Flux Power Holdings, Inc.

Good day and thank you for standing by. Welcome to the Flux Power fiscal year 2021 financial results and company update call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. If you require any further assistance, please press star 0. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our speaker today, Justin Forbes. Please go ahead.

Thank you. Good afternoon, and welcome to FlexPower's financial results call. This is Justin Forbes, Director of Marketing and Investor Relations for FlexPower. Ron Dutt, CEO, and Chuck Shiawee, CFO, will present the results of operations for our fiscal year 2021, ended June 30th, Now I'd like to read our safe 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. You are cautioned 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 a 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 Flux Power Investor Relations website at fluxpower.com backslash investors. And with that, I'll now turn it over to Rhonda.

Good afternoon, and thanks, Justin, for the introduction. As you may know, we issued our press release on fiscal year 21 financial results on Wednesday, September 22nd. to support executing a registered direct offering, which closed earlier today. We announced on Thursday, September 23rd, our entering into a securities purchase agreement with institutional investors with HC Wainwright acting as exclusive placement agent. Earlier today, we closed on 2,142,860 shares of common stock with 50% market coverage at a purchase price of $7 even per market share, an associated warrant which generated gross proceeds of $15 million. The securities were issued pursuant to our shelf registration, which had been effective on October 26, 2020. We plan to use these proceeds to support our current rapid business growth, to provide capability to accelerate our path to profitability, and to exploit market opportunities. As our key customers are typically Fortune 500 companies with large material handling fleets, they require suppliers who have financial underpinnings and have the capability to deliver quality product on time. After all, it's disruptive to chain suppliers, especially given complexities in purchasing, service, and at the same time, support expansion of lithium adoption across their fleets, which happens over a multi-year period. And to recall from last year, we uplifted on the NASDAQ capital market in August 2020, including raising 12.4 million in equity capital. Turning to our financial results for fiscal year 21, we increased revenue by 56% from the prior year to a record $26.3 million. This growth reflects continued momentum from the prior year. Despite the headwinds of supply chain disruption, and the continued impact of COVID-19. We launched our next generation battery packs with a high volume class three in rider product line. And there has been a very positive response to the quality and performance of these new packs. Deliveries of several of our product lines were initiated with the world's largest meat processor. along with several major customers in industries including paper products, chemical manufacturing, and packaging. We made good progress acquiring these and other new major customers and are currently working on bringing on more. We are experiencing the impact of growing awareness and acceptance of the lithium value proposition and the reputation of flux power to satisfy Fortune 500 customers. We've resumed deliveries to a global airline that were transferred, that were deferred during the disruptions caused by COVID. And a partnership agreement was signed with Clark Material Handling, adding another sales channel. And we initiated deliveries of a new proprietary high voltage battery pack to a prior, provider of autonomous electric shuttle vehicles. All of this revenue expansion resulted in surpassing 10,000 battery packs in the field as of this past July. We believe this is an indicator of our market leadership in the lithium-powered material handling and ground support equipment sectors. The widely reported supply chain disruption has caused us slower deliveries from vendors, especially lithium ion battery cells, and scarcity of electronic components. Pricing has skyrocketed for steel and shipping costs. We have experienced delays in meeting some customer delivery dates, but have not lost any orders, only had deferred delivery timing. This is evident in our current backlog of open sales orders, which now total over $18 million. Fortunately, our PACs accompany orders for new forklifts, which are also experiencing delays, mitigating misalignment of delivery timing to customers. Increased pricing of steel, shipping, and some other components That put pressure on us, causing us to recently announce price increases. The material handling sector has seen price increases announced broadly in response to the widespread raw material increases. This component pricing pressure has had some adverse effect on our gross margins, especially since last June. And while it is unlikely that supply chain delays and increased pricing will abate suddenly, we are seeing indications that recovery will be coming. And finally, COVID-19 continues on with the Delta variant. However, we follow California Department of Health and CDC guidance and have had no production stoppages. We made substantial progress on our gross margins during fiscal 21, increasing from 13% last year to 22.1% this year. We continue implementing specific plans to achieve 30% gross margins with intent to target 40% after that. Chuck will provide more detail on gross margin and operating expense shortly. We also made progress on technology with the introduction of our telemetry product, which offers real time reports on battery pack state of health for access by customers located anywhere at any time. Our telemetry has been enthusiastically received by customers to embrace the added value to managing their fleets. We do have three patents in process that support our state of the art DMS or battery management system. Our new feature capability with that is expanding and represent a platform for offering power by the month in a bundled package of energy for fleets. And we added Eve as a supplier, a highly regarded Chinese battery cell manufacture to ensure timeliness and quality of supply. We continually research and assess emerging cell technologies and potential cell suppliers. Our fiscal 21 Q4 revenue of $8.3 million increased 33% from $6.3 million last year. representing our 12th consecutive quarter of year-over-year revenue increases. We made progress during the quarter on initiating shipments of recently developed 400-volt battery packs for autonomous electric shuttle vehicles, as I mentioned earlier. We believe there's an opportunity for applications for high-voltage equipment including larger capacity forklifts and material handling, especially those located at ports of entry, which supports our goal of offering a full line of energy storage solutions. And airports and ports of entry are reporting goals of carbon reduction, which favored lithium adoption. We believe that achieving our goal of leading lithium adoption will be enabled by our ongoing efforts to expand technology leadership and synergistic partnerships with customers and suppliers. As I have mentioned, our telemetry products are currently leading the way with real-time reports via the cloud. And examples of our partnerships include Beam Global and their solar-powered EV charging stations, Clark Material Handling and their forklifts, our private label with the top five forklift OEM, and Eve Battery Cell Manufacturer. We continue to leverage our reputation to expand relationships and build scale. I'll now turn it over to Chuck Schiewe, our Chief Financial Officer.