we take to protect
our intellectual property from use by others may not be effective for various reasons, including the following:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify; text-indent: 45pt">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: .75in">&nbsp;</td>
    <td style="width: .25in"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">The patents we have been granted may be challenged, invalidated or circumvented because of the pre-existence of similar patented or unpatented intellectual property rights or for other reasons;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">The costs associated with enforcing patents, confidentiality and invention agreements or other intellectual property rights may make aggressive enforcement impracticable; and</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Existing and future competitors may independently develop similar technology and/or duplicate our systems in a way that circumvents our patents.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify; text-indent: 45pt">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Our patent applications
may not result in issued patents, which may have a material adverse effect on our ability to prevent others from commercially exploiting
products similar to ours.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We cannot be certain that we are
the first creator of inventions covered by pending patent applications or the first to file patent applications on these inventions, nor
can we be certain that our pending patent applications will result in issued patents or that any of our issued patents will afford protection
against a competitor. In addition, patent applications that we intend to file in foreign countries are subject to laws, rules and procedures
that differ from those of the United States, and thus we cannot be certain that foreign patent applications related to issue United States
patents will be issued. Furthermore, if these patent applications are issued, some foreign countries provide significantly less effective
patent enforcement than in the United States.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The status of patents involves
complex legal and factual questions and the breadth of claims allowed is uncertain. As a result, we cannot be certain that the patent
applications that we file will result in patents being issued, or that our patents and any patents that may be issued to us in the near
future will afford protection against competitors with similar technology. In addition, patents issued to us may be infringed upon or
designed around by others and others may obtain patents that we need to license or design around, either of which would increase costs
and may adversely affect our business, prospects, financial condition and operating results.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>We rely on trade secret
protections through confidentiality agreements with our employees, customers and other parties; the breach of such agreements could adversely
affect our business and results of operations.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We rely on trade secrets, which
we seek to protect, in part, through confidentiality and non-disclosure agreements with our employees, customers and other parties. There
can be no assurance that these agreements will not be breached, that we would have adequate remedies for any such breach or that our trade
secrets will not otherwise become known to or independently developed by competitors. To the extent that consultants, key employees or
other third parties apply technological information independently developed by them or by others to our proposed projects, disputes may
arise as to the proprietary rights to such information that may not be resolved in our favor. We may be involved from time to time in
litigation to determine the enforceability, scope and validity of our proprietary rights. Any such litigation could result in substantial
cost and diversion of effort by our management and technical personnel.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Our business depends substantially
on the continuing efforts of the members of our senior management team and our business may be severely disrupted if we lose their services
or are unable to recruit qualified replacements in the event of departures.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We believe that our success is
largely dependent upon the continued service of the members of our senior management team, who are responsible for who establishing our
corporate strategies and focus, overseeing the execution of our business strategy and ensuring our continued growth. Our continued success
will depend on our ability to attract and retain a qualified and competent management team in order to manage our existing operations
and support our expansion plans. If any of the members of our senior management team are unable or unwilling to continue in their present
positions, we may not be able to replace them readily. Therefore, our business may be severely disrupted, and we may incur additional
expenses to recruit and retain their replacement. In addition, if any of the members of our senior management team joins a competitor
or forms a competing company, we may lose some of our customers. Moreover, if new executive officers are unable to successfully adapt
and transition into their new roles, our business may be adversely affected.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>If we are forced to implement
workforce reductions, our staff resources will be stretched making our ability to comply with legal and regulatory requirements as a public
company difficult.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">There can be no assurance that
our management team will be able to implement and affect programs and policies in an effective and timely manner especially if subject
to workforce reductions, that adequately respond to increased legal, regulatory compliance and reporting requirements imposed by such
laws and regulations. Our failure to comply with such laws and regulations could lead to the imposition of fines and penalties and further
result in the deterioration of our business.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Compliance with changing
regulations concerning corporate governance and public disclosure may result in additional expenses.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">There have been changing laws,
regulations and standards relating to corporate governance and public disclosure, including the (Sarbanes-Oxley) Act of 2002, new regulations
promulgated by the SEC and rules promulgated by the national securities exchanges. These new or changed laws, regulations and standards
are subject to varying interpretations in many cases due to their lack of specificity, and, as a result, their application in practice
may evolve over time as new guidance is provided by regulatory and governing bodies, which could result in continuing uncertainty regarding
compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. As a result, our efforts
to comply with evolving laws, regulations and standards are likely to continue to result in increased general and administrative expenses
and a diversion of management time and attention from revenue-generating activities to compliance activities. Members of our Board of
Directors and our chief executive officer and chief financial officer could face an increased risk of personal liability in connection
with the performance of their duties. As a result, we may have difficulty attracting and retaining qualified directors and executive officers,
which could harm our business. If the actions we take in our efforts to comply with new or changed laws, regulations and standards differ
from the actions intended by regulatory or governing bodies, we could be subject to liability under applicable laws or our reputation
may be harmed.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In addition, Sarbanes-Oxley specifically
requires, among other things, that we maintain effective internal controls for financial reporting and disclosure of controls and procedures.
In particular, we must perform system and process evaluation and testing of our internal controls over financial reporting to allow management
to report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of Sarbanes-Oxley. Our testing,
or the subsequent testing by our independent registered public accounting firm, when required, may reveal deficiencies in our internal
controls over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 will require that we incur
substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group, and we may
need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.
Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered
public accounting firm identifies deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses,
the market price of our stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities,
which would require additional financial and management resources.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>We may face significant
costs relating to environmental regulations for the storage and shipment of our lithium-ion energy storage solutions.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Federal, state, and local regulations
impose significant environmental requirements on the manufacture, storage, transportation, and disposal of various components of advanced
energy storage systems. Although we believe that our operations are in material compliance with applicable environmental regulations,
there can be no assurance that changes in such laws and regulations will not impose costly compliance requirements on us or otherwise
subject us to future liabilities. Moreover, Federal, state, and local governments may enact additional regulations relating to the manufacture,
storage, transportation, and disposal of components of advanced energy storage systems. Compliance with such additional regulations could
require us to devote significant time and resources and could adversely affect demand for our products. There can be no assurance that
additional or modified regulations relating to the manufacture, storage, transportation, and disposal of components of advanced energy
systems will not be imposed.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Natural disasters, public
health crises, political crises and other catastrophic events or other events outside of our control may damage our sole facility or the
facilities of third parties on which we depend, and could impact consumer spending.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our sole production facility is
located in southern California near major geologic faults that have experienced earthquakes in the past. An earthquake or other natural
disaster or power shortages or outages could disrupt our operations or impair critical systems. Any of these disruptions or other events
outside of our control could affect our business negatively, harming our operating results. In addition, if our sole facility, or the
facilities of our suppliers, third-party service providers or customers, is affected by natural disasters, such as earthquakes, tsunamis,
power shortages or outages, floods or monsoons, public health crises, such as pandemics and epidemics, political crises, such as terrorism,
war, political instability or other conflict, or other events outside of our control, our business and operating results could suffer.
Moreover, these types of events could negatively impact consumer spending in the impacted regions or, depending upon the severity, globally,
which could adversely impact our operating results. Similar disasters occurring at our vendors&rsquo; manufacturing facilities could impact
our reputation and our consumers&rsquo; perception of our brands.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Security breaches, loss
of data and other disruptions could compromise sensitive information related to our business, prevent us from accessing critical information
or expose us to liability, which could adversely affect our business and our reputation.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We utilize information technology
systems and networks to process, transmit and store electronic information in connection with our business activities. As the use of digital
technologies has increased, cyber incidents, including deliberate attacks and attempts to gain unauthorized access to computer systems
and networks and divert financial resources, have increased in frequency and sophistication. These threats pose a risk to the security
of our systems and networks and the confidentiality, availability and integrity of our data, all of which are vital to our operations
and business strategy. There can be no assurance we will succeed in preventing cyber-attacks or successfully mitigating their effects.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Despite implementing security
measures, any of the internal computer systems belonging to us or our suppliers are vulnerable to damage from computer viruses, unauthorized
access, natural disasters, terrorism, war, and telecommunication and electrical failure. Any system failure, accident, security breach
or data breach that causes interruptions could result in a material disruption of our product development programs. Further, our information
technology and other internal infrastructure systems, including firewalls, servers, leased lines and connection to the Internet, face
the risk of systemic failure, which could disrupt our operations. If any disruption or security breach results in a loss or damage to
our data or applications, or inappropriate disclosure of confidential or proprietary information, we may incur resulting liability, and
competitive position may be adversely affected, and the further development of our products may be delayed. Furthermore, we may incur
additional costs to remedy the damage caused by these disruptions or security breaches.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Risks Related to Ownership of Our Common Stock
and this Offering</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>We may receive proceeds
from the offering in an amount insufficient to meet our business goals</i></b>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Because there is no minimum offering
amount or escrow account required as a condition to closing, we may close this offering for an amount that is insufficient to meet our
business goals described in this prospectus. As a result, any proceeds from the sale of securities offered by us will be available for
our immediate use, despite uncertainty about whether we would be able to use such funds to effectively implement our business plan</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>We have broad discretion
in the use of the net proceeds from this offering and may not use them effectively. </i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 20.4pt">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our management will have broad
discretion in the application of our existing cash and cash equivalents and the net proceeds from this offering, including for any of
the purposes described in the section titled &ldquo;Use of Proceeds,&rdquo; and you will not have the opportunity as part of your investment
decision to assess whether such proceeds are being used appropriately. Because of the number and variability of factors that will determine
our use of our existing cash and cash equivalents and the net proceeds from this offering, their ultimate use may vary substantially from
their currently intended use. Our management might not apply our existing cash and cash equivalents and the net proceeds from this offering
in ways that ultimately increase the value of your investment. The failure by our management to apply these funds effectively could harm
our business. Pending their use, we may invest the net proceeds from this offering in short- and intermediate-term, interest-bearing obligations,
investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government. These investments may
not yield a favorable return to our stockholders. If we do not invest or apply the net proceeds from this offering in ways that enhance
stockholder value, we may fail to achieve expected financial results, which could cause our stock price to decline.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>The sale of our Common Stock
in this offering, including any shares issuable upon exercise of any pre-funded warrants or Common Warrants, and any future sales of our
Common Stock, or the perception that such sales could occur, may depress our stock price and our ability to raise funds in new stock offerings.
</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We may from time-to-time issue
additional shares of Common Stock at a discount from the current trading price of our Common Stock. As a result, our stockholders would
experience immediate dilution upon the purchase of any shares of our Common Stock sold at such discount. In addition, as opportunities
present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt securities, preferred
stock or Common Stock. Sales of shares of our Common Stock in this offering, including any shares issuable upon exercise of any pre-funded
warrants or Common Warrants issued in this offering and in the public market following this offering, or the perception that such sales
could occur, may lower the market price of our Common Stock and may make it more difficult for us to sell equity securities or equity-related
securities in the future at a time and price that our management deems acceptable, or at all.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>There is no public market
for the pre-funded warrants and Common Warrants to purchase Common Stock in this offering.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">There is no established public
trading market for the pre-funded warrants and Common Warrants that are being offered in this offering, and we do not expect a market
to develop. In addition, we do not intend to apply to list the pre-funded warrants and Common Warrants on any national securities exchange
or other trading market. Without an active market, the liquidity of the pre-funded warrants and Common Warrants will be limited.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>We may not receive any additional
funds upon the exercise of the pre-funded warrants or Common Warrants. </i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Each Pre-Funded Warrant may be
exercised by way of a cashless exercise, meaning that the holder may not pay a cash purchase price upon exercise, but instead would receive
upon such exercise the net number of shares of our Common Stock determined according to the formula set forth in the pre-funded warrants.
Accordingly, we may not receive any additional funds upon the exercise of the pre-funded warrants.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Each Common Warrants may be exercised
by way of a cashless exercise if at the time of exercise hereof there is no effective registration statement registering, or the prospectus
contained therein is not available for the issuance of our Common Stock issuable upon exercise of the Common Warrants to the holder.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Significant holders or beneficial
holders of our Common Stock may not be permitted to exercise pre-funded warrants that they hold. </i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">A holder of a Pre-Funded Warrant
will not be entitled to exercise any portion of any pre-funded warrants which, upon giving effect to such exercise, would cause the aggregate
number of shares of our Common Stock beneficially owned by the holder (together with its affiliates) to exceed 4.99% (or, at the election
of the purchaser, 9.99%) of the number of shares of our Common Stock outstanding immediately after giving effect to the exercise. Such
percentage may be increased or decreased by written notice by the holder of the pre-funded warrants to any other percentage not in excess
of 9.99%. Such increase or decrease will not be effective until the sixty-first (61<sup>st</sup>) day after such notice is delivered to
us. As a result, you may not be able to exercise your pre-funded warrants for shares of our Common Stock at a time when it would be financially
beneficial for you to do so. In such circumstance you could seek to sell your pre-funded warrants to realize value, but you may be unable
to do so in the absence of an established trading market for the pre-funded warrants.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>The holders of the pre-funded
warrants and Common Warrants will have no rights as Common Stockholders until such holders exercise their pre-funded warrants or Common
Warrants and acquire shares of our Common Stock.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Except by virtue of such holder&rsquo;s
ownership of shares of our Common Stock, the holder of a Pre-Funded Warrant and Common Warrants will not have the rights or privileges
of a holder of our Common Stock, including any voting rights, until such holder exercises the Pre-Funded Warrant and the Common Warrants.
Upon exercise of the Pre-Funded Warrant or Common Warrants, the holders will be entitled to exercise the rights of a stockholder of Common
Stock only as to matters for which the record date occurs after the exercise date.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Because the public offering
price of our securities will be substantially higher than the pro forma as adjusted net tangible book value per share of our outstanding
Common Stock following this offering, new investors will experience immediate and substantial dilution.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The assumed combined public offering
price of share of Common Stock and the pre-funded warrants are substantially higher than the pro forma as adjusted net tangible book value
per share of our Common Stock immediately following this offering based on the value of our total tangible assets less our total tangible
liabilities. Therefore, assuming the sale of all Common Stock offered hereby and no sale of any pre-funded warrants in this offering (assuming
no exercise of Common Warrants sold in this offering), you will suffer immediate and substantial dilution of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
in the pro forma as adjusted net tangible book value per share of Common Stock as of June 30, 2024, based on the assumed combined public
offering price of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , which is the last reported sale price of our Common Stock on The
Nasdaq Capital Market on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2025. Therefore, if you purchase shares of Common Stock and
pre-funded warrants in this offering, you will pay a price per share that substantially exceeds our pro forma as adjusted net tangible
book value per share after this offering. See the section titled <i>&ldquo;Dilution</i>&rdquo; below for a more detailed discussion of
the dilution you will incur if you participate in this offering.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>The price of our stock may
be volatile, which could result in substantial losses for investors. Further, an active, liquid and orderly trading market for our Common
Stock may not be sustained, and we do not know what the market price of our Common Stock will be, and as a result it may be difficult
for you to sell your shares of our Common Stock.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Although our Common Stock is listed
on the Nasdaq Capital Market, the market for our shares has demonstrated varying levels of trading activity. Furthermore, an active trading
market for our shares may not be sustained in the future. You may not be able to sell your shares quickly or at the market price if trading
in shares of our Common Stock is not active. An inactive market may also impair our ability to raise capital by selling shares of our
Common Stock and may impair our ability to enter into strategic partnerships or acquire companies or products by using shares of our Common
Stock as consideration, which could have a material adverse effect on our business, financial condition, and results of operations. Further,
the trading price of our Common Stock is likely to be highly volatile and could be subject to wide fluctuations in response to various
factors, some of which are beyond our control, including limited trading volume. In addition, the stock market in general, and biopharmaceutical
companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to
the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our Common Stock,
regardless of our actual operating performance. In the past, securities class action litigation has often been instituted against companies
following periods of volatility in the market price of a company&rsquo;s securities. This type of litigation, if instituted, could result
in substantial costs and a diversion of management&rsquo;s attention and resources, which could have a material adverse effect on our
business, financial condition, and results of operations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>If securities or industry
analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume
could decline.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The trading market for our Common
Stock depends in part on the research and reports that securities or industry analysts publish about us or our business.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">If one or more of the analysts
covering us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price may decline. In addition,
if one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could
decrease, which might cause our stock price and trading volume to decline.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Sales and issuances of our
Common Stock or other securities could result in additional dilution of the percentage ownership of our stockholders and could cause our
share price to fall.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">If we sell additional shares of
our Common Stock, convertible securities or other equity securities, existing stockholders may be materially diluted by subsequent sales
and new investors could gain rights, preferences, and privileges senior to existing holders of our Common Stock. Pursuant to our obligations
under certain registration rights agreements, we have (1) registered on another registration statement filed with the SEC 20,393,816 shares
of Common Stock, 1,912,154 warrants to purchase our Common Stock, and 1,912,154 shares of Common Stock issuable upon exercise of the private
placement warrants, and (2) agreed to also register on another registration statement shares of Common Stock issuable upon conversion
of two outstanding convertible promissory notes issued on March 8, 2024 for the principal amount of $1,500,000 and $2,000,000, respectively
issued on pursuant to a Settlement Agreement and Release of All Claims Agreement dated on March 8, 2024. The number of shares that may
be sold pursuant to the resale registration statement is subject to cutback in the event that the underwriter or placement determines
that inclusion of the resale shares would adversely affect the offering price, timing, distribution or probability of success of the proposed
offering. In the event we complete an offering (i) for at least $8 million in a public offering or (ii) of at least $2 million with a
non-affiliated purchaser at an effective price of at least 150% of the initial note conversion price, then the convertible notes will
be subject to mandatory conversion, subject to certain conditions, at the lower of the then conversion price in effect and the effect
price of the securities sold in the financing. Until such time that it is no longer effective, the registration statement registering
such securities will permit the resale of these shares. In addition, securityholders may also sell their shares pursuant to an exemption
available under the securities laws. The resale, or perceived potential resale, of a substantial number of shares of our Common Stock
in the public market could adversely affect the market price for our Common Stock and make it more difficult for other stockholders to
sell their holdings at times and prices that they determine are appropriate.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>If we fail to comply with
the continued listing standards of the Nasdaq Capital Market, our Common Stock could be delisted. If it is delisted, the market value
and the liquidity of our Common Stock would be impacted.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The continued listing of our Common
Stock on the Nasdaq Capital Market is contingent on our continued compliance with a number of listing standards. The Nasdaq Capital Market
retains substantial discretion to, at any time and without notice, suspend dealings in or remove from any security from listing. In order
to maintain this listing, we must maintain certain share prices, financial and share distribution targets, including maintaining a minimum
amount of stockholders&rsquo; equity and a minimum number of public shareholders. In addition to these objective standards, The Nasdaq
Capital Market may delist the securities of any issuer: (i) if, in its opinion, the issuer&rsquo;s financial condition and/or operating
results appear unsatisfactory; (ii) if it appears that the extent of public distribution or the aggregate market value of the security
has become so reduced as to make continued listing on The Nasdaq Capital Market inadvisable; (iii) if the issuer sells or disposes of
principal operating assets or ceases to be an operating company; (iv) if an issuer fails to comply with the Nasdaq Capital Market&rsquo;s
listing requirements; (v) if an issuer&rsquo;s Common Stock sells at what The Nasdaq Capital Market considers a &ldquo;low selling price&rdquo;
and the issuer fails to correct this via a reverse split of shares after notification by the Nasdaq Capital Market; or (vi) if any other
event occurs or any condition exists which makes continued listing on the Nasdaq Capital Market, in its opinion, inadvisable. There is
no assurance that we will remain in compliance with these standards.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Delisting from The Nasdaq Capital
Market would adversely affect our ability to raise additional financing through the public or private sale of equity securities, significantly
affect the ability of investors to trade our securities and negatively affect the value and liquidity of our Common Stock. Delisting also
could limit our strategic alternatives and attractiveness to potential counterparties and have other negative results, including the potential
loss of employee confidence, decreased analyst coverage of our securities, the loss of institutional investors or interest in business
development opportunities. Moreover, we committed in connection with the sale of securities to use commercially reasonable efforts to
maintain the listing of our Common Stock during such time that certain warrants are outstanding.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>The market price of our
Common Stock could become volatile, or our trading volume become weak, either of which could lead to the price of our stock being depressed
at a time when you may want to sell.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our Common Stock is being traded
on The Nasdaq Capital Market under the symbol &ldquo;FLUX.&rdquo; We cannot predict the extent to which investor interest in our Common
Stock will lead to the development of an active trading market on that stock exchange or any other exchange in the future. An active market
for our Common Stock may never develop. We cannot assure you that the volume of trading in shares of our Common Stock will increase in
the future. The trading price of our Common Stock has experienced volatility and is likely to continue to be highly volatile in response
to numerous factors which have been discussed in this Section 1A, and additional factors, many of which are beyond our control, including,
without limitation, the following:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&nbsp;</td>
    <td style="width: 0.25in"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Our earnings releases, actual or anticipated changes in our earnings, fluctuations in our operating results or our failure to meet the expectations of financial market analysts and investors;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Changes in financial estimates by securities analysts, if any, who might cover our stock;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Speculation about our business in the press or the investment community;</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&nbsp;</td>
    <td style="width: 0.25in"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Significant developments relating to our relationships with our customers or suppliers;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Stock market price and volume fluctuations of other publicly traded companies and, in particular, those that are in our industry;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Customer demand for our products;</font></td></tr>
</table>

<p style="margin: 0">&nbsp;</p>

<p style="margin: 0"></p>

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<p style="margin: 0">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&nbsp;</td>
    <td style="width: 0.25in"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Investor perceptions of our industry in general and our Company in particular;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">General economic conditions and trends;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Announcements by us or our competitors of new products, significant acquisitions, strategic partnerships or divestitures;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Changes in accounting standards, policies, guidance, interpretation or principles;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Loss of external funding sources;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Sales of our Common Stock, including sales by our directors, officers or significant stockholders; and</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Additions or departures of key personnel, including but not limited to our chief financial officer.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify; text-indent: 9pt">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The trading price and volume of
our Common Stock may impact your ability to sell your shares of Common Stock, causing you to lose all or part of your investment.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>The ownership of our stock
is highly concentrated in our management.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As of January 3 2025, our directors
and executive officers, and their respective affiliates beneficially owned approximately 27.5% of our outstanding Common Stock, including
Common Stock underlying options, and warrants that were exercisable or convertible or which would become exercisable or convertible within
60 days, with Michael Johnson, our director and sole director of Esenjay Investments LLC (&ldquo;Essenjay&rdquo;), beneficially owning
approximately 25.1% of such outstanding Common Stock. As a result of their ownership, our directors and executive officers and their respective
affiliates collectively, and Esenjay, individually, are able to significantly influence all matters requiring stockholder approval, including
the election of directors and approval of significant corporate transactions. This concentration of ownership may also have the effect
of delaying or preventing a change in control.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>We do not intend to pay
dividends on shares of our Common Stock for the foreseeable future.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We have never declared or paid
any cash dividends on shares of our Common Stock. We intend to retain any future earnings to fund the operation and expansion of our business
and, therefore, we do not anticipate paying cash dividends on shares of our Common Stock in the foreseeable future.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>&nbsp;We are not currently
in compliance with the continued listing requirements for the Nasdaq Stock Market. If we fail to regain compliance or to meet the continued
listing requirements, our Common Stock may be delisted, which could affect the market price of our Common Stock, negatively
impact stockholders&rsquo; ability to sell shares and negatively impact our ability to access the capital markets.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On January 31, 2025, we received
a notice (the &ldquo;Stockholders&rsquo; Equity Notice&rdquo;) from The Nasdaq Stock Market (&ldquo;Nasdaq&rdquo;) LLC notifying the Company
that based on its stockholders&rsquo; equity of $194,000 as reported in its Form 10-K for the fiscal year ended June 30, 2024, the Company
is no longer in compliance with Nasdaq Listing Rule 5550(b)(1), which requires the Company to maintain a minimum of $2,500,000 in stockholders&rsquo;
equity for continued listing on Nasdaq (the &ldquo;Stockholders&rsquo; Equity Requirement&rdquo;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Under the Nasdaq rules and pursuant
to the Stockholders&rsquo; Equity Notice, we had until March 17, 2025 to submit to Nasdaq a plan to regain compliance with the Stockholders&rsquo;
Equity requirement. On March 17, 2025, we filed such plan with Nasdaq to regain compliance with the Stockholders&rsquo; Equity requirement,
including requesting an extension through July 30, 2025, which is 180 calendar days from the date of the Stockholders&rsquo; Equity Notice
to regain compliance of the Stockholders&rsquo; Equity Requirement. In the event the plan is not accepted by Nasdaq, or in the event the
plan is accepted by Nasdaq and the 180-day extension period is granted, but we fail to regain compliance within such plan period, we would
have the right to a hearing before an independent panel. The hearing request would stay any suspension or delisting action pending the
conclusion of the hearing process and the expiration of any additional extension period granted by the panel following the hearing. We
intend to take all reasonable measures available to regain compliance under the Nasdaq Listing Rules and to remain listed on Nasdaq.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Any subsequent failure to regain
and maintain compliance with the continued listing requirements of Nasdaq could result in delisting of our Common Stock from Nasdaq
and negatively impact our company and holders of our Common Stock, including by reducing the liquidity and trading of our Common
Stock, limited availability of price quotations and reduced news and analyst coverage. Delisting may adversely impact the perception
of our financial condition, cause reputational harm with investors, our employees and parties conducting business with us and limit our
access to debt and equity financing.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In addition, we cannot assure
that we will be able to continue to comply with the minimum bid price requirement, successfully comply and continue to comply with the
stockholders&rsquo; equity requirement, and the other standards that we are required to meet in order to maintain a listing of our Common
Stock on Nasdaq. Our failure to continue to meet these requirements may result in our Common Stock being delisted from Nasdaq.
There can be no assurance that our Common Stock will continue to trade on Nasdaq or trade on the over-the counter markets or any
public market in the future. In the event our Common Stock is delisted, our stock price and market liquidity of our stock will
be adversely affected which will impact your ability to sell your securities in the market.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Preferred Stock may be issued
under our Articles of Incorporation, which may have superior rights to our Common Stock.</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our Articles of Incorporation
authorize the issuance of up to 500,000 shares of preferred stock. The preferred stock may be issued in one or more series, the terms
of which may be determined at the time of issuance. These terms may include voting rights including the right to vote as a series on particular
matters, preferences as to dividends and liquidation, conversion rights, redemption rights and sinking fund provisions. In addition, these
voting, conversion and exchange rights of preferred stock could negatively affect the voting power or other rights of our Common Stockholders.
The issuance of any preferred stock could diminish the rights of holders of our Common Stock, or delay or prevent a change of control
of our Company, and therefore could reduce the value of such Common Stock.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><b><a name="a_007"></a>USE OF PROCEEDS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We estimate that the net proceeds
from sale of Common Stock offered by us in this offering will be approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million
based on an assumed public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per Common Stock (assuming an offering
with gross proceeds of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million), assuming all the shares of Common Stock offered are
sold, after deducting the placement agent fees and estimated offering expenses payable by us. These estimates exclude the proceeds, if
any, from the exercise of Common Warrants and sale and exercise of pre-funded warrants sold in this offering, if any. However, because
this is a best efforts offering and there is no minimum offering amount required as a condition to the closing of this offering, the actual
offering amount, the placement agent fees and net proceeds to us are not presently determinable and may be substantially less than the
maximum amounts set forth on the cover page of this prospectus.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We intend to use the net proceeds
of this offering for working capital and general corporate purposes, and &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; subject to the
actual amount of proceeds received.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">This expected use of the net proceeds
from this offering represents our intentions based upon our current plans and business conditions. Pending our application of the net
proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation investments, including short-term,
investment grade, interest bearing instruments and U.S. government.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><b><a name="a_008"></a>MARKET INFORMATION FOR
COMMON STOCK AND DIVIDEND POLICY</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white"><b>Market for Common Stock</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our Common Stock is traded on
The Nasdaq Capital Market under the symbol &ldquo;FLUX.&rdquo;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Holders of Record of Common Stock</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As of
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2025, we had approximately
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; stockholders of record for our Common Stock. The foregoing number of stockholders
of record does not include an unknown number of stockholders who hold their stock in &ldquo;street name.&rdquo;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Dividend Policy</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We have never declared or paid
cash dividends on our Common Stock. We presently do not expect to declare or pay such dividends in the foreseeable future and expect to
reinvest all undistributed earnings to expand our operations, which the management believes would be of the most benefit to our stockholders.
The declaration of dividends, if any, will be subject to the discretion of our Board of Directors, which may consider such factors as
our results of operations, financial condition, capital needs and acquisition strategy, among others.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Purchases of Equity Securities</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">None.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Equity Compensation Plan Information</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The following table provides certain
information with respect to our equity compensation plans in effect as of June 30, 2024:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number of securities to be issued upon exercise of outstanding options, and settlement of RSUs<BR> (a)</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted-average exercise price of outstanding options, and issuance price of RSUs <BR> (b)</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column a)<BR> (c)</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 46%; text-align: left"><font style="font-size: 10pt">Equity compensation plans approved by stockholder <sup>(1)</sup></font></td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 14%; text-align: right">596,983</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">6.64</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 14%; text-align: right">89,922</td><td style="width: 1%; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left"><font style="font-size: 10pt">Equity compensation plans approved by stockholders <sup>(2)</sup></font></td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">1,122,743</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">$</td><td style="text-align: right">3.41</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">777,551</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt"><font style="font-size: 10pt">Equity compensation plans approved by stockholders <sup>(3)</sup></font></td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">-</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">-</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">312,457</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; padding-bottom: 2.5pt">Total</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,719,726</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4.53</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,179,930</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: .25in"><font style="font-size: 10pt"><sup>(1)</sup></font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Represents shares of Common Stock reserved for issuance under the 2014 Equity Incentive Plan (the &ldquo;2014 Plan&rdquo;) which was approved by our stockholders on February 17, 2015, and was amended on October 25, 2017.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt"><sup>(2)</sup></font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Represents shares of Common Stock reserved for issuance under the 2021 Equity Incentive Plan (the &ldquo;2021 Plan&rdquo;) which was approved by our stockholders on April 29, 2021.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt"><sup>(3)</sup></font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Represents the number of shares of Common Stock reserved as authorized for the grant of options under the Flux Power Holdings, Inc. 2023 Employee Stock Purchase Plan (the &ldquo;2023 ESPP&rdquo;), which was approved by our stockholders on April 20, 2023. </font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><a name="a_009"></a>CAPITALIZATION</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The following table sets forth our cash and capitalization
as of December 31, 2024:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&nbsp;</td>
    <td style="width: 0.25in"><font style="font-size: 10pt">&#9679; </font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">on an actual basis; and</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&nbsp;</td>
    <td style="width: 0.25in"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">on an as adjusted basis to give effect to the issuance and sale of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of Common Stock and accompanying Common Warrants in this offering at an assumed combined public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share of Common Stock (the last reported sale price of our Common Stock on The Nasdaq Capital Market on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2025), after deducting placement agent fees and estimated offering expenses payable by us. The as adjusted basis assumes no pre-funded warrants are sold in this offering and excludes the proceeds, if any, from the exercise of any Common Warrants issued in this offering.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The unaudited as adjusted information
below is prepared for illustrative purposes only and our capitalization following the completion of this offering will be adjusted based
on the actual public offering price and other terms of this offering determined at pricing. You should read the following table in conjunction
with Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations and the historical financial statements
and related notes for the fiscal year ended June 30, 2024 appearing elsewhere in this prospectus.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 84%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1pt">&nbsp;</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td>
    <td colspan="6" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">As of December 31, 2024</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td>
    </tr>
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1pt solid; font-weight: bold">(In thousands, except par value data)</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td>
    <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Actual <BR> (unaudited)</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td>
    <td colspan="2" style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><font style="font-size: 10pt"><b>As Adjusted<br /> (unaudited)<sup>)</sup></b></font></td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td>
    </tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1pt">Cash</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">883,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right"></td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td>
    </tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt">Current debt</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">10,693,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">&nbsp;</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td>
    </tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt">Long term debt</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">-</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">&nbsp;</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td>
    </tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Stockholders&rsquo; (deficit) equity:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td>
    </tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt">Common stock, $0.001 par value; 30,000,000 shares authorized; 16,682,465 issued and outstanding at December 31, 2024; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; pro forma as adjusted basis</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">17,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">&nbsp;</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td>
    </tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt">Additional paid-in capital</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">100,514,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">&nbsp;</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td>
    </tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt; width: 64%">Accumulated deficit</td><td style="padding-bottom: 1pt; width: 2%">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left; width: 1%">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right; width: 14%">(103,268,000</td><td style="padding-bottom: 1pt; text-align: left; width: 1%">)</td><td style="padding-bottom: 1pt; width: 2%">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left; width: 1%">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right; width: 14%">&nbsp;</td><td style="padding-bottom: 1pt; text-align: left; width: 1%">)</td>
    </tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt">Total Stockholders&rsquo; (deficit) equity</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(2,737,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">&nbsp;</td><td style="padding-bottom: 1pt; text-align: left">)</td>
    </tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt">Total Capitalization</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">7,956,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">&nbsp;</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td>
    </tr>
  </table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: .25in">&nbsp;</td>
    <td style="width: .25in"><font style="font-size: 10pt">(1)</font></td>
    <td><font style="font-size: 10pt">The as adjusted information is illustrative only and following the completion of this offering will be adjusted based on the actual public offering price and other terms of this offering determined at pricing.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">A $0.15 increase (decrease) in
the assumed combined public offering price per Common Stock and accompanying warrant of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, which
was the last reported sale price of our Common Stock on The Nasdaq Capital Market on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2025
would increase (decrease) each of cash, Common Stock and additional paid-in capital, total stockholders&rsquo; equity and total capitalization
on a pro forma as adjusted basis by approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;($&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;),
assuming that the number of Common Stock and accompanying Common Warrants offered by us, as set forth on the cover page of this prospectus,
remains the same and after deducting the placement agent fee and estimated offering expenses payable by us and assuming no exercise of
Common Warrants.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;The table and discussion
above are based on (A) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Common Stock outstanding as of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
and (B) as reflected above in the Pro Forma as Adjusted column includes the issuance and sale of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
shares of Common Stock in this offering at an assumed combined public offering price of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per
shares of Common Stock and accompanying Common Warrants (the last reported sale price of our Common Stock on The Nasdaq Capital Market
on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; but excludes the following:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&nbsp;</td>
    <td style="width: 0.25in; text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">shares Common Stock issuable pursuant to restricted stock units, granted under our 2021 Equity Incentive Plan (the &#8220;2021 Plan&#8221;&#8221;) as of December 31, 2024 with a weighted-average exercise price of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">shares of Common Stock reserved and available for future issuance under our&nbsp;&nbsp;2021 Plan as of December 31, 2024;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">shares Common Stock issuable pursuant to options outstanding, granted under our 2021 Plan, as of December 31, 2024, with an exercise price of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ;</font></td></tr>
</table>

