flux power holdings, inc. (flux)

Washington, D. C. Securities and Exchange CommissionC. 20549FORM10-
Q☑Quarterly reports submitted under section 13, 15 (d)
1934 Securities Trading Act for the quarter ended December 31, 2018☐Transition reports submitted under sections 13 or 15 (d)
1934 Commission File No. : 000-Securities Exchange Act
25909 Flux Power Holdings Limited(
The exact name of the registrant specified in the articles of association)Nevada86-0931332(
State or other jurisdiction registered or organized)(I. R. S.
Employer identification number)
Vista A suite, California, 985 Red Avenue (
Main executive office address)(Zip Code)877-505-3589(
The phone number of the registrant, including the area code)
Indicate by check mark whether the registrant (1)
All reports requested in Section 13 or 15 have been submitted (d)
Securities Trading Act for the first 12 months of 1934 (
Or the issuer is required to submit such reports for a short period of time),and (2)
This filing requirement has been bound for the last 90 days.
Yes. ☑No. ☐Indicate by check mark whether the registrant has submitted its company website electronically, if any, and each interactive data file needs to be submitted and published in accordance with S-Regulation section 405thT (§ 232.
This Chapter 405)
In the past 12 months (
Or a short period of time required for the registrant to submit and publish such documents).
Yes. ☑No. ☐Indicate by check mark whether the registrant is a large accelerated file manager, a non-accelerated file manager
A smaller reporting company or an emerging growth company.
See the definition of \"large accelerated reporting companies\", \"Small reporting companies\" and \"emerging growth companies\" in rule 12b
Two of the exchanges(Check one)
: Big speed filer☐Speed up filer☐Non
Speed up filer☐Small Reporting Company☑(
Do not check if there are smaller reporting companies)
Emerging growth companies☐If it is an emerging growth company, please indicate by check mark whether the registrant chooses not to use the extended transition period to comply with any new or revised financial accounting standards as set out in section 13a)
The Trading Act.
☐Indicate whether the registrant is a shell company with a match number (
Defined in Rule 12b-
2 parts of the transaction law).
Yes. ☐No. ☑Indicate the number of outstanding shares of the issuer\'s common shares as of the latest feasible date: the number of outstanding shares of ordinary shares as of February 13, 2019, $0.
001 face value 50,962,900 flow Power Holding Co. , Ltd. FORM 10-
Quarterly ContentsPART I-table as of December 31, 2018
Financial information 1.
Consolidated balance sheet as at December 31, 2018 (unaudited)
Consolidated operating statements prepared by ANDJUNE 20184 (unaudited)-
Consolidated Statements of Cash Flows For the three and six months ended December 31, 2018 and 20175 (unaudited)-
In the six months of December 31, 2018, 20176 notes to the consolidated financial statements (unaudited)7ITEM2.
Management Discussion and Analysis of Financial Position and operational results.
Quantitative and qualitative disclosure of market risks
Part Two-
Other information 1.
Legal proceedings.
RISKFACTORS20ITEM2.
Use of unregistered sales and procedures for equity securities
The default UPONSENIOR SECURITIES20ITEM4.
My security report.
OTHERINFORMATION20ITEM6.
Exhibit S21 signatures222 special Note on Forward-Looking Statements This report contains forward-looking statements
Look at the report. The forward-
Lookingstatements are primarily included in the section entitled \"Management\'s Discussion and Analysis of the financial position and results of operations.
\"These statements relate to known and unknown risks, uncertainties, and other factors that may lead to any future results, performance or achievements expressed or implied by our actual results, performance or achievements and forward
Look at the report.
These risks and uncertainties include, but are not limited to, the factors described in the section entitled \"risk factors\" below.
In some cases, you can identify it forward-
Statements in terms of \"expectation\", \"belief\", \"possibility\", \"estimate\", \"expectation\", \"intention\", \"possibility\", \"plan, \"Potential\", \"forecast\", \"project\", \"should\", \"will\" and similar expressions
Look at the report. Forward-
Lookingstatements reflect our current view of future events, based on assumptions, and influenced by risks and uncertainties.
With these uncertainties in mind, you should not rely too much on these forward-looking
Look at the report. Theseforward-
The outlook statement includes, among other things, statements relating to: ● our ability to obtain sufficient funds and alternative sources to support our current and proposed operations;
● Our expected growth strategy and ability to effectively manage business expansion;
Our ability to maintain or increase market share in a highly competitive market;
We are able to keep up with rapidly changing technologies and evolving industry standards, including our ability to make technological progress;
Our dependence on the growth of product demand;
We can diversify our products and seize new market opportunities;
● We are able to meet the needs of skilled labor, machinery, parts and raw materials economically;
Key members of our senior management. Also,forward-
As of the date of publication of this report, forward-looking statements represent only our estimates and assumptions.
You should read this report in full and the documents we cite and file as evidence of this report, and understand that our actual future results may be significantly different from what we expected
We have no obligation to update any information except as required by law
Publicly looking for statements, or updating the reason, the actual results may be very different from any expected results in the future
Even if there is new information in the future, there should be forward-looking statements.
Use certain defined terms, unless otherwise required by the context, and only for the purposes of this report: ● \"Company\", \"we\", \"our\" refer to Flux PowerHoldings, Inc. consolidated Business
Nevada Corporation and its wholly owned subsidiaries
A subsidiary of Flux Power, Inc. (“Flux Power”)
Company of California;
● The Trading Act refers to the revised Securities Trading Act of 1934;
● \"SEC\" means the Securities and Exchange Commission;
● The Securities Trading Act refers to the revised Securities Act of 1933. 3PART I -
Financial information item 1.
Financial StatementsFLUX power Holdings Limited.
