Flux Power(FLUX) - 2024 Q4 - Annual Report

Inventory Management and Accounting Errors - The company identified approximately $1.2 million of excess and obsolete inventory due to a change in battery cells, resulting in an overstatement of inventories[21] - The company also discovered an overstatement of inventories of approximately$0.5 million related to improperly accounted loaner service packs[21] - The company plans to restate its audited consolidated financial statements for the fiscal years ended June 30, 2023, and 2022 due to material accounting errors[20] - The company has initiated an internal investigation to address the accounting errors identified in the financial statements[22] - The company plans to enhance its inventory management and reporting processes to prevent future misstatements[29] Financial and Operational Challenges - The company incurred substantial unanticipated costs for accounting, legal, and consultancy fees related to the restatements and internal investigations[15] - The company is dependent on the growth in demand for its products and the ability to manage working capital efficiently[15] - The company faces risks related to compliance with credit facility agreements and potential legal proceedings affecting its operations[15] Internal Control and Leadership Changes - The company has engaged a new Chief Financial Officer with over 20 years of experience to strengthen internal financial expertise[28] - The company is taking steps to remediate identified material weaknesses in its internal control over financial reporting[31]