Nevada
|
|
86-0931332
|
(State or other jurisdiction of incorporation or
organization)
|
|
(I.R.S. Employer Identification Number)
|
985 Poinsettia Avenue, Suite A, Vista, California
|
|
92081
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
☐
|
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☑
|
(Do not check if a smaller reporting company)
|
|
|
|
|
Emerging growth company ☐
|
|
|
|
Class
|
|
Outstanding as of February 13, 2019
|
Common Stock, $0.001 par value
|
|
50,962,900
|
PART I - Financial Information
|
|
|
|
|
|
4
|
||
|
4
|
|
|
5
|
|
|
6
|
|
|
7
|
|
14
|
||
19
|
||
19
|
||
|
|
|
PART II - Other Information
|
|
|
|
|
|
20
|
||
20
|
||
20
|
||
20
|
||
20
|
||
20
|
||
21
|
||
|
|
|
22
|
|
December 31,
2018
(Unaudited)
|
June 30,
2018
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
Cash
|
$1,044,000
|
$2,706,000
|
Accounts
receivable
|
2,035,000
|
946,000
|
Inventories
|
2,848,000
|
1,512,000
|
Other
current assets
|
56,000
|
92,000
|
Total
current assets
|
5,983,000
|
5,256,000
|
|
|
|
Other
assets
|
26,000
|
26,000
|
Property,
plant and equipment, net
|
157,000
|
87,000
|
|
|
|
Total
assets
|
$6,166,000
|
$5,369,000
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$1,104,000
|
$417,000
|
Accrued
expenses
|
595,000
|
391,000
|
Deferred
revenue
|
40,000
|
-
|
Line
of credit - related party
|
2,405,000
|
10,380,000
|
Convertible
promissory note - related party
|
-
|
500,000
|
Accrued
interest
|
294,000
|
1,014,000
|
Total
current liabilities
|
4,438,000
|
12,702,000
|
|
|
|
Long
term liabilities:
|
|
|
Customer
deposits from related party
|
93,000
|
102,000
|
|
|
|
Total
liabilities
|
4,531,000
|
12,804,000
|
|
|
|
Commitments
and contingencies (Note 8)
|
|
|
|
|
|
Stockholders’
equity (deficit):
|
|
|
|
|
|
Preferred
stock, $0.001 par value; 5,000,000 shares authorized; none issued
and outstanding
|
|
|
Common
stock, $0.001 par value; 300,000,000 shares authorized; 50,329,436
and 31,061,028 shares issued and outstanding at December 31, 2018
and June 30, 2018, respectively
|
50,000
|
31,000
|
Additional
paid-in capital
|
33,572,000
|
19,196,000
|
Accumulated
deficit
|
(31,987,000)
|
(26,662,000)
|
Total
stockholders’ equity (deficit)
|
1,635,000
|
(7,435,000)
|
|
|
|
Total
liabilities and stockholders’ equity (deficit)
|
$6,166,000
|
$5,369,000
|
|
Three months ended December 31,
|
Six months ended December 31,
|
||
|
2018
|
2017
|
2018
|
2017
|
Net
revenue
|
$2,711,000
|
$1,201,000
|
$4,547,000
|
$1,354,000
|
Cost
of sales
|
2,456,000
|
1,589,000
|
4,275,000
|
1,898,000
|
|
|
|
|
|
Gross
income (loss)
|
255,000
|
(388,000)
|
272,000
|
(544,000)
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Selling
and administrative expenses
|
1,604,000
|
807,000
|
3,097,000
|
1,483,000
|
Research
and development
|
882,000
|
479,000
|
1,533,000
|
957,000
|
Total
operating expenses
|
2,486,000
|
1,286,000
|
4,630,000
|
2,440,000
|
|
|
|
|
|
Operating
loss
|
(2,231,000)
|
(1,674,000)
|
(4,358,000)
|
(2,984,000)
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(693,000)
|
(166,000)
|
(967,000)
|
(302,000)
|
|
|
|
|
|
Net
loss
|
$(2,924,000)
|
$(1,840,000)
|
$(5,325,000)
|
$(3,286,000)
|
|
|
|
|
|
Net
loss per share - basic and diluted
|
$(0.07)
|
$(0.07)
|
$(0.15)
|
$(0.13)
|
|
|
|
|
|
Weighted
average number of common shares outstanding - basic and
diluted
|
41,966,786
|
25,097,827
|
36,517,598
|
25,108,859
|
|
Six months ended December 31,
|
|
|
2018
|
2017
|
Cash
flows from operating activities:
|
|
|
Net
loss
|
$(5,325,000)
|
$(3,286,000)
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
Depreciation
|
31,000
|
26,000
|
Stock-based
compensation
|
407,000
|
164,000
|
Stock
issuance for services
|
208,000
|
12,000
|
Changes
in operating assets and liabilities:
|
|
|
Accounts
receivable
|
(1,089,000)
|
(1,049,000)
|
Inventories
|
(1,336,000)
|
403,000
|
Other
current assets
|
36,000
|
15,000
|
Accounts
payable
|
687,000
|
113,000
|
Accrued
expenses
|
204,000
|
24,000
|
Deferred
revenue
|
40,000
|
-
|
Accrued
interest
|
890,000
|
325,000
|
Customer
deposits
|
(9,000)
|
(9,000)
|
Net
cash used in operating activities
|
(5,256,000)
|
(3,262,000)
|
|
|
|
Cash
flows from investing activities
|
|
|
Purchases
of equipment
|
(101,000)
|
(43,000)
|
Net
cash used in investing activities
|
(101,000)
|
(43,000)
|
|
|
|
Cash
flows from financing activities:
|
|
|
Proceeds
from the sale of common stock
|
3,695,000
|
-
|
Repayment
of line of credit - related party debt
|
(2,500,000)
|
-
|
Borrowings
from line of credit - related party debt
|
2,500,000
|
3,215,000
|
Net
cash provided by financing activities
|
3,695,000
|
3,215,000
|
|
|
|
Net
change in cash
|
(1,661,000)
|
(90,000)
|
Cash,
beginning of period
|
2,706,000
|
121,000
|
|
|
|
Cash,
end of period
|
$1,044,000
|
$31,000
|
|
|
|
Supplemental Disclosures of Non-Cash Investing and Financing
Activities:
|
|
|
Common
stock issued for conversion of related party debt
|
$8,475,000
|
$-
|
Common
stock issued for conversion of accrued interest