Consolidated balance sheet 31, 2018 (Unaudited)
June 30, 2018 RMB: $1,044,000 in cash $2,706,000 accountsable2, RMB, 000ventories2, 848,0001 512,000Othercurrent assets56 00092,000Totalcurrent assets5, 983,0005, 256,000 Otherassets26, 00026,000 property, factory and equipment, net157 00087,000 totalassets $6,166,000 $5,369,000 liabilities and shareholders rights and interests (DEFICIT)
Currentliabilities: account spayable $1,104,000 $417,000 Accruedexpenses595, 000391,000 de ferredrevenu40, 000-Lineof credit -
Related Parts 2, 405,00010, 380,000 convertible promissory notes-related party-
500,000 Accruedinterest294 0001,014,000 total current liabilities4, 438,00012, 702,000 cm long term liabilities: From the 000102,000 Totalliabilities4, 531,00012 804,000 commitmentsemergency (Note 8)
Equity of shareholders (deficit)
: Preferred stock, $0. 001 par value;
Authorized 5,000,000 shares;
Common stock not issued and outstanding, $0. 001 par value;
Authorized 300,000,000 shares;
50,329, 436 and 31,061,028 shares issued and unissued in December 31, 2018 and June 30, 2018 were 00031, respectively,
The cumulative deficit is 196,000, 572,00019 (31,987,000)(26,662,000)
Rights and interests of all shareholders (deficit)1,635,000(7,435,000)
Total liabilities and shareholders\' equity (deficit)
The note attached to $6,166,000, $5,369, is an integral part of these consolidated financial statements.
4 Flux Power Holding Co. , Ltd.
Streamlined consolidated operating statements (Unaudited)
December 31 in the three a month, six a month end December 31 2018201720182017 netrevenue $2,711,000 $1,201,000 $4,547,000 $1,354,000 costof sales2 456,0001 589,0004 275,0001 898,000 grossincome (loss)255,000(388,000)272,000(544,000)
Tips: Sellingand administrative expenses1, 604,000807, 0003,097mm, 0001,483,000mm linear interpolation developopment882, stand, 533,000957, 000 Totaloperating expenses2, 486,0001, 286,0004, 630,0002 440,000Operatingloss (2,231,000)(1,674,000)(4,358,000)(2,984,000)Otherincome (expense)
: Interest expenditure (693,000)(166,000)(967,000)(302,000)Netloss$(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)
Average weight of issued common stock
The notes accompanying the basic and diluted 41, 966,78625, 097,82736, 517,59825, 108, 859 are those condensed consolidated financial statements
5 Flux Power Holding Co. , Ltd.
Consolidated Statement of Cash Flow (Unaudited)
Cash flow from operating activities for the six months ended December 31: net loss of $ (5,325,000)$(3,286,000)
Adjustment to reconcile net losses used in operating activities with net cash: Depreciation 00026
Basic Compensation 407, service stock issuance 000164,000, operating assets and liabilities change 00012,000: Accounts receivable (1,089,000)(1,049,000)Inventories(1,336,000)
403,000 Other current assets 36, 00015, 000113, 00024 ,,
Accumulated interest 000325,000 Customer deposits (9,000)(9,000)
Netcash used in business activities (5,256,000)(3,262,000)
Cash flow from investment activities to purchase equipment (101,000)(43,000)
Netcash for investment activities (101,000)(43,000)
Cash flow for financing activities: Procedures for the sale of common stock 3, 695,000-
Repayment of credit line-
Debt of related parties (2,500,000)-
Borrowing from the credit line-
Related party debt2, 500,0003, 215,000 net cash 3, 695,0003, 215,000 net cash provided by financing activities (1,661,000)(90,000)
Cash, beginning of the period, 706,000121, 000 Cash, end of the period $1,044,000 $31,000 Supplementary disclosure non-
Cash investment and financing activities: $8,475,000 of common stock issued by related party debt conversion-
Common stock issued for conversion of accrued interest $1,610,000 $-
$208,000 in service shares. The attached notes are an integral part of these consolidated financial statements.
6 Flux Power Holding Co. , Ltd.
Notes to Consolidated Financial Statements 31, 2018note 1-
The business nature statement basis accompanying unaudited Consolidated corporate financial statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”)
And the rules of the stock exchange (“SEC”)
Applicable to company interim reports submitted as smaller reporting companies.
These financial statements shall be read in conjunction with the audited financial statements contained in the Company\'s Annual Report on Form 10 and their notes
K for the fiscal year ended June 30, 2018 filed an application with the SEC on September 26, 2018.
The management believes that the accompanying consolidated financial statements include all necessary adjustments to make the financial statements not misleading.
The results of the mid-term operations do not necessarily indicate the expected results for the full year or any other future period.
Certain notes to the financial statements will significantly repeat the disclosure contained in the audited financial statements for the most recent fiscal year reported in the Company\'s Annual Report Form 10
K is omitted.
The accompanying June 30 consolidated balance sheet is derived from the June 30 audited balance sheet contained in this form 10. K.
Nature of commercial power Holdings Limited
Design, develop and sell rechargeable advanced lithium-
Ion batteries for industrial equipment.
As described in this article, the terms \"we\", \"our\", \"flow\" and \"Company\" refer to flow Power Holdings Ltd.
Our wholly owned subsidiary, Flux Power, Inc. (“Flux Power”)
Unless otherwise stated.
We focus on the core technology \"battery management system \"(“BMS”).
Our BMS provides three key features for our battery system: battery balance, monitoring, and error reporting.
With our proprietary management technology, we are able to provide our customers with complete integrated energy storage solutions or customized stand-alone systems.
We have also developed a range of complementary technologies and products that match your core products.
Sales are mainly for customers across the United States.
7 note 2-The condensed consolidated financial statements accompanying liquidity and continuing operations are prepared on the basis of continuing operations, which take into account the realization of assets and the satisfaction of liabilities during normal operations.
The company paid $31,987,000 through an accumulateddeficit in December 31, 2018, net lossof $2,924,000 and $5,325,000 for three years and six months of endedDecember, 2018, respectively.
So far, our revenue and operating cash flows are not sufficient to sustain operations, and we rely on debt and equity financing to fund operations.
These factors have raised great doubts about our ability to continue to focus within 12 months of the submission date of the quarterly report in Form 10.
Q. February 13, 2019.
Our ability to operate continuously depends on whether we can raise extra capital in a timely manner until income and related cash flows can effectively fund our operations.