<p style="margin: 0">&nbsp;&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&nbsp;</td>
    <td style="text-align: justify; width: 0.25in"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">shares Common Stock issuable pursuant to warrants outstanding as of &nbsp;December 31, 2024, with a weighted average exercise price&nbsp;&nbsp;of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, and </font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of Common Stock issuable upon the exercise of the Common Warrants to be issued in connection with this offering.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><a name="a_010"></a>DILUTION</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">If you invest in our securities
in this offering, your ownership interest will be diluted immediately to the extent of the difference between the combined public offering
price per share of our Common Stock and pre-funded warrant and the pro forma as adjusted net tangible book value per share of our Common
Stock immediately after this offering.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our historical net tangible book
value (deficit) as of December 31, 2024, was $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;or $(&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;)
per share of our Common Stock. Our historical net tangible book value (deficit) is the amount of our total tangible assets less our total
tangible liabilities. Historical net tangible book value (deficit) per share represents our historical net tangible book value (deficit)
divided by &nbsp;16,682,465 shares of our Common Stock outstanding as of December 31, 2024.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">After
giving effect to the sale of Common Stock and Common Warrants in this offering at an assumed combined public offering price of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
, the closing sale price per share of our Common Stock on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2025, and after deducting
the estimated placement agent fees and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as
of December 31, 2024 would have been approximately $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , or $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
per share. This represents an immediate increase in pro forma net tangible book value of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share to existing stockholders and an immediate dilution of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share to new investors.
The following table illustrates this per share dilution:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 68%"><font style="font-size: 10pt">Assumed public offering price per share of Common Stock</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 13%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 13%; text-align: right">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><font style="font-size: 10pt">Historical net tangible book value per share as of December 31, 2024</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><font style="font-size: 10pt">Increase in the net tangible book value per share attributable to this offering</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right">&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1.5pt"><font style="font-size: 10pt">Pro forma as adjusted net tangible book value per share after this offering</font></td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="border-bottom: black 1pt solid">&nbsp;</td>
    <td style="border-bottom: black 1pt solid; text-align: right">&nbsp;</td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt"><font style="font-size: 10pt">Dilution per share to new investors participating in this offering</font></td>
    <td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: black 2.25pt double">&nbsp;</td>
    <td style="border-bottom: black 2.25pt double; text-align: right">&nbsp;</td>
    <td style="padding-bottom: 2.5pt">&nbsp;</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">A $0.15
increase (decrease) in the assumed combined public offering price of a share of Common Stock and Common Warrant, assuming that the number
of shares of Common Stock offered by us, as set forth on the cover page of this prospectus, remains the same, assuming no exercise of
any Common Warrants, and after deducting the estimated placement agent fees and expenses, would increase or decrease our pro forma as
adjusted net tangible book value to approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million or $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
per share and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million or $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, respectively,
representing an immediate dilution of approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
per share to new investors purchasing shares of our Common Stock in this offering.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We may
also increase or decrease the number of shares of Common Stock and accompanying Common Warrants we are offering. Each increase (decrease)
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares in the number of Common Stock we are offering would increase (decrease) our pro forma
net tangible book value by approximately $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, or $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
per share, and decrease (increase) the dilution per share to new investors participating in this offering by $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
per share, assuming that the assumed public offering price per share for each share of Common Stock and accompanying Common Warrants remains
the same, and after deducting the placement agent fees and estimated offering expenses payable by us. The as adjusted information discussed
above is illustrative only and will change based on the actual public offering price, number of shares and other terms of this offering
determined at pricing.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The foregoing table is based on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
shares of Common Stock issued and outstanding as of December 31, 2024, but excludes the following:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&nbsp;</td>
    <td style="width: 0.25in; text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">shares Common Stock issuable pursuant to restricted stock units, granted under our 2021 Equity Incentive Plan (the &#8220;2021 Plan&#8221;&#8221;) as of December 31, 2024, &nbsp;a weighted-average exercise price of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">shares of Common Stock reserved and available for future issuance under our&nbsp;&nbsp;2021 Plan as of &nbsp;December 31, 2024;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">shares Common Stock issuable pursuant to options outstanding, granted under our 2021 Plan, as of December 31, 2024, with an exercise price of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">shares Common Stock issuable pursuant to warrants outstanding, as of December 31, 2024, with a weighted average exercise price&nbsp;&nbsp;of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, and </font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of Common Stock issuable upon the exercise of the Common Warrants to be issued in connection with this offering.</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  </table>
<p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0">The foregoing discussion and table do not take into account further dilution
to new investors that could occur upon the exercise of outstanding options, warrants or other convertible securities having an exercise
price per share less than the offering price per share in this offering. In addition, we may choose to raise additional capital due to
market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To
the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities
could result in further dilution to our stockholders.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><a name="a_011"></a>MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS OF</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>FINANCIAL CONDITION AND RESULTS OF OPERATIONS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><i>The following discussion and
analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements
and related notes included elsewhere in this prospectus. This discussion and analysis of our financial condition and results of operations
and other parts of this prospectus contain forward-looking statements based upon current beliefs that involve risks, uncertainties and
assumptions, such as statements regarding our plans, objectives, expectations, intentions and projections. Our actual results and the
timing of selected events could differ materially from those described in or implied by these forward-looking statements as a result of
several factors, including those set forth under &ldquo;Risk Factors&rdquo; and elsewhere in this prospectus. You should carefully read
the &ldquo;Risk Factors&rdquo; section of this prospectus to gain an understanding of the important factors that could cause actual results
to differ materially from our forward- looking statements. Please also see the section entitled &ldquo;Cautionary Note Regarding Forward-Looking
Statements.&rdquo;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Restatement of the Prior Financial Statements</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On January 29, 2025, the Company
filed its Annual Report on Form 10-K for June 30, 2024 (&ldquo;Form 10-K&rdquo;) as a comprehensive filing for the fiscal years ended
June 30, 2024, 2023 and 2022, including interim periods, by the Company unless the context indicates otherwise. As previously disclosed,
the Company concluded that the previously issued audited consolidated financial statements for the fiscal years ended June 30, 2023 and
all of the quarterly unaudited consolidated financial statements within the fiscal years ended June 30, 2024, 2023 and 2022 (collectively,
the &ldquo;Prior Financial Statements&rdquo;), could no longer be relied upon due to material accounting errors identified by management
and a restatement should be undertaken. As a result, the Company restated its audited consolidated financial statements for the fiscal
years ended June 30, 2023 and 2022, including all related unaudited consolidated interim financial statements within the fiscal years
ended June 30, 2024, 2023 and 2022, which have been included and appears elsewhere in this prospectus.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In connection with the preparation
of its consolidated financial statements as of and for the fiscal year ended June 30, 2024, the Company identified multiple prior-period
misstatements within the Prior Financial Statements. As previously disclosed in the Form 12b-25 for the Annual Report on Form 10-K for
the fiscal year ended June 30, 2024 filed with the SEC on September 30, 2024, the Company was unable to file its Annual Report on Form
10-K for the fiscal year ended June 30, 2024 within the prescribed time period because of errors it has discovered at that time in the
audited consolidated financial statements as of and for the fiscal year ended June 30, 2023 which required restatement. Specifically,
the Company at that time became aware that (i) approximately $1.2 million of excess and obsolete inventory, primarily as a result of a
change in battery cells from a new supplier, had not been properly reserved or written-off in earlier periods, resulting in an overstatement
of inventories, and (ii) certain loaner service packs were improperly accounted for as finished goods inventory as of June 30, 2023 resulting
in an overstatement of inventories of approximately $0.5 million.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In addition, promptly after learning
of these errors, the audit committee initiated an internal investigation, which was conducted with the assistance of independent counsel.
As a part of this restatement and evaluation process, along with the internal investigation, the Company also discovered that:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&nbsp;</td>
    <td style="width: 0.25in"><font style="font-size: 10pt">(a)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">the Company&rsquo;s original estimate of the overstatement of inventories had risen due to additional excess and obsolete inventory identified related to inventory components not recorded at the lower of cost or net realizable value, as well as consigned inventory not reconciled in a timely manner;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">(b)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">the Company had not properly recognized revenue in the periods in which the related performance obligations had been satisfied for a contract with a certain customer, and that the Company had improperly recorded accounts receivable pertaining to that contract as a reduction to its accounts payable owed to that customer although the right of offset conditions under ASC 210-20 had not been met, resulting in misstatements to revenues, accounts receivable and accounts payable;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">(c)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">the Company had 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;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">(d)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">the Company had various clearing accounts that had not been reconciled in a timely manner, resulting in misstatements of accounts payable, inventories and cost of sales;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">(e)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">the Company had not included certain product warranty-related expenses within the proper periods 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;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">(f)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">the Company erroneously presented non-cash debt issuance cost incurred in conjunction with credit facility arrangements as a non-cash adjustment to reconcile net loss to net cash used in operating activities in the consolidated cash flow statements when such cost should have been recognized as a change in other assets.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The impact of applying corrections
for these errors is material. Accordingly, prior to the filing of the Company&rsquo;s Annual Report for fiscal year ended June 30, 2024
(the &ldquo;Form 10-K&rdquo;), in coordination with the Board of Directors and audit committee members, the Company determined to restate
its audited consolidated financial statements for the fiscal years ended June 30, 2023 and 2022, including all related unaudited consolidated
interim financial statements within the fiscal years ended June 30, 2024, 2023 and 2022.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">All material restatement information
was included in the Form 10-K which was filed with the SEC on January 29, 2025. The Company believes that by presenting all of the information
for the periods indicated above in the Form 10-K will allow investors and others to review all pertinent data in a single presentation.
As such, the Company has not filed, and does not intend to file, any amended annual or quarterly reports on Form 10-Q or Form 10-K for
our annual financial statements for the fiscal years ended June 30, 2023 and 2022, or unaudited consolidated interim financial statements
within the fiscal years ended June 30, 2024, 2023 and 2022 or any prior fiscal years. Information about the effects of the restatement
on each of these periods is contained in Note 15 &ndash; Restatement of Previously Issued Financial Statements and Note 16 &ndash; Quarterly
Financial Summary (unaudited) to our consolidated financial statements, which appears elsewhere in this prospectus.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As such the accompanying Management&rsquo;s
Discussion and Analysis of Financial Condition and Results of Operations gives effect to the restatement adjustments made to the previously
reported consolidated financial statements for the fiscal years ended June 30, 2023, and 2022. For additional information and a detailed
discussion of the restatement, see Note15 &ndash; Restatement of Previously Issued Financial Statements in the notes to our consolidated
financial statements included in this prospectus.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Control Considerations</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In connection with restatements,
the Company conducted an internal investigation of the accounting errors identified. In connection therewith, management has assessed
the effectiveness of the Company&rsquo;s internal control over financial reporting. Management previously concluded that the Company&rsquo;s
disclosure controls and procedures and internal control over financial reporting were not effective during the periods covered by the
restatement 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 &amp; 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 consultant
with extensive technical accounting expertise. In August 2024, the Company engaged an external financial consulting firm to assist the
Company with accounting advisory services.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">After re-evaluation, the Company&rsquo;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&rsquo;s disclosure controls and procedures and the Company&rsquo;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&rsquo;s internal control over financial reporting. While the Company has processes to account
for its inventory, under the leadership of the Company&rsquo;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
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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company&rsquo;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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Based on this assessment, the
Company identified material weaknesses in its internal control over financial reporting. Management is taking additional steps to remediate
these material weaknesses. See Item 9A, Controls and Procedures, for additional information related to these material weaknesses in internal
control over financial reporting and the related remedial measures.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As such following discussion gives
effects to the restatement of our consolidated financial statements for the fiscal years ended June 30, 2023, and 2022, discussed in Note
15 &ndash; Restatement of Previously Issued Financial Statements to the consolidated financial statements of this prospectus, and should
be read together with our consolidated financial statements, the accompanying notes, and other information included in this prospectus</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The discussion should be read
in conjunction with the Audited and Unaudited Consolidated Financial Statements and Notes thereto contained in this prospectus. Some of
the statements contained in the following discussion of the Company&rsquo;s financial condition and results of operations refer to future
expectations or include other &ldquo;forward-looking&rdquo; information. Those statements are subject to known and unknown risks, uncertainties
and other factors that could cause the actual results to differ materially from those contemplated, including, but not limited to, those
discussed in this prospectus under the heading &ldquo;Risk Factors,&rdquo; which are incorporated herein by reference. See &ldquo;Cautionary
Note regarding Forward-Looking Statements&rdquo; included in this prospectus for a discussion of factors to be considered when evaluating
forward-looking information detailed below. These factors could cause our actual results to differ materially from the forward-looking
statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Business Overview</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We design,
develop, manufacture, and sell a portfolio of advanced lithium-ion energy storage solutions for electrification of a range of industrial
and commercial sectors which include material handling and airport ground support equipment (&ldquo;GSE&rdquo;). We believe our mobile
energy storage solutions provide our customers a reliable, high performing, cost effective, and more environmentally friendly alternative
as compared to traditional lead acid and propane-based solutions. Our 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 &ldquo;state of the art&rdquo; real time monitoring of pack performance. We believe 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
our revenue growth.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Our long-term
strategy is to meet the rapidly growing demand for lithium-ion energy solutions and to be the supplier of choice, targeting large companies
having energy storage needs. We have established selling relationships with customers with large fleets of forklifts and GSE. We intend
to reach this goal by investing in research and development to expand our product mix, by expanding our sales and marketing efforts, improving
our customer support efforts and improving production efficiencies. Our research and development efforts will continue to focus on providing
adaptable, reliable and cost-effective energy storage solutions for our customers. We have filed three new patents on advanced technology
related to lithium-ion energy storage solutions. The technology behind these pending patents is designed to:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: .75in">&nbsp;</td>
    <td style="width: .25in"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">increase battery life by optimizing the charging cycle,</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">give users a better understanding of the health of their battery in use, and</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">apply artificial intelligence to predictively balance the cells for optimal performance.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our largest sector of penetration
thus far has been the material handling sector which we believe is a multi-billion-dollar addressable market. We believe the sector will
provide us with an opportunity to grow our business as we enhance our product mix and service levels and grow our sales to large fleets
of forklifts and GSE. Applications of our modular packs for other industrial and commercial uses, such as mobile energy storage systems,
are providing additional current growth and further opportunities. We intend to continue to expand our supply chain and customer partnerships
and seek further partnerships and/or acquisitions that provide synergy to meeting our growth and &ldquo;building scale&rdquo; objectives.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The following table summarizes
the new orders, shipments, and backlog activities for the last six (6) fiscal quarters:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid">Fiscal Quarter Ended</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Beginning<BR> Backlog</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">New Orders</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Shipments</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fiscal Quarter Ended</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 36%; padding-bottom: 2.5pt">September 30, 2023</td><td style="width: 2%; padding-bottom: 2.5pt">&nbsp;</td>
    <td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 12%; border-bottom: Black 2.5pt double; text-align: right">28,393,000</td><td style="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="width: 2%; padding-bottom: 2.5pt">&nbsp;</td>
    <td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 12%; border-bottom: Black 2.5pt double; text-align: right">8,102,000</td><td style="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="width: 2%; padding-bottom: 2.5pt">&nbsp;</td>
    <td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 12%; border-bottom: Black 2.5pt double; text-align: right">14,787,000</td><td style="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="width: 2%; padding-bottom: 2.5pt">&nbsp;</td>
    <td style="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</td><td style="width: 12%; border-bottom: Black 2.5pt double; text-align: right">21,708,000</td><td style="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">December 31, 2023</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">21,708,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">26,552,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">18,203,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">30,057,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">March 31, 2024</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">30,057,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,030,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">14,457,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">19,630,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">June 30, 2024</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">19,630,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">11,614,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">13,377,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">17,867,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">September 30, 2024</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">17,867,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">19,451,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">16,125,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">21,193,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">December 31, 2024</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">21,193,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">13,116,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">16,830,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">17,479,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>&nbsp;&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i></i></b></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&ldquo;Backlog&rdquo; represents
the amount of anticipated revenues, at a given point in time, we may recognize in the future from existing contractual orders with customers
that are in progress and have not yet shipped. Backlog values may not be indicative of future operating results as orders may be cancelled,
modified or otherwise altered by customers. In addition, our ability to realize revenue from our backlog will be dependent on the delivery
of key parts from our suppliers and our ability to manufacture and ship our products to customers in a timely manner. There can be no
assurance that outstanding customer orders will be fulfilled as expected and that our backlog will result in future revenues.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As of February 28, 2025, our order
backlog was approximately $19.5 million and, in part, reflects current delays in orders of new forklifts due to a general slowing of capital
spending by our customers.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Business Updates</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We have experienced some delays
in new orders of our energy storage solutions due to corresponding deferrals of new forklift purchases mainly caused by lower capital
spending in the market sector that we serve and due to interest rate variability affecting capital spending by certain large customer
fleets. While we have had very few cancellations of existing purchase orders, some customers have extended their orders to later periods.
Causal rationale for delays is speculative and not definitive, but some customer feedback indicates concerns over the economy and the
uncertainty of interest rates, as well as broader geopolitical uncertainty. The impact of order deferrals has required additional selling
strategies to support our targeted sales trajectory.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We have seen improvements in our
sourcing and purchasing activity, reflecting our efforts to expand and optimize our vendor strategy. Additional improvements include more
secondary sources to minimize stock-outs, lower costs from increasing sources, and controlled delivery times, as reflected in our current
inventory levels. With strategic supply chain and profitability improvement initiatives, lower costs and higher volume purchasing, we
are targeting gross margin improvement to continue. We are highly focused on expanding sales and marketing initiatives to secure new customer
relationships and support continued migration to lithium of current customers. We recently have added our second &ldquo;tier one&rdquo;
OEM private label battery program to supplement our strong OEM relationships and approvals. This collaboration marks a significant milestone
for our S-Series line, which now includes products with the UL Type EE certification, which provides added safety and durability capabilities.
We are also working with our distribution network to expand customer acquisition with direct-to-customer initiatives.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 40.5pt">We are also expanding our deployment
of our telemetry solution providing customers with state of health, better asset management, and a platform for more timely management
of service and maintenance requirements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We also announced a new partnership
aimed at enhancing the recycling process for end-of-life lithium-ion batteries with the largest critical battery components recycling
company in the U.S. This collaboration represents a significant step forward in our ongoing commitment to environmental responsibility.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Nasdaq Stock Market Notices</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in"><b></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 16, 2024, the Company received a notice (the &#8220;October Notice&#8221;) from the Listing Qualifications Department (the &#8220;Staff&#8221;)
of the Nasdaq Stock Market (&#8220;Nasdaq&#8221;) stating that because the Company had not yet filed its Form 10-K for the fiscal year
ended June 30, 2024 (the &#8220;Form 10-K&#8221;), the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) (the &#8220;Listing
Rule 5250(c)(1)&#8221;), which requires Nasdaq-listed companies to timely file all required periodic financial reports with the Securities
and Exchange Commission.</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 20, 2024, the Company received a notice (the &#8220;November Notice,&#8221; together with the October Notice, the &#8220;Notices&#8221;)
from the Staff of Nasdaq stating that because the Company had not yet filed its Form 10-Q for the period ended September 30, 2024 (the
&#8220;September Form 10-Q&#8221;) and because the Company remains delinquent in filing its Form 10-K (together with the Form 10-Q, the
&#8220;Delinquent Reports&#8221;), the Company does not comply with the Listing Rule 5250(c)(1).</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
notices stated that the Company had until December 16, 2024 to submit a plan to regain compliance with the Listing Rule (the &#8220;Plan&#8221;).
If Nasdaq accepts the Company&#8217;s Plan to regain compliance, then Nasdaq may grant the Company up to 180 calendar days from the Form
10-K filing due date, or until April 14, 2025, to file the Delinquent Reports to regain compliance. If Nasdaq does not accept the Company&#8217;s
Plan, then the Company will have the opportunity to appeal that decision to a Nasdaq Hearings Panel. The Notice had no immediate effect
on the listing of the Company&#8217;s Common Stock on Nasdaq. On December 16, 2024, the Company filed a plan with Nasdaq to regain Nasdaq
compliance, including requesting an extension to file the Delinquent Reports by no later than April 14, 2025. If Nasdaq does not accept
the Company&#8217;s Plan and the Company fails to prevail in its appeal to Nasdaq, or if the Company fails to meet the Nasdaq listing
requirements and do not regain compliance, the Company&#8217;s Common Stock will be subject to delisting by Nasdaq. In the event our
Common Stock is delisted, our stock price and market liquidity of our stock will be adversely affected which will impact the ability
of the Company&#8217;s stockholders to sell securities in the market. Further, delisting from Nasdaq markets could also have other negative
effects, including potential loss of confidence by partners, lenders, suppliers and employees. On January 29, 2025, the Company filed
the Form 10-K and received letter from Nasdaq on January 31, 2025 informing the Company of its partial compliance with the Listing Rule
5250(c)(1)as it relates to the Form 10-K.</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in">On January 31, 2025, the Company
received a notice (the &ldquo;January Notice&rdquo;) from The Nasdaq Stock Market LLC (&ldquo;Nasdaq&rdquo;) notifying the Company that
based on its stockholders&rsquo; equity of $194,000 as reported in its Form 10-K for the fiscal year ended June 30, 2024, the Company
is no longer in compliance with Nasdaq Listing Rule 5550(b)(1), which requires the Company to maintain a minimum of $2,500,000 in stockholders&rsquo;
equity for continued listing on Nasdaq (the &ldquo;Stockholders&rsquo; Equity Requirement&rdquo;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Pursuant to the January Notice,
the Company had 45 calendar days from the date of the January Notice, or until March 17, 2025, to submit a plan to regain compliance.
On March 17, 2025, the Company filed its plan with Nasdaq to regain compliance with the Stockholders&rsquo; Equity Requirement, including
requesting an extension through July 30, 2025, which is 180 days from the date of the Stockholders&rsquo; Equity Notice, to regain compliance
of the Stockholders&rsquo; Equity Requirement. In the event the plan is not accepted by Nasdaq, or in the event the plan is accepted by
Nasdaq and the 180-day extension period is granted but the Company fails to regain compliance within such plan period, the Company would
have the right to a hearing before an independent panel. The hearing request would stay any suspension or delisting action pending the
conclusion of the hearing process and the expiration of any additional extension period granted by the panel following the hearing. The
Company intends to take all reasonable measures available to regain compliance under the Nasdaq Listing Rules and to remain listed on
Nasdaq.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On February 21, 2025, the Company
received a notice (the &ldquo;February Notice&rdquo;) from the Nasdaq Listing Qualifications Department (the &ldquo;Staff&rdquo;) stating
that because the Company had not yet filed its Form 10-Q for the period ended December 31, 2024 (the &ldquo;December Form 10-Q&rdquo;),
the Company does not comply with Nasdaq Listing Rule 5250(c)(1) (the &ldquo;Listing Rule&rdquo;), which requires Nasdaq-listed companies
to timely file all required periodic financial reports with the Securities and Exchange Commission, and required the Company to submit
an update to its original plan to regain compliance with the Listing Rule. The Company submitted its update to its original plan to Nasdaq
on February 25, 2025, including its plan to file the December Form 10-Q by no later than April 14, 2025. The Company filed the September
Form 10-Q and December Form 10-Q on March 20, 2025 and is now current with its required periodic financial reports to be filed with
the Securities and Exchange Commission under the Listing Rule.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">If Nasdaq does not accept the
Company&rsquo;s Stockholders&rsquo; Equity Compliance Plan and the Company fails to prevail in its appeal to Nasdaq, or if the Company
fails to comply with the Nasdaq listing requirements and does not regain compliance, the Company&rsquo;s Common Stock will be
subject to delisting by Nasdaq. In the event our Common Stock is delisted, our stock price and market liquidity of our stock will
be adversely affected which will impact the ability of the Company&rsquo;s stockholders to sell securities in the market. Further, delisting
from Nasdaq could also have other negative effects, including potential loss of confidence by partners, lenders, suppliers and employees.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Management and Board of Directors Changes</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On March 10, 2025, Mr. Dutt, our former chairman and Chief Executive Officer, notified the Company&rsquo;s Board of his decision to retire and resign from his position as director, Chairman of the Board, Chief Executive Officer and President of the
Company and its wholly owned subsidiary, Flux Power, effective March 10, 2025. Mr. Dutt&rsquo;s stepping
down is for personal reasons and not due to any disagreement with the Company&rsquo;s management team or the Company&rsquo;s Board on
any matter relating to the operations, policies or practices of the Company or any issues regarding the Company&rsquo;s accounting policies
or practices.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In connection with Mr. Dutt&rsquo;s
retirement, the Board appointed Mr. Robinette as the new Chairman of the Board, effective March 10, 2025. Mr. Robinette also currently
serves as an independent director, chairperson of the Compensation Committee, and a member of both the Audit
Committee and the Nominating and Governance Committee. In addition, the Board appointed Mr. Vanka as director, Chief Executive
Officer and President of the Company and Flux Power, effective March 10, 2025.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Overview of 2024 Financing Activities</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Gibraltar Credit Facility</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On July 28, 2023, we entered into
a Loan and Security Agreement (the &ldquo;Agreement&rdquo;) with GBC. The Agreement provides us with a senior secured revolving loan facility
for up to $15.0 million (the &ldquo;Revolving Loan Commitment&rdquo;). 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 &ldquo;Maturity Date&rdquo;), unless extended, modified or renewed
(the &ldquo;Revolving Note&rdquo;). 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In addition, subject to conditions
and terms set forth in the Agreement, we may request an increase in the Revolving Loan Commitment from time to time upon not less than
30 days&rsquo; 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 (&ldquo;SOFR&rdquo;, 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. We paid GBC a non-refundable closing fee for the GBC Credit Facility of $112,500 upon the execution
of the Agreement. In addition, we are 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On November
2, 2023, we entered into the First Amendment to Loan and Security Agreement (the &ldquo;First Amendment&rdquo;) with Gibraltar Business
Capital, LLC (&ldquo;GBC&rdquo;), 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On January
30, 2024, we entered into the Second Amendment to Loan and Security Agreement (the &ldquo;Second Amendment&rdquo;) 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 million to $16 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 &ldquo;Eligible Accounts;&rdquo; and (iv) amending the EBITDA
Minimum financial covenant. In consideration for the Second Amendment, we 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Our loans
and other obligations under the GBC Credit Facility are secured by substantially all of our tangible and intangible assets (including,
without limitation, intellectual property) pursuant to the terms of the Agreement and the Intellectual Property Security Agreement entered
into by GBC and us on July 28, 2023. During the year ended June 30, 2024, we 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">In April
2024, we notified GBC of a certain event of default with respect to our anticipated failure to maintain the EBITDA covenant for the trailing
three (3) month period ended April 30, 2024, (the &ldquo;Default&rdquo;). On May 8, 2024, we received a waiver of the Default from GBC
(the &ldquo;Waiver&rdquo;), subject to satisfaction of the following conditions: (i) receipt of a counterpart of the Waiver duly executed
by us; (ii) receipt of a fee of $20,000; (iii) receipt of the representations and warranties from us 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On May
31, 2024, we entered into the Third Amendment to Loan and Security Agreement (the &ldquo;Third Amendment&rdquo;) 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. In consideration for the Third Amendment, we agreed to pay GBC a non-refundable amendment fee of $50,000 in cash.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Under
the Agreement, upon an occurrence of an event of default, GBC may, at its option, declare its commitments to us to be terminated and all
obligations to be immediately due and payable, all without demand, notice or further action of any kind required on the part of GBC, and/or
exercise other remedies available to it among other things including its rights as a secured party. On August 30, 2024, GBC agreed to
waive our non-compliance with, and the effects of our non-compliance under, various representations, financial covenants and non-financial
covenants relating to our financial restatements (the &ldquo;August Waiver&rdquo;). On January 17, 2025, GBC agreed to waive our non-compliance
with, and the effects of our non-compliance under, various representations, financial covenants and non-financial covenants relating to
our financial restatements and our failure to maintain the EBITDA Minimum for certain financial periods (the &ldquo;January Waiver&rdquo;).
As a result of the August Waiver and January Waiver, the Company expects that its revolving credit facility remains available subject
to meeting certain lending criteria under the Loan Agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On January
22, 2025, we entered into Amendment No. 4 to Loan and Security Agreement (the &ldquo;Fourth Amendment&rdquo;) 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We rely
on our credit facility with GBC to meet our anticipated capital resources and to fund our operations. The availability of the GBC Credit
Facility is subject to satisfaction of certain affirmative covenants and financial covenants including maintaining minimum tangible net
worth, and certain limitations on dispositions of assets. The Agreement also contains usual and customary events of default (with customary
grace periods, as applicable) and provides that, upon the occurrence of an event of default, payment of all amounts payable under the
GBC Credit Facility may be accelerated and/or GBC&rsquo;s commitment may be terminated by GBC without any action by GBC. Due to our inability
to satisfy certain financial covenants and other covenants under the agreement with GBC in the past, we have had to obtain waivers from
GBC. In the event we are unable to comply with terms of the Agreement or to obtain waivers from GBC for failure to comply, then funds
will be unavailable to us under the GBC Credit Facility and our operations, financial condition and business will be materially and adversely
affected.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b>Segment and Related Information</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We operate
as a single reportable segment.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Adopted Accounting Pronouncements</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company did not adopt any
new accounting pronouncements during the year ended June 30, 2024.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Recently Issued Accounting Pronouncements</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Management has considered all
recent accounting pronouncements issued since the last audit of the Company&rsquo;s consolidated financial statements. In December 2023,
the FASB issued Accounting Standards Update 2023-09, Income Taxes (Topic 740), <i>Improvements to Income Tax Disclosures</i>, 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In November 2023, the FASB issued
ASU 2023-07, &ldquo;<i>Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures</i>&rdquo; (&ldquo;ASU 2023-07&rdquo;),
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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Critical Accounting Policies and Estimates</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our discussion and analysis of
our financial condition and results of operations are based upon our Financial Statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America (&ldquo;GAAP&rdquo;). The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and the related
disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates based on its historical experience and
on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We believe the following critical
accounting policies and estimates affect the preparation of our financial statements:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Accounts Receivable</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Accounts receivable are carried
at their estimated collectible amounts. We have not experienced significant issues related to the collection of our accounts receivable.
As of June 30, 2024, we had an allowance for credit losses of $55,000. We did not record an allowance for credit losses during the years
ended June 30, 2023 and 2022.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Inventories</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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. We evaluate 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. We recorded an adjustment
related to obsolete inventory in the amount of approximately $490,00, $690,000 and $665,000 during the years ended June 30, 2024, 2023
and 2022, respectively.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Revenue Recognition</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We recognize revenue in accordance
to the Accounting Standards Codification (&ldquo;ASC&rdquo;) Topic 606, <i>Revenue from Contracts with Customers</i> (&ldquo;ASC 606&rdquo;)
for all contracts. We derive our revenue from the sale of products to customers. We sell our products primarily through a distribution
network of equipment dealers, OEMs and battery distributors in primarily North America. We recognize 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 us and the costs incurred or to be incurred with
respect to the transaction can be measured reliably.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Product revenue is recognized
as a distinct single performance obligation which represents the point in time that a customer receives delivery of our products. Our
customers do have a right to return product, but our returns have historically been minimal.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Product Warranties</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We evaluate our 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, we carried warranty liability of approximately $3,018,000, $1,600,000
and $1,012,000, respectively, which is included in accrued expenses on our consolidated balance sheets.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Stock-based Compensation</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Pursuant to the provisions of
the Financial Accounting Standards Board (&ldquo;FASB&rdquo;) ASC Topic No. 718-10, <i>Compensation-Stock Compensation</i>, 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Results of Operations</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Comparison of Results of Operations of the Three
and Six Months Ended December 31, 2024 and 2023 (restated)</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The following table represents
our unaudited condensed consolidated statement of operations for the three months ended December 31, 2024 and 2023.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="14" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Three months ended December 31,</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2024</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2023</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% of<BR> Revenues</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% of<BR> Revenues</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 36%">Revenues</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">16,830,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 12%; text-align: right">100</td><td style="width: 1%; text-align: left">%</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">18,203,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 12%; text-align: right">100</td><td style="width: 1%; text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1pt">Cost of sales</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">11,367,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">68</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">12,822,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">70</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt">Gross profit</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">5,463,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">32</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">5,381,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">30</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Operating expenses:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Selling and administrative</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">5,985,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">35</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">4,593,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">25</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Research and development</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">957,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">6</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">1,235,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">7</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt">Total operating expenses</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">6,942,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">41</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">5,828,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">32</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Operating loss</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(1,479,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(8</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(447,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(2</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt">Interest income (expense), net</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(408,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(3</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(449,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(3</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Net loss</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(1,887,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 2.5pt double; text-align: right">(11</td><td style="padding-bottom: 2.5pt; text-align: left">)%</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(896,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 2.5pt double; text-align: right">(5</td><td style="padding-bottom: 2.5pt; text-align: left">)%</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Revenues</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Revenues for the quarter ended
December 31, 2024 was $16,830,000 versus $18,203,000 for the quarter ended December 31, 2023. The decrease of $1,373,000 or 8% was driven
by lower demand in the material handling market and lower average selling prices due to product mix.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Cost of Sales</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Cost of sales for the quarter
ended December 31, 2024 was $11,367,000 or 68% of revenue versus $12,822,000 or 70% of revenue for the quarter ended December 31, 2023.
The decrease in cost of sales was directly associated with a decrease in units of energy storage packs sold during the current quarter,
and lower average cost of sales per unit achieved during the current quarter as a result of our product cost improvement initiatives,
partially offset by higher warranty costs.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Gross Profit</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Gross profit for the quarter ended
December 31, 2024 was $5,463,000 or 32% of revenue versus $5,381,000 or 30% of revenue for the quarter ended December 31, 2023. The 200
basis point increase in gross profit margin (gross profit as a percent of revenues) was primarily driven by a decrease in average costs,
partially offset by an increase in warranty costs.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Selling and Administrative Expenses</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Selling and administrative expenses
for the quarter ended December 31, 2024 were $5,985,000 versus $4,593,000 for the quarter ended December 31, 2023. The increase of $1,392,000
or 30% was primarily attributable to variable incentive compensation, severance and professional fees associated with the multi-year restatement
of previously filed financial statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Research and Development Expense</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Research and development expenses
for the quarter ended December 31, 2024 was $957,000 versus $1,235,000 for the quarter ended December 31, 2023. The decrease of $278,000
was mainly driven by lower salaries and stock-based compensation.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Interest Income (Expense), net</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Interest income (expense), net
for the quarter ended December 31, 2024 was $408,000 versus $449,000 for the quarter ended December 31, 2023. The decrease of $41,000
or 9% was primarily related to lower balances outstanding under our credit facilities.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Net Loss</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Net loss for the quarter ended
December 31, 2024, was $1,887,000 versus $896,000 for the quarter ended December 31, 2023. The increase in net loss was primarily attributable
to the increase in operating expenses related to costs associated with the multi-year restatement of previously filed financial statements
and executive severance.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The following table represents
our unaudited condensed consolidated statement of operations for the six months ended December 31, 2024 and 2023.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="14" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Six months ended December 31,</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2024</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2023</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% of Revenues</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% of Revenues</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 36%">Revenues</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">32,955,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 12%; text-align: right">100</td><td style="width: 1%; text-align: left">%</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">32,990,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 12%; text-align: right">100</td><td style="width: 1%; text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1pt">Cost of sales</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">22,274,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">68</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">23,374,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">71</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt">Gross profit</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">10,681,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">32</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">9,616,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">29</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Operating expenses:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Selling and administrative</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">11,100,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">33</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">9,318,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">28</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Research and development</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">2,272,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">7</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">2,530,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">8</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt">Total operating expenses</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">13,372,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">40</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">11,848,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">36</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Operating loss</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(2,691,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(8</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(2,232,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(7</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt">Interest income (expense), net</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(865,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(3</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(852,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(2</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Net loss</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(3,556,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 2.5pt double; text-align: right">(11</td><td style="padding-bottom: 2.5pt; text-align: left">)%</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(3,084,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 2.5pt double; text-align: right">(9</td><td style="padding-bottom: 2.5pt; text-align: left">)%</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Revenues</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Revenues for the six months ended
December 31, 2024 were $32,955,000 versus $32,990,000 for the six months ended December 31, 2023. Revenues were nearly flat with decreases
in the material handling market being nearly offset by gains in the ground support market.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Cost of Sales</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Cost of sales for the six months
ended December 31, 2024 was $22,274,000 or 68% of revenue versus $23.374,000 or 71% of revenue for the six months ended December 31, 2023.
The decrease of $1,100,000 was mostly attributed to a reduction in average costs for material handling battery packs slightly offset by
an increase in warranty expense. The decline in cost of sales as a percent of revenue of 300 basis points was driven by an increase in
average selling prices in the ground support market and reduced costs in material handling.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