|
$1,610,000
|
$-
|
Stock
issuance for services
|
$208,000
|
$12,000
|
|
Number of
Warrants
|
Weighted
Average
Exercise
Price Per
Warrant
|
Remaining
Contract
Term (#
years)
|
Warrants
outstanding and exercisable at June 30, 2018
|
1,740,790
|
$2.03
|
0.74
|
Warrants
issued
|
-
|
-
|
-
|
Warrants
exercised
|
(79,957)
|
$1.48
|
-
|
Warrants
forfeited
|
-
|
$-
|
-
|
Warrants
outstanding and exercisable at December 31, 2018
|
1,660,833
|
$2.06
|
0.19
|
|
Number of
Shares
|
Weighted
Average
Exercise Price
|
Weighted
Average
Remaining
Contract
Term (# years)
|
Outstanding
at June 30, 2018
|
3,544,473
|
$0.83
|
|
Granted
|
401,174
|
1.75
|
|
Exercised
|
-
|
-
|
|
Forfeited
and cancelled
|
180,000
|
0.46
|
|
Outstanding
at December 31, 2018
|
3,765,647
|
$0.95
|
8.48
|
Exercisable
at December 31, 2018
|
1,884,940
|
$0.83
|
7.69
|
|
Number of
Shares
|
Weighted
Average
Exercise Price
|
Weighted
Average
Remaining
Contract
Term (# years)
|
Outstanding
at June 30, 2017
|
716,277
|
$1.01
|
|
Granted
|
1,970,000
|
0.46
|
|
Exercised
|
-
|
|
|
Forfeited
and cancelled
|
(1,000)
|
0.50
|
|
Outstanding
at December 31, 2017
|
2,685,277
|
$0.61
|
8.96
|
Exercisable
at December 31, 2017
|
1,626,613
|
$0.81
|
7.86
|
|
For the Three Months Ended December 31
|
For the Six Months Ended December 31,
|
||
|
2018
|
2017
|
2018
|
2017
|
Research
and development
|
$17,000
|
$61,000
|
$32,000
|
$64,000
|
General
and administration
|
226,000
|
92,000
|
375,000
|
100,000
|
Total
stock-based compensation expense
|
$243,000
|
$153,000
|
$407,000
|
$164,000
|
Six months ended December 31,
|
|
2018
|
|
|
2017
|
||
Expected volatility
|
|
142
%-143%
|
|
|
100
%
|
||
Risk free interest rate
|
|
2.73
% -
2.82%
|
|
|
1.76
%
|
||
Forfeiture rate
|
|
20.0
%
|
|
|
23.0
%
|
||
Dividend yield
|
|
0
%
|
|
|
0
%
|
||
Expected term (years)
|
|
5
|
|
|
5
|
|
Three Months Ended December 31,
|
|||
|
2018
|
2017
|
||
|
$
|
% of Revenues
|
$
|
% of Revenues
|
|
|
|
|
|
Net
revenue
|
$2,711,000
|
100%
|
$1,201,000
|
100%
|
Cost
of sales
|
2,456,000
|
91%
|
1,589,000
|
132%
|
Gross
income (loss)
|
255,000
|
9%
|
(388,000)
|
-32%
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Selling
and administrative expenses
|
1,604,000
|
59%
|
807,000
|
67%
|
Research
and development
|
882,000
|
33%
|
479,000
|
40%
|
Total
operating expenses
|
2,486,000
|
92%
|
1,286,000
|
107%
|
|
|
|
|
|
Operating
loss
|
(2,231,000)
|
-82%
|
(1,674,000)
|
-139%
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
Interest
expense, net
|
(693,000)
|
-26%
|
(166,000)
|
-14%
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$(2,924,000)
|
-108%
|
$(1,840,000)
|
-153%
|
|
Six months ended December 31,
|
|||
|
2018
|
2017
|
||
|
$
|
% of Revenues
|
$
|
% of Revenues
|
|
|
|
|
|
Net
revenues
|
$4,547,000
|
100%
|
$1,354,000
|
100%
|
Cost
of sales
|
4,275,000
|
94%
|
1,898,000
|
140%
|
Gross
income (loss)
|
272,000
|
6%
|
(544,000)
|
-40%
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Selling
and administrative expenses
|
3,097,000
|
68%
|
1,483,000
|
110%
|
Research
and development
|
1,533,000
|
34%
|
957,000
|
71%
|
Total
operating expenses
|
4,630,000
|
102%
|
2,440,000
|
180%
|
|
|
|
|
|
Operating
loss
|
(4,358,000)
|
-96%
|
(2,984,000)
|
-220%
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
Interest
expense, net
|
(967,000)
|
-21%
|
(302,000)
|
-22%
|
|
|
|
|
|
Net
loss
|
$(5,325,000)
|
-117%
|
(3,286,000)
|
-243%
|
ExhibitNo.
|
|
Description
|
|
|
|
|
Credit
Facility Agreement, dated October 26, 2018, with Cleveland Capital
L.P.(1)
|
|
|
Credit
Facility Agreement, dated October 31, 2018, with Private Investor
(1)
|
|
|
Early
Note Conversion Agreement, dated October 31, 2018, with Esenjay
Investments, LLC (1)
|
|
|
Amendment
to Convertible Promissory Note, dated October 25, 2018, with Scott
Kiewit (1)
|
|
|
Form
of Subscription Agreement (2)
|
|
|
Certifications
of the Chief Executive Officer under Section 302 of the
Sarbanes-Oxley Act.*
|
|
|
Certifications
of the Chief Financial Officer under Section 302 of the
Sarbanes-Oxley Act.*
|
|
|
Certifications
of the Chief Executive Officer under Section 906 of the
Sarbanes-Oxley Act.*
|
|
|
Certifications
of the Chief Financial Officer under Section 906 of the
Sarbanes-Oxley Act.*
|
|
101.INS
|
|
XBRL
Instance Document*
|
101.SCH
|
|
XBRL
Taxonomy Extension Schema*
|
101.CAL
|
|
XBRL
Taxonomy Extension Calculation Linkbase*
|
101.DEF
|
|
XBRL
Taxonomy Extension Definition Linkbase*
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase*
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase*
|
|
Flux Power Holding, Inc. |
|
|
|
|
|
|
Date: February 13,
2019
|
By:
|
/s/ Ronald
F. Dutt
|
|
|
|
Name: Ronald
F. Dutt
|
|
|
|
Title:
Chief
Executive Officer (Principal
Executive Officer)
|
|
|
|
|
|
|
By:
|
/s/ Charles A. Scheiwe
|
|
|
|
Name: Charles A. Scheiwe
|
|
|
|
Title: Chief Financial Officer (Principal
Financial Officer)
|
|
|
|
|
|
|
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Flux Power
Holdings, Inc.