Management takes steps to improve operations with the goal of maintaining our operations.
These steps include (a)
Develop additional products for the primary and secondary industrial equipment markets; (b)
Expand sales efforts; and (c)
Increase profit margins.
In this regard, we have stepped up our R & D efforts to focus on completing the development of energy storage solutions that can be used for large forklifts and additional marketing efforts are implemented.
These efforts have driven an ongoing assessment of the battery pack of largerforklifts and ground support equipment (“GSE”)
With the commercial sales of GSE packages, End Rider packages, Tier 2 packages, and Tier 1 packages.
We assessed the expected cash requirements for the next 12 months, including but not limited to investments in additional sales, marketing and product development resources, capital expenditures, our existing cash resources are not enough to meet our expected needs for the next 12 months, and additional funding is needed to support current operations.
Based on our current and planned expenditure levels, we estimate that approximately $10,300,000 in total proceeds from financing will be used to fund current and planned operations for 12 months following the date of submission of this quarterly reportQ.
In addition, we expect that further additional financing may be required after that date to fund our business plan until revenue and related cash flows become effective to support our operating costs.
We intend to continue to seek capital through private placement or public offering and bond issuance to sell equity securities.
Although management believes that additional required funds will be obtained, we cannot guarantee that additional required funds will be available in a timely manner or that the funds will be provided on conditions that we can accept.
If such funds are not available when required, management will be required to cut investments in additional sales, marketing and product development resources and capital expenditures, this may have a significant adverse effect on our future cash flow and operational results and our ability to continue to operate as an ongoing business.
The accompanying financial statements do not include any necessary adjustments, and if we cannot proceed as an ongoing business, we are therefore required to liquidate our assets, discharge of our debt outside the normal course of business, the amount may be different from the amount reflected in the accompanying consolidated financial statements. NOTE3 -
Summary of important accounting policies of the company are described in Note 3 \"summary of important accounting policies\", which is in the Company\'s Annual Report on Form 10-
For the fiscal year ended June 30, 2018.
There has been no significant change in these policies or their application.
For the purposes of comparison, the pre-period amount was re-classified to match the current period presentation.
Net loss of common stock per share the company calculates the basic loss of common stock per share by dividing the net loss of common stock per share by the weighted average number of outstanding common stock during the period.
The loss of common stock diluted per share includes the impact of potential common stock diluted in connection with excellent convertible securities.
For the three months ended December 31, 2018 and 2017, the basic weighting and dilution weighting
The average issued common stock is 41,966,786 shares and 097,827 shares respectively.
For the six months ended December 31, 2018 and 2017, the basic weighting and dilution weighting-
The average share of ordinary stocks was 36,517,598 and 25,108,859, respectively.
The company suffered net losses in the three months and six months as of 31, 2018 and 2017, so that the share of basic and diluted losses during the period was the same, because the potential share of common equivalents is excluded from the diluted weighted share
Average common stock issued during this period as including these shares will bedilutive.
Total potential diluted Common stock issued as of December 31, 2018 and 2017, excluding dilution weighting-
The average outstanding common stock, including convertible bonds, stock options and ordinary shares of warrants, is 5,441,481 and 848,448 respectively.
Income tax follows the liability method of income tax accounting under which Deferred tax assets and liabilities are recognized (i)
The temporary difference between the tax base of assets and liabilities and the amount reported in the consolidated financial statements and (ii)
Business losses and tax credits
Forward for tax purposes.
Deferred tax assets have been reduced by valuation allowances, and according to management estimates, there is a high probability that the part of deferred tax assets will not be realized for a period of time to come.
As of December 31, 2018 and June 30, 2018, we confirmed the full valuation allowance and did not confirm any tax provisions or benefits for any reporting period.
We review tax uncertainties every quarter.
We do not have any uncertain tax positions as of June 30, 2018, 2018 or.
Recently, the Financial Accounting Standards Committee (June 20, 2018) has not yet been AdoptedOn (FASB)
Updated accounting standards (ASU)2018-07, compensation-
Stock compensation (Topic 718)
: Improvement of non-employee share-
Accounting based on payment. ASU 2018-
07 designed to reduce costs and complexity and improve shared financial reporting
Payment of goods and services to non-employees.
Amendment in ASU 2018-
07 is effective for fish starting after December 15, 2018, including the medium term.
Management has considered all recent accounting statements issued since the last audit of the consolidated financial statements of the company and believes that these recent statements will not have a substantial impact on the consolidated financial statements of the company. NOTE4 -
Related debt AGREEMENTSEsenjay credit facilitiesbetenoctober 2011 on September 2012, the company signed the threedebt agreement Esenjay Investment Co. , Ltd (“Esenjay”).
Esenjay is considered an associate of asMr.
Beneficial Owner and Director of Esenjay Michael Johnson is a current member of our board of directors and a major shareholder of the company (
Holding approximately 62% of issued common stock as of December 31, 2018).
The three loan agreements include a bridge loan promissory note, a secondary revolving promissory note and an unrestricted credit line (
(\"Loan agreement \").
On December 31, the bridge loan promissory note and the second revolution promissory note expired, and the credit line available for future withdrawals was not restricted.
The maximum amount of unlimited credit is $10,000,000 and the convertible rate is $0.
At $60 per share, boreinterest is 8% and expires on January 31.
In 2018 months, flux power signed a credit financing agreement with Esenjay with a maximum loan amount of $5,000,000.
Proceeds from credit financing will be used to purchase inventory and related operating expenses and interest rates at a rate of 15% per year (
\"Credit line in Stock \").
The outstanding balance of the inventory credit line and accrued interest shall be due on March 31, 2019.
Funds received from mesenjay since December 5, 2017 have been transferred to the inventory credit line, with outstanding funds of $2,405,000 as of December 31, 2018 and future recoverable funds of $2,595,000 subject
For the three months ended December 31, the Company recorded approximately $91,000 in interest payments in the attached consolidated business statement relating to the amount of inventory credit.