<!-- Field: Page; Sequence: 48; Value: 1 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Gross Profit</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Gross profit for the six months
ended December 31, 2024 was $10,681,000 or 32% of revenue versus $9,616,000 or 29% of revenue for the six months ended December 31, 2023.
The 300 basis point increase in gross profit margin (gross profit as a percent of revenues) was primarily driven by an increase in average
selling prices in the ground support market and reduced costs in material handling.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Selling and Administrative Expenses</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Selling and administrative expenses
for the six months ended December 31, 2024 were $11,100,000 versus $9,318,000 for the quarter six months December 31, 2023. The increase
of $1,782,000 or 19% was primarily attributable to higher variable incentive compensation, severance and professional fees associated
with the multi-year restatement of previously filed financial statements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Research and Development Expense</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Research and development expenses
for the six months ended December 31, 2024 were $2,272,000 versus $2,530,000 for the six months ended December 31, 2023. The decrease
of $258,000 was primarily attributable to lower salaries and stock-based compensation.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Interest Income (Expense), net</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Interest income (expense), net
for the six months ended December 31, 2024 was $865,000 versus $852,000 for the six months ended December 31, 2023, relatively flat year
over year.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Net Loss</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Net loss for the six months ended
December 31, 2024, was $3,556,000 versus $3,084,000 for the six months ended December 31, 2023. The increase in net loss was primarily
attributable to the increase in operating expenses related to costs associated with the multi-year restatement of previously filed financial
statements and executive severance, partially offset by the increase in gross profit.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Adjusted EBITDA</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Adjusted EBITDA is a non-GAAP
financial measure. Adjusted EBITDA is calculated by taking net loss and adding back the expenses related to interest, income taxes, depreciation,
amortization and stock-based compensation, each of which has been calculated in accordance with GAAP. Adjusted EBITDA was a loss of $951,000
for the quarter ended December 31, 2024, a decrease of $1,160,000 compared to a gain of $209,000 for the quarter ended December 31, 2023.
Adjusted EBITDA was a loss of approximately $1,564,000 for the six months ended December 31, 2024, a loss increase of $525,000 compared
to a loss of $1,039,000 for the six months ended December 31, 2023.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Management believes that Adjusted
EBITDA, when viewed with our results under GAAP and the accompanying reconciliations, provides useful information about our period-over-period
results. Adjusted EBITDA is presented because management believes it provides additional information with respect to the performance of
our fundamental business activities and is also frequently used by securities analysts, investors and other interested parties in the
evaluation of comparable companies. We also rely on Adjusted EBITDA as a primary measure to review and assess the operating performance
of our company and our management team.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As Adjusted EBITDA is a non-GAAP
financial measure, it should not be construed as a substitute for EBITDA and net income (loss) (as determined in accordance with GAAP)
for the purpose of analyzing our operating performance or financial position.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">A reconciliation of our Adjusted
EBITDA to net loss is included in the table below:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>&nbsp;</i></b></p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Three months ended December 31,</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Six months ended December 31,</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2024</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2023</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2024</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2023</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 36%; text-align: left">Net loss</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(1,887,000</td><td style="width: 1%; text-align: left">)</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(896,000</td><td style="width: 1%; text-align: left">)</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(3,556,000</td><td style="width: 1%; text-align: left">)</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(3,084,000</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>Add/Subtract:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Interest, net</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">408,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">449,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">865,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">852,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Income tax provision</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Depreciation and amortization</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">250,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">262,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">502,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">523,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>EBITDA</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(1,229,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(185,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(2,189,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(1,709,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Add/Subtract:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Stock-based compensation</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">278,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">394,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">625,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">670,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt">Adjusted EBITDA</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(951,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">209,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(1,564,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(1,039,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Liquidity and Capital Resources</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Overview</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">To date,
our business has not generated sufficient cash to fund our operations. However, given our existing backlog, we anticipate that revenue
growth coupled with improvement in our gross margin and lower operating expenses will move us closer to profitability and improve our
cash flow. Our gross margin improvement plan includes, but is not limited to, efforts to reduce product costs while increasing the price
of our products for new orders. We received new orders during the six months ended December 31, 2024 of approximately $32.6 million.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As of December 31, 2024, we had
an existing cash balance of $0.9 million, $6.3 million available under our $16.0 million GBC Credit Facility, subject to borrowing base
limitations, and $1.0 million available from Cleveland Capital under our $2.0 million 2023 Subordinated LOC.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On January
22, 2025, we entered into Amendment No. 4 to the Loan and Security Agreement (the &ldquo;Fourth Amendment&rdquo;) 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, we agreed to pay GBC a non-refundable amendment fee of $50,000 in cash, as follows:
(i) $25,000 paid on March 1, 2025, and (ii) $25,000 shall be due and payable on April 1, 2025.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As of January 31, 2025, we believe
our cash balance of $0.4 million, together with $4.9 million available under our $16.0 million revolving line of credit with GBC, subject
to borrowing base limitations, and $1.0 million available under the subordinated line of credit (&ldquo;Subordinated LOC&rdquo;) through
August 2025, will not be sufficient to meet our anticipated capital resources to fund planned operations for the next twelve (12) months.
<font style="background-color: white">See &ldquo;Future Liquidity Needs&rdquo; below and <i>Liquidity and Financial Condition</i> in Note
2 &ndash; Summary of Significant Accounting Policies to the unaudited condensed consolidated financial statements for additional information.</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Cash Flows</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Cash Flow Summary</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Six months ended December 31,</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2024</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2023</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 68%; text-align: left">Net cash provided by (used in) operating activities</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">3,774,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(4,045,000</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Net cash used in investing activities</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(317,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(338,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt">Net cash provided by (used in) financing activities</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(3,217,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">3,588,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Net change in cash</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">240,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(795,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><u>Operating Activities</u></i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Net cash provided by operating
activities was $3,774,000 for the six months ended December 31, 2024, which consisted of $5,389,000 provided by changes in operating assets
and liabilities and $1,941,000 of non-cash operating costs, partially offset by net loss of $3,556,000. The primary changes in operating
assets and liabilities were a decrease in accounts receivable, a decrease in inventories and an increase in accounts payable and accrued
expenses combined, partially offset by office lease payable payments.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Net cash used in operating activities
was $4,045,000 for the six months ended December 31, 2023, which consisted of net loss of $3,084,000 and $2,817,000 used in changes in
operating assets and liabilities, partially offset by $1,856,000 of non-cash operating costs. The primary changes in operating assets
and liabilities were an increase in accounts receivable, partially offset by a reduction in accounts payable and accrued expenses combined
and a reduction in inventories.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><u>Investing Activities</u></i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Net cash used in investing activities
for the six months ended December 31, 2024 was $317,000, which consisted primarily of equipment purchases.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Net cash used in investing activities
for the six months ended December 31, 2023 was $338,000, which consisted primarily of equipment purchases.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i><u>Financing Activities</u></i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Net cash used in financing activities
for the six months ended December 31, 2024 was $3,217,000, which primarily consisted of $4,141,000 in net repayments under the working
capital line of credit, partially offset by $1,000,000 of subordinated debt borrowings.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Net cash provided by financing
activities for the six months ended December 31, 2023 was $3,588,000, which primarily consisted of $3,663,000 in net borrowing under the
working capital line of credit.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Critical Accounting Policies</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The unaudited interim financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which require
us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited financial
statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. Information with respect
to our critical accounting policies which we believe could have the most significant effect on our reported results and require subjective
or complex judgments by management is contained in Item 7, Management&rsquo;s Discussion and Analysis of Financial Condition and Results
of Operations, of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 filed with the SEC on January 29, 2025.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Comparison of Results of Operations of the Fiscal
Years Ended June 30, 2024 and 2023 (restated)</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The following discussion should
be read in conjunction with our financial statements and the related notes that appear elsewhere in this prospectus.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The following table represents
our statement of operations for the fiscal years ended June 30, 2024 (&ldquo;fiscal 2024&rdquo;) and June 30, 2023 (&ldquo;fiscal 2023&rdquo;).&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year ended June 30, 2024</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year ended June 30, 2023</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% of Revenues</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% of Revenues</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="text-align: center">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="text-align: center">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Restated</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="text-align: center">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 36%">Revenues</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">60,824,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 12%; text-align: right">100</td><td style="width: 1%; text-align: left">%</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">66,488,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 12%; text-align: right">100</td><td style="width: 1%; text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1pt">Cost of sales</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">43,591,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">72</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">50,598,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">76</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt">Gross profit</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">17,233,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">28</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">15,890,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">24</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Operating expenses:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Selling and administrative</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">18,932,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">31</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">17,620,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">27</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Research and development</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">4,916,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">8</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">4,682,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">7</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt">Total operating expenses</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">23,848,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">39</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">22,302,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">34</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Operating loss</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(6,615,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(11</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(6,412,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(10</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Other income (expense):</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Other income</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">8,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Interest expense</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(1,718,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(3</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(1,339,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(2</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Net loss</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(8,333,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 2.5pt double; text-align: right">(14</td><td style="padding-bottom: 2.5pt; text-align: left">)%</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(7,743,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 2.5pt double; text-align: right">(12</td><td style="padding-bottom: 2.5pt; text-align: left">)%</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><b><i>Revenues</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Historically our product focus
has been on material handling equipment, reflecting a mix of walkie pallet jacks and higher capacity packs for Class 1, 2, and 3 forklifts.
Over the past two years, we expanded our product offering into adjacent applications, including airport GSE. The launch of larger packs
over the past two years has shifted our portfolio mix to include packs with higher average selling prices as compared to our historical
mix. We believe that we are well positioned to address the needs of many segments within the material handling sector in light of our
modular and scalable energy storage solution design coupled with our proprietary battery management system that can be coupled with our
telemetry based &ldquo;SkyBMS&rdquo; product offering.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We sell our products through several
different channels including OEMs, lift equipment dealers and battery distributors as well as directly to end users, primarily in North
America. The channels sell principally to large company, national accounts. We sell certain energy storage solutions directly to other
accounts including industrial equipment manufacturers and end users.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Revenues for fiscal 2024 decreased
$5,664,000 or 9%, to $60,824,000, compared to $66,488,000 for fiscal 2023. The decrease in revenues was primarily in GSE reflecting a
delay in shipments to a large customer. Material Handling revenue also declined year-over-year as our OEM customers experienced double
digit declines in sales. In both cases the decrease in sales volume was partially offset by shifts to higher priced products as well as
certain pricing increases.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Cost of Sales</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Cost of sales for fiscal 2024
decreased $7,007,000, or 14%, to $43,591,000, compared to $50,598,000 for fiscal 2023. The decrease in cost of sales was directly associated
with lower sales of energy storage solutions, partially offset by lower average cost of sales per unit achieved during the current year
as a result of our gross margin improvement initiatives, including design enhancements to lower cost, improve serviceability, simplify
bill of materials and supply chain initiatives to improve inventory turns and create part commonality across multiple product line. Cost
of sales as a percentage of revenues for fiscal 2024 was 72%, a decrease of four percentage points, compared to 76% for fiscal 2023.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Gross Profit</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Gross profit for fiscal 2024 increased
$1,343,000 or 8%, to $17,233,000, compared to $15,890,000 for fiscal 2023. The increase in profitability reflects sales of higher margin
products and the impact of cost savings initiatives more than offsetting the effect of the decline in GSE unit sales. Gross profit margin
(gross profit expressed as a percentage of revenues) increased to 28% for fiscal 2024 compared to 24% for fiscal 2023. The 400 basis point
improvement in gross profit margin reflects the shift to higher margin products and the effect of cost control and reduction initiatives.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Selling and Administrative</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Selling and administrative expenses
for fiscal 2024 increased $1,312,000 or 7%, to $18,932,000, compared to $17,620,000 for fiscal 2023. Such expenses consist primarily of
salaries and personnel-related expenses, sales force commissions, consulting fees, facilities-related expenses, outbound shipping costs,
insurance premiums, marketing expenses, travel expenses, public relations expenses and bad debt expenses. The increase in selling and
administrative expense was primarily attributable to increases in stock-based compensation, new hires in sales, sales force commissions,
professional service fees and depreciation, which were partially offset by reductions in bonus expenses and insurance premiums.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Research and Development</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Research and development expenses
for fiscal 2024 increased $234,000 or 5%, to $4,916,000, compared to $4,682,000 for fiscal 2023. Such expenses consist primarily of materials,
supplies, salaries and personnel-related expenses, product testing, consulting and other expenses associated with revisions to existing
product designs and new product development. The increase in research and development expenses was primarily attributable to increased
payroll and related benefits and stock-based compensation, which were partially offset by reductions in materials and testing related
to development of new products, equipment rentals and bonuses.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Interest Expense</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Interest
expense for fiscal 2024 increased $379,000 or 28%, to $1,718,000, compared to $1,339,000 for fiscal 2023. The increase in interest expense
was due to higher average balances outstanding on our GBC Credit Facility and higher interest rates, as well as the amortization of approximately
$230,000 of debt issuance costs related to our existing lines of credit.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Net Loss</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Net loss during fiscal 2024 increased
$590,000 or 8%, to $8,333,000 compared to $7,743,000 for fiscal 2023. The higher net loss for fiscal 2024 was primarily attributable to
the increase in gross profit being more than offset by greater sales and marketing personnel expenses and commissions as well as the increase
in interest expense due to higher levels of borrowing at higher interest rates during the year.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Adjusted EBITDA</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Adjusted EBITDA is a non-GAAP
financial measure. Adjusted EBITDA is calculated taking net loss and adding back the expenses related to interest, income taxes, depreciation,
amortization and stock-based compensation, each of which has been calculated in accordance with GAAP. Adjusted EBITDA was a loss of approximately
$3,999,000 for fiscal 2024 compared to a loss of $4,707,000 for fiscal 2023.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Management
believes that Adjusted EBITDA, when viewed with our results under GAAP and the accompanying reconciliations, provides useful information
about our period-over-period results. Adjusted EBITDA is presented because management believes it provides additional information with
respect to the performance of our fundamental business activities and is also frequently used by securities analysts, investors and other
interested parties in the evaluation of comparable companies. We also rely on Adjusted EBITDA as a primary measure to review and assess
the operating performance of our company and our management team.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As Adjusted EBITDA is a non-GAAP
financial measure, it should not be construed as superior to or a substitute for net loss, as determined in accordance with GAAP, for
the purpose of analyzing our operating performance or financial position.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">A reconciliation of our net loss
to Adjusted EBITDA is included in the table below.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year ended June 30,</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2024</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2023</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="text-align: center">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Restated</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 68%; text-align: left">Net loss</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(8,333,000</td><td style="width: 1%; text-align: left">)</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(7,743,000</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>Add/Subtract:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Interest, net</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">1,718,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">1,339,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Income tax provision</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Depreciation and amortization</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">1,045,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">899,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>EBITDA</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(5,570,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(5,505,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Add/Subtract:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Stock-based compensation</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">1,571,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">798,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt">Adjusted EBITDA</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(3,999,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(4,707,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Comparison of Results of Operations of the Fiscal Years Ended June 30,
2023 (restated) and 2022 (restated)</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The following discussion should
be read in conjunction with our financial statements and the related notes that appear elsewhere in this Prospectus.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The following table represents
our statement of operations for the fiscal years ended June 30, 2023 (&ldquo;fiscal 2023&rdquo;) and June 30, 2022 (&ldquo;fiscal 2022&rdquo;),
as restated</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year ended June 30, 2023</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year ended June 30, 2022</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% of Revenues</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">% of Revenues</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Restated</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="text-align: center">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Restated</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="text-align: center">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 36%">Revenues</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">66,488,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 12%; text-align: right">100</td><td style="width: 1%; text-align: left">%</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">42,333,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 12%; text-align: right">100</td><td style="width: 1%; text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1pt">Cost of sales</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">50,598,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">76</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">36,726,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">87</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt">Gross profit</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">15,890,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">24</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">5,607,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">13</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Operating expenses:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Selling and administrative</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">17,620,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">27</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">15,515,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">36</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Research and development</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">4,682,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">7</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">6,313,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">15</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt">Total operating expenses</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">22,302,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">34</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">21,828,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">51</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Operating loss</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(6,412,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(10</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(16,221,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(38</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Other income (expense):</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Other income</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">8,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Interest expense</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(1,339,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(2</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(252,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(1</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Net loss</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(7,743,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 2.5pt double; text-align: right">(12</td><td style="padding-bottom: 2.5pt; text-align: left">)%</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(16,473,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 2.5pt double; text-align: right">(39</td><td style="padding-bottom: 2.5pt; text-align: left">)%</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Revenues</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Revenues for fiscal 2023 increased
$24,155,000 or 57%, to $66,488,000, compared to $42,333,000 for fiscal 2022.&nbsp;The increase in revenues was due to sales of energy
storage solutions with higher average selling prices and a higher volume of units sold, driven by significant increases in GSE sales.
The increase in revenues included both greater sales to existing and new material handling customers as well as an increase in GSE sales.
Additionally, we further diversified our sales channels and saw considerable volume improvement in GSE sales as domestic airlines resumed
operations with a reinvigorated focus on sustainably scaling their own operations with our environmentally friendly and cost-effective
solutions.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Cost of Sales</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Cost of sales for fiscal 2023
increased $13,872,000 or 38%, to $50,598,000, compared to $36,726,000 for fiscal 2022.&nbsp;The increase in cost of sales was directly
associated with higher sales of energy storage solutions, partially offset by lower average cost of sales per unit achieved during the
current year as a result of our gross margin improvement initiatives, including design enhancements to lower cost, improve serviceability,
simplify bill of materials and supply chain initiatives to improve inventory turns and create part commonality across multiple product
line.&nbsp;Cost of sales as a percentage of revenues for fiscal 2023 was 76%, a decrease of 11 percentage points, compared to 87% for
fiscal 2022.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Gross Profit</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Gross profit for fiscal 2023 increased
$10,283,000 or 183%, to $15,890,000, compared to $5,607,000 for fiscal 2022.&nbsp;The gross profit margin (gross profit expressed as a
percentage of revenues) increased to 24%&nbsp;for fiscal 2023 compared to 13% for fiscal 2022.&nbsp;Gross profit improved by 11 percentage
points as a result of a higher volume of units sold with a higher selling price and lower cost of sales as a result of the gross margin
improvement initiatives as noted above.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Selling and Administrative</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Selling and administrative expenses
for fiscal 2023 increased $2,105,000 or 14%, to $17,620,000, compared to $15,515,000 for fiscal 2022. The increase was primarily attributable
to increases in personnel expenses related to new hires and temporary labor, severance expenses incurred, sales force commissions, bonus
expenses, depreciation, insurance premiums, travel expenses and marketing expenses, which were partially offset by decreases in third-party
agent commissions and stock-based compensation.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Research and Development</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Research and development expenses
for fiscal 2023 decreased $1,631,000 or 26%, to $4,682,000, compared to $6,313,000 for fiscal 2022. Such expenses consisted primarily
of materials, supplies, salaries and personnel related expenses, product testing, consulting fees and other expenses associated with revisions
to existing product designs and for new product development. The decrease in research and development expenses was primarily due to lower
staff-related expenses and expenses related to development of new products.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Interest Expense</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Interest expense for fiscal 2023
increased $1,087,000 or 431%, to $1,339,000, compared to $252,000 for fiscal 2022. The increase in interest expense was due to&nbsp;higher
average balances outstanding of our SVB Credit Facility and higher interest rates, as well as recording of&nbsp;approximately $482,000
of debt issuance costs amortization related to our existing lines of credit.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Net Loss</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Net loss during fiscal 2023 decreased
$8,730,000 or 53%, to $7,743,000 compared to $16,473,000 for fiscal 2022.&nbsp;The lower net loss for fiscal 2023 was primarily attributable
to increased gross profit, partially offset by increased operating expenses and higher interest expense.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b></b></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Adjusted EBITDA</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Adjusted EBITDA was a loss of
approximately $4,707,000 during fiscal 2023 compared to a loss of $14,935,000 during fiscal 2022. As adjusted EBITDA is a non-GAAP financial
measure, it should not be construed as superior to or a substitute for net income (loss) (as determined in accordance with GAAP) for the
purpose of analyzing our operating performance or financial position.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">A reconciliation of our adjusted EBITDA to net loss
is included in the table below.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year ended June 30,</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2023</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2022</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Restated</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Restated</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 68%; text-align: left">Net loss</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(7,743,000</td><td style="width: 1%; text-align: left">)</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(16,473,000</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>Add/Subtract:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Interest, net</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">1,339,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">252,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Income tax provision</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Depreciation and amortization</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">899,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">575,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>EBITDA</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(5,505,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(15,646,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Add/Subtract:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Stock-based compensation</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">798,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">711,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt">Adjusted EBITDA</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(4,707,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(14,935,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Liquidity and Capital Resources</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Overview</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">For fiscal
2024, we generated negative cash flows from operations of $4.8 million. As of June 30, 2024, we had an accumulated deficit of $99.7 million.
To date, our business has not generated sufficient cash to fund our operations. However, given our existing backlog, we anticipate that
revenue growth coupled with improvement in our gross margin and lower operating expenses will move us closer to profitability and improve
our cash flow. Our gross margin improvement plan includes, but is not limited to, efforts to reduce product costs while increasing the
price of our products for new orders. We received new orders during fiscal 2024 of approximately $50.3 million.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As of June 30, 2024, we had an
existing cash balance of $0.6 million, $2.2 million remaining available under our $16.0 million GBC Credit Facility subject to borrowing
base limitations, and $2.0 million was available from Cleveland Capital under our 2023 Subordinated LOC. However, if the Company were
to experience an event of default, as defined by the loan agreements, as amended, such additional funds may not be made available.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In April 2024 we notified GBC
of a certain event of default with respect to our failure to maintain the EBITDA covenant for the trailing three (3) month period ended
April 30, 2024, (the &ldquo;Default&rdquo;). On May 8, 2024, we received a waiver, which waived the Default, subject to satisfaction of
certain conditions, which have been met.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On May
31, 2024, we entered into the Third Amendment to Loan and Security Agreement (the &ldquo;Third Amendment&rdquo;) 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. In consideration for the Third Amendment, we agreed to pay GBC a non-refundable amendment fee of $50,000 in cash (See Note 8
&ndash; Notes Payable).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On August
30, 2024, GBC agreed to waive our non-compliance with, and the effects of our non-compliance under, various representations, financial
covenants and non-financial covenants relating to our financial restatements (the &ldquo;August Waiver&rdquo;). On January 17, 2025, GBC
agreed to waive our non-compliance with, and the effects of our non-compliance under, various representations, financial covenants and
non-financial covenants relating to our financial restatements and our failure to maintain the EBITDA Minimum for certain financial periods
(the &ldquo;January Waiver&rdquo;). As a result of the August Waiver and January Waiver, we expect that our revolving credit facility
remains available subject to meeting certain lending criteria under the Loan Agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On January
22, 2025, we entered into Amendment No. 4 to Loan and Security Agreement (the &ldquo;Fourth Amendment&rdquo;) 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, we 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As of December 31, 2024, we believe
that our existing cash, together with $6.3 million that currently remains available under our $16.0 million revolving line of credit with
Gibraltar Business Capital (&ldquo;GBC Credit Facility&rdquo;), subject to borrowing base limitations, and $1.0 million available under
the subordinated line of credit (&ldquo;Subordinated LOC&rdquo;), will be not be sufficient to meet our anticipated capital resources
to fund planned operations for the next twelve (12) months. See &ldquo;Future Liquidity Needs&rdquo; below and <i>Liquidity and Financial
Condition</i> in Note 3 &ndash; Summary of Significant Accounting Policies to the audited consolidated financial statements for additional
information.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Cash Flow Summary</i></b></p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="10" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year ended June 30,</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2024</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2023</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2022</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 52%; text-align: left">Net cash used in operating activities</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(4,798,000</td><td style="width: 1%; text-align: left">)</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(3,574,000</td><td style="width: 1%; text-align: left">)</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(23,893,000</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Net cash used in investing activities</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(853,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(1,024,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(797,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt">Net cash provided by financing activities</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">3,915,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">6,492,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">20,462,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt">Net change in cash</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(1,736,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,894,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(4,228,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Operating Activities</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Net cash used in operating activities
was $4,798,000 during fiscal 2024, compared to net cash used in operating activities of $3,574,000 and $23,893,000 during fiscal 2023
and 2022, respectively. The primary uses of cash during fiscal 2024 were the net loss of $8,333,000 and increases in inventory and accounts
receivable, that were partially offset by non-cash operating costs and an increase in accounts payable and accrued expenses combined.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The primary uses of cash during
fiscal 2023 were the net loss of $7,743,000, as restated and increases in inventory, as restated, office lease payable, customer deposits
and other assets, that were partially offset by non-cash operating costs and an increase in accounts payable and accrued expenses combined.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The primary uses of cash during
fiscal 2022 were the net loss of $16,473,000, as restated, increases in accounts receivable, inventory, as restated, and other assets,
and decreases in accounts payable, accrued expenses and deferred revenue, that were partially offset by increases in customer deposits,
deferred revenue and non-cash operating costs.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Investing Activities</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Net cash used in investing activities
during fiscal 2024 was $853,000, primarily due to purchases of furniture and office equipment, warehouse equipment and other related costs.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Net cash used in investing activities
during fiscal 2023 was $1,024,000, primarily due to purchases of furniture and office equipment, warehouse equipment and other related
costs.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Net cash used in investing activities
during fiscal 2022 was $797,000, primarily due to purchases of furniture and office equipment, computer software, warehouse equipment
and other related costs.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Financing Activities</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Net cash provided by financing
activities during fiscal 2024 was $3,915,000, primarily due to $3,922,000 in net borrowings under the GBC Credit Facility and SVB Credit
Facility.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Net cash provided by financing
activities during fiscal 2023 was $6,492,000, primarily due to $5,023,000 in net borrowings under the SVB Credit Facility, and $1,556,000
in net proceeds from sales of Common Stock under our ATM offering.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Net cash provided by financing
activities during fiscal 2022 was $20,462,000, primarily due to $13,971,000 in net proceeds from the issuance of Common Stock in a registered
offering completed in September 2021, $4,889,000 in net borrowings under the SVB Credit Facility and $1,602,000 in net proceeds from sales
of Common Stock under our ATM Offering.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Future Liquidity Needs</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We have
evaluated our expected cash and working capital requirements, which include, but are not limited to, investments in additional sales and
marketing, research and development and capital equipment and have determined that our existing cash resources are not sufficient to meet
our anticipated needs for the next twelve (12) months from the date of this prospectus.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">As of
January 31, 2025, we had a cash balance of $0.4 million, available funding under our GBC Credit Facility for up to $4.9 million, subject
to borrowing base limitations, and additional borrowing capacity under our 2023 Subordinated LOC of $1.0 million. Our operations have
relied on our ability to successfully maintain and draw on our credit facilities. Our ability to draw funds from the GBC Credit Facility
is subject to certain restrictions, covenants and borrowing base limitations. In light of the recent Default under the GBC Credit Facility,
the financial covenants in the Agreement were modified to help prevent future defaults.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">In addition,
our ability to meet projected revenue targets and generate cash from operations has been impacted by delays in new orders of our energy
storage solutions, primarily due to deferrals of new forklift purchases caused by lower capital spending in the market sector that we
serve and due to interest rate variability affecting capital spending in certain large customer fleets.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Furthermore,
should there be any delays in the receipts of key component parts, due in part to supply change disruptions, our ability to fulfill the
backlog of sales orders will be negatively impacted resulting in lower availability of cash resources from operations. In that event,
we may be required to raise additional funds by issuing equity, convertible debt securities or other forms of indebtedness. If such funds
are 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 our ability to continue operating as a going concern.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our failure to timely file our
fiscal 2024 annual report on Form 10-K and subsequent fiscal 2025 interim quarterly reports on Form 10-Q means that we currently are ineligible
to use a registration statement on Form S-3. We will not be eligible to use a registration statement on Form S-3 again until we have timely
filed all materials and reports required to be filed pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934 for a
period of at least twelve (12) calendar months immediately preceding the filing of a new registration statement on Form S-3. The inability
to use a Form S-3 registration statement will limit our ability to raise capital through sales of our securities and would require us
to file a Form S-1, which would require additional effort to complete. To the extent that we raise additional funds by issuing equity,
equity-linked or convertible debt securities, our stockholders may experience dilution and such financing could be costly.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">These events and circumstances
raise substantial doubt about our ability to continue as a going concern for the next twelve (12) months following the filing date of
this prospectus. See <i>Liquidity and Financial Condition</i> in Note 2 &ndash; Summary of Significant Accounting Policies to the <font style="background-color: white">unaudited
condensed </font>consolidated financial statements for additional information, and Note 3 &ndash; Summary of Significant Accounting Policies
to the audited consolidated financial statements for additional information.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><a name="a_012"></a>BUSINESS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Overview</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We design, develop, manufacture,
and sell 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 (&ldquo;GSE&rdquo;), and other commercial and industrial applications.
We believe our mobile and stationary energy storage solutions provide our customers a reliable, high performing, cost effective, and more
environmentally friendly alternative as compared to traditional lead acid and propane-based solutions. Our 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 &ldquo;state of the art&rdquo; real time monitoring of pack performance. We
believe 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 our revenue growth.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Our Strategy</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Our long-term
strategy is to meet the rapidly growing demand for lithium-ion energy solutions and to be the supplier of choice, targeting large companies
having demanding energy storage needs. We have established selling relationships with equipment OEMs and customers with large fleets of
forklifts and GSE. We intend to reach this goal by investing in research and development to expand our product mix, by expanding our sales
and marketing efforts, improving our customer support efforts and continuing our efforts to increase production capacity and efficiencies.
Our research and development efforts will continue to focus on providing adaptable, reliable and cost-effective energy storage solutions
for our customers.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Our largest
sector of penetration thus far has been the material handling sector which we believe is a multi-billion-dollar addressable market. We
believe the sector will provide us with an opportunity to grow our business as we enhance our product mix and service levels and grow
our sales to large fleets of forklifts and GSE. Applications of our modular packs for other industrial and commercial uses, such as mobile
energy storage, are providing additional current and future growth opportunities. We intend to continue to expand and diversify our supply
chain and customer base and seek further partnerships that provide synergy to meeting our growth and &ldquo;building scale&rdquo; objectives.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><i>Supply Chain Issues and
Higher Procurement Costs</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Disruptions
from the COVID-19 pandemic over the past several years have been largely abated. We addressed supply chain challenges with improved vendor
selection, and improved supply chain internal practices. However, we have experienced recent shipment delays of battery packs for some
forklift models as a result of production delays from our suppliers. We have seen recent improvements in shipment timing. However, there
can be no assurance that our price increases, inventory levels or any future steps we take will be sufficient to offset the rising procurement
costs and manage sourcing of raw materials and component parts effectively.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white"><i>Strategic Initiatives</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><i>&nbsp;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Our near-term
priorities will be to achieve &ldquo;profitability,&rdquo; specifically, cash flow breakeven, within our capital constraints. Accordingly,
we will continue to pursue supply chain improvements, gross margin expansion initiatives, and cost reductions. In addition, we are focusing
on business expansion to accelerate gross margins by:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white">
  <tr style="vertical-align: top">
    <td style="width: .5in">&nbsp;</td>
    <td style="width: .25in; text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">leveraging current high-profile &ldquo;proven customer relationships&rdquo; to respond to growing demand of large fleets for lithium-ion value proposition;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">pursuing new markets that can leverage our technology and manufacturing capabilities;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">expanding features of our popular &ldquo;SkyBMS&rdquo; (telemetry) which provides customized fleet management, and real time reports;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">expanding our manufacturing and service capacities to ensure customer satisfaction from increased deliveries, and service;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">capitalizing on our leadership position with new product offerings, particularly to exploit the rising demand for higher power applications; and</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">while we are &ldquo;agnostic to the type of lithium chemistry,&rdquo; ensuring our research efforts support other chemistries as they may become available.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">There can be no assurance that
these initiatives and efforts will be successful.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Recent Developments</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Management Transition</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On March 10, 2025, Mr. Dutt, our former chairman and Chief Executive Officer, notified the Company&rsquo;s Board of  his decision to retire and resign from his position as director, Chairman of the Board, Chief Executive Officer and President of the
Company and its wholly owned subsidiary, Flux Power, effective March 10, 2025. Mr. Dutt&rsquo;s stepping
down is for personal reasons and not due to any disagreement with the Company&rsquo;s management team or the Company&rsquo;s Board on
any matter relating to the operations, policies or practices of the Company or any issues regarding the Company&rsquo;s accounting policies
or practices.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In connection with Mr. Dutt&rsquo;s
retirement, the Board appointed Mr. Robinette as the new Chairman of the Board, effective March 10, 2025. Mr. Robinette also currently
serves as an independent director, chairperson of the Compensation Committee, and a member of both the Audit
Committee and the Nominating and Governance Committee. In addition, the Board appointed Mr. Vanka as director, Chief Executive
Officer and President of the Company and Flux Power, effective March 10, 2025.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Credit Facility</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On July 28, 2023, we entered into
a certain Loan and Security Agreement (the &ldquo;Agreement&rdquo;) with Gibraltar Business Capital, LLC, a Delaware limited liability
company (&ldquo;GBC&rdquo;). The Agreement provides the Company with a senior secured revolving loan facility (the &ldquo;GBC Credit Facility&rdquo;)
for up to $15.0 million (the &ldquo;Revolving Loan Commitment&rdquo;). 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 &ldquo;Maturity Date&rdquo;), unless extended, modified or renewed
(the &ldquo;Revolving Note&rdquo;). 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. 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&rsquo; 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 (&ldquo;SOFR&rdquo;, 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 bears interest at a rate per annum equal to three percent (3.0%) above the rate that is
otherwise applicable to such amounts. We paid GBC a non-refundable closing fee for the GBC Credit Facility of $112,500 upon the execution
of the Agreement. In addition, we are 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In April 2024, we notified GBC
of a certain event of default with respect to the Company&rsquo;s anticipated failure to maintain the EBITDA covenant for the trailing
three (3) month period ended April 30, 2024, (the &ldquo;Default&rdquo;). On May 8, 2024, the Company received a waiver from GBC, (the
&ldquo;Waiver&rdquo;) which waived the Default, subject to satisfaction of the following conditions: (i) receipt of a counterpart of the
Waiver duly executed by us; (ii) receipt of the waiver fee of $20,000; (iii) receipt of the representations and warranties from us 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On May 31, 2024, we entered into
the Third Amendment to Loan and Security Agreement (the &ldquo;Third Amendment&rdquo;) 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. In consideration
for the Third Amendment, the Company agreed to pay GBC a non-refundable amendment fee of $50,000 in cash.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Under the Agreement, upon an occurrence
of an event of default, GBC may, at its option, declare its commitments to the Company to be terminated and all obligations to be immediately
due and payable, all without demand, notice or further action of any kind required on the part of GBC, and/or exercise other remedies
available to it among other things including its rights as a secured party. On August 30, 2024, GBC agreed to waive the Company&rsquo;s
non-compliance with, and the effects of its non-compliance under, various representations, financial covenants and non-financial covenants
relating to the Company&rsquo;s restatement (the &ldquo;August Waiver&rdquo;). On January 17, 2025, GBC agreed to waive our non-compliance
with, and the effects of our non-compliance under, various representations, financial covenants and non-financial covenants relating to
our financial restatements and our failure to maintain the EBITDA Minimum for certain financial periods (the &ldquo;January Waiver&rdquo;).
As a result of the August Waiver and January Waiver, the Company expects that its revolving credit facility remains available subject
to meeting certain lending criteria under the Loan Agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On January 22, 2025, we entered
into Amendment No. 4 to Loan and Security Agreement (the &ldquo;Fourth Amendment&rdquo;) 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We rely on our credit facility
with GBC to meet our anticipated capital resources and to fund our operations. The availability of the GBC Credit Facility is subject
to satisfaction of certain affirmative covenants and financial covenants including maintaining minimum tangible net worth, and certain
limitations on dispositions of assets. The Agreement also contains usual and customary events of default (with customary grace periods,
as applicable) and provides that, upon the occurrence of an event of default, payment of all amounts payable under the GBC Credit Facility
may be accelerated and/or GBC&rsquo;s commitment may be terminated by GBC without any action by GBC. Due to our inability to satisfy certain
financial covenants and other covenants under the agreement with GBC we have previously needed to obtain waivers from GBC. In the event
we are unable to comply with terms of the Agreement or to obtain a waiver from GBC, funds will be unavailable to us under the GBC Credit
Facility, and our operations, financial condition and business will be materially and adversely affected.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b><i>Nasdaq Stock Market
Notices</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On October 16, 2024, the Company
received a notice (the &ldquo;October Notice&rdquo;) from the Listing Qualifications Department (the &ldquo;Staff&rdquo;) of the Nasdaq
Stock Market (&ldquo;Nasdaq&rdquo;) stating that because the Company had not yet filed its Form 10-K for the fiscal year ended June 30,
2024 (the &ldquo;Form 10-K&rdquo;), the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) (the &ldquo;Listing Rule 5250(c)(1)&rdquo;),
which requires Nasdaq-listed companies to timely file all required periodic financial reports with the Securities and Exchange Commission.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On November
20, 2024, the Company received a notice (the &ldquo;November Notice,&rdquo; together with the October Notice, the &ldquo;Notices&rdquo;)
from the Staff of Nasdaq stating that because the Company had not yet filed its Form 10-Q for the period ended September 30, 2024 (the
&ldquo;Form 10-Q&rdquo;) and because the Company remains delinquent in filing its Form 10-K (together with the Form 10-Q, the &ldquo;Delinquent
Reports&rdquo;), the Company does not comply with the Listing Rule 5250(c)(1). The notices stated that the Company had until December
16, 2024 to submit a plan to regain compliance with the Listing Rule 5250(c)(1)(the &ldquo;Plan&rdquo;). If Nasdaq accepts the Company&rsquo;s
Plan to regain compliance, then Nasdaq may grant the Company up to 180 calendar days from the Form 10-K filing due date, or until April
14, 2025, to file the Delinquent Reports to regain compliance. If Nasdaq does not accept the Company&rsquo;s Plan, then the Company will
have the opportunity to appeal that decision to a Nasdaq Hearings Panel. The Notice had no immediate effect on the listing of the Company&rsquo;s
Common Stock on Nasdaq. On December 16, 2024, the Company filed a plan with Nasdaq to regain Nasdaq compliance, including requesting an
extension to file the Delinquent Reports by no later than April 14, 2025. If Nasdaq does not accept the Company&rsquo;s Plan and the Company
fails to prevail in its appeal to Nasdaq, or if the Company fails to meet the Nasdaq listing requirements and do not regain compliance,
the Company&rsquo;s Common Stock will be subject to delisting by Nasdaq. On January 29, 2025, the Company filed the Form 10-K and received
letter from Nasdaq on January 31, 2025 informing the Company of its partial compliance with the Listing Rule 5250(c)(1)as it relates to
the Form 10-K.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On February
21, 2025, the Company received an additional notice (the &ldquo;Notice&rdquo;) from the Staff of Nasdaq stating that because the Company
had not yet filed its Form 10-Q for the period ended December 31, 2024 (the &ldquo;December Form 10-Q&rdquo;) and because the Company
remained delinquent in filing its Form 10-Q for the period ended September 30, 2024 (the &ldquo;September Form 10-Q&rdquo; and together
with the December Form 10-Q, the &ldquo;Delinquent Reports&rdquo;), the Company failed to comply with Listing Rule 5250(c)(1), which
requires Nasdaq-listed companies to timely file all required periodic financial reports with the Securities and Exchange Commission.
The Notice stated that as a result of this additional delinquency, the Company must submit an update to its original plan to regain compliance
with respect to the filing requirement. The update was due by March 10, 2025. If Nasdaq accepts the Company&rsquo;s update to its original
plan to regain compliance, then Nasdaq may grant the Company up to 180 calendar days from the due date of the initial delinquent filing,
the Form 10-K for the fiscal year ended June 30, 2024, or until April 14, 2025, to file the Delinquent Reports to regain compliance.
The Notice had no immediate effect on the listing of the Company&rsquo;s Common Stock on NASDAQ. The update to the compliance plan was
submitted to Nasdaq on February 25, 2025. In the event our Common Stock is delisted, our stock price and market liquidity of our stock
will be adversely affected which will impact the ability of the Company&rsquo;s stockholders to sell securities in the market. Further,
delisting from Nasdaq markets could also have other negative effects, including potential loss of confidence by partners, lenders, suppliers
and employees. The Company filed the September Form 10-Q and December Form 10-Q on March 20, 2025 and is now current with its required
periodic financial reports to be filed with the Securities and Exchange Commission under the Listing Rule.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On January 31, 2025, the Company
received a notice from The NASDAQ Stock Market LLC (&ldquo;Nasdaq&rdquo;) notifying the Company that based on its stockholders&rsquo;
equity of $194,000 as reported in its Form 10-K for the fiscal year ended June 30, 2024, the Company is no longer in compliance with Nasdaq
Listing Rule 5550(b)(1), which requires the Company to maintain a minimum of $2,500,000 in stockholders&rsquo; equity for continued listing
on The Nasdaq Capital Market (the &ldquo;Stockholders&rsquo; Equity Requirement&rdquo;). Pursuant to the Notice, the Company had 45 calendar
days from the date of the Notice, or until March 17, 2025, to submit a plan to regain compliance. If it accepts the plan, Nasdaq can grant
an extension of up to 180 calendar days from the date of the Notice to evidence compliance. In the event the plan is not accepted by Nasdaq,
or in the event the plan is accepted by Nasdaq and the 180-day extension period is granted, but the Company fails to regain compliance
within such plan period, the Company would have the right to a hearing before an independent panel. The hearing request would stay any
suspension or delisting action pending the conclusion of the hearing process and the expiration of any additional extension period granted
by the panel following the hearing. On March 17, 2025, the Company submitted a plan to regain compliance with the Stockholders&rsquo;
Equity Requirement. The Company intends to take all reasonable measures available to regain compliance under the Nasdaq Listing Rules
and to remain listed on Nasdaq. There can be no assurances that the Company will be able to regain compliance with the Stockholders&rsquo;
Equity Requirement or that the Company will otherwise be in compliance with all applicable requirements for continued listing on the Nasdaq
Capital Market.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Our Business</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We have leveraged our experience
in lithium-ion technology to design and develop a portfolio of industrial and commercial energy storage packs that we believe provide
attractive solutions to customers seeking an alternative to lead acid and propane-based power products. We believe that the following
attributes are significant contributors to our success:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Engineering and integration
experience in lithium-ion for motive applications:</i></b> Our engineers design, develop, test, and service our advanced lithium-ion energy
storage solutions. We have been developing lithium-ion applications for the advanced energy storage market since 2010, starting with products
for automotive electric vehicle manufacturers. We believe our engineering experience enables us to develop competitive solutions that
meet our customers&rsquo; needs currently and in the foreseeable future.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>UL Listing:</i></b> Our
goal is to obtain a UL Listing for all of our Packs, and we recently completed the process for our newest source of battery cells. We
believe this UL Listing provides us a significant competitive advantage and provides assurance to customers that our technology has been
rigorously tested by an independent third party and determined to be safe, durable and reliable.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Original equipment manufacturer
(OEM) approvals:</i></b> Many of our energy storage packs have been tested and approved for use by Toyota Material Handling USA, Inc.,
Crown Equipment Corporation, and The Raymond Corporation, among the top global lift truck manufacturers by revenue according to Material
Handling &amp; Logistics. We also provide a &ldquo;private label&rdquo; Class 3 Walkie Pallet Pack to two major top 10 forklift OEMs.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Broad product offering and
scalable design:</i></b> We offer energy storage packs for use in a variety of industrial motive applications. We believe that our modular
and scalable design enables us to optimize design, inventory, and part count to accommodate natural product extensions of our products
to meet customer requirements. We have leveraged our Class 3 Walkie Pallet Pack design to develop larger energy storage packs for larger
forklifts, GSE Packs, and other industrial equipment applications. Natural product extensions, based on our modular, scalable designs,
include solar backup power for electric vehicle (&ldquo;EV&rdquo;) mobile charging stations and robotic warehouse equipment.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Significant advantages over
lead acid and propane-based solutions:</i></b> We believe that lithium-ion battery systems have significant advantages over existing technologies
and will displace lead acid batteries and propane-based solutions, in most applications. Relative to lead acid batteries, such advantages
include environmental benefits, no water maintenance, faster charge times, greater cycle life, longer run times, and less energy used
that provide operational and financial benefits to customers. When compared to lead acid solutions, our energy storage solutions do not
discharge carbon dioxide in the atmosphere due to lithium chemistry efficiencies. In addition, when compared to propane-based solutions,
lithium-ion systems avoid the generation of exhaust emissions and associated odor and environmental contaminates, and maintenance of an
internal combustion engine, which has substantially more parts subject to wear than an electric motor.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Proprietary Battery Management
System:</i></b> Critical to our success is our innovative, proprietary and versatile battery management system (&ldquo;BMS&rsquo;) that
optimizes the performance of our lithium-ion energy solutions and provides a platform for adding new energy storage solution features,
including customized telemetry (energy storage solution data and reports available anytime, anywhere) for customers who choose this option.
The BMS serves as the brain of the energy storage solution, managing cell balancing, charging, discharging, monitoring and communication
between the pack and the forklift. Our &ldquo;next generation&rdquo; versatile BMS is currently part of our full product lines and provides
significant product features for improved customer productivity. Our BMS also enables ongoing feature development for reduced cost and
higher performance. We have included our proprietary telemetry solution, branded &ldquo;SkyBMS&rdquo; which provides real time reports
on pack performance, health, and remaining useful life.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Our Products</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We design, develop, test and sell
our energy storage solutions for use in a broad range of lift trucks, industrial equipment including airport GSE, and other commercial
applications. Within each of these product segments, we offer a range of power and equipment solutions.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our energy storage solution system
design is adaptable with three core design modules used in our entire family of small, medium, and large pack forklift products. A scalable
modular design allows for core modules to be configured to address a variety of unique power and space requirements. We also have the
capability to offer varying chemistries and configurations based on the specific application. Currently, our energy storage packs use
lithium iron phosphate (LiFePO4) battery cells, which we source from a single supplier located in China, that meet our power, reliability,
safety and other specifications. Our BMS works with several battery configurations providing the flexibility to use battery cells developed
and manufactured by other suppliers. We believe we can readily adapt our energy storage packs to incorporate new chemistries as they become
available in the future in order to meet changing customer preferences and to reduce the cost of our products.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We also
offer 24-volt onboard chargers for our Class 3 Walkie Pallet Packs, and smart &ldquo;wall mounted&rdquo; chargers for larger applications.
Our smart charging solutions are designed to interface with our BMS and integrate easily into most all major chargers in the market.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white"><b>New Product Update</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">During
fiscal 2024, we introduced new product designs to respond to customer requests and to allow for greater operational efficiencies for us.
Some of the improvements included higher capacities for extra-long and demanding shifts, easier servicing, cost efficiencies, and other
features to solve a variety of existing performance challenges of customer operations. We intend to continue to develop and to introduce
new product designs for margin enhancement, part commonality and improved serviceability.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">In fiscal
2024, we also introduced the next generation of Material Handling and GSE products, the G2 line. These seven new products greatly extend
the reach of Flux packs in the Class 1 and 2 forklift market as well as enhancing our offerings for aircraft ground support equipment.
Ranging from 36 to 80 volts and capacities between 210 and 840 amp-hours, the G2 systems deliver power and versatility.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We also
added a second &ldquo;private label&rdquo; program for a top 10 OEM for Class 3 products. This program accelerates our sales and distribution
capabilities including representing a leverage point to sell our larger packs to end customers. It also has shown to provide wider exposure
to new potential customers.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Industry Overview</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Historically, lithium-ion battery
solutions were unable to compete with lead acid and propane-based solutions in industrial applications on the basis of cost. However,
the supply of lithium-ion batteries has rapidly expanded, leading to price declines of eighty-five percent (85%) since 2010 according
to BloombergNEF. BloombergNEF also estimates that lithium-ion battery prices, which averaged $1,160 per kilowatt hour in 2010, were $156
per kWh in 2019 and dropped to $115 per kWh in 2024. Lithium metal itself represents well less than 5% of the cost of our energy storage
solutions.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The sharp decline in the price
of lithium-ion batteries has made these energy solutions more cost competitive. Affordability has in turn enabled customers to shift away
from lead acid and propane-based solutions for power lift equipment to lithium-ion based solutions with more favorable environmental and
performance characteristics. Reducing our cost per kilowatt of energy enables our value proposition to attract increasing customer demand.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Material Handling Equipment</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We focus on energy storage solutions
for industrial equipment and related industrial applications because we believe they represent large and growing markets that are just
beginning to adopt lithium-ion based technology. We apply our scalable, modular designs to natural product extensions in the industrial
equipment market. These markets include not only the sale of lithium-ion energy storage solutions for new equipment but also a replacement
market for existing lead acid battery packs.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">According to Modern Materials
Handling, worldwide new lift truck orders reached approximately 1.4 million units in 2017. The Industrial Truck Association (&ldquo;ITA&rdquo;)
has estimated that approximately 200,000 lift trucks had been sold yearly since 2013 in North America (Canada, the United States and Mexico),
with sales relatively evenly distributed between electric rider (Class 1 and Class 2), motorized hand (Class 3), and internal combustion
engine powered lift trucks (Class 4 and Class 5). The ITA estimates that electric products represented approximately sixty-nine percent
(69%) of the North American shipments in 2020, reflecting the long-term trend of increasing mix of electric products versus internal combustion
(propane) engines. Driven by growth in global manufacturing, e-commerce and construction, Research and Markets expects that the global
lift truck market will grow at a compound annual growth rate of six and four-tenths percent (6.4%) through 2024.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Customers</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our customers include OEMs, lift
equipment dealers, battery distributors and end users. Our customers vary from small companies to Fortune 500 companies.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">During the year ended June 30,
2024, we had three (3) major customers that each represented more than 10% of our revenues on an individual basis, and together represented
approximately $47,178,000 or 78% of our total revenues. During the year ended June 30, 2023, we had three (3) major customers (as restated)
that each represented more than 10% of our revenues on an individual basis, and together represented approximately $53,140,000 (as restated)
or 80% (as restated) of our 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Shift Toward Lithium-ion Battery Technologies</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Today&rsquo;s lithium-ion energy
storage solutions offer higher performance, environmental benefits, and lower life cycle costs, and these features are driving an increase
in demand for safe and efficient alternatives to lead acid and propane-based power products. The value proposition of lithium-ion energy
storage solutions includes a number of factors impacting customer preferences:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Duration of Charge/Run Times</i></b>:
Lithium-based energy storage systems can perform for a longer duration compared to lead acid batteries. Lithium-ion batteries provide
up to 50% longer run times than lead acid batteries of comparable capacity, or amps-per-hour rating, allowing equipment to be operated
over a long period of time between charges.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>High/Sustained Power</i></b>:
Lithium-ion batteries are better suited to deliver high power versus legacy lead acid. For example, a 100Ah lead acid battery will only
deliver 80Ah if discharged over a four-hour period. In contrast, a 100Ah lithium-ion system will achieve over 92Ah even during a 30-minute
discharge. Additionally, during discharge, the energy storage pack sustains its initial voltage, maximizing the performance of the forklift
truck, whereas, lead acid voltages, and hence power, decline over the working shift.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Charging Time</i></b>: Lead
acid batteries are limited to one shift a day, as they discharge for eight hours, need eight hours for charging, and another eight hours
for cooling. For multi-shift operations, this typically requires battery changeout for the equipment. Because lithium batteries can be
recharged in as little as one hour and do not degrade when subjected to opportunity charging, hence, battery changeout is unnecessary.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Safe Operation</i></b>:
The toxic nature of lead acid batteries presents significant safety and environmental issues in the event of a cell breach. During charging,
lead acid batteries emit combustible gases and increase in temperature. Lithium-ion (particularly LFP) batteries do not get as hot and
avoid many of the safety and environmental issues associated with lead acid batteries.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Extended Life</i></b>: The
performance of lead acid batteries degrades after approximately 500 charging cycles in industrial equipment applications. In comparison,
lithium-ion batteries last up to five times longer in the same application.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Size and Weight</i></b>:
Lithium is about one-third the weight of lead acid for comparable power ratings. Lower weight enables forklift OEMs the ability to optimize
the design of the truck based on a smaller footprint for lithium-ion instead of lead acid.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Lower Cost</i></b>: Lithium-ion
energy storage solutions provide power dense solutions with extended cycle life, reduced maintenance and improved operational performance,
resulting in lower total cost of ownership.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.75in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Less Energy Used</i></b>:
we believe our lithium-ion energy storage solutions use 20-50% less energy based on our internal studies comparing lithium-ion to lead
acid.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Marketing and Sales</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We sell our products through several
different channels including OEMs, lift equipment dealers and battery distributors as well as directly to end users. In the industrial
motive market, OEMs sell their lift products through dealer networks and directly to end customers. Because of environmental issues associated
with lead acid batteries and to preserve customer choice, industrial lift products are typically sold without a battery pack or an energy
storage solution. Equipment dealers source battery packs from battery distributors and battery pack suppliers based on demand or in response
to customer specifications. End customers may specify a specific type and manufacturer of battery pack to the equipment dealer or may
purchase battery packs from battery distributors or directly from battery suppliers.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.75in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our direct sales staff cover major
geographies throughout North America and collaborate with our sales partners who have an established customer base. We plan to hire additional
sales staff to support our expected sales growth. In addition, we have developed a nationwide sales network of relationships with equipment
OEMs, their dealers, and battery distributors. To support our products, we have a nationwide network of service providers, typically forklift
equipment dealers and battery distributors, who provide local customer service to large customers. We also maintain a customer support
center and provide Tech Bulletins and training to our service and sales network out of our corporate headquarters. We have partnered with
an experienced GSE distributor to market our lithium-ion energy storage solutions for airport GSE.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Manufacturing and Assembly</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Rather than manufacture our own
battery cells, our battery cells are currently sourced from one manufacturer located in China. We source the remainder of the components
primarily from numerous vendors in the United States. We developed our BMS to be agnostic to a battery&rsquo;s lithium-ion chemistry and
cell manufacturer. Despite such flexibility, we have experienced occasional supply interruptions in the past, and more recently, we have
been forced to navigate supply chain and transportation issues stemming from the global pandemic. We have made great strides in sourcing
alternate suppliers and parts to minimize future global supply chain disruptions. We are continuing to monitor and test potential new
cell technologies on an ongoing basis to help mitigate our supply chain risks. Using Lean Manufacturing principles, our final assembly,
testing and shipping of our energy storage solutions are completed within our ISO 9001 certified facility in Vista, California, which
includes six assembly lines.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We buy chargers from several sources,
including a U.S. based supplier. Additionally, we are a qualified dealer for a well-known manufacturer of &ldquo;high capacity, modular,
smart chargers&rdquo; which support our larger packs.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Research and Development</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our engineers design, develop,
test, and service our advanced lithium-ion energy storage solutions at our company headquarters in Vista, California. We believe our strengths
include our core competencies and capabilities in designing and developing proprietary technology for our BMS, lean manufacturing processes,
systems engineering, engineering application, and software engineering for both energy storage solutions and telemetry. We believe that
our ability to develop new features and technology for our BMS is essential to our growth strategy.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As we continue to develop and
expand our product offerings, we anticipate that research and development will continue to be a substantial part of our strategic priorities
in the future. We seek to develop innovative, new and improved products for cell and system management along with associated communication,
display, current sensing and charging tools. Our research and development efforts are focused on improving performance, reliability and
durability of our energy storage solutions for our customers and on lowering our costs of production.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Competition</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our competitors in the lift equipment
market in years past have been primarily major lead acid battery manufacturers, including Stryten Energy, East Penn Manufacturing Company,
EnerSys Corporation, and Crown Battery Corporation. However, more recently our potential customer base has become increasingly aware of
the performance, lifetime cost, and environmental advantages of lithium-ion solutions. At the same time, our competitor base offering
lithium-ion solutions has grown from a number of early-stage businesses and now includes several larger companies. The increasing market
activity reflects the double-digit sales growth of lithium-ion based solutions. The sales channel includes. equipment dealers, OEMs and
battery distributors.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The key competitive factors in
this market are performance, reliability, durability, safety and price. We believe we compete effectively in all of these categories in
light of our experience with lithium-ion technology, including our development capabilities and the performance of our proprietary BMS.
We believe having the UL Listing covering our core products gives us a significant differentiating competitive advantage. In addition,
because our BMS is not reliant on any specific battery cell chemistry, we believe we can adapt rapidly to changes in advanced battery
technology or customer preferences.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Intellectual Property</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our success depends, at least
in part, on our ability to protect our core technology and intellectual property. To accomplish this, we rely on a combination of patents
pending, patent applications, trade secrets, including know-how, employee and third-party nondisclosure agreements, copyright laws, trademarks,
intellectual property licenses and other contractual rights to establish and protect our proprietary rights in our technology. In addition
to such factors as innovation, technological expertise and experienced personnel, we believe that a strong patent position is important
to remain competitive.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As of June 30, 2024, we have two
issued U.S. patents. We have filed one new U.S. patent application on advanced technology related to lithium-ion energy storage solutions.
The technology behind these three patents is designed to:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: .75in">&nbsp;</td>
    <td style="width: .25in"><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">increase battery life by optimizing the charging cycle;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">give users a better understanding of the health of their battery in use; and</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">apply artificial intelligence to predictively balance the cells for optimal performance.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We do not know whether any of
our efforts will result in the issuance of patents or whether the examination process will require us to narrow our claims. Even if granted,
there can be no assurance that these pending patent applications will provide us with protection.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We have obtained U.S. federal
trademark registrations for Flux, Flux Power, Flux Power logo and Lift. We have pending applications to register SkyBMS. We also believe
that we have common law trademark rights to certain marks in addition to those which we have registered.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Suppliers</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We obtain a limited number of
components and supplies included in our products from a small group of suppliers. During the year ended June 30, 2024, we had one (1)
supplier who accounted for more than 10% of our total purchases, which represented approximately $12,437,000 or 27% of our total purchases.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">During the year ended June 30,
2023, we had one (1) supplier who accounted for more than 10% of our total purchases, which represented approximately $17,022,000 or 31%
of our total purchases.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We currently single source our
battery cells from one Chinese supplier. We are actively pursuing backup cell suppliers as part of our growth strategy, efforts to manage
the risks of having only one supplier of battery cells and strategies to address potential exposure to tariffs. In addition, with our
expanding portfolio of energy storage solutions and expected higher volumes, we will also seek to lower the costs of our component parts
through a network of suppliers</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Government Regulations</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Product Safety Regulations</i></b>.
Our products are subject to product safety regulations by Federal, state, and local organizations. Accordingly, we may be required, or
may voluntarily determine, to obtain approval of our products from one or more of the organizations engaged in regulating product safety.
These approvals could require significant time and resources from our technical staff and, if redesign were necessary, could result in
a delay in the introduction of our products in various markets and applications.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Environmental Regulations</i></b>.
Federal, state, and local regulations impose significant environmental requirements on the manufacture, storage, transportation, and disposal
of various components of advanced energy storage systems. Although we believe that our operations are in material compliance with current
applicable environmental regulations, there can be no assurance that changes in such laws and regulations will not impose costly compliance
requirements on us or otherwise subject us to future liabilities.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Moreover, Federal, state, and
local governments may enact additional regulations relating to the manufacture, storage, transportation, and disposal of components of
advanced energy storage systems. Compliance with such additional regulations could require us to devote significant time and resources
and could adversely affect demand for our products. There can be no assurance that additional or modified regulations relating to the
manufacture, storage, transportation, and disposal of components of advanced energy systems will not be imposed.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Occupational Safety and
Health Regulations</i></b>. The California Division of Occupational Safety and Health (Cal/OSHA) and other regulatory agencies have jurisdiction
over the operations of our Vista, California facility. Because of the risks generally associated with the assembly of advanced energy
storage systems we expect rigorous enforcement of applicable health and safety regulations. Frequent audits by, or changes, in the regulations
issued by Cal/OSHA, or other regulatory agencies with jurisdiction over our operations, may cause unforeseen delays and require significant
time and resources from our technical staff.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Cybersecurity</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We are dedicated to safeguarding
our invaluable assets and ensuring the well-being of personnel, as demonstrated through the preparation of our cybersecurity program.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><i><br />
Cybersecurity Risk Management and Strategy</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our cyber risk management program
is designed to comprehensively address the spectrum of cybersecurity threats that confront our organization. Within this program, we integrate
an analysis of the risks facing the organization to guide our preparedness against cybersecurity threats to ensure a holistic approach
that encompasses cross-functional and geographical visibility under the oversight of executive leadership through regular risk management
meetings.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">To aid our cybersecurity risk
management strategy, we contract with dedicated third-party firms and assessors to identify risks and threats to our organization. These
assessments adhere to leading cybersecurity standards such as the National Institute of Standards and Technology (NIST) Cybersecurity
Framework aligning with industry best practices. To oversee incident response and mitigation we utilize our incident response plan and
processes to standardize our processes for assessing, identifying, and managing cybersecurity incidents. This includes a comprehensive
reporting structure and analysis processes to provide visibility and determine incident business impact. Were a cybersecurity incident
to occur, we have also implemented a cross-functional business team to aid in the determination of incident impact, severity, and materiality,
with the support of standing external counsel and third-party incident response advisors. Additional to our third-party incident response
advisors and support contracts, we undergo regular penetration tests to bolster our readiness in the event of cybersecurity incidents.
Furthermore, we have also obtained cybersecurity insurance coverage to enhance protection and minimize potential financial losses arising
from cyber threats.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We prioritize cybersecurity within
our supply chain, both nationally and globally, by assessing our third-party cybersecurity posture to provide secure visibility with our
partnerships. As part of our due diligence processes, we conduct security questionnaires and service provider reviews, to align our cybersecurity
standards on the onset of our partnerships. Additionally, we collaborate closely with a third-party vendor to enhance supply chain resilience.
This collaboration involves leveraging their expertise to inform decision-making and enhance risk oversight processes, ensuring greater
robustness, and adaptability in managing supply chain challenges.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">While we maintain a strong cybersecurity
posture, we continuously strive for improvement and vigilance to mitigate evolving threats within this dynamic environment and protect
our stakeholders&rsquo; interests. Our organization has not experienced any unauthorized access resulting from cybersecurity incidents
with a materially adverse effect on our business, operations, or financial condition and we remain cognizant of the potential impact of
insufficient cybersecurity measures on our operations. For further insights into additional risks relating to our business, please refer
to &ldquo;Item 1A &ndash; Risk Factors - Risk Factors Relating to Our Business.&rdquo;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><i>Cybersecurity Governance</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Board delegated primary oversight
authority to the Audit Committee who plays a pivotal role in ensuring the effectiveness of our cybersecurity strategy. Through regular
updates provided by our leadership team, the committee actively evaluates the organization&rsquo;s cybersecurity posture and aids in prioritizing
risk mitigation efforts aligned with our strategic objectives. These updates encompass detailed quarterly reports during audit committee
meetings, covering key metrics, ongoing initiatives, and any cybersecurity incidents. Additionally, on an annual basis, the entire board
receives updates on the progress of our cybersecurity program and strategy, including insights into emerging risks and industry trends.
Moreover, the board benefits from supplementary educational briefings delivered by both internal and external experts, providing invaluable
global threat visibility and enhancing the Board&rsquo;s understanding of cybersecurity challenges and opportunities.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Overseeing our cybersecurity initiatives
is our Director of Information Technology who provides invaluable expertise in managing cybersecurity risks and leading our cybersecurity
operations. The Director of Information Technology possesses good knowledge in information technology and program management, with contract
resources available to help and supplement our security profile. Furthermore, the executive leadership team is active in security operations,
overseeing implementation of policies, procedures, and policies related to cybersecurity, technology, and vendors. Both the Audit Committee
of the Board as well as executive leadership team will be notified and updated in the event of an incident, with incident updates, mitigation
efforts, and impact, as deemed appropriate.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Properties</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our corporate headquarters and
production facility totals approximately 63,200 square feet and is located in Vista, California. Our production facility is ISO 9001 certified.
We lease this property. Rent during the year ended June 30, 2024 was approximately $66,000 per month, and our annual rent will escalate
approximately 3% per year through the end of the lease term on November 20, 2026. Our east coast customer service facility located in
Atlanta, Georgia is approximately 4,900 square feet and monthly rent is approximately $5,000, which will escalate approximately 5% per
year through the end of the lease term on April 30, 2028. Total rent expense was approximately $942,000, $899,000 and $867,000 for the
fiscal years ended June 30, 2024, 2023 and 2022, respectively.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We believe that our leased property
is in good condition and suitable for the conduct of our business.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Legal Proceedings</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">From time to time, we 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&rsquo;s business. To
the best knowledge of management, except for the legal proceedings disclosed below, there are no other material legal proceedings pending
against us.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><u>Securities Class Action</u></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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
<i>Kassam v. Flux Power Holdings, Inc. et al.</i> (No. 2:24-cv-02051), against the Company, our former chairman, Chief Executive Officer
and President, Ronald F. Dutt, and our former Chief Financial Officer, Charles A. Scheiwe.&nbsp;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.&nbsp;The action purports to be brought on behalf of those who purchased or otherwise acquired the Company&rsquo;s
publicly traded securities between November 11, 2022 and September 30, 2024, and seeks unspecified damages and other relief.&nbsp;On January
14, 2025, the court granted an unopposed motion to transfer the case to the Southern District of California for all further proceedings.&nbsp;The
case is in its early stages and a lead plaintiff has yet to be appointed.&nbsp;Management believes these claims to be meritless and intends
to vigorously defend against them.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><u>Shareholder Derivative Action</u></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="background-color: white">On
January 7, 2025, plaintiff Ronald Pearl filed a purported shareholder derivative complaint in the United States District Court, District
of Nevada, captioned <i>Pearl v. Dutt, et al</i>. (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 <i>Kassam</i> 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.</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><u>Employment Related Actions</u></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On April 30, 2024, a former employee
(the &ldquo;Employee&rdquo;) filed a class action complaint against us and Insperity, our 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 &ldquo;Employment Proceeding&rdquo;). On July 1, 2024, we 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On July 5, 2024, the Employee
filed a representative action complaint against us and Insperity in San Diego County Superior Court for Violation of Private Attorneys&rsquo;
General Act (&ldquo;PAGA&rdquo;), seeking an unspecified amount of penalties and attorneys&rsquo; fees based on allegations that we violated
certain California employment laws (the &ldquo;PAGA Proceeding&rdquo;). On August 8, 2024, we filed an answer to the complaint in which
we denied that any of the asserted claims possessed any merit and contended that certain of the asserted claims were subject to binding
arbitration.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On December 10, 2024, we 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, we intend to move to have the Employee&rsquo;s action claims dismissed, the Employee&rsquo;s
individual claims compelled to binding arbitration and the Employee&rsquo;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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On January 25, 2024, a former
CPM, LTD Inc. (&ldquo;CPM&rdquo;) employee filed a complaint against CPM, a third-party staffing service provider, Flux Power, Inc., and
Flux Power Holdings, Inc. (collectively, the &ldquo;Defendants&rdquo;) 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 us. The plaintiff has alleged that we and CPM were &ldquo;joint employers&rdquo; to the plaintiff under California law
and are jointly liable for the plaintiff&rsquo;s claims. The plaintiff is seeking an unspecified amount of unpaid wages, statutory penalties,
emotional distress damages, punitive damages, and attorneys&rsquo; fees from Defendants. On June 21, 2024, we filed an answer to the complaint
in which we denied that any of the asserted claims possessed any merit and contended that certain of the asserted claims were subject
to binding arbitration.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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. Management intends to vigorously defend against these claims.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Human Capital Resources</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As of April 8, 2025, we
had approximately [119] employees. We engage outside consultants to assist our efforts in business development, operations, finance and
other functions from time to time. None of our employees is currently represented by a trade union.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Corporate Office</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our corporate headquarters and
production facility totals approximately 63,200 square feet and is located in Vista, California. Our production facility is ISO 9001 certified.
The telephone number at our principal executive office is (760)-741-FLUX or (760)-741-3589.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Other Information</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company website Internet address
is www.fluxpower.com. We make available on our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably
practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (&ldquo;SEC&rdquo;).
Other than the information expressly set forth in this prospectus, the information contained, or referred to, on our website is not part
of this prospectus.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The SEC also maintains a website
at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, such as us, that file
electronically with the SEC.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><a name="a_013"></a>MANAGEMENT</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The following table and text
set forth the names and ages of our current directors, executive officers and significant employees as of April 1, 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 46%; border-bottom: black 1pt solid"><font style="font-size: 10pt"><b>Name </b></font></td>
    <td style="width: 2%; padding-bottom: 1pt">&nbsp;</td>
    <td style="width: 10%; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Age </b></font></td>
    <td style="width: 2%; padding-bottom: 1pt">&nbsp;</td>
    <td style="width: 40%; border-bottom: black 1pt solid"><font style="font-size: 10pt"><b>Position</b></font></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><font style="font-size: 10pt">Krishna Vanka <sup>(1) </sup></font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">42 </font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Director, Chief Executive Officer and President</font></td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td><font style="font-size: 10pt">Kevin S. Royal </font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">60 </font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Chief Financial Officer and Secretary</font></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><font style="font-size: 10pt">Jeffrey C. Mason</font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">54</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Vice President of Operations</font></td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td><font style="font-size: 10pt">Dale T. Robinette <sup>(2) (4)</sup></font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">60 </font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Director</font></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><font style="font-size: 10pt">Michael Johnson </font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">76 </font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Director</font></td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td><font style="font-size: 10pt">Lisa Walters-Hoffert <sup>(2) (3)</sup></font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">66 </font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Director</font></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><font style="font-size: 10pt">Mark F. Leposky <sup>(2) (5) </sup></font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">60 </font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Director</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.25in"><font style="font-size: 10pt"><sup>(1)</sup></font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Mr. Vanka was appointed as the Company&rsquo;s Director, Chief Executive Officer and President, effective March 10, 2025.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt"><sup>(2)</sup></font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Independent Director.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt"><sup>(3)</sup></font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Chairperson of the Audit Committee, Member of the Compensation Committee and the Nominating and Governance Committee.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt"><sup>(4)</sup></font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Chairman of the Board, Chairperson of the Compensation Committee, Member of the Audit Committee and the Nominating and Governance Committee.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt"><sup>(5)</sup></font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Chairperson of the Nominating and Governance Committee, Member of the Audit Committee and the Compensation Committee. </font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">&nbsp;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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Business Experience</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><b>Krishna
Vanka<i>,&nbsp;</i></b>age 42. Mr. Vanka has over 18 years of experience in building, scaling, managing and transforming technology companies
in sectors including renewable energy, electric vehicle charging, and others. Mr. Vanka has served as SVP &amp; Chief Digital Officer
(CEO of Digital Division) at Fluence Energy, Inc. (Nasdaq: FLNC), from August 2022 to January 2024. In this role, he was responsible for
the company&rsquo;s strategic growth, profitability, and operational execution, achieving a 300% increase in Annual Recurring Revenue
(ARR) and overseeing a fivefold expansion in Assets Under Management (AUM). He played a key role in integrating product lines of two cloud-based
software offerings, Mosaic and Nispera, into a unified platform, driving innovation in Fluence&rsquo;s software offerings, including Battery
Management Systems (BMS), IoT devices, and Core OS. Mosaic was recognized for its state-of-the-art machine learning algorithms and AI-driven
capabilities, winning Time magazine&rsquo;s 2022 Best Innovations award in the software category. Prior to joining FLNC, Mr. Vanka was
a founding team member and Chief Product Officer at InCharge Energy from November 2020 to August 2022, where he led product development
and technology strategy for EV fleet charging solutions. From April 2018 to November 2020, he was the founder and Chief Executive Officer
of MyShoperoo Inc, an enterprise-focused on-demand shopping platform that optimized last-mile delivery efficiency through intelligent
aggregation algorithms. Mr. Vanka holds a Bachelor of Applied Science in Computer Engineering from the University of Ottawa and an MBA
from Georgia State University. He has also completed executive leadership programs at UC Berkeley, including coursework in Artificial
Intelligence for Business Strategies.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>Kevin S. Royal, Chief Financial
Officer and Secretary. </b>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&amp;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 &amp; 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).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>Jeffrey C. Mason, Vice President
of Operations.</b> 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&rsquo;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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>Michael Johnson, Director.
</b>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&rsquo;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&rsquo;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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>Lisa Walters-Hoffert, Director.</b>
Ms. Walters-Hoffert was appointed to our Board on June 28, 2019. Ms. Walters-Hoffert was a co-founder of Dar&eacute; Bioscience, Inc.
and following the company&rsquo;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 Jos&eacute;, Costa Rica and Oppenheimer &amp; 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&rsquo;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&rsquo;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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>Dale T. Robinette, Director</b>.
Mr. Robinette was appointed to our Board on June 28, 2019 and our Chairman on March 10, 2025. Mr. Robinette previously served as our
lead independent director from September 10, 2021 to March 10, 2025. 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>Mark F. Leposky, Director.
</b>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&rsquo;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&rsquo;s extensive executive experience within the consumer product and service industry qualifies Mr.
Leposky to serve on the Board.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Management Transition</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On March 10, 2025, Mr. Dutt, our former chairman and Chief Executive Officer, notified the Company&rsquo;s Board of his decision to retire and resign from his position as director, Chairman of the Board, Chief Executive Officer and President of the
Company and its wholly owned subsidiary, Flux Power effective March 10, 2025. Mr. Dutt&rsquo;s stepping
down is for personal reasons and not due to any disagreement with the Company&rsquo;s management team or the Company&rsquo;s Board on
any matter relating to the operations, policies or practices of the Company or any issues regarding the Company&rsquo;s accounting policies
or practices.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In connection with Mr. Dutt&rsquo;s
retirement, the Board appointed Mr. Robinette as the new Chairman of the Board, effective March 10, 2025. Mr. Robinette also currently
serves as an independent director, chairperson of the Compensation Committee, and a member of both the Audit
Committee and the Nominating and Governance Committee. In addition, the Board appointed Mr. Vanka as director, Chief Executive
Officer and President of the Company and Flux Power, effective March 10, 2025.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><i>&nbsp;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><i></i></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><i>&nbsp;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Involvement in Certain Legal Proceedings</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Board Leadership Structure and Role in Risk
Oversight</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our Board of Directors (&ldquo;Board&rdquo;)
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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
September 10, 2021, the Board adopted the Lead Independent Director Guidelines (&ldquo;Guidelines&rdquo;). 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.
The responsibilities of the Lead Independent Director, if required under the Guidelines, 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.</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Prior
to March 10, 2025, Mr. Dutt, previously held the Chairman and Chief Executive Officer roles, and Mr. Robinette previously served as the
Lead Independent Director elected by the majority of the Board on September 10, 2021.</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On March 10, 2025, Mr. Dutt, our former chairman and Chief Executive Officer, notified the Company&rsquo;s Board of his decision to retire and resign from his position as director, Chairman of the Board, Chief Executive Officer and President of the
Company and its wholly owned subsidiary, Flux Power, effective March 10, 2025. Mr. Dutt&rsquo;s stepping
down is for personal reasons and not due to any disagreement with the Company&rsquo;s management team or the Company&rsquo;s Board on
any matter relating to the operations, policies or practices of the Company or any issues regarding the Company&rsquo;s accounting policies
or practices.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In light of the anticipated
transition, the Nominating and Governance Committee of the Board determined that it would be in the best interest of the Company and
its stockholders if the position of Chairman of the Board was held by a non-executive member of the Board on a going forward basis. Accordingly,
upon Mr. Dutt&rsquo;s retirement on March 10, 2025, the Board appointed Mr. Dale T. Robinette as the new Chairman of the Board, effective
March 10, 2025. Since Mr. Robinette is an independent director, we do not and will not have a Lead Independent Director until required
to have one under our Independent Director Guidelines.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">In connection
with Mr. Dutt&rsquo;s retirement, the Board appointed Mr. Robinette as the new Chairman of the Board, effective March 10, 2025.
Mr. Robinette also currently serves as an independent director, chairperson of the Compensation Committee,
and a member of both the Audit Committee and the Nominating and Governance Committee. In addition, the Board appointed Mr. Vanka
as director, Chief Executive Officer and President of the Company and Flux Power, effective March 10, 2025.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Mr.
Robinette 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 as our Chairman. The Board believes the appointment of a strong 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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&rsquo;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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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&rsquo;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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Board Composition, Committees and Independence</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Under the rules of Nasdaq, &ldquo;independent&rdquo;
directors must make up a majority of a listed company&rsquo;s Board of Directors. In addition, applicable Nasdaq rules require that, subject
to specified exceptions, each member of a listed company&rsquo;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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 33.75pt">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&rsquo;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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 33.75pt">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Board Committees</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Audit Committee</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 33.75pt">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&rsquo;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 <u>www.fluxpower.com</u>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 33.75pt">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 33.75pt">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Compensation Committee</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 33.75pt">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&rsquo;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 <u>www.fluxpower.com</u>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Nominating and Governance Committee</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 33.75pt">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&rsquo;s independence standards.
The Nominating and Governance Committee operates under a written charter, which is available on our website at <u>www.fluxpower.com</u>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Code of Business Conduct and Ethics</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our Board has adopted a Code of
Business Conduct and Ethics (the &ldquo;Code&rdquo;) 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Indemnification Agreements</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We execute a standard form of
indemnification agreement (&ldquo;Indemnification Agreement&rdquo;) with each of our Board members and executive officers (each, an &ldquo;Indemnitee&rdquo;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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&rsquo;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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>




