Flux Power Holdings, Inc

$FLUX - OTCUS - Electrical Equipment
ON 4
Up 1 0 Down
Flux Power Holdings, Inc files Form 8-K (Events or Changes Between Quarterly Reports) SEC Filing
VISTA, CA — Flux Power Holdings, Inc filed Form 8-K (Events or Changes Between Quarterly Reports) today. All items submitted with this filing are below. View items submitted with this filing: 8-K (sec.gov) EXHIBIT 3.1 (sec.gov) READ MORE
Up 1 0 Down
@CatalystIR asked: What sort of revenue guidance can you give for the balance of this year or next year?
@FluxPowerIR of $FLUX: The simple answer is that we do not provide financial or revenue guidance; it’s just too early for us to be able to predict with any level of accuracy when and at what scope we will be able to develop our sales.

But I would emphasize he things that we can say, which include comments in our Q2 press release that point at “potential” scope, including our pipeline of orders in discussion which is now $1.2 million, net of Q2 sales, a 50% increase over the same measure just one quarter ago. To put this into perspective, we estimate the total market potential for just walkie LiFT Packs is well in excess of $180 million. The question is at what pace will the industry move to lithium storage – a superior solution at a lower total cost of ownership but with a higher initial purchase price.

I think we’ve been through the hardest part of the product lunch – and now with ramping sales and some major customer & OEM endorsements, the pace is very likely to accelerate.

Additionally, the RFP we mentioned for a large, high power materials handling storage application, is in excess of $500,000 for the prototype phase and well in excess of $5 million for the full deployment. We may or may not be selected, but it shows you the scope of just one significant project.
Up 1 0 Down
@CatalystIR asked: What is in the pipeline other than LiFT Packs for Walkie pallet jack forklifts?
@FluxPowerIR of $FLUX: Flux is developing a new line of LiFT Pack solutions for Class III “Stand On” pallet jacks. “Stand On’s” are larger and require more power than pallet jacks, but are based on all the fundamental science and engineering that are built into our earlier product lines. And I am very pleased to point out that the development of this new line of products actually resulted from a number of customer requests. They liked what we were doing for Walkies and told us they’d be interested in a comparable product for their larger lift trucks. Of course, our long-term strategy is to build out a full line of storage solutions for the full range of lift equipment. We entered the market at the ground level via the walkie solution, as that seemed to offer the most attractive risk/reward and would be the most efficient means to jump start our materials handling experience.

Importantly, given the increased size & performance requirements, we do anticipate higher margins on these products that cost roughly twice as much as our walkie LiFT Packs.

Importantly, we will be selling these packs through the same sales channels that we have developed already. What will help our cause in the market for Stand On’s are the pre-existing relationships Flux has with leading OEM’s. In fact, the two OEM’s with the lions share of the Class III lift equipment market have granted technical approval for the full product lineup of Flux LiFT Packs for Walkie pallet jacks. The technical approval process for Stand On’s should therefore be quicker since they know our core technology.
Up 1 0 Down
@CatalystIR asked: Recent sales of LiFT Packs to a global consumer packaged goods company were relatively small. What makes you excited about this development?
@FluxPowerIR of $FLUX: National (let alone global) accounts take their time to test and adopt new products. It’s the benefit of having strong organizations with talented management. Now that we have secured national approval for fleet manager purchases, we will work to convert that validation into further deployments within the customer’s regions.

Of equal importance, the customer and OEM validation that was required to get to this point, casts a very positive glow across all other potential sales & distribution relationships. We will not be shy in highlighting this very significant approval – and the comprehensive testing behind it – in all customer and distribution dialogues. It’s a very powerful endorsement that we’ve only just begun to leverage. While the sales cycle of demo to fleet approval and orders did take a lot of time, now that it’s public, we expect it will help accelerate adoption across all market segments.
Up 1 0 Down
@CollinsIR asked: Q: How is Flux building a brand in its markets? Isn’t that hard as a new entrant?
@FluxPowerIR of $FLUX: A: Our view on branding is that to be successful in the materials handling industry, Flux has to demonstrate its core values to the market, not just talk about it. Most industries are hesitant about new vendors and particularly with new products or technology. There’s no shortcut to building trust and appreciation for the value you deliver, and we’ve focused our small team on making sure that we demonstrate our care and concern for our customers each and every day. We have elected to move a bit more slowly than perhaps our shareholders would like, but that is because you really only have one shot at gaining industry engagement & trust.

