Flux Power Holdings, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Flux Powers first quarter fiscal year 2021 financial results and company update conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Mr. Justin Forbes. Thank you. Sir, please go ahead.

Hi. Good afternoon. Welcome to FlexPower's earnings call. This is Justin Forbes, Director of Marketing and Investor Relations for FlexPower. I'm joined by Ron Dutt, our CEO, and Chuck Shiawee, our CFO, who will present the results of operations for our first fiscal quarter of fiscal year 2021, ended September 30th. I'd like to now read our State Harbor Statement. Our discussion may include predictions, estimates, or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. Your caution not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our predictions. You should also review our most recent Form 10-K and Form 10-Q for more complete discussion of these factors and other risks, particularly under the heading Risk Factors. A copy of our press release and financial tables can be viewed and downloaded on the FluxPower Investor Relations website at fluxpower.com backslash investors. And with that, I will now turn it over to Ron Dutt.

Good afternoon, and thanks, Justin, for the introduction. Well, it's been only six weeks since our last earnings call where we discussed fiscal year 20 full-year results ending June 30th. I do want to provide an update on our first quarter of this new fiscal year 21 for us, along with our latest remarks. Our fiscal year 21 revenue increased by 135% to $4.5 million from $1.9 million last year. This more than doubling reflects traction from several of our new products. Our new Class II lift truck pack, also referred to as M36. And secondly, our new S24 narrow aisle walkie pack. And finally, our stationary power pack, which is part of our new C-Series lithium packs. Our full product lineup is now ramping, including year-over-year increases in our Class III, class one and ground support equipment product lines. Our private label product continues to generate regular monthly orders currently pacing at over 10% of our quarter sales. Our new class two entry for the growing high efficiency narrow aisle forklifts accounted for over 30% of our quarterly sales, and we anticipate continued strength with this model. Our C-Series packs are shipping monthly to our partner, Beam Global, who uses these packs for energy storage of their solar-powered mobile EV charging stations. We are optimistic this product will support increasing demand of stationary power applications from Beam Global. While the airport ground support equipment sector has been impacted by reduced passenger air travel due to COVID, our GSE or ground support equipment sales revenue did account for 25% of the quarter sales. However, this level of sales from GSE is likely to decline over the coming months due to continuation of the COVID epidemic. We believe our current December ending quarter is picking up a more seasonal pacing similar to our experience in past years. As part of our strategy to achieve UL listing certification on our products, we recently received certification for our Class 2 M36 pack and our S24 Narrow Aisle Waukee pack. We are close to certification on our redesigned lithium ion pack for the high volume class three in Rider. I will say we believe that some of our customers have been more cautious in their ordering plans due to COVID and the presidential election outcome uncertainties. It is very difficult to quantify this pack impact although we have noticed some effect. Our new product rollout, along with the continued demand for lithium-ion products, are offsetting effects from those externalities. Our relationships with forklift OEMs continue to grow, including potential business across the U.S. and Mexico. We did announce during the September ending quarter, a supply agreement with Clark Material Handling, who is the top 10 forklift OEM. And we look forward to supplying our packs, especially for one of their new marquee forklifts. So our business momentum is strong. A word about our sales cycle and quarterly results. As I've said in the past, The first quarter, which in our case is the quarter ending September 30th, has historically been a seasonally slow revenue-generating quarter for us, reflecting customers not purchasing or installing new equipment over the historically slow summer months of July and August. December can also experience some seasonality due to the holidays. Hence, to assess our progress, we encourage investors to compare the results of our current quarters with comparable quarters from prior years rather than consecutive quarterly results. Turning to gross margins, our 2020 calendar year initiative that we have to increase our gross margins has been experiencing anticipated traction, increasing the first the fiscal first quarter to 19.4% from 6.1% a year ago. Improved vendor pricing has come from volume increases on battery cells sourced in China, steel sourced in US and Mexico, along with other electronic components. Rollout of our next generation BMS has provided per pack cost reductions for our smaller packs and larger reductions for larger PACs. The next generation of technology, which has also provided expanded and improved functions, such as managing extreme temperature in the operating cases. And we have now been rolling out our telemetry product, now named Sky BMS, which is driven by our BMS electronics with extensive PAC data now accessible from our cloud-based Amazon platform. Customers continue to be very excited, making comments such as, and I quote, from a household name, this is our best telemetry we have ever seen, and we want to have it on all our packs. Now I comment about the COVID-19 pandemic. As reported previously, flux power was designated as an essential business as a manufacturer of power sources for material handling equipment, supporting the flow of food and other goods during the pandemic. And we remained open throughout the pandemic and diligently followed CDC and state of California guidelines. We continue to have experienced only minimal disruptions to our supply chain. including sourcing our batteries from our two suppliers in China, and have had very minor disruptions to our employee base. However, we have all seen an uptick in cases in certain areas of the country, as well as numerous areas around the county near our customers. Sorry, let me restate that. We have seen an uptick in cases in certain areas of our county, as well as numerous areas around the country nationwide near the customers we serve. We continue to monitor COVID conditions closely, avoiding all unnecessary travel, including visits to customers and vendors. Extensive use of Zoom and Microsoft Teams has been very useful for our business continuity. I will now hand it over to Chuck Shiawe, our CFO, to provide an update on our financials and our capital structure, and he will also mention the improvements to our balance sheet achieved since the end of September.