<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b><i>Insider Trading Policy
and Rule 10b5-1 Trading Programs</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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
&nbsp;(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 (&ldquo;Material Nonpublic
Information&rdquo;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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&rsquo;s stock through a third-party broker or (ii) trading of the Company&rsquo;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&nbsp;a&nbsp;Rule&nbsp;10b5-1&nbsp;plan,&nbsp;a&nbsp;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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><a name="a_014"></a>EXECUTIVE COMPENSATION</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Compensation for our Named Executive Officers</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Name<br />
and Principal Position</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Fiscal Year</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Salary <br />
($)</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Bonus<br />
($)</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Stock Awards <sup>(1)</sup><br />
&nbsp;($)&nbsp;</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Option Awards <sup>(2)</sup> ($)</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Non-Equity Incentive Plan Compensation <br />
($)</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>All Other Compensation<br />
($)</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Total<br />
($)</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="width: 42%"><font style="font-size: 10pt">Ronald F. Dutt, former</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 4%; text-align: center"><font style="font-size: 10pt">2024</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 4%; text-align: right"><font style="font-size: 10pt">375,000</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="width: 4%; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="width: 6%; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 6%; text-align: right"><font style="font-size: 10pt">484,155</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="width: 4%; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&mdash;</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="width: 4%; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&mdash;</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 4%; text-align: right"><font style="font-size: 10pt">859,155</font></td>
    <td style="width: 1%">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Chief Executive Officer, President, and Chairman*</font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2023</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">290,962</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">146,273</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">230,542</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">667,777</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: white">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Charles A. Scheiwe</font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2024</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">205,200</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">89,348</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">294,548</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">former Chief Financial Officer and Corporate Secretary<sup>(4)</sup></font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2023</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">205,989</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">53,613</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">120,419</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">380,021</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: white">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Jeffrey C. Mason <sup>(3)</sup></font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2024</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">275,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">119,152</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">394,152</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Vice President of Operations</font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2023</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">204,346</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">40,176</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">100,602</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">345,124</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: white">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Kevin S. Royal</font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2024</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">330,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">200,970</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&mdash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">530,970</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Chief Financial Officer and Corporate Secretary <sup>(5)</sup></font></td>
    <td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.25in"><font style="font-size: 10pt">*</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Mr. Dutt served as our Chief Executive Officer, President, and Chairman until March 10, 2025. In connection with Mr. Dutt&rsquo;s retirement, the Board appointed Mr. Dale T. Robinette as the new Chairman of the Board, effective March 10, 2025. In addition, the Board appointed Mr. Krishna Vanka as the director, Chief Executive Officer and President of the Company and Flux Power, effective March 10, 2025.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(1)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Represents the fair value of the RSUs granted on grant date.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(2)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">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 prospectus.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(3)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">On November 7, 2022, Mr. Mason&rsquo;s position was expanded to include additional Company authority and delegation.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(4)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">On March 1, 2024, Mr. Scheiwe stepped down as the Company&rsquo;s Chief Financial Officer and Corporate Secretary.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(5)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Mr. Royal was appointed as the Company&rsquo;s Chief Financial Officer and Corporate Secretary effective March 4, 2024.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Benefit Plans</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Equity Compensation Plan Information</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On February 17, 2015, our stockholders
approved our 2014 Equity Incentive Plan (&ldquo;2014 Plan&rdquo;), 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On April 29, 2021, at the Company&rsquo;s
annual stockholders meeting, the 2021 Equity Incentive Plan (the &ldquo;2021 Plan&rdquo;) 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Option Awards <sup>(1)</sup></b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="14" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Stock Awards</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Name</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Award Grant Date</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Award Expiration Date</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Number of Securities Underlying Unexercised Options Exercisable</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Number of Securities Underlying Unexercised Options Unexercisable</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Option Exercise Price <br />
($)</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Number of Shares or Units of Stock That Have Not Vested</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Grant Date Market Value of Shares or Units of Stock That Have Not Vested <br />
($)</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Equity Incentive Plan: Grant Date Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested <br />
($)</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="width: 6%"><font style="font-size: 10pt">Ronald F.Dutt*</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 7%; text-align: right"><font style="font-size: 10pt">10-20-23</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 8%; text-align: right"><font style="font-size: 10pt">10-20-33</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 8%; text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 8%; text-align: right"><font style="font-size: 10pt">223,216</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 8%; text-align: right"><font style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&ndash;</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 5%; text-align: right"><font style="font-size: 10pt">3.36</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 5%; text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 5%; text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 7%; text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 7%; text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td style="width: 1%">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">10-31-22</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">10-31-32</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">20,043</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">60,132</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">3.43</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">3-15-19</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">3-14-29</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">50,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">13.60</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">7-25-18</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">7-24-28</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">33,527</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">19.80</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">6-29-18</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">6-28-28</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">50,001</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">14.40</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">10-26-17</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">10-25-27</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">50,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">4.60</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">12-22-15</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">12-21-25</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">19,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">5.00</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">10-29-21</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">10-29-31</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">4,021</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">23,121</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">4,021</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">23,121</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">11-12-20</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">11-30-30</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">13,214</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">117,340</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">13,214</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">117,340</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: white">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Jeffrey C. Mason <sup>(2)</sup></font></td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">10-20-23</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">10-20-33</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">54,934</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">3.36</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">10-31-22</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">10-31-32</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">8,746</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">26,240</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">3.43</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">10-29-21</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">10-29-31</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">1,280</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">7,360</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">1,280</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">7,360</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: white">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Kevin S. Royal <sup>(3)</sup></font></td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">3-4-24</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">3-4-34</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">55,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">5.00</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 0.25in"><font style="font-size: 10pt">*</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Mr. Dutt served as our Chief Executive Officer, President, and Chairman until March 10, 2025. In connection with Mr. Dutt&rsquo;s retirement, the Board appointed Mr. Dale T. Robinette as the new Chairman of the Board, effective March 10, 2025. In addition, the Board appointed Mr. Krishna Vanka as the director, Chief Executive Officer and President of the Company and Flux Power, effective March 10, 2025.</font></td></tr>
</table>