|
2.
|
Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
|
|
|
|
|
3.
|
Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the Registrant as of, and for, the
periods presented in this report;
|
|
|
|
|
4.
|
The Registrant’s other certifying officer and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
Registrant and have:
|
|
|
|
|
a.
|
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
Registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
|
|
|
|
|
b.
|
Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
|
|
|
|
|
c.
|
Evaluated the effectiveness of the Registrant’s disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures as of the end of the period covered by this report based
on such evaluation; and
|
|
|
|
|
d.
|
Disclosed in this report any change in the Registrant’s
internal control over financial reporting that occurred during the
Registrant’s most recent fiscal quarter (the
Registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the Registrant’s internal control over
financial reporting; and
|
|
|
|
|
5.
|
The Registrant’s other certifying officer and I have
disclosed, based on our most recent evaluation of internal control
over financial reporting, to the Registrant’s auditors and
the audit committee of the Registrant’s board of directors
(or persons performing the equivalent functions):
|
|
|
|
|
a.
|
All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the Registrant’s
ability to record, process, summarize and report financial
information; and
|
|
|
|
|
b.
|
Any fraud, whether or not material, that involves management or
other employees who have a significant role in the
Registrant’s internal control over financial
reporting.
|
|
Date: February 13, 2019
|
|
|
|
|
|
By:
|
/s/ Ronald F. Dutt
|
|
|
Name: Ronald F. Dutt
|
|
|
Title: Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Flux Power
Holdings, Inc.
|
2.
|
Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
|
|
|
|
|
3.
|
Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the Registrant as of, and for, the
periods presented in this report;
|
|
|
|
|
4.
|
The Registrant’s other certifying officer and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
Registrant and have:
|
|
|
|
|
a.
|
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
Registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
|
|
|
|
|
b.
|
Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
|
|
|
|
|
c.
|
Evaluated the effectiveness of the Registrant’s disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures as of the end of the period covered by this report based
on such evaluation; and
|
|
|
|
|
d.
|
Disclosed in this report any change in the Registrant’s
internal control over financial reporting that occurred during the
Registrant’s most recent fiscal quarter (the
Registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the Registrant’s internal control over
financial reporting; and
|
|
|
|
|
5.
|
The Registrant’s other certifying officer and I have
disclosed, based on our most recent evaluation of internal control
over financial reporting, to the Registrant’s auditors and
the audit committee of the Registrant’s board of directors
(or persons performing the equivalent functions):
|
|
|
|
|
a.
|
All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the Registrant’s
ability to record, process, summarize and report financial
information; and
|
|
|
|
|
b.
|
Any fraud, whether or not material, that involves management or
other employees who have a significant role in the
Registrant’s internal control over financial
reporting.
|
|
Date: February 13, 2019
|
|
|
|
|
|
By:
|
/s/ Charles A. Scheiwe
|
|
|
Name: Charles A. Scheiwe
|
|
|
Title: Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
Date: February 13, 2019
|
|
|
|
|
|
By:
|
/s/ Ronald F. Dutt
|
|
|
Name: Ronald F. Dutt
|
|
|
Title: Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
Date: February 13, 2019
|
|
|
|
|
|
By:
|
/s/ Charles A. Scheiwe
|
|
|
Name: Charles A. Scheiwe
|
|
|
Title: Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
Document And Entity Information - shares |
6 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Feb. 13, 2019 |
|
Document And Entity Information | ||
Entity Registrant Name | Flux Power Holdings, Inc. | |
Entity Central Index Key | 0001083743 | |
Trading Symbol | flux | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Current Reporting Status | Yes | |
Entity Common Stock, Shares Outstanding | 50,962,900 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2018 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parenthetical) - $ / shares |
Dec. 31, 2018 |
Jun. 30, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 50,329,436 | 31,061,028 |
Common stock, shares outstanding | 50,329,436 | 31,061,028 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Statement [Abstract] | ||||
Net revenue | $ 2,711,000 | $ 1,201,000 | $ 4,547,000 | $ 1,354,000 |
Cost of sales | 2,456,000 | 1,589,000 | 4,275,000 | 1,898,000 |
Gross income (loss) | 255,000 | (388,000) | 272,000 | (544,000) |
Operating expenses: | ||||
Selling and administrative expenses | 1,604,000 | 807,000 | 3,097,000 | 1,483,000 |
Research and development | 882,000 | 479,000 | 1,533,000 | 957,000 |
Total operating expenses | 2,486,000 | 1,286,000 | 4,630,000 | 2,440,000 |
Operating loss | (2,231,000) | (1,674,000) | (4,358,000) | (2,984,000) |
Other income (expense): | ||||
Interest expense | (693,000) | (166,000) | (967,000) | (302,000) |
Net loss | $ (2,924,000) | $ (1,840,000) | $ (5,325,000) | $ (3,286,000) |
Net loss per share - basic and diluted | $ (0.07) | $ (0.07) | $ (0.15) | $ (0.13) |
Weighted average number of common shares outstanding - basic and diluted | 41,966,786 | 25,097,827 | 36,517,598 | 25,108,859 |
Note 1 - Nature of Business |
6 Months Ended |
---|---|
Dec. 31, 2018 | |
Notes To Financial Statements [Abstract] | |
Nature of Business | Basis of Presentation
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 (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) 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’s Annual Report on Form 10-K for the fiscal year ended June 30, 2018 filed with the SEC on September 26, 2018. 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’s Annual Report on Form 10-K have been omitted. The accompanying condensed consolidated balance sheet at June 30, 2018 has been derived from the audited balance sheet at June 30, 2018 contained in such Form 10-K.