OnOctober 31,2018, the company signed an early Bill conversion agreement (
Agreement on the conversion of early morning bills)
Under the agreement, Esenjay agreed to immediately exercise the right of conversion under unrestricted and open lines of credit, September 24, 2012, convert the outstanding principal of $7,975,000 plus accrued and unpaid interest of $1,041,280 into 15,027,134 shares of the Company\'s common stock.
The company follows the fasb asc theme number
470, debit debt to equity in advance.
The early note conversion agreement conducted an induced conversion, which included the issuance of 268,018 ordinary shares and was recorded in October 31, 2018 as interest expense at the fair value of the shares of $466,351.
Shareholder convertible promissory note 2017, we formally verbally agreed to shareholders, the amount is $500,000 (“Shareholder”)
Into a written convertible promise
\"Convertible Notes \").
The loan under Convertible Notes shall be at interest rate of 12% per year, and all unpaid principal and accrued interest shall be due on October 27, 2018.
In addition, at any time starting on or after 6 (6)
Within a few months from the date of issue, in the election of shareholders, all or any part of the outstanding principal, accrued but unpaid interest and/or late fees under convertible notes may be converted to shares of the Company\'s common stock at a price of $1. 20 per share;
However, if the shareholder does not have the right to convert any part of the convertible note, as long as the shareholder has a beneficial share convertible common stock of more than 5% of the total number of ordinary shares immediately after the issuance takes effect.
In the 2018 month, the company and shareholders revised the convertible promissory note. The amendment (i)
Extend the due date of the convertible note from October 27 to February 1, 2019 and (ii)
Allows for the automatic conversion of convertible notes immediately after the full conversion of the credit line granted to the company by Esenjay under the Esenjay loan to become the company\'s common stock.
Due to the conversion of the Esenjay loan in October 31, the shareholder convertible note of $500,000 plus the accumulated interest of $102,510 is automatically converted to 502,091 ordinary shares.
2018, the Company entered into a credit facility agreement with Cleveland capital. P.
Delaware limited partnership (“Cleveland”)
As a minority shareholder, Cleveland has agreed to provide credit to Flux (\"Cleveland LOC \")
The maximum principal is up to $ Two Million at any time ($2,000,000)
Expiration Date: December 31, 2018.
The original cost of level and LOC is $20 ($20,000)
Representing 1% (1%)
Cleveland LOC with a simple interest of 12% (12%)per annum.
Interest is calculated based on the actual daily balance under Cleveland LOC.
Clevelandand was returned in December 27, 2018.
OnOctober 31,2018, Flux signed a credit loan agreement with shareholders ,(“Investor”)
Under the agreement, investors agree to provide credit lines to Flux (“Investor LOC”)
The maximum principal is up to $500 at any time ($500,000)
Expiration Date: December 31, 2018.
Investor LOC has an initiation fee of $5,000 ($5,000)
Representing 1% (1%)
The simple equity of investor LOC and carriesa is 12% (12%)per annum.
Interest is calculated based on the actual daily balance under investor LOC.
Investor LOC was repaid on December 28. NOTE5 -
Equity of shareholders (DEFICIT)
On December 2018, our board of directors approved the private placement of 4,545,455 shares of our common stock to select an approved investor of a total of $5,000,000 or $1.
10 ordinary shares per share and the board of directors is entitled to increase the issue amount to $7,000,000 (the“Offering”).
On December 26, 2018, we completed our initial offering, and according to this offering, we sold a total of 3,359,100 ordinary shares for $1.
At $10 a share, the total purchase price of cash is $3,695,010.
A portion of the proceeds from the issuance are used to repay approximately $2 in full.
6 million borrowing and accrued interest under two
Regular credit facility provided by Cleveland capitalP.
And a shareholder.
Under the revised Securities Act of 1933, shares issued and sold have not been registered (
Securities law)
, Where no exemption is required for registration in the registered or applicable Securities Act, it shall not be provided or sold in the United States.
Under Rule 506, these hares are provided and sold to accredited investors who rely on a registration waiver (c)
Regulation D promulgated under Section IV (a)(2)
Under the Securities Act.
Consulting Agreement of Global Limited Liability Company
Since April 1, 2018, we have signed a contract for Renewal (
\"2018 Renewal \")
Catalyst Global LLC will offer a 12-month Investor Relations service in exchange for a monthly fee of $4,500 per month and 34,840 restricted ordinary shares per quarter.
The initial valuation of 8,710 shares was $1.
When issued on June 21, 2018, the second part of 14,807 shares was worth $2, or $8,710.
$17,507 or $2018, and $8,710 in Part III.
$75 per share, $15,243 on December 31.
2018 renewal can be canceled after 60 days of written notice.
Shenzhen Dada Investment Development Co. , Ltd. (“SRID”).
On March 14, 2018, we signed a consultation agreement with SRID to help us find strategic partners, suppliers and manufacturers in China for a period of 12 months.
Services include atwo-
A week-long trip to China met with potential manufacturers in April 2018.
In consideration of the service, weagreed issued a total of about $174,672 in the SRID, up to 80,000 of the shares limited to the sale of commonstock the12-month term.
As of December 31, 2018, 145,416 shares had been issued.
Details of the warrants activity for the six months ended December 31, 2018 are as follows: number of warrantsyears)
Warrantsoutstanding and exercisable at $1,740,790 in June 30, 2018. 030.
Charged---
(79,957)$1. 48-
Guarantor confiscated$--
At $2, $1, 6, 60, 8, 33 on December 31, 2018, it may be applied and exercised. 060. 19Stock-
Basedcompensationnovember 26,2014, 2014 EquityIncentive plan approved by our board of directors2014 plan)
Approved by byour shareholders in February 17, 2015.
2014 The program provides selected employees, directors and consultants with access to our common stock and helps encourage the employees we hire and attract new employees.
2014 The plan allows for the grant of shares and options, with a maximum of 10,000,000 of our common stock.
The activities of stock options for the six months ended December 31, 2018, and the relevant balances that have not been paid as of that date, are reflected as follows:years)
In June 30, 2018, $473 was outstanding.