<p style="margin-top: 0; margin-bottom: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.25in"><font style="font-size: 10pt"><sup>(1)</sup></font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">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&rsquo;s stock or, when the expected term exceeds how long the Company&rsquo;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&rsquo;s Common Stock on the grant date.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt"><sup>(2)</sup></font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">On November 7, 2022, Mr. Mason&rsquo;s position was expanded to include additional Company authority and delegation.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt"><sup>(3)</sup></font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Mr. Royal was appointed as the Company&rsquo;s Chief Financial Officer and Corporate Secretary effective March 4, 2024.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Aggregated Option/Stock Appreciation Right (&ldquo;SAR&rdquo;)
exercised and Fiscal year-end Option/SAR value table</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Neither our executive officers
nor the other individuals listed in the tables above, exercised options or SARs during Fiscal 2024.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>2023 Employee Stock Purchase Plan (the &ldquo;2023
ESPP&rdquo;)</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The 2023 ESPP was approved by
the Board on March 6, 2023 and approved by the Company&rsquo;s stockholders on April 20, 2023. The 2023 ESPP enables eligible employees
of the Company and certain of its subsidiaries (a &ldquo;Participating Subsidiary&rdquo;) to use payroll deductions to purchase shares
of the Company&rsquo;s Common Stock and acquire an ownership interest in the Company. The maximum aggregate number of shares of the Company&rsquo;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&rsquo;s compensation on each pay day to
be used to purchase up to 1,500 shares of Common Stock for the employee&rsquo;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&rsquo;s stockholders, unless otherwise
earlier terminated.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">There were 37,543 and zero shares
of stock purchased under the ESPP during Fiscal 2024 and Fiscal 2023, respectfully.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Employment Agreements with Executive Officers</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b><i>Summary of Employment
Agreement with Mr. Krishna Vanka</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On March
10, 2025, the Company entered into an executive employment agreement with Mr. Vanka, pursuant to which he agreed to serve as the Chief
Executive Officer and President of the Company (the &ldquo;Employment Agreement&rdquo;). Pursuant to the terms of the Employment Agreement,
Mr. Vanka receives an annual base salary of $400,000, subject to annual performance reviews by the Board or Compensation Committee. As
an initial incentive for achieving key financial milestones, the Company agreed to award Mr. Vanka a cash bonus of $100,000 if the Company&rsquo;s
average EBITDA is net positive over the next nine months (end of the calendar year). Beginning fiscal year 2026, Mr. Vanka will have the
ability to achieve a cash bonus of up to 150% of base salary based on budget performance goals as determined by the Board or the Compensation
Committee. Beginning fiscal year 2026, Mr. Vanka will be granted time-based restricted stock units (&ldquo;Time RSUs&rdquo;) equivalent
to 50% of his base salary, vesting in three (3) equal annual installments over three (3) years. He will also be eligible for performance-based
restricted stock units (&ldquo;PSUs&rdquo;), with a target of 50% of his base salary and a maximum of 150%, based on budget performance
goals. Any earned PSUs will cliff-vest on the third (3<sup>rd</sup>) anniversary of the grant date. Additionally, the Employment Agreement
provides that, Mr. Vanka may be terminated at any time by the Company with or without cause. If Mr. Vanka is terminated without cause
or upon a Change in Control (as defined in the Employment Agreement), he will receive: (a) twelve (12) months of base salary paid in a
lump sum; and (b) twelve (12) months of continued life, medical, and dental insurance coverage, with the Company covering the cost subject
to the same employee contribution as active employees. Additionally, in the event of a Change in Control termination, Time RSUs and any
PSUs, for which the performance criteria are satisfied, will be subject to double-trigger acceleration. Mr. Vanka is subject to a non-compete
obligation during the term of his employment and confidentiality obligations that extend beyond termination. The Employment Agreement
also includes other customary clauses and arrangements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b><i>Summary of Employment
Agreement with Former President, Mr. Ron Dutt</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On February 12, 2021, we entered
into an Amended and Restated Employment Agreement with the Company&rsquo;s president and chief executive officer, Mr. Dutt (the
&ldquo;Dutt Employment Agreement&rdquo;), which amends and restates the Employment Agreement effective December 11, 2012, as amended
(the &ldquo;Prior Agreement&rdquo;). 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&rsquo;s continued services as the president and chief executive officer of the Company and its wholly-owned subsidiary, Flux
Power, and the terms pursuant to which he would provide such services. Pursuant to the terms of the
Dutt Employment Agreement, Mr. Dutt&rsquo;s annual base salary was $375,000.&nbsp;<font style="background-color: white">On March 10,
2025, Mr. Dutt notified the Board of his decision to retire and resign from his position as director, Chairman of the Board, Chief Executive
Officer and President of the Company and its wholly owned subsidiary, Flux Power, effective March 10, 2025. Mr. Dutt&rsquo;s stepping
down was because of personal reasons and not due to any disagreement with the Company&rsquo;s management team or the Company&rsquo;s
Board on any matter relating to the operations, policies or practices of the Company or any issues regarding the Company&rsquo;s accounting
policies or practices.</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">To ensure a smooth transition,
on March 10, 2025, the Company entered into an Amendment to Mr. Dutt&rsquo;s Amended and Restated Employment Agreement, dated February
17, 2021 (the &ldquo;Amendment to Dutt Employment Agreement,&rdquo; and together with the Amended and Restated Employment Agreement, the
&ldquo;Dutt Employment Agreement&rdquo;). Under this amendment, Mr. Dutt may provide services and answer questions on an as-needed basis
as a senior advisor and will be compensated based on his current monthly salary in the amount of $32,187.50 through March 2025, unless
terminated earlier pursuant to its terms. Mr. Dutt reports to the Chief Executive Officer or his designee. In addition, the Company and
Mr. Dutt also agreed to enter into separation and release agreement (&ldquo;Separation Agreement&rdquo;), which includes the contemplated
terms of the payments and benefits in exchange for the release and other agreements set forth therein with Mr. Dutt, including: (a) a
cash severance payment of $386,250.02, equivalent to twelve (12) months of his base salary as of the Resignation Date to be paid pro ratably
over twelve (12) months; and (b) a monthly cash payment for twelve (12) months in an amount of $4,034.20 for health insurance coverage.
Mr. Dutt&rsquo;s Separation Agreement includes a customary general release of claims in favor of the Company and certain related parties.
Mr. Dutt&rsquo;s employment with the Company ended on March 31, 2025.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b><i></i></b></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b><i>Summary of Employment
Agreement with Mr. Kevin S. Royal</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b><i>&nbsp;</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On February 22, 2024, we entered
into an Employment Agreement with Mr. Kevin S. Royal, in connection with Mr. Royal&rsquo;s appointment as Chief Financial Officer and
Corporate Secretary, which provides for an annual base salary of $330,000, effective March 4, 2024 (the &ldquo;Employment Agreement&rdquo;).
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&rsquo;s Common Stock (the &ldquo;Options&rdquo;)
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&rsquo;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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Under their respective employment
agreement, Messrs. Vanka 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
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&rsquo;s agreement to a general release
of claims in favor of the Company following termination of employment. Messrs. Vanka 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. Vanka 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. Vanka and Royal employment is &ldquo;at-will&rdquo; and may be terminated at any time for any reason.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Separation Agreements</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On August 12, 2022, Jonathan Berry,
the Company&rsquo;s Chief Operating Officer, separated from the Company and entered into an Employee Separation and Release dated August
24, 2022 (&ldquo;Separation Agreement&rdquo;). 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 &ldquo;Separation Benefits&rdquo;). 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On March 1, 2024 and in connection
with Mr. Scheiwe&rsquo;s departure from the Company, he entered into a Separation and Release Agreement (the &ldquo;Scheiwe Separation
Agreement&rdquo;). 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&rsquo;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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Annual Bonus Plan</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On November 5, 2020, the Board
approved an annual cash bonus plan (the &ldquo;Annual Bonus Plan&rdquo;) 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 (&ldquo;Participants&rdquo;) 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 &ldquo;Plan Year&rdquo;). 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 &ldquo;Participation
Criteria&rdquo;). 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&rsquo;s executive officers are eligible to participate in the Annual Bonus Plan.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On October 20, 2023, the Board
approved an amended and restated annual cash bonus plan (the &ldquo;Amended Annual Bonus Plan&rdquo;) 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 (&ldquo;Participants&rdquo;)
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 &ldquo;Plan Year&rdquo;). 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 &ldquo;Participation Criteria&rdquo;). The Participation Criteria may differ from Participant to Participant and from bonus
to bonus. All of the Company&rsquo;s executive officers are eligible to participate in the Amended Annual Bonus Plan.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Amended Annual Bonus Plan
was approved by the Board in anticipation of the Company adopting its &ldquo;clawback&rdquo; policy applicable to its executive officers
as required under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the &ldquo;Dodd-Frank Act&rdquo;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Clawback Policy</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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 &ldquo;Clawback Policy&rdquo;) 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&rsquo;s
current and former executive officers. Administration of the Clawback Policy will be by the Compensation Committee of the Company.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Restatement of Prior Financial Statements</u></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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&rsquo;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 &ldquo;Received&rdquo;
(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 &ldquo;Clawback Eligible Incentive Compensation&rdquo; (as defined in the Clawback Policy&rdquo;)
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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Fiscal 2023</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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 &ldquo;2023 Bonus&rdquo;).
For the Company&rsquo;s fiscal year 2023, the performance goals applicable to a bonus are based on the Company achieving certain targets
based on the Company&rsquo;s annual revenue, Adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, and
stock-based compensation), functional goals (the &ldquo;Financial Targets&rdquo;), in addition to individual performance objectives and
additional bonus amounts if the Company&rsquo;s financial results exceeds certain thresholds of the Financial Targets.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1pt solid"><font style="font-size: 10pt"><b>Name</b></font></td>
    <td>&nbsp;</td>
    <td style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Position</b></font></td>
    <td>&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Fiscal 2023<br />
Base Salary</b></font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Bonus<br />
Percentage of<br />
Base Salary</b></font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Total<br />
Target<br />
Payout</b></font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Maximum<br />
Payout<sup>(1)</sup></b></font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 16%"><font style="font-size: 10pt">Ronald F. Dutt</font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 26%"><font style="font-size: 10pt">Chief Executive Officer</font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 12%; text-align: right"><font style="font-size: 10pt">300,000</font></td>
    <td style="width: 1%"><font style="font-size: 10pt"><sup>(2)</sup></font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 12%; text-align: right"><font style="font-size: 10pt">75</font></td>
    <td style="width: 1%"><font style="font-size: 10pt">%</font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 8%; text-align: right"><font style="font-size: 10pt">225,000</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 8%; text-align: right"><font style="font-size: 10pt">270,000</font></td>
    <td style="width: 1%">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><font style="font-size: 10pt">Charles Scheiwe</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Chief Financial Officer</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">205,200</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">35</font></td>
    <td><font style="font-size: 10pt">%</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">71,820</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">86,184</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><font style="font-size: 10pt">Jeffery C. Mason</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Vice President of Operations</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">206,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">30</font></td>
    <td><font style="font-size: 10pt">%</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">61,800</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">74,160</font></td>
    <td>&nbsp;</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><sup>(1) </sup>Subject to a bonus cap for achieving
above set revenue target and a payout cap for achieving 10% positive Adjusted EBITDA.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><sup>(2) </sup>To be effective during the second fiscal
quarter of 2023.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Fiscal 2024</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><u>Salary Increases</u></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On October 20, 2023, pursuant
to the recommendation of the Compensation Committee of the Board (the &ldquo;Compensation Committee&rdquo;), the Board approved the following
salary increases (the &ldquo;Fiscal 2024 Annual Salary&rdquo;) to the following executive officers, effective for the fiscal year 2024
(&ldquo;Fiscal 2024&rdquo;):</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1pt solid"><font style="font-size: 10pt"><b>Name</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Position</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Salary for<br />
Fiscal 2023</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Salary for <br />
Fiscal 2024</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="width: 29%"><font style="font-size: 10pt">Ronald F. Dutt</font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 29%"><font style="font-size: 10pt">Chief Executive Officer</font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 16%; text-align: right"><font style="font-size: 10pt">300,000</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 16%; text-align: right"><font style="font-size: 10pt">375,000</font></td>
    <td style="width: 1%">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: white">
    <td><font style="font-size: 10pt">Charles Scheiwe*</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Chief Financial Officer</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">205,200</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">205,200</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Jeffrey Mason</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Vice President of Operations</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">206,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">230,720</font></td>
    <td>&nbsp;</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">* Plus an additional supplemental
payment of $4,000 per month</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Fiscal 2024 Bonuses Under the Amended Bonus Plan</u></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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 &ldquo;2024 Bonus&rdquo;). For Fiscal 2024, the performance goals applicable to a bonus are based on the
Company achieving certain targets based on the Company&rsquo;s full year revenue, Adjusted EBITDA (earnings before interest, income taxes,
depreciation, amortization, and stock-based compensation) for Fiscal 2024, and functional goals (the &ldquo;Financial Targets&rdquo;),
in addition to individual performance objectives and goals (the &ldquo;2024 Performance Matrix&rdquo;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Board approved the following
cash bonuses under the 2024 Bonus for the following executive officers:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1pt solid"><font style="font-size: 10pt"><b>Name</b></font></td>
    <td style="padding-bottom: 1pt; text-align: center">&nbsp;</td>
    <td style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Position</b></font></td>
    <td style="padding-bottom: 1pt; text-align: center">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Maximum Payout<sup>(1)</sup></b></font></td>
    <td style="padding-bottom: 1pt; text-align: center">&nbsp;</td>
    <td style="padding-bottom: 1pt; text-align: center">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Special Bonus Maximum Payout<sup>(2)</sup></b></font></td>
    <td style="padding-bottom: 1pt; text-align: center">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="width: 29%; text-align: justify"><font style="font-size: 10pt">Ronald F. Dutt</font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 29%; text-align: justify"><font style="font-size: 10pt">Chief Executive Officer</font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 16%; text-align: right"><font style="font-size: 10pt">256,281</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 16%; text-align: right"><font style="font-size: 10pt">400,000</font></td>
    <td style="width: 1%">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: white">
    <td style="text-align: justify"><font style="font-size: 10pt">Charles Scheiwe</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Chief Financial Officer</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">91,571</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">-</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="text-align: justify"><font style="font-size: 10pt">Jeffrey Mason</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Vice President of Operations</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">94,607</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-size: 10pt">400,000</font></td>
    <td>&nbsp;</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><sup>(1) </sup>Full maximum payout assuming targets reached as set forth
in the 2024 Performance Matrix.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><sup>(2) </sup>Full maximum payout for achieving certain
additional gross margin targets</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Restricted Stock Unit Grants</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We did not grant any Restricted
Stock Units to any of our executive officers in Fiscal 2024 and Fiscal 2023.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Stock Option Grants</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><i>Fiscal 2024 Grants</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On October 20, 2023 (the &ldquo;Fiscal
2024 Grant Date&rdquo;), pursuant to the recommendation of the Compensation Committee, the Board approved the grant of stock options (the
&ldquo;Fiscal 2024 Options&rdquo;) under the Company&rsquo;s 2014 Equity Incentive Plan (the &ldquo;2014 Plan&rdquo;) and the Company&rsquo;s
2021 Equity Incentive Plan (the &ldquo;2021 Plan&rdquo; and together with 2014 Plan, the &ldquo;Plan&rdquo;) 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 &ldquo;2014 Option Agreement&rdquo;) or the form of Incentive Stock
Option Agreement under the 2021 Plan (the &ldquo;2021 Option Agreement&rdquo;). Additionally, as previously discussed, Mr. Royal was granted
options as part of his chief financial officer employment agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Name</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Position</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 10pt"><b>Options <sup>(1)</sup></b></font></td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Vesting Schedule</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 20%; text-align: left">Ronald F. Dutt</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 24%; text-align: left">Chief Executive Officer</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 12%; text-align: right">223,216</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 36%; text-align: left">Annually over 3 years from the date of grant</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Charles Scheiwe</td><td>&nbsp;</td>
    <td style="text-align: left">Chief Financial Officer</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">42,750</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">Annually over 3 years from the date of grant</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Jeffrey Mason</td><td>&nbsp;</td>
    <td style="text-align: left">Vice President of Operations</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">54,934</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">Annually over 3 years from the date of grant</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Kevin S. Royal</td><td>&nbsp;</td>
    <td style="text-align: left">Chief Financial Officer</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">55,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">Annually over 3 years from the date of grant</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><sup>(1) </sup>Subject to $100,000 ISO limitation
under the 2021 Plan. Excess, if any, issued as non-qualified stock options.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>&nbsp;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Fiscal 2023 Grants</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On October 31, 2022 (the &ldquo;Fiscal
2023 Grant Date&rdquo;), the Compensation Committee approved the grant of incentive stock options (the &ldquo;Fiscal 2023 Options&rdquo;)
under the Company&rsquo;s 2014 Plan and the Company&rsquo;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 &ldquo;2021 Option Agreement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1pt solid"><font style="font-size: 10pt"><b>Name</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Position</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Options <sup>(1)</sup></b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Vesting Schedule</b></font></td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="width: 20%"><font style="font-size: 10pt">Ronald F. Dutt</font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 24%"><font style="font-size: 10pt">Chief Executive Officer</font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 12%; text-align: right"><font style="font-size: 10pt">80,175</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 36%"><font style="font-size: 10pt">Annually over 4 years from the date of grant</font></td></tr>
  <tr style="vertical-align: bottom; background-color: white">
    <td><font style="font-size: 10pt">Charles Scheiwe</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Chief Financial Officer</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">41,878</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Annually over 4 years from the date of grant</font></td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Jeffrey C. Mason</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Vice President of Operations</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">34,986</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Annually over 4 years from the date of grant</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><sup>(1) </sup>Subject to $100,000 ISO limitation
under the 2021 Plan. Excess, if any, issued as non-qualified stock options.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Incentive Plans</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b><i>Compensation of Non-Executive Directors</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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:&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Name</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Independent Non-Executive Director</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Position</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Base Retainer<br />
    <font style="font-style: normal; font-weight: normal">(cash)</font></td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Chair Fee<br />
    <font style="font-style: normal; font-weight: normal">(cash)</font></td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><p style="margin-top: 0; margin-bottom: 0">Lead Independent Director</p>
                                                                                <p style="margin-top: 0; margin-bottom: 0"><font style="font-style: normal; font-weight: normal">(cash)</font></p></td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 22%; text-align: left">Lisa Walters-Hoffert</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 12%; text-align: center">X</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 20%; text-align: left">Audit Chair</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">50,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">7,500</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">-</td><td style="width: 1%; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Dale Robinette</td><td>&nbsp;</td>
    <td style="text-align: center">X</td><td>&nbsp;</td>
    <td style="text-align: left">Compensation Chair</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">50,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">5,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">20,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><font style="font-size: 10pt">John A. Cosentino Jr<sup>. (1)</sup></font></td><td>&nbsp;</td>
    <td style="text-align: center">X</td><td>&nbsp;</td>
    <td style="text-align: left">Governance Chair</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">50,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">5,000</td><td style="text-align: left"><sup>(1)</sup></td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left"><font style="font-size: 10pt">Cheemin Bo-Linn&nbsp;&nbsp;<sup>(2)</sup></font></td><td>&nbsp;</td>
    <td style="text-align: center">X</td><td>&nbsp;</td>
    <td style="text-align: left">Board Member</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">50,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Michael Johnson</td><td>&nbsp;</td>
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">Board Member</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">50,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: .25in; text-align: justify"><font style="font-size: 10pt">(1)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Mr. Cosentino resigned as our director on March 1, 2022. As appreciation for Mr. Cosentino&rsquo;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.&nbsp;</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><font style="font-size: 10pt">(2)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Dr. Bo-Linn was appointed as Chairperson of the Governance Committee on March 3, 2022. For Dr. Bo-Linn&rsquo;s services as Chairperson, she is entitled to a Chair Fee of $5,000 for calendar year 2022.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">There was no change to the cash
compensation package for non-executive directors of the Company during Fiscal 2023.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Name</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Independent Non-Executive Director</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Position</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><p style="margin-top: 0; margin-bottom: 0">Base Retainer</p>
                                                                                <p style="margin-top: 0; margin-bottom: 0"><font style="font-style: normal; font-weight: normal">(cash</font>)</p></td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><p style="margin-top: 0; margin-bottom: 0">Chair Fee</p>
                                                                                <p style="margin-top: 0; margin-bottom: 0"><font style="font-style: normal; font-weight: normal">(cash)</font></p></td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-style: normal; font-weight: normal; text-align: center; border-bottom: Black 1pt solid"><font style="font-size: 10pt"><b>Committee
    Member Fee<sup>(1) </sup></b><br /> <b></b><font style="font-style: normal; font-weight: normal">(cash)</font></font></td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Lead Independent Director (cash)</td><td style="padding-bottom: 1pt">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 18%; text-align: left">Lisa Walters-Hoffert</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 10%; text-align: center">X</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 20%; text-align: left">Audit Chair</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">50,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">7,500</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">5,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 8%; text-align: right">-</td><td style="width: 1%; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Dale Robinette</td><td>&nbsp;</td>
    <td style="text-align: center">X</td><td>&nbsp;</td>
    <td style="text-align: left">Compensation Chair</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">50,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">5,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">6,250</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">20,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><font style="font-size: 10pt">Cheemin Bo-Linn <sup>(2)</sup></font></td><td>&nbsp;</td>
    <td style="text-align: center">X</td><td>&nbsp;</td>
    <td style="text-align: left">Board Member</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">50,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">5,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">6,250</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Michael Johnson</td><td>&nbsp;</td>
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">Board Member</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">50,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><font style="font-size: 10pt">Mark Leposky <sup>(3)</sup></font></td><td>&nbsp;</td>
    <td style="text-align: center">X</td><td>&nbsp;</td>
    <td style="text-align: left">Board Member</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">50,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">5,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">6,250</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: .25in; text-align: justify"><font style="font-size: 10pt"><sup>(1)</sup></font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">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.</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><font style="font-size: 10pt"><sup>(2)</sup></font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Dr. Bo-Linn stepped down as our director on April 18, 2024. As appreciation for Dr. Bo-Linn&rsquo;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.</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><font style="font-size: 10pt"><sup>(3)</sup></font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">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&rsquo;s services, he is entitled to a prorated Chair Fee and Committee Member Fee for the fiscal year ended June 30, 2024.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Name</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Independent Non-Executive Director</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Position</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Base Retainer</b> (cash)</font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Chair Fee</b> (cash)</font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Committee Member Fee <sup>(1)</sup></b> <br />
(cash)</font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt">Lead Independent Director (cash)</font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 18%"><font style="font-size: 10pt">Lisa Walters-Hoffert</font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 10%; text-align: center"><font style="font-size: 10pt">X</font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 20%"><font style="font-size: 10pt">Audit Chair</font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 8%; text-align: right"><font style="font-size: 10pt">50,000</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 8%; text-align: right"><font style="font-size: 10pt">7,500</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 8%; text-align: right"><font style="font-size: 10pt">5,000</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 8%; text-align: right"><font style="font-size: 10pt">-</font></td>
    <td style="width: 1%">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><font style="font-size: 10pt">Dale Robinette</font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">X</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Compensation Chair</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">50,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">5,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">6,250</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">20,000</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><font style="font-size: 10pt">Mark F. Leposky</font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">X</font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Nominating and Governance Chair</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">50,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">5,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">6,250</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">-</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><font style="font-size: 10pt">Michael Johnson</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">Board Member</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">50,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">-</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">-</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">-</font></td>
    <td>&nbsp;</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: .25in; text-align: justify"><font style="font-size: 10pt"><sup>(1)</sup></font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">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.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Equity Component of Non-Executive Director Compensation</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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&rsquo;s s grant was consistent with the standard equity component
of Non-Executive Director Compensation Package as approved by the Board.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In April 2023, each of our non-executive
directors were granted 16,883 RSUs which are scheduled to fully vest on April 20, 2024.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Director Compensation Table</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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 &ldquo;Executive Compensation.&rdquo;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Name</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Fiscal Year</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Fees Earned or Paid In Cash <br />
($)</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Stock Awards<sup>(1) </sup>&nbsp;($)</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>All Other Compensation <br />
($)</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Total <br />
($)</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="width: 32%"><font style="font-size: 10pt">Lisa Walters-Hoffert</font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 10%; text-align: center"><font style="font-size: 10pt">2024</font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 10%; text-align: right"><font style="font-size: 10pt">62,500</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 10%; text-align: right"><font style="font-size: 10pt">80,000</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 10%; text-align: right"><font style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 10%; text-align: right"><font style="font-size: 10pt">142,500</font></td>
    <td style="width: 1%">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2023</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">57,500</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">50,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">-</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">107,500</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: white">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Dale Robinette</font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2024</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">81,250</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">80,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">-</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">161,250</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2023</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">75,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">50,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">-</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">125,000</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: white">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Michael Johnson</font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2024</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">50,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">50,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">-</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">100,000</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2023</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">50,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">50,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">-</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">100,000</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: white">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Cheemin Bo-Linn <sup>(2)</sup></font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2024</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">48,958</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">-</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">-</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">48,958</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2023</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">55,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">50,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">-</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">105,000</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: white">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Mark F. Leposky <sup>(3)</sup></font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2024</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">15,312</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">80,000</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">95,312</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2023</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">-</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">-</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">-</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">-</font></td>
    <td>&nbsp;</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
    <td style="width: 0.25in"><font style="font-size: 10pt"><sup>(1)</sup></font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Represent the fair value of the RSUs granted using the volume weighted average price of the ten days of trading prior to grant date.</font></td></tr>
</table>