Nature of Business
Flux Power Holdings, Inc. designs, develops and sells rechargeable advanced lithium-ion batteries for industrial equipment. As used herein, the terms “we”, “us”, “our”, “Flux” and “Company” refer to Flux Power Holdings, Inc. and our wholly owned subsidiary, Flux Power, Inc. (“Flux Power”), unless otherwise indicated. We have structured our business around our core technology, the “Battery Management System” (“BMS”). Our BMS provides three critical functions to our battery systems: cell balancing, monitoring and error reporting. Using our proprietary management technology, we are able to offer complete integrated energy storage solutions or custom modular standalone systems to our customers. We have also developed a suite of complementary technologies and products that accompany our core products. Sales have been primarily to customers located throughout the United States.
|
Note 2 - Liquidity and Going Concern |
6 Months Ended |
---|---|
Dec. 31, 2018 | |
Notes To Financial Statements [Abstract] | |
Liquidity and Going Concern | 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. The Company has incurred an accumulated deficit of $31,987,000 through December 31, 2018 and had a net loss of $2,924,000 and $5,325,000 for the three and six month ended December 31, 2018, respectively. To date, our revenues and operating cash flows have not been sufficient to sustain our operations and we have relied on debt and equity financing to fund our operations. These factors raise substantial doubt about our ability to continue as a going concern for the twelve months following the filing date of our Quarterly Report on Form 10-Q, February 13, 2019. Our ability to continue as a going concern is dependent upon our ability to raise additional capital on a timely basis until such time as revenues and related cash flows are sufficient to fund our operations.
Management has undertaken steps to improve operations with the goal of sustaining our operations. These steps include (a) developing additional products to serve the Class 1 and Class 2 industrial equipment markets; (b) expand our sales efforts; and (c) improve gross margins. In that regard, we have increased our research and development efforts to focus on completing the development of energy storage solutions that can be used on larger forklifts and have implemented additional marketing efforts. Those efforts have resulted in ongoing evaluations of battery packs on larger forklifts and ground support equipment (“GSE”) along with commercial sales of GSE packs, End Rider packs, Class 2 packs and Class 1 packs.
We have evaluated our expected cash requirements over the next twelve months, which include, but are not limited to, investments in additional sales, marketing, and product development resources, capital expenditures, and working capital requirements and have determined that our existing cash resources are not sufficient to meet our anticipated needs during the next twelve months, and that additional financing is required to support current operations. Based on our current and planned levels of expenditure, we estimate that total financing proceeds of approximately $10,300,000 will be required to fund current and planned operations for the twelve months following the filing date of this Quarterly Report on Form 10-Q. In addition, we anticipate that further additional financing may be required to fund our business plan subsequent to that date, until such time as revenues and related cash flows become sufficient to support our operating costs.
We intend to continue to seek capital through the sale of equity securities through private or public placements and debt placements.
Although management believes that the additional required funding will be obtained, there is no guarantee we will be able to obtain the additional required funds on a timely basis or that funds will be available on terms acceptable to us. If such funds are not available when required, management will be required to curtail its investments in additional sales, marketing, and product development resources, and capital expenditures, which may have a material adverse effect on our future cash flows and results of operations, and our ability to continue operating as a going concern. The accompanying financial statements do not include any adjustments that would be necessary should we be unable to continue as a going concern and, therefore, be required to liquidate our assets and discharge our 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.
|
Note 3 - Summary of Significant Accounting Policies |
6 Months Ended |
---|---|
Dec. 31, 2018 | |
Notes To Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | The Company's significant accounting policies are described in Note 3, "Summary of Significant Accounting Policies," in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2018. There have been no material changes in these policies or their application.
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation for comparative purposes.
Net Loss Per Common Share
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.
For the three months ended December 31, 2018 and 2017, basic and diluted weighted-average common shares outstanding were 41,966,786 and 25,097,827, respectively. For the six months ended December 31, 2018 and 2017, basic and diluted weighted-average common shares outstanding were 36,517,598 and 25,108,859, respectively. The Company incurred a net loss for the three and six months ended December 31, 2018 and 2017, and therefore, basic and diluted loss per share for the periods are the same because the inclusion of potential common equivalent shares were excluded from diluted weighted-average common shares outstanding during the period, as the inclusion of such shares would be anti-dilutive. The total potentially dilutive common shares outstanding at December 31, 2018 and 2017, excluded from diluted weighted-average common shares outstanding, which include common shares underlying outstanding convertible debt, stock options and warrants, were 5,441,481 and 18,848,448, respectively.
Income Taxes
We follow the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences of (i) temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements and (ii) operating loss and tax credit carry-forwards for tax purposes. Deferred tax assets are reduced by a valuation allowance when, based upon management’s estimates, it is more likely than not that a portion of the deferred tax assets will not be realized in a future period. We recognized a full valuation allowance as of December 31, 2018 and June 30, 2018 and have not recognized any tax provision or benefit for any of the periods presented. We review our tax positions quarterly for tax uncertainties. We did not have any uncertain tax positions as of December 31, 2018 or June 30, 2018.
Recent Accounting Pronouncements Not Yet Adopted
On June 20, 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce the cost and complexity and to improve financial reporting for share-based payments to nonemployees for goods and services. The amendments in ASU 2018-07 are effective for fiscal years beginning after December 15, 2018, including interim periods therein.
Management has considered all recent accounting pronouncements issued since the last audit of the Company’s consolidated financial statements and believes that these recent pronouncements will not have a material effect on the Company’s condensed consolidated financial statements. |
Note 4 - Related Party Debt Agreements |
6 Months Ended |
---|---|
Dec. 31, 2018 | |
Notes To Financial Statements [Abstract] | |
Related Party Debt Agreements | Esenjay Credit Facilities
Between October 2011 and September 2012, the Company entered into three debt agreements with Esenjay Investments, LLC (“Esenjay”). Esenjay is deemed to be a related party as Mr. Michael Johnson, the beneficial owner and director of Esenjay, is a current member of our board of directors and a major shareholder of the Company (owning approximately 62% of our outstanding common shares as of December 31, 2018). The three debt agreements consisted of a Bridge Loan Promissory Note, a Secondary Revolving Promissory Note and an Unrestricted Line of Credit (collectively, the “Loan Agreements”). On December 31, 2015, the Bridge Loan Promissory Note and the Secondary Revolving Promissory Note expired, leaving the Unrestricted Line of Credit available for future draws.
The Unrestricted Line of Credit had a maximum borrowing amount of $10,000,000, was convertible at a rate of $0.60 per share, bore interest at 8% per annum and was to mature on January 31, 2019.
On March 22, 2018, Flux Power entered into a credit facility agreement with Esenjay with a maximum borrowing amount of $5,000,000. Proceeds from the credit facility are to be used to purchase inventory and related operational expenses and accrue interest at a rate of 15% per annum (the “Inventory Line of Credit”). The outstanding balance of the Inventory Line of Credit and accrued interest is due and payable on March 31, 2019. Funds received from Esenjay since December 5, 2017 were transferred to the Inventory Line of Credit resulting in $2,405,000 outstanding as of December 31, 2018 and $2,595,000 available for future draws, subject to the lender’s approval. During the three months ended December 31, 2018, the Company recorded approximately $91,000 of interest expense in the accompanying condensed consolidated statements of operations related to the Inventory Line of Credit.
