Flux Power Issues Shareholder Letter and Corporate Update

Flux Power Holdings, Inc. (NASDAQ: FLUX), a developer of advanced lithium-ion energy storage solutions for electrification of commercial and industrial equipment, today issued a letter to shareholders from Ron Dutt, CEO of Flux Power.

Dear Fellow Shareholders,

On behalf of the entire team at Flux Power, we hope you had a wonderful Holiday Season and wish you a Happy New Year!

Throughout the calendar year 2023, Flux Power continued revenue and margin expansion while diligently following our roadmap to achieve consistent profitability and an improved capital structure. The year was highlighted by new purchase orders from installed and new customers, ending 2023 with over 20,000 high performance battery packs in the field for lift trucks and other industrial equipment including airport ground support equipment (GSE), and stationary energy storage for EV charging. For our products, during the year we obtained UL Solutions List Status for our next-generation G2 series battery platform and began developing Artificial Intelligence (AI) features for the SkyBMS Telematics Platform. Operationally we opened a new Atlanta facility to supplement customer support services and continued our strategic supply chain and profitability improvement initiatives.

2023 Initiatives Accomplished:

• Added 8 new customers in 2023, reflecting customers desire to fulfill long-term fleet needs of replacing lead acid battery packs with lithium-ion.
• Expansion of Gross Margins Leading to Profitability in FY2024
• Commenced development of Artificial Intelligence (AI) features for SkyBMS Telematics Platform to drive more informed decision-making around asset management and maximize operational efficiency.
• Completed UL Solutions compliance testing to obtain third-party, safety and durability certification for high demand new heavy-duty models to be launched for 2024, reflecting our product line expansion.
• Launched initiative with technology partner to incorporate fast charging capability into our lithium-ion battery cells.
• Reached prototype stage for automation of battery cells into modules to support current high customer demand, while achieving purchasing simplification and reducing inventory.
• Expanded testing and product validation capabilities with on-site vibration table, to reduce time required from testing to certification.
• Opened a new Atlanta facility to supplement customer support services in response to growth in nationwide sales of lithium-ion battery packs, enabling faster response times to Flux Power’s nationwide customer base.
• Strategic Supply Chain & Profitability Improvement Initiatives continued to accelerate the path to cash flow breakeven.
• Secured a new $15 million credit facility, with expansion capability to $20 million, from Gibraltar Business Capital (“GBC”) to fund working capital and to repay its existing credit facility with Silicon Valley Bank (“SVB”).
• Secured a new $2.0 million subordinated line of credit with Cleveland Capital providing additional credit support with an extended duration to August 15, 2025.
• Terminated an at-the-market (“ATM”) offering program.
• Customer order backlog of $31.1M as of November 2, 2023.

Throughout the year, our increase in revenue mirrored the global trend of major corporations actively seeking ways to curtail emissions and address the challenges posed by climate change, particularly through the adoption of electric fleets. The escalating convergence of sustainability programs, financial efficiencies, and governmental regulations is compelling businesses to explore innovative solutions that not only cut carbon emissions but also align with their environmental, social, and governance objectives. In addition, our customers typically migrate to our lithium-ion packs to achieve higher performance and cost reductions, without government incentives.