<p style="margin-top: 0; margin-bottom: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in"><font style="font-size: 10pt"><sup>(2)</sup></font></td>
    <td><font style="font-size: 10pt">Dr. Bo-Linn stepped down as our director on April 18, 2024. </font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt"><sup>(3)</sup></font></td>
    <td><font style="font-size: 10pt">Mr. Leposky was elected as our director on April 18<b>, </b>2024. </font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Name</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Year</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Vested Stock Options</b></font></td>
    <td style="padding-bottom: 1pt">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td style="width: 66%"><font style="font-size: 10pt">Lisa Walters-Hoffert</font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 14%; text-align: center"><font style="font-size: 10pt">2024</font></td>
    <td style="width: 1%">&nbsp;</td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 14%; text-align: right"><font style="font-size: 10pt">3,948</font></td>
    <td style="width: 1%">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2023</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">3,948</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: white">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Dale Robinette</font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2024</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">3,948</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2023</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">3,948</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: white">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Cheemin Bo-Linn <sup>(1)</sup></font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2024</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2023</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: white">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Michael Johnson</font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2024</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">9,948</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2023</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">12,948</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: white">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center">&nbsp;</td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><font style="font-size: 10pt">Mark F. Leposky <sup>(2)</sup></font></td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2024</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: center"><font style="font-size: 10pt">2023</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: right"><font style="font-size: 10pt">&ndash;</font></td>
    <td>&nbsp;</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: .25in">&nbsp;</td>
    <td style="width: .25in"><font style="font-size: 10pt"><sup>(1)</sup></font></td>
    <td><font style="font-size: 10pt">Dr. Bo-Linn stepped down as our director on April 18, 2024.</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt"><sup>(2)</sup></font></td>
    <td><font style="font-size: 10pt">Mr. Leposky was elected as our director on April 18, 2024.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="text-transform: uppercase"><b>&nbsp;</b></font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="text-transform: uppercase"><b><a name="a_014a"></a>CERTAIN
RELATIONSHIPS AND RELATED PARTY  TRANSACTIONS</b></font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The following includes a summary
of certain relationships and transactions since July 1, 2022  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 &ldquo;Executive Compensation.&rdquo;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Pursuant to the Audit Committee&rsquo;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&rsquo;s approval of related party transactions.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b><i>Line of Credit Facility
and Subordinated Unsecured Promissory Note</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On November
2, 2023, we entered into a Credit Facility Agreement (the &ldquo;Credit Facility&rdquo;) with Cleveland (the &ldquo;Lender&rdquo;). The
Credit Facility provides the Company with a line of credit of up to $2,000,000 for working capital purposes (&ldquo;LOC&rdquo;). In connection
with the LOC, the Company issued a subordinated unsecured promissory note for $2,000,000 (the &ldquo;Commitment Amount&rdquo;) in favor
of the Lender (the &ldquo;Note&rdquo;).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Pursuant
to the terms of the Credit Facility, the Lender agreed to make loans (each such loan, an &ldquo;Advance&rdquo;) up to such Lender&rsquo;s
Commitment Amount to the Company from time to time, until August 15, 2025 (the &ldquo;Due Date&rdquo;). 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, &ldquo;GBC&rdquo;), pursuant to a Subordination Agreement
dated on or about November 2, 2023, by and between the Lender and GBC (the &ldquo;Subordination Agreement&rdquo;). 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&rsquo;s commitment
to provide the Advances, we agreed to issue the Lender warrants to purchase 41,196 shares of Common Stock (the &ldquo;Warrants&rdquo;)
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. As of April 8, 2025, the Company had $12,123,718 in principal amount outstanding under the Credit
Facility.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="text-transform: uppercase"><b><a name="a_014b"></a>PRINCIPAL
SECURITYHOLDERS</b></font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Security Ownership of Principal Stockholders and
Management</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">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 April 8, 2025, we had a total of 16,682,465 shares of Common
Stock issued and outstanding.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;The
following table sets forth, as of April 8, 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; border-bottom: Black 1pt solid"><font style="font-size: 10pt"><b>Name and Address of Beneficial Owner&nbsp;<sup>(1)</sup></b></font></td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Shares</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Beneficially</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Owned</b></p></td><td style="padding-bottom: 1pt">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>% of</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Ownership</b></p></td><td style="padding-bottom: 1pt">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-style: italic; text-align: left">Officers and Directors</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="width: 68%; text-align: left; padding-left: 10pt">Michael Johnson, Director</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 12%; text-align: right">4,214,939</td><td style="width: 1%; text-align: left"><sup>(2)</sup></td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 12%; text-align: right">25.1</td><td style="width: 1%; text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Krishna Vanka, Chief Executive Officer, President, and Director</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&ndash;</td><td style="text-align: left"><sup>(3)</sup></td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&ndash;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Kevin S. Royal, Chief Financial Officer and Secretary</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">18,331</td><td style="text-align: left"><sup>(4)</sup></td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right"><font style="font-size: 10pt">*</font></td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Jeffrey C. Mason, Vice President of Operations</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">43,066</td><td style="text-align: left"><sup>(5)</sup></td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right"><font style="font-size: 10pt">*</font></td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Mark F. Leposky, Director</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">17,057</td><td style="text-align: left"><sup>(6)</sup></td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right"><font style="font-size: 10pt">*</font></td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Lisa Walters-Hoffert, Director</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">48,055</td><td style="text-align: left"><sup>(7)</sup></td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right"><font style="font-size: 10pt">*</font></td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Dale Robinette, Director</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">60,257</td><td style="text-align: left"><sup>(8)</sup></td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right"><font style="font-size: 10pt">*</font></td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-style: italic; text-align: left">All Officers and Directors as a group (7 people)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">4,401,707</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">26.0</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-style: italic">5% Stockholders</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Esenjay Investments LLC</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">4,148,680</td><td style="text-align: left"><sup>(2)</sup></td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">24.7</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Cleveland Capital Management L.L.C.</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">1,445,182</td><td style="text-align: left"><sup>(9)</sup></td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">7.0</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">1250 Linda Street, Suite 304</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Rocky River, OH 44116</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify">Formidable Asset Management, LLC</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">3,274,325</td><td style="text-align: left"><sup>(10)</sup></td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">19.5</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; padding-left: 10pt">221 E Fourth Street, Suite 2700</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify; padding-left: 10pt">Cincinnati OH 45202</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left">*</td><td style="text-align: justify">Represents less than 1% of shares outstanding.</td>
</tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white">
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(1)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">All addresses above are 2685 S. Melrose Drive, Vista, California 92081, unless otherwise stated.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(2)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">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, (ii) 9,948 shares of common stock issuable to Mr. Johnson upon exercise of stock options within 60 days, and (iii) 17,057 shares of common stock issuable upon vesting of restricted stock units within 60 days.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(3)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Mr. Vanka was appointed Chief Executive Officer, President and director on March 10, 2025.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(4)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Includes 18,331 shares of common stock issuable upon exercise of stock options within 60 days.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(5)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Includes 7,264 shares of common stock and 35,802 shares of common stock issuable upon exercise of stock options within 60 days.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(6)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Includes 17,057 shares of common stock issuable upon vesting of restricted stock units within 60 days.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(7)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Includes 27,050 shares of common stock, 3,948 shares of common stock issuable upon exercise of stock options within 60 days, and 17,057 shares of common stock issuable upon vesting of restricted stock units within 60 days.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(8)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Includes 39,254 shares of common stock, 3,948 shares of common stock issuable upon exercise of stock options within 60 days, and 17,057 shares of common stock upon vesting of restricted stock units within 60 days.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(9)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Based on Amendment No. 8 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 14, 2025, reporting information as of December 31, 2024. Reflects 1,404,032 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) 41,150 shares of common stock individually held by Mr. Massad and (ii) 50,000 shares of common stock individually held by Mr. Shiry.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(10)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">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.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><a name="a_015"></a>DESCRIPTION OF CAPITAL STOCK</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">The following description of our
current capital stock and provisions of our amended and restated articles of incorporation (Articles of Incorporation) and Amended and
Restated Bylaws (Bylaws) are summaries, are not intended to be complete and are qualified in their entirety by reference such Articles
of Incorporation and Bylaws, copies of which have been filed as exhibits to our registration statement, of which this prospectus forms
a part.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Proposed Amendment to Articles of Incorporation</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On April 9, 2025, the Company
filed a definitive proxy statement with the SEC in connection with the 2025 Annual Meeting of Stockholders to be held at 10:00 a.m. Pacific
Standard Time, on Wednesday, May 28, 2025 via a live webcast on the internet (&ldquo;Annual Meeting&rdquo;). At the Annual Meeting, stockholders
of record as of April 8, 2025 will be asked to elect five directors to the Board, ratify Haskell &amp; White LLP as its independent registered
public accounting firm for fiscal year ended June 30, 2025, to approve a 2025 Equity Incentive Plan, to approve an amendment to the Company&rsquo;s
Articles to (i) to increase the authorized shares of common stock from 30,000,000 to 75,000,000, and (ii) to permit the issuance of 3,000,000
shares of preferred stock with rights and preferences to be determined by the Company&rsquo;s Board of Directors from time to time.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Common Stock</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We are authorized to issue up
30,000,000 shares of Common Stock, par value $0.001 per share. Each outstanding share of Common Stock entitles the holder thereof to
one vote per share on all matters. As of April 8, there were 16,682,465 shares of Common Stock issued and outstanding.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The holders of shares of our Common
Stock are entitled to dividends out of funds legally available when and as declared by our Board of Directors. In the event of our liquidation,
dissolution or winding up, holders of our Common Stock are entitled to receive, ratably, the net assets available to stockholders after
payment of all creditors.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">To the extent that additional
shares of our Common Stock are issued, the relative interests of existing stockholders will be diluted.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Voting Rights</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Our Common Stock is entitled to
one vote for each share held of record on all matters submitted to a vote of the stockholders, including the election of directors, and
does not have cumulative voting rights.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Economic Rights</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 24.45pt; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Except as otherwise expressly
provided in our Articles of Incorporation or required by applicable law, all shares of Common Stock will have the same rights and privileges
and rank equally, share ratably, and be identical in all respects for all matters, including those described below.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Dividends</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Subject to preferences that may
be applicable to any then-outstanding preferred stock, the holders of Common Stock are entitled to receive dividends, if any, as may be
declared from time to time by our Board of Directors out of legally available funds.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>Liquidation Rights</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">In the event of our liquidation,
dissolution or winding-up, holders of our Common Stock will be entitled to share ratably in the net assets legally available for distribution
to stockholders after the payment of all of our debts and other liabilities, subject to the satisfaction of any liquidation preference
granted to the holders of any outstanding shares of preferred stock.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><b><i>No Preemptive or Similar
Rights</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The holders of our shares of Common
Stock are not entitled to preemptive rights, and are not subject to conversion, redemption or sinking fund provisions. The rights, preferences
and privileges of the holders of our Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares
of any series of our preferred stock that we may designate and issue in the future.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 33.75pt"><b><i>Removal of Directors by
Stockholders</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 33.75pt">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 33.75pt">Our Bylaws provide that subject
to any limitations in our Articles of Incorporation, directors may be removed by a vote not less than two-thirds of the voting power of
the issued and outstanding stock entitled to vote thereon, at a special meeting of the stockholders called for that purpose.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 33.75pt">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 33.75pt"></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 33.75pt">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Preferred Stock</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We may issue up to 500,000 shares
of preferred stock, par value $0.001 per share in one or more classes or series within a class pursuant to our Articles of Incorporation.
There are no shares of preferred stock issued and outstanding. Preferred stock may be issued from time to time by the Board of Directors
as shares of one or more classes or series. One of the effects of undesignated preferred stock may be to enable the Board of Directors
to render more difficult or to discourage an attempt to obtain control of us by means of a tender offer, proxy contest, merger or otherwise,
and thereby to protect the continuity of our management. The issuance of shares of preferred stock pursuant to the Board of Directors&rsquo;
authority described above may adversely affect the rights of holders of Common Stock. For example, preferred stock issued by us may rank
prior to the Common Stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible
into shares of Common Stock. Accordingly, the issuance of shares of preferred stock may discourage bids for the Common Stock at a premium
or may otherwise adversely affect the market price of the Common Stock.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Nevada Laws</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Sections 78.378 to 78.3793 of
the Nevada Revised Statutes (NRS) (Acquisition of Controlling Interest) provide generally that any person or entity that acquires at least
one-fifth of all the voting power in the election of directors of a Nevada corporation, which has 200 or more stockholders of record and
does business in the State of Nevada, may be denied voting rights with respect to the acquired shares, unless a majority of the disinterested
stockholders of the corporation elects to restore such voting rights in whole or in part.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Section 78.3785 of the NRS provides
that a person or entity acquires &ldquo;control shares&rdquo; whenever it acquires shares that, but for the operation of the control share
acquisition act, would bring its voting power within any of the following three ranges:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&nbsp;</td>
    <td style="width: 0.25in"><font style="font-size: 10pt">&#9679;</font></td>
    <td><font style="font-size: 10pt">One-fifth or more but less than one-third;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td><font style="font-size: 10pt">One-third or more but less than a majority; or</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">&#9679;</font></td>
    <td><font style="font-size: 10pt">A majority or more.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">A &ldquo;control share acquisition&rdquo;
is generally defined as the direct or indirect acquisition of either ownership or voting power associated with issued and outstanding
control shares. The stockholders or board of directors of a corporation may elect to exempt the stock of the corporation from the provisions
of the control share acquisition act through adoption of a provision to that effect in the articles of incorporation or bylaws of the
corporation.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Transfer Agent And Registrar</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The transfer agent and registrar
for our Common Stock is Issuer Direct Corporation, 1981 Murray Holladay Rd Suite 100, Salt Lake City, Utah 84117.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><b><a name="a_016"></a>DESCRIPTION OF SECURITIES
WE ARE OFFERING</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We are
offering shares of Common Stock, Common Warrants to purchase shares of Common Stock and pre-funded warrants to purchase shares of Common
Stock. For each pre-funded warrant we sell, the number of shares of Common Stock we are offering will be decrease on a one-for-one basis.
Each share of Common Stock and pre-funded warrant will be sold together with one Common Warrant. The shares of Common Stock and accompanying
Common Warrants are immediately separable and will be issued separately in the offering, and the pre-funded warrants and the accompanying
Common Warrants are immediately separable and will be issued separately in the offering.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We are
also registering the shares of our Common Stock issuable from time to time upon exercise of the Common Warrants and pre-funded warrants
offered hereby.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b>Common Stock</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">The material
terms and provisions of our Common Stock and each other class of our securities which qualifies or limits our Common Stock are described
under the caption &ldquo;<i>Description of Our Capital Stock</i>&rdquo; in this prospectus.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b>Pre-Funded Warrants</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">The following
summary of certain terms and provisions of pre-funded warrants that are being offered hereby is not complete and is subject to, and qualified
in its entirety by, the provisions of the pre-funded warrant, the form of which is filed as an exhibit to the registration statement of
which this prospectus forms a part. Prospective investors should carefully review the terms and provisions of the form of pre-funded warrant
for a complete description of the terms and conditions of the pre-funded warrants.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>Duration
and Exercise Price</i>. Each pre-funded warrant offered hereby will have an initial exercise price per share equal to $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
. The pre-funded warrants will be immediately exercisable and may be exercised at any time until the pre-funded warrants are exercised
in full. The exercise price and number of shares of Common Stock issuable upon exercise is subject to appropriate adjustment in the event
of stock dividends, stock splits, reorganizations or similar events affecting our Common Stock and the exercise price. The pre-funded
warrants will be issued separately from the accompanying Common Warrants and may be transferred separately immediately thereafter.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>&nbsp;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>Exercisability</i>.
The pre-funded warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise
notice accompanied by payment in full for the number of shares of our Common Stock purchased upon such exercise (except in the case of
a cashless exercise as discussed below). Purchasers of the pre-funded warrants in this offering may elect to deliver their exercise notice
following the pricing of the offering and prior to the issuance of the pre-funded warrants at closing to have their pre-funded warrants
exercised immediately upon issuance and receive shares of Common Stock underlying the pre-funded warrants upon closing of this offering.
A holder (together with its affiliates) may not exercise any portion of the pre-funded warrant to the extent that the holder would own
more than 4.99% of the outstanding Common Stock immediately after exercise, except that upon at least 61 days&rsquo; prior notice from
the holder to us, the holder may increase the amount of ownership of outstanding stock after exercising the holder&rsquo;s pre-funded
warrants up to 9.99% of the number of shares of our Common Stock outstanding immediately after giving effect to the exercise, as such
percentage ownership is determined in accordance with the terms of the pre-funded warrants. Purchasers of pre-funded warrants in this
offering may also elect prior to the issuance of the pre-funded warrants to have the initial exercise limitation set at 9.99% of our outstanding
Common Stock. No fractional shares of Common Stock will be issued in connection with the exercise of a pre-funded warrant. In lieu of
fractional shares, we will round down to the next whole share.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>&nbsp;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>Cashless
Exercise</i>. If, at the time a holder exercises its pre-funded warrants, a registration statement registering the issuance of the shares
of Common Stock underlying the pre-funded warrants under the Securities Act is not then effective or available, then in lieu of making
the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the holder may
elect instead to receive upon such exercise (either in whole or in part) the net number of shares of Common Stock determined according
to a formula set forth in the pre-funded warrants.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>Transferability</i>.
Subject to applicable laws, a pre-funded warrant may be transferred at the option of the holder upon surrender of the pre-funded warrant
to us together with the appropriate instruments of transfer.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>&nbsp;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>Exchange
Listing</i>. There is no trading market available for the pre-funded warrants on any securities exchange or nationally recognized trading
system. We do not intend to list the pre-funded warrants on any securities exchange or nationally recognized trading system.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>Right
as a Stockholder</i>. Except as otherwise provided in the pre-funded warrants or by virtue of such holder&rsquo;s ownership of shares
of our Common Stock, the holders of the pre-funded warrants do not have the rights or privileges of holders of our Common Stock, including
any voting rights, until they exercise their pre-funded warrants.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>&nbsp;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>Fundamental
Transaction.&nbsp;</i>In the event of a fundamental transaction, as described in the pre-funded warrants and generally including any reorganization,
recapitalization or reclassification of our Common Stock, the sale, transfer or other disposition of all or substantially all of our properties
or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding Common Stock,
or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding Common Stock, the holders
of the pre-funded warrants will be entitled to receive upon exercise of the pre-funded warrants the kind and amount of securities, cash
or other property that the holders would have received had they exercised the pre-funded warrants immediately prior to such fundamental
transaction. Notwithstanding the foregoing, in the event of a fundamental transaction, the holder of the pre-funded warrant will have
the right to require us or the successor entity to purchase the remaining unexercised portion of the pre-funded warrant in cash in an
amount equal to a Black Scholes Value as defined in the pre-funded warrant.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b>Common Warrants</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">The following
summary of certain terms and provisions of Common Warrants that are being offered hereby is not complete and is subject to, and qualified
in its entirety by, the provisions of the Common Warrants, the form of which is filed as an exhibit to the registration statement of which
this prospectus forms a part. Prospective investors should carefully review the terms and provisions of the form of Common Warrants for
a complete description of the terms and conditions of the Common Warrants.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>Duration
and Exercise Price.</i>&nbsp;Each Common Warrant offered hereby will have an initial exercise price per share equal to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
of the public offering price of the shares of Common Stock and accompanying Common Warrants. The Common Warrants will be immediately exercisable
and will expire on the fifth anniversary of the original issuance date. The exercise price and number of shares of Common Stock issuable
upon exercise are subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting
our Common Stock and the exercise price. The Common Warrants will be issued together with the Common Stock or pre-funded warrant and may
be transferred separately immediately thereafter.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>&nbsp;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>Exercisability</i>.
The Common Warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise
notice accompanied by payment in full for the number of shares of our Common Stock purchased upon such exercise (except in the case of
a cashless exercise as discussed below). A holder (together with its affiliates) may not exercise any portion of the Common Warrant to
the extent that the holder would own more than 4.99% of the outstanding Common Stock immediately after exercise, except that upon at least
61 days&rsquo; prior notice from the holder to us, the holder may increase the amount of ownership of outstanding stock after exercising
the holder&rsquo;s Common Warrants up to 9.99% of the number of shares of our Common Stock outstanding immediately after giving effect
to the exercise, as such percentage ownership is determined in accordance with the terms of the Common Warrants. No fractional shares
of Common Stock will be issued in connection with the exercise of a Common Warrant. In lieu of fractional shares, we will round down to
the next whole share.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>&nbsp;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>Cashless
Exercise</i>. If, at the time a holder exercises its Common Warrants, a registration statement registering the issuance of the shares
of Common Stock underlying the Common Warrants under the Securities Act is not then effective or available and an exemption from registration
under the Securities Act is not available for the issuance of such shares, then in lieu of making the cash payment otherwise contemplated
to be made to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise
(either in whole or in part) the net number of shares of Common Stock determined according to a formula set forth in the Common Warrants.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>&nbsp;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>Transferability.</i>&nbsp;Subject
to applicable laws, Common Warrants in physical form may be transferred upon surrender of the Common Warrant together with the appropriate
instruments of transfer.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>&nbsp;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>Exchange
Listing</i>. There is no established public trading market for the Common Warrants, and we do not expect a market to develop. In addition,
we do not intend to list the Common Warrants on any securities exchange or nationally recognized trading system. Without an active trading
market, the liquidity of the Common Warrants will be limited.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>&nbsp;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>Right
as a Stockholder</i>. Except as otherwise provided in the Common Warrants or by virtue of such holder&rsquo;s ownership of shares of our
Common Stock, the holders of the Common Warrants do not have the rights or privileges of holders of our Common Stock, including any voting
rights, until they exercise their Common Warrants.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>&nbsp;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><i>Fundamental
Transaction.&nbsp;</i>In the event of a fundamental transaction, as described in the form of Common Warrant, and generally including any
reorganization, recapitalization or reclassification of our Common Stock, the sale, transfer or other disposition of all or substantially
all of our properties or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding
Common Stock, or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding Common Stock,
the holders of the Common Warrants will be entitled to receive upon exercise of the Common Warrants the kind and amount of securities,
cash or other property that the holders would have received had they exercised the Common Warrants immediately prior to such fundamental
transaction. Notwithstanding the foregoing, in the event of a fundamental transaction, the holder of the Common Warrant will have the
right to require us or the successor entity to purchase the remaining unexercised portion of the Common Warrant in cash in an amount equal
to a Black Scholes Value as defined in the Common Warrant.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><b><a name="a_017"></a>PLAN OF DISTRIBUTION</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Pursuant
to a placement agency agreement to be entered into between&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; and us, we will
engage&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to act as our exclusive&nbsp;placement agent to solicit
offers to purchase the securities offered by this prospectus on a reasonable best-efforts basis. The placement agent is not purchasing
or selling any securities, nor is it required to arrange for the purchase and sale of any specific number or dollar amount of securities,
other than to use its &ldquo;reasonable best efforts&rdquo; to arrange for the sale of the securities by us. Therefore, we may not sell
the entire amount of securities being offered, or any at all. The placement agent may engage one or more subagents or selected dealers
in connection with this offering.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We will
enter into a securities purchase agreement directly with the investors, at the investor&rsquo;s option, who purchase our securities in
this offering. Investors who do not enter into a securities purchase agreement shall rely solely on this prospectus in connection with
the purchase of our securities in this offering.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We will
deliver the securities being issued to the investors upon receipt of investor funds for the purchase of the securities offered pursuant
to this prospectus. We will deliver the securities being offered pursuant to this prospectus upon closing.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We will
pay the placement agent a cash transaction fee equal to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; % of the aggregate gross
proceeds to us from the sale of the securities in the offering. In addition, we will reimburse the placement agent for its accountable
legal expenses incurred in connection with this offering in the amount of up to $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
, as well as non-accountable expenses of up to $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , incurred by the placement agent
in connection with this offering. The placement agency agreement, however, will provide that in the event this offering is terminated,
the placement agent will only be entitled to the reimbursement of out-of-pocket accountable expenses actually incurred in accordance with
Financial Industry Regulatory Authority, Inc. (&ldquo;FINRA&rdquo;) Rule 5110(f)(2)(C).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">The following
table shows the public offering price, placement agent fees and proceeds, before expenses, to us, assuming the purchase of all the securities
we are offering. Because there is no minimum offering amount required as a condition to closing in this offering, the actual total placement
agent fees, if any, are not presently determinable and may be substantially less than the maximum amount set forth below.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Per Common <br />
Stock and <br />
Common <br />
Warrant</b></font></td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Per Pre-Funded <br />
Warrant and <br />
Common <br />
Stock</b></font></td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td>
    <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Total<br />
Offering</b><sup>(3)</sup></font></td>
    <td style="padding-bottom: 1.5pt">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 52%"><font style="font-size: 10pt">Public offering price</font></td>
    <td style="width: 2%">&nbsp;</td>
    <td style="width: 1%"><font style="font-size: 10pt">$</font></td>
    <td style="width: 12%; text-align: right">&nbsp;</td>
    <td style="width: 1%; text-align: right">&nbsp;</td>
    <td style="width: 2%; text-align: right">&nbsp;</td>
    <td style="width: 1%; text-align: left"><font style="font-size: 10pt">$</font></td>
    <td style="width: 12%; text-align: right">&nbsp;</td>
    <td style="width: 1%; text-align: right">&nbsp;</td>
    <td style="width: 2%; text-align: right">&nbsp;</td>
    <td style="width: 1%; text-align: left"><font style="font-size: 10pt">$</font></td>
    <td style="width: 12%">&nbsp;</td>
    <td style="width: 1%">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td><font style="font-size: 10pt">Placement Agent Fees<sup>(1)</sup></font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td style="text-align: left"><font style="font-size: 10pt">$</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td style="text-align: left"><font style="font-size: 10pt">$</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><font style="font-size: 10pt">Proceeds to us (before expenses)<sup>(2)</sup></font></td>
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">$</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td style="text-align: left"><font style="font-size: 10pt">$</font></td>
    <td>&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td style="text-align: right">&nbsp;</td>
    <td style="text-align: left"><font style="font-size: 10pt">$</font></td>
    <td>&nbsp;</td>
    <td>&nbsp;</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: .25in"><font style="font-size: 10pt">(1)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">We have agreed to pay the placement agent a cash fee equal to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; % of the gross proceeds that are sold in the offering and to reimburse the placement agent for certain expenses. See section titled &ldquo;<i>Plan of Distribution</i>&rdquo; for additional information.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(2)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">The amount of offering proceeds to us presented in this table does not give effect to any exercise of the Common Warrants or pre-funded warrants.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(3)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Assumes no pre-funded warrants are issued.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We estimate
that the total expenses of the offering, including registration, filing and listing fees, printing fees and legal and accounting expenses,
but excluding the placement agent commission, will be approximately $[&#9679;], all of which are payable by us. This figure includes the
placement agent&rsquo;s out-of-pocket expenses, including, but not limited to, legal fees for the placement agent&rsquo;s legal counsel,
that we have agreed to pay at the closing of the offering, up to $[&#9679;].</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b>Lock-Up Agreements</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We and
our directors, officers and stockholders who beneficially own &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; % or more of our outstanding
Common Stock have agreed with the placement agent, for a period of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; days after the closing
of this offering, not to offer for sale, issue, sell, contract to sell, pledge grant any option to purchase, make any short sale or otherwise
dispose of, directly or indirectly any shares of our Common Stock or any securities convertible into or exchangeable for our Common Stock
either owned as of the date of the placement agent agreement or thereafter acquired without the prior written consent of the placement
agent, subject to certain exceptions. The placement agent may, in its sole discretion and at any time or from time to time before the
termination of the lock-up period, without notice, release all or any portion of the securities subject to lock-up agreements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b>Indemnification</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We have
agreed to indemnify the placement agent against certain liabilities, including liabilities under the Securities Act, and to contribute
to payments that the placement agent may be required to make for these liabilities.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b>Determination of Offering
Price and Warrant Exercise Price</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">The actual
combined public offering price of the Common Stock and Common Warrants, and pre-funded warrants and Common Warrants, we are offering,
and the exercise price of the Common Warrants that we are offering, will be negotiated between us, the placement agent and the investors
in the offering based on the trading price of our Common Stock prior to the offering, among other things, including a to be negotiated
discount to the trading price. Other factors considered in determining the combined public offering price of the Common Stock and Common
Warrants, and pre-funded warrants and Common Warrants, we are offering, as well as the exercise price of the Common Warrants that we are
offering, include our history and prospects, the stage of development of our business, our business plans for the future and the extent
to which they have been implemented, an assessment of our management, the general conditions of the securities markets at the time of
the offering and such other factors as were deemed relevant.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b>Regulation M</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">The placement
agent may be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act, and any commissions received by
it and any profit realized on the resale of the securities sold by it while acting as principal might be deemed to be underwriting discounts
or commissions under the Securities Act. As an underwriter, the placement agent would be required to comply with the requirements of the
Securities Act and the Exchange Act, including, without limitation, Rule 10b-5 and Regulation M under the Exchange Act. These rules and
regulations may limit the timing of purchases and sales of our securities by the placement agent acting as principal. Under these rules
and regulations, the placement agent (i) may not engage in any stabilization activity in connection with our securities and (ii) may not
bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under
the Exchange Act, until it has completed its participation in the distribution.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b>Trading Market and Symbol</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Our Common
Stock is listed on The Nasdaq Capital Market under the symbol &ldquo;Flux.&rdquo; The pre-funded warrants and Common Warrants are not
and will not be listed on an exchange and there will be no public market for the pre-funded warrants nor Common Warrants.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b>Electronic Distribution</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">A prospectus
in electronic format may be made available on a website maintained by the placement agent. In connection with the offering, the placement
agent or selected dealers may distribute prospectuses electronically.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Other
than the prospectus in electronic format, the information on the placement agent&rsquo;s website and any information contained in any
other website maintained by the placement agent is not part of the prospectus or the registration statement of which this prospectus forms
a part, has not been approved and/or endorsed by us or the placement agent in its capacity as placement agent and should not be relied
upon by investors.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b>Certain Relationships</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">The placement
agent and its affiliates may in the future provide, from time to time, investment banking and financial advisory services to us in the
ordinary course of business, for which they may receive customary fees and commissions.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><b><a name="a_018"></a>LEGAL MATTERS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">The validity
of securities offered hereby will be passed upon for us by Lewis Brisbois Bisgaard &amp; Smith LLP, San Francisco, California. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
is acting as counsel to the placement agent in connection with certain legal matters related to this offering.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><b><a name="a_019"></a>EXPERTS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">The consolidated
financial statements of Flux Power Holdings, Inc. as of June 30, 2023 and June 30, 2024, and the related consolidated statements of operations,
stockholders&rsquo; equity, and cash flows for the year then ended, have been audited by Baker Tilly US, LLP (&ldquo;Baker Tilly&rdquo;),
an independent registered public accounting firm, as stated in its report included herein (which report includes an explanatory paragraph
describing conditions that raise substantial doubt about our ability to continue as a going concern described in Note 3 to the consolidated
financial statements). Such financial statements have been included herein in reliance on the report of such firm given upon its authority
as experts in accounting and auditing.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><a name="a_020"></a>CHANGES IN AND DISAGREEMENTS WITH </b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><font style="font-size: 10pt"><b>Notification Not to Stand for Re-Election</b></font></p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On January
6, 2025, the Company was notified by Baker Tilly that it would not stand for re-election as the Company&rsquo;s independent registered
public accounting firm upon completion of its audit for the fiscal year ended June 30, 2024. Baker Tilly remains engaged to complete its
audit of the Company&rsquo;s financial statements for the fiscal year ended June 30, 2024. Upon completion of its audit of such financial
statements and filing of the Form 10-K for the fiscal year ended June 30, 2024, its engagement with the Company will cease.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Baker
Tilly&rsquo;s reports on the Company&rsquo;s financial statements for the fiscal years ended June 30, 2023 and June 30, 2022, prior to
the effects of the pending restatement as disclosed in Form 8-K filed with the Securities and Exchange Commission on September 5, 2024,
did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting
principles. During the Company&rsquo;s two most recent fiscal years ended June 30, 2023 and June 30, 2022 and the subsequent interim period
through January 6, 2025, there were no disagreements, within the meaning of Item 304(a)(1)(iv) of Regulation S-K promulgated under the
Securities Exchange Act of 1934 (&ldquo;Regulation S-K&rdquo;) and the related instructions thereto, with Baker Tilly on any matter of
accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Baker Tilly, would have caused it to make reference to the subject matter of the disagreements in connection with
its reports. Also during this same period, there were no reportable events within the meaning of Item 304(a)(1)(v) of Regulation S-K and
the related instructions thereto, except for the material weaknesses in the Company&rsquo;s internal control over financial reporting
as disclosed in the Company&rsquo;s Form 10-K for the fiscal year ended June 30, 2023, and the Form 10-Q for the periods ended September
30, 2023, December 31, 2023, and March 31, 2024. Baker Tilly did not seek the Company&rsquo;s consent to its decision not to stand for
re-election. As a result, neither the Company&rsquo;s Board of Directors nor the Company&rsquo;s Audit Committee recommended or approved
such decision. We provided Baker Tilly with the disclosures under this Item 4.01 and requested Baker Tilly to furnish us with a letter
addressed to the United States Securities and Exchange Commission stating whether it agrees with the foregoing statements made by us .01
and, if not, stating the areas of disagreement. A copy of Baker Tilly&rsquo;s letter, dated January 8, 2025, is attached hereto as exhibit
to the registration. Baker Tilly completed its audit of the Company&rsquo;s consolidated financial statements as of and for the fiscal
year ended June 30, 2024 and issued their report thereon. As previously disclosed, upon completion of its audit of such financial statements
and filing of the Form 10-K for the fiscal year ended June 30, 2024, Baker Tilly&rsquo;s engagement with the Company ceased.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b>New Independent Registered
Public Accounting Firm</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">On January
6, 2025, the Audit Committee of the Company completed its selection process and approved the appointment of Haskell &amp; White LLP (&ldquo;Haskell
&amp; White&rdquo;) as the Company&rsquo;s independent registered public accounting firm for the year ending June 30, 2025, subject to
the completion of Haskell &amp; White&rsquo;s standard client acceptance procedures and the execution of an engagement letter. On January
29, 2025, the Company executed an engagement letter with Haskell &amp; White to engage Haskell &amp; White as its independent registered
public accounting firm for the year ending June 30, 2025 (the &ldquo;Effective Date&rdquo;). During the Company&rsquo;s two most recent
fiscal years, and the subsequent interim period through the Effective Date, neither the Company nor anyone acting on its behalf, has consulted
with Haskell &amp; White regarding (1) the application of accounting principles to a specific transaction, either completed or proposed,
or the type of audit opinion that might be rendered on the Company&rsquo;s financial statements or the effectiveness of internal control
over financial reporting, and neither a written report nor oral advice was provided to the Company that Haskell &amp; White concluded
was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue,
(2) any matter that was the subject of a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K, or (3) any reportable
event within the meaning of Item 304(a)(1)(v) of Regulation S-K.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><a name="a_021"></a>WHERE YOU CAN FIND MORE INFORMATION</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We have
filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of Common Stock and warrants
offered hereby. This prospectus, which constitutes part of the registration statement, does not contain all of the information set forth
in the registration statement and the exhibits and schedules thereto. For further information with respect to our company and our Common
Stock and warrants, reference is made to the registration statement and the exhibits and any schedules filed therewith. Statements contained
in this prospectus as to the contents of any contract or any other document referred to are not necessarily complete, and in each instance,
we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each of these statements
is qualified in all respects by this reference.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">You can
read our SEC filings, including the registration statement, over the internet at the SEC&rsquo;s website at <i>www.sec.gov</i>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">We are
subject to the information reporting requirements of the Exchange Act and we are required to file reports, proxy statements and other
information with the SEC. These reports, proxy statements, and other information are available for inspection and copying at the SEC&rsquo;s
website referred to above. We also maintain a website at <u>www.fluxpower.com</u> at which you may access these materials free of charge
as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on or accessible
through our website is not a part of this prospectus, and the inclusion of our website address in this prospectus is an inactive textual
reference only.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>FLUX POWER HOLDINGS, INC.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><a name="a_022"></a>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="padding-bottom: 0pt; padding-left: 0pt; text-indent: 0pt"><font style="font-size: 10pt"><b></b></font></td>
    <td style="padding-bottom: 0pt; vertical-align: bottom; border-bottom: black 1pt solid; width: .5in; text-align: center"><font style="font-size: 10pt"><b>Page</b></font></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 0pt; text-align: justify; padding-left: 0pt; text-indent: 0pt"><b>CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS
    ENDED&nbsp;JUNE 30, 2024, 2023 (RESTATED) AND 2022 (RESTATED)</b></td>
    <td style="padding-bottom: 0pt; vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="padding-bottom: 0pt; padding-left: 0pt; text-align: justify; text-indent: 0pt"><a href="#fin_01">P<font style="font-size: 10pt">Report of Independent Registered Public Accounting Firm</font></a><font style="font-size: 10pt">&ndash; (Baker Tilly US, LLP, San Diego, CA PCAOB Firm ID# 23)</font></td>
    <td style="padding-bottom: 0pt; vertical-align: bottom; text-align: center">F-2</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 0pt; padding-left: 0pt; text-align: justify; text-indent: 0pt"><a href="#fin_02"><font style="font-size: 10pt">Consolidated Balance Sheets as of June 30, 2024, 2023 (restated) and 2022 (restated)</font></a></td>
    <td style="padding-bottom: 0pt; vertical-align: bottom; text-align: center">F-3</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="padding-bottom: 0pt; padding-left: 0pt; text-align: justify; text-indent: 0pt"><a href="#fin_03"><font style="font-size: 10pt">Consolidated Statements of Operations for the Years Ended June 30, 2024, 2023 (restated) and 2022 (restated)</font></a></td>
    <td style="padding-bottom: 0pt; vertical-align: bottom; text-align: center">F-4</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 0pt; padding-left: 0pt; text-align: justify; text-indent: 0pt"><a href="#fin_04"><font style="font-size: 10pt">Consolidated Statements of Stockholders&rsquo; Equity for the Years Ended June 30, 2024, 2023 (restated) and 2022 (restated)</font></a></td>
    <td style="padding-bottom: 0pt; vertical-align: bottom; text-align: center">F-5</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="padding-bottom: 0pt; padding-left: 0pt; text-align: justify; text-indent: 0pt"><a href="#fin_05"><font style="font-size: 10pt">Consolidated Statements of Cash Flows for the Years Ended June 30, 2024, 2023 (restated) and 2022 (restated)</font></a></td>
    <td style="padding-bottom: 0pt; vertical-align: bottom; text-align: center">F-6</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 0pt; padding-left: 0pt; text-align: justify; text-indent: 0pt"><a href="#fin_06"><font style="font-size: 10pt">Notes to the Condensed Consolidated Financial Statements</font></a></td>
    <td style="padding-bottom: 0pt; vertical-align: bottom; text-align: center">F-7</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 0pt; padding-left: 0pt; text-align: justify; text-indent: 0pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; vertical-align: bottom; width: 0.5in; padding-bottom: 0pt; text-align: center"><font style="font-size: 10pt"><b>Page</b></font></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 0pt; padding-left: 0pt; text-align: justify; text-indent: 0pt"><font style="font-size: 10pt"><b>UNAUDITED
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE SIX MONTHS ENDED DECEMBER 31, 2024 AND 2023</b></font></td>
    <td style="vertical-align: bottom; padding-bottom: 0pt; text-align: center">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 0pt; padding-left: 0pt; text-align: justify; text-indent: 0pt"><font style="font-size: 10pt"><a href="#fin_07">Unaudited Condensed Consolidated Balance Sheets as of December 31, 2024 and June 30, 2024</a></font></td>
    <td style="vertical-align: bottom; padding-bottom: 0pt; text-align: center">F-26</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 0pt; padding-left: 0pt; text-align: justify; text-indent: 0pt"><a href="#fin_08"><font style="font-size: 10pt">Unaudited Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2024 and 2023</font></a></td>
    <td style="vertical-align: bottom; padding-bottom: 0pt; text-align: center">F-27</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 0pt; padding-left: 0pt; text-align: justify; text-indent: 0pt"><a href="#fin_09"><font style="font-size: 10pt">Unaudited Condensed Consolidated Statements of Changes in Stockholders&rsquo; Equity for the Six Months Ended </font><font style="font-size: 10pt">December 31, 2024 and 2023</font></a></td>
    <td style="vertical-align: bottom; padding-bottom: 0pt; text-align: center">F-28</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 0pt; padding-left: 0pt; text-align: justify; text-indent: 0pt"><a href="#fin_10"><font style="font-size: 10pt">Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2024 and 2023</font></a></td>
    <td style="vertical-align: bottom; padding-bottom: 0pt; text-align: center">F-29</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 0pt; padding-left: 0pt; text-align: justify; text-indent: 0pt"><a href="#fin_11"><font style="font-size: 10pt">Notes to Unaudited Consolidated Financial Statements</font></a></td>
    <td style="vertical-align: bottom; padding-bottom: 0pt; text-align: center">F-30</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>&nbsp;&nbsp;</b></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>&nbsp;&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><a name="fin_01"></a>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">To the Shareholders and the Board of Directors of
Flux Power Holdings, Inc.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Opinion on the Financial Statements</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We have audited the accompanying
consolidated balance sheets of Flux Power Holdings, Inc. (the &ldquo;Company&rdquo;) as of June 30, 2024, 2023 and 2022, the related consolidated
statements of operations, stockholders&rsquo; 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 &ldquo;consolidated financial statements&rdquo;). 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Restatement of Previously Issued Financial Statements</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">As discussed in Note 2 to the
consolidated financial statements, the Company has restated prior year consolidated financial statements to correct misstatements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Going Concern Uncertainty</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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&rsquo;s current liquidity position and projected cash needs raise substantial doubt about its ability
to continue as a going concern. Management&rsquo;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</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Basis for Opinion</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">These consolidated financial statements
are the responsibility of the Company&rsquo;s management. Our responsibility is to express an opinion on the Company&rsquo;s consolidated
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (&ldquo;PCAOB&rdquo;) 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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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&rsquo;s internal control over financial reporting. Accordingly, we express no such opinion.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Critical Audit Matter</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">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.&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>/s/ BAKER TILLY US, LLP</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We have served as the Company&rsquo;s auditor since
2012.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">San Diego, California</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">January 29, 2025</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>FLUX
POWER HOLDINGS, INC.</B></FONT></P>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><a name="fin_02"></a><font></FONT>CONSOLIDATED
BALANCE SHEETS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">&#160;</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">&#160;</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">&#160;</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">&#160;</TD><TD STYLE="text-align: left">&#160;</TD></TR>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">&#160;</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">&#160;</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>The
accompanying notes are an integral part of these consolidated financial statements.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>FLUX
POWER HOLDINGS, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><font><a name="fin_03"></a></FONT>CONSOLIDATED
STATEMENTS OF OPERATIONS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

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  <TR STYLE="vertical-align: bottom; background-color: White">
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">&#160;</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>The
accompanying notes are an integral part of these consolidated financial statements.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>FLUX
POWER HOLDING, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><font><a name="fin_04"></a></FONT>CONSOLIDATED
STATEMENTS OF STOCKHOLDERS&#8217; EQUITY</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B></B></FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
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    <TD COLSPAN="2">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="2">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom">
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    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Shares</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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<P STYLE="text-align: center; margin-top: 0; margin-bottom: 0">&#160;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
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    <TD COLSPAN="2">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
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 Capital</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">355,309</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">1,556,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">110,248</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">798,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
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  </TABLE>


<P STYLE="text-align: center; margin-top: 0; margin-bottom: 0">&#160;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD>&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1pt solid; text-align: center; font-weight: bold">Common Stock</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="2">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="2">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD>&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
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 Amount</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
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 Capital</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&#160;</TD></TR>
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">&#160;</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">253,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">&#160;</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">253,000</TD><TD STYLE="text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Stock-based compensation</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">711,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">711,000</TD><TD STYLE="text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Net loss</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(16,473,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(16,473,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; padding-bottom: 2.5pt">Balance, as restated, at June 30, 2022</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">15,996,658</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">16,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">95,732,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(83,636,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">12,112,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD></TR>
</TABLE>


<P STYLE="margin: 0">&#160;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 15pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</FONT></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">June 30, 2021 total shareholders&#8217; 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.</FONT></TD>
</TR></TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>The
accompanying notes are an integral part of these consolidated financial statements.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


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    <div style="break-before: page; margin-top: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></div>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>FLUX
POWER HOLDING, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><font><a name="fin_05"></a></FONT>CONSOLIDATED
STATEMENTS OF CASH FLOWS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="10" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year ended June 30,</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2024</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2023</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2022</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="text-align: center">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Restated</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Restated</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Cash flows from operating activities:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="width: 52%; text-align: left">Net loss</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(8,333,000</td><td style="width: 1%; text-align: left">)</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(7,743,000</td><td style="width: 1%; text-align: left">)</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(16,473,000</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Adjustments to reconcile net loss to net cash used in operating activities:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 20pt">Depreciation</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">1,045,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">899,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">575,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 20pt">Stock-based compensation</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">1,571,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">798,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">711,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 20pt">Amortization of debt issuance costs</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">230,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">482,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&ndash;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 20pt">Non-cash lease expense</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">606,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">512,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">438,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 20pt">Inventory write downs</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">490,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">690,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">665,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Changes in operating assets and liabilities:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 20pt">Accounts receivable</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(973,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(191,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(2,512,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 20pt">Inventories</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(1,309,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(2,408,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(5,550,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 20pt">Other assets</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(163,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(170,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(549,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 20pt">Accounts payable</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">1,523,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">3,227,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(530,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 20pt">Accrued expenses</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">745,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">972,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(374,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 20pt">Accrued interest</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">124,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(32,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">139,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 20pt">Office leases payable</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(644,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">1,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(1,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 20pt">Deferred revenue</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">354,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(518,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(436,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 20pt">Customer deposits</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(64,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(93,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">4,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 30pt">Net cash used in operating activities</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(4,798,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(3,574,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(23,893,000</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Cash flows from investing activities:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt">Purchases of equipment</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(853,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(1,032,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(797,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Proceeds from sale of fixed assets</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">-</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">8,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">-</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 30pt">Net cash used in investing activities</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(853,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(1,024,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(797,000</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Cash flows from financing activities:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Proceeds from the issuance of common stock in registered direct offering, net of offering costs</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">13,971,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Proceeds from the issuance of common stock in public offering, net of offering costs</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">1,556,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">1,602,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Proceeds from stock option exercises and employee stock purchase plan exercises</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">141,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 10pt">Proceeds from revolving line of credit</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">67,209,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">63,400,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">8,450,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 10pt">Payment of revolving line of credit</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(63,287,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(58,377,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(3,561,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Payment of finance leases</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(148,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(87,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">&ndash;</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt; padding-left: 30pt">Net cash provided by financing activities</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">3,915,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">6,492,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">20,462,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Net change in cash</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(1,736,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">1,894,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(4,228,000</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1pt">Cash, beginning of period</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">2,379,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">485,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">4,713,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">Cash, end of period</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">643,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,379,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">485,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left">Supplemental Disclosures of Non-Cash Investing and Financing Activities:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Initial right of use asset recognition</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">-</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">855,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">-</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Common stock issued for vested RSUs</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">538,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">417,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">21,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Warrants issued in connection with borrowing agreements, recorded as debt issuance cost</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">92,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">-</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">253,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Supplemental cash flow information:</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 2.5pt; padding-left: 10pt">Interest paid</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,409,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,127,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">151,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td></tr>
  </table>


<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>The
accompanying notes are an integral part of these consolidated financial statements.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>FLUX
POWER HOLDINGS, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><font><a name="fin_06"></a></FONT>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>JUNE
30, 2024 and JUNE 30, 2023</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
1 &#8211; NATURE OF BUSINESS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Nature
of Business</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Flux
Power Holdings, Inc. (&#8220;Flux&#8221;) was incorporated in 2008 in the State of Nevada, and Flux&#8217;s operations are conducted
through its wholly owned subsidiary, Flux Power, Inc. (&#8220;Flux Power&#8221;), a California corporation (collectively, the &#8220;Company&#8221;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 (&#8220;GSE&#8221;), 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&#8217;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 &#8220;state of the art&#8221; 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
2 &#8211; <FONT STYLE="text-transform: uppercase">Restatement of Previously Issued Financial Statements</FONT></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&#160;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 (&#8220;SAB No. 99&#8221;) Topic 1.M, &#8220;Materiality&#8221;
and SAB No. 99 Topic 1.N &#8220;Considering the Effects of Misstatements when Quantifying Misstatements in the Current Year Financial
Statements,&#8221; the Company assessed the materiality of these misstatements to its previously issued consolidated financial statements.
Based upon the Company&#8217;s evaluation of both quantitative and qualitative factors, the Company concluded the misstatements were
material to the Company&#8217;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 &#8211; 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 &#8211;
Inventories, Note 11 &#8211; Income Taxes and Note 12 &#8211; Concentrations. See Note 16 &#8211; 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</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
3 &#8211; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
summary of the Company&#8217;s significant accounting policies which have been consistently applied in the preparation of the accompanying
consolidated financial statements follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Principles
of Consolidation</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 36pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><FONT></FONT></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: left"><B><I>Liquidity and Financial Condition</I></B></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><FONT></FONT></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">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&#8217;s ability to continue as a going concern exists.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Historically,
the Company&#8217;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 (&#8220;GBC&#8221;) Credit Facility, and $1.0 million
available for future draws under the Subordinated LOC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">In addition, the Company&#8217;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&#8217;s ability to meet projected revenue targets and generate cash from operations. </P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Management has evaluated the Company&#8217;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&#8217;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&#8217;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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">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&#8217;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&#8217;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&#8217;s ability to continue operating
as a going concern.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">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.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&#160;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Use
of Estimates</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (&#8220;GAAP&#8221;)
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.</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Cash
and Cash Equivalents</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Fair
Values of Financial Instruments</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

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Company does not have any other assets or liabilities that are measured at fair value on a recurring or non-recurring basis.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Accounts
Receivable</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Inventories</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Property,
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Stock-based
Compensation</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the provisions of the Financial Accounting Standards Board (&#8220;FASB&#8221;) Accounting Standards Codification (&#8220;ASC&#8221;)
Topic No. 718-10, <I>Compensation-Stock Compensation</I>, 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Revenue
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company recognizes revenue in accordance to the ASC Topic 606, <I>Revenue from Contracts with Customers</I> (&#8220;ASC 606&#8221;) 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.</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Product
revenue is recognized as a distinct single performance obligation which for the Company&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Product
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;s consolidated balance sheets.</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Impairment
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

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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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Research
and Development</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is actively engaged in new product development efforts. Research and development costs relating to possible future products are
expensed as incurred.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Income
Taxes</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to FASB ASC Topic No. 740, <I>Income Taxes,</I> 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Net
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</font></P>

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<TR STYLE="vertical-align: bottom">
    <TD>&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
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    <TD STYLE="padding-bottom: 1pt">Warrants</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
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    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,132,836</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Adopted
Accounting Pronouncements</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company did not adopt any new accounting pronouncements during the year ended June 30, 2024.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Recently
Issued Accounting Pronouncements</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
December 2023, the FASB issued Accounting Standards Update (&#8220;ASU&#8221;) 2023-09, <I>Income Taxes (Topic 740): Improvements to
Income Tax Disclosures</I>, 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In November 2023, the FASB issued ASU 2023-07, &#8220;<I>Segment Reporting (Topic 280): Improvements to Reportable
Segment Disclosures</I>&#8221;, 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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
4 &#8211; INVENTORIES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inventories
consist of the following:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD>&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="10" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">June 30,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD>&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2024</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2023</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2022</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD>&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD>Raw materials</TD><TD>&#160;</TD>
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    <TD STYLE="text-align: right">12,850,000</TD><TD>&#160;</TD><TD>&#160;</TD>
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  <TR STYLE="vertical-align: bottom; background-color: White">
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,018,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="border-bottom: Black 2.5pt double; text-align: center">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">16,158,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14,440,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inventories
consist primarily of our energy storage systems and the related subcomponents, and are stated at the lower of cost or net realizable
value.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
5 &#8211; OTHER CURRENT ASSETS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
current assets consist of the following:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</font></P>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="10" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">June 30,</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
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    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2022</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">573,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 14%; text-align: right">478,000</td><td style="width: 1%; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&nbsp;</td><td style="text-align: right">181,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">202,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">343,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1pt">Other</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">345,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">143,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">440,000</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">945,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
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  </table>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
6 &#8211; ACCRUED EXPENSES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accrued
expenses consist of the following:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</font></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD>&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="10" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">June 30,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD>&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2024</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2023</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 46%; text-align: left">Payroll and bonus accrual</TD><TD STYLE="width: 2%">&#160;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">471,000</TD><TD STYLE="width: 1%; text-align: left">&#160;</TD><TD STYLE="width: 2%">&#160;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">1,157,000</TD><TD STYLE="width: 1%; text-align: left">&#160;</TD><TD STYLE="width: 2%">&#160;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">767,000</TD><TD STYLE="width: 1%; text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">437,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">412,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">430,000</TD><TD STYLE="text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Warranty liability</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">3,018,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">1,600,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">1,012,000</TD><TD STYLE="text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">12,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,926,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,181,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
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  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
7 &#8211; PROPERTY, PLANT AND EQUIPMENT, NET</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Property,
plant and equipment, net consist of the following:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD>&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="10" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">June 30,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom">
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    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2024</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2023</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2022</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 46%; text-align: left">Machinery and equipment</TD><TD STYLE="width: 2%">&#160;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">1,352,000</TD><TD STYLE="width: 1%; text-align: left">&#160;</TD><TD STYLE="width: 2%">&#160;</TD>
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    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">808,000</TD><TD STYLE="width: 1%; text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Office equipment</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">2,690,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">2,153,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">1,574,000</TD><TD STYLE="text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Furniture and equipment</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">274,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">273,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">256,000</TD><TD STYLE="text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Vehicles</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Leasehold improvements</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">148,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">56,000</TD><TD STYLE="text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">CIP</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">106,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">43,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">4,570,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">3,719,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">2,714,000</TD><TD STYLE="text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Less: accumulated depreciation</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,821,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: center; padding-bottom: 2.5pt"></TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,749,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
8 &#8211; NOTES PAYABLE</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Revolving
Line of Credit</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Gibraltar
Business Capital Credit Facility</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 28, 2023, the Company entered into a Loan and Security Agreement (the &#8220;Agreement&#8221;) with GBC. The Agreement provides
the Company with a senior secured revolving loan facility for up to $15.0 million (the &#8220;Revolving Loan Commitment&#8221;). 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 &#8220;Maturity
Date&#8221;), unless extended, modified or renewed (the &#8220;Revolving Note&#8221;). 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


<!-- Field: Page; Sequence: 108; Value: 1 -->
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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217; 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
(&#8220;SOFR&#8221;, 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 2, 2023, the Company entered into the First Amendment to Loan and Security Agreement (the &#8220;First Amendment&#8221;) with
Gibraltar Business Capital, LLC (&#8220;GBC&#8221;), 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 30, 2024, the Company entered into the Second Amendment to Loan and Security Agreement (the &#8220;Second Amendment&#8221;) 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 &#8220;Eligible Accounts;&#8221; 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
April 2024, the Company notified GBC of a certain event of default with respect to the Company&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 31, 2024, the Company entered into the Third Amendment to Loan and Security Agreement (the &#8220;Third Amendment&#8221;) 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Silicon
Valley Bank Credit Facility</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&#160;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 9, 2020, the Company entered into a Loan and Security Agreement (&#8220;Loan and Security Agreement&#8221;) with Silicon Valley
Bank (&#8220;SVB&#8221;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 29, 2021, the Company entered into a First Amendment to Loan and Security Agreement (&#8220;First Amendment&#8221; and together
with the Agreement, the &#8220;Loan Agreement&#8221;) 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 (&#8220;Revolving LOC&#8221;). 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 23, 2022, the Company entered into a Second Amendment to Loan and Security Agreement (&#8220;Second Amendment&#8221; and together
with the Loan Agreement, the &#8220;Second Amended Loan Agreement&#8221;) 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).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;s legal fees and expenses
incurred in connection with the Second Amendment.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 7, 2022, the Company entered into a Third Amendment to Loan and Security Agreement (&#8220;Third Amendment&#8221;) with SVB,
which amended certain terms of the Second Amended Loan Agreement (together with the Third Amendment, the &#8220;Third Amended Loan Agreement&#8221;),
including but not limited to, (i) extending the maturity date from November 7, 2022 to May 7, 2023 (the &#8220;Extension Period&#8221;),
(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&#8217;s legal fees and expenses incurred in connection with the Third Amendment.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 10, 2023, the Company entered into a Fourth Amendment to Loan and Security Agreement (the &#8220;Fourth Amendment&#8221;) 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&#8217;s legal fees and expenses incurred in connection with the Fourth Amendment.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 27, 2023, the Company entered into a Fifth Amendment to Loan and Security Agreement (the &#8220;Fifth Amendment&#8221;) with SVB
which further amended certain terms of the credit facility (together with the Fifth Amendment, the &#8220;Agreement&#8221;), including
but not limited to, (i) extending the maturity date from May 7, 2023 to December 31, 2023 (the &#8220;2023 Extension Period&#8221;),
(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&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
9 &#8211; RELATED PARTY DEBT AGREEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
June 30, 2024,2023 and 2022, the Company had no related party debt balance outstanding. Below are the activities for the Company&#8217;s
related party debt agreements that existed during the years ended June 30, 2024, 2023 and 2022.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Subordinated
Line of Credit Facilities</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Cleveland
Capital, L.P. Credit Facility</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 2, 2023, the Company entered into a Credit Facility Agreement (the &#8220;Credit Facility&#8221;) with Cleveland Capital, L.P.,
(the &#8220;Lender&#8221;). The Credit Facility provides the Company with a line of credit of up to $2,000,000 for working capital purposes
(&#8220;2023 Subordinated LOC&#8221;). In connection with the LOC, the Company issued a subordinated unsecured promissory note for $2,000,000
(the &#8220;Commitment Amount&#8221;) in favor of the Lender (the &#8220;Note&#8221;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the terms of the Credit Facility, the Lender agreed to make loans (each such loan, an &#8220;Advance&#8221;) up to such Lender&#8217;s
Commitment Amount to the Company from time to time, until August 15, 2025 (the &#8220;Due Date&#8221;). 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, &#8220;GBC&#8221;), pursuant to a Subordination Agreement dated on or about November 2, 2023,
by and between the Lender and GBC (the &#8220;Subordination Agreement&#8221;). 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).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
consideration of the Lender&#8217;s commitment to provide the Advances to the Company, the Company issued the Lender warrants to purchase
41,196 shares of common stock (the &#8220;Warrants&#8221;) which rights are represented by a warrant certificate (&#8220;Warrant Certificate&#8221;).
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&#8217;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 &#8211; Stockholders&#8217; Equity).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>&#160;</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>2022
Subordinated LOC</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 11, 2022, the Company entered into a Credit Facility Agreement (the &#8220;2022 Subordinated LOC&#8221;) with Cleveland, Herndon
Plant Oakley, Ltd., (&#8220;HPO&#8221;), and other lenders (together with Cleveland and HPO, the &#8220;Lenders&#8221;). 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 &#8220;Note&#8221;) for each Lender&#8217;s commitment amount (each
such commitment amount, a &#8220;Commitment Amount&#8221;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the terms of the 2022 Subordinated LOC, each Lender severally agrees to make loans (each such loan, an &#8220;Advance&#8221;) up to
such Lender&#8217;s Commitment Amount to the Company from time to time, until December 31, 2022 (the &#8220;Due Date&#8221;). 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 &#8220;Common Stock&#8221;) 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 &#8220;Subordination Agreement&#8221;) for the purposes of subordinating the right to payment under the Note
to SVB&#8217;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 (&#8220;GBC&#8221;), each Lender signed a Subordination Agreement by and between the Lenders
and GBC dated as of July 28, 2023 (the &#8220;GBC Subordination Agreement&#8221;) for the purposes of subordinating the right to payment
under the Note to GBC&#8217;s indebtedness by the Company then incurred and outstanding or thereinafter incurred.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;s Commitment Amount. In addition, in consideration of the Lenders&#8217; 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 &#8220;Warrants&#8221;) (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&#8217;s Commitment Amount divided by the $5,000,000).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 2, 2023, the 2022 Subordinated LOC was terminated.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
10 &#8211; STOCKHOLDERS&#8217; EQUITY</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>At-The-Market
(&#8220;ATM&#8221;) Offering</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 21, 2020 the Company entered into a Sales Agreement (the &#8220;Sales Agreement&#8221;) with H.C. Wainwright &amp; Co., LLC
(&#8220;HCW&#8221;) to sell shares of its common stock, par value $0.001 (the &#8220;Common Stock&#8221;) from time to time, through
an &#8220;at-the-market offering&#8221; program (the &#8220;ATM Offering&#8221;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Public
Offering</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Registered
Direct Offering</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
September 27, 2021, the Company closed a registered direct offering, priced at-the-market under Nasdaq rules (&#8220;RDO&#8221;) 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
securities sold in the RDO were sold pursuant to a &#8220;shelf&#8221; registration statement on Form S-3 (File No. 333-249521), including
a base prospectus, previously filed with the Securities and Exchange Commission (the &#8220;SEC&#8221;) 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 &#8220;shelf&#8221; registration
statement expired on October 26, 2023.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&#160;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Warrants</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection with the Company&#8217;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&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
May 2022 and in conjunction with entry into a credit facility with Cleveland, HPO, and other lenders (together with Cleveland and HPO,
the &#8220;Lenders&#8221;), the Company issued five-year warrants to the Lenders to purchase up to 128,000 shares of the Company&#8217;s
common stock at an exercise price of $2.53 per share and had a fair value of approximately $173,000.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;s common stock at an exercise
price of $2.23 per share and had a fair value of approximately $80,000.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;s common stock at an exercise price of $3.24 per share with a fair value of
approximately $92,000.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Warrant
detail for the year ended June 30, 2024 is reflected below:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</font></P>