On October 31, 2018, the Company entered into an Early Note Conversion Agreement (the “Early Note Conversion Agreement”) with Esenjay, pursuant to which Esenjay agreed to immediately exercise its conversion rights under the Unrestricted and Open Line of Credit, dated September 24, 2012 to convert the outstanding principal amount of $7,975,000 plus accrued and unpaid interest of $1,041,280 for 15,027,134 shares of the Company’s common stock. The Company followed FASB ASC Topic No.470, Debt to record the early conversion of debt to equity. The Early Note Conversion Agreement had an induced conversion which included issuance of 268,018 additional shares of common stock and recorded as interest expense at the stock’s fair value of $466,351 at October 31, 2018.
Shareholder Convertible Promissory Note
On April 27, 2017, we formalized an oral agreement for advances totaling $500,000, received from a shareholder (“Shareholder”) into a written Convertible Promissory Note (the “Convertible Note”). Borrowings under the Convertible Note accrue interest at 12% per annum, with all unpaid principal and accrued interest due and payable on October 27, 2018. In addition, at any time commencing on or after the date that is six (6) months from the issue date, at the election of Shareholder, all or any portion of the outstanding principal, accrued but unpaid interest and/or late charges under the Convertible Note may be converted into shares of the Company’s common stock at a conversion price of $1.20 per share; provided, however, the Shareholder shall not have the right to convert any portion of the Convertible Note to the extent that the Shareholder would beneficially own in excess of 5% of the total number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon conversion of the Convertible Note.
On October 25, 2018, the Company and the Shareholder entered into an amendment to the Convertible Promissory Note. The amendment (i) extended the maturity date of the Convertible Note from October 27, 2018 to February 1, 2019 and (ii) allowed for the automatic conversion of the Convertible Note immediately following the full conversion of the line of credit granted by Esenjay to the Company under the Esenjay Loan into shares of Common Stock of the Company. As a result of the conversion of the Esenjay Loan on October 31, 2018, the Shareholder Convertible Note of $500,000 plus accrued interest of $102,510 automatically converted into 502,091 shares of common stock.
Shareholder Short Term Lines of Credit
On October 26, 2018, the Company entered into a credit facility agreement with Cleveland Capital, L.P., a Delaware limited partnership (“Cleveland”), our minority shareholder, pursuant to which Cleveland agreed to make available to Flux a line of credit (“Cleveland LOC”) in a maximum principal amount at any time outstanding of up to Two Million Dollars ($2,000,000) with a maturity date of December 31, 2018. The Cleveland LOC has an origination fee in the amount of Twenty Thousand Dollars ($20,000), which represents one percent (1%) of the Cleveland LOC, and carries a simple interest of twelve percent (12%) per annum. Interest is calculated on the basis of the actual daily balances outstanding under the Cleveland LOC. The Cleveland LOC was paid back December 27, 2018.
On October 31, 2018, Flux entered into a credit facility agreement with a shareholder, (“Investor”), pursuant to which Investor agreed to make available to Flux a line of credit (“Investor LOC”) in a maximum principal amount at any time outstanding of up to Five Hundred Thousand Dollars ($500,000) with a maturity date of December 31, 2018. The Investor LOC has an origination fee in the amount of Five Thousand Dollars ($5,000), which represents one percent (1%) of the Investor LOC, and carries a simple interest of twelve percent (12%) per annum. Interest is calculated on the basis of the actual daily balances outstanding under the Investor LOC. The Investor LOC was paid back December 28, 2018.
|
Note 5 - Stockholders' Equity (Deficit) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes To Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity (Deficit) | Private Placement of Common Stock
In December 2018, our Board of Directors approved the private placement of up to 4,545,455 shares of our common stock to select accredited investors for a total amount of $5,000,000, or $1.10 per share of common stock with the right of the Board to increase the offering amount to $7,000,000 (the “Offering”). On December 26, 2018, we completed an initial closing of the Offering, pursuant to which we sold an aggregate of 3,359,100 shares of common stock, at $1.10 per share, for an aggregate purchase price of $3,695,010 in cash. A portion of the proceeds from the Offering was used to repay in full approximately $2.6 million in borrowings and accrued interest under two short-term credit facilities provided by Cleveland Capital, L.P. and a shareholder. The shares offered and sold in the Offering have not been registered under the Securities Act of 1933, as amended (“Securities Act”), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. The shares were offered and sold to the accredited investors in reliance upon exemptions from registration pursuant to Rule 506(c) of Regulation D promulgated under Section 4(a)(2) under the Securities Act.
Advisory Agreement
Catalyst Global LLC. Effective April 1, 2018, we entered into a renewal contract (the “2018 Renewal”) with Catalyst Global LLC to provide investor relations services for 12 months in exchange for monthly fees of $4,500 per month and 34,840 shares of restricted common stock per quarter. The initial tranche of 8,710 shares was valued at $1.70 or $14,807 when issued on June 21, 2018, the second tranche of 8,710 shares was valued at $2.01 or $17,507 when issued September 28, 2018, and the third tranche of 8,710 shares was valued at $1.75 per share or $15,243 when issued on December 31, 2018. The 2018 Renewal is cancelable upon 60 days written notice.
Shenzhen Reach Investment Development Co. (“SRID”). On March 14, 2018, we entered into a consulting agreement with SRID to assist us with identifying strategic partners, suppliers and manufacturers in China for a term of 12 months. Included with the services is a two-week trip to China to meet with potential manufacturers, which took place in April 2018. In consideration for the services, we agreed to issue to SRID, up to 174,672 shares of restricted common stock valued at approximately $80,000 over the course of the 12-month term. As of December 31, 2018, 145,416 shares have been issued.
Warrant Activity
Warrant detail for the six months ended December 31, 2018 is reflected below:
Stock-based Compensation
On November 26, 2014, our board of directors approved our 2014 Equity Incentive Plan (the “2014 Plan”), which was approved by our shareholders on February 17, 2015. The 2014 Plan offers selected employees, directors, and consultants the opportunity to acquire our common stock, and serves to encourage such persons to remain employed by us and to attract new employees. The 2014 Plan allows for the award of stock and options, up to 10,000,000 shares of our common stock.