83 granted401 1741. 75Exercised--
Forfeitedand cancelled180, 0000.
On December 31, 2018, $46 was outstanding. 958.
Exercise at 1,884,940 $0 on December 31, 2018. 837.
69 activities of stock options for the six months ended December 31, 2017, the relevant balances that have not been paid as of that date are reflected as follows:years)
The performance on June 30, 2017 was particularly prominent.
09, issue 00. 01. 46Exercised-
Cancellation and cancellation (1,000)0.
In December 31, 2017, $50 exceeded $5,277. 618.
$96 available on December 31, 2017. 817. 8611Stock-
The base compensation expenses that we have confirmed in the consolidated operating statements for the three months and six months of the closing date 31, 2018 and 2017 include inventory compensation costs
Options and awards granted based on the fair value of the grant date.
Direct Amortization of fees for granted options and awards
The line method for the expected attribution period. Stock-
The base compensation fee confirmed in the compressed Consolidated operating statement has been reduced as an option for attribution may be lost.
Confiscation is estimated at the time of award, and if the actual forfeiture is different from those estimates, the necessary revisions are made during the subsequent period.
For the six months ended December 31, 2018, the average share price was $2.
As a result, the intrinsic value of the exercise option as at December 31, 2018 was approximately $2,410,000.
Rich in stock-
Basic compensation fees included in the confirmed consolidated statement of employee options grants and non-employee options business
Employee stock options are as follows: half-year results for the three months ending December 31 December 31, 2018201720182017 front teeth development $17,000 $61,000 $32,000 $64,000Generaland administration 226, 00092,000370. , 000100,000 Totalstock-
243,000 dollar 153,000 dollar 407,000 dollar 164,000 dollars
Scholes valuation model for fair value calculation of stock options.
The fair value of stock options is assumed on the date of grant (
Annualized percentage)
Table below: Expected volatility for the six months ended December 31
143% 100% risk-free interest rate 2. 73% -2. 82%1.
76% confiscation rate 20. 0%23.
0% dividend yield0 % 0% is expected to be in the medium term (years)
55 amount of unconfirmed inventory-
The December 31, 2018 remuneration expenditure associated with outstanding stock options is approximately $1,717,000 and is expected to be confirmed over the weighted average period of 1. 59 years. NOTE6 -
Other interested parties TRANSACTIONSTransactions and epic boathhecompany sublet epic equipment for office and production sites (
Entities created and controlled by our board member, former ceo Chris Anthony)
According to a month, we are in the factory in Vista, California. to-
Monthly sublease agreement.
According to this agreement, at the end of our lease agreement, epic ships paid a free fee of 10% of the power of the flux.
Under the sublease lease agreement, the company received $5,000 and $10,000 respectively for the three and six months ended December 31, 2018, which is recorded as rental expenses and a reduction in customer deposits
As at June 30, 2018, 2018 and 31, total customer deposits were approximately $93,000 and $102,000, respectively, recorded in the accompanying consolidated balance sheet.
As of December 31, 2018 and June 30, 2018, accounts receivable from epic ships were not received. NOTE7 -
The centralized credit risk financial instruments that may expose the company to the concentration of credit risk mainly include temporary cash investment and unsecured trade accounts receivable.
The company maintains cash balances at a financial institution in San Diego, California.
Our cash balance at this agency is guaranteed by the Federal Deposit Insurance Company, up to $250,000.
As at December 31, 2018, the company\'s uninsured cash was approximately $794,000.
The company has not suffered any losses in such accounts.
Management believes that the company will not face any major credit risks in cash.
In the three months ended December 31, 2018, we had five major customers, each accounting for more than 10% of our revenue, totaling about 95%.
In the six months ended December 31, 2018, we had four major customers, each of which accounted for more than 10% of our personal income, totaling about 86%.
In the three months ended December 31, 2017, we had three major customers, each accounting for more than 10% of our revenue, totaling about 94%.
In the six months ended December 31, 2017, we had three major customers, each of whom accounted for more than 10% of our personal income, totaling about 89%.
The supplier/supplier center obtains a limited number of components and supplies contained in our products from a small group of suppliers.
In the three months of December 31, 2018, we had three suppliers, who personally accounted for more than 10% of our total inventory purchases, totaling about 59%.
In the six months of December 31, 2018, we had two suppliers who accounted for more than 10% of our total inventory purchases, or about 52% of the total.
In the three and six months ended December 31, 2017, we had three suppliers who accounted for more than 10% of our total inventory, accounting for about 55% and 48% respectively. NOTE8 -
Commitment and chance, we may be involved in day-to-day legal proceedings, as well as claims, claims and threat actions that arise during our normal business process.
The final liability amount (if any) for any type of claim )(
Individual or total)
It may have a significant adverse effect on our financial position, operating results and liquidity.
Moreover, the final result of any action is uncertain.
Any outcome, whether favorable or unfavorable, may have a significant and adverse impact on us due to legal costs and costs, transfer of management attention and other factors.
We paid legal fees during this period.
We cannot assure you that future surprises will not be brought to us with a legal nature or with a legal aspect that may be related to previous, current or future transactions or events.
As of December 31, 2018, we are not the party to any legal action that is expected to have a significant adverse impact on our business, financial position or operational results. NOTE9 -
After December 31, 2018, we sold another 633,464 ordinary shares at a cash purchase price of $696,810.
Shares of common stock issued and sold in the issuance are not registered under the Securities Act and, without registration or applicable exemption from the registration requirements of the Securities Act, may not be issued or sold in the United States.
Under Rule 506, the shares were sold to an accredited investor with a reliance registration waiver (c)
According to the regulations promulgated in section IV (a)(2)
Under the Securities Act. 13ITEM2 -
Management\'s Discussion and Analysis of the financial position and results of operations this information should be combined with unaudited interim financial statements and Table 10-
Q, and audited financial statements and their notes and Part II, Item 7, management discussion and analysis of the financial position and operational results contained in our Annual Report on form 10
The year ending June 30, 2018.