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  <TR STYLE="vertical-align: bottom">
    <TD>&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
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    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Weighted Average<BR>
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 Per Warrant</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


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detail for the year ended June 30, 2023 is reflected below:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">The
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issuance date using the assumptions in the table below:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">&#160;</font></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Equity
Award Plans</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;t
any options to purchase common stock outstanding under the 2010 Plan. No additional options may be granted under the 2010 Plan.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 17, 2015, the Company&#8217;s stockholders approved the 2014 Equity Incentive Plan (the &#8220;2014 Plan&#8221;). The 2014 Plan
offers certain employees, directors, and consultants the opportunity to acquire the Company&#8217;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&#8217;s common stock and stock options, up to 1,000,000 shares of the Company&#8217;s common stock. As of June 30, 2024,
89,922 shares of the Company&#8217;s common stock were available for future grants under the 2014 Plan.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 29, 2021, the Company&#8217;s stockholders approved the 2021 Equity Incentive Plan (the &#8220;2021 Plan&#8221;). 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&#8217;s
common stock were available for future grants under the 2021 Plan.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


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October 31, 2022, the Board of Directors authorized a total of 624,441 stock options to be granted under the Company&#8217;s 2014 Plan
and 2021 Plan.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Stock
Options</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

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in stock options during the year ended June 30, 2024 and related balances outstanding as of that date are reflected below:</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Activity
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Activity
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</font></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <TD STYLE="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 0.25in">(1)</TD>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Restricted
Stock Units</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 5, 2020, the Company&#8217;s Board of Directors approved an amendment to the 2014 Plan, to allow for grants of Restricted Stock
Units (&#8220;RSUs&#8221;). 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&#8217;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 (&#8220;Time-based Award Agreement&#8221;),
and (ii) the Performance Restricted Stock Unit Award Agreement for performance-based awards (&#8220;Performance-based Award Agreement&#8221;).
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
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Activity
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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Shares</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
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 Exercise Price</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
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 Remaining<BR>
 Contract Term<BR>
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">(136,956</TD><TD STYLE="text-align: left">)</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">5.55</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Activity
in RSUs during the year ended June 30, 2023 and related balances outstanding as of that date are reflected below:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD>&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
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Shares</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
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 Contract Term<BR>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">(109,676</TD><TD STYLE="text-align: left">)</TD><TD>&#160;</TD>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


<!-- Field: Page; Sequence: 116; Value: 1 -->
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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Activity
in RSUs during the year ended June 30, 2022 and related balances outstanding as of that date are reflected below:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD>&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
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    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">304,221</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">6.06</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&#160;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Employee
Stock Purchase Plan</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 6, 2023, the Company&#8217;s Board of Directors approved the 2023 Employee Stock Purchase Plan (the &#8220;2023 ESPP&#8221;), which
subsequently was approved by the Company&#8217;s stockholders on April 20, 2023. The 2023 ESPP enables eligible employees of the Company
and certain of its subsidiaries (a &#8220;Participating Subsidiary&#8221;) to use payroll deductions to purchase shares of the Company&#8217;s
Common Stock and acquire an ownership interest in the Company. The maximum aggregate number of shares of the Company&#8217;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&#8217;s compensation on each pay day
to be used to purchase up to 1,500 shares of Common Stock for the employee&#8217;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&#8217;s stockholders, unless otherwise
earlier terminated.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;s common stock on the offering date pursuant to the provisions of the 2023 ESPP.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
June 30, 2024, 312,457 shares of the Company&#8217;s common stock were available for future grants under the 2023 ESPP.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Stock-based
Compensation</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table summarizes stock-based compensation expense for employee and non-employee option and RSU grants:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</font></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD>&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="10" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Year ended June 30,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD>&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2024</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2023</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2022</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 46%; text-align: left">Research and development</TD><TD STYLE="width: 2%">&#160;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">1,335,000</TD><TD STYLE="width: 1%; text-align: left">&#160;</TD><TD STYLE="width: 2%">&#160;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">173,000</TD><TD STYLE="width: 1%; text-align: left">&#160;</TD><TD STYLE="width: 2%">&#160;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">144,000</TD><TD STYLE="width: 1%; text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Selling and administrative</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">236,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">625,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">567,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 10pt; text-align: left; padding-bottom: 2.5pt">Total stock-based compensation expense</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,571,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">798,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">711,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
11 &#8211; INCOME TAXES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the provisions of FASB ASC Topic No. 740 <I>Income Taxes</I> (&#8220;ASC 740&#8221;), 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&#8217;s ability to generate future taxable income to realize these assets.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is subject to taxation in the United States, California and Georgia. The Company&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;s net deferred tax assets and liabilities are shown in the table below.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD>&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="10" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Year ended June 30,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD>&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2024</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2023</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
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  <TR STYLE="vertical-align: bottom">
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">&#160;</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">&#160;</TD><TD STYLE="text-align: left">&#160;</TD></TR>
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  <TR STYLE="vertical-align: bottom; background-color: White">
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">&#8211;</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <TR STYLE="vertical-align: bottom; background-color: White">
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <TR STYLE="vertical-align: bottom; background-color: White">
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <TR STYLE="vertical-align: bottom; background-color: White">
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  <TR STYLE="vertical-align: bottom; background-color: White">
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
June 30, 2024, the Company had unused net operating loss (&#8220;NOL&#8221;) 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD>&#160;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&#160;</TD>
    <TD COLSPAN="10" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Year ended June 30,</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom">
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  <TR STYLE="vertical-align: bottom">
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    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">(1,749,000</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 2%">&#160;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">(1,625,000</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 2%">&#160;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">(3,459,000</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">State income taxes, net</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">(546,000</TD><TD STYLE="text-align: left">)</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">(485,000</TD><TD STYLE="text-align: left">)</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">(1,151,000</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">Permanent differences and other</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">241,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">152,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">102,000</TD><TD STYLE="text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Other true ups</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">270,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">(113,000</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Change in valuation allowance</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,787,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,235,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,621,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Provision for income taxes</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;s consolidated financial statements as of June 30,
2024, 2023 and 2022.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
accordance with ASC 740, there are no unrecognized tax benefits as of June 30, 2024, 2023 or 2022.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
12 &#8211; CONCENTRATIONS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Credit
Risk</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 10, 2023, the Federal Deposit Insurance Corporation (the &#8220;FDIC&#8221;) issued a press release stating that Silicon Valley
Bank (&#8220;SVB&#8221;) 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 &#8220;Statement&#8221;), 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Customer
Concentrations</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&#160;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Suppliers/Vendor
Concentrations</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During the year ended June 30, 2023 <FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
Company had one (1) supplier who accounted for more than 10% of its total purchases which represented approximately $17,022,000 </FONT><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">or 31</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%
of its total purchases.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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
</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">or 28</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%
of its total purchases</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
13 &#8211; COMMITMENTS AND CONTINGENCIES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Legal Proceedings</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>



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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><FONT STYLE="text-decoration: underline">Securities
Class Action</FONT></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 <I>Kassam v. Flux Power Holdings, Inc. et al.</I> (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&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><FONT STYLE="text-decoration: underline">Shareholder
Derivative Action</FONT></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
January 7, 2025, plaintiff Ronald Pearl filed a purported shareholder derivative complaint in the United States District Court, District
of Nevada, captioned <I>Pearl v. Dutt, et al</I>. (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 <I>Kassam</I>
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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><FONT STYLE="text-decoration: underline">Employment
Related Actions</FONT></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

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April 30, 2024, a former employee (the &#8220;Employee&#8221;) 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 &#8220;Employment Proceeding&#8221;). 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217; General Act (&#8220;PAGA&#8221;), seeking an unspecified amount of penalties and attorneys&#8217;
fees based on allegations that the Compnay violated certain California employment laws (the &#8220;PAGA Proceeding&#8221;). 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;s action claims dismissed, the Employee&#8217;s individual claims compelled to binding arbitration and the Employee&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 25, 2024, a former CPM, LTD Inc. (&#8220;CPM&#8221;) employee filed a complaint against CPM, a third-party staffing service provider,
Flux Power, Inc., and Flux Power Holdings, Inc. (collectively, the &#8220;Defendants&#8221;) 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 &#8220;joint employers&#8221;
to the plaintiff under California law and are jointly liable for the plaintiff&#8217;s claims. The plaintiff is seeking an unspecified
amount of unpaid wages, statutory penalties, emotional distress damages, punitive damages, and attorneys&#8217; 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Operating
Leases</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 25, 2019 the Company signed a Standard Industrial/Commercial Multi-Tenant Lease (&#8220;Lease&#8221;) 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 26, 2020, the Company entered into the First Amendment to Standard Industrial/Commercial Multi-Tenant Lease dated April 25,
2019 (the &#8220;Amendment&#8221;) 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
rent expense was approximately $942,000, $899,000 and $867,000 for the fiscal years ended June 30, 2024, 2023 and 2022, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Finance
Leases</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has finance leases outstanding as of June 30, 2024 as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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    <TD STYLE="width: 18%; text-align: center">9/2/2022</TD><TD STYLE="width: 2%">&#160;</TD>
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    <TD STYLE="width: 1%; text-align: left">&#160;</TD><TD STYLE="width: 14%; text-align: right">60</TD><TD STYLE="width: 1%; text-align: left">&#160;</TD><TD STYLE="width: 2%">&#160;</TD>
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    <TD STYLE="text-align: center">1/24/2023</TD><TD>&#160;</TD>
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<P STYLE="margin: 0">&#160;</P>

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<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</font></td><td style="text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Excludes
sales tax and other fees.</font></td>
</tr></table>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Future
minimum lease payments as of June 30, 2024 are as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left">2028</TD><TD>&#160;</TD>
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">21,000</TD><TD STYLE="text-align: left">&#160;</TD></TR>
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    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&#160;</TD></TR>
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">293,000</TD><TD STYLE="text-align: left">&#160;</TD></TR>
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    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(234,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">2,055,000</TD><TD STYLE="text-align: left">&#160;</TD><TD>&#160;</TD>
    <TD STYLE="text-align: left">&#160;</TD><TD STYLE="text-align: right">268,000</TD><TD STYLE="text-align: left">&#160;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(734,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&#160;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&#160;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(156,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,321,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&#160;</TD><TD STYLE="padding-bottom: 2.5pt">&#160;</TD>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
14 &#8211; SUBSEQUENT EVENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>Management Transition</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 20, 2024, Ronald F. Dutt, the Company&#8217;s chairman and Chief Executive Officer, notified the Company&#8217;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.</P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Waivers
to Loan and Security Agreement with Gibraltar Business Capital</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
previously announced in the Company&#8217;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 &#8220;Prior Financial Statements&#8221;), could no longer be relied upon
due to material accounting errors identified by management. See Note 15 &#8211; Restatement of Previously Issued Financial Statements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company notified GBC that the restatement of historical financial statements was likely to result in event of default with respect to
the Company&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;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&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Amendment
to Loan and Security Agreement with Gibraltar Business Capital</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 22, 2025, we entered into Amendment No. 4 to Loan and Security Agreement (the &#8220;Fourth Amendment&#8221;) 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.</FONT></P>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
15 &#8211; RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
described in Note 2 &#8211; 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
nature of the restatement adjustments and their impact on previously reported consolidated financial statements are as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">(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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">(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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">(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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">(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&#8217;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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Below
are the restated consolidated balance sheets as of June 30, 2023 and 2022, and the restated consolidated statements of operations, statements
of stockholders&#8217; equity and statements of cash flows for each of the years ended June 30, 2023 and 2022 that summarize the effects
of the restatement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;<font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</font></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>FLUX
POWER HOLDINGS, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><a name="fin_07"></a>CONDENSED
CONSOLIDATED BALANCE SHEETS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

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    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Current assets:</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 10pt; width: 60%"><FONT STYLE="font-family: Times New Roman, Times, Serif">Cash</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 16%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">643,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Accounts receivable, net
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">9,773,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Inventories, net</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">16,977,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 10pt; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Other
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    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">838,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">945,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">28,338,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Right of use assets</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,694,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">2,096,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Property, plant and equipment, net</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,641,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,749,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Other assets</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">118,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">118,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total assets</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">28,959,000</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">32,301,000</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">LIABILITIES AND STOCKHOLDERS&#8217;
    EQUITY (DEFICIT)</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Current liabilities:</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Accounts payable</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">13,034,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">11,395,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Accrued expenses</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">3,926,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Line of credit</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">13,834,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Subordinated debt</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8211;&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Deferred revenue</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Customer deposits</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">170,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Finance leases payable,
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  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  <TR STYLE="vertical-align: bottom; background-color: White">
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <TR STYLE="vertical-align: bottom; background-color: White">
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right">&#8211;&#160;</TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8211;&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">17,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">17,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Additional paid-in capital</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">99,889,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 10pt; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Accumulated
    deficit</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(103,268,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(99,712,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total stockholders&#8217;
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    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(2,737,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">194,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total liabilities and
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    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">28,959,000</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">32,301,000</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>The
accompanying notes are an integral part of these condensed consolidated financial statements.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>FLUX
POWER HOLDINGS, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><a name="fin_08"></a>CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    months ended December 31,</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1pt solid; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">Six
    months ended December 31,</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">2024</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">2023</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 12%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">18,203,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 12%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">32,990,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">12,822,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">23,374,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">5,381,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">10,681,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">9,616,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Operating expenses:</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">4,593,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,235,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">2,272,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">2,530,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 20pt; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total
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    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">5,828,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">13,372,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">11,848,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Operating loss</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(447,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(2,691,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(2,232,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
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    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>The
accompanying notes are an integral part of these condensed consolidated financial statements.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>FLUX
POWER HOLDING, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><a name="fin_09"></a>CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS&#8217; EQUITY (DEFICIT)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1pt solid; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">Common
    Stock</FONT></TD><TD STYLE="text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif"></FONT></TD><TD STYLE="text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    Stock<BR>
 Amount</FONT></TD><TD STYLE="text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Additional <FONT STYLE="font-family: Times New Roman, Times, Serif">
    Paid-in Capital</FONT></TD><TD STYLE="text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(99,712,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 9%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">194,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Stock-based compensation</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(1,669,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(1,669,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"></FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">17,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"></FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">100,236,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"></FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(101,381,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif"></FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(1,128,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Stock-based compensation</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">278,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">278,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Net loss</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(1,887,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(1,887,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">Balance at December 31 2024</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">17,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">100,514,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(103,268,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(2,737,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD></TR>
</TABLE>

<P STYLE="margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></P>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Common Stock</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">&nbsp;</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="text-align: center">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="text-align: center">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Shares</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Capital<BR> Stock<BR> Amount</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Additional Paid-in Capital</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Accumulated Deficit</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 35%; font-weight: bold">Balance at June 30, 2023</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 9%; text-align: right">16,462,215</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">16,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">98,086,000</td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(91,379,000</td><td style="width: 1%; text-align: left">)</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">6,723,000</td><td style="width: 1%; text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Issuance of common stock - exercised options and warrants</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">16,022</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&ndash;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&ndash;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&ndash;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&ndash;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Stock-based compensation</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">276,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">276,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1pt">Net loss</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">-</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">-</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">-</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(2,188,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(2,188,000</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold">Balance at September 30, 2023</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">16,478,237</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">16,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">98,362,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(93,567,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">4,811,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Issuance of common stock - exercised options and RSU settlements</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">54,038</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">1,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">(1,000</td><td style="text-align: left">)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&ndash;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&ndash;</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Stock-based compensation</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">394,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">-</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">394,000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>Fair value of warrants issued</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&ndash;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&ndash;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">92,000</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&ndash;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">92000</td><td style="text-align: left">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1pt">Net loss</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">-</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">-</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">-</td><td style="padding-bottom: 1pt; text-align: left">&nbsp;</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(896,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: left">&nbsp;</td><td style="border-bottom: Black 1pt solid; text-align: right">(896,000</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; padding-bottom: 2.5pt">Balance at December 31 2023</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</td><td style="border-bottom: Black 2.5pt double; text-align: right">16,532,275</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">17,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">98,847,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(94,463,000</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,401,000</td><td style="padding-bottom: 2.5pt; text-align: left">&nbsp;</td></tr>
  </table>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>The
accompanying notes are an integral part of these condensed consolidated financial statements.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>FLUX
POWER HOLDINGS, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><a name="fin_10"></a>CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="6" STYLE="border-bottom: Black 1pt solid; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">Six
    months ended December 31,</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">2024</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">2023</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 16%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(3,084,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">523,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 20pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Stock-based compensation</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">625,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 20pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Amortization of debt issuance
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">134,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 20pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Non-cash lease expense</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">296,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 20pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Inventory write downs</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">233,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Changes in operating assets
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(3,926,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 20pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Inventories</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 20pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Other assets</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 20pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Accounts payable</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 20pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Accrued expenses</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 20pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Accrued interest</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 20pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Office leases payable</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(357,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(312,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 20pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Deferred revenue</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">179,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 20pt; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Customer
    deposits</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">152,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">150,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 30pt; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Net
    cash provided by (used in) operating activities</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">3,774,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(4,045,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Cash flows from investing activities:</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 10pt; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Purchases of equipment</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(317,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(338,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 30pt; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Net
    cash used in investing activities</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(317,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(338,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Cash flows from financing activities:</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Proceeds from subordinated
    debt borrowing</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,000,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8211;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Proceeds from revolving
    line of credit</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">30,051,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">35,868,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Payment of revolving line
    of credit</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(34,192,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(32,205,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-left: 10pt; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Payment
    of finance leases</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(76,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(75,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 30pt; text-align: left; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Net
    cash provided by (used in) financing activities</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(3,217,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">3,588,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Net change in cash</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">240,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(795,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Cash, beginning of period</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">643,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">2,379,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Cash, end of period</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">883,000</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,584,000</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Supplemental Disclosures
    of Non-Cash Investing and Financing Activities:</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>The
accompanying notes are an integral part of these condensed consolidated financial statements.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>


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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>FLUX
POWER HOLDINGS, INC.</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><a name="fin_11"></a>NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>DECEMBER
31, 2024</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(Unaudited)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
1 - NATURE OF BUSINESS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Basis
of Presentation</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles
generally accepted in the United States of America (&#8220;GAAP&#8221;) and the rules of the Securities and Exchange Commission (&#8220;SEC&#8221;)
applicable to interim reports of companies filing as a smaller reporting company. These financial statements should be read in conjunction
with the audited financial statements and notes thereto contained in the Company&#8217;s Annual Report on Form 10-K for the fiscal year
ended June 30, 2024, filed with the SEC on January 29, 2025. In the opinion of management, the accompanying condensed consolidated interim
financial statements include all adjustments necessary in order to make the financial statements not misleading. The results of operations
for interim periods are not necessarily indicative of the results to be expected for the full year or any other future period. Certain
notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for
the most recent fiscal year as reported in the Company&#8217;s Annual Report on Form 10-K have been omitted. The accompanying unaudited
condensed consolidated balance sheet at June 30, 2024 has been derived from the audited balance sheet at June 30, 2024 contained in such
Form 10-K.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Nature
of Business</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Flux
Power Holdings, Inc. (&#8220;Flux&#8221;) was incorporated in 2009 in the State of Nevada, and Flux&#8217;s operations are conducted
through its wholly owned subsidiary, Flux Power, Inc. (&#8220;Flux Power&#8221;), a California corporation (collectively, the &#8220;Company&#8221;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
design, develop, manufacture, and sell 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 (&#8220;GSE&#8221;), and other commercial
and industrial applications. We believe our mobile and stationary energy storage solutions provide our customers a reliable, high performing,
cost effective, and more environmentally friendly alternative as compared to traditional lead acid and propane-based solutions. Our 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 &#8220;state of the art&#8221; real time monitoring of
pack performance. We believe 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 our revenue growth.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s significant accounting policies are described in Note 3 &#8211; Summary of Significant Accounting Policies to the consolidated
financial statements in the Company&#8217;s Annual Report on Form 10-K for the fiscal year ended June 30, 2024. There have been no material
changes in these policies or their application.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Adopted
Accounting Pronouncements</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company did not adopt any new accounting pronouncements during the six months ended December 31, 2024.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Recently
Issued Accounting Pronouncements</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
November 2024, the FASB issued Accounting Standards Update (&#8220;ASU&#8221;) 2024-03, <I>Income Statement &#8211; Reporting Comprehensive
Income &#8211; Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses</I>, which requires additional
disclosure of certain amounts included in the expense captions presented on the statement of operations, as well as disclosures about
selling expenses. The ASU is effective on a prospective basis, with the option for retrospective application, for our fiscal year ending
June 30, 2028 and interim periods thereafter. Early adoption is permitted for annual financial statements that have not yet been issued.
The Company is evaluating the disclosure requirements related to the new standard.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
December 2023, the FASB issued ASU 2023-09, <I>Income Taxes (Topic 740): Improvements to Income Tax Disclosures</I>, 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 the Company&#8217;s fiscal year ending
June 30, 2026, with early adoption permitted. The Company is evaluating the disclosure requirements related to the new standard.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
November 2023, the FASB issued ASU 2023-07, &#8220;<I>Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures</I>&#8221;,
which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant
segment expenses. The standard is effective annually for the Company&#8217;s fiscal year ending June 30, 2025 and interim periods thereafter.
While early adoption is permitted, the Company has decided not to adopt during the interim period reflected in this quarterly report.
The Company is evaluating the disclosure requirements related to the new standard.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Net
Loss Per Common Share</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

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the three months ended December 31, 2024 and 2023, basic and diluted weighted-average common shares outstanding were 16,682,465
and 16,516,700,
respectively. For the six months ended December 31, 2024 and 2023, basic and diluted weighted-average common shares outstanding were 16,682,465
and 16,495,727,
respectively. The Company incurred a net loss for the three and six months ended December 31, 2024 and 2023 and, therefore, basic
and diluted loss per share for the periods were the same because all potentially dilutive common share equivalents would have been
anti-dilutive. At December 31, 2024 and 2023, potentially dilutive common shares excluded from the calculation of diluted
weighted-average common shares outstanding were as follows:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="padding-bottom: 2.5pt"></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">3,020,314</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">3,466,276</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Liquidity
and Financial Condition</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&#160;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying condensed 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&#8217;s
ability to continue as a going concern exists.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Historically,
the Company&#8217;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 $103.3 million through December 31,
2024, and, for the six months ended December 31, 2024 generated cash flows from operations of $3.8 million and incurred a net loss of
$3.6 million. As of January 31, 2025, the Company had a cash balance of 0.4 million, $4.9 million available funding under the Gibraltar
Business Capital (&#8220;GBC&#8221;) Credit Facility and $1.0 million available for future draws under the November 2, 2023 subordinated
line of credit with Cleveland Capital, L.P. (&#8220;Cleveland&#8221;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the Company&#8217;s ability to meet projected revenue targets and generate cash from operations has been impacted by delays
in new orders of our energy storage solutions, primarily due to deferrals of new forklift purchases caused by lower capital spending
in the market sector that the Company serves and due to interest rate variability affecting capital spending in certain large customer
fleets.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

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    <div style="break-before: page; margin-top: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></div>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management
has evaluated the Company&#8217;s expected cash and working capital requirements, which include but are not limited to investments in
additional sales and marketing, research and development and capital equipment, and believes the Company&#8217;s existing cash and funding
available under the GBC Credit Facility and the November 2, 2023 subordinated line of credit with Cleveland, along with the forecasted
gross margin, will not be sufficient to meet the Company&#8217;s anticipated capital resources to fund planned operations for the next
twelve (12) months following the filing date of this quarterly report.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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. 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&#8217;s control could potentially have a 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&#8217;s ability to continue operating as a going concern.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying condensed 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 condensed consolidated financial
statements.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&#160;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
3 &#8211; INVENTORIES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inventories
consist of the following:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">December
    31,<BR> 2024</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">June
    30,<BR> 2024</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 60%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Raw materials</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 16%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">12,850,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Work in process</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">474,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Finished goods</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">2,370,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">15,323,000</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">16,977,000</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
4 &#8211; ACCRUED EXPENSES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accrued
expenses consist of the following:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">June
    30,<BR> 2024</FONT></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 60%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Payroll and bonus accrual</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 16%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">471,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Warranty liability</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">3,480,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">5,086,000</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">3,926,000</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  </TABLE>
<!-- Field: Split-Segment; Name: 001 -->
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
5 &#8211; NOTES PAYABLE</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Revolving
Line of Credit</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Gibraltar
Business Capital (&#8220;GBC&#8221;) Credit Facility</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 28, 2023, the Company entered into a Loan and Security Agreement (the &#8220;Agreement&#8221;) with GBC. The Agreement provides
the Company with a senior secured revolving loan facility for up to $15.0 million (the &#8220;Revolving Loan Commitment&#8221;). 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 &#8220;Maturity
Date&#8221;), unless extended, modified or renewed (the &#8220;Revolving Note&#8221;). 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217; 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
(&#8220;SOFR&#8221;, 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</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 2, 2023, the Company entered into the First Amendment to Loan and Security Agreement (the &#8220;First Amendment&#8221;) with
Gibraltar Business Capital, LLC (&#8220;GBC&#8221;), which amended certain definition of the Subordinated Debt referenced in the Loan
and Security Agreement dated July 28, 2023 as Subordinated Debt owed by the Company to Cleveland Capital L.P. (&#8220;Cleveland&#8221;)
pursuant to that certain Subordinated Unsecured Promissory Note, dated as of November 1, 2023, in the aggregate principal amount of $2,000,000.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 30, 2024, the Company entered into the Second Amendment to Loan and Security Agreement (the &#8220;Second Amendment&#8221;) 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 &#8220;Eligible Accounts;&#8221; 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 six months ended December 31,
2024, the Company had multiple drawdowns under the GBC Credit Facility totaling $30.1 million and made multiple repayments totaling $34.2
million. As of December 31, 2024, the outstanding balance under the GBC Credit Facility was approximately $9.7 million, with up to $6.3
million available for future borrowings, subject to borrowing base limitations.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
April 2024, the Company notified GBC of a certain event of default with respect to the Company&#8217;s anticipated failure to maintain
the EBITDA covenant for the trailing three (3) month period ended April 30, 2024 (the &#8220;Default&#8221;). 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 31, 2024, the Company entered into the Third Amendment to Loan and Security Agreement (the &#8220;Third Amendment&#8221;) 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&#160;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&#160;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 30, 2024, GBC agreed to waive the Company&#8217;s non-compliance with, and the effects of its non-compliance under, various representations,
financial covenants and non-financial covenants relating to our financial restatements (the &#8220;August Waiver&#8221;). On January
17, 2025, GBC agreed to waive the Company&#8217;s non-compliance with, and the effects of our non-compliance under, various representations,
financial covenants and non-financial covenants relating to its financial restatements and its failure to maintain the EBITDA Minimum
for certain financial periods (the &#8220;January Waiver&#8221;). As a result of the August Waiver and January Waiver, the Company expects
that the revolving credit facility remains available subject to meeting certain lending criteria under the Loan Agreement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&#160;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 22, 2025, the Company entered into the Fourth Amendment to Loan and Security Agreement (the &#8220;Fourth Amendment&#8221;) 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 paid on March 1, 2025, and (ii) $25,000 shall be due and payable on April 1, 2025.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Silicon
Valley Bank Credit Facility </I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 9, 2020, the Company entered into a Loan and Security Agreement (&#8220;Loan and Security Agreement&#8221;) with Silicon Valley
Bank (&#8220;SVB&#8221;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 29, 2021, the Company entered into a First Amendment to Loan and Security Agreement (&#8220;First Amendment&#8221; and together
with the Agreement, the &#8220;Loan Agreement&#8221;) 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 (&#8220;Revolving LOC&#8221;). 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 23, 2022, the Company entered into a Second Amendment to Loan and Security Agreement (&#8220;Second Amendment&#8221; and together
with the Loan Agreement, the &#8220;Second Amended Loan Agreement&#8221;) 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).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;s legal fees and expenses
incurred in connection with the Second Amendment.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 7, 2022, the Company entered into a Third Amendment to Loan and Security Agreement (&#8220;Third Amendment&#8221;) with SVB,
which amended certain terms of the Second Amended Loan Agreement (together with the Third Amendment, the &#8220;Third Amended Loan Agreement&#8221;),
including but not limited to, (i) extending the maturity date from November 7, 2022 to May 7, 2023 (the &#8220;Extension Period&#8221;),
(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&#8217;s legal fees and expenses incurred in connection with the Third Amendment.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 10, 2023, the Company entered into a Fourth Amendment to Loan and Security Agreement (the &#8220;Fourth Amendment&#8221;) 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&#8217;s legal fees and expenses incurred in connection with the Fourth Amendment.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 27, 2023, the Company entered into a Fifth Amendment to Loan and Security Agreement (the &#8220;Fifth Amendment&#8221;) with SVB
which further amended certain terms of the credit facility (together with the Fifth Amendment, the &#8220;Agreement&#8221;), including
but not limited to, (i) extending the maturity date from May 7, 2023 to December 31, 2023 (the &#8220;2023 Extension Period&#8221;),
(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&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">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 three months ended September 30, 2023, the Company had multiple Revolving LOC drawdowns totaling $1.4
</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">million and multiple
Revolving LOC payments totaling $11.3
</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">million inclusive of
the final repayment of the LOC in full. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
6 - RELATED PARTY DEBT AGREEMENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2024, the Company had $1.0 million of related party debt outstanding. As of June 30, 2024, the Company had no related
party debt balance outstanding.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Subordinated
Line of Credit Facilities</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Cleveland
Capital, L.P. Credit Facility</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 2, 2023, the Company entered into a Credit Facility Agreement (the &#8220;Credit Facility&#8221;) with Cleveland Capital, L.P.,
(&#8220;Cleveland&#8221;). The Credit Facility provides the Company with a line of credit of up to $2,000,000 for working capital purposes
(&#8220;2023 Subordinated LOC&#8221;). In connection with the LOC, the Company issued a subordinated unsecured promissory note for $2,000,000
(the &#8220;Commitment Amount&#8221;) in favor of Cleveland (the &#8220;Note&#8221;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the terms of the Credit Facility, Cleveland agreed to make loans (each such loan, an &#8220;Advance&#8221;) up to such Lender&#8217;s
Commitment Amount to the Company from time to time, until August 15, 2025 (the &#8220;Due Date&#8221;). 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 Cleveland are subject to the rights of Gibraltar Business Capital, LLC
(together with its successors and assigns, &#8220;GBC&#8221;), pursuant to a Subordination Agreement dated on or about November 2, 2023,
by and between Cleveland and GBC (the &#8220;Subordination Agreement&#8221;). 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 Cleveland 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).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"></P>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
consideration of Cleveland&#8217;s commitment to provide the Advances to the Company, the Company issued Cleveland warrants to purchase
41,196 shares of common stock (the &#8220;Warrants&#8221;) which rights are represented by a warrant certificate (&#8220;Warrant Certificate&#8221;).
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&#8217;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 7 &#8211; Stockholders&#8217; Equity (Deficit).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>2022
Subordinated LOC</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 11, 2022, the Company entered into a Credit Facility Agreement (the &#8220;Subordinated LOC&#8221;) with Cleveland, Herndon Plant
Oakley, Ltd., (&#8220;HPO&#8221;), and other lenders (together with Cleveland and HPO, the &#8220;Lenders&#8221;). The Subordinated LOC
provides the Company with a short-term line of credit not less than $3,000,000 and not more than $5,000,000, the proceeds of which shall
be used by the Company for working capital purposes. In connection with the Subordinated LOC, the Company issued a separate subordinated
unsecured promissory note in favor of each respective Lender (each promissory note, a &#8220;Note&#8221;) for each Lender&#8217;s commitment
amount (each such commitment amount, a &#8220;Commitment Amount&#8221;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the terms of the Subordinated LOC, each Lender severally agrees to make loans (each such loan, an &#8220;Advance&#8221;) up to such
Lender&#8217;s Commitment Amount to the Company from time to time, until December 31, 2022 (the &#8220;Due Date&#8221;). 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 &#8220;Common Stock&#8221;) 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 Lenders in writing. In addition, each Lender signed a Subordination Agreement by and between the Lenders and SVB dated
as of May 11, 2022 (the &#8220;Subordination Agreement&#8221;) for the purposes of subordinating the right to payment under the Note
to SVB&#8217;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 (&#8220;GBC&#8221;), each Lender signed a Subordination Agreement by and between the Lenders
and GBC dated as of July 28, 2023 (the &#8220;GBC Subordination Agreement&#8221;) for the purposes of subordinating the right to payment
under the Note to GBC&#8217;s indebtedness by the Company then incurred and outstanding or thereinafter incurred.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Subordinated LOC includes customary representations, warranties and covenants by the Company and the Lenders. The Company has also agreed
to pay the legal fees of Cleveland&#8217;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 Lenders, 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 Lenders.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection with entry into the Subordinated LOC, the Company paid to each Lender a one-time commitment fee in cash equal to 3.5% of such
Lender&#8217;s Commitment Amount. In addition, in consideration of the Lenders&#8217; 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 &#8220;Warrants&#8221;) (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&#8217;s Commitment Amount divided by the $5,000,000).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
were no borrowings or amounts outstanding under the Subordinated LOC during the six months ended December 31, 2023. On November 2, 2023,
the Subordinated LOC was terminated.</FONT></P>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
7 - STOCKHOLDERS&#8217; EQUITY (DEFICIT)</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>At-The-Market
(&#8220;ATM&#8221;) Offering</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 21, 2020, the Company entered into a Sales Agreement (the &#8220;Sales Agreement&#8221;) with H.C. Wainwright &amp; Co., LLC
(&#8220;HCW&#8221;) to sell shares of its common stock, par value $0.001 (the &#8220;Common Stock&#8221;) from time to time, through
an &#8220;at-the-market offering&#8221; program (the &#8220;ATM Offering&#8221;).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 5, 2023, the Company terminated the Sales Agreement with HCW upon given prior written notice of termination to HCW pursuant to
the terms of the Sales Agreement.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Public
Offering</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Registered
Direct Offering</I></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
September 27, 2021, the Company closed a registered direct offering, priced at-the-market under Nasdaq rules (&#8220;RDO&#8221;) 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
securities sold in the RDO were sold pursuant to a &#8220;shelf&#8221; registration statement on Form S-3 (File No. 333-249521), including
a base prospectus, previously filed with the Securities and Exchange Commission (the &#8220;SEC&#8221;) 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 &#8220;shelf&#8221; registration
statement expired on October 26, 2023.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Warrants</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
connection with the Company&#8217;s <FONT STYLE="background-color: white">registered direct offering</FONT> (&#8220;RDO&#8221;), in September
2021 the Company issued five-year warrants to the RDO investors to purchase up to 1,071,430 shares of the Company&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
May 2022 and in conjunction with entry into a credit facility with the Lenders, the Company issued five-year warrants to the Lenders
to purchase up to 128,000 shares of the Company&#8217;s common stock at an exercise price of $2.53 per share and had a fair value of
approximately $173,000.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;s common stock at an exercise
price of $2.23 per share and had a fair value of approximately $80,000.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;s common stock at an exercise price of $3.24 per share with a fair value of
approximately $92,000.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Activity
in warrants during the six months ended December 31, 2024 is reflected below:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Number
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 Warrants</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Weighted<BR>

    Average<BR>
 Exercise Price<BR>
 Per Warrant</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Weighted<BR>

    Average<BR>
 Remaining<BR>
 Contract Term<BR>
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    at June 30, 2024</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 12%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,413,110</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 12%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">6.14</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 12%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Warrants exercised</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
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  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Activity
in warrants during the six months ended December 31, 2023 is reflected below:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Number
    of<BR>
 Warrants</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Weighted<BR>

    Average<BR>
 Exercise Price<BR>
 Per Warrant</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Weighted<BR>

    Average<BR>
 Remaining<BR>
 Contract Term<BR>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    at June 30, 2023</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 12%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,455,119</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Warrants issued</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">41,196</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Warrants exercised</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">-</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Warrants forfeited and
    cancelled</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(83,205</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">4.00</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Warrants outstanding
    and exercisable at December 31, 2023</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,413,110</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">6.23</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">2.98</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company uses the Black-Scholes valuation model to calculate the fair value of warrants. Weighted average annualized percentages and expected
term inputs used in Black-Scholes valuations during the period are listed below:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Six months ended December 31,</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif">2024<SUP>(1)</SUP></FONT></td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2023</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%; text-align: left">Expected volatility</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 16%; text-align: right"></td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 16%; text-align: right">83.70</td><td style="width: 1%; text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Risk free interest rate</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">4.65</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Dividend yield</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&ndash;</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Expected term (years)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">5.00</td><td style="text-align: left">&nbsp;</td></tr>
  </table>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="margin: 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.5in; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></TD><TD STYLE="width: 0.25in"><SUP>(1)</SUP></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">No warrants were
issued during the six months ended December 31, 2024.</FONT></TD>
</TR></TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&#160;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Equity
Award Plans</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 17, 2015 the Company&#8217;s stockholders approved the 2014 Equity Incentive Plan (the &#8220;2014 Plan&#8221;). The 2014 Plan
offers certain employees, directors, and consultants the opportunity to acquire the Company&#8217;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&#8217;s common stock and stock options, up to 1,000,000 shares of the Company&#8217;s common stock. As of December 31,
2024, 107,956 shares of the Company&#8217;s common stock were available for future grants under the 2014 Plan.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 29, 2021, the Company&#8217;s stockholders approved the 2021 Equity Incentive Plan (the &#8220;2021 Plan&#8221;). 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 December 31, 2024, 872,039 shares of the Company&#8217;s
common stock were available for future grants under the 2021 Plan.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Stock
Options</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Activity
in the Company&#8217;s stock options during the six months ended December 31, 2024 and related balances outstanding as of that date is
reflected below:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">Number
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 Shares</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">Weighted<BR>

    Average<BR>
 Exercise<BR>
 Price</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">Weighted<BR>

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 Remaining<BR>
 Contract<BR>
 Term <BR>
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    <TD STYLE="border-bottom: Black 1pt solid; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">Weighted<BR>