Activity in stock options during the six months ended December 31, 2018, and related balances outstanding as of that date are reflected below:
Activity in stock options during the six months ended December 31, 2017, and related balances outstanding as of that date are reflected below:
Stock-based compensation expense recognized in our condensed consolidated statements of operations for the three and six months ended December 31, 2018 and 2017, includes compensation expense for stock-based options and awards granted based on the grant date fair value. For options and awards granted, expenses are amortized under the straight-line method over the expected vesting period. Stock-based compensation expense recognized in the condensed consolidated statements of operations has been reduced for estimated forfeitures of options that are subject to vesting. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
Our average stock price during the six months ended December 31, 2018 was $2.05, and as a result the intrinsic value of the exercisable options at December 31, 2018 was approximately $2,410,000.
We allocated stock-based compensation expense included in the condensed consolidated statements of operations for employee option grants and non-employee option grants as follows:
The Company uses the Black-Scholes valuation model to calculate the fair value of stock options. The fair value of stock options was measured at the grant date using the assumptions (annualized percentages) in the table below:
The remaining amount of unrecognized stock-based compensation expense at December 31, 2018 relating to outstanding stock options, is approximately $1,717,000, which is expected to be recognized over the weighted average period of 1.59 years.
|
Note 6 - Other Related Party Transactions |
6 Months Ended |
---|---|
Dec. 31, 2018 | |
Notes To Financial Statements [Abstract] | |
Other Related Party Transactions | Transactions with Epic Boats
The Company subleases office and manufacturing space to Epic Boats (an entity founded and controlled by Chris Anthony, our board member and former Chief Executive Officer) in our facility in Vista, California pursuant to a month-to-month sublease agreement. Pursuant to this agreement, Epic Boats pays Flux Power 10% of facility costs through the end of our lease agreement.
The Company received $5,000 and $10,000, respectively during the three months and six months ended December 31, 2018, from Epic Boats under the sublease rental agreement which is recorded as a reduction to rent expense and the customer deposits discussed below.
As of December 31, 2018 and June 30, 2018, customer deposits totaling approximately $93,000 and $102,000, respectively, were recorded in the accompanying condensed consolidated balance sheets. There were no receivables outstanding from Epic Boats as of December 31, 2018 and June 30, 2018.
|
Note 7 - Concentrations |
6 Months Ended |
---|---|
Dec. 31, 2018 | |
Notes To Financial Statements [Abstract] | |
Concentrations | Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments and unsecured trade accounts receivable. The Company maintains cash balances at a financial institution in San Diego, California. Our cash balance at this institution is secured by the Federal Deposit Insurance Corporation up to $250,000. As of December 31, 2018, the Company had approximately $794,000 of cash not insured. 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.
Customer Concentrations
During the three months ended December 31, 2018, we had five major customers that each represented more than 10% of our revenues on an individual basis, or approximately 95% in the aggregate. During the six months ended December 31, 2018, we had four major customers that each represented more than 10% of our revenues on an individual basis, or approximately 86% in the aggregate.
During the three months ended December 31, 2017, we had three major customers that each represented more than 10% of our revenues on an individual basis, or approximately 94% in the aggregate. During the six months ended December 31, 2017, we had three major customers that each represented more than 10% of our revenues on an individual basis, or approximately 89% in the aggregate.
Suppliers/Vendor Concentrations
We obtain a limited number of components and supplies included in our products from a small group of suppliers. During the three months ended December 31, 2018, we had three suppliers who accounted for more than 10% of our total inventory purchases on an individual basis or approximately 59% in the aggregate. During the six months ended December 31, 2018 we had two suppliers who accounted for more than 10% of our total inventory purchases on an individual basis or approximately 52% in the aggregate.
During the three and six months ended December 31, 2017, we had three suppliers who accounted for more than 10% of our total inventory purchases on an individual basis or approximately 55% and 48%, respectively, in the aggregate. |
Note 8 - Commitments and Contingencies |
6 Months Ended |
---|---|
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | From time to time, we may be involved in routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate amount of liability, if any, for any claims of any type (either alone or in the aggregate) may materially and adversely affect our financial condition, results of operations and liquidity. In addition, the ultimate outcome of any litigation is uncertain. Any outcome, whether favorable or unfavorable, may materially and adversely affect us due to legal costs and expenses, diversion of management attention and other factors. We expense legal costs in the period incurred. We cannot assure you that contingencies of a legal nature or contingencies having legal aspects will not be asserted against us in the future, and these matters could relate to prior, current or future transactions or events. As of December 31, 2018, we are not a party to any legal proceedings that are expected, individually or in the aggregate, to have a material adverse effect on our business, financial condition or operating results.
|
Note 9 - Subsequent Events |
6 Months Ended |
---|---|
Dec. 31, 2018 | |
Notes To Financial Statements [Abstract] | |
Subsequent Events | In connection with the Offering, subsequent to December 31, 2018, we have sold an additional 633,464 shares of common stock for a total purchase price of $696,810 in cash. The shares of common stock offered and sold in the Offering have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. The shares were offered and sold to the accredited investors in reliance upon exemptions from registration pursuant to Rule 506(c) of Regulation D promulgated under Section 4(a)(2) under the Securities Act. |
Note 3 - Significant Accounting Policies (Policies) |
6 Months Ended |
---|---|
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Reclassifications | Certain prior period amounts have been reclassified to conform to the current period presentation for comparative purposes. |
Net Loss Per Common Share | 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.
For the three months ended December 31, 2018 and 2017, basic and diluted weighted-average common shares outstanding were 41,966,786 and 25,097,827, respectively. For the six months ended December 31, 2018 and 2017, basic and diluted weighted-average common shares outstanding were 36,517,598 and 25,108,859, respectively. The Company incurred a net loss for the three and six months ended December 31, 2018 and 2017, and therefore, basic and diluted loss per share for the periods are the same because the inclusion of potential common equivalent shares were excluded from diluted weighted-average common shares outstanding during the period, as the inclusion of such shares would be anti-dilutive. The total potentially dilutive common shares outstanding at December 31, 2018 and 2017, excluded from diluted weighted-average common shares outstanding, which include common shares underlying outstanding convertible debt, stock options and warrants, were 5,441,481 and 18,848,448, respectively.
|
Income Taxes | We follow the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences of (i) temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements and (ii) operating loss and tax credit carry-forwards for tax purposes. Deferred tax assets are reduced by a valuation allowance when, based upon management’s estimates, it is more likely than not that a portion of the deferred tax assets will not be realized in a future period. We recognized a full valuation allowance as of December 31, 2018 and June 30, 2018 and have not recognized any tax provision or benefit for any of the periods presented. We review our tax positions quarterly for tax uncertainties. We did not have any uncertain tax positions as of December 31, 2018 or June 30, 2018. |
Recent Accounting Pronouncements Not Yet Adopted | On June 20, 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce the cost and complexity and to improve financial reporting for share-based payments to nonemployees for goods and services. The amendments in ASU 2018-07 are effective for fiscal years beginning after December 15, 2018, including interim periods therein.