Design, develop and sell rechargeable premium lithium-
Ion batteries for industrial use, including our first
Lithium certified by UL 2271
Electric forklift battery.
We have developed a high level of innovation.
Power battery management system (“BMS”)
And built our business around this core technology.
Our proprietary BMS provides three key functions for our battery system: ■ battery balance: this is by constantly adjusting the capacity of each battery in the storage system based on temperature, voltage and internal impedance
This management ensures the life of the entire system.
■ Monitoring: this is performed by a temperature probe, physical connection to a single battery, for the calculation of voltage and basic indicators to determine the remaining capacity and internal impedance.
This monitoring uses accurate measurements to manage the system and ensure longevity.
■ Error reporting: this is performed by analyzing data from a single unit and determining whether the system is operating within the normal specification.
This error reporting is critical to system management as it ensures that the auxiliary device does not damage the battery;
This will give the operator an opportunity to take corrective actions to maintain the long life of the entire system.
Using our proprietary battery management technology, we offer our customers a fully integrated energy storage solution or a customized modular stand-alone system.
In addition, we have developed a complementary set of technologies and products to enhance the capabilities of our BMS to meet the needs of the growing market for advanced energy storage.
Our business is focused on elevator equipment.
Forklift is usually called forklift (
Also known as forklift, forklift or forklift)
It is an electric industrial truck used to transport materials.
Modern forklifts are developed by a variety of companies, including transmission manufacturing company Clark and crane company Yale & Towne Manufacturing.
Since then, forklifts have become an indispensable equipment in manufacturing and warehousing operations.
Elevator equipment is from a smaller type of elevator equipment such as walkie-talkie (ie. , pallet jack)to a ride-onforklift.
Part of the forklift, especially the larger forklift, uses propane with an internal combustion engine as power.
With the steering of electric forklifts, this area has been experiencing a long-term decline.
The larger forklift fleet is more of a battery-driven forklift.
Elevator equipment vehicles are not new technologies and new tests are not required, which may result in delays in product placement.
Main use of existing elevator equipment market
Acid batteries are a legitimate technology that can lead to customer discontent with life cycle, performance and additional maintenance costs.
We believe in alternatives to lead.
Acid batteries with lithium batteries greatly extend the operating time and battery system life, reducing the overall cost of ownership to a level comparable to lead
Acid is used in many applications.
InJanuary 2016, we are certified from the insurance company lab (“UL”)
The global organization for Safety Sciences, our forklift trucks are packed with lifts.
The UL 2271 listing proves the quality, safety and reliability of the elevator packaging line we offer to customers, distributors and OEMpartners.
We believe that we have stood out from this effort with products that significantly enhance design, durability, performance and value.
In addition, during September 2017, we completed the initial ISO 9001 audit and were certified.
We have obtained the ISO 9001 certificate at november207.
Obtaining ISO 9001 certification further demonstrates our strong focus on our customers, the motivation and participation of topmanagement, and our commitment to consistently deliver quality products and services to our customers.
During 2018, we commercially developed, tested and sold Class 3 end riders, Class 2 forklifts, Class 1 balance forklifts and aviation ground support equipment (“GSE”).
We now have a complete package to meet the needs of the elevator equipment industry and to be able to significantly accelerate our sales.
14 paragraphs and related information we operate as a report segment.
Operating results and financial status the following table is our unaudited consolidated operating statements for the three months ended December 31 (“Q2 2019”)
December 31, 2017 (“Q22018”).
For the three months ended December 31, $2,711 in revenue, $ 000100% in revenue, $1,201, 000100% of sales costs, 1,589, 000132% of revenueloss)255,0009%(388,000)-
32% Operatingexpenses: Sellingand administrative expenses1, 604,00059% 807,00067% development882 linear interpolation, 00033% 479,00040% Totaloperating expenses2, 486,00092% 1,286, 000107% Operatingloss (2,231,000)-82%(1,674,000)-
Other income (139%)expense)
: Interest expenditure, net (693,000)-26%(166,000)-14%Netloss$(2,924,000)-108%$(1,840,000)-
Compared with 153% in the second quarter, 1,510,000 of revenue increased by $ 126%, or 2018.
DuringQ2 2019 sells about 327 packs of includingelie in all categories, bottom Knight, class month, GSE Q2 toapproximately 420 compared to 2018 intercom lift packs.
The full supply of batteries and the focus of the sales and management team have driven the completion of new orders.
Battery packs in other categories other than the Walkie Talkie series cost about $8,500 to $31,000 per pack and drive higher revenueper packs.
Compared with 2019 in the second quarter, the sales Cost of 867,000 in the second quarter increased by $ 55%, or 2018.
The increase in sales costs is directly related to the substantial increase in our packaging sales, as described above.
The company\'s development and improvement of all battery packs, reducing inventory costs, improving staff efficiency, and reducing whichhave warranty costs all contribute to the improvement of 41% to 2019 of Mao Q2 marginpercentage 2018.
We expect the gross margin percentage to continue to increase as sales volume increases, Assembly productivity increases and costs decrease.
Sales and administrative expenses mainly include salary and personnel related expenses, inventory
Compensation fees, public company fees, consulting fees, professional fees and other fees.
Compared with 2019 in the second quarter, 797,000 of such expenses in the second quarter increased by $ 99% or 2018.
This increase is mainly related to the additional staff required to support sales work and back office operations, as well as the increase in inventory
Additional professional fee.
Research and development costs for the second quarter of 2019 increased by $403,000, or 84%, compared with 2018 in the second quarter.
These expenses mainly include materials, supplies, wages and personnel-related expenses, inventory
Basic compensation fees, consultation fees and other expenses related to the continuous development of our complete product linerollout.
In the 2019 quarter, we continued our efforts to refine and improve the battery pack for class 1 forklifts, Class 2 forklifts and class 3 end riders.
We also started the final listing process for our class 3 end rider and Class 1 forklift battery.
As we continue to develop new and improved products for our product line, we expect that the cost of R & D will continue to be a significant part of our cost.
Interest expenditure in the 2019 quarter increased by $527,000, or 317%, over the 2018 quarter, including interest expenditure related to our outstanding credit line and convertible promissory notes.