    Average<BR>
 Grant Date<BR>
 Fair Value</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="width: 10%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="width: 1%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
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    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Granted</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8211;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8211;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD>
    <TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8211;</FONT></TD>
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    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Exercised</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8211;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Forfeited and cancelled</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Outstanding at December 31, 2024</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,493,278</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">4.96</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8211;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Exercisable at December 31, 2024</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">757,220</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8211;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Activity
in the Company&#8217;s stock options during the six months ended December 31, 2023 and related balances outstanding as of that date
is reflected below:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">Number
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 Shares</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">Weighted<BR>

    Average<BR>
 Exercise<BR>
 Price</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">Weighted<BR>

    Average<BR>
 Remaining<BR>
 Contract<BR>
 Term <BR>
(# years)</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">Aggregate<BR>

    intrinsic<BR>
 Value</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: center; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">Weighted<BR>

    Average<BR>
 Grant Date<BR>
 Fair Value</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
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    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company uses the Black-Scholes valuation model to calculate the fair value of stock options. Weighted average annualized percentages
and expected term inputs used in Black-Scholes valuations during the period are listed below:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Six months ended December 31,</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-family: Times New Roman, Times, Serif">2024<SUP>(1)</SUP></FONT></td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td><td style="font-weight: bold; padding-bottom: 1pt">&nbsp;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2023</td><td style="padding-bottom: 1pt; font-weight: bold">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%; text-align: left">Expected volatility</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 16%; text-align: right"></td><td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 2%">&nbsp;</td>
    <td style="width: 1%; text-align: left">&nbsp;</td><td style="width: 16%; text-align: right">78.29</td><td style="width: 1%; text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Risk free interest rate</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">4.90</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Dividend yield</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&ndash;</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Expected term (years)</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">&nbsp;</td><td style="text-align: left">&nbsp;</td><td>&nbsp;</td>
    <td style="text-align: left">&nbsp;</td><td style="text-align: right">6.00</td><td style="text-align: left">&nbsp;</td></tr>
  </table>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(1)</sup></font></td><td style="text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">No
stock options were granted during the six months ended December 31, 2024.</font></td>
</tr></table>


<P STYLE="margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></P>

<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&#160;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Restricted
Stock Units</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 5, 2020, the Company&#8217;s Board of Directors approved an amendment to the 2014 Plan, to allow for grants of Restricted Stock
Units (&#8220;RSUs&#8221;). 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&#8217;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 (&#8220;Time-based Award Agreement&#8221;),
and (ii) the Performance Restricted Stock Unit Award Agreement for performance-based awards (&#8220;Performance-based Award Agreement&#8221;).
On April 20, 2023, a total of 67,532 time-based RSUs were authorized by the Company&#8217;s Board of Directors to be granted to the Company&#8217;s
four non-executive directors under the amended 2014 Option Plan.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Activity
in RSUs during the six months ended December 31, 2024 and related balances outstanding as of that date is reflected
below:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Number
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Shares</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Weighted
    <BR>
Average Grant<BR>
 Date Fair Value</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Weighted
    <BR>
Average<BR>
 Remaining<BR>
 Contract <BR>
Term (# years)</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <TR STYLE="vertical-align: bottom; background-color: White">
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    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Activity
in RSUs during the six months ended December 31, 2023 and related balances outstanding as of that date is reflected
below:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Number
    of <BR>
Shares</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Weighted
    <BR>
Average Grant<BR>
 Date Fair Value</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Weighted
    <BR>
Average<BR>
 Remaining<BR>
 Contract Term <BR>
(# years)</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 14%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">6.09</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 14%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Granted</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8211;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#8211;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Vested and settled</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(54,038</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Forfeited and cancelled</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(1,539</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">5.75</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Outstanding at December 31, 2023</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">138,172</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">5.63</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">0.55</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&#160;</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Employee
Stock Purchase Plan</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 6, 2023, the Company&#8217;s Board of Directors approved the 2023 Employee Stock Purchase Plan (the &#8220;2023 ESPP&#8221;), and
on April 20, 2023, the 2023 ESPP was approved by the Company&#8217;s stockholders. The 2023 ESPP enables eligible employees of the Company
and certain of its subsidiaries (a &#8220;Participating Subsidiary&#8221;) to use payroll deductions to purchase shares of the Company&#8217;s
Common Stock and acquire an ownership interest in the Company. The maximum aggregate number of shares of the Company&#8217;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&#8217;s compensation on each pay day
to be used to purchase up to 1,500 shares of Common Stock for the employee&#8217;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&#8217;s stockholders, unless otherwise
earlier terminated.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
were no stock purchases under the 2023 ESPP during the six months ended December 31, 2024 and 2023.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Stock-based
Compensation</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Stock-based
compensation expense for the three and six months ended December 31, 2024 and 2023 represents the estimated fair value of stock options
and RSUs at the time of grant, and ESPP shares at the beginning of each offering period, 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 December 31, 2024, the aggregate
intrinsic value of exercisable stock options was zero.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table summarizes stock-based compensation expense for employee and non-employee stock option and RSU grants:</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="white-space: nowrap; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="white-space: nowrap; text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    months ended December 31,</FONT></TD><TD STYLE="white-space: nowrap; text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="white-space: nowrap; text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    months ended December 31,</FONT></TD><TD STYLE="white-space: nowrap; text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
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    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">2024</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">2023</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">2024</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 11%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">140,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
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    <TD STYLE="padding-left: 10pt; text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total stock-based compensation
    expense</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
December 31 2024, the unamortized stock-based compensation expense related to outstanding stock options and RSUs was approximately $1,466,000
and $99,000, respectively, and these amounts are expected to be expensed over the weighted-average remaining recognition period of 1.37
years and 0.30 years, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
8 &#8211; CONCENTRATIONS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Credit
Risk</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;s
cash balance at this institution is secured by the Federal Deposit Insurance Corporation up to $250,000. As of December 31, 2024 and
June 30, 2024, the cash balance was approximately $883,000 and $643,000, respectively.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Customer
Concentrations</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the three months ended December 31, 2024, the Company had three major customers that each represented more than 10% of revenues on an
individual basis and together represented approximately $12,238,000 or 73% of total revenues. During the six months ended December 31,
2024, the Company had three major customers that each represented more than 10% of revenues on an individual basis and together represented
approximately $23,741,000 or 72% of total revenues.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the three months ended December 31, 2023, the Company had three major customers that each represented more than 10% of revenues on an
individual basis and together represented approximately $13,666,000 or 75% of total revenues. During the six months ended December 31,
2023, the Company had three major customers that each represented more than 10% of revenues on an individual basis and together represented
approximately $26,221,000 or 79% of total revenues.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Suppliers/Vendor
Concentrations</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company obtains components and supplies included in its products from a group of suppliers. During the three months ended December 31,
2024, the Company had one supplier that accounted for more than 10% of total purchases on an individual basis and represented approximately
$3,532,000 or 26% of total purchases. During the six months ended December 31, 2024, the Company had one supplier that accounted for
more than 10% of total purchases on an individual basis and represented approximately $7,518,000 or 28% of total purchases.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the three months ended December 31, 2023, the Company had one supplier that accounted for more than 10% of total purchases on an individual
basis and represented approximately $3,674,000 or 30% of total purchases. During the six months ended December 31, 2023, the Company
had one supplier that accounted for more than 10% of total purchases on an individual basis and represented approximately $6,965,000
or 29% of total purchases.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
9 - COMMITMENTS AND CONTINGENCIES</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Legal
Proceedings</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><FONT STYLE="text-decoration: underline">Securities
Class Action</FONT></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 <I>Kassam v. Flux Power Holdings, Inc. et al.</I> (Case 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&#8217;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 (Case No. 3:25-cv-00113). On February 20, 2025, the court appointed
Brandon Paulson to act as lead plaintiff for the putative class. The court set a schedule under which the lead plaintiff
will file an amended complaint on or before April 21, 2025, and defendants will file their motion(s) to dismiss on or
before May 12, 2025. The case is still in its early stages. Management believes these claims to be meritless and intends to
vigorously defend against them.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><FONT STYLE="text-decoration: underline">Shareholder
Derivative Action</FONT></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">On
January 7, 2025, plaintiff Ronald Pearl filed a purported shareholder derivative complaint in the United States District Court,
District of Nevada, captioned <I>Pearl v. Dutt, et al</I>. (Case 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 <I>Kassam</I> 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. On February 19,
2025, the court granted an unopposed motion to transfer the case to the Southern District of California for all further
proceedings (Case No. 3:25-cv-00373).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><FONT STYLE="text-decoration: underline">Employment
Related Actions</FONT></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 30, 2024, a former employee (the &#8220;Employee&#8221;) 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 &#8220;Employment Proceeding&#8221;). 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217; General Act (&#8220;PAGA&#8221;), seeking an unspecified amount of penalties and attorneys&#8217;
fees based on allegations that the Company violated certain California employment laws (the &#8220;PAGA Proceeding&#8221;). 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;s action claims dismissed, the Employee&#8217;s individual claims compelled to binding arbitration and the Employee&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 25, 2024, a former CPM, LTD Inc. (&#8220;CPM&#8221;) employee filed a complaint against CPM, a third-party staffing service provider,
Flux Power, Inc., and Flux Power Holdings, Inc. (collectively, the &#8220;Defendants&#8221;) 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 &#8220;joint employers&#8221;
to the plaintiff under California law and are jointly liable for the plaintiff&#8217;s claims. The plaintiff is seeking an unspecified
amount of unpaid wages, statutory penalties, emotional distress damages, punitive damages, and attorneys&#8217; 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. This case was settled for an immaterial
amount.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Operating
Leases</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 25, 2019 the Company signed a Standard Industrial/Commercial Multi-Tenant Lease (&#8220;Lease&#8221;) 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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 26, 2020, the Company entered into the First Amendment to Standard Industrial/Commercial Multi-Tenant Lease dated April 25,
2019 (the &#8220;Amendment&#8221;) 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 (subject to 3% annual increase).</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
rent expense, including the Company&#8217;s portion of common area maintenance and other costs allocated between tenants, was approximately
$233,000 and $465,000 for the three months and six months ended December 31, 2024, respectively, and $235,000 and $473,000 for the three
and six months ended December 31, 2023, respectively. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Finance
Leases</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s leased properties as of December 31, 2024 are as follows:</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Lease
    Date</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Property
    Leased</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Lease
    <BR>
Term (months)</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Commencement<BR>

    Date</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Monthly
    Lease<BR>
 Payment(1)</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="width: 18%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">9/2/2022</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="width: 25%"><FONT STYLE="font-family: Times New Roman, Times, Serif">Vehicle</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 13%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">60</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="width: 17%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">9/10/2022</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 15%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,200</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">10/17/2022</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Manufacturing equipment</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">36</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">5,500</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">1/24/2023</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Manufacturing equipment</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">36</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">1/24/2023</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">6,700</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">3/2/2023</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Manufacturing equipment</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">36</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">3/2/2023</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">1,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  </TABLE>


<P STYLE="margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"></P>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</font></td><td style="text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Excludes
sales tax and other fees.</font></td>
</tr></table>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lease
costs are amortized on a straight-line basis over their respective lease terms. Depreciation expense related to leased assets was approximately
$39,000</FONT> <FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">and
$77,000</FONT> <FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">for
the three and six months ended December 31, 2024, respectively, and $38,000
</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">and $77,000
</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">for the three and six months ended December 31,2023,
respectively. Interest expense on leased liabilities was approximately $5,000
</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">and $10,000
</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">for the three months and six months ended December
31, 2024, respectively</FONT>.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Future
Minimum Lease Payments as of December 31, 2024 are as follows:</font></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Operating
    Leases</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="text-align: center; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD COLSPAN="2" STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif">Finance
    Leases</FONT></TD><TD STYLE="text-align: center; padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">Years ending June 30,</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="font-weight: bold"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="font-weight: bold; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="font-weight: bold; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 60%"><FONT STYLE="font-family: Times New Roman, Times, Serif">2025 (remaining six months)</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 16%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">443,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="width: 2%"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="width: 16%; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">86,000</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
    <TD STYLE="text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">2026</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  <TR STYLE="vertical-align: bottom; background-color: White">
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <TR STYLE="vertical-align: bottom; background-color: White">
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 10pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">Total lease liability</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
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  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(783,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">(146,000</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">)</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 10pt; text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Leases
    payable, noncurrent portion</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">915,000</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif">46,000</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-family: Times New Roman, Times, Serif">&#160;</FONT></TD></TR>
  </TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>NOTE
10 - SUBSEQUENT EVENTS</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Waiver
to Loan and Security Agreement with Gibraltar Business Capital</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
filing of the Company&#8217;s Annual Report on Form 10-K for the fiscal year ended June 30, 2024 with the SEC was due on September
30, 2024 but was not filed until January 29, 2025. The Company&#8217;s failure to file its Annual Report in a timely manner resulted
in an event of default with respect to a covenant under the Loan and Security Agreement with GBC to timely deliver a copy of the
Company&#8217;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.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Amendment
to Loan and Security Agreement with Gibraltar Business Capital</I></B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 22, 2025, we entered into Amendment No. 4 to Loan and Security Agreement (the &#8220;Fourth Amendment&#8221;) 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 paid on March 1, 2025, and (ii) $25,000 shall be due and payable on April 1, 2025.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><B><I>Management and Board of Director Changes</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">On March 10 2025, Mr. Ronald F.
Dutt notified the Company&#8217;s Board of Directors of his decision to retire and resign from his position as director, Chairman of the
Board, Chief Executive Officer and President of the Company and its wholly owned subsidiary, Flux Power, Inc., effective March 10, 2025.
In connection with Mr. Dutt&#8217;s retirement, the Board appointed Mr. Dale T. Robinette as the new Chairman of the Board, effective
March 10, 2025. Mr. Robinette also currently serves as an independent director, chairperson of the Compensation
Committee, and a member of both the Audit Committee and the Nominating and Governance Committee. In addition, the Board appointed Mr.
Krishna Vanka as director, Chief Executive Officer and President of the Company and Flux Power, effective March 10, 2025.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&#160;</B></FONT></P>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">Up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Shares of Common Stock</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">Up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Warrants to purchase up to &nbsp;&nbsp;&nbsp;Shares of Common Stock</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">Up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pre-Funded Warrants to purchase up to &nbsp;&nbsp;&nbsp;Shares of Common Stock</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">Up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Shares of Common Stock Issuable Upon Exercise of the Warrants and the Pre-Funded Warrants</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><img src="formdrs_002.jpg" alt=""></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>________________</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>PROSPECTUS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>________________</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center"><i>Sole Placement Agent </i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; text-align: center">The date of this prospectus is &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2025<b>.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0"><b>You should rely only on the information contained in this prospectus.
We have not, and the placement agent have not, authorized anyone to provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. We are not, and the placement agent are not, making an offer to sell
securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this
prospectus is accurate as of any date other than the date on the front of this prospectus.</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>&nbsp;</b></p>


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    <div style="break-before: page; margin-top: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></div>
    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>PART II</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; background-color: white"><b>INFORMATION NOT REQUIRED
IN PROSPECTUS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><font style="font-size: 10pt"><b>Item 13.</b></font> <font style="font-size: 10pt"><b>Other Expenses of Issuance and Distribution.</b></font></p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">The
following table indicates the expenses to be incurred in connection with the offering described in this registration statement, other
than placement agent fees, all of which will be paid by us. All amounts are estimated except the SEC registration fee, the FINRA filing
fee.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 85%; padding-left: 10pt; text-indent: -10pt"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">SEC registration fee</font></td>
    <td style="white-space: nowrap; width: 1%; padding-bottom: 2.25pt">&nbsp;</td>
    <td style="white-space: nowrap; width: 1%"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="width: 13%; padding-bottom: 2.25pt">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">FINRA filing fee</font></td>
    <td style="white-space: nowrap; padding-bottom: 2.25pt">&nbsp;</td>
    <td style="white-space: nowrap"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="padding-bottom: 2.25pt">&nbsp;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accounting fees and expenses</font></td>
    <td style="white-space: nowrap; padding-bottom: 2.25pt">&nbsp;</td>
    <td style="white-space: nowrap"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</font></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Legal fees and expenses</font></td>
    <td style="white-space: nowrap; padding-bottom: 2.25pt">&nbsp;</td>
    <td style="white-space: nowrap"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</font></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Transfer agent&rsquo;s and registrar&rsquo;s fees and expenses</font></td>
    <td style="white-space: nowrap; padding-bottom: 2.25pt">&nbsp;</td>
    <td style="white-space: nowrap"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</font></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Printing and engraving expenses</font></td>
    <td style="white-space: nowrap; padding-bottom: 2.25pt">&nbsp;</td>
    <td style="white-space: nowrap"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</font></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 10pt; text-indent: -10pt"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Non-accountable expenses to placement agent</font></td>
    <td style="white-space: nowrap; padding-bottom: 2.25pt">&nbsp;</td>
    <td style="white-space: nowrap"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</font></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 10pt; text-indent: -10pt"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Miscellaneous fees</font></td>
    <td style="white-space: nowrap; padding-bottom: 2.25pt">&nbsp;</td>
    <td style="white-space: nowrap; border-bottom: Black 1pt solid"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="border-bottom: Black 1pt solid; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</font></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt; padding-left: 20pt; text-indent: -10pt"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total</font></td>
    <td style="white-space: nowrap; padding-bottom: 2.5pt">&nbsp;</td>
    <td style="border-bottom: Black 2.5pt double; white-space: nowrap"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td>
    <td style="border-bottom: Black 2.5pt double; text-align: right">&nbsp;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"></p>

<!-- Field: Rule-Page --><div style="margin-top: 0pt; margin-bottom: 0pt; width: 25%"><div style="font-size: 1pt; border-top: Black 1pt solid">&nbsp;</div></div><!-- Field: /Rule-Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left">*</td><td style="text-align: justify">To be filed by amendment.</td>
</tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white">&nbsp;</p>

<p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><font style="font-size: 10pt"><b>Item 14.</b></font> <font style="font-size: 10pt"><b>Indemnification of Directors and Officers.</b></font></p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">We are a corporation organized
under the laws of the State of Nevada. Section 78.138 of the Nevada Revised Statutes (NRS) provides that, unless the corporation&rsquo;s
articles of incorporation or an amendment thereto provide otherwise, a director or officer will not be individually liable to the corporation
or its stockholders or creditor for any damages as a result of any act or failure to act in his or her capacity as a director or officer,
unless (i) the presumption that the director and officer acted in good faith, on an information basis and with a review to the interest
of the corporation, is rebutted, and (ii) it is proven that the director&rsquo;s or officer&rsquo;s acts or omissions constituted a breach
of his or her fiduciary duties, and such breach involved intentional misconduct, fraud, or a knowing violation of the law.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Section 78.7502 of the NRS permits
a corporation to indemnify its directors and officers against expenses, including attorney&rsquo;s fees, judgments, fines, and amounts
paid in settlement actually and reasonably incurred in connection with a threatened, pending, or completed action, suit, or proceeding,
if the officer or director (i) is not liable pursuant to NRS 78.138, or (ii) acted in good faith and in a manner the officer or director
reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe the conduct was unlawful. Section 78.7502 of the NRS requires a corporation to indemnify a director
or officer who has been successful on the merits or otherwise in defense of any action or suit. Section 78.7502 of the NRS precludes indemnification
by the corporation if the officer or director has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals,
to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court determines
that in view of all the circumstances, the person is fairly and reasonably entitled to indemnity for such expenses.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Section 78.751 of the NRS permits
a Nevada corporation to indemnify its officers and directors against expenses incurred by them in defending a civil or criminal action,
suit, or proceeding as they are incurred and in advance of final disposition thereof, upon determination by the stockholders, the disinterested
board members, or by independent legal counsel. If so provided in the corporation&rsquo;s articles of incorporation, bylaws, or other
agreements, Section 78.751 of the NRS requires a corporation to advance expenses as incurred upon receipt of an undertaking by or on behalf
of the officer or director to repay the amount if it is ultimately determined by a court of competent jurisdiction that such officer or
director is not entitled to be indemnified by the corporation. Section 78.751 of the NRS further permits the corporation to grant its
directors and officers additional rights of indemnification under its articles of incorporation, bylaws, or other agreements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Section 78.752 of the NRS provides
that a Nevada corporation may purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was
a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, for any liability asserted against
him or her and liability and expenses incurred by him or her in his or her capacity as a director, officer, employee, or agent, or arising
out of his or her status as such, whether or not the corporation has the authority to indemnify him or her against such liability and
expenses.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Charter Provisions</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Article XI of our Amended and
Restated Articles of Incorporation (Articles) provide that the Company shall indemnify any person who incur expenses by reason of the
fact that he or she is or was an officer, director, employee or agent of the company and that this indemnification shall be mandatory
on all circumstances in which indemnification is permitted by law. Article XII of our Articles provide that the Company shall indemnify
its directors and officers from personal liability for lawful acts of the Company has permitted by law. The foregoing provisions shall
not eliminate or limit the liability of a director for (i) any breach of the director&rsquo;s duty of loyalty to us or our stockholders,
(ii) acts or omissions not in good faith or, which involve intentional misconduct or a knowing violation of law, (iii) the payment of
dividends in violation of Section 78.300 of the Nevada Revised Statutes; or (iv) any transaction from which the director derived an improper
personal benefit.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Article VII of our Amended and
Restated Bylaws (Bylaws) provide for indemnification of our directors, officers, and employees in most cases for any liability suffered
by them or arising out of their activities as directors, officers, and employees if they acted in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of the Company, and with respect to any criminal action to proceeding, have no
reasonable cause to believe their conduct was unlawful. To the extent that our directors and officers have been successful on the merits
of otherwise in defense of any action, suit, or proceeding, the Company shall indemnify them against expenses, including attorneys&rsquo;
fees, actually and reasonably incurred. Any other indemnification, unless ordered by a court, shall be made by the Company only in the
specific case on a determination that the indemnification has met the applicable standard or conduct set forth in the Bylaws. The determination
shall be made by disinterested directors, stockholders, or independent legal counsel. Our Bylaws, therefore, limit the liability of directors
to the maximum extent permitted by Nevada law (Section 78.751 of the NRS).</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><i>&nbsp;</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Indemnification Agreements</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company has entered into Indemnification
Agreements with all of the Company&rsquo;s directors. Under the Indemnification Agreement, the Company agrees to indemnify the director
against any and all expenses incurred if the director acted in good faith and in a manner he reasonably believed to be in or not opposed
to the best interest of the Company and, in the case of a criminal proceeding, had no reasonable cause to believe that his conduct was
unlawful.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The Company also maintains directors&rsquo;
and officers&rsquo; liability insurance under which its directors and officers are insured against loss (as defined in the policy) as
a result of certain claims brought against them in such capacities.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">At present, there is no pending
litigation or proceeding involving any of our directors or officers in which indemnification or advancement is sought. We are not aware
of any threatened litigation that may result in claims for advancement or indemnification.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Limitations of Liability and Indemnification Matters
</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">The limitation of liability and
indemnification provisions in our Charter and Bylaws may discourage stockholders from bringing a lawsuit against our directors for breach
of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though
an action, if successful, might benefit us and other stockholders. Further, a stockholder&rsquo;s investment may be adversely affected
to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification
provisions.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Insofar as indemnification for
liabilities arising under the Securities Act may be permitted for directors, executive officers or persons controlling us, we have been
informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore
unenforceable.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">The registrant
maintains insurance policies that indemnify its directors and officers against various liabilities arising under the Securities Act and
the Exchange Act that might be incurred by any director or officer in his or her capacity as such.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&#9;[The
proposed form of Placement Agency Agreement, to be filed as Exhibit 1.1 to this Registration Statement, provides for indemnification of
directors and officers of the Registrant by the placement agent against certain liabilities.]</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&nbsp;</p>

<p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><font style="font-size: 10pt"><b>Item 15.</b></font> <font style="font-size: 10pt"><b>Recent Sales of Unregistered Securities.</b></font></p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">On November
2, 2023, the Company issued warrants to purchase 41,196 shares of its Common Stock to Cleveland Capital, L.P. (the &ldquo;Lender&rdquo;)
on November 2, 2023, as consideration for the Lender&rsquo;s commitment under a $2,000,000 line of credit provided pursuant to a Credit
Facility Agreement. The warrants are immediately exercisable, have an exercise price of $3.24 per share, and will expire five years from
the date of issuance. The warrants are subject to adjustment in the event of stock dividends, stock splits, combinations, or reclassifications
of the Company&rsquo;s Common Stock, and include provisions entitling the holder to receive alternative consideration in connection with
certain corporate events defined as Triggering Events. The issuance of the warrants was made in reliance on the exemption from registration
provided under Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Rule 506 of Regulation D, as the transaction did not
involve a public offering and the Lender is an accredited investor.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">On July
20, 2023, the Company issued 16,022 restricted shares of Common Stock to a warrant holder pursuant to a cashless exercise of the Amended
and Restated Warrant Certificate, dated July 3, 2019, and as amended on July 24, 2020, in reliance upon the exemption therefrom afforded
by Section 4(a)(2) of the Act and by Rule 506 of Regulation D promulgated thereunder. The cashless exercise was based on an exercise price
of $4.00 per share of Common Stock and the Company received no cash from the exercise.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&nbsp;On
June 23, 2022, the Company issued warrants to purchase 40,806 shares of its Common Stock on June 23, 2022, to Silicon Valley Bank (&ldquo;SVB&rdquo;)
in connection with the execution of a Second Amendment to the Loan and Security Agreement between SVB, the Registrant, and its wholly-owned
subsidiary, Flux Power, Inc. The warrants are immediately exercisable, have an exercise price of $2.23 per share, and will expire on June
23, 2034. In accordance with the terms of the Warrants, SVB transferred all of its rights, title, and interest in the Warrants to its
parent company, SVB Financial Group. The issuance of the warrants was made in reliance on the exemption from registration provided under
Section 4(a)(2) of the Securities Act of 1933, as amended, as the transaction did not involve a public offering and the recipient was
an accredited investor.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">On May
11, 2022, the Company agreed to issue warrants to purchase shares of its Common Stock to the lenders participating in a Credit Facility
Agreement entered into on the same date. The warrants were issued as consideration for the lenders&rsquo; respective commitments under
the facility, with the number of warrant shares allocated based on each lender&rsquo;s proportionate commitment amount relative to a maximum
commitment pool of $5,000,000. The warrants are immediately exercisable, have an exercise price of $2.53 per share, and expire five years
from the date of issuance. Subject to certain limitations, the warrants also provide for cashless exercise and include standard anti-dilution
adjustments and provisions triggered upon certain corporate events. Each lender represented to the Company that it is an accredited investor,
and the Company relied on such representations in issuing the warrants. The issuance of the warrants and the securities underlying the
Credit Facility were made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as
amended, and Rule 506(b) of Regulation D promulgated thereunder, as the offerings were not conducted in connection with a public solicitation
or advertisement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>&nbsp;&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Item 16. Exhibits and Financial Statement Schedules</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">(a) Exhibits</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The following exhibits are filed herewith or incorporated by reference
in this prospectus:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1pt solid; width: 0.75in">
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Exhibit</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0">No.</p></td>
    <td style="width: 0.1in; padding-bottom: 1pt">&nbsp;</td>
    <td style="border-bottom: Black 1pt solid; text-align: justify"><font style="font-size: 10pt">Description</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">1.1*</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Form of Placement Agency Agreement</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">2.1</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000121478212000038/ex2-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">2.2</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000114420412035294/v315845_ex2-2.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">3.1</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000114420415010941/v402312_ex3-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Restated Articles of Incorporation. Incorporated by reference to Exhibit 3.1 on Form 8-K filed with the SEC on February 19, 2015.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">3.2</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000121478212000041/ex3-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">3.3</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000143774917015036/ex3-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">3.4</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000165495419008217/flux_ex31.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Certificate of Change. Incorporated by reference to Exhibit 3.1 on Form 8-K filed with the SEC on July 12, 2019.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">4.1</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315221023512/ex4-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Form of Warrant. Incorporated by reference to Exhibit 4.1 on Form 8-K filed with the SEC on September 23, 2021.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">4.2</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315222013380/ex4-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Form of Warrant Certificate. Incorporated by reference to Exhibit 4.1 on Form 8-K filed with the SEC on May 13, 2022.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">4.3</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315222017963/ex4-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">4.4</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315223039226/ex4-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Form of Warrant. Incorporated by reference to Exhibit 4.1 on Form 8-K filed with the SEC on November 3, 2023.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">4.5*</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Form of Pre-funded Warrant</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">4.6*</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Form of Common Warrant</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">5.1*</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Opinion of Lewis Brisbois Bisgaard &amp; Smith, LLP</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.1+</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000165495419004180/flux_ex101.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Form of Indemnification Agreement. Incorporated by reference to Exhibit 10.1 on Form 8-K filed with the SEC on April 9, 2019.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.2</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000165495419005065/flux_ex101.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.3</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315220003467/ex10-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.4</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315220021091/ex10-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Form of Representative Warrant. Incorporated by reference to Exhibit 10.1 on Form 10-Q filed with the SEC on November 12, 2020.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.5+</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000114420412035294/v315845_ex10-6.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.6+</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000114420415031612/v410018_ex10-23.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">2014 Equity Incentive Plan. Incorporated by reference to Exhibit 10.23 on Form 10-Q filed with the SEC on May 15, 2015.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.7+</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000165495418010522/ex10-20.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.8+</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315220020810/ex10-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.9+</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315220020810/ex10-2.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.10+</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315220020810/ex10-3.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.11+</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315220020810/ex10-4.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Annual Cash Bonus Plan. Incorporated by reference to Exhibit 10.4 on Form 8-K filed with the SEC on November 9, 2020.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.12+</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315221004066/ex10-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.13+</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315221004066/ex10-2.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white">
  <tr style="vertical-align: top">
    <td style="width: 0.75in"><font style="font-size: 10pt">10.14+</font></td>
    <td style="width: 0.1in">&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315221010371/ex10-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">2021 Equity Incentive Plan. Incorporated by reference to Exhibit 10.1 on Form 8-K filed with the SEC on May 4, 2021.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.15+</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315221010371/ex10-2.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Form of Restricted Stock Unit Award Agreement &ndash; Non-Executive Director. Incorporated by reference to Exhibit 10.2 on Form 8-K filed with the SEC on May 4, 2021.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.16+</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315221026986/ex10-3.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.17</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315223013215/ex10-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.18</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315223026533/ex10-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Loan and Security Agreement. Incorporated by reference to Exhibit 10.1 on Form 8-K filed with the SEC on August 3, 2023.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.19</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315223026533/ex10-2.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Intellectual Property Security Agreement. Incorporated by reference to Exhibit 10.2 on Form 8-K filed with the SEC on August 3, 2023.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.20</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315223026533/ex10-3.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Form of Revolving Note. Incorporated by reference to Exhibit 10.3 on Form 8-K filed with the SEC on August 3, 2023.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.21</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315223038129/ex10-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.22</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315223039226/ex10-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.23</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315223039226/ex10-2.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.24</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315224004610/ex10-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.25+</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315224007732/ex10-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Form of Separation and Release Agreement (Charles Scheiwe). Incorporated by reference to Exhibit 10.1 on Form 8-K filed on February 23, 2024.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.26</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315224007732/ex10-2.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Form of Consulting Agreement (Charles Scheiwe). Incorporated by reference to Exhibit 10.2 on Form 8-K filed on February 23, 2024.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.27+</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315224007732/ex10-3.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Employment Agreement (Kevin S. Royal). Incorporated by reference to Exhibit 10.3 on Form 8-K filed on February 23, 2024.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.28</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315224018968/ex10-5.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Waiver Agreement dated May 8, 2024. Incorporated by reference to Exhibit 10.5 on Form 10-Q filed on May 13, 2024.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.29</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315224031774/ex10-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.30</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315225004175/ex10-30.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Waiver to Loan and Security Agreement dated August 30, 2024. Incorporated by reference to Exhibit 10.30 to Form 10-K filed on January 29, 2025.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.31</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315225004175/ex10-31.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Waiver to Loan and Security Agreement dated January 17, 2025. Incorporated by reference to Exhibit 10.31 to Form 10-K filed on January 29, 2025.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.32</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315225003979/ex10-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">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.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.33</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315225009641/ex10-1.htm" style="-sec-extract: exhibit">Executive Employment Agreement with Krishna Vanka. Incorporated by reference to Exhibit 10.1 to Form 8-K filed on March 10, 2025</a></font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.33</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000149315225009641/ex10-2.htm" style="-sec-extract: exhibit">Amendment to the Amended and Restated Employment Agreement with Ronald F. Dutt. Incorporated by reference to Exhibit 10.2 to Form 8-K filed on March 10, 2025</a></font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">10.33</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000164117225002354/ex10-1.htm" style="-sec-extract: exhibit">Separation and Release Agreement with Ronald F. Dutt. Incorporated by reference to Exhibit 10.1 to Form 8-K filed on April 2, 2025.</a></font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">21.1</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1083743/000114420412035294/v315845_ex21-1.htm" style="-sec-extract: exhibit"><font style="font-size: 10pt">Subsidiaries. Incorporated by reference to Exhibit 21.1 on Form 8-K filed with the SEC on June 18, 2012.</font></a></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">23.1*</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Consent of Independent Registered Public Accounting Firm.</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">23.2*</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Consent of Lewis Brisbois Bisgaard &amp; Smith, LLP (included in Exhibit 5.1)</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">24.1*</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Powers of Attorney (included on signature page to this registration statement).</font></td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">107*</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Filing Fee Table</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">* To be filed.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">+ Indicates management contract or compensatory plan
or arrangement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">[&dagger; Pursuant to item 601(b)(10)(iv) of Regulation
S-K, certain information has been excluded because it is both not material and the type of information that the registrant treats as private
or confidential.]</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&nbsp;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">(b) Financial Statement Schedules.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">All financial
statement schedules are omitted because the information required to be set forth therein is not applicable or is shown in the consolidated
financial statements or the notes thereto.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><font style="font-size: 10pt"><b>Item 17.</b></font> <font style="font-size: 10pt"><b>Undertakings.</b></font></p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">The undersigned
registrant hereby undertakes:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(1)</font></td>
    <td colspan="2" style="text-align: justify"><font style="font-size: 10pt">to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td colspan="2" style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="width: 0.25in">&nbsp;</td>
    <td style="width: 0.25in"><font style="font-size: 10pt">(i)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">(ii)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the &ldquo;Calculation of Registration Fee&rdquo; table in the effective registration statement; and</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td><font style="font-size: 10pt">(iii)</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(2)</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(3)</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(4)</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">that, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use; and</font></td></tr>
  <tr style="vertical-align: top">
    <td>&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td><font style="font-size: 10pt">(5)</font></td>
    <td>&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">that, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="width: 0.5in; text-align: justify">&nbsp;</td>
    <td style="vertical-align: top; width: 0.25in; text-align: justify"><font style="font-size: 10pt">(a)</font></td>
    <td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;</font></td></tr>
  <tr>
    <td style="text-align: justify">&nbsp;</td>
    <td style="vertical-align: top; text-align: justify">&nbsp;</td>
    <td style="vertical-align: top; text-align: justify">&nbsp;</td></tr>
  <tr>
    <td style="text-align: justify">&nbsp;</td>
    <td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">(b)</font></td>
    <td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="width: 0.5in; text-align: justify">&nbsp;</td>
    <td style="vertical-align: top; width: 0.25in; text-align: justify"><font style="font-size: 10pt">(c)</font></td>
    <td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and</font></td></tr>
  <tr>
    <td style="text-align: justify">&nbsp;</td>
    <td style="vertical-align: top; text-align: justify">&nbsp;</td>
    <td style="vertical-align: top; text-align: justify">&nbsp;</td></tr>
  <tr>
    <td style="text-align: justify">&nbsp;</td>
    <td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">(d)</font></td>
    <td style="vertical-align: top; text-align: justify"><font style="font-size: 10pt">any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding)
is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed
by the final adjudication of such issue.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>


<!-- Field: Page; Sequence: 147; Value: 1 -->
    <div style="margin-bottom: 6pt; border-bottom: Black 1pt solid"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 33%">&nbsp;</td><td style="width: 34%; text-align: center">II-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->6<!-- Field: /Sequence --></td><td style="width: 33%; text-align: right">&nbsp;</td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><P STYLE="margin: 0pt">&nbsp;</P></div>
    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b><a name="poa"></a>SIGNATURES</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Pursuant to the requirements of
the Securities Act of 1933, the registrant has duly caused this registration statement on Form S-1 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Vista, California on [&#9679;], 2025.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td colspan="2" style="text-align: justify"><font style="font-size: 10pt"><b>FLUX POWER HOLDINGS, INC.</b></font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td colspan="2" style="text-align: justify">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="width: 50%; text-align: justify">&nbsp;</td>
    <td style="width: 5%; text-align: justify"><font style="font-size: 10pt">By:</font></td>
    <td style="width: 45%; border-bottom: black 1pt solid">&nbsp;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Name:</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Krishna Vanka</font></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&nbsp;</td>
    <td style="text-align: justify"><font style="font-size: 10pt">Title:</font></td>
    <td style="text-align: justify"><font style="font-size: 10pt">Chief Executive Officer</font></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Known All Persons By These Presents,
that each person whose signature appears below appoints Krishna Vanka or Kevin Royal as his or her true and lawful attorney-in-fact and
agent, with full power of substitution, for him or her and in his or her name, place and stead, to sign any amendment (including post-effective
amendments) to this registration statement (or any other registration statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933), and to file the same, with all exhibits thereto, and other documents in connection
therewith, with the SEC, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he may do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent or any of them, or of his substitutes, may lawfully do or cause to be
done by virtue hereof.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">Pursuant to the requirements of
the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&nbsp;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="vertical-align: top; width: 34%; border-bottom: black 1pt solid"><font style="font-size: 10pt"><b>Signature</b></font></td>
    <td style="vertical-align: top; width: 2%; padding-bottom: 1pt">&nbsp;</td>
    <td style="vertical-align: top; width: 44%; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Title</b></font></td>
    <td style="vertical-align: top; width: 2%; padding-bottom: 1pt">&nbsp;</td>
    <td style="vertical-align: bottom; width: 18%; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 10pt"><b>Date</b></font></td></tr>
  <tr>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top; text-align: center">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr>
    <td style="vertical-align: top; border-bottom: black 1pt solid">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top; text-align: center"><font style="font-size: 10pt">Chief Executive Officer,</font> President and Director</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr>
    <td style="vertical-align: top"><font style="font-size: 10pt">Krishna Vanka</font></td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top">
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><i>(Principal Executive Officer)</i></p></td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top; text-align: center">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr>
    <td style="vertical-align: top; border-bottom: black 1pt solid">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top; text-align: center"><font style="font-size: 10pt">Chief Financial Officer</font></td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr>
    <td style="vertical-align: top"><font style="font-size: 10pt">Kevin S. Royal</font></td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top; text-align: center"><font style="font-size: 10pt"><i>(Principal Financial Officer)</i></font></td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top; text-align: center">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr>
    <td style="vertical-align: top; border-bottom: black 1pt solid">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top; text-align: center"><font style="font-size: 10pt">Director</font></td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr>
    <td style="vertical-align: top"><font style="font-size: 10pt">Michael Johnson</font></td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top; text-align: center">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top; text-align: center">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr>
    <td style="vertical-align: top; border-bottom: black 1pt solid">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top; text-align: center"><font style="font-size: 10pt">Director</font></td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr>
    <td style="vertical-align: top"><font style="font-size: 10pt">Mark Leposky</font></td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top; text-align: center">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top; text-align: center">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr>
    <td style="vertical-align: top; border-bottom: black 1pt solid">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top; text-align: center"><font style="font-size: 10pt">Director</font></td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr>
    <td style="vertical-align: top"><font style="font-size: 10pt">Lisa Walters-Hoffert</font></td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top; text-align: center">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top; text-align: center">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr>
    <td style="vertical-align: top; border-bottom: black 1pt solid">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top; text-align: center"><font style="font-size: 10pt">Director</font></td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  <tr>
    <td style="vertical-align: top"><font style="font-size: 10pt">Dale Robinette</font></td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: top; text-align: center">&nbsp;</td>
    <td style="vertical-align: top">&nbsp;</td>
    <td style="vertical-align: bottom; text-align: center">&nbsp;</td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.25in"><b>&nbsp;</b></p>


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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