In the material handling industry there are several key areas of influence – and we are working to build awareness, interest and trust in each of them. There are the forklift OEMs who dictate the standards and are critical in their approvals of new technologies as far as warranties go. Then there are the equipment dealers who can play a very important role in making their customers aware of our solutions and then specifying them – both in the replacement and initial, purchase cycles. Finally, and perhaps most importantly are the battery distributors – who do most of the heavy lifting in the battery replacement market, the largest revenue opportunity. We must earn their trust and ensure we put in place suitable terms and business practices to make sure that they will prosper when they introduce Flux to their customers.

Of course, at the end of the day, the customer is the one that sets the ground rules for all of us, and so we also need to develop awareness with customers that helps to 'pull' our solutions into the market. Frankly, one of the major factors that has allowed us to get this far, has been the enthusiasm and support we have received from a few very substantial national and global customers. Their interest drives the entire channel, and has helped to “electrify” the industry toward the concept of lithium power.

I am extremely proud of the progress we have made in establish Flux as a brand in the materials handling market and in other areas. We have kept in very close dialogue with customers every step of the way. We listen to their views, and we respond quickly to any problems – and there will always be problems when you are developing new technologies. Through our customer orientation and ongoing dialogue regarding their needs and preferences, we have developed roughly 15 separate enhancements to our product over the last year. That is a win/win dynamic for us all.

The Flux brand needs to mean more than just lithium batteries – it needs to mean integrity, reliability and value. There are no shortcuts to building that brand value, but now that it is forming, we are able to leverage this growing interest via an active slate of sales & marketing efforts including participation at several key industry conferences including PROMAT in March and the BevOps Fleet Summit and DC Power, both in April.

In addition to this outreach, we also plan to expand our base of training and sales programs for our distribution and dealer networks. All of these resource investments are putting Flux on the roadmap, both for our technology but also for the business ethics that will make us a valued partner.

(we should note that all "A's" in this Q&A are from Flux CEO Ron Dutt)
Up 1 0 Down
@CollinsIR asked: Q: Status of your lithium battery solution for the Class III Stand-On pallet jack market? Unit prices and/or market size? [Feel free to send questions to me and I will post the on the BoardVote Q&A - flux @catalyst -ir.com is the address for questions]
@FluxPowerIR of $FLUX: A: Our stand-on lift truck battery pack is in the final stages of development, including initial field testing with several beta customers. This storage solution is expected to sell for roughly double the price of our walkie LiFT packs which retail between $2,500 and $3,900, because the stand-on packs are larger, more complex and powerful.

Industry estimates suggest that this segment of the Class III market addresses a total market of approximately 30,000 new vehicle sales per year, with addressable annual revenue, including replacement packs, of $800 million.

As you can see, this product line extension provides a very significant increase to our total market opportunity and sales potential. We expect to be in a position to commence commercial sales of this product at some point in the second half of calendar 2015, which is the first half of our fiscal year ending June 2016.
Up 1 0 Down
@CollinsIR asked: Q: Flux is very enthusiastic about the future prospects for sales of LiFT Packs. What’s preventing sales from taking off?
@FluxPowerIR of $FLUX: A: Entering a market and simultaneously launching a solution based on new technology is a process that takes time. Before a sales ramp can engage, you must first establish awareness, credibility and trust that you provide a high quality product, that you are committed to the market, that you stand behind your product and intend to be a long term vendor.

There is no quick way to develop credibility and trust, so we have been building industry relationships step by step. It requires responsiveness, listening to their needs, concerns and suggestions and persistence.

While our sales performance has been relatively modest to date, we are building a very strong foundation for our business. We have achieved OEM approvals for our products with the three largest forklift manufacturers, built a solid base of dealer and battery distributor relationships and spent substantial time in cultivating key customer relationships with companies that demonstrate “first-mover” interest.

We’ve now spent over a year working with key industry players in refining our solutions, learning about their needs and refining our products to meet their requirements. We are very confident, as reflected in our growing base of orders in negotiation (which increased 50% from the end of our first quarter) that we are nearing the point of accelerated engagement.