For the three months ended December 31, 2018, the interest expense also included an additional interest expense of approximately $466,000 agreed under the Esenjay early conversion agreement, as well as $25,000 of the shareholder credit linesee Note 4).
Compared with the net loss of 2019 in the second quarter, the net loss of 1,084,000 in the second quarter increased by $ 59% or 2018.
The main reason for the increase is the increase in inventory
The cost of compensation for our growth sales division was $90,000, Class 1 and Class 2 forklift battery packs were developed, and the additional interest expense was $527,000.
As we continue to increase the sales of our full range of packaging, we expect to be able to take advantage of larger volume discounts to increase gross margin.
The table below shows our unaudited consolidated operating statements for the six months ended December 31, 2018 and December 31, 2017.
For the six months ended December 31, $4,547 in revenue, $ 000100% in revenue, $1,354, 000100% of sales costs, 1,898, and 000140% of total revenue (loss)272,0006%(544,000)-
40% Operatingexpenses: Sellingand administrative expenses3, 097,00068% 1,483 000110% linear interpolation development 1, 533,00034% 957,00071% Total operating expenses 4, 630,000102% 2,440, 000180% Operatingloss (4,358,000)-96%(2,984,000)-
Other income (220%)expense)
: Interest expenditure, net (967,000)-21%(302,000)-22%Netloss$(5,325,000)-117%(3,286,000)-
The six monthly income as at December 31, 2018 was 243%, an increase of $3,193,000 or 236% over the six months as at December 31, 2017.
The substantial increase in revenue is directly attributable to the increase in battery pack sales throughout the battery series for the six months ended December 31, 2018.
For the six months ended December 31, 2018, sales costs increased by $2,377,000, or 125%, over the six months ended December 31.
The increase in sales costs is directly related to the substantial increase in our packaging sales, as mentioned above, which is offset by the reduction in inventory costs and the reduction in direct manual contact time, and lower warranty costs as a percentage of revenue, resulting in a 46% increase in the percentage of agricultural profits over the past six months, 2018 compared to the six months ended December 31.
Sales and administrative expenses for the six months ended December 31 increased by $1,614,000, or 109% per cent, compared with an increase of 2017 per cent for the six months ended.
As discussed above on 2019 in the second quarter, the main reason for the increase is the increase in staff and inventory
Pay and additional professional fees.
Half-year results of R & D and development expenses of monthly ExpenseResearch increased by $576,000 or 60% in December 31, 2018, compared with six months endedDecember, 2017 because we continue to focus on development lithium-
Ion battery pack for class 1 forklift, Class 2 forklift, class 3 end rider and GSE.
Interest expenditure for the six-month period ended December 31, 2018 increased by $665,000 or 220% over the six months ended December 31, 2017, mainly including additional credit lines with us and convertible promissory notes
It also includes interest expenses for the six months ended December 31, 2018, that is, additional interest expenses of approximately $466,000 agreed to under Esenjay\'s early conversion agreement, and $25,000 of shareholder credit linessee Note 4).
The net loss for the six months ended December 31, 2018 increased by $2,039,000, or 62% per cent, compared with a net loss of 2017 per cent for the six months ended.
Clearing and Capital Resources Regulation accounted for 2018, and our cash balance was $1,044,000, with a cumulative deficit of $31,987,000.
In the 12 months following the date of submission of this quarterly report, we did not have sufficient liquidity and capital resources to fund the planned operations.
The company is exploring and working to obtain additional capital from current sources and new sources in the form of convertible debt and private or public offerings.
See \"future liquidity needs\" below \".
17 cash flow operating activities resulting in net cash used for operations for the six-month period ended December 31, 2018 at $5,256,000, compared with net cash used for operations during the six-month period of December 31, 2017 at $3,262,000
The main reason for the increase in net cash used in operations is a significant increase in net losses, an increase in inventory and accounts receivable on the 31st, and 2018 being offset by an increase in accounts payable and accrued charges.
For the six months ended 31, 2018 of cash for investment activities included the purchase of office equipment for $101,000, mainly computer-related equipment.
In the six months to the 31st, Netcash for investment activities in 2017 mainly included the purchase of office and warehouse equipment and rental improvements, totaling $43,000.
During the six months ended the 31st, the $2018 cash provided by the financing activities was $3,695,000, consisting of common stock proceeds.
Netcash enddecember raised activities during the six months of the Month, 2017 is $3,215,000, due to borrowingfrom our credit line with Esenjay.
Future liquidity demand is 2018, and our board of directors has approved a privatized offering of 4,545,455 shares of our common stock to select an approved investor with a total amount of $5,000,000 or $1.
10 shares per share of common stock and the board of directors shall have the right to increase the issue amount to $7,000,000 (the “Offering”).
We completed the issue in January 2019 and sold a total of 992,564 ordinary shares at a total purchase price of $4,391,820, or $1.
10 yuan cash per share.
Part of the lawsuit for this issue was used to pay back about $2 in full.
6 million short-term loans and accrued interest-
Regular credit service with two investors.
We assessed the expected cash demand for the next 12 months, including, but not limited to, additional sales and marketing and investment in product development resources, capital expenditures, our existing cash resources are not sufficient to meet our expected needs for the next 12 months, in order to support current operations, additional funding is also needed.
Based on our current and planned expenditure levels, we estimate that within 12 months from the date of submission of this quarterly report, around $10,300,000 in financing proceeds will be needed to fund current and planned operationsQ.
In addition, we expect that further additional financing may be required after that date to fund our business plan until revenue and related cash flows are sufficient to support our operating costs.
We intend to continue to seek capital through private placement or public offering and bond issuance to sell equity securities.
Although management believes that additional required funds will be obtained, we cannot guarantee that additional required funds will be available in the future or that the funds will be provided on conditions that we can accept.
Without these funds, management will need to cut investment in additional sales, marketing and product development resources, as well as capital expenditures, this will have a significant adverse impact on our future cash flow and operational results and our ability to continue to operate as an ongoing business.