Management has considered all recent accounting pronouncements issued since the last audit of the Company’s consolidated financial statements and believes that these recent pronouncements will not have a material effect on the Company’s condensed consolidated financial statements. |
Note 5 - Stockholders' Equity (Deficit) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' equity (deficit): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Warrant Activity |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Option Activity |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-based Compensation |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Options Valuation Assumptions |
|
Note 2 - Liquidity and Going Concern (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Jun. 30, 2018 |
|
Note 2 - Liquidity And Going Concern | |||||
Accumulated Deficit | $ (31,987,000) | $ (31,987,000) | $ (26,662,000) | ||
Net Loss | $ (2,924,000) | $ (1,840,000) | $ (5,325,000) | $ (3,286,000) |
Note 3 - Summary of Significant Accounting Policies (Details Narrative) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Accounting Policies [Abstract] | ||||
Weighted Average Number of Shares Outstanding, Basic and Diluted | 41,966,786 | 25,097,827 | 36,517,598 | 25,108,859 |
Antidilutive Securities Excluded from Computation of Earnings Per Share | 5,441,481 | 18,848,448 | 5,441,481 | 18,848,448 |
Note 5 - Stockholders' Equity (Deficit) (Details) |
6 Months Ended |
---|---|
Dec. 31, 2018
$ / shares
shares
| |
Stockholders' equity (deficit): | |
Warrants outstanding and exercisable, beginning | shares | 1,740,790 |
Warrants issued | shares | 0 |
Warrants exercised | shares | (79,957) |
Warrants forfeited | shares | 0 |
Warrants outstanding and exercisable, ending | shares | 1,660,833 |
Warrants outstanding and exercisable, weighted average exercise price, beginning | $ / shares | $ 2.03 |
Warrants issued, weighted average exercise price | $ / shares | .00 |
Warrants exercised, weighted average exercise price | $ / shares | 1.48 |
Warrants forfeited, weighted average exercise price | $ / shares | .00 |
Warrants outstanding and exercisable, weighted average exercise price, ending | $ / shares | $ 2.06 |
Warrants outstanding and exercisable, remaining contractual term, beginning | 8 months 27 days |
Warrants outstanding and exercisable, remaining contractual term, ending | 2 months 8 days |
Note 5 - Stockholders' Equity (Deficit) (Details 1) - Employee Stock Option [Member] - $ / shares |
6 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Options outstanding, beginning | 3,544,473 | 716,277 |
Options granted | 401,174 | 1,970,000 |
Options exercised | 0 | 0 |
Options forfeited and cancelled | 180,000 | (1,000) |
Options outstanding, ending | 3,765,647 | 2,685,277 |
Options exercisable | 1,884,940 | 1,626,613 |
Weighted average exercise price outstanding, beginning | $ .83 | $ 1.01 |
Weighted average exercise price, granted | 1.75 | .46 |
Weighted average exercise price, exercised | .00 | .00 |
Weighted average exercise price, forfeited and cancelled | .46 | .50 |
Weighted average exercise price outstanding, ending | .95 | .61 |
Weighted average exercise price exercisable | $ .83 | $ .81 |
Weighted average remaining contract term, outstanding | 8 years 5 months 23 days | 8 years 11 months 16 days |
Weighted average remaining contract term, exercisable | 7 years 8 months 8 days | 7 years 10 months 10 days |
Note 5 - Stockholders' Equity (Deficit) (Details 2) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Allocated Share-based Compensation Expense | $ 243,000 | $ 153,000 | $ 407,000 | $ 164,000 |
Research and Development Expense [Member] | ||||
Allocated Share-based Compensation Expense | 17,000 | 61,000 | 32,000 | 64,000 |
General and Administrative Expense [Member] | ||||
Allocated Share-based Compensation Expense | $ 226,000 | $ 92,000 | $ 375,000 | $ 100,000 |
Note 5 - Stockholders' Equity (Deficit) (Details 3) |
6 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Stockholders' equity (deficit): | ||
Expected volatility | 100.00% | |
Expected volatility, minimum | 142.00% | |