Lastly, we are a small company and our personnel and financial resources are limited. This position limits what we can do on the sales and marketing front, but also imposes focus and solid discipline as to where we are putting our energy. We are actively working on shareholder friendly ways to provide greater financial and personnel resources to the Company, at the same time we are moving the ball forward and providing some visibility on the very exciting opportunity we have developed.

Said another way, the first few 1000 packs are the hardest… but what keeps us focused and motivated is the tremendous response we are getting from customers and partners on their reaction to our Flux LiFT Pack solutions. They absolutely love them in virtually all cases and when they talk about their experience, they tend to be grinning from ear to ear. That makes us feel the work is worthwhile and that continued driving toward our goals should be met with success.
Up 2 0 Down
@CollinsIR asked: Q: What is the status of the 48V battery array delivered to Penguin Automated Systems last summer?
@FluxPowerIR of $FLUX: A: Penguin has spent the last few months assembling the three-ton robot that is powered by Flux’s battery array. The robot is expected to soon ship to the ultimate client in South America for use in their underground mining operations. It’s hard to predict when the testing will commence, how long it will proceed and when we might have feedback that we could share with our investors.

Importantly, this development projects serves as a proof of concept for Flux in developing larger, higher power & more robust solutions. In fact, the development of this battery array caught the attention of a regional government agency, which has invited Flux in to submit a proposal for a very large scale material handling application. The proposal will be for several prototype storage units and thereafter there is the potential for production units. The opportunities are estimated in the $500,000 and >$5 million range, respectively.
Up 3 0 Down
@bboskoviz asked: I invested in companies that are involved in electric vehicles like Tesla, and now Apple is planning to do so. Are there plans to penetrate and supply your batteries to the electric vehicles companies? If so, what is the time line?
@FluxPowerIR of $FLUX: A: While longer term Flux has the potential to target most electric battery opportunities, our current focus is on select industrial markets where we have identified substantial sales opportunities and little or no competition. We intend to maintain our focus on these key areas of opportunity as we don’t want to spread ourselves too thin in chasing too many different applications or market segments.

In fact, our earliest days were focused on electric vehicles, where we delivered in excess of $5 million in lithium batteries, only to find our customers' markets for these vehicles were not sufficiently developed. We took our battery management system technology, engineering and design capabilities and refocused Flux on markets that were already fully developed, but did not yet have solutions that were based on new battery technologies.

Our first area of focus has been in industrial markets, with specific emphasis on forklifts and other motive equipment. We have purposely targeted the smaller equipment in this material handling segment as we felt that was the best place to enter the market, develop customer awareness and product success and then build from there.

We are making solid progress in this strategy with our LiFT Pack line for Class III Walkie pallet jack fork lifts. We are now extending our product line to stand-on lift trucks which are the next step up in size, performance demands and price point.

That’s a long way to say we prefer focusing on the less glitzy business-to-business opportunities in industrial markets. We are able to be a first-mover, bringing new, better performing and lower cost solutions to these markets for the first time.

As we build our brand, capabilities and financial strength, Flux will be in a position to consider other markets that meet our risk, reward and opportunity profile. For now we are content pursuing our targeted markets which provide enormous growth potential for years to come.
Up 2 0 Down
@ki4qg asked: Does FLUX have any patents on your battery management system or any other way of preventing others from copying your technology? Please compare and contrast your battery management system with that used by Tesla. Tesla has declared their patents are open for anyone to use. Are you taking advantage of their offer to improve FLUX technology?
@FluxPowerIR of $FLUX: A: Flux does have several patents on our battery management system as well as a range of engineering and design knowledge and customer and distributor relationships that would be hard to replicate.

While technology is important, it is the entire turnkey solution, and a reputation for quality and service, that are the greatest barriers to entry in the markets we are pursuing. For example, we have had success in bringing tailored solutions based on researching the operating needs of national account customers.

We are actively reviewing our patent opportunities as we proceed in new product development and with existing product enhancements. We fully expect Flux to continue to take a leadership role in storage system development, but we are of course also keeping an eye on technology developments across the industry. In that vein, we are assessing Tesla and other patents as we develop our next generation battery management systems.