If we raise additional funds by issuing shares or bonds, our shareholders may experience additional significant dilution, and such financing may involve restrictive covenants.
If we raise additional funds through cooperation and licensing arrangements, it may be necessary to waive some of the rights to our technical or product candidates, or to grant permission on terms that are not good for us.
Such behavior may have a significant adverse impact on our business. 18Off-
Arrangement of balance sheet.
The unaudited interim financial statements of key accounting policies are prepared in accordance with generally accepted accounting principles in the United States, which requires us to make estimates and assumptions, the amount of assets and liabilities reporting affecting the date of the unaudited financial statements and the income and expenditure during the reporting period.
The actual results may be different from those estimates.
Item 7 contains information related to our key accounting policies, which we believe may have the most significant impact on the results of our reports, management is required to make subjective or complex judgments Management\'s Discussion and Analysis of our financial status and operational results of the Annual Report on Form 10
The year ended June 30, 2018.
On June 20, 2018, the Financial Accounting Standards Committee issued an accounting statement that has not yet been adopted (FASB)
Updated accounting standards (ASU)2018-07, compensation-
Stock compensation (Topic 718)
: Improvement of non-employee share-
Accounting based on payment. ASU 2018-
07 designed to reduce costs and complexity and improve shared financial reporting
Payment of goods and services to non-employees.
Amendment in ASU 2018-
07 is effective for fish starting after December 15, 2018, including the medium term.
Management has considered all recent accounting statements issued since the last audit of the consolidated financial statements of the company and believes that these recent statements will not have a substantial impact on the consolidated financial statements of the company. ITEM 3 -
Quantitative and qualitative disclosure of market risk according to rule 12b-defined, the company is a smaller Reporting Company
2 The transaction law does not require the information required for this project. ITEM 4 -
Control and procedure assessment disclosure controls and procedures ensure that the disclosure controls and procedures for information required to be disclosed in our report to SEC under the Securities and Exchange Act, modified records, processing, summary and reporting within the time period specified in SEC rules and forms, this information is accumulated and communicated to our management, including our key executives and financial officers, allow a timely decision on the requirement for disclosure.
Requirements under SEC Rule 13a15(e)and15d-15(e)15d-15(b)
, Under supervision, with the participation of our management, including our chief executive and CFO, we conducted an assessment of the end of the fiscal quarter as of December 31, 2018, effectiveness of the design and operation of our disclosure controls and procedures (
As defined in the revised Securities Trading Act 1934 (“Exchange Act”)
And conclude that our disclosure controls and procedures are valid to ensure that the information required for disclosure is recorded in the reports we submit or submit under the Transaction Act, processing and reporting within the time period specified in SEC rules and forms.
Changes in internal control of financial reports during the recently completed financial quarter, the company\'s internal control of financial reports has not changed, and these changes have seriously affected or are quite likely to seriously affect the company\'s internal control of financial reports. 19PART II -
Other information items 1-
Legal proceedings we may participate in daily legal proceedings from time to time, as well as claims, claims and threat actions that arise during our normal business process.
The final liability amount (if any) for any type of claim )(
Individual or total)
It may have a significant adverse effect on our financial position, operating results and liquidity.
Moreover, the final result of any action is uncertain.
Any outcome, whether favorable or unfavorable, may have a significant and adverse impact on us due to legal costs and costs, transfer of management attention and other factors.
We paid legal fees during this period.
We cannot assure you that future surprises will not be brought to us with a legal nature or with a legal aspect that may be related to previous, current or future transactions or events.
As of December 31, 2018, we are not the party to any legal action that is expected to have a significant adverse impact on our business, financial position or operational results. ITEM 1A -
The risk factor investment of our common stock involves a high degree of risk.
Investors should carefully consider the risks described in our Annual Report on Form 10
K. Submitted to SEC on September 26, before deciding whether to purchase our common stock, all the information contained in our public documents. ITEM 2 -
Since April 1, we have signed a contract for Renewal (
\"2018 renewal \")
Provide 12-month investment relationship services with Catalyst Global LLC in exchange for a monthly fee of $4,500 per month and 8,710 restricted common shares per quarter.
The initial valuation of 8,710 shares was $1.
When issued on June 21, 2018, $70 per share, or $14,807, the value of the second batch of 8,710 shares was $2.
When issued on September 28, 2018, $01 per share, or $17,507, the third part of 8,710 shares was worth $1.
Issue onDecember 75 months, 15,243 per share or $2018.
After 60 days of written notice, 2018 renewal can be canceled.
The shares were not registered under the Securities Act.
These shares are issued after exemption from registration under Section IV (a)(2)
Securities Act.
In 2018 months, we signed a consultation agreement with Shenzhen Investment Development Co. , Ltd. (“SRID”)
Assist us in identifying strategic partners, suppliers and manufacturers in China within 12 months.
These services include two-
A week-long trip to China met with potential manufacturers in April 2018.
In considering to make a service, we agree to issue a trajectory of SRID, up to 174,672 shares of ofrestricted common stock worth about $80,000 + months --month term.
As of December 31, 2018, 145,416 shares had been issued.
The shares were not registered under the Securities Act.
These shares are issued after exemption from registration under Section IV (a)(2)
Securities Act.
In addition to the equity issuance disclosed in Item 2 and the equity we sell, these equity shares have previously been included in the current report in form 8 --
K filed an application with SEC and in the quarter ended December 31, 2018 we did not issue any other equity. ITEM 3 -
No default on senior securities. ITEM 4 -
Mine safety disclosure does not apply. ITEM 5 -
No other information. 20ITEM 6 -
The following exhibits are submitted as part of this report. Description10.
The credit financing agreement with Cleveland Capital Corporation in October 26, 2018. P. (1)10.
2 Credit financing agreement signed with private investors on October 31, 2018 (1)10.
3 Early bill conversion agreement signed with EsenjayInvestments, LLC on October 31, 2018 (1)10.
Monthly Amendmentto exchange money order (October 25, 2018) with ScottKiewit (1)10.
5 form of subscription agreement (2)31.