Expected volatility, maximum | 143.00% | |
Risk free interest rate | 1.76% | |
Risk free interest rate, minimum | 2.73% | |
Risk free interest rate, maximum | 2.82% | |
Forfeiture rate | 20.00% | 23.00% |
Dividend yield | 0.00% | 0.00% |
Expected term | 5 years | 5 years |
Note 5 - Stockholders' Equity (Deficit) (Details Narrative) |
6 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
$ / shares
| |
Stockholders' equity (deficit): | |
Share Price | $ / shares | $ 2.05 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | $ 2,410,000 |
Unrecognized Stock-based Compensation Expense | $ 1,717,000 |
Unrecognized Stock-based Compensation Expense Recognition Period | 1 year 7 months 2 days |
Note 6 - Other Related Party Transactions (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Jun. 30, 2018 |
|
Related Party Transactions [Abstract] | |||||
Sublease Revenue | $ 5,000 | $ 5,000 | $ 10,000 | $ 10,000 | |
Customer Deposits | $ 93,000 | $ 93,000 | $ 102,000 |
Note 7 - Concentrations (Details Narrative) - Customer Concentration Risk [Member] - Integer |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Sales Revenue, Net [Member] | ||||
Number of Major Customers | 5 | 3 | 4 | 3 |
Concentration Risk, Percentage | 95.00% | 94.00% | 86.00% | 89.00% |
Accounts Receivable [Member] | ||||
Number of Major Suppliers | 3 | 3 | 2 | 3 |
Concentration Risk, Percentage | 59.00% | 55.00% | 52.00% | 48.00% |
:%ID4$Y+SW0_4_N+#.31W4UJGNPIW9I)7QGLO#M&[C-PMT8*Y
MS)APBUD1Q+"O$J%/XA+^$Q[ZPR-OAI$+C[;J<> GB+T$L2.(_R(X[$KT8?Z3
M9>(523P$T4[$AXG](D>OR-%#D.Q$?)BC7R3UBJ0>@G0GXL.<=B)D\P0YR,8U
MGT*E&'O7^!OOVM^/[LV3/_!Y.'RALNEZA6Y"FT9PS[460H-))7@PM]J:>;0:
M#&IMMZG9R[DK9T.+81DX9)UZQ6]02P,$% @ 4H!-3B*SWRC> 0 4
M !D !X;"]W;W)K TTJ_.7!1$J67X@AD+2C96U+)@.]Y(2A)4;EI8F-;D2;\I%A1
MT:UPY*DLB?B[I(PW"Q>ZE\!;< )^[,<$!$+L8'86SV3!<7%PPF#, $R(6]W)B
MX\CQ/=;T/"H-POP_"7N/HK06P>H$]+J3
M/5)0Y_AQ=SRE#N\!+QU,>C-'KI.+E*\N^%KE.'(% 8?2. 5FARL\ >=.R);Q
M>]'$JZ4C;N?OZI]][[:7"]/P)/FOKC)MCN\QJJ!F(S?/9G?9+5SDU=YT3/Y-K(%S9\IE-"D>M,V7^E-]HHN8Y$,4K6"//KE%\CXC,(0XX$?S%,,. C#&
MP#@(%@ZB +8/0?O0V(?_!!!8.8Z:R&BZ49.$?I+Y,"@"01$ "BU0] !:0<0@
M(@80D86('Q ?DBR+$IB3@)P$X,06)_G?5%(0D0*(Q$*DC\<2QWX:K)Q_!H(R
M )1:H%&3+4!XXZ]0D ^7D@]P,KN6 -':GPRME"P"7#S4[%38_G+K-F&Z0@(K
M=X\P0,(V"1*M9007. H %W:%3B+KB.(5$'P3(. JR.P*!471"@>^"!!P$V1V
M^8 BNTB]Q47>4GXQ+4PX);MVIG\N5N^@+/0,Q'@PNTW@ @5[H/ZC^@6!NRN#PC[,,AM
M-I HSET8R-/2@X(;,?([,4;N2PZ*W#8,BM(%&+@+(Z -([>"(9%7PJ GL@ #
MMV $]DE3 D\AX3)"H68.!6C(!>C+V:@43(A8%$[K<[F@TC#9='.[?UP4Z<
M6V4^^[/=:39\P&:89+,S/:(>?-S3!P?F/R6+5]\"24'I7L0',00G'-&-_I
M SOI&7=:U/R@S"W5]W(8](:%$MTXQ$;3)+WY!U!+ P04 " !2@$U.J>""
M[E(" ".!P &0 'AL+W=O
LQY(I ,H$^"]^6Q
8>B*@="AH$:D<:M1,"2
U4-5]; =4?=L"^ZX6@4'8VBHUY8HA>.
M":H#3%!M2[(ZQU3F\Z&4;40C*"1TI)0#IY3-UU'VCY3R+"AEHT'@CX$_20VH
MR%>LEA$5POVYR(,5K_R(=OK1.RU!Q7MNI)^$%^-9@J\0VYS]XGE0_3%N>3#N
M@Q#@?46 2V="(._/XJ)T^?18@'XL0"\MP_ 1R&O,T'1]+(KW8^LP61EO/Y,N\#T]\SQ76$?/P38? ,Z(NT3_ U1J8!?&&,G(PB4:[P
M)"6$G 6;'"N3_.:1JW&-C3A!4-Z@BRZF$/%K4DEHQ+C.B&0S>V3\Z)/LD\NR
M'P2 =B=@:8)!=&=-8=0 O@Q**( N<,@S"5)2=. @O^6 -Y!SV\R)D >A*
MGV[,88M\[K+@Z5%.&.OEH%KXP2%FLA'*L+@8?TV56YF&S4!Q[RTZT1F(@IMJ
M3+7IOB$4J8#MP*](H8#W%K:P /B2UMP'N7S<.,_1#G!!,U#P>PM06 !?JLV.
M4UZV7+3@'&=HX)\'&=/.Q?A33GET1E*UX*WG>X^Z9/_#B;T!_U'0\R(%BQ;:
M^ 3GKK#TP4%EY_S)-_X9>H,7):4?RR(HIC2<$D)HT7EK71TA&I)X5GA/&O'Z
M%O1B?-G ^(9A^HDQ\EWNP6W:LE5P J-T$?;*\U^A1 N](%_%K.%2L1O3TNC
MSY@GY;!>#)%4['3OA$YWP'XLVO&"-/**EKRZJ6?OTP^=^2TO*9,QSHYP?IN-
M;G&>-?$ >)U)&SOI;>9*1;I
MM9$5WFECUW\0VX2^ &U5&(]QI23J?/A72'8[CJ1X%#C6 Y=Y]'7 7(?OKLUN
M(BY9>=726-8*XF@@LNW<4(DG"AOH@_@(+-1+BM6OVYU*$&
M<+&(+H0SI)7@\X&Y]XPC$LT(%]9-()$30OXR(HS<)ICA[[$%EG\ DFW6JO\[
MJ%YV$\0H3
6._.B;Z%#++[@&\;7/MX;_EW,.Q0@-+=G8OQ
M3A9H.TCFFC]@VIBE-<:I!+TF:M4";:1E[4B!88<66B?E*A=$82,:@D$6%YZ,
M2!$K.\8C1EY[R,7>;+J3>;P0D,2H5"_CI8\T6\VSY,6WB,'1@U8-7>2U,2
M#(F,\+3[+4LI#88\=,6SH+:'@]YDG;QG"IEAMUBD%H9$)"-"!9>X/,(RV360
MV>T$SS%#'16/H%W@(+/1R:SB-W6C'7PSB:->'@RO'$!V$SM*%42E#@QJ7=1S
MGI@II1;U&RSIP3;#I*X<&.H8P+4I9ICGH#>*
_QO>PR??(K2;)1&QVD6
M9W,.%ID6O#+^B\;N"!K_^H*3^MPBN&7P+_X%0IO-9\R\:3R=)4P?>^V8_!0D
M7)_7=PAE]# GA'WT$I$81U_3((_B#$4Z7@V:V!;+EP%_>(>R. R2#O@7MM>)
M,-QI$4>:7HPO9KP'8